1

1.1. ABOUT THE STUDY Accounting is the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information. It involves recording, classifying and summarising various business transactions. The end products of business transactions are the financial statements comprising primarily the position statement or the balance sheet and the income statement or the profit and loss account. MEANING OF FINANCIAL STATEMENTS A financial statement is a collection of data organised according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It may show a position at a moment in time, as in the case of a balance sheet, or may reveal a series of activities over a given period of time, as in the case of an income statement. FINANCIAL STATEMENTS: The term financial statement or published accounts refer to the: 1) Balance Sheet. 2) Profit & Loss Account. 3) Directors Report. 4) Auditors Report

NATURE OF FINANCIAL STATEMENT According to john N. Myer, The financial statements are composed of data which are the result of a combination of (1) recorded facts concerning the business transactions, (2) conventions adopted to facilitate the accounting technique, (3) postulates, or assumptions made to and (4) personal judgements used in the application of the conventions and postulates. The nature and accuracy of the data shown in the financial statement are affected by the following facts: BASED ON RECORDED FACTS The transactions affecting the business are recorded in the books and shown in the financial statements at the same values. For eg: fixed assets are recorded in the books at cost price and shown in the business at cost price less depreciation. The financial statements do not disclose facts which cannot be recorded in books. However, recently such facts are mentioned as foot notes to make the financial statement more meaningful and useful. ACCOUNTING CONVENTIONS The financial statements are prepared by following certain accounting conventions and principles. Accounting itself is a dynamic science of accountants has developed, from time to time, a member of conventions on the basis of experience.

When accounts are finalized, some conventions are followed: for eg. A part of particular expenses is charged to profit & loss account (revenue) and the rest may be capitalized. A number of conventions have been developed for valuation of stock, debtors, etc. Therefore data shown in the financial statements are subject to the validity of conventions used in their preparation. POSTULATES Accountants always take some facts as accepted or Postulates. In other words, business transactions are recorded on certain assumptions such as going concern, stable value of rupee, profit accrual, etc. These postulates or assumptions are reflected in the financial statements. PERSONAL JUDGMENTS Even though a number of conventions and assumption have been propounded in accountancy, their use is affected by the personal judgment of accountants. That is why financial statements prepared by two different persons of the same concerns give dissimilar results and this is due to different personal judgments in using or applying particular conventions. Personal judgments of accountants affects the amount kept as reserve for doubtful debts, amount of depreciation on fixed assets, valuation of stock etc. The financial statements are affected by the personal judgments of accountants and as such they are subjective documents. OBJECTIVES OF FINANCIAL STATEMENTS Financial statements are the sources of information on the basis of which conclusions are drawn about the profitability and financial position of a concern. the accounting principles board of America (APB) states the following objectives of financial statement:

1. To provide reliable financial information about economic resources and obligations of a business firm. 2. To provide other needed information about changes in such economic resources and obligations. 3. To provide reliable information about changes in net resources arising out of business activities. 4. To provide financial information that assists in estimating the earning potentials of business 5. To disclose, to the extent possible, other information related to the financial statements that is relevant to the needs of the users of these statements. INTERPRETATION OF FINANCIAL STATEMENTS: Financial statement is to determine the solvency of the business form its balance sheet, to measure the efficiency of operation or the profitability from its income statement and to appraise financial statement as compared with similarly situated concerns. NATURE OF THE RATIO ANALYSIS Ratio analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions. However, ratio analysis is not an end in itself. It is only a means of better understanding of financial strengths and weakness of the firm. Calculation of mere ratios does not serve any purpose, unless several appropriate ratios are analyze and interpreted. There are a number of ratios, which can be calculated from the information given in the financial statement, but the analyst has to select the appropriate data and calculate only a few appropriate ratios

from the same keeping in mind the objective of analysis. The ratios may be used as a symptom like blood pressure, the pulse rate or the body temperature and their interpretation depends upon the calibre and competence of the analyst. The following are the four steps involved in the ratio analysis: o Selection of relevant data from the financial statements depending upon the objective of the analysis. o Calculation of appropriate ratios from the above data. o Comparison of the calculated ratios of the same firm in the past, or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with the industry to which the firm belongs. o Interpretation of the ratios.

INTERPRETATION OF RATIOS SINGLE ABSOLUTE RATIO Generally speaking one cannot draw any meaningful conclusion when a single ratio is considered in isolation. But single ratio may be studied in relation to certain rules of thumb which are based upon well proven conventions as for example 2:1 is considered to be a good ratio for current assets to current liabilities. GROUP OF RATIOS Ratios may be interpreted by calculating a group of related ratios. A single

ratio supported by other related additional ratios becomes more understandable and meaningful. For example, the ratio of current assets to current liabilities may be supported by the ratio liquid assets to liquid liabilities to draw more dependable conclusions. HISTORICAL COMPARISON One of the easiest and most popular ways of evaluating the performance of the firm is to compare its present ratios with the past ratios called comparison overtime. When financial ratios are compared over a period of time, it gives an indication of the direction of change and reflects whether the firms performance and financial position has improved, deteriorated or remained constant over a period of time. But while interpreting ratios from comparison over time, one has to be careful about the changes, if any, in the firms policies and accounting procedures. PROJECTED RATIOS Ratios can also be calculated for future standards based upon the projected or Performa financial statements. These future ratios may be taken as standard for comparison and the ratios calculated on actual financial statements can be compared with the standard ratios to find out variance, If any. Such variances help in interpreting and taking corrective action for improvement in future. INTER-FIRM COMPARISON Ratios of one firm can also be compared with the ratios of some other selected firms in the same industry at the same period of time. This kind of comparison helps in evaluating relative financial position and performance of the firm. But while making use of such comparison one has to be very careful regarding the different accounting methods, policies and procedures adopted by

different firms. A. MANAGERIAL USES OF RATIO ANALYSIS Helps in Financial Forecasting and Planning Helps in communicating Helps in Co-ordination Helps in control

1.2. ABOUT THE INDUSTRY Cement industry is one of the major industries in the industrial sector which effects the activities of industrial and constructional sector to great extent in India and world. Over this industry is also industry is also a part of the economical growth of our country. In the 18th century a British engineer named JOHN SEMEATIOR invited how to make cement for construction of the time. Cement from process of lime and the roman invented volcanic ashinancient days. In the early 19th century the British engineer named Joshph aspdin developed a kind of cement Portland the newly developed cement and hence become popular in the market. In 1916 the Portland association was formal in Chicago. TYPE OF CEMENT The Various types of cement are produced in India Ordinary Portland Cement Portland POZZOLANA Cement Portland blast furnace slag Cement Sulphate resistant Portland Cement White Cement

1. ORDINARY PORTLAND CEMENT It is also know as grey cement it is manufactured by combining limestone, bauxite, and ironers and calking in a preheated kiln to produce clinker which is grounded with gypsum in a given proportion to produce opc. This cement is combined the proposition of clinker, and gypsum. The ratio is clinker 95% and gypsum 5%. 2. PORTLAND POZZOLANA CEMENT Using fly ash. Whish is got a waste material makes this from thermal plants with clinker and gypsum in a different ratio. The ratio for clinker is 75% fly ash is 20% and gypsum 5%. 3. PORTLAND BLAST FURNACE SLAG CEMENT This is manufacture by using slag. The standard mix of PBFSC is 47.5% clinker 47.5% slag and gypsum 5%. 4. SULPHATE RESISTANT PORTLAND CEMENT This is a special type of cement mainly used in seashore area and sculpture content soil areas. GROWTH OF CEMENT INDUSTRY IN INDIA. 1914 Foundation a cement industry first cement plant Porbander, Gujarat. 1936 11 Companies merged to from the associated cement corporation limited.

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1939-45 Cement was deformed as essential commodities under the deferses of India rules end the some was brought under government control. 1992-1993 Cement capacity was 70.19 million tones and production was 54.08 million tones. 1996 Cement industry has registered a whooping growth 11% as compared to 9.9% during the same period previous years. Single tied retention price was fixed at Rs. 320/- tone per Port lend Pozzolana cement and Rs.355/- tone ordinary Portland cement. The task force report estimates that the per capital consumption would touch only about hundred Kgs. by 2002 and possibly reach a level of 150 kg by the year 2010,if the present GDP growth trend resists. 1961 Cement manufactures were established 1962 Chettinad Cement Corporation was established. 1969 uniform retention price Rs.100/- per tone allowed cement replacing producers 3 hire pricing.

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1.3. ABOUT THE COMPANY Chettinad Cement Corporation Limited (CCCL) was launched three decades ago by one of the India's most illustrious sons Dr.Raja Sir. Muthiah Chettiar. The company continues to uphold ana illustrates today under the dynamic leadership of Dr.M.A.M.Ramaswamy, Chairman and M.A.M.R.Muthiah, Managing Director. Chettinad Cement Corporation Limited was started in the year 1967. Initially the Cement was manufactured in the wet process technology. Due to hike in the fuel prices the company went for expansion in the year 1989 to produce cement with the latest dry process technology. CCCL has acquired most of its critical equipments, from Europe, USA and I Japan and utilized foreign technological expertise to install and commissioned these equipments. The Vertical roller mill from Loesche for grinding Lignite, the first of its kind in the country is commissioned for processing the fuel requirement. The company with the installation of OK Mill, the world's most sophisticated and HiTech cement mill (a vertical roller mill), the production capacity has quantum leaped and expected to touch a million marks. CCCL, apart from manufacturing cement, is also into wind energy farms. This includes harnessing power from 66 windmills setup at Poolavadi with various capacities. CCCL has taken elaborate measures for pollution control spending almost 10 cores in this field. Many of the electrostatic precipitators and several filters and bag dust collector in cement mill are installed all over the plant. STP is also working to take care of water pollution. For Occupational Health & Safety, CCCL has institutionalized a Safety Committee working group, promoted the use of Personal Protective Equipment (PPE) in key work areas and subjecting the employees for regular health check-up.

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Chettinad Cement Corporation Ltd., Puliyur Cement Factory has won International Recognition by getting IS/ISO 9001:2000 Quality Management System Certification and IS/ISO 14001:2004 Environmental Management System Certification. SITE DESCRIPTION AND SITE PLAN CCCL is located at Puliyur village in Karur (Dt.) Tamil Nadu, TrichyKarur Highway 65km away from Trichy and 13 Km before Karur. It is situated at the elevation of approx 110m Mean sea level. The Ambient temperature is 42 deg C max and 25 deg e Min with an average rainfall of 600-S00mm in a year. The relative Humidity is SO85% max and 50% min. The Maximum wind velocity is 50Km/Hr Max during the windy seasons. For 6 month wind direction is East- west and for the next 6 months west east. To pographicillly the firm is generally flat. Amaravathi river which is tributary to river Calvary, is situated about 2 Km away from the Factory. We have provided a school for our employees and for our near by society behind our colony. It is well connected by road in Tamil Nadu and Broad gauge Railway throughout India. The Chettinad Cement Corporation Limited (CCCL) is one of the most modem cement plant in the country located at Puliyur in Karur district, Tamil Nadu. 1967 - 4 lac tonnes per annum cement production capacity with wet process 1995 - ISO - 9001 Certificate received. Latest Technology LV-Tech Classifier installed in Raw mill Kiln capacity increased to 2800 TPD. B) Green field cement Plant with capacity of 1.1 Million was commissioned at Karikkali works 2001-Rock breaker (Terminator) installed in mines

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2003-ISO 14001 : 2004 is implemented 2006-IS: ISO 18001: 2000 is implemented ORIGIN OF CEMENT Cement industry is one of the major industries in the industrial sector, which affects the activities of industrial and construction sector to great extent in India and world ever. This industry is also a part of the economical growth of our country. VARIOUS TYPES OF CEMENT According to the Bureau of Industrial Costs and Prices report on Cement Industry (1989) Indian manufacturers produce nine different verities of cement. HIGH ALUMINIUM CEMENT It is used as a re factory cement and as structured material giving high strength in cold regions. The history of the group House of Chettinad is linked with the 9 decades old saga. In 1912 took birth the House of Chettinad through a visionary, idealist and born entrepreneur Dr. Rajah Sir Annamalai Chettiar who believed in social transformation through business. The founder of the House of Chettinadu envisaged his companies providing the stimulus for industrial Growth and conceived business as a means of improving the living standards of people. Following the footsteps of his father Dr. Rajah Sri Annamalai Chettiar, Dr. Rajah M.A.Muthiah Chettiar continued to contribute to the nation building cause and combined his business acumen to establish the company Chettinad Cement Corporation Limited., in 1962 to cater to growing demands of cement in the

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country. The companys first manufacturing unit located at Puliyur, Karur District, in Tamilnadu commenced production in April 1968. Today the group is being started under the versatile dynamic and pragmatic Leadership of Dr. M.A.M. Ramaswamy and his son Sri M.A.M.R. Muthiah based on the footsteps of Dr. Rajah Sir M.A Muthiah Chettiar. Apart from cement, the Chettinad House is today engaged in activities as diverse as granite, engineering, silica garnet, information technology, plantations, shipping, transportation, stevedoring, clearing and forwarding and logistics having a combined turnover of Rs 8500 million. PRODUCTS OPC 43 Grade Super Grade Sulphate Resistant Portland cement Port land slag Cement PROCESS CONTROL Equipped with centralized control room for process control, the advanced instrumentation and elaborate display screens give uptothe minute information on the production process so that any deviation can be promptly corrected. PERFORMANCE OF THE CHETTINAD CEMENT The company, which has always been striving for Total Quality, possesses international Certificate ISO 9001: 2000 and ISO14001: 1996 and takes pride in being acclaimed as one of the major player in a highly competitive cement Industry in India. The company added another feature to its cap by installing and commissioning a giant. Sophisticated, high-tech and power efficient O&K cement Mill resulting in a quantum leap in production to touch One million Tone

15

mark. The company has achieved many laurels through award for BEST PERFORMANCE in the cement industry issued by National productivity council Besides it has been customary to receive National Safety Awards. Chettinad Cement has attached great importance to social responsibility and environment values. This is manifest in the installation of the latest pollution control equipment in the plant. The companys new state of the Art Green Field Cement Plant in Karikkali Village. Tamilnadu commenced commercial production in October 2001 with a capacity of 0.9 Million Tonnes per annum. It is equipped with ABBs latest knowledge based solution package right from the treatment of Raw Material to the packing of Cement, making it one of Indias most modern and efficient plant The company commissioned a 15 MW captive Thermal Power plant at its unit at Karikkali in October 2004 to cater to the entire power requirements of the Karikkali plant there by reduce the power cost. 0.5 million tonnes. DIVIDEND Your Director are pleased to recommended a dividend on Equity Share Capital @ 40 % for the year 2008 2009. OPERATIONS This is covered under the topic management discussion and analysis.

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LIST OF AWARDS RECEIVED BY CHETTINAD CEMENT SL NO 1.

AWARDS NATIONAL SAFETY AWARD(For outstanding performance in industrial safety in achieving lowest frequency rate in industry) Runners up Highest % reduction in frequency rate

YEAR

1976 1977 1982 1985

2.

MERIT AWARDS from regional directorate of workers education a. National Productivity Award (Best productivity Performance in cement industry issued by NPC) Best b. Best productivity award (Issued by Government of Tamilnadu)

3.

1995-1996 1995-1996

5.

NCBM NATIONAL AWARDS Award for Energy efficiency 1. Best improvement in thermal energy performance 2. Best improvement in energy performance in manufacture of blended cement 2000-2001 First prize First prize

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6.

Tamilnadu government awards (State safety awards first and third prize )

1998

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DIRECTORS Sri R. KrishnaMoorthy, Sri C.S.Pani and Sri K. Ganapathy, Directors retire under clause 102 of the Articles of Association of the company and being eligible offer themselves for reappointment. Sri V. Subramanian had been appointed as director on the Board of Directors of the company by the Life Insurance Corporation of India (LIC) in the year 2001 representing on their behalf and in June 2004 he had been withdrawn by the LIC. Due to health reason Sri M. Nataraj had resigned his directorship on the Board of the company from 12.1.2005 further the ICICI Bank Ltd also with Drawn Sri S. Srinivasan ICICI Nominee from the Board of the company with the repayment of all their loans.

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2.1. OBJECTIVES OF THE STUDY 1. To study the financial performance of the company. 2. To ascertain the profitability position of the company. 3. To access the solvency position of the company. 4. To suggest ways and means to improve the present performance of the company.

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2.2. SCOPE OF THE STUDY The study mainly focused on the Financial performance of the Chettinad Cement Corporation Limited, Puliyur. The Study could be used to review the Financial Performance of the company. The study gives a clear-cut picture regarding the Financial Evaluation of the company. It helps the company to plan for the expansion of the company. This study helps to measure the degree of wealth and health position of the enterprise. This Study could help the management to use the Sources in such a way, So as to maintain profitability of minimum risk. This Study will help to take Suitable Measure to over come the problems.

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LIMITATIONS OF THE STUDY Finance data required for the Study has been obtained from the Secondary data. This study focuses only Chettinad Cement Corporation Limited for the period of 5 years 2004 -2005 to 2008-2009. The study is limited with Chettinad Cement Corporation Limited and other concerns are not considered. The study does not take into account the other areas of financial management such as capital budgeting, dividend policy and others. The figures taken from the financial statement analysis were historical in nature; time value of money is not being used.

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2.3. RESEARCH METHODOLOGY Research in common parlance refers to a search for knowledge. Once can also define research as a scientific and systematic search for pertinent information on a specific topic. Research is an art of scientific investigation. 1. RESEARCH DESIGN To research design used on the study is analytical research. The research has to analyze the balance sheet, which is a historical data and derive conclusions from it. 2. NATURE OF DATA The nature of data used for the study is secondary data. Because the data is collected from the balance sheet for the analysis part. 3. DATA COLLECTION The data needed for the study is being collected from the annual reports of the company and which is a secondary data. 4. PERIOD OF THE STUDY The period taken into consideration for the study is from 2004-2005 to 2008-2009. 5. TOOLS USED FOR ANALYSIS The tools used for the study by researcher are follows. a. RATIO ANALYSIS b. COMPARATIVE BALANCE SHEET c. COMMON SIZE BALANCE SHEET

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RATIO ANALYSIS CURRENT RATIO Current ratio may be defined as the relationship between current assets and current liabilities. This ratio also known as Working Capital Ratio is a measure of General liquidity and is mostly used to make the analysis of short-term financial position of liquidity of a firm. The rule of thumb is 2:1 the current ratio is. CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES LIQUID RATIO Liquid ratio may be defined as the relationship between quick or liquid assets or current assets of liquid liabilities. The rule of thumb of quick ratio is 1:1 the ratio can be calculated by dividing the total of the quick asset by total liabilities. LIQUID RATIO = LIQUID ASSETS / CURRENT LIABILITIES LIQUID ASSETS = CURRENT ASSETS INVENTORIES DEBT EQUITY RATIO Debt equity ratio is also known as external- internal equity ratio is calculate do measure the relative claims of outsiders and the owners against the firms assets. These ratios indicate the relationship between external equities or the outsiders funds and the internal equities. DEBT EQUITY RATIO = DEBT / EQUITY EQUITY = SHARE CAPITAL+ RESERVE & SURPLUS

PROPRIETARY RATIO

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Proprietary ratio is also known as equity ratio or share holders total equities ratio of net worth total asset ratio. This ratio establishes the relationship between share holders funds total assets of the firm. This ratio can be calculated as under. PROPRIETARY RATIO = SHAREHOLDER FUND / TOTAL ASSETS TOTAL ASSETS = FIXED ASSETS + CURRENT ASSETS

INVENTORY TURNOVER RATIO Inventory turnover ratio is normally calculated as sales/average inventory turnover ratio. This ratio is calculated as under. INVENTORY TURNOVER RATIO = NET SALES / INVENTORY WORKING CAPITAL TURNOVER RATIO Working capital turnover ratio indicates the velocity of utilization of net working capital. These ratios indicate the number of times the working capital is turned over in the course of year. This ratio can be calculated as WORKING CAPITAL TURNOVER RATIO = NET SALES / NET WORKING CAPITAL NET WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITY

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DEBTORS TURNOVER RATIO Debtors turnover indicates the velocity of debt collection of the firm. It indicates the numbers of average debtors are turned over during a year. DEBTORS TURNOVER RATIO = NET CREDIT ANNUAL SALES / AVERAGE TOTAL DEBTORS AVERAGE COLLECTION PERIOD The average collection period ratio represents the average number of days for which a firm has to wait before its receivables are converted into cash. The ratio can be calculated as AVERAGE COLLECTION PERIOD = NUMBER OF DAYS / AVERAGE COLLECTION PERIOD CREDITORS TURNOVER RATIO It indicates the average number of days taken by firm to pay its creditors accounts payable includes creditors and bills payable. CREDITORS TURNOVER RATIO = NET CREDIT ANNUAL PURCHASE AVERAGE TOTAL CREDITORS AVERAGE PAYMENT PERIOD The average payment period ratio represents the average number of days taken by the firm to pay its creditors. This ratio indicates the velocity with which the creditors are turnover in relation to purchases. AVERAGE COLLECTION PERIOD = NUMBER OF DAYS / CREDITORS TURNOVER RATIO

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GROSS PROFIT RATIO Gross profit ratio measures the relationship of gross profit to net sales and is usually represented as percentage. This ratio is calculated as GROSS PROFIT RATIO = (GROSS PROFIT / NET SALES) * 100

NET PROFIT RATIO Net profit ratio measures the relationship of net profit to net sales (after tax) and sales and indicate the efficiency of the management in manufacturing, selling, administrative and other activities of the firm. This ratio is the overall measures of the first profitability and is calculated as NET PROFIT RATIO = (NET PROFIT / NET SALES) * 100

B.COMPARATIVE BALANCE SHEET Comparative balance sheet analysis is the study of the trend of the same item, group of items and computed items in two or more balance sheet of the same business enterprise on different dates. The comparative balance sheet has two columns is used to show increase in figure, the fourth column may be added for giving percentage of increase or decrease.

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2.4. REVIEW OF LITERATURE A personal of research studies in projects reveals that the topic of financial performance and analysis of major interest to finance students over the last decade the topic has been researched by a good number of management students. In this chapter the researcher briefly brings to light some of the selected studies on the topic. A study on the financial performance of a sick unit Dharmapuri District CO-Operative Spinning Mills Limited., (Prabu 1999) objectives of the study were; to analyze the cost structure of the company in terms of various components of cost; to analyses in details the financial position of the company; to examine the trend in sales ant to find out the empirical relationship between the key elements of costs and rates; to identify the extent of the sickness with the help of key financial ratios and to suggest suitable revival measured for the company. The primary data was collected through interview and personal observation. The secondary data was obtained from the annual reports of the company. The study revealed that both materials and operational costs were very high, the accumulated losses were also very high. A study on financial planning and financial performance analysis, 10 years back and its current trends in Madras refineries limited (Saba tilak). The objective of the study were to examine the financial performance of the company. To analyze the operational efficiency of the enterprises to make analysis on the possible changes that could be made to improve the existing system. The study revealed that the financial position as well s financial performance of the company was good but could be improved and strengthened further by consciously identifying and cultivating new innovative techniques and methods of financial management for better management of time an funds.

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Sakthivel.V has done the project in the topic of performance of Bharat Heavy Electrical Ltd in India from the year of 1993 to 2002. The main objectives are to study the operational performance of BHEL thorough the value added analysis, the study the financial performance of BHEL and evaluate the same, to study the profit and loss account of the unity to know the economic condition of the BHEL units in India. The conclusions are there is a general fall in cost of production, decrease in the placement of order is due to continued show down in the capital goods sectors and lack of investment, turnover of the new products continued 24 percent at the turnover and spares turn over was Rs.5724 million. While turn over increased by 10 percent other expenses were strictly controlled. Paramasivam. D. a research student has done the project topic for financial performance analysis of TNPL in Karur during the period of 2002. The main objectives of to measure the liquidity position, leverage effect, profitability and activity of the company. The findings are the company is heavily good liquidity position and we can say with out any default the company can pay its liability as on the due dates, the gross profit ration is concerned the TNPL has a good gross profit margin, the net profit ratio of TNPL is a satisfaction before the expansion programmed, as for as the financial leverage ration is concerned TNPL us at far. But in the year 2001, the company has lost its magnitude of the financial leverage.

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ANALYSIS & INTERPRETATION TABLE -3.1 CURRENT RATIO YEAR 06 07 07 08 08 09 09 10 10 11 CURRENT ASSET ( LAKHS ) 16435 17986 21789 40469 62614 CURRENT LIABILITIES ( LAKHS ) 7928 10768 17296 35837 38959 RATIO 2.07 1.67 1.26 1.13 1.60

INTERPRETATION The above table indicates the current ratio of the year 2006 is 2.07.who is shows the decrease as 1.67 in 2007, 1.26 in 2008, 1.13 in 2009 and finally it reached 1.60 in 2010. The table indicates current ratio is not satisfactory.

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CHART 3.1 CURRENT RATIO

2.5 2.07 2 1.67 Percentage 1.5 1.26 1.6

1.13

RATIO

0.5

0 06 07 07 08 08 09 year 09 10 10 11

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TABLE 3.2 LIQUID RATIO

YEAR

LIQUID ASSETS ( LAKHS)

CURRENT LIABILITIES ( LAKHS )

RATIO

06 07 07 08 08 09 09 10 10 11

6538 7969 13962 23852 41153

7928 10768 17296 35837 38959

0.82 0.74 0.81 0.66 1.05

INTERPRETATION The above table indicates liquidity ratio have got achieved year by year as 0.82 in 2007, 0.74 in 2008, 0.81 in 2009 and finally it reaches to 1.05 in 2009.It shows that liquid ratio of the company is satisfactory.

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CHART -3.2 LIQUID RATIO

1.2 1.05 1 0.82 0.8 0.74 0.66 0.6 0.4 0.81

Percentage

Series1

0.2 0 06 07 07 08 08 09 09 10 10 11

year

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TABLE 3.3 DEBT EQUITY RATIO

YEAR

DEBT ( LAKHS )

EQUITY (LAKHS ) 14746 17442 26324 39649 35515 1.75

RATIO

06 07 07 08 08 09 09 10 10 11

32668 30491 23136 43619 99703

2.21

0.88 1.10 2.80

INTERPRETATION The above table indicates the debt equity ratio that increased from 2.21 in 2007 to 1.75 in 2007. Suddenly got decrease in 2008 as 0.88 & 1.10 in 2009 & finally reaches to 2.80 in 2010. The debt equity ratio of the company is satisfactory.

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CHART 3.3 DEBT EQUITY RATIO

2.5

percentage

1.5

RATIO

0.5

0 06 07 07 08 08 09 09 10 10 11

Year

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TABLE-3.4. PROPRIETARY RATIO YEAR 06 07 07 08 08 09 09 10 10 11 SHAREHOLDER FUND ( LAKHS ) 14746 17442 26324 39649 35515 TOTAL ASSETS ( LAKHS ) 60946 66575 74191 125135 174929 RATIO 0.24 0.26 0.35 0.24 0.20

INTERPRETATION The above table indicates the proprietary ratio. in the year 2008 the ratio level is highest 0.35. It suddenly decreased to 0.24 in 2009 and suddenly decreased for coming years and finally reaches to 0.20 in 2010, It shows that the proprietary ratio is not satisfactory.

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CHART 3.4 PROPRIETARY RATIO 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 06 07 07 08 08 09 Year 09 10 10 11 RATIO

Percentage

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TABLE -3.5 INVENTORY TURNOVER RATIO

YEAR

NET SALES ( LAKHS)

INVENTORY ( LAKHS ) 9897 10017 7827 16617 21461 3.90

RATIO

06 07 07 08 08 09 09 10 10 11

38686 48504 72663 93193 113745

4.84 9.28 5.61 5.30

INTERPRETATION

The above table indicates the inventory turnover ratio of the year 2006 in 3.90, it is suddenly increases to 4.84 in 2007&2008 and suddenly it is decreased for coming years 2009 to 2010.The Company maintain its inventory level in bad position. It shows not satisfactory in inventory management.

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CHART 3.5 INVENTORY TURNOVER RATIO 10 9 8 7 Percentage 6 5 4 3 2 1 0 06 07 07 08 08 09 Year 09 10 10 11 RATIO

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TABLE-3.6 WORKING CAPITAL TURNOVER RATIO

YEAR

NET SALES ( LAKHS )

NET WORKING CAPITAL ( LAKHS )

RATIO

06 07 07 08 08 09 09 10 10 11

38686 48504 72663 93193 113745

8507 7218 4493 4632 23655 16.17

4.55 6.72

20.10 4.81

INTERPRETATION The above table indicates the working capital turnover ratios of the year 2006 in 4.55 and suddenly increased in the year 2007 as 6.72 and it increased in 2008 as 16.17 & 20.10 in 2009 and finally reached 4.81 in 2010. It denotes inefficient utilisation of working capital. .

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CHART 3.6 WORKING CAPITAL TURNOVER RATIO

25

20

Percentage

15 RATIO 10

0 06 07 07 08 08 09 Year 09 10 10 11

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TABLE 3.7 DEBTORS TURNOVER RATIO

YEAR

NET CREDIT ANNUAL SALES ( LAKHS )

AVERAGE TOTAL DEBTORS ( LAKHS ) 1706 1825.5 1721.5 1593 2678.5

RATIO

06 07 07 08 08 09 09 10 10 11

38686 48504 72663 93193 113745

22.68 26.57 42.20 58.50 42.46

INTERPRETATION The above table indicates the debtors turnover ratios for year 2006 is 22.68 it slightly increased in 2007 as 26.57 and in for coming years 58.50 is 2009. It is decreased and finally it reaches to 42.46 is2010. It shows the insufficient bank balance & cash in hand. It is not favourable for the company.

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CHART 3.7 DEBTORS TURNOVER RATIO

70 60 50

Percentage

40

RATIO
30 20 10 0 06 07 07 08 08 09 09 10 10 11

Year

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TABLE-3.8 AVERAGE COLLECTION PERIOD

YEAR

NO.OF. DAYS 365 365 365 365 365

DEBTORS TURNOVER RATIO 22.68 26.57 42.20 58.50 42.46

AVERAGE COLLECTION PERIOD 16.09 13.74 8.65 6.24 8.60

06 07 07 08 08 09 09 10 10 11

INTERPRETATION The above table indicates the Average Collection Period year 2008 is decreased and in for coming year it is increased year by year. Which indicates that the company reaches its collection period which is for the process. The average collection period is satisfactory.

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CHART 3.8 AVERAGE COLLECTION PERIOD

18 16 14 12

Percentage

10 8 6 4 2 0 06 07 07 08 08 09 09 10 10 11

AVERAGE COLLECTION PERIOD

year

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TABLE 3.9 CREDITORS TURNOVER RATIO

YEAR

NET CREDIT ANNUAL PURCHASE ( LAKHS)

AVERAGE TOTAL CREDITORS ( LAKHS) 3656 4023 4402.5 7739.5 10702.5

RATIO

06 07 07 08 08 09 09 10 10 11

2838 3838 5902 8806 10956

0.78 0.95 1.34 1.14 1.24

INTERPRETATION The above table Indicates the Creditors Turnover Ratios for the year 2007 is 0.95 and it is increased in for coming years and reaches to 1.24 in the year 2010. The ratio indicates unfavourable condition for the company.

46

CHART 3.9 CREDITORS TURNOVER RATIO

1.6 1.4 1.2 1

Percentage

0.8 0.6 0.4 0.2 0 06 07 07 08 08 09 09 10 10 11

RATIO

Year

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TABLE 3.10 AVERAGE PAYMENT PERIOD

YEAR 06 07 07 08 08 09 09 10 10 11

NO.OF. DAYS 365 365 365 365 365

CREDITORS TURNOVER RATIO 0.78 0.95 1.34 1.14 1.24

AVERAGE PAYMENT PERIOD 467.95 384.21 272.39 320.17 294.35

INTERPRETATION The above table indicates the Average Payment Period to creditors in the year 2007 is 2008 is 384.21, but in the year the ratio level is low that 467.95 in 2006, 272.39 in 2008,320.17 in 2009 & finally 294.35 in 2010. The Low ratio indicates that the average payment period to creditors is good for the company.

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CHART 3.10 AVERAGE PAYMENT PERIOD

500 450 400 350 Percentage 300 250 200 150 100 50 0 06 07 07 08 08 09 09 10 10 11 Year AVERAGE PAYMENT PERIOD

49

TABLE 3.11 GROSS PROFIT RATIO

YEAR

GROSS PROFIT ( LAKHS )

NET SALES ( LAKHS ) 38686 48504 72663 93193 113745

GROSS PROFIT RATIO 84.49 85.92 84.77 85.3 89.0

06 07 07 08 08 09 09 10 10 11

32689 41677 61595 79501 100978

INTERPRETATION The above table clearly depicts the gross profit ratios from 2006 2007 indicates a ratio of 84.49 and against it has increased to 85.92 in the year 2007 2008 and it is decreased to 84.77 in the year 2008 2009 and again it is increased to 85.3 in the year 2009 2010 and 2010 - 2011 indicates a ratio of 89.0. It shows that they had increased the profit in sales.

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CHART 3.11 GROSS PROFIT RATIO

100 90 80 70 Percentage 60 50 40 30 20 10 0 0 YEAR 06 07 07 08 08 09 09 10 10 11 GROSS PROFIT 84.49 85.92 84.77 85.3 89

Year

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TABLE - 3.12 NET PROFIT RATIO

YEAR

NET PROFIT ( LAKHS)

NET SALES ( LAKHS ) 38686 48504 72663 93193 113745

NET PROFIT RATIO 19.35 20.05 25.97 33.54 31.99

06 07 07 08 08 09 09 10 10 11

7487 9729 18868 31256 25022

INTERPRETATION The above table indicates that the year 2006 2007 net profit ratios is 19.35 and in the year 2010 2011 net profit ratio is 31.99. It shows that net profit is increased.

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CHART 3.12 NET PROFIT RATIO

40 35 30 25 20 15 10 5 0 YEAR 06 07 07 08 08 09 09 10 10 11

Percentage

NET PROFIT

Year

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TABLE 3.13 COMPARATIVE BALANCE SHEET OF CHETTINAD CEMENT CORPORATION LIMITED PARTICULARS 20062007 ( RS.In lakhs) Assets Inventories Sundry Debtors Cash&Bankbalance Loans& Advances others 6004 1505 1395 2462 30 9897 1907 1709 2904 18 3893 402 314 442 -12 64.84 26.71 22.50 17.95 -40 20072008 ( RS.In lakhs ) INCREASE/ DECREASE PERCENTAGE CHANGE (%)

Fixed Assets Investments Working-in-progress

Less: provision 11396 41328 NIL 880 53604 16435 43569 NIL 942 60946 5039 2241 NIL 62 7342 44.21 5.42 NIL 7.04 13.69

54

6934 Total Assets Current Liability Shareholder funds Share Capital Reserves& Surplus 2950 10345 46670

7928 53018

-994 6348

-14.33 13.60

2950 11796

---8549

---82.63

Loans Funds Secured Loans Unsecured Loans DeferredTaxLiability 13295 14746 1451 10.91

12428 16477 4470 Total Liabilities 46670

5906 26762 5604 53018

-6522 10285 1134 6348

-52.47 62.42 25.36 13.60

INTERPRETATION (i)The comparative balance sheet shows that during the year 2006-2007, Their has been increased in fixed assets, worth Rs. 2241 i.e., 5.24%. The company is it purchased fixed asset.

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(ii) The current asset has increased Rs.44.21 and current liability has increased by Rs.212 respectively. This further conforms that the company has raise the long term finance increasing the current asset or for paying current liabilities. (iii) Overall performance is satisfactory.

TABLE-3.14 COMPARATIVE BALANCE SHEET OF CHETTINAD CEMENT CORPORATION LIMITED PARTICULARS 2007-2008 ( RS.In lakhs ) 2008-2009 ( RS.In lakhs) INCREASE/ DECREASE PERCENTAGE CHANGE (%)

56

Current Assets Inventories Sundry Debtors Cash& Bank balance Loans & Advances Others 9897 1907 1709 2904 18 10017 1744 2149 4072 4 120 -163 440 1168 -14 1.21 -8.54 25.74 40.22 -77.77

Fixed Assets Investments Working-in-progress

Less: provision 16435 43569 NIL 942 60946 7928 Total Assets 53018 17986 47948 361 280 66575 10768 55807 1551 4379 361 -662 5629 2840 2789 9.43 10.05 100 -70.27 9.23 35.82 5.26

57

Current Liability Shareholder Funds Share Capital Reserves& Surplus 2950 11796 2950 14492 --2696 --22.85

Loans Funds Secured Loans Unsecured Loans DeferredTax Liability 14746 17442 2696 18.28

5906 26762 5604 Total Liabilities 53018

2404 28087 7874 55807

-3502 1325 2270 2789

-59.29 4.95 40.50 5.26

INTERPRETATION (i)Comparative balance sheet reveals that during the year 2007 2008 there has been an increased fixed asset of Rs.4379 i.e. 10.5%, while that the company have purchase fixed assets in the year 2005-2006.

58

(ii)Current assets and current liability has increased by Rs. 151 i.e. 9.43% and Rs.2840 i.e. 35.82% respectively. While reserve and surplus has the slightly increase from Rs.182.63 in 2008 to Rs.22.85 in 2008.which shows that company has utilized reserves and surplus for the payment. (iii)Overall financial performance is satisfactory.

TABLE-3.15 COMPARATIVE BALANCE SHEET OF CHETTINAD CEMENT CORPORATION LIMITED PARTICULARS 2008-2009 ( RS.In lakhs) 2009-2010 ( RS.In lakhs ) INCREASE/ DECREASE PERCENTAGE CHANGE (%)

59

Current Assets Inventories Sundry Debtors Cash&Bank balance Loans & Advances Others 10017 1744 2149 4078 4 7827 1699 2825 9434 4 -2190 -45 676 5356 ---21.86 -2.58 31.45 131.33 ---

Fixed Assets Investments Working-in-progress

Less: provision 17986 47948 361 280 66575 10768 Total Assets 55807 21789 48497 58 3847 74191 17296 56895 3803 549 -303 3567 7616 6528 1088 21.14 1.14 -83.93 1273.92 11.43 60.62 1.94

60

Current Liability Shareholder Funds Share Capital Reserves& Surplus 2950 14492 2950 23374 --8882 --61.28

Loans Funds Secured Loans Unsecured Loans DeferredTaxLiability 17442 26324 8882 50.92

2404 28087 7874 Total Liabilities 55807

903 22233 7435 56895

-1501 -5854 -439 1088

-62.43 -20.84 -5.57 1.94

INTERPRETATION (i)The comparative balance sheet of the company in the year 2008 and 2009 indicates that the fixed asset have been increased for Rs. 549 @1.14% respectively. (ii)Where current asset and current liabilities of the company also shows

61

increases in values bys21.14 % and 60.62%, debtors and loans and other items increased respectively. (iii)Overall financial performance is satisfactory. TABLE-3.16 COMPARATIVE BALANCE SHEET OF CHETTINAD CEMENT CORPORATION LIMITED PARTICULARS 20092010( RS. In lakhs ) 2010-2011 ( RS.In lakhs) INCREASE/ DECREASE PERCENTAG E CHANGE (%)

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Current Assets Inventories Sundry Debtors Cash&Bankbalance Loans &Advances Others 7827 169 2825 9434 4 16617 1487 2585 19780 --8790 -212 -240 10346 -4 112.30 -12.47 -8.49 109.66 -100

Fixed Assets Investments Working-inprogress

Less: provision 21789 48497 58 3847 74191 17296 Total Assets 56895 40469 49243 58 35365 125135 35837 89298 18680 746 --31518 50944 18568 32403 85.73 1.53 819.28 --68.66 107.35 56.95

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Current Liability Shareholder Funds Share Capital Reserves& Surplus 2950 23374 2950 36299 --12925 --55.29

Loans Funds Secured Loans UnsecuredLoans DeferredTaxLiability 26324 39249 12925 49.09

903 22233 7435 Total Liabilities 56895

3761 39858 6430 89298

2858 17625 -1005 32403

316.50 79.27 -13.51 56.95

INTERPRETATION (i)The Comparative balance Sheet reveals that during the year 2009 2010 there has been increased in fixed assets Rs. 746 i.e.1.53%. This shown that the company purchase fixed assets for this year.

64

(ii)Current assets and Current liability has increased by Rs. 18680 i.e.85.73% and Rs.12925 i.e.55.29% respectively. (iii)Overall financial performance is satisfactory.

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TABLE-3.17 COMPARATIVE BALANCE SHEET OF CHETTINAD CEMENT CORPORATION LIMITED PARTICULARS 2010-2011 ( RS.In lakhs) Current Assets Inventories Sundry Debtors Cash&Bankbalance Loans&Advances Others 16617 1487 2585 19780 --21461 3870 4299 32983 1 4844 2383 1714 13203 1 29.15 160.25 66.30 66.74 100 2011-2012 ( RS.In lakhs) INCREASE/ DECREASE PERCENTAG E CHANGE (%)

Fixed Assets Investments Working-in-progress

Less: provision 40469 62614 22145 54.72

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49243 58 35365 125135 35837 Total Assets Current Liability Shareholder Funds Share Capital Reserves& Surplus 2950 36299 89298

80941 58 31316 174929 38959 135970

31698 ---4049 49749 3122 46672

64.37 ---11.44 39.79 8.71 52.26

2950 32565

---3734

---10.28

Loans Funds Secured Loans UnsecuredLoans DeferredTaxLiability 39249 35515 -3734 -9.51

3761 39858 6430

28200 71503 752

24439 31645 -5678

649.80 79.39 -88.30

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Total Liabilities

89298

135970

46672

52.26

INTERPRETATION (i)The Comparative balance Sheet reveals that during the year 2010 2011 there has been increased in fixed assets Rs. 64.37 i.e.7.5%. Will the company purchase fixed assets for this year. (ii)Current assets & current liability has increased by Rs. 54.72 i.e., -10.28 % and Rs.312. &39.79 is respectively. (iii)Overall financial performance is satisfactory.

4.1. FINDINGS Current ratio in the year 2006 is 2.07 & next three years it is decreased to 1.67, 1.26, and 1.13 respectively and during 08-09 it is increased to 1.60. Liquid ratio in the year 2006 is 0.82 & next years it is decreased to 0.74 and suddenly increased 2007 are 0.81, and 2008 is 0.66 respectively and during 09-10 it is increased to 1.05. Debt equity ratio in the year 2006 is 2.21 & next three years it is decreased to 1.75, 0.88, and 1.10 respectively and during 09-10 it is increased to 2.80. Proprietary ratio was constant in the year 2007 is 0.26 and increased 2008

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is 0.35. Inventory turnover ratio for the year 2008 is 9.28. Working capital turnover ratio for the year 2009 is 20.1 is shown inefficient utilization of working capital. In the year 2010 the debtor turnover ratio is 58.50. In the year 2006 the average collection period is reduced to 16.09. Creditor turnover ratio is high in the year 2008 and it decreases in for the coming years. Average payment period 2005 is reduced to 467.95. In the year 2011 the gross profit ratio is 89. Net profit ratio decreases in trend due to move expenses. Comparative balance sheet of the company was satisfactory for all the years from 2006 to 2011. 4.2. SUGGESTION Company should concentrate to reduce the current liability. The dues should meet of time & company should maintain adequate current asset & reserves to meet the current obligation of the company. The company has to maintain adequate working capital to operate the day to day operations of business smoothly. The step has to be taken to keep adequate cash in hand & cash at bank and

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should maintain lowest wastage in manufacturing side.

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4.3 CONCLUSION The study is based on analyzing the financial position of a company using various tools and techniques CHETTINAD CEMENT CORPORATION LIMITED, PULIUR is taken as a sample case and its operations are analyzed with aid of financial techniques. The study is primarily based on the annual reports of the company for the period of five years. Regarding this study it is identified that the industry is comparing the overall efficiency by calculating the ratios and average of five years but this study is calculated by the difference of each year with the previous year.Hence it can be concluded that the Chettinad Cement, overall financial position is satisfactory. The company has to still analysis various aspects to improve the company position on puliyur and karikkali.

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APPENDIXE BALANCE SHEET

Schedule Sources of Funds (a) Capital (b) Reserves and Surplus Loan Funds (a) Secured Loans (b) Unsecured Loans Deferred Tax Deferred tax liability Less : Deferred tax asset
Total

As at 31.03.2005 2950 11796 14746

As at 31.03.2006 2950 14492 17442

As at 31.03.2007 2950 23374 26324

As at 31.03.2008 2950 36299 39249

As at 31.03.2009 2950 32565 35515

1 2

3 4

5906 26762 8014 2410 5604

53018

2404 32668 28087 8173 299 7874

55807

903 30491 22233 7575 140 7435

56895

3761 23136 39858 6503 73 6430

89298

28200 43619 71503 836 84 752

135970

99703

Application of Funds Fixed Assets

68642

76558

82424

91320

16603 9

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(a) Gross Block

(b) Less : Depreciation 25073 (c) Net Block 43569 (d) Capital work in progress Investment Current Assets, Loans & Advances (a) Inventories (b) Sundry Debtors (c) Cash and Bank balance (d) Other Current Assets 1907 1709 1744 2149 1699 2825 1487 2585 3870 4299 7 9897 10017 7827 16617 21461 6 942 44511 47948 280 48228 48497 3847 52344 49243 35365 84608 80941 31316 112257 28610 33927 42077 85098

361

58

58

58

18

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(e) Loan & Advance

2904 16435

4072 17986

9434 21789

19780 40469

32983 62614

Less: Current Liabilities & Provisions (a) Liabilities (b) Provisions 1872 7928 Net Current Assets Total 8507 53018 3009 10768 7218 55807 9839 17296 4493 56895 20197 35837 4632 89298 24339 38959 23655 135970 8 6056 7759 7457 15640 14620

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BIBLIOGRAPHY BOOKS 1. I.M. Pandey Financial Management, New Delhi, Vikash Publishing House Pvt., Ltd., 2. Prasanna Chandra - Financial Management Theory and Practice, Tata Mcgraw Hill. 3. Dr.S.N.Maheswari- Elements of Financial Management, Sultan Chand & Sons, Educational Publishers, New Delhi. 4. Y.K.Busan Fundamental of Business organization and Management. Y 5. Kuchai.S.C - Financial Management 6. Varma Agarwal Financial Management REPORTSS Company Annual Records & Reportss

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WEBLIOGRAPHY 1. www. chettinadcement.com

2. www.google.com