Vous êtes sur la page 1sur 81

Ratio Analysis at NSL

EXECUTIVE SUMMARY
Ratio Analysis is one of the techniques of financial analysis where ratios are
used as a yardstick for evaluating the financial condition and performance of
a firm. Analysis and interpretation of various accounting ratios gives a better
understanding of financial condition and performance of firm. Trend ratios
indicate the direction of change in the performance improvement,
deterioration or constancy- over the year.
Objectives of the study:
. To help the management in its planning and forecasting activities.
!. To evaluate operational efficiency, liquidity, and solvency of "#$.
%. To help the management in having effective control over the activities
of different departments.
&. To compare the previous five years and present year performance of
the company.
'. To give suggestion and recommendation based on the study.
(or the study "irani sugars $td, is considered. The ratio analysis is done
using the )ncome statements and *alance #heets of the company between
!++' to !++,.
-ata )nterpretation on trend ratio analysis is carried out at "#$ at
.ulali cross Tq/ 0udhol -ist/ *agalkot .arnataka #tate. (or study, of five
years is considered and compared it1s performance over the period of five
years. (or result analysis and 0# 23cel #oftware package are used. (rom the
analysis, ) am able to indicate following finding of the firm
. (rom the current ratio it is found that the ratio is not satisfactory
because the 4 increase in current assets is less than the 4 increase in
current liabilities during the year !++'-!++,.The highest ratio
recorded is %.+& in !++' and the lowest ratio recorded is +.&! in the
year !++5.And less than the standard ratio.

Ratio Analysis at NSL


!. (rom the gross profit ratio it is found that the ratio is satisfactory
during the last three years from !++5 to !++,. The highest ratio
recorded in the year !++6 is !.7' and the lowest ratio recorded is +.
in the year !++'.
%. (rom the operating profit ratio it is found that the ratio is highly
satisfactory during the considered financial years. The highest ratio
recorded is ++.+6 in the year !++5 and the lowest is 77.'7 in the year
!++&.
(inally study concluded by giving some suggestion in view of
improving performance and efficiency of the company.
!
Ratio Analysis at NSL
INTRODUCTION
Ratio analysis is a technique of analy8ing the financial statement of
industrial concerns. "ow a day this technique is sophisticated and is
commonly used in business concerns. Ratio analysis is not an end but it is
only means of better understanding of financial strength and and weakness of
a firm.
Ratio analysis is one of the most powerful tools of financial analysis
which helps in analy8ing and interpreting the health of the firm. Ratio1s are
proved as the basic instrument in the control process and act as back bone in
schemes of the business forecast.
ith the he!" of #$tio %e c$& dete#'i&e
The ability of the firm to meet its current obligation.
The limit or e3tent to which the firm has used its borrowed funds.
The efficiency with which the firm is utili8ing in generating sales revenue.
The operating efficiency and performance of the company .
C!$ssific$tio& of R$tios
Ratios can be classified into different categories depending upon the
basis of classification.
I( TRADITIONA) C)ASSI*ICATION
Traditional 9lassification has been on the basis of financial statements,
on which ratio may be classified as follows.
. :rofit ; $oss account ratios.
2.g. <ross :rofit Ratio, "et :rofit Ratio, =perating Ratio etc
%
Ratio Analysis at NSL
!.*alance sheet ratio.
2.g. 9urrent Ratio, -ebt 2quity Ratio, >orking 9apital Ratio etc
%. 9omposite?0i3ed ratio.
2.g. #tock Turnover Ratio, -ebtors Turnover Ratios, (i3ed Assets
Turnover Ratio etc
&
Ratio Analysis at NSL
II( *UNCTIONA) C)ASSI*ICATION O* RATIOS
(unctional ratios
. $iquidity ratios
a@ 9urrent Ratio
b@ Auick Ratio
!. $everage Ratios
a@ -ebt-equity Ratio
b@ 9urrent Asset to :roprietor1s fund Ratio
III( +RO,A,I)ITY RATIOS
a. <ross profit Ratio
b. =perating profit Ratio
c. Return on investment

IV( ACTIVITY RATIO
i. )nventory Turnover Ratio
ii. Asset Turnover Ratio/
a. (i3ed Asset Turnover Ratio
b. 9urrent Asset Turnover Ratio
iii. >orking 9apital Turnover Ratio.
'
Ratio Analysis at NSL
COM+ANY
+RO*I)E
7
Ratio Analysis at NSL
INDUSTRY +RO*I)E
The -isto#ic$! ,$c./#ou&d of the I&di$& Su/$# I&dust#y:
The sugar industry is proud to be an industry, which spreads the taste
of sweetness to the mankind. The history of origin of this industry is as old
as the history of main him self. #ugar is generally made from sugarcane and
beet. )n )ndia, sugar is produced mainly from sugarcane. )ndia had
introduced sugarcane all over the worlds and is a leading country in the
making sugar from sugarcane.
B#aint Cishwamitra1 is known as the research person of the sugarcane
in religious literature. >e can find the e3ample of sugarcane in Cedic
literature also as well as sugarcane. >e can also find the reference of sugar
and the sugarcane in :atanDali1s 0ahabashya and the treaty on the grammar
of B:anini1. <reek traveler B"iyarchus1 and 9hinese traveler BTai-#ung1 have
mentioned in their travelogue that the people of )ndia used to know the
methods of making sugar and Duice from sugarcane the great 2mperor
Ale3ander also carried sugarcane with him while returning to his country.
5
Ratio Analysis at NSL
Thus from different historical references and from some B:uranas1 it
can be concluded that method of making sugar from sugarcane was known
To the people of *ihar. The historical evidences of sugar industry prospering
in ancient)ndia concrete and this has helped to develop and prosper the co-
operative sugar movement in )ndia.
6
Ratio Analysis at NSL
N$tio&$! Sce&$#io Of Su/$# I&dust#y:
The first sugar mill in the country was set up in ,+% in the Enited
:rovinces. There are '77 installed sugar mills, of which &'% were in
operation in the year !++!-+% and utili8ed ,&.& million ton of sugarcane
F7,4 of total cane production@ to produce !+.& million tons of sugar. About
' lakhs workmen are directly employed in the sugar. About ' lakhs workmen
are directly employed in the sugar industry besides many in industries, which
utili8e by-products of sugar industry as raw material.

)ndia is the largest consumer and second largest producer of sugar in
the world. The )ndian sugar industry is the second largest agro-industry
located in the rural )ndia. )ndian sugar industry has been a focal point for
socio-economic development in the rural areas. About '+ million sugarcane
farmers and a large number of agricultural laborers are involved in sugarcane
cultivation and ancillary activities, constituting 5.'4 of the rural population.
*esides, the industry provides employment to about ! million skilled?semi
skilled workers and others mostly from the rural areas. The industry not only
generates power for its own requirement but surplus power for e3port to the
grid based on by-product *agasses. )t also produces ethyl alcohol, which is
used for industrial and potable uses, and can be used to the manufacture
2thanol, an ecology friendly and renewable fuel for blending with petrol.
The sugar industry in the country uses only sugarcane as inputG hence
sugar companies have been established in large sugarcane growing states
like Ettar :radesh, 0aharashtra, .arnataka, <uDarat, Tamilnadu, and Andhra
:radesh. )n sugar year !++%-+&, these si3 states contribute more than 6'4of
total sugar production in the countryG Ettar :radesh, 0aharashtra, and
.arnataka together contribute more than 7'4of total production. The
government of )ndia licensed new units with an initial capacity of !'+ T9-
,
Ratio Analysis at NSL
up to the ,6+s and with the revision in minimum economic si8e to !'++
T9-, the <overnment issued licenses for setting up of !'++ T9- plants
thereafter. The government de-licensed sugar sector in the year of
.#eptember.,66.
The entrepreneurs have been allowed to set up sugar factories of
e3pand the e3isting sugar factories as per the techno-economic feasibility of
the proDect. However, they are required to maintain a radial distance of '
kms from the e3isting sugar factory. After de-licensing, a number of new
sugar plants of varying capacities have been set up and the e3isting plants
have substantially increased their capacity.

There are '77 installed sugar mills in the country as on 0arch %
st
!++', with a production capacity of 6+ lack 0Ts of sugar, of which only
&'% are working. These mills are located in 6 states of the country.
The secto# %ise b#e$. u"0s $s fo!!o%s/
T$b!e &o12
#l.
"o.
#ector "o of factories
. :rivate 6,
!. :ublic 7!
%. 9o-operative %'
Total '77
+
Ratio Analysis at NSL
TIT)E: +RO3ECT ON RATIO ANA)YSIS AT NS)
Objectives of the study:
7. To help the management in its planning and forecasting activities.

5. To evaluate operational efficiency, liquidity, and solvency of "#$.
6. To help the management in having effective control over the activities
of different departments.
,. To compare the previous five years and present year performance of
the company.
+.To give suggestion and recommendation based on the study.
)IMITATION O* T-E STUDY
@ The study is limited to few ratios because of non availability of
detailed financial data.
!@ The study is used on secondary data such as annual report of the
company
%@ The reliability and accuracy of calculation depends more on
information found in profit and loss a?c and balance sheet.
&@ The study is confined only to a period of ' years.
MET-ODO)O4Y
The study is conducted at "irani #ugars $td, 0udhol.
TqG 0udhol, -ist/ *agalkot.

Ratio Analysis at NSL


#=ER92# =( -ATA 9=$$29T)="

The data is collected in two types
@ :R)0ARI -ATA
!@ #29="-ARI -ATA
25 +#i'$#y d$t$:
)t will be collected with the help of interaction with the employee of "#$,
and the internal guide.
65 Seco&d$#y d$t$:
Through Annual Reports of the company, 0aga8ine etc.
COM+ANY +RO*I)E
"ame of the company / ")RA") #E<AR# $)0)T2-. 0E-H=$
Address / ")RA") #E<AR# $)0)T2-.
C)"AIA. "A<AR, #I "=-77
"2AR .E$A$) 9R=##,
JA0A.HA"-) R=A-,
0E-H=$ '65%%
-)#T/ *A<A$.=T
Regd. =ffice / K !+'%, High :oint- ))
&' :alace Road,
*angalore '7+ ++
*ranch =ffice / *iDapur
#tatus of 9ompany / #ole trading concern.
9onstitution of the firm / Registered under companies act ,'7
(inancial )nstitutions / ..#.).-.9, )-*), *=),
!
Ratio Analysis at NSL
..#.(.9
*ankers of the 9ompany / ).9.).9.) *ank Jamakhandi
#.*.) 0udhol *ranch.
)ndian *ank $okapur.
<rameen bank 0udhol.
:roducts / #ugar F$%+, 0%+, #%+@
0olasses, :ress 0ud, *agasse.
2lectricity.
:ress 0ud ? (ilter cake / This is also another type of product. )t is
sold for Rs.!'+
per Ton.
#ugar #toring 9apacity / ! lakh *ags.
%
Ratio Analysis at NSL
-ISTORY O* NIRANI SU4ARS )TD(
0?s. ")rani #ugars $imited F"#$@, a company incorporated on the 7
th
-ec, ,,' under the 9ompanies Act, ,'7 has applied for Term $oan of Rs.
'.,+ crores to #ugar -evelopment (undF#-(@ for meeting part of the
capital cost of its proDect envisaging moderni8ation ; up-gradation of
e3isting sugar factory with an installed capacity of !'+ T9- to %5'+ T9-
with substantial investment at .ulali cross 0udhol Tq. -ist/ *agalkot,
.arnataka #tate, "#$ has included in the scope of the proDect, the co-
generation of surplus power also at a total proDect cost of about Rs. ,5.++
crores. F#ugar unit Rs. '%.++ crores and cogeneration unit Rs. &&.++ crores@.
Total 9ost of the :roDect, for the #ugar plant e3pansion Rs. '%++ $akhs,FRs.
&!.++ 9rores for sugar and .++ crores loading from co-generation plant
cost@ consisting of an 2quity 9ontribution of Rs. '.%+ 9rores :romoters, Rs.
'.,+ crores equity from #ugar development fund of <ovt. of )ndia ; the
balance of Rs. %.6+ crores funded through Term $oans from the (inancial
)nstitutions?*anks.
The funding for the cogeneration plant costing Rs. &&++.++ $akhs is
envisaged by obtaining Rs. %+6+ $akhs from )R2-A, Rs &&+.++ $akhs from
promoter1s contribution and Rs. 66+ $akhs from sugar development fund.
0?s. "irani #ugars $imited F"#$@ is a company registered under the
)ndian 9ompanies Act, ,'7, initially as :rivate $imited 9ompany, vide
registration certificate number +6?,%&+ of ,,' dated +7.!.,,' by the
registrar of companies in .arnataka, *angalore, #ubsequently, the company
has been converted into :ublic $imited 9ompany vide 9ertificate of
)ncorporation dated '.+!.!++! by R=9, .arnataka, *angalore.
&
Ratio Analysis at NSL
The unit was originally established in the year ,,5-,6 as a modern
.handasari #ugar unit with a crushing capacity of '++ tones of cane per day
and later converted into white crystal sugar unit. This is one amongst the
earliest .handasari unit in the country, which started with a new technology
like/
'
Ratio Analysis at NSL
Fa@ High pressure boiler F%!.+ ATA@
Fb@ 0ultiple effect pressure evaporator system with falling film evaporator
and also with captive power generation.
#ubsequently making use of the <overnment of )ndia1s liberali8ed
policy, vide <ovt. of )ndia notification -9#?#?&?-T- +!-+7-,,6, which
permitted .handasari sugar units to use vacuum system, they moderni8ed
the unit quickly by adding vacuum pans and vacuum evaporators. The
capacity of the plant was increased in stages to its present capacity of !'+
T9- during !++'-+7. The plant runs fairly efficiently and is self sufficient in
fuel and power. )t has recorded an average sugar recovery of over percent
during ,,,-!+++ crushing season.
0?s. "irani #ugar $itd. "ow proposes to e3pand the sugar factory
from the present capacity of !'+ T9- to %5'+ T9- by adding a new plant
of !'++ T9-, retaining the e3isting plant also. Also 7 0> 9ogen :ower
:lant is part of the e3pansion. The proDect appraisal was done by 0ilton
9onsultancy #ervices $imited, :une.
,AC74ROUND O* +ROMOTERS
The key promoter of the company also 9hairman of the company, 0r.
0urugesh R. "irani is 0ember of the $egislative AssemblyF0$A@,
<overnment of .arnataka.
+ROMOTERS :
7
Ratio Analysis at NSL
0?s. "irani #ugars $imited promoted by the following -irectors /
. 0r. 0urugesh R. "irani, *.2., -.*.0 F0$A@
!. 0r. Hanumanth Rudrappa "irani, 0.9om $.$.*
%. 0rs. .amala 0urugesh "irani, *.A.
. 0r. 0urugesh R. "irani, aged about &+ years is the 9hief promoter
and the 9hairman ; managing -irector of the company, is a Technical
<raduate and is the sitting $egislator F0$A@ representing *ilagi
constituency in Assembly of .arnataka, He hails from an agricultural
family from *ilagi Taluk of *agalkot -istrict. He started his carrier as
an industrialist by settling up a modern .handasari sugar plant at
0udhol. 0r. 0.R. "irani has also co-promoted a !'++ T9- sugar
plant at *adagandi village in *ilagi taluk vi8. *ilagi #ugars $imited in
which he holds the position of 0anaging -irector. This unit has Dust
successfully completed trial runs and started commercial operations
Fduring January !++7@. 0rs. 0.R. "irani has also been recogni8ed and
awarded *harat Edyog Ratna award from govt. of )ndia. He has the
credit of taken over a sick mini cement plant of ++ T:- capacity at
0udhol and successfully put into commercial operation with an
increased capacity of !++T:- within a short span of time. His social
services contributed in setting up residential schools, -.2d. college at
0udhol.
!. 0r. Hanumanth R. "irani, aged about &+ years is a post graduate in
commerce and also a leading advocate in *ilagi Tq. He is the brother
of 0r. 0urugesh R. "irani and is also actively involved in the day-to-
day operations of the sugar plant.
5
Ratio Analysis at NSL
%. 0rs. .amala 0urugesh "irani aged about %! years is another director
on the *oard of the company and is the wife of 0r. 0urugesh R.
"irani, who associates 0r. 0urugesh R. "irani and 0r. Hanamanth R.
"irani in company matters.
As could be observed the company is a family concern and the overall
management of the 9ompany rests with 9hairman #hri. 0urugesh R.
"irani who is assisted by the other *oard of -irectors.
*$cto#s ,ehi&d Est$b!ish'e&t
. Abundant available of resources like raw materialFsugarcane@, labors
Fskilled ; semi skilled@, transportation facilities, banking facilities,
!. (ertile land with having irrigation facilities. F<$*9, .rishna River,
<hataprabha river@
%. "o strong competitors.
&. <ovt. #upport.
6
Ratio Analysis at NSL
+RODUCT +RO*I)E
+#oduct +#ofi!e:
0ain product >hite 9rystal #ugar/
The main product of the sugar manufacturing process is white crystal
sugar .This white crystal sugar is manufacturing in the following grades/
$-%+ L $arge si8e sugarM
0-%+ L 0edium si8e sugarM
#-%+ L#mall si8e sugarM
#!-%+ L Cery small si8e sugarM
,y8 +#oducts of Su/$# C$&e:
The sugar mill produces many by-product along with sugar. A typical
sugarcane comprising of '+++ tons capacity can produce %&' on of sugar,
6+++ liters alcohol % tons of yeast, ' tons of potash fertili8er, !' ton of
press mud fertili8er and 5'+ kw of power from bagasse.
Mo!$sses:
0olasses is the final effluent obtained in the preparation of sugar by repeated
crystalli8ation. 0olasses still contains some quantity of sugar, but this sugar
cannot be e3tracted by usual technology. )t is the end product from a refining
process carried out to yield sugar. #ucrose and invert sugars constitute a
maDor portion F&+ to 7+4@ of 0olasses. The yield of 0olasses per ton of
sugarcane varies in range of %.'' to &.'4.
,
Ratio Analysis at NSL
0olasses is mainly used for the manufacturing of ethyl
alocoholFethanol@,Ieast and cattle feed "#$ produces alcohol from the
molasses left after the e3traction of sugar from cane Duice cane be used both
for portable purpose as well an industrial chemical. (urther this alcohol can
be again purified to produce fuel alcohol that cane be blended with petrol.
2thanol is in turn used to produce portable liquor and down stream value
added chemical such as acetone, acid, butanol, acetic anhydride, etc. face
stiff competition form production through the petrochemical route.
The government controls the e3pert of molasses through e3port
license issued for every quarter. 0olasses and alcohol crop based industries
were decontrolled in ,,% and being controlled by respective state
government polices. "early 5+' of the alcohol produced is consumed by
portable alcohol sector.
The molasses prices that used to rule around !++ per ton during the
yearly niceties shot up to Rs.&++ per ton as a result of decontrol crop in
,,7, the prices came down to Rs .&++ level. The increase in e3cise duty to
specific rate of Rs.'++ per ton in ,,5 budget lend to sharp increase in
molasses price.
,$/$sse:
*agasse is a fibrous residue of cane stalk that is obtained after
crushing an e3traction of Duice. )t consists of water, fiber an relatively small
quantities of soluble solids, the composition of bagasse various based on
the variety of sugarcane, maturity of cane, method of harvesting and the
efficacy of the sugar mill, the usual bagasse composition is given below.
!+
Ratio Analysis at NSL
9="T2"T RA"<2 )" 4
0oisture &7-'!
(iber &%-'!
#oluble solids !-7
*agasse is usually as a combustible in the furnaces to produce steam,
which in turn is used to generate power, it is also used as raw materials for
production of paper and as feedstock for cattle.
+o%e# 4e&e#$tio& +!$&t:
:ower plant uses the fiber of the processed sugar cane Fbagasse@ as
fuel to generate electrically in an environmentally responsible manner. An
integarated.! 0> power generates and supplies electricity to the state grid
produced for sugar cane waste used to rotate turbines !&0> power is
utili8ed in the plant remaining power is supplied to .:T9$.
!
Ratio Analysis at NSL
A#e$ of o"e#$tio&84!ob$!9N$tio&$!9Re/io&$!:
"#$ manufacture is originally from .arnataka. The head office of
"#$ umbai,*agalkot sameerwadi plant is main manufacturing plant.
0udhol
0ahalingapur
0alapure
#organvi
Roogi
Ettur
Jamakhandi
*asavanbagevadi
#ameerwadi
T$b!e of Su/$# C$&e C#ushed i& diffe#e&t ye$#
#l."o Iear 9ane 9rushed
F)n $akhs@
Recovery 4 -uration
F-ays@
,,,-!+++ &&'6,.'' 5.7 !++
! !+++-!++ ,+',5.6! 6.6 !!
% !++-!++! 5&'&5.'% ,.5' 6%
& !++!-!++% &'5%'.&% ,.7 !
' !++%-!++& !5,'&.77 ,.6' ,,
7 !++&-!++' 7%!%&.7+ 6.7 ''
5 !++'-!++7 &5&&+.5%+ +.+, 7%
6 !++7-!++5 %&!67%.5'+ !. !
, !++5-!++6 6%,+5.'&% !.'7 !%

!!
Ratio Analysis at NSL
!%
Ratio Analysis at NSL
,o$#d of M$&$/e'e&t
. #ri. 0urugesh R. "irani 9hairman ; 0anaging -irector
!. #ri. #angamesh R. "irani 23ecutive -irector.
%. #ri. Hanamanth R. "irani -irector.
&. #mt. .amala 0. "irani -irector.
!&
Ratio Analysis at NSL
*UNCTIONA) DE+ARTMENTS
STUDY O* DE+ARTMENTS
Human Resource -epartment
! 0arketing -epartment
% :urchase -epartment
& 9ane -evelopment -epartment
' :roduction -epartment
7 (inance -epartment
5 #ales and -istribution -epartment
!'
Ratio Analysis at NSL
-UMAN RESOURCE DE+ARTMENT
The Human Resource department is the primarily concerned with the
human constitution of an organi8ation. )t is concerned with the manpower
recruitment, remuneration, promotion, retirement etc., all related to human
resource or labors of the organi8ation.
The Human Resource -epartment refers to the systematic approach to
the problem of selection, training motivating and retaining personnel in any
organi8ation. )t also consider with planning, organi8ing, directing the
personnel functions in the organi8ation.
!7
Ratio Analysis at NSL
The de"$#t'e&t is $!so co&ce#&ed %ith #ec#uit'e&t se!ectio& $&d
"!$ce'e&t(
-evelopment and training to the workers.
! -evelopment evaluation of the workers.
% >age and salary administration.
)n "irani #ugars the personnel manager takes all the above responsibilities
and undertakes the activities concerned with him.
#uitable candidates are selected to a particular Dob according to their
qualification and e3perience.
There is no necessary to give training to the workers on separate
machine other than actual production process. Hence training is given on the
Dob only.
0anager and supervisor are continuously inspecting every worker ti
access their performance and there is a better scope for hard workers.
!5
Ratio Analysis at NSL
TIME O**ICE
Time office is one of the important sections of administration
department. This section maintains the attendance of workers. )t also shows
records of a particular workers about his working hours, dit, etc. it evaluates
the workers punctuality, discipline and uniforms and maintains documents
and records for the future reference purpose.
*UNCTIONS
#howing the absenteeism report of H=-.
! To receive the attendance cards from the workers.
% To put attendance of the workers in he muster role.
)n time office there are & types of leaves.
SIC7 )EAVE/- employees are eligible to take have on the sickness. 6 days
sick leave shall be granted with full wages.
CASUA) )EAVE/- + days casual leave shall be granted with full wages or
pay including -A to the every workman.
+RIVI)E4ED )EAVE/- ' -ays privileged leave shall be granted with
full wages or pay including -A to the every workman for every completed
year.
!6
Ratio Analysis at NSL
O,3ECTIVES O* -UMAN RESOURCE DE+ARTMENT
. To maintain good relation between employer and employees.
!. To maintain good industrial relation.
%. To select right person at right Dob.
&. To cope with a chain.
'. To develop employees in organi8ation.
7. To full utili8ation of human resource.
*UNCTIONS O* -UMAN RESOURCE DE+ARTMENT
Recruitment
Job analysis and Dob description
:romotion
>ages and salary administration
Training and development
Records and incentives
>elfare maintenance
!,
Ratio Analysis at NSL
II MAR7ETIN4 DE+ARTMENT
%+
Ratio Analysis at NSL
M$#.eti&/ +#ocess
The term marketing has been derived from the word 0AR.2T.
0arket is generally understood as a place or geographical area where buyers
and sellers meet and enter in to transactions involving transfer of ownership
of goods, service, and securities.
*e$tu#es of M$#.eti&/
)t is consumer oriented.
! )t starts and ends with consumer.
% 0arketing is a system
& )t is a goal oriented.
' 23change process is the essence of marketing.
7 )t is the guiding element of business.
%
Ratio Analysis at NSL
MAR7ETIN4
0arketing is a social and managerial process by which individual and
group obtains what they need and what through creating, offering and
e3changing products of values with others. This marketing is important
element in every organi8ation, which should be maintained compulsory in a
systematic manner.
This section will take care of all sale transactions like sale of sugar,
molasses, *agasse and scrap material. This section works by 5 employees
including sales manager. The factory has sold the sugar according to central
government notification. The central government sends the notice to the
factory every month regarding sale of sugar, without notice the sugar is not
sold to anybody. The government is giving permission for a particular
period, particular for sale of sugar. The sugar is sold to the buyer who quotes
highest price. )n this section, some records like sale of sugar register,
molasses register, *agasse registers and scrap material registers are
maintained.
+RODUCT O* SA)E
The organi8ation undertakes selling activities in two methods/-
*REE SA)E/- free sale of sugar is being done to bulk purchases on
the basis of tenders called, collected, negotiated and sold.
! )EVY SA)E/- This is being sold to the government of .arnataka on
levy basis. The government then distributes the same to the public
through public distribution outlets at predetermined reasonable price.
%!
Ratio Analysis at NSL
+URC-ASE DE+ARTMENT
:urchase success and failure of any company depends on the cost of
materials, the proper buying of materials and procurement of materials at the
right time from the right source is having greater importance in any business.
There is a need for separate department for buying the materials known as
:urchasing department.
The purchase section also connected to administrative department. )n
this section % workers are working including purchase officers. This section
is purchasing all types of materials for the factory, plant and machinery.
This department also maintains the quality of raw materials, by taking
the sample of cane to laboratory test then if the raw material will below
standard then will be reDected, otherwise the raw material will be purchased
at the particular price.
*UNCTIONS O* +URC-ASE DE+ARTMENT/-
Receiving purchasing requisition
-etermining the volume of materials to be ordered
:lacing orders
)nviting tenders and quotations from different suppliers
9hecking and passing bills for payment.
Receiving and inspecting materials.
%%
Ratio Analysis at NSL
CANE DEVE)O+MENT DE+ARTMENT
%&
Ratio Analysis at NSL
O,3ECTIVES O* CANE DEVE)O+MENT DE+ARTMENT
To get high yield of sugarcane to the factory in right time.
To improve variety of cane
To develop the backward area
To provide all facilities like seeds, fertili8ers, unloading and loading
charges
To maintain registration of cane, gang and plantation.
To undertake seed distribution programme
The soil of this area is varying alluvial fertile soil is there on the bank
of .rishna and <hataprabha rivers. (urther upwards, there is a medium deep
black soil, vary fertile well drained light to medium clay soil, which has
received heavy application if from yard 0anu science last +-! years also is
presently in some parts.
The main function of cane development department is to arrange for
raw material, which is required to the factory. (or this the order is received
by priority basis F that is growers who grows sugar cane first in his lead @.
They also provide a loading gang with 6 to + members per village and also
a bonded tractor for transportation.
%'
Ratio Analysis at NSL
SU4AR CANE VARIETIES
At present 9=9-75, 9=9-6+ are very popular sugar cane varieties
growing in this area. The factory had introduced a new variety of sugar cane
that is 9=9 67+%! two years back. Here more than 6'4 of sugar cane is
of variety 9=9 75 which is mainly grown in this area.
S() NAME O* T-E
VARIETY
AREA IN -A
:+5
:R5
9=-9-75 '% ha 7+.+!4
! 9=-6+ &6+ ha !&.,,4
% 9=-67+%! ,! ha &.,,4
%7
Ratio Analysis at NSL
+RODUCTION DE+ARTMENT
The production department is center of the center organi8ation. The
main function of the production department is (unctions/-
To maintain close and co-ordinates relationship with all others.
To upgrade the technical efficiency of the production.
To flow up the daily production schedule of as per plan.
To produce the future needs of the company and to promote the
organi8ation.
O,3ECTIVES
To plan and meet the production requirements as per customer
specification through the continuous improvement in the planning
processing and optimum utili8ation of resource.
To identify control the customer supplied products.
To produce for future needs and customers specification.
This department is one of the core parts in every organi8ation and it
plays a vital role in the organi8ation, smooth going, basically, in every sugar
industry production is divided in to two sections.
2ngineering section
0anufacturing section
%5
Ratio Analysis at NSL
+RODUCTION +ROCESS
Ste" 2( weighing of sugar cane, it means, when the sugar cane comes to the
factory. After weighing of sugar cane the unloaded carrier cane weigh
bridge.
Ste" 6( )n the ne3t step sugar cane go to the cane cutter machine and it cuts
the fine pieces after that, there are % mills and ' mills tandem that is
sequential mill.
Ste" ;( After the milling of sugar cane there is a separation of baggasse and
Duice milk, baggasse will be used as a fuel. There are 5 boilers. They used as
a fuel and there is production steam and steam is used to produce the
electricity.
Ste" <. The Duice, weighing takes place and there are mi3ing the Duice and
there is addition of phosphoric. After heated of Duice milk 5' 9 that Duice is
called as Raw Duice.
Additional of milk of lime and #=! is called #ulfur and this again
goes to Duice heater it heated up to +& 9.
Ste" =. Then the ne3t step, the Duice sent to clarifier and in that there is a
separation of dust and clear transferals Duice.
9lear Duice sends to N*hoomi $abhO. This is the produce fertili8er.
9lear Duice will be thick. )t calls as syrup. Again add to the milk and #=!
then it is called syrup suplitation.
%6
Ratio Analysis at NSL
Ste" >. sulpitation comes to the pan boiling station and this there are %
categories, A,* and 9 first of all the sulpitation goes to the NAO category.
And the pan boiling directly goes to pan crystal. Raw sugar goes to
the centrifugal machine routed to the high speed of around !++ rbm. )t will
be separated sugar crystal and molasses.
Ste" ?. )n this, the sugar crystal downs and passes through grass happer. )n
the grass happer the sugar goes to the one place to another place.
After there is gradation, in that there are % grades. )t will be divide the %
grades/- high grade, small grade, low grade.
Ste" @. And then the sugar goes to the different vessels. )n that, package of
sugar. )n this there are ! types packing e3porting and domestic is different.
*INIS-ED +RODUCTS
(inished product is sugar. There are % types of finished sugars, High
Auality, 0iddle Auality and $ow Auality.
These are % types of bye products
0olasses
*agasse
(ilters mud
%,
Ratio Analysis at NSL
EN4INEERIN4 SECTION
This section is assisted by workshop. )t maintains all the work
connected with plant and machinery.
OR7S-O+:-
)n this workshop machinery work is done. The spares, materials are
fabricated using the lather machines in the workshop, shaping like square
cutting etc is also done in the workshop. (ollowing machines are used in
this workshop.
! lathe machines for round Dob
redial drilling machines for drilling hole
shaping machine of %!P for right angle planning
hacksaw machine for cutting
grinding machine for tool grinding
MANU*ACTURIN4 SECTION
The manufacturing section again divided in to % sub sections.
$aboratory
0anufacturing process
<o down
&+
Ratio Analysis at NSL
)A,ORATORY
The factory has a separate well equipped laboratory. The main
activity of the lab is to check the content of sugar in the sugarcane and also
fi3ing the correct shape and si8e of sugar. The lab prepares hourly reports
which advice on the addition of other chemicals in he production.
OT-ER CONCERNED ACTIVI4IES O* T-E )A,ORAORY
)t determines the percentage of water content in the dilution of Duice.
)t determines as well as maintaining the temperature of boiling Duice.
9hoice of color and si8e of sugar.
To manage time and quality.
)t decided the percentage and contents and chemicals to be added
during production.
To finds the :H of water through universal indicator.
&
Ratio Analysis at NSL
C-EMICA) DE+ARTMENT
C-EMICA)S USED IN +RODUCTION
9austic #oda F #odium 9arbonate @
>ashing soda F #odium *icarbonate @
9ommon salt F sodium 9hloride @
:hosphoric Acid F To maintain the :H @
Ammonium *i-fluoride
(ormalin quality maintain and preservative
0ill sanitation chemical to prevent the generation of bacteria and
germs
Hydrous - Esed for 9olor
Ciscosity - Esed for reducer
0isopropile - Esed for Alcohol
9ommercial H9$
*leaching :owder - #hining purpose
$ed Acitate -(or laboratory purpose
&!
Ratio Analysis at NSL
+#ocess
&%
Ratio Analysis at NSL
*INANCE DE+ARTMENT
&&
Ratio Analysis at NSL
SOT ANA)YSIS
STREN4T-S
The :romoter are young political background and have vast industrial
e3perience in the field of #ugar and are having good relationship with
the local farmers. This may help them in sugarcane procurement.
"o difficulty is envisaged in availability of raw material i.e. sugar
cane, as the proDect is coming up in the area of sugar cane growing
belt with a good irrigation facilities and good recovery.
The area will not suffer draught as the $ift irrigation system of Almatti
-am as already implemented hence the #ugar recovery in the area is
good.
The co-generation of power of 7 0> will improve the profitability
of the company.
The by-product vi8. molasses will bring additional revenue as it will
be sold to distillery units as raw material.
EA7NESSES
9o-<en plant being capital intensive, economics of operations suffer
in case of shortened season.
<overnment policy of full decontrol of sugar during !++%-+&.
#ugar imports will have bearing on the profit margins of the company.
Any disturbance in the co-gen plant would interrupt sugar
manufacturing operations totally. The cost of such interruptions can be
e3tremely high on account of production loss, machine failure,
spillage of Duice, sugar and quality degradation.
&'
Ratio Analysis at NSL
The promoters are having political background and changing loyalties
by the local farmers may affect them in sugarcane procurement.
O++ORTUNITIES
#etting up of further down stream proDects like manufacture of ethanol
or a distillery for manufacture of liquor.
T-REATS
Raw material, cane, being a agricultural product its availability and
prices are dependent upon vagaries of monsoon.
Tough competition from other sugar factories.
(ailure to adopt modern technology.
Enable to satisfy the needs of workers, this might make them to leave
the organi8ation.
&7
Ratio Analysis at NSL
Visio& of Ni#$&i Su/$#s )td(
. To establish production 5,'++ T.9.- at 0udhol.
!. To produce &+ 0egawatt electricity.
%. To produce !,+++ liters of distillery unit..
&. To produce +,+++ ton *io fertili8ers.
'. To establish agricultural development and resource center at 0udhol.
7. :lan to establish "irani 2ducation )nstitution in *ilagi and 0udhol.
5. CiDaya 9o-operative 9redit society. CiDayanagar 0udhol.
6. To implement highly technical "irani 2ducational institutes 0udhol
; *ilagi
&5
Ratio Analysis at NSL
MISSION
>e will provide products of superior quality at competitive price and
ensure sustained profitability and growth.
>e will protect the interest of all concerned promoters, shareholders,
customers, distributors, employees and community.
>e believe in fair trade practice, standards and strive for total
customer1s satisfaction, keeping the environment eco friendly.
>e believe that our people are most valuable assets for personal and
organi8ational growth.
>e will treat our people with dignity and look after the safety and
welfare of individuals and there families.
>e provide electricity which is maDor necessity for the country.
#ugar industries are providing ethanol which can be added in diesel
and diesel is maDor requirement of the company.
O,3ECTIVES O* NIRANI SU4ARS )TD(:
. 0a3imum, effective and efficient utili8ation of available resources.
!. To manufacture good quality sugar and bi-products.
%. >elfare of agriculturists
&. To provide comparative market rate to the farmers.
'. :roper co-ordination and co-operation among its members.
7. To maintain proper means of transportation to the farmers during
season.
5. :rovide modern techniques and methods and of cultivation and to
supply seeds, fertili8ers to the farmers.
&6
Ratio Analysis at NSL
6. To undertake such other activities as are incidental and conductive to
the development of society.
DATA INTER+RETATION A RATIO ANA)YSIS
&,
Ratio Analysis at NSL
INTRODUCTION
Ratio analysis is a technique of analy8ing the financial statement of
industrial concerns. "ow a day this technique is sophisticated and is commonly
used in business concerns. Ratio analysis is not an end but it is only means of
better understanding of financial strength and and weakness of a firm.
Ratio analysis is one of the most powerful tools of financial analysis which
helps in analy8ing and interpreting the health of the firm. Ratio1s are proved as
the basic instrument in the control process and act as back bone in schemes of the
business forecast.
ith the he!" of #$tio %e c$& dete#'i&e
The ability of the firm to meet its current obligation.
The limit or e3tent to which the firm has used its borrowed funds.
The efficiency with which the firm is utili8ing in generating sales revenue.
The operating efficiency and performance of the company .
C!$ssific$tio& of R$tios
Ratios can be classified into different categories depending upon the
basis of classification.
I( TRADITIONA) C)ASSI*ICATION
Traditional 9lassification has been on the basis of financial statements,
on which ratio may be classified as follows.
'+
Ratio Analysis at NSL
2( +#ofit A )oss $ccou&t #$tios(
2.g. <ross :rofit Ratio, "et :rofit Ratio, =perating Ratio etc
6(,$!$&ce sheet #$tio(
2.g. 9urrent Ratio, -ebt 2quity Ratio, >orking 9apital Ratio etc
;( Co'"osite9MiBed #$tio(
2.g. #tock Turnover Ratio, -ebtors Turnover Ratios, (i3ed Assets
Turnover Ratio etc
'
Ratio Analysis at NSL
II( *UNCTIONA) C)ASSI*ICATION O* RATIOS
*u&ctio&$! #$tios
6( )iCuidity #$tios
c@ 9urrent Ratio
d@ Auick Ratio
6( )eve#$/e R$tios
c@ -ebt-equity Ratio
d@ 9urrent Asset to :roprietor1s fund Ratio
III( +RO,A,I)ITY RATIOS
a. <ross profit Ratio
b. =perating profit Ratio
c. Return on investment

IV( ACTIVITY RATIO
i. )nventory Turnover Ratio
ii. Asset Turnover Ratio/
c. (i3ed Asset Turnover Ratio
d. 9urrent Asset Turnover Ratio
iii. >orking 9apital Turnover Ratio.
'!
Ratio Analysis at NSL
ANA)YSIS A INTRE+RETATION
I( )iCuidity R$tio
$iquidity ratio measures the ability of the firm to meet its current
obligation Fliabilities@. )n fact analysis of liquidity needs the preparation of
cash budget and cash and fund flow statement but liquidity ratio, by
establishing a relationship between cash and other current asset to current
obligation, to provide a quick measure of liquidity. A firm should ensure that
it doesn1t suffer lack of liquidity and also that it dose not have e3cess
liquidity.
The common liquidity ratios are/-
2( Cu##e&t R$tio
9urrent ratio may be defined as the relationship between current
asset and current liabilities. This is a measure of general liquidity ; is most
widely used to make analysis of short-turn financial position or liquidity of
firm. )t is calculated by dividing the total current assets by total current
liabilities.
9urrent Ratio Q 9urrent Assets
9urrent $iabilities
'%
Ratio Analysis at NSL
TA,)E82(2 Cu##e&t R$tio


Ye$#
Cu##e&t Cu##e&t R$tio
Assets )i$bi!ities
!++&-+' &%++57+,% &!+''&7 %.+&
!++'-+7 %&%77'!,% !!&5'6+%' .'
!++7-+5 %%7%6,%!7 6+!67!+ +.&!
!++5-+6 &56!75 676'%6&+ +.&6
!++6-+, %&,%&'57 55&'%+,6 +.&'
CURRENT RATIO
3.04
1.5
0.42
0.48 0.45
0
0.5
1
1.5
2
2.5
3
3.5
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
INTER+RETATION
The above table shows that "#$1s current ratio has decreased from %.+& to
.' in the year !++' and !++7 and in the year !++5 it was drastically
fluctuated to +.&! and then the year !++6 it raise to +.&6 but again decreased
to +.&' in the !++, .
The company had the fluctuation of !&.!+4 increase in current assets and
6.64 in current liabilities. in the year !++, the current assets has decreased
by 7.%64 and +.6!4 in current liabilities.
'&
Ratio Analysis at NSL
An ideal current ratio is !/ for every one rupee of current liabilities, current
assets of doable rupee are available. The current ratio determines margin of
safety for creditors, there has been decrease in the ratio during !++,
compared with !++6.
6( Duic. R$tio9Acid Test R$tio
Auick ratio establishes relationship between quick or liquid assets
; current liabilities. )t is also known as acid test ratio. An asset is said to be
liquid if it can be converted into case within short period of time without loss
of value. The prepaid e3penses and stock were e3cluded.
Auick ratio Q Auick asset
9urrent $iabilities
TA,)E82(6 Duic. R$tio

Iear Auick 9urrent Ratio
Assets $iabilities
!++&-+' !6&!6,!6%5 &!+''&7 !.+
!++'-+7 55,,!,55 !!&5'6+%' +.5,
!++7-+5 %6%%!57 6+!67!+ +.5
!++5-+6 !56%5,% 676'%6&+ +.'
!++6-+, 5+56& 55&'%+,6 +.!!
''
Ratio Analysis at NSL
QUICK RATIO
2.01
0.79
0.17 0.15 0.22
0
0.5
1
1.5
2
2.5
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEAR
R
A
T
I
O
Ratio
INTER+RETATION:
The above table shows that the quick assets of "#$ has decreased from !.+
to +.5, in the year !++' and !++7 and had drastical fluctuation to +.5 and
+.' in the year !++5 and !++6 and had slight raise to +.!! in the year !++,.
The company had fluctuation 5.',4 decrease in quick asset and and 6.64
increase in current liabilities and in the year !++, there was increase in quick
asset %%.'74 and +.6!4 decrease in current liabilities.
This ratio measures firm1s ability to serve short term liabilities. The ideal
quick ratio is NO . a low quick ratio represents that firm1s liquidity poison is
not good.
'7
Ratio Analysis at NSL
II( )eve#$/e R$tios
$everage ratios are also known as capital structure ratio. These
ratios indicate mi3 of funds provided by owners ; lenders. As a general rule
these should be appropriate mi3 debt ; owners equity in financing the firm1s
assets.
$everage ratios are calculated to Dudge the long long-term financial
position of the company. #ome of the popular leverage ratios are/
a( Debt8ECuity R$tio
-ebt-2quity ratio shows the relative contribution of creditors and
owners. -ebt-2quity also known as 23ternal-)nternal equity ratio. )t is
calculated to measure the relative claims of outsiders against firm assets.
-ebt-2quity Ratio Q Total -ebt
"et >orth
TA,)E86(2 Debt ECuity R$tio
'5
Iear Total -ebt "et >orth Ratio
!++&-+' ''&+!&, &%+'!&!, +.7
!++'-+7 &,,!&7!,% 7%5,&5 +.7!
!++7-+5 '&5767&5 '766!6+57 +.'!
!++5-+6 '7'+,!577 '5+666'6 +.6!
!++6-+, 7!5%,575 '5!77+65 +.,%
Ratio Analysis at NSL
INTER+RETATION
The table shows that the total debt ratio of "#$ had increase in the
year !++' and !++7 from +.7 to +.7! and had fluctuation to +.'! in the year
!++5 and further increased to +.6! in the !++6 and +.,% in the year !++,.
The company had increase in the total debt by %.!54 and +.!%4 in net
worth and in the year !++, the debt was increased by .+!4 and +.664 in
net worth.
-ebt equity ratio measures ultimate solvency of the company.)t provides a
margin of safety to creditors,thus when the ratio is smaller the creditors are
more secured . An appropriate debt equity ratio is +.%%.A ratio higher than
this is an indication of risky financial policies.
'6
Ratio Analysis at NSL
b( Cu##e&t Assets to +#o"#ieto#0s fu&ds #$tio
This ratio is calculated by dividing total current assets by
shareholders funds. )t indicates the e3tent to which proprietor funds are
invested in current assets. There is no rule of thumb for this ratio ;
depending upon the nature of the business there may be different ratios for
different firms.
9A to :( ratio Q 9urrent Assets
:roprietors (und
TA,)E86(6 Cu##e&t Assets to +#o"#ieto#s *u&d

Iear 9urrent Assets :roprietors (und Ratio
!++&-+' &%++57+,% !5%%'+++ .,5
!++'-+7 %&%77'!,% !5&+++++ .'6
!++7-+5 %%7%6,%!7 !5'%++++ .''
!++5-+6 &56!7& !6+6&,' .,!
!++6-+, %&,%&'57 !!%,6%!5& .'7
',
Ratio Analysis at NSL
C/A TO PROPRIETARY RATIO
1.97
1.58 1.55
1.92
1.56
0
0.5
1
1.5
2
2.5
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
INTER+RETATION
The table of current assets to proprietory ratio shows that the ratio has been
decreased by .,5 to .'6 in the year !++' and !++7 and .'' in the year !++5
and then raise to .,! in the year !++6 and then decreased to .'7 in the year
!++,.
There was raise in current asset by !&.!+4 in the year !++6 and proprietary fund
by +.!!4 and further in !++, there was decrease by 7.%64 in current asset and
there was increase by !.5%4 in proprietary fund
This ratio indicates the e3tent to which proprietors fund are invested in current
asset
7+
Ratio Analysis at NSL
III(+#ofit$b!i!ity R$tios
The primary obDective of a business undertaking is to earn profits.
:rofit is the difference between revenue ; e3penses over a period of time.
:rofit is output of a company ; company will have no further if it fails to
make sufficient profit :rofits are thus a useful measure of overall efficiency
of a firm.
These ratios are calculated to measure the operating efficiency of the
company. *eside management, creditors, owners are also interested in the
profitability of the company. <enerally profitability ratios are calculated
either in relation to sales or in relation to investment. The various profitable
ratios are/
I I& Re!$tio& to S$!es

$5 4#oss +#ofit R$tio
<.:.Ratio measures the relationship between gross profits ; salesG it is
usually represented in percentage. Thus <ross profit margin highlights the
production efficiency at a concern
<.:.Ratio Q <ross :rofit R ++
#ales
<.:.Ratio indicate the e3tent to which selling price of goods per unit
may decline without resulting in losses on operations of firm. )t reflect
efficiency with which firm produces the product.
7
Ratio Analysis at NSL
TA,)E8;(2 4#oss +#ofit R$tio

Iear <ross :rofit #ales Ratio
!++&-+' %!+&66&7 !7,6&!&,' +.
!++'-+7 ,,,!!%! 7!!7567&! +.,
!++7-+5 65'7, ',!'%!76,
%.6
!++5-+6 ,6'7&,5 &'%&%'!% !.7'
!++6-+, 5,'%6,6 5%7!+7,65 +.6
GROSS PROFIT RATIO
0.11 0.19
13.8
21.65
10.8
0
5
10
15
20
25
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
INRTE+RETATION
The above table shows the gross profit ratio of "#$ the table indicates that
the ratio in the year !++' was +. and in the year !++7 it raised to
+.,.further it had drastical change in gross profit to %.6 in the year !++5
and !.7' in the year !++6 ,but decreased to +.6 in the year !++,.
7!
Ratio Analysis at NSL
The company had fluctuated by increase of !+.+74 in gross profit and
decrease by !%.&5 4 in the year !++6 and in the year !++, there is decrease
in gross profit by 6.,54 and increase in sales by 7!.%74.
The gross profit indicates the degree to which the selling price of goods per
unit may decline without resulting in losses on operation of the firm .)t
reflects the efficiency with which firm produces its products.
b5 O"e#$ti&/ R$tio
)t is the relation between cost of goods sold ; operating e3penses on
one hand ; the sales on the other hand. )t measures the cost of operations
per rupee of sales.
=perating Ratio Q =perating 9ost R ++
#ales
TA,)E8;(6 O"e#$ti&/ R$tio
Iear =perating 9ost #ales Ratio
!++&-+' 5,7!+!7+ !7,6&!&,' 77.'7
!++'-+7 &,6',+%%% 7!!7567&! 6+.+5
!++7-+5 ',!,,5'6% ',!'%!76, ++.6
!++5-+6 &&5!+++&, &'%&%'!% ,6.7!
!++6-+, '&'%'%' 5%7!+7,65 5&.+&
7%
Ratio Analysis at NSL
OPERATING RATIO
66.56
80.07
100.8
98.62
74.04
0
20
40
60
80
100
120
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
INTRE+RETATION
The above table shows the firm1s operating ratio increasing drastically from
77.'7 in the year !++' to 6+.+5 and ++.6 in the years !++7 and !++5 but
further fluctuating to ,6.7! in the year !++6 and 5&.+& in the year !++, .
There is a decrease in operating cost by !&.'64 and ,!.%&4 in sales but in the
year !++, there was increase by !.,%4 in operating cost and 7!.%74 in
sales.
An increase in the ratio over a previous period is an indication of
improvement in a operational efficiency of a concern the higher the ratio is
more successful the business is ,but a lower ratio indicates large amount of
manufacturing e3penses.
7&
Ratio Analysis at NSL
6( +#ofit$bi!ity i& #e!$tio& to I&vest'e&t
$( Retu#& o& sh$#eho!de#s I&vest'e&t:
Return on shareholders investments, popularly known as R=). )t is
the relationship between net profit after ta3 ; shareholders funds. Thus this
ratio is considered as affective indicator of the company1s profitability
because it reflects the success of management in the efficient utili8ation of
the owner1s investment.
R=)Q. "et :rofit after Ta3 R ++
#hareholders fund

TA*$2-%.% Return on shareholder investment
Ye$# S$!es Cu##e&t Assets R$tio
!++&-+' !7,6&!&,' &%++57+,% +.7!
!++'-+7 7!!7567&! %&%77'!,% .6
!++7-+5 ',!'%!76, %%7%6,%!7 .57
!++5-+6 &'%&%'!% &56!7& .+,
!++6-+, 5%7!+7,65 %&,%&'57 !.
7'
Ratio Analysis at NSL
INTRE+RETATION:
The above table reveals that there is increase in the return on investment
from !+4 in the year !++' to !,4 in the year !++7 but fell down to 5.+4
in the year !++5 .(urther in the year !++6 there was a drastical raise to
!&.&4 but fluctuated to +.+&4 in the year !++,.
Through the analysis we found that in the year !++, the net profit was
decreased by ,,.6!4 and increased shareholders fund by +.5%. This ratio is
used to measure the overall efficiency of a concern ,the higher the ratio the
better the results will be as this ratio reveals how well the resources of a
concern are being used.

77
Ratio Analysis at NSL
IV( Activity R$tios:
(unds are invested in various assets in business to make sales ; earn
profit. The efficiency with which assets are managed directly affects the
volume of sales. The better the management of assets, the larger is the
amount of sales ; the profit. Activity ratio measures the efficiency or
effectiveness with which a firm manages its resources or assets. These ratios
are also called turnover ratio because they indicate the speed with which
assets are converted or turned over into sales.
The various activity ratios are/
$( I&ve&to#y Tu#&ove# R$tio:
)nventory turnover ratio indicates the number of times stock has
been turned over during the period ; evaluates efficiency with which a firm
is able manage inventory.
The ratio is calculated by dividing the net sales divided by average
inventory at cost.
)TRQ "et #ales .
Average )nventory at 9ost
Average inventory should be taken for calculating stock turnover ratio.
Adding the stock in the beginning ; at the end of period ; dividing it by !
to calculate average inventory.

75
Ratio Analysis at NSL
TA*$2-&. )nventory turnover ratio
Iear "et #ales Average )nventory Ratio
!++&-+' !7,6&!&,' &,+&+''7 .6
!++'-+7 7!!7567&! &&+&'5% !.&&
!++7-+5 ',!'%!76, %!7&++6+ .,
!++5-+6 &'%&%'!% &6&7!%+&& +.,&
!++6-+, 5%7!+7,65 %5,%&&%& .,&
INVENTORY TURNOVER RATIO
1.81
2.44
1.9
0.94
1.94
0
0.5
1
1.5
2
2.5
3
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
76
Ratio Analysis at NSL
INTER+RETATION:
The table shows the increase in the inventory turnover ratio from .6 to
!.&& in the year !++' and !++7 .)n the year !++5 there was a fluctuation to
., and further to +.,& in the year !++6,but in the year !++, there was a
drastical increase to .,&.
The company had !%.&54 decrease in net sales and increase by ''.++4 in
average inventory but in the year !++, there was increase in net sales by
7!.%74 and decrease by !.5%4 in average inventory.
)nventory turnover ratio signifies the liquidity of the inventory. A high ratio
implies good inventory management ,a low ratio results in blocking of funds
in inventory. The reference value of this ratio , and the ma3imum conversion
period is %66.

7,
Ratio Analysis at NSL
b( Assets Tu#&ove# R$tio:
Assets are used to generate sales. Therefore a firm should manage its
assets efficiency to ma3imum sales. Assets turnover ratio shows relationship
between sales ; assets. The various assets turnover ratio are/MM
i( *iBed Assets Tu#&ove# R$tio:
This ratio establishes the relationship between the costs of goods sold and
fi3ed assets. )t can be calculated by ,
(i3ed Assets Turnover Ratio Q #ales
(i3ed Assets
TA,)E : <(6 *iBed Assets Tu#&ove# R$tio
Iear #ales "et (i3ed Assets Ratio
!++&-+' !7,6&!&,' '!%'6'%' +.'
!++'-+7 7!!7567&! '%!7,+',' .7
!++7-+5 ',!'%!76, '766!6757 .+&
!++5-+6 &'%&%'!% '5+666'6 +.6+
!++6-+, 5%7!+7,65 '5!77+65 .!,
5+
Ratio Analysis at NSL
F/A TURNOVER RATIO
0.51
1.16
1.04
0.8
1.29
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
INTRE+RETATION:
The table reveals that there is increase in fi3ed asset turnover ratio from +.'
in the year !++' to .7 in the year !++7 but decreased to .+& in the year
!++5 and drastical fluctuation to +.6 in the year !++5 and raise in the year to
.!, in the year !++,.
The company had !%.&54 decrease in net sales and increase in fi3ed assets by
+.!%4 in the year !++6 and further in the year !++, it had increase net sales
by 7!.%74 and increase by +.64 in fi3ed assets.
=ne of the cautions to be kept in mind that when fi3ed assets are old and
substantially depreciated the ratio tenders to be high,because,the denominator
of the ratio will be low.
5
Ratio Analysis at NSL
ii( Cu##e&t Assets Tu#&ove# R$tio:
This ratio is indicates how many net sales are made for every rupee of
investment in current assets.
9urrent Assets Turnover Ratio Q #ales
9urrent Assets
5!
Ratio Analysis at NSL
TA,)E: <(; Cu##e&t Assets Tu#&ove# R$tio

C/A TURNOVER RATIO
0.62
1.81 1.76
1.09
2.11
0
0.5
1
1.5
2
2.5
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEAR
R
A
T
I
O
Ratio
INTRE+RETATION:
The table reveals that the current ratio has drastical increase from +.7! the
year !++' to .6 in the year !++7 but again there was a decrease to .57 in
the year !++5 and .+, in the year !++6. *ut there was a drastical increase of
ratio to !. in the year !++,.
5%
Ye$# Net +#ofit Sh$#eho!de# *u&d R$tio
!++&-+' &%+'!&!, !5%%'+++ !+4
!++'-+7 7%5,&5 !5&+++++ !,4
!++7-+5 '!&',%6 !5'%++++ 5.+4
!++5-+6 '+&'575 !6+6&,' !%.&4
!++6-+, ,&!% !!%,6%!5& +.+&4
Ratio Analysis at NSL
The company had decrease of !%.&54 in net sales and increase in current
assets by !&.!+4 . )n the year !++, there was increase in net sales by 7!.%74
and 7.%64 decrease in currents asssets.
d( o#.i&/ C$"it$! tu#&ove# R$tio:
A firm may also related net current assets to sales. >orking capital
turnover ratio indicates the velocity of the utili8ation of net working capital.

>orking 9apital Turnover RatioQ #ales
"et 9urrent Assets
TA,)E:<(< o#.i&/ C$"it$! Tu#&ove# R$tio

INTER+RETATION
5&
Iear #ales "et 9urrent Assets Ratio
!++&-+' !7,6&!&,' &'67&!&'.' .!!
!++'-+7 7!!7567&! 7!'!,%+7.& %.%5
!++7-+5 ',!'%!76, !!6665+'&5 +.!
!++5-6 &'%&%'!% 6,+5!'6.' '.!%
!++6-+, 5%7!+7,65 5!7,+6'%.& 6.'
Ratio Analysis at NSL
The table reveals that the working capital turnover ratio of "#$ in the year
!++' was .!! and increased to %.%5 in the year !++7.but in the year !++5
there was a drastical fluctuation to +.! in the year !++5 further there was a
high increase in working capital turnover ratio to '.!% in the year !++6 and
6.' in !++,.
There is decrease in net sales by !%.&54 and ,&.6+4 in net current assets in
the year !++6 and in the year !++, the net sales increased by 7!.%74 and
decreased by %6.674 in net current assets.
The assets turnover ratio measures the efficiency of a firm in managing and
utili8ing the assets.Higher turnover ratio,more efficient is the management
utili8ation of the assets while low turnover are indicative of under utili8ation
of available resources and presence of idle capacity. )n operational terms, it
implies that firm can e3pand its activity level without requiring additional
capital investments.
*INDIN4S
5'
Ratio Analysis at NSL
A
SU44ESTIONS
57
Ratio Analysis at NSL
*INDIN4S

I ( )IDUIDITY RATIO:
. (rom the current ratio it is found that the ratio is not satisfactory
because the 4 increase in current assets is less than the 4 increase in
current liabilities during the year !++'-!++,.The highest ratio
recorded is %.+& in !++' and the lowest ratio recorded is +.&! in the
year !++5.And less than the standard ratio.
!. (rom the quick ratio it is found that the ratio is not satisfactory
because the ratios recorded during the year were less than the standard
ratio.)n the year !++6 the ratio recorded is +.' and the ratio recorded
highest was !.+ in the year !++'.
II ( )EVERA4E RATIO:

. (rom the debt equity ratio it is found that the ratio recorded during the
year !++',!++7,; !++5 is satisfactory as the ratios are near to the
standard ratio but during the year !++6;!++, it is not satisfactory as
the ratios are very high compared to the standard ratio.
!. (rom the current assets to proprietors fund ratio is not satisfactory as
the proprietory funds invested in the current assets is less in the year
!++, is less compared to previous years .The highest ratio recorded is
.,5 in the year !++' and the lowest ratio recorded is .'' in the year
!++5.
55
Ratio Analysis at NSL
III ( +RO*ITA,I)ITY RATIOS:

. (rom the gross profit ratio it is found that the ratio is satisfactory
during the last three years from !++5 to !++,. The highest ratio
recorded in the year !++6 is !.7' and the lowest ratio recorded is +.
in the year !++'.
!. (rom the operating profit ratio it is found that the ratio is highly
satisfactory during the considered financial years.The highest ratio
recorded is ++.+6 in the year !++5 and the lowest is 77.'7 in the year
!++&.
%. (rom the return on investment it is found that the ratio calculated for
the considered financial years is good . The ratio is satisfactory as the
return on investment is effective and good,comparing the previous
years.
IV ( ACTVTY RATIOS :
. (rom the inventory turnover ratio it is found that the ratio is not
satisfactory as the inventory holding period is very high,compared
during the financial years.
!. (rom the fi3ed assets turnover ratio it s found that the ratio is
satisfactory as the ratios are raising yearly during the comparative
years.
56
Ratio Analysis at NSL
Su//estio&
. The company may improve its current ratio by decreasing the current
liabilities because in the year !++6-+, current assets are decreased
and it may also improve its quick ratio.
!. The company may decrease its total debt as there is increase in total
debt the year !++6-+,. The company may increase its investment in
current assets.
%. $ong terms solvency of the company has to be improved by limiting
amount invested by outsiders to the amount invested by the owner of
the company . this can be achieved by purchasing the shares gradually.
&. The proper management of the inventory can improve liquidity
position and efficiency of the company.
5,
Ratio Analysis at NSL
CONC)USION
#tuday of ratio analysis of nirani sugars $td. Reveals the performance
of the company in terms of financial aspects. )t is found that there is increase
in sales gross profit during !++' to !++,. The cash balance is also increased
for the above saied years this is due to company1s revised policy in debt
collection. )t is also observed that the current ratio is not so satisfactory
which creates chunks in the current assets in the form of sundry debtors and
inventory.
6+
Ratio Analysis at NSL
Refe#e&ces
@. Annual reports of "irani sugars ltd. for !++', !++7, !++5, !++6, !++,.
!@. J 0adegouda NAccounting for managersO
%@. .han 0 and :... Jain N(inancial managementO
6

Vous aimerez peut-être aussi