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A study

On
RATIO ANALYSIS
IN
NAGAR1UNA FERTILIZERS AND CHEMICALS LIMITED
KAKINADA
A Project Report
Submitted Andhra university Visakhapatnam in partial fulfillment of the
requirement for the award of
MASTER OF BUSINESS ADMINISTRATION
Submitted By
R.Padmavathi
(Regd no: 20854100039)
Under the esteemed guidance of
Smt.K.Sri Devi.M.B.A.,
ADITYA INSTITUTE OF P.G STUDIES
(Affiliated to Andhra University)
SURAMPALEM
2008-2010


ADITYA INSTITUTE OF P.G STUDIES
(Affiliated to Andhra University)
Aditya nagar, ADB Road SURAMPALEM-533437, East Godavari District
Phones :( 08852)252243, 252250, cell: 9866576662
CERTIFICATE
This is to certify that the project title RATIO ANALYSIS with reference
to NAGAR1UNA FERTILIZERS AND CHEMICALS LIMITED, At KAKINADA being
submitted by R.PADMAVATHI with Regd no: 208541000! during the period 2008"10 in
partial fulfillment of the re#uirement for the award of the $egree of MASTER OF BUSINESS
ADMINISTRATION in ADITYA INSTITUTE OF P.G STUDIES (Affiliated to Andhra
University) is a record of bonafide wor% carried out by under my guidance and super&ision'
Project Guide Head of the department
Smt.K.Sri Devi.M.B.A. Mr. 1. Nagendra Kumar, M.B.A


DECLARATION
( here by declare that the project wor% entitled A STUDY ON RATIO ANALYSIS
with reference to NAGAR1UNA FERTILIZERS AND CHEMICALS LIMITED
KAKINADA has been prepared by me during the period of 200! )ay and *une partial
fulfillment of the re#uirement for the award of the MASTER OF BUSINESS
ADMINISTRATION OF +ndhra ,ni&ersity'
( also declared that this project is result of my own effort and that it has not seen submitted
to other uni&ersity for the award of any degree or diploma'
Date :
Place : (R.PADMAVATHI)


ACKNOWLEDGEMENTS
( am e-tremely than%ful to Mr. 1. Nagendra Kumar, M.B.A. and /ead of the
department of management studies for their &aluable guidance and consistent super&ision
through of the course of my project'
( am highly than%ful to Smt.K.Sri Devi.M.B.A. 0aculty guidance of +ditya institute of
1'2 3tudies for her timely assistance and support through out the project wor% in the course of
carrying out the project wor%'
( e-press my deep sense of gratitude to )r' 45+T'6+6, 3r')anagar 7Training8 for
their &aluable guidance and consistent super&ision through of the course of my project'
0inally ( would li%e to e-press my deep sense of gratitude to my belo&ed parents as
because with out their support and encouragement ( would not ha&e finished this wor%' ( also
e-press my sincere than%s to my friends and well wishers too'

'
(R.PADMAVATHI)


INDEX
CHAPTER-I 1-11
o (ntroduction
o 9eed :f 3cope of The 3tudy
o :bjecti&es :f 3tudy
o )ethodology :f 3tudy
o ;imitations :f 3tudy
CHAPTER-II 12-20
o (ndustry profile
CHAPTER-III 21-40
o <ompany profile
CHAPTER-IV 41-52
o Theoretical 0rame =or%
CHAPTER-V 53-95
o (nterpretation and analysis
CHAPTER-VI 96-98
o 0indings
o 3uggestions
BIBLIOGRAPHY


CHAPTER - I
Introduction
Need and scope of the study
Objectives of the Study
Methodology of Study
Limitations of Study

INTRODUCTION
0inance is regarded as THE LIFE BLOOD OF BUSINESS ENTERPRISE. 0inance function
has become so important that it has gi&en birth to financial management as a separate subject' 3o. this
subject is ac#uiring uni&ersal applicability' 0inancial )anagement is that managerial acti&ity which is
concerned with the planning and controlling and of the firm>s financial resources' +s a separate acti&ity or
discipline is of recent origin it was a branch of economics till 18!0' 3till today it has no uni#ue %nowledge
of its own. and it draws hea&ily on economy for its theoretical concepts'
The subject of financial management is of immense interest to both academicians and practicing
managers' (t is of great interest to academicians because the subject is still de&eloping. and there are still
certain areas where contro&ersies e-ist for which no unanimous solutions ha&e been reached as yet'
1racticing )anagers are interested in this subject because among the most crucial decisions of the firm are
those which relate to finance and an understanding of the theory of financial management pro&ides them
with conceptual and analytical insights'
+n integral aspect of fundamental analysis in&ol&es performing what many would call ?ratio analysis@' This
in&ol&es calculating a number of different industry standard ratios and comparing them to &arious benchmar%s'
The benchmar%s can be the ratios of other competitors. industry a&erage ratios. or industry ?rules"of"thumb@'
There>s no set procedure for performing ratio analysis because it all depends on the type of company you>re
analyAing B certain industries ha&e industry specific ratios' Regardless. this article will gi&e you an o&er&iew of
some of the standard ratios and what they may tell us about a company'
(n this article (>ll group ratios into four categories used to e&aluate the different facets of a company>s
performance and o&erall condition: li#uidity. operating performance. le&erage. and e#uity &aluation'


SCOPE OF FINANCE MANAGEMENT:
0irms create manufacturing capacities for production for goodsC some pro&ide ser&ices to customers' They
sell their goods or ser&ices to earn profits' They raise funds to ac#uire manufacturing and other facilities'
Thus. the three most important acti&ities of a business firm are:
1roduction
)ar%eting
0inance
+ firm secures whate&er capital it needs and employees it 7finance acti&ity8 in acti&ities that generate returns
on in&ested capital 7production and mar%eting acti&ities8' + business firm thus is an entity that engages in
acti&ities to perform the functions of finance. production and mar%eting' The raising of capital funds and
using them for generating returns to the supplies of funds is called the finance function of the firm'


FUNCTIONS OF FINANCIAL MANAGEMENT
Two significant contribution to the de&elopment of modern theory of financial management are:
Theory of 1ortfolio )anagement de&eloped by /arry )ar%owitA in 1!50. which deals with portfolio
selection with ris%y in&estment' This theory uses statistical concepts to #uantify the ris%"return
characteristics of holding a groupDportfolio of securities. in&estment or assets'
The theory of ;e&erage and 5aluation of 0ire de&eloped by )odigliani and )iller in 1!58' They ha&e
shown by introducing analytical approach as to how the financial decision ma%ing in any firm be
oriented towards ma-imiAation of the &alue of the firm and the ma-imiAation of the shareholders wealth'
Type of Financial Actions:
1' The 0inancial )anagement of trading or manufacturing firms
2' 0inancial )anagement of 0inancial (nstitutions'
' 0inancial acti&ities relating to in&estment acti&ities'


International Finance:
Public Finance:
0unctions are broadly classified into three groups' Those relating to resource allocation. those
co&ering the financing of these in&estments and theses determining how much cash are ta%en out and how
much rein&ested'
Investment decision
Financing decision
Dividend decision
Liquidity decision
I) Investment Decision:
0irms ha&e scarce resources that must be allocated among competiti&e uses' The financial management
pro&ides a frame wor% for firms to ta%e these decisions wisely' The in&estment decisions include not only
those that create re&enues and profits 7e'g' introducing a new product line8 but also those that sa&e money'
3o. the in&estment decisions are the decisions relating to assets composition of the firm' +ssets can be
classified into fi-ed assets and current assets. and therefore the in&estment decisions can also be bifurcated
into <apital 6udgeting decisions and the =or%ing <apital )anagement'


The <apital 6udgeting decisions are more crucial for any firm' +
finance manager may be as%ed to decide about'
1' =hich asset should be purchased out of different alternati&e optionsC
2' /ow to buy an asset or to get it on leaseC
' /ow to produce a part of the final product or to procure it from some other supplierC
4' =hether to buy or not an other firm as a running concernC
5' 1roposal of merger of other group firms to a&ail the synergies of consolidation'
=or%ing <apital )anagement. on the other hand. deals with the )anagement of current assets of the firm'
Though the current assets do not contribute directly to the earnings. yet their e-istence is necessitated for the
proper. efficient and optimum utiliAation of fi-ed assets' There are dangers of both the e-cessi&e wor%ing
capital as well as the shortage of wor%ing capital' + finance manager has to ensure sufficient and ade#uate
wor%ing capital to the firm'
II Financing Decisions:
+s firms ma%e decisions concerning where to in&est these resources. they ha&e also to decide how they
should raise resources' There are two main sources of finance for many firm. the shareholders funds and the
borrowed funds' The borrowed funds are always repayable and re#uire payment of a committed cost in the
form of interest on a periodic basis' The borrowed funds are relati&ely cheaper but always entail ris%'
The ris% is %nown as the financial ris% i'e'. the ris% of insol&ency due to non"payment of interest or non"
repayment of capital amount' The shareholders fund is the main source of funds to any firm' This may
comprise of the e#uity share capital. preference share capital and the accumulated profits' 0irms usually
adopt a policy of employing both the borrowed funds as well as the shareholders funds to finance their
acti&ities' The employment of these sources in combination is also %nown as financial management'
III) Dividend Decisions:
+nother major area of the decision mar%ing by a finance manager is %nown as the $i&idend decisions
which deal with the appropriation of after ta- profits' These profits are a&ailable to be distributed among
the shareholders or can be retained by the firm for rein&estment with in the firm' The profits which are not
distributed are impliedly retained in the firm' +ll firms whether small or big. ha&e to decide how much of
the profits should be rein&ested bac% in the business and how much should be ta%en out in form of di&idends
i'e'. return on capital' :n one hand. paying out more to the owners may help satisfying their e-pectationsC
on the other hand. doing so has other implications as a business that rein&ests less will tend to grow slower'

Rein&estment opportunities a&ailable to the firm.
The opportunity rate of the shareholders'
The Identification of the relevant groups:
The &arious groups which may ha&e sta%es in the financial decisions ma%ing of a firm and
therefore re#uired to be considered while ta%ing financial decisions are:
The shareholders
The debt in&estors.
The employees.
The customer and the suppliers.
The public.
The 2o&ernment. and
The )anagement
Objective of the Financial Decision Making
The following two are often considered as the objecti&es of the financial management'
The ma-imiAation of the profits of the firm. and
The ma-imiAation of the shareholders wealth

Maximization of the Profits of the firm:
0or any business firm. the ma-imiAation of the profits is often considered as the implied
objecti&e and therefore it is natural to retain the ma-imiAation of profit as the goal of the financial manager
also'
The profit ma-imiAation as the objecti&e of financial management has a built in fa&or for its choice' The
profit is regarded as yard stic% for the economic efficiency of any firm' (f all business firms of the society
are wor%ing towards profit ma-imiAation then the economic resources of the society as a whole would ha&e
been most efficiently. economically and profitably used' The profit ma-imiAation by one firm and if
targeted by all. will ensure the ma-imiAation of the welfare of the society' 3o. the profit ma-imiAation as
objecti&e of financial management will result inefficient allocation of resources not only from the point of
&iew of the firm but also for the society as such'
(t ignores the ris%'

The profit ma-imiAation concentrates on the profitability only and ignores the financing aspect of that
decision and the ris% associated with that financing'
(t ignores the timings of costs and returns and thereby ignores the time &alue of money
The profit ma-imiAation as an objecti&e is ague and ambiguous'
The profit ma-imiAation may widen the gap between the perception of the management and that of the
shareholders'
The profit ma-imiAation borrows the concept of profit from the field of accounting and thus tends to
concentrate on the immediate effect of a financial decisions as reflected in the increase in the profit of
that year or in near future'

Maximization of Shareholder Wealth:
This objecti&e is generally e-pressed in term of ma-imiAation of the &alue of a share of a firm' (t is
necessary to %now and determine as to how the ma-imiAation of shareholders wealth is to be measured'
The measure of wealth which is used in financial management is the concept of economic &alue' The
economic &alue is defined as the present &alue of the future cash flows generated by a decision. discounted
as appropriate rate of discount which reflects the degree of associated ris%' This measure of economic &alue
is based on cash flows rather than profit' The economic &alue concept is objecti&e in its approach and also
ta%es into account the timing of cash flows and the le&el of ris% through the discounting process'
Profit Maximization Versus Wealth Maximization:
The objecti&e of profit ma-imiAation measures the performance of a firm by a loo%ing at its total profit'
The objecti&e of ma-imiAation of the shareholders wealth is operational and objecti&e in its approach' +
firm that wishes to ma-imiAe the profits may opt to pay no di&idend and to rein&est the retained earnings.
whereas a firm that wishes to ma-imiAe the shareholders wealth may pay regular di&idends'

THE CHANGING ROLE OF FINANCIAL MANAGEMENT:
)any changes in the contemporary world. financial management has undergone significant changes
o&er the years' The financial management has a &ery limited role in business enterprise' 0inance )anger is
responsible only for maintaining financial records. preparing reports of the companies> status. performance
and arranging funds recorded by company so that it would meet its obligations in time'
0inancial )anager as a matter of act was regarded as specialiAes officers in the company concerned only
with administering sources of funds. he has called upon only when the company e-perimental the problem
relates the financial managers to locate the suitable sources for funds and additional funds' The emphasis on
decision ma%ing has continued in recent years'
0irst there was been increased belief the cost of capital producer the re#uired accurate measurement of
the cost of capital'
3econdly. capital has been in short supplies the old interest in the ways of raising funds'
Thirdly. there was has been a continued managerial acti&ity that has led to re&ealed interests in
ta%eo&ers'
0ourthly. accelerated progress in transportation and communication has brought the countries of the
world close together'
They in turn ha&e stimulated interest in the international finance' 0inding the firm>s appropriate role in
the efforts they sol&e these problems demanding on increasing the proportion of these items of financial
manger'
IMPORTANCE OF FINANCIAL MANGEMENT:
0inance )anagement is of greater importance on the present corporate world' (t is a science of money.
which permits the authorities to go further'
SIGNIFICANCE OF FINANCIAL MANAGEMENT CAN BE SUMMARISED AS:
(t assists in the assessment of financial needs of industry large or small and indicates the internal and
e-ternal resources for meeting them' (t assesses the efficiency and effecti&eness of the financial institution
in mobiliAing indi&idual or corporate science' (t also prescribes &arious means for such mobiliAation of
sa&ings into desirable in&estment channels'

(t permits the management to safeguard against the interest of shareholders by properly utiliAing the
funds procured from different sources and it also regulates and controls the funds to get ma-imiAe use'
OB1ECTIVES OF THE STUDY
This project wor% is aimed to attain the following major objecti&es' The objecti&es are:
To %now about the fertiliAer industry and business acti&ities of 9agarjuna 0ertiliAers and <hemicals
;imited. Ea%inada'
To study the ability of the firm to meet its current re#uirements'
To study the e-tent to which the firm has used its long"term sol&ency by borrowing funds'
To study the o&erall operating efficiency in performance of 9agarjuna 0ertiliAers and <hemicals
;imited. Ea%ianda'
To study the efficiency with which the firm is utiliAing its &arious assets in generating sales'
To suggest guidelines to the company for impro&ing its financial position'




METHOLOGODY OF THE STUDY
The re#uired for this study would be collected through two sources i'e'.
1. Primary Data:
The primary data comprises information obtained by the candidate during discussions with /eads of
$epartments and from the meeting with officials and staff'
2. Secondary Data:
The secondary data has been collected from information through +nnual Reports. 1ublic Report.
6ulleting and other 1rinted )aterials supplied by the <ompany'
(n the present study. 1D4
th
of the total information of time is from primary data and the rest is
from the secondary data'
METHODS
PRIMARY DATA SECONDARY DATA


LIMITATIONS OF STUDY
The study is limited to 90<;. Ea%inadaC it does not relate to any other company of 9agarjuna 2roup or
other firm>s of 0ertiliAer (ndustry'
The smaller time frame for understanding this study is also a significant limitation'
The ratios are calculated on the basis of past dataC these are not future indicators'
The scope of study is limited to the last fi&e years balance sheets'
The analysis is made basing only on the +nnual Reports of 90<;'


CHAPTER II
Industrial Profile

INDUSTRY PROFILE
(ndia has been predominantly considered as an agricultural dependent economy' +griculture plays a &ery
dominant role as more than one"fourth of our 2$1 come from this sector' 9early F0G of population depends
on agriculture for their li&ely"hood' The basic need for an agricultural dependant economy is fertiliAers and
urea is one of the main fertiliAers' (ndia is the second largest manufacturing country in the world'
+ll fertiliAers consist of three main ingredients'
9itrogenH798 "" which promotes general plant growth
1hosphorousH718 "" which promotes flowering
1otassium B 7E8 B which promotes strong roots'
The ingredients are mi-ed in &arious combinations because plants ha&e different needs'
The combinations are indicated by a three number code:
The first number is the percent of nitrogen 798
The second number is the percent of phosphorus 718
The third number is the percent of potassium 7E8
About Fertilizer:
0ertiliAer is simply. plant food' *ust li%e the human body needs &itamins and minerals. plants need
nutrients in order to grow' 1lants need large amounts of three nutrients B nitrogen. phosphorus. and potassium'
These are commonly referred to as macronutrients' 0ertiliAer ma%ers ta%e those three nutrients from nature and
put them into soluble forms that plants can easily use'
:ur world would be &astly different without commercial fertiliAers' 0ollowing =orld =ar ((. new
technologies allowed for the rapid e-pansion of fertiliAer production' <oupled with growing food demand and

the de&elopment of higher"yielding crop &arieties. fertiliAer helped fuel the 2reen Re&olution' Today. the
abundance of food we enjoy is just one way fertiliAers help enrich the world around us'
=hile fertiliAers pro&ide many important benefits that are necessary for our way of life. the improper
use of fertiliAers can harm our en&ironment' =e>&e used the most recent de&elopments in science to study our
products and ma%e sure safety comes first'
Fertilizer:
0uel for growing plants just li%e humans and animals. plants need ade#uate water. sufficient food. and
protection from diseases and pests to be healthy' <ommercially produced fertiliAers gi&e growing plants the
nutrients they cra&e in the form they can most readily absorb and use: nitrogen 798. a&ailable phosphate 718 and
soluble potash 7E8. 4lements needed in smaller amounts. or micronutrients. include iron 70e8. Ainc 7In8. copper
7<u8 and boron 768'
4ach crop year. certain amounts of these nutrients are depleted and must be returned to the soil to
maintain fertility and ensure continued. healthy future crops' 3cientists project that the earth>s soil contains less
than 20 percent of the organic plant nutrients needed to meet our current food production needs' Therefore.
through the scientific application of manufactured fertiliAers. farmers are meeting the challenge of the future.
today'
+nother component of plant $9+ is phosphate. which helps plants to use water efficiently' (t also helps
to promote root growth and impro&es the #uality of grain and accelerates its ripening' +nd potassium.
commonly called potash. is important because it is necessary for photosynthesis. which is the production.
transportation and accumulation of sugars in the plant' 1otash ma%es plants hardy and helps them to withstand
the stress of drought and fight off disease'
Fertilizer Types:
6ecause e&ery crop is different and the soils and weather conditions crops are grown in &ary
dramatically around the world. commercial fertiliAers. which are manufactured from natural sources. come in
many formulations'
<ombining air with hydrogen using natural gas as the feedstoc% ma%es ammonia. the building bloc% for
nitrogen fertiliAers' +mmoniated phosphates. which include mono ammonium phosphate 7)+18 and

diammonium phosphate 7$+18. are made by reacting ammonia with phosphoric acid' )uriate of potash. also
called potassium chloride. is made from mine ores that ha&e been processed to remo&e naturally occurring salts'
+mmonium nitrate is a solid fertiliAer containing appro-imately 4 percent nitrogen that is water soluble
and used in &arious fertiliAer solutions' +#ua ammonia is another nitrogen"based fertiliAer made by combining
ammonia with water' (t contains up to 25 percent nitrogen and is either applied directly to the soil or is used to
manufacture phosphate fertiliAers'
9itrogen solutions are water solutions of ammonia. ammonium nitrate and. sometimes. urea. a solid
fertiliAer containing appro-imately 45 percent nitrogen. and other soluble compounds of nitrogen' 9itrogen
solutions are used in ammoniating super phosphate. the manufacture of complete fertiliAer and for direct
injection into the soil' They &ary in composition and nitrogen content and are sometimes applied under
pressure'
Nitrogen (N):
9itrogen is a part of all plant proteins and is a component of $9+ and R9+ B the ?blueprints@ for
genetic characteristics' (t is necessary for plant growth and chlorophyll production' 9itrogen is the building
bloc% for many fertiliAers' =here does 9 come fromJ 9itrogen is present in &ast #uantities in the air. ma%ing
up about F8 percent of the atmosphere' 9itrogen from the air is combined with natural gas in a comple-
chemical process to ma%e ammonia'
Phosphorus/Phosphate (P):
1hosphorus as a nutrient is sometimes most &aluable to plants when put near the seed for early plant
health and root growth' 1lant root upta%e is dependent on an ade#uate supply of soil 1' 1hosphorus is relati&ely
insoluble in water' The water in most soils must replace all of the 1 in the soil water 2 to times each day to
meet the crop>s demand for 1' 1hosphorus compounds help in directing where energy will be used' 1hosphorus
compounds are needed in plant photosynthesis to ?repac%age@ and transfer energy' 1hosphate is also a
component of $9+. so it is one of the building bloc%s of genes and chromosomes' 1hosphorus is in&ol&ed in
seed germination and helps plants to use water efficiently' =here does 1 come fromJ 1hosphorus occurs in
natural geological deposits' $eposits can be found in the ,'3' and other parts of the world'
Potassium/Potash (K):

1otassium protects plants against stresses' 1otassium protects plants from cold winter temperatures and
helps them to resist in&asion by pests such as weeds and insects' 1otassium stops wilting. helps roots stay in
one place and assists in transferring food' 1otassium is a regulator' (t acti&ates plant enAymes and ensures the
plant uses water efficiently' 1otassium is also responsible for ma%ing sure the food you buy is fresh' =here
does E come fromJ The element potassium is se&enth in order of abundance in the 4arth>s crust'
Through long"term natural processes E filters into the oceans and seas' :&er time. these bodies of water
e&aporate. lea&ing behind mineral deposits' +lthough some of these deposits are co&ered with se&eral
thousands of feet of earth. it is mined as potash or potassium chloride' 1otash ore may be used without
comple- chemical con&ersionC just some processing is necessary to remo&e impurities such as common salt'
FOOD FOR THE GROWING WORLD
Industry at a glance:
3ince 188 the industry has wor%ed to promote the ad&ances in the de&elopment and application of
fertiliAers that ha&e helped to feed a hungry world' The re&olutionary concept of plant nutrition was born from
the disco&ery of the biological role of chemical elements in plant nutrition and the need to feed a growing
population concentrated away from the farm in the rising industrial centers of the world'
6ecause of modern fertiliAers. world food production since 1!K0 has more than doubled. %eeping pace
with the population e-plosion' Today. the fertiliAer industry is poised to help produce the food that will be
needed to feed the world>s projected ! billion people in 2025'
The fertiliAer industry is essentially concerned with the pro&ision of three major plant nutrients B
nitrogen 798. phosphorous 718 and potassium 7E8 B in plant a&ailable form' 4ach nutrient is responsible for
different aspects of plant growth and health'
Fertilizers:
Regulated for #uality and safety li%e other manufactured goods. fertiliAers are regulated for #uality and
safety at the federal and state le&els' 4&ery state in the country. plus 1uerto Rico. has its own fertiliAer
regulatory program. usually administered by the state department of agriculture'

State Regulation:
3tate regulation is concerned with consumer protection. labeling. the protection of human health and the
en&ironment. and the proper handling and application of fertiliAers' 0ertiliAers are regulated at the state le&el
because soil conditions &ary dramatically from state to state across the country' 0or e-ample. the roc%y. thin
soils of 9ew 4ngland are &astly different from the deep. rich blac% soils of the )idwest <orn 6elt' + different
le&el of fertiliAer nutrients in the soil. different crops 7potatoes &ersus corn. for instance8 and different weather
and cropping patterns re#uire state"specific regulation'
Assessing Fertilizer Safety:
0ertiliAer research and de&elopment historically ha&e been focused on ma-imiAing economic crop yields
from gi&en rates of nutrient application' 3ince the ad&ent of the modern en&ironmental mo&ement in the 1!K0s.
research has also been concerned with minimiAing potentially ad&erse human health and en&ironmental effects
from fertiliAer manufacture and application'
+s part of its continuing commitment to safety. in 1!!K' The 0ertiliAer (nstitute initiated a
comprehensi&e safety assessment project to determine the ris%s. if any. of metals in fertiliAer' 3mall amounts of
metals are found in phosphate and potash fertiliAers due to their presence in the mined ore bodies' (n addition to
phosphate and potash products. some micronutrient fertiliAers'
Fertilizers Enrich our World:
(mpro&ements in agricultural efficiency through research and technology increase food output while
protecting the en&ironment and enriching our world in numerous ways'
0ertiliAers feed the growing world' +s the world>s population continues to climb toward an estimated
8'5 billion in 2040. e-perts estimate that food production must increase more than two percent annually to e&en
maintain current diets' <ommercial fertiliAers will be %ey in the fight to feed the growing world'
Fertilizers at work in industry:

+side from their benefits to agriculture. fertiliAer components are central to such industrial process as
semiconductor chip ma%ing. resin manufacture. cattle feed production. metal finishing. the manufacture of
detergents. fiberglass insulation and more. e&en roc%et fuel'
Global Fertilizer Consumption


Major Fertilizer Producing Countries:
)illion metric tons. years ending *une 0L
COUNTRY 2003-04 2004-05 2005-06 2006-07 2007-08
Nitrogen
China
20.2 21.5 22.8 21.5 22.1
India
10.1 10.5 10.9 10.9 10.7
United States
13.8 13.5 11.2 9.9 10.6
Russian
Federation
4.1 4.1 5.0 5.4 5.5
Canada
3.7 3.7 4.1 3.9 3.5
Phosphate
United States
9.0 9.0 8.5 7.3 7.6
China
6.4 6.7 6.4 6.7 7.4
India
3.0 3.2 3.4 3.7 3.9
Russian
Federation
1.9 1.7 2.0 2.3 2.4
ra!i"
1.4 1.4 1.4 1.5 1.4
Potash
Canada
9.0 9.2 8.2 9.2 8.2

Russian
Federation
3.4 3.5 4.0 3.7 4.3
e"arus
3.3 3.4 3.6 3.4 3.7
Source: 0ood and +griculture +ssociation 70+:8 and
The 0ertiliAer (nstitute 7T0(8: 0or countries that report their fertiliAer statistics on a calendar"year basis. data are
shown under the fertiliAer year that begins in that calendar yearC for e-ample. 200 data are under 200D04'
Major Fertilizer Consuming Countries:
(n million metric tons. years ending *une 0L
COUNTRY 2003-04 2004-05 2005-06 2006-07 2007-08
Nitrogen
<hina 2'0 22'! 24'1 22'1 22'5
(ndia 11'0 11'4 11'K 10'! 11'
,nited 3tates 11'2 11' 11'2 10'5 10'!
0rance 2'5 2'5 2'K 2' 2'4
1a%istan 2'1 2'1 2'2 2' 2'2
Phosphate
<hina !' !'4 !'0 8'F 8'!
(ndia 4'0 4'1 4'8 4' 4'
,nited 3tates 4'2 '! '! '! 4'20
6raAil 2'0 2'0 2'0 2' 2'5
+ustralia 1'1 1'0 1'1 1'1 1'2
Potash

,nited 3tates 4'8 4'5 4'5 4'5 4'5
<hina '4 '5 '4 '5 4'0
6raAil 2'4 2' 2'2 2'K 2'F
(ndia 1'4 1'4 1'F 1'K 1'F
Source: 0ood and +griculture +ssociation 70+:8 and
The 0ertiliAer (nstitute 7T0(8'
L0or countries that report their fertiliAer statistics on a calendar"year basis. data are shown under the fertiliAer
year that begins in that calendar yearC for e-ample. 200 data are under 200D04'


CHAPTER - III
Company Profile
COMPANY PROFILE
THE NAGAR1UNA GROUP

:ur founder 3ri E'5'E' Raju 728'11'1!28 B 1K'0K'1!!8 laid the foundation of the 9agarjuna 2roup in
1!F4 with an in&estment of Rs' 50 millions' /e was a &isionary and a professional technocrat entrepreneur who
realiAed the importance of <ore 3ectors to an economy li%e ours' /e has guided the group with his philosophy
SERVING SOCIETY THROUGH INDUSTRY
9agarjuna 0ertiliAers and <hemicals ;imited 790<;8 is the first gas based fertiliAer factory in 3outh
(ndia' The plant is based on the latest fertiliAer technology from )Ds' 3namprogetti. (taly for ,rea process with
an installed capacity of 1500 )tDday for each unit' The ammonia process is based on technology from )Ds'
/aldor Topsoe. $enmar% with an installed capacity of !00 )TDday per each unit'
The feed stoc% for unit B ( is natural gas and feed stoc% for ,nit B (( is 92D9aphtha' The current
consumption of natural gas is 2'15 million standard cubic meters per day and 500 )T of 9aphtha per day' The
natural gas is being recei&ed through pipe lines from Tatipa%a situated !2 Ems away from the factory and is
mar%eted by )Ds 2as +uthority of (ndia ;imited' 9apththa is being supplied by )Ds /1<;' The water
re#uirement of K'0 )illion 2allonsDday is recei&ed from 3amal%ot 3ummer Reser&oir through two pipelines'

Finance:

The total cost of the e-isting comple- is Rs' 215K crores 7Rs' 118K crores for ,nit"( and Rs' !F0 crores
for ,nit B ((8' This consists of loan of Rs' 1.1K2 crores 7Rs' 515 crores for ,nit"( and Rs' K4F corores for ,nit B
((8 sanctioned by ($6(. (0<(. (<(<(. ,T(. ;(<. 2(< and also 6an%s' The foreign e-change component of Rs'
F81'0F cores was met by the (ndian 0inancial (nstitutions li%e ($6(. (0<( M (<(<( and also by (talian 6uyers
credit' The public and promoters
subscribed the e#uity portion of Rs' 2'12 crores' The internal reser&es of Rs' 2 crores were utiliAed for
construction of ,nit B (('
LIVING IN HARMONY WITH NATURE - NFCL`S CONTRIBUTION TO ECOLOGY
4n&ironmental protection is an a&owed corporate philosophy and the plant is built on the principle of
Aero"effluent discharge and is totally eco"friendly' 90<;>s aim is to maintain ecological harmony. which is
NATURE`S INVALUABLE AND BEAUTIFUL GIFT TO MANKIND )an can li&e in harmony with the
en&ironment only when man%ind is guided by respect for the )other 4arth and all li&ing things' 9agarjuna
0ertiliAers and <hemicals ;imited belie&e that (ndustry should e-ist in harmony with nature' (n pursuance of
the corporate &ision. and as a humble contribution to the )other 9ature. the complete ecological system in and
around the factory has been changed by establishing a K.V.K.RA1U SUNDARAVANAMU in an area of F4F
acres surrounding the <omple-'
The entire area has been co&ered with 4.50.000 plants consisting of 1F0 species. transforming a once
highly saline marshy area de&oid of any &egetation into a lush green arboreal par%' The establishment of 1 E)
wide E5E 3undar&anam is an integral part of o&erall natural ecological system consisting of ele&en water
bodies for fish. habitat for animal life and sanctuary for both indigenous as well as migratory birds with the
factory nestled in the most natural and idyllic surroundings created with dedication'
+n integrated 4n&ironmental )anagement 1lan 74)18 has been incorporated in the basic design itself to
ensure strict adherence to (nternational 3tandards' The in&estment on pollution control e#uipment in the 1lant
is close to Rs' 110 crores of capital in&estment and recurring e-penditure of Rs K crores being spent annually for
operating and maintaining the e#uipment'
MAIN FEATURES OF ECO-SYSTEM:

A forestation:
F40 acres of area has been planted with 4'5 la%h saplings of 1F0 species' =ea% areas ha&e been planted
with selected species based on criteria li%e tolerance to salinity. a&ailability from local sources and their ability
sur&i&e with least maintenance' + full"fledged nursery with mist chamber and sprin%ler irrigation system has
been de&eloped for supply of plants to a forestation programme'
Animal Enclosures:
+ deer par% with spotted deer has been set up in an area of si- hectares with chain"lin% fence on all
sides' 3eparate enclosures for birds. rabbits and certain other animals are made a&ailable' 3ome of these
animals li%e jungle cat. fo-. jac%als. mongooses. s#uirrels. bats. sna%es. and turtles are also being let out freely
in this eco"system as a part of our animal conser&ation programme'
Use of Treated Effluent:
The total treated effluent generated from the factory is being utiliAed through a networ% of o&er 1F E)
of 15< pipeline for sustenance of the eco"system to show the purity le&els of the effluents and the technological
efficiency of the plant e#uipment'
Awareness Programme:
+s a part of 90<;>s sincere endea&or to bring awareness about the benefits of cleaner en&ironment on
the general standards of life. company has started ?2R449(92 T/4 R:+$3@ of Ea%inada in 1hases' +s a
part of this programme. flowering trees were planted on either side of the 4 %m length of roads from 6hanugudi
*unction to 9agamallithota and from 9agamallithota to 90<;' This programme is being e-tended to further
areas in phases'

VALUES STATEMENT OF NFCL COMMITMENT

=e the +ssociates of 90<; are committed to continuously e&o%ing customer delight through constant
re&iew and monitoring and deli&ering proacti&e &alue added solutions' =e are also committed to stri&e for
satisfaction of all sta%eholders in a balanced manner through sustainable growth and profitability
Excellence:
=e shall continuously stri&e for 4-cellence in all dimensions of the <ompany through teamwor%.
creati&ity and other means'
Ethics:
=e shall stri&e for wholesome business relationships by adhering to the principles of trusteeship. fair
play and transparency in all our dealings that we shall practice a wor% cultural. which is performance dri&en and
conduci&e to in pro&ing discipline. accountability and depth of character. team spirit and honesty in all our
personal and professional relationships'
=e shall build a learning organiAation where creati&ity. inno&ation. entrepreneurship and %nowledge
sharing are encouraged and fostered acti&ely
Concern:
=e consciously recogniAe that the de&elopment of associates is ine-tricably lin%ed to the sustainable
growth and profitability of the organiAation' Therefore. mutual care and concern between the associates and the
organiAation shall be our abiding &alue'

NFCL`S VISION STATEMENT

SERVING SOCIETY THROUGH INDUSTRY
?0or close to two decades. we at 90<; ha&e predominantly been in the business of manufacturing and
mar%eting ,rea. a segment of the plant 9utrition business space' 2i&en our cumulated e-perience and strengths
in understanding the farmer. the agriculture. &arious initiati&es ta%en in the past. the e-posure of (ndian
agriculture to global economy and therefore the need for (ndian farmers to be globally competiti&e. ha&e
realiAed the need to pro&ide inno&ati&e and comprehensi&e 1lant 9utrition 3olutions'
?The leadership we refer to in our 5ision 3tatement is in terms of pro&iding inno&ati&e and creati&e
solutions'@
NFCL`S MISSION STATEMENT
=e shall:
" 1ioneer transformation in the approach to plant nutrition
" $eli&er holistic plant nutrition solutions to the farmers
" 6e the most preferred organiAation to be associated with
1ioneer transformation in the approach to plant nutrition we shall de&elop crop. site and stage specific
wholesome plant nutrition solutions' 90<; shall focus on all necessary initiati&es towards this B be it
manufacturing technology. regulatory. logistics and using a mi- of se&eral sciences and s%ills' The most
preferred organiAation to be associated with in the process of pro&iding these
solutions. 90<; shall delight all the sta%eholders B employees. in&estors. suppliers. customers and society at
large' The sta%eholders would prefer to be associated with us not only for the higher &alue we offer. but also
shall cherish their relationship with us due to the way we deal with them B with full commitment. responsibility
and accountability'
EMPLOYEE FOCUS:

90<;>s aim to ha&e the most satisfied employee base by the turn of the century through its commitment
to 1ersonal and professional de&elopment of the indi&idual'
Rewarding teamwor%. inno&ation and #uality beha&ior
Through job satisfaction
<reating and sustaining a close"%nit family culture wherein e&ery indi&idual e-perience a sense of
belonging'
Marketing:
90<; is operating in +ndhra 1radesh. :rissa. =est 6engal. )aharastra. Earnata%a. 1ondicherry
7Nanam territory8' + professional team. with a wide range of products. that include ,rea. traded fertiliAers
7$+1. ):1. <omple- fertiliAers8. )icro"nutrients. 1esticides. :rganic fertiliAers and 6io"1esticides. has ta%en
90<; &ery close to the farmers and made NAGAR1UNA a household name among the farming community
Eeeping pace with the changes in agricultural practices 90<; has de&eloped organic"fertiliAers and bio"
pesticides with support from 9+R$(' + new concept in fertiliAers i'e'. <ustomiAed 0ertiliAer 2ranules 7<02s8
has been de&eloped and the product is in trials'
90<;>s $e&elopment acti&ities focus on imparting training to farmers and dealers on the latest pac%age
of practices in &arious crop sand technology transfer' Training programs are carried out both on campus at
E5E. Ea%inada and off"campus at &illages and towns' + =ell"e#uipped and trained de&elopment tem
organiAes the programs using audio"&isual &ans. jeeps. slide projectors'

PERFORMANCE HIGHLIGHTS

YEAR PRODUCTION SALES
SALES
TURNOVER
INCLUDING
SUBSIDY
NET
PROFIT
AFTER TAX
Ammonia (MT) Urea (MT)
MFG Urea
(MT)
(Rs. Corers) (Rs. Corers)
1992-93
(8 months)
18802F 0845 2515!! K4'48 2'11
1993-94 444!8 5!121 5!8F8F K0K'51 12F'8K
1994-95 8K5F KF514! K5!0!4 84'14 1!2'8!
1995-96 41!0 F0805! K8!FKF 882'2F 221'18
1996-97 412K!4 F1K!10 K!5154 !22'4! 155'24
1997-98 401K2F K8!K48 K828K F!5'88 122'10
1998-99 K!!110 1212K0F 1205FK 1214'54 14'F
1999-00 F51542 12!F510 1281!5 145'!K 11'50
2000-01 F!K024 1K4F!4 1244!F 1215'52 4K'5
2001-02 F0K528 1221!44 121FK2! 10K2'K! !'F0
2002-03 K8!2K 118F25! 1101FFK F48'K5 5F'4F
2003-04 F1254 1254KF 12K5FK 11F8'2K F4'KF
2004-05 F2525 182!5 125KF04 185'K 85'5
2005-06 F884F1 1F!220 1!K!2F 14F'8 KK'85
2006-07 F5K814 124054 11085F 184'2 1'F1
2007-08 FF2584 1544!0 1802 221'4 22'4!

CUSTOMER FOCUS:

(n recognition that business is based on #uality and integrity. 90<;>s aim to ha&e the most satisfied
customer base by enhancing farmer producti&ity through forward integration on the one hand. and through
catering to industrial needs on the other' ,nto this end. 90<; shall:
1roduce high #uality products that gi&e &alue for money
:ffer. both products and ser&ices
(nno&ate to satisfy the real needs of customers
4ngage in fair. open and ethical practices
SHAREHOLDER FOCUS
90<; aim to %eep its shareholders satisfied by:
$eli&ering the best long"term return on in&estment amongst all companies in the (ndian agri"business
industry'
<ontinuous growth and e-cellence in business performance'
AWARDS AND HONOURS
?41(<@ +ward for +nti"1ollution measures ta%en by the (ndustry by 4n&ironment 1ublic interest
<ommittee. Ea%inada in 1!!'
2ood /ouse%eeping +ward for 1!!4 by 9ational 3afety <ouncil. +'1' <hapter'
6est (ndustrial <anteen +ward for 1!!4 by 9ational 3afety <ouncil. +'1' <hapter'

(ndian <hemical )anufacturer>s +ssociation 7(<)+8 +ward for ?4n&ironmental <ontrol 3trategies and
3afety in <hemical 1lants@ for the year 1!!4'
+ward of )erit for 1!!4"!5 by 9ational 3afety <ouncil. ,'3'+' for completing 2 )illion +ccident
0reeman /ours'
(3: !002 <ertification from 6ureau 5erities Ouality (nternational 765O(8. 9etherlands. in 1!!5'
2olden 1eacoc% 9ational Ouality +ward by (nstitute of $irectors. 9ew $elhi. (ndia for 1!!5'
6ritish 3afety <ouncil>s 9ational 3afety +ward for the fi&e consecuti&e years. 1!!4. 1!!5. 1!!K. 1!!F M
1!!8 and also for the year 2000'
?Raji& 2andhi 1arti 6hoomi )itra@ +ward for 1!!4"!K by =asteland $e&elopment 6oard. 2o&ernment of
(ndia'
9ational 3afety +ward for 1!!K by 9ational 3afety <ouncil. ,'3'+'
+ward for (nno&ati&e and 1urposeful 1rogramme for 3ocial 1rogress for the year 1!!K by (ndian <hemical
)anufacturer>s +ssociation 7(<)+8. )umbai'
)erit +ward for 1!!F and 1!!8 by Royal 3ociety for the 1re&ention of +ccident 7Ro31+8
?6est =or%ers@ =elfare 7including 0amily 1lanning8 effort by an (ndustrial or <ommercial ,nit in the
3tate@ for the year 1!!F"!8 by +ndhra 1radesh <hambers of <ommerce M (ndustry 70+1<<(8
2olden 1eacoc% 9ational +ward for en&ironmental )anagement by =orld 4n&ironment 0oundation for
the year 1!!8

1arya&arana 1arira%sha% +ward by Rotary (nternational at 5isa%hapatnam for the year 1!!8
5+9+)(TR+ B 1!!! from 2o&t'. of +'1' for $e&eloping and )aintaining 2reenbelt'
+chie&ed 84G in :/ M 3 B +udit conducted by 6ritish 3afety <ouncil. ,'E' in *anuary 2000'

6est 3chool (ndustry ;in%age +ward 2000 by 9<4RT B an +utonomous :rganiAation of 2o&ernment of
(ndia B $ecember 2000'
6est 4n&ironmental )anagement 1lan B 2000"01 in 5iAag Ione by +ndhra 1radesh 1ollution <ontrol
6oard. 5isa%hapatnam'
9ational 3afety award for 2000"01 from 6ritish 3afety <ouncil. ,'E'
6est 4n&ironmental (mpro&ement 4ffort by (ndustries located in the 3tate in 2000"2001 from 0ederation of
+'1' <hamber of <ommerce and (ndustry. +ndhra 1radesh'
6ronAe +ward for :ccupational 3afety for the year 2001 by Royal 3ociety for the 1re&ention of +ccident
7Ro31+8. ,E
<ommendation Trophy jointly gi&en by 9ational 3afety <ouncil. +'1' <hapter M $irector of 0actories.
+'1' for (mplementing :/3+3 18001 in )arch 2001'
P4n&ironmental 1rotection +ward> in 9itrogenous 0ertiliAer plants category for the year 2001"02 from
0ertiliAer +ssociation of (ndia. 9ew $elhi'
?1erfect Record@ in :ccupational 3afetyD/ealth +ward 1rogramme for operating two million employee
hours without occupational injury or illness for the period from 10'10'01 to 1'11'02 from 9ational 3afety
<ouncil 793<8 of ,3+'
Certificate of Appreciation for implementing the process safety management system 713)38 by national
safety council. +'1' <hapter. /yderabad in 2008

OTHER GROUP COMPANY / INSTITUTION
Nagarjuna Agrichem Limited
Nagarjuna Palma India Limited

Nagarjuna Agricultural Research & Development Institute
KVK Raju International Leadership Academy
Nagarjuna power Corporation Limited
Nagarjuna Haifa India Limited
Nagarjuna Oil Corporation Limited
Bijam Biosciences Limited
Nagarjuna Foundation
FUTURE PLANS OF THE COMPANY
18 To impro&e the capacity utiliAation and energy efficiency through technology up gradation'
28 3witching o&er to 100G natural gas as raw material instead of 9apatha in +mmonia plant ((
8 To continue to impro&e en&ironmental performance under the framewor% of (3: 14000 B 4)3'
48 To enhance the standards in the present #uality management system 7(3: !0028 by adopting the (3:
!001"2000 re&ision'
58 To widen the scope and offer technical ser&ices to &arious e-ternal agencies including o&ers as a
e-citement'
Diversification:
9agarjuna 2roup is on the threshold of major growth phase' 9agarjuna>s aim is not just to meet the
challenges of change. but to be the leaders in all the businesses that we are in namely. +gri (nputsD:utputs.
4nergy 3ector and Refinery' 9agarjuna 2roup will thus ha&e significant presence in the core sectors of the
economy. which will ha&e a multiplier effect on the industrial and socio"economic de&elopment of the
country'
90<; is also underta%ing se&eral acti&ities for the de&elopment of the surrounding &illages by pro&iding
free medical. educational and drin%ing water facilities besides supporting the mentally"retarded children'
The Ea%inada facility of 9agarjuna 0ertiliAers and <hemicals ;imited 790<;8. has achie&ed a record
,rea production of 11'1G. producing a total of 1'F! la%h )etric Tones of ,rea during 200F"08' The 1lant
has repeated this phenomenal feat. producing ,rea more than its capacity. for the consecuti&e second year'

90<; produces ,rea in two units' =hile the ,nit one 1roduced F.0.K45 )etric Tones. unit two also
surpassed its capacity by producing K.F5.5F1 )etric Tones ma%ing this phenomenal feat repeated during 200F"
08 too' Total capacity of the plant is 11.!4.K00 )etric Tones'
The 1lant also has achie&ed this record production at a &ery optimal utiliAation of energy of 5'KK2
)c<allD)T of ,rea against (nternal target of 5'KF )c<allD)T. which is already much lower than the standard
0ertiliAer (ndustry <oordination <ommittee>s 70(<<8 norm of 5'F12 )c<allD)T' 90<; has one more reason to
celebrate that full production of ,rea i'e'. 1'F! la%h )etric Tones has been dispatched to the farmers'
+long with the production. 90<; has also done well in sales and distribution wings' (ts products.
which include )ahaAinc. Iinc 3ulphate and Aeta specialty fertiliAers besides ,rea. ha&e been sold out during
200F"08'
NFCL WINS GAS CONSERVATION AWARD FROM GAIL:
0ertiliAer facility of 9agarjuna 0ertiliAers and <hemicals ;imited in Ea%inada has been selected for the
Award for Excellence in Natural Gas Conservation` in the P0ertiliAers 3ector> category for it>s outstanding
contribution to natural gas conser&ation in the country during 200K"0F'
This annual award has been instituted by 2as +uthority of (ndia ;imited 72+(;8 as a recognition of the
e-cellent wor% done by the organiAations in 2as <onser&ation' 2+(; has been conducting a nation"wide
9atural 2as <onser&ation 1rogramme. meant to spread the word of conser&ation of this precious natural
resource' +ll the natural gas using industries li%e power. fertiliAer. steel. sponge iron. transport. glass. ceramic
and petrochemicals. would be considered for this award'
This is the 4
th
achie&ement of 90<; for it>s e-cellence in different departments during 2008' these
includeC 5 star rating in :'/ M 3 +udit from 6ritish 3afety <ouncil. ,E' <ommendation +ward in ?;eadership
and 4-cellence +wards in 3afety. /ealth M 4n&ironment 73/48 200K@. by <onfederation of (ndian (ndustry.
3outhern Region. <hennai' Re"certification for (3: !001:2000 by 6ureau 5erities Ouality (nternational
765+(8 for #uality management systems' +nd 90<; also recei&ed 4n&ironment 1rotection +ward from
0ertiliAers +ssociation of (ndia'
90<; wins the prestigious 4n&ironment 1rotection +ward from the 0ertiliAer +ssociation of (ndia
9agarjuna 0ertiliAers and <hemicals ;imited 790<;8 the flagship company of the 9agarjuna 2roup has won

the prestigious 0+( 70ertiliAer +ssociation of (ndia8 4n&ironment 1rotection +ward in the 9itrogenous fertiliAer
plants category for the year 200K"0F' 90<; had won the same award for 200"04 also' 2oing much beyond
the statutory re#uirements of law for en&ironment protection. 90<; has implemented a comprehensi&e
protection plan in its plant at Ea%inada' 90<; has been widely ac%nowledged for its <ommitment to the
betterment of 4n&ironment and this award further adds to the long list of recognition'
90<; has also won two more awards from 0+(' + &ideo film titled ?The 3ugarcane@ produced by
90<; was adjudged Runner-up in the Annual Video Film Competition by FAI for the year 2006-07. The
&ideo film has been de&eloped with the objecti&e to transfer technology and to enhance the yield of sugarcane
farmers in +ndhra 1radesh' 0or 90<;. this is the second consecuti&e year of winning in this category' +n
article titled ?0rom 1roducts to 3olutions B 4-ploring :pportunities@ published in the 3eptember 2008 issue of
the (ndian *ournal of 0ertiliAers was awarded the Second prize in the category of Shriram Award for Best
article in Marketing.
Bureau Verities Quality International (BVQI) awards re-certification of ISO 9001:2000 for
Nagarjuna Fertilizers and Chemicals Limited.
9agarjuna 0ertiliAers and <hemicals ;imited 790<;8 has been re"certified of (3: !001:2000 by 6ureau
5erities Ouality (nternational 765O(8. for its Ouality )anagement 3ystems' The 0lagship <ompany of the
9agarjuna 2roup has already been an (3: !001:2000 organiAation since 1!!5' This re"certification. which is
&alid up to 0ebruary 2008. is only an e-tension of recognition for company>s e-cellent #uality management
systems'
65O( team has done the re"certification audit during 0ebruary at 90<; plant Ea%inada' +fter
conducting audit in 1lant :perations and +rea )ar%eting :ffices 65O( sent a certificate to 90<; in which it
mentioned ?Ouality )anagement 3ystem of the 9agarjuna 0ertiliAers and <hemicals ;imited has been audited
and found to be in accordance with the re#uirements of the standards (3: !001:2000@'
65O( is today the most widely recogniAed certification body in the world. offering solutions in the %ey
strategic fields of companies operations: Ouality. /ealth and 3afety. 4n&ironment and 3ocial Responsibility' (t
is recogniAed by more than 0 national and international accreditation bodies across the world to deli&er (3:
!001 certification'

Nagarjuna Fertilizers and Chemicals Limited Awarded the prestigious 5 star Rating by the British Safety
Council, U.K:
9agarjuna 0ertiliAers and <hemicals ;imited 790<;8. the flagship company of the 9agarjuna 2roup has
been awarded the highly co&eted 5 star rating by the 6ritish 3afety <ouncil. ,'E' +fter a detailed /ealth and
3afety )anagement 3ystem +udit conducted during the month of *anuary 2008. the 6ritish 3afety <ouncil has
awarded an P4-cellent> rating 73core of !2'!G8 to 90<;>s manufacturing facility at Ea%inada' The audit
co&ered eight areas of 90<;>s management systems leading to best practices. 0ire <ontrol 3ystems.
)easurement and <ontrol 3ystems. =or%place implementation. 5erification. 6est practice and <ontinuous
impro&ement'
The 6ritish 3afety <ouncil 763<8 is one of the world>s leading occupational health. safety and en&ironmental
organiAations' 63<>s 0i&e 3tar /ealth and 3afety )anagement 3ystem +udit is a benchmar% for best practices'
(t pro&ides a detailed e-amination of the organiAation>s current practices. and gi&es a comprehensi&e report and
plan for implementing. monitoring and achie&ing continuous impro&ement' (t is based on the 6usiness
e-cellence )odel and goes beyond /3728K5 and :/3+3 18001 to measure how far an organiAation has gone
towards achie&ing best practice'
Information Technology & Communications Department, Government of Andhra Pradesh signs MoU
with IKisan Limited
To provide agriculture related information and services through Rajiv Internet Village Centers /
(RSDPs/Rural eSeva Centers)
(n its efforts towards 2rameen 5i%as aimed at alle&iating rural po&erty and ensuring agricultural
de&elopment. the (nformation Technology M <ommunications $epartment. 2o&ernment of +ndhra 1radesh
today signed a )o, with (%isan ;imited to pro&ide agricultural related information and ser&ices to the &ast
farming community of the state through Raji& (nternet 5illage <enters 7R3$1sDRural e3e&a <entres8'
The (nformation Technology and <ommunications $epartment has already set up 1200 %ios%s spreading
across the state under the Rural 3er&ice $eli&ery 1oint 1roject 7R3$18 in rural areas to ser&e as centers of e"
commerce and information dissemination' (%isan ;imited has partnered with the (nformation Technology M
<ommunications $epartment to pro&ide agriculture information software and ser&ices in these %ios%s' The

modules will be in Telugu and &oice enabled addressing the needs of rural population comprising mainly of
farmers' The %ios% operators will be pro&ided training by (%isan ;imited enabling them to
effecti&ely utiliAe the software and other applications for the benefit of agriculturists'
(%isan ;imited is a pioneer in +gri"1ortals in (ndia' + 9agarjuna 2roup initiati&e. (%isan'com is a
comprehensi&e +gri 1ortal addressing the (nformation. %nowledge and business re#uirements of &arious players
in the +gri arena &iA'. 0armers. Trade <hannel partners and +gri (nputD:utput companies' ;e&eraging
(nformation Technology and e-tensi&e field presence. (%isan is positioned as an (nformationD:utput companies'
;e&eraging (nformation Technology and e-tensi&e field presence. (%isan is positioned as an
(nformationDEnowledge e-change and an e")ar%etplace' +n integrated agriculture group. 9agarjuna has core
competencies in the fields of plant nutrition. plant protection. irrigation and farm ser&ices'
Our Values:
$eli&er solutions that will please our customers deli&er returns that moti&ate out in&estors ta%e actions
that strengthen us and inspire the best in others 7by setting an e-ample in relationship. integrity. honesty.
humility and hard wor%8
6y understanding the deep and fundamental needs of our people. our customers our (n&estors and our
4cosystem 7+lliances. <ommunity and 4n&ironment8'
The Group:
0ounded in 1!F by 3hri E'5'E' Raju with a modest in&estment of ,3Q 2 million. the 9agarjuna
2roup Today is a prominent industrial house in (ndia with an asset base of ,3Q 2'5 billion'
1974: 6irth of a business group that pioneered se&eral core sector enterprises in the coming decades'
3tarting with manufacturing steel. 9agarjuna 3teels ;imited was launched'
1985: =ith focus on agriculture input business started plant nutrition business with 9agarjuna
0ertiliAers and <hemicals ;imited
1992: 0orayed into the <rop 1rotection 6usiness with (n&estments in 1esticide 0ormulations
manufacturing followed by Technical 2rade )anufacturing in the year 1!!4'

1994: )icro irrigation business started to address the irrigation problems of farmers li&ing in water and
energy scarce regions'
1995: 5entured into 4nergy 3ector' 4ntered into power generation by setting up 9agarjuna 1ower
<orporation ;imited'
1997: 4ntered into petroleum by setting up 9agarjuna :il <orporation ;imited'
<onsolidating its core acti&ities. today the 2roup>s major operations co&er +gri and 4nergy sectors



The logo e-emplifies the 2roup>s inner
strength through the circles. which stand for
the core &alues of the organiAation &iA'.
concern. commitment. #uality and integrity
towards its sta%eholders &iA'. customers.



The new corporate logo of the 9agarjuna
2roup symboliAes a dynamic and &alue"
based organiAation. actualiAing the concept of
Trusteeship'
employees. in&estors and community' The
central circle symboliAes the 3un. the source
of prime energy for the solar system' The
fi&e circles also symboliAe the fi&e elements
of the ,ni&erse and the spirit of continuity'
The triangle represents the planet )ars'
)ars. from time immemorial has symboliAed
prosperity. success and abundance of energy'
The triangle in the logo represents the
upward flow of perennial energy towards the
mission of the group ?3er&ing 3ociety
through (ndustry@
WELFARE MEASURES IN NFCL:
(t has ta%en se&eral welfare measures to impro&e the general wor%ing conditions' They are gi&en below'
+'<' 0acilities

$rin%ing =ater 0acilities
;oc%ers gi&en to employees for %eeping their belongings
+nnual )edical 4-amination
0irst +id 6o-es at se&eral locations
<ultural +cti&ities
;ibrary 0acilities
3chool for children of 90<; employees
4mployees 3tate (nsurance 0acilities
,niform to all 4mployees
2roup>s sa&ings lin%ed (nsurance 3cheme
1rotecti&e wear li%e helmets
Transport facilities
<anteen facilities
/ousing ;oan facilities

NFCL OB1ECTIVES:
1erformance management
/igh performance potential
(ndi&idual growth potential
6elief in Nouth
/igh Result :rientation
;aw procedure orientation
4ntrepreneurial $e&elopment
$istinct 9agarjuna 2roup 4thos
/igh sense of respect for &alue of time and money /armonious employee relations
$e&elopment of /uman Resources on a continuous basi
/ighest importance to human &alues
:bjecti&es assessment of indi&idual performance
$isciplined beha&ior of all employees
6elief in system management
6elief dynamism
6elief in multi s%illed concept
<ontinuous monitoring cost control

FINANCE DEPARTMENT IN NFCL PLANT:
There are fi&e sections in the project finance:
6ill section
<ash and ban% section
2eneral accounts section
<osting and 0(<< 7fertiliAers industry co"ordinate committee8
<1<
BILL SECTION:
This section recei&es bills from &arious departments in the plant' (t chec%s the in&oices as per the purchase
orderDser&ice order terms and passes' The entry &oucher to cash and ban% section'
CASH AND BANK SECTION:
The section chec%s these bills and cash payments depending on the transactions. the a&ailability of finance' This
section decides that bills ha&e to be paid in the order of importance' )aterial departments send one copy of the
in&oice of the material procurement of the finance department'
GENERAL ACCOUNTS SECTION:
This section is also responsible to the maintenance of the accounts for the purpose of the internal audit' 6udget
preparation initiating necessary control mechanism is also part M parcel of this department' 2eneral accounts
maintain all accounts. ledgers and other re#uirement for audit and loo%s after the entire mar%eting transport bills
payments'
COSTING AND FICC: 0ertiliAers industry co"ordination committee is formed by members from different
departments li%e agriculture departments. ministry of finance and representation of big fertiliAer industry' (t
calculates the production cost of urea and with proper documentation submits it to the 0(<< to fi- the subsidy'

(t is also responsible for maintaining other statutory re#uirements and sends &arious reports to 0(<<' <osting
section regularly recei&ing the cost thrice to eliminate unnecessary cost'
CPC: -
They will prepare salaries of the employees and employees 1'0. 4'1'0. and 4'3'('
CHAPTER -IV
Theoretical Frame Work

NATURE OF RATIOS
Ratio analysis is a widely used tool of finance analysis' The term ratio in it refers to the relation ship e-pressed
in mathematical terms between indi&idual figures of group of figures connected with each other in some logical
manner and are selected from financial statements of the concern' The ratio analysis is based on the fact that a
single accounting figure by itself may not communicate any meaningful information but when e-pressed as a
relati&e to some other figure. it may definitely pro&ide some significant information' The relation between two
or more accounting figuresDgroups is called a 0(9+9<(+; R+T(:' + financial ratio helps to e-press the
relationship between two accounting figures in such a way that users can draw conclusions about the
performance. strengths and wea%ness of a firm'
STANDARDS OF COMPARISON:
The ratio analysis in&ol&es comparison for a useful interpretation of the financial statements' + single ratio in
itself does not indicate fa&orable or unfa&orable condition' (t should be compared with some standard'
3tandards of comparison may consist of:
1ast ratios. i'e' ratios calculated from the financial statements of the same firm'
<ompetitors ratios i'e' ratios of some selected firms. especially the most progressi&e and successful
competitor. at the same in time'
(ndustry ratios i'e' ratios of the industry to which the firm belongs'
ADVANTAGES OF RATIOS
,seful for e&aluating performance in terms of profitability and financial stability'
,seful for intra and inter from comparison
,seful forecasting and budgeting'
(t is just in a tabular form o&er a period of years indicates the trend of the business'

3imple to understand rather than the reading but the figures of financial statement'
Eey tool in the hands of modern financial management'
4nables outside parties to assess the strength and wea%ness of the firm'
Ratio analysis is &ery useful for ta%ing management decision and also highlights the performance in
the area of profitability. financial stability and operational efficiency'
LIMITATIONS OF FINANICIAL RATIOS
The ratio analysis is a widely used of techni#ue to e&aluate the financial position and performance of
business' 6ut there are certain problems ( using ratios' The analyst should be aware of these
problems' The following are some of the limitations of the ratio analysis:
(t is difficult to decide on the proper basis of comparison'
The comparison is rendered difficult because of differences on situations of two companies or of one
company o&er years'
The price le&el changes ma%e the interpretations of ratios in&alid'
The differences in the definitions of items in the balance sheet and profit and loss statement ma%e
the interpretation of ratios difficult'
The ratios calculated at a point of time are less informati&e and defecti&e as they suffer from short
term changes'
The ratios are generally calculated from past financial statements and. thus re no indicators of future'
$ifferences in accounting policies and accounting period ma%e the accounting data of two firms
non"comparable as also the accounting ratios'
(t is &ery difficult to generaliAe whether a particular ratio is good or bad' 0or e-ample. low current
ratio may be said 6+$ from the point of &iew of low li#uidity. but a high current ratio may not be
2::$' +s this may result from inefficient wor%ing capital management'
0inancial ratios pro&ide clues but not conclusions' These are tools only in the hands of e-perts because
there is no standard ready"made interpretation of financial ratios'


TYPES OF RATIOS:
3e&eral ratios calculated from the accounting date. can be grouped into &arious classes according to financial
acti&ity or function to be e&aluated' +s stated earlier. the parties interested in financial analysis are short and
long"term creditors. owners and management'
?3hort"term creditors@ main interest is in li#uidity position or the short"term sol&ency of the firm' ;ong"term
creditors. on the other hand. are more interested in the long"term sol&ency and profitability of the firm'
3imilarly. owners concentrate on the firms> profitability and financial condition' )anagement is interested on in
e&aluating e&ery aspect of the firms> performance' They ha&e to protect the interests of all parties and see that
the firm grows profitability' (n &iew of the re#uirements of &arious users of ratios. we may classify them into
the following four important categories:
;i#uidity ratios
;e&erage ratios
+cti&ity ratios
1rofitability ratios
LIQUIDITY RATIOS:
The li#uidity refers to the maintenance of cash. ban% balance and those assets. which are easily
con&ertible into cash in order to meet the liabilities as and when arising' 3o. the li#uidity ratios study the firm>s
short"term sol&ency and its ability to pay off the liabilities'
CURRENT RATIO: <urrent ratio is the ratio of current assets and current
liabilities' <urrent assets are assets which can be co&ered into cash within one

year and include cash in hand and at ban%. bills recei&able. net sundry debtors.
stoc% of raw
materials. finished goods and wor% in progress. prepaid e-penses. outstanding and accrued incomes. and short
term or temporary in&estments'
<urrent liabilities are liabilities. which are to be repaid within period of 1 year and
include bills payable. sundry creditors. ban% o&erdraft. outstanding e-penses.
incomes recei&ed in ad&anced. proposed di&idend. pro&ision for ta-ation.
unclaimed di&idends and short term loans and ad&ances repayable within 1 year'
<urrent ratio R current assetsDcurrent liabilities
+ current ratio of 2:1 is considered as ideal' (f business has an underta%ing with its ban%ers to meet its wor%ing
capital re#uirements short notices. a current ratio of its ade#uate'
2. QUICK RATIO:
Ouic% ratio is the ratio of #uic% assets to #uic% liabilities' Ouic% assets are assets. which can be
con&erted into cash &ery #uic%ly without much loss' Ouic% liabilities are liabilities. which ha&e to be necessarily
paid within 1 year'
Ouic% ratio R #uic% assetsD#uic% liabilities
Ouic% assets R current assets B in&entories
Ouic% liabilities R current liabilities B ban% o&erdraft
+ #uic% ratio of 1 is considered as ideal' + #uic% ratio of less than 1 is indicati&e of inade#uate li#uidity of the
business' + &ery high #uic% ratio is also not a&ailable. as funds can be more profitably employed'
3. ABSOLUTE LIQUID RATIO:

(t is the ratio of absolute li#uid assets to #uic% liabilities' /owe&er. for calculation purposes. it is ta%en as ratio
of absolute li#uid assets of current liabilities' Trade in&estments or mar%etable securities are e#ui&alent of cash
thereforeC they may be included in the computation of absolute li#uid ratio'
+bsolute #uic% ratio R absolute li#uid assetsDcurrent liabilities
+bsolute li#uid assets R cash in hand S cash at ban% S short term in&estments'
The ideal absolute ratio is ta%en as 1:2 or 0'5'
LEVERAGE RATIOS:
;e&erage ratios indicate the relati&e interests of owners and creditors in a business' (t shows the proportions of
debt and e#uity in financing the firm>s assets the long"term sol&ency of firm can be e-amined by using le&erage
ratios' The long"term creditors li%e debenture holders. financial institutions etc. are more concerned with the
firms long"term financial strength'
There are two aspects of long"term sol&ency of a firm'
1' +bility to repay the principal when due. and
2' Regular payment of the interest the le&erage ratio are
<alculated to measure the financial rest and firms abilities of using debts'
TOTAL DEBT RATIO:
Total debt will include short and long"term borrowings from financial institutions debentures bonds' <apital
employed will include total debt and net worth'
The firm may be interested in %nowing the proportion of the interest bearing debt in the
capital structure by calculating total debt ratio' + highly debt burdened firm will find difficulty in raising funds
from creditors and owners in future' <reditors treat the owner>s e#uities as a margin of safety'
Total debt ratio R total debtDcapital employed

Total debt R secured loads S unsecured loads'
<apital employed R share capital S reser&es and surplus'
2) DEBT-EQUITY RATIO:
(t reflects the relati&e claims of creditors and shareholders against the assets of the business'
$ebt. usually. refers to long"term liabilities' 4#uity includes preference share capital and reser&es'
The relationship describing the lenders contribution for each refers of the owner>s contribution is
called debt e#uity ratio. a high ratio shows large of financing by the creditors relati&ely to the owners and
therefore. larger claim against the assets of the firm' + low ratio implies smaller claims of creditors' The debt
e#uity indicates the margin to satisfy the creditors soC there is no doubt that beth high nd low debt e#uity ratios
are not desirable' =hat is needed is a ratio. which stri%es a proper balance between debt and e#uity'
$ebt"e#uity ratio R total debtDnet worth
3ome financial e-perts opine that Pdebt> should include current liabilities also' /owe&er. this is not a
popular practice' (n case of preference share capital. it is treated as a part of shareholders funds. but if the
preference shares are redeemable. they are ta%en as a part of long"term debt' 3hareholders are also %nown as
proprietor funds and it includes items e#uity share capital. reser&es. and surplus' + debt e#uity ratio of 2:1 is
considered ideal'
PROPERTY RATIOS:
(t e-presses the relationship between net worth and total assets'

1roperty ratio R net worthDtotal assets
9et worth R e#uity share capital S preferential share capital S reser&es fictitious assets
Total assets R fi-ed assets S current assets
Reser&es are mar%ed specifically for a particular purpose shouldn>t be included in calculation of net worth'
+ high proprietor>s ratio is indicati&e of strong financial position of business' The higher the ratio. the better it
is'
FIXED ASSETS RATIO
0i-ed assetsR 0i-ed assets
<apital employed
<apital employed B 4#uity share capital S preference share capital S Reser&es S ;ong term liabilities B
0ictitious assets'
This ratio indicates the mode of financing the fi-ed assets' + financially well"managed
company will ha&e its fi-ed assets financed by long"term funds' Therefore. the fi-ed assets ratio should ne&er
be more than
1' + ratio of 0'KF is considered ideal'
INTEREST COVERAGE RATIO:
This interest co&erage ratio is computed by di&iding earnings before interests and ta-ed
by interest charges'
(nterest co&erageR4 6 ( TDinterest

This interest co&erage ratio shows the number of times of times the interest charges are co&ered by funds that
are or demurely a&ailable for their payments' + high ratio is desirable but too high ratio indicates that the firm is
&ery conser&ati&e in using debt and that is not using credit to the debt ad&antage of share holder' + lower ratio
indicates e-cessi&e use of debt or inefficiency operations' The firm should ma%e efforts to impro&e the
operating efficiency or to retire debt to ha&e a comfortable co&erage ratio'
DEBT SERVICE COVERAGE RATIO (DSCR):
This is considered a more comprehensi&e and apt measure to compure debt ser&ice
capacity of a business firm' (t pro&ides the &alue in terms of the number of times the total debt ser&ice
obligations consisting of interest and repayment of the principle in installments are co&ered by the total
operating funds a&ailable after the payment of ta-es'
$3<R R 4+TS(9T4R43TS$41R4<(+T(:9
(93T+;)49T
The higher the ratio. the better it is a ratio of less than one may be ta%en as a sign of long term sol&ency
problem as it indicates that the firm does not generate enough cash internally to ser&ice debt in general. lending
financial institutions consider 2:1 as satisfactory ratio'
ACTIVITY RATIO:
+cti&ity ratio measures the efficiency or effecti&eness with which a firm manages its
resource or assets' They calculate the speed with which &arious assets. in which funds are bloc%ed up. get
con&erted into sales'
I) TOTAL ASSETS TURNOVER RATIO:
The assets turno&er ratio. measures the efficiency of a firm in managing and utiliAing its
assets' The higher the turno&er ratio. the more efficiency the management and utiliAation of the assets while
low turno&er ratio is indicati&e of under"utiliAation of a&ailable resources and presence idle capacity'
The total assets turno&er ratio is computed by di&iding sales by total assets'
Total assets turn"o&er ratioR salesDtotal assets'

2) WORKING CAPTIAL TURNOVER RATIO: This ratio is defined as
=or%ing capital turno&er ratio Rcost of goods soldDwor%ing capital
=here if cost of goods sold is not %now' 9et sales can be ta%en in the numerator'
=or%ing capitalRcurrent +ssets"current liabilities'
+ high wor%ing capital turno&er ratio indicates efficiency utiliAation of the firm>s funds' /owe&er. it
should not result in o&ertrading'

3) DEBTORS TURNOVER RATIO:
$ebtors> turno&er ratio e-presses the relationship between debtors and sales' (ts is calculated
9et credit salesDa&erage debtors
9et credit sales inspire credit sales after adjusting for sales returns' (n case information no credit sale is
not a&ailable' ?3ales@ can be ta%en in the numerator' $ebtors include bills recei&able' $ebtors should be ta%en
at gross &alue. without adjusting pro&isions for bad debts' (n case. a&erage debtors can>t be foundC closing
balance of debtors should be ta%en in the dominator' + high debtor>s turno&er ratio or a low debt collection
period is indicati&e of a sound credit management policy' + debtor>s turno&er collection period of 0"K days is
considered ideal'
4) DEBT COLLECTION PERIOD:
The debt collection period measures the #uality of debtors since it indicates the speed of the collection'
The shorter the a&erage collection period. the better the #uality of debtors' 3ince a short collection period
implies the prompt payment by debtors'
$ebt collection period R no of days in year D debt collection period

+n e-clusi&ely long collection period implies &ery liberal and inefficient credit and collection
performance' This certainly delays the collection of each and impairs the firm>s li#uidity' The a&erage no' of
days for which debtors remain outstanding is called debt collection period or a&erage collection period'
5) CREDITORS TURNOVER RATIO:
<reditors> turno&er ratio e-presses the relationship between creditors and purchases'
<reditors turno&er R net credit purchaseDa&erage creditors'
9et credit purchases imply credit purchases after adjusting for purchases returns' (n case information on
credit purchases may be ta%en in the numerator' <reditors include bills payable' (n case a&enue creditors can>t
be found. closing balance of creditors should be ta%en in the denominator'
The creditors> turno&er ratio is 12 or more' /owe&er. &ery less creditors turno&er ratio. or high
debt payment period. may indicate the firm>s inability in meeting its obligations in time
6) PAYMENT PERIOD RATIO:
<redit turno&er can also be e-pressed in terms of number of days ta%en by the business to pay off its
debts' (t is termed as debt payment period which is calculated as:
9umber of days in a yearDcreditors turno&er ratio
7) FIXED ASSETS TURNOVER RATIO: (t is defined as
9et sales D fi-ed assets
0i-ed assets imply net fi-ed assets i'e' after deprecation' + high fi-ed assets turno&er ratio indicates
better utiliAation of the firm>s fi-ed assets' + ratio around 5 is considered ideal'
8) INVENTORY TURNOVER RATIO: 3toc% turno&er ratio indicates the number of times the stoc% has
turned o&er into sales in a year'
(t is calculated as R cost of goods sold D a&erage in&entory
<ost of goods sold R sales gross profit
+&erage stoc%R7 opening stoc% Sclosing stoc% D 28

(n case. information regarding cost of goods sold is not %nown' 3ales may be ta%en in the numerator'
3imilarly. if a&erage stoc% cant be calculated. closing stoc% should be ta%en in the denominator'
+ stoc% turno&er ratio of ?8@ is considered ideal' + high stoc% turno&er ratio indicates that the stoc%s
are fast mo&ing and get con&erted into sales #uic%ly' /owe&er. it may also be on account of holding low
amount of stoc%s and replenishing stoc%s in large number of installments'
9) INVENTORY CONVERSON PERIOD:
(t is calculated R no' :f days a year D in&entory turno&er ratio
(n&entory or stoc% turno&er ratio can also be e-pressed in terms of number of days it ta%en for the
stoc% to get con&erted into sales' (t is called stoc% con&ersion into period'
IV) PROFITABILTY RATIO:
(t measures the o&erall performance and effecti&eness of the firm' 1oor operational performance
may indicate poor sales and hence poor profit' + ;ower profitability may arise due to the lac% of control o&er
the e-penses' 6an%ers. financial institutions and other creditors loo% at the profitability>s' Ratio as an indicator
whether or not the firm earns substantially more than it pays interest for the use of borrowed funds and whether
the ultimate repayment of their debt appear reasonably certain owner are interested to %nown the profitability as
it indicates as the return which they can get on this instrument'
1rofitability ratio measures the profitability of a concern generally' They are calculated either
in relation to sales or in relation to in&estment'
1) NET PROFIT RATIO:
(t indicates the result of the o&erall operation of the firm' The higher ratio. is per profitable is the
business' The net profit ratio is reassured by di&iding

net profit by sales' The net profit ratio indicates management efficiency in manufacturing administrating and
selling the products' This ratio is the o&erall firm>s ability to turn each rupee of sales into net profit' (f the net
profit margin is inade#uate. the firm will fail to achie&e satisfactory return on shareholder>s funds'
9et profit ratio R profit after ta- D net sales
+ firm with high net profit margin can ma%e better use of fa&orable conditions' 3uch a rising
selling prices. failing the cost of products are increasing demand for the product' 3uch a firm will be able to
accelerate the profits at a faster rate than a firm with a low net profit margin' This ratio also indicates the firm
capacity to withstand ad&erse economic conditions'
2) RETURN ON NET WORTH RATIO:
(t indicates the return. which the shareholders are earning on their resource in&ested in the business'
Return on net worth ratio R profit after ta- D net worth
94T =:RT/ R 3hareholder>s funds R 4#uity share capital S 1reference share capital S Reser&es B 0ictitious
assets'
The higher ratio. the better it is for the shareholders' /owe&er. inter firm comparisons should be
made to ascertain if the returns from the company are ade#uate' + trend analysis of the ratio o&er the past few
years much is done to find out the growth or deterioration in the profitability of the business'
8 RETURN ON ASSETS RATIO: (t is calculated as:
Return on +ssets ratio R profit after ta- D Total +ssets
Total assets do not include fictitious assets' The higher ratio. better it is'

4) EARNINGS PER SHARE RATIO:
4arnings per share are the net profits of the ta- and preference di&idends. which is earned on the capital
representati&e of one e#uity share' (t is calculated as:
4arning per share ratio R profit after ta- a&ailable to e#uity shareholders D
no' of ordinary shares
The higher the 413. the better is the performance of the company' The 413 is one of the di&ing factors in
in&estment analysis and perhaps the most widely calculated ratio amongst all ratio used for financial analysis'

CHAPTER- V
Interpretation and Analysis
LIQUIDITY RATIO
;i#uidity ratio measures the firm>s ability to meet current obligations'
I. CURRENT RATIO:
The current ratio is the measures of the firm>s short"term sol&ency' (t indicates the a&ailability of current assets
in rupees for e&ery one rupee of current liability'
Rs. Lakhs
Nears <urrent +ssets <urrent ;iabilities Ratio

200"04 12218!'2 1K1F4'2 F'55
2004"05 101K12'!4 128F'54 8'20
2005"0K 8F822'00 FF82'51 11'28
200K"0F 4!8FK'00 100F0'!2 4'!5
200F"08 KF514'42 20151'82 '5
2008"0! 8K4!'5 2!542'K5 2'8
INTERPRETATION:
The ideal current ratio of current assets and current liabilities is 2:1'
(t is tremendous increase in current ratio from the year 200"04 to 2004"05' There is an increase in the last
financial years 200K"0F. 200F"08 M 2008"0! e&en though there is a decrease in the ratio' (t is good for the
organiAation'

CURRENT RATIO
0
2
4
6
8
10
12
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
R
A
T
I
O
S
Ratios
2. QUICK RATIO:

Ouic% ratio is establishes a relationship between #uic% or li#uid assets and current liabilities'
Rs. Lakhs
Nears Ouic% assets <urrent liabilities Ratios
200"04 10!82'54 1K1F4'2 K'4
2004"05 82F0'25 S K'F2
2005"0K 81KK4'F FF82'51 10'4!
200K"0F 4225K'42 100F0'!2 4'20
200F"08 K1F8'22 20151'82 '0K
2008"0! 82F45'24 2!542'K5 2'80
INTERPRETATION:
The #uic% ratio of the company is abo&e ideal norm i'e'. 1:1
This ratio is increasing trend' (ts tremendous increase in #uic% ratio from the year 200"04 to 2005"0K' There is
a drastic decrease from the years 200K"0F to 200F"08 M 2008"0!' There is no stability in maintaining the #uic%
assets and #uic% liabilities' 6ut the company is maintaining the idle norm and in a good position to meet its
obligations'

QUICKRATIO
0
2
4
6
8
10
12
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
R
A
T
I
O
S
Ratios
3) ABSOLUTE LIQUID RATIO:

3ince cash is the most li#uid asset. a financial analyst may e-amine cash ratio and its e#ui&alent to current
liabilities'
Rs. Lakhs
Nears absolute li#uid assets <urrent liabilities Ratio
200"04 FKK0!'4 1K1F4'2 4'F4
2004"05 F420'4F 128F'54 5'!
2005"0K F2482'15 FF82'51 !'1
200K"0F K8KK'05 100F0'!2 K'F!
200F"08 F!!K'2F 20151'82 '0F
2008"0! F55K2'54 2!542'K5 2'55
INTERPRETATION:
The ideal absolute li#uidity ratio of absolute li#uid assets and current liabilities is 0'5'
The company maintains increase in absolute li#uid ratio in 200"04 to 2005"0K' There is a growth trend in the
absolute li#uid ratio from the years 2001"02 to 2005"0K' 0rom the last 2 years 200K"0F. 200F"08 M 2008"0! it
has been a downfall trend in the last 2 years' The company is in a position to meet its obligations by
maintaining the ideal norm'


ABSOLUTELIQUIDRATIO
0
2
4
6
8
10
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
R
A
T
I
O
S
Ratio

II) LEVERAGE RATIO:
1. TOTAL DEBT RATIO:

$ebt ratio indicates the proportion of total debt in the capital structure'
Rs. Lakhs
Nears Total debt <apital employed Ratio
200"04 1!2!KK'82 28152'45 0'K!
2004"05 184K'88 2K8482'0 0'K!
2005"0K 1KK411'F! 25201'0K 0'KK
200K"0F 14!!'! K0!1'18 0'44
200F"08 1452F'45 2!FF!F'41 0'44
2008"0! 1554'KF 410!8!'K5 0'2
INTERPRETATION:
The proportion of the total debts in the capital structure is in alarming position in the years 200"04 to 2005"0K'
0rom the years 200K"0F to 200F"08 M 2008"0! maintaining the stable position but it has been reduced'
+ high ratio means that claims of creditors are greater than those of owners' + high le&el of debt introduces
infle-ibility in the firm>s operations due to the increasing interference and pressure from creditors which will
restrict management>s independent and energies'


TOTAL DEBT RATIO
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
R
A
T
I
O
S
Ratio

1. DEBT EQUITY RATIO:

This ratio shows the relationship between borrowed funds and owner>s capital. =hich is the popular measure of
the long"term financial sol&ency of the firm'
Rs. Lakhs
Nears Total $ebt 9et =orth $ebt"4#uity Ratio
200"04 1!2!KK'82 888K5'K 2'18
2004"05 184K'8K 84145'42 2'1!
2005"0K 1KK411'F! 8588!'2F 1'!4
200K"0F 14!!'! 18KK!F'2K 0'80
200F"08 1452F'45 1844K!'!K 0'F!
2008"0! 1F15!'1F 224545'F4 0'K1
INTERPRETATION:
+ debt"e#uity ratio of 2:1 is considered ideal' 1re&iously. company used to maintaining good debt e#uity' 0rom
200"04 to 2005"0K the lenders contribution is more than the owners as well as creditors to ha&e faith on each
other' =here as from years 200K"0F to 200F"08 M 2008"0!. pre&iously company used to maintain good debt
e#uity. now it has been slightly reduced'

DEBT-EQUITY RATIO
0
0.5
1
1.5
2
2.5
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEARS
R
A
T
I
O
S
Debt-Equity Ratio

3) PROPRIETORY RATIO:
The proportion of total assets collected through properties fund can be understood from this ratio'

Rs. Lakhs
Nears 9et worth Total assets 1roprietory Ratio
200"04 885K5'K 45!2'0F 0'2K
2004"05 84145'42 141F'50 0'2F
2005"0K 8588!'2F 2880K5'0 0'0
200K"0F 18KK!F'2K FF244'F1 0'4!
200F"08 1844K!'!K F585'1 0'4!
2008"0! 18221'F5 454F5'15 0'52
INTERPRETATION:
The proprietor is not around idle norm 1:' 0rom the years 200"04 to 200F"08 M 2008"0!. it is an
impro&ement from the year by year'
(t indicates that less use of proprietor fund and more use of debts funds in increasing asset structure of the firm'
This situation shows good sol&ency and suitable financial position of the company'


PROPRIETORY RATIO
0
0.1
0.2
0.3
0.4
0.5
0.6
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEARS
R
A
T
I
O
S
Proprietory Ratio


4) FIXED ASSETS RATIO:
This ratio indicates mode of financing the fi-ed assets' (t is used to measure the long"term financial sol&ency of
the firm and financial stability of the firm'

Rs. Lakhs
Nears 0i-ed +ssets Total <apital 4mployed 0i-ed +ssets Ratio
200"04 1414!K'K! 28152'45 0'50
2004"05 1401K'4K 2K8482'0 0'52
2005"0K 12!224'!4 25201'0K 0'51
200K"0F 2K0!24'2F K0!1'18 0'F8
200F"08 2!!58'44 2!F!F'41 0'F
2008"0! 2FFKK4'8K 1058!'0! 0'84
INTERPRETATION:
The fi-ed assets ratio is in increasing e&ery year '(t is good for the organiAation' The organiAation will ha&e
fi-ed assets financed by long"term funds'

FIXED ASEETS RATIO
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEARS
R
A
T
I
O
S
Fixe !ssets Ratio

5) INTEREST COVERAGE RATIO:
The interest co&erage ratio shows the numbers of times of interest charges are co&ered by earning out of which
they will be paid'

Rs. Lakhs
Nears $46(T (9T4R43T (nterest co&erage ratio
200"04 2K8F'5 2!42' 1'11
2004"05 9il 2KK8F'01 9il
2005"0K 9il 255F'81 9il
200K"0F 1!80'F0 142F8'K 1'!
200F"08 1845'!K 10!8'F4 1'41
2008"0! 1F2F5'12 11!F'85 1'52
INTERPRETATION:
The lower the interest co&erage ratio indicates e-cessi&e use of debt and more o&er the companies operating
profits shows increasing position'
The company should try to decrease its debts it will impro&e profit margin' The ratio shows that we are using
more debt capital'

INTEREST COVERAGE RATIO
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEARS
R
A
T
I
O
S
"#terest $o%era&e ratio

6. DEBT SERVICE COVERAGE RATIO (DSCR):
$ebt ser&ice co&erage ratio is considered more comprehensi&e apt measure to
compure debt ser&ice capacity of business firm'

Rs. Lakhs
Nears 9et profit
1
$epreciation
2
(nterest

<ash
a&ailable
71S2S8R4
Term loan
5
$ebt
:bligation
7S58RK
$3<R
74DK8RF
200"04 1F4'82 121K'82 12F!!'2! 2KF0K'! 1K!!5'K1 2!F!4'! 0'8!
2004"05 2!52'F 1215!'1 !KK4'K4 24FFK'44 1054K'F 20211'4 1'22
2005"0K KK85'2 202K'K 84F5'58 5524'41 854'!1 1F01!'4! 2'08
200K"0F 1F1'1 20K5K'04 8004'55 181'82 10K28'12 18K2'FF 1'F
200F"08 224!'08 202K2'1K F88K'4K 0!F'F 8451'K5 1K8'11 1'8K
INTERPRETATION:
(n the year 200 "04 $3<R is less than 1 (t tells that the company unable to pay loan and interest
installment in that particular year' 6ut The $3<R in the years 2004"05 to 200F"08 is satisfactory' (t
shows that the <ompany repays the loan installment with interest in the respecti&e years

DEBT SERVICE COVERAGE RATIO
0
0.5
1
1.5
2
2.5
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
YEARS
R
A
T
I
O
Ratio
III) ACTIVITY RATIO:
1) The assets turn over ratio:

+cti&ity ratio is employed to e&aluate the efficiency with which the firm>s managed and utiliAes its assets'
These ratios are also called turn o&er ratios because they indicate the speed with which assets are being
con&erted or turned into sales
Total assets turn o&er ratio: the assets turn o&er ratio show the firm>s efficiency of utiliAing firms assets to
ma-imiAe its sales'
Rs. Lakhs
Nears 3ales Total assets Total assets turn o&er
ratio
200"04 104KF'F1 45!2'0F 0'1
2004"05 !8!85'0! 14F0'50 0'2!
2005"0K 10F2K2'11 2880K5'0 0'F
200K"0F 12KK8'!F FF244'F1 0'4
200F"08 1452!4'F4 F485'1 0'!
2008"0! 1K44F2'5K 5242K'0K 0'4K
INTERPRETATION:
The increase in total assets may not be an indicator in ratio' 6ut sales help in the increase of the financial
conditions of the organiAation' The assets turn o&er ratio shows the firm>s efficiency of utiliAing the firm>s
assets to ma-imiAe its sales' There is an increased position in the assets ratios from the years 200"04 to 200F"
08 M 2008"0!C it shows the effecti&e utiliAation of the assets according to the re#uirement' The organiAations
financial position is good o&erall' (t is maintaining stability in the ratio of total assets'


TOTAL ASSETS TURN OVERRATIO
0
0.1
0.2
0.3
0.4
0.5
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEARS
R
A
T
I
O
S
'ota( assets tur# o%er
ratio

2) WORKING CAPITAL TURN-OVER RATIO:
+ firm may also li%e to relate net current assets or networ%ing capital to sales' =or%ing capital determines the
li#uidity position of the firm and measures the ability of the firm to meet its current obligations'

Rs. Lakhs
Nears 3ales =or%ing capital =or%ing capital
200"04 104KF'F1 10K00F'00 10K00F'00
2004"05 8!!85'0! 8!225'40 8!225'40
2005"0K 10F2K2'11 800!'K! 800!'K!
200K"0F 12KK8'!F !805'K !805'K
200F"08 1452!4'F4 4FK2'K0 4FK2'K0
2008"0! 1K4412'51 K5120'F2 K5120'F2
INTERPRETATION:
The wor%ing capital idle norm is 0'F5'
0rom the years 200"04 to 200K"0F there is a increase in the wor%ing capital margin where as there is a slight
decrease in the year 200F"2008 M 2008"0!'
The ratios are good and as per standard norms the trend indicates that the company is able to generate its
finances without outside borrowin
3) DEBIT TURN-OVER RATIO:
$ebit turn"o&er ratio indicates the number of times debtors turn"o&er each year' The li#uidity of company
depends on #uality of debtors to a great e-tent'

Rs. Lakhs
Nears <urrent sales +&erage debtors $ebtors turn o&er ratio
200"04 104KF'F1 51K08'54 2'02
2004"05 8!!85'0! K!45'1K 2'44
2005"0K 10F2K2'11 58'!1 '01
200K"0F 12KK8'!F 221F0'K4 5'F1
200F"08 1452!4'F4 1124'1 4'KF
2008"0! 1K4012'51 005F'4 5'4K
INTERPRETATION:
The debtor>s turn"o&er ratio shows increasing trend from the years 200"04 to 200K"0F' 4&en though in 200F"08
M 2008"0! the debtors turn"o&er ratio is slightly decreased
(t reflects on efficiency of the firm in managing credit of the organiAation though the company is in better
position to meets its obligations'
The company maintains consistency in collections and credit policy'

Debt Turn Over Rat!
0
1
2
3
4
5
6
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
Year"
R
a
t

!
R!'")
4) DEBIT COLLECTION PERIOD:
The a&erage number of days for which debtors remain outstanding is the a&erage collection period'

Rs. Lakhs
Nears 9umber of $ays $ebtors Turn"o&er Ratio $ebit collection period
ratio in days
200"04 K5 2'02 180'K!
2004"05 K5 2'44 14!'5!
2005"0K K5 '0 120'F!
200K"0F K5 5'F1 K'!2
200F"08 K5 4'KF F8'1K
2008"0! K5 4'4! 81'2
INTERPRETATION:
The debit collection period indicates the efficiency of trade credit management' + debit collection of period 0"
K days is considered as ideal' The debtors collections period ratio in days was seen fa&orable during the year
200F"2008 M 2008"0! =hen compared to pre&ious years' The shorter collection period implies promote
payment by debtors'

Debt C!##e$t! Per!%
0
50
100
150
200
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
Year"
R
a
t

!
R!'")

5. CREDITORS TURNOVER RATIO:
<reditor>s turno&er ratio e-presses the relationship between net credit purchases and creditors'
Rs. Lakhs

Nears 9et credit purchase +&erage creditors <reditors turno&er ratio
200"04 81842'0K !445'84 0'8K
2004"05 4F0'F0 K5!'F2 0'KK
2005"0K 05K'F0 48F0'K! 0'K
200K"0F 1015'50 F12K'8 1'4
200F"08 F85K'4! 12!01'2K 0'K1
2008"0! KF4!'F 14K42'4! 0'4K
INTERPRETATION:
The creditors> turno&er ratio of 12 or more indicates that the firm is not able to get the best terms of
credit' /owe&er. &ery less credit of turno&er ratio may indicates. the firm>s inability in meeting its obligations in
time'
The creditors> turno&er ratio is 0'8K. 0'KK. 0'K. 1'4. and 0'K1 each year respecti&ely' The credit of turno&er
ratio shows positi&e approach of the organiAation'


Cre%t!r" Turn!ver Rat!
0
0.5
1
1.5
2
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
Year"
R
a
t

!
R!'")

6) PAYMENT PERIOD RATIO:
<redit turno&er rate can also be e-pressed in terms of number of days ta%en by the business to pay off its
debts'

Rs. Lakhs
Nears 9umber of days <redit turn o&er ratio 1ayment period ratio
200"04 K5 0'K1 5!8'K
2004"05 K5 0'KK 55'0
2005"0K K5 0'K 280'F5
200K"0F K5 1'42 25F'04
200F"08 K5 0'K1 5!8'K
2008"0! K5 0'K5 5K1'5
INTERPRETATION:
The debit payment period indicates the efficiency of management or organiAation' + debit payment
period of 0 or less number of days indicates that the firm is not able to get the best terms of credit' + high debit
payment period may indicate the firms> inability in meeting its obligation in time' The ratio show there is an
increase in the ratio from the year 200 "2004 to 2005"200K and there is a decrease in the year 200F"2008 M
2008"0!'The company is in a 1osition to ma%e the payments in time'

PAY&ENT PERIOD RATIO
0
100
200
300
400
500
600
700
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEARS
R
A
T
I
O
S
Pay*e#t perio ratio
7) FIXED ASSETS TURNOVER RATIO:
(t is used to measure the managerial efficiency in which the firm has utiliAed its in&estments in fi-ed
assets and its o&erall acti&ities' (t indicates the generation of the sales per rupee in&estment in fi-ed assets'
Rs. Lakhs

Nears 3ales 9et fi-ed assets 0i-ed assets turno&er ratio
200"04 104KF'F1 1414!K'K! 0'F4
2004"05 8!!85'0! 1401K'4K 0'K4
2005"0K 10F2K2'11 12!224'!4 0'8
200K"0F 12KK8'!F 2K0!24'2F 0'4!
200F"08 1452!4'F4 2!!58'44 0'K1
2008"0! 1K4052'51 201882'K1 0'81
INTERPRETATION:
0rom the years 200"04 to 2005"0K has increased and in the 200K"0F the fi-ed assets turno&er ratio has slightly
reduced' (f we compare with the year 0K"0F there is increase in the fi-ed assets turno&er ratio in the year 200F"
08 M 2008"0!'
+ high assets turno&er ratio indicates better utiliAation of the firm>s fi-ed assets'

F'e% A""et" Turn!ver Rat!
0
0.2
0.4
0.6
0.8
1
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
Year"
R
a
t

!
R!'")

8) INVENTORY TURNOVER RATIO:
(n&entory turno&er ratio indicates the efficiency of the firm in producing and selling its product'
Rs. Lakhs

Nears <ost of goods sold +&erage in&entory (n&entory turno&er ratio
200"04 104KF'F1 1414!K'K! 5'80
2004"05 8!!85'0! 182F0'F 4'!
2005"0K 10F2K2'11 12250'08 8'FK
200K"0F 12KK8'!F K888'81 18'8
200F"08 1452!4'F4 KK!8'1K 21'K!
2008"0! 1K4420'51 K40F'54 2'KF
INTERPRETATON:
3ales are ta%en instead of cost of goods sold' Ta%ing pre&ious stoc% &alue and present stoc% &alue.
adding both &alues and di&iding it by 2' <alculate a&erage stoc%'
There is an increase in the consumption of in&entory form last 5 years company must try to reduce the
in&entory


INVENTORY TURNOVER RATIO
0
5
10
15
20
25
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEARS
R
A
T
I
O
S
"#%e#tory tur#o%er ratio
9) INVENTORY CONVERSION PERIOD:
(n&entory con&ersion period indicates the number of days' The company holds in&entory'

Rs. Lakhs
Nears 9o of days (n&entory turno&er ratio (n&entory con&ersion period
7ratio in days8
200"04 K5 5'80 K2'!
2004"05 K5 4'! F4'04
2005"0K K5 8'FK 41'F8
200K"0F K5 18'8 1!'8K
200F"08 K5 21'K! 1K'8
2008"0! K5 2'KF 15'42
INTERPRETATION:
0rom the year 200"04 to 2004"05. has increased position in in&entory con&ersion period' 0rom the year
2005"0K to 200K"0F. has increased position when compared to pre&ious years' (n 2005"0K the in&entory
con&ersion period is slightly decreasing position'

INVENTORY CONVERSION PERIOD RATIO
0
10
20
30
40
50
60
70
80
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEARS
R
A
T
I
O
S
"#%e#tory $o#%ersio#
perio +ratio i# ays,

IV) PROFITABILITY RATIO:

1rofitability ratio measures the profitability or the operational efficiency of the firm' These ratio>s reflect
the final results of business operations' The result of firm can be e&aluated in terms of its earnings with
reference to a gi&en le&el of assets or owners interest etc'
1'8 9et profit ratio: " 9et profit ratio indicates the o&erall measures of firm>s ability to turn each rupee sales into
net profit'
Rs. Lakhs
Nears 1rofit after ta- 3ales 9et profit ratio
200"04 !K!'F8 102K8'81 0'01
2004"05 9il 8!!8'0! 9il
2005"0K 9il 10F2K2'11 9il
200K"0F 2!52'F0 12KK8'!F 0'02
200F"08 KK85'20 1452!4'F4 0'04
2008"0! 8F8'50 1KF412'5 0'05
INTERPREATION:
The higher ratio. is the more profitable. is the business a high net profit margin would ensure ade#uate
the return to the owners of an organiAation'
There is a profit margin in the year 2008"0! it has impro&ed from the pre&ious years'


Pr!(tab#t) Rat!
0
0.01
0.02
0.03
0.04
0.05
0.06
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
Year"
R
a
t

!
R!'")

2) RETURN ON NETWORTH RATIO:

Return on net worth ratio measures the profitability of e#uity funds in&ested in the firm' The return on
net worth indicates how well the firm has used the resource of owners'
Rs. Lakhs
Nears 1rofit after ta- 9et worth Return on net worth ratio
7in G8
200"04 !K!'F8 885K5'K 0'01
2004"05 9il 84145'42 9il
2005"0K 9il 8588!'2F 9il
200K"0F 2!52'F0 18KK!F'2K 0'02
200F"08 KK85'20 1844K!'!K 0'04
2008"0! 8F8'50 18221'5 0'04
INTEPRETATION:
The higher the ratio. the better is for the shareholders' 0rom the year 200"04 the return on net worth
ratio is increasing' 0rom the year 2004"05 to 2005"0K there was 9: return on net worth' 0rom the year 200K"0F
slightly impro&ed position in return on net worth ratio' (n 2008"0! the return on net worth ratio has been
increasing position'
The management must ta%e necessary action and responsibility of ma-imiAing owners> welfare'

Return !n Net*!rt+ Rat!
0
0.01
0.02
0.03
0.04
0.05
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
Year"
R
a
t

!
R!'")

3) RETURN ON ASSETS RATIO:

The return on assets ratio is used to measure the profitability of the firm in terms of assets employed in
the firm' (t is also li%e a yard of stic%s measuring a managerial efficiency in relation to the utiliAation of assets'
Rs. Lakhs
Nears 9et profit after ta- Total assets Return on assets 7in G8
200"04 !K!'F8 45!2'0F 0'00
2004"05 9il 80141F'50 9il
2005"0K 9il 2880K5'0 9il
200K"0F 2!52'F0 FF244'F1 0'01
200F"08 KK85'20 F585'1 0'02
2008"0! 8F8'50 5242K'0K 0'02
INTERPRETATION:
The return on assets ratio re&eals the relationship between profit after ta- and total assets' The total
assets don>t include fictitious assets. the higher the ratio. better it is'
0rom the year 200"04 the return on assets has increased position' 0rom the year 2004"05 and 2005"0K.
there was no return on assets' 0rom the year. 200K"0F there was slight impro&ement in return on assets' (n 2008"
0!. the return on assets has been in increasing position' The return on assets ratio is in increasing trend. but we
cannot say that the company will maintain the same trend by obser&ing 2004"05 to 2005"0K'


RETURN ON ASSESTS RATIO
0
0.005
0.01
0.015
0.02
0.025
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEARS
R
A
T
I
O
S
Retur# o# assets +i# -,
4) EARNING PER SHARE:

The probability of the common shareholders in&estment can also be measured in many other ways'
4arning per share shows the profitability of the firm per share basis' (t measures the profitable a&ailable to the
e#uity shareholders on share basis. the amount that they can get on e&ery share held'
Rs. Lakhs
Nears 1rofit after ta- 9umber of ordinary
shares
4arning per share ratio
200"04 !K!'F8 41F0'20 0'2
2004"05 9il 41F0'20 9il
2005"0K 9il 41F0'20 9il
200K"0F 2!52'F0 4281'81 0'F0
200F"08 KK85'20 4281'81 1'5K
2008"0! 8F8'50 4!2'42 1'!0
INTERPRETATION:
There is an increase in the earnings per share ratio from the year 200"04 to 2008"0!'$ue to change and
uncertainties in the policy parameters or retention price the company decided to declare di&ided and carry on
plough bac% the profits'

Earnn," Per S+are
0
0.5
1
1.5
2
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
Year"
R
a
t

!
R!'")


CHAPETER - VI
Findings
Suggestions
FINDINGS

The (ndian fertiliAers industry stands in fourth position in the world not only for terms of production but
also in terms of consumption of nitrogenous D phosphate nutrients'
90<; continues to be mar%et share in +ndhra 1radesh catering more than F0G of mar%et'
0indings with respect to li#uidity ratio:
+s compared to last year there is decreased in the li#uidity of the firm. e&en though company is in a
position to meet its current obligations' There was margin safety to the creditors'
0inding with respect to le&erage ratio:
90<; le&erage ratios are not in satisfactory le&el' <ompany is maintaining as stable position in the
le&erage acti&e' <ompany is facing hea&y burdens of interest payment that affects the profit' (t will lead
to serious difficulties in raising funds in future' (t was impressi&e during the year 200F"08. because of
decrease in debt'
0indings with respect to acti&ity ratio:
The in&entory turno&er ratio. a&erage collection period has been increasing from pre&ious year'
The debtors> turno&er ratio. payment period ratio decreased from pre&ious year' (t is not good sign to the
company'/owe&er in the year 200F"08. the in&entory turno&er ratio. fi-ed assets turno&er ratio has been
significantly impro&ed'
0indings with respect to profitability ratio:
+s compared to the year profitability ratios there was a slight impro&ement but it is &ery negligible and
ratios are not satisfactory' $uring the year 200F"08 the interest and financing charges decreased when
compared to pre&ious year' (f we can reduce that amount we can get more profits'
(nterest charges were declined due to falling of the interest rates' /owe&er net profit ratio. return on net
worth and return on assets ratio was impro&ed during the year 200F"08 with impro&ement in sales'
SUGGESTIONS

The company should maintain the present le&el of li#uidity 7current ratio8 in low and funds not be %ept ideal. it
must be utiliAed efficiently'
The company should maintain responsible le&el of debit e#uity preparation in capital structure'
+ high debit e#uity ratio e-poses higher ris%. because greater the loan the firm must pay e&en in
ad&erse conditions' Therefore. the firm should ma%e efforts to impro&e the operating efficiency or
retire debt to ha&e a comfortable co&erage ratio'
(n&entory turno&er ratio showing increasing trend' $ebtors> turno&ers ratio showing decline trends. the
company has to still impro&e and maintain good in&entory management system and management in
holding the debtors'
0irm. ha&ing net profit margin. it should concentrate on impro&ing sales by in decreasing interest charge
and cost of production to impro&e profit'
The company should utiliAe the fi-ed assets effecti&ely in order to generate profit in future'
BIBILOGRAPHY

0(9+9<(+; )+9+24)49T " Ehan and *ain
0(9+9<(+; )+9+24)49T " R' 1' Rustasi
0(9+9<(+; )+9+24)49T " (' )' 1andey
0(9+9<(+; )+9+24)49T " 1rasanna <handra
<:)1+9N +99,+; R41:RT3 75 years8
Websites:-
www'nfcl'com
www'nagargunagroup'com
www'nagarjunafertiliAers'com

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