PROJECT REPORT ON

ANALYSIS OF FINANCIAL STATEMENTS

SHREE DOODHAGANGA KRISHNA SAHAKARI SAKKARE KARKHANE NIYAMIT, CHIKODI.

WITH SPECIAL REFERENCE TO

Unit- 1 EXECUTIVE SUMMARY

Importance Of Financial Statement Analysis Need For The Study Objectives Of The Study Methodology Of The Report Scope Of The Study Limitations Of The Study Review Of Literature Statement Of The Problem Hypothesis

Unit- 2 COMPANY PROFILE

World Sugar Industry Scenario Indian Industry Profile Company Profile Product Profile

Unit 3 THEORETICAL FRAMEWORK ON FINANCIAL STATEMENT ANALYSIS.

Definition Of Financial Statement Nature Of Financial Statements Conventions Uses And Importance Of Financial Statements Limitations Of Financial Statements Parties Interested In Financial Statements Analysis And Interpretation Of Financial Statements Types Of Financial Statements Tools Of Financial Analysis Used In The Study

-- -Comparative Financial Statements

-Common-Size Financial Statements -Trend Analysis -Ratio Analysis

Unit -4 DATA ANALYSIS AND INTERPRATION

Calculation Calculation Calculation Calculation

of Comparative financial statements. of Common-size statements. Of Trends of Financial Statements. of Trend analysis.

Unit -5

Findings, Suggestions & Recommendations And Conclusion ANNEXTURE BIBLIOGRPHY

Importance of Financial statement Analysis

Financial statement analysis is very helpful in knowing the sugar factories internal operations and its relations with the outside world. The present project seeks to discuss the framework for invest ment & financing decision and also helps to expound several analytical methods which are in practice. An attempt has been made to analysis the financial statement of D.K.S.S.K.N. sugar factory. The investors relay on the financial statement and judge the factory and ensure that these statements are correct, complete, consistent and comparable.

The accuracy of the financial statement can be identified from the report of the auditors. The financial statement analysis can be used by investors for deciding about their investments. The debenture holders, creditors, employees and government can also use the financial statements for different purposes.

METHODOLOGY OF THE REPORT

COLLECTION OF DATA There are two methods of collection of data which are as follows:1. Primary Method 2. Secondary Method 1. Primary Method The primary data was not a part of my study, my every interpretation and analysis is fully based in secondary data. 2. Secondary Method The methodology followed in conducting the study is to collect data regarding Sugar production in Shree Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit, Chikodi. The secondary data is obtained from the following. Collection of required data from annual records, monthly records, internal Published book or profile of D.K.S.S.K.N.Chikodi. -Other books and Journals and magazines -Annual Reports of the company. -Use of Internet.

NEED FOR THE STUDY

To calculate the important financial terms of the organisation as a part of the financial analysis thereby to understand the changes the needs and trends in the firms financial position. To assess the performance of D.K.S.S.K on the basis of earnings and also to evaluate the solvency position of the company. To identify the financial strengths and weaknesses of the organization. To give the appropriate suggestions to the investors. To help them to make more informed decisions.

OBJECTIVES OF THE STUDY

To understand an item wise study of the company financial performance of the company.

To provide information about the financial position, performance and changes in financial position of an enterprise that are useful to wide range of users in making economic decision.
To provide factual and interpretative information about transaction and other events which are useful for prediction, comparing, and evaluating enterprises earning power. Locate and use sources of information about company performance. Analyze the performance of a company using trend analysis, common-size financial statements and ratio analysis.

SCOPE OF THE STUDY

The present study is undertaken with an intention that it would be helpful in assessing the financial position in the organization and to make recommendations for the improvement of requirements of D.K.S.S.K.N. The scope of the study is identified after and during the study is conducted. The study of financial statement analysis is based on tools like Comparative Financial Statements, Common-Size Financial Statements and Trend Analysis Further the study is based on last 5 years Annual Reports of D.K.S.S.K.N Chikodi. That is from accounting period from 2008 to 2012.

Scope of the study is limited up to the availability of official records and Information provided by the employees.
The industry and competitors analysis were not considered while preparing the project. The Study also highlights the present scenario of the Sugar Industry in the global market as a whole and the contribution of D.K.S.S.K.N in the Indian Market & State Market in Particular. Thus a good deal of ground is covered in the study, including the trends of various components of financial statements, so as to find the effect of each component on decisionmaking.

STATEMENT OF THE PROBLEM:

The statement of problem is pertained to THE STUDY OF FINANCIAL STATEMENT ANALYSIS AT SHREE
DOODHAGANGA KRISHNA SAHAKARI SAKKARE KARKHANE NIYAMIT CHIKODI is directed towards evaluation of FINANCIAL STATEMENT ANALYSIS to ensure higher

profitability, liquidity and sound structural health of organization.

HYPOTHESIS: Three important hypotheses can be formulated from the interpretation of data, the following findings were made:
Proper analysis of financial statements may enhance the profitability and solvency position of the industry. The application of the analysis and interpretation can spark towards the success or improper implementation may hinder it. Proper judgement with financial analysis would make it easy to management with correct decision making.

PERIOD OF REFERENCE The study is conducted with reference to the cooperative years 2008 to 2012. The selection of the years is conditioned by mere convenience of the research study. Moreover, deliberately, the study was limited to five years only with a view to getting fuller and correct information of the D.K.S.S.K.N Chikodi.

LIMITATIONS OF THE STUDY

The project has completed with annual report i.e., secondary data. There were limitations for the primary date.

The project is based on five year annual reports of the company. It is difficult to collect the data regarding competitor and their financial information.
The information is confined only with D.K.S.S.K. Hence it cannot be generalized to the entire sugar industry. Non-availability of confidential financial data.

The economic and government policies etc., may affect the industry after the study which is not taken into consideration.
The study will be only a provisional one based on the data collected from the report and accounts during the period and it is subject to refinement.

Findings
Profit is the main motto of any undertakings. There is healthy trend analysis analysed during the conduct of this project. Net profit has increased fairly and consistently during these 5 years.

The inventory has varied year to year. This is proportional to the demand in the market for the products of that company.
There is an increasing trend in the cash & bank balances. This is acceptable and shows the positive trend as the costs rises year to year. The increase in cash and bank is essential to meet the increased costs of overhead. The slope of the trend equation is also positive There is polite increase in the current assets and fixed assets every year in the 5 years of the project undertaken indicating that the slope of the trend is positive analysis for the factories future. The liability named other banks over draft payables have been fully cleared during 2010 which shows factory is processing and running smoothly and flawlessly.

Findings Cont...
During the year 2008 the companys financial statements showed a loss of nearly 3.28 crore with heavy tax adding to the amount of loss and after the hiccup the stood tall and was dealing in heavy profits in the next 4 years till the date. Repair and maintenance expenses have been continuously increasing from 2008 to 2012 where management has to play an active role. Reserves and Surplus has been continuously increasing in a trend without any fall in all the 5 years. Total capital and amount of income statements, assets and liabilities are also increasing year by year.

Miscellaneous expenses have been the highlight in the year 2011 interpretation which has been considerably increased by 888.58% from 3334726 in 2010 to 32966491 in 2011.
There has been slowly but effectively increase in the investments in the later half of these 5years of project study. The life blood of a factory i.e., working capital loan which has increased nearly 2 folds from the beginning of 2008 till 2012 which is quite important and vital analysis. The additional working capital has been bought from outside as a Working capital loan.

Findings Cont...
A standard current ratio is 2:1 which company does not stand to the task of being in the standard ratio. This simply indicates that the liquidity position of the company is weak.

Quick ratio of the company is not so consistent to meet its short term debt obligations
Except in the year 2009 and 2010 factory has generated a good amount of revenue with a decent utilization of its capital. Whereas in 2008 there has been a huge loss. The Gross Profit ratio is showing continuously a mixed trend which shows that a company is losing its productivity in maintaining its gross profit margin.

The Net profit ratios calculated indicate the net margin of company decreasing for last 4 years. In 2011 it has decreased by 5.74. It is because of increase in indirect expenses. And in the year 2011-12 again there is increment in the ratio by 0.17.
The inventory turnover of the company over the period of five years has remained stable more or less.

SUGGESTIONS AND RECOMMENDATIONS:

To ensure higher profitability, liquidity and sound structural health of organization it is essential to use the sources of funds and cash effectively. The company should finance some parts of its currents assets with shortterm funds. It should not depend on long-term funds as they involve higher interest payments. Generally an ideal company will try to maintain an average working capital policy rather too conservative or too aggressive. But the company highly followed conservative approach. It can be suggested that the company should develop an optimum working capital policy, in keeping in view of the availability of the funds for day-to-day operations to get more returns. The capital employed or investment should be properly utilised by the DKSSK to increase its return on investment and total assets. The company should try to set orders from other customers other than permanent Customers so that company could get economy of scale and reduce cost of Production to maximize its profit. Inventory should be perfectly managed so as to process of the factory should not be obstacled by scarce of raw materials needed at the time and place in the quantity needed.

SUGGESTIONS AND RECOMMENDATIONS contd...

The investment in loans and advances should be minimized to possible extent.

The company has to find out new source of funds for introducing new investment opportunities. The firm should take necessary steps immediately to improve long term solvency, short term liquidity position and rate of return on capital employed.
Quick liquid position of the firm is not up to the mark, the company has to concentrate on short term obligation to improve their liquidity position of the firm. The liquid liabilities surpasses liquid assets. Current ratio is fair below the standard ratio of 2:1 so company should initiate urgent steps to improve current ratio by reducing current liabilities. Assets turnover ratio is very weak indicating poor performance of assets which may be seriously viewed and necessary actions should be taken.

CONCLUSION
Understanding nancial statements is key to fundamental stock analysis and overall investment research. Financial statements provide an account of a companys past performance, a picture of its current nancial strength and a glimpse into the future potential of a rm. On the basis of analysis of financial statements of DKSSKN Chikodi we may conclude that overall working stability - soundness have improved over the years. The financial performance during the year ended 31st March, 2012 remain healthy with total income of Rs 359,531,974 against 256,382,775 in 2008 i.e., a significant increase of 40.23% over the period of just four years which is quite notable and appreciable. This growth was driven primarily by increase in sales. Sale of power by Co-generation unit, sale by distillery unit and the main product of DKSSKN through sale of tones together of sugar by sugar unit.

Operating expenses has been managed optimally which is an highlight of my study undertaken operating expenses have never been out of hands as throughout all the 5 years it has hardly moved out of the charts, it was amounting 44,807,699 for the year 2008 and surprisingly with the decent amount of profit generated from it, expenses have never increased to a notable point as in 2012 statements showed operating expenses amounting 42,058,462 less than what was in 2008 decreasing by 6.14%. Its clear the management has played an active and participative role in its operations, operating expenses mainly consists of salary, wages and bonus. This data also reflects that employee have their job as well pay satisfaction during these years.

CONCLUSION
Shree Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit, Chikodi this factory has been producing sweet in lifes of many people through its qualitative sugar for nearly 44 years established in 1969. In these times DKSSKN has stood tall in such a cut throat competition with several other factories surrounding it. As rightly said Customers are kings of markets the undertakings vision is concerned towards Total customers satisfaction which shows its intent towards society and its real assets that is human assets.

With the analysis of DKSSKN financial statements lastly it can be concluded that factory has a great potential and capacity with all the needed resources. Factory has a bright future in coming times.

BIBLIOGRAPHY
Internet Url References: http://www.investopedia.com http://www.investorwords.com http:// WWW.scribd.com http:// www.oecd.org http:// www.slideshare.com http://www.indiansugar.com/ (Indian sugar mills association.) http://www.agriculturesnetwork.org http://www.wikinvest.com/commodity/Sugar http://www.investopedia.com Book References: 1. 2. 4. 5. Financial Management by I.M. Pandey Financial Management by M Y Khan and P K Jain Annual Report of the company. Financial Management by Dr.Ravindra Diwan. Magazines: Magnum connect magazine Feb 2013 for industrial profile. Volume V Issue No. 54 February 2013