Ratio Analysis

INTEGRATED THARMO PLASTIC LTD
A STUDY ON
RATIO ANALYSIS
Done for
INTEGRATED THARMO PLASTIC LTD PROJECT REPORT

Submitted in partial fulfillment of the requirements For the award of the degree of
MASTER OF BUSINESS ADMINISTRAITON

By M.VENKATA PRASAD
B.Com.
(Reg. NO: 330898053) Under the guidance of

Mr. S. LAKSHMI PRASAD
M.Com, M.B.A.
Assistant Professor
DEPARTMENT OF MANAGEMENT STUDIES SV PG COLLEGE

(Affiliated to Sri Venkateswara University, Tirupati, Approved By AICTE, New Delhi) Kadapa- 516003. 2007-2009.
SV PG COLLEGE
(Approved by AICTE, New Delhi, and Affiliated to S.V.University, Tirupati) Bajaj Nagar, KADAPA-516003. A.P.
CERTIFICATE
. This is to certify that the project Entitled A STUDY ON FUNDS FLOW STATEMENT done for INTEGRATED THARMO PLASTIC LTD, is a benefited record of the work done by Mr. VENKATA PRASAD.M, Regd. No. 330898053 in Partial fulfillment of requirements for the award of the Degree of MASTER OF BUSINESS ADMINISTRATION in SV PG COLLEGE, KADAPA during 2007-2009.
DECLARATION
I VENKATA PRASAD.M here by declare that the project report entitled A STUDY ON RATIO ANALYSIS INTEGRATED THARMO PLASTIC LTD, Done for submitted by me in partial fulfillment of the
requirement of Master of Business Administration of Sri. Venkateswara University, Tirupati and it has not been submitted previously in part /full to any university or institution.
Place: Date : ( VENKATA PRASAD.M )
ACKNOWLEDGEMENT
I must thank Mr. Gang Reddy Garu. Correspondent SV PG College Kadapa for making me convenient to under take a project work.
I am also thankful to Mr. Rama Krishna Reddy Garu Principal SV PG College, Kadapa, for making it convenient to under tae a project work. Encouraging advice and words of wisdom when things seemed to do away Misses Bhaghyamma Garu Head of the Department helped meet my project objective and match the time and resource framework.
I am thankful to Mr. S. Lakshmi Prasad Garu, SV PG College, kadapa for his invaluable suggestion and guidance in every moment of my project. I take the opportunity to express my sincere gratitude to VENKATA RAO. Finance Manager, INTEGRATED THARMO PLASTIC LTD Granting permission to undergo the summer internship and for his support and guidance. I will remain always indebted to my parents & friends for their moral support and have been the most caring and the best critics during the course of my project. My special thank to all the Executives for their active participation without whom the project work not have been possible.
( VENKATA PRASAD.M )
CONTENTS
Declaration Company certificate College certificate Acknowledgement List of tables List of graphs S.NO CHAPTER - I 1.1 1.2 1.3 CHAPTER - II 2.1 2.2 2.3 2.4 2.5 CHAPTER - III CHAPTER - IV CHAPTER - V PARTICULERS INTRODUCTION Industry profile Company profile Introduction to concept Objectives & methodology Research methodology Objective of the study Sources of data(Data collection) Methodology Limitations of the study Data analysis & interpretation FINDINGS SUGGESTIONS ANNXURE BIBLOGRAPHY PAGE NO 8 - 28 8 13 14 - 21 22 - 28 29 - 31 29 - 30 30 - 31
32 67 68 71 72 73 82 83
1.1 INDUSTRY PROFILE

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PVC products have found wide acceptance in India and abroad. PVC is one of the most versatile plastics. It can be extruded, moulded, calendared, or thermoformed into a multitude of furnished products. The PVC resin can be formulated to give a wide range of propertied ranging from hard, tough materials for products as diverse as wires and cable insulation and sheathing and flooring. PVC products cater to both interiors and exteriors. In interiors it can be used for flooring, profile and cable trays, was covering, modular office systems, house and furniture. For exterior it is used for doors and windows, fencing partitions and paneling, roofing and rain systems. The other external applications are in the field of irrigation, portable water supplies and public water supplies. In the field of irrigation there are several methods to irrigate the fields. There are major and minor irrigation projects apart from the individual sources like wells, tube wells and boar wells. Major irrigation projects will have canals and lift irrigation schemes etc. Like pipelines; cement and GGI pipes were conventional methods of irrigation in the lift irrigation schemes. Now a days PVC pipes replaced the conventional pipes and they constitute almost 90% in this respect. Drip irrigation has become wide concept in agricultural sector especially in the field of horticulture, commercial cropping and green and poly houses. The drip irrigation concept is becoming more popular with its advantages like high yield, water conservation, less labour cost, less fertilizer, less pest management cost, less power cost and many more. The demand for this concept is increasing at a pace of 30% to 40% per annum. Aquaculture, a sunrise industry in Indian economy is mainly depended on PVC for the seawater suction and pumping to their aqua ponds. They are using pipelines of 4-5 Ks. Of 10 16 diapipes. The state and central governments are using these pipelines for the public water supply schemes. 6

The state and central governments are using these pipelines for the public water supply schemes. The state Government of A.P. is using rigid PVC pipes for the irrigation water supplies for the past few years. The state government is providing pipes through APSIDC (Andhra Pradesh State Irrigation Development Corporation) for its lift irrigation schemes and other development schemes. The State Panchayat Raj Department is producing the pies for public water supply schemes. These pipes can be used for the main distributors, sub-distributors and individual connections. These PVC pipes are widely used by the farmers in their farming and agriculture for water supply in their fields through PVC pipelines. The property of UV stability is incorporated into other wise rigid PVC resin by mixing butyl tin stabilizer. This property is important in tropical countries like ours were high temperature fluctuations in the daily temperature are quite common. The UV stabilizer prevents expansion and contradiction longitudinally in the pipes. When expansion and contraction takes place in the pipes they bend. As a result the joints get loosened because they are fixed to walls with the help of the clamps. This results in the subsequent leakage.
ROLE OF PLASTICS IN THE NATIONAL ECONOMY:

Plastics are been perceived as just simple colorful household products in the minds of common man. A dominant part of the plastics of the present and future find their utilization in the following areas. 1. Agricultures, forestry and water management. 2. Automobiles and transportation. 3. Electronics and telecommunications, building construction and furniture especially wood substitutes. 4. Food processing and packing. 5. Power and gas distribution.
IMPORTANCE OF PIPES INDUSTRY:

We shall look at the basic data about plastics and particularly those properties, which are of use in practical working with plastics. Plastics are man made materials, the oldest raw materials for producing plastics are carbonaceous materials obtained from stagnant at around Rs.60-70 crores per annum double to Rs.129 crores. The plastic industry as taken up the economy of achieving an export target of Rs. 7 crores. Major export markets for plastics related products are Australia, Bangladesh, Canada, Egypt, Hong Kong, Hungary, ltaly, Kuwait, Srilanka, Federal republic of Germany, Sweden, Taiwan, UK, USA and Russia.
PROSPECTS:
The production of various plastics raw materials in the country is expected to double by the end of the 2010. The consumption of the commodity plastics Including LDPE, HDPE and PVC is immense scope for the use of plastics in agriculture, electronics, automobiles, telecommunications and irrigation and thus, the plastics industry on the threshold of the explosive growth.
NAME: PVC PIPES INDUSTRY

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PVC products have found wide acceptance in India and abroad. PVC is one of the most versatile plastics. It can be extruded, moulded, calendared, or thermoformed into a multitude of furnishined products. The PVC resin can be formulated to give a wide range of propertied from hard, tough materials for products as diverse as wires and insulation and sheathing and flooring.
UTILITIES AND IMPORTANCE OF PVC PRODUCTS:

PVC products cater to both interiors and exteriors. INTERIORS ARE AS FOLLOWS
In interiors it can be used for 1) Floorings. 2) Profile and cable trays. 3) Wall covering. 4) Modular office systems. 5) House and furniture.
EXTERIORS ARE AS FOLLOWS In exterior it can use for
1. Doors and windows. 2. Fencing partitions and paneling. 3. Roofing and rain systems.
THE OTHER EXTERNAL APPLICATIONS ARE:

1) In the field of irrigation 2) Portable water supplies and pubic water supplies
In the field of irrigation there are several methods to irrigate the fields. There are major and minor irrigation projects apart from the individual sources like wells, tube wells and boar wells. Major irrigation projects will have canals and lift irrigation schemes etc. like pipelines cement and GGI pipes were conventional methods of irrigation in the lift irrigation schemes. Now a days PVC pipes replaced the conventional pipes and they constitute almost 90% in this respect. Drip irrigation has become a wide concept in agricultural sector especially in the field of horticulture, commercial cropping and green and poly houses. The drip irrigation concept is becoming more popular with its advantages like high yield, water conservation, less labour cost, less fertilizer, less pest management cost, less power cost and many more. The demand for this concept is increasing at a pace of 30% to 40% per annum. Aquaculture, a sunrise industry in India economy is essentially dependent on PVC for the seawater suction and pumping to their aqua ponds. They are using pipelines of 4-5 ks. Of 10-16 diapipes. The state and central governments are using these pipelines for the public water supply schemes. The state government of A.P is using PVC pipes for the irrigation water supplies for the past few years. The state govt. is providing pipes through APSIDC (Andhra Pradesh state irrigation development schemes. The state Panchayat Raj department is producing the pipes for public water supply schemes. These pipes can be sued for the main distributors, sub-distributors and individual connections. These PVC pipes are widely sued by the farmers their farming and agriculture for water supply in their fields through PVC pipelines.
1.3 COMPANY PROFILE

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INTEGRATED THERMOPLASTICS LIMITED ESTABLISHMENT:

The company was incorporated on 25th January 1994 as a limited company namely TORRENT THERMOPLASTICS LIMITED. It was subsequently converted in to a public limited company on 26th may 1994; the companys name was changed by INTEGRATED THERMOPLASTICS LIMITED on 5th august, 1994. In the year 1998 it has been taken over by NANDI GROUP OF COMPANIES, after that tremendous change have been noticed in production under the dynamic and energy leadership of Mr.S.P.Y.Reddy, the monarch in manufacturing of quality PVC pipes. The unit also has world-class quality assurance systems in place. The company ensures products of uncompromising quality meeting all relevant ISI, BS, DIN and ASTM standards with a view to effectively cater, to the needs of the International markets. Integrated thermoplastics limited has achieved ISO 9001-2000 accreditation on 2003 in implementing and maintaining quality systems management with the scope of PVC pipes and became a member of selected brand of elite group of companies. In addition extensive R&D facilities provide reliable and committed support for new product development.
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INTEGRATED THARMO PLASTIC LTD VISION AND MISSION : Vision:

To serve people through providing good quality products at reasonable cost.
Mission:
To achieve companys growth innovation and development of resources to meet organizational goals. To provide products and services of best value possible to customers, thereby gaining their respects.
TECHNICAL INFORMATION :
ITL rigid PVC pipes are manufactured in accordance with Indian standards specifications 4985:1998 and other international specifications. The company also manufactures special ranges of commercial pipes under different ranges to satisfy the customer requirements. ITL PVC pipes are normally manufactured in uniform length of 6 meters with plain ends both the sides and also with self socked one side. Varied length can be Integrated manufactured according to the customer requirement.
Thermoplastics Limited is manufacturing rigid PVC pipes from 20mm to 400 mm in conformity to ISI 4985:2000 and other international specifications.
QUALITY CONTROL ASSURANCE:
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Integrated Thermoplastics Limited is having well equipped quality testing machines in their labs as per the ISI standards for testing of all diameters and gets excellent result. We at ITL Pipes are proud to say that we follow world-class QCM (Quality control management) techniques in our Quality Control lab to achieve the best quality. Stringent quality control tests are regularly conducted to ensure top quality production of PVC products.
MAINTENANCE AND SERVICE:

This company is better equipped with excellent workshop to provide maintenance and service of machinery in electrical, mechanical and civil lines all the time, We assure service at any time to enable our equipment and machinery to perform efficiently, thus reducing production down time.
EXPLORING NEW HORIZONS: EXPORTS

Integrated Thermoplastics Limited is trying very hard in exporting their products like rigid PVC pipes of water, electrical conduits and SWR pipes to Middle East, Europe, Africa and other Asian countries. Taking an example our esteemed overseas customers, we are proud to say that we are associate with CEYLON ELECTRICTY BOARD SRILANK supplying electrical conduits to their project requirements.
GENERATING EMPLOYMENT:
The Integrated Thermoplastics Limited has the work force of more than 400 workers working at our manufacturing plant located at Manoharbad village, Toopran mandal, and Medak district. In this way the company generates employment to several people.
DYNAMIC WORK FORCE:

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The dynamic work force is the strong base for the success of the company. The administrative as well as the technical staff are well The company follows the specialization of work, qualified and skilled.
which helps the company to assign the right job to the right person. The technical staff at the manufacturing units is well versed in the field of production, which generates new innovative ideas and concepts. All the workers are dedicated to work and responsible for their work done.
DISTRIBUTION NETWORK:
One of the most important parts of the companys effective functioning in the competitive market is its distribution network. 100 dealers through out the state. The company has its own vehicles for transportation, which helps the Sales department to cater the needs of the customers at the right time and at the right place. The company has its own dealers network with a number of nearly more than
MARKET NETWORK:
Integrated Thermoplastics Limited covers the national level markets, but their main target market areas are Andhra Pradesh, Karnataka, Tamil Naidu, Maharashtra, Bihar and Jharkhand etc.
DISTRIBUTION CHANNELS:
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The company has got two levels of distribution channels they are, 1) Zero Level Single Level ZERO LEVEL MANUFACTURER CUSTOMER
2) SINGLE level SINGLE LEVEL MANUFACTURER DEALER CUSTOMER
PRODUCTS OF THE COMPANY:

The ITL has the ISI registration for its products, which speaks of high quality and commitment. The main brand of ITL is 1. ITL (ISI) and the other brands which belong to company are 2. SAGAR 3. SAGAR (special) These brands namely sagar and sagar special are characterized as the commercial quality, which enables the customers to have a second choice Other than the superior quality products with the brand name of ITL.
NATIONAL WIDE COMPETETORS:

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1. Sudhaker polymers ltd. 2. Finolex industry ltd. 3. Jain irrigation ltd.
SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF ACCOUNTING: ` The financial statements are prepared under historical costs convention on an accrual basis and are in compliance with accounting standards referred to in Section 211 (3c) of the companies act, 1956, except in case of AS-15 Accounting for Retirement Benefits in the financial statements of employers. FIXED ASSETS: Fixed assets are stated at cost less accumulated depreciation. Cost comprises of the purchase price and any attributable cost of bringing the asset to working condition less excise duty taken as CENVAT credit, for its intended use. DEPRECIATION: Depreciation on Fixed Assets is provided on straight-line method at the rates specified from time to time in Schedule xiv of the Companies Act, 1956. Depreciation on additions/deductions during the year is calculated pro-rata from/to date of additions/deductions. INVESTMENTS: Long-term investments are carried at cost including accrued interest thereon.
INVENTORIES: 16

Inventories of finished goods are valued at cost or market price whichever is lower. Whereas, raw material and semi-finished reusable scrap and stores and valued at cost on FIFO basis. SALES: Sales comprises of invoiced value of goods supplied net off discounts and returns. MISCELLANEOUS EXPENDITURE: i) Preliminary Expenditure: Preliminary and public issue expenses are being written off over a period of ten year. STAFF BENEFITS: The provisions of Accounting Standard 15 on Accounting for Retirement Benefits in the financial Statement of employers, issued by the council of the institute of Chartered Accountants of India is being complied with by the company under the provident fund Act. Leave encashment is accounted on cash basis.
PRIOR PERIOD AND EXTRA-ORDINARY ITEMS:

Income and expenditure pertaining to prior period as well as
extraordinary items, where material, are disclosed separately. ACCOUNTING FOR TAXES ON INCOME: The company has unabsorbed losses available for set off under the income Tax Act, 1961. However in view of the present uncertainty regarding generation of sufficient further taxable income, deferred tax assets at the year end including related credit for the year have not been recognized in the accounts on prudent basis, as per the accounting standard 22 Accounting for taxes on income issued by the institute of Chartered Accountants of India.
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INTEGRATED THARMO PLASTIC LTD PROMOTERS AND BOARD OF DIRECTORS PROMTERS

Mr.s.p.y. Reddy chairman of NANDI Group of industries. DIRECTORS: 1. Mr.Y.Srinivas Reddy 2. Mr.M.D.Chand pasha 3. Mr.Y.V.Rama rao STATUTORY AUDITORS: M/S.M.T.R.& ASSOCIATES Chartered Accountants Hyderabad-500034. BANKERS: 1) ANDHRA BANK HYDERABAD. 2) INDIAN OVERSEAS BANK HYDERABAD. 3) KARUR VYSYA BANK LTD.
REGISTRARS & SHARE TRANFER AGENTS:

M/S.KARVY CONSULTANTS LIMITED, KARVY HOUSE, 46 AVENUES 4, STREET NO 1, BANAJARA HILLS, HYDERABAD-500 034.
ADMN. & CORPORATE OFFICE: 701, 7TH Floor, Paigah plaza, Basheerbagh, Hyderabad-500 001.
RATIO ANALYSIS
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STANDARDS OF COMPARISON The ratio analysis involves comparison for a useful interpretation. A single ratio in itself does not indicate favorable or unfavorable condition. It should be compared with some standard. Standards of comparison may consist: 1. Ratios calculated from the past financial statements of the same firm; 2. 3. Ratios developed using the projected, or proforma of financial statements of the same firm; Ratios of some selected firms, especially the most progressive and successful, at same point in time, and 4. Ratios of the industry to which the firm belongs. The easiest way to evaluate the performance of a firm is to compare its current ratios with the past ratios. When financial ratios over a period of time are compared it is known as the time series or trend analysis. It gives an indication of the direction of change and reflects whether the firms financial performance has improved, deteriorated or remained constant over time. The analyst should not simply determine the change, but, more importantly, he should understand why ratios have changed. The change may be affected by changes in the accounting policies without a material change in the firms performance. Sometimes future ratios are used as the standard of comparison. Future ratios can be developed from the projected or proforma of financial statements. The comparison of past ratios with future ratios shows the firms relative strengths and weaknesses in the past and the future. If the ratios indicate weak financial position, corrective actions should be initiated. Another way of comparison is to compare ratios of one firm with some selected firms in the same industry at the same point in time. This kind of comparison indicates the relative financial position and performance of the firm. To determine the financial condition and performance of a firm, its ratios may compare with average ratios of the industry analysis, helps to ascertain the 19

financial standing and capability of the firm in the industry to which it belong. Industry ratios are important standards in view of the fact that each industry has its characteristics, which influence the financial and operating relationship. TYPES OF RATIOS Several ratios, calculated from the accounting data, can be grouped into various classes according to financial activity or function to be evaluated. The parties interested in financial analysis are short-term and long-term creditors, owners and management. Short-term creditors main interest in the liquidity position or the short-term solvency of the firm. Long -term solvency and profitability of the firm. Similarly, owners concentrate on the firms profitability and financial condition. Management is interested in evaluating every aspect of the firms performance. They have to protect the interests of all parties and see that the firm grows profitability. n view of the requirements of the various users of ratios, we may classify them into the following four important categories: 1. Liquidity Ratios 2. Leverage Ratios 3. Activity Ratios 4. Profitability Ratios Liquidity ratios measure the firms ability to meet current obligations. Leverage ratios show the proportions of debt and equity in financing the firms assets. Activity ratios reflect the firms efficiency in utilizing its assets, and profitability ratios measure overall performance and effectiveness of the firm.
1. LIQUIDITY RATIOS:
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It is extremely essential for a firm to be able to meet its obligations as they become due. Liquidity ratios measure the ability of the firm to meet its current obligations. In fact, analysis of liquidity needs the preparation of cash budgets and fund flow statements; but liquidity ratios, by establishing a relationship between cash and other current assets to current obligations, provide a quick measure of liquidity. A firm should ensure that if does not suffer from lack of liquidity, and also that it does not have excess liquidity. The failure of a company to meet its obligations due to lack of sufficient liquidity, will result in a poor credit worthiness, loss of creditors confidence, or even in legal tangles resulting in the closure of the company. A very high degree of liquidity is also bad; idle assets earn nothing. The firms funds will be unnecessarily tied up in current assets. Therefore, it is necessary to strike a proper balance between high liquidity and lack of liquidity. The most common ratios, which indicate the extent of liquidity or lack of it, are: Current ratio Quick ratio Cash ratio Working capital turnover ratio Sales trend ratio
2. LEVERAGE RATIOS: The process of magnifying the share holders return through the employment of debt is called Financial Leverage or Trading on Equity. To judge the long-term financial position of the firm, financial leverage or capital structure ratios are calculated. The ratios indicate funds provided by owners and lenders. As a general rule there should be appropriate mix of debt and owners equity in financing the firms assets.
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The use of debt magnifies the shareholders earnings as well as increases their risk and firms ability of using debt for the benefit of shareholder. Basically these are prepared to know the extent which operating profits are sufficient to cover the fixed charges. The following are the some of the important leverage ratios: Debt-Equity Ratio Total-Debt Ratio
3. ACTIVITY RATIOS: The funds of creditors and owners are inverted in various assets to generate sales and profits, the better assets management, the large amount of sales. Activity ratios are employed to evaluate the efficiency with which the firm managers and utilities its assets. These ratios are also called as turnover ratios, because they indicate the speed with which assets are being converted or turned into sales. Activity ratios , thus, involve a relationship between sales and assets. A proper balance between sales and assets generally reflect that assets are managed well. Several activity ratios can be calculated to judge the effectiveness of the asset utilization. The following are the important activity ratios, which will evaluate the efficiency of the firm: Inventory Turnover Ratio Creditors Turnover Ratio Working Capital Turnover Ratio Fixed Assets Turnover Ratio Total assets turnover ratio
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4. PROFITABILITY RATIOS: Profit is the difference between revenues and expenses over a period of time (usually one year). Profit is the ultimate output of a company, and it will have no future if it fails to make sufficient profits. Therefore, the financial manager should continuously evaluate the efficiency of the company in term of profits. The profitability ratios are calculated to measure the operating efficiency of the company. Besides management of the company, creditors and owners are also interested in the profitability of the firm. Creditors want to get interest and repayment of principal regularly. Owners want to get a required rate of return on their investment. This is possible only when the company earns enough profits. The following are the some of the important profitability ratios: Gross Profit Margin Net Profit Margin Pre-tax Profit Ratio Operating Profit Ratio Cost of Goods Sold Ratio Return on Investment Ratio Return on Equity
IMPORTANCE OF RATIO ANALYSIS: 1) It helps to analysis the probable casual relation among different items after analysis and scrutinizing the past result. 2) Then helps the management to prepare budgets, to formulate policy and to prepare the future plan of action and thus helps as a guide to harmonize among different items for preparing budgets. 3) It helps to take time dimension into account by trend analysis 9 time series analysis. 4) It throws light on the degree of efficiency of management and utilization of the assets (and called surveyor of efficiency). 5) It helps to make inter firm comparison (cross-sectional analysis).
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6) Short-term liquidity position can be measured i.e., whether the firm is able to maintain its short-term solvency position can also be measured by the application of leverage and profitability ratios. 7) Comparison of current or past ratios with future ratios shows the firms relative strengths & weaknesses in the past and the future. Ratio analysis can serve as a better tool for measurement of the financial health of an enterprise than is possible by the analysis of absolute figures. LIMITATIONS OF RATIO ANALYSIS: a) Comparison between two variables, prove worth provided their basis of valuation is identical. But in reality, it is not possible, such as methods of valuation of stock-in-trade, or charging different methods of depreciation of fixed assets etc. b) Ratio depends on the figure of the financial statements. But in most cases, the figures are window dressed. c) Ratio analysis became more meaningful and significant if trend analysis (i.e., the analysis over a number of years) is possible, but in practice, it is difficult all the time. d) Ratios are calculated join the basis of past result which may not be suited to implement to the present business policies. e) It is very difficult to ascertain the normal or standard ratio in order to make proper comparison. Because, it differs from firm to firm, industry to industry.
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USE AND APPLICATION OF DIFFERENT RATIOS: Parties interested To Test 1.Creditors (short-term) Liquidity & Solvency Investors, Money Lenders, social investigators etc., 2.Creditors (long term i.e., Profitability debenture holders, holders) Govt., Share Social Application of Ratios Current ratio, liquid ratio, absolute liquidity ratio, proprietary ratio, assets to proprietary ratio, debt-equity ratio, capital gearing ratio. Gross profit ratio, Net profit ratio, Operating ratio, Return on capital employed, Dividend ratio, PE ratio, EPS, DPS, ROE etc., Capital gearing ratio, Equity capital ratio, Long term to Net worth ratio. Stock turnover ratio, Debtors turnover ratio, Creditors turnover ratio, working capital turnover ratio, total assets turnover, operating ratio,FAto CA, 5.Share Holders & Stability Stability Management 6.Share Holders, Outsiders, Measure of sickness turnover to CE and Liquidity ratios. Proprietaryratio,Assets Proprietorship ratio, Debt-Equity ratio. a) Profitability indicators: cash
Investigators etc. 3.Share Holders and Outsiders Capital Structure etc., 4.Management Management & efficiency
Govt., Social Investigator etc.,
from operations sales, cash from operations net worth, cash from operations total assets (i.e., FA+CA) b) Liquidity NGC-TA indicators: net generated cash sales, NGC-NW,
RESERCH METHODOLOGY
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NEED FOR THE STUDY: The major purpose of the study is to analyze the financial performance of a firm using ratio analysis as a tool .the ability of the firm to make use its resources in the best way represents the future of a firm analysis of financial performance is the process of identifying financial strength and weakness of the firm OBJECTIVES OF STUDY: To know the financial strengths and weaknesses of ITL Company LTD. Suggesting a better way if any, for the business growth of ITL Company LTD.
DATA COLLECTION: The secondary data has been colleted from the annual reports of last 5 years (i.e.) balance sheet and profit and loss accounts of the company from 20032006. ratio analysis has done to analyze the data METHAODOLOGY: Ratios calculated for analyzing the financial position area: 1.Liquidty ratios: Current ratio, cash ratio, quick ratio, net working capital ratio it measures the firms ability to met current obligations 2. Leverage ratio: Debt ratio, debt equity ratio capital employed to net worth ratio it shows the proportions of debt and equity in financing the firms assets 3.Activity ratio: Inventory turn over ratio, debt turn over ratio, collection period, total assets turn over ratio, fixed and current assets turn over ratio, creditor turn over ratio, working capital ratio etc, Activity ratio reflect the firms efficiency in utilizing its assets
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4.Profitabilty ratios: Gross profit, net profit, operating, return on equity, return on investment .it measures over all performance and effectiveness of the firm
LIMITATIONS:
1 .Less scope of gathering data. 2. During the project period some executives are very busy with their works .They could not offered to give full information. 3. The analysis and interpretation of collected data is restricted to available information.
DATA ANALYSIS AND INTERPRETATION

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LIQUIDITY RATIOS: 1. CURRENT RATIO: Current ratio is calculated by dividing the current assets by current liabilities. Current assets include cash and those assets that can be converted into cash within a year , such as marketable securities , debtors and inventories .prepaid expenses also includes in current assets .current liabilities include creditors , bills payable , arrived expenses , short term bank loan , income tax liability and long term debt maturing in the current year. Current ratio represents a margin of safety for creditors. Current ratio of 2 to 1 or more is considered satisfactory. The higher the current ratio the greater the margin of safety. The larger the amount of current assets in ratio to current liabilities the more the firms ability to meet its current obligations.
Current ratio = current assets / current liabilities

Data
Year 2003 2004 2005 2006 2007 Current assets 1011.82 1091.39 1038.14 1156.08 1993.59
( Amount Rs in Lacks)
Current Liabilities 821.70 857.55. 769.39 802.66 145.16 Current ratio 1.23 1.27 1.34 1.44 1.37
Table No.1
Factors:
Year 2003 2004 2005 2006 2007
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Current ratio
1.23
1.27
1.34
1.44
1.37
C URRE RAT NT IO
1.45 1 .4 1.35 Percentag e 1 .3 1.25 1 .2 1.15 1 .1 2003 2004 2005 200 6 Y ears 2007 1.23 1.27 1.34 1.44 1.37
Graph No.1 Interpretation:

The standard current ratio is 2:1 in the year 2002-03 the current ratio is 1.23 which below the standard ratio in the year 2003-04 is 1.27 and it was continuously increasing up to the year 2005-06 and in the year 2006-07 the ratio was decreased by 1.37 and overall liquidity position of the firm is not satisfied
QUICK RATIO (or)ACID TEST RATIO:
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Establishes a relationship between quick or liquid, Assets and liabilities. An asset is a Liquid if it can be converted into cash immediately. Inventories are considered to be less liquid. The quick ratio is found out by dividing quick assets by current liabilities. A quick ratio of 1to1 is considered to represent a satisfactory current financial condition.
Quick Ratio= (current assets-Inventorories)/current liabilities
Data: Year 2003 2004 2005 2006 2007 Current assets 842.69 826.27 855.86 936.81 162.15
( Amount Rs in Lacks) Current liabilities 8217.00 8575.59 7693.90 8026.62 1457.64 Quick ratio 1.02 0.96 1.11 1.16 1.11
Table No.2
Factors
Year Quick ratio 2002-03 1.02 2003-04 0.96 2004-05 1.11 2005-06 1.16 2006-07 1.11
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QUIC R K ATIO
1.2 1 0.8 0.6 1.02 0.96 1.11 1.16 1.11
P ercenta e g
0.4 0.2 0 2002-03 2003-04 2004-05 2005-06 2006-07
Y rs ea
Graph No.2
INTERPRETATION: The above table depicts that the company has 1.025 in quick ratio in 2002-03 financial year how ever it was come up to 1.16 in the year 2005-06 the quick ratio fluctuation in every year hence we can say that company has maintained minimum quick ratio (1:1) over all the 5 financial years.
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Cash ratio:
Cash is the most liquid asset. A financial analyst may examine cash ratio and its Equivalent to current liabilities. Trade investment or marketable securities are Equivalent of cash. The standard ratio is 0.5:1or 50:100(%).
Cash Ratio = (Cash+ Marketable Securities)/Current Liabilities
Data:
Year 2003 2004 2005 2006 2007 Cash 12.40 826.27 85.58 936.81 1621.54 Current liabilities 82.17 857.55 769.39 802.66 1457.64
( Amount Rs in Lacks)
Cash ratio 0.01 7.25 0.02 3.11 0.01
Table No.3
Factors
Year Cash ratio 2003 0.01 2004 7.25 2005 0.02 2006 3.1 2007 0.01
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C HRATIO AS 8 7 6 5 7 .25
P ercenta e g
4 3 2 1 0 0 .01 20 -03 02 20 -04 03 0.0 2 20 5 0 4-0 2 5-06 00 0 .01 20 -0 06 7 3 .1
Years
Graph No.3
INTERPRETATION: The standard cash ratio is 0.5:1. It represents the satisfactory level. In The year 2003 to 2007. The cash ratio is 0.01, 7.25, 0.02, 3.11and 0.011 respectively. It has some times increased i.e 7.25, 3.11 in the years 2003-04 and 2005-06 it represents the company is not maintained standard level of cash in the company.
33
INTEGRATED THARMO PLASTIC LTD SALES TREND RATIO:

Sales trend gives picture whether the company sales are increasing or decreasing by this we can know the company sales decreased or increased.
Sales trend ratio = Current year / previous year .

Data: Year 2003 2004 2005 2006 2007 Current year 2110.20 4116.05 4579.73 3765.88 4168.08 Previous year 2110.20 4116.05 4579.73 3765.88 ( Amount Rs in Lacks) Sales trend 195.05 111.26 82.22 1106.80
Table No.4
Factors
YEAR Sales trend 2003 2004 195.05 2005 111.26 2006 82.22 2007 1106.80
34

S ales trend ratio
10 20 10 00 80 0 1 0 .8 16
P ercentag e
60 0 40 0 20 0 0 15 5 9 .0 11 6 1 .2 8 .2 2 2
2 0 -0 2 0 -0 2 0 -0 2 0 -0 2 0 -0 02 3 03 4 04 5 05 6 06 7
Y ears
Graph No.4
INTERPRETATION Sales trend shows the a brief summary of about the company .Sales percentage whether increasing or decreasing here in this position the year 2003 2004 Sales percentage is 195.05.Ansd the 2004 2005 the sales are slightly decreasing and the year 2006 2007 the sales are again increase to 1106.80.
35
INTEGRATED THARMO PLASTIC LTD II. LEVERAGE RATIOS:

Financial leverage refers to the use of debt finance leverage ratios help in assessing the risk arising from the use of debt capital. To judge the longterm financial position of the firm, financial leverage ratios are calculated the ratios indicate Mix of funds provided by owners and lenders.
1. DEBT EQUITY RATIO: Several debt equity ratios are utilized to analyze the out siders funds of a firm. And the total share holders fund
Debt equity ratio= outsiders fund/share holders fund

Data: ( Amount Rs in Lacks) Year 2003 2004 2005 2006 2007 Outsiders fund 1521.70 1548.56 1460.39 8717.54 2048.65 Share holders fund 642.13 640.84 639.56 638.28 628.89 Debt equity ratio 2.36 2.41 2.28 1.36 3.25
Table No.5
Factors
Year Debt ratio
2002-03 2.36
2003-04 2.41
2004-05 2.28
2005-06 1.36
2006-07 1.891
36

D equity ratio ebt
2.5 2 1.5 1 1 6 .3 2 .36 2 .41 2.2 8 1.89 1
P ercenta e g
0.5 0
20 -0 20 -0 2 0 02 3 03 4 0 4-05 20 -0 20 6 05 6 0 -07
Y rs ea
Graph No.5
INTERPRETATION The standard ratio consider 2:1 in the year 2002-03 the ratio is 2.36 and 2003-04 the ratio is 2.41 in the next year 2006-07 the ratio is 3.25 over all the five years debt equity ratio is satisfactory.
TOTAL DEBT RATIO: 37
Debt ratios are used to analyze the lo9ng term solvency of a firm. Total debt indicates the short and long term barrowings . The firm may be interested in knowing the proportion of the interest bearing debt in the3 capital structure .It may therefore compute the debt ratio by following formula.
Total Debt Ratio=Total debt/capital employed

Total debt = Secured loans + un secured loans. Capital employed = total debt + Net worth. Data: Year 2003 2004 2005 2006 2007 Total debt 602.47 601.89 745.81 829.64 107.00 ( Amount Rs in Lacks) Capital employed 2193.37 2178.32 2455.44 2287.40 2105.61 Debt equity ratio 0.27 0.27 0.30 0.36 0.50
Table No.6
Factors
YEAR D.E.R
2002-03 0.27
2003-04 0.27
2004-05 0.30
2005-06 0.36
2006-07 0.50
38
Debt equity ra tio

0 .5 0 .4 0 .3 0 7 .2 0 7 .2 0 .3 0 6 .3 0 .5
P ercentag e
0 .2 0 .1 0 2 0 -0 2 0 -0 2 0 -0 2 0 -0 2 0 -0 02 3 03 4 04 5 05 6 06 7
Years
Graph No.6
INTERPRETATION: The standard ratio 4:1 the above table indicate that approximately half of ITL net assets finance provided by the lenders the above delegate the company has 0.27 debt ratio 2003-03 of financial however it was gradually increased to 2006-2007 it represents the company having high debt ratio so the company is flexibility in the firms operations.
39
INTEGRATED THARMO PLASTIC LTD III. ACTIVITY RATIOS:

Activity ratios are employed to evaluate the efficiency with which the firm managers and utilizes its assets. These ratios are also called Turnover Ratios. Because they indicate the speed with assets are being converted into sales
INVENTORY TURNOVER RATIO (or) STOCK TURNOVER RATIO:

Inventory turnover ratio is a measure of liquidity. It indicates the speed at which the inventory is sold out. A high turnover ratio indicates that the inventory is out Fast and a low turnover ratio show a sale of inventory. This ratio indicates the efficiency of the firm in selling its products.
Stock turnover ratio=sales / inventory

Data: Year 2003 2004 2005 2006 2007 Sales 1556.73 3482.35 3937.87 2826.18 3403.96 Inventory 224.33 130.71 212.41 174.40 237.74 ( Amount Rs in Lacks) Stock turnover ratio 6.93 2.03 18.53 16.40 14.31
Table No.7
FACTORS: 40
Year S.t.ratio
2002-03 6.93
2003-04 2.03
2004-05 18.53
2005-06 16.40
2006-07 14.31
P ercenta e g
20 18 16 14 12 10 8 6 4 2 0
S tockturnover ra tio
18.53 16.4 14.31
6.93 2.03 2002-03 2003-04 2004-05 2005-06 2006-07
Y rs ea
Graph No.7
INTERPRETATION: The inventory turnover ratio shows how rapidly the inventory is turning into receivable through sales. A high inventory turnover is indicative of good inventory management. The year 2003 to 2007 the company inventory turnover ratio is fluctuating. That is 6.93, 2.03, 18.53, 16.40, and 14.31higher the ratio is satisfaction i.e 18.53, 16.40, 14.31.
41
INTEGRATED THARMO PLASTIC LTD CREDITORS TURNOVER RATIO:

Creditor turnover ratio is calculated to analyze the speed with which payments are made to creditors this ratio indicate the velocity with which others are turnover in relations to creditors , purchases during the year. It is calculated as :
Creditors turnover ratio=purchases/creditors.

Data: Year 2003 2004 2005 2006 2007 Purchases 1444.49 3541.70 3849.29 2868.31 3516.07 Creditors 821.70 848.79 767.32 790.28 1457.64 ( Amount Rs in Lacks) Creditors turnover ratio 1.75 4.06 5.01 0.36 2.41
Table No.8
Factors:
Year C.t.r
2002-03 1.75
2003-04 4.06
2004-05 5.01
2005-06 0.36
2006-07 2.41
42
C reditors turnover ra tio

6 5 5.01 4.06
P ercentag e
4 3 2 1 0 2002-03 1.75
2.41
0.36 2003-04 2004-05
Years
2005-06
2006-07
Graph No.8
INTERPRETATION: Creditors turnover ratio is calculated analysis the speed with which payments are made to creditors this ratio indicates velocity with which others are turnover in relation to creditors purchases the creditors turnover ratio was 1.75 times in 2001-2003 and later it was increased to 4.06, 5.01 and next two years decreased the creditors turnover ratio was not satisfactory and it shows the inefficiency of the creditors or purchases
43
WORKING CAPITAL TURNOVER RATIO: Working capital turnover ratio shows the efficiency of business operations is also judged by the comparing capital invested to sales. Working capital turnover ratio indicates the utilization of working capital and the number of times that the working capital turnover during the year the better is the utilization of resources of working capital. It is calculated as :
Working capital turnover ratio= sales /working capital

Data: (Amount Rs in Lacks) Total assets turnover Year 2003 2004 2005 2006 2007 Sales 211.20 4116.05 45979.73 3765.88 4168.08 Total assets 190.12 233.83 268.75 358.42 535.95 ratio 11.09 17.60 17.04 10.65 7.77
TableNo.9
Factors:
Year .W.c.t.r
2002-03 11.09
2003-04 17.60
2004-05 17.04
2005-06 10.65
2006-07 7.77
44
W orkingcapita turnover ratio l

18 16 14 12 10 8 6 4 2 0 17.6 17.0 4
1 1.09
10 .65 7.7 7
P ercenta e g
2 02-0 0 3
2 03 0 -04
Graph No.9
Years
20 4-0 0 5
2 -06 005
20 6-0 0 7
INTERPRETATION: Working capital turnover ratio indicates the utilization of working capital and the number of times that the working capital turnover ratio during the year higher the ratio better management of working capital in the year 2003-07 the ratios are11.09,17.60,17.04,10.65,7.77 it shows the overall five years working capital position of the company
FIXED AND CURRENT ASSETS TURNOVER RATIO: 45
The firm may wish to know its efficiency of utilizing fixed assets and current assets separately.
Fixed assets turnover=sales /Net fixed assets Current assets turnover ratio=sales / current assets
Data: ( Amount Rs in Lacks) Fixed assets turnover Year 2003 2004 2005 2006 2007 Sales 2110.20 4116.05 4579.73 3765.88 4168.08 Net fixed assets 449.80 422.41 416.65 370.89 332.79 ratio 46.91 9.74 10.99 10.15 12.52
Table No.10
Factors Year F.a.t.r 2002-03 46.91 2003-04 9.74 2004-05 10.99 2005-06 10.15 2006-07 12.52
46
5 0 4 0
46 .91
F ixedasset turnover ratio
P ercenta e g
3 0 2 0 1 0 0 9 .74 1 0.99 10 .15 12 .52
20 -0 02 3
2 3-0 00 4
20 -05 04
20 -0 05 6
2 6-0 00 7
Yea rs
Graph No.10
INTERPRETATION: The fixed assets turnover ratio shows lower the ratio was satisfactory .it shows the efficiency in work performance is good during the year 2003 the fixed assets turnover ratios 46.91 and it was continuously decreased in to 9.74 in 2004 in the next year ratios are 10.99,10.15,12.52. overall the five years performance is not satisfactory.
47

TOTAL ASSETS TURNOVER RATIO: The total assets turnover ratio shows the firms ability in generation sales from all financial resources committed to total assets. Total assets include net fixed assets and current assets.
Total assets turnover ratio=sales / total assets.

Data: Year 2003 2004 2005 2006 2007 Sales 21102.00 4116.05 4579.73 3765.88 4168.08 Total assets 2193.37 2178.32 1958.72 1924.59 1219.89 ( Amount Rs in Lacks) Total assets turnover ratio 0.96 1.88 2.33 1.95 3.41
Table No.11
Factors Year T.a.t.r 2002-03 0.96 2003-04 1.88 2004-05 2.33 2005-06 1.95 2006-07 3.41
48
T l asset turnover ratio ota

3.5 3 2.5 2.33 1.88 0.96 1.95 3.41
P ercenta e g
2 1.5 1 0.5 0 2002-03
2003-04
2004-05
2005-06
2006-07
Years
Graph No.11
INTERPRETATION: This ratio shows the firms ability in generating sales from all resources committed to total sales in the year 2003-06 the ratio are 0.96, 1.88, 2.33, 1.95. in the year 2007 the ratio will be increasing 3.41 it represents the firm efficiency in work performance
49

PROFITABILITY RATIOS: Profitability ratios are calculated to measure the operating efficiency of the company. Besides management of the company, creditors and owners are also interested in the profitability of the firm. Creditors want to get interest and Repayment of principal regularly. Owners want to get a required rate of return on their investment. This is possible only when the company earns enough profits. Generally two major types of profitability ratios.
They are calculated Profitability in relation to sales. Profitability in relation to investment.
GROSSPROFIT RATIO: The gross profit ratio indicates the extent to which sales of goods per unit may decline with out May loss in the operations of the firm. This is also known as Gross profit margin (or) Gross profit margin on sales. The gross profit is the difference between sales and cost of goods sold.
Gross profit ratio=gross profit / sales.

Data: Year 2003 2004 2005 2006 2007 Gross profit -21.55 20.73 25.00 35.88 47.34 ( Amount Rs in Lacks) Sales 2110.20 4116.05 4579.73 3765.88 4168.08 G.p.m.r -1.02 0.50 0.54 0.59 1.13
Table No.12
50

Factors: Year G.p.m.r 2002-03 -1.02 2003-04 050 2004-05 0.54 2005-06 0.59 2006-07 1.13
Gross profit m rg ratio a in

5 0 4 0 3 0 2 0 5 0
P ercenta e g
1 0 0 -1 0 -1 2 .0 2 0 -0 02 3 2 0 -0 03 4 0 4 .5 2 0 -0 04 5 0 9 .5 2 0 -0 05 6 1 3 .1
2 0 -0 06 7
Y rs ea
Graph No.12
INTERPRETATIOPN: The gross profit ratio reflex the efficiency with which management produce each unit of product this ratio indicates the average spread between cost of goods sold and sales revenue high gross profit ratio relating to the industry average implies that the firm is able to produce relatively lower the sign of good management the year 2003-08 the gross profit ratio is -1.02,0.50,0.54,0.59,1.13 it is not satisfactory..
SELLING AND DISTRIBUTION EXPENSES RATIO 51
The selling and distribution ratio explains the changes in the profit margin ratio. This ratio is computed by dividing selling and distribution. Cost of goods sold plus Selling expenses and general and administrative expences (excluding interest) by sales.
Selling and distribution ratio=selling and distribution expenses/sales

Data: Year 2003 2004 2005 2006 2007 S.and d.e. 46.86 103.73 177.94 193.73 193.41 Sales 2110.20 4116.05 4579.73 3765.88 4168.08 ( Amount Rs in Lacks) S.and a.e.r 2.22 2.52 3.88 5.14 4.64
Table No.13
Factors: Year S.and d.e 2002-03 2.22 2003-04 2.52 2004-05 2.88 2005-06 5.14 2006-07 4.64
52
S .ANDD.E
6 5 4 5.1 4 4 .64
P ercentag e
3 2 1 0
2 .22
2 .52
2.88
2 -0 002 3
20 -04 03
200 -05 4
20 05-0 6
20 06-07
Yea rs
Graph No.13
INTERPRETATION The selling and distribution expenses is very important for analyzing the profitability of the firm the higher operating ratio is unfavorable because it will leave only a small amount of operating expenses to meet financial expenses in the year 2003-2005 the selling and distribution expenses ratio is continuously increased the ratios are 3.88,5.14,4.64,it represents the company is not taking neccessasary steps to controlling selling and distribution
COST OF GOODS SOLD RATIO: 53
Cost of goods sold ratio is very important for analyzing profitability of the firm .It should be compare over a period of time with industry average as well as firm of similar type. Cost of goods sold ratio=cost of goods sold / sales. Data: Year 2003 2004 2005 2006 2007 Cost of goods sold 167.95 148.67 148.67 127.47 1217.47 ( Amount Rs in Lacks) Sales 2110.20 4116.05 4579.73 3765.88 4168.08 C.g.s.r 7.95 3.61 3.24 3.38 3.05
Table No.14
Factors: Year C.g.s.r 2002-03 7.95 2003-04 3.61 2004-05 3.24 2005-06 3.38 2006-07 3.05
54

C .R .G.S
8 7 6 7 5 .9
P ercenta e 4 g
3 2 1 0 2 0 -0 02 3
5 3 1 .6 3 4 .2 3 8 .3 3 5 .0
2 0 -0 03 4
2 0 -0 04 5
2 0 -0 05 6
2 0 -0 06 7
Y rs ea
Graph No.14
INTERPRETATION: The cost of goods sold ratio is very important to analyzing the profitability of the firm the cost of goods sold ratio is 7.95 in 2003 and it was decreased to 3.61 in the year 2004 and it was continuously decreased to 3.07 in the year 2007 the cost of goods sold ratio was low in the year 2007 (3.05) when compare with past years it indicates the greater profitability position of the company.
NET PROFIT MARGIN RATIO:

55
Net profit is obtained when operating expenses, Interest and taxes are subtracted from the gross profit. The net profit margin ratio is measured by dividing profit after tax by sales. The ratio also indicates the firms capacity to withstand adverse economic conditions. Net Profit Margin=Profit After Tax / Sales Data: Profit (or)loss Year 2003 2004 2005 2006 2007 after tax 304.90 20.45 24.22 34.04 46.76 Sales 2110.20 4116.05 4579.73 3765.88 4168.08 Net profit margin ratio 14.44 0.49 0.52 0.90 1.12 ( Amount Rs in Lacks)
Table No.15
Factors:
Year N.p.m.r
2002-03 14.44
2003-04 0.49
2004-05 0.52
2005-06 0.90
2006-07 1.12
56
N.P .M.R
1 6 1 4 1 2 1 0 1 .4 4 4
P ercenta e g
8 6 4 2 0 2 0 -0 02 3 0 9 .4 2 0 -0 03 4 0 2 .5 2 0 -0 04 5 0 .9 2 0 -0 05 6 1 2 .1 2 0 -0 06 7
Years
Graph No.15
INTERPRETATION: The ratio measures the relationship between the net profit and sales of the firm net profit margin indicate the management ability to earn sufficient profits on sales not only to cover. All revenue operating expenses of the business in ITL during period 2003 the current ratio is 14% 2003-07 the net profit margin is continuously decreasing i.e. 0.49, 0.52, 0.90, 1.12 it shows falling operating expenses and increasing demand for the product.
57
INTEGRATED THARMO PLASTIC LTD Operating expenses ratio:

Expenses ratio is very important for analyzing of the profitability of the firm. It should be compared over a period of time with industry average as well as firms are similar type. It includes repairs and maintenance of and employee cost and administrative and general expenses. It calculates expenses divided by sales. Operating expenses ratio=operating expenses / sales. Data: Year 2003 2004 2005 2006 2007 Operating expenses 303.60 357.65 189.33 317.05 359.73 ( Amount Rs in Lacks) Sales 2110.20 4116.05 4579.73 3765.88 4168.08 O.e.ratio 14.38 86.89 83.38 84.19 86.30
Table No.16
Factors:
Year O.e.ratio
2002-03 14.38
2003-04 86.89
2004-05 83.85
2005-06 84.19
2006-07 86.30
58
Opera tingexpences ra tio

90 80 70 60 50 86.89 83.85 84.19 86.3
P ercentag 30 e
20 10 0 2002-03 2003-04 2004-05 2005-06 2006-07 14.38
40
Years
Graph No.16
INTERPRETATION: The operating expenses ratio explain the changes in the profit margin ratio a higher operating expenses ratio is unfavorable i.e. 2003 it is the ratio is 14.38 it is satisfactory but the rest of the years ratios are 86.89,83.85,84.19,86.30 it is increased continuously the higher ratios are not sufficient.
59
RETURN ON ASSETS RATIO:

This ratio indicates the efficiency of utilization of assets in generating the revenue the higher the ratio is efficiency in utilization the assets. A low ratio shows idle capacity. The profitability of the firm is measured in establishing the relation of net profit with the total assets of the organization.
Return on assets = Net profit after tax / total assets.

Data: Year 2003 2004 2005 2006 2007 Net profit after tax 304.90 20.45 24.22 34.04 46.76 Total assets 449.80 422.41 416.65 370.89 332.79 ( Amount Rs in Lacks) Return on assets ratio 0.67 0.04 0.05 0.09 0.14
Table No.17
Factors: Year Roa 2002-03 0.67 2003-04 0.04 2004-05 0.05 2005-06 0.09 2006-07 0.14
60
R eturnona ssetsra tio

0 .7 0 .6 0 .5 0 7 .6
Percentag 0.4 e
0 .3 0 .2 0 .1 0 2 0 -0 02 3 0 4 .0 2 0 -0 03 4 0 5 .0 2 0 -0 04 5 0 9 .0 2 0 -0 05 6 0 4 .1
2 0 -0 06 7
Y ears
Graph No.17
INTERPRATATION: This ratio indicates the efficiency of utilization of assets in generating the revenue higher ratio is efficiency in utilization of resources. A low ratio shows idle capacity during the year 2003 the ratio is 0.67.later years is continuously decreased that is 2003-2007 the ratio is 0.04 , 0.05 , 0.09 , 0.14.It represents the idle capacity of company or assets.
61
INTEGRATED THARMO PLASTIC LTD EARNING PER SHARE RATIO:

This ratio reviles the amount of the periods earning after taxes is occurs to its each equity share. It indicates wealth of each share holder on a per share basis.
Earning per share ratio = Earnings after tax / Equity share
Data: Year 2003 2004 2005 2006 2007 Earnings after tax 304.90 20.45 24.22 34.04 46.76 ( Amount Rs in Lacks) Equity shares Equity share ratios 6288.59 0.48 6288.59 0.03 6288.59 0.03 6288.59 0.05 6288.59 0.07
Table No.18
Factors: Year Eps 2002-03 0.48 2003-04 0.03 2004-05 .03 2005-06 0.05 2006-07 0.07
62
E rningper share ra a tio

0.5 0.4 0.3 0.48
P ercentag e
0.2 0.1 0 0.03 2002-03 2003-04 0.03 2004-05 0.05 2005-06 0.07 2006-07
Y rs ea
Graph No.18
INTERPRATATION: Earning per share shows the profitability of the firm on a per share basics the earning per share was 0.48 in 2003.Remaining years it was continuously decreasing to 2003 2007,the ratios are 0.03 , 0.03 , 0.05 , 0.07.
FINDINGS
63
The standard current ratio is 2:1 in the year 2002-03 the current ratio is 1.23 which below the standard ratio in the year 2003-04 is 1.27 and it was continuously increasing up to the year 2005-06 and in the year 2006-07 the ratio was decreased by 1.37 and overall liquidity position of the firm is not satisfied. The company has 1.025 in quick ratio in 2002-03 financial year how ever it was come up to 1.16 in the year 2005-06 the quick ratio fluctuation in every year hence we can say that company has maintained minimum quick ratio (1:1) over all the 5 financial years. The standard cash ratio is 0.5:1. It represents the satisfactory level. In The year 2003 to 2007. The cash ratio is 0.01, 7.25, 0.02, 3.11and 0.011 respectively. It has some times increased i.e 7.25, 3.11 in the years 200304 and 2005-06 it represents the company is not maintained standard level of cash in the company. Sales trend shows the a brief summary of about the company .Sales percentage whether increasing or decreasing here in this position the year 2003 2004 Sales percentage is 195.05.Ansd the 2004 2005 the sales are slightly decreasing and the year 2006 2007 the sales are again increase to 1106.80. The standard ratio consider 2:1 in the year 2002-03 the ratio is 2.36 and 2003-04 the ratio is 2.41 in the next year 2006-07 the ratio is 3.25 over all the five years debt equity ratio is satisfactory. The inventory turnover ratio shows how rapidly the inventory is turning into receivable through sales. A high inventory turnover is indicative of good inventory management. The year 2003 to 2007 the company inventory turnover ratio is fluctuating. That is 6.93, 2.03, 18.53, 16.40, and 14.31higher the ratio is satisfaction i.e 18.53, 16.40, 14.31.
64

The standard ratio 4:1 the above table indicate that approximately half of ITL net assets finance provided by the lenders the above delegate the company has 0.27 debt ratio 2003-03 of financial however it was gradually increased to 2006-2007 it represents the company having high debt ratio so the company is flexibility in the firms operations. The creditors turnover ratio was 1.75 times in 2001-2003 and later it was increased to 4.06, 5.01 and next two years decreased the creditors turnover ratio was not satisfactory and it shows the inefficiency of the creditors or purchases Working capital turnover ratio indicates the utilization of working capital and the number of times that the working capital turnover ratio during the year higher the ratio better management of working capital in the year 2003-07 the ratios are11.09,17.60,17.04,10.65,7.77 it shows the overall five years working capital position of the company The fixed assets turnover ratio shows lower the ratio was satisfactory .it shows the efficiency in work performance is good during the year 2003 the fixed assets turnover ratios 46.91 and it was continuously decreased in to 9.74 in 2004 in the next year ratios are 10.99,10.15,12.52. overall the five years performance is not satisfactory. The gross profit ratio reflex the efficiency with which management produce each unit of product this ratio indicates the average spread between cost of goods sold and sales revenue high gross profit ratio relating to the industry average implies that the firm is able to produce relatively lower the sign of good management the year 2003-08 the gross profit ratio is -1.02,0.50,0.54,0.59,1.13 it is not satisfactory.. This ratio shows the firms ability in generating sales from all resources committed to total sales in the year 2003-06 the ratio are 0.96, 1.88, 2.33, 1.95. in the year 2007 the ratio will be increasing 3.41 it represents the firm efficiency in work performance
65
The selling and distribution expenses is very important for analyzing the profitability of the firm the higher operating ratio is unfavorable because it will leave only a small amount of operating expenses to meet financial expenses in the year 2003-2005 the selling and distribution expenses ratio is continuously increased the ratios are 3.88,5.14,4.64,it represents the company is not taking neccessasary steps to controlling selling and distribution The cost of goods sold ratio is very important to analyzing the profitability of the firm the cost of goods sold ratio is 7.95 in 2003 and it was decreased to 3.61 in the year 2004 and it was continuously decreased to 3.07 in the year 2007 the cost of goods sold ratio was low in the year 2007 (3.05) when compare with past years it indicates the greater profitability position of the company. Operating expenses of the business in ITL during period 2003 the current ratio is 14% 2003-07 the net profit margin is continuously decreasing i.e. 0.49, 0.52, 0.90, 1.12 it shows falling operating expenses and increasing demand for the product. The operating expenses ratio explain the changes in the profit margin ratio a higher operating expenses ratio is unfavorable i.e. 2003 it is the ratio is 14.38 it is satisfactory but the rest of the years ratios are 86.89,83.85,84.19,86.30 it is increased continuously the higher ratios are not sufficient. This ratio indicates the efficiency of utilization of assets in generating the revenue higher ratio is efficiency in utilization of resources. A low ratio shows idle capacity during the year 2003 the ratio is 0.67.later years is continuously decreased that is 2003-2007 the ratio is 0.04 , 0.05 , 0.09 , 0.14.It represents the idle capacity of company or assets. Earning per share shows the profitability of the firm on a per share basics the earning per share was 0.48 in 2003.Remaining years it was
66

continuously decreasing to 2003 2007,the ratios are 0.03 , 0.03 , 0.05 , 0.07.
SUGGESTIONS
1. Current assets like cash and bank balance which are in excess can be converted into investments which can earn profits for the company. 2. Inventory should be increased in future to larger extent which increases sales and contribute to huge profits for the company. 3. Company can go for manageable debt and thus can take benefits relating to tax for the future years. 4. Efficient receivable management is needed in the company.
5. The assets contribution is very low to generate sales. It is suggested to
increase contribution towards assets.
67
PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31-03-2003 Amount for the Schedule year No. Ended 31-03-2003
12 211020069.56 4259993.00 11275448.79 226555511.35 16795577.59 144449202.56 5704178.00 47731669.97 4187514.05 4686591.89 607503.22 3655863.22 892417.00 228710517.50 -2155006.15 33237644.50 31082638.35 720614.00 128190.21 30490214.56 Balance brought forward from previous year Balance carried over to Balance sheet Accounting prices & notes on accounts 16 -98841038.09 -68350823.53
S.No
1
Particulars INCOME
Sales Other income Closing stock of finished goods
II
EXPENDITURE
Opening stock of finished goods Raw material consumed Power and fuel Excise duty & Sales tax Payments & benefits to employees Selling & administration expenses Bank charges and commission Depreciation Misleanious exp. Written off
13 14 15
III IV V VI
OPERATING PROFIT/LOSS PRIOR PERIOD ITEAMS(Int.on OTS) NET PROFIT / LOSS Provision for Taxation Transform from Reserve NET PROFIT AFTER TAX / LOSS
68
12 411605903.65 2798512.00 14867498.33 429271913.98 11275448.79 345170267.81 6657518.36 41274850.00 6600372.00 10373487.14 890874.30 4335358.64 620712.00 427198889.04 2073024.94 0.00 2073024.94 155476.87 128190.21 2045738.28 -68350823.53 -66305085.25 Balance carried over to Balance sheet Accounting prices & notes on accounts 16
S.No
1
Particulars INCOME
II
EXPENDITURE
Opening stock of finished goods Raw material consumed Power and fuel Excise duty & Sales tax Payments & benefits to employees Selling & administration expenses Bank charges and commission Depreciation Misleanious exp. Written off
13 14 15
III IV V VI
OPERATING PROFIT/LOSS PRIOR PERIOD ITEAMS(Int.on OTS) NET PROFIT / LOSS Provision for Taxation Transform from Reserve NET PROFIT AFTER TAX / LOSS Balance brought forward from previous year
69
13 457973861.64 625477.00 12747145.31 471346483.95 14867498.33 384929106.80 6737872.00 27406981.00 8466978.39 17794483.07 3473352.38 4549473.45 620712.00 468846457.42 2500026.53 206085.00 128190.21 2422131.74 -66305085.25 -63882953.51 17
S.No
1
Particulars INCOME
II
EXPENDITURE
Opening stock of finished goods Raw material consumed Power and fuel Excise duty & VAT Payments & benefits to employees Selling & administration expenses Bank charges and commission Depreciation Misleanious exp. Written off 14
16
III IV
OPERATING PROFIT/LOSS Less: Provision for taxation Add: Transform from reserve NET PROFIT / LOSS Add balance brought forward from precious year Balance carried over to balance sheet Accounting prices & notes on accounts
70
13 376588534.49 745133.00 9387421.57 386721089.06 12747145.31 286831036.96 7494785.70 33546547.65 8855961.13 19373453.92 8947499.46 4711613.00 624227.40 383132270.53 3588818.53 312786.00 128190.21 3404222.74 -63882953.51 -60478730.77 17
S.No
1
Particulars INCOME
II
EXPENDITURE
16
III IV
71
13 416808490.06 888774.07 28774830.00 446472094.13 9387421.57 351607389.15 8176276.00 29854259.78 119838857.50 19341559.60 56643298.53 4743541.86 ----------------441737633.99 4734460.14 186332.00 128190.21 4676318.35 -60478730.77 -55802412.42 17
S.No
1
Particulars INCOME
II
EXPENDITURE
15 16
III IV
72
BALANCE SHEET AS ON 31ST MARCH 2003 SCHEDULE NOTE SEDULE NO. AS ON 31-032003 AMOUNT Rs. Sources of funds SHARE HOLDERS FUNDS Share capital Reserves & surplus LOAN FUNDS Unsecured loans TOTAL APPLICATION OF FUNDS Fixed assets INVESTMENTS CURRENT ASSETS &ADVANCES Inventories Sundry debtors Cash and bank balance Loans and advances Current liabilities and provisions Net current assets (3-4) Miscellaneous expenditure Profit and loss account TOTAL Accounting policies and notes on accounts 1 2 3 4 5 & LOANS 6 7 8 9 10 11 16 16912353.79 60247987.75 1240554.78 22781257.16 101182153.48 821720019.76 19012133.92 1865651.40 68350823.53 134213788.71 62889000.00 1324000.31 64213000.31 70000788.40 134213788.71 44980179.86 5000.00 IN
BALANCE SHEET AS ON 31ST MARCH 2004 SCHEDULE NOTE Sources of funds SHARE HOLDERS FUNDS 73 SEDULE NO. AS ON 31-03-2004 AMOUNT IN Rs.

Share capital Reserves & surplus LOAN FUNDS Unsecured loans TOTAL APPLICATION OF FUNDS Fixed assets INVESTMENTS CURRENT ASSETS &ADVANCES Inventories Sundry debtors Cash and bank balance Loans and advances Current liabilities and provisions Net current assets (3-4) Miscellaneous expenditure Profit and loss account TOTAL Accounting policies and notes on accounts 1 2 3 4 5 & LOANS 6 7 8 9 10 11 16 26512173.33 60189038.02 621872.37 21816823.78 109139907.50 85755930.87 23383976.63 1244939.40 66305085.25 133185598.50 62889000.00 1195810.10 64084810.10 69100788.40 133185598.50 42241572.22 10025.00
BALANCE SHEET AS ON 31ST MARCH 2005 SCHEDULE NOTE Sources of funds SHARE HOLDERS FUNDS Share capital Reserves & surplus LOAN FUNDS Unsecured loans TOTAL APPLICATION OF FUNDS Fixed assets INVESTMENTS CURRENT ASSETS &ADVANCES 74 SEDULE NO. 1 2 3 4 5 & LOANS AS ON 31-03-2005 AMOUNT IN Rs. 62889000.00 1067619.89 63956619.89 69100788.40 133057408.29 41665018.57 10025.00

Inventories Sundry debtors Cash and bank balance Loans and advances Current liabilities and provisions Net current assets (3-4) Miscellaneous expenditure Profit and loss account TOTAL Accounting policies and notes on accounts 6 7 8 9 10 11 16 18227690.31 74581342.34 1957215.60 9047956.26 103814204.51 76939020.90 26875183.61 624227.40 63882953.51 133057408.29
BALANCE SHEET AS ON 31ST MARCH 2006 SCHEDULE NOTE Sources of funds SHARE HOLDERS FUNDS Share capital Reserves & surplus LOAN FUNDS Secured loans Unsecured loans TOTAL APPLICATION OF FUNDS Fixed assets INVESTMENTS CURRENT ASSETS &ADVANCES Inventories Sundry debtors Cash and bank balance Loans and advances Current liabilities and provisions Net current assets (3-4) Miscellaneous expenditure Profit and loss account 75 3 4 SEDULE NO. 1 2 AS ON 31-03-2006 AMOUNT IN Rs. 62889000.00 939429.68 63828429.68 9990799.54 59100788.20 69091587.74 132920017.42 37089122.87 10025.00
5 6 & LOANS 7 8 9 10 11 12
21926615.57 82964067.14 249894.41 10467859.94 115608437.06 80266298.28 35342138.78 -------60478730.77

TOTAL Accounting policies and notes on accounts
BALANCE SHEET AS ON 31ST MARCH 2007 SCHEDULE NOTE Sources of funds SHARE HOLDERS FUNDS Share capital Reserves & surplus LOAN FUNDS Secured loans Unsecured loans TOTAL APPLICATION OF FUNDS Fixed assets INVESTMENTS CURRENT ASSETS &ADVANCES Inventories Sundry debtors Cash and bank balance Loans and advances Current liabilities and provisions Miscellaneous expenditure Profit and loss account TOTAL Accounting policies and notes on accounts SEDULE NO. 1 2 3 4 5 6 & LOANS 7 8 9 10 11 12 13 37205827.00 107002423.80 2005025.83 53146646.16 199359922.08 145764226.03 ------------888774.07 146653000.1 AS ON 31-03-2007 AMOUNT IN Rs. 62889000.00 811239.47 63700239.47 20250349.34 59100788.40 79351137.74 33279261.01 10025.00
76
BIBLIOGRAPHY
FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT ANNUAL REPORTS OF
- I.M.PANDEY - PRASANNA CHANDRA - KHAN & JAIN
INTEGRATED THERMOPLASTICS LIMITED.
77
78

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INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD PROJECT REPORT

MASTER OF BUSINESS ADMINISTRAITON

(Reg. NO: 330898053) Under the guidance of

DEPARTMENT OF MANAGEMENT STUDIES SV PG COLLEGE

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

Place: Date : ( VENKATA PRASAD.M )

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

1.1 INDUSTRY PROFILE

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

ROLE OF PLASTICS IN THE NATIONAL ECONOMY:

INTEGRATED THARMO PLASTIC LTD

IMPORTANCE OF PIPES INDUSTRY:

NAME: PVC PIPES INDUSTRY

INTEGRATED THARMO PLASTIC LTD

UTILITIES AND IMPORTANCE OF PVC PRODUCTS:

EXTERIORS ARE AS FOLLOWS In exterior it can use for

THE OTHER EXTERNAL APPLICATIONS ARE:

INTEGRATED THARMO PLASTIC LTD

1.3 COMPANY PROFILE

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THERMOPLASTICS LIMITED ESTABLISHMENT:

INTEGRATED THARMO PLASTIC LTD VISION AND MISSION : Vision:

QUALITY CONTROL ASSURANCE:

INTEGRATED THARMO PLASTIC LTD

MAINTENANCE AND SERVICE:

EXPLORING NEW HORIZONS: EXPORTS

DYNAMIC WORK FORCE:

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

2) SINGLE level SINGLE LEVEL MANUFACTURER DEALER CUSTOMER

PRODUCTS OF THE COMPANY:

NATIONAL WIDE COMPETETORS:

INTEGRATED THARMO PLASTIC LTD

SIGNIFICANT ACCOUNTING POLICIES:

INTEGRATED THARMO PLASTIC LTD

PRIOR PERIOD AND EXTRA-ORDINARY ITEMS:

INTEGRATED THARMO PLASTIC LTD PROMOTERS AND BOARD OF DIRECTORS PROMTERS

REGISTRARS & SHARE TRANFER AGENTS:

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

Govt., Social Investigator etc.,

INTEGRATED THARMO PLASTIC LTD

INTEGRATED THARMO PLASTIC LTD

DATA ANALYSIS AND INTERPRETATION

INTEGRATED THARMO PLASTIC LTD

Current ratio = current assets / current liabilities

INTEGRATED THARMO PLASTIC LTD

Graph No.1 Interpretation:

QUICK RATIO (or)ACID TEST RATIO:

INTEGRATED THARMO PLASTIC LTD

Quick Ratio= (current assets-Inventorories)/current liabilities

INTEGRATED THARMO PLASTIC LTD

0.4 0.2 0 2002-03 2003-04 2004-05 2005-06 2006-07

INTEGRATED THARMO PLASTIC LTD