Sagar Cement_financial Stmt Analysis

7/31/2019 Sagar Cement_financial Stmt Analysis

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INTRODUCTION

An analysis of financial statement is important aid to financial analysis. The

focus of financial analysis is on key figures in the financial statements and thesignificant relationship that exists between them.

The analysis of a financial statement is the process of evaluating the relationship

between component parts of financial statements to obtain a better understanding of the

firms position and performance.

However, the basic limitation of the traditional financial statements can pricing

the balance sheet and the profit and loss a/c i.e. they do not give all the informationrelated to the financial operations of a firm. Therefore, the financial statements provide

a view of the financial position and operations of a firm thus. They not only indicate the

present position they also indicate the causes leading up to large extent.

SCOPE OF THE STUDY

The study confines itself mainly to the comparitive analysis of the Balance

sheet of the overseas and presents the position of the Company. Besides this the present

study will reveal the financial position of the overseas covering purely the financial data

supplied in the financial statements through ratio analysis also. The data was analyzed

along with the interpretations .

OBJECTIVES OF THE STUDY

The purpose of the study is to discover the profitability and Liquidity of the

overseas to make clear the exact position and also about the industry in a systematic

way. The primary objective of the study is to assist in decision making while taking

decisions. Though each research study has its own specific purpose.


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LIMITATIONS OF THE STUDY

Though financial statements are relevant and useful for the concern, still they do

not present a final picture of the concern. The utility of their statements is dependent

upon a number of factors. The case is limited to only by following:

The data has been collected through secondary source.

The time span i.e. (45 days) which has become difficult to collect all the

information.

Study has been restricted only to comparative analysis.

The analysis id made on the basis of data.

The available data is 5 years.

.


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ORGANIZATION PROFILE

HISTORY OF INDIAN CEMENT INDUSTRY

By stating production in 1914 the story of story of Indian cement is a stage of

continuous growth. Cement is derived from the Latin word cementam.

Egyptians and Romans found the process of manufacturing cement. In England

during the first century the hydraulic cement has become more versatile building

material. Later on, Portland cement was invented and the invention was usuallyattributed to Joseph Aspdin of England.

India is the worlds 4 th largest cement produced after China, Japan and U.S.A.

The South Industries have produced cement for the first time in 1904. The company

was setup in Chennai with the installed capacity of 30 tonnes per day. Since then the

cement industry has progressing leaps and bounds and evolved into the most basic and

progressive industry. Till 1950 1951, the capacity of production was only 3.3 milliontonnes. So far annual production and demand have been growing a pace at roughly 78

million tonnes with an installed capacity of 87 million tonnes.

In the remaining two years of 8 th plan an additional capacity of 23 million tonnes

will actually come up.

India is well endowed with cement grade limestone(90 billion tonnes) and

coal(190 billion tonnes). During the nineties it had a particularly impressive expansion

with growth rate of 10%.

The strength and vitality of Indian Cement Industry can be gauged by the interest

shown and support gives by World Bank considering the excellent performance of the

industry in utilizing the loans and achieving the objectives and targets. The World Bank

is examining the feasibility of providing a third line of credit for further upgrading the

industry in varying areas, which will make it global. With liberalization policies of


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Indian Government. The industry is posed for a high growth rates in nineties and the

installed capacity is expected to cross 100 million tonnes and production 90 million

tonnes by 2003 AD.

The industry has fabulous scope for exporting its product to countries like the

U.S.A., U.K, Bangladesh, Nepal and other several countries. But there are not enough

wagons to transport cement for shipment.

Cement The product:

The natural cement is obtained by burning and crushing the stones containing

clayey, carbonate of lime and stone amount of carbonate of magnesia. The natural

cement is brown in color and its best variety is known as ROMAN CEMENT. It sets

very quickly after addition of water.

It was in the eighteenth century that the most important advances in the

development of cement were which finally led to the invention of Portland cement.

In 1756, John Smeaton showed that hydraulic lime which can resist the action of water

can be obtained nit only from hard lime stone but from a limestone which contain

substantial proportion of clayey.

In 1796, Joseph Parker found that modules of argillaceous limestone made

excellent hydraulic cement when burned in the usual manner. After burning the product

was reduced to a powder, this started the natural cement industry.

The artificial cement is obtained by burning at a very high temperature a mixture

of calcareous and argillaceous material. The mixture of ingredients should be intimate

and they should be in correct proportion. The calcined product is known as clinker. A

small quantity of gypsum is added to clinker and it is then pulverized into very fine

powder, which is known as cement.


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The common variety of artificial cement is known as normal setting cement or

ordinary cement. A mason Joseph Aspdn of Leeds of England invented this cement in

1824. He took out a patent for this cement called it PORTLAND CEMENT because

it had resemblance in its color after setting to a variety of sandstone, which is found aabundance in Portland England.

The manufacture of Portland cement was started in England around 1825.

Belgium and Germany started the same 1855. America started the same in 1872 and

India started in 1904. The first cement factory installed in Tamilnadu in 1904 by South

India limited and then onwards a number of factories manufacturing cement were

started. At present there are more than 150 factories producing different types of cements.

Composition of Cement:

The ordinary cement contains two basic ingredients, namely, argillaceous and

calcareous. In argillaceous materials the clayey predominates and in calcareous

materials the calcium carbonate predominates.

A good chemical analysis of ordinary cement along with desired range of ingredients.

Ingredients Percent Range

Lime(C aO)

Silica(SiO 2)

Alumina(Al 2O3)

Calcium sulphate (CaSO 4)

Iron Oxide (Fe 2O3)

Magnesia(MgO)

Sulphur (S)

62

22

5

4

3

2

1

62-67

17-25

3-8

3-4

3-4

1-3

1-3


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Alkalies 1 0.2-1

Industry Structure and Development:

With a capacity of 115 million tonnes of large cement plants, Indian Cement

industry is the fourth largest in the world. However per captia consumption in our

country is still at only 100Kgs of developed countries and offers significant potential for

growth of cement consumption as well as addition to cement capacity. The recent

economic policy announcement by the government in respect of housing, roads, power

etc., will increase cement consumption.

Opportunity and threats:

In view of low per captia consumption in India, there is a considerable scope for

growth in cement consumption and creation of new capacities in coming years.

The cement industry does not appear to have adequately exploited cement

consumption in rural segment where damaged where damaged growth is possible.

Landed cost of cement (with import duty)continues to be higher than home

market prices but with reduced import duty, increasing imports, may pose a serious

threat to the domestic cement industry.

Outlook

The recent change in the budget 2003- 2004 relating to fiscal incentives for

individual housing and reduction in borrowing cost for this purpose and with the

government reaffirmation to accelerate the reform process, infrastructure development


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should logically get priority leading to increase in demand of cement in coming years.

The addition capacity of cement in the pipeline is limited and therefore the demand and

supply situations is expected to be more favorable and cement prices are likely to firm

up.

Risks and Concerns

Slow down of Indian economy or drop in growth rate of agriculture may

adversely affect the consumption. The recent increase in railway freight coupled with

diesel / petrol price like will increase the cost of production and distribution, as being

bulky, cement is freight intensive increase in Limestone royalty also adds to the cost of

production, which is considerably higher than corresponding costs of many other

developing countries.

In our country there is a need to undertake a massive programme of house

construction activity into the rural and urban areas. It is impossible to construct a house

without cement and steel, in other words, cement is one of the basic construction

materials and therefore it is one of the vital elements for the economic development of

the nation.

India inspite of being the 4 th biggest producer of cement in the world has still a

very low per capital consumption of cement.

Cement Companies 51 Nos

Cement plant 99Nos

Installed Capacity 64.8mt

Total Investment (approx) Rs.10,000 Crores

Total Manpower Over 1.25 Lakhs


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COMPANY PROFILE

Sagar Cements is a prominent player in the field of cement in Andhra Pradeshfor the past 25 Years adopting progressive manufacturing practices, whether it relates tomaintaining high standards of quality of its products or development of its highlyvalued human resources or the need to keep the pollution to the barest minimum.

The Company manufactures various varieties of cement like Ordinary PortlandCement (OPC) of 53 grade, 43 grade, Portland Pozzalona Cement (PPC) and SulphateResistant Cement (SRC) to suit different needs of customers and all these products are

being sold under the Brand Name Sagar which has already become popular in AndhraPradesh, has now found its acceptance among the customers in the neighboring Statesas well.

The Company employs modern technology in each of its process of manufactureat its Plant and has adopted progressive manufacturing practices, whether it relates tomaintaining high standards of quality of its products or development of its highlyvalued human resources or the need to keep the pollution to the barest minimum.

The Company has a strong committed marketing network comprising variouslayers like Distributors, Dealers, C&F Agents, all of whom are served by dedicatedmarketing personnel. The Company has a well-designed Organizational Structure andthe roles and responsibilities of each of its personnel have been well defined. TheCompany believes in the importance of development of Human Resources as a valuableasset and is endeavoring to enhance its value by organizing various need based in-housetraining programmes and encouraging their participation in the external programmessponsored by various institutions of repute.

Sagar Cements has a consistent Profit track record and, except for a few yearswhen it was either executing its expansion plans or the industry as a whole wasundergoing a difficult period, it has been declaring dividend at reasonable percentages.

The companys Shares are listed on Hyderabad and Bombay Stock Exchanges,where they are actively traded.

The Company which started its operation with a Cement capacity of 66000 TPA,has gradually increased it to the level of 2.35 MTPA, while its Clinker capacity has alsowitnessed a significant increase from 66000 TPA in 1982 to present level of 2.10MTPA.

Vision


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To provide foundations for society 's future

Mission

To be the India's most respected and attractive company in our industry -creating value for all our stakeholders.

History

Sagar Cements has a rich history of providing high quality cement for more than25 years. Starting of by being a mini cement plant , our journey started in the year 1985and is moving into higher gears with production getting into multi million tonnes per annum.

Organisation

Sagar Cements is managed by a Board, whose members are highly competentand well known. The Senior Management team consists of highly qualifiedProfessionals with rich experience in the area of their Specialization.

Group

Sagar is well diversified group serving various sectors of the economy. Thegroup constitutes of

Sagar Cements Limited - Production of Cement & Clinker

Sagar Power Limited - Production of Hydel Power

Panchavati Polyfibers - Production of PP Fabric / Woven Sacks for Cement Industries

RV Consulting - Consulting for setting Cement Plants


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Sagarsoft (India) limited -www.sagarsoft.in - Software Services for global Clients

Corporate Governance

Sagar Cements has set itself high standards of corporate governance, ensuringresponsible and transparent company management to enable its long-term success.

Code of Conduct

CODE OF CONDUCT AND ETHICS FOR DIRECTORS AND SENIOR MANAGEMENT TEAM

Sagar Cements being committed to be a good corporate citizen conducts its business as per the applicable laws, rules, regulations and statutory guidelines as are in

force and with highest standards of business ethics.

It is expected of the Directors and Senior Management Team of the Company tocomply with applicable laws, rules, regulations and guidelines while discharging their respective roles and to promote honesty in the process apart from abiding themselves bythe policies and procedures laid down for the conduct of the business. The accounts of the Company will be maintained in a fare and accurate manner in accordance with therelevant accounting and financial reporting standards.

CONFLICTS OF INTEREST

A conflict situation is deemed to arise directly or indirectly when:

It is difficult to exercise an independent judgment of the company's interest;

A Director or a member of the Senior Management Team accepts any personal

benefits or gifts or entertainment beyond the customary level either by himself or

through his family as a result of his position in the company from any person /

company with which the company may have business dealings;A Director or a member of the Senior Management Team engages in any other

business activity that detracts his ability to devote appropriate time and attention

to his responsibilities to the company;

There exists a significant ownership interest with any supplier, customer or

competitor of the company


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There is any employment relationship between a Director or a member of the

Senior Management Team with any supplier, customer, business associate or

competitor of the company.

While it is expected of a member of the Board and the Senior Management Team toavoid generally the situations where the 'conflicts of interest' can be deemed to exit, incase of unavoidable conflict of interest, he should disclose all facts and circumstancesthereof to the Board of Directors or any officer nominated for this purpose by the Boardand a prior written approval should be obtained.

FINANCIAL REPORTING AND RECORDS

As the professional and ethical conduct in the matter of financial affairs isessential for the proper functioning of the company, the officers and employees engagedin the finance functions should act with honesty and integrity. The persons in-charge of finance and accounting function should prepare and maintain companys accounts fairlyand accurately in accordance with generally accepted guidelines, principles, standards,laws and regulations applicable to the company. Internal accounting and audit

procedures shall fairly and accurately reflect all of the company's business transactionsand disposition of assets. There shall be no willful omissions of the companytransactions from the books and records. Any willful material misrepresentation or

misinformation on the financial accounts and reports shall be regarded as a violation of this code.

PROTECTING COMPANY ASSETS

The assets of the company should not be misused but employed only for the purpose of conducting the business for which they are authorised. All Directors andmembers of the Senior Management Team should strive to protect company's assets and

property and ensure efficient use of them.

PROMOTING INTEREST OF THE COMPANY

Directors and Senior Management Team owe a duty to the company to promoteits legitimate interests when the opportunity to do so arises. They should not usecompany's property, information or position for personal gains. All Directors andSenior Management Team of the company must strive to perform their best at all times.

INTEGRITY AND HONESTY


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The Directors and Senior Management Team shall act in accordance with thehighest standards of personal and professional integrity, honesty and ethical conduct.They shall act and conduct free from fraud and deception. Their conduct shall conformto the professional standards of conduct.

FAIR DEAL

Each Director and the member of Senior Management Team should deal fairlywith customers, suppliers and competitors. He should not take unfair advantage of anyone through manipulation, concealment, abuse of confidential, proprietary or tradesecret, information, misrepresentation of material facts, or any other unfair practices.

HEALTH, SAFETY, ENVIRONMENT AND SOCIAL RESPONSIBILITY

Sagar Cements shall strive to provide a safe and healthy working environmentand comply with all regulations regarding the preservation of the environment in andaround its manufacturing facilities and other points of operations. The companies iscommitted to efficient use of natural resources and minimize any hazardous impact of the development, production, use and disposal of any of its products and services on theecological environment.

CONFIDENTIALITY

The Directors and the Senior Management Team shall maintain utmostconfidentiality of information or that of any customer, supplier or business associates of the company to which company has a duty to maintain confidentiality except whendisclosure is authorized. The use of confidential information for his own advantage or

profit is also prohibited.

COMPLIANCES

The Directors and the Senior Management Team shall comply with allapplicable laws, rules and regulations. Transactions relating to sale or purchase of company's equity shares should not be undertaken without complying with theformalities contained in the company's code of internal procedures and conduct for

prevention of insider trading. If any Director or Member of the Senior ManagementTeam who knows of or suspects of any violation of applicable laws, rules or regulationsor this Code of Conduct, he must immediately report the same to the Board of Directorsor any designated person thereof. Such person should as far as possible provide thedetails of suspected violations with all known particulars relating to the issue. The

company recognizes that resolving such problems or concerns will advance the overall


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interests of the company that will help to safeguard the companys assets, financialintegrity and reputation.

All Directors and Senior Management Team should adhere to the Code of

Conduct and Ethics of the company. Violations of this Code of Ethics will result indisciplinary action, which may even include termination of services of the employee.The Board of Directors or any person designated by the Board for this purpose shalldetermine appropriate action in response to violations of this Code.

Compliance Officer : Mr. R. Soundar Rajan , Company Secretary

He can be reached at [email protected]

Environment CommittmentSagar Cements is committed to being an responsible organization with respect to

environment and has adopted various measures to reduce the carbon footprint byincreasing the efficiency of our operations.

Social Committment

Sagar Cements is committed to providing safe and healthy workingenvironments for its employees and also contributing to the enhancement of quality of

life of the people residing in and around the plant and other parts of the state byconducting several community programs and contributing to welfare measures.

Products

Sagar Cement is a leading producer of different types of Cements in the State of Andhra Pradesh.

The different types of cement produced include:

53 Grade OPC 43 Grade OPC


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53 Grade OPC is a higher strength cement to meet the needs of the consumer for higher strength concrete... The 43 grade OPC is the most popular general-purpose cement in the country today. The production of 43 grade OPC isnearly...

33 Grade OPC Portland Pozzolana Cement

This cement is used for general civil construction work under normalenvironmental conditions. The compressive strength... Portland PozzolanaCement is a kind of Blended Cement which is produced by either intergrinding of OPCclinker...

53 Grade OPC

53 Grade OPC is a higher strength cement to meet the needs of the consumer for higher strength concrete. As per BIS requirements the minimum 28 days compressivestrength of 53 Grade OPC should not be less than 53 MPa. For certain specializedworks, such as pre-stressed concrete and certain items of precast concrete requiringconsistently high strength concrete, 53 grade OPC is found very useful. 53 grades OPC

produce higher-grade concrete at very economical cement content. In concrete mixdesign, for concrete M-20 and above grades a saving of 8 to 10 % of cement may beachieved with the use of 53 grade OPC.

53 Grade OPC can be used for the following applications.

+ RCC works(Preferably where grade of concrete is M-25 and above)

+ Precast concrete items such as paving blocks, tiles building blocks etc.

+ Pre-stressed concrete components

+ Runways, concrete Roads, Bridges etc.


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43 Grade OPC

The 43 grade OPC is the most popular general-purpose cement in the countrytoday. The production of 43 grade OPC is nearly 50% of the total production of cementin the country.

43 Grade OPC can be used for the following applications:

+ General Civil Engineering construction work.

+ RCC works(preferably where grade of concrete is up to M-30).

+ Precast items such as blocks, tiles, pipes etc.

+ Asbestos products such as sheets and pipes.

+ Non-structural works such as plastering, flooring etc.

Network

The network of our dealers has been ensuring the fast and easy reach withspeedy feedback. The wide network of our dealers even more ensures that not even asingle remote area is left.

Further, We take pleasure to appreciate our most trusted dealers who are helpingus to utilize the full capacity of our plants.

Dealers Request for Dealership

The network of our dealers has been ensuring the fast and easy reach withspeedy feedback. The wide network of our dealers even more ensures that not even asingle remote area is left.

Further, We take pleasure to appreciate our most trusted dealers who are helpingus to utilize the full capacity of our plants.The 43 grade OPC is the most popular general-purpose cement in the country today. The production of 43 grade OPC isnearly...
http://www.sagarcements.in/dealers.html


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Careers

Like any other standard company, Sagar Cements Limited too believes that theemployees are the most important assets to the company. Our 3000 trained and

professional employees make the toughest targets possible. We too care for them inevery way so that they can have total job satisfaction while putting efforts to serve theend users in a best possible way.

Values Skill Development

Sagar Cements was built on a strong foundation of fundamental values of responsibility, respect & trust....Sagar Cements actively supports skill development

programs to train workers to professional level.....

Open Jobs Apply Online

Currently advertised positions for inspired and energetic people to join the Sagar

Cements team....Sagar Cements was built on a strong foundation of fundamental valuesof responsibility, respect & trust...
http://www.sagarcements.in/apply.htmlhttp://www.sagarcements.in/jobs.htmlhttp://www.sagarcements.in/skill.htmlhttp://www.sagarcements.in/values.html


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THEORETICAL FRAME WORK

INTRODUCTION

The financial statements are important aid to financial analysis. The focus of

financial analysis is on key figures in the financial statements and significant

relationships that exist between them. The analysis of financial statement is a process of

evaluating relationship between component parts of financial statements to obtain a

better understanding of the firms position and performance.

STEPS INVOLVED IN FINANCIAL STATEMENTS ANALYSIS:

The analysis of the financial statements requires:

The first task of the financial analysis is to select the information relevant to the

decision under consideration from the total information, contained in the financial

statements.

The second step involved in financial analysis is to arrange the information in a

way so as to highlight significant relationships. The final step is interpretation and

drawing of inferences and conclusions. In brief financial analysis is the process of

selections, relation and evaluation.

Financial statements are the basic for decision making by the management as

well as all other outsiders. Who are interested in affairs of the firm such as investors

creditors, customers, suppliers, financial institutions, employers, potential investors,

government and general public? The analysis and interpretation of financial statementdepend upon the nature and type of information available in these statements.

Financial statements are prepared primarily for decision-making. They play a

dominant role in setting the framework of managerial decision. Financial analysis is the

process of identifying the financial strengths and weakness of the firm by properly

establishing relationship between the items of the balance sheet and profit and loss

account.


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The main concern of a financial management is considered with raising financial

resources and their effective utilization towards achieving in the organization goals.

FINANCE MANAGEMENT:

It is concerned with the acquisition, financing and management of assets with

over all goals in mind. Thus it involves decisions relating to these three aspects all these

areas are interrelated the decision to acquire assets necessitates the financing and

management cost effect the decision to invest. All these decisions determine the firm to

its shareholders.

MEANING AND DEFINITION OF FINANCIAL MANAGEMENT:

A financial statement is a collection of data organized according to logical and

consistent accounting procedures; its purpose is to convey an understanding of some

financial aspects of a business firm. It may show the position at a moment of time, as in

the period of time as in the case of an Income Statement.

The term financial analysis also known as analysis and interpretation of financial

statement refers to process of determining financial strengths and weaknesses of thefirm by establishing strategic relationship between the items of the Balance sheet, profit

and loss account.

DEFINITIONS:

Financial statement analysis is largely a study of relationship among the various

financial factors in a business or disclosed by single set of statements and a study of the

trend of these factors as shown in a series of statement.

The financial statements provide a summary of accounts of a business

enterprise the balance sheet reflecting the assets, liabilities and capital as a certain data

and the income statement showing results of operations during a certain period.

- John N.Myers


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According to Metcalf and Titard: is a process of evaluating the relationship

between component parts of a financial statement to obtain a better understanding of a

firms position and performance.

NATURE AND OBJECTIVES OF FINANCIAL STATEMENTS

Nature:

The financial statements are prepared on the basis of recorded facts. The

recorded facts are those which can be expressed in monitory terms the statements are

prepared for a particular period, generally one year. The accounting records and

financial statements are prepared from these records are based on the historical costs.

The financial statements, by nature, are summarizes of the items recorded in the

business and these statements are prepared periodically, generally for the accounting

period.

The American Accounting Association expresses in its statements. Every

corporate statement should be based on accounting principles that are sufficiently

uniform, objective and well understanding to justify opinions as to the conditions and

progress of business enterprises.

And it also states the nature of financial statement as Financial statements are

prepared for the purpose of presenting a periodical review of report on progress by the

management and deal with the status of investment in the business and the results

achieved during the period under review.

The financial statements are composed of data which is the result of combination

of

1. Recorded facts concerning business transactions

2. Convection adopted to facilitate the accounting technique.

3. Postulates or assumptions made to personal judgments used in the application of

the correction and postulates.


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OBJECTIVES OF FINANCIAL STATEMENTS:

Financial statements are the sources of information on the basis of which

conclusions are drawn about the probability and financial positions of a concern. They

are the major means employed by firms to present their financial situation of owners,

creditors and the general public. The primary objectives of Financial Statements are to

assist in decision-making. The Accounting principles Board of America (APB) state the

following objectives of Financial Statements.

The basic objectives of financial statements are to furnish information required

for decision-making. Other objectives are:

i. To provide reliable financial information about economic resources and

obligations of an enterprise.

ii. To provide reliable information about changes is net resources of an enterprise

that result from the activities.

iii. To provide financial information that assists in estimating the earnings potential

of the enterprise.

iv. To provide other relevant information about changes in the economic resources

and obligations, and

v. To disclose, to the extent possible, other information related to the financial

statements relevant to the users of the statements.

IMPORTANCE OF FINANCIAL STATEMENTS:

The information given in the financial statement is very useful to number of parties

as given below:

Owners:

Owners provide funds for the operations of a business and want to know whether

their funds are properly utilized or not. The financial statement is prepared from time to

time to satisfy their curiosity.


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Creditors:

Creditors want to know the financial position of a concern before giving loans

or granting credit. The financial statements help them in judging such position.

Investors:

Prospective investor, who wants to invest money in a firm, would like to make

an analysis of the financial statements of that to know how state proposed investment

will be.

Managers:

Management is the art of getting things done through others. This requires that

the subordinates are doing work properly. Financial statements are an aid in this respect

because they serve the manager in appraising the performance of the subordinates.

Actual results achieved by the employees can be measured against the budgeted

performance they were expected to achieve and remedial action can be taken if the

performance is not up to the mark.

TYPES OF THE FINANCIAL STATEMENTS

The term financial statements generally refers to two basic statements viz.,

i. The Income Statement.

ii. The Balance Sheet of course a business may also prepare

iii. A statement of Retained Earnings and

iv. A statement of Changes in Financial Position in addition to the above two

statements.

The meaning and significance of each of these statements is explained below:

1) INCOME STATEMENT:

The income statement, (also termed as Profit and Loss account) shows the

income and expenses under different head. The income minus expenditure indicates the

profit made by the firm. Broadly there are three kinds of expenses, Sales income minus

the expenses incurred on operations, gives the operating profit for a given year.


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2) BALANCE SHEET:

The Balance sheet is a statement of financial position of a business at a specified

moment of time. It is a statement of assets and liabilities of a firm or what it owes and

what it owns, as on a given date. In a Balance sheet, the assets and liabilities balances

are equal to each other, as the statement is based on the double entry system of

bookkeeping.

The important distinction between an Income statement and a Balance sheet is

that Income statement is for a period while Balance sheet is on a particular date

ROLE OF FINANCIAL STATEMENTS:

Finance is regarded as the lifeblood of a business enterprise i.e., finance is to

business what blood is to human body. This is because in the modern money oriented

economy; finance is one of the basis foundation of all kinds of economic activities. It is

the master key, which provides access to all sources for being employed manufactured

and economic activities. However it is also true that money be gets more money. Only

when it is properly managed. Hence efficient management of every business enterprise

is closely limited with effect management of its finance.

SCOPE OF FINANCIAL MANAGEMENT:

The approach to the scope of financial management is divided, for purpose of

exposition in to two broad categories.

a) The Traditional approach and

b) The Modern approach.

a) Traditional Approach:

The traditional approach to the scope of financial management refers to its

subject matter, in academic literature in the initial stages of its evolution, as a separate

branch of academic study. The term corporation finance was use to describe what is

now known in the academic world as financial management.


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The scope of the finance was of funds by corporate enterprise to meet their

financial needs. The field of study dealing with finance was treated as encompassing

three interrelated aspects of raising and administering resource from outside.

1. The institutional arrangement in the form of financial institutions, which

comprise the organization of the capital, market.

2. The financial instrument through which funds are raised from the capital

market and the selected aspects of practices and the procedural aspects of

capital market.

3. The legal and accounting relationship between a firm and its source of

funds.

The traditional approach to the scope of finance function evolves during the

1920s and 1930,s and it dominated in this decade. But it has now discarded as suffers

from serious limitations they are:

i) Those relations to the treatment of various topics and the emphasis attach

to them.

ii) These relating to the basic conceptual and analytic framework of definition and scope of finance function.

b) MODERN APPROACH:

The modern approach view the term financial management in a broad sense and

provides a conceptual and analytical framework for financial decision making. Thus,

the finance function covers both acquisition of funds as well as their allocations.

Defined in a broad sense, it is viewed as an integral part of overacts

management. The principles contains of the modern approach to the financial

management can be said to the

1. How large should an enterprise be and how fast should it grow?

2. In what from should it hold assets? And

3. What should be the composition of its liabilities?


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IMPORTANCE AND USES OF FINANCIAL STATEMENTS:

Financial Statements assume importance by reporting the financial position and

operating results of an enterprise at the end of the accounting period. The impact of

business transactions on the financial position and progress of the enterprise is briefly

disclosed by these statements. Financial statements may be described as a

comprehensive index of the financial affairs of a concern and are useful in many ways

to a variety of people.

Managers are responsible for the overall performance of the firm. They make

several decisions and therefore, need information. Accounting provides relevant

information of them. Thus, they have a direct interest in accounting information.

Some users of the accounting information have a direct interest in the firm while

others have an indirect interest. Those who directly interested in the financial

information, are owners, managers, creditors, investors, employees, customers,

and tax authorities.

Creditors supply financial resources to the firm. They are interested in the

continuing profitable performance of the firm, so that they may regularly receiveinterest and repayment of the principal sum. They need accounting information

to estimate the firms performance and to determine the degree of risk to which

they are exposed.

Potential investors, creditors or owners, get an idea about the firms financial

strength and performance from its financial reports. They are generally interested

in the earnings, dividend, and growth trends of the firm.

Customers may be interested in the financial statements of a firm, because a

careful study of financial statements may provide information about the prices

being charged by the firm. Hence the financial statements are most important

and useful for the knowing each and every significant aspect of the company and

taking for taking useful decisions.

LIMITATIONS OF FINANCIAL STATEMENTS:


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27/79

The financial statements provide, for the readers, understanding of some

financial aspects of a firm and also reveal the result of series of activities over a given

period of time. The above said functions delivered by financial statements are of

primary in nature. By analyzing the same information from financial statements one canunderstand much more important things like, financial strengths and weakness of a

firm.

I) Meaning of a financial analysis:

The financial statements also to better explain the financial strengths and

weakness of a firm. In such a case the financial statement analysis can be defined as the

process of identifying the financial strengths and weaknesses of the firm by properlyestablishing the relationships between the items of balance sheet and profit and loss

account.

Analysis involves breaking/separating a thing into its components, establishing

the existing relationships between the key items/components, interpreting the

relationship so as to draw meaningful inferences.

a) Type of relationship to the established:

The type of relationship to be investigated depends upon the objective and

purpose of evaluation. The purpose of evaluation of financial statements differs among

various groups interested in the result reported in the financial statements. For example,

short-term creditors are primarily interested in judging the firms ability to pay its

currently maturing obligations.

b) Focus on key figures:

Although many financial items/figures are available in the financial statements,

the analysis should focus on key items only. If this is not the case, each small, or

unimportant figures also merits for analysis. This leads to emergence of unimportant

conclusions. A single item or a group of items may be key figures for analysis.

Generally, capital, net worth, sales, expenses categorized under different heads are

some better example of key figures.

c) Analysis and interpretation:


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Analysis and interpretation are closely interlinked. They are complimentary to

each other. Analysis with out interpretation is useless and interpretation without

analysis is impossible. But, generally, the term analysis is used to include interpretation

as well, since analysis always aimed at interpretation of relationships that areestablished in the course of analysis.

OBJECTIVES OF FINANCIAL ANALYSIS:

The following are some of the important objectives of financial statement analysis

a) It helps in assessing the present and future earning capacity or profitability of

the concern.

b) It helps in determining the operational efficiency of the concern as a whole and

of its various departments.

c) It helps in assessing short-term and long-term liquidity of the concern, which is

highly useful to the suppliers of funds.

d) It helps in undertaking a comparative study in regard to one firm with another firm of same concern over a period of years or one department with another

department of the concern.

e) It helps in studying the possibility of developments in the future by making

forecasts and preparing budgets.

f) It helps in learning the financial stability of a concern by the application of

ratio techniques.

g) It helps in identifying the reason for change in the profitability/ financial

position of the firm.

h) It helps in assessing the real meaning and significance of financial data.

TYPES OF FINANCIAL ANALYSIS:


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The analysis of financial statements can be done on the basis of the following criteria;

A) Material used for analysis,

B) Modus operandi of the analysis.

A) Material used for analysis:

The financial analysis can be done on the basis of financial information of

a firm. This information can be had either from externally available reports like

financial statements or internally available records books of accounts.

The types of analysis can be decided. Thus the analysis based on material

used can be of two types.

i) Internal analysis, ii) External analysis.

I. Internal analysis:

This analysis is made use by those persons who have access to the books

of accounts. When the financial statements are analysed for managerial purposes

by the member of the organization, it is called as internal analysis.

II. External analysis:

This type of analysis is done by utilising information from financial

statements, which are available externally to any interested party. Investors,

lenders, governmental agencies and labour unions generally undertake this type

of analysis. They do not have access to the internal records of the firm and

mainly depend upon published financial statements. Such an analysis cannot be

detailed one and as such serves only a limited purpose.

B) Modus operandi of the analysis:

The other basis on which financial analysis can be viewed is Modus operandi.

According to this, financial analysis can also be of two types:

i) Horizontal Analysis

ii) Vertical analysis

I. Horizontal Analysis:


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Financial tool is a logic employed by a skilled analyst to measure the

effectiveness of operations of a company and to assess the validity of decisions. An

array of financial tools involves analysis of the relationships among the financial

statements and the changes that has taken place in these items as reflected by successivefinancial statements.

1. Comparative statements

2. Common- size statements

3. Trends analysis

4. Funds flow statements

5. Cash flow statements6. Ratio analysis.

Common size statements:

The common size statements, balance sheet and income statement are shown in

analytical percentages. The figures are shown as percentage of total assets, total

liabilities and total assets. The total assets are taken as 100 and different assets are

expressed as percentage of the total similarly various liabilities are taken as a part of total liabilities.

Trend analysis:

Trend analysis depicts behaviors of the ratios over a period of time and the

trends in the operation of the enterprise. The trend figures are index figures going a

birds exe view of the comparative data by presenting it over a period of time.

Funds flow statements:

Funds flow a statement that shows the movements of funds and is a report

of financial operations of the business undertaking. It indicates various means by which

funds were obtained a particular period and the ways to which these funds were

employed.

Cash flow statements:


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A statement of changes in financial position of firm on cash basis is called cash

flow statements such a statement enumerates net effects of the various business

transactions on cash, and takes into account receipt and disbursements of cash. A cash

position of a business enterprise between data of two balance sheets.

COMPARATIVE STATEMENTS ANALYSIS:

Objectives

After studying this lesson, you should be able to

Understand the comparative statement analysis.

Prepare the comparative statement, and interpret the changes efficiently.

StructureIntroduction

Need for comparative Statements

Comparative Income Statement

Comparative Balance Sheet

Limitations of Comparative Financial Statements

Introduction

You have learnt the basics of financial statements and analysis and interpretation

of the same, in the last lesson. An important technique of financial analysis, i.e.,

comparative statement analysis, is discussed in this lesson, so as to enable you to

undertake the analysis of financial statements of a concern.

Need for comparative statement analysis

The financial statements viz., the balance sheet and the profit and loss account

contain summarized information of the firms financial affairs organized systematically.

The balance sheet indicates the financial position or the state of affairs of a business at a

particular moment of time similarly; profit and loss account is the score board of the

firms performance during a particular period of time.

Although these two statements do inform about financial affairs at a point of

time and results of the operations conducted during a year, they do not reveal the


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periodic changes took place. The periodic changes mean changes in the value of a

financial element at a time compared to some previous date. The know the periodic

changes in financial variables, the tool comparative financial statement being

prepared. This analysis is an example of Horizontal analysis, as it relates to arriving atthe change in a single item from one period compared to the other.

In brief, comparative financial statements are those statements, which have been

designed in a way so as to provide time perspective to the consideration of various

elements of financial position embodied in such statements.

Comparative Income Statement:

A comparative income statement will show:

i. Absolute figures for two (or more) periods.

ii. The absolute change from one period to another and

iii. The relative/percentage change

Relating to the items pertaining to income statement viz., net sales, cost of goods

sold, gross profit, administrative expenses etc. The reader may quickly ascertain

whether the cost goods sold has increased or decreased by just glancing at thestatement. A report of interpretation of the changes in various financial items will be

much useful in arriving at meaningful conclusions.

Comparative Balance Sheet:

Actually speaking, comparative balance sheet will be similar to that of

comparative income statement except that it draws its financial items from Balancesheet pertaining to two different years and tabulated in vertical statement. Interpretation

report, similar to the comparative income statement, is arranged at the end for arriving

at conclusions.

Limitations of Comparative Financial Statements


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COMPARATIVE BALANCE SHEET OF SAGAR CEMENTS FOR THE

YEAR ENDING 31 ST MARCH 2007& 2008

INTERPRETATION

PARTICULARS 31-03-2007 31-03-2008ABSOLUTE

CHANGE

PERCENTAGE

OF CHANGESOURCES OF FUNDSShare capital 23431000 23431000 0 0

Reserve & surplus 31796552.66 38514508.88 6717956.22 21.13

Secured loans 9103918.85 26867178.33 17763259.48 195.12

Unsecured loans 5000000 10000000 5000000 100

Sales tax deferred

liability

26393601.4 26483547.4 89946 0.34

Provision for deferred

tax liability

1987112 2678331 691219 34.79

TOTAL 97712184.9

1

127974565.6

1

30262380.7 30.97

APPLICATION OF FUNDS

Fixed assets 41819971 45360574.65 3540603.65 8.47

Investments 27000 27000 0 0

Deposits 4584922 3896967 -687955 -15

Current assets, loans&

advances

51272111.91 78685933.96 27413822.05 53.47

Preliminary & pre-

operative expenses

8180 4090 -4090 -50

TOTAL 97712184.9

1

127974565.6

1

30262380.7 30.97


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1. The comparative balance sheet of the company reveals that during the year 2007,

there has been sound increase in current assets, loans & advances of

27413822.05 i.e., 53.47%. this fact depicts that the companys liquidity position

is good.2. The company has increased the unsecured loan of Rs.5000000 i.e., 100%. And

also there is a sound increase in secured loan of Rs.17763259.48 i.e.,195.12%

3. While there is increase of fixed asset value to the extent of Rs. 3540603.65 i.e.,

8.47%. This fact depicts that the company has diverted its loan to purchase fixed

assets.

4. On the whole, overall financial position of the company satisfactory.


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YEAR ENDING 31 ST MARCH 2008 & 2009

PARTICULARS 31-03-2008 31-03-2009 ABSOLUTE

CHANGE

PERCENTAGE

OF CHANGE

SOURCES OF FUNDS

Share capital 23431000 23431000 0 0

Reserve & surplus 38514508.88 51326867.89 12812359.01 33.27

Secured loans 26867178.33 36200447.38 9333263.05 34.73

Unsecured loans 10000000 13830206 3830206 38.3

Sales tax deferred

liability

26483547.4 26473735.4 -9812 -0.037


tax liability

2678331 2783243 104912 3.92

TOTAL 127974565.61 154045499.67 26070934.06 20.37


Fixed assets 45360574.65 43734109 -1626465.65 -3.59


Deposits 3896967 4247949 350982 9.006

Current assets, loans&advances

78685933.96 106036441.67 27350507.71 34.76

Preliminary & pre-

operative expenses

4090 0 -4090 -100

TOTAL 127974565.61 154045499.67 26070934.06 20.37


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INTERPRETATION

1. The comparative balance sheet of the company reveals that, there slight

increasing comparatively previous year of Rs. 27350507.71 i.e., 34.76%. Any

way the companys liquidity position is good.

2. The company has increased the secured and unsecured loans of 9333269.05 and

3830206 i.e., 34.73% and 38.30% respectively.

3. The companys reserves and surplus is increased by 12812359.01 i.e., 32.27%

4. There is short decrease in companys fixed asset value of -1626465.65 i.e.,

-3.59%.

5. The preliminary and pre-operative expenses were total written off.

6. On the whole, overall financial position of the company is satisfactory.


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PARTICULARS 31-03-2009 31-03-2010ABSOLUTE

CHANGE

PERCENTAGE

OF CHANGE

SOURCES OF FUNDS

Share capital 23431000 23431000 0 0

Reserve&surplus 51326867.89 72621203.04 21294335.15 41.49

Secured loans 36200447.38 54353221.01 18152773.63 50.15

Unsecured loans 13830206 17810745 3980539 28.78

Sales tax deferred

liability

26473735.4 26579192 105456.6 0.4


tax liability

2783243 2694458.9 -88784.1 -3.19

TOTAL 154045499.67 197489819.95 43444320.28 28.20


Fixed assets 43734109 47415935 3681826 8.42


Deposits 4247949 4740902 492953 11.6


advances

106036441.67 145305982.95 39269541.28 37.03

Preliminiary & pre-

operative expenses

0 0 0 0

TOTAL 154045499.67 197489819.95 43444320.28 28.20

INTERPRETATION


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1. The comparative balance sheet of the company reveals that, there were increase

of current assets, loans & advances of Rs.39269541.28 i.e., 37.03%. Which

depicts that the companys liquidity position is satisfactory?

2. There is a sound increase in secured loans value of 18152773.63 i.e., 50.15%.

and also increase in unsecured loan of Rs.3980539 i.e., 28.78%.

3. There is an increase in fixed asset value of Rs.3681826 i.e., 8.42%. This fact

depicts that the company is diverting its loan to purchase fixed asset.

4. There is increase in increasing rate of reserves & surplus of Rs.21294335.15 i.e.,

41.49%. This depicts the good profitability of the company.

5. On the whole, overall financial position of the company satisfactory.


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INTERPRETATION

PARTICULARS 31-03-2010 31-03-2011 ABSOLUTE

CHANGE

PERCENTAGE

OF CHANGESOURCES OF FUNDS

Share capital 23431000 23431000 0 0

Reserve &

surplus

72621203.04 82985086.60 10363883.56 14.27

Secured loans 54353221.01 46893584.12 -7459636.89 -13.72

Unsecured loans 17810745 25692270.90 7881525.9 44.25

Sales tax deferred

liability

26579192 26579192 0 0

Provision for

deferred tax

liability

2694458.90 3809447 1114988.1 41.38

TOTAL 197489819.95

209390580.62

11900760.67 6.026

APPLICATION OF FUNDSFixed assets 47415935 76281546.5 28865611.5 60.88


Deposits 4740902 6277902 1537000 32.42

Current assets,loans& advances

145305982.95 126804132.12 -18501850.83 -12.73

TOTAL 197489819.9

5

209390580.6

2

11900760.67 60.26


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1. The comparative balance sheet of the company reveals that, there is decrease in

current assets, loans& advances of Rs. -18501850.83 i.e., -12.73% . This fact

depicts that the company is losing its liquidity.

2. There is increase in the unsecured loan value of Rs.7881525.9 i.e., 44.25% and

we can see the decrease in secured loan of Rs.-7459636.89 i.e., -13.72%.

3. There is a sound increase in the companys fixed asset value of Rs.28865611.5

i.e., 60.88% and also increase in deposits of the company of Rs.1537000 i.e.,

32.42%.

4. The above fact depicts that the company is diverting its loan amount to purchase

fixed assets.

5. There is a decrease in increasing rate of reserves & surplus of 14.27%. which

amounted 10363883.56

6. On the which, overall financial position of the company satisfactory.


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INTERPRETATION

PARTICULARS Year-2011 Year-2012 ABSOLUTE

CHANGE

PERCENTAGE

OF CHANGESOURCES OF FUNDS

Share capital 23431000 23431000 0 0

Reserve & surplus 82985086.60 85218617.33 2233530.73 2.69

Secured loans 46893584.12 41498464.30 -5395119.82 -11.50

Unsecured loans 25692270.90 36181575.20 10489304.3 40.82

Sales tax deferred

liability

26579192 26579192 0 0


tax liability

3809447 5335491.28 1526044.28 40.06

TOTAL 209390580.62 218244340.11 8853759.49 4.228

APPLICATION OF FUNDSFixed assets 76281546.5 98043419.75 21761873.25 28.63


Deposits 6277902 7655913 1378011 21.95


advances

126804132.12 112518007.36 -14286124.76 -11.27

TOTAL 209390580.62 218244340.11 8853759.49 4.228


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1. The comparative balance sheet of the company reveals that, there is decrease in

current assets, loans& advances of Rs. 14286124.76 i.e., -11.27% . This fact

depicts that the company is losing its liquidity.

2. There is increase in the unsecured loan value of Rs.36181575.20 i.e., 40.82%

and we can see the decrease in secured loan of Rs.41498464.30 i.e., -11.50%.

3. There is a sound increase in the companys fixed asset value of Rs.98043419.75

i.e., 28.63% and also increase in deposits of the company of Rs.7655913 i.e.,

21.95%.

4. The above fact depicts that the company is diverting its loan amount to purchase

fixed assets. There is a decrease in increasing rate of reserves & surplus of

2.69%. This amounted 85218617.33.

5. On the which, overall financial position of the company satisfactory.

COMMOMN SIZE BALANCE SHEET OF SAGAR CEMENTS FOR THE



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INTERPRETATION

PARTICULARS 31-03-2007 PERCENTAGE

OF CHANGE

31-03-2008 PERCENTAGE

OF CHANGE

SOURCES OF FUNDSShare capital 23431000 45.2 23431000 32.57

Reserve& surplus 4514157.35 8.71 15921035.29 22.13

Secured loans 4153804.78 8.01 8119302.71 11.29

Sales tax deferred

liability

19734229 38.08 23281709.48 32.36

Provision for

deferred tax

liability

0 0 1188516 1.65

TOTAL 51833191.1

3

100 71941563.4

8

100


Fixed assets 33320851 64.28 30856945 42.89

Investments 53520 0.1 27000 0.04

Deposits 1521927 2.94 1554192 2.16Current assets,

loans& advances

16920533.13 32.64 39491156.48 54.89

Preliminiary &

pre-operative

expenses

16360 0.04 12270 0.02

TOTAL 51833191.1

3

100 71941563.4

8

100


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1. The analysis of current assets, loans & advances of both the years shows that the

percentage of current assets, loans & advances to that of total assets is 32.64%

in 2007, and increased to 54.89% in the year 2008 and in the both the years the

company is having adequate working capital.

2. The analysis of fixed assets of both the years shows that the percentage of fixed

assets to that of total assets is 64.28% in the year 2007 and it reduced to 42.89%

in the year 2008.

3. Companys reserves capacity is very good. Because percentage of

reserves to that of total liabilities is 8.7% in 2007, it increased to 22.13% in

2008.

COMMOMN SIZE BALANCE SHEET OF SAGAR CEMENTS FOR THEYEAR ENDING 31 ST MARCH 2008 & 2009


47/79

INTERPRETATION


percentage of current assets, loans & advances to that of total assets is 54.89% in

PARTICULARS 31-03-2008

PERCENTA

GE OF

CHANGE

31-03-2009

PERCENTA

GE OF

CHANGE


Reserve& surplus 15921035.29 22.13 31796552.6

6

32.54

Secured loans 8119302.71 11.29 9103918.85 9.32

Unsecured loans 0 0 5000000 5.12

Sales tax deferred

liability

23281709.48 32.36 26393601.4 27.01

Provision for

deferred tax

liability

1188516 1.65 1987112 2.03

TOTAL 71941563.48 100 97712184.9

1

100


Fixed assets 30856945 42.89 41819971 42.80

Investments 27000 0.04 27000 0.03Deposits 1554192 2.16 4584922 4.69

Current assets,

loans& advances

39491156.48 54.89 51272111.9

1

52.47

Preliminary & pre-

operative expenses

12270 0.02 8180 0.01

TOTAL 71941563.48 100 97712184.9

1

100


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2008 and it decreased to 52.47% in 2009 and in the both the years the company

is having adequate working capital.

2. The analysis of fixed assets of both the years shows the percentage of fixed

assets to that of total assets is 42.89% in 2008 and 42.80% in 2009.

3. Companys reserves capacity is very good. Because percentage of Reserves

&surplus to that of total liabilities is 22.13% in the year 2008 and it increased to

32.54% in the year 2009.


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PARTICULARS 31-03-2009PERCENTAGE

OF CHANGE31-03-2010

PERCENTAGE

OF CHANGE

SOURCES OF FUNDS

Share capital 23431000 23.98 23431000 18.31

Reserve& surplus 31796552.66 32.54 38514508.88 30.10

Secured loans 9103918.85 9.32 26867178.33 20.99

Unsecured loans 5000000 5.12 10000000 7.81

Sales tax deferredliability

26393601.4 27.01 26483547.40 20.69

Provision for

deferred tax

liability

1987112 2.03 2678331 2.1

TOTAL 97712184.9

1

100 127974565.6

1

100


Fixed assets 41819971 42.80 45360574.65 35.44

Investments 27000 0.03 27000 0.02

Deposits 4584922 4.69 3896967 3.04

Current assets,

loans& advances

51272111.91 52.47 78685933.96 61.49

Preliminary &

pre-operative

expenses

8180 0.01 4090 0.01

TOTAL 97712184.91 100 127974565.61 100


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INTERPRETATION


percentage of current assets, loans & advances to that of total assets is 52.47% in

2009 and it increased to 61.49% in the year 2009. And in the both the years the




3. Companys reserve capacity is very good. Because percentage of Reserves &

surplus to that of total liabilities is 32.54% in 2009 and 30.10% in 2010 .


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INTERPRETATION


OF CHANGE31-03-2011

PERCENTAGE

OF CHANGE

SOURCES OF FUNDS

Share capital 23431000 18.31 23431000 15.21

Reserve& surplus 38514508.88 30.10 51326867.89 33.32

Secured loans 26867178.33 20.99 36200447.38 23.5

Unsecured loans 10000000 7.81 13830206 8.98

Sales tax deferred

liability

26483547.40 20.69 26473735.4 17.19

Provision for

deferred tax

liability

2678331 2.1 2783243 1.8

TOTAL 127974565.6

1

100 154045499.6

7

100


Fixed assets 45360574.65 35.44 43734109 28.39

Investments 27000 0.02 27000 0.02

Deposits 3896967 3.04 4247949 2.76

Current assets,

loans& advances

78685933.96 61.49 106036441.67 68.83

TOTAL 127974565.6

1

100 154045499.6

7

100


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Percentage of current assets, loans & advances to that of total assets is 61.49% in

2010 and it increased to 68.83% in the year 2011 and in the both the years the




3. Companys reserve capacity is very good. Because percentage of reserves &

surplus to that of total liabilities is 30.10% in 2010 and increased to 33.32% in

2011.

COMMOMN SIZE BALANCE SHEET OF SAGAR CEMENTS FOR THEYEAR ENDING 31 ST MARCH 2011& 2012


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INTERPRETATION


OF CHANGE31-03-2012

PERCENTAGE

OF CHANGE


Reserve& surplus 51326867.89 33.32 72621203.04 36.77

Secured loans 36200447.38 23.5 54353221.01 27.52

Unsecured loans 13830206 8.98 17810745 9.02

Sales tax deferred

liability

26473735.4 17.19 26579192 13.46

Provision for

deferred tax

liability

2783243 1.8 2694458.90 1.37

TOTAL 154045499.6

7

100 197489819.9

5

100


Fixed assets 43734109 28.39 47415935 24.01

Investments 27000 0.02 27000 0.01

Deposits 4247949 2.76 4740902 2.4

Current assets,

loans& advances

106036441.67 68.83 145305982.95 73.58

TOTAL 154045499.6

7

100 197489819.9

5

100


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COMPARATIVE INCOME STATEMENT OF SAGAR CEMENTS FOR THE


INTERPRETATION

PARTICULARS 31-03-2007 31-03-2008 ABSOLUTECHANGE

PERCENTAGE OFCHANGE

INCOME

Sales 165084742 244225722.08 79140980.08 47.94

Other receipts 9842450.58 13846059.16 4003608.58 40.68

Increase/ decrease infinished stock

0 105203.20 105203.20 100

TOTAL(A) 174927192.58 258176984.44 83249791.86 47.59

EXPENDITURE

Consumption of rawmaterial & store

111692719.74 170317647 58624927.26 52.49

Manufacturing expenses 13872935.93 18251986.27 4379050.34 31.57

Taxes & duties 31571594.44 44979966.63 13408372.19 42.47

Administrative expenses 2662990.56 5282272.94 2619282.38 98.36

Interest & financecharges

616676 486760.23 -129915.77 -21.07

Depreciation 1826842 1852573 25731 1.41

Misc expenses 4090 4090 0 0

Decrease in finishedstock

150843.20 0.00 -150843.20 -100

TOTAL(B) 162398691.87 241175296.07 78776604.20 48.51

Profit before tax for theyear(A-B)

12528500.71 17001688.37 4473187.66 35.7

Excess provision for taxation of earlier year

-66893.23 327575 394468.23 589.69

Provision for deferredtax liability

443536 798596 355060 80.05

Profit after taxation(PAT)

12151857.94 15875517.37 3723659.43 30.64

Add B/f previous year 4514157.35 15921035.29 11406877.94 252.69

Balance profit/losscarried to reserve &surplus

16666015.29 31796552.66 15130537.37 90.79


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1. The comparative income statement of the company reveals that, during the year

sales are increased by 79140980.08. i.e., 47.94% and also other receipts

increased by 40.68%.

2. While there is increase in sales of 47.94%, the consumption of raw material also

increased by 58624929.26 i.e., 52.49%.

3. There is a sound increase of administration expenses of 2619282.38 which is

98.36%.

4. Any way the profit before tax (PBT) of the company increased by 4473187.66

i.e., 35.7%.

5. Overall the profitability of the company is more than satisfactory.


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INTERPRETATION


PERCENTAGE OFCHANGE

INCOME

Sales 244225722.08 235323873.45 -8901848.63 -3.64

Other receipts 13846059.16 7847939.32 -5998119.84 -43.32


105203.20 3981781 3876577.8 3684.85

TOTAL(A) 258176984.44 247153593.77 -11023390.67 -4.27

EXPENDITURE


170317647 192965699.31 22648052.31 13.29


Taxes & duties 44979966.63 5909210 -39070756.63 -86.86


Interest & finance charges 486760.23 2654443.92 2167683.69 445.33

Depreciation 1852573 2699138.85 846565.85 45.69

Misc expenses 4090 4090 0 0

Decrease in finished stock 0.00 0.00 0 0

TOTAL(B) 241175296.07 239744418.55 -1430877.52 -0.59


17001688.37 7409175.22 -9592513.15 -56.42


327575 0.00 -327575 -100

Provision for deferred taxliability

798596 691219 -107377 -13.45

Profit after taxation (PAT) 15875517.37 6717956.22 -9157561.15 57.68


Balance profit/loss carriedto reserve & surplus

31796552.66 38514508.88 6717956.22 21.13


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there is a short decline of sales by -8901848.63 i.e., -3.64% and as well as

decline of other receipts of -5998119.84 i.e., -43.32%.

2. The above decline in sales caused to increase in finished stock by 3876577.8 i.e.,

3684.85%.

3. While there is decline in sales by -3.64%, the consumption of raw material

increased only 13.29%

4. During the year interest & financial charges of the company increased by

2167683.69 i.e., 445.33%.

5. With the above results, the company faces the loss of -56.42% (PBT)

6. On the whole, overall profitability of the company satisfactory.


59/79




PERCENTAGEOF CHANGE

INCOME

Sales 235323873.45 307228040.60 71904167.15 30.56

Other receipts 7847939.32 8867291.63 1019352.31 12.99


3981781 1135483 -2846298 -71.48

TOTAL(A) 247153593.77 317230815.23 70077221.46 28.35

EXPENDITUREConsumption of rawmaterial & store

192965699.31 238204911.77 45239212.46 23.44


Taxes & duties 5909210 2106623 -3802587 -64.35


Interest & finance charges 2654443.92 4281164.47 1626720.55 61.28

Depreciation 2699138.85 2857930.01 158791.16 5.88

Misc expenses 4090 4090 0 0TOTAL(B) 239744418.55 298067004.22 58322585.67 24.33


7409175.22 19163811.01 11754635.79 158.65

(-)Provision for deferred taxliability

691219 104912 -586307 -84.82

6717956.22 19058899.01 12340942.79 183.7

(-) Provision for taxation 0.00 6246540 6246540 100

Profit after taxation (PAT) 6717956.22 12812359.01 6094402.79 90.72


Balance profit/loss carried toreserve & surplus

38514508.88 51326867.89 12812359.01 33.27


60/79

INTERPRETATION

1. The comparative income statement of the company reveals that during the year

sales are increased by 71904167.15 i.e., 30.56% and also increased in other

receipts of 1019352.31 i.e., 12.99%.

2. Consumption of raw material and manufacturing expenses increased by

45239212.46 and 10964636.29 i.e., 23.44% & 38.23% respectively.

3. During the year administration and Interest & financial charges are increased by


4. There is a sound increase in Profit before tax of 11754635.79 i.e., 158.65%.

5. On the whole, the profitability of the company is satisfactory.


61/79



PARTICULARS 31-03-2010 31-03-2011 ABSOLUTE CHANGE

PERCENTAGE OFCHANGE

INCOME

Sales 307228040.60

526034638 218806597.4 71.22

Other receipts 8867291.63 3418411.56 -5448880.07 -61.45


1135483 4281651 3146168 277.08

TOTAL(A) 317230815.23

533734700.56

216503885.33

68.25

EXPENDITURE


238204911.77

429689292.09 191484380.32

80.39

Manufacturing expenses 39648256.10 55302431 15654174.90 39.48

Taxes & duties 2106623 4091580 1984957 94.22


Interest & finance charges 4281164.47 7453592 3172427.53 74.10

Depreciation 2857930.01 2946126 88196 3.09

Misc expenses 4090 0.00 -4090 -100

TOTAL(B) 298067004.22

512423692.91

214356688.7 71.92


19163811.01 21311007.65 2147196.63 11.2

(-)Provision for deferredtax liability

104912 -88784.10 -193696.1 -184.63

19058899.01 21399791.75 2340892.73 12.28

(-)Provision for sales taxliability

0.00 105456.60 10556.60 100

(-) Provision for taxation 6246540 0.00 -6246540 -100

Profit after taxation (PAT) 12812359.01 21294335.15 8481976.13 66.20



51326867.89 72621203.05 21294335.15 41.49


62/79

INTERPRETATION

1. The comparative income statement of the company reveals that during the year

sales of the company increased by 218806597.4 i.e., 71.22%. And also other

receipts are decreased by -61.45%.

2. Consumption of raw material and manufacturing expenses are increased by


3. During the year taxes & duties and interest & financial charges are increased by

94.22% and 74.10% respectively.

4. There is increase in profit before taxes of the company by 2147196.63 i.e.,

11.2%.



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COMPARATIVE INCOME STATEMENT OF SAGAR CEMENTS for THE


INTERPRETATION

PARTICULARS 31-03-2011 31-03-2012 ABSOLUTE CHANGE

PERCENTAGE OFCHANGE

INCOME

Sales 526034638 600575514 74540876 14.17

Other receipts 3418411.56 5100343.92 1681932.36 49.20


4281651 5602655 1321004 30.85

TOTAL(A) 533734700.56 611278512.92 77543812.36 14.53

EXPENDITURE


429689292.09

490782880.36

61093588.27 14.22

Manufacturing expenses 55302431 65129369.08 9826938.08 17.77

Taxes & duties 4091580 7593753.11 3502173.11 85.59


Interest & finance charges 7453592 9774017.65 2320425.65 31.13

Depreciation 2946126 3942364 996238 33.82

TOTAL(B) 512423692.91

594339128.27

81915435.36 15.99


21311007.65 16939384.65 -4371623 -20.51

(-)Provision for deferred taxliability

-88784.10 1114988.10 1203772.2 -1355.84

21399791.75 15824396.55 -5575395.2 26.05

(-)Provision for sales taxliability

105456.60 0.00 -105456.60 -100

(-) Provision for taxation 0.00 5460513 5460513 100

Profit after taxation (PAT) 21294335.15 10363883.55 -10930451.60

51.33



72621203.05 82985086.60 10363883.55 14.27


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sales are increased by 74540876 i.e., 14.17% and other receipts also increased by

1681932.36 i.e., 49.2%.

2. While there is increase in sales by 14.17%, the consumption of raw material also

increased by 14.22%.

3. Taxes & duties are increased by 85.59%

4. There is a negative results in profit before tax (PBT) of the company i.e.,

-20.51%.

5. On the whole, overall profitability of the company is not satisfactory.


65/79

COMMON SIZE INCOME STATEMENT OF SAGAR CEMENTS FOR THE

YEAR ENDING 31 ST MARCH 2007 TO 2008

INTERPRETATION

PARTICULARS 31-03-2007 PERCENTAGE OFCHANGE

31-03-2008 PERCENTAGE OFCHANGE

INCOME

Sales 92003562 100 165084742 100

Other receipts 10542580.72 11.46 9842450.58 5.96

Increase in finished stock 1342058 1.46 0 0.00

TOTAL(A) 103888200.7

2

112.92 174927192.5

8

105.96

EXPENDITURE


62172572.47 67.58 111692719.74

67.66


Taxes & duties 19303217 20.98 31571594.44 19.12

Administration expenses 2758430.81 2.99 2662990.56 1.61

Interest & financial charges 1471658 1.59 616676 0.37

Depreciation 1907066.50 2.07 1826842 1.11Misc expenses 4090 0.004 4090 0.002

Decrease in finished stock 0.00 0.00 150843.20 0.09

TOTAL(B) 100411504.53

110.34 162398691.87

98.37

Profit for the year beforetax(A-B)

3476696.19 3.78 12528500.71 7.59

Excess provision for

taxation of earlier year

0.00 0.00 -66893.23 -0.04


0.00 0.00 443536 0.27

Profit after taxation 3476696.19 3.78 12151857.94 7.36



4514157.35 4.91 16666015.29 10.09


66/79

1. The common size income statement of the company reveals that, other receipts is

11.46% on sales in 2007 and 5.96% on sales in 2008.

2. There is no change in consumption of raw material comparing on sales i.e.,

67.58% in 2007 and 67.66% in 2008.

3. Profit before tax is also increased from 3.78% on sales to 7.59% on sales during

the year.

4. Balance profit carried to balance sheet is also increased from 4.91% on sales to

10.09% on sales during the year.


COMMON SIZE INCOME STATEMENT OF SAGAR CEMENTS FOR THEYEAR ENDING 31 ST MARCH 2008 TO 2009


67/79

INTERPRETATION



INCOME

Sales 244225722.08 100 235323873.45 100Other receipts 13846059.16 5.67 7847939.32 3.33

Increase in finished stock 105203.20 0.04 3981781 1.69

TOTAL(A) 258176984.44 105.71 247153593.77 105.03

EXPENDITURE


170317647 69.74 192965699.31 82


Taxes & duties 44979966.63 18.42 5909210 2.51

Administration expenses 5282272.94 2.16 6828216.66 2.90

Interest & financial charges 486760.23 0.19 2654443.92 1.13

Depreciation 1852573 0.76 2699138.85 1.15

Misc expenses 4090 0.002 4090 0.002

Decrease in finished stock 0.00 0.00 0.00 0.00

TOTAL(B) 241175296.07 98.75 239744418.55 101.88

Profit for the year beforetax(A-B)

17001688.37 6.96 7409175.22 3.15


327575 0.13 0.00 0.00


798596 0.33 691219 0.29

Profit after taxation 15875517.37 6.5 6717956.22 2.85



31796552.66 13.02 38514508.88 16.37


68/79

1. The common size statement of the company reveals that, there is a sound

increase in consumption of raw materials from 69.74% to 82% on sales during

the year.

2. The above increase is not resulted to increase the sales volume during the year.

3. Manufacturing expenses also increased from 7.47% to 12.19% on sales.

4. There is a decrease in profit before tax (PBT) from 6.96% to 3.15% during the

year.

5. Balance profit carried to balance sheet is increased from 13.02% to 16.37%

during the year.


COMMON SIZE INCOME STATEMENT OF SAGAR CEMENTS FOR THE

YEAR ENDING 31 ST MARCH 2009 TO 2010


69/79

INTERPRETATION



INCOME

Sales 235323873.45 100 307228040.60 100

Other receipts 7847939.32 3.33 8867291.63 2.88


3981781 1.69 1135483 0.37

TOTAL(A) 247153593.77 105.03 317230815.23 103.26

EXPENDITURE


192965699.31 82 238204911.77 77.53


Taxes & duties 5909210 2.51 2106623 0.69


Interest & financecharges

2654443.92 1.13 4281164.47 1.39

Depreciation 2699138.85 1.15 2857930.01 0.93

Misc expenses 4090 0.002 4090 0.001

TOTAL(B) 239744418.55 101.88 298067004.22 97.02


7409175.22 3.15 19163811.01 6.24

(-)Provision for deferredtax liability

691219 0.29 104912 0.03

6717

Documents

Sagar Cement_financial Stmt Analysis