PROJECT.docx

Shivaji University, Kolhapur.

Shivaji University, Kolhapur.

INTRODUCTION OF THE STUDY AND METHODOLOGY:-

Introduction of the StudyAs earlier mentioned in the introduction of the study, Financial Position Analysis is the ultimate priority of every company to know the actual financial position of the company & how to improve it. The common size statement and ratio analysis is used to measure the financial position of the company.

Objective of the Study To understand the concepts of common size statement & ratio analysis. To study the various aspects of financial management. To study the overall financial performance of the company. To know the profit position of the company. To suggest the meaningful & constructive measures based on data analysis & interpretation.

Importance of the Study The focus of financial analysis is on key figures in the financial statements & the significant relationship that exists between them. The analysis of financial statements is a process of evaluating the relationship between component parts of financial statements to obtain a better understanding of the firms position & performance. The ratio analysis helps in building the economic viability of factory in all departments. In brief, financial analysis is the process of selection, relation & evaluation.Scope of the StudyThe scope of present study is limited to financial analysis of Shri. Datta Sahakari Shetkari Sakhar Karkhana Limited, Shirol. The data collected & presented covering three years information that is 2010-2011, 2011-2012, 2012-2013.

Limitation of the Study

Study is limited to the information provided regarding the finance statement of 3 years. Reliability & accuracy of calculation depends very much on the information found in the balance sheet & its reliability. The study is entirely based on the secondary data that is the financial statement or industry annual report published by industry. The study is limited only to Shri. Datta Shetkari Sahakari Sakhar Karkhana Ltd, Shiorl.

Research Methodology

Collection of data: Data collected through two sources i.e. Primary data and Secondary Data.1. Primary data:The primary data are those which are collected afresh and for first time, thus happen to be original in character. The primary data is collected through: Questionnaire Observation

b) Secondary Data:The secondary data, on the other hand, are those which have already been collected by someone else and which have already been passed through the statistical process. The secondary data is collected through: Records Organization website. For this project, the sources of secondary data used are factory annual report Balance Sheet & Profit & Loss A/c to calculate overall calculations.

Sample Size:The data collected & presented covering three years information that is 2010-2011, 2011-2012, 2012-2013s profit & loss a/c & balance sheet, which show the whole information of the companys financial position.

Methods & technique of Interpretation & Analysis Data:For analysis and interpretation of data used statistical techniques are:

Tabulation Percentage Graph

THEORITICAL BACKGROUND:-

Introduction of the Financial Position Analysis Financial analysis is the art of recording, classifying & summarizing in a significant manner in term of money transaction.The balance sheet & income statement or profit & loss a/c are the traditional basic financial statement of a business enterprise. A balance sheet shows the financial position of the firm as at the last day of the accounting period. Revenues recorded in income statement do not reflect cash inflows as the debtors may pay later. Likewise, some of the expenses shown in income statement may be non cash expenses (depreciation) &some may not be paid in full (goods purchased on credit, salaries payable etc.) Thus the periods profit &loss dose not evidently provide information about the investing & financing activities of the firm during the accounting period.Balance sheet & profit &loss provide some extremely useful information to the extent that the balance sheet mirrors the financial position on a particular date in terms of the structure of assets, liabilities & owners equity, & so on & the profit &loss a/c shows the results of operation during the year. Thus the financial statements provide a summarized view of the financial position & operations of the firm. Other useful way of analyzing financial statements is to convert them into percentages. When this method is pursued, the income statement exhibits each expense item or group of expense items as a percentage of net sales are taken at 100%. Similarly, each individual asset & liability classification is shown as a percentage of total assets & liabilities respectively. Statements prepared in this way are referred to as common size statement.

Meaning of financial analysis One of the most common ways of analyzing financial data is to calculate ratios from the data to compare against those of other companies or against the company's own historical performance. For example, return on assets is a common ratio used to determine how efficient a company is at using its assets and as a measure of profitability. This ratio could be calculated for several similar companies and compared as part of a larger analysis.

Definition of financial analysis Financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a specific company, the financial analyst will often focus on the income statement, balance sheet, and cash flow statement.To the study of financial position analysis using the Common Size Statement & Ratio Analysis there is discussed below:

Financial Position Analysis Common Size Statement Ratio Analysis

Common size statement Nature of common size statement The common-size statement is a financial document that is often utilized as a quick and easy reference for the finances of a business. Unlike balance sheets and other financial statements, the common-size statement does not reflect exact figures for each line item. Instead, the structure of the common size statement uses a common base figure, and assigns a percentage of that figure to each line item or category reflected on the document. The use of a common-size statement can make it possible to quickly identify areas that may be utilizing more of the operating capital than is practical at the time, and allow budgetary changes to be implemented to correct the situation. The common size statement can also be a helpful tool in comparing the financial structures and operation strategies of two different companies. The use of percentages in the common size statements removes the issue of which company generates more revenue, and brings the focus on how the revenue is utilized within each of the two businesses. Often, the use of a common-size statement in this manner can help to identify areas where each company is utilizing resources efficiently, as well as areas where there is room for improvement. Introduction of common size statement Financial statements are mainly prepared for decision making purpose. But the information as is provided in the financial statements is not adequately helpful in drawing a meaningful conclusion. Thus, an effective analysis and interpretation of financial statements is required. Analysis means establishing a meaningful relationship between various items of the two financial statements with each other in such a way that a conclusion is drawn. By financial statements we mean two statements:

Profit Balance sheet or position statement These are prepared at the end of the given period of time. They are the indicators of profitability & financial soundness of the business concern. The term financial analysis is also known as analysis & interpretation of financial statements. It refers to the establishing meaningful relationship between various items of the two statements that is income statement &position statement. It determines financial strength & weaknesses of the firm. Analysis of financial statement is an attempt to assess the efficiency & performance of an enterprise. Thus the analysis & interpretation of financial statements is very essentials to measure the efficiency, profitability, financial soundness & future prospects of the business units. Types of financial statement are Comparative statement Common size statement Trend analysis The main objective of a business is to earn a satisfactory return on the funds invested in it. Financial analysis helps in ascertaining whether adequate profits are being. Definition of common size statement A company financial statement that displays all items as percentages of a common base figure. This type of financial statement allows for easy analysis between companies or between time periods of a company.Uses of common size statementThe values on the common size statement are expressed as percentages of a statement component such as revenue. While most firms don't report their statements in common size, it is beneficial to compute if you want to analyze two or more companies of differing size against each other.

A common-size financial statement is simply one that is created to display line items on a statement as a percentage of one selected or common figure. Creating common-size financial statements makes it easier to analyze a company over time and compare it with peers. Using common-size financial statements helps investors spot trends that a raw financial statement may not uncover.

Advantages of common size statement (1) It reveals Sources and Application of Funds in a nutshell which help in taking decision. (2) If common size statements of 2 or more years are compared it indicate the changing proportion of various components of Assets, Liabilities, Cost, Net Sale & Profit. (3) When Inter Firm Comparison is made with the help of Common size statement it helps in doing corporate evaluation and Ranking.

Limitations of common size statementThe interpretation of common size statement is subject to many of the limitations to the accounting data used to construct them. For exampleDifferent accounting policies may be used by different firms or within same firm at different points in time. Adjustments should be made for such differences. Different firms may use different accounting calendars, so the accounting periods may not be directly comparable.

Ratio analysis Nature of Ratio AnalysisIt is a technique of analysis and interpretation of financial statements. Ratio analysis helps in making decisions as it helps establishing relationship between various ratios and interpret thereon. Ratio analysis helps analysts to make quantitative judgment about the financial position and performance of the firm. Ratio analysis involves following steps:1. Relevant data selection from the financial statements related to the objectives of the analysis.2. Calculation of required ratios from the data and presenting them either in pure ratio form or in percentage.3. Comparison of derived different ratios with:i. The ratio of the same concern over a period of years to know upward or downward trend or static position to help in estimating the future, orii. The ratios of another firm in same line, oriii. The ratios of projected financial statements, oriv. The ratios of industry average, orv. The predetermined standards, orvi. The ratios between the departments of the same concern assessing either the financial position or the profitability or both.4. Interpretation of the ratioRatio analysis uses financial report and data and summarizes the key relationship in order to appraise financial performance. The effectiveness will be greatly improved when trends are identified, comparative ratios are available and inter-related ratios are preparedIntroduction of ratio analysisFinancial ratio analysis is a useful technique to measure, compare, and evaluate the financial condition and performance of a firm. Ratio analysis enables a credit manager to spot trends in a firm's financial performance, and to compare its performance and financial condition with the average performance of similar businesses in the same industry. Financial ratio analysis is used by credit professionals to answer these questions about firms:Is the business profitable?Can the business pay its bills on time?How is the business financed?How does the company financial performance this year compare to last year?How does the customer's performance compare with its competitors?How does the customer's performance compare to the industry norms? Financial ratio analysis is a useful tool for determining a customer's overall financial condition. Industry-wide financial ratios are published by a variety of sources, including Dun & Bradstreet. Financial ratios are useful for making quick comparisons. Banks and trade creditors use financial ratio analysis to help them decide whether a business is a good credit risk or not.Ratio analysis is a tool to help evaluate the overall financial condition of a customer's business. Ratios are useful for making comparisons between a customer and other businesses in an industry. A financial ratio is a simple mathematical comparison of two or more entries from a company's financial statements. Creditors use ratios to chart a company's progress, uncover trends and point to potential problem areas.Meaning of ratio analysis Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements so that the strength and weaknesses 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 variables. Definition of ratio analysis 1) In general, a ratio is a way of concisely showing the relationship between two quantities of something. The most formal way of stating a ratio is by separating the two quantities with a colon (:) although sometimes a division sign (/) is used in place of the colon. Thus, where there is a ratio of 5:2 between apples and oranges, for each five apples, there are two oranges.For a ratio to have meaning, both numbers must be nonzero.2) In mathematics, a ratio is a quotient used to compare quantities of the same units of measure.Uses of ratio analysis Ratio analysis is a technique of analyzing the financial statements by calculating ratios. Here is the list of uses of ratio analysis 1. It is useful for inter firm comparison which implies that company compares its performance with that of its industry peers.2. It is useful in intra firm comparison which means that company will compare the performance of various departments of the company so as to judge the best department within the company.3. It is useful in simplifying the accounting figures to make them understandable to a layman, because it is easier to understand ratios then plain figures.4. It is also useful in forecasting and planning for the future, also it helps in control by comparing the actual performance with that of forecasted performance and looking for reason for it.5. It is also used for analysis of financial statements by various interested parties like bankers, creditors, supplier etc. for taking future decision about the company.

Importance of ratio analysis:Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects: Liquidity Position With the help of ratio analysis conclusions can be drawn regarding the liquidity position of a firm. The liquidity position of a firm would be satisfactory if it is able to meet its current obligations when they become due. A firm can say to have the ability to meet its short-term liabilities if it has sufficient liquid funds to pay the interest on its short maturing debt usually within a year as well as to repay the principal. This ability is reflected in the liquidity ratios of a firm. The liquidity ratios are particularly useful in credit analysis by banks & other suppliers of short-term loans. Long-term SolvencyRatio analysis is equally useful for assessing the long-term financial viability of a firm. This aspect of the financial position of a borrower is of concern to the long term creditors, security analysts & the present & potential owners of a business. The long-term solvency is measured by the leverage/capital structure & profitability ratios which focus on earning power & operating efficiency.

Operating EfficiencyAnother dimension of the usefulness of the ratio analysis, relevant from the viewpoint of management is that it throws light on the degree of efficiency in the management & utilization of its assets. The various activity ratios measure this kind of operational efficiency. In fact, the solvency of a firm is, in the ultimate analysis, dependent upon the sales revenues generated by the use of its assets-total as well as its components. Overall Profitability Unlike the outside parties which are interested in one aspect of the financial position of a firm, the management is constantly concern about the overall profitability of the enterprise. That is, they are concern about the ability of the firm to meet its short-term as well as long-term obligations to its creditors, to ensure a reasonable return to its owners & secure optimum utilization of the assets of the firm. Limitations of accounting ratios Difficulty in comparison One serious limitation of ratio analysis arises out of the difficulty associated with their comparability. One technique that is employed is inter-firm comparison. But such comparisons are vitiated by deferent procedures adopted by various firms. The differences may relate to:Differences in the basis of inventory valuation ( for example last in first out, first in first out, average cost & cost);Different depreciation methods (straight line vs. written down basis); estimated working life of assets, particularly of plant & equipment; Amortization of intangible assets like goodwill, patents etc;Amortization of deferred revenue expenditure such as preliminary expenditure & discount on issue of shares; Capitalization of lease & so on.Impact of inflation The second measure limitation of the ratio analysis as a tool of financial analysis is associated with price level changes. This, in fact, is a weakness of the traditional financial statements which are based on historical costs. An implication of this feature of the financial statement as regards ratio analysis is that assets acquired at different periods are, in effect, shown at different prices in the balance sheet, as they are not adjusted for changes in the price level. As a result, ratio analysis will not yield strictly comparable and, therefore, dependable results. Conceptual DiversityYet another factor which influences the usefulness of ratios is that there is difference of opinion regarding the various concept used to compute the ratios. There is always room for diversity of opinion as to what constitutes shareholders equity, debt, assets, profit& so on. Classification of ratio analysis Ratios may be classified in a number of ways keeping in a vie the particular purpose. Ratios indicating profitability are calculated on the basis of the profit & loss account: those indicating financial position are computed on the basis of the balance sheet & those which show operating efficiency or productivity or effective use of resources are calculated on the basis of figures in the profit & loss account & the balance sheet. This classification is rather crude & unsuitable to determine the profitability & financial position of the business. To achieve this purpose effectively, ratios may be classified as:Liquidity RatiosLeverage Ratios Profitability Ratios Activity Ratios These are discussed one by one as follows: Liquidity Ratios These ratios are calculated to judge the financial position of the concern from short term solvency point of view. These ratios as follows: Current Ratios This ratio indicated the extent of the soundness of the current financial position of an undertaking & the degree of safety provided to the creditors. The higher the current ratio the larger amount of rupee available per rupee of current liability, the more the firms ability to net current obligations & the greater safety of the funds of short term creditors. A current ratio of 2:1indicates a highly solvent position. A current ratio of 1.33:1 is considered banks are minimum acceptable level for providing working capital finance.Current Ratio =Current Assets / current LiabilitiesQuick Ratio Quick Ratio is a more refined tool to measure the liquidity of an organization. It is a better test of financial strength than the current ratio, because it excludes very slow moving inventories & the items of current assets which cannot be converted into cash easily. A quick ratio of 1:1 usually considered satisfactory through it is again a rule of thumb only. Quick Ratio = Current Assets, Loans & Advances Inventory / Current Liabilities & ProvisionsLeverage ratioThe long term lenders/creditors would judge the soundness of a firm on the basis of the long term financial strength measured in terms of its ability to pay the interest regularly as well as repay the installment of the principal on due dates or in one lump sum at the time of maturity. The long term solvency of the firm can be examined by using leverage or capital structure ratios.

Debt-Equity RatioThe relation between borrowed funds & owners capital is a popular measure of the long term financial solvency of a firm. This relationship is shown by the debt equity ratios. This ratio reflects the relative claims of creditors & shareholders against the assets of the firm. Alternatively, this ratio indicates the relative proportions of debt & equity in financing the assets of a firm. The relationship between outsiders claims & owners capital can be shown in different ways &, accordingly, these are many variants of the Debt-Equity Ratio.One approach is to express the D/E Ratio in terms of the relative proportion of long-term debt & shareholders equity. D/E Ratio = Long term Debt/Shareholders EquityCoverage RatioThese ratios are computed from information available in the profit & loss account. The obligations of a firm are normally met out of the earnings or opening profits. The coverage ratios measure the relationship between what is normally available from operations of the firms & the claims of the outsiders. The important coverage ratios are as follows:

Interest coverage ratio Interest coverage ratio is also known as time interestearned ratio. This ratio measures the debt servicing capacity of a firm insofar as fixed interest on long-term loan is concerned. It is determined by dividing the operating profits or earnings before interest & taxes (EBIT) by the fixed interest charges on loans. Thus, Interest Coverage = EBIT/Interest

Dividend Coverage Ratio It measures the ability of a firm to pay dividend on preference shares which carry a stated rate of return. This ratio is the ratio (expressed as X number of times) of net profits after taxes (EAT) & the amount of preference dividend. Thus, Dividend Coverage = EAT/Preference DividendProfitability Ratio Profitability reflects the final results of business operations. There are two types of profitability ratios: profit margin ratios & rate of return ratios. Profit margin ratios show the relationship between profit & sales. Since profit can be measured at different stages, there are several measures of profit margin. The most popular profit margin ratios are: gross profit margin, operating profit margin, & net profit margin. Rate of return ratios reflect the relationship between profit & investment. The Important rate of return measures are: return on assets, earning power, return on capital employed, & return on equity. Gross Profit RatioThe gross profit margin ratio is defined as: Gross Profit Ratio = Gross Profit /Net Sales*100

The ratio shows the margin left after meeting manufacturing costs. It measures the efficiency of production as well as pricing. To analyze the factors underlying the variation in gross profit margin the proportion of various elements of cost (labor, materials & manufacturing overheads).

Net Profit Ratio This ratio shows the earnings left for shareholders (both equity & preference) as a percentage of net sales. It measures the overall efficiency of production, administration, selling, financing, pricing, & tax management. Jointly considered, the gross & net profit margin ratios provide a valuable understanding of the cost & profit structure of the firm & enable the analyst to identify the sources of business efficiency / inefficiency. Net Profit Ratio = Net Profit after Tax/Net Sales *100Return on total Assets This ratio is calculated to measure the profit after tax against the amount invested in total assets to ascertain whether assets are being utilized properly or not. It is calculated as under:Return on Total Assets = Net profit after Tax/Total AssetsActivity Ratio Funds of creditors & owners are invested in various assets & generate sales & profits. Activity ratios are employed to evaluate the efficiency with which the firm manages & utilities its assets. These ratios are also called Turnover ratios. Examining the liquidity is to determine how quickly certain current assets are converted into cash. The ratios to measure these are referred to as turnover ratios. Inventory Turnover Ratio It is computed by dividing the cost of goods sold by the average inventory. Thus, Inventory turnover ratio = cost of goods sold/average inventoryThe cost of goods sold means sales minus gross profit. The average inventory refers to the simple average of the opening & closing inventory. The ratio indicates how fast inventory is sold. A high ratio is good from the viewpoint of liquidity & vice versa.

Debtors turnover ratio It is determined by dividing the net credit sales by average debtors outstanding during the year. Thus, Debtors turnover ratio = net credit sales/Average debtorsDebtors turnover indicates the number of times debtors turnover each year. Generally, the higher the value of debtors turnover, the more efficient is the management of credit. To outside analyst, information about credit sales & opening & closing balances of debtors may not be available. Therefore, debtors turnover can be calculated by dividing total sales by the year-end balance of debtors:Debtors Turnover = Sales/DebtorsDebtors collection period (in days)Debtors Collection Period, which measures how long it takes to collect amounts from debtors. The actual collection period can be compared with the stated credit term of the company. It is longer than those terms, & then this indicates some insufficiency in the procedures for collecting debts. Debtors Collection Period = Sundry Debtors/Sales*365Current Assets Turnover Ratio This ratio indicates the efficiency with which current assets turn into sales. A higher ratio implies by & large a more efficient use of funds. This high turnover rate indicates reduced lock-up o funds in current assets. An analysis of this ratio over a period of time reflects working capital management of a firm. Current assets turnover ratio = Sales/Current Assets

THE RATIOS USED FOR THE STUDY:-

Current Ratio= Current Assets/Current LiabilitiesQuick Ratio = Quick Assets/Quick LiabilitiesNet Profit Ratio = Net Profit/Net Sales*100Return on Total Assets Ratio = Sales/Total AssetsDebtors Turnover Ratio = Credit Sale/ Average Account ReceivableDebtors Collection Period = 12 month/Debtors Turnover RatioCurrent Assets Turnover Ratio = Sales/Current Assets

INTRODUCTION OF THE ORGANIZATION:-Company Profile SHRI DATTA SHETKARI SAHAKARI SAKHAR KARKHANA LTD.,SHIROL.Name of the companyShri. Datta Shetkari Sahakari Sakhar Karkhana Limited, Shirol.

Address of the companyPost: Dattanagar 416 120, Taluka Shirol, District Kolhapur (MS) India.

Registration No.& DateKPR/PRG/ (A)-1.Dated 9th June, 1969

ConstitutionCo-Operative Limited

E-mail IDK/[email protected]

Websitewww.dattasuger.org

7000 TCD (capacity of crushing)

Origin:Shri. Datta Shetkari Sahakari Sakhar Karkhana Ltd., Shirol. A pioneering effort of starting an Agro Industrial project in the co-operative field for achieving social upliftment through rural development was made for the first time in Ahmedanagar District in the year 1950 by Pravara Sahakari Sakhar Karkhana Ltd., under the guidance of distinguished co-operative leaders like Sarvashri Dr. Dhananjayrao Gadgil, Shri Vaikunthbhai Mehta & Shri. Vitthalrao Vikhe-Patil & it proved to be very successful venture mainly on account of efforts of the rural co-operative leaders. This has ushered in an era of Sugar Co-Operative in Maharashtra which has resulted in transforming Rural Economy in the vicinity of Sugar Factories by ensuring stability & better return to the cultivators. Shirol Taluka of Kolhapur District is gifted by the presence of natural irrigation potential on account of five rivers viz: Krishna, Panchganga, Warana, Doodhganga & Vedganga & very fertile land of alluvial type soil. The agriculturists in this area were very eager to have a Sugar Factory so as to ensure all-round development & economic prosperity to the higher to poor & marginal farmers. A preliminary meeting was, therefore, held at Kurundwad in Shirol Taluka on 31st December 1960 for organizing a Sugar Factory. After collecting requisite amount of share capital, an application for Industrial License was forwarded to the Government of India. During initial phase Late Shri. Dattajirao Baburao Kadam, Late shri. Dinkarrao Bhausaheb Yadav, Late Shri.Vishwasrao Santajirao Ghorpade Dattawadkar& Dr. Appasaheb alias S. R. Patil put their joint efforts to get the License from Government of India. These main promoters put very hard efforts to establish the Sugar Factory in adverse condition. The persistent efforts put forth by the promoters of the proposed Shree Datta Shetkari Sahakari Sakhar Karkhana Ltd., Shirol, ultimately proved to be successful & the government of India issued a Letter of Intent in the month of May, 1969, in accordance with its enlightened Agro-Industrial Policy. Shree Datta Shetkari Sakhar Karkhana Ltd., Shirol, was registered as a Co-Operative Society under the Maharashtra Co-Operative Societies Act, 1960 on 9th June 1969 vide registration no. KPR/PRG/(A)-1. An Industrial License for establishing a Sugar Factory on Co-Operative basis with initial crushing capacity of 1250 M. Tones per day was issued.Organizations Motto Our aim is to give maximum return to cane growers by producing quality products with minimum expenses. Adoption of advanced technologies. We are committed to improve the environment. We will strive to improve our performance on continuous basis through effective implementation of quality Management System.

Area of OperationSr. No.Name of TalukaName of District Name of the stateNo. of Villages

1ShirolKolhapurMaharashtra50

2HatkanangleKolhapurMaharashtra32

3KarveerKolhapurMaharashtra2

4KagalKolhapurMaharashtra3

5ChikodiBelgaumKarnataka21

6AthaniBelgaumKarnataka7

Total 115

Financial Performance of the company (Rupees in lacks)SR.No.Particulars2010-20112011-20122012-2013

1Total Fixed Assets 14432.6215073.1816871.91

2Investments20.9320.9320.93

3Term Loan1050.66787.46524.27

4Deposits64.9453.9310.10

5Share Capital2437.573372.844167.96

6Reserves535.801254.061297.12

7Net worth3088.994796.715835.04

Some features of OrganizationEnvironment Department The factory management has established a separate Environmental cell to look after all the related issues of Pollution control. It has a task to look after the effluent treatment of sugar factory and distillery.Due to the efforts of Department effluent quantity has reduced to meager 300 M3/Day for crushing of 7500 TCD. The effluent was treated in the full-fledged ETP anaerobic filter followed by activated sludge process. The results are found to be one of the best. The treated effluent is used for irrigation of about 40Ha of land. The Distillery effluent spent wash is one of the most polluted wastes. The factory management has adopted composting technique for the treatment & disposal of spent wash. Press mud, Bagasse and ash are mixed in definite proportion with the spent wash and aerated for about 21 days to get good quality of compost. The ready compost is distributed to the member farmers at a rate of 275/- per ton. The compost is good in Humes content & bacterial content. The application of compost has helped to improve the yield of crop along with soil quality.

Water ManagementShree Datta Shetkari Sahakari Sakhar Karkhana Ltd., Shirol has a average crushing capacity of 7500TCD. The water consumption of the factory during 2001-02 was 3000 cum/d. looking to this water consumption the authority decided to reduce the consumption. It established the separate cell to look into the matter. The cell undertook the scientific study to monitor the water consumption &various ways to reduce the consumption. The authority took various measures to reduce the water consumption by way of recycling the excess condensate. Reusing the water, which do not contaminate? The excess condensate is collected separately and cooled with the help of Two Stage Cooling Tower and subsequently filtered through MGF (Multi Grade Sand Filter) and ACF (Activated Carbon Filter). This filtered condensate water has better quality than river water. This water is recycled back to the process.

Medical CenterFactory has established a Medical Center in the premises of the Karkhana with modern building and equipped with all instruments and facilities to render the medical needs to people. The Medical Center has four well-qualified doctors. Moreover, the medical center have two ambulances, Medical center has X-ray machine, Physiotherapy Section, well-equipped operation theater. Medical center is totally implemented by financial support by factory cane growers. The total investment for the said Medical Center is Rs. 263.92 lacks.

Industrial Training Center (ITC)Considering the fast growth of small and large scale industries in the nearby towns, the Factory Management has started Government recognized Industrial Training Center, incorporating six trades viz: 1) Fitter, 2) Mechanic Motor Vehicle [MMV], 3)Electrician, 4)Mechanic Agriculture Machinery, 5)Information Technology & Electronic System Maintenance &6) computer operating &programming Assistance, which will facilitate the participant trainees the job surety as also they can have individual workshop of the subject matter.

Datta Polytechnic CollegeFactory Management has started Polytechnic College from academic year 2010-2011. The Polytechnic is recognized by AICTE, New Delhi and Director of Technical Education Govt. of Maharashtra. It has five faculties viz. 1) Mechanical Engineering, 2) Civil Engineering, 3) Electrical Engineering, 4) Electronic& Telecommunication, 5) Computer Engineering.Dattajirao Kadam Kamgar Kalyan Mandal & Labor welfareManagement of the Karkhana is always trying to give the job to the people in the area of operation. Relations between employees and management are very harmonious due to the harmonious relations development of Industrial Complex is achieved. Late Dattajirao Kadam Kamgar Kalyan Mandal Dattanagar implements various schemes for workers families. Workers & family members can receive up to Rs. 10000 Medical Aid, if major operation has taken place. Mandal has Gymnasium, Akhada, Library and Balwadi. Also Recreation Hall is constructed for various functions. Beside this facilities, Karkhana provides 50% Medical Expenditure for the employees suffering from Heart Diseases, Paralysis, TB, Cancer & Leprosy & a paid leave up to 6 months.

Recently, we have covered all the employees under VIDYA SHREE (F) Medical scheme of KLE Hospital Belgaum. Late Dattajirao Kadam Kamgar Kalyan Mandal Dattanagar started its activities through Gymnasium, Akhada & athletics. It is proud to mention here that; some of our players of our Mandal are rating of the top of District, State & National Level. Besides this they always get Championship of Kamgar Kalyan Mandal, Mumbai.

ComputerizationKarkhana started computerization activity from 1987 with PC/XT hardware. It was used for processing the salary of the employees. After those other applications are covered step. Recently Karkhana has installed latest computer hardware & software. Fiber Optic Cabling connects various departments to a Central Server. The application software is developed under Oracle RDBMS.The system developed is on-line type. The transactions are recorded in to the computer system at the source point as & when they occur. All these transactions come to the Central Server. As soon as the Accountants authorize the transactions, the balances of the concerned accounts get updated.

Sugarcane development activitiesShree Datta SSSK Ltd., Shirol has set up a separate wing of cane development activities within the area of operation. For the said work we have appointed one agri. Assistant for every 200 acres cane area. The Agri. Assistant gives advice to the concerned cane growers from land preparation for cane planting up to harvesting.

Members of All Departments

SR.NONAMEDESIGNATION

1SHRI. M. V. PATILMANAGING DIRECTOR

2SHRI. B.B. SHINDE SECRETARY

3SHRI, B. G. PATILFINANCE MANAGER

4SHRI. S. S. HEGANA CHIEF AGRICULTURE OFFICER

5SHRI. Y. R. MANECIVIL MANAGER

6SHRI. M. B. RAUTGUEST HOUSE & VEHICLE INCHARGE

7SHRI. M. R. PATIL WORKS MANAGER

8SHRI. V. SHINDE PRODUCTION MANAGER

9SHRI. V. T. MALISTORES SUPERINTENDENT

10SHRI. DAYANIDHI JESWALL & RESHMA SHAH DOCTOR

11SHRI. J. B. DESAI ASSISTANT WELFARE OFFICER

12SHRI. S. H. SANADIINCHARGE SECURITY OFFICER

13SHRI. B. G. GAVADE SANITATION SUPERVISOR

14SHRI. B. B. PATILGARDEN SUPERVISOR

15SHRI. S. K. YADAVDISTILLERY CHEMIST

ChairmanORGANIZATIONS CHART

Vice-Chairman

Managing DirectorSecretary

FinanceWork ManagerStore SuperintendentLabor Welfare OfficeDistillery ManagerProduction Manager

Dy. Chief Assist.Assist. EngineerStaffStaffChemistDy. Chief Chemist

StaffAssist. EngineerWorkerManufacturing Chemist

Jr. EngineerLab Chemist

WorkerWorker

COMMON SIZE STATEMENTOF 2011Liabilities2010-11(Amt.)%Assets2010-11(Amt.)%

Paid up share capital243756890.266.55Cash in hand & with bank2305293.270.062

Reserve Fund & Other Fund949188669.425.5Investment20928900.056

Secured loans1158867437.7431.13Advances & Receivables206291353.205.54

Unsecured Loan105065928.002.82Shri. Datta SSSK Ltd. Char. Trust40857043.691.1

Deposits6493561.90.17Current Assets 159357100.534.28

Current Liabilities & Provisions 1244535918.1433.44Closing stock Sugar & By product186415467750.08

Profit & loss Account14305646.050.38Fixed Assets144326174238.77

Horticulture & Garden1935905.860.05

Pre paid Expenses1958045.50.05

Total3722214051100Total3722214051100

Assets of 2010-11Cash in hand & with bank = 2305293.27/3722214051 = 0.062Investment = 2092890/3722214051 = 0.056Advances & Receivables = 206291353.20/3722214051 = 5.54Shri. Datta SSSK Ltd. Char. Trust = 40857043.69/3722214051 = 1.1Current Assets = 159357100.53/3722214051 = 4.28Closing stock Sugar & By product = 1864154677/3722214051 = 50.08Fixed Assets = 1443261742/3722214051 = 38.77Horticulture & Garden = 1935905.86/3722214051 = 0.05Pre paid Expenses = 1958045.5/3722214051 = 0.05

Liabilities of 2010-11 Paid up share capital = 243756890.26/3722214051 = 6.55Reserve fund & other fund = 949188669.4/3722214051 = 25.5Secured loans = 1158867437.74/3722214051 = 31.13Unsecured Loan = 105065928.00/3722214051 = 2.82Deposits = 6493561.9/3722214051 = 0.17Current Liabilities & Provisions = 1244535918.14/3722214051 = 33.44Profit & loss Account = 14305646.05/3722214051 = 0.38


Paid up share capital3372843127.88Cash in hand & with bank133173220.31

Reserve Fund & Other Fund109929712525.69Investment20928900.049

Secured loans109300091425.55Advances & Receivables3313208497.74

Unsecured Loan787463821.84Shri. Datta SSSK Ltd. Char. Trust1228533862.87

Deposits53930020.13Current Assets 1630239513.81

Current Liabilities & Provisions164485336738.45Closing stock Sugar & By product213351501049.87

Fixed Assets150700196035.22

Horticulture & Garden19748760.046

Pre paid Expenses29005590.068

Profit & loss Account197412030.46Work in Process3155020.007

Total4278316305100Total4278316305100

Assets of 2011-12Cash in hand & with bank = 13317322/4278316305 = 0.31Investment =2092890/4278316305 = 0.049Advances & Receivables = 331320849/4278316305 = 7.74Shri.Datta SSSK Ltd. Char. Trust = 122853386/4278316305 = 2.87Current Assets = 163023951/4278316305 = 3.81Closing stock Sugar & By product = 2133515010/4278316305 = 49.87Fixed Assets = 1507001960/4278316305 = 35.22Horticulture & Garden = 1974876/4278316305 = 0.046Pre paid Expenses = 2900559/4278316305 = 0.068Work in Process = 315502/4278316305 = 0.007

Liabilities of 2011-12Paid up share capital = 337284312/4278316305 = 7.88Reserve fund & other fund = 1099297125/4278316305 = 25.69Secured loans = 1093000914/4278316305 = 25.55Unsecured Loan = 78746382/4278316305 = 1.84Deposits = 5393002/4278316305 = 0.13Current Liabilities & Provisions = 1644853367/4278316305 = 38.45Profit & loss Account = 19741203/4278316305 = 0.46



Reserve Fund & Other Fund1272171908.4525.57Investment2092890.000.042


Unsecured Loan52426836.001.05Shri. Datta SSSK Ltd. Char. Trust165174514.133.32

Deposits1010269.900.020Current Assets 165768423.043.33

Current Liabilities & Provisions1846462752.9837.11Closing stock Sugar & By product2493122385.5750.10

Fixed Assets1620141970.5232.56

Horticulture & Garden2033915.860.041

Profit & loss Account

22003985.460.44Pre paid Expenses2610513.500.052

Total4976149550.62100Total4976149550.62100

Assets of 2012-13Cash in hand & with bank = 4009229.67/4976149550.62 = 0.081Investment = 2092890.00/4976149550.62 = 0.042Advances & Receivables = 521195708.33/4976149550.62 = 10.47 Shri. Datta SSSK Ltd. Char. Trust = 165174514.13/4976149550.62 = 3.32Current Assets = 165768423.04/4976149550.62 = 3.33Closing stock Sugar & By product = 2493122385.57/4976149550.62 = 50.10Fixed Assets = 1620141970.52/4976149550.62 = 32.56Horticulture & Garden = 2033915.86/4976149550.62 = 0.041Pre paid Expenses = 2610513.50/4976149550.62 = 0.052

Liabilities of 2012-13Paid up share capital = 416804913.81/4976149550.62 = 8.38Reserve fund & other fund = 1272171908.45/4976149550.62 = 25.57Secured loans = 1365268884.02/4976149550.62 = 27.44Unsecured Loan = 52426836.00/4976149550.62 = 1.05Deposits = 1010269.90/4976149550.62 = 0.020Current Liabilities & Provisions = 1846462752.98/4976149550.62 = 37.11Profit & loss Account = 22003985.46/4976149550.62 = 0.44

Cash in hand & with bank

InterpretationThe graph shows that, the cash in hand & with bank percentage, in year 2010-11 at 0.062 & percentage is going up in the year 2011-12 at 0.31 but in the year 2012-13 is has decreased again. Investment

InterpretationThe graph shows that, the percentage of investment in the year 2010-11 (0.056%), & in the year 2011-12 (0.049) & in the year 2012-13 (0.042) has decreased. It shows a decreasing trend. Advances & Receivables

InterpretationThe graph clearly show that, the Advances & Receivables for the year 2010-11, 2011-12 & 2012-13 are also increase at 5.54%, 7.74% & 10.47% respectively.Charitable Trust, Dattanagar

InterpretationThe graph clearly indicates that, the contribution of charitable trust, for the year 2010-11 is at 1.10% & it is less than the following two years that are, in the year 2011-12 percentage is 2.87% & in the year 2012-13 percentage is 3.32% respectively.Current Assets

InterpretationIn the financial year 2010-11, the current assets was 4.28% which has decreased to 3.81% in the year 2011-12 has further decreased to 3.33 in the year 2012-13. Closing stock Sugar & By-product

InterpretationThe graph shows that, the closing stock decreased from the year 2010-11 (50.08%) to 2011-12 (49.87%), but in the year 2012-13 the closing stock, again increased to (50.10%)

Fixed Assets

InterpretationFrom the above graph it can inferred that the fixed assets has successively decreased from the year 2010-11, 2011-12 & 2012-13 with 38.77%, 35.22% & 32.56% respectively. The graph shows a downward trend in the amount of fixed assets.Horticulture & Garden

InterpretationFrom graph, it can be concluded that, the factory had been spending less and less percentage on total assets viz. for the year 2010-11, 2011-12 & 2012-13, were 0.05%, 0.046% & 0,041% of the total assets respectively.Prepaid expenses

InterpretationIn the financial year 2010-11, the prepaid expenses were 0.05% which increased to 0.068% in the year 2011-12 while it further decreased to 0.052% in the 2012-13 year of the total assets.Paid up Share Capital

InterpretationFrom graph of paid up share capital, it is to be concluded that it has been constantly increasing in the years that is in 2010-11, 2011-12 & 2012-13. Paid up share capital were 6.55%, 7.88% & 8.38% in respect of total liabilities. Reserve fund & other fund

InterpretationThe graph of reserve fund & other fund indicates that, the reserve fund & other fund in the year 2010-11 were 25.5% of the total liabilities which increased in year 2011-12 with 25.69% of the total liabilities which further again decreased in year 2012-2013 with 25.57% of the total liabilities. Secured Loans

InterpretationThe graph shows, the secured loan in the year 2010-11 with 31.13% decrease to 25.54% in the year 2011-12, & again increase in year 2012-13 with percentage at 27.44%. Unsecured loan

InterpretationFrom graph, it can be predicted that, the unsecured loan been decreasing from the year 2010-11, 2011-12 & 2012-13 with the percentage 2.82%, 1.84% & 1.05% respectively. Deposits

InterpretationThe graph shows that, the deposits successively decreased from the year 2010-11 (0.17), 2011-12 (0.13) & 2012-13 (0.02) of the respective total liabilities. Current liabilities & provisions

InterpretationIn the financial year 2010-11, the current liabilities was 33.44%, which increased to 38.45% in the year 2011-12 while further decreases to 37.11 in the year 2012-13 of the total liabilities. Profit or Loss

InterpretationIn the financial year 2010-11, the profit was 0.38% which increased to 0.46% in the year 2011-12 while further decreased to 0.44 in the year 2012-13. It is advisable to the company to increase its Profit Ratio to be in a favorable position. Current AssetsTable No. 1Particulars2010-112011-122012-13

Current Assets159357100.53163023951165768423.04

Cash in Hand & Bank2305293.27133173224009229.67

Investment2092890.0020928902092890.00

Stock

Opening Stock 1904091284.2918130657082111645307.48

Closing Stock 1813065708.0721116453082402743560.13

Other Receivable65959274.72125440884229567736.53

Prepaid Expenses1958045.5029005592610513.50

Total3948829596.3842314866224918437660.35

Current Liabilities Table No. 2Particulars2010-112011-122012-13

Current liabilities1244535918.1416448533671846462752.98

Short Term Loan973354815.7410322670911232884715.02

Total 2217890733.8826771204583079347468

Quick AssetsTable No. 2Particulars2010-112011-122012-13

Total Current Assets 3948829596.3842314866224918437660.35

Less Stock 3717156992.3639247110174514388867.61

Quick Assets 231672604.02306775606404048792.35

Using the data from Balance sheet & Annexure, the calculation of ratio was carried out. After calculating the ratios, the interpretation is given.

LIQUIDITY RATIO -Current Ratio:-Current Ratio = Current Assets / Current LiabilitiesTable No. 1YearCurrent AssetsCurrent LiabilitiesRatio

2010-113948829596.382217890733.881.78

2011-1242314866222677120458.001.58

2012-134918437660.353079347468.001.60

CURRENT RATIO

Interpretation The ratio indicates the solvency of the company. It shows the proportion of current assets to current liabilities. Normally, it is expected that current ratio should be 2:1, which indicates that current assets should be twice as compared to current liabilities. 2010-11 ratios were well but 2011-12 current ratios have decreased but in 2012-13 it have again slightly increased.

Quick Ratio:-

Quick Ratio = Quick Assets/Quick LiabilitiesTable no. 2YearQuick AssetsQuick LiabilitiesRatio

2010-11231672604.021244535918.140.19

2011-1230677560616448533670.19

2012-13404048792.351846462752.980.22

QUICK RATIO

InterpretationThis ratio indicates the proportion of quick assets to quick liabilities. The ideal Acid test ratio should be 1:1 which means that the quick assets should be equal to quick liabilities. But above ratios are below 1:1 hence, the company increases the ratio within 2012-13 so, it is advisable to the company to increase its Quick Ratio to be in a favorable position.

PROFITABILITY RATIO - Net Profit Ratio:-Net Profit Ratio = Net Profit/Net sales*100Table No. 3YearNet ProfitNet SalesRatio

2010-1114153531.384073817460.40.35

2011-12545355742650127600.13

2012-132260782.114479938596.620.05

NET PROFIT RATIO

InterpretationThis ratio shows the earnings left for shareholders as percentage of net sales. It measures the overall efficiency of all the functions of business firm like production, administrative, selling, financing, pricing, tax management etc. higher the ratio the better it is, because it gives an idea of overall efficiency of the firm. As we see the trend in this ratio is successively decreasing in the year 2010-11 with 0.35%, in the year 2011-12 with 0.13% & in the year 2012-13 with 0.05% respectively.

Return on Total Assets:-Return on Total Assets = Net Profit/Total Assets*100Table No.4YearNet ProfitTotal AssetsRatio

2010-1114153531.383722214051.490.38

2011-12545355742783163050.13

2012-132262782.114976149550.620.045

RETURN ON TOTAL ASSETS

Interpretation Return on assets crudely reflects how well the firm uses its assets in total. The higher ratio means it is favorable to the firm as it indicates the firm is utilizing its assets profitability. In the above chart the ratio is decreasing which is not favorable for the firm hence it should be increased.

ACTIVITY RATIO - Debtors Turnover Ratio:-Debtors Turnover Ratio = Credit Sales/Average Account ReceivableTable No.5YearCredit SalesAverage Account ReceivableRatio

2010-114073817460.4206291353.2019.75

2011-12426501276033132084912.87

2012-134479938596.62521195708.338.60

DEBTORS TURNOVER RATIO

InterpretationThis ratio indicates the efficiency of the firm in collecting its receivables from its customers to whom the firm has sold on credit. In most business situation it is necessary to grant credit to customers. This could be either because of competition or because of the customs of trade. A low ratio implies the company should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm. Debtors collection period:-Debtors collection period = 12 months/Debtors Turnover RatioTable No. 6YearMonthsDebtors Turnover RatioDebtors Turnover Ratio (in month)

2010-111219.750.61

2011-121212.870.93

2012-13128.601.39

DEBTORS COLLECTION PERIOD

Interpretation This ratio indicates the efficiency of the firm in collecting its receivables from its customers to whom the firm has sold on credit. It also indicates how quickly the debtors are turned into cash. The higher the ratio lower is the collection period. In the above charts the debtors turnover ratio should be increased to reduce the collection period.

Current Assets Turnover Ratio:-Current Assets Turnover Ratio = Sales/Current AssetsTable No.7YearSalesCurrent AssetsRatio

2010-114073817460.43822785572.991.06

2011-12426501276044895902170.95

2012-134479938596.625249112431.440.85

CURRENT ASSETS TURNOVER RATIO

Interpretation The graph shows that the current assets turnover ratio has been goes on decreasing successively from the year 2010-11, 2011-12 & 2012-13 with 1.06%, 0.95% & 0.85% respectively.

Findings:

In the year 2011-12 sales were 4265012760 (426 crore), having closing stock 2111645308 (211 crore), but in 2012-13 sales increased by 214925836.62 (214 crore) with closing stock being 2402743560.13 (240 crore). Compared to the previous year 2011-12 the sales in the year 2012-13 are less in proportion to the closing stock. Reasons for such a high closing stock need to be investigated, as sales have not risen in proportion to the stock available.

It can be observed that cash & bank balance, decreased in the year 2010-11 but increased in the year 2011-12, but in the year 2012-13 the cash & bank balance again decreased which is non-favorable to the factory, while advance expenses increases in the year 2012-13, is in favor of the factory.

From the graph of profit & loss, it can be seen that, the profit has slightly increased in the year 2011-12 & again has slightly decreased in 2012-13.

The Quick Ratio in year 2010-11(0.19), 2011-12(0.19) & 2012-13(0.22) is less than the ideal quick ratio, so the company has unfavorable liquidity position. Calculated in table no. 2

Net profit ratio is very low in financial year 2010-11, 2011-12, 2012-13 with the ratio 0.35, 0.13 & 0.05 respectively.

The debtors turnover ratio has decreased in 2010-11 to 2012-13. Increases in this ratio is beneficial for company because it indicates increase in the speed of collection of credit sales & decreases debtors collection period, but in this case, the debtors turnover ratio has decreased &debtors collection period is increased, so it is unfavorable to the factory.

Suggestions:

The company should further study in depth the future financial position.

The company can carry out on a yearly or two yearly basis, financial ratio analysis audits.

The company can decide & implement the necessary timely changes, to avoid the future negative consequences.

The financial condition of the company can be known with the help of the estimated ratios & Common Size Statement.

The factory should increase their investments, to increase profit maximization.

It is suggested that factory try to reduce its debt & increase its capital.

It is suggested that factory try to reduce their operating costs, so this will result in increase their net profit.

Increase the solvency condition of the factory for the sound financial performance.

Conclusion:

From the finding & suggestions it can be concluded that:

A study of financial position analysis is very essential to understand the financial performance of the factory.

It gives an insight of the factorys performance & efficiency at which it is carrying out its business activities.

Here the financial position of the factory is sound which is found from common size statement & ratio analysis of the factory.

The factory has unfavorable net profit ratio in the year 2012-13 with only 0.05% net profit.

It indicates the inefficiency in production & administrative cost.

Bibliography:

BooksFinancial Management Khan M. Y & Jain P. K., 2007 by Tata McGraw Hill Publishing Company Limited New Delhi. Fifth Edition

Financial Management Pandey I. M. 2005 by Vikas Publishing House Pvt. Ltd. Ninth Edition

Financial Management Chandra Prasanna, 2008 by Prassana Chandra, Tata Mc McGraw Hill Publishing Company Limited New Delhi. Seventh Edition

Research Methodology - Kothari C.R. & Garg Gaurav, 2014 by New Age International Publishers, Limited New Delhi.Third Edition

Financial Reports Financial reports from the year 2011-2013 of Shri Datta Shetkari Sahakari Sakhar Karkhana Limited Shirol.

Websitewww.investopedia.comwww.netMBA.com

Balance sheetLiabilities2010-112011-122012-13Assets2010-112011-122012-13


Reserve Fund & Other Fund949188669.410992971251272171908.45Investment209289020928902092890.00


Unsecured Loan105065928.007874638252426836.00ShriDatta SSSK Ltd. Char. Trust40857043.69122853386165174514.13

Deposits6493561.953930021010269.90Current Assets159357100.53163023951165768423.04

Current Liabilities & Provisions1244535918.1416448533671846462752.98Closing stock Sugar & By product186415467721335150102493122385.57

Fixed Assets144326174215070019601620141970.52

Horticulture &Garden1935905.8619748762033915.86

Profit & loss Account

14305646.051974120322003985.46Pre paid Expenses1958045.529005592610513.50

Work in Process315502

Total372221405142783163054976149550.62Total372221405142783163054976149550.62

Profit & Loss Account

Expenditure2010-112011-122012-13Receipts2010-112011-122012-13

Cane purchase & related expenses3241893012.1239447186173956666366.58Sugar Production Value (including Duties)3786688870.9543584700124506728123.22

Salary & Wages275437837.01259986237264893815.29By-product Production value (including duties)196103013.23

205122348

264308726.05

Stores & repairs212879701.49232663914222149586.30Co-generation Receipts45830239.506691414332109097.90

Production & sales expenses23596006.722471697722463513.06Other Income81841807.4515185771891321871.99

Excise Duty162871647.92155107146153919561.23By-product Profit (Distillery)23639856.5710295326132768.28

Administrative expenses54134776.256424209976427087.01Petrol Pump Profit1222922.19727338361349201.14

Interest63474650.005524314548405111.00

Depreciation

50608547.006401389774761966.00

Price Fluctuation Fund

15000000.003000000040000000.00

Project Fund21277000.002000000040000000.00

Provision for loan repayment

Net profit14153531.3854355572262782.11

Total4135326709.8948561275894901949788.58Total4135326709.8948561275894901949788.58

A.G.I.M.S.,Sangli.Page 28

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