Final Report

A

PROJECT REPORT

ON

RATIO ANALYSIS OF

PARADIP PORT TRUST, ORISSA

A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR MANAGEMENT OF BUSINESS ADMINISTRATION

FOR THE SESSION 2009-2011

Submitted to : Mr. A.K.Sahu

Deputy Manager (MS)

(PARADIP PORT TRUST)

Mr. S.K.Sahu

Deputy F.A &C.A.O

(PARADIP PORT TRUST)

Submitted by: Avitanshu Ranjan Rath

CONTENTS 1. Introduction

2. Industry profile

3. Ratio Analysis

Nature

Classification of ratio

Use of Ratio Analysis

Balance sheet at a glance

Accounting Ratio

Data analysis and interpretation

Balance sheet as at 31st march 2008

Balance sheet as at 31st march 2009

Profit and loss account for the year ended 31st march 2008

Profit and loss account for the year ended 31st march 2009

Audit report

Notes on account for the year 2008-09

4. Conclusion

5. Bibliography

6. Website

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DECLARATION

I Mr. Avitanshu Ranjan Rath of Regd no-0906266018 student of Trident Academy of Creative Technology,Bhubaneswar do hereby declare that the Project Entitled “RATIO ANALYSIS OF PARADIP PORT TRUST,ORISSA”at Paradip Port Trust is a product of my own and not borrowed from any other source not submitted any where else before.

Avitanshu Ranjan Rath

Regd no-0906266018

1st year MBA

3rd Trimester

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ACKNOWLEDGEMENT

I express my gratitude for helping me and providing necessary information during various stages of project thereby making it successful.

It is a great privilege to express deep sence of gratitude and debtness to the esteemed guides of Sri A.K.Sahu,Deputy Manager(MS) and Sri S.K.Sahu(Dy.F.A & CAO)for their sincere guidance and inspiration in this project.

And overall I am very much thankful to Sri D.Sai Kumar (Faculty of finance) and my parent without whose cooperation it was not possible.

Last but not the least I express my sincere thanks to my friends who have extended their help in completion of this project report.

Once again thanking you all.

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Avitanhu Ranjan Rath

Regd.no-0906266018

CERTIFICATE

This is to certify that Mr.Avitanshu Ranjan Rath of 3rd trimester, MBA student of “Trident Academy of Creative Technology, Bhubaneswar”has successfully completed the summer project entitled “RATIO ANALYSIS OF PARADIP PORT TRUST, ORISSA.

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Place: ParadipMr.S.K.Sahu

Date: Dy.F.A & CAO

Paradip Port Trust

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Paradip port trust (PPT) is one of the major ports of India and is the main out- let and in-let of the sea borne trade of the eastern part of the country spread over states such as Orissa. Andhra Pradesh, Bihar and West Bengal. The natural resources and industrial products of this wide spread hinterland are immense and the value of the ore trade of the country passing through port of Paradip is considerably higher than many other major ports of India.

The foundation stone of the port laid by Pandit Jawaharlal Nehru on the 3rd January, 1962. The construction works commenced from the 19th November. 1962 and dredging operations started from the 15th March, 1964 by Yugoslav Dredger “Vlasina”. During this period, this port was under control of the Government of Orissa.

Government of India took over the management of the port from the State Government on 1st June, 1965. The construction of the Iron Ore Berth was completed and INS “Investigator” had the privilege of maiden berthing in the port on the 12th March, 1966. The port was declared open by Mr. Peter Stambolic, Prime Minister of Yugoslavia on the same day.

Government of India declared Paradip as the eighth major port of India on 18th April, 1966 making it the first major port in the East Coast commissioned in independent India. The port was opened to traffic for iron ore in 1966 but after two decades, the cargo profile has undergone a complete transformation. It consists of not only iron ore, but also thermal coal, coking coal, chrome ore, manganese ore, semi processed ore cargo like chrome, Ferro chrome, Ferro manganese, Limestone, hard coke, ingots and

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moulds, billet and steel materials, dead burnt mangesite, scrap, fertilizer, food rain, reefer cargo and fertilizer raw materials e. g. phosphoric acid, ammonia, sulpher, rock phosphate. The port started handling containers and transshipment of petroleum products in 1991. The varied nature of cargo handled bears testimony to the efficient and personalized services of this deep water port.

In the year 1992, mechanized unloading of thermal coal through wagon tripper commenced. In the very next year working agreements were signed with S. E. Railways. The port was started exporting POL in the year 1994, becomes a port of the PORTNET under NICNET. Sea born traffic cross 10 million tonnes during 1994—95.

LOCATION

The port is situated on the east coast of India at about 7 kms south of the junction of river Mahanadi of Bay of Bengal. It is a distance of 210 nautical miles south of Calcutta and 260 nautical miles north of Vishakhapatnam.

Latitude: 15-55, 44” N

Longitude: 40-34. 62” E

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A PROFILE OF PARADIP PORT TRUST

The foundation stone of the port laid by Pandit Jawaharlal Nehru on the 3rd January, 1962. The construction works started from the 19th November. 1962 and dredging operations started from the 15th March, 1964 by Yugoslav Dredger “Vlasina”. During this period. This port was under control of the Government of Orissa.

Government of India took over the management of the port from the State Government on 1st June, 1965. The construction of the Iron Ore Berth was completed and INS “Investigator” had the privilege of maiden berthing in the port on the 12th March, 1966. The port was declared open by Mr. Peter Stambolic, Prime Minister of Yugoslavia on the same day.

Government of India declared Paradip as the eighth major port of India on 18th April, 1966 making it the first major port in the East Coast commissioned in independent India. The port was opened to traffic for iron ore in 1966 but after two decades, the cargo profile has undergone a complete transformation. It consists of not only iron ore, but also thermal coal, coking coal, chrome ore, manganese ore, semi

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processed ore cargo like chrome, Ferro chrome, Ferro manganese, Limestone, hard coke, ingots and moulds, billet and steel materials, dead burnt mangesite, scrap, fertilizer, food rain, reefer cargo and fertilizer raw materials e. g. phosphoric acid, ammonia, sulpher, rock phosphate. The port started handling containers and transshipment of petroleum products in 1991. The varied nature of cargo handled bears testimony to the efficient and personalized services of this deep water port.

In the year 1992, mechanized unloading of thermal coal through wagon tripper commenced. In the very next year working agreements were signed with S. E. Railways. The port was started exporting POL in the year 1994, becomes a port of the PORTNET under NICNET. Sea born traffic cross 10 million tones during 1994—95.

LOCATION

The port is situated on the east coast of India at about 7 kms south of the junction of river Mahanadi of Bay of Bengal. It is a distance of 210 nautical miles south of Calcutta and 260 nautical miles north of Vishakhapatnam.

Latitude: 15-55, 44” N

Longitude: 40-34. 62” E

COMPETITORSIn INDIA there are some other major ports, which helps to develop our nation’s economy. Now

INDIA is ranked 17th position in the world shipping industry and we try to improve our position in international market..So our major ports play a very vital role to move INDIA to that position. we are discussing about some major ports in INDIA as follows:

1.MUMBAI PORT TRUSTAlthough the port of Mumbai, located almost the West-coast of India is comparatively a modern

creation as we hence it today. Its magnificent harbour,which is the key stone of its prosperity, has held a pride place for centuries. The most modern of Mumbai’s Dock was constructed in 1904-1914.To handle petroleum product and liquid chemicals, a jetty was constructed at Pir Pua in 1923 and a modern jetty was capable of handle tankers of 47000 displacement ton was commissioned December,1996.

Mumbai port has long been principal Get way to India and played a pivotal role in the development of national economy, trade and commerce and prosperity of Mumbai city in particular. The port of Mumbai has been every responsive top the changing need of maritime trade. The port is now to set to take new chalanges.The root to success is paved with adoption of new technology and provision of quality service. With a mission of quality & cost effective service, Mumbai port embarked upon major restricting & reforms. looking ahead, the port redicets itself to provide quality service to costumers In all spheres of operation.

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Future plans:Mumbai Port Trust adopting a two pronged approach of restructuring and reforms in all area of port

modernization technology in area of port operation.

In immediate future, the port has decided to install state of the art Telecommunication system. Other major plan includes:

Modernization of oil handling facilities for enhanced capacity and higher efficiency.

Construction of modern off-shore container terminal to recapture the container traffic.

Up gradation of railway system to facilitate container movement to and from the dock directly.

Conversion of Ballard pier extension terminal in to a world class passenger terminal.

Establishment of maritime museum at Sassoon Dock.

2.Chennai Port Trust:Chennai Port is an artificial harbour situated on the Coriander Coast in South-east India and it is the

second principle port in handling container. On December 15th,1875 work was commenced for the construction of harbour,since the port has growly steadily. The first modern container Terminal in India was established at the port of Chennai in 1983.In 2001-02 the port handels36.11 Million tons of cargo including 344528TEU of containers. The principal commodities handled by the Chennai Port are petroleum and oil lubricant (POL),iron ore,fertilizers,thermal,other coal,contaioners,passenger vessels,etc.Besides the exports of iron ore the other major exports through the ports and ports are Food grains,Granite,other ores and minerals,Garments,leather product,etd.The main items of important beside crode oil are chemical,Pharmaceuticals,Fertilizers including Phosphoric acid,Potash,etc.and cocking coal.

Future plans: Clean the port.

Attract food grain traffic.

Seek the assistance of new players in the oil industry.

Provide railway goods shed for receiving wheat.

Interact with state government to permit export of rice product in other state through Chennai port.

Give storage facility for Granite stones.

Privatization of some part of the port.

Create a climate of cost consciousness, productivity and service among staff worker.

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3. Visakhapatnam Port Trust:Visakhapatnam Port, a natural harbour of Eastern cost of India, is ideally located almost midway of Kolkota and Chennai . Visakhapatnam Port has played a prominent role in forecasting accelerated growth in the region and significantly contribution to the country trade and development. The was originally conceived in 1933 as an outlet for manganese ore export. It progressed from strength to strength planned infrastructure development in successive five year plan and envolved itself to the ever-changing requirement of sea transport system. The port comprises inner harbour with 15 bearths,outer harbour with 12 berths to accommodate deep draft vessels. It has record quantity of 15492 tones of sulpher was unloaded in a day on 05.11.2004 which stands out as the “Highest Unloading”.

Future plans:The Port has following future plans:

Two berth for captive users for exports of Aluminum.

Development of additional link road as a joint venture with National Highway Authority of India.

Procurement of higher capacity cranes(20 tones).

Installation of container handling equipment at multipurpose berth in outer harbor.

Extension of existing multipurpose berth by another 300 mts.

Strategic crude storage facility.

Strengthening the facilities for transshipment of oil.

4.Kolkata Port Trust:Kolkata Port is get way of Eastern India for the rest of the world. This is the oldest major port ion India whose 1st appearance in the map of the maritime world date back to the year 1870 & this is the 140 th year of its existence.Kolkata Port is the only riverine major Port in India. Being a riverine Port, its problems and feature are unique and can not be compared with other ports of India.Kolkata Port Trust occupied 2nd

position among all major ports in terms of traffic handled from April-December 2004.Which was 32.4 million tones during the same period of last year and achieved a growth rate of 12.78%.Kolkata Port Trust ranked 3rd in terms of container handling among major ports, registering a growth rate of 13.6% against previous year.

Future plans:The following are the future plans of Kolkata port:

24 hours delivery/receipt of container/cargo at the docks.

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Reduction of Port charges on certain containerized commodities like waste papers, gift consignments and vegetable oil.

Resurfacing of berths faces of container handling berths at Netaji Subhas Dock.

Continuous updating of port website which, gives estimates of river drafts, scales of rates,etc.

PORT ESTATE:

The Port estate extends over a sprawling area. Some portion of the Port estates has been leased out for construction of office/residential buildings of concerns directly connected with activities of the Port. The Port Trust has also a scheme of providing ready built office/residential accommodation on 15 years Advance Rental Deposit Scheme. Details of the scheme could be had from the Estate Office of the Port.

Port Township: The Port Township has a population of about 1,00,000. The Port Trust staff colonies are located in Madhuban, ‘V’ Point, Sector-21 and Atharbanki areas. The Port Trust have also provided required accommodation for office/residence purposes to various users of the Port in the staff colonies.

Water Supply: Adequate water is supplied to the Port Township from the extension of the Atharbanki Canal. The Port has the facility for supplying filtered water up to 2.5 million gallons a day.

Hospital: The Port Trust has a modern 62-beded hospital which has adequate number of qualified doctors and specialists for treatment of Port Trust employees and Cargo Handling Workers. The hospital is also used by others based at Paradip Port. Besides this, dispensaries at Atharbanki and Sector-21 and a First-aid Centre inside the Cargo Berth Area are also run by Paradip Port Trust. There is also a 10-beded hospital run by the Government of Orissa.

Post Office: There are four Post Offices in the Port i.e. the main Post Office at Sector-21, Madhuban and Atharbanki areas. The main Post Office has public telephone call facilities.

HARBOUR

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The port Paradip has an artificial lagoon type harbour protected by two rubble mound “Breakwaters” and approached by the dredged Channel. The North Break Water is 538 mtrs. Long on the Northeastern side of the Port and the South Break-Water is 1217 mtrs. Long on the South-eastern side. The position of the channels inside the harbour is as under :

Approach Channel 2020 mtrs. Long, 190 mtrs. Wide

(-) 12.90 mtrs deep

Entrance Channel 500 mtrs. Long, 160 mtrs. Wide

(-) 12.90 mtrs deep

Turning Basin 520 mtrs. In diameter.

BERTH & HANDLING FACILITIES:

Iron Ore Berth:

Jetty Length 155 mtrs.

Jetty Width 13.75 mtrs.

Dist. Between Dolphin to Dolphins 320 mtrs.

Max. LOA of vessels accepted 260 mtrs.

Max Beam of vessels accepted 40.mtrs.

Designed/actual draught 13.20 mtrs.

Cargo Berths:

First Cargo Berth

Length 281 mtrs.

Designed/actual Draught 11.50 mtrs.

Second Cargo Berth

Length 205 mtrs.

Designed/actual Draught 11.50 mtrs.

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Third Cargo Berth

Length 200 mtrs.

Designed/actual Draught 12.50 mtrs.

South Quay

Length 265 mtrs.

Designed/actual Draught 12.50 mtrs.

Western Quay

Length 497 mtrs.

Designed/actual Draught 13.00 mtrs.

Multi Purpose Cargo Berth

Length 290 mtrs.

Designed/actual Draught 13.00 mtrs.

Fertilizer Berth

Long Arm 252 mtrs.

Short Arm 62 mtrs.

Designed/actual Draught 13.00 mtrs.

Integrated Fishery Harbor:

At present, Paradip is the most important centre in the state for marine fishing. Now about 300 mechanized boats each of 10m length and 50 trawlers each of 13m length are operating here. An integrated Fishery Harbour for 370 mechanized boats of 10m length, 80 trawlers of 13m., 15 trawlers of 15m. length and 50 deep sea trawlers of 23m. length has been developed for the purpose.

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REPAIRING FACILITIES:

The Port has a 500 Ton slip-way along with workshop for repair and maintenance of Port crafts and barges. A Wet Basin for Port crafts is available close to the Slipway. There is a well equipped Central Workshop for repair and maintenance of Port equipment. This workshop can undertake repair jobs for ships, in case of need.

COMMUNICATIONS:

The Port is connected with Broad-gauge Railway system of the South Eastern Railway and is also served by National Highway No.5A. The port is a part of the PORTNET-a Closed user Group (CUG) under the NICNET-provided by the National Informatics Centre (NIC). The PORTNET facility provides E-mail facility between the ports. Ministry and the Indian Ports Association (IPA). Gateway facility with international networks is also available through NIC and BSNL.

The computerization of the entire port operation and documentation has been taken up as the first stage in EDI and will be fully operational during 1999-2000. Port users can have terminal facilities to this port operation system through modem.

PORT RAILWAYS:

The Port has its own Railway system. The route length is 6.8 Kms and track length is 55 Kms. At present, there are 7 nos. of Locomotives as indicated below:

1150 BHP .. 1 (BHEL)

1350 BHP .. 2 (BHEL)

1400 BHP .. 4 (DLW-WDS-6)

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ADMINISTRATION:

The Port of Paradip, a body corporate under the Major Port Trusts Act, is administered by a Board of Trustees set up by the Government of India and comprises the Chairman appointed by Government of India, who also presides over the Board of Trustees and Trustees nominated by Government of India from various users of the Port such as Shippers, Ship owners, Government Departments concerned and also labour. The day to day administration is carried out under general supervision and control of the Chairman, assisted by the Deputy Chairman and various departmental heads.

.

DEVELOPMENT PLANS:

To cope up with the buoyant traffic, a no of capacity yielding developmental works have been taken up by the Port. A Rs.587 crores ADB-aided project for handling 20 million tones of thermal coal per annum is in progress. This includes construction of 2 berths with mechanized loading facilities and receipt, unloading and stacking of coal through bottom discharge type of wagons. The project is scheduled to be completed by July, 2000.

1. Deepening of channel

2. Construction of new berth

3. Connectivity project

Four laning of Chandikhole to Paradip NH5 A(77 kms)

New railway line between Haridaspur to Paradip.

ENVIRONMENT:

Since the super cyclone in 1999 more than Eight lakhs plant have already been planted and developed successfully. Besides this various gardens,parks,nurseries have also been developed and maintained. There is a proposal to plant more than 60,000 plants at this port by the next monsoon..

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WELFARE MEASURES :

During the year an amount of Rs. 24,05,035/- ( Rupees twenty four lakhs five thousand thirty five ) only has been sanctioned from the Employees Welfare Fund towards providing necessary financial assistance fro medical treatment of port employees, their family members and scholarship to the children of Port Trust employees for pursuing higher studies. Besides this, under group personal accidents policy scheme, the death clame of port employee was settled and an amount of Rs.10,00,000/-(Rupees ten lakhs)only has been paid through Paradip Port Trust towards their insurance coverage.

Construction of Auditorium:

To met the needs of Port Township on a long time measure, Port Trust is constructing a modern auditorium to accommodate 1,500 to 2,000 viewers at a time at an estimated cost of Rs.10.00 crores. The facilities provided in that auditorium are advanced techno-multi-plex air conditioning system, good acoustics with higher fidelity, latest IT software along with provision of large screen display/overhead projection, advanced systems for public address, fire exit, electrical installations, decorative lighting arrangements etc.,

Construction of Sea Farer’s Club :

As port expanding its capacity and also the traffic is booming up, Port Trust is constructing a Seamen Farer’s Club to the benefit of the seamen calling at Paradip Port at and estimated cost of more that Rs.2.00 crores. The facilities provided in the club are swimming pool, multi-gym, table tennis room, restaurant , shopping centre etc.,

GAMES AND SPORTS

All India Major Ports Children Athletic Meet :

Paradip Port Trust children Athletic team participated in all India Major Ports Children Athletic Meet at Visakhapatnam from 04/02/2009 to 06/02/2009. and achieved .09Gold, 19 silver and 25 Bronze.

All India Major Port Beach Volleyball Tournament :

Paradip Port Trust Beach Volleyball team participated in the All India Major Port Beach Volleyball Tournament held at New Mangalore port from 04/03/2009 to 06/03/2009. Paradip Port Team secured 3 rd

place.

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All India Major Port Table Tennis Tournament:

Paradip port Trust Table Tennis team participated in the all India major ports table tennis

tournament held at Kandal Port and secured 3rd place in veteran group.

PERFORMANCE HIGHLIGHT DURING 2008-09

IMPORTS

A quantity of 198.84 lakh tones of import traffic was handled during the year 2007-08 and 168.38lakh tones

in previous year 2008-09This represents a growth of 18.09 % in traffic over the previous year.

Commodity 2008-09 2007-08 Variation in %

Coking Coal 54.30 47.25 14.92

N.C. Coal 38.66 26.88 43.82

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Fertilizer 1.73 1.36 27.21

Lime Stone 07.67 7.44 3.09

Cement Clinker 1.45 1.00 45

Edible OIL 0.32 0.12 166.67

POL 29.21 13.96 109.24

Manganese Ore 5.32 3.62 46.96

Ammonia 4.87 4.86 0.21

MOP 3.10 1.79 73.18

Others 52.21 60.10 (-)13.13

Total 198.84 168.38 18.09

EXPORT

An all time record export traffic of 265.22 lakh tones was handled during 2008-09 and 255.22 lakh tones in the year 2007-08. The variation in two years is 3.67%.

Commodity 2008-09 2007-08 Variation in %

Iron Ore 141.56 129.42 9.38

Thermal Coal 108.32 106.60 1.61

Chrome Conc. 3.63 6.94 (-) 47.69

Pig Iron 3.01 3.97 (-) 24.18

Ferro Chrome 1.37 1.92 (-)28.65

POL 3.12 3.51 (-)11.11

Others 4.21 3.47 21.33

Total 265.22 255.83 3.67

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FINANCIAL PERFORMANCE OF PARADIP PORT TRUST

Need to measure financial performance:

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It is a process to find the strength and weakness of organization by properly establishing relationship between the items Of the balance sheet and profit and loss account. Financial analysis can be undertaken by the management of the organization or by the parties out side the firmviz.owners, creditors, investors and others. The nature of analysis will differ depending on the purpose of analysis.

Trade creditors are interested in firm’s ability to meet their claimes over a very short period of time. Their analysis will therefore confined to the evaluation of the firm’s liquidity position.

Suppliers of long term debt, on the other hand concern with the firm’s long term solvency and survival. They analyse the firms profitability overtime, its ability to generate cash to be able to pay interest repay principal and the relationship between various source of funds. Long term creditors do analyse the historical financial statements, but they place more emphasis firms projected, or Performa financial statements, to make analysis about its future solvency and profitability.

Investors who have invested their money in the firm’s share, are more concern about the firm’s earnings. They restore more confidence in those firms that show steady growth in earnings. As such they concentrate on the analysis of the firm’s present and future profitability. They are also interested in the firm’s financial structure to the extent it influences in the firms financial structure to the extent it influences the firms earning ability and risk.

Management of the firm would be interested in every aspect of the financial analysis. It is their overall responsibility and efficiently and the firm’s financial condition is sound.

OBJECTIVE OF STUDY:Find out the growth of the port from last two years.

Find out the role of Paradip Port Trust.

Find out the specific contribution of Paradip Port Trust o the country.

SCOPE OF STUDY:

Source of information Primary information

Secondary information

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The study is conducted on the micro level with specific reference to performance of Paradip Port Trust study is best on last two years data.

METODOLOGY:

This is basically theoretically study ratio analysis.

Data analysis and interpretation.

RATIO ANALYSIS:Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the quotient of two mathematical

expressions and as the relationship between two or more things. In financial analysis, a ratio is used as a benchmark for evaluating the financial position and performance of the firm. The absolute accounting figures reported in the finical statements do not provide a meaningful understanding of performance and finical position of the firm. An accounting figure conveys meaning when it is related to some other relevant information. For example, a Rs 5 cores net profit may look impressive but the firm’s performance can be said good or bad only when the profit figure is related to the firm’s investment. The relationship between two accounting figures, expressed mathematically is known as financial ratio. Ratios help to summarize large quantity of data and to make qualitative judgment about the firm’s performance.

NATURE:

It is a technique of interpreting financial results. It has following steps-

1. Selection of the relevant data from the financial statement depending upon the object of analysis.

2. Calculation of appropriate ratio.

3. Comparison with calculated

4. Interpretation

CLASSIFICATION OF RATIO

The use of ratio analysis is not confined to the financial managers only. There are other parties, which are interested

in these ratios for different other purposes. Different ratios are calculated for different purposes depending on their

needs.

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Various accounting ratios can be classified as follows:

RATIOS

(A) (B) (C)

Traditional Functional Significance

Traditional Classification / Statement Ratio can be classified as follows:

TRADITIONAL CLASSIFICATION

(A) (B) (C)

Balance Sheet Profit & Loss Mixed

Ratios Ratios Ratios

Classification is based on the statement from which ratios are calculated:

Balance sheet Ratio

Profit & Loss Account Ratio

Balance sheet and Profit & Loss Account Ratio

BALANCE SHEET RATIO

This ratio is based on balance sheet figures. The ratio deals with the relation sheep between two Balance sheet

items, these ratios are:

Current Ratio/ Working Capital Ratio

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Liquid Ratio/ Quick Acid Ratio/ Acid Ratio

Proprietary Ratio

Asset – Proprietorship Ratio

PROFIT & LOSS ACCOUNT RATIO

This ratio is based on Profit & Loss Account Ratio. This ratio can also be termed Income/ Revenue Statement Ratio.

This ratio deals with the relationship between two Profit & Loss Account items. The examples of these ratios are: -

Gross Profit Ratio

Operating Ratio

Expenses Ratio

Net Profit Ratio

Stock Turnover/ Inventory Turnover Ratio

BALANCE SHEET AND PROFIT & LOSS ACCOUNT RATIO

This ratio is based on both the statement that is Balance sheet and Profit & Loss Account. The examples of mixed

ratios are:

Return on Total Resources

Return on Own Funds

Turnover of Fixed Assets

Turnover of Debtors

Earnings Per Share

Ratio may be classified from the part of users. Thus we can have Ratio Analysis from:

Share Holder point of view

Short – term creditors point of view

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Long – term creditors point of view

USE OF RATIO ANALYSIS:

The use of ratio is both in the field of management and in the different fields like,credit,banking,investors,share holders with the help of ratio. We can understand whether a firm is improving or not.

1.Marginal use of ratio analysis

2.Utility to share holder and investor

3.Utility to creditors.

4.Utility of employees.

5.Utility to Government

.

LIMITATION:

The subject of ratio analysis is free from limitation. Because, it is an extract of financial accounting reports it carries all the limitation that present in financial accounting system.

BALANCE SHEET AT GLANCE ( Figures in Crores )

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PARTICULARS AS ON 31.03.2009 AS ON 31.03.2008

ASSETS

Capital Assets at Original cost 1634.93 1581.37

Investment 773.62 666.81

Current Assets 874.20 689.81

Total 3282.75 2938.05

LIBILITY

Reserves & Surplus 613.02 535.15

Dep. On capital Assets 496.49 446.61

Capital Debts 08.12 47.26

Current Liabilities 937.98 875.05

Surplus in Working 1227.14 1033.98

Total: 3282.75 2938.05

PERFORMANCE INDICATORS

(ACCOUNTING RATIO)

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( Figures in Crores )

PARTICULARS 2008-09 2007-2008

A. OPERATING RATIO

Operating Expenditure 358.17 315.79

Operating Income 696.71 639.98

Operating Ratio (%) 51.41 49.34

B STORES CONSUMPTION TO AVERAGE STOCK HOLDINGS:

Value of stores issued 23.03 27.84

Average stock 6.36 7.75

Ratio (%) 362.39 359.23

C CURRENT ASSET TO CURRENT LIABILITIES

Current Assets 874.20 698.81

Current Liabilities 937.98 875.05

Current Ratio (%) 93.20 78.83

DATA ANALYSIS AND INTERPRETATION

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LIQUIDITY RATIO

Financial ratio in these categories measures the company’s capacity to pay in its debt as they come due.

A) Current ratio

Defination: The ratio between current assets and current liabilities, another way of expressing liquidity.

Current ratio =current assets/current liability

2005-06 2006-07 2007-08 2008-09

57.06 62.12 78.83 93.19

CURRENT RATIO

YEAR

Interpretation:

Higher the current ratio, higher is the ability of the business to pay its current obligation. In these years 2008-09 has higher ability than before.

1. Quick Test Ratio

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Definition: The ratio between all assets quickly convertible into cash and all current liabilities specifically exceeds inventory.

Quick Test Ratio=Quick asset/current liability.

2005-062006-07 2007-08 2008-09

37.04 32.02 39.31 37.41

(Here the quick assets represent sundry debtors, accrud interest due to the port on investment, cash in saving bank and current account in bank and cash in hand)

QUICK RATIO

YEAR

Interpretation

Usually a high quick test ratio is an indication that a firm is liquid and has ability to meet its current or liquid liability in time and on other hand a low liquid ratio represents that the firm liquid position is not good.

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2. MOVEMENT/EFFICIENCY/ACTIVITY RATIO

Activity ratios are employed to evaluate the efficiency with which the firm manage and utilized its assets. These ratios are called turn over ratio, because they indicate the speed with which the assets being converted or turned over into sales.

A) Fixed assets turn over ratio:

Definition: This indicates how will the fixed assets are being used to generate sales in business.

Fixed assets turn over ratio: Total revenue /fixed assets

2005-06 2006-07 2007-08 2008-09

0.37 times 0.42 times 0.43 times 0.43 times

YEAR

Interpretation

Higher is the ratio, better is the performance, on the other hand a low ratio indicate that the fixed assets are not being utilized.

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B) Return on total investment/return on total assets

Definition: Consider a measure of how efficiency assets are used to generate a returns (this ratio is not very useful for most businesses).

ROI =Net profit /total revenue

2005-06 2006-07 2007-08 2008-09

0.1176 0.2122 0.2210588 0.22177

YEAR

Interpretation

ROI shows the amount of income tied up in assets. Year to year trend may be indicator but watch out but changes in the total assets figure as we depreciated your assets.

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4. PROFITABILITY RATIO

The ratio in the section measures the ability of the business to make a profit.

Net Profit Margin

Definition: It shows how much profit comes from the every dollar of sales.

Net Profit Margin=Net profit/total revenue

2005-062006-07 2007-08 2008-09

20.91 21.22 22.21 22.20

YEAR

Interpretation

Comparing to the other business in the same industries to see if your business is operating as a profitably as it should be look at the trend from month to month. Is it staying same or improving of deteriorating ?

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5. OPERATING RATIO:

Definition:

This ratio is computed by dividing cost of goods sold plus management and general and administration expenses by total revenue.

OPERATING RATIO=Cost of good sold+ Operating expenses/Total revenue

2005-06 2006-07 2007-08 2008-09

51.08 47.36 49.34 50.52

Interpretation

It indicate the percentage of the net revenue that is consumed by operating cost obviously higher it would have a small margin to cover and revenue operating ratio is considered to be yardstick of operating, but it should cautiously.

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6.OPERATING PROFIT RATIO

Definition: This ratio is completed by operating profit by total revenue.

OPERATING PROFIT RATIO=Operating profit / Total revenue

2005-06 2006-07 2007-08 2008-09

48.92 52.64 50.63 53.01

YEAR

Interpretation

This ratio is also stated as (100-Operating ratio) higher is the ratio better is performance analyzing above the given ratio the performance of the port is satisfactory.

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7.NET PROFIT RATIO

Definition: Net profit ratio establishes a relationship between net profit (after tax) and sales and indicates the efficiency of the management in manufacturing, selling, administrative and other activity of the firm. This ratio is the over all measure of firm profitability.

NET PROFIT RATIO=Net profit after tax/net sales*100

2005-062006-07 2007-08 2008-09

37.25 31.99 33.41 32.01

Interpretation

This ratio indicates the firms capacity to face adverse economic condition such as price compition,low demand etc.Higher the ratio the better is the profitability. While interpreting the ratio it should keep in mind that the

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performance of the profit must also be seen in relation to investment or capital of the firm and not only relation to the sales.

8.ADMINISTRATIVE EXPENSES RATIO

Definition Expense ratio indicates the relationship of various expenses to total revenue.

ADMINISTRATIVE EXPENSES RATIO=

ADMINISTRATIVE EXPENSES * 100

Total revenue

2005-06 2006-07 2007-08 2008-09

0.12 08.60 10.15 10.57

YEAR

Interpretation:

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The lower the ratio, the grater is the profitability and higher is the ratio, lower is the profitability. While interpreting the ratio, it must remember that for a fixed expense like rent, the ratio will fall if the sales increase and for a variable expense, the ratio in proportion to sales shall remain nearly the same.

9.FIXED ASSET RATIO

Definition: This ratio indicates between the fixed assets after depreciation to the ling term fund by the business.

FIXED ASSET RATIO=Fixed asset (after deprecation)/total long term funds

2005-06 2006-07 2007-08 2008-09

5.16 11.84 24.00 49.8

YEAR

Interpretation:

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The ratio indicates the extent to which the extent the total of fixed assets are financed by long term funds of the firm generally, the total of fixed asset should be equal to the total of the long term funds say, the ratio should be hundred percent.

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PARADIP PORT TRUST

Balance sheet as at 31st march, 2008

(Amount Rs.in crores )

SCH As at 31.03.08 As at 31.03.07

I SOURCE OF FUNDS

1 RESERVES & SURPLUS 1 15,691,349.834 13,099,954,010

2 LOAN FUNDS 2 472,636,348 962,186,348

TOTAL 16,163,986,182 14,062,140,358

II APPLICATION OF FUNDS

1 FIXED ASSETS 3

A. Gross block 15,565,451,138 15,004,500.056

Less: Depreciation 4,466,053,988 3,961,426,021

Net Block 11,099,397,150 11,043,074,035

B Capital Works-in Progress 248,284,224 352,038,621

11,347,681,374 11,395,112,656

2 INVESTMENT 4 6,668,700.000 5,583,400,000

3 CURRENT ASETS

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LOANS & ADVANCES 5 6,898,123,240 4,781,597,411

Less: CURRENT 6 8,750,518,432 7,697,969,709

LIABILITYES AND

PROVISIONS

NET CURRENT ASSETS 1,852,395,192 2,916,372,298

TOTAL 16,163,986,182 14,062,140,358

Proforma Pilotage 18

Notes on Accounts 19

Schedules 1 to 19 annexed hereto form part of Balance Sheet and the Profit and Loss Account

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PARADIP PORT TRUST

Balance sheet as at 31st march, 2009

(Amount in crores )

SCH As at 31.03.09 As at 31.03.08

I SOURCE OF FUNDS

3 RESERVES & SURPLUS 1 18,401,629,513 15,691,349,834

4 LOAN FUNDS 2 81,160,348 472,636,348

TOTAL 18,482,789,861 16,163,986,182

II APPLICATION OF FUNDS

2 FIXED ASSETS 3

C Gross block 15,891,233,184 15,565,451,138

Less: Depreciation 4,964,879,233 4,466,053,988

Net Block 10,926,353,951 11,099,397,150

D Capital Works-in Progress 458,090,204 248,284,224

11384,444,155 11,347,681,374

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2 INVESTMENT 4 7,736,200,000 6,668,700,000

3 CURRENT ASETS

LOANS & ADVANCES 5 8,741,964,557 6,898,123,240

Less: CURRENT 6 9,379,818,851 8,750,518,432

LIABILITYES AND

PROVISIONS

NET CURRENT ASSETS 637,854,294 1,852,395,192

TOTAL 18,482,789,861 16,163,986,182

Proforma Pilotage 18

Notes on Accounts 19

Schedules 1 to 19 annexed hereto form part of Balance Sheet and the Profit and Loss Account

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PARADIP PORT TRUST

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008

(Amount in crores.)

SCH 2007-08 2006-07

INCOME

Cargo Handling & Storage Charges 07

4,127,776,429 3,884,978,049

Port & Dock Charges (Including polo age fees) 08

1332,514,544 1,343,157,344

Railway Earnings 09

830,626,141 628,919,284

Estate Rentals 10

108,930,469 110,520,229

6,399,847,583 110,520,229

LESS:EXPENDITURE

Cargo Handling & Storage Charges 11

1,218,327,272 1,196,639,873

Port & Dock Facilities (Including Pilotage) 12

615,910,875 525,433,780

Railway workings 13

422,723,902 331,155,147

Rentable Land & Buildings 14

250,902,869 257,725,287

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Management & General Administration 15

650,079,623 515,005,397

(not directly attributable to a Activity)

3,157,944,541 2,825,959,484

Operating Surplus (+) Deficit (-) 3,241,903,042 3,141,615,422

Add: Finance & Misc. Income 16

398,162,722 436,127,452

Less: Finance & Misc. Expenditure 17

331,055,949 648,491,519

Net Surplus (+) Deficit (-) before Tax 3,309,009,815 2,929,251,445

Provision for Income Tax 1,170,271,800 1,019,832,230

Net Surplus after Tax 2,138,738,015 1,909,419,215

Less: Appropriations

Replacement, Rehabilitation & Modernization

Of Capital Assets

300,000,000 250,000,000

Development, repayment of Loan & contingencies

300,000,000 250,000,000

Deferred Tax Liability 119,416,498 142,894,961

Net surplus after Appropriation 1,419,321,517 1,266,524,254

Performa Pilotage 18

Notes on Accounts 19

Schedules 1 to 19 annexed hereto form part of Balance Sheet and the Profit and Loss Account

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PARADIP PORT TRUSTPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009

(Amount in crores.)

SCH 2007-08 2006-07

INCOME

Cargo Handling & Storage Charges 07

4,371,136.686 4,127,776,429

Port & Dock Charges (Including polo age fees) 08

1,504,437,220 1,332,514,544

Railway Earnings 09

990,144,788 830,626,141

Estate Rentals 10

101,421,259 108,930,469

6,967,140,023 6,399,847,583

LESS:EXPENDITURE

Cargo Handling & Storage Charges 1 1,283,906,514 1,218,327,272

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1

Port & Dock Facilities (Including Pilotage) 12

772,,702,230, 615,910,875

Railway workings 13

426,662662,493 422,723,902

Rentable Land & Buildings 14

361,455,217 250,902,869

Management & General Administration 15

-737,021,094 650,079,623

(not directly attributable to a Activity)

3,385,747,548 3,157,944,541

Operating Surplus (+) Deficit (-) 3,385,392,475 3,241,903,042

Add: Finance & Misc. Income 16

371,583,918 398,162,722

Less: Finance & Misc. Expenditure 17

291,587,829 331,055,949

Net Surplus (+) Deficit (-) before Tax 3,465,388,464 3,309,009,815

Provision for Income Tax 1,234,572,921 1,170,271,800

Net Surplus after Tax 2,230,815,543 2,138,738,015

Less: Appropriations

Replacement, Rehabilitation & Modernization

Of Capital Assets

300,000,000 300,000,000

Development, repayment of Loan & contingencies

300,000,000 300,000,000

Deferred Tax Liability 90,667,364 119,416,498

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Net surplus after Appropriation 1,540,148,179 1,419,321,517

Performa Pilotage 18

Notes on Accounts 19

Schedules 1 to 19 annexed hereto form part of Balance Sheet and the Profit and Loss Account

AUDIT REPORT

Review of Accounts of Paradip Port Trust, Paradip for the year ended 31st

March, 2008 by Comptroller & Auditor General of India

Note:- The review of Accounts has been prepared without taking in to account the observations/comments contained in the Audit Report of the Comptroller and Auditor General of India.

Review of accounts:

2. FINANCIAL POSITION

2.1. The financial position of the Port under broad headings for the last three years was as follows:

(Rupees in crores)

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2008-09

(current year)

2007-08

(previous year)

2006-07

(previous year)

(A) LIABILITIES

i) Capital Reserve (#) 612.91 535.05 467.02

ii) Other Reserve (@) 1227.25 1034.05 842.97

iii) Borrowings

a) Inter Corporate Loan 0.00 0.00 0.00

b) Capital Debt (Govt. of India Loan)

8.12 47.26 96.22

c) Institutional Loan

(Asian Development Bank) 0.00 0.00 0.00

iv) Current Liabilities & Provisions

937.98 875.05 769.80

v) Other Liabilities

(CPF Pension fund etc.) 0.00 0.00 0.00

TOTAL: 2786.26 2491.44 2176.01

B) ASSETS

i) Fixed Assets (Gross Block 1589.12 1556.55 1500.45

ii) Less: Depreciation 496.49 446.61 396.14

iii) Net Fixed Assets 1092.63 1109.94 1104.31

iv) Work-in-Progress 45.81 24.82 35.20

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v) Investment 773.62 666.87 558.34

vi) 874.20 689.81 478.16

TOTAL 2786.26 2491.81 2176.01

(A) REVINUE

i) Operating Income 696.71 639.98 596.76

ii) Non-operating Income 37.16 39.82 43.61

TOTAL 73387 679.80 640.37

B) EXPENDITURE

i) Operating Expenditure 358.17 315.79 282.60

ii) Non-Operating Expenditure 29.16 33.11 64.85

TOTAL 387.33 348.90 292.92

(C) Net Surplus (Deficit) before

Appropriation 346.54 330.90 292.92

(D) Less (i) mandatory appropriation/

Transfer to reserve fund 60.00 50.00 50.00

ii) Provision for taxation 123.46 117.03 101.98

iii) Deferred Tax Liability 9.07 11.94 14.29

(E) Surplus/(Deficit) Transferred to

General Reserve fund 154.01 141.93 126.65

(F) Percentage of Net Surplus to

a)Operating Income 49.74% 51.70% 49.09%

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b) Fixed Assets 31.72% 29.81% 26.53%

c) Net Worth 18.83% 21.09% 22.36%

NOTES ON ACCOUNTS FOR THE YEAR 2008-09

1. YEAR IN BRIEF

RESULTS FOR THE YEAR 2008-09 2007-08

Traffic ( In Million MI) 46.41 42.44

Operating Income ( Rs. In Cr. ) 696.98 639.98

Operating Surplus ( Rs. in Cr. ) 358.17 315.79

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Total Income ( Rs. In Cr. ) 733.87 679.79

Total Expenditure (Rs. In Cr.) 387.33 348.89

Net Surplus ( Rs. In Cr. ) 346.54 330.90

Operating Ratio 1:0.51 1:0.49

Unit Cost per Ton of Cargo

Handled ( Rs.in crores) 77.18 11.79

Percentage change of Operating

Income over previous year 13.42 11.79

Operating surplus as percentage of

Operating Income 48.59 50.66

Salary & Wages as percentage of

Operating expenditure 23.84 22.63

Interest as percentage of Total

Expenditure 0.52 1.50

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CONCLUSION

Ratio analysis is one of the most powerful tools of financial analysis. it is a device to analyses and interpret the financial health of enterprise.

From the report it is concluded that the port had a sound financial position.

As, port is making many development plans it is becoming more sound day by day.

The supplier of goods on credit, banks, financial institutions, investors, share holders and management all make use of ratio analysis as a tool in evaluating the financial position and performance of a firm for granting credit, providing loans or making investments in the firm.

The conclusion can be drawn as to wheather the performance of the firm is improving or decreasing.

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BIBLIOGRAPHY

I.M.PANDEY Financial management (Vikas Publishing House Pvt.Ltd)

R.K.Shrama & S.K.Gupta Management Accounting, Kalyani Publisher, New Delhi

Annual Report of PPT

Administration report

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