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INTRODUCTION
Ratio Analysis of financial statements stands for the process of determining and
presenting relationship of items and group of items in the statements.
There are different ratios which an analyst can employ depending on the purpose
for which the analysis is made. A creditor, who likes to know the ability to meet its
current obligations, may think of current and liquid ratios, similarly, managers and
investors who want to know operationally efficiency may think of return on investments,
turnover and fixed assets, earnings per share, book value per share and dividend per
share.
Ratio analysis is a powerful tool of financial analysis.
It is
a process of
identifying the financial strength and weakness of the firm by properly establishing
relationship between the items of Balance sheet and Profit and Loss a more meaningful
understanding of the financial position and performance of a firm.
A ratio is a mathematical relationship between the two related items expressed in
quantitative form. A ratio is used as an index yard stick for evaluating the financial
position and performance of a firm.
Liquidity Ratios:
It is extremely essential for a firm to be able to meet its obligations as they
become due. Liquidity Ratios measure the ability of the firm to meets its current
obligations. In fact, analysis of liquidity needs the preparation of Cash Budgets and Cash
flow statements .But liquidity ratios, by establishing in a relationship between Cash and
other Current obligations provide a quick measure of liquidity.
Also that it is not too much meets its obligations, due to lack of sufficient
liquidity, will result in bad credit rating, loss of creditors' confidence, or even in lawsuits
resulting in the closure of the Company. A very high degree of liquidity is also bad.
Therefore, it is necessary to strike a proper balance between Liquidity.
The ratios, which measured and indicate the extent of firm's liquidity, are known
was liquidity ratios or short-term solvency ratios commonly used liquidity ratios
included.
Leverage Ratios:
The long term creditors like Debentures holders, financial Institutions, etc. , are
more concerned with the firm's long -term financial strength. To judge the long-term
financial position of the firm, Leverage or capital structure ratios are calculated. These
ratios indicate the funds provided by the owners and creditors. As a general, there should
be an appropriate mix of the debt and owner's equity in financing the firm's assets.
Firm with low leverage have less risk of loss, but they also have lower expected
returns. Conversely firms high leverage ratios have risk of large losses.
But also have a chance of earning huge profits. Therefore, before deciding
whether a firm should have debt, must balance with higher expected returns against
increased risks. The most commonly examined leverage ratios are:
Viswam Degree and PG College, Angallu, Madanapalle
ii)
iii)
Activity Ratios
The funds of creditors and owners are interested in various kinds of Assets to
generate sales and profit. The better the management of Assets, the larger will be the
amount of sales. Activity ratios are employed to evaluate the efficiency with which the
firm manages and utilizes its assets. These ratios are also called Turn over ratios because
they indicate the speed with which assets are being converted or turn over in to sales.
Activity ratios thus involve a relationship between sales and the various assets .A proper
balance between Sales and Assets generally reflects that assets are managed well.
Following are some of the important activity ratios.
i)
ii)
iii)
iv)
v)
vi)
Profitability Ratios:
A company should earn profits to survive and grow over a long period of time.
Profits are essential, but it would be wrong to assume that every action initiated by
management of the company should be aimed at maximizing profits, irrespective of
social consequences.
Profit is the difference' between total Revenues and total Expenses over a period
of time. Profits are the ultimate output of a company and it will have no future if it fails
Viswam Degree and PG College, Angallu, Madanapalle
ii)
Operating Ratio
iii)
iv)
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11
INDUSTRY PROFILE
ORIGIN:
Rayalaseema is economically backward area in Andhra Pradesh was rarefied
region for industries. A dynamic entrepreneur Sri S.P.Y.REDDY who is basically a
Mechanical Engineer started unit at Nandyal, which manufactures black pipes in 1977.
The determination and hard work of Sri S.P.Y.REDDY helped him to over come the
problems faced by the company in the initial years, and with financial assistance from
local commercial banks. The company could over come the problems of the merger and
is running smoothly.
Late the company started manufacturing PVC pipes, which terminated the
manufacturing of black pipes. This resulted in the formation of a PVT Ltd., Company
called SUJALA PIPES PVT LTD., with Sri S.P.Y.REDDY as the managing director.
The only major competitors to the company are Sudhakar Pipes, Maharaja Pipes.
The only backdrop to it is the competition from local brands. As the majority of
customers belong to farmers, they consider than quality. The company has to make
aware of the companys quality standards to them.
Nandi has its origins in the year 1979, when Mr.S.P.Y.REDDY, a technocrat left
his job at Bhaba Atomic Research Centre, Mumbai to start a plastic containers unit in
Anantapur. The company has grown at a fast pace and Mr.REDDY who sensed an
opportunity in making pipes for irrigation started manufacture of PVC Pipes in year
1984 and has fast become leading manufacturer in Andhra Pradesh and later in India.
With annual consumption of 50,000 tones of resin, Nandi group is one of the biggest
plastic processors in Asia. The group has either setup or acquired plants in different
geographical locations of South India to improve operational efficiency and to enhance
customer satisfaction. Nandi group sells PVC pipes under 4 brands of which Nandi
brand is the most Prominent.
Plastic have become synonymous with modern living. It is undoubtedly a
product, which has penetrated extensively into the common mans life. No wonder the
industry has achieved in terms of supply of raw material expansion and diversification of
processing capabilities and manufacturing of processing machinery and equipment.
Viswam Degree and PG College, Angallu, Madanapalle
12
This versatile material with its superior qualities such as light weight, easy
process ability corrosion resistance, energy conservation, no toxicity etc., many
substitute to a large extent many conventional and costly industrial materials like wood,
metal, glass, jute lather etc., in the future. The manifold applications of plastics in the
field of automobiles, electronics, electrical, packaging and agriculture give enough
evidence of the immense utility of plastics.
At 80 percent of total requirement for raw material and almost all types of
plastic machines required
investment in all the three segments of the industry namely production of raw materials,
expansion and diversification of processing capacities, manufacturing of processing
machinery and ancillary equipment is Rs. 1,250 crores and it provides employment to
more than eight lakh people.
On account of their inherent advantage in properties and versatility in adoption
and use, plastics have come to play a vital role in a variety of applications, the world
over. In our country, plastics are used in making essential consumer goods of daily use
for common man such as baskets, shopping bags, water bags, water bottles, school bags,
Tiffin boxes, hair combs, tooth brushes, spectacle frames and fountain pens, they also
find applications in field like packaging, automobiles, and transportation, engineering,
electronics, telecommunications, defense, medicine, and building and construction.
Plastics are growing in importance in agriculture and water management.
The Govt of India recognizing the importance of plastics in agriculture appointed
on March 7th, 1981 a National Committee on the use of plastics in agriculture under the
chairmanship of Dr.G.V.K.Rao. This committee has forecast a tremendous growth of
drip irrigation through a net work of plastic pipes and tubes. In its opinion large scale
adoption of irrigation would lead to sports in demand for PVC pipes, L.D.P.E tubes and
polypropylene emitters.
recommendations for
13
are Australia,
Bangladesh, Canada, Egypt, Hong Kong, Italy, Kuwait, Federal Republic of Germany,
Sri Lanka, Sweden, Taiwan, U.K., U.S.A., and Russia.
With view to boosting the export, the plastics and linoleums export promotion
council has urged the government to reduce import duty of plastic raw material, supply
indigenous raw materials at international prices, fix duty, draw backs on weighted
average basis and charge freight rate on plastic products on weights basis instead of
volume basis.
Prospects:
The Production of various plastics a raw materials in the country is expected to
double by the end of seventh plan, the consumption of commodity plastics including
LDPE, HDPE, PP, PS AND PVC is immense scope for the use of plastics in agriculture,
electronics, automobile, telecommunications and irrigation and thus, the plastic industry
is on the threshold of an explosive growth.
Role of Plastics in the National Economy:
Plastics are got perceived as just simple colorful household products in the mind
so common person. A dominant part of the plastics of the percent and future find their
utilization in the areas.
14
15
seepage, which was predominant in earlier practices, with services of P.V.C pipes, water
can be transported efficiently with lesser from the place of higher potential to the place
of lower water potential.
Presently the revolutionary tried in water management speaks much about drip
irrigation, which is developed in Israel and is practiced by all agricultural based nations
in the world. Drip irrigation greatly P.V.C pipes as core tools of implementation with
the services of this sort, P.V.C pipes one way or the other strengthening the hands of
countrys economy.
A part with the referred P.V.C pipes supplemented with fitting is used in houses
for electrical connection and other domestic purposes.
applications it has got wide applications even in industrial sectors. P.V.C pipes with
much unique heart, chemical and physical characteristics serve
many industrial
purposes.
Even characteristics of weight and low price attract many more applications.
Ragid PVC pipes have been manufactured in India from the 60s on imported extrusion
lines and there after indigenous plan were few pipes manufactures upto 1979-83. When
many extrusion lines were imported from batten field. Cincinnati, Kraaus maffi etc,
the Govt allowed the imports of sophisticated and high output plants, which were not
available indigenously.
PVC Pipes in India:
Pipes products have found wide acceptance in India and abroad. PVC is one of
the more versatile plastics. It can be extruded, molded, calendared and thermoformed
into a multitude of furnished products. The PVC resin can be formulated to give a wide
range of properties ranging from hand, tough materials for load bearing application lime
pipes, windows and doors to flexible materials for products a due as wire and cable
insulation and shooting and flooring.
16
For
in the field of
horticulture commercial cropping and greenply houses. The drip irrigation concept is
becoming more popular with its advantages like highly yield, water conversion, less
labour cost, less fertilizer, less past management costs, less power costs and many more
advantages. The demand for this concept is increasing at a place of 30% - 40% per
annum.
Agriculture a sunrise industry in the Indian economy is mainly dependent on the
PVC pipes for the seawater sector and pumping to their aqua ponds. They are using
pipelines of four to five kilometers of 10-16 diameters pipes.
The state Govt of A.P is using rigid PVC pipes for the irrigation water supplies
for the past few years.
17
COMPANY PROFILE
MONARCH PIPES:
Monarch Pipes Ltd., was incorporated in the year 1986. The factory is situated
at Nh 7, Hampapuram Village, Rathadu Mandalam, Nandipur District. It was taken
over by Nandi Pipes.
In annual production capacity is 16000 Mts, and
manufactures of PVC pipes in the South India. The company is equipped with technical
collaboration from Batten field of West Germany. It has made possible few other small
ventures.
and
KRISHNA.
Monarch pipes with their good quality trouble free services durability and
economical use or a better choice than mild steel, Galvanized steel, cast iron and plastic
pipes. The company is managed by a term of professionals under the guidance of a
young, experienced and well qualified dynamic managing director Mrs.Sreedhar Reddy.
Nandi PVC Pipes Ltd., Nandyala a premier enterprise of Nandi Group is the will
known manufacturer of the largest and most comprehensive range of UPVC Pipes in
India. Nandi Gold Pipes, with a diameter up to 400 are suitable for water Transportation,
Irrigation, Plumbing, Drainage, Cable Ducting, Bore Wells, Transfer
of Industrial
18
Mission Statement:
The mission statement of Nandi PVC Pipes Pvt Ltd., is as follows:
To be preferred supply chain partner to out customer.
To be recognized as the best in the world at we do.
To create new values in the quality for our customers and employees.
Vision Statement:
The vision statement of Nandi PVC Pipes Pvt Ltd is as follows:
Creating new values in quality by working together for you
BOARD OF DIRECTORS
S.P.Y.REDDY
Sri S.P.Y.REDDY locally well known industrialist with the base at Nandyal,
Is
technically qualified person with B.E. MECHANICAL from R.E.C (Warangal) and with
work experience at BAARC (Bombay). He has daringly ventured and established
industries.
NANDI MILK
MAHANANDI MINERALS WATER
NANDI INFOSYS
NANDIONLINE SERVICES
MONARCH PIPES LTD
INTEGRATED THERMOS PLASTICS LTD
NANDI PVC PRODUCTS
PROMOTER:
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BRANCHES
PONDICHERY
SALEM
BELLARY
MADURAI
GOA
SIZES:
Various sizes ranging to 10 inches pipes are offered to the customers. Even
pipes with different gauges and sizes are manufactured to suit specific conditions.
DETAILS OF NANDI PVC PIPES
PIPE DIAMETER CLASS
MM
20
25
32
40
50
63
75
90
110
140
160
180
200
225
250
INCHES
0.5
0.75
1
1.25
1.5
2
2.5
3
4
5
6
7
8
9
10
CLASS
5
5
5
3
3
2
2
2
2
2
2
2
2
2
2
FLOW RANGE
PRESSURE
10
10
10
6
4
4
4
4
4
4
4
4
4
4
4
LITRE / SEC
0.07 -0.13
0.13-0.25
0.25-0.50
0.50-1.00
1.00-1.80
1.980-3.00
3.00-5.00
5.00-15.00
8.00-15.00
15.00-20.00
20.00-30.00
30.00-40.00
40.00-50.00
50.00-60.00
60.00-70.00
20
1984 - 1985
1985 1986
Telangana Regions
1986-1987
1988-1991
1991-1994
Kerala
TRANSPORTATION:
The transportation department of Sujala Pipes Pvt Ltd. Is very admirable. This
unique strength of the organization enables the dealers to reduce inventory levels to the
minimum. Thus dealers are also supplemented with dealers to reduce inventory levels
to the minimum. Thus dealers are also supplemented with the benefit of the lower tied
up capital in the form of inventory.
Ingredients:
PVC Resin
D.B.L.S
T.B.L.S
Viswam Degree and PG College, Angallu, Madanapalle
21
managerial staff are able in talking their area not highly educated.
Most of the
employees are skilled is uniqueness of workers in Sujala Pipes Pvt., Ltd. There is nonindulgence in trade union activities.
As the company is located in Industrial Estate of Nandyal. It is facilitated with
good communication networks. Which includes telecom; fax machine and Internet
Company has also got the support of electronic date processing. Companys major
settings.
The Companys major strength is considered to be transportation vehicles.
A unique cash out flow justifies it self by providing good reputation of the
company through improved customer service.
`The unit also has
uncompromising excellence, meeting all relevant ISI, BS,DIN, and ASTM standards. In
addition to these features, extensive R&D facilities provide reliable and committed
support for new product development, implying the even if a Nandi Customer is unable
to acquire his precise requirement from our elaborate ranges, Nandi also could supply
customized products as per his own exclusive specifications. Such relentless pursuit of
quality and readiness to adopt and innovate, the propelled the Nandi to the forefront of
this product category in India.
Viswam Degree and PG College, Angallu, Madanapalle
22
company follows cash and carry policy for Nandi Brand. The product is
not delivered until the cash is paid and financial department with the help of marketing
department look after this transaction.
MARKETING DEPARTMENT:
Marketing manager who reports to executive director and assistant marketing
manager who reports and 20 salesmen headed by 30 sales representatives who are
headed by assistant marketing heads the marketing department. Marketing mix and
advertising particulars of Sujala Pipes Pvt Ltd.
Two marketing
managers, financial manager, public relations officer and quality control officer who all
reports to executive director, other than executives there are thousand works in
organization panel consisting of managing director, executive director and managers of
concerned departments makes the recruitment and selection of persons A part from the
attractive salaries company provides health card facilities.
PURCHASING DEPARTMENT:
The perplexing situation i.e., conformed by manufactures of the PVC pipes is
scarcity of resin. Though the govt of India has taken various steps to improve supply
conditions of PVC resin. The Indian manufacturers could meet only 50 percent of
demand of demand of remaining 50 percent is met from imports.
23
distribution.
MANUFACTURER
MANUFACTURER
MANUFACTURER
CONSUMER
DEALER
CONSUMER
Nandi PVC Pipes Pvt.,Ltd. Has an extensive network of 350 dealers in Andhra
Pradesh and who are directly serviced by company sales force and 620 dealers in South
India.
PROCESS:
The main raw materials are HDPE granules, PP granules. The manufacturing for
pipes consist of mixing various resins along with coloring material in a mixture and the
prepared material is fed to the extruder. In the extruder, the material is heated to the
required politicizing temperature (1900 Centigrade to 2300 Centrigrade) the extruded
through the die hard to from the pipe. The hot pipe coming out of the extruder is cooled
Viswam Degree and PG College, Angallu, Madanapalle
24
ORGANIZATION STRUCTURE
MANAGING
DIRECTOR
FINANCIAL
MANAGER
ACCOUNTS
MANAGER
Accounts
Officer
PRODUCTION
MANAGER
PRODUCTION
INCHARGE
Operator
PERSONAL
RELATION
OFFICER
MARKETING
MANAGER
QUALITY
CONTROLLER
Lab
Technician
REGIONAL
MANAGER
PERSONAL
OFFICER
Sales
Officer
25
REVIEW OF LITERATURE
Review of Literature refers to the collection of the results of the various
researches relating to the present study. It takes into consideration the research of the
previous researchers which are related to the present research in any way. Here are the
reviews of the previous researches related with the present study:
Bollen (1999) conducted a study on Ratio Variables on which he found three
different uses of ratio variables in aggregate data analysis: (1) as measures of
theoretical concepts, (2) as a means to control an extraneous factor, and (3) as a
correction for heteroscedasticity. In the use of ratios as indices of concepts, a problem
can arise if it is regressed on other indices or variables that contain a common
component. For example, the relationship between two per capita measures may be
confounded with the common population component in each variable. Regarding the
second use of ratios, only under exceptional conditions will ratio variables be a suitable
means of controlling an extraneous factor. Finally, the use of ratios to correct for
heteroscedasticity is also often misused. Only under special conditions will the
common form forgers soon with ratio variables correct for heteroscedasticity.
Alternatives to ratios for each of these cases are discussed and evaluated.
Cooper (2000) conducted a study on Financial Intermediation on which he
observed that the quantitative behavior of business-cycle models in which the
intermediation process acts either as a source of fluctuations or as a propagator of real
shocks. In neither case do we find convincing evidence that the intermediation process
is an important element of aggregate fluctuations. For an economy driven by
intermediation shocks, consumption is not smoother than output, investment is
negatively correlated with output, variations in the capital stock are quite large, and
interest rates are procyclical. The model economy thus fails to match unconditional
moments for the U.S. economy. We also structurally estimate parameters of a model
economy in which intermediation and productivity shocks are present, allowing for the
intermediation process to propagate the real shock. The unconditional correlations are
closer to those observed only when the intermediation shock is relatively unimportant.
Viswam Degree and PG College, Angallu, Madanapalle
26
27
seek to adjust
their
financial ratios
the
28
RESEARH METHODOLOGY
Research in common parlance refers to a search for knowledge. Research as a
scientific and systematic search for pertinent in formulation on a specific topic. In fact,
research is an art of scientific investigation. It is a careful investigation or inquiry.
Data Sources
Primary Data:
The data has been gathered through interactions and discussion with the finance
department and executive.
Secondary Data:
Referred standard texts and reference books for collecting the information
regarding the theoretical aspects, of the topic.
Annual reports and other magazines published by the company are used for
collecting the required information.
29
30
31
The main objective of the present study is to find out the financial position of the
company.
32
Confidential matters like financial position soundness etc. are naturally not
disclosed fully. This is set back while drawing the conclusion.
Since the study covers only SRI NANDI PVC PVT LTD, It does not represent the
over all scenario of the Nandi industry.
33
Current Ratio =
Current Assets
Current Liabilities
Table: 4.1
Years
Current Ratio
2009-10
16137.54
(Rs. in Lakhs)
8106.45
2010-11
18321.76
9202.11
1.99
2011-12
26196.83
10188.34
2.57
2012-13
26616.98
9319.38
2.86
2013-14
35973.84
10109.38
3.56
1.99
34
Graph: 4.1
Interpretation
The current ratio of Nandi Industries Pvt Ltd varied from 1.99 to with an
average of 3.56 during the study period. In the above table and chart, the ratio of
current assets and current liabilities should be 2:1 according to the financial report of
the company that the firm is liquid and has ability to pay its current obligations in
time.
35
2. Quick Ratio
Quick ratio express relationship between quick assets and current liabilities. It
is obtained by measures quick assets by current liabilities. A quick ratio of 1:1 is
considered adequate. For every one rupee current liabilities there should be
maintained one rupee of worth of quick assets.
Quick Ratio =
Quick Assets
Current Liabilities
Table: 4.2
Years
Current Liabilities
Quick Ratio
2009-10
16137.54
7085.18
8106.45
1.99
2010-11
18321.76
9194.09
2011-12
26196.83
10736.86
2012-13
26616.98
12102.91
2013-14
35973.84
14436.48
9202.11
10188.34
9319.38
10109.38
1.99
2.57
2.86
2.56
36
Graph: 4.2
Interpretation
The quick ratio of Nandi Industries Pvt Ltd varied from 1.99 to 2.86 with an
average of 1.11. It was above standard norm of 1:1 for the entire period. It conforms
that the liquidity position of this Nandi Industries Pvt Ltd in terms quick ratio was
more than the standard except in the 2010-11 financial year. The firms capacity of
pays of currant obligations immediately and is a test of liquidity. The high quick ratio
is an indicate of the firm is liquid and has the ability to meet is current liabilities.
37
3. Cash Ratio
This ratio is also called "Absolute Liquidity Ratio" or "Super Quick Ratio".
Since cash is the most liquid asset, a financial analysis may examine cash ratio and its
equivalent to liabilities. Trade investment or marketable securities are equivalent of
cash, the reform, they may be included in the computation of cash ratio is,
Cash Ratio =
Cash+Marketable Securities
Current Liabilities
Table: 4.3
Years
Cash+MS
(Rs. in Lakhs)
2009-10
247.72
8681.59
0.03
2010-11
350.67
9556.53
0.04
2011-12
2650.37
10826.59
0.25
2012-13
420.1
10030.68
0.04
2013-14
3463.66
10109.38
0.34
38
Graph: 4.3
Interpretation
The cash ratio of Nandi Industries Pvt Ltd was started low at first by 0.03in
the year 2009-10 andThen it was increased by 0.25 in the year 2011-12, it was fatly
decreased by 2012-13 by 0.04 and it increased in 2013-14. So, it will increase in
future also.
39
NWC Ratio =
Table: 4.4
Years
Net Assets
(Rs. in Lakhs)
NWC Ratio
2009-10
7455.95
28680.37
0.26
2010-11
8765.23
32901.4
0.27
2011-12
15470.24
40386.36
0.38
2012-13
16586.3
43836.66
0.38
2013-14
25865.46
54106.44
0.48
40
Graph: 4.4
Interpretation
The NWC ratio of Nandi Industries Pvt Ltd was started with 0.26 in the first
year 2009-10 and it was increased same like another two years respectively. The
NWC ratio was increased to 0.38 by the year 2011-12 and it was constant to next
2012-13 and it increased in 2013-14 year. The average NWC ratio of Nandi Industries
Pvt Ltd is 0.45 for during period.
41
LEVERAGE RATIO
1. Debt Ratio
Several debt ratios may be used to analyze the long term solvency of a firm.
The firm may be interested in knowing the proportion of the interest bearing debt in a
capital structure. It may therefore, compute debt ratio by dividing total debt by capital
employed. Capital employed will include total debt and net worth.
Debt Ratio =
Total Debt
Captial Employed
Table: 4.5
Years
Total Debt
Capital Employed
Debt Ratio
2009-10
20999.21
28680.31
0.73
2010-11
24931.96
32901.40
0.76
2011-12
31301.36
40386.36
0.78
2012-13
32679.87
43836.66
0.75
2013-14
41229.73
53755.86
0.76
42
Graph: 4.5
Interpretation
The debt ratio of Nandi Industries Pvt Ltd was started with 0.73 at first year
2009-10. It was increased to 0.76, 0.78, 0.75 and 0.76 by remaining year's i.e.2010-11,
2011-12, 2012-13 and 2013-14 respectively. The last year it was increased with 0.76.
The average debt ratio of Nandi Industries Pvt Ltd is 0.75 for the above study period.
43
Total Debt
Net Worth
Table: 4.6
Years
Total Debt
Net worth
2009-10
20999.21
7781.10
2.69
2010-11
24931.96
7969.42
3.13
2011-12
31301.36
9095.07
3.45
2012-13
32679.87
11156.07
2.93
2013-14
41229.73
12526.13
3.29
44
Graph: 4.6
Interpretation
The debt equity ratio of Nandi Industries Pvt Ltd was started with 2.69 at first
time in the year 2009-10 and then it was increased up to 3.45 in the year 2011-12. It
was decreased by 2.93 in the year 2012-13 and it increased by 3.29. The average debt
equity ratio of Nandi Industries Pvt Ltd is 3.09 during the Study period.
45
Capital Employed
Net Worth
Table: 4.7
Years
Capital Employed
Net worth
2009-10
22264.36
6136.54
3.63
2010-11
28256.36
7781.10
3.63
2011-12
32283.34
7969.42
4.06
2012-13
40386.36
9095.07
4.45
2013-14
53755.86
12526.13
4.29
46
Graph: 4.7
Interpretation
This ratio of Nandi Industries Pvt Ltd was started with 3.63 at first year 200910 and it was increased up to 4.45 in the year 2012-13 it decreased by 4.29 in the year
2013-14. The average of this ratio of Nandi Industries Pvt Ltd is 4.09 during the study
period.
47
ACTIVITY RATIOS
1. Inventory Turnover Ratio
It indicates whether inventory is efficiently used or not the purpose is to see
whether only the required minimum funds have been locked up to inventory. This
ratio implies number of times stock has been turned over during a period and
evaluates efficiency with which a firm is able to manage its inventory.
Usually a high inventory turn over ratio indicated efficient management of
inventory. A low inefficient management of inventory indicating over investment in
inventories, debt business, poor quality of goods, stock accumulation and low profit
as compared to total investment.
Sales
Inventory
Table: 4.8
Years
Sales
(Rs. in Lakhs)
Inventory
(Rs. in Lakhs)
InventoryTurnover
Ratio
2009-10
28608.02
7085.18
4.04
2010-11
30295.60
9194.09
3.30
2011-12
36936.10
10736.86
3.47
2012-13
46365.12
12102.91
3.83
2013-14
64471.61
14436.48
4.46
48
Graph: 4.8
Interpretation
The inventory turn over ratio of Nandi Industries Pvt Ltdwas started with 4.04
at 2009-10. It was decreased by 3.30 at 2010-11 and slowly fluctuation by next 2
years. It was increased by 3.83 i.e., 2012-13 and it increased by 4.46. The average
ratio of Nandi Industries Pvt Ltd is 3.82 for the above study period.
49
Sales
Debtors
Table: 4.9
Years
Sales
(Rs. in Lakhs)
Debtors
(Rs. in Lakhs)
2009-10
28608.00
7197.89
3.97
2010-11
30295.60
6707.59
4.52
2011-12
36936.00
7667.92
4.82
2012-13
46365.00
8814.31
5.26
2013-14
64471.61
11966.16
5.38
50
Graph: 4.9
Interpretation
The debtors turn over ratio of Nandi Industries Pvt Ltd was started with 3.97
by the year 2009-10. It was going up to, increased by 4.52 to 4.82 and it stands at last
by 5.38 in the years 2010-11, 2011-12 and 2013-14 respectively. The debtors turn
over ratio average of Nandi Industries Pvt Ltd is 4.79 for the above study period.
51
Sales
Net Assets
Table: 4.10
Years
Sales
(Rs. in Lakhs)
Net assets
(Rs. in Lakhs)
2009-10
28608.00
28680.37
1.00
2010-11
30295.60
32901.40
0.92
2011-12
36936.00
40386.36
0.91
2012-13
46365.00
43836.66
1.07
2013-14
64471.61
61074.35
1.07
52
Graph: 4.10
Interpretation
The net assets turn over ratio of Nandi Industries Pvt Ltd was 1.00 in the year
2009-10. It was increased and decreased by 0.92 and 0.91 in the years2010-11 to
2011-12 respectively. Then it was increased in the year 2013-14 by 1.07. The average
of net assets turn over ratio of Nandi Industries Pvt Ltd is 0.99 during the above study
period.
53
Sales
Net Fixed Assets
Table: 4.11
Years
Sales
(Rs. in Lakhs)
2009-10
28608.00
20719.42
1.39
2010-11
30295.60
24129.72
1.26
2011-12
24912.53
1.48
2012-13
36936.00
.
46365.00
27242.36
1.70
2013-14
64471.61
28665.35
2.25
54
Graph: 4.11
Interpretation
The Fixed Assets Turn over Ratio of Nandi Industries Pvt Ltd was started with
1.39 in the year 2009-10. Then it was increased and decreased by 1.26 by the years
2010-11 respectively. At last it was increased by 1.48 to 1.70 in the years 2011-12 and
2012-13 respectively and it increased by 2.25 in the year2013-14. Then the average of
this ratio of Nandi Industries Pvt Ltd is 1.61 during the above study period.
55
Sales
Current Assets
Table: 4.12
Years
Sales
(Rs. in Lakhs)
Current assets
(Rs. in Lakhs)
Current Assets
Turnover ratio
2009-10
28608.00
16137.54
1.77
2010-11
30295.60
18321.76
1.65
2011-12
36936.00
26196.83
1.41
2012-13
46365.00
26616.98
1.74
2013-14
64471.61
35973.84
1.79
56
Graph: 4.12
Interpretation
The current assets turn over ratio of Nandi Industries Pvt Ltd was started with
1.77 in the year 2009-10 and it was decreased by 1.65 and 1.41 i.e. 2010-11 and 201112 respectively. Then it may increased by 1.79 in the year 2013-14. The average
current assets turn over ratio of Nandi Industries Pvt Ltd 1.67 during the above study
period.
57
Sales
Net Current Assets
Table: 4.13
Years
Sales
(Rs. in Lakhs)
Working Capital
Turnover Ratio
2009-10
28608.00
7455.95
3.84
2010-11
30295.60
8765.23
3.46
2011-12
36936.00
15470.24
2.39
2012-13
46365.00
16586.3
2.80
2013-14
64471.61
25100.51
2.57
58
Graph: 4.13
Interpretation
The Working Capital Turn over of Nandi Industries Pvt Ltd was started with
3.84 in the year 2009-10. Then it was decreased by 3.46 in the year 2010-11. At the
last three years i.e.2011-12, 2012-13 and 2013-14 it was decreased by2.39, 2.80 and
2.57 respectively. The average of Working Capital Turn over Ratio of Nandi
Industries Pvt Ltd is 3.01 during the study period.
59
PROFITABILITY RATIOS
1. Gross Profit Ratio
This ratio established a relationship between gross profit into sales. It is
calculated by gross profit by sales. It indicates the position of trading result. The
higher gross profit ratio is indicated better performance and lower gross profit ratio is
shown unfavorable.
Gross Ratio =
Gross Profit
x100
Sales
Table: 4.14
Years
Gross profit
(Rs. in Lakhs)
Net Sales
2009-10
34742.20
31587.00
1.00
2010-11
60991.00
33589.00
1.81
2011-12
216164.00
41045.00
5.27
2012-13
400144.00
49472.00
8.10
2013-14
480022.00
64471.61
7.44
60
Graph: 4.14
Interpretation
The Gross Profit Ratio in the year 2008-09 is 1.00, and it is increased in the
next year 2010-11 by 1.81 respectively. Later it is increased in the year2011-12 and
2012-13 by the values of 5.27 and 8.10 respectively later it decreased by 7.44 it has to
increased in future.
61
Table: 4.15
Years
Net Sales
2009-10
2552.80
21024.15
0.12
2010-11
2698.38
28608.29
0.10
2011-12
1163.79
30295.60
0.04
2012-13
2591.74
46365.63
0.06
2013-14
1835.29
64471.61
0.02
Graph: 4.15
62
INTERPRETATION
The above graph shows the Net Profit Ratio of five years from 2010-14. This
shows the relation between Profit after Tax and Net Sales. The Net Profit Ratio in the
year 2009-10 is 0.12 and it decreased in the years 2012-13 and 2013-14 by 0.06, 0.02
respectively, the profit must be increase in future.
FINDINGS
Current ratio is 2.65 in 2012-13 and 3.56 in 2013-14, because of increase in
current assets and current liabilities.
Viswam Degree and PG College, Angallu, Madanapalle
63
SUGGESTIONS
The company should maintain adequate cash to meet daily business
obligations.
Viswam Degree and PG College, Angallu, Madanapalle
64
CONCLUSION
It is concluded that, the firms overall financial performance is very good. If
the credit collection period could be reduced. The company has to increase the
Viswam Degree and PG College, Angallu, Madanapalle
65
BIBLIOGRAPHY
. FINANCIAL MANAGEMENT
Viswam Degree and PG College, Angallu, Madanapalle
66
. FINANCIAL MANAGEMENT
S.P. Khan & P.K. Jain
. FINANCIAL MANAGEMENT
Prasanna Chandra
Web sites
www.google.com
www.money controwork
www.nandipipes.com
NANDI PVC PIPES PVT LTD BALANCE SHEET FOR THE 2009-14
ANNEXURE - I
PARTICULARS
S.NO 2009-10
Rs.
2010-11
Rs.
(Rs. In lakes)
2011-12 2012-13 2013-14
Rs.
Rs.
Rs.
67
Source of funds
1 . Share holders funds
3976.30
a) Share capital
3804.70
a) Secured loans
10986.30
b) Unsecured loans
Total
Application of funds
1 .Fixed assets
a) Gross block
b) Less: Depreciation
c) Net block
d) Capital work in
progress
6015.10
5604.02
754.45
862.01
425.37
589.83
a) Inventories
7085.18
b) Sundry debtors
7197.89
247.72
10
1616.75
2. Investments
3. Current assets, loans
and
Advances
350.67 2650.37
420.10 3463.66
68
11
b) Provisions
586.14
12
354.42
538.25
711.30
774.95
8681.59
7455.95
10.17
6.45
3.59
69
S.NO
Income
Sales
2009-10
Rs.
2010-11
Rs.
2011-12
Rs.
(Rs. In Lakhs)
2012-13
2013-14
Rs.
Rs.
2979.50 3294.08
Sales(net)
4109.00
3107.00
3575.34
Other income
13
Increase(decrease) in
stocks
14
Total
Expenditure
62.34
77.70
33.59
93.21
210.18
879.63 741.46
471.20
14.16
246.82
Raw material
consumed
15
15484.0
Manufacturing
expenses
16
6479.97
8629.00
8874.00
10101.71
4403.50
276.10
644.00
659.16
608.33
Salaries, wages
and other
Allowances
17
954.90
1254.33
1449.00
1862.53
2142.75
Other expenses
18
1612.60
1879.07
2331.00
2479.56
2745.53
19
989.50
1257.86
1832.00
2302.59
4608.48
852.50
1103.6
1156.00
1512.99
1641.84
Depreciation
Total
3474.20
609.91
2164.00
4001.44
2822.82
272.42
52.78
242.00
453.41
318.20
-52.78
242.00
453.41
109.14
70
for
Balance
brought
forward from
17.21
1392.16
546.78
1108.60
193.89
566.00
17.54
14.41
2104.10
415.02
1580.00
2591.74
1835.29
604.21
748.77
837.00
858.92
1242.48
2698.30 1163.79
2417.00
3395.20
3087.77
previous year
Profit available for
appropriation
Appropriations
Transfer to Debenture
Redemption Reserve
Transfer to general
reserve
Proposed dividend
Tax on dividend
Balance carried
balance sheet
to
93.75
187.50
468.75
1500.00
100.00
1000.00
1500.00
1000.00
397.64
198.82
397.00
397.64
397.64
51.97
27.88
67.09
67.58
67.58
748.77
837.10
858.00
1242.48
1143.80
2698.30 1163.79
2417.00
3395.20
3087.77
5.27
1.04
3.98
6.52
4.62
397.63
397.63
397.63
397.63
397.63
basic.
EPS.
71