Final Project Report

TABEL OF CONTENTS

CONTENTS PAGE NO

CHAPTER-1. COMPANY PROFILE 1-14

COMPANY OVERVIEW

HISTORY

HISTORY MILESTONES

MISSION AND VISION

BUSINESS PHILISOPHY

RESEARCH TECHENOLOGY

OBJECTIVES OF COMPANY

ORGANIZATION STRUCTURE

GROUP COMPANIES

PRODUCTION PROCESS

AWARDS AND RECOGNISATION

SWOT ANALYSIS

CHAPTER-2. CONCEPTUAL FRAMEWORK 15-42

RATIO ANALYISIS

ADVANTAGE

LIMITATION

CLASSFICATION

CONCLUSION

CHAPTER-3 RESEARCH METHDOLOGY 43-46

THE STUDY

THE TOOLS OF DATA COLLECTION

OBJECTIVE OF STUDY

LIMITATIONS OF STUDY

RECOMMENDATIONS

1

PREFACE

No study can be termed complete if there is no practical experience. Hence need for training has become a real necessity. The training aim to prepare students through a process of practical experience. Practical exposure no doubt has contributed a significant amount of knowledge to me along with real life experience &was an ideal combination of academic knowledge & practical experience. I am sure will go a long way in my future endeavors.

1

ACKNOWLEDGMENT

Preparing a report is an arduous task and I was fortunate enough to get support from a large number of persons to whom I shall always remain grateful.

I would like to record my gratitude to Mr.M.K.Meashwary for allowing me to take this project report.

I take this opportunity to thanks Dr. rakesh soral Sir, coordinator of, Indira Gandhi National Open University for providing us good atmosphere in the institute.

Last but not the least, I would also like to thanks to Dr.D.C.Jain under his supervision I have done training all the respondents for giving their precious time and relevant information and experience.

(Vikas Sharma)

M.B.A V-SAM

1

DECLARATION

I Vikas Sharma M.B.A V semester from indira Ghandhi National Open University, Delhi. I hereby declare that the project report entitled “A study of profitability Analysis at Magalam Cement Ltd. ” is a piece of genuine work done under the supervision of Mr. R.C.Gupta Mangalam Cemet ltd kota.The empirical finding in this report are based on the information collected by the company finance report . The project accomplished for the partial fulfillment of the Post Graduate Diploma in Management for Financial Management.

Place: Delhi Vikram Sharm

Date M.B.A. V-Sem

1

CERTIFICATE

I certify that Mr.Vikram Sharma has completed his summer training in Mangalam Cement..Ltd, Morak in the area of Finance. His project title is “A study of Profitability analysis at Mangalam Cement Ltd.” He has completed his summer training report under my supervision and guidance.

DATE: Prof.D.C.Jain PLACE:Gr.Noida ( Faculty Guide & Placement officer)

1

Introduction

In the most general sense of the word, cement is a binder, a substance which sets and hardens independently, and can bind other materials together. Cement used in construction is characterized as hydraulic or non-hydraulic. Hydraulic cements (e.g. Portland cement) harden even underwater or when constantly exposed to wet weather while non-hydraulic cements (e.g. lime and gypsum plaster) must be kept dry in order to gain strength.

The most important use of cement is the production of mortar and concrete used by the construction and real estate sectors. The world production of hydraulic cement is dominated by China (1.2 billion MT), followed by India and Brazil, with these 3 countries contributing to over half of global production. There are a number of employment opportunities within the sector such as site engineer, packaging engineer, surveyor, geologist, contractor, and supervisor amongst others.

Typically, the industry is characterized by few large players due to the high entry barriers such as economies of scale, high capital requirements, long gestational period of over 3 years and the need for capacity augmentation in large increments. These producers tend to have high bargaining power due to their limited numbers and the lack of any substitutes for their product, which is quintessential for secondary industries. The largest global players are Lafarge (France), Holcim (Switzerland) and Cemex (USA).

Performance

India is the world’s 2nd largest producer of cement after China with an industry capacity of over 200 MT. The cement industry in India is one amongst the fastest growing sectors due to the rapid development of infrastructure and real estate projects in the country, with 2008’s domestic consumption growing ~10% YoY. The Southern and Central regions saw

1

Cement

maximum consumption growth (~16% and ~14% respectively) whereas the North and Eastern lagged behind, with lacklustre growth (~4% and ~2% respectively).

The industry consists of both the organized sector and the unorganized sector. The largest organized sector companies include Ambuja Cements Ltd, J.K Cement Ltd, Grasim Industries Ltd, Associated Cement Company Ltd (ACC) and Madras Cement Ltd. while the main players of the unorganized sector are the regional and local cement producing units across various states. Some of the states where the cement industry is booming are Gujarat, Madhya Pradesh, and Rajasthan.

The significant growth trajectory of the industry has attracted a lot of foreign interest in the recent few years, with Holcim increasing its stake in Ambuja Cement from 22% to 56% and leading foreign funds investing in a 7.5% stake in India’s 3d largest cement company, India Cements (ICL) valued at US$125 million.

Growth Potential

Prospects for the industry remain bright over the coming years, given India’s dominance of global markets and relatively low cost of production. Also, the overall economic prosperity of the country, with a burgeoning middle class, growing infrastructure demand, significant technological change and increasing government spending all bode well for the future. On the flip side, some caution has to be maintained due to the current demand- supply gap leading to over capacity and falling margins and prices. Also, given the close linkages between them, the effect of a slowdown in global real estate and infrastructure demand or hike in interest rates should also be evaluated.

Future Prospects

1

According to the recent surveys, one metric ton of cement generates job opportunities for around 1.4 million people. In most cases, one needs to have some type of expertise in architecture in order to get a good job in this sector. Given that most of the jobs for qualified graduates have a good pay package with other benefits and perks coupled with positive growth prospects, working in the cement industry is considered a lucrative career option for new graduates, especially for those with an interest in architecture.

It is believed that in the coming years, more than 2.5 million people will be directly employed by cement companies. To cater to this growing demand, a number of colleges and educational institutes have introduced various courses and study programs related to the cement industry such as a ‘Post Graduate Diploma in Cement Technology’.

1

HISTORY

Profile

Mangalam Cement Limited was promoted in the year 1978 by the famed House of Shri B.K.Birla, the most eminent and illustrious industrialist of the country. It is a professionally managed and well established cement manufacturing company enjoying the confidence of consumers because of its superior quality product and excellent customer service.

The company has recently commissioned its state-of-the-art new cement plant with German technology for producing 7 lakh tonnes per annum at its existing site at Morak, Distt. Kota in Rajasthan under the name of Neer Shree Cement.

1

Management

An eminent Board of Directors runs the company with proven professional acumen.

1. Sh. O.P. Gupta Chairman

2. Sh. Anshuman Vikram Jalan Director

3. Smt. Vidula Jalan Director

4. Sh. N.G.Khaitan Director

5. Sh. K.K.Mudgil Director

6. Sh. T.S. Vishwanath Director

7. Sh. K.C. Jain Managing Director

Key Management Personnel

In any company there are various levels of management that make it possible to run the company successfully. At Mangalam also the following levels of Management Team are

making it possible to keep the company on the top amongst various other cement companies.

1. Mr. R.C. Gupta  President & Company Secretary

1

2. Mr. S.S. Jain President (Works & Projects)

3. Mr. A.K. Uppal President (Marketing)

4. Mr. Yaswant Mishra Sr. Joint President

5. Mr. S.K. Agrawal Joint President (Technical)

6. Mr. Anil Mandot Sr. Vice President (A & T)

7. Mr. V. Raghupati Vice President (Power Plant)

8. Mr. R. Giri Vice President (Elect. & Instrumenation)

9. Mr. R.K.Sodhani Vice President (Production)

10. Mr. G.S.Chandak     Vice President (Sales & Sales Accounts)

11. Mr. S.S. Oswal Vice President (Civil)

12. Mr. Anoop Walia Vice President (Marketing)

13. Mr. G.S.Nathawat Astt. Vice President (Stores)

14. Mr. J.R.Mehta Astt. Vice President (Purchase)

15. Mr. S.D. Mishra Astt. Vice President (Mechanical)

16. Mr. S.B. Sharma Astt. Vice President (Mines)

17. Mr. N.K. Maheshwari Astt. Vice President (Personnel)

1

1

Company History - Mangalam Cement

YEAR EVENTS

1976 - The company was incorporated on 27th October. The company was promoted by Kesoram Industries & Cotton Mills Ltd. The Century Spinning & Mfg. Co. Ltd., The Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., and Pilani Investment Corporation Ltd., Rajasthan State Industrial & Mineral Development Corporation Ltd. (RIMC) also participated in the promoters capital. The Company manufacture portland cement by dry process. 1979 - 16 Equity shares subscribed for by the signatories to the Memorandum and Articles of Association. 20,000 Pref. and 57,99,984 No. of equity shares issued at par through a prospectus. Out of this the following shares were reserved for allotment: 20,000 Pref. and 4,00,000 No. of equity shares to Rajasthan State Industrial & Mineral Development Corporation, Ltd. (RIMDC); 11,19,984 No. of equity shares to Kesoram Industries & Cotton Mills, Ltd., its directors, etc. 6,00,000 No. of equity shares to The Century Spg. & Mfg. Co. Ltd., 3,50,000 No. of equity shares to Pilani Investment Corpn. Ltd., and 2,50,000 No. of equity shares to the Gwalior Rayon Silk Mfg. (WVG.) Co. Ltd., 30,80,000 No. of equity shares offered for public subscription during December 1978. Pref. shares redeemable during 27.2.1991/94 at 6 months notice. 1985 - 10,00,422 shares issued at par to Financial Institutions on conversion of loans. 200 forfeited shares reissued or forfeiture on them annulled. 1986 - Forfeiture on 150 No. of Equity shares annulled. Allotted 2,77,965 No. of equity shares to ICICI and 33,344 No. of equity shares to GIC and its subsidiaries both at par in part conversion of loans. 1987 - The Production suffered a set back and declined slightly due to heavy power cut and shortfall in the availability of wagons fo cement despatches. - To tide over the shortage of power, the Company installed Diesel generator sets. - The Company evaluated the offers received for supply of plant and machinery for expansion of capacity from 4,00,000 tonnes per annum to 6,00,000 tonnes per annum. - The Company examined the feasibility of setting up a new plant of 2,000 tonnes per day capacity so as to derive maximum benefit of energy, coal and other costs. 1988 - Buildings, plant, machinery and railway siding of the Company were revalued as on 1st January. 1989 - Production of cement declined to 3,71,658 tonnes on account of plant shutdown for 37 days in the month of April/May. The Japanese generating set with a capacity of 5.4 MW was commissioned during the year. - The Company decided to instal a new grassroot plant of 6 lakh TPA capacity at the existing site. - 5,300 forfeited equity shares reissued. 1992 - The Company issued 42,67,038 No. of equity shares of Rs 10 each at a premium of Rs 50 per share on rights basis in the prop. of 3:5. All were taken up. Allotment of 16,890 shares were kept in abeyance pending litigation.

1

- Another 50,000 No. of equity shares of Rs 10 each at a premium of Rs 50 per share were offered to the employees. Only 4,700 share taken up. The balance 45,300 shares were allowed to lapse. 1994 - 35,00,000 No. of Equity shares of Rs 10 each (Prem. Rs 75 per share) allotted to Financial Institutions and Mutual Funds on private placement basis. 1996 - Severe power cut resulted in closure of Mangalam Cement Kiln for the month of December. 1997 - Performance of the company was affected due to sluggish market conditions and unremunerative realisations. Price of cement was under pressure throughout the year as supply was far in excess of demand due to addition of new capacities and poor purchases by the Government. - The Company proposed to expand the plant capacity by installing a pre-calcinator. - The Company received a letter of intent to increase the Capacity from 4,00,000 tonnes per annum to 6,00,000 tonnes per annum. - The Company had applied for letter of intent to manufacture acrylic fibre and acrylonitrile. - The Company decided to import a D.G. set of 5.4 MW from Japan. Application was also made for a letter of intent to manufacture toluene-di-isocynate, used for the manufacture of flexible town glass, moulded flexible looms and for paints, coating and adhesives. 1998 - The Company issued 133,80,179-14% optionally convertible cumulative preference shares on rights basis in proportion 1:1. These shares are optionally convertible into equity shares on the expiry of third, fourth and fifth year from the date of allotment i.e. 5th November. Shareholders not opting for conversion within the said period would be eligible for redemption at par at the end of 60th month from the date of allotment. 2000 - The networth of the company has been totally eroded and it has become a sick company (under SICA, 1985) 2004 -Receives Rs 119 cr dues waiver under One Time Settlement (OTS) deal with nine of the company's eleven lenders 2009 - Mangalam Cement Ltd has informed BSE that the Board of Directors of the Company at its meeting held on July 30,2009,appointed the following two Additional Directors on the Board of the Company with immediate effect.

(i) Shri. Anshuman Vikram Jalan, Kolkata

(ii) Smt. Vidula Jalan, Kolkata. - Mangalam Cement Ltd has informed that the Board of Directors of the Company at its meeting held on July 30, 2009, appointed the following two Additional Directors on the Board of the Company with immediate effect.(i) Shri. Anshuman Vikram Jalan, Kolkata (ii) Smt. Vidula Jalan, Kolkata.

1

Vision & Mission

Mangalam mission expression has been crafted to envelope both extant and emerging

realities:

“To delight and deliver beyond expectation through ingenious strategy, intrepid

entrepreneurship, improved technology, innovative products, insightful marketing and inspired

thinking about the future.”

A breakdown of the statement above reveals a ‘means and end’ approach, where the end is

articulated at the beginning with the means linked to it.

“

This segment not only underlines the importance of the ultimate goal - customer satisfaction (‘delight’)

and ultimate target - the customer, but also of intermediate processes and principals, which have

contributed to building a robust, dependable.

1

OBJECTIVES

To Minimize the Accidents.

To control the waste.

To minimize the defect.

To control the breakdowns.

To see the consumer complaints will be zero.

To keep the environment pollution free.

Maximize capital utilization.

Increase production capacity.

Increase plant availability.

Improve environmental programmed.

Minimize indirect and direct loses.

Compliance with relevant legislation and regulation.

Efficient use of resources.

Effective use of all employees.

Training for all.

Ensure empowerment and improvement of department.

Establish the sustain document quality management system.

Continually improvement in process, product, and profitability.

1

Organizational Structure Of Mangalam Cement

M.D.

President

Joint President

Sen.Vice President

Vice President

D.Genral Manager

Personnal Instrument Electrical Store Accounts

Manager

Asst. Manager

Officer

1

Assist.Officer

FINACIAL PERFORMANCE-

Abridged Profit and loss statement {Non –consololidated}

All figures in Rs.Crore

2009-2010

2008-2009

2007-2008

2006-2007

2005-2006

Gross Sales 68183.82 64631.05 59689.31less : Excise Duty 6814.74 8216.12 8599.23Net Sales 61369.08 56414.93 50987.89 22799.42Operating Profit before interest and Financial Charges,Depreciation and tax 21145.35 16200.86 16049.8 6959.3Less : Interest and Financial Charges 196.16 317.66 294.67 64.5Gross Profit before Depreciation and tax 20949.19 15883.2 15755.16 6894.8Less : Depreciation (net of transfer from revaluation reserve) 2535.96 2426.95 1770.25 608.26Profit after Depreciation 18413.23 13456.25 13984.91 6286.54Less : exceptional ItemsLess/Diminution on sale of Investment 255.57Profit before Tax 18413.23 13200.68 13984.91 6286.54Less : provision for tax 2629.94 2093.67(a) Income Tax 6700.2 3449.63(b) Deferred Tax Assets -168© Fringe Benefit Tax 34.65Net Profit after Tax 11881.03 9716.4 11354.97 4192.87provision for Dividend for 73.67Corporate Dividend Tax provided in last year written back 12.52Profit brought forward from previous year 20655.42 14742.88Profit available for appropriation 32622.64 24459.28 APPROPRIATIONS(A) Transfer to general Reserve 1200 2000(b) Proposed Dividend on Equity Shares 1601.63 1541.83(c) Corporate Dividend Tax 266.01 262.03(d) Balance carried forward to next year 29555 20655.42TOTAL 32622.64 24459.28

1

Period ending (months) F.Y

2005

F.Y

2006

F.Y

2007

F.Y

2008

F.V

2009

Net sales

Other Income

Total Income

Cost of goods sold

OPBDIT

PAT

Gross Block

Equity capital

EPS (Rs.)

DPS (Rs.)

BV (Rs.)

P/E range (x)

Debt / Equity (x

Operating margin (% of OI)

Net margin (% of OI)

1

1

CONCEPTUAL FRAMEWORK

RATIO:

It is the mathematical relation between two quantities in from of fraction or percentage.Ratio on its own has no meaning. Absolute figures are valuable but they standing alone convey no meaning unless compared with another. These single figures become important when studied in relation to other figures. Such relationship of accounting information given in terms of money are commonly referred to as ratio so, ratio is one figure expressed in terms of another, it is an expression of relationship between one figure and the other figure which are mutuality interdependent.

R.N.Anthony-“A ratio is Simple one number expressed in terms of another it is found by dividing one number into another.

Ratio may be expressed in the following three ways:-

(1) Pure Ratio or Simple Ratio: - In this form, the relationship between two figures is expressed in a common denominator. It is obtained by the simple division of one number by another so that the proportionate relationship becomes clear. For example, 2:1, 1:1, 5:6 etc.

(2) Rate Or So Many Times:- In this form, a ratio is calculated between two numerical fact for which one item divided by another and the quotient is taken as unit of expression when ratio is expressed in this form, it is called as ‘turnover’ and is written in ‘times’. For example, 4 times, 5 times, 6 times etc.

(3) Percentage:- In this form, the relationship between two items is expressed in

percentage for which one item is divided by another and the quotient is

multiplied by one hundred. For example, 25%, 50%

.

1

RATIO ANALYSIS;-

SIGNIFICANCE OF RATIO ANALYSIS;- Financial ratio analysis is the calculation and comparison of ratios which are derived from the information in a company’s financial statements.

Financial ratios are calculated from one or more prices of information from a company’s financial statements. A financial ratio can given a financial analyst an excellent picture of a company’s situation and the trends that are developing.

Credit analysts, those interpreting the financial ratios from the prospects of a lender, focus on the “downside” risk since they gain none of the upside from an improvement in operations. They pay great attention to liquidity and leverage ratio to ascertain a company’s financial risk. Equity analysts look more to the operational and profitability ratios, to determine the future profits that will accrue to the shareholder.

Although financial ratio analysis is well-developed and the actual ratios are well-known, practicing financial analysts often develop their own measures for particular industries and even individual companies. Analysts often differ drastically in there conclusions from the same ratio analysis. The significance of a ratio can only truly be appreciated when:-

It is compared with other ratios in the same set of financial statements.

It is compared with the same ratio in previous financial statements (trend analysis)

It is compared with a standard of performance (industry average). Such a standard a standard may be either the ratio which represents the typical performance of the trade or industry, or the ratio which represents the target set by management as desirable for the business.

1

ADVANTAGES OF RATIO ANALYSIS;-

Financial statement like profit and loss account and balance sheet are prepared at the end of the year do not always conveys to the reader the real profitability and financial health of the business. They contain various fact and figures and it is for the reader to conclude, whether these facts indicate a good or bad managerial performance. Ratio analysis is the most important tool of the analysis these financial statements. The figures then speak of liquidity, solvency by a profitability etc., of the business enterprices.Some important object and advantage derived by a firm by the use of accounting ratios are:-

Helpful in analysis of financial statement.

Simplification of accounting data.

Helpful in comparative study.

Helpful in locating the weak spots of the business.

Helpful in forecasting.

Estimation of ideal standards.

Fixation of ideal statement.

Effective control

Study of financial soundness.

1

.

LIMITATIONS OF RATIO ANALYSIS:-

Ratio analysis is a very important tool of financial analysis. But despite It’s being indispensable, the ratio analysis suffers from a number of limitations. These limitations should be kept in mind while making use of the ratio analysis.

False accounting data gives false ratios.

Comparison not possible if different firms adopt different accounting policies.

Ratio analysis becomes less effective due to price level change.

Limited use of a single ratio.

Window dressing.

Lack of proper standards

Ratio alone is not adequate for proper conclusion.

1

CLASSFICATION OF RATIO:-

According ratios or financial ratio has been classified in various ways according to different purposes in view. However, we shall discuss the classification according to annual financial statement and according to annual financial statement and according to objectives.

A.Classfication of the ratio on the basis of financial statement.:-Ratio is calculated on the basis of information given in the financial statement, which is as follows:

1.Balancesheets Ratio or position Statement ratios:.-These are the ratios which explain The numerical relationships between two figures in the balance sheet, e.g,the ratio of current assets or current liabilities or the ratio between capital and total assets. This is also called financial ratio. The most common amongst the balance sheet ratio are:

CURRENT RATIO

LIQUID RATIO OR ACID TEST RATIO

PROPERIETARY RATIO

CAPITAL GEARING RATIO

FIXED ASSETS TO CURRENT ASSETS RATIO

2.Income statement Ratio or Profit and Loss Account Ratios:-These explain the numerical relationships between two items of group of items of the P & L A/C. The item should refer to the same statement. The more common Ratio under these head are.

OPERATING RATIO

GROSS PROFIT RATIO.

NET PROFIT RATIO

EXPENSES RATIO

STOCK TURNOVER RATIO

1

3. Composite Ratio:-These ratios are based on the figure of the postions.Statement as well as income statement e.g. .

Fixed assets.

Returns on Capital employed ratio, etc.

B.Classification of ratio on the basis of the objective.:-

Ratio can be classified into four groups on the basis of objective. Liquidity Ratios

Solvency Ratios

Activity Profitability Ratio

Investment Ratio

A. LIQUIDITY RATIO;- Liquidity refers to the ability of a firm to meet its short-term financial obligation when and as they fall due. Thus a liquidity ratio measures the firm’s ability to fulfil short-item commitment out of its liquid assets.

Liquidity ratios are not only useful for the short-item creditor of the firm who are interested in receiving the payment of their dues but also useful for the management of the firm who are responsible to give the payment. The ratios are cold liquidity ratio because they give an indication of the degree of liquidity or “money less” of the current assets of the company.

(1) CURRENT RATIO OR WORKING CAPITAL RATIO;-

This ratio explains the relationship between current Assets and current liabilities of a business. “current assets” include those assets, which can be converted into cash within a year’s time, and current liability includes those liabilities, which are repayable in a year’s time. The formula for calculating the ratio is:-

Current Assets

Current Ratio =------------------------------- Current Liabilities

1

SIGNIFICANCE;-

The current ratio can give a sense of the efficiency of a company’s operating cycle or its ability to turn its product into cash .Companies that have trouble getting paid on their receivables or have long inventory turnover can run into liquidity problems because they are unable to alleviate their obligations.This ratio is used to assess the firm’s ability to meet its short term liabilities on time accounting – to accounting principles; a current ratio of 2:1 is supposed to be an ideal ratio. The reason of assuming 2:1 as the ideal ratio is that the current assets include such assets include such assets as stock, debtors etc,from which full amount cannot be released in case of need. Hence, even if half the amount is released from the current assets on time, the firm can still meet its current liabilities in full.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10CURRENT ASSETS

4399.17 5416.73 7748.98 6,050.22 10721.32

CURRENT LIABLITIES

2452.00 2999.61 4502.99 5065.11 7062.10

CURRENT RATIO

1.79 1.80 1.72 1.19 1.51

COMMENTS:-

In 2006 Mangalam Cement ltd, gas Rs 2.26 to pay Rs 1 which is more than ideal ratio. This or more than this ratio is good for investor’s point of view. In 2007 & 2008 current ratio of Mangalam Cement ltd fell down to 1.34 &1.55 this is less than idel ratio. These low numeric values of ratio do not indicate a good sign from investor’s especially for sundry creditors. Company has to concentrate on company‘s liquidity problem.

2.QUICK RATIO OR ACID-TEST RATIO OR LIQUID RATIO:-

Quick ratio whether the firm is in position to pay its current liabilities within month immediately.’ Liquid assets’ means those assets, which will yield cash very shortly. All current assets except stock and prepaid expenses’ are included in liquid assets.

Liquid Assets Quick Ratio=…………………….

Current Liabilities

1

SIGNIFICANCE:-

An ideal Quick Ratio is said to be 1:1.If is more it is considered to be better. The idea for every rupee of current liabilities, there should at least be one rupee of liquid assets.

Companies with ratios of less than 1 cannot pay their current liabilities and should be looked at with extreme caution .Furthermore, if the acid-test ratio is much lower than the working capital ratio; it means current assets are highly dependent on inventory. Retail stores are the example of this type of business. YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 Current Assets(1) 4399.17 5416.73 7748.98 6,050.22 10721.32 Inventories(2) 548.39 1612.64 2614.40 1300.60 2374.84 Liquid Asset(1)-(2) 3850.48 3804.09 5134.58 4749.62 8346.48 Current Liabilities 2452.00 2999.61 4502.99 5065.11 7062.10 Quick Ratio 1.57 1.26 1.14 0.93 1.18

COMMENTS:-

In 2006 Samtel glass ltd has ability to meet their cash demand but in 2007,the numeric value of ratio is less than their ideal value which sow that company was suffering from cash problem. These Data of ratio is not good for those creditors’ who give short-term loan to company. Now in 2008 ,company again starts playing its attention towards this problem of liquidity as a result there is appreciable improvement in quick ratio.

B. LEVERAGE RATIO OR CAPITAL STRUCTURE RATIO OR SOLVENCY RATIO:-

Any ratio used to calculate the financial leverage of the company to get an idea of the company’s method of financing or to measure its ability to meet financial obligations. There are several different ratios, but the main factors looked at include debt, equity, assets and interest expenses.

There are Five-type of Leverage ratio :-

1) DEBT-EQUITY RATIO:-

This ratio expresses the relationships between external liabilities and shareholder’s funds. It indicates the proportion of fund, which is provided outside

1

creditors in comparison to shareholder funds. This Ratio is calculated ascertain the soundness of the long –term financial policies of the firm.

a) External Equities:-These include all the long term and short term debt such as, debenture, Mortgage loan, Bank loan, Public Deposits and all the current liabilities.

b) Internal Equities:-These include Equity share capital, Preference share capital, Reserves and credit balance of Profit & loss Account.

DEBT DEBT-EQUATIY RATIO= ---------------------- EQUITY

SIGNIFICANCE:-

This ratio is calculated to assess the ability of the firm to meet its long-term liabilities. Generally debt-equity ratio of 1.1 is considered safe. If the debt-equity ratio is more than that, it shows a rather risky financial position from the long –term point of view. As it indicates that more of the funds invested in the business are provided by outside creditors.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 SECURED LOAN (1)

6693.21 6873.77 6425.34

UNSECURED LOAN(2)

0 0 572.79

CURRENT LIABILITIES(3

2833.2 4506.68 3517.61

TOTAL DEBT[1+2+3]

9526.41 11380.45 10515.74

EQUITY 8360 8360 8360 DEBT-EQUITY RATIO

1.14 1.36 1.26

COMMENTS:-

In Mangalam Cement ltd the value of debt-equity ratio is more than 1. On the other hand, return to company is not high so that debt become beneficial for company .It is a burden on

1

Company. In 2008 company shows some fall in this ratio but this improvement is not much appreciable.

2) PROPRIETORY RATIO:-

This is the ratio which shows the relationship of internal equity with the total assets. This ratio indicates the proportion of total funds provided by a firm from internal sources it is.

Equity Internal Equity (shareholder’s fund)Proprietory Ratio=------------------------ or --------------------------------------------- Equity +Debts Total Equity or Total assets

SIGNIFICANCE:-

This ratio should be more than 50% in other word the proportion of shareholder funds to total funds should be more than 50% a higher proprietary ratio is generally treated as indicator of sound financial position from long term point of view, because it means that the firm is less dependent on external source of finance.

YEAR 2005-06 2006-07 2008-09 2008-09 2009-10 EQUITY 8360 8360 8360TOTAL DEBT 10365 10366 10367EQUITY+DEBT 18725 18726 18727Proprietory Ratio 0.45 0.45 0.45

COMMENTS:-

1

In Mangalam Cement Ltd ,Proprietory Ratio is same which is less than 1 or 50%.The low

valueof ratio indicates the unsound financial position of company. It is not good for Long term

prospects. Company has to take certain steps to Equity portion of this ratio.

2) DEBT-TOTAL ASSET RATIO:-

Total debt comprises of long term debt & current liabilities &Total Assets comprises

of permanent capital and current assets.

While calculating total assets all the intangible assets appearing on the assets side

of the Balance sheets should be deducted such as preliminary expenses

Underwriting Commission debt balance of P & L A/c. This ratio indicates the

proportion of total funds acquired by a firm by outside sources.

Total Debt

DEBT-ASSET RATIO=--------------------------

Total Assets

SIGNFICANCE:-

The ratio should be less than 50% in other words the proportion of outside funds

assets should be less than 50% A higher ratio than this is generally treated an

indicator of risky financial position, because it means that the firm depends too

much upon outside loans for its existence. Payment of interest may become

difficult if profit is reduced. Hence, good concerns keep the debt –total assets. The

lowers the ratio, the better it is from the long-term solvency point of view.

1

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

FIXED ASSETS(1) 17513.93 15844.49 13785.05

CAPITAL WIP(2) 210.58 373.17 251.56

PROPERATING

EXPENCES(3

541.05 0 0

INVESTMENT (4) 0.025 0.025 0.025

TOTAL

ASSETS(1+2+3+4)

18265.59 16217.68

5

14036.64

TOTAL DEBT 18806.66 1621.71 14036.64

DEBT-ASSET

RATIO

1.03 1.00 1.00

COMMENTS :-

It is appreciable ratio for Samtel Glass Ltd.It should be less than 1 or 50%.This

shows that company has strong financial position. If the Company has more total

assets then it is good for their long term financing.

3) INTREST COVERAGE RATIO.

The interest coverage ratio is a measurement of the number of times a company

could make its interest payments with its earnings before interest and taxes ;the

lower the ratio the higher the company’ debt burden

Earnings before interest& tax

Interest coverage ratio = --------------------------------------- Total Interest

SIGNIFICANCE:-

For bond holders, the interest coverage ratio is supposed to act as safety gauge. It gives you a sense of how far a company’s earning can fall before it will start defaulting on its bond

1

payments. For stockholders, the interest coverage ratio is important because it gives a clear picture of the short –term financial health of business.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10Earnings before tax 472.20 -2,764.88 -1518.07 Interests 1,113.95 1,197.25 1,148.04Earnings before tax and Interest

1586.15 -1567.63 -66.42

Interest coverage Ratio 1.42 -1.31 -0.06

COMMENTS:-

In 2005, interest coverage ratio of Samtel glass ltd was 1.42 which is low below standard for investor’s point of view. Company has negative interest coverage ratio which shows that company is not able to pay its interest obligation. It also shows that company has weak short-term financial health.

C.ACTIVITY RATIO OR TURN-OVER RATIO:-

These ratios measure how well the facilities at the disposal of the being utilized. These ratios are known as turnover ratio as they indicate the rapidity with which resources available to concern are being used to product sales. In other, words these ratio measure the efficiency and rapidity of resources of the company. Some of the important activity ratio are discussed below:-

1. STOCK TURNOVER RATIO OR INVENTORY TURNOVER RATIO:-

a) This ratio indicates the relationship between the cost of goods sold during the year and average stock kept during that year.

Cost of goods sold STOCK TURNOVER RATIO= --------------------------------- Average stock

Cost of Goods Sold= (Opening stock+Purchase+Direct Exp- Closing stock)

Or

1

= Sales-Gross Profit

b) Average stock can be calculated as follows:-

Opening Stock+ Closing StockAverage Stock= ----------------------------------- 2

SIGNIFICANCE:-

This ratio indicates whether stock has been efficiently used on not it shows the speed with which the stock is rotated into sales or the number of times the stock is turned into sales during the year.The higher the ratio the better it is since it indicates that stock is selling quickly in a business where stock turnover ratio is high. Goods can be sold at a low margin of profit and even profitability may be quite high .A low stock turnover ratio indicates that stock does not sell quickly and remain lying in the go down for quite a long time.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 GROSS SALES(1) 16422.06 1083

3.1 13653.08

GROSS PROFIT(2) 472.19 -2764.88

-1518.07

OPENING STOCK(3)

1241.7 841.16 1255

CLOSING STOCK (4)

841.16 1255 248.45

AVG.STOCK [(3)-(4)]

1462.01 1675.58 875.95

COST OF GOOD SOLD(1)-(2)

15949.87 13597.98 15171.16

STOCK TURNOVER RATIO

10.91 8.12 17.32

COMMENTS:-

In 2008, Mangalam Cement ltd has appreciably increased their stock turnover ratio .It is more than double in 2008 than 2007. It proves that their sales increase during this period. Stocks are converted into sells quickly even the profit margin increases.

1

2) DEBTOR’S TURNOVER RATIO OR RECEIVABLE TURNOVER RATIO:- This Ratio indicates between credit sales and average debtors during the year:-

NET CREDIT SALESDEBTOR’S TURNOVER RATIO = ----------------------------------------- AVG DEBTORS + AVG B/R

Bills receivable are added in Debtors for the purpose of calculations of this ratio. Avg Debtors are calculated by adding the debtors and B/R at the beginning of a period as well as at the end of the period and by dividing the total by 2.While calculating this ratio provision for bad and doubtful debts is not deducted from total debtors so that it may not give a false impression that debtors are collected quickly.

SIGNIFICANCE:-

This ratio indicates the speed with which the amount is collected from debtors. The higher the ratio the better it is since it indicates that amount from debtors’ is being collected more quickly. The more quickly the debtors pay the less the risk from bad debts and so the lower the expenses of collection and increase liquidity form.

By Maintaining accounts receivable, firms are indirectly extending interest- free loan to their clients. A high ratio implies either that a company operates on cash basis or that its extension of credit and collection of accounts receivable is efficient.

A low ratio implies the company should re-asses its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 NET CREDIT SALES 14233.38 9139.52 11546.768 OPENING DEBTORS 3261.31 2204.73 900.03 CLOSING DEBTORS 2204.73 900.03 2245.64 AVG.DEBTORS 3835.385 2002.395 2695.655DEBTORSTURNOVER RATIO

3.71 4.56 4.28

COMMENTS:-In Mangalam Cement ltd., Debtors turnover ratio is continually increases which are good for a company. It indicates that company operates its function either on cash basis or collection of account receivable is Efficient. Here Company is facing low risk of bad debt.

1

3) AVERAGE COLLECTION PERIOD:-

This Ratio indicates the time within which the amount is collected from debtors and bills receivables. Average Collection period may be calculated alternatively as follows:-

AVERAGE DEBTORSAVERAGE COLLECTION PERIOD= ------------------------------------- x 365

TOTAL CREDIT SALES

SIGNIFIACNCE:-

This ratio shows the time which customers are paying for credit sales. In the above example the average collection period is 30 days, it means that on average if a sales is made today, the cash will be collected actually after 30 days i.e., 30 days credit sales are looked up in debtors.Increase in the ratio indicates the excessive blockage of fund with debtors, which increases the change of bad debts.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10AVERAGE DEBTORS 3835.385 2002.39 2695.655NET CREDIT SALES 14233.38 9139.52 11546.768AVG.COLLECTION PERIOD

98.35 79.97 85.21

COMMENTS:-

In Mangalam Cement Ltd above data shows that in 2007 company got success in decreasing its average collection period but in 2008 it again increases which is not a good sign for company. It indicates that there is a blockage of fund with debtors. More the Average collection Period , more is the chance of bad debt.

4) CREDITORS TURNOVER RATIO OR ACCOUNT PAYABLE TURNOVER RATIO:-

1

A short-term liquidity measure used to quantity the rate at which a company pays off its suppliers. Account payable turnover ratio is calculated by taking the total purchase made from suppliers and dividing it by the average accounts payable amount during the same period.

TOTAL PURCHASECREADITORS TURNOVER RATIO = --------------------------------------

AVG.ACCOUNT PAYABLE

SIGNIFICANCE:-

The measure shows investor how many times per period the company pays its average payable amount if the turnover ratio is falling from one period to another, this is sign that the company is taking longer to pay off its suppliers than it was before.

YEAR 2005-06

2006-07 2007-08 2008-09 2009-10

OPENING STOCK (1) 1100.51 1167.17 1922.23CLOSING STOCK (2) 1167.17 1922.33 804.43CONSUMPTION (3) 6257.24 4701.88 7001.1PURCHASE (1)+(3)-(2) 6190.58 3946.82 8279.786

OPENING CREDITORS 2050.62 2359.2 3029.21CLOSING CREDITORS 2359.2 3029.21 3127.98 AVG. CREDITORS 3230.22 3873.805 4593.2

CREDITORS TURNOVER RATIO

1.92 1.02 1.80

COMMENTS: -

In 2007 company had decrease its pay-off creditors which again increases in 2008. This indicates that company has increases its pay –off turnover in a year. It is a good sign to creditors as pay –off period decreases.

1

5) WORKING CAPITAL TURNOVER:-

It is a measurement comparing the depletion of working capital to generation of sales over a given period. This provides some useful information as to how effectively company is using its working capital to generate sales.

SALESWORKING CAPITAL TURNOVER= -------------------------------

WORKING CAPITAL

WORKING CAPITAL= CURRENT ASSETS – CURRENT LIABILITIES. SIGNIFICANCE:- This ratio measures the effectiveness with which a concern is using capital at its disposal. It indicates how many times the capital is turned over into sales. The higher the ratio the better it is for the business because a higher ratio indicates the quicker rotation of capital to generate higher sales which leads to higher profitability.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

NET SALES

CURRENT ASSETS 6401.20 6050.22 5458.42 CURRENT LIABILITIES

2833.20 4506.68 3517.61

WORKING CAPITAL

3568.00 1543.54 1940.81

WORKING CAPITAL TURNOVER

3.99 5.92 5.95

COMMENTS:-

During the previous three year Samtel Glass Ltd., shows improvement in working capital turnover. This ratio is concerned with the effective use of working capital & indicates the number of times capital is changed into Sales. In 2007, current liabilities of company increased due to which working capital also decreased in the same year. In 2008, net sales increased in same manner in which working capital increases that indicate the some improvement in use of working capital.

1

6) TOTAL ASSET TURNOVRE RATIO :-

This ratio expresses the relationships between total assets and net sales. It is calculated using the following formula:-

NET SALES

TOTAL ASSET TURNOVER RATIO = ---------------------------------------

TOTAL ASSETS SIGNIFICANCE:-

Assets turnover ratio measures a firm’s efficiency at using its assets in generating sales or revenue the higher the number the better. It also indicates pricing strategy: companies with low profit margins tend to have high assets turnover, while those with high profit margins have low asset turnover.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08TOTAL ASSETS

18265.045 16217.685 14036.635

TOTAL ASSETS TURNOVER

0.78 0.56 0.82

COMMENTS:-

Mangalam Cement ltd. Does not use their total assets effectively to increase their profit margins & sales. In 2007 this ratio decrases vigorously which shows that sales were not increases to make efficient utilization of resources.

7) FIXED ASSET TURNOVER RATIO:-

This ratio expresses the relationships between fixed assets less depreciation and net sales or cost of goods sold. This formula used for calculating this ratio is as follows.

1

NET SALES OR COST OF GOODS SOLDFIXED ASSETS TURNOVER RATIO = ----------------------------------------------- NET FIXED ASSETSNet fixed assets= Fixed assets – Depreciation

SIGNIFICANCE:-

This ratio of particular importance in manufacturing concerns where the investments in fixed assets are being utilized compared with the previous year, if there is increase in this ratio, it will indicate that there is better utilization of fixed assets.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08FIXED ASSET 12963.37 19417.38 25785.89 28131.33 31944.20DEPERCIATIONNET FIXED ASSET FIXED ASSETS TURNOVER

COMMENTS:-

On the basis of mentioned data, Mangalam Cement Ltd does not utilize their fixed assets efficiently. Sales do not occurs according to capacity of fixed assets. Management has to take some critical steps for the improvements of this ratio.

8) CURRENT ASSETS TURNOVER RATIO:-

This ratio shows the relationships between current assets and net sales or cost of good sold. It is calculated by using the following formula:-

SALESCURRENT ASSSETS TURNOVER RATIO = ------------------------------

CURRENT ASSETS

1

SIGNIFICANCE:-

This Ratio reflects the efficiency and capacity of working capital. It is very useful techniques for non-manufacturing unit regarding lesser working capital.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08CURRENT ASSET

4399.17 5416.73 7748.98 7293.15 10721.32

CURRENT ASSET TURNOVER

9.76 4.20 6.59 7.73 5.72

COMMENTS:-

In Mangalam Cement ltd. 2007 data shows the ratio of current assets turnover decreases & again in 2008 it increases. These figure show that company do not utilize working capital efficiently.

D. PROFITABILITY RATIO:-

The main object of ever business concern is to earn profits. A business must be able to earn adequate profits in relation to the capital invested in it. The efficiency and the success of a business can be measured with the help of profitability ratios. We can understand more about these ratios by categorized it into the following two:

1. Ratio calculated on the basis of sales -{Net Sales means (sales + income from service)} these are as follows.

1) NET PROFIT RATIO :-

This ratio measured the relationships net profit and sales of a firm. Net profit is the excess of revenue over expenses during a particular accounting period. The net profit ratio is determined by dividing the net profit by sales an expressed as percentage. The formula used is as follow.

1

NET PROFIT AFTER INTREST & TAXNET PROFIT RATIO = ------------------------------------

NET SALES

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10Net Profit After Tax And Interest

6902.36 4192.87 11354.097 9716.40 11881.03

NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08

SIGNIFICANCE :-

This ratio is the indication of overall profitability and efficiency of the business. This ratio not only reveals the recovery of cost and expenses from the revenue of the period but also to leave a margin of reasonable compensation to owners for providing capital at their risk a high net profit ratio would only mean adequate returns to the owners.

COMMENTS:- In Mangalam Cement ltd. Net sales do not show appreciable rise & cost of production is continuously increases due to which there was slight profit margin 2005 but after that company shows losses. It is not good from shareholders point of view.

2) OPERATING RATIO:-

It is calculated by subtracting all direct and indirect expenses relating to main business from net sales.

Operating Profit

Operating Profit Ratio = ----------------------

Net Sales

SIGNIFICANCE:- This Ratio indicates the net profitability of the main business, operating efficiency of a firm. In Such a case, the operating profit ratio explains that the efficiency of the firm is

1

very low. Therefore, the higher the operating ratio that better would be the operational efficiency of the firm.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08Operating Profit 10717.25 6959.30 16063.06 16200.86 21145.35OPERATING PROFIT RATIO

.24 .30 .31 .28 .34

COMMENTS:-

In Mangalam Cement ltd .operating profit ratio decreases from last 3 years continuously. This shows that net profit of main business is very low. This highly low numeric value of ratio indicates the danger for the business.

GROSS PROFIT RATIO ;-

Gross profit

Gross profit ratio = ----------------------

Sales

Year 2005-06 2006-07 2007-08 2008-09 2009-10Gross Profit 9856.93 6894.80 15768.42 15883.20 20949.19NET SALES 42949.27 22799.42 51090.08 56414.93 61369.08GROSS PROFIT RATIO

0.22 0.30 0.30 0.28 0.34

1

II) Ratio calculated on basis of Capital –There are as follows;

(1)RETURN ON CAPITAL EMPLOYED;

This ratio reflects the overall profitability of the business. It is calculated by comparing the profit earned and the employed to earn it. This ratio is usually in percentage and is also known as ‘Rate of Return’ or Return on Capital Employed’ or ‘Yield on Capital’.The tern ‘Investment’ here refers to long-term funds deployed in the enterprise. AS defined earlier long-term fund are also know as capital employed which means total of shareholder fund and long term loans. Since the Capital employed includes shareholders funds and long-term loans, interest paid on long-term loans will not be deducted from profits while calculating this ratio. The ratio is computed as under.

Net Profit before interest and tax Return on Investment = ----------------------------------- Capital employed

Here, Capital Employed = Total Assets—Current Liabilities or Net worth +Total debts

SIGNIFICANCE;-

The return on capital employed provides a test of profitability related to the long-term funds. The higher the ratio the more effective and efficient would be the utilization of capital or vice-versa. The comparison of this ratio with that of similar firms and with industry average over a period of time would disclose as to how effectively the long terms funds provided by owners and creditors have been used. YEAR 2005-06 2006-07 2007-08 2008-09 2009-10Earnings before Tax & Interest

9536.78 6351.04 14279.55 13518.34 18609.39

Total Assets (1) 17362.54 24944.36 24131.86 36232.58 44615.86Current Liabilities (2) 4399.17 2999.61 4502.99 5065.11 7062.10Capital Employed (1)-(2)

12963.37 21944.75 19628.87 31167.47 37553.76

Return on Capital employed

0.73 0.28 0.072 0.43 0.49

1

COMMENTS;-

In Mangalam Cement Ltd. Return on capital employed is in negative. This indicates that there is effective & efficient utilization of capital. This shows that effective utilization of long term fund is not takes place.

2) RETURN ON EQUITY SHARE HOLDER’S FUND:-

This ratio expresses the percentage relationship between net profit after interest and tax and proprietors fund and shareholders’ investment. This is also known as “return on proprietor’s funds” It is used to ascertain the earning power of shareholders investment.Proprietors or shareholders funds include preference share capital as well as equity shareholders funds which in turn comprises equity share capital share premium, and reserve and surplus. The shareholders equity also refers to the net worth of a company. The net profit is after deducting interest and tax but before deducting dividend on preference shares. It is the final income that is available for distribution as dividend to shareholders. The ratio is calculated by using the following formula:-

Net profit after interest and TaxReturn on proprietor’s Fund =-------------------------------------- Shareholder’s Fund or Net Worth

SIGNIFICANCE:-The return on Equity provides a test of profitability related to the long- term funds. The Higher the Ratio the more effective and efficient would be the utilization of equity or vice versa. The comparison of this ratio with that of similar company and with industry average over a period of time would disclose as to how effectively long terms fund provided by equity holders have been utilized.

YEAR 2005-06 2006-07 2007-08 2008-2009 2009-2010Profit after Tax (1) 6902.36 4192.87 11354.97 9716.40 11881.03Net Worth 11242.47 14769.19 22206.52 29433.19 38682.70Return on shareholders’ fund

0.61 0.28 0.51 0.33 0.30

COMMMENTS:-

In Mangalam Cement Ltd, profitability on share capital & long term fund is in negative i.e. shareholders loss their amount from principal. This decreases the value of company in market which may create finance problem in future.

1

3) RETURN ON TOTAL ASSET:-

Profitability can also measured by establishing relationships between net profit and total assets. This ratio is computed by dividing the net profits after tax by total funds invested or total assets. Total assets mean all net fixed current assets and non- trading investments. The ratio is expressed as formula.

NET PROFIT AFTER INTEREST AND TAX

RETURN ON TOTAL ASSETS = ------------------------------------------------------

TOTAL ASSETS

SIGNIFICANCE:-

ROA tells about what earning were generated from invested capital (assets). ROA for public companies can vary substantially and will be highly dependent on the industry. This is why when using ROA as a comparative measure it is best to compare it against a company’s previous ROA numbers or the ROA of similar Company.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10PROFIT AFTER TAX

6902.36 4192.87 11354.97 9716.40 11881.03

TOTAL ASSETS

17362.54 24944.36 24131.86 36232.58 44615.86

RETURN ON TOTAL ASSETS

0.39 0.16 0.47 0.26 0.26

COMMENTS:-

In Mangalam Cement Ltd Return on total assets are very pathetic. Company Invests money in various operations but do not able to get back return from it, Here also company is continuously losing.

1

E. INVESTEMENT ANALYSIS:-

1) RESERVE CAPITAL RATIO :-

This ratio explains the profit allocation policy of a company . It is Calculated by

dividing reserves by equity shares capital thus.

RESERVE

RESERVE CAPITAL RATIO = ---------------------------

EQUITY SHARE CAPITAL

SIGNIFICANCE:-

The ratio depicts the progress or development made by a company when it follows

conservative policy in dividend distribution then ratio will be high. A high Ratio

revels sound financial position and the capacity of the company to absorb losses

arising in future it indicates that the prices of its shares have gone up.

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10

RESERVE & SURPLUS 8417.80 11944.52 19381.85 26629.87 36013.32

SHARE CAPITAL 2824.67 2824.67 2824.67 2803.32 2669.38

RESERVECAPITAL

RATIO

2.98 4.22 6.86 9.49 13.49

COMMENTS: -

This data find out equity share is no more than different in three years. So company is

not dealing of trading in share. Company has good reserves in 2006.

1

CONCLUSION:-

LIQUIDITY RATIO

CURRENT RATIO 2.26 1.34 1.55

QUICK RATIO 1.34 0.62 1.25

LEVERAGE RATIO

DEBT- EQUITY RATIO 1.16 1.36 1.26

PROPRITEORY RATIO 0.45 0.45 0.45

DEBT-ASSET RATIO 1.03 1.00 1.00

DEBT-SERVICE-COVERAGE

RATIO

1.42 -1.31 - 0.06

INTEREST-COVERAGE RATIO 3.17 -O.99 2.06

ACTIVITY RATIO

STOCK TURNOVER RATIO 10.91 8.12 21.65

DEBTORSTURNOVER RATIO 3.71 4.56 4.28

AVG.COLLECTION PERIOD 98.35 79.97 85.21

CREDITORS TURNOVER RATIO 1.92 1.02 1.80

WORKING-CAPITAL

TURNOVER

3.99 5.92 5.95

TOTAL ASSETS TURNOVER 0.78 0.56 0.82

FIXED ASSETS TURNOVER 0.90 0.64 0.99

CURRENT-ASSETS TURNOVER 2.22 1.51 2.12

PROFITABILITY RATIO

ON THE BASIS OF SALES:-

1

NET PROFIT RATIO 0.03 -0.35 -0.1

OPERATING PROFIT RATIO 0.16 0.13 0.01

GROSS PROFIT RATIO 0.11 -0.17 -0.02

ON THE BASIS OF CAPITAL:-

RETURN-ON-CAPITAL

EMPLOYED

0.10 -0.35 -0.10

RETURN ON SHARE HOLDER’S

FUND

0.04 0.13 0.01

RETURN ON TOTAL ASSET 0.11 -0.17 -0.02

INVESTEMENT ANALYSIS

RESERVE CAPITAL RATIO 0.63 0.34 0.34

1

1

RESEARCH METHEDOLOY

Research in common parlance refers to search for knowledge. Data has been collected by

primary and secondary methods. Research methodology is away to systematically solve the

research problem. It may be understood as a science of studying how research is done

systematically. The study of Research methodology gives the student the necessary training in

gathering material and arranging them.

According to Hudson maxim, “All progress is born of inquiry. Doubt is often better than

overconfidence, for it leads to inquiry, and inquiry leads to invention.”

DATA COLLECTION:-

The task of data collection begins after a research problem has been defined and research

design \plan chalked out. While deciding about the method of data collection to be used for the

study , the researcher should keep in mind two types of data.

THERE ARE TWO TYPES OF DATA:-

PRIMARY DATA

SECONDARY DATA.

TOOLS FOR DATA COLLECTION:

1

Data collected mainly belonged to primary source as the sample units were interviewed

directly, some secondary data was also collected the company profile and the company

published literature, business magazines& previously framed project report.

OBJECTIVES OF STUDY:-

To know the financial position of the company.

To find out true and fair view of the business.

To find out various assets mix and the capability of the business to meet its

long-term & short-term liabilities.

To study about working environment planning & strategies, business policy,

various methods & technologies for better output utilization of resources.

To understand the management of human assets, finance, marketing &

production for achieving the desired goals.

LIMITATIONS OF STUDY:-

There was legs information shared by the MCL management regarding

ANALYSIS OF FINANCIAL STATEMENT OF MCL, KOTA.

The study which posses a time constraint on the research.

Research is based on secondary data of company profile is not available in

any website and also difficulty get in official documents.

1

RECOMMENDATIONS:-

The company has achieved highest ever turnover in future as compared to

previous turnover.

If company will be achieve net profit or controlled net loss in future then

good for going on company, otherwise company should be closed on merge

other company.

Company should have awareness all facilities by staff and employees.

The company should be better utilization of human resources and

improvement in work culture and productivity.

The company should moving ahead with strong performance and well

conceived strategies for expansion, diversification and corporate

transformation.

The company continuously customer satisfaction quality products with best

after sales services.

Employees were motivated through competition , prizes and incentives

declared by the company from time to time.

AnswerBHARGAVI,here  is some  useful  material.regardsLEO LINGHAM===========================

Recruitment: Do you measure up?

Common recruitment metrics1.candidate  ratioFor agencies wishing to track candidate interest and/or the short-listing resources required for a typical

1

candidate pool.To add meaning to this ratio, an agency should first seek to understand various job application and short-listing methods and their relative effectiveness.total  candidates /  offers  accepted---------------------------------------------------2.INTERNAL / EXTERNAL  CANDIDATE  RATIOUseful for agencies that frequently use internal candidates to fill positions or that have established strategies around recruiting internal talent to reduce turnover and improve development opportunities.Internal recruits are often calculated to include all internal movements, transfers and promotionsINTERNAL / EXTERNAL  RECRUITS------------------------------------------------RECRUITMENT  SOURCE BREAKDOWNThis metric presents the percentage of external engagements by the recruitment channel through which they first learned of the vacancy. It is particularly useful for agencies that use multiple channels to advertise employment opportunities and wish to monitor volume and quality of candidates by source in order to maximise advertising ‘spend’. Recruitment Source information can be captured via an application form or managed manually.EXTERNAL  ENGAGEMENTS [ recruitment  source ]  /  EXTERNAL  ENGAGEMENTS  X  100-----------------------------------------------------------------------------------------------AVERAGE   TIME  TO  STARTUseful for agencies that wish to measure the efficiency and timeliness of their recruitment processes. The Australian Public Service Commission recommends a target of 45 days from the identification of the recruitment need to the new starter commencing for a typical, non-SES recruitment exercise.AVERAGE  TIME  FROM  IDENTIFICATION  OF  RECRUITMENT NEED /  NEW  STARTER  COMMENCING-------------------------------------------------------------------------------------INTERVIEWS  PER  VACANCYFor agencies interested in finding the balance between interviewing ‘enough’ candidates and protracting the recruitment process by interviewing an excessive number of candidates.This metric can be a useful indicator of process quality (e.g. recruitment speed or short-listing ability), candidate quality or of a selection team’s understanding of the roleCANDIDATES  INTERVIEWED  / VACANCIES.--------------------------------------------------------OFFER  RATE  These metrics will help the agency to identify inefficiencies in the recruitment process and gauge the strength of the employment value proposition or ‘offer’ to candidates. [OFFERS  EXTENDED / CANDIDATES  INTERVIEWED] X 100-------------------------------------------------------------OFFER  ACCEPTANCE  RATEThese metrics are especially important for those who operate in highly competitive talent markets[OFFERS  ACCEPTED / OFFERS  EXTENDED ]  X  100----------------------------------------------------------------TURNOVER  RATE  OF  NEW  RECRUITSUseful for those who wish to measure the rate at which new recruits (e.g. <1 year length of service) leave the agency. The early departure of an employee may be due to any number of factors, including poor job or organisational fit, a poor understanding of the position, or poor induction. In this way, this metric can be used as an indication of recruitment effectiveness.[ TERMINATIONS  {new recruits}/ AVERAGE HEADCOUNT]  X   100--------------------------------------------------------------------------------NEW  RECRUITS  PERFORMANCE  RATIOArguably the most important metric – it does not matter what the process costs, how long it takes, or whether it meets expectations if the agency is recruiting the wrong people.This metric helps agencies to monitor the relative effectiveness of recruitment activities in securing

1

high-performing candidates and to evaluate return on investment.It may be considered more useful to establish an ‘interim’ performance rating at the three or six month period as this can be more directly telling of recruitment effectiveness, while a performance rating a year into the employee’s service may be influenced by many other factorsAVERAGE  PERFORMANCE  RATING. RECENT  RECRUITMENTS /  AVERAGE  PERFORMANCE RATING . AGENCY------------------------------------------------------------------------------------RECRUITMENT COST PER  VACANCYThese metrics will be most useful to agencies that wish to monitor the relative magnitude of direct and indirect recruitment costs.The ‘Cost Breakdown’ method can often be more valuable than the traditional cost–per–vacancy metric because it isolates the various individual factors that affect cost.ANNUAL RECRUITMENT COST / NUMBER  OF  VACANCIES.---------------------------------------------------------------------------------RECRUITMENT  COST  BREAKDOWNHigh costs may be driven by process inefficiencies, poor technology, ineffective advertising, excessive allowances or travel expenses, or other factors. However, recruitment costs must be considered in light of the potential costs and benefits of acquiring high–quality candidates.{ RECRUITMENT COST [type]/  TOTAL  COST ] X 100--------------------------------------------------------------------------NEW RECRUITMENT  TURNOVER  CONTRIBUTIONAs a general rule, any employee who voluntarily leaves within the first year of service can be interpreted as a poor recruitment decision. This metric can also be an indicator of other problems within the agency.Recruitment mistakes result in higher turnover, higher costs and lower productivity. It is therefore important to spend more upfront to ensure that those recruited are the best suited to the agency[ TERMINATION .SHORT  SERVICE / TERMINATIONS ]  X 100---------------------------------------------------------------RETENTION  RATEThis is a useful benchmarking metric for agencies who understand their patterns of candidate attraction and separation (who is joining, who is leaving, and for what reasons) and who wish to monitor and measure their retention rates in light of new HR strategies.[START OF  PERIOD  HEADCOUNT+ EXTERNAL  RECRUITS- TERMINATIONS] /  [ START  OF  PERIOD  HEADCOUNT  + EXTERNAL  RECRUITS]  X  100.

============================1.RECRUITMENT  SOURCING  COST /  TOTAL  PAYROLL COST.

--------------------------------------2.RECRUITING  COST / TOTAL PAYROLL  COST.

-------------------------------------------------------3.COST  PER  HIRE.

----------------------------------------------4.HIRING  TIME  / DEMAND  FULFILLMENT  TIME.

-----------------------------------------------------5.QUALITY  OF  HIRE  [ manager's  satisfaction index]

-----------------------------------------------------6.PROCESS  DOCUMENTATION  INDEX.

1

-----------------------------------------------------------7.PROCESS  AUDIT  COMPLIANCES SCORE.

--------------------------------------------------------------8. PROCESS  CYCLE  TIME

--------------------------------------------------------Quality of Hire = 65% of target.-------------------------------------------------------- Time to Hire= 70% of target----------------------------------------------------------- Time to Productivity = 70% of target--------------------------------------------------------------- Cost per Hire = 80% of target-------------------------------------------------------------------Job Vacancies Outstanding = 75% of target. ---------------------------------------------------------------------Output and performance of the hire (70% of the target )------------------------------------------------------------------------------ How quickly the new hire performs the job productively (60% of the target)-------------------------------------------------------------------------- Retention Rate for New Hires = 70% of the target. ----------------------------------------------------------------------------Completion Rate for OnboardingTasks = 60% of the target. --------------------------------------------------------------------------------------Time to Productivity for New Hires = 50% of the target. -----------------------------------------------------------------------------

1