A STUDY ON FINANCIAL PERFORMANCE AND ANALYSIS IN SRI SOWDESWARI
MILLS (P) LTD, JALAKANTAPURAMA project submitted to thePERIYAR
UNIVERSITYIn partial fulfillment of the requirements For the award
of the degreeMASTER OF BUSINESS ADMINISTRATIONSubmitted
byP.MANIKANDANREGISTER NUMBER: P12MGT2027Under the guidance of Dr.
T. SARATHY, BE (ECE)., M.B.A., Ph.D.Assistant ProfessorPRIMSPeriyar
University, Salem.
PERIYAR INSTITUTE OF MANAGEMENT STUDIES (PRIMS)PERIYER
UNIVERSITYSALEM 6360112013
BONAFIED CERTIFICATE
PERIYAR INSTITUTE OF MANAGEMENT STUDIES PERIYAR UNIVERSITYSALEM
636 011BONAFIDE CERTIFICATECertified that this project report
titled A STUDY ON FINANCIAL PERFORMANCE AND ANALYSIS IN SRI
SOWDESWARI MILLS PRIVATE LIMITED., JALAKANTAPURAM is the bonafide
work of P.MANIKANDAN (REGISTER NUMBER : P12MGT2027 ) who carried
out the project under my supervision . Certified further , that to
the best of my knowledge the work reported here in does not from
part of any other project report or dissertation on the basis of
which a degree or award was conferred on an earlier occasion on
this or any other candidate,
DIRECTOR SUPERVISOR
Viva voice held on
INTERNAL EXAMINER EXTERNAL EXAMINER
DECLARATION
DECLARATIONI P.MANIKANDAN [REGISTER NUMBER : P12MGT2027 ] a
student of Periyar Institute of Management Studies, Periyar
University , Salem hereby declare that the Project work titled A
STUDY OF FINANCIAL PERFORMANCE AND ANALYSIS IN SRI SOWDESWARI MILLS
PRIVATE LIMITED., JALAKANTAPURAM submitted to the Periyar
University in partial fulfillment of the requirement for the award
of degree of MASTER OF BUSINESS ADMINISTRATION is a record of
bonafide research carried out by me under the guidance of
Dr.T.SARATHY, Assistant Professor, PRIMS, Periyar University, Salem
and no part of it has been for any other degree or diploma
Place: (P.MANIKANDAN)Date: signature of the student
ACKNOWLEDGEMENT
ACKNOWLEDGEMENT
First of all I thank god and My Parents who have brought me to
this position.It is my responsibility to express my thanks to Vice
chancellor Dr.K.MUTHUCHELIAN, Periyar University, Salem, for
encouragement me to do this project.I would like to convey my
sincere thanks to Dr.N.RAJENDHIRAN, M.com, MBA., PhD. Professor cum
Director, Periyar Institute of Management Studies (PRIMS), Periyar
University, Salem-11 for his Valuable encouragement.I express my
Deep Sense of gratitude Dr.T.SARATHY, B.E., M B A.,Ph.D. in Periyar
Institute of Management Studies (PRIMS) , Periyar University,
Salem-11. Who gave me constant inspiration and guidance throughout
the Project work.My Sincere thanks to MR.R.GUNASEKARAN, ACCOUNTS
MANAGER, FINANCIAL DEPARTMENT, SRI SOWDESWARI MILLLS,
JALAKANTAPURAM, SALEM (DT) for giving the necessary facilities for
the successive completion of the Project.I record My Sincere thanks
to My Friend and all those who helped me to prepare the Project and
helped me in getting the Project work beautiful Printed and
bound.
CERTIFICATE
ABSTRACT
ABSTRACTThe study focuses about the financial performance of Sri
Sowdeswari Mill Private Limited, Jalakantapuram, Salem and titled
as A STUDY ON FINANCIAL PERFORMANCE AND ANALYSIS IN SRI SOWDESWARI
MILLS PRIVATE LIMITED, JALAKANTAPURAM, SALEM undertaken at Sri
Sowdeswari Mills Private Limited, Jalakantapuram, Salem. Financial
analysis is to identify the strength and weakness of the firm by
properly establishing relationships between the items of balance
sheet and profit and loss account, and other operative data. The
current study covers a period of five years (from 2009-2013).The
study aims assessing the liquidity, profitability position of the
firm. It analyzed by using the ratios, schedule of changes in
working capital, and comparative balance sheets.The analysis
reveals that the companys short term solvency position is not up to
the optimal but long term and increase their current assets like
cash and bank balance.
TABLE OF CONTENTS
CONTENTSCHAPTER NOTITLEPAGE NO
List of Tables
List of charts
Abstract
IGENERAL INTRODUCTION
1.1 Introduction of the study1
1.2 Introduction about industry2-6
1.3 About the company Profile7-29
IIREVIEW OF THE LITERATURE30-31
IIIINTRODUCTION TO THE STUDY
3.1 Objectives of the Study32
3.2 Scope of the Study33
3.3 Limitation of the study34
IVRESEARCH METHODOLOGY35-40
VDATA ANALYSIS AND INTERPRETATION41-76
VIRESULT
6.1 Findings77
6.2 Suggestion78
6.3 Conclusion79
BIBLIOGRAPHY80
APPENDIX81-82
LIST OF TABLES
LIST OF TABLESTABLENONAME OF THE TABLEPAGE NO
5.1.1NET PROFIT RATIO41
5.1.2OPERATING PROFIT RATIO43
5.1.3DEBTORS TURNOVER RATIO45
5.1.4FIXED ASSETS TURNOVER RATIO47
5.1.5TOTAL ASSETS TURNOVER RATIO49
5.1.6INVENTORY TURNOVER RATIO51
5.1.7CURRENT ASSET TURNOVER RATIO53
5.1.8WORKING CAPITAL TURNOVER RATIO55
5.1.9CURRENT ASSET RATIO57
5.1.10LIQUID ASSET RATIO59
5.2.1COMPARATIVE BALANCE SHEET 2009-201061
5.2.2 COMPARATIVE BALANCE SHEET 2010-201163
5.2.3COMPARATIVE BALANCE SHEET 2011-201265
5.2.4COMPARATIVE BALANCE SHEET 2012-201367
5.3.1STATEMENT OF CHANGES IN WORKING CAPITAL 2009-201069
5.3.2STATEMENT OF CHANGES IN WORKING CAPITAL 2010-201171
5.3.3 STATEMENT OF CHANGES IN WORKING CAPITAL 2011-2012 72
5.3.4STATEMENT OF CHANGES IN WORKING CAPITAL 2012-201374
LIST OF CHARTS
LIST OF CHARTSCHARTNONAME OF THE CHARTPAGE NO
5.1.1NET PROFIT RATIO42
5.1.2OPERATING PROFIT RATIO44
5.1.3DEBTORS TURNOVER RATIO46
5.1.4FIXED ASSETS TURNOVER RATIO48
5.1.5TOTAL ASSETS TURNOVER RATIO50
5.1.6INVENTORY TURNOVER RATIO52
5.1.7CURRENT ASSET TURNOVER RATIO54
5.1.8WORKING CAPITAL TURNOVER RATIO56
5.1.9CURRENT ASSET RATIO58
5.1.10LIQUID ASSET RATIO60
5.3.1STATEMENT OF CHANGES IN WORKING CAPITAL 2009-201070
5.3.2STATEMENT OF CHANGES IN WORKING CAPITAL 2010-201172
5.3.3STATEMENT OF CHANGES IN WORKING CAPITAL 2011-201274
5.3.4STATEMENT OF CHANGES IN WORKING CAPITAL 2012-201376
CHAPTER I
GENERAL INTRODUCTION
CHAPTER-I1.1 INTRODUCTION TO THE STUDY Financial statements are
prepared primarily for decision making. They play a dominant role
in setting the framework of managerial decisions. The term
financial analysis, also known as analysis and interpretation of
financial statements refers to the process of determining financial
strengths and weaknesses of the firm by establishing strategic
relationship between the items of the Balance sheet, profit and
loss account and other operative data. Analyzing financial
statements, according to Metcalf and Tigard, is a process of
evaluating the relationship between component parts of a financial
statement to obtain a better understanding of a firms position and
performance. The purpose of financial analysis is to diagnoses the
information contained in financial statements so as to judge the
profitability and financial soundness of the firm.
1.2 INDUSTRIAL PROFILE INDRODUCTION ABOUT THE INDUSTRYTextile
industry is the eldest and one of the firmly established major
industries in the country producing a wide range of products for
human consumption in India as well as abroad. Cotton textile
industries is the largest industry in providing Employment about 20
million people. During 1992-1993, 138 lakhs bales of cotton valued
at Rs.94 crores was produced. Out of this, 13 lakhs bales were
exported during the same period. The position has greatly improved
to 173.94 lakhs bales during 1992-1993 while the demand (or) total
take is 133 lakhs bales. Indias share in the world trade of cotton
exports is just 5% during 1992-1993. Cotton textile exports touched
Rs.3884.64 crores. The basic tenant of Indias exports policy has
been to exports which will take into consideration the interest of
traders, mills and state agencies has to be implemented. In 1998
the cotton textile exports fall by 3% as a result of sharp fall in
the export of Cotton yarn and knitted fabrics. The cotton exports
during 2006 were to the tune of Rs.57.41 crores against Rs.46.83
crores in the previous year.
PRESENT CONDITION OF THE INDUSTRYThe growth of the cotton
spinning sector, in terms of capacity, received an impetus in 1991
with the deli censing of spindle age. Installed spindle age has
been rising steadily since then, in 1991, the number of spindles
installed was around 26.27 million and the number went up to nearly
50 million in 1995 (in the non-SSI units). The total spindles
installed by 2007 are estimated to have gone up to 400
millions.Cotton spun yam production (excluding blended and 100
percent non-cotton yarn declined from 2.213 million kg in 1997-98
but recovered to 2.266.86 million kg in 2000-01. Spindle capacity
utilization, which was 76 percent in 1991-1992, had gone up to 86
percent in 1996-1997 fell to 79 percent in 2004-2005 before
bouncing back to 83 percent in 2005-2006.As on march 31, 2006, the
spinning capacity was 57, 41 million. During 2005-2006, while the
power loom sector had consumed around 24 percent was exported.The
cotton yarn spinning units could capitalize on the growth in yarn
imports expected in key Asian destinations. According to the
Chairman of Southern India mills Association (SIMA), there has been
a revival both in the domestic and export makers. However, if the
revival is to be sustained, certain issues need to be addressed, he
feels. The Chairman of textile Exports Promotion Council says a
major step needed is to reduce the cost of production. The cost of
almost all components power, raw material, transport and labour has
gone up during the last four or five years. Up to Rs.1776.54 kg. In
order to make availability raw cotton of good quality at reasonable
price, the price, the thrust is on integrated cotton farming
now.
TEXTILE INDUSTRY IN INDIA Textile industry is the eldest and one
of the firmly established major industries in the country producing
a wide range of products from human consumption in India as well as
abroad. Cotton textile industry is the largest industry in
providing Employment to about 20million people. During 1992-1993,
138 lakhs bales of cotton valued at Rs.94 crores was produced. Our
of the above 131 lakhs bales were exported during the same period.
The position has greatly improved to 173.94 Lakhs bales during
1992-93 while the demand (or) total take off is 133 lakhs
bales.Indias share in the world trade of cotton exports just 5
percent during 1992-93. The cotton textile exports touched
Rs.3884.64 crores. The basic tenant of Indias exports policy has
been to export only the surplus however a liberalized policy in
cotton exports which will take into consideration the interest of
traders, mills and state agencies has to be implemented. In 1998
the cotton textile exports fall by 3% as a result of sharply falls
in the export of cotton yarn and knitted fabrics. Total cotton
exports during 1998 were to the tune of Rs.14.216 crores against
Rs.13.028 crores in the previous year.
PRESENT TREND OF THE INDUSTRY The growth of the cotton spinning
sector, in terms of capacity, received an impetus in 1991 with the
deli censing of spindle age, installed spindle age has been rising
steadily since, in 1991. The number of spindles installed was
around 26.27 million and the number went up to nearly 50 million in
1995 (in the non-SSI units). The total spindles installed by 2001
are estimated to have gone up to 35.53 million.The share of
spinning capacity of south Indian mills (including small scale
spinning units) in All India capacity is estimated to be around 50
per cent. As on march 31.2002. The spinning capacity of southern
mills was 19.53 million spindles with the All India capacity was
38.33 million. During 2000-01, while the power loom sector had
consumed nearly 42 per cent of the total cotton yarn produced,
handlooms had consumed around 23 per cent was exported. During
1994-2002 some of the major destinations for Indian cotton yarn
exports had been South Korea, Bangladesh and Hong Kong. According
to a report on Achieving Breakthrough Growth in Cotton Textile
Export, India has a large and modern spinning industry and a major
portion of its capacity is in the organized sector. In 2001, it had
shot up to Rs.232.63 a kgs. In order to make available raw cotton
of good quality at reasonable price, the thrust is on integrated
cotton farming now.
GROWTH AND DEVELOPMENT Even while there has been a steady rise
in spindle age, there has been an increase in the number of mills
that stopped production temporarily, and those closed and sick.
While the number of closed mills (non SSI) was 130 in 1991-92 and
132 in 1994-95, it rose to 383 in 2000-01. There is a feeling that
serious efforts should be made to identify and support mills that
can be revived. The south India textile Research Association
(SITRA) has done an ABC Analysis and submitted the report to the
ministry of textile. According to SITRA, the study covered nearly
90 spinning mills (that are in operation) in the four southern
states. The objective was to identify mills that could be revived
with some support. They will be classified into A, B and C
categories based on criteria such as financial performance during
the last 10 year and the level of modernization.As a measure to
find a solution for the problems of the units and ensure a level
playing field, the industry has been demanding an unbreakable
convert chain. Representatives of the spinning sector are of the
opinion that a four percent excise duty on cotton yarns for a two
or three year period will help the revival trend.With modernization
and value addition at every stage including weaving and processing,
domestic consumption of high quality yarn is bound to go up. With
the restructuring of the sector, and the revival of the market, it
is felt that the spinning units can be put back on the rails with
immediate attention to these external factors and the problems
faced at the factory level.
1.3 COMPANY PROFILE SRI SOWDESWARI MILLS PRIVATE LIMITED This
Project work was carried out at SRI SOWESWARI MILLS PVT LTD is
registered office 201-A, Tharamangalam Main Road, Jalakantapuram,
Salem 636 501. It has been incorporated as private limited company,
1991 and the companies act, 1956. The factory is constructed in a
modern type.PROMOTERS OF THE COMPANYR. Arthanari Cettiar,A.
Kandasamy,R. Chokalingam,A. Padmanaban,A. Saravanan,P. Sivaraj Sri
R. Arthanari Cettiar is the main promoter of the company, and he
have good experience person in power loom fabric manufacture in
jalakandapuram. At the time of incorporation of the company, the
share capital was just Rs. 50Laks but now the authorized capital of
the company is Rs. 85 Lakhs and the paid up capital is around Rs.
75 Lakhs. Thus company has a prosperous growth in its life
time.
MILLS SITUATED ATSri Sowdeswari Mills Pvt Ltd,Near
Kattampatti,Jalakantapuram, Salem (Dt).GENESIS AND DEVELOPMENT
Ventured in 1995 the mill started with a spindle capacity of 3024
had grown into a unit having as installed of 15720 spindles.SRI
SOWDESWARI MILLS PRIVATE LIMITED1. Name and Address of the Company
: SRI SOWDESWARI MILLS PVT LTD, 201-A, Tharamangalam main Road,
Jalakantapuram 636 501.
2. Registered and Administrative Office:JALAKANTAPURAM
3. State in which the company is registered:TAMIL NADU
4. Status:PRIVATE LIMITED COMPANY
5. Year of Commencement:19956. Type of Industry:100% cotton yarn
production7. Mill Location:Near Kattampatti,Jalakantapuram,Salem
636 5018. Sales Office:381, Trichy main Road,Guai, Salem.9. The
Management:The Board of Directors,B. Arthanari Chettiar,A.
Padmanaban,A. Saravanan,R. Chockelingam P.Sivaraj10. Financial
Institutions:The city union Bank,Jalakantapuram.11. Auditors:R.
Gunasekaran.Chartered Accountants, Salem.
PRESENT PLAN: The Company is presently headed by Sri R.
Arthanari Chettiar, Managing Director who is sincere, Motivated
with hands on approach towards all issues and leading from the
front. He is ably assisted by his sons A. Padmanaban and A.
Saravanan. They have been involved in the running of the company
for the past more than to decade and have acquired considerable
knowledge in finance, textile and general management Sri A.
Saravanan yen graduate GOAL OF THE COMPANYFUTURE PLAN The company
is planned for a forward integration, in the area of weaving,
knitting and processing and also garments manufacturing for exports
with in a period of 3 years.GROUP STRENGTH The company directors
have own Power looms and Auto looms to consumed their yarns used to
50% of the mill yarn production.FULFILLMENT OF SOCIAL
RESPONSIABILITIES The Company has contributed its share to the well
being of the social, it lends a helping towards the educational
aids and medical contribution to the poor people by foundation of
R..ARTHANARI CHETTIAR AND SIVAGAMI AMMAL CHARITABLE TRUST.
DEPARTMENT ACTIVITIES1. Receipts: Funds Transfer from Head
office Cash with drawls Sale of scraps A.C. Sheet sales2. Payments:
Validated & approved bill are paid on due dates through bank.
Petty expenses are paid after verification by accounts officer
& approved by works.PURCHASE / JOB WORK Purchase orders are
screened & forwarded to work manager for approval. After
Approval of purchase orders, GRN is raised against the material
receipt at the stores. Supplier invoices is obtained & matched
with PO & GRN then the process of ERP-Validation approves &
crate accounting is carried out. Job works are certified by the
concern HOD & approval by works manager. Approved job work bill
works bills are verified and entered in the system. TDS &
Service tax wherever applicable is provide then the process of
ER-validation approval & create accounting is carried out.PART
TIME MEDICAL OFFICER We are pleased to inform that Dr. S.
parasuraman, M.B.B.S., will be visiting our factory on every Monday
and Thursday between 3.00 pm and 4.00 pm. All are advised to check
up their health, if required, and take advice from medical
officer.SOURCES OF FINANCE:The finance of the company can be
obtained from. Private Share Capital. Loans from bank &
financial institutions.PRIVATE CAPITALS It means the capital
sponsored by the board of directors (or) the founders of the
organization (or) company.LOANS FROM BANK &FINANCIAL
INSTITUTIONS: It means the capital raised from the banks (or)
financial Institution the bankers and financial institution of the
company are THE CITY UNION BANK respectively. The financial status
of GSM is studied from the accounts department. The company started
it business with their Own Capital. The Companys share capital is
2.85 crores. They also utilized reserves and surplus and loans.The
companies maintain good accounting policies in the following areas.
(1). Fixed asset. (2). Investments. (3). Inventories. (4). Sales.
(5). Government grants. (6). Contingencies
SPINNING METERIALSTotal Machine: 16Machine Name: LAKHSMIModel:
LR 6Year of Bought: 2004 and 2005Machine: 6Machine name: LMW C
LakhsmiModel: LRG 5/1Year of Bought: 1995 TO 1998No. of Machines :
4Machine name : Lakhsmi LMWModel : LR 60Year of bought : 2012No. of
machines : 6I Cops Weight: 86 to 96 gramsEmpty Cops Weight : 53
grams INPUT: Raving 270 per M/COUTPUT: Cop
PRODUCTION PROCESS CHART
Cotton
Mixing
Blow Room
Silver Ribbon LabCarding
ComberDrawing
Simplex
Spinning
DoublingCone WindingReeling
Yarn Go downBalingPacking
PRODUCTION PROCESSMixingThis department plays an important role.
In this department, the various varieties of cotton are mixed,
according to their length, strength, fineness and maturity to get
the required counts of yarn i.e. 60s, 80s etc. Usually four buckets
of water and one liter firm soap oil is sprayed on the spread
cotton and kept for 24 hours before the next process.Blow RoomMixed
cotton is cleaned by removing the foreign matters and waste. This
may consist of seed coats, jute, etc. The output from this process
is a uniform and clean sheet like form rolled in a rod and is known
as LAP.CardingThe proverb of the experts says, well carded is half
spun and effective carding, efficient spinning. All these 4
proverbs demonstrate that the immense significance of carding is
the final result of the spinning operation.Carding Process The laps
that are produced in a sheet form are sent to the carding section.
The main aim of carding is to eliminate short fibers and also
elimination of laps which are formed in the blow room. The process
done here is completely open into individual fibers and the dirty
foreign matter and nap are removed.Carded SliverThe sliver produced
after normal carding in the form of long thread like fibers called
as carded sliver. There carded slivers are sent to drawing the next
stage.
Combined SliverThe combined slivers aim is to further remove
short fibers and laps that are still present in it. The comber
process means just like we comb over hair. In this combing process
short fibers are removed and fibers are arranged in parallel
formation. This combed sliver is the best quality of sliver then
the carded.Sliver LapThe carding slivers are fed and by pressing
them it is transformed into lab form. The output is called as
Sliver Lap.Ribbon LapThe sliver lap is fed and by drafting process
it is converted into a Ribbon Lap.ComberIt is the high quality
process. In this process producing the high quality sliver. It is
the next stage of carding. Then go to the sliver into the simplex
and spinning. The main different between drawing and comber is
producing the high quality combed yarn. Also 20% waste reduces than
drawing process. - 20 slivers converted into single comber lap -
Per comber lap producing time 7 minutes. - Per comber lap have 3.7
kgs weight - Get the output time of the comber sliver within 2.5
hours. 17
DrawingIt is the fourth stage in the manufacturing process. In
this process eight slivers can be converted into singly
sliver.Again 8 single can be converted into one sliver. There are 8
machines installed in the drawing room.Processing Time.Eight sliver
completing time is 4 hours.Simplex Operation:Sliver is converted
into Roving. In this process sliver size is decreased. There are 8
machines located in the simplex operation. Each machine has 120
spindles. Spindles mean rod or shaft rotating which twist the
yarn.Processing Time40s and 41s output get within 2 hours.80s
output get within 4 hours.Cone windingInputFinishing
FormOutputSpinning Cop: Single Yarn on ConesPackingSpinning Cop:
Doubled Yan Doubled WindingDoubling Cop: Double Yan on
ConesPackingDoublingTwist the doubt thread into single thread.
There are 32 doubling machines being the doubling section. Each
machine has 400 spindles. Twist than yarn according to the order
according to the order basis. For Example2 yarns X 40s Count =
2/40s2 yarns X 60s Count= 2/60sReelingThe yarn spindles are wound
in hank from the process is called reeling. There are 36 machines
installed in the reeling section. Each machine has 80
spindles.PackingPacking refers to the activities of designing and
producing the container or wrapper for a product. There are two
types of packing used are as under:i.Cone Packingii. Yarn
packingAccording to the customer a requirement the packing is done
by the packing department. Cone packing is done using manpower. For
yarn packing, bale press machine is used.
PRODUCT TESTINGIt is the final testing in the product to find
the imperfection. The buyers accept the 495-imperfection condition
within the 100 kilometers yarn.U% 12.5Thin 25.0Thick 160.0Neps
297.5_______Total 495.0 It is accepted for the 80s combed
yarn.NUMBER OF WORKERS The manpower details areTotal numbers of
workers are-183Out of this, permanent workers-128Temporary workers-
55OFFICE STAFFNon Technical staff-10Technical
staff-10Total-20ALLOCATION OF WORKERSThe worker in the company is
working in different department as pet the details given below: Up
to preparatory-21Spinning-46Cone Winding-30Doubling-17
Reeling-25Bundling / Packing- 7Maintenance &
Cleaning-20Others-17Total- 183FORMATION OF SHIFT SYSTEMThe shift
timing for general shift workers and staff category is Non
TechnicalTechnicalMorning9.00 am to 1.00 pm8.00 pm to 1.00
pmAfternoon2.00 am to 6.00 pm2.00 pm to 5.00 pm
The Shift Working For Workers Are;1st Shift7.00 am to 3.00
pmwith half an hour break2nd Shift3.00 am to 11.00 pmwith half an
hour break3rd Shift3.00 am to 11.00 pmwith half an hour breakANNUAL
LEAVE WITH WAGES As per the provisions of the Factories Act, all
the workers are provide with one day annual leave for the 20 worked
days in the previous year. Apart from this, maximum 9 days of
national & Festival holidays are allowed in a calendar year.
They are Republic Day-1May 1st-1Independence Day-1Gandhi
Jayanthi-1Pongal Day-2Mariamman Festival-1 (local holidays)Pooja
Holiday-1Deepavali-1
PAYMENT OF WAGES / SALARYWAGESThe wages are disbursed to workers
on 7th of every month by way of THE CITY UNION BANK ATM.SALARYThe
salary to staff is being paid on 7th of every month by way of THE
CITY UNION BANK ATM.STATUTORY BENEFITSPROVIDENT FUND The company is
deducting 12% of basic plus dearness allowances of employees as
employees contribution to provident fund and the company is
contributing 12% as its contribution. In this, 3.67% goes to
provident fund and the remaining 8.33% goes to family pension
scheme.ESI SCHEME The company is deducting 1.75% on total wages and
salary of employees as a contribution to ESI scheme and the company
is contributing 4.75% as its contribution.The various benefits
which the employees enjoying under this scheme are 1. Sickness
Benefit 2. Maternity Benefit
An insured women is entitled to claim maternity benefit in case
of1 Confinement2 Miscarriage 3Funeral Benefit 4 Disablement
BenefitTAMIL NADU LABOUR WELFARE FUND All the employees have to
contribute the prescribed amount to this fund every year. The
benefits from this fund are1 Scholarship for workers children2
Funeral expenses up to Rs. 1000/- for the workers3 Medical
facilitiesBONUS Bonus is provided to all workers, for the period of
one year. It is given as per discussed with SIMA (South India Mill
Owners Association) on the basic salary of previous year i.e.
Basic, Dearness Allowance 20%LOAN In case of marriage, family
function and any emergency expenses, workers are provided with
loan. This loan is recoverable from their wage in monthly
installments.
SAFETY MEASURES Adequate safety measures with water fire
extinguisher are providing throughout the mill.UNIFORM Aprons and
caps are providing to female workers. Male workers are providing
with Banyans and Toreros. Free uniform is given permanent workers
once in a year. Temporary workers purchase their union outside. The
company will issues banyans and the cost will be deducted from
their wages.UNION Trade union principle underlined in the above is
that a group of persons whether workers or employees will have a
better voice than an individual raising a loan voice.FACILITIES OR
WORKERS1 Rs. 75 is given to each worker for medical allowances.2
Rs. 150 is given to each worker for housing rent.3 Tea and sacks is
given free to all workers of night shift.4 Water coolers are
provided for employees to use in the mill.5 First aid facilities
are available.
INCREMENT The regular employers are eligible for increment on
every year in January based on their job performance.Excluding
casual workers, other workers are eligible for this increment.
CategoriesAmountBasis
WorkersRs. 3/- to Rs. 10/-(on daily wages)Once in 6 months
StaffRs. 500/-Yearly once
PROMOTION It is carried out in three stages and to become
eligible for such promotion, all workers should have completed
certain period of year in services.Workers6 months to 1
yearApprentice3 yearsConfirmation2 yearsWhen a worker employees all
the stages have become a permanent workers.
WAGE STRUCTUREThe labours are classified as follows. unskilled
labour Semi-skilled labour. Skilled labour Permanent
labour.UNSKILLED TRAINEESNewly employed trainees who are yet to
start training. They have only daily wage scheme which is around
25/day.SEMI-SKILLED TRAINEESThey are those in the training career
and have the same daily wage structure.SKILLED TRAINEES:-Those who
completed the training successfully are called skilled trainees.
They are entitled to ex-gratia, cloth, wan etc. Their leave and
absent during the year is taken into account for the annual
increment. Their efficiency and job turn over plays an important
factor in becoming a permanent worker.PERMANENT WORKERSThe workers
who have been working for a period of 5years and above are
considered to be permanent workers. The enjoy the benefit of.
WORKING HOURSThey are having 3 shifts/dayFirst Shift7A.M. to
3P.M.Second Shift3P.M to 11P.MThird Shift11P.M to 9 A.M.MEDICAL
FACILITIESThey also extend their welfare towards the employee of
their concern. Concessions are provided to the workers.LABOUR
WELFARE FACILITYHospital, co-operating, society loan, provident
fund was given to workers.FUNDS 3.67%- Provident Fund8.33%- Family
FundBONUSLast years bonus 24%Minimum bonus 8.33%
IDENTIFICATIONIdentification card is given to each and every
worker.White card- permanent workersAny color- Training
workersINCREMENT BASESIncrements are paid to the workers which are
as follows.
GRADERS.ABSENTEEISM
O5Up to 2 days
A4Up to 7 days
B3Up to 15 days
C2.50Up to 25 days
D1More than 25 days
EXPORT MARKET IN LOCAL The yarns have specific application which
is manufacture according at the specifications of the buyers. This
companys products are being sold into industrial consumers at local
market in Erode Shevapet (Salem)DELIVERY GOODS In Sri Sowdeswari
Spinning Mills Limited, are two types of delivery of goods. There
areCONE & HANK.HANK Hank yarn in hand loom sectors are used to
only of them. Yarn it is not a final product. Only semi-finished
goods.
CHAPTER II
REVIEW OF LITERATURE
CHAPTER-II REVIEW OF LITERATUREFinancial performance analysis is
vital for the triumph of an enterprise. Financial performance
analysis is an appraisal of the feasibility, solidity and fertility
of a business, sub-business or mission. Altman And Eberhart (1994)
reported the use of neural network in identification of distressed
business by the Italian central bank. Using over 1,000 sampled
firms with 10 financial ratios as independent variables, they found
that the classification of neural networks was very close to that
achieved by discriminate analysis. They concluded that the neural
network is not a clearly dominant mathematical technique compared
to traditional statistical techniques. Altman (1968) and Ohlsons
(1980) models to a matched sample of failed and non-failed firms
from 1980s, they found that the predictive accuracy of Altmans
model declined when applied against the 1980s data. The findings
explained the importance of incorporating the time factor in the
traditional failure prediction models. Campbell (2008) constructed
a multivariate prediction model that estimates the probability of
bankruptcy reorganization for closely held firms. Six variables
were used in developing the hypotheses and five were significant in
distinguishing closely held firms that reorganize from those that
liquidate. The five factors were firm size, asset profitability,
the number of secured creditors, the presence of free assets, and
the number of under-secured secured creditors. The prediction model
correctly classified 78.5% of the sampled firms. This model is used
as a decision aid when forming an expert opinion regarding a
debtors likelihood of rehabilitation.No study has incorporated the
financial performance analysis of the central public sector
enterprises in Indian drug & pharmaceutical Industry. Nor has
any previous research examined the solvency position, liquidity
position, profitability analysis, operating efficiency and the
prediction of financial health and viability of public sector drug
& pharmaceutical enterprises in India.Dr, S.P Gupta rightly
pointed out, it is only by interpreting the financial reports one
can make the figure position of a business concern in clear and
simple language understand by the layman.Financial statement
analysis is a method if analysis of interpreting information the
financial statements contain. In doing so, our goal is to determine
whether a company is going or losing ground struggle for
profitability and solvency.ANTHONS (2005), the financial statements
essentially are interim reports presented annually and reflect a
division of life of an enterprise into more or less arbitrary
accounting period more normally a year .AMUTHAVALLI (2000) in her
study had revealed that the companys profitability position and
short term financial position are sound during the period of the
study.SUMATHI (2002) had concluded that the operating efficiency
solvency position and the profitability of the company were
satisfactory. The liquidity position company remarkable good.
CHAPTER III
INTRODUCTION OF THE STUDY
CHAPTER- III3.1 OBJECTIVES OF THE STUDY To analyze the financial
performance of the company through the measurement profitability,
liquidity, turnover and capital structure aspects To measure the
efficiency and performance of SRI SOWDESWARI MILLS (P) LTD. To
study the changes in the assets, liabilities of the company during
the period of study. To offer suggestion to increase the financial
performance of the company
3.2 SCOPE OF THE STUDY Financial analysis is the process of
identifying the financial strengths and weakness of the firm by
properly establishing relationships between the item of the balance
sheet and profit and loss account. It is process of synthesis and
summarization of financial and operative data with a view to
getting an insight in to the operative activities of a business
enterprise. The study is conducted at Sri Sowdeswari Mills (P) Ltd.
He topic selected is A GENERAL STUDY ON FINANCIAL PERFORMANCE AND
ANALYSIS WITH SPECIAL REFERENCE TO VENUS SRI SOWDESWARI MILLS (P)
LTD, KATTAMPATTI, JALAKANTAPURAM, SALEM -636 501. The project work
is confined to finance department only. Various tools of financial
operations like, Ratio analysis, Comparative balance sheet,
schedule of changes in working capital have been used. Based on
analysis some findings and recommendation are given.
3.2 LIMITATIONS OF THE STUDY The study is based on the result of
limited period only i.e.5 years from 2008-09 to 2012-13. The
analysis and interpretation are based on secondary data taken from
financial reports. Ratio itself will not completely show the
companys good (or) bad financial position. The figures from the
financial statements for analysis were historical in nature and the
time value of money is not considered.
CHAPTER IV
RESEARCH METHODOLOGY
CHAPTER-IV4.1 RESEARCH METHODOLOGYINTRODUCTION: This chapter
deals with the methodology and the steps undertaken for the
collection and organization of data and presenting the findings of
investigation. The methodology of research indicates the general
pattern of organizing the procedure for gathering valid and
reliable data for the purpose of investigation The methodology of
the study includes the description of research design, population
sample size, sampling technique development and description of
tool, data collection procedure and method analysis.4.2 TYPES OF
RESEARCHThe study is based on theoretical and also the data can be
analyzed. The research type is analytical research.
4.3 ANALYTICAL RESEARCHIn this study the researcher has to use
facts or information already available and analyze these to make a
critical evaluation of the material.
4.4 SAMPLING DESIGNSample unitThe sample unit A financial
year.Sample sizeThe sample size of the study is 5 years from
2008-09 to 2012-2013.Method of collection dataSource of data1.
Primary data2. Secondary dataPrimary dataResearch data collected
has to be done of industry of companyIt refers to collected the
informationUsing different type of data and finance analysisPresent
study collected working capitalSecondary dataThis information
already collected in the data some of earlier research workThe
secondary data has annual report financial reportAll information
collected Sri Sowdeswari Spinning Mills4.5 TOOLS USED FOR ANALYSISA
financial analyst can adopt the following tools for analysis of the
financial statement. These are also termed as methods of financial
analysis. Ratio Analysis Comparative Balance Sheet Changes In
Working Capital
4.5.1 RATIO ANALYSISRatio analysis is a widely used tool of
financial analysis. It is defined as the systematic use of ratios
to interpret the financial statements so that the strengths and
weakness of a firm as well as its historical performance and
current financial condition can be determined. The term ratio
refers to the numerical or quantitative relationship between two
items/ variables. This relationship can be expressed as (i)
percentages (ii) Fractions (iii) Proportion of numbers. Computing
of ratios does not add any information not already inherent in the
financial statement. The ratios reveal that relationship in a more
meaningful way so as to enable us to draw conclusions from them.
The rationale of ratio analysis lies in the fact that it makes
related information comparable. A single figure by itself has no
meaning but when expressed in terms of a related figure, it yields
significant interfaces. The ratio analysis, as a quantitative tool,
answers to questions such as are the net profits adequate? Are the
assets being used efficiently? Is the firm Solvent? Can the firm
meet its current obligations? And so on.
A) PROFITABILITY RATIOS The primary objective of a business
undertaking is to earn profits. Profit earning is considered
essential for the survival of the business. A business needs
profits not only for its existence but also for expansion and
diversification. Generally, profitability ratios are calculated
either in relation to sales or in relation to investment.The
following ratios can be calculated, Net Profit Ratio Operating
Profit RatioB) TURN OVER RATIOSTurn over ratios, also referred to
as activity ratios or asset management ratios, measure how
efficiency the assets are employed by the firm. . Here the
calculated activity ratios are Debtors Turnover Ratio Fixed Asset
Turnover Ratio Total Assets Turnover Ratio Inventory Turnover Ratio
Current Assets Turnover Ratio Working Capital Turnover Ratio
C) LIQUIDITY RATIOSLiquidity refers to the ability of a concern
to meet its current obligations as and when these become due. The
short term obligations are met by realizing amounts from current
floating or circulating assets. The current assets should either be
liquid or hear liquidity. These should be convertible into cash for
paying obligations of short term nature. Current Ratio Liquid
Ratio
D) LEVERAGE RATIOFinancial leverage refers to the use of debt
finance. While debt capital is a cheaper source of finance, it is
also a riskier source of finance. Leverage ratios help in assessing
the risk arising from the use of debt capital.4.5.2 WORKING CAPITAL
MANAGEMENTWorking capital management also referred to short term
financial management refers to the day to day financial activities
that deal with current assets (inventors, debtors short term
holding of marketing securities and cash ) and current liabilities
( short term debt, trade creditors, accrual provisions)
WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITY
STATEMENT OF CHANGES IN WORKING CAPITIALWorking capital means
the excess of current assets over current liability, statements of
changes between the two balance sheet dates. This statement is
prepared with the help of current assets liabilities derived from
the two balance sheets.Every business needs funds for two purposes
for its establishment and to carry out its day operations. Long
term funds are required to create production facilities through the
fixed assets such as plant & machinery land buildings furniture
etc.
Investments in the assets such as plant part of firms capital
which is blocked on a permanent of fixed bass answer it called
fixed capital. Funds are also needs for short term purpose for
purchase for purchase raw material payment of wages and other day
to day expenses etc., these funds are known as working capital.In
the words of statement of working capital is the amount of funds
necessary to cover the cost of opening of the enterprise.4.5.3
COMPARATIVE BALANCE SHEETThe comparative balance sheet analysis is
the study trend of the same items groups of items and compute items
in two more balance sheet items reflect the conduct of the
business. The change can be observed by comparison of the balance
sheet, at the beginning and at the period and these can help is
forming an opinion about the columns for the original balance
sheets. A third column is used to show increase in figures. The
following items are included in the share balance viz., Fixed
assets investments current asset, loans and advances, share
capital, reserves, secured loans, current liabilities and
provisions, deferred tax. CHAPTER -V
DATA ANALYSIS AND INTERPRETATION
CHAPTER-VDATA ANALYSIS AND DATA INTERPRETATION5.1 RATIO ANALYSIS
5.1.1 NET PROFIT RATIOThe ratio indicates net margin earned on
income this ratio, helps to determine the efficiency with which the
affairs of business are being managed. A higher ratio indicates
better position. Net profitNet Profit Ratio = x 100 Net SalesTABLE
NO; 5.1.1S.NoYearNet Profit (Rs.in.Lakhs)Net
Sales(Rs.in.Lakhs)Ratio %
12008 20097121603.28
22009 20108429032.89
32010 201110935143.10
42011 201216147333.40
52012 2013-844207-1.99
Source: Annual Report 2009-2013 of SSM PVT LtdINTERPRETATIONThe
above table shows the net profit ratio is maximum 3.40% in the year
2011-2012. It gradually changes in the year 2009&2010&2011.
It was minimum -1.99% in the year 2012-2013. It shows an average
net profit ratio is 2.13% for the study period.CHART NO; 5.1.1NET
PROFIT RATIO
5.1.2 OPERATING PROFIT RATIOThis ratio indicates the
relationship between operating profit and sales. It shows the
operational efficiency of the firm and it measures the operational
efficiency of the management in carrying the routine operations of
the firm.
Operating ProfitOperating Profit Ratio = X 100SalesTABLE NO;
5.1.2S.NoYearOperating Profit (Rs.in.Lakhs)Sales
(Rs.in.Lakhs)Ratio%
12008 20099021604.16
22009 - 20109029033.10
32010 - 201117235144.89
42011 - 201223647334.98
52012 20135342071.24
Source: Annual Report 2009-2013 of SSM PVT LtdINTERPRETATIONThe
above table shows the operating profit ratio is maximum 4.98 in the
year 2011-2012. It gradually changes in the year 2009-2011. It is
minimum 1.24% in the year 2012-2013. It shows an average operating
profit ratio is of 3.67% for the study period.CHART NO;
5.1.2OPERATING PROFIT RATIO
5.1.3 DEBTORS TURNOVER RATIODebtors turnover ratio is called
"Receivable Turnover ratio" or "Debtors Velocity". Goods are sold
on credit based on credit policy adopted by the firm. Those
customers who are purchases on credit are called traded debtors or
book debtors. Bills or bundies are termed as bills receivables. The
debtors turnover ratio can be calculated as follows: Total Sales
Credit SalesDebtors Turnover Ratio = or ______________ Debtors
Average DebtorsTABLE NO; 5.1.3S.NoYearSales (Rs.in.Lakhs)Debtors
(Rs.in.Lakhs)Ratio
12008 200921609123.73
22009 - 201029039929.32
32010 - 201135149835.85
42011 - 201247337761.46
52012 2013420718622.61
Source: Annual Report 2009-2013 of SSM PVT LtdINTERPRETATIONThe
above table shows that debtors turnover ratio during 2011-2012 was
61.46 then 2010-2011 was 35.85 and it has been 2009-2010 was 29.32.
But has been decreased was 23.73 and 22.61 in the year 2008-209
& 2012-2013. The average Debtors turnover ratio is 34.59 during
the period of study.CHART NO; 5.1.3DEBTORS TURNOVER RATIO
5.1.4 FIXED ASSET TURNOVER RATIOThese ratios express the number
of times fixed asset are being turned over in a stated period. It
also indicated the adequacy of sales is relation to the relation to
the investment in fixed assets. It shows whether fixed assets are
being efficiently used or not. A higher rate shows efficient
utilization of fixed assets. SalesFixed assets turnover ratio = Net
fixed assetTABLE NO; 5.1.4S.NoYearSales (Rs.in.Lakhs)Fixed Asset
(Rs.in.Lakhs)Ratio
12008 2009216019411.11
22009 2010290312821.54
32010 2011351418041.94
42011 2012473316562.85
52012 2013420714902.82
Source: Annual Report 2009-2013 of SSM PVT LtdINTERPRETATIONThe
above table shows that fixed assets turnover ratio during 2011-2012
was 2.85 then 2012-2013 was 2.82 and it has been 2010-2011 was
1.94. But has been decreased was 1.54 and 1.11 in the year
2009-2010 & 2008-2009. The average fixed assets turnover ratio
is 2.05 during the period of study.CHART NO; 5.1.4FIXED ASSET
TURNOVER RATIO
5.1.5 TOTAL ASSETS TURNOVER RATIOThe total asset turnover
represents the amount of revenue generated by a company as a result
of its assets on hand. This equation is a basic formula for
measuring how efficiently a company is operating Sales Total Assets
Turnover Ratio = Total AssetsTABLE NO; 5.1.5 S.NoYearSales
(Rs.in.Lakhs)Total Assets (Rs.in.Lakhs)Ratio
12008 2009216024120.89
22009 - 2010290324691.10
32010 - 2011351425411.38
42011 - 2012473326101.81
52012 2013420725501.64
Source: Annual Report 2009-2013 of SSM PVT LtdINTERPRETATIONThe
above table shows that total assets turnover ratio during 2011-2012
was 1.81. Then 2012-2013 was 1.64 and it has been 2010-2011 was
1.38. But has been decreased was 1.10 and 0.89 in the year
2009-2010 & 2008-2009. The average total assets turnover ratio
is 1.36 during the period of study.
CHART NO; 5.1.5TOTAL ASSET TURNOVER RATIO
5.1.6 INVENTORY TURNOVER RATIOInventory turnover ratio indicates
how quickly the goods are sold by a enterprise. It measures the
number of times the inventories are held and replaced during the
period, by comparing the cost of good sold with the stock carried.
A company uses this ratio to determine whether there is excess
stock or not. Ideal ratio is 7-8 times per year.
SalesInventory/Stock Turnover Ratio = Average InventoriesTABLE NO;
5.1.6S.NoYearSales (Rs.in.Lakhs)Inventories (Rs.in.Lakhs)Ratio
12008 2009216016013.50
22009 - 2010290328210.29
32010 - 201135145456.44
42011 - 2012473337012.79
52012 2013420726016.18
Source: Annual Report 2009-2013 of SSM PVT LtdINTERPRETATIONThe
above table shows that inventory turnover ratio during 2012-2013
was 16.18 then 2008-2009 was 13.50 and it has been 2010-2012 was
12.79. But has been decreased was 10.29 and 6.44 in the year
2009-2010 & 2010-2011. The average of inventory turnover ratio
is 11.84 during the period of study.
CHART NO; 5.1.6INVENTORY TURNOVER RATIO
5.1.7 CURRENT ASSETS TURNOVER RATIOThat indicates how
efficiently a firm is its to generate.
Net SalesCurrent Assets Turnover Ratio = __________________
Current Assets TABLE NO; 5.1.7S.NoYearSales (Rs.in.Lakhs)Current
Assets (Rs.in.Lakhs)Ratio
12008 200921603615.98
22009 - 201029035015.79
32010 - 201135147894.45
42011 - 201247337925.97
52012 201342077115.91
Source: Annual Report 2009-2013 of SSM PVT LtdINTERPRETATIONThe
above table shows that current assets turnover ratio during
2008-2009 was 5.98 then 2011-2012 was 5.97 and it has been
2012-2013 was 5.91. But has been decreased was 5.79 and 4.45 in the
year 2009-2010 & 2010-2011. The average of current assets
turnover ratio is 5.62 during the period of study.
CHART NO; 5.1.7CURRENT ASSET TURNOVER RATIO
5.1.8 WORKING CAPITAL TURNOVER RATIOThese ratio measures the
effective utilization of working capital it also measure the smooth
running of business or otherwise the ratio establishes relationship
between cost of sales and working capital.SalesWorking capital
Turnover Ratio = _________________ Working capital TABLE NO;
5.1.8S.NoYearSales (Rs.in.Lakhs)Working Capital
(Rs.in.Lakhs)Ratio
12008 20092160-97- 22.26
22009 - 201029031519.35
32010 - 2011351414025.10
42011 - 2012473335113.48
52012 2013420724717.03
Source: Annual Report 2009-2013 of SSM PVT LtdINTERPRETATIONThe
above table shows that working capital turnover ratio during
2010-2011 was 25.10 then 2009-2010 was 19.35 and it has been
2012-2013 was 17.03. But has been decreased was 13.48 and -22.26 in
the year 2012-2013 & 2008-209. The average working capital
turnover ratio is 10.54 during the period of study.
CHART NO; 5.1.8WORKING CAPITAL TURNOVER RATIO
5.1.9 CURRENT RATIOThe ratio of current assets to current
liabilities is called current ratio. In order to measure the short
term liquidity or solvency of the concern, comparison of current
assets and current liabilities is inevitable. Current ratio in the
case liability of a concern to meet its current obligations as and
well they are due for payment.The current ratio is calculated by
the following formula. Current Assets Current ratio = Current
LiabilitiesTABLE NO; 5.1.9S.NoYearCurrent Assets
(Rs.in.Lakhs)Current Liability (Rs.in.Lakhs)Ratio
12008 20093614580.79
22009 - 20105014861.03
32010 - 20117896491.21
42011 - 20127924411.80
52012 20137114641.53
Source: Annual Report 2009-2013 of SSM PVT LtdINTERPRETATIONThe
above table shows that current ratio during 2011-2012was 1.87 then
2012-2013 was 1.53 and it has been 2010-2011 was 1.21.But has been
decreased was 1.03 and 0.79 in the year 2009-2010 & 2008-2009.
The average current ratio is 1.27 during the period of study.CHART
NO; 5.1.9CURRENT RATIO
5.1.10 QUICK RATIOThis ratio is otherwise known as quick ratio.
This ratio measures the firms ability to convert its current assets
quickly into cash in order to meet its current liabilities. It is a
true test of business solvency. A company uses this ratio to
determine the extent to which its immediate liabilities are met.
Higher ratio indicates sound financial position. (Quick Assets =
Current Assets Inventory)
Liquid Assets Liquid/Quick Ratio = Liquid LiabilitiesTABLE NO;
5.1.10S.NoYearQuick Asset (Rs.in.Lakhs)Current Liability
(Rs.in.Lakhs)Ratio
12008 20092014580.43
22009 20102194860.45
32010 20112446490.37
42011 20124224410.95
52012 20134514640.97
Source: Annual Report 2009-2013 of SSM PVT LtdINTERPRETATIONThe
above table shows that quick ratio during 2012-2013was 0.97 then
2011-2012 was 0.95 and it has been 2009-2010 was 0.45. But has been
decreased was 0.43 and 0.37 in the year 2008-2009 & 2010-2011.
The average quick ratio is 0.63 during the period of study.CHART
NO; 5.1.10QUICK RATIO
5.2 COMPARATIVE BALANCE SHEET
TABLE NO; 5.2.1 Comparative balance sheet for the year ended
31st March 2009 to 31st March 2010.
Particulars2008-2009
(Rs.in.Lakhs)2009-2010(Rs.in.Lakhs)Increase/Decrease
AmountIncrease/Decrease%
ASSETS
Fixed Assets
Gross block43084322140.32
Less: Depreciation23672440733.08
Net Block19411882-59-3.03
Capital Working process5516-39-70.90
Sub Total19961898-98-4.90
Investments10810800
Current Assets & Loans
Inventories16028212276.65
Sundry Debtors919988.79
Cash & Bank Balance110120109.09
Loans & Advances4054484310.61
Miscellaneous exp0.000.00--
Sub Total76694918323.90
Grand Total27622847853.07
LIABILITIES
Current Liabilities450478286.22
Provisions8800
Sub Total458486286.22
Secured Loan672770284.16
Share Holders Fund
Share capital28528500
Reserves and Surplus14541413-41-2.81
Sub Total17391698-41-2.81
Grand Total28692954852.96
Source: Annual Report 2009-2010INTERPRETATION From the
comparative balance sheet of the year 2009 2010 The following
inference can be made. Net block has decreased by 3.03%. Capital
work in progress has been decreased by 70.90%. No changes in
investment. Net current asset & loan has been increased by the
23.90% Current liability has been increased by the 6.22% Secured
loan increase 4.16% No changes in share capital. Reserve has been
decreased by 2.81%.
TABLE NO; 5.2.2Comparative balance sheet for the year ended 31st
March 2010 to 31st March 2011Particulars2009-2010
(Rs.in.Lakhs)2010-2011
(Rs.in.Lakhs)Increase/DecreaseAmountIncrease/Decrease%
ASSETS
Fixed Assets
Gross block43224355330.76
Less: Depreciation244025511114.54
Net Block18821804-78-4.14
Capital Working process1615-1-6.25
Sub Total18981819-79-4.16
Investments108105-3-2.77
Current Assets & Loans
Inventories28254526393.26
Sundry Debtors9998-1-1.01
Cash & Bank Balance1201462621.66
Loans & Advances448477296.47
Sub Total1057137131429.70
Grand Total295531902357.95
LIABILITIES
Current Liabilities47863415632.63
Provisions815787.5
Sub Total48664916333.53
Secured Loan7708598911.55
Share Holders Fund
Share capital28528500
Reserves and Surplus14131398-15-1.06
Sub Total16981683-15-1.06
Grand Total295431912378.02
Source: Annual Report 2010-2011INTERPRETATION From the
comparative balance sheet of the year 2010 2011. The following
inference can be made. Net block has decreased by 4.14%. Capital
work in progress has been decreased by 6.25%. Investment has been
decrease 2.77% Net current asset & loan has been increased by
the 29.70% Current liability has been increased by the 33.53%
Secured loan increase 11.55% No changes in share capital. Reserve
has been decreased by 1.06%.
TABLE NO; 5.2.3Comparative balance sheet for the year ended 31st
March 2011 to 31st March
2012Particulars2010-2011(Rs.in.Lakhs)2011-2012(Rs.in.Lakhs)Increase/DecreaseAmountIncrease/Decrease%
ASSETS
Fixed Assets
Gross block43554387320.73
Less: Depreciation255127311807.05
Net Block18041656-148-8.20
Capital Working process158-7-46.66
Sub Total18191664-155-8.52
Investments10510500
Current Assets & Loans
Inventories545370-175-32.11
Sundry Debtors9877-21-21.42
Cash & Bank Balance146345199136.30
Loans & Advances477490132.72
Miscellaneous exp0000
Sub Total12661282161.26
Grand Total30852946-139-4.50
LIABILITIES
Current Liabilities634420-214-33.75
Provisions1521640
Sub Total649441-208-32.04
Secured Loan859892333.84
Share Holders Fund
Share capital28528500
Reserves and Surplus13981434362.57
Sub Total16831719362.13
Grand Total22052159-46-2.08
Source: Annual Report 2011-2012INTERPRETATION From the
comparative balance sheet of the year 2011 2012. The following
inference can be made. Net block has decreased by 8.20%. Capital
work in progress has been decreased by 46.66%. No changes in
investment. Net current asset & loan has been increased by the
1.26% Current liability has been increased by the 32.04% Secured
loan increase 3.84% No changes in share capital. Reserve has been
decreased by 2.17%.
TABLE NO; 5.2.4Comparative balance sheet for the year ended 31st
March 2012 to 31st March
2013Particulars2011-2012(Rs.in.Lakhs)2012-2013(Rs.in.Lakhs)Increase/DecreaseAmountIncrease/Decrease%
ASSETS
Fixed Assets
Gross block43874399120.27
Less: Depreciation273129091786.5
Net Block16561490-166-10.02
Capital Working process87-112.5
Sub Total16641497-167-10.03
Investments1050-105-100
Current Assets & Loans
Inventories370260-110-29.72
Sundry Debtors77186109141.55
Cash & Bank Balance345265-80-23.18
Loans & Advances49080631664.48
Miscellaneous exp0000
Sub Total1282151723518.33
Grand Total30513014-37-1.21
LIABILITIES
Current Liabilities420412-8-1.90
Provisions215231147.61
Sub Total441464235.21
Secured Loan892104014816.59
Share Holders Fund
Share capital28528500
Reserves and Surplus14341225-209-14.57
Sub Total16921510-209-12.15
Grand Total30253014-11-0.36
Source: Annual Report 2012-2013INTERPRETATION From the
comparative balance sheet of the year 2012 2013. The following
inference can be made Net block has decreased by 10.02%. Capital
work in progress has been decreased by 12.5%. Investment has been
decrease by 100%. Net current asset & loan has been increased
by the 18.33% Current liability has been increased by the 5.21%
Secured loan increase 16.59% No changes in share capital. Reserve
has been decreased by 14.57%.5.3 SCHEDULE OF CHANGES IN WORKING
CAPITALTABLE NO; 5.3.1Statement showing changes in working capital
for the year ended 31st March
2010.PARTICULAR2008-2009(Rs.in.Lakhs)2009-2010(Rs.in.Lakhs)INCREASEDECREASE
Current AssetsInventoriesSundry debtorsCash and bank balanceLoan
and advances160911104052829912044812281043----
Total current assets766949
Current LiabilityCurrent liabilityProvisions45084788-028-
Total current liability458486--
Net working capital(CA-CL)Increase Working Capital308
15546318328
155
Total463463183183
Source: Annual Report 2009-2010INTERPRETATIONIn the year
2009-2010 the working capital has been increased up to 155 lakhs
due to the increase in the current asset such as inventories,
debtors, cash and bank balance, loan and advance. The current
liability is decrease. In the year firm has enough money to met its
current liability.CHART NO; 5.3.1SCHEDULE OF CHANGES IN WORKING
CAPITAL
TABLE NO; 5.3.2Statement showing changes in working capital for
the year ended 31st March 2011PARTICULAR2009-2010
(Rs.in.Lakhs)2010-2011 (Rs.in.Lakhs)INCREASEDECREASE
Current AssetsInventoriesSundry debtorsCash and bank balanceLoan
and advance2829912044854598146447263-2629-1--
Total current assets9491266
Current LiabilityCurrent liabilityProvision478863415
1567
Total current liability486649
Net working capital(CA-CL)Increase working capital463
154617
318164
154
Total617617318318
Source: Annual Report 2010-2011INTERPRETATIONIn the year
2010-2011 the working capital has been increased up to 154 lakhs
due to the increase in the current asset such as inventories,
debtors, cash and bank balance, loan and advance. The current
liability is decrease. In the year firm has enough money to met its
current liability.CHART NO; 5.3.2SCHEDULE OF CHANGES IN WORKING
CAPITAL
TABLE NO; 5.3.3Statement showing changes in working capital for
the year ended 31st March
2012PARTICULAR2010-2011(Rs.in.Lakhs)2011-2012(Rs.in.Lakhs)INCREASEDECREASE
Current AssetsInventoriesSundry debtorsCash and bank balanceLoan
and advances5459814647737077345490
1991317521
Total current assets12661282
Current LiabilityCurrent liabilityProvisions6341542021214
6
Total current liability649441
Net working capital(CA-CL)Increase working capital617
224841426202
224
Total841841426426
Source: Annual Report 2011-2012INTERPRETATIONIn the year
2011-2012 the working capital has been increased up to 224 lakhs
due to the increase in the current asset such as inventories,
debtors, cash and bank balance, loan and advance. The current
liability is decrease. In the year firm has enough money to met its
current liability.CHART NO; 5.3.3SCHEDULE OF CHANGES IN WORKING
CAPITAL
TABLE NO; 5.3.4Statement showing changes in working capital for
the year ended 31st March
2013PARTICULAR2011-2012(Rs.in.Lakhs)2012-2013(Rs.in.Lakhs)INCREASEDECREASE
Current Assetsinventoriessundry debtorscash and bank balanceloan
and advances37077345490260186265806
109
31610
80
Total current assets12821517
Current liabilityCurrent liabilityProvisions42021412528
31
Total current liability441464
Net working capital(CA-CL)Increase working capital841
2121053433221
212
Total10531053433433
Source: Annual Report 2012-2013INTERPRETATIONIn the year
2012-2013 the working capital has been increased up to 212 lakhs
due to the increase in the current asset such as inventories,
debtors, cash and bank balance, loan and advance. The current
liability is decrease. In the year firm has enough money to met its
current liability.CHART NO; 5.3.4SCHEDULE OF CHANGES IN WORKING
CAPITAL
CHAPTER -VI
FINDING, SUGGESTION, CONCULSIONCHAPTER-VI6.1 FINDINGS Net profit
ratio has a slow growth and decline during the period of study. It
is decreases in the year 2012 2013. It indicates insignificant
improvement in conditions of the business. Operating profit ratio
is the test of operational efficiency. The efficiency has risen
slightly and decreases 1.24 in the year 2012 2013. Debtor turnover
ratio shows slight variation between the all years, the higher
ratio it signifies that the debts are being collected more promptly
in the company. Fixed asset turnover ratio shows increasing trend
in the all financial year during the period of study. It shows
asset share well utilized. Total asset turnover ratio indicates the
fluctuation status of the company. The lowest ratio 0.89 in the
year 2008 2009. Inventory turnover ratio indicates the utilization
of inventory in an efficient manner. It was higher ratio 16.18 in
the year 2012-2013. Current asset turnover ratio shows the smooth
condition of the company. Working capital turnover ratio shows the
negative 22.26 in the year 2008 2009. It is smooth condition during
the period 2009 -2010 to 2012 2013. The current ratio was favorable
to the organization during the year 2010-2013. It is decrease 0.79
in the year 2009. The liquid ratio was dissatisfaction level.
Liquid liability is excesses the liquid asset during the period of
study. Comparative balance sheet shows the overall financial
position in good. The schedule of changes in working capital shows
the increasing trends of all period.6.2 SUGGESTIONS &
RECOMMENDATIONS The management may take proper decisions to
maintain their absolute liquid ratio, so that they can maintain
their liquidity position in the long run. The liquidity position
could be strengthened by reducing the current liabilities. The
management may try to increase the EPS by increasing the
profitability of the company. The cash balance level of the company
when compared to current liabilities is minimum and the management
may improve the cash balance to an optimum level to meet the
contingencies. The company may increase their net profit. The
company may control the expenses and increase their operating
profit. The company should concentrate with investment and it will
be helpful to the company for its successful running.
6.3 CONCLUSION The study made the researcher to analyses the
financial position of the SRI SOWDESWARI MILLS. The company has
maintained the proper financial position to meet day to day
activities. But if we take the current liability, they should keep
some attention the reduce these things in the following year
through the company is a small scale company. If they utilize the
resources in a effective and efficient way to meet the profit. The
study was undertaken on the financial performance of the company
tools such as ratio analysis and schedule of changes in working
capital, comparative balance sheets have been used to find out of
the companys efficiency. The firm has healthy condition of finance
for long term.
BIBLIOGRAPHY
BIBLIOGRAPHYI. Company profile is Sri Sowdeswari Mills Private
Ltd.II. Dr.S.N.Maheswari (2000) Principles Of Management
Accounting, Publishing By Sultan Chand&Sons, New Delhi.III.
Dr.V.R.Palanivel (2010) Financial Management 1st Edition, S Chand
& Company Ltd, New Delhi.IV. Dr.I.M.Pandey (2003) Financial
Management 8th Edition, Vikas Publishing House Pvt. Ltd, New
Delhi.V. T.S. REDDY, Y.HARI PRASAD REDDY, Management AccountingREAD
MORE;I. http;//www.investorwords.comII.
http;//www.businessdictionary.comIII. http;//www.google.comIV.
http;//www.yahoo.com
APPENDIX
APPENDIX;
SRI SOWDESWARI MILLS PRIVATE LIMITED BALANCE SHEET .. In Rs
Cr..Sources of fundsMar '13
Mar '12
Mar '11
Mar '10
Mar09
Total Share Capital2.852.852.852.852.85
Equity Share Capital2.852.852.852.852.85
Share Application Money0.000.000.000.000.00
Preference Share Capital0.000.000.000.000.00
Reserves12.2514.3413.9814.1314.54
Revaluation Reserves0.000.000.000.000.00
Networth15.1017.1916.8316.9817.39
Secured Loans10.408.928.597.706.72
Unsecured Loans0.000.000.000.000.00
Total Debt10.408.928.597.706.72
Total Liabilities25.5026.1125.4224.6824.11
Application of fundsMar '13Mar '12Mar '11Mar '10Mar09
Gross Block43.9943.8743.5543.2243.08
Less: Accum. Depreciation29.0927.3125.5124.4023.67
Net Block14.9016.5618.0418.8219.41
Capital Work in Progress0.070.080.150.160.55
Investments0.001.051.051.081.08
Inventories2.603.705.452.821.60
Sundry Debtors1.860.770.980.990.91
Cash and Bank Balance2.653.451.461.201.10
Total Current Assets7.117.927.895.013.61
Loans and Advances8.064.904.774.484.05
Fixed Deposits0.000.000.000.000.00
Total CA, Loans & Advances15.1712.8212.669.497.66
Deffered Credit0.000.000.000.000.00
Current Liabilities4.124.206.344.784.50
Provisions0.520.210.150.080.08
Total CL & Provisions4.644.416.494.864.58
Net Current Assets10.538.416.174.633.08
Miscellaneous Expenses0.000.000.000.000.00
Total Assets25.5026.1025.4124.6924.12
Contingent Liabilities0.000.000.000.000.00
Book Value (Rs)52.9760.3059.0459.5961.03