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CHAPTER-I INTRODUCTION

CHAPTER-1

1.1

INTRODUCTION

The present study of financial performance of BHAVINI is intended to examine the current practices of financial performance in the regard under the present inflationary condition management of financial performance is perhaps more important of an even management of profit and this requires greatest affection of the financial performance. The project communicates financial information to the users through statements and reports. The financial statements contain summarized information of the firms financial affairs organized systematically. They are means to present the firms financial situation to users preparation of the financial statement is the responsibility of the top management as these statements are by investors and financial analyst to examine the firm performance in order to make investment decisions they should be prepared very carefully and contain as much information as possible. Two basic financial prepared for the purpose of external reporting are 1. Profit and loss Account 2. Balance sheet these statements are contained in a companys annual report. It includes the auditors report and accounting policy changes for internal management purposes i.e., planning and controlling much more information than contained in the published financial information is presented in different headings and report in such a way as to serve the internal needs of management. Financial statements are prepared from the accounting records maintained by the firm. Finance is the life blood of the nation as well as organization the success of the organization greatly depends on the better utilization of finance. Finance plays vital role in determining the strength, weakness and control funds of the concern without finance no organization cannot performance its activities in modern enterprises, financial manager occupies a key position he is responsible for shaping the fortunes of the enterprises. The conceptual frame works of financial analysis have been discussed the meaning of financial wealth, method financial analysis tools used for the purpose of financial analysis and compilation of the accounts department functioning in the BHAVINI and detail explain nation about the revenue department and what are the charges they treated as a income and vice versa of the expenditure about of the each section of the revenue department of BHAVINI

The report which was taken in the total study of the accounts department function and in the profit and loss account of BHAVINI and balance sheet for the last five year i.e., 2006-2010 to find the financial position of BHAVINI.

The financial statement method used was, comparative balance sheet statement, common size balance sheet statement and ratio analysis.

1.1.1.1 FINANCIAL ANALYSIS Management, creditors, investors and others to form judgment about the operating performance and financial performance of the firm use the information contained in financial statement. Users of financial statement can get further insight about financial strength and weaknesses of the firm if they properly analyze information reported in these statements. Management should be particularly interested in knowing financial strength of the firm to make their best use and to be able to spot out financial weaknesses of the firm to take suitable corrective action. The further plans of the firm should be laid down in view of the firms financial strength and weaknesses. Thus, financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedure, understanding the past is a prerequisite for anticipating the future.

To have a very clear understanding of the profitability and financial position of a business, the financial statements will have to be analyzed and interpreted. Financial analysis is the process of identifying the strengths and weaknesses of the company with the help of accounting informations provided by the profit and loss account and balance sheet Financial analysis is the process of evaluation of relationship between component parts of financial statements to obtain a better understanding of the firms position and performance. Financial analysis will give the management considerable insight into levels and areas strength or weakness. Financial statements are prepared primarily for decision-making. They play a dominant role in setting the framework of management decisions. But the information provide in the financial statement alone. However, the information provided in the financial statements is of immense use in taking decisions through analysis and interpretation of financial statements. Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and profit and loss account

1.1.1.2

TYPES OF FINANCIAL ANALYSIS

The process of financial statement analysis is of different types. The process of analysis is classified on the basis of information used and modus operandi of analysis. The classification is as under

Types of financial Analysis

On the basis of Material used

On the basis of modus operandi of Analysis

External Analysis

Internal Analysis

Horizont al Analysis

Vertical Analysis

EXTERNAL ANALYSIS: This analysis is based on published financial statements of a firm. Outsiders have limited access to internal records of the concern. Therefore, they depend on published financial statements. Thus, the analysis done by outsiders namely, creditors, suppliers, investors and government agencies are known as external analysis. This analysis serves a very limited purpose.

INTERNAL ANALYSIS: This analysis is done on the basis of internal and unpublished records... it is done by executives or other authorized officials. It is very much useful and significant to employees and management. ON THE BASIS OF MODUS OPERANDI OF ANALYSIS: HORIZONTAL ANALYSIS: In the case of this type of analysis, financial statement for number of years are reviewed and analyzed. The current years figures are compared with in the standards or base year. The analysis statement usually contains figures for two or more years and the changes are shown regarding each item from the base year usually in the form of percentage. Such an analysis gives the management considerable insight in to levels and areas of strength and weakness. Since this type of analysis is based on the date from year to year rather than on one date, it is also termed as Dynamic Analysis.

VERTICAL ANALYSIS: Vertical analysis is also known as static Analysis or Structural Analysis. This analysis is made on the basis of a single set of financial statements prepared at a particular date. Under vertical analysis, quantitative relationship is established between different items shown in a particular statement. Common-size statements are a form of vertical analysis. Different items shown in the statement are expressed as a percentage to any one item as base.

1.1.1.3 OBJECTIVE OF ANALYSIS


1. To interpret the profitability and efficiency of various businesses activates with the

help of profit and loss account. 2. To measure short-term and long-term solvency of the business. 3. To measure managerial efficiency of the firm. 4. To determine potential of the concern.

1.2 COMPANY PROFILE The Nuclear Energy Programme in India has been visualized to grow in three phases. Phase I consisting of natural uranium fuelled Pressurized Heavy Water Reactors (PHWR) which can sustain a capacity of 12 GWe for about 30 years with proven reserves of 50,000 t of natural uranium in the country. Presently 18 Nuclear reactors of PHWR type are under operation with installed capacity of 4780 MWe. Five reactors are under construction with installed capacity of 4800 MWe. The Phase II consists of Fast Breeder Reactors (FBR). FBR can convert the abundant U238 of natural uranium into plutonium and thorium in to U233. Thus the power generation can be increased to 300 GWe for about 70 years. In Phase III by converting thorium into U233 the nuclear capacity can be raised to 1000 GWe and sustained for a period of 500 years. India has gained valuable experience by indigenously constructing and operating a 40 MWt /13 MWe Fast Breeder Test Reactor (FBTR) at Kalpakkam since 1985. For FBTR, all the key components, except grid plate, were manufactured indigenously. Control rod drive mechanisms, fuelling machines and sodium pumps are operating satisfactorily since 1985. No leaks have been observed in steam generators. All the systems have performed well. 500 MWe Prototype Fast Breeder Reactor (PFBR) is a pool type reactor having larger dimensions as compared to FBTR. Design of PFBR has been carried out indigenously with a strong R&D back up in IGCAR. Complete design and technology development was demonstrated by IGCAR before taking the approval for project. Cost effective design has been made by decreasing the number of loops and components and increasing the life to 40 years.

Organization structure:
Manufacturing technology development of critical Nuclear Steam Supply System components, taken up through the Indian Industry, has been done successfully before taking up the construction of PFBR. The construction of a 500MWe Plant will have the following advantages: The standard 500MWe turbo generator set manufactured by BHEL can be effectively utilized in PFBR. This eliminates special development cost. The design can be standardized so that the capital cost and time of construction can be progressively reduced. Operating cost and consequent unit energy cost will be reasonable

Doubling time and specific fuel inventory will be lower for a 500MWe unit, as compared to a 250MWe unit. Increasing the unit size in future, to 1000MWe or higher is expected to be easier and A 500MWe station can be comfortably accommodated in the regional grids. Department of Atomic Energy (DAE) has prepared action plan to set up 5 Fast Breeder Reactors each of 500 MWe capacities by 2020. PFBR is the forerunner of the second stage of Indias nuclear programme and represents the commencement of the commercial phase of the second stage of Indias nuclear power programme. By constructing and operating a 500MWe PFBR, India will be demonstrating techno-commercial viability of the second stage nuclear power programme. Government of India had accorded administrative approval and financial sanction for construction of PFBR in September, 2003. Bharatiya Nabhikiya Vidyut Nigam Limited (BHAVINI), a public sector company was set up in October, 2003 as a special purpose vehicle for construction, commission and operation of PFBR. BHAVINI is also responsible for setting up of future Fast Breeder Reactors. . PFBR project is located 500m south of the twin units (220MWe each) of the existing Madras Atomic Power Station at Kalpakkam

PFBR Project Details:


Fuel = PuO2 + UO2 Reactor thermal Power = 1250 MWth Electrical output = 500 / 470 MWe Gross thermal Efficiency = 40 %

1.3

ORGANISATION CHART OF BHAVINI

CHAIRMAN & MANAGING DIRECTOR

DIRECTOR (TECHNICAL)

DIRECTOR (FINANCE)

DIRECTOR (CONSTRUCTION) / PROJECT DIRECTOR

HEAD (FIELD ENGINEERI NG)

HEAD (PROCURE MENT)

HEAD QA (PROCUREM ENT)

HEAD (CIVIL)

HEAD (MECHANIC AL)

HEAD (ELECTRIC AL AND C & I)

HEAD QA (CONSTRU CTION)

HEAD (INDUSTRIAL & FIRE SAFETY)

THE HIERARCHIES IN THE BHAVINI

CHAIRMAN

DEPUTY CHAIRMAN

DEPARTMENT HEADS

DEPUTY CHIEF OFFICER

SUPERINTENDENTS

LABOURERS

1.4 NEED OF THE STUDY

In financial analysis is the starting point for making plans, before using any sophistical forecasting and planning procedures. Financial analysis strengths of the firms to make their best use and to be able to spot out financial weakness of the firm to state suitable corrective actions.

The fulltime plans of the firm should be laid down in view of the firms financial strengths and weakness between properly establishing relationship between the items of the balance sheet and profit and loss account. A study of ratio, comparative, common-size statement and trend percentage that took place for the last five years will help the financial department of the company in better decisions the near future.

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1.5 OBJECTIVES OF THE STUDY:Primary objectives: To study the overall financial performance in BHAVINI Secondary objectives:

To analyze, interpret and suggest the means for improving the operational efficiency of BHAVINI To calculate financial ratio, solvency ratio to assess the financial position of the firm. To know the strengths and weakness of BHAVINI with reference to finance functions To suggest ways and means of improving the financial position of BHAVINI

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1.6 SCOPE OF THE STUDY This research helps the BHAVINI to understand the financial trends as well as areas of the draft contributed to crises. The company can utilize data to improve and reword on their means and methods of allocation of financial resources for the smooth and efficient performance of the BHAVINI There are many different ways to measure financial performance, but all measures should be taken in aggregation. Line items such as revenues from operations, operating income or cash flow from operations can be used, as well as total unit sales. Furthermore, the analyst or investor may wish to look deeper into financial statements and seek out margin growth rates or any declining debt.

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CHAPTER-II LITERATURE SURVEY

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CHAPTER-2

LITERATURE SURVEY 2.1 REVIEW OF LITERATURE 2.2.1 MEANING OF FINANCIAL STATEMENTS The statement disclosing status of investments is known as balance sheet and the statement showing the result is known as profit and loss account. This statement put together, or called package of Financial Statements. A. FOR THE FINANCIERS Financial statements are also of great importance to the financiers and lenders. Lenders need information regarding customers financial position, solvency, credit standing, profitability, etc. financial statements provide most of the information. B. FOR THE CREDITORS The creditor is another class for whom financial statements are important. Trade credit implies extending facilities of deferred payment for credit purchases b seller to buyer. All these facts are revealed by financial statements with the help of solvency ratios, cash and fund flow analysis etc., C. FOR INVESTORS Present and prospective investors are interested in studying financial statements to assess earning capacity, growth potential and efficiency of management. Financial statements provide such information readily to share holders.

Finance can be defined as the art and science of managing money. Financial performance is relevant and useful for a concern. The field of finance is broad and dynamic it directly affects the lives fo every person and every organization. Financial analysis and planning is concerned with Monitoring the firms financial condition

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Evaluating the need their increased or reduced productive capacity and determin what financing is required. These functions encompass the entire balance sheet as well as the firms income statement and other financial statements.

2.2.2 RATIO ANALYSIS The ratio analysis is one of the most powerful tools of financial analysis. It is the process of establishing and interpreting various ratios. A financial ratio is the relationship between two accounting figures expressed mathematically. Ratios provide clues to the financial position of a concern. These are the pointers and indicators of financial strength, soundness, position or weakness of an enterprise. One can draw conclusions about the exact financial positions of concern with the help of ratios. Ratio analysis is a process of comparison of one figure against another, which make a ratio, and the appraisal of the ratios to make proper analysis about the strengths and weaknesses of the companys operations. Ratio analysis is extremely helpful in providing valuable insight into a companys financial picture.

CLASSIFICATIONS OF RATIOS
1.

CURRENT RATIO ACID TEST RATIO ABSOLUTE LIQUID RATIO NET SALES TO WORKING CAPITAL RATIO RETURN ON INVESTMENT RETURN OF TOTAL INVESTMENT FIXED ASSET RATIO ASSET TURNOVER RATIO

2. 3. 4.
5. 6. 7. 8.

2.2.3 COMPARATIVE BALANCE SHEET ANALYSIS:

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The comparative balance sheet analysis is the study of the trend of the same items, group of items and computed items in two or more balance sheets of the same business enterprise of different dates. The changes in periodic balance sheet items reflect the conduct of a business. The changes can be observed by comparison of the balance sheet at the beginning and at the end of a period and these changes can help in forming an opinion about the progress of an enterprise. Balance sheets as on two or more different dates are used for comparing the assets, liabilities and the net worth of the company. Comparative balance sheet analysis is useful for studying the trends of an undertaking.

ADVANTAGES Comparative statements help the analyst to evaluate the performance of the company. Comparative statements can also be used to compare the performance of the firm with the average performance of the industry between different years. It helps in identification of the weaknesses of the firm and remedial measures and be taken accordingly.

2.2.4 COMMON SIZE STATEMENTS Common size statements indicate the relationship of various items expressed as percentage of the common item, in the income statements, the sales figure is taken as basis and all other figures are expressed as percentage of sales. Similarly, in the balance sheet the total assets and liabilities is taken as base and all other figures are expressed as percentage of this total.

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CHAPTER-III METHODOLOGIES

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CHAPTER-3
METHODOLOGIES

Methodology refers to the way adopted for collecting information for the purpose of drawing inference. Methodology places a vital role in the analysis of the study. The methodology places a vital role in the analysis of the study .The methodology is the science of the system and method of conducting the research work.

The methodology consists of the following:

1. Primary data 2. Secondary data

1. Primary data:

The primary data were collected by direct contact with the finance department staff of the BHAVINI

2. Secondary data:

The secondary data is the one which already exists. In includes the following:

Annual reports of the company Audit reports Company profile Newspapers and magazines.

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3.1 TYPE OF PROJECT

Descriptive research: The research design undertaken for the study is Descriptive Research Design. These designs are determined for some specific purpose. It is focused on the accurate description of the variables present in the problem.

3.2 LIMITATIONS OF THE STUDY The limitations of the study are as follows * The study is covered only to the past financial performance of BHAVINI. The period of the study is restricted to five years from 2006-2010

* Some of the data has not given by the company due to maintenance of financial secrecy.

* So the study cannot be covered to all the areas of working capital. The financial data cannot be estimated for the future period due to the financial crisis.

3.3 ANALYSIS FO TOOLS:

To analyze and study about the company with regard to financial performance the following tools been applied.

COMPARATIVE FINANCIAL ANALTSIS

Comparative balance sheet Common size balance sheet

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RATIO ANALYSIS

o Current ratio

o Return on investment

o Return on total asset

o Profit margin ratio

o Fixed assets turnover ratio

Total assets turnover ratio

3.3.1 RATIOS:

A ratio is a statistical yard stick that a measure of relationship between variables. The rationale of ratio line in the fact it makes related information comparable. A single figure by inferences. There are four types of comparison of items within a single years financial statement of a firm and comparison with standards.

3.3.1.1 LIOUDITY RATIOS:

The short-term solvency ratios, which measure the liquidity of the firm and its ability to meet its maturing short-term obligations. Liquidity is defined as the ability to realize value in

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money the most liquid of assets. The importance of adequate liquidity in the sense the ability of a firm to satisfy its short term obligations as they become due.

3.3.1.1.1 CURRENT RATIO: It is the ratio of total current asset to total current liability. The higher the current ratio, the larger the amount of rupees available per rupee of current liability, the more is the firms ability to meet the current obligations and greater the safety.2:1 is considered satisfactory. Current ratio = current assets / current liabilities

3.3.1.1.2 ACID TEST RATIO: It is a measure of liquidity calculated dividing quick assets (current asset- inventory and prepaid expenses) by current liabilities. Quick assets refer to current assents which can be converted in to cash immediately or at a short notice without diminution of value. 1.33:1 is considered satisfactory Acid test ratio= quick assets / current liabilities

3.3.1.1.3 ABSOLUTE CASH RATIO: Absolute liquidity is represented by cash and near cash items. It is a ratio of absolute liquid assets to current liabilities. In the computation of this ratio only the absolute liquid assets are compared with the liquid liabilities. The absolute liquid assets are cash, bank and marketable securities. It is to be observed that receivables (debtors/ accounts receivables and bills receivables) are eliminated from the list of liquid assets order to obtain absolute4 liquid assets since there may be some doubt in their liquidity. This ratio gains mush significance only when it is used in conjunction with the current and liquid ratios. A standard of 0.5:1 absolute liquidity ratio is considered an acceptable norm. However, this ratio is not in mush use. Absolute cash ratio=absolute liquid asset / liquid liabilities

3.3.1.1.4 NET SALES TO W.C.: Working capital turnover ratio indicates the velocity of utilization of working capital. This ratio represents the number of times the working capital is turned over in the course of year. The two components of the ratio are cost of sales and the net working capital. If the information about cost of sales is not available the figure of sales may be taken as the numerator. Net working capital is found by deduction from the total of the current assets the total of the current liabilities. Net sales to W.C = sales / working capital

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3.3.1.2 PROFITABILITY RATIOS: These ratios tell about the financial soundness of a firm. Profitability ratios can be determined on the basis of either sales or investments. The purpose of study and analysis of profitability ratios are to help assessing the adequacy of profits earned by the company and also to discover whether profitability is increasing or declining.

3.3.1.2.1 PROFIT MARGIN RATIO It is a measurement of profit margin which facilitates to maintain good sales and production for a firm. It is also called as operating ratio. Operating ratio shows the operational efficiency of the business. Lower operating ratio shows higher operating profit and vice versa. An operating ratio ranging between 75% and 80% is generally considered as standard for manufacturing concerns. This ratio is considered to be a yardstick of operating efficiency but it should be used cautiously because it may be affected by a number of uncontrollable factors beyond the control of the firm. Moreover, in some firms, non-operating expenses from a substantial part of the expenses and in such cases operating ratio may misleading results. Profit margin ratio = EBIT / sales

3.31.2.2 RETURN ON INVESTMENTS: It measures the sufficiency or otherwise of profit in relation to capital employed .An indicator of how profitable a company is relative to its total assets .ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a companys annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as return on investment. ROI=EBIT/net asset

3.31.2.3 FIXED ASSET TURNOVER RATIO: Fixed asset turnover ratio is the ratio is the ratio of sales to the value of fixed assets. It indicates how well the business is using its fixed assets to generate sales. Generally speaking, the higher the ratio, the better, because a high ratio indicates the business has less money tied up in fixed asset for each rupee of sales revenue. A declining ratio may indicate that the business is over invested in plant, equipment, or other fixed assets. This ratio determines efficiency of utilization of fixed assets and profitability of a business concern. Higher the ratio more is the efficiency in utilization of fixed assets. Fixed asset turnover ratio = sales / average net fixed assets

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3.3.1.2.4 TOTAL ASSET TURNOVER RATIO: The asset turnover ratio simply compares the turnover with the assets that the business has to generate that turnover.

Total asset turnover ratio = sales / total assets

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CHAPTER-IV DATA ANALYSIS AND INTERPRETATION

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CHAPTER-4

DATA ANALYSIS AND INTERPRETATION 4.1. 1 LIQUDITY RATIOS:

4.1 1.1 CURRENT RATIOS:

CURRENT RATIO= CURRENT ASSETS/ CURRENT LIABILITIES

4.1.1.1 TABLE SHOWING CURRENT RATIO YEAR 2006 2007 2008 2009 2010 CURRENT ASSETS 905,094,327 842,574,016 1,182,060,484 2,142,690,118 4,501,605,272 CURRENT LIABILITIES 315,838,356 433,784,685 626,027,801 913,920,878 1,611,796,562 CURRENT RATIO 2.87 1.94 1.89 2.34 2.79

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4.1.1.1 CHART SHOWING CURRENT RATIO

3 2.5 2 1.5 1 0.5 0 C R UR ENT R ATIO 2 006 2 007 2 008 2 009 2 010

INTERPRETATION: From the above table, it is inferred that the current ratio for the year 2006-2010 is 2.87, 1.94, 1.89, 2.34and 2.79 respectively. The ratio is very high during the year 2006 and 2010 and low during the year 2008. The increase in ratio during the year 2006 and2010 is because there was increase in cash balance and loans and advances. From 2006-2009 there was a good increase in inventories.

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4.1.1.2 ACID TEST RATIO

ACID TEST RATIO= QUICK ASSETS/ CURRENT LIABILITIES

4.1.2 TABLE SHOWING ACID TEST RATIO YEAR 2006 2007 2008 2009 2010 QUICK ASSETS 903,961,011 837,482,309 1,167,836,637 1,417,470,414 4,448,540,177 CURRENT LIABILITIES 315,838,356 433,784,685 626,027,801 913,920,878 1,611,796,562 ACID TEST RATIO 2.86 1.93 1.87 1.55 2.76

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4.1.1.2 CHART SHOWING ACID TEST RATIO 3 2 .5 2 1 .5 1 0 .5 0 AC TES R ID T ATIO 2006 2007 2008 2009 2010

INTERPRETATION: From the above table it is inferred that the acid test ratio for the year 2006-2010 is 2.86, 1.93, 1.87, 1.55 and 2.76 respectively. The ratio was high during the year 2006 and 2010 and low during the year 2009. From 2006-2010 the ratio crossed the standard limit 1.33 which shows the acid test ratio is very high

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4.1.1.3 ABSOLUTE LIQUID RATIO

ABSOLUTE LIQUID RATIO= ABSOLUTE LIQUID ASSET/ LIQUID LIABILITIES

4.1.1.3 TABLE SHOWING ABSOLUTE LIQUID RATIO YEAR 2006 2007 2008 2009 2010 ABSOLUTE LIQUID ASSETS 1,133,316 5,091,707 14,223,847 725,219,704 53,065,065 LIQUID LIABILITIES 315,838,356 433,784,685 626,027,801 913,920,878 1,611,796,562 ABSOLUTE CASH RATIO 0.0035 0.0117 0.0227 0.7935 0.0329

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4.1.1.3 CHART SHOWING ABSOLUTE LIQUID RATIO 0 .8 0 .7 0 .6 0 .5 0 .4 0 .3 0 .2 0 .1 0 AB OL S UTE C HR AS ATIO 20 06 20 07 20 08 20 09 21 00

INTERPRETATION: From the above table it is inferred that the absolute ratio for the year 2006-2010 is 0.0035, 0.0117, 0.0227, 0.7935, and 0.0329 respectively. The ratio is high during the year 2009 and low during the year 2006. But the standard ratio is 0.5:1, during 2010 it was nearer to the standard ratio as cash balances got reduced from the 2006-2008. By 2009 the cash balances increased drastically while current liabilities did not increases in that pace.

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4.1.1.4 NET SALES TO WORKING CAPITAL RATIO:

NET SEALES TO W.C= SALES/ WORKING CAPITAL

4.1.1.4 TABLE SHOWING NET SALES TO WORKING CAPITAL. YEAR 2006 2007 2008 2009 2010 NET SALES
49,769,058

WORKING CAPITAL 589,255,971 408,789,331 556,032,683 1,228,769,240 2,889,808,710

NET SALES TO WORKING CAPITAL 0.084 0.208 0.155 0.084 0.037

85,104,361 86,172,488 102,962,988 108,374,725

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4.1.1.4 CHART SHOWING NET SALES TO WORKING CAPITAL

0 5 .2 0 .2 0 5 .1 0 .1 0 5 .0 0 20 06 20 07 20 08 20 09 21 00

NE S E T WOR ING C IT T AL S O K AP AL

INTERPRETATION: From the above table it is inferred that the net sales to working capital ratio for the year 20062010 is 0.084, 0.208, 0.155, 0.084 and 0.037 respectively. The ratio is high during the 2007 and low during the year 2010. The ratio has decreased gradually from 2008-2010. Sales have decreased during the consecutive years.

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4.1.2 PROFITABILITY RATIOS:

4.1.2.1 PROFIT MARGIN RATIO:

PROFIT MARGIN RATIO= EBIT/SALES

4.1.2.1 TABLE SHOWING PROFIT MARGIN RATIO YEAR 2006 2007 2008 2009 2010 EBIT
63,167,880 112,143,893 152,825,472

SALES
49,769,058

PROFIT MARGIN RATIO 1.270 1.318 1.808 0.975 0.681

85,104,361 86,172,488 102,962,988 108,374,725

100,438,208 73,870,108

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4.1.2.1 CHART SHOWING PROFIT MARGIN RATIO

2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0

2006 2007 2008 2009 2010

PR IT MAR OF GIN R ATIO

INTERPRETATION: Form the above table it is inferred that the profit margin ratio for the year 2006-2010 is 1.270, 1.318, 1.808, 0.975and 0.681 respectively. The ratio was high during the year 2008 and low during the year 2010. The standard is .75 to .89. During the year 2009 the ratio was satisfactory where as in previous year it is not been satisfactory. EBIT and sales has been gradually decreasing.

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4.1.2.2 RETURN ON INVESTMENT

ROI= EBIT / NET ASSETS

4.1.2.2 TABLE SHOWING RETURN ON INVESTMENT YEAR 2006 2007 2008 2009 2010 EBIT
63,167,880 112,143,893 152,825,472

NET ASSETS
881,130,034

ROI 0.072 0.139 0.139 0.039 0.016

806,783,029 1,102,565,161 2,552,094,302 4,505,963,129

100,438,208 73,870,108

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4.1.2.2 CHART SHOWING RETURN ON INVESTMENT

0 4 .1 0 2 .1 0 .1 0 8 .0 0 6 .0 0 4 .0 0 2 .0 0 R OI 20 06 20 07 20 08 20 09 21 00

INTERPRETATION: From the above table it is inferred that the ROI for the year 2006-2010 is 0.072, 0.139, 0.139, 0.039 and 0.016 respectively. The ratio was high during 2007 and 2008 and low during 2010. There is a gradual increase in EBIT from 2006 to 2008 and decrease from 2009 and 2010. Net asset during 2006-2010 there was increase in fixed assets and current assets. From above table there was a good increase in current assets from 2006-10.

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4.1.2.3 FIXED ASSET TURNOVER RATIO:

FIXED ASSET TURNOVER RATIO= SALES / AVERAGE NET FIXED ASSETS

4.1.2.3 TABLE SHOWING FIXED ASSET TURNOVER RATIO YEAR 2006 2007 2008 2009 2010 SALES
49,769,058

AVERAGE FIXED ASSETS 145,937,032 198,996,849 273,266,239 661,662,531 808,077,210

FIXED ASSETS TURNOVER RATIO 0.341 0.428 0.315 0.156 0.134

85,104,361 86,172,488 102,962,988 108,374,725

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4.1.2.3 CHART SHOWING FIXED ASSET TURNOVER RATIO

0 5 .4 0 .4 0 5 .3 0 .3 0 5 .2 0 .2 0 5 .1 0 .1 0 5 .0 0 F ED AS ETSTUR IX S NOV R ER ATIO 20 06 20 07 20 08 20 09 21 00

INTERPRETATION: From the above table it is inferred that the fixed asset turnover for the year 2006-2010 is 0.341, 0.428, 0.315, 0.156 and 0.134 respectively. The ratio was high during the year 2007 and was low during the year 2010. There is a increase fixed assets during the year continuous year from 200610

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4.1.2.4 TOTAL ASSETS TURNOVER RATIO

TOTAL ASSET TURNOVER RATIO= SALES/ TOTAL ASSETS

4.1.2.4 TABLE SHOWING TOTAL ASSET TURNOVER RATIO YEAR 2006 2007 2008 2009 2010 SALES
49,769,058

TOTAL ASSETS
881,130,034

TOTAL ASSETS TURNOVER RATIO 0.565 0.105 0.078 0.040 0.024

85,104,361 86,172,488 102,962,988 108,374,725

806,783,029 1,102,565,161 2,552,094,302 4,505,963,129

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4.1.2.4 CHART SHOWING TOTAL ASSET TURNOVER RATIO

0 .6 0 .5 0 .4 0 .3 0 .2 0 .1 0 TOTAL AS ETSTUR S NOV R ER ATIO 2006 2007 2008 2009 2010

INTERPERTATION: From the above table it is inferred that the total asset turnover ratio for the year 2006-2010 is 0.565, 0.105, 0.078, 0.040 and 0.024 respectively. The ratio was very high during 2006 and very low during 2010. In total asset, during 2007 it was decreased while comparing to 2006 and thereafter it was gradually increased from 2008. There was an increase in all the components of the total assets.

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4.1.3 COMPARATIVE BALANCE SHEET ANALYSIS 4.1.3.1 Comparative balance sheet for the year 2006-2007 (In rupees)

4.1.3.2 Comparative balance sheet for the year 2007-2008 31.03.2006 31.03.2007 Increase Decrease Particulars
Amount I. SOURCES OF FUNDS a. share capital b. Amount received for share capital pending allotment TOTAL II. APPLICATION OF
FUND :1.Fixed Assets a) Gross Block less: Depreciation Net block b) Capital work in Progress 304,772,451 12,898,388 291,874,063 3,030,363,966 3,322,238,029 1,133,316 867,820,977 35,531,486 608,548 905,064,327 289,951,226 25,887,130 315,838,356 589,255,971 20,006,000 --430,952,817 32,959,119 397,993,698 5,054,710,971 5,452,704,669 5,091,707 777,543,611 59,346,647 592,051 842,574,016 379,174,782 54,609,903 433,784,685 408,789,331 20,006,000 --126,180,366 20,060,731 106,119,635 2,024,347,005 2,130,466,640 4,978,391 (-90,277,366) 23,815,161 (-16,497) (-62,490,311) 89,223,556 28,722,773 117,946,329 (-180,466,640) ----3.20 (0.51) 2.69 51.49 54.18 0.12 (-2.29) 0.60 (-0.004) (-1.58) (2.26) (0.73) 3.00 (-4.59) ----3,931,500,000 --3,931,500,000 5,531,500,000 350,000,000 5,881,500,000 1,600,000,000 350,000,000 1,950,000,000

Percentage
40.69 08.90 49.59

TOTAL A 2. Currents assets.


a) Inventories b) Cash and bank balance c) other current assets d) loans and Advances less:- current liabilities a) liabilities b) provision

Net current assets TOTAL B


3. Miscellaneous Expenditure 4. Notes on Accounts

TOTAL

3,931,500,000

5,881,500,000

1,950,000,000

49.59

(In rupees)
41

Particulars
I. SOURCES OF FUNDS a. share capital b. Amount received for share capital pending allotment TOTAL II. APPLICATION OF
FUND :1.Fixed Assets a) Gross Block less: Depreciation Net block b) Capital work in Progress

31.03.2007

31.03.2008

Increase Amount

Decrease Percentage
72.26 (-5.95) 66.30

5,531,500,000 350,000,000 5,881,500,000

9,781,500,000 --9,781,500,000

4,250,000,000 (-350,000,000) 3,900,000,000

TOTAL A 2. Currents assets.


a) Inventories b) Cash and bank balance c) other current assets d) loans and Advances less:- current liabilities a) liabilities b) provision

430,952,817 32,959,119 397,993,698 5,054,710,971 5,452,704,669 5,091,707 777,543,611 59,346,647 592,051 842,574,016 379,174,782 54,609,903 433,784,685 408,789,331 20,006,000 ---

600,195,668 53,663,190 546,532,478 8,658,928,839 9,205,461,317 14,223,847 1,073,654,684 90,848,082 3,333,871 1,182,060,484 550,472,150 75,555,651 626,027,801 556,032,683 20,006,000 ---

169,242,851 20,704,071 148,538,780 3,604,217,868 3,752,756,648 9,132,140 296,111,073 31,501,435 2,741,820 339,486,468 171,297,368 20,945,748 192,243,116 147,243,352 -----

2.87 (0.35) 2.52 61.28 63.80 0.15 5.03 0.53 0.05 5.77 (2.91) (0.36) (3.27) 2.50 -----

Net current assets TOTAL B


3. Miscellaneous Expenditure 4. Notes on Accounts

TOTAL

5,881,500,000

9,781,500,000

3,900,000,000

66.30

4.1.3.3 Comparative balance sheet for the year 2008-2009

42

Particulars
I. SOURCES OF FUNDS a. share capital b. Amount received for share capital pending allotment TOTAL II. APPLICATION OF
FUND :1.Fixed Assets a) Gross Block less: Depreciation Net block b) Capital work in Progress

31.03.2008

31.03.2009

Increase Amount

Decrease Percentage
74.16 0.65 74.81

9,781,500,000 48,023,573 9,829,523,573

17,071,500,000 112,372,538 17,183,872,538

7,290,000,000 64,348,965 7,354,348,965

TOTAL A 2. Currents assets.


a) Inventories b) Cash and bank balance c) other current assets d) loans and Advances less:- current liabilities a) liabilities b) provision

600,195,668 53,663,190 546,532,478 8,705,705,991 9,252,238,469 14,223,847 1,073,654,684 90,848,082 3,333,871 1,182,060,484 550,472,150 75,555,651 626,027,801 556,032,683

1,434,930,942 111,605,880 1,323,325,062 14,606,103,971 15,929,429,033 725,219,704 1,305,173,074 103,145,728 9,151,612 2,142,690,118 815,489,976 98,430,902 913,920,878 1,228,769,240

834,735,274 57,942,690 776,792,587 5,900,397,980 6,677,190,564 710,995,857 231,518,390 12,297,646 5,817,741 960,629,634 265,017,826 22,875,251 287,893,077 672,736,557

8.49 (0.58) 7.90 60.02 67.93 7.23 2.36 0.13 0.06 9.77 (2.70) (0.23) (2.93) 6.84

Net current assets TOTAL B


3. Miscellaneous Expenditure a) Preliminary expenses b) Commissioning related cost TOTAL C 4. Notes on Accounts

20,006,000 1,246,421 21,252,421

20,006,000 5,668,265 25,674,265

--4,421,844 4,421,844

--0.04 0.04

TOTAL

9,829,523,573

17,183,872,538

7,354,348,965

74.81

4.1.3.4 Comparative balance sheet for the year 2009-2010

43

Particulars
I. SOURCES OF FUNDS a. share capital b. Amount received for share capital pending allotment TOTAL II. APPLICATION OF
FUND :1.Fixed Assets a) Gross Block less: Depreciation Net block b) Capital work in Progress

31.03.2009

31.03.2010

Increase Amount

Decrease Percentage
57.94 0.21 58.15

17,071,500,000 112,372,538 17,183,872,538

27,028,500,000 149,148,777 27,177,648,777

9,957,000,000 36,776,239 9,993,776,239

TOTAL A 2. Currents assets.


a) Inventories b) Cash and bank balance c) other current assets d) loans and Advances less:- current liabilities c) liabilities d) provision

1,434,930,942 111,605,880 1,323,325,062 14,606,103,971 15,929,429,033 725,219,704 1,305,173,074 10,381,603 9,484,515 2,050,258,896 815,822,879 5,666,777 821,489,656 1,228,769,240

1,790,506,509 174,352,090 1,616,154,419 22,671,685,648 24,287,840,067 53,065,095 4,428,326,951 14,880,536 5,332,690 4,501,605,272 1,603,022,562 8,774,000 1,611,795,562 2,889,808,710

355,575,567 62,746,210 292,829,357 8,065,581,677 8,358,411,034 (672,154,609) 3,123,153,877 4,498,933 4,151,825 2,451,346,376 787,199,683 3,107,223 790,305,906 1,661,039,470

2.07 0.37 1.70 46.93 48.64 (3.91) 18.17 0.02 0.02 14.27 (4.58) (0.01) 4.59 9.67

Net current assets TOTAL B


3. Miscellaneous Expenditure c) Preliminary expenses d) Commissioning related cost TOTAL C 4. Notes on Accounts

20,006,000 5,668,265 25,674,265

--------

(20,006,000) (5,668,265)

(0.12) (0.03)

TOTAL

17,183,872,538

27,177,648,777

9,993,776,239

58.15

4.1.4 INFERENCE FOR COMPARATIVE BALANCE SHEET

44

4.1.4.1 CURRENT ASSETS:

During the year 2006-2007, the current assets have been decreased, which indicate that the company has not in a good liquidity position during that year. During the year 2007-2008, the current assets have been increased, which indicate that the company has in a good liquidity position during that year. During the year 2008-2009, the current assets have been increased, which indicate that the company has in a good liquidity position during that year. During the year 2009-2010, the current assets have been increased, which indicate that the company has in a good liquidity position during that year.

4.1.4.2

CURRENT LIABILITIES

In the year 2006-2007, the current liabilities have increased which indicates

that the company has not repaid its current liabilities. In the year 2007-2008, the current liabilities have increased which indicates

that the company has not repaid its current liabilities. In the year 2008-2009, the current liabilities have increased which indicates

that the company has not repaid its current liabilities. In the year 2009-2010, the current liabilities have increased which indicates

that the company has not repaid its current liabilities.

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4.1.4.3 RESERVES AND SURPLUS:

During the year 2006-2007, the reserve was not shown in the balance sheet where the company has not maintained the reserve to meet the contingencies situation. During the year 2007-2008, the reserve was not shown in the balance sheet where the company has not maintained the reserve to meet the contingencies situation.

During the year 2008-2009, the reserve was bought into the company so has

to maintain the reserve to meet the contingencies situation During the year 2009-2010, the reserve was increased which shows that the

company has maintain the good reserve to meet the contingencies and the unexpected loss.

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4.1.5 COMMON SIZE BALANCE SHEET ANALYSIS:


4.1.5.1 Common size balance sheet for the year 2006-2007

Particulars
I. SOURCES OF FUNDS a. share capital b. Amount received for share capital pending allotment TOTAL II. APPLICATION OF
FUND :1.Fixed Assets a) Gross Block less: Depreciation Net block b) Capital work in Progress

31.03.2006
3,931,500,000 --3,931,500,000

%
100.00

31.03.2007
5,531,500,000 350,000,000

%
94.05 5.95 100.00

100.00

5,881,500,000

TOTAL A 2. Currents assets.


a) Inventories b) Cash and bank balance c) other current assets d) loans and Advances less:- current liabilities a) liabilities b) provision

304,772,451 12,898,388 291,874,063 3,030,363,966 3,322,238,029 1,133,316 867,820,977 35,531,486 608,548 905,064,327 289,951,226 25,887,130 315,838,356 589,255,971 20,006,000 ---

7.75 (0.33) 7.42 77.08 84.50 0.03 22.07 0.90 0.02 23.02 (7.38) (0.66) (8.03) 14.99 0.51 ---

430,952,817 32,959,119 397,993,698 5,054,710,971 5,452,704,669 5,091,707 777,543,611 59,346,647 592,051 842,574,016 379,174,782 54,609,903 433,784,685 408,789,331 20,006,000 ---

7.33 0.56 6.77 85.94 92.71 0.09 13.22 1.01 0.01 14.33 6.45 0.93 7.38 6.95 0.34 ---

Net current assets TOTAL B


3. Miscellaneous Expenditure 4. Notes on Accounts

TOTAL

3,931,500,000

100.00

5,881,500,000

100.00

47

4.1.5.2 Common size balance sheet for the year 2007-2008

Particulars
I. SOURCES OF FUNDS a. share capital b. Amount received for share capital pending allotment TOTAL II. APPLICATION OF
FUND :1.Fixed Assets a) Gross Block less: Depreciation Net block b) Capital work in Progress

31.03.2007
5,531,500,000 350,000,000 5,881,500,000

%
94.05 5.95 100.00

31.03.2008
9,781,500,000 --9,781,500,000

%
100.00

100.00

TOTAL A 2. Currents assets.


a) Inventories b) Cash and bank balance c) other current assets d) loans and Advances less:- current liabilities a) liabilities b) provision

430,952,817 32,959,119 397,993,698 5,054,710,971 5,452,704,669 5,091,707 777,543,611 59,346,647 592,051 842,574,016 379,174,782 54,609,903 433,784,685 408,789,331 20,006,000 ---

7.33 (0.56) 6.77 85.94 92.71 0.09 13.22 1.01 0.01 14.33 6.45 0.93 7.38 6.95 0.34 ---

600,195,668 53,663,190 546,532,478 8,658,928,839 9,205,461,317 14,223,847 1,073,654,684 90,848,082 3,333,871 1,182,060,484 550,472,150 75,555,651 626,027,801 556,032,683 20,006,000 ---

6.14 0.55 5.59 88.52 94.11 0.15 10.98 0.93 0.03 12.08 (5.63) (0.77) (6.40) 5.68 0.20

Net current assets TOTAL B


3. Miscellaneous Expenditure 4. Notes on Accounts

TOTAL

5,881,500,000

100.00

9,781,500,000

100.00

48

4.1.5.3 Common size balance sheet for the year 2008-2009

Particulars
I. SOURCES OF FUNDS a. share capital b. Amount received for share capital pending allotment TOTAL II. APPLICATION OF
FUND :1.Fixed Assets a) Gross Block less: Depreciation Net block b) Capital work in Progress

31.03.2008
9,781,500,000 48,023,573 9,829,523,573

%
99.51 0.49 100.00

31.03.2009
17,071,500,000 112,372,538 17,183,872,538

%
99.35 0.65 100.00

TOTAL A 2. Currents assets.


a) Inventories b) Cash and bank balance c) other current assets d) loans and Advances less:- current liabilities e) liabilities f) provision

600,195,668 53,663,190 546,532,478 8,705,705,991 9,252,238,469 14,223,847 1,073,654,684 90,848,082 3,333,871 1,182,060,484 550,472,150 75,555,651 626,027,801 556,032,683

6.14 0.55 5.59 88.52 94.11 0.15 10.98 0.93 0.03 12.08 (5.63) (0.77) (6.40) 5.68

1,434,930,942 111,605,880 1,323,325,062 14,606,103,971 15,929,429,033 725,219,704 1,305,173,074 103,145,728 9,151,612 2,142,690,118 815,489,976 98,430,902 913,920,878 1,228,769,240

8.35 0.65 7.70 85.00 92.70 4.22 7.60 0.60 0.05 12.50 4.75 0.57 5.32 7.15

Net current assets TOTAL B


3. Miscellaneous Expenditure e) Preliminary expenses f) Commissioning related cost TOTAL C 4. Notes on Accounts

20,006,000 1,246,421 21,252,421

0.20 0.01 0.21

20,006,000 5,668,265 25,674,265

0.12 0.03 0.15

TOTAL

9,829,523,573

100.00

17,183,872,538

100.00

49

4.1.5.4 Common size balance sheet for the year 2009-2010

Particulars
I. SOURCES OF FUNDS a. share capital b. Amount received for share capital pending allotment TOTAL II. APPLICATION OF
FUND :1.Fixed Assets a) Gross Block less: Depreciation Net block b) Capital work in Progress

31.03.2009
17,071,500,000 112,372,538 17,183,872,538

%
99.35 0.65 100.00

31.03.2010
27,028,500,000 149,148,777 27,177,648,777

%
99.45 0.55 100.00

TOTAL A 2. Currents assets.


a) Inventories b) Cash and bank balance c) other current assets d) loans and Advances less:- current liabilities g) liabilities h) provision

1,434,930,942 111,605,880 1,323,325,062 14,606,103,971 15,929,429,033 725,219,704 1,305,173,074 103,145,728 9,151,612 2,142,690,118 815,489,976 98,430,902 913,920,878 1,228,769,240

8.35 0.65 7.70 85.00 92.70 4.22 7.60 0.60 0.05 12.50 4.75 0.57 5.32 7.15

1,790,506,509 174,352,090 1,616,154,419 22,671,685,648 24,287,840,067 53,065,095 4,428,326,951 14,880,536 5,332,690 4,501,605,272 1,603,022,562 8,774,000 1,611,795,562 2,889,808,710

6.59 0.64 5.95 83.42 89.37 0.20 16.29 0.05 0.02 16.56 5.90 0.03 5.93 10.63

Net current assets TOTAL B


3. Miscellaneous Expenditure g) Preliminary expenses h) Commissioning related cost TOTAL C 4. Notes on Accounts

20,006,000 5,668,265 25,674,265

0.12 0.03 0.15

--------

-------

TOTAL

17,183,872,538

100.00

27,177,648,777

100.00

50

4.1.6 INFERENCE FOR COMMON SIZE BALANCE SHEET

4.1.6.1 CURRENT ASSETS:

During the year 2006-2007, the current asset has decreased, firm has 23.02% of current assets in 2006 to repay the current liabilities of 8.03% of current liabilities and has 14.33% of current assets to repay the 7.38% of current liabilities. But even thou the firm have in a position to repay the liabilities in 2007.

During the year 2007-2008, the current asset has increased, firm has 14.33% of current assets in 2006 to repay the current liabilities of 7.38% of current liabilities and has 12.08% of current assets to repay the 5.68% of current liabilities. So firm has in a position to repay the liabilities in 2008.

During the year 2008-2009, the current asset has increased, firm has 12.08% of current assets in 2006 to repay the current liabilities of 5.68% of current liabilities and has 12.50% of current assets to repay the 5.32% of current liabilities. So firm has in a position to repay the liabilities in 2009.

During the year 2009-2010, the current asset has increased, firm has 12.50% of current assets in 2006 to repay the current liabilities of 5.68% of current liabilities and has 16.56% of current assets to repay the 5.93% of current liabilities. So firm has in a position to repay the liabilities in 2010.

51

4.1.6.2 CURRENT LIABILITIES:

The current liabilities of the firm have decreased from 8.03% to 7.38% which indicate that the firm has repaid its debts during the year 2006-2007. There was an out flow of cash during the year. The current liabilities of the firm have decreased from 7.38% to 5.68% which indicate that the firm has repaid its debts during the year 2007-2008. There was an out flow of cash during the year. The current liabilities of the firm have decreased from 5.68% to 5.32% which indicate that the firm has repaid its debts during the year 2008-2009. There was an out flow of cash during the year.
The current liabilities of the firm have increased from 5.32% to 5.93% which

indicate that the firm has not repaid its debts during the year 2009-2010. There was an inflow of cash during the year.

52

CHAPTER -V SUMMARY OF FINDINGS

53

CHAPTER -5 5.1 SUMMARY OF FINDINGS

It is inferred that the current ratio for the year 2006-2010 is 2.87, 1.94, 1.89, 2.34and 2.79 respectively. The ratio is very high during the year 2006 and 2010 and low during the year 2008. The increase in ratio during the year 2006 and2010 is because there was increase in cash balance and loans and advances. From 2006-2009 there was a good increase in inventories. It is inferred that the acid test ratio for the year 2006-2010 is 2.86, 1.93, 1.87, 1.55 and 2.76 respectively. The ratio was high during the year 2006 and 2010 and low during the year 2009. From 2006-2010 the ratio crossed the standard limit 1.33 which shows the acid test ratio is very high It is inferred that the absolute ratio for the year 2006-2010 is 0.0035, 0.0117, 0.0227, 0.7935, and 0.0329 respectively. The ratio is high during the year 2009 and low during the year 2006. But the standard ratio is 0.5:1, during 2010 it was nearer to the standard ratio as cash balances got reduced from the 2006-2008. By 2009 the cash balances increased drastically while current liabilities did not increases in that pace. It is inferred that the net sales to working capital ratio for the year 2006-2010 is 0.084, 0.208, 0.155, 0.084 and 0.037 respectively. The ratio is high during the 2007 and low during the year 2010. The ratio has decreased gradually from 2008-2010. Sales have decreased during the consecutive years. It is inferred that the profit margin ratio for the year 2006-2010 is 1.270, 1.318, 1.808, 0.975and 0.681 respectively. The ratio was high during the year 2008 and low during the year 2010. The standard is .75 to .89. During the year 2009 the ratio was satisfactory where as in previous year it is not been satisfactory. EBIT and sales has been gradually decreasing. It is inferred that the ROI for the year 2006-2010 is 0.072, 0.139, 0.139, 0.039 and 0.016 respectively. The ratio was high during 2007 and 2008 and low during 2010. There is a gradual increase in EBIT from 2006 to 2008 and decrease from 2009 and 2010. Net asset during 2006-2010 there was increase in fixed assets and current assets. From above table there was a good increase in current assets from 2006-10.

54

It is inferred that the fixed asset turnover for the year 2006-2010 is 0.341, 0.428, 0.315, 0.156 and 0.134 respectively. The ratio was high during the year 2007 and was low during the year 2010. There is a increase fixed assets during the year continuous year from 2006-10 It is inferred that the total asset turnover ratio for the year 2006-2010 is 0.565, 0.105, 0.078, 0.040 and 0.024 respectively. The ratio was very high during 2006 and very low during 2010. In total asset, during 2007 it was decreased while comparing to 2006 and thereafter it was gradually increased from 2008. There was an increase in all the components of the total assets. The reserves and surplus of the firm has to be increased every year. Current assets was decreased only in the year 2006-2007, after that the firm is in the better position to meet their current liabilities. The current liabilities of the firm were decreased every year.

55

5.2 SUGGESTIONS AND RECOMMENDATIONS

Current ratio of the firm is satisfactory because for all the years it is more then 1.5. The firm should try to maintain it to the standard of 2:1 in order to meet the uncertainties in the future and to maintaining the liquidity of the organization.

The acid test ratio was satisfactory from 2006-2010 with having a ratio of 1.42. The firm is maintaining it in the standard level of 1.33:1 so that the liquidity is maintained satisfactorily.

The absolute cash ratio satisfactory during the year 2006-2010. While comparing the acceptance ratio, here the ratios are higher. The firm is maintaining the standard level of 0.5:1.
The net sales to working capital ratio were not satisfactory during the year 2010.

Further during the year 206-2007 it is in increasing trend. Hence the organization must quickly convert the receivables in to cash in order to increase the ratio. The profit margin ratios show an increasing trend from 2006 to 2008. But the lower the ratio higher the operating efficiency, here it is increasing which indicates that the operating efficiency is low. But the standard is 75% to 80%. If this is considered the ratio during the year 2008 is acceptable. The company should try to maintain it. The organization should try to improve the return on investment even though it shows an increasing trend. Secured loan are increasing year to year. It should be reduced in the forth coming year. The liquidity position of the firm has to be improved. There is an increasing in working capital due to increase in current asset. The firm wants to maintain the current asset and current liabilities for forth coming year. The cash position ratio indicates that the liquidity of the organization is weak so the collection period of sundry debtor should be reduced. Current liabilities of organization are reduced Secured loan are increasing year to year. It should be reduced in the forth coming year.

56

5.3 CONCLUSION On studying the financial performances (through ratio analysis of BHARATIYA NABHIKIYA VIDYUT NIGAM LIMITED) for the period of FIVE years from 2006-2010 to study reveals that the financial performances in general is satisfactory. It could be concluded that the BHAVINI must increase the performance level of the organization. The Study reveals the financial position of the company for the FIVE years. The study will enable the company to plan for the future Financial analysis establishes relationship between different items in the balance sheet and helps to analysis the firms profitability over time, its ability to generate cash, to be able to pay interest and repay principle its the responsibilities of financial manager to see that the source of the funds are used in an effectively and efficiently. There is a scope for diversification and also the company has the opportunity for enter global market.

5.4 Bibliography

57

REFERENCES M.Y.Khan & P.K.Jain - Management Accounting, Tata McGraw Hill publishing company Ltd., 2004. M.A.Sahaf Management Accounting (Principles & Practice): Vikas publishing House Pvt. Ltd., New Delhi, 2004. R.S.N.Pillai & Bagavathi Management Accounting S. Chand & Co. Ltd., New Delhi, (2002) R. Narayanaswamy Financial Accounting A managerial perspective prentice Hall India Pvt., Ltd., New Delhi. Bhatacharya S.K.John Dearden Accounting for Management text and cases Vikas publishing house, New Delhi, 2000 Charles T.Hornegren Introduction to management accountion prentice Hall, New Delhi, 2001. I.M.Pandey Financial Management, Vikas publishing House Pvt. Ltd., 8th edition, 1999. M.Y.Khan and P.K. Jain Financial Management, Text problems and cases tata McGraw Hill Publishing Company Ltd., 4th edition, 2004. Company annual report of Chennai port trust.

WEBSITE: www.google.com www.bhavini.co.in

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