CHAPTER-I ABSTRACT 1

ABSTRACT Financial performance study is to analysis about overall financial activities of the Company. Finance plays a key role in a companys success, gives accurate and reliable Information on financial parameters and helps for the decision making process of the Corporate management. The required datas are collected from finance department. It is divided ion to tw o Categories, which are primary data and secondary data. Primary data is collect ed from Finance department by querying them. Secondary data already exists data, like company Balance sheet and other finance documents. The major objectives of this project is to analysis the financial position of th e Company, identify the problem and provide suggestion for the improvement, a Co mparative study of the company balance sheet and sales & profit trends of the Co mpany. Different methods are used to analysis financial performance of the company, Suc h as comparative financial statement, common-size statements, trend analysis, an d ratio analysis. Financial statement may not be realistic since they are prepared by following Ce rtain basic concepts and conventions. Financial disclose only monetary facts. Th ose Transactions, which cannot be measured by monetary terms, are not reflected in these Statements. A highly efficient concern may conceal its real profitabili ty by disclosing loss Or minimum profit whereas an inefficient concern may decla re dividend by wrongly Showing profit in the books. 2

CHAPTER-II INTRODUCTION 3

CHAPTER- II 1.1 Introduction Financial performance study is to analysis about overall financial activities or the Company. Any successful organization needs information both internally and externally. Ac curate And reliable information form the foundation for good decision-making. Fi nance plays a key role. In a companys success. This is the moving force within th e organization. Accurate and reliable Information on financial parameters speeds up the decision making process of the corporate Management. Financial performance analysis is prepared for the purpose of presenting a perio dical Review and deal with the state of investment in business and result achiev ed during the period under review. They reflect a combination of recorded facts. Financial statements are prepared at the end of accounting period so that vario us parties may take decisions of their future actions in Respect of the relation ship with the business. 1.2 Importance Financial statements provide information to owners regarding the funds invested in the Business. Bankers and other lenders of money want to know the financial p osition of a concern before giving loans. Prospective investors who want to inve st money in the firm would like to make an analysis of the financial statements of that firm to know how safe proposed investment would be. 4

The financial statements being a mirror of the financial position of the firms a re of immense value to the research scholar who wants to make a study into finan cial operations of a Particular firm. 1.3 Analysis and Interpretation of Financial Statement Analysis and interpretation of financial statements, therefore, refers to such a treatment of the information contained in the income statement and the balance sheet so as to afford full Diagnosis of the profitability and financial soundnes s of the business. A distinction here can be made between the two terms Analysis and Interpretation . The Term analysis means methodical classification of the data given in the fin ancial statement. The Figures given in the financial statements will not help on e unless they are put in a simplified Form. For example, all items relating to c urrent assets are put at one place while all items relating To current liabiliti es are put at another place. The term Interpretation means explaining the Meanin g and significance of the data so simplified. Both analysis and interpretation are complementary to each other interpretation requires Analysis, while analysis is useless without interpretation. Most of the authors have used the term Analysis only to cover the meanings of both analysis and interpretation, since analysis involves Interpretation. 1.4 TYPES OF FINANC IAL ANALYSIS a) According to Nature (i) External analysis 5

Those who are outsiders for the business do this analysis. The term outsiders in clude Investors, credit agencies, government agencies and other creditors who ha ve no access to the Internal records of the company. These persons mainly depend upon the published financial Statements. Their analysis serves only a limited p urpose. The position of these analysts has Improved in recent times on account o f increase governmental control over companies and Governmental regulations requ iring more detailed disclosure of information by the companies in Their financia l statements. (ii) Internal analysis This analysis is done by persons who have access to the books of account and oth er Information related to the business. Executives and employees of the organiza tion or by officers Appointed for this purpose by the government or the court un der powers vested in them can Therefore, do such analysis. This analysis is done depending upon the objective to be achieved Through this analysis. (b) According to Objectives (i) Long-term analysis This analysis is made in order to study the long term financial stability, solve ncy and Liquidity as well as profitability and earning capacity of a business co ncern. The purpose of Making such type of analysis is to know whether in the lon g run the concern will be able to earn A minimum amount which will be sufficient to maintain a reasonable rate of return on the 6

Investment so as to provide the funds required for growth and development of bus iness and to Meet its cost of capital. (ii) Short-term analysis This is made to determine the short-term solvency stability and liquidity as wel l as Earning capacity of the business. The purpose of the analysis is to know wh ether in the short run A business concern will have adequate funds really availa ble to meet its short-term requirements And sufficient borrowing capacity to mee t contingencies in the near future. ( c ) According to Mode (i) Horizontal analysis This analysis is made to review and analyze financial statements of a number of years And therefore based on financial date taken from several years. This is ve ry useful for long-term Trend analysis. (ii) Vertical analysis This analysis is made to review and analyze the financial statements of one part icular Year only. Ratio analysis of the financial year relating to a particular accounting year is an Example of this type of analysis. 1.5 Tools of Financial Performance Analysis

Comparative Financial Statements 7

Common Size Statements Trend Analysis Ratio Analysis 8

1.6 OBJECTIVES Primay Objectives To analyze the financial performance of the company through the relevant financi al ratios & other method. To study the financial position of the company. Secondary Objectives To have a comparative study of the company balance sheet and profit & loss accou nt Between various years. To find the liquidity position of the company. To find profitability position of the company and analysis of sales. To identify the problem and provide suggestion for the improvement. 9

1.7 DATA COLLECTION The datas are obtained from the two methods 1. Primary data 2. Secondary data Primary data Primary data comprises information obtained by during discussions with the offic ials. Secondary data The secondary data comprises of information obtained from annual reports, balanc e sheet And other financial statements, files and some other documents maintaine d by Organization. In the study maximum part of the data obtained is from second ary data i.e., the annual Reports etc and the rest is form primary data. 10

1.8 LIMITATIONS The study covers only a period of three years. The study is based only on secondary data. There may be basis in the published data. But this deficiency could be over come by the Adoption of scientific evaluator methods. The study will be only a provisional one based on the data collected from the re port and Accounts during the period and its subject to refinement. The economic and government policies etc. may affect the industry after the stud y, which Is not taken into consideration. The studies on ratios of the company are not compared with some benchmark ratios (industry averages) due to lack of the information regarding it. Due to lack of constraints in time and source of information approach has not be en Fulfilled successfully. 11

CHAPTER-III INDUSTRY PROFILE Chapter-3.I .NDUSTRY PROFILE 12

The first manufacturing unit set up by our founders, in Chennai, Tamilnadu, in 1 963, to produce various grades of Ultramarine Blue for Laundry as well as Indust rial purposes, in partnership with Bayer AG. Today it is one of the largest Pigm ent and Surfactant manufacturing companies in the world servicing prominent Poly mer, Personal Care, Specialties, and Cosmetic companies worldwide. Lapiz Divisions set up by Ultramarine & Pigments Limited in 1999 offers Business Process Outsourcing facility for US and UK markets. TCL, with its extensive exp erience for over three decades in applied research, laboratory-scale synthesis, and development of effective manufacturing process, set up TCL Research in 2005. TCL Research offers research services to Pharma, Cosmetic and Intermediates Comp anies in Europe and the USA, in Custom Synthesis, Product Development, Process D evelopment, Scaleup and small volume manufacturing. Since 1982, TCL operates a large, multi-product Liquid Storage Terminal at Chenn ai Port, to receive petrochemicals directly from ships at 3 Berths, store and lo ad the material into railway tankers to transport it to the final destination. I t is rated among one of the best operated petrochemical terminals in India. 13

CHAPTER-IV COMPANY PROFILE 14

COMPANY PROFILE Ultramarine & Pigments Ltd., endeavor to serve the customers with range of pigme nts and surfactants and in the process, be the most preferred supplier. To achie ve this, we constantly study and understand the needs and expectations of our cu stomers by offering quality products and services with an uncompromising sense o f responsibility and a firm commitment to the society. Ultramarine & Pigments Ltd is one of the largest Pigment and Surfactant manufact uring company of Indian origin, having two factories in South India. It speciali zes in the manufacture of Inorganic Pigments and Organic Surfactants with intern ational Quality standard. Today the company produces diverse range of products. ULTRAMARINE BLUE is a very safe, non-hazardous blue pigment with a variety of ap plications worldwide. Its synthetic manufacturing process and possibility for cl ose control over its physical, chemical, and colour characteristics enable the p roduction of several types of this blue pigment, which are readily accepted by p lastic, printing ink, paint, cosmetic and many other industries due to advantage s over other organic pigments and dyes. Besides, Ultramarine blue is an environm ent friendly pigment available to the industry today. LINEAR ALKYL BENZENE SULPH ONIC ACID LINEAR ALKYL BENZENE SULPHONIC ACID (LABSA) is produced in the most so phisticated "Falling Film Reactor", with Italian technology. The process is auto mated fully with most modern computer aided process equipment to produce high qu ality products with consistency. LABSA is an anionic surfactant widely used in t he formulations of all ranges of domestic detergents and dishwash liquids. It is specially suited for the manufacture of all types of detergent 15

powders and cakes. Due to its high active matter, quick miscibility with water a nd low salt content, it easily finds its way in to variety of liquid formulation s. QUALITY ASSURANCE Ultramarine & Pigments Ltd., is equipped with an excellent infrastructural setup which includes most modern production equipments, process and Quality control i nstruments, continuously updated technical know-how, Quality management and assu rance systems. The Quality assurance system ensures that every batch of products conforms to the grade specification in all aspects. Technically superior approach to analysis and measurements are constantly identi fied and implemented. Besides, the organization has implemented ISO 9002 Quality system management standard and ISO 14001 Environment system management standard . We always strive to meet the customer demand with all aspects of Quality, deli very, and technical services.To meet the needs and expectations of the customer, the company makes efforts to implement important tasks of training, utilizing q ualified and skilled people in solving application oriented problems of the cust omer. The company provides free technical service to industrial customers irresp ective of the size, and the technical service department maintains close link wi th industry, visiting customers to understand their requirements, to provide sol utions to customers who are encountering difficulties. The technical service lab oratory explores the possibility of widening the application horizon to serve th e industry better. Ultramarine & Pigments Ltd., creates Customer relationship ma nagement with every customer, through service and communication to enhance longterm relationship. 16

17

CHAPTER-V REVIEW OF LITERATURE 18

4.1COMPARATIVE FINANCIAL STATEMENTS Comparative financial statements are those statements, which have been designed in a Way so as to provide time perspective to the consideration of various eleme nts of financial Position embodied in such statements. In these statements figur es for two or more periods are placed side by side to facilitate comparison. The preparation of comparative financial and operating statement is an important de vice of horizontal financial analysis. The American Institute of Certified Public Accountants has explained The presentation of comparative financial statements in annual and other reports Enhances the usefulness of such reports and brings out more clearly the nature a nd trend of Current changes affecting the enterprise. Such presentation emphasiz es the fact that statement for A series of periods is far more significant than those of a single period and that the accounts of One period are but an installm ent of what is essentially a continuous history. In any one year, it is Ordinari ly desired that the Balance sheet, the Income statement and the surplus statemen t be Given for one or more preceding years as well as for the current year It is divided into two categories Comparative Income Statement 19 Comparative Balance sheet

Comparative Income Statement The income statement discloses Net profit or Net loss on account of operations. A Comparative income statement will show the absolute figures for two or more pe riods, the Absolute change from one period to another and, if desired, the chang e in terms of percentages. Since the figures for two or more periods are shown s ide by side, the reader can quickly ascertain Whether sales have increased, whet her cost of sales has increased or decreased, whether cost of Sales has increase d or decreases, etc. Comparative Balance Sheet Comparative Balance sheet as on two or more different dates can be used for comp aring Assets and liabilities and finding out any increase or decrease in those i tems. Thus, while in a Single Balance sheet the emphasis is on present position, it is on change in the comparative Balance sheet. 20

4.2COMMON-SIZE FINANCIAL STATEMENT Common-size financial statements are those in which figures reported are convert ed into Percentages to some common base. Comparative Common-Size Financial Statement The comparative common-size financial statements show the percentage of each ite m to the total in each period but not variations in respective items from period to period. It is divided into two categories ize balance sheet Common-Size Balance Sheet Common-size Balance sheet means, the whole Balance sheet is converted into perce ntage Form. Comparative Common-Size Balance Sheet When Balance sheets of the same concern for several years or when Balance sheet of two Or more than two concerns for the same year are converted into percentage form and presented as Such, they known as Comparative common-size Balance sheet s. 21 Common-size balance sheet Comparative common-s

4.3TREND ANALYSIS Comparing the past data over a period of time with a base year is called trend a nalysis. The method of calculating trend percentages involves the calculation of percentage relationship That each item bears to the same item in the base year. Any year may be taken as the base year. It Is usually the earliest year. Any in tervening year may also be taken as the base year. Each item of Base year is tak en as 100 on that basis the percentages for each of the items of each of the yea rs Are calculated. These percentages can also be taken as Index Numbers showing relative changes In the financial data resulting with the passage of time. The method of trend percentages is a useful analytical device for the management since By substituting percentages for large amounts; the brevity and readabilit y are achieved. However, Trend percentages are not calculated for all of the ite ms in the financial statements. They are Usually calculated only for major items since the purpose is to highlight important changes. It is mainly used for Sales trend analysis 22 Profit trend analysis

4.4RATIO ANALYSIS Ratio The term ratio refers to the numerical or quantitative relationship between two figures. A Ratio is the relationship between two figures, and obtained by dividi ng the former by the latter. Ratios are designed to show how one number is relat ed to another. It is worked out by dividing One number by another. Ratio can be expressed in two ways Times Percentage Times

When another divides one value, the unit used to express the quotient is termed as Times. Percentage If 100 multiply the quotient obtained, the unit of expression is termed as percen tage. 23

1) CURRENT RATIO Current Ratio lities. It is rking capital ratio is the is expresses relationship between current assets and current liabi The most common ratio for measuring liquidity. Being related to wo analysis, it is Also called the working capital ratio. The current ratio of total current assets to current Liabilities.

The current ratio of a firm measures its short-term solvency. It is ability to m eet shortTerm obligations. As a measure of short-term current financial liquidit y, it indicates the rupees of Current assets available for each rupees of curren t liability/obligation. The higher the current Ratio, the larger the amount of r upees available per rupee of current liability, the more the firms Ability to mee t current obligations and the greater the safety of funds of short-term creditor s. Formula Current Assets Current Ratio = -------------------------Current Liabilities 24

Current Assets Which assets are easy to converted cash or which assets are easy to realized wit hin one Year, is called current assets. The current assets of a firm represent t hose assets, which can be in The ordinary course of business converted into cash within a period not exceeding one year. 2) QUICK RATIO Quick ratio is also known as liquid ratio or acid test ratio or near money ratio . It is the Ratio between quick or liquid assets and quick liabilities. It indic ates the relation between strictly Liquid assets whose value is almost certain o n the one hand, and strictly liquid liabilities on the Other. Formula Liquid Assets Liquid Ratio = --------------------------Liquid Liabilities Liquid Assets Liquid assets means, which assets are immediately convertible into cash without much Loss. 25

Liquid Assets = Current Assets (Stock and Prepaid Expenses) Liquid Liabilities Liquid liabilities mean liabilities which are payable within a short period. Liquid liabilities = Current Liabilities Bank Overdraft 3) STOCK TURNOVER RATIO Stock Turnover Ratio is also known as Stock Velocity. This ratio is calculated t o consider The adequacy of the quantum of capital and its justification for inve sting in inventory. A firm Must have reasonable stock in comparison to sales. It is the ratio cost of sales and average Inventory. This ratio helps the financia l manager to evaluate inventory policy. This ratio reveals The number of times f inished stock is turned over during a given accounting period. This ratio is Use d for measuring the profitability. This ratio indicates whether investment in inventory is efficiently used or not. It, Therefore, explains whether investment in inventories is within proper limi ts or not. The quantum Of stock should be sufficient to meet the demands of the business but it should not be too large to Indicate unnecessary lock-up of capit al in stock and danger of stock items obsolete and getting it Wasted by passing of time. The inventory turnover ratio measures how quickly inventory is sold. It is a tes t of 26

Efficient inventory management. To judge whether the ratio of a firm is satisfac tory or not, it should be compared over a time on the basis of trend analysis. Formula Net Sales Stock Turnover Ratio = ----------------------------------Avera ge Inventory at Cost Opening Stock + Closing Stock Average Stock = -----------------------------------------2 4) DEBTORS TURNOVER RAIO This is also called Debtor Velocity or Receivable Turnover. A firm sells goods on Cr edit and cash basis. When the firm extends credits to its customers, book debts (Debtors or Account Receivable) are created in the firms account: debtors expecte d to be converted into Cash over short period and thus included in current asset s. A debtor includes the amount of Bills Receivables and Book Debts at the end o f accounting period. It is most essential that a b Reasonable quantitative relationship between Outstanding Receivables and Sales s hould always be maintained. If the firm has not been able to collect its debtors within a reasonable time its Funds are unnecessarily locked up in Receivables. In such case short-term loans have to be arranged for paying off its current lia bilities. The liquidity position of the firm depends on the Quality of debtors t o a great extent. 27

The purpose of this ratio is to measure the liquidity of the Receivables or to f ind out the Period over which Receivables remain uncollected. Financial analysts to judge the liquidity of a firm use two ratios. They are Debtors turnover ratio Debt collection period ratio Formula Total Sales Debtor t urnover ratio = -------------------------------------------Average Account Recei vables Account Receivables = Debtors + Bills Receivable Opening Balance + Closing Balance Average Account Receivable = -------------------------------------------------2 5) DEBT COLLECTION PERIOD The ratio indicates the extent to which the debts have been collected in time. I t gives the Average debt collection period. The ratio is very helpful to the len ders because it explains to them Whether their borrowers are collection money wi thin a reasonable time. An increase in the period Will result in greater blockag e of funds in debtors. 28

Formula Months or Days in a year Debt collection period = ------------------------------------Debtors Turnover 6) CREDITOR TURNOVER RATIO This is also known as Account payable or Creditors Velocity. A business firm usu ally Purchase on credit goods, raw materials and services from other firms. The amount of total Payables of a business concern depends upon the purchases policy of the concern, the quantity of Purchases and suppliers credit policy. Longer t he period of outstanding payable is, lesser is the Problem of working capital of the firm. But when the firm does not pay of its creditors within Time, it may h ave adverse effect on the business. Credit turnover indicates the speed with which the payments for credit purchases are made to the creditors. It signifies the credit period enjoyed by the firm p aying creditors. Formula: Total Purchases Creditor Turnover Ratio = ---------------------------------Average Account Payable Account Payable = Creditors + Bills Payable 29

Opening Balance + Closing Balance Average Account Payable = ----------------------------------------2 7) FIXED ASSETS TURNOVER RATIO The ratio gives the average credit period enjoyed from the creditors. Formula Months or Days in a year Debt payment period = -------------------------------------Creditor Turnover 8) FIXED ASSETS TURNOVER RATIO This ratio indicates the extent to which the investments in fixed assets contrib ute towards Sales. If compared with a previous period, it indicates whether the investment in fixed assets has been judicious or not. 30

Formula Net Sales Fixed assets turnover ratio = -------------------------------Net Fixed Assets Net Sales = Sales- Sales Return Excise Duty Net Fixed Assets = Fixed Assets Depreciation 9) WORKING CAOPITAL TURNOVER RATIO This is also known as Working Capital Leverage Ratio. This ratio indicates wheth er or Not working capital has been effectively utilized in making sales. In case a company can achieve Higher volume of sales with relatively small amount of wo rking capital, it is an indication of the Operation efficiency of the company. Formula Net Sales Working capital turnover ratio = -----------------------Working Capita l 10) PROPRIETARY RATIO 31

Proprietary Ratio relates the shareholders funds to total assets. It is a varian t of the debt Equity ratio. This ratio shows the long term or future solvency of the business. Formula Shareholders Fund Proprietary ratio = -----------------------------Total tangible Assets 11) DEBT EQUITY RATIO The debt-equity ratio is determined to ascertain the soundness of the long-term financial Policies of the company. It is also known as External-Internal equity ra tio. The term external equities refer to total outside liabilities and the term inter nal equities refer to shareholders funds or the tangible net worth. In case the r atio is (outsiders funds are Equal to shareholders funds) it is considered to be q uite satisfactory Formula Total long-term debt Debt-Equity Ratio = -----------------------------32

Shareholders funds 12) SOLVENCY RATIO It is also know as Debt ratio. It is difference of 100 and proprietary ratio. Th is ratio is found out between total assets and external liabilities of the compa ny. External liabilities mean all long period and short period liabilities. Solv ency generally refers to the capacity or ability of the business to meet its sho rt-term and long-term obligations. If a company is in a position to pay its long -term liabilities easily, it is said to possess long-term solvency. If a companys financial position is strong to pay current Liabilities, it is regarded as shor t-term solvency. There are circumstances arising to find out Solvency of the com pany for very short period for immediate solvency. Examples Liquidity Ratio 33 Absolute Liquid Ratio

13) OPERATING RATIO This ratio established the relationship between total operation expenses and sal es. Total Operation expenses include cost of goods, administrative expenses, fin ancial expenses and selling Expenses. Cost of goods sold is also known as direct operation expenses and the rest are known As other operating expenses. Operatio n ratios are generally expressed in percentages. Formula Cost of goods sold + Operating Expenses Operating Ratio = ------------------------------------------------------Net Sales 34

CHAPTER-VI ANALYSIS AND INTERPRETATION 35

COMPARATIVE STATEMENT 36

Table No:5.1 ULTRAMARINE & PIGMENTS LIMITED COMPARATIVE INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH 2005 & 2006 % Absolute particulars 2005 2006 increase or decrease 2006 Sales Less: selling & 32,48,62,648 8,19,04,800 37,43,47,830 12,39,10,600 4,94,85,182 4,20,05,800 15.23 51.29 36,37,26,667 46,30,90,690 99,36,40,23 increase or decrease 2006 27.31 administrative express operating income 37

Add: other income Total income Less: interests Profit before tax Provision for t ax Net profit for the year Interpretation 44,92,565 40,68,06,105 1,61,15,267 2,67,73,785 ------1,47,03,555 39,37,268 49,84,96,558 1,22,58,400 7,35,04,710 41,94,777 5,80,90,883 -5,55,297 91,69,04,533 -3,85,68,67 4,67,30,925 -41,94,777 4,33,87,278 - 12.36 22.54 - 23.93 174.54 ------295.08 The sale of the company during 2005 was 36,37,26,667. In 2006 the sale was 6,30, 90,690. It shows that the company net sale 99,36,40,23 was increased during he p eriod. The operating income of the company during 2005 was increase. In 2005 it was 8,19,04,800 but in 2006 it was 12,39,10,600.The increased amount is 4,20,05,800. The Other income is increase during the year 2005. In 2005 it was 44, 92,565, bu t in 2006 it was 39,37,268. The decrease amount is -5, 55,297, and the increase percentage is -12.23. The income statement finally shows that, the company profit was increased by 295 .08%. 38

Table no:5.2 ULTRAMARINE & PIGMENTS LIMITED COMPARATIVE INCOME STATEMENTFOR THE YEAR ENDED 31ST MARCH 2005 & 2006 Absolute % increase or increase decrease Sch A Particulars Source Of funds Shareholders fund s Share capital Reserves and surplus Loan Funds Secured Unsecured Total 2005 45, 45,12,880 13,28,556 6,95,62,711 7,15,00,000 59,69,04,147 2006 45,45,12,88 0 13,2 8,556 12,36,97,65 3 7,25,00,000 65,20,39,08 9 39 2006 0 0 5,41,34,942 10,00,000 5,51,34,942 decrease 2006 0 0 -77.82 13.99 9.24 B C

D Application of funds Fixed Assets Gross block Less: depreciation 68,11,09,760 27,48,62,752 40,62,47,008 71,52,23,46 4 31,28,79,91 4 40,23,43,55 0 18,86,67,80 5 10,86,124 3,41,13,704 3,80,17,162 -39,03,458 1,15,630 5.01 13.83 -0.96 158.32 E Capital work-in-progress 7,30,37,701 F Deferred tax assets 1,12,62,492 Current assets, loans & advances Accrued income Inventories Sundry debtors Cash and bank balance Loans and advances 59,046 11,25 ,74,217 1,81,40,354 1,77,72,110 77,88,893 15,63,34,620 -1,01,76,368 -90.36 2,13,853 12,63,30,81 7 2,20,36,659 1,46,20,968 97,27,489 17,29,29,78 6 12,86,46, 51 7 4,42,83,269 1,56,58,341 65,20,39,08 9 1,54,807 1,37,56,600 38,96,305 -31,51,142 19,38,596 1,65,95,166 51,49,546 1,14,4 5,620 5,78,60,956 5,51,34,942 262.18 12.22 21.48 -17.73 24.89 10.62 4.17 34.86 78.70 92.37 G Less: current liabilities 12,34,96,971 3,28,37,649 7,35,19,297 59,69,04,147 and provisions Net Current Assets (F-G) Profit and loss account Total 40

Interpretation The current assets were increase during the year 2005. In 2005 the cost was 15,6 3,34,623, but in 2006 the cost was 17,29,29,786. The decreased amount is 1,65,95 ,166 and the increase percentage is 10.62. The current liabilities sufficiently increased during the year 2005. In 2005 the cost was 12,34,96,971, but in 2006 the cost 12,86,46,517. The increased amount is 51,49,546, and the increased percentage is 4.76. All fixed assets have decrease during 2005. In 2005 the cost was 40,62,47,008, b ut in 2006 the cost was 40,23,43,550. The decrease amount is -39,03,458. The reserve was same at 13,28,556 by 2006 compare with previous year. 41

Table no:5.3 ULTRAMARINE & PIGMENTS LIMITED COMPARATIVE INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH 2006 & 2007 % Absolute increase decrease particulars Sales Less: selling administrative expr ess operating income Add: other income Total income Less: interests Profit befor e tax Provision for tax Net profit for the year 2006 46,30,90,690 increase or or decrease 2006 16.45 2007 53,92,93,728 2006 7,62,03,038 & 37,43,47,830 1,23,91,000 39,37,268 49,84,96,558 1,22,58,400 7,35,04,710 41,94,77 7 5,80,90,883 4300,47,853 1,20,87,000 1,19,46,451 55,12,40,451 1,45,77,140 6,36, 66,606 71,63,854 3,91,18,336 5,57,00,023 -30,40,000 80,09,455 5,27,43,893 23,18, 746 -98,38,104 29,69,077 -1,89,72,547 14.88 -102.51 2.14 10.58 18.92 -13.38 70.7 8 -32.66 42

Interpretation The sale of the company during 2006 was 46,30,90,690 . In 2007 the sale was 53,92,93,728. It shows that the company net sale 7,62,03,038 was increased durin g the period. The operating income of the company during 2006 was increased. 28972387 but in 2 004 it was 37137615. percentage of increase was 28.18. In 2003 it was The increased amount is 8165228, and the The Other income is increase during the year 2004. In 2003 it was 2538085, but i n 2004 it was 3691123. The increase amount is 1153038, and the increase percenta ge was 45.43. The income statement finally shows that, the company profit was increase by 24.7 9%. 43

Table no:5.4 ULTRAMARINE & PIGMENTS LIMITED COMPARATIVE INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH 2006 & 2007 Absolute increase decrease Sc h A Particulars Source Of funds Shareholders funds Share capital Reserves and surplus Loan Funds Secured Unsecured Total Application of funds Fixed Assets Gross block Less: dep reciation Capital Work-in-progress Deferred tax assets Current assets, loans & a dvances Accrued income Inventories Sundry debtors Cash and bank balance Loans an d advances F Less: current 2,13,853 12,63,30,817 2,20,36,659 1,46,20,968 97,27,4 89 17,29,29,786 liabilities 12,86,46,517 -13,91,96,849 4,02,25,572 1,85,53,538 2 ,61,88,027 22,41,63,986 10,35,45,734 -12866032 18188913 3932578 16460538 5123420 0 -25100783 -78.78 82.54 26.89 169.22 29.63 -19.51 2006 2007 2007 % or increase decrease 2007 45,45,12,880 13,28,556 12,36,97,653 7,25,00,000 65,20,39,089 71,52,23,464 31,28, 79,914 40,23,43,550 18,86,67,805 10,86,124 45,45,12,880 2,98,91,848 21,44,02,377 7,62,80,250 79,74,42,083 94,55,34,607 35,5 7,46,560 58,97,88,047 8,70,35,784 13,91,96,849 0 28563292 9,07,04,724 37,80,250 145402994 230311143 42866646 187444497 -1016320 21 138110725 0 2149.95 73.33 5.21 22.29 32.20 13.71 46.59 -53.87 12715.93 B C D E and provisions Net Current Assets(F-G) Profit and loss account Total 4,42,83,269 1,56,58,341 65,20,39,089 12,06,18,252 -79,74,42,083 76334983 -172.83 --22.30 44

14,54,02,994 Interpretation The Borrowing was increased during the year 2004. In 2003 it was 119776792 and i n 2004 it was 206492425. The increased amount was 86715633. The current assets were increased during the year 2004. In 2003 the cost was 168 560352, but in 2004 the cost was 173792236. The increased amount is 5231884 and the increased percentage is 3.10. The current liabilities increased during the year 2004. In 2003 the cost was 779 59588, but in 2004 the cost was 100915372. The increased amount is 22955784, and the increased percentage is 29.45. 45

COMMON-SIZE Fixed assets have increased during 2004. In 2003 the cost was 171339877, but in 2004 the cost was 287779800. The increased amount is 116439923, and the percenta ge of increase is 67.96. The reserve was increased during the year 2004. The inc reased amount is 12000390. STATEMENT 46

Table no:5.5 ULTRAMARINE & PIGMENTS LIMITED COMPARATIVE INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH 2005 & 2006 particulars Sales Less: selling administrative express operating income Add: oth er income Total income Less: interests Profit before tax Provision for tax Net p rofit for the year 2005 36,37,26,667 % 100.01 2006 46,30,90,690 % 100.00 80.84 & 32,48,62,648 81,90,48,600 44,92,565 40,68,06,105 1,61,15,267 2,67,73,785 ------1 ,47,03,555 89.32 225.18 1.24 111.84 4.43 7.36 -------4.04 37,43,47,830 1,23,91,0 00 39,37,268 49,84,96,558 1,22,58,400 7,35,04,710 41,94,777 5,80,90,883 2.68 0.85 107.65 2.65 15.87 0.91 12.54 47

Table no:5.6 ULTRAMARINE & PIGMENTS LIMITED COMPARATIVE INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH 2006 & 2007 particulars Sales Less: selling administrative 2006 46,30,90,690 % 100.00 80.84 2007 53,92,93,728 % 100.00 79.74 & 37,43,47,830 4300,47,853 express operating income Add: other income Total income Less: interests Profit b efore tax Provision for tax Net profit for the year 1,23,91,000 39,37,268 49,84,96,558 1,22,58,400 7,35,04,710 41,94,777 5,80,90,883 2.68 0.85 107.65 2.65 15.87 0.91 12.54 1,20,87,000 1,19,46,451 55,12,40,451 1,45,77,140 6,36,66,606 71,63,854 3,91,18,3 36 2.24 2.22 102.22 2.70 11.81 1.33 7.25 Interpretation Net Profits were fluctuating during the study period. In 2002 the sales was 5.90 %, in 2003 it was 5.59%, in 2004 it was 5.30%, in 2005 it was 3.99%, and in2006 was 5.06. Companys Gross profit was decreased in during the study period. During 2002 it was 19.51, in 2006 it was 18.19%. 48

During 2002 to 2006 the cost of sales were gradually declined. This decline may due to fall in raw materials prices and efficiency of the purchasing departments . During 2002 to 2006 other income was increased. During 2002 other income was 0.6 4, in 2006 it was 0.85%. During 2002 to 2006 total income was decreased. during 2002 total income was 10. 96%, in 200 it was 10.70%. during 2002 to 2006 the interests were increased. During 2002 it was 2.49%, in 2 006 it was 3.89%. Table no:5.6 ULTRAMARINE & PIGMENTS LIMITED COMMON-SIZE BALANCESHEET AS ON 31ST MARCH 2005 & 2006 49

Sch A Particulars Source Of funds Shareholders funds Share capital Reserves and surplus Loan Funds Secured Unsecured Total 2005 45,45,12,880 13,28,556 6,95,62,711 7,15,00,000 59,69,04,147 % 124.96 0.37 19.13 19.68 164.11 2006 45,45,12,88 0 13,28,556 12,36,97,65 3 7,25,00,000 65,20,39,08 9 % 98.15 0.39 26.71 15.76 140.81 B C D Application of funds Fixed Assets Gross block Less: depreciation 68,11,09,760 27,48,62,752 40,62,47,008 187.26 75.57 111.71 20.11 3.11 71,52,23,46 4 31,28,79,91 4 40,23,43,55 0 18,86,67,80 5 10,86,124 154.44 67.66 86.98 40.74 0.37 E Capital work-in-progress Deferred tax assets 7,30,37,701 1,12,62,492 F Current assets, loans & advances Accrued income Inventories Sundry debtors Cash and bank balance Loans and advances 59,046 11,25,74,217 1,81,40,354 1,77,72,110 77,88,893 15,63,34,620 0.02 31.10 5.01 4.99 2.14 42.99 2,13,853 12,63,30,81 7 2, 20,36,659 1,46,20,968 97,27,489 17,29,29,78 0.12 27.28 4.76 3.16 2.10 37.34 50

G Less: current liabilities 12,34,96,971 and provisions Net Current Assets (F-G) P rofit and loss account Total 3,28,37,649 7,35,19,297 59,69,04,147 33.96 9.03 20.21 164.11 6 12,86,46,51 7 4,42,83,269 1,56,58,341 65,20,39,08 9 27.87 9.66 3.28 140.80 Table no :5.7 ULTRAMARINE & PIGMENTS LIMITED COMMON-SIZE BALANCESHEET AS ON 31ST MARCH 2006 & 2007 Sch A Particulars Source Of funds Shareholders funds Share capital Reserves and surplus 2006 45,45,12,880 13,28,556 % 98.15 0.39 2007 45,45,12,88 0 2,98,91,848 % 84.28 5.54 B 51

C Loan Funds Secured Unsecured Total 12,36,97,653 7,25,00,000 65,20,39,089 26.71 15.76 140.81 21,44,02,37 7 7,62,80,250 79,74,42,08 3 39.86 14.14 147.87 D Application of funds Fixed Assets Gross block Less: depreciation 71,52,23,464 31,28,79,914 40,23,43,550 154.44 67.66 86.98 40.74 0.37 94,55,34,60 7 35,57,46,56 0 58,97,88,04 7 8,70,35,784 -------175.33 65.97 109.36 16.14 -----E F Capital work-in-progress Deferred tax assets Current assets, loans & advances In ventories Sundry debtors Cash and bank balance Loans and advances 18,86,67,805 10,86,124 12,63,30,817 2,20,36,659 1,46,20,968 99,41,.342 17,29,29,786 27.28 4.76 3.16 2.10 37.34 13,91,96,84 9 4,02,25,572 1,85,53,538 2,61,88,027 22,41,63,98 6 25.81 7.56 3.44 4.96 41.97 G Less: current liabilities and provisions Net Current Assets (F-G) Profit and los s account 12,86,46,517 4,42,83,269 1,56,58,341 27.87 9.66 3.28 10,35,45,73 4 12, 06,18,25 2 -. 19.20 22.37 -----52

Total 65,20,39,089 140.80 79,74,42,08 3 147.87 Interpretation Current assets and total current liabilities have considerably increased during he period. At the end of 2006, the firms current assets are sufficiently more tha n its current liabilities. As such, the firms solvency position appears to be sat isfactory. during 2002 to 2006 the current assets were 59.74%, 49.59%, 37.652%, 33.99% and 32.766%. During 2002 to 2006 the current liabilities were 20.45%, 22.93%, 21.86% , 18.82% and 18.64%. This information show that the company is in solvency posit ion. Reserve funds were fluctuating during the study period. In 2002 it was37.01%, in 2003 it was 35.07%, in 2004 it was 28.43%, in 2005 it was 21.96%, and in 2006 w as 19.80%. This show that the companys profits retain percentage is decreasing ye ar by year. 53

Borrowings were fluctuating during the study period. In 2002 it was34.84%, in 20 03 it was 35.23%, in 2004 it was 44.73%, in 2005 it was 50.03%, and in 2006 48.3 2%. It shows the companys burden is increasing. Fixed assets were considerably increasing during the study period. In 2002 it wa s 69.2%, in 2003 it was 79.52%, in 2004 it was 87.21%, in 2005 it was 82.03%, an d in 2006 77.84%, hence it seems that the company is investing its borrowing mone y in buying fixed assets. CHAPTER VI 54

Trend percentage 160 140 120 100 80 60 40 20 0 36,37,26,667 46,30,90,690 2005 2006 2007 ANALYSIS 6.1 SALES TREND ANALYSIS TABLE 6.1 Year 2005 2006 2007 Sales 36,37,26,667 46,30,90,690 53,92,93,728 53,92,93,728 TREND Trend percentage Chapter :vi Trend percentage 100 127.31 148.27 55

6.2PROFIT AND LOSS ANALYSIS TABLE6.2 Year 2005 2006 2007 Net profit 1,47,03,555 5,80,90,883 3,91,18,336 Tren d percentage 100 395.08 266.05 PROFIT TREND 56

Trend percentage Trend percentage 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1,47,03,555 2005 5,80,90,883 2006 3,91,18,336 2007 Table no 6.3 TREND ANALYSIS AS ON 31ST MARCH 2005-2007 Sch A Particulars Source Of funds Shareholders funds Share capital Reserves surplus Loan Funds Secu red Unsecured Total Application funds of 31st march 2005 2006 2007 Trend % base year 2002 % % % B 45,45,12,880 and 13,28,556 45,45,12,880 13,28,556 45,45,12,880 2,98,91,848 100.00 100.00 100.00 100.00 100.00 2250.0 1 C 6,95,62,711 7,15,00,000 59,69,04,147 12,36,97,653 7,25,00,000 65,20,39,089 21,44,02,377 7,62,80,250 79,74,42,083 100.00 100.00 100.00 177.82 101.21 109.24 308.22 106.71 133.61 57

D Fixed Assets Gross block Less: depreciation Capital progress Deferred tax assets work-in68,11,09,760 27,48,62,752 40,62,47,008 7,30,37,701 1,12,62,492 71,52,23,464 31,28,79,914 40,23,43,550 18,86,67,805 10,86,124 94,55,34,607 35,57,46,560 58,97,88,047 8,70,35,784 -------100.00 100.00 100.00 100.00 100.00 105.01 113.83 99.04 258.32 9.65 E 138.82 129.43 145.18 119.17 1236.9 3 F Current assets, loans & advances Accrued income Inventories Sundry debtors Cash and bank balance Loans advances 59,046 11,25,74,217 1,81,40,354 1,77,72,110 2,13,853 12,63,30,817 2,20,36,659 1,46,20,968 97,27,489 17,29,29,786 12,86,46,51 7 4,42,83,269 1,56,58,341 65,20,39,089 -------13,91,96,849 4,02,25,572 1,85,53,538 2,61,88,027 22,41,63,986 10,35,45,73 4 12,06,18,252 ------79,74,42,083 100.00 100.00 100.00 100.00 100.00 100.00 100.00 362.18 112.22 121.48 82.27 124.48 110.62 104.17 ----123.65 221.75 104.21 336.22 143.49 83.85 and 77,88,893 15,63,34,620 G Less: liabilities current and 12,34,96,971 provisions Net Current Assets 3,28,37,649 (F-G) Profit account Total and loss 7, 35,19,297 100.00 100.00 100.00 134.91 21.31 109.24 367.32 ---133.61 59,69,04,147 Interpretation

From the trend analysis as on 31st March 2005 to 2007, it is observed that the r eserve funds trend percentage in base year 2005 is 100%, in 2006 was 100.00, in 2007 was 2250.90. It shows that the reserve fund is sufficiently increased compa re with every previous year. 58

From the trend analysts it is observed that the application of funds in fixed ass ets and current assets drastically changes during the study period. Fixed assets the cost for the base year is 100% in 2005 but in 2006 percentage was 100.00, i n 2007 percentage was 145.18 these trends show that the fixed assets costs were increased year by year as well as the accumulated depreciation increase year by year in base year 2005 it is 100%, in 2006 is 113.83, in 2007 is 129.43. During 2005 to 2007 the current liabilities were, the percentage in the base yea r 2005 was 100%, in 2006 were 104.17, and in 2007 were 83.85. The applications of funds such as inventories, cash and bank balance and loans & advances have a different trend analysis. It finally the entire trend shows tha t there is upward result in during the study period. 59

CHAPTER VII RATIO ANALYSIS Chapter : VII 7.1 RATIO ANALYSIS 1) 7.1CURRENT RATIO (i) Significance 60

Current ratio provides a margin of safety to the creditors. In a sound business, a current Ratio of 2:1 is considered an ideal one. The ratio of 2 is considered as a safe margin of solvency due to the fact that it the current assets are red uced to half, I instead of 2, then also the creditors will be able to get their payment in full. (ii) Table-7.2 YEAR 2005 2006 2007 CURRENT ASSETS 3,28,37,649 4,45,82,565 12,05,65,607 CURRENT LIABILITES 12,34,96,971 12,79,05,710 10,32,26,334 RATIO 0.26 0.34 1.16 (iii) Interpretation From the above table it is clearly observed that, the current ratios for the 200 5 and 2006were matched with the ideal ratio. During 2006 to 2007 the ratios show that the company was sufficiently able to repay its debts. 61

Chart 7.3 RATIO 1.4 1.2 1 0.8 0.6 0.4 0.2 0 12,34,96,971 3,28,37,649 2005 12,79,05,710 4,4 5,82,565 2006 10,32,26,334 12,05,65,607 2007 RATIO CURRENT RATIO 2) QUICK RATIO (i) Significance 62

An acid test ratio of 1:1 is considered satisfactory as a firm can easily meet a ll current Claims. If the ratio is less than 1:1, that is, liquid assets are les s than current liabilities, the Financial position of the concern shall be deeme d to be unsound. (ii) Table 7.4 YEAR 2005 2006 2007 LIQUID ASSETS 15,63,34,620 17,24,88,275 22,37,91,941 CURRENT LIABILITES 12,34,96,971 12,79,05,710 10,32,26,334 RATIO 1.26 1.34 2.76 (iii) Interpretation From the above table it is clearly observed that, the current ratio during the t hree year Matched with the in 2005 and 2006. During 2005 to 2007 the ratios Show that every one rupee of companys current liabilities it has 1.26, 1.34, & 2.76 of Liquid assets. Hence, its liquidity position is satisfactory. RATIO 3 2.5 2 1.5 1 0.5 0 12,34,96,971 12,79,05,710 10,32,26,334 Chart 7.5 RATIO 15,63,34,620 22,37,91,941 17,24,88,275 2005 2006 2007 63

3.STOCK TURN OVERRATIO (i) Significance 64

A high inventory turnover ratio indicates brisk sales. A high ratio implies good inventory management and an indication of under-investment. It will adversely a ffect the ability of a firm to meet customers demand. At the same time, a higher ratio reflects efficient business activities A low inventory turnover ratio is dangerous. It ventory and over investment in inventory. A low quality goods, stock of Unsaleable and absolute ll business and suggests that some steps should is an indication of excessive in ratio may be result of inferior goods. A lower ratio reflects du be taken to push up sales.

(ii) Table 7.6 YEAR 2005 2006 2007 SALES 36,37,26,667 46,30,90,690 53,92,93,728 AVERAGE INVENTORY 11,25,74,210 12,63,30,817 13,91,96,849 RATIO 3.23 3.66 3.87 (iii) Interpretation From the above table it is clearly observed that, the inventory turnover ratio s hows that 3.23 times in 2005, 3.66 in 2006, 3.87 in 2007, It shows that the stoc k turnover of the company is satisfactory. 65

Chart7.7 RATIO RATIO 11,25,74,210 36,37,26,667 2005 12,63,30,817 46,30,90,690 2006 13,91,96,849 53,92,93,728 2007 4) DEBTORS TURNOVER RATIO (i) Significance 66

It indicates the efficiency of the staff entrusted with collection of book debts . The higher the ratio, the better it is, since it would indicate that debts are being collected more promptly. For measuring the efficiency, it is necessary to set up a standard figure; a ratio lower than the standard will indicate ineffic iency. (ii) Table 7.8 YEAR 2005 2006 2007 SALES 36,37,26,667 46,30,90,690 53,92,93,728 AVERAGE DEBTRES 1,81,40,354 2,20,36,659 4,02,25,572 RATIO 20.05 21.01 13.41 (iii) Interpretation From the above table it is clearly observed that, the company was able to turnov er its Debtors 20.05 times in 2005, 21.01 times in 2006, 13.41 times in 2007. co mpanys debtors turnover was decreasing which is not satisfactory. It shows that th e RATIO 25 20 15 Chart 7.9 10 5 0 1,81,40,354 2,20,36,659 4,02,25,572 36,37,26,66746,30,90,69053,92,93,728 2005 2006 21.01 2007 13.41 RATIO 20.05 67

5) DEBT COLLECTION PERIOD (i) Significance 68

Debtors collection period measures the quality of debtors since it measures the rapidity or slowness with which money is collected from them a shorter collectio n period implies prompt payment by debtors. It reduces the chances of bed debts. A longer collection period implies too liberal and inefficient credit collectio n performance. The amount of receivables should not exceed 90-120 days credit sa les. (ii) Table 7.10 YEAR 2005 2006 2007 DAYS IN A YEAR 360 360 360 DEBTER RATIO 20.0 5 21.01 13.41 DAYS 18.00 17.13 26.85 (iii) Interpretation From the above table it is clearly observed that, the company was able to collec t money Form its debtors, 79 days in 2005, 130 days in 2006 and 150 Days in 2007 . It has been showing increasing situation from 2005 to 2007 as it may due to Ch ange in economic conditions and/or laxity in managing receivables Chart 7.11 69

DAYS 30 20 10 0 DAYS 20.05 360 2005 DAYS 18 21.01 360 2006 17.13 13.41 360 2007 26.85 6) PROPRIETARY RATIO (i) Significance The acceptable norm of the ratio is 1:3. The ratio shows the general strength of the company. If is very important to creditors as it helps them to find out the proportion of 70

shareholders funds in the total assets used in the business. Higher ratio indica tes a secured position to creditors and a low ratio indicates greater risk to cr editors. A ratio below 50% may be alarming for the creditors since they may have to lose heavily in the event of companys liquidation on account of heavy losses. (ii) Table 7.12 YEAR 2005 2006 2007 (iii) Interpretation SHAREHOLDERS FUND 45,45,12,880 45,45,12,880 45,45,12,880 TOTAL TANGIBLE RATIO 3.06 2.80 2.30 ASSETS 14,84,86,681 16,25,79,477 19,77,39,690 From the above table it is clearly observed that, the proprietary ratio during t he three-year is not matching the ideal proprietary ratio. During 2005 to 2007 t he ratios were 3.06, 2.80, and 2.30. This shows that there is no secured positio n to creditors. Chart 7.13 3.5 3 2.5 2 1.5 1 0.5 0 YEAR 0 0 0 2005 0 0 3.06 2006 0 0 2.8 2007 0 0 2.3 71

7) DEBT-EQUITY RATIO (i) Significance 72

As acceptable norms for this ratio is considered to be 2:1 a higher debt-equity ratio allowed in the case of capital-investment industries. A norm of 4:1 is use d for fertilizer and cement units and a norm of 6:1 is used for shipping units. (ii) Table 7.14 TOTAL LONGTURN SHREHOLDERS YEAR 2005 2006 2007 (iii) Interpretat ion From the observation it is clear that the total debt ratio that the companys lenders have Contributed more than owners; lenders contribution was 0.04 times of owners contribution in the year of 2005, 0.05 times in 2006, and 0.09 times in 2 007. DEBT 1,81,40,354 2,20,36,659 4,02,25,572 FUND 45,45,12,880 45,45,12,880 45, 45,12,880 RATIO 0.04 0.05 0.09 Chart 7.15 73

0.1 0.08 0.06 0.04 0.02 0 45,45,12,880 45,45,12,880 45,45,12,880 1,81,40,354 2005 0.04 2,20,36,659 2006 0. 05 4,02,25,572 2007 0.09 Series1 8) OPERATING RATIO (i) Table 7.16 YEAR 2005 2006 2007 OPERATING EXPENSES 32,48,62,648 46,30,90,690 53,92,93,728 SALES 36,37,26,667 46,30,90,690 53,92,93,728 RATIO 0.87 0.80 0.79 74

(ii) Interpretation From the above table it is clearly observed that, the operating ratio has been f luctuating form 2005 to 2007. This has resulted in fluctuation of the profit. Chart 7.17 75

0.88 0.86 0.84 0.82 0.8 0.78 0.76 0.74 36,37,26,6676,30,90,690 4 53,92,93,728 32 ,48,62,6486,30,90,690 4 53,92,93,728 2005 Series1 0.87 2006 0.8 2007 0.79 9) TOTAL ASSETS TURNOVER RATIO 76

(i) Significance This ratio shows the firms ability in generating sales from all financial resourc es committed to total assets. (ii) Table 4.44 YEAR 2005 2006 2007 SALES 36,37,26,667 46,30,90,690 53,92,93,728 TOTAL ASSETS 15,63,34,620 17,24,88,275 22,37,91,941 RATIO 2.33 2.68 24.09 (iii) Interpretation The total assets turnover of 2.33 times in 2005, 2.68 times in 2006, 24.09 times in 2004, which implies that the company generates a sale of Rs.2.33 in 2005, 2. 68 in 2006, 24.09in 2007, against one rupee investment infixed and current asset s together. (iv) Chart 4.11 77

25 20 15 10 5 0 15,63,34,620 17,24,88,275 22,37,91,941 36,37,26,667 46,30,90,690 53,92,93,728 2005 Series1 2.33 2006 2.68 2007 24.09 10) FIXED ASSETS TURNOVER RATIO 78

(i) Table 7.18 YEAR 2005 2006 2007 SALES 36,37,26,667 46,30,90,690 53,92,93,728 NET FIXEDASSETS 40,62,47,008 40,22,69,816 58,97,44,071 RATIO 0.89 1.15 0.91 (ii) Interpretation From the above table it is clearly observed that the companys fixed assets turnov er ratios were decreasing during 2005 to 2007 which show that the company did no t use its fixed assets promptly. (iii) Chart 7.19 79

1.2 1 0.8 0.6 0.4 0.2 0 40,62,47,008 40,22,69,816 58,97,44,071 36,37,26,667 46,3 0,90,690 53,92,93,728 2005 Series1 0.89 2006 1.15 2007 0.91 11) CURRENT ASSETS TURNOVER RATIO (i) Table 7.20 80

YEAR 2005 2006 2007 SALES 36,37,26,667 46,30,90,690 53,92,93,728 CURRENT ASSETS 3,28,37,649 4,45,82,565 12,05,65,607 RATIO 11.08 10.39 4.47 (ii) Interpretation From the above table it is clearly observed that, during 2005 to 2007 current as sets were sufficiently used. (iii) Chart 7.21 81

12 10 8 6 4 2 0 3,28,37,649 4,45,82,565 12,05,65,607 36,37,26,667 46,30,90,690 5 3,92,93,728 2005 Series1 11.08 2006 10.39 2007 4.47 82

CHAPTER-V FINDINGS FINDINGS The company net sales were increased during the three years. 83

The cost of sales was increased due to production increased. The operating expenses were increased during the three years. The operating income was increased during the study period. The depreciation was increased due to fixed assets were increased and used. Company profits were increased year by year due to increase of sales and efficie nt management. Company raised borrowings year by year. Fixed assets were increased during the study period. Net working capital was increased during the last two years. Current & liquidity ratios during the five years matching ideal ratio so companys solvency and liquidly positions were good. Inventory turnover ratio shows norma l fluctuations during 2002 to 2006 due to product is moving in market. Debtors e njoying credit facility more than 150 days. Proprietary ratios during the three years were not satisfactory. 84

Debt equity ratio shows that the lenders have contributed more than owners. During 2005 to 2007 fixed assets were not properly used. 85

SUGGESTION SUGGESTION 86

During the five years study low inventory turnover ratio is found due to product ion was not matching with the demand. So create the demand for the product. Debt should be collected in right time and rectify debt collection department. Apply budget and budgetary control system for each and every item of operating e xpenses Push sales and reduce expenses in order to retain its current positions. Product is not familiar to market so make advertisement in appropriate media. M otivate sales representatives through various promotional activities. 87

CONCLUSION 88

CONCLUSION During the project study period it was observed that the companys financial posit ion as steadily increasing, sales were increasing, and assets were effectively u tilized. The companys borrowings were increasing compare with every previous year hence wh ich should be considered so as to avoid high burden. The project period gave an opportunity to interact with the experienced people a nd gains acquire knowledge about various financial activities. 89

BIBLIOGRAPHY 90

BIBLIOGRAPHY S.NO AUTHOR NAME BOOK NAME 1 Dr.S.N. MAHESHWARI Management Accounting . Edition Published by Sultan Chand & Sons. 2 I.M.PANDEY Financial Management , Vikas Publishing House Private Limited. 3 R.S.N. PILLAI BAGAVATHI Management Accounting . Edition Published by Sultan Chand Company Limited. 4 R.PRASANNA CHANDRA Financial Management, Himalaya Publication Limited, Delhi. Reference sites 91

http://www.moneycontrol.com/financials/ultramarinepigments/balance-sheet/UP02 ht tp://www.ultramarinepigments.net/ http://money.rediff.com/money/jsp/company.jsp? companyCode=16090012 http://economictimes.indiatimes.com/ultramarine-&-pigmentsltd/stocks/companyid-12880.cms http://www.thirumalaichemicals.com/upl.html 92

ANNEXURE 93

PROFIT AND LOSS A/C 94

ULTRAMARINE & PIGMENTS PROFIT AND LOSS A/c particulars Sales Less: selling & administrative express operating income Add: o ther income Total income Less: interests Profit before tax Provision for tax Net profit for the year 2005 36,37,26,667 2006 46,30,90,690 2007 53,92,93,728 32,48,62,648 8,19,04,800 44,92,565 40,68,06,105 1,61,15,267 2,67,73,785 ------1, 47,03,555 37,43,47,830 12,39,10,600 39,37,268 49,84,96,558 1,22,58,400 7,35,04,710 41,94,7 77 5,80,90,883 4300,47,853 1,20,87,000 1,19,46,451 55,12,40,451 1,45,77,140 6,36,66,606 71,63,8 54 3,91,18,336 95

BALANCE SHEET ULTRAMARINE & PIGMENTS BALANCE SHEET S.no Particulars 2005 2006 2007 96

A B C Source Of funds Shareholders funds Share capital Reserves and surplus Loan Funds Secured Unsecured Total Application of funds Fixed Assets Gross block Less: depr eciation Capital work-in-progress Deferred tax assets Current assets, loans & ad vances Accrued income Inventories Sundry debtors Cash and bank balance Loans and advances 45,45,12,880 13,28,556 6,95,62,711 7,15,00,000 59,69,04,147 45,45,12,880 13,28,556 12,36,97,653 7,25,00,000 65,20,39,089 45,45,12,880 2,98,91,848 21,44,02,377 7,62,80,250 79,74,42,083 D E F 68,11,09,760 27,48,62,752 40,62,47,008 7,30,37,701 1,12,62,492 71,52,23,464 31,28,79,914 40,23,43,550 18,86,67,805 10,86,124 94,55,34,607 35,57,46,560 58,97,88,047 8,70,35,784 -------59,046 11,25,74,217 1,81,40,354 1,77,72,110 77,88,893 15,63,34,620 12,34,96,971 3,28,37,649 7,35,19,297 59,69,04,147 2,13,853 12,63,30,817 2,20,36,659 1,46,20,968 97,27,489 17,29,29,786 12,86,46,51 7 4,42,83,269 1,56,58,341 65,20,39,089 -----13,91,96,849 4,02,25,572 1,85,53,538 2,61,88,027 22,41,63,986 G Less: current liabilities and provisions Net Current Assets (F-G) Profit and los s account Total 10,35,45,734 12,06,18,252 -79,74,42,083 97