Kiran Sir Financial Performance Sagar Cements

7/24/2019 Kiran Sir Financial Performance Sagar Cements

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CHAPTER-1

INTRODUCTION

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INTRODUCTION

Financial analysis is the process of identifyin the

!nancial strenths and "ea#ness of the !r$ %y properly

esta%lishin relationships %et"een the ite$s of !nancial

state$ents &i'( %alance sheet tradin acco)nt* and pro!t

+loss acco)nt,

Financial analysis assess the co$panys

operational e.ciency and also learn a%o)t !nancial

position at the end of the acco)ntin year,

Financial state$ent analysis larely a st)dy of

relationship a$on the &ario)s !nancial factors in a

%)siness as disclosed %y a sinle set of state$ents assho"n in a series of state$ents,

Importance of nancial analysis:

In&estors in co$pany e/ects are concern

principally "ith present and e0pected f)t)re earnins and

sta%ility of this earnins a%o)t a trend* as "ell as they

co&ariance "ith the earnins of other co$panies, As a

res)lt in&estors $iht concentrate their analysis on the

pro!ta%ility of !r$, They "o)ld %e concerned "ith

!nancial condition,


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In so far its e/ects the a%ility of the co$pany

to pay the di&idends and to a&oid %an#r)pt, in order to

%arain $ore e/ecti&ely for o)tside f)nds * the

$anae$ent of the !r$ sho)ld %e interested in all

aspects of !nancial analysis that o)tside s)ppliers of

capital )se in e&al)atin the !r$, 2anae$ent also

e$ploys !nancial analysis for the p)rpose of internal

control,

In partic)lar it is concerned "ith the

pro!ta%ility on in&est$ent in the &ario)s assets of the

co$pany and in the !r$ iss)es of the co$pany and in the

!r$ iss)es &ario)s o&ern$ent re)lators $y )se

!nancial analysis in partic)lar re)latory aencies

concerned "ith the rate of ret)rn of a co$pany earns on

its assets* as "ell as "ith the proportion of non-e3)ity

f)nds e$ployed in the %)siness Th)s* this type of!nancial )nder ta#in &aries accordin to the speci!c

interest of a !nancial state$ents analysis is the part of

larer infor$ation processin syste$ of "hich infor$ed

decisions can %e %ased,

Co$parati&e analysis are relationship e0pressed in a

$athe$atical for$s %et"een !)res "hich are connected

"ith each other in sa$e $anner o%&io)sly4 no p)rpose "ill

%e ser&ed %y co$parin t"o steps of !)res* "hich are

not at all connected "ith each other* $ore e&er ade3)ate

!)res are also )nits for co$parison,

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Co$$on si'e analysis is a si$ple arith$etic

e0pression of the relationship of one n)$%er to another ,it

$ay %e de!ned as the indicated re3)ire$ents of t"o

$athe$atical e0pression ,in si$ple lan)ae ratio

e0pressed in ter$s of another and can %e "or#ed o)t %y

di&idin one n)$%er to another,

NEED FOR THE STUDY

Financial 6t$ants HE7P6A66E66THEOPRETION7E

and learn a%o)t the !nancial position of the %)siness at

the end of the acco)ntin period ,

The acco)ntant prepares a pac#ae of a !nancialstate$ents thats is tradin* pro!t + loss acco)nt*

%alance sheet

6o the !nancial analyst depends pri$arly on

these state$ents to dionise !nancial perfor$ance the 5

$ain reasons of the !nancial analyst depends on the

state$ents

As lon as acco)ntin %iases re$ain $ore or less the

sa$e o&er ti$e* $eanin f)ll inferences can %edra"n %y e0a$ine trends in ra" data and in !nancialRatios

6ince si$ilar %iases characteri'e &ario)s !r$s in the

sa$e ind)stry* inter-!r$ co$parisons are )sef)l,

E0perience see$s to s)est that !nancial analysis

"or#s if one is a"are of acco)ntin %iases and $a#esad8)st$ents for the sa$eIf properly analy'ed and interpreted !nancial

state$ents is of interest to

o 7enders9short ter$ and lon ter$ lenders:

o In&estors

o 6ec)rity analystso 2anaers and also it helps for assessin

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o Corporate e0cellence

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To pro&ide relia%le infor$ation a%o)t chanes in

net reso)rces of the acti&ity,

Researc! met!o#olo$y:

2ethodoloy is a syste$atic proced)re of

collectin infor$ation in order to analysis and =arity

a pheno$enon* the collection is done thro)h

principles so)rces &i'4

i:Pri$ary data,

ii:6econdary data,

i%&rimary #ata:

It is infor$ation collected directly "ith o)t any

reference , in this st)dy it "as $ainly inter&ie"s* "ith

concerned o.cers and sta/* either indi&id)ally or

collected so$e of the infor$ation had %een &eri!ed

or s)pple$ented cond)ctin personal "itho%ser&ations,

T!e #ata incl"#es

Inter&ie"s "ith 6pone Iron Indian 7i$ited

e$ployees Oranition charts has %een dra"n thro)h

o%ser&ation

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ii% secon#ary #ata:

The secondary data "as collectin for$

so)rce s)ch as pa$phlets* ann)l reports * ret)rn and

internal records,

The data incl)des,

Collection of re3)ired data fro$ the ann)al

reports of 6A@AR CE2ENT67I2ITED INDIA

7I2ITED in ho)se $aa'ines* p)%lication and"e%sites,

Reference fro$ te0t %oo#s and 8o)rnals relatin!nancial $anae$ent

'I(IT)TIONS OF THE STUDY:

As the researcher as the pro8ect and period of

ti$e consideration for analy'in the !nancialperfor$ance is less* it is not possi%le to ha&e

enerali'ation the chance of errors in $ore,

As it is not the researcher direct o%ser&ation %)t

a secondary so)rces of infor$ation pro&ided %ythe co$pany,

It is dealin "ith &ery li$ited pro$oters for

e&al)atin desired o%8ecti&es

It is $a8orly %ased on the secondary datan)$%ers,

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CHAPTER-

INDU6TR PROFI7E


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*E(ENT INDUSTRY

India* %ein the second larest ce$ent prod)cer in the"orld after China "ith a total capacity of 1>1, 2illion

Tones 92T:* has ot a h)e ce$ent ind)stry, ith theo&ern$ent of India i&in %oost to &ario)s infrastr)ct)repro8ects* ho)sin facilities and road net"or#s* the ce$entind)stry in India is c)rrently ro"in at an en&ia%le pace,2ore ro"th in the Indian ce$ent ind)stry is e0pected inthe co$in years, It is also predicted that the ce$entprod)ction in India "o)ld rise to 5?,1? 2T in F11, Itsalso e0pected to rise to ?,?1 2T in F1,

The ce$ent ind)stry in India is do$inated %y aro)nd Gco$panies* "hich acco)nt for al$ost BG of the total

ce$ent prod)ction in India, In the present year* the Indiance$ent co$panies ha&e prod)ced 11 2T ce$ent d)rinApril-6epte$%er GG, It too# the total ce$ent prod)ctionin FG to 51 2T,

Ce$ent ind)stry* in any co)ntry* plays a $a8or role in thero"th of the nation, Ce$ent ind)stry in India "as )nderf)ll control and s)per&ision of the o&ern$ent, Ho"e&er* it

ot relief at a lare e0tent after the econo$ic refor$, J)t


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o&ern$ent interference* especially in the pricin* is stille&ident in India, In spite of %ein the second larestce$ent prod)cer inthe "orld* India falls in the list oflo"est per capita cons)$ption of ce$ent "ith 1> #, The

reason %ehind this is the poor r)ral people "ho $ostly li&ein $)d h)ts and cannot a/ord to ha&e the co$$odity,Despite the fact* the de$and and s)pply of ce$ent inIndia has ro"n )p, In a fast de&elopin econo$y li#eIndia* there is al"ays lare possi%ility of e0pansion ofce$ent ind)stry,

+lobal Scenario:

7ocal* national* reional and lo%al entities*

in&ol&ed in the $an)fact)re and $o&e$ent of ce$ent and

clic#er* are the constit)ents of the lo%al ce$ent ind)stry,

The ind)stry is a dyna$ic one* respondin to chanes in

$)ltit)de of &aria%les- incl)din $acro- econo$ic ro"th*

ho)sin sector %oo$s* p)%lic spendin le&els* trade

protectionis$* and transportation costs-pre&ailin in the

respecti&e co)ntries, The ce$ent capacity is do$inated at

lo%al le&el %y a handf)l of $)ltinational co$panies*

"hose presence is increasinly felt in ro"in Indian*

Chines* 2iddle East and 7atin A$erica $ar#ets* as a res)lt

of "hich the ce$ent sector has %eco$e e&en $ore

lo%alisied in recent years, D)e to this*

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National Scenario:

India "itnessed the %einnin of $an)fact)re of

ce$ent in an orani'ed $anner in the year 11; "hen the

Indian ce$ent co$pany li$ited co$$enced its

$an)fact)re of ce$ent at its plant Por%)ndhar in @)8arat,

6ince then the ind)stry has co$e a lon "ay to reach the

c)rrent position of %einnin the second larest prod)cer

of ce$ent in the "orld* ne0t in china,

There are nearly 1> lare ce$ents plants

and $ore than 5GG s$all ce$ent plants c)rrently

operatin in the co)ntry, This ind)stry has also $ade

tre$endo)s strides in technoloical )p rad)ation and

assi$ilation of latest technoloy to prod)ce di/erent types

of ce$ent li#e

Ordinary Portland ce$ent

Portland po''olana ce$ent

Portland %last fyrnace sla ce$ent

Oil "ell ce$ent

Rapid hardenin Portland ce$ent

6)lphate resistin Portland ce$ent

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hite ce$ent,

Presently* $ore than G percent of the total

capacity in the ind)stry is %ased on $odern anden&iron$ent-friendly dry process technoloy,

The positi&e de&elop$ents ha&e pa&ed the "ay

for entry of $)ltinational co$panies li#e holci$* ci$por

9of por)ese:* crh plc* &icat 6,A of France into the Indian

ce$ent ind)stry* "hich has also attracted the attention

of lo%al in&estors and f)nd $anaers li#e Jlac#stone*Fidelity* AJNA$ro *H6JC* No$)ra Asset 2anae$ent

F)nd and E$erin 2ar#et F)nd, This trend "ill ain

f)rther strenths as the ind)stry is set to "itness a

fastest ro"th "ith h)e in&est$ents planned in the

Indian infrastr)ct)re %oth %y o&ern$ent and pri&ate

sector* %oo$in ho)sin constr)ction and e0pansion in

corporate prod)ction facilities

*ompany Scenario:

The year GG-G "as a$o$ento)s one for )s at saar ce$ents for $ore then

one reason, It "as d)rin this year that the co$pany

e0pand its capacity to ,5> $illion tones* transfor$in

it self fro$ %ein a $ini ce$ent plant to a $a8or

ce$ent plant, The e0pansion "as co$pleted "ith in a

recorded ti$e* $a#in opti$)$ )se of infrastr)ct)re

and other facilities a&aila%le at the plant and at the

$ini$)$ cost,

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The e0pand plant e$ployees &ertical roller

$ill technoloy and IKNP end)l)$ cooler, F76 $idth

a)to$ations LCM Ro%ola% syste$ has %een installed inthe plant and 6C7 is one of the !rst fe" Indian

copaniess to i$ple$ent s)ch as a syste$,

This "o)ld ens)re the %est 3)ality in la%

operations to facilitate hih prod)ct 3)ality "hich "o)ld

opti$i'e o&erall plant operation

In the year GG-G saar ce$ents entered

into 8oint &ent)re "ith =ICAT 6,A, CE2ENT $a8or and

the o ship co$pany of the lo%ally #no"n =ICAT

ro)p of France* to set )p a reen !eld ce$ent plant of

>,> $illon tones capacity at CHATRA6HA7A &illae of

Chincholi Tal)# in @)l%ar Dirstic of KARNATAKA

A separate entity )nder the na$e of =ICAT

6A@AR CE2ENT PRI=ATE 7I2ITED has %een for$ed for

the p)rpose* in rhe e3)ity capital of "hich saar and

&icat ro)p "ill %eholdin ; and >1 respecti&ely

the ac3)isition of land for the pro8ect is nearin

co$pletion,

HISTORY:

6aar Ce$ents 7i$ited 96C7: is a Co$pany of >ears standin* enaed in $an)fact)re of Ce$ent at itsPlant in 2atta$pally* Nalonda District* Andhra Pradesh,

The Co$pany is $anaed %y a Joard* "hose$e$%ers are hihly co$petent and "ell #no"n, The

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6enior 2anae$ent tea$ consists of hihly 3)ali!edProfessionals "ith rich e0perience in the area of their6peciali'ation,

The Co$pany e$ploys $odern technoloyin each of its process of $an)fact)re at its Plant and hasadopted proressi&e $an)fact)rin practices* "hether itrelates to $aintainin hih standards of 3)ality of itsprod)cts or de&elop$ent of its hihly &al)ed h)$anreso)rces or the need to #eep the poll)tion to the %arest$ini$)$,

6aar Ce$ents has a consistent Pro!ttrac# record and* e0cept for a fe" years "hen it "as eithere0ec)tin its e0pansion plans or the ind)stry as a "hole"as )nderoin a di.c)lt period* it has %een declarindi&idend at reasona%le percentaes,

The co$panys 6hares are listed on Hydera%ad

and Jo$%ay 6toc# E0chanes* "here they are acti&elytraded,

The Co$pany "hich started its operation "ith aCe$ent capacity of ??GGG TPA* has rad)ally increased itto the le&el of ,5> 2TPA* "hile its Clin#er capacity hasalso "itnessed a sini!cant increase fro$ ??GGG TPA in1 to present le&el of ,1G 2TPA,

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*!apter,-

*O(&)NY &ROFI'E

&ERSON)':

.ISION(

To pro&ide fo)ndation for society s f)t)re

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(ISSION:

To %e the Indian $ost respected and attracti&e

co$pany in o)r ind)stry creatin &al)e for all o)rstoc#holders,

The &ision and $ission state$ents of 6C7 ltd is

to $aintain leadership in ce$ent ind)stry and de&elop

co$ple$entary prod)cts and ser&ices to strenths core

%)siness of %)ldin prod)cts %y

f)l!ll$ent of $ar#et needs "ith cost e/ecti&e

sol)tion for endin and enhance c)sto$ersatisfaction

stri&in for e0cellence in all that "e do

inno&ati&e sol)tion to create "orld class prod)cts

and ser&ices

$aintain e3)ita%le %alance %et"een

de&eloped and en&iron$ental needs of the society,

/)*0+ROUD OF THE *O(&)NY:

Chief Pro$oter ( 6ri, 6,=eera Reddy

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Other Pro$oters ( 6ri, 6,Annand Reddy

( 6ri, 6,6ree#anth Reddy

( 6ri, O,6"a$inatha Reddy

The corporate head o.ce is located at

--;B% Road No-

Jan8ara hills

Hydera%ad->GGG5;

Tel-G;G-55>1>B1,

The $an)fact)rin plant of ce$ent is located at

2atta$ pally 9&:

2atta$ pally 9$:

Nalonda 9Dt:

Andhra Pradesh,

)RE)S IN 1HI*H R2D *)RRIED OUT /Y

S)+)R *E(ENTS 'TD

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The follo"in areas 6C7 is )nderta#in R+D

de&elop$ent of ne" prod)cts

I$pro&e$ents in process e.ciency

Usae of cost e/ecti&e ra" $aterials

Conser&ation of enery and "ater

Technoloy a%sorption

Red)ctin and recyclin "astes

6C7 $atts$ pally )nits is ha&in $ilestone

deposits 'ones for ce$ent co&erin area 5,1G acres

&i'

2atta$ pally Nalonda dt (1?,G>

2atta pally Nalonda dt (BG,G>

@)ndla pally Nalonda dt (1GG,GG

Peda&eed) Nalonda dt (>G,GG

HU()N RESOUR*ESS:

the plant has "ell 3)ali!ed hihly $oti&ated

$anpo"er of 5> e$ployss on its rolls

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The Directors and 6enior 2anae$ent Tea$ shall act in

accordance "ith the hihest standards of personal and

professional interity* honesty and ethical cond)ct, They

shall act and cond)ct free fro$ fra)d and deception, Their

cond)ct shall confor$ to the professional standards of

cond)ct

HE)'TH3 S)FETY3 EN.IRON(ENT )ND SO*I)'

RES&ONSI/I'ITY

6aarsoft shall stri&e to pro&ide a safe and healthy

"or#in en&iron$ent and co$ply "ith all re)lations

reardin the preser&ation of the en&iron$ent in and

aro)nd its $an)fact)rin facilities and other points of

operations, The co$panies is co$$itted to e.cient )se of

nat)ral reso)rces and $ini$i'e any ha'ardo)s i$pact of

the de&elop$ent* prod)ction* )se and disposal of any of

its prod)cts and ser&ices on the ecoloical en&iron$ent,

FIN)N*I)' RE&ORTIN+ )ND RE*ORDS

As the professional and ethical cond)ct in the $atter of

!nancial a/airs is essential for the proper f)nctionin of

the co$pany* the o.cers and e$ployees enaed in the

!nance f)nctions sho)ld act "ith honesty and interity,

The persons in-chare of !nance and acco)ntin f)nction

sho)ld prepare and $aintain co$panys acco)nts fairly

and acc)rately in accordance "ith enerally accepted

)idelines* principles* standards* la"s and re)lations

applica%le to the co$pany, Internal acco)ntin and a)dit

proced)res shall fairly and acc)rately reect all of the

co$panys %)siness transactions and disposition of assets,

There shall %e no "illf)l o$issions of the co$pany

transactions fro$ the %oo#s and records, Any "illf)l

$aterial $isrepresentation or $isinfor$ation on the

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!nancial acco)nts and reports shall %e rearded as a

&iolation of this code,

&ROTE*TIN+ *O(&)NY )SSETS

The assets of the co$pany sho)ld not %e $is)sed %)t

e$ployed only for the p)rpose of cond)ctin the %)siness

for "hich they are a)thorised, All Directors and $e$%ersof the 6enior 2anae$ent Tea$ sho)ld stri&e to protect

co$panys assets and property and ens)re e.cient )se of

the$,

&ro#"cts

Ce$ent is the %asic and the $ost "idely )sed %)ildin$aterial, T"ice as $)ch Ce$entConcrete is )sed"orld"ide than all other J)ildin 2aterials,

A 2i0t)re of 7i$estone and Clay is ro)nd and %)rnt at a&ery hih te$perat)re to for$ Clin#er, The Clin#er isro)nd to a !ne po"der "ith addition of @yps)$ 9 )p to >: to for$ Ce$ent, The essential co$ponents of Ce$entare 7i$e* 6ilica* Al)$ina and Iron O0ide,

4- +ra#e O&*

>5 @rade OPC is a hiher strenth ce$ent to $eet theneeds of the cons)$er for hiher strenth concrete,

4- +ra#e O&* can be "se# for t!e follo5in$

applications6

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Q RCC "or#s9Prefera%ly "here rade of concrete is 2->

and a%o&e:

Q Precast concrete ite$s s)ch as pa&in %loc#s* tiles

%)ildin %loc#s etc,

Q Pre-stressed concrete co$ponents

Q R)n"ays* concrete Roads* Jrides et

7- +ra#e O&*

The ;5 rade OPC is the $ost pop)lar eneral-p)rposece$ent in the co)ntry today, The prod)ction of ;5 radeOPC is nearly >G of the total prod)ction of ce$ent in theco)ntry,

7- +ra#e O&* can be "se# for t!e follo5in$applications6

Q @eneral Ci&il Enineerin constr)ction "or#,

Q RCC "or#s9prefera%ly "here rade of concrete is )p to2-5G:,

Q Precast ite$s s)ch as %loc#s* tiles* pipes etc,

Q As%estos prod)cts s)ch as sheets and pipes,

Q Non-str)ct)ral "or#s s)ch as plasterin* oorin etc,

-- +ra#e O&*

This ce$ent is )sed for eneral ci&il constr)ction "or#


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)nder nor$al en&iron$ental conditions,

This ce$ent is )sed for eneral ci&il constr)ction "or#)nder nor$al en&iron$ental conditions, The co$pressi&e

strenth of ce$ent after days test as per JI6speci!cation is 55 2Pa, D)e to lo" co$pressi&e strenth*this ce$ent is nor$ally not )sed "here hih rade ofconcrete &i'* 2-G and a%o&e is re3)ired, The a&aila%ilityof hiher rades of OPC in the $ar#et i$pacts the )saeof 55 rade OPC as these days ;5 rade OPC is nor$ally)sed for eneral constr)ction "or#, This rade of ce$entis $ore )sef)l for $ass concretin and plain ce$entconcretin and can also %e )sed for plasterin and sinle

storied indi&id)al ho)ses,

&ortlan# &o88olana *ement 9&&*%

Portland Po''olana Ce$ent is a #ind of Jlended Ce$ent

"hich is prod)ced %y either interrindin of OPC clin#er

alon "ith yps)$ and po''olanic $aterials in certain

proportions or rindin the OPC clin#er* yps)$ and

Po''olanic $aterials separately and thoro)hly %lendin

the$ in certain proportions,

&ortlan# &o88olana *ement is i#eally s"ite#for t!e follo5in$ constr"ction:

Q Hydra)lic str)ct)res,Q 2ass concretin "or#s,Q 2arine str)ct)res,Q 2asonry $ortars and plasterin,

Q Under aressi&e conditions,Q All other applications "here OPC is )sed,

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Q The co$pressi&e strenth of PPC as per JI6code at present is e3)i&alent to that of 55 rade OPC,

*ONTRI/UTION TO THE E*HE;UER:

6C7 2atta$ pally has %een contri%)tion aro)nd of Rs

>>,1G 7a#hs to the e0che3)er in the for$ of Ta0es*Royalties etc

TO1NSHI&:

6C7 2atta$ pally has a "ell-planned to"nship

consistin of ;GG 3)arters ha&in facilities li#e

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O'D )+E &ENSION

RO)DS

Jy allocatin a %)det a$o)nt of a%o)t % Rs

746* Coal -G* Clin#er

-B* @ypsa$ -5,

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BOARD OF DIRECTORS OF SAGAR CEMENTS LIMITED

SI.N

O NAME OF THE DIRECTOR

CATEGORY OF THE

DIRECTOR

1 SHRi O.Swaminatha Reddy

Independent N!n "

E#e$%ti&e

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' SHRi S.(ee)a Reddy Mana*in* Di)e$t!)

N!n+ Independent

E#e$%ti&e

,

SHRi S.Annand Reddy- !int mana*in*

Di)e$t!)

N!n+ Independent

E#e$%ti&e

/

SHRi S S)ee0anth Reddy. E#e$%te

Di)e$t!)

N!n+ Independent

E#e$%ti&e

SHRi 2.Than% pi33ai

Independent N!n "

E#e$%ti&e

4 SHRi 5e)ne) C.R.6OOT

N!n+ Independent N!n

"E#e$%ti&e

7 SHRi (.(.S Ra&ind)a8IDBI9

Independent N!n "

E#e$%ti&e

: SHRi 6.Rae;wa)a Ra!8A6IDC Naminee9

N!n "E#e$%ti&e N!n+

Independent

Financial perfor$ance "ith respect to the operational

perfor$ance

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E6S8R;9 11./: ',.7

The end prod)cts of the %)siness

transactions are !nancial state$ents co$parin the

position state$ents or %alance sheet and inco$e

state$ent or pro!t and loss acco)nt, Financial

state$ents are the %asis for decision $a#in %y the

$anae$ent and as "ell as all other o)t siders "ho are

interested in the a!re of !r$ s)ch as in&estors*

creditors *c)sto$ers* s)ppliers* !nancial instit)tions*

e$ployee* potential in&estors *o&ern$ent and eneral

p)%lic

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(eanin$ of nancial statements

analysis(

A !nancial state$ent is a collection of data

orani'ed accordin to loical and consist ant acco)ntin

proced)res, Its p)rpose is to con&ey on on )nderstandin

of so$e !nancial aspects of %)siness !r$s ,these the

!nancial state$ents enerally refer to the t"ostate$ents,,

The position state$ents or %alance sheet

The inco$e stat $et or the pro!t and loss acco)nt

In the "ords of


38/72

Use an# importance of nancial staments:

The !nancial state$ents are

$irror "hich reect the !nancial position and operatin

and strenths or "ea#ness of the concern these

state$ents are )sef)l to the $anae$ent in&estors

creditors %an#ers *"or#ers* o&ern$ent *and p)%lic at

lare

@eore o$ey points o)t the fallo"in $a8or )ses of

!nancial state$ents,

As a report of ste"ard ship

As a %asic for !scal policy

As a deter$ine the leality of di&idends

As a )ide to ad&ice di&idend action

As a %asic for the rantin of credit

As infor$ation for prospecti&e in&estor in an

enterprise

5


39/72

As a )ide to the &al)e of in&estor s in an

enterprise,

As a )ide to the &al)e of in&est$ent already$ade,,

As an aid to o&t s)per&ision

As a %asis for ta0ation

'imitations of nancial statements

Thro)h !nancial state$ents are rele&ant and )sef)l

for the cocern* still they do not present a !nal pict)re of

the concern

The analysis and interpretation of these state$ents

sho)ld %e done &ery caref)lly, Other"ise $isleadin

concl)sion $ay %e dra"n,

The !nancial state$ents s).cient and !nal

reports

Only in ter$ reports and !nal reports

7ac# of precision and de!niteness

7ac# of o%8ecti&e 8)d$ent,

Record only $onetary facts,

Historical in nat)re,

6cope of $anip)lation* inade3)ateinfor$ation

)nalysis an# interpretation:

5


40/72

The analysis and interpretation of !r$

state$ent is essential to %rin o)t the $y state$ents

%ehind the !)res in !nancial state$ents , the ter$

!nancial state$ents analysis incl)des other analysis and

interpretation, A distinction sho)ld %e $ade %et"een the

t"o ter$s,

The ter$ analysis is )sed to $ean the

si$pli!cation !nancial data %y $ethodalic classi!cation of

the data i&en in the !nancial state$ents the ter$

interpretation $eans E e$ployin the $eanin and

sini!cance of the si$pli!ed

Ho"e&er the %oth analysis and interpretation are

inter lin#ed and co$pli$entary to each other

In the "ords of KENDE and 2E2U77AR The

analysis and interpretation of !nancial state$ents are an

atte$pt to deter$ine the sini!cance nd $eanin of the

!nancial state$ents data ,so the at forecast $ay %e $adeof the prospect for f)t)re earnins a%ility to pay interest

and de%t $at)rities and pro!ta%ility of so)nd di&idend

policy

Tec!ni?"es@Tools@Deices@(et!o#s of

ananlysis:

To analy'e and interpret the !nancial state$ents

n)$%ers of techni3)es can %e )sed those are

Co$parati&e state$ents,

Co$$on si'e state$ents

Trend pro8ection $ethod

F)nds o" analysis,,

Cash oe analysis,,

Ratio analysis

;G


41/72

The a%o&e $ethods are )sed to analy'e the

co$pany li3)idity position or cash position , in these

$odel "e ta#en the co$parati&e state$ents and

#no" the li3)idity position of the saar ce$ents

li$ited,

*omparatie statements:

The co$parati&e state$ents are state$ents of

the !nancial position at di/erent periods of ti$e, The

ele$ents are sho"n in co$parati&e for$ so as to i&e and

idea of !nancial position at t"o or $ore periods any

state$ents prepared in a co$parati&e state$ents for$partial point of &ie" enerally t"o !nancial p)rpose not

only the co$parison of the !)res of t"o periods %)t also

%e relationship %et"een %alance sheet and inco$e

state$ent ena%les in depth st)dy of !nancial position

and operati&e res)lts the co$parati&e state$ents $ay

sho"

A%sol)te !)res9r)pees a$o)nts:,

Chanes in a%sol)te !ers i,e, increase decrease in

a%sol)te !)res ,,

A%sol)te data in ter$s of percentaes

The analysis is a%le to dra" )sef)l concl)sion "hen!)res are i&en in co$parati&e position, The !)res of

sales for a 3)arter * half yearly or one year $ay tell only

the present position of the sales e/orts, hen sales

!)res of analysis "ill %e a%le to st)dy the trends of sale

o&er di/erent periods of ti$e, 6i$ilarly co$parati&e

!)res "ill indicated the trend and direction of !nancial

position and operatin res)lts,,

;1


42/72

The !nancial data "ill co$pared only "hen sa$e

acco)ntin principals are )sed in preparin the

state$ents in case of any de&iation in )se of )sin

acco)ntin principal this fact $)st %e $aintained at the

analyst sho)ld %e caref)l in )sin these state$ents are,,

1:Jalance sheet

:Inco$e state$ent

*O(&)R)TI.E /)')N*E SHEET:

THE CO2PARATI=E JA7ANCE 6HEET ANA76I6 is

the st)dy of the trend of the sa$e ite$s* ro)p of ite$sand co$pared ite$s in t"o or $ore %alance sheets of the

sa$e %)siness enterprise on di/erent dates, the chanes

in periodic %alance sheet ite$s reected the cond)ct of

the %)siness, The chanes can %e o%ser&ed %y

co$parison of the %alance sheet of the %einnin and at

the end of a period and these chanes can help in for$in

and opinions a%o)t the proress of an enterprise, A third

col)$n )sed to sho" increase in !)res,

The forth col)$n $ay %e added for i&in percentae

of increase or decrease,

2ain pae(

The assets are i&en )nder the fallo"in %alance sheet

ite$s,,

)SSETS SIDE

A%FiBe# assets(

The !0ed assets are those "hich are p)rchased for

the p)rpose of )se o&er a lon period, These assets $eet

to increase prod)ction capacity of the %)siness* they are

;


43/72

not ac3)ired for sale %)t are )sed for a considera%le

period of the ti$e,, the %alance sheet is prepared to

sho"n !nancial position of the concern, This assets sho)ld

%e sho"n in s)ch a"ay that %alance sheet depicts tr)e

!nancial position of the %)siness , !0ed assets are sho"n

distinctly fro$ each other ,e,, @ood "ill land and

%)ildins* lease holdsetc these assets are sho"n at their

oriinal cost any additions and ded)ction d)rin the

year are sho"n separately, The a$o)nt of depreciation )p

to the pre&io)s year and the d)rin the c)rrent year is

separately ded)cted fro$ the assets

C%Inestments:

In&est$ents are sho"n %y i&in their nat)re and

$ode of &al)ation in&est$ents )nder &ario)s s)% heads

s)ch as in&est$ents in o&t or tr)sty sec)ritys in shares*

de%ent)res and %onds and i$$o&a%le properties arei&en separately in the separate col)$n of the %alance

sheet,,

-%*"rrent assets:

Accordin to al0ander "all c)rrent assets are

s)ch assets as in the ordinary and nat)ral co)rse of

%)siness $ore on "ord thro)h &ario)s the &ario)s

process of prod)ction* distri%)tion and pay$ent ofoods* )ntil they %eco$e cash or its e3)i&alent %y "hich

de%ts $ay %e readily and i$$ediately paid c)rrent

assets are either cash in hand and cash at %an#s or

shortly con&erti%le into cash, The assets li#e de%tors and

%ills recei&a%les are non step "ay fro$ cash, The stoc#

in trade is considera%le to %e t"o steps "ay fro$ cash

%eca)se !rst sales "ill %e $ade and then collection "ill

%e )nderta#en , the co$$only )sed $ethod of

;5


44/72

&al)ation,, i,e, cost or $ar#et price "hiche&er is lo" ,this

is done to a&oid anticipatin pro!ts d)rin inationary

conditions and on the other hand ta#in into acco)nt

losses, If there is a fall in prices of stoc#, The de%tors if

$ore than si0 $onths old are separately i&en,, the

a$o)nt o"ed %y directors etc,, if incl)de in de%tors* are

also separately $entioned

7:(iscellaneo"s EBpen#it"res:

e sho" defer e0pendit)re )nder this headin,

These are the e0penses "hich are not de%ited f)lly to the

pro!t and loss acco)nt of the year in "hich they ha&e%een inc)rred, These e0penses are spred o&er a n)$%er of

the years and the )n"ritten %alance is sho"n in the

%alance sheet,, the ite$s on iss)e of shares or de%ent)res

interest paid o)t of capital d)rin constr)ction etc,,

')I/I'TIES SIDE ITE(S:

A%S!are capital:

The share capital is sho"n as a !rst ite$ an

the lia%ilities side of the %alance sheet,A)thori'ed and

iss)ed capital is sho"n i&in the n)$%ers of shares and

their a$o)nt, The n)$%er of shares and their a$o)nt, The

n)$%er of shares for "hich p)%lic has applied are

$entioned alon "ith the type of capital, i,e, preference

*share capital* e3)ity share capital,, if the capital is iss)ed

for the other than cash, The a$o)nt of s)ch capital is

$entioned, The fact of iss)ed %ones shares is also

$entioned any )npaid calls are ded)cted fro$ the called

)p capital,, if forfeited shares are re iss)ed then this

a$o)nt is added to the paid )p capital,,

C% Resere# an# s"rpl"s:

;;


45/72

Under this headin all those reser&es "hich ha&e

%een created )ndistri%)ted pro!ts are sho"n, Capital

reser&es are those reser&es* "hich are not free for

distri%)tion as pro!ts "here as re&en)es reser&es are

created o)t of apportion of pro!ts &ario)s ite$s incl)ded

here as ,,

a: Capital reser&e

%: Capital rede$ption

c: 6hare pre$i)$ acco)nt

d: Other reser&es

e: 6)rpl)s ,i,e, pro!t and loss acco)nt

f: Proposed addition to reser&es

: 6in#in f)nd

The additional and ded)ction since last %alance

sheet %e sho"n )nder each head, The "ord f)nd in

relation to any reser&e sho)ld %e )sed only "here s)chreser&es is speci!cally represented %y earn $ore

in&est$ents,,

-%Sec"re# loans:

All those loans aainst "hich sec)rities are i&en are

sho"n )nder this cateory, De%ent)re are sho"n )nder

this headin loans and ad&ances fro$ %an#s *s)%sidiary

co$panies etc,, sho)ld %e sho"n separately and thenat)re of sec)rities sho)ld also %e $entioned,,

7%Unsec"re# loans:

These are the loans and ad&ances sec)rity *the

ite$s incl)ded here are deposits* loans fro$ %an#s and

others are also sho"n in they cateory, 6hort ter$ loans

incl)de those are year on the date of the %alance sheet,

;>


46/72

,as reard loans fro$ directors* $anaers etc,, these

sho)ld %e sho"n separately )nder di/erent s)%-headins,

4%*"rrent liabilities an# proisions:

These are di&ided into

a: c)rrent lia%ilities

%: pro&isions

a%c"rrent liabilities:

Acceptance

6)ndry creditor

6)%sidiary co$panies

Ad&ance pay$ent and e0pired disco)nts

Unclai$ed di&idends

Other lia%ilities if any

Interest acc)rd %)t not paid on loans

b%proisions>

follo"in ite$s are incl)ded )nder pro&isions

Pro&isions for ta0ation

Proposed di&idends

Pro&isions for pro&ident f)nd sche$e

Pro&ision for ins)rance* pension and sta/ %ene!ts

sche$es

Other pro&isions

;?


47/72

CO2PARATI=E JA7ANCE 6HEET PROFOR2A

6ARTIC>LARS

YEAR ENDING INCRESE?DECRES

E

8AMO>NT9

INCRESE?DECRESE

86ERCENTAGE9

ASSETS 8RS9 8RS9

I)Current Assets +++ +++ +++ +++

a9In&ent!)ie; +++ +++ +++ +++

@9;%nd)y De@t!); +++ +++ +++ +++

$9Ca;h and Ban0 @a3an$e +++ +++ +++ +++

d9 Othe) C%))ent A;;et; +++ +++ +++ +++

e9L!an; and Ad&an$e;; +++ +++ +++ +++

Total current Assets (A) +++ +++ +++ +++

II) Fixed Assets +++ +++ +++ +++

a9Net @3!$0 ! a;;et; +++ +++ +++ +++

@9In&e;tment; +++ +++ +++ +++

$9w!)0 in p)!*)e;; +++ +++ +++ +++

Total Fixed Asset(B) +++ +++ +++ +++

Total Misc Expenditure (C) +++ +++ +++ +++

Total Fixed Assets (A+B+C) +++ +++ +++ +++

IABIITIES +++ +++ +++ +++

I)S!are !olders "und +++ +++ +++ +++

a9Capita3 +++ +++ +++ +++

@9Re;e)&e; S%)p3%; +++ +++ +++ +++Total S!are !olders Fund (A) +++ +++ +++ +++

II)on# Ter$ ia%ilities +++ +++ +++ +++

a9;e$%)ed 3!an; +++ +++ +++ +++

@9>n ;e$%)ed 3!an; +++ +++ +++ +++

$9Dee)d Ta# +++ +++ +++ +++

d9 $)edit!); !) 3!n* te)m +++ +++ +++ +++

Total on# Ter$ ia%ilites (B) +++ +++ +++ +++

Current ai%ilites& 'roisions +++ +++ +++ +++

a9Lia@i3itie; +++ +++ +++ +++

;B


48/72

@96)!&i;i!n; +++ +++ +++ +++

Total Current ia%ilities (C) +++ +++ +++

TOTA IABIITES (A+B+C) +++ +++ +++ +++

CO22ON 6IE JA7ANCE 6HEET PROFOR2A

6ARTIC>LARS YEAR 6ERCENTAG

E

YEAR 6ERCENTAGE

ASSETS

I)Current Assets

a9In&ent!)ie;@9;%nd)y De@t!);

$9Ca;h and Ban0 @a3an$e

d9 Othe) C%))ent A;;et;

e9L!an; and Ad&an$e;;

Total current Assets (A)

II) Fixed Assets

a9Net @3!$0 ! a;;et;

@9In&e;tment;

$9w!)0 in p)!*)e;;

Total Fixed Asset(B)

Total Misc Expenditure (C)

Total Fixed Assets (A+B+C)

IABIITIES

I)S!are !olders "und

a9Capita3

@9Re;e)&e; S%)p3%;

Total S!are !olders Fund (A)

II)on# Ter$ ia%ilities

a9;e$%)ed 3!an;

@9>n ;e$%)ed 3!an;

$9Dee)d Ta#

d9 $)edit!); !) 3!n* te)m

Total on# Ter$ ia%ilites (B)

Current ai%ilites& 'roisions

a9Lia@i3itie;

@96)!&i;i!n;

;


49/72

Total Current ia%ilities (C)

TOTA IABIITES (A+B+C)

+UIDE'INES FOR INTER&RET)TION OF *O(&)R)TI.E

/)')N*E SHEET:

hile interpretin co$parati&e %alance sheet the

interpreter is e0pected to st)dy

the

fallo"in aspects

1: C)rrent !nancial position and li3)idity position

: 7on-ter$ !nancial position

5: Pro!ta%ility of the concern

*ommon si8e statement:

The co$$on si'e state$ents* %alance sheet and

inco$e state$ents are sho"n in analytical percentaes, The!)res are sho"n as a percentaes of total assets* total

lia%ilities and total sales, The total assets are ta#en as 1GG and

di/erent assets are e0pressed as a percentae of the total,

6i$ilarly *&ario)s lia%ilities are ta#en as apart of the total

lia%ilities, these state$ents are also #no"n as a co$ponent

percentae of 1GG percentae state$ents %eca)se e&ery

indi&id)al ite$s co)ld not %e co$pared "ith the total has %een

co&er )p, The analy'e is a%le to assess the !)res in relationto total &al)es, The co$$on si'e state$ents $ay %e prepared

in the follo"in "ay,

1: The total of assets or lia%ilities are ta#en as 1GG

: The indi&id)al assets are e0pressed as a percentaeof total assets i,e, 1GG and di/erent are calc)lated inrelation to total lia%ilities ,for e0a$ple* if total assetsare Rs, >7a#es and in&entory &al)es is Rs,>GGGG thenit "ill %e 1G of total assets,

;


50/72

*H)&TER,4

D)T) )N)'YSIS)ND

INTER&RET)TION6

>G


51/72

CO2PARATI=E JA7ANCE 6HEET OF 6A@AR CE2ENT6 7I2ITED

FOR THE A66E662ENT EAR GG-G AND GG-1G

9R)pees in 7a#hs:

6ARTIC>LARS '1


52/72

Total Current ia%ilities (C) 2,.,-*4 /,/4-1* 03**-*1 /0-31

TOTA IABIITES (A+B+C) 2,1,0-.2 /1222-3 0/*1-, 4-40

INTERPRETATION(

The Net Fi0ed Assets in GG-G is B;,;> and

GG-1G is 5B1;?,;B i,e ,there is increase of B,?in Fi0ed Assets,

There has %een arisin in C)rrent Assets G,5 of

the co$pany, The rise $ainly on a$o)nt increasein In&entorys , The co$pany $iht ha&e chaned itcredit policy and list f)t)re li3)idity position "ill %edependent on credit $anae$ent,

7on ter$ lia%ility are in GG-G are >1,B1 and

in GG-1G is B55B,;1 there is increase 1,1G

The pro!ta%ility of the co$pany appears to %e ood

i$pressi&e as 8)ded %y 5, increase inReser&es and s)rpl)s,

The o&erall !nancial position of the co$pany

appears to %e satisfactory,

>


53/72


FOR THE A66E662ENT EAR GGB-G AND GG-G

9R)pees in 7a#hs:

6ARTIC>LARS '


54/72


a9Lia@i3itie; 1711.7 '1.77 ///.


55/72


FOR THE A66E662ENT EAR GG?-GB AND GGB-G

9R)pees in 7a#hs:

6ARTIC>LARS '


56/72

Total on# Ter$ ia%ilites (B) 1.,-*4 22*-./ 433-10 0,-,.


a9Lia@i3itie; 1,


57/72

CO2PARATI=E JA7ANCE 6HEET OF 6A@ARCE2ENT6 7I2ITED

FOR THE A66E662ENT EAR GG>-G? AND GG?-GB

9R)pees in 7a#hs:

6ARTIC>LARS '


58/72

Total on# Ter$ ia%ilites (B) 1*32-20 1.,-*4 00/,-4, 41-3,


a9Lia@i3itie; 1' inFi0ed Assets,

There has %een arisin in C)rrent Assets 5,G? of

the co$pany, The rise $ainly on a$o)nt increasein Cash and Jan# %alances, The co$pany $ihtha&e chaned it credit policy and list f)t)re li3)idityposition "ill %e dependent on credit $anae$ent

The pro!ta%ility of the co$pany appears to %e ood

i$pressi&e as 8)ded %y 1,1 increase in 6ec)redloans,

The o&erall !nancial position of the co$pany

appears to %e satisfactory,

>


59/72


60/72

a9Capita3 1,:'.'4 ,.7' 1


61/72

year GG-1G c)rrent assets are ;,G andc)rrent lia%ilities are 1?,1, the "or#incapital of the co$pany in the year GG-G is$)ch %etter than year GG-1G

The analysis of &ario)s !)res sho"n that the

7on- ter$ and 6hort ter$ !nancial position issatisfactory,

CO22ON 6IE JA7ANCE 6HEET OF 6A@AR CE2ENT6 7I2ITED

FOR THE A66E662ENT EAR ANGGB-G and GG-G

9R)pees in 7a#hs:

6ARTIC>LARS '


62/72

IABIITIES

I)S!are !olders "und

a9Capita3 1,74.:, 1,1 these fro$ 7on ter$ so)rces,

?


63/72

The "or#in capital of the co$pany is ood in

%oth years, The c)rrent assets co$pares of;G,?1 and c)rrent lia%ilities are G,>5, in theyear GG-G c)rrent assets are 1B,B and

c)rrent lia%ilities are 1G,1?, the "or#incapital of the co$pany in the year GG-G is$)ch %etter than year GGB-G




FOR THE A66E662ENT EARGG?-GB AND GGB-G

9R)pees in 7a#hs:

6ARTIC>LARS '


64/72

Total Fixed Asset(B) 411/-* *1-4, .44-,* /3-21

Total Misc Expenditure (C) < 1,the !)re in GGB-G"ere 5,G and5 these fro$ 7on ter$ so)rces,

?;


65/72


%oth years, The c)rrent assets co$pares of5B,> and c)rrent lia%ilities are 1,B5, in theyear GGB-G c)rrent assets are ;G,?1 andc)rrent lia%ilities are G,>5, the "or#incapital of the co$pany in the year GGB-G is$)ch %etter than year GG?-GB

The analysis of &ario)s !)res sho"n that the7on- ter$ and 6hort ter$ !nancial position issatisfactory,


FOR THE A66E662ENT EAR GG>-G? AND GG?-GB

9R)pees in 7a#hs:

6ARTIC>LARS '


66/72

II) Fixed Assets

a9Net @3!$0 ! a;;et; ':7-G? share capitalconsists of C67of total in&est$ent, "hile thepercentae is 5?,B> in GGB-G the co$panyshare holder f)nds are increased %y co$parethen pre&io)s year,

??


67/72

In the %oth the year the co$pany has follo"ed

the policy of !nancin !0ed assets fro$ 7onter$ f)nds, In the year GG>-G? in&est$ents in!0ed assets are >B,1B,"hich lon ter$ f)nds

B,1,the !)re in GG?-GB"ere ;1,51 and5 these fro$ 7on ter$ so)rces,


%oth years, The c)rrent assets co$pares of;,5 and c)rrent lia%ilities are >,GG, in theyear GG?-GB is 5B,> c)rrent assets are 1,B5and c)rrent lia%ilities are G,>5, the "or#incapital of the co$pany in the year GG?-GB is$)ch %etter than year GG>-G?



?B


68/72

*H)&TER,4

*ON*'USION )NDSU++ESTIONS

*ON*'USION )ND SU++ESTIONS6

The orani'ation C)rrent Assets is &ery hih in the

Assess$ent year GG-1G*the a$o)nt Rs-

?


69/72

1?1G,5>7a#hs*and the C)rrent Assets is lo" in theassess$ent tear GG?-GB,the a$o)nt is Rsis>5,157a#hs these is increasinly ood proportion*"here or#in capital is hih* this is )sef)l for

orani'ation ,so $aintain this position in f)t)re also,

The orani'ation share holders f)nd is hih in GG-

1G the a$o)nt is -1,5 7a#hs and this is lo" inthe assess$ent year* the a$o)nt is Rs-;>,57a#hs*the 6hare holder f)nd is rad)allyincreased , so the Co$pany $aintain for the f)t)reyears also,

The co$pany 7on-ter$ f)nds are hih in the

assess$ent year GG-1G*the a$o)nt Rs-B55B,;17a#hs and it is lo" in the assess$ent year GG?-GBthe a$o)nt Rs -GB,?;the co$pany has a $aintainood lon-ter$ f)nds it is &ery )sef)l in the %adposition,

The 6aar ce$ents li$ited Assets &ery hih in the

assess$ent year GG-1G( the a$o)nt is Rs-5B5,>>7a8hs, this is &ery hih %y co$parepre&io)s year ,so totally a$o)nt in&ested for !0edAssets* also C)rrent assets ,so the proportion of"or#in capital is also ood,

The c)rrent lia%ilities is slo"ly increasin the

pre&io)s year GG?-GBtoGG-1G the orani'ationha&e a ood position in the c)rrent lia%ilities *so$ain tan this res)lts in f)t)re,

The or#in capital $anae$ent of the co$pany

indicates lo" )ct)ations its not e/ect on theco$pany perfor$ance,

?


70/72

The lon ter$ !nancial position of concern al"ays

!0ed assets $ore than increase in lon-ter$sec)rities* as also the co$pany ha&e ood "or#incapital %)t the in&est$ent in !0ed assets is less

co$pare to c)rrent assets, 6o its not ood sin forthe co$pany,

In order to $aintain the or#in capital

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co$pare to other c)rrent assets, 6o co$pany$aintain ood cash and %an# %alances for the f)t)re)se,,

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Kiran Sir Financial Performance Sagar Cements

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