A project report on cash and fund flow analysis and ratio analysis of dksskn, chikodi

“CASH AND FUND FLOW ANALYSIS AND RATIO ANALYSIS
OF DKSSKN, CHIKODI”

Contents

Titles Page No.
Chapter I

Executive summary 1

Chapter II

• Industrial profile 3
• Company profile 7
• Organization structure 16
17
• Product profile

Chapter III

Design of the study
• Statement of problem 42
• Objectives of the study 42
• Scope of the study 42
• Methodology of data collection 43
• Sources of data collection 43
• Limitations 44

Chapter IV

Financial analysis
• Financial statement 46
46
• Balance sheet
50
• Income statement 51
• Analysis of financial statement 52
• Significance of financial statement analysis 53
• Statement of changes in the financial statement

Chapter V

Data analysis and interpretation
• Comparative financial statement
• Common size financial statement
• Trend analysis financial statement
• Ratio analysis
• Fund flow statement
• Cash flow statement

Chapter VI

1
Babasabpatilfreepptmba.com


Findings and suggestions
55
Chapter VII 59
62
Conclusion 64
80
Chapter VIII 84

Bibliography

Chapter IX
88
Annexure

89

90

91

2


LIST OF TABLES

Table Name of the Table Page
No. No.
1 Comparative Balance sheet 56
2 Comparative Income Statement 58
3 Common-size Income Statement 60
4 Common-size Balance Sheet 61
5 Trend Income Statement 62
6 Trend Balance Sheet 63
7 Current Ratio 65
8 Quick Ratio 67
9 Proprietary Ratio 69
10 Solvency Ratio 70
11 Fixed Assets Turnover Ratio 72
12 Working Capital Turnover Ratio 74
13 Gross Profit Turnover Ratio 76
14 Operating Cost Turnover Ratio 77
15 Return On Investment 79
16 Fund Flow Statement 81
17 Cash Flow Statement 84

LIST OF CHARTS

Chart Name of the Chart Page
No. No.
1 Current Ratio 66
2 Quick Ratio 67
3 Proprietary Ratio 69

3


4 Solvency Ratio 71
5 Fixed Assets Turnover Ratio 73
6 Working Capital Turnover Ratio 74
7 Gross Profit Turnover Ratio 76
8 Operating Cost Turnover Ratio 78
9 Return On Investment 79

CHAPTER- I
EXECUTIVE SUMMARY

Shree D.K.S.S.K.N. Chikodi is a co-operative unit. It is a situated near
Nanadi village.
By conducting the organization study it is found that
All the departments were actively working towards the achievement of the goals of
the company.
My topic is

4


“Cash and fund flow analysis and ratio analysis of DKSSKN, Chikodi”
Financial statements summarizes that the financial position and operation
of the company. Many companies are used comparative, ratio analysis, fund flow
and cash flow analysis to know about the financial position of the firm. The
comparative, ratio analysis, fund flow analysis and cash flow analysis are widely
used for analyzing the financial statements. It is systematic use of ratio to interpret
the financial statements so that the strength and weaknesses of a firm is
determined.
During my project the firm is not in good health and the company funds are
used only for short term assets not for long term assets.

My Objectives are
1. To determine the operational efficiency of the company using ratio analysis.
2. To know the changes in financial statements for the past 3 years
using trend analysis.
3. To conduct cash and fund flow statement for 2007- 2008
4. To identify the financial strength and weakness that the firm
might have.
Suggestions

5


1. The firm should concentrate on enhancing the operating
efficiency of the firm.
2. From the study it is found that the funds are used for short term
assets which should be avoided.

CONCLUSION

By analyzing the topic of “CASH AND FUND FLOW
ANALYSIS AND RATIO ANALYSIS OF DKSSKN LTD. CHIKODI”
I conclude that the company liquidity position is not satisfactory
due to more concentrate on raising the fixed assets rather than operating activities.
which decreases working capital of the company. Which affects the operational
efficiency of the company and also the liquidity position.

CHAPTER- II

INDUSTRIAL PROFILE

THE BRITISH

AT FIRST

6


After the blockade and the landing of British troops superior in number than
the French force of the General Decaen, the French capitulated in December 1810.
From the Treaty of Paris of 1814, Mauritius and its dependencies became British,
whereas Reunion even that it was captured was given back to France. Mauritius
became British and got back the name the Dutch gave her, but stayed quite close to
France as she kept the language, culture and French laws. Left on their own, under
the same legal system, the ancient French colonist and their descendants was then
able to live a French style as in the past, changing from a colony base on maritime
trade to that of an agricultural one.

Even that the sugar industry started under the French period, it was only
during the British period that it developed in such a way that it became almost a
mono-crop industry until some other crops were cultivated such as tea, tobacco and
more recently small industries for food, textile and household products.
ABOLITION OF SLAVERY. The most important event under the British.

Administration was the abolition of slavery in 1835 EMANCIPATION OF
THE SLAVES. The emancipation of the slaves in 1835 was been opposed by the
colonists same at those of other British colonies for economic reasons since the
sugar industry in development needed man power. The colonists obtained a very
high compensation. Then there were no trouble as expected since everything went
on calmly, but to replace for the sudden lack of human resource, the country had to
ask for free workers from India. The first importation of Indian human resource in

7


Mauritius was in 1829. But it was only when the slaves were emancipated that it
took importance.

It resulted in an accelerated development of the sugar industry and brought
prosperity as from 1850. That prosperity of 1850 was also due to a recovery in
trade. Another development during the British period: the change in the
constitution, which was slow at the start, but got speed after the second world war
to bring independence in 1968.

TOWODRS INDEPENDENCE

It is as from 1937 with the requests of the workers and the establishment of
the Labour Party that regrouped the colored people and certain intellectuals from
Indian origin as well as the recognition of the workers unions that progress started
to be done. There was also a new constitution after the elections of 1943 during
which two forth of the population could vote. The elections of 1953 made
democracy move ahead when the Labour party obtained more seats. It was in 1957,
the year when the ministerial system started in Mauritius that Dr Ramgoolam took
the leadership of the Labour party.

PICTURE OF SUGAR MAKING

8


SUGAR INDUSTRY IN INDIA:

Mostly sugar industries are located in U.P, Bihar Maharashtra, A.P.
Karnataka and T.N. The sugar industry is one of the largest organized industries
with total capital investment of more than 500 crores. It employees more than 2.5
lakhs of workers besides creating extensive indirect employment over 25 to 30
million cultivators of sugar cane, dealers in sugar and confectioneries.

When sugar industry was granted tariff protection the history of sugar
industry started again before 1932 which gave limpet us (driving force) to growth
of industry. Again the government in 1951 provided incentives by fixing
minimum prices of cane and maximum prices of sugar.

This incentive scheme increased the production of sugar but dis-couraged
the cane production. We will see later on how contradictory government. Policies
have adversely affected the growth of sugar industry. Unfortunately, government
policy has been that of control and re-control from time to time creating an

9


environment inimical (hostility, untrendly) to the growth of sugar industry. Up to
1957-58 both consumption and production of sugar rose to; 20 lakhs tones each.
During 1969’s production of sugar rose to 35lakshs tones and during 1970’s it was
in between 40 to 50 lakh tones. And during 2000-01 it was in-between 80 to 90
lakhs tonnes.

POLICY

The present policy of partial decontrol 10% of production by each unit
is supplied for public distribution system i.e. as levy sugar at Govt. notified prices
admittedly below 20% of the actual cost of production. The levy sugar is I to the
public irrespective of their economic status. The balance 90% is sold in the free
market against monthlyissued by the Government. This policy has been
continuing since 1967-68 except for brief periods of de-control me during the years
of surplus production and accumulated sugar stocks.

Government announces the Statutory Minimum Price (SMP) for sugarcane every
year based on recommendations of the Commission for Agricultural Costs and
Prices (CACP).

COMPANY PROFILE

SHREE D.K.S.S.K.N.- CHIKODI,
Taluka – chikodi, dist.- Belgaum

10


Name of the Organization : Shree D.K.S.S.K.N.-Chikodi.
Location : Nanadi Village.
Tal.-Chikodi, Dist.- Belgaum
Karnataka.

Regi .office : Chikodi.
Ph. No. – 08338-276931 To 35
Fax: 08338 – 276105
E-Mail – dksugar@sancharnet.com

Construction : Building Layout, Garden & Light
Facilities.

Capacity : 5500 tones sugar cane crashing / day.
20.7 M. W. Power Generation.
30 K.L.P.D. Restrified Spirit.

Turnover : 450 to 500 Crores / Annum.
Employees : 756.

Work Shifts : 3 Shifts / 8 hours per shift (no Holiday)

BOARD OF DIRECTORS

11


The following composition of directors on the board of Shree
Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit, Chikodi.

Name Designation
1. Sri Mahantesh M Kavatagimath Chairman
2. Sri Ajit S Desai Vice Chairman
3. Sri Annasaheb S Jolle Director
4. Sri Ashok A Patil Director
5. Sri Prakash J Patil Director
6. Sri Tatyasaheb D Kate Director
7. Sri Mallikarjun G Kore Director
8. Sri Kallappa K Maishale Director
9. Sri Shantappa Y Miraji Director
10. Sri Amit P Kore Director
11. Sri Satappa N Saptasagar Director
12. Sri Parasagouda I Patil Director
13. Sri Bharatesh S Banawane Director
14. Sri Subhash N Katrale Director
15. Sri Mallikarjunayya V Hiremath Director
16. Sri Nandakumar M Nashipudi Director
17.Sri S B Umarane The Managing Director

12


BACKGROUND

SHREE DOODHAGANGA KRISHNA SAHAKARI SAKKARE
KARKHANE NIYAMIT, CHIKODI is a co-operative society registered under
Karnataka co-operative society’s Act in 1969. The industrial license number of the
factory is L-25/N-250/-LC dated 16/10/1970.

Shree D.K.S.S.K.N. Chikodi is a co-operative unit. It is a situated near
Nandi village, at a distance of about 13Km from Chikodi town .and the factory at
present has an attractive campus with magnificent buildings over it.

Agriculture was continues to; be an extremely important sector in our
country and cooperative system, as one of its main pillars providing vital support
services, is crucial for the transformation of agriculture. It is how inspired our
founder Late Sri. Chidanand B Kore, an agriculturist and a co-operator, to
establish this factory during 1972-73 with the financial support from cane growers
of this area and the State Government. With an initial crushing capacity 1250 TCD
and as a stand alone sugar industry, lour factory had faced a lot of problems all
these years in coming out as a viable unit. Though this factory had emerged in this
area with a meager beginning, it had not only provided a source of income for
forming community but also created a sustainable employment opportunity in this
rural area.

13


After a lot of dispute on location of plant, near Nandi village, the
construction work started in year 1971 and comp elected in the year 1974. The
factory was inaugurated by Vice-president Shri B.D Jatti on 6th November 1974.
The regular production has been started from December 1974.
The factory started on 5/3/1969 with initial Crushing capacity to the extent
of 1250 TCD per day began during the year 1974 with total expenditure of Rs.337
lakhs.
The area of operation covered 111 villages of which 102 villages are from
chikodi talukas, 5 villages are from chikodi taluka, 5 villages are from Raibag
taluka and 4 villages are from Athani taluka.
At present total sugar cane supplied to this sugar industry is from 20,000
acres with average yield per acre of 25 MT.
The entire plant and Machinery has been supplied by m/s National Heavy
Engineering Co-operative Ltd. Pune, A co-operative institution has also been
installed to meet the present requirement of the Crushing capacity. The DKSSK, at
present is equipped with modern machines and skilled personals. Rs. 325 lakhs
long term loan was borrowed from IFC, LIC, IDBI for original plant and First
phase expansion and has been repaid as per their
The crushing capacity was enhanced from 1250 TDC to 2000 in 1984-85
and from 2000 TCD to 3000 IN 1993-94. The factory house hold expenses of
factory from 3500 to 5500 TCD. Every expansion was not easy and had created a
financial set backs due to the lack of professionalism both in technical and
financial managements.

14


Thus over the period of two and half decades, the factory had grown
only in sizes but not adopted the range of different bi-product activities and had
suffered due to a weak governance on efficiency, effectiveness, adaptability and
internal and external accountability in the management. These things have brought
the factory almost to the brink of sickness. Besides resulting a huge negative net
worth and ever-high accumulated losses. However this cooperative and rural
based industry must succeed if the poor farmers and the rural unemployed youths
have to be prosperous.

Nature of Business

Sugar sector is one of the large scale industries in manufacturing sector.
Now a day the competition in sugar sector is very high. SHREE
DOODHAGANGA KRISHNA SAHAKARI SAKKARE KARKHANE
NIYAMIT, CHIKODI is a co-operative society registered under Karnataka co-
operative society’s Act in 1969. The object of business is to encourage proper
devolvement of agricultural industrial amongst members on co-operative lives by
promotions of co-operative and joint forming methods so as to secure best merits
of modern large scale agriculture production to the owners of the lands. The nature
of business is to encourage self help, thrift and co-operate amongst members.

Vision, mission and quality policy
Vision
“Total customer satisfaction”

15


Mission
• Encourage agro-based co-operative industry.
• To develop co-operative movement in rural sector.
• To encourage the farmers to grow sugar cane for production of sugar and
its by-products.

AIMS & OBJECTIVE OF THE COMPANY

The object of the society is to encourage proper development of Agricultural
Industrial amongst members on Co-operative lives by promotions of principal and
methods of Co-operative and joint forming methods so as to secure best merits of
modern large scale agriculture production to the owners of lands and for this
purpose.

a) To encourage self-help, thrift and co-operate amongst members.
b) To acquire lands either by way of purchase or otherwise for cultivation of
sugar cane and other cost and for erection of building. Godawns staff
quarters etc and for installations of machineries.
c) To manufacture sugar jogger and their by products out of sugar-cane grown
and supplied by members of the society and other and to sell the same to the
best advantage.
d) To under take such other activities as are identical and conductive to the
development of the society etc.

16


e) To acquire and install machinery for the utilization of the product and buy
raw material and sell finished product is the course of utilizing and
marketing the by products.

OWNERSHIP PATTERN

The authorized share capital of the Society shall be RS.15.20 crores divided
in to total 38,000 shares of RS.4,000/-each as under.
i) Rs.14,51,000/-dividend in to 36,275 shares of the face value of
Rs.4,000/-each reserved for the grower members called as “A”Class.
ii) Rs.9,00,000/-dividend in to 225 shares of the face value of Rs.4000/-
each reserved for Co-operative Institutions. Called as “B”Class.
iii) Rs.20,00,000/-dividend in to 500 shares of Redeemable preference
share of Rs.4,000/-each to be issued to Government of
Karnataka/Maharastra called as “C”Class.
iv) Rs.40,00,000/- dividend in to 1,000 shares of face value of Rs.4,000/-
each reserved for non grower members called as “D” Class.

INFRASTRUCTURAL FACILITIES
 Nearer to raw materials.
 Good transportation facilities.
 Nearer to rivers place. (Krishna River)
 Good networking.
 Proper accommodation for its employees

17


• ACHIVEMENTS AND AWARDS

ACHIEVEMENTS
• STAI, SISSTA & DSTA in their recent 8th annual convention at Hyderabad
held on 13-08-2005 have honored with the most prestigious award as the
“THE BEST EFFICIENCY & PERFORMANCE SUGAR FACTORY” in
the country for the year 2004-05. The award was given by Hon’ble Union
Minister for agricultural, food & Civil Supplies, in presence of Hon’ble
Chief Minister of Andhra Pradesh.

• The Karnataka State Co-op Federation Ltd. had adjudged as “The Best Co-
operative Sugar Factory in the State” and AWARD had been given to us
through Hon’ble Chief Minister of Karnataka, on 14/11/2004.

• Energy Department of Government of Karnataka and KREDL have
awarded us he “excellence Award” through Deputy Chief Minister of
Karnataka for having developed efficiently 20.7 MW Co-gen Power Project
on the occasion of RAJIV GANDHI AKSAYA URJA DIWAS ON
20/8/2004 .

18


• The companies have the Honour of achieving the Highest Sugar Recovery
@ 11.80% in Southern part of India for the year 2001-02. And 11.90% for
2002-03 also.

Awards

The Karnataka State Cooperative Sugar Factories Federation Ltd., Bangalore had
honored the company with the following awards for the:-

1. Highest sugar recovery in South India during 2001-02.
2. The “Best Administration Award” to the Managing Director with a cash
prize of Rs .10.000/- and a certificate.
3. The Best chief Chemist Award with Rs.5,000/- Cash prize and a Certificate.
4. Best chief engineer with award worth of Rs.5,000/- cash prize and
certificate.

ORGANISATION CHART

BOARD OF MANAGEMENT

19


MANAGING DIRECT

SECRETARY

GENERAL CIVIL STORE MEDICAL HEAD TIME CHIEF CHIEF AC OFFICE L.W.O. WATCH &
MANAGER ENG. KEEPER OFFICER KEEPER C.D.O. OFFICER SPDT WARD
TOOLROOM&DIESEL
PUMP

CHIEF CHIEF DIST. CO-GEN CANE AGRIL
ENG. CHEMIST CHEMIST YARD DEVPT.

GODOWN SECTION
GENERAL CANE SALES CASH
AC. AC.

COMPUTER

GAD EST MEETING INWARD & SHARE TYPING GUEST LEGAL PURC.
SECTION SECTION SECTION OUTWARD SECTION SECTION HOUSE SECTION SECTION

PRODUCT PROFILE

 BYPRODUCTS OF SUGAR CANE

20



The chief by products of sugar manufacturing are -
1) Bagasse
Bagasse is the by product of sugar left behind after crushing of sugar cane. It
is used as a fuel in the sugar factory boiler. Excess Bagasse finds use as raw
materials in paper manufacturing industry.
2) Molasses
Molasses is a by product of Sugar refining chiefly used for alcohol
production. The entire molasses output is routed to the distillers unit which is
maintained by the organization.
3) Pressmud
Pressmud is the by product generated by cane juice filtration during sugar
manufacture, currently Pressmud is used as a fertilizer in sugarcane cultivation.

AREA OF OPERATION
The area of operation of the society shall be confined to the following
villages of chikodi, Athani, Raibag Talukas of Belgaum District and Jamakhandi
Taluka of Bagalkot District of Karnataka State and villages of shirol, kagal Talukas
of Kolhapur District Maharastra State only.

FLOW CHART OF SUGAR MANAFACTURING

Weighed cane-hauled to crushing yard

21


Cane unloaded on to the carrier

Cane cut into pieces

Crushed in successive mills

Juice treated with line and surplus dry chaff fed into boilers
& Heated as fuel

Subsider

Sucm clear juice

Filter cake used clear evaporates
As manure juice

Concentrated syrup

Surplus syrup to vacuum pans

Boiler to mane cite

Centrifugal

Sugar molasses

Bagging

Dispatching power alcohol portable alcohol

MC KINSEY 7 S MODEL

22


The first three element are strategy, structure and system are
considered as hardware of success, the meet four elements are style, staff, skills
and shared values / super ordinate goals are the software of any company.

1. Structure
The general admission of the company is carried out by the following departments
and these are downwards communication in the company. The information flows
from the top level of management to the lower levels.

23


2. System

System refers to how the production system, distribution, information system
and security system is maintained in its company.

a. Production System

The process of production consisting of input of sugar come and
output of the sugar.

24


b. Distribution System

The distribution system of the products produced is in the following
way:

 Direct sales are made with in the state and outside the state.

 Indirect sales are made outside the country and the depot sales are
also made.

 The producers are also sold directly to the consumers or sold to the
wholesales.

c. Information System

Structure of information system

CHAIRMAN

MANAGING DIRECTOR

SENIOR GENERAL MANAGER

HEAD OF THE DEPARTMENT

25
SECTION


d. Security System

The DKSSK has strict security system.

In the maintenance of accounts after the record have been closed, the
records are kept in the room and closed the room is opened only with
permission of higher authority.
If the visitors went to inter they have to take prior permission with the
authority and after entering they are not suppose to go any dept other then the
department from whom they took the permission.

26


3. Strategy

The way in which a business aims to improve its position in relation to its
competition is embodies in its strategy or the way of doing something in an
organization.

In DKSSK, introduce new technologies and products strategies importance in
time with national objective to improve quality reliability of products there by
attaining the international standards.

4. Skills

Skills here refer to how the training will be given to the employees and
employees. The training will be given in 2 months they are

a) On the job

This is one of the oldest method, under this method, the individual place is on
the regular job and taught the skill necessary to perform that job on the job
training has the advantage of giving first hand knowledge and experience under
the actual working conditions. This training is given to employees.

b) Off the job

In this methods trainee is separated from the job situations and his attention is
focused upon learning the material related to his future job performance. There
is an opportunity for freedom of expression for the trainees.

27


5. Style
The style which is portrayed to outside world is derived from the style and
behaviors exhibits inside organization. The internal style of the organization effects
new staff feels thinks and does their jobs. Therefore an organization is reflection of
its structure.
a) Top down / Bottom up
At the time of policy framing, the style flows from top to bottom. If the
policy has to be framed then the policy has to be taken by upper level & it flows
towards lower level.
But when the opinion of the policy is to known, at that time the style flows
from bottom to up. This is to know the attitudes of the employees about the policy
which is framed by the upper level.
b) Authoritarian / Participative
Only the upper level is having the authority to make the decisions in the
factory.
• Regarding policy matter
Board of management will take the decision in case of policy making.
• Financial matter

If the financial matter is within the amount of Rs 20,000/-, Managing
Director will take the decision. And if financial matter is more than Rs 20,000/-,
then the board will take the decision.

28


6. Staff

Good hard working citizen play essential role in the development of nation. The
employees are responsible for the success or failure of company.

The company has totally 778 workers are working in the company. They are
divided as follows

No. of Workers

1) Permanent worker 285

2) Seasonal workers 183

3) Consolidated worker 288

4) Daily wage worker -

756

Company is paying salary of Rs. 55, 00, 000 per month to its workers.

7. Shared values
Shared values are refers to company policies. In Mysore Sugar
Company limited the following policies are maintained.
 Quality policies

29


 Environment policies
 T.P.M. policies (Total productivity management)

 QUALITY POLICY

Total customer satisfaction is our goal. To achieve this we at
S.D.K.S.S.K.N. committed to produce quality white crystal sugar as per the Indian
sugar standard through continual Improvement in our process, people & stake
holders.

 ENVIRONMENT POLICY

The DKSSK is committed to comply with the requirement of relevant
environment regulation and standards by implementing environment management
system and the continually improve its effectiveness.

 TOTAL PRODUCTIVE MANAGEMENT

The DKSSK is committed in maximizing limited is committed in
maximizing overall plants effectiveness to make Mysore sugar company a world
class company through total productive manufactured by

30


 Promoting automates maintenance culture.
 Involving all employees and building culture.
 Minimizing the losses and reduced the cost.

PROCEDURE FOLLOWED IN SALE OF SUGAR, MOLASSES,
BAGASSE, RECTIFIED SPIRIT AND ARRACK

 SUGAR
Domestic Sale of Sugar
The free sale released by Government of India is sold in the domestic
market through tender system. Sugar tenders will be called periodically from the
various sugar traders. The traders will be called advance about the grade and
quantity being offered in tender over telephone. The sugar tender are some time
will be conducted at Karnataka Sugar Institute, Belgaum and also at this factory
site.
The offers of K.S.I will be present at the time of tenders. The rates will be
collected over telephone from the various parties along with grade and quantity of
sugar required by them. The committee will take decision on allotment of sugar to
the parties who have offered higher price. Karkhana has maintained Sugar Sale
Tender register for recording the offers received and allotment made to the parties.
The parties who have purchased sugar in the tender will be sold against 100%
payment. The rate of domestic price of sugar in the state and the rate of
neighboring sugar factories will be compared while selling the sugar in tenders.

31


Export of sugar
When the international price of sugar is remunerative compared to domestic
price of sugar, we do export some of the stock of sugar. The sugar export is mainly
undertaken through the mercantile export or through EXIM Corporation New
Delhi. The price for export sugar is negotiated taking into account, the prevailing
international sugar price and the price being offered by various sugar factories for
export of sugar. Once the rates are finalized, they will enter into agreement with
the party. Then the party will obtain a release orders from the Chief Director of
sugar, New Delhi and necessary excise bond from the concerned authority. After
completing all the necessary formalities Sugar will be delivered to the party for
export against full payment of the consignment.

After the export shipmen are completed, necessary documents in proof of export
of consignment will be collected from the parties. The same will be submitted to
the excise department.

 Molasses Bagasses
For sale of Molasses and Bagasses we use to make a vide publicity in
the various news papers in Karnataka and Maharashtra and also floating the

32


enquiries to the prospective purchasers in order to get competitive offers and better
price realization.

PRODUCTION PROCESS
The main raw material in the production of sugar is.

• Sugar cane.

The raw materials has to go through following stages before it become
finished product. The process in each stage is as under:

STAGE: 1 SUGAR CANE SUPPLY.

The harvested and transported sugar can received is weighed on the weigh
Bridge. It is unloaded and kept on the feeder tables. It is fed to the cane carrier as
per the requirement.

STAGE: 2 MILLING OF CANE/ EXTRACTION OF JUICE.

This cane is passed through leveler and furzier by making the fine making
the fine chips. It is crushed through series of mills. Imbibitions hot water is added

33


prior to the last mill to extract more possible sugar. The bagasse from the last will
is carried through bagasse conveyor and required quantity of bagasse is fed to the
boilers and excess quality is sent for storage.

STAGE: 3 CLARIFICATION AND EVAPORATIONS.

The juice from all the mills is pumped to juice weighting scale. It is heated
to about 70-77’o c in the juice heaters. It is taken to continuous juice sulphitor in
which milk of lime and sulphur dioxide gas are adjusted to maintain ph 7.0. It is
again heated in juice heaters to about 100 to 105’oc and sent to continuous
clarifier. Clear juice is taken to multiple effect evaporators to concentrate up to
60oc Brix.
The settled mud from the bottom of the clarifier is taken to mud mixer to
mix with beguile and taken to continuous vaccum filer. The filtrate is transferred
to raw juice receiving tank for treatment. The adhered mud on the screens is
scraped and sent out as filter cake, which will be used for composting the manure.

STAGE: 4 CRYSTALLIZATION PURGING AND SUGAR
MANUFACTURE
The concentrated syrup from evaporator is taken to syrup sulpthitor to adjust
Ph 4.8 to 5.2. This is stored in the supply tanks and fed to “A” masscult boiling by
taking B-seed as a footing. It is concentrated to 92o Brix and dropped to the

34


crystallizes. This masscult is purged in the centrifugal machines. The adhered
crystals are scraped to hopper and treated with hot air and cold air blower. It is
sent to grader the size for gradation. This graded sugar is stared in SILOS.
Weighed and bagged sugar bags are transferred to respective godowns for
stocking.

STAGE: 5 FURTHER PROCESS

While purging A- massecuite the A-light molasses received is sent to supply
tanks and fed to ‘A’- molasses is sent to supply tanks and fed to ‘B’- masscult
boiling with b-grain as footing. This is purged in the centrifugals. This sugar is
used as B- seed and excess is melted and fed to ‘A’- masscult’s. White purging
low purity B- Heavy molasses obtained is used for boiling C- masscult with C-
grain as footing.
This C- massecuite is taken for purging in C.F.W. Centrifugal machines.
The final molasses is separated, weighed and sent to storage tanks. C.F.Magma is
sent to melt supply tanks and fed to ‘A’ massecuite boiling. C-light molasses
obtained is tired in supply tanks and used for C- massecuite boiling and C-
graining also.0

FINANCE AND ACCOUNTS DEPARTMENT

35


Finance plays a vital role in the functioning of all industrial units. Finance is
the life blood of the organization. In sugar Industry Finance and accounts
Department has very vital roles. The financial plan basically deals with raising and
proper utilization of funds. The funds can be raised by issue of shares as well as
by raising loans various sources.

The finance manager supported with accountant manager and an accountant
assistant looks finance department

FUNCTIONS:

1. They look after the overall financial requirements of the company.
2. They see that a proper inflow and outflow of income and expenditure
is maintained.
3. Costing and accounting is framed and maintained.
4. Yearly budget is framed so that each department can meet their cash
requirements.
5. Budget prepared is based on sales forecasting, expenses forecasting,
cost forecasting, purchase forecasting etc. which submitted by
respective departments.

Finance Department consists of following sub branches:
1. General Accounts Section
2. Cane Accounts Section
3. Sales Section

36


4. Cash Section
Accounts offices are the head of this department. Accountant sales manager,
and head cashier assist him.

Finance controlling repayment of term loans. Taking loans excepting and
payment call deposits maintains all Accounts. Payment of all bills statutory and
normal bills.

As functioning of each section is summarized follows -

1. GENERAL ACCOUNTS SECTION:
General Accounts are looking after the passing of bills and
payments. Management is also done by General account section and preparation
of financial statements i.e., Balance sheet, profit and loss account is attended by
general accounts section.

2. CANE ACCOUNTS SECTION:
The Bills and payment concerned to procurement of sugar cane, is attended
by cane accounts section. Payments like cane bills, transport and harvesting bills
etc., are prepared and passed in cane accounts section.

3. SALES SECTION:
It is looking after sales of sugar and by products molasses, Rectified spirit
and other scrap materials. It is keeping records of the concerned to all sales
section.

4. CASH SECTION:

37


It is looking after the payments of all general bills and salary bills apart from
cane payment and it is also looking after receipt of cash and check payment.

All accounts are maintained in usual manner.
Various records and books kept are:
a) General ledger
b) Sub ledger
c) Subsidiary
d) Cash book
e) Vouchers.
Each branch prepares trading profits and loss account and Balance as on 31 st
March every year. And the government Auditors audits the accounts.

PURCHASE DEPARTMENT
Purchase Department is headed by purchase officer is responsible for
purchasing the spare parts required for the industry. The storekeeper is responsible
for stacking quality maintaining and issuing to the concerned section.

38


The important functions of the department are:
Purchasing materials
• Calling quotations
• Preparing C.S.Q (comparative statement quotation)
• Placing before meeting for decision
• Placing orders for supply of materials.
• Passing bills to Accounts section for payment.

PURCHASE DEPARTMENT HIERARCHY

PROCEDURE OF PURCHASING

PURCHASE MANAGER

GODOWN SUPERVISORS

STORE KEEPERS

ASSISTANTS

1. DETERMINATION OF PURCHASE BUDGET:

39


In the beginning of the year the purchase manager, with the help of
production planning department, prepare a purchase budget. This budget quads
him in knowing what when he has to buy and also quality, Size and quantity of
purchase.
2. DETERMINATION OF QUANTITY:
The stock availability in each location is determined and compared with the
actual requirements. After receiving the sales order raw materials needed are
scheduled according to these order level. The stock availability in each location is
determined and compared with actual requirements these quantities to be
purchased are determined.

3. PURCHASE ORDER:
After satisfy with the quantity of materials and reputation of the supplier,
purchase order is send to the supplier. Purchase order contain includes the date of
order, description of materials to be supplied made of supply. The companies of
this send to the Head office, another to accounts departments and one copy send to
the storekeeper.

4. RECEIVING AND ISSUING RAW MATERIALS:
The department heads and the storekeeper check the quality and quantity of
raw materials received respectively. The storekeeper enters the details of
purchased materials in the store receipt book store receipt after the details are
entered in the stared receipt book, the materials from the part of inventory. Then
the general manager passes the amount for payment.

40


MECHANICAL DEPARTMENT

This department is headed by General Manager and Chief Engineer.
Maintenance of the sugar machinery and plant over having of the some in off
season and to run all the sugar machinery and their devices properly and smoothly
in the season and to extract cane juice for the cane in respect of less losses of sugar
content in fazes that is more extraction.

MANUFACTURE DEPARTMENT
This department is headed by Chief Chemist. To manufacture the maximum
quality the sugar from the cane juice of superior ISI. grade minimize the sugar
losses in bye-products to maintain the register and calculations of sugar entering in
the house and production submit day to day report of production and recoverable
sugar and excise matters in the season. In the off season maintenance of the
boiling house plant.
WATCH AND WARD
This department is headed by security officer. Security of factory and
control on gates and supervision day and night all over the factory area from
security point of view.,

41


STORES DEPARTMENT
This department is headed by store keeper. To keep the sores and required
materials for the factory section wise in a proper way and to maintain their
registers and big cards of indents (order goods)
FUNCTIONS:
1> Receiving the materials
2> Unfolding the packing.
3> Takes entry in store receipt Book (SRB)
4> Preparing bills after receiving quality memo back.
5> Stacking the materials.
6> Issue of materials to concerned sections as per their indents.

TIME OFFICE DEPARTMENT
This department is headed by head time keeper. To maintain the register of
attendance of the factory staff to prepare the pay sheets and leave records and
personal services register of the staff.

ADMINISTRATIVE OFFICE
The office time is from 10.30 to 5.30pm
The lunch break is from 1.30 to 2.00 pm

FACTORY PREMISES
Inside: from 8:30am to 5:30pm

42


The lunch break is from 12:30 to 1:30 pm

AGRICULTURAL DEPARTMENT
This department is headed by Cane development officer. Cane procurement,
harvesting (to reap) and development of cane. To make the provision of proper
seed of cane to the cultivators, soil testing and proper guideline for measuring etc.

CIVIL DEPARTMENT
This department is headed by civil engineer. Construction of the roads for
proper transport of cane in the area, civil works of the factory, maintenance of the
factory building etc.

LABOUR WELFARE
This department is headed by labour welfare officer. To look into the
welfare activities of the worker and solve the labour problems. The factory
provides all the necessary facilities. The purpose of providing welfare amenities is
to facilitate the development of total personality of working class for physical,
mental, psychological, cultural, social, moral and intellectual development the
factory provides well planned residential accommodation, medical facilities,
educational facilities, drinking and washing water, canteen, cycle stand, library etc.
In addition, the factory has following non-statutory schemes for workers welfare.
Consumers society, uniforms to watchman production and engineering workers
etc.

43


OBJECTIVES
1) To secure for the worker fair wage.

2) To improve the working condition and express share in the increased
profitability.

3) To ensure the workers security of employment and protect larger interest
of the society.

4) To establish relationship between management and employees.

FUNCTION:
1) To promote harmonious relation between the factory management and
workers.

2) To bring to the notice of board of directors grievances of workers and to
act as a liaison officer between management and labour.

3) To study and understand the point of view of labour in order to help the
management to shape and formulate labour welfare policies.

4) To advice and assist the management in fulfillment of statutory and other
obligations.

5) To encourage the formation of work joint production councils, co
operative societies and welfare committee and supervise their work.

6) To secure the provision of amentias such as canteen, washing, first aid,
shelter, rest rooms, launch rooms etc.

44


7) To suggest the measure which will serve to raise the standard of living of
workers and in general to promote their well being.

SWOT- ANALYSIS-

I have found some strengths and weaknesses, opportunities to the factory
during my training period at this plant. Factory is facing some problems regarding
sale of sugar under government restriction. How much government permits to sell
the sugar that much only factory has to sell not more than that it sells through
quotations. It covers small area only. Even there is no particular system for
appointment of employees.

STRENGHTS -
• The major strength is crushing capacity and highest chimney and
packing of bags per day.
• It is producing own electricity it reduces the cost of electric bills.
• It also sells electricity to the KPTCL.
• This factory has its own trucks and some other vehicles, which
reduces transportation charges.
• They have foreign customers too.
• Good Administration
• Healthy management labour relations
• Superior product quality

45


• Skilled and efficient staff and labour force
• Maximum profitability due to various by products
• Well structured distribution channel.
• Improved infrastructure.
• In total this factory has a very good organization structure

WEAKNESS-
• It does not have separate HR department, so the selection of employees is
not satisfactory and it creates lot of burden on labour welfare officer.
• Too much stock of sugar in godown.
• They purchased two wheeler vehicles and trucks on loan. During off-season
they remain idle, but the interest of the loan is always shooting up.
• They don’t have particular employee for particular work. Anybody can do
any work assigned by their respective superiors.
• High cost of production.
• No control on minimizing the losses in process.
• Company can’t sell as much as sugar in the market at any specific time, as
sugar release mechanism is controlled by government of India.

OPPORTUNITIES-
• It is located in the best area. Here all the resources are available in less cost.

46


• Offer replacement of machinery to new machinery for good running of
factory.
• Present production performance per tone is excellent.
• Non-establishment of the programs to motivate and develop effective
manpower.
• Restricted market opportunities shirked a better price for finished products.
• Reducing the overhead expenditure.
• To provide comfort and convince to employees for doing the work.
• To facilitate the smooth running of the manufacturing process.
THREATS-
The production comes under hazardous activities, competition are
updating latest technology.

• Due to uncertain rainfall procurement of raw material is being affected.
• High competition in procurement of raw material.
• The main raw material sugarcane may not sufficiently be available in future.
• Change in various government policies.

CHAPTER- III

47


DESIGN OF THE STUDY

3.1 Statement of the problem
Financial analysis being an integral part of overall corporate
management and it is one of the powerful tools of financial performance analysis.
The analysis of financial statement of SRSL is done in order to know the
company’s financial position.

3.2 Objectives of the study
For the purpose of any research, objective is must. It shows the
direction with which the task can be accomplished.
The specific objectives of the study are
a) To determine the operational efficiency of the company using ratio analysis.
b) To know the changes in financial statements for the past 3 years using trend
analysis.
c) To conduct cash and fund flow statement for 2007- 2008
d) To identify the financial strength and weakness that the firm might have.

3.3 Scope of the study
The scope of the study is to find out how assets and liabilities are
maintained. It is done through the Balance sheet of the company, for the periods,
2004-2005, 2005-2006, 2006-2007 and 2007-2008.

48


3.4 Methodology
This project is an analytical research where in the researcher has to
use the available facts as information and analyze these to make a critical
evaluation of materials. This is also an applied research with an aim to find a
solution for immediate problems facing industry or the firm.
The methodologies followed in the analysis of the financial
statement are comparative statement, Common size statement, Trend analysis, ratio
analysis, fund flow analysis and cash flow analysis.

3.5 Purpose of the study
 The purpose of doing this project is mainly to make a thorough study of the
financial analysis of the company.
 To access the company’s trends for the last four years with regard to
liquidity performance.
 The purpose also includes assessing the impact of financial analysis on
liquidity strength of the company

3.6 Sources of data collection
1. Primary data: The data required for the project was collected minor
through primary data. That is through interviewing & discussion with
concerned authorities in the company.
2. Secondary data: The major source of data for this project was collected
from annual reports, profit and loss account, manuals & some more
information collected through the internet.

49


Plan of analysis
This study is conducted with the help of statistics figures &
techniques like Graphs & charts for better comparison and interpretation.

Tools and techniques used for analysis
The following are the methods of financial analysis used in general.
1. Comparative financial statements
2. Common-size financial statements
3. Trend percentage analysis
4. ratio analysis
5. fund flow analysis
6. cash flow analysis

3.7 Limitations

1. The study is done only on the Balance sheet and Profit and loss account.
1. Study is based on information provided by the company.

CHAPTER- IV
FINANCIAL ANALYSIS

50


Financial analysis is the selection, evaluation and interpretation of
financial data, along with other pertinent information, to assist in investment and
financial decision- making. Financial analysis may be used internally to evaluate
issues such as employee performance, the efficiency of operations, and credit
policies, and externally to evaluate potential investments and the credit-worthiness
of borrowers, among other things.
The analyst draws the financial data needed in financial analysis from many
sources. The primary source is the data provided by the firm itself in its annual
report and required disclosures. The annual report comprises the income
statements, the balance sheet, and the statement of cash flows. Certain businesses
are required by securities law to disclose additional information.
The financial analyst must select the pertinent information, analyze it, and
interpret the analysis, enabling judgments on the current and future financial
condition and operating performance of the firm. In this reading, we introduce you
to financial ratios------ the tool of financial analysis. In financial ratio analysis we
select the relevant information---- primarily the financial statement data--- and
evaluate it. We show how to incorporate market data and economic data in the
analysis and interpretation of financial ratios and we show how to interpret
financial ratio analysis.

4.1 FINANCIAL STATEMENTS

51


The Financial statements are the end product of the financial accounting
process. The financial statements are nothing but the financial information
presented in concise and capsule form, and the financial information is the
information relating to the financial position of any firm. Therefore the financial
statements are the depiction of the financial position of firm.
The basic source which provides the financial information is the annual
report of the company, which is presented by the company to its shareholders at the
annual general meeting. This annual report contains the chairman’s report, the
balance sheet, the income statement , the auditors report together with number of
schedules, annexure etc. Though the presentation of annual report is a statutory
requirement under the companies Act of 1956. Every firm prepares the following
financial statement.
1. The Balance Sheet
2. The Income Statement
4.2 BALANCE SHEET
The Balance sheet is regarded as the most significant and basic financial
statement of any firm. The Balance sheet is prepared by a firm to present a
summery of financial position at a given point of time, usually at the end of a
financial year. It shows the statement of affairs of the firm and the contribution of
the owners of the firm. The BS in fact balances the assets of firm against its
financing i.e. the total value of the assets must be equal to the total claims against
the firm and this can be stated as

Total assets = Total claims (Debt + shareholders)

52


= Liabilities + shareholders equity
The Balance sheet includes:
1. Assets
2. Liabilities
• ASSETS
Assets are the monetary value of the resources that owned by the
concern at a measurable cost. A resource is valuable if it is in form of the cash or
convertible into cash or expected to benefit in the future operation of the business,
an asset includes a) physical resources like land, machinery, plant, building, stocks
etc. b) non physical resources like cash, securities, accounts receivables etc.)
Intangible resources like goodwill, trademark and d) future benefit like expenses
paid in advance. Some time some fictitious assets also show like as incorporation
cost of the company discount on issue of debentures etc.
• Fixed assets
• Current assets

Fixed assets
Fixed assets are held in business for use not for sale. These assets provide long-
term benefits to the concern. Fixed assets will be higher in manufacturing concern.
The fixed assets involves – Tangible assets – includes land, building, machinery,
equipment, furniture, fixtures etc. these assets are shown the balance sheet
deducting the depreciation there on.

a) Intangible fixed assets:

53


These assets include the patents, copyright, trademarks, trade name
goodwill etc.
b) Long term investment:
These assets represent the firm’s long term investments like
investments in share, investments in debenture and bonds of other firms or
government bodies.
c) Other non current assets:
These assets are those which represent the deferred charges etc.
d) Current assets:
Current assets consist of cash and other sources of cash which get
converted into cash during the period of operating cycle of the firm. These assets
are owned for a short period of time. The other name of the current assets includes
cash, debtors, bills receivables, stock of work in progress, bank balance, advance
payment of expenses like taxes and insurance, loan and advances to customers and
employees.

• LIABILITIES
Liabilities are the obligations of the concern that is to pay the outsiders.

CONTENS OF ANNUAL REPORT:
The Shree Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit, Chikodi
annual report for the year 2007-2008 contains
a) Report of the board of directors
b) Auditors report

54


c) Accounting policies

• Report of the board of directors
Directors report provides a summery of profits made and appropriated
by the company and other relevant information such as industrial relations,
investments, financing, reorganization, appointment of auditors and directors
etc. the report of the SRSL board of directors gives a brief account of the
company profit and dividend during the 2005-2006.

• Auditors report
Auditors report to shareholders verifies whether the balance sheet and
profit and loss account provides a true and fair view of the state of a
company’s affairs. Auditors should obtain all necessary informations and
explanations and ensure that proper books of accounts as required by law
have been prepared by the company.

• Accounting policies
Companies adopt different accounting policies for preparing their balance
sheet and profit and loss account. Annual reports incorporate major accounting
policies as well as changes made in current year.

4.3 INCOME STATEMENTS

55


Income statement is, also known as the profit and loss account or the
statement of earnings, summarizes the revenues and expenses of the firm for an
accounting period. It gives a detail of sources of income and expenses and thus it
provides the summery of the operating results of the firm for a specific period. It
matches the revenues with the costs that are incurred in generating the revenues,
and shows the difference between the two as the net profit made or net loss
incurred during the period. The IS shows the results of the operations of the firm
during the period. The IS therefore, is a flow report against the BS which is a stock
report or a status report. The IS depicts the earning capacity of the firm during the
period under consideration.
Profit and loss account presents the summery of revenues, expenses and
net income of a firm. It serves as a measure of the firm’s profitability. Revenues
are amount. The main content of the income statement are:
 Net sales
 Cost of goods sold
 Gross profit
 Operating expenses
 Operating income
 Non operating expenses
 Non operating income
 Profit
 Loss

56


4.4 ANALYSIS OF FINANCIAL STATEMENT
AFS refers to the process of the critical examination of the financial
information contained in the financial statement in order to understand and make
decisions regarding the operations of the firm. The AFS is basically a study of the
relationship among various financial facts and figures as given in a set of financial
statements. The basic financial statements i.e. the BS and IS, already discussed in
the preceding section contain a whole lot of historical data.
It is very important to analysis the financial statement to know the
different factors to see are behind the change in the figures of the financial
statement. Analysis of financial statements contains comparison between different
figures of different periods, comparison.
Process of the analysis of the financial statements:
Financial statement analysis contains the following steps:
 Analysis of all transaction one by one to determine the accounts
to credited and debited evaluate all transactions to ascertain the
amount involved in that.
 Analysis of recording of the transactions in the journal,
summaries that in ledger and preparation of trial balance.
 Preparation of final accounts or financial statements.

 Get different information by analyzing these statements and
provide the information to the interested parties like the bankers,
investors, creditors and managerial personals.

57


4.5 Significance of the financial statement analysis:

The analysis of financial statement is very important for the different
parties related to the concern i.e. internal users and external users. The
significance of the financial statement analysis will be clear from the
following points:-
• This analysis simplifies, summarizes and present the accounting figures
in that way that they can provide more and more information to the
different parties for taking the valuable decisions.
• Financial statement analysis is provide in valuable aid to management
for complete the basic functions like forecasting, planning, directing, co-
ordaining and control.
• This analysis diagnose the financial health of the concern by evaluating
different facts of the business i.e. liquidity, solvency, profitability,
capital gearing etc.
• The financial statement analysis involves the different ways of analysis
and interpretation of the financial statements. So anyone can take the
decision according to his/her requirement.
• The analysis of financial statements provides important and useful
information to the management as well as other users. If this analysis
does not make then it is difficult to take decision from the financial
statements.

58


TECHNIQUES/TOOLS OF THE AFS
The methodology adopted for the AFS may be varying from one situation to
another. However, the following are some of the common techniques of the AFS:
1. Comparative financial statements
2. Common-size financial statements
3. Trend percentage analysis
4. Ratio analysis
5. Fund flow analysis
6. Cash flow analysis
The ratio analysis is the most common, comprehensive and powerful tool of
the AFS.

4.6 STATEMENT OF CHANGES IN FINANCIAL POSITION
Two basic financial statements of importance to owners, management and
investors are Balance sheet and profit and loss account. Balance sheet gives a
summery of firm’s resources(assets) and obligations ( liabilities and owners equity)
at a point of time, the profit and loss account reflects the result of the business
operations by summarizing revenues and expenses during a period of time. Both
these statement fail to explain the changes in assets and liabilities and owners
equity. This statement is intended to summaries.
• Changes in assets and liabilities resulting from financial and investment
transactions during the period, as well as those changes which resulted
due to change in owner’s equity.

59


• The statement of changes in financial position deals with the flow of
funds during the year i.e., the funds coming in and going out of the firm.
It summarizes the sources from where the funds might have been
arranged by the firm and the uses for which the funds might have been
used by the firm during the year. The following are the important
concepts of funds.
• The term funds may be taken to refer to cash only. This is a general
notation of the term funds and is used for expressing the liquidity of a
firm. Therefore, a SCFP based on this concept of funds will report and
include only those transaction which are affecting the cash balance, such
SCFP will be just a summery of the cash transactions. Hence, non-
monetary transaction such as purchase of fixed assets by issue of
debenture will not be reported in a SCFP.
• The term funds may also be used to denote the net working capital of the
firm. The net working is the difference between the total current assets
and total current liabilities. Since, cash is only one of the several current
assets; this view of the term funds is broader than the preceding concept.
A SCFP prepared on the basis of the net working capital concept of funds
will include all those transactions which affect the net working capital of
the firm. So, any transaction affecting current assets or current liabilities
will find place in the SCFP. However, there may be different transaction
which do not affect the net working capital and therefore, will be outside
the scope of SCFP.

60


CHAPTER-V
DATA ANALYSIS AND INTERPRETATION

5.1 COMPARATIVE FINANCIAL STATEMENL (CFS)

In CFS, two or more BS and/ or the IS of a firm are presented
simultaneously in columnar form. The financial data for two or more years are
placed and presented in adjacent columns and thereby the financial data is
provided a times perspective in order to facilitate periodic comparison.

The preparation of the CFS is based on the premise that a statement covering
a period of a number of years is more meaningful and significant than for a single
year only, and that the financial statement for one period represent only 1 phase of
the long and continuous history of the firm.
The CFS can be prepared for both the BS and the IS.

5.1 a) COMPARATIVE BALANCE SHEET (CBS)
The CBS shows the different assets and liabilities of the firm on different
dates to make comparisons of absolute balances and also of changes if any, from
one date of another. The CBS may be helpful in analyzing and evaluating the
financial position of the firm over a period of number of years.

61


Table No. 1
KARKHANE NIYAMIT, CHIKODI
Comparative Balance Sheet
(Amts in crores)
Particulars 2006-2007 2007-2008 INCREASE/ INCREASE /
DECREASE
DECREASE(Amt) (%tage)
LIABILITIES -
Share Capital 132.19 133.66 1.47 1.12
Reserves & Surpluses 676.80 757.90 81.10 11.99
Term loan 409.49 502.83 93.34 22.80
Working capital loan 912.46 717.85 (194.61) 21.33
Bank O. D. payable 8.40 12.83 4.43 52.74
Statutory and other deposits 683.18 666.17 (17.01) 2.49
Suspense, sundries & other 555.99 471.07 (84.92) 15.28
Total 3378.51 3262.31 (116.20) 3.44
ASSETS -
Fixed assets 1296.30 1307.44 11.14 0.86
Investments 2.62 16.73 14.11 583.55
Current assets 1242.47 1039.87 (202.6) 16.31
Loans and advances 48.55 101.44 52.89 108.94
Debtors 272.93 274.33 1.40 0.52
Cash in hand 0.32 0.30 (0.02) 6.25
Cash at bank 158.33 132.40 (25.93) 16.38
Profit and loss account 356.99 389.80 32.81 9.19
Total 3378.51 3262.31 (116.20) 3.44

INTERPRETATION

Current assets
The investments in the current assets are low and it has decreasing trend
over the period under study. The current assets have decreased by Rs. 202.60

62


(crores) i.e., Rs.1242.47 in 2007 and Rs.1039.87 in 2008. So it is significantly
effects on the liquidity position of the company and it also decrease the working
capital of the company.
Net fixed assets
The net fixed assets increased by 11.14(crores) i.e., almost 1307.44 in 2008
when composed to 2007. So it is increased the financial performance of the
company.
Investments
There is change in investments for comparing the previous year and the
current year. For previous year it will be Rs. 2.62 (crores) and for current year it
will be Rs. 16.73 (crores).
Current liabilities
Current liabilities include current liabilities and provisions. Current
liabilities and provisions decreased by Rs.275.10(crores) i.e., about Rs.1476.85 in
2007 when composed to Rs.1201.75 in 2008.
. Reserve and surplus
The Reserve and Surplus has increased by Rs.81.10(crores) i.e, about
Rs.676.80 in 2007 to Rs.757.90 in 2008.

5.1 b) COMPARATIVE INCOME STATEMENT (CIS)
A CIS shows the figure of different items of the IS of the firm in
absolute terms, the absolute changes from one period to another and if desired, the
changes in percentage form. The CIS is helpful in deriving meaningful conclusions
regarding changes in sales volume, cost of goods sold, different expenses items etc.

63


from the CIS, a financial analyst can quickly ascertain whether sales are increasing
or decreasing and by how much amount or by how much percentage.
Table No. 2
COMPARATIVE INCOME STATEMENT
(Amounts in crores)
2006-2007 2007-2008 Increase/decrease Increase/decrease
Details AMOUNT (%tage)
Income
Sales (Revenues) 1640.81 1773.10 132.29 8.07
Other Income 10.48 3.25 7.23 68.99
Total 1651.29 1776.35 125.06 7.58
Expenditure
Cost of goods sold 1517.95 1624.81 106.86 7.04
Gross Profit 133.34 151.54 18.2 13.65
Selling and Administration
Expense(operating exp) 40.23 94.75 54.52 135.52
Operating income 42.35 1.36 40.99 96.79
Non operating exp 124.37 161.62 37.25 29.95
Non operating income 7.13 70.66 63.53 891.03
Loss 18.22 32.81 14.59 80.08

INTERPRETATION

On the basis of comparative income statement it can be said that gross profit
for the year 2006 has increased by Rs.18.20 over the profit for the year 2008. The
Net sales during the same period have increased by Rs.132.29. The cost of goods
sold increased by Rs.106.86.

64


The selling and Administrative expenses increased by 135.52% Non
operating income for the year 2008 is increased by 891.03%. The non operating
expense is increased by 29.95% during the year 2008. The Net loss is increased
80.08%.

5.2 COMMON SIZE STATEMENT
The CSS represents the relationship of different items of a financial
statement with some common item by expressing each item as a percentage of the
common item. In common size Balance sheet, each item of the Balance sheet is
stated is stated as a percentage of the total of the Balance sheet. Similarly in
common size income statement, each item is stated as percentage of the net sales.
The percentage for different items is computed by dividing the absolute amount of
that item by the common base and then multiplying by 100. The percentage so
calculated can be easily compared with the corresponding percentages in some
other period.

Table No. 3
COMMON SIZE INCOME STATEMENT
(Amts in crores)

Particulars 2005 2006 2007 2008

65


Net sales 100 100 100 100
less-cost of goods
sold 79.08 96.78 92.52 91.64
G.P. 20.89 3.22 7.49 8.37
less-selling
&administrative exp 24.25 11.28 2.46 5.35
Add-operating
income 21.13 1.30 2.59 0.08
Less-Non operating
exp 15.45 6.93 7.58 9.12
Add-Non operating
income 0.24 0.79 0.44 3.99
Profit 2.56 0.48
Loss 12.90 2.04

Table No. 4
COMMON SIZE BALANCE SHEET
(Amts in crores)
Particulars 2004-05 2005-06 2006-07 2007-08
LIABILITIES -
Share Capital 3.91 3.44 3.92 4.10
Reserves & Surpluses 16.74 18.14 20.02 23.23
Term loan 19.25 16.43 12.12 15.42

66


Working capital loan 22.75 25.23 27.01 22.01
Bank O. D. payable 0.96 0.18 0.25 0.40
Statutory and other deposits 27.24 23.73 20.23 20.41
Suspense, sundries & other 9.15 12.85 16.45 14.43
Total 100 100 100 100
ASSETS -
Fixed assets 40.18 39.31 38.37 40.08
Investments 0.05 0.07 0.08 0.52
Current assets 45.71 48.67 36.78 3.11
Loans and advances 1.80 1.55 1.44 31.86
Debtors 8.79 7.95 8.08 8.41
Cash in hand 0.05 0.04 0.01 0.01
Cash at bank 2.97 1.97 4.67 4.06
Other assets 0.45 0.44 - -
Profit and loss account - - 10.57 11.95
Total 100 100 100 100

5.3 TREND PERCENTAGE ANALYSIS
The TPA is a technique of studying several financial statements
over a series of years. In TPA the trend percentage are calculated for each item by
taking the figure of that item for some base year as RS. 100. So, the trend
percentage is the percentage relationship which each item of different years bears
to the same item in the base year. Any year may be taken as the base year, but
generally the starting/initial year is taken as the base year. So, each item for base
year is taken as 100and then the same item for other years is expressed as a
percentage of the base year.
Table No. 5
TREND ANALYSIS INCOME STATEMENT

67


(Amounts in crores)
Trend percentage (%)
Particulars 2006 2007 2008
Sales 100 120.17 129.86
Less- cost of sales 100 114.87 122.96
Gross profit 100 279.49 337.33
Less- admin & selling exp. 100 26.14 61.56
Add- operating income 100 238.73 7.67
Less- Non operating exp 100 135.53 59.54
Add- Non operating income 100 0.33 57.13
Profit 100 66.64
Loss 100 660.38

Table No. 6
TREND ANALYASIS BALANCE SHEET
(Amounts in crores)
Particulars 2005-2006 2006-07 2007-08
LIABILITIES -
Share Capital 100 1206.93 1220.30
Reserves & Surpluses 100 117.22 131.27
Term loan 100 96.13 78.28
Working capital loan 100 113.62 89.39
Bank O. D. payable 100 139.07 212.41
Statutory and other deposits 100 90.44 88.19
Suspense, sundries & other 100 135.88 115.12
Total 100 106.12 102.47
ASSETS -
Fixed assets 100 103.60 104.50
Investments 100 103.98 666.53
Current assets 100 80.18 67.10
Loans and advances 100 98.41 205.63
Debtors 100 107.83 108.38
Cash in hand 100 28.31 26.54
Cash at bank 100 251.79 210.55
Other assets 100 - -
Profit and loss account 100 - -

68


Total 100 106.12 102.47

INTERPRETATION:

Current Assets and Current Liabilities
Current assets and current liabilities have declined in current year. It
affected the liquidity of a company. Current assets are 67.10% in 2008 and Current
Liabilities are 128.08% in 2008.
Net fixed assets
The net fixed assets increased in 2008 by 104.50% and 103.60 in 2007. It
shows the company is more invested in fixed assets.
Investments
There is change in investments for comparing the base year and the current
year. For previous year it will be 103.98% and for current year it will be 666.53%.

5.4 RATIO ANALYSIS
MEANING
Ratio analysis is a widely-used tool of financial analysis. It is defined as the
systematic use of ratio to interpret the financial statements to that the strength and
weaknesses of a firm as well as its historical performance and current financial
condition can be determined. A ratio is relationship expressed in mathematical
terms between two individual and groups of figures connected with each other in
some logical manner. The relationship between two or more accounting
figures/groups is called financial ratio. A financial ratio helps to summarize a large

69


mass of financial data into a concise form and to make meaningful interpretation
and conclusion about the performance and positions of a firm.
TYPES OF RATIO
Ratio can be classified into four broad groups:
• LIQUIDITY RATIOS
• LEVERAGE RATIOS
• ACTIVITY RATIOS
• PROFITABILITY RATIOS
LIQUIDITY RATIO
Liquidity ratio measures the ability of the firm to meet its current obligation.
In fact, analysis of liquidity needs the preparation of cash budgets and cash and
fund flow statements; but liquidity ratio, by establishing a relationship between
cash and other current assets to current obligation, provide a quick measure of
liquidity.

The most common ratios which indicate the extent of liquidity are:
Current ratio
Quick ratio
• Current ratio
The current ratio is calculated by dividing current assets by current liabilities:

Current ratio = current assets
_______________________

70


Current liabilities
Current assets include cash and those assets which can be converted into cash
within a year, such as marketable securities, debtors and inventories. The standard
ratio is 2:1.

Table No. 7
CHART SHOWING CURRENT ASSETS
TO CURENT LIABILITIES
2004- 2005- 2006- 2007-
Details 05 06 07 08
1. CURRENT
RATIO 1.51 1.25 1.41 1.21
1402.8 1521.0 1673.7
Current Assets 8 7 4 1446.92
1216.5 1472.9
Current Liabilities 932.47 0 5 1200.52

71


Chart No. 1

CURRENT RATIO

3500
3000
2500
2000
1500
Current Liabilities
1000
Current Assets
500
0
2004- 2005- 2006- 2007-
05 06 07 08
YEAR

INTERPRETATION
As a matter of policy or as referred to as banker’s rule of thumb, the
current ratio of 2:1 is considered to be satisfactory. The analysis is proved that the
current ratio position of the DKSSK is not fully satisfactory. That is 1.51 times in
2005, 1.25 times in 2006, 1.14 times in 2007, 1.21 times in 2008.

• Quick ratio
Quick ratio establishes a relationship between quick, or liquid, assets and
current liabilities. An asset is liquid if it can be converted into cash immediately or
reasonably soon without a loss of value. Inventories are considered to be less

72

A project report on cash and fund flow analysis and ratio analysis of dksskn, chikodi

A project report on cash and fund flow analysis and ratio analysis of dksskn, chikodi

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Ähnlich wie A project report on cash and fund flow analysis and ratio analysis of dksskn, chikodi

Ähnlich wie A project report on cash and fund flow analysis and ratio analysis of dksskn, chikodi (20)

Mehr von Babasab Patil

Mehr von Babasab Patil (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

A project report on cash and fund flow analysis and ratio analysis of dksskn, chikodi