Surya Raju Final

8/10/2019 Surya Raju Final

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PROJECT REPORT ON

FINANCIAL PERFORMANCE ANALYSIS IN

KESORAM CEMENTS, NIZAMABAD

Proj ect Report submi tted to Jawaharlal Nehr u Technological Universi ty, H yderabad,

In partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by:

Mr./Ms._____________________________

H.T.No._____________________________ Under the esteemed guidance of

Mr./Ms._________________________

Associate/Assistant Professor

DEPARTMENT OF BUSINESS MANAGEMENT

VIJAY RURAL ENGINEERING COLLEGE, NIZAMABAD

(Approved by AICTE, New Delhi and Affiliated to JNTU Hyderabad)

2012-2014


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DECLARATION

I hereby declare that the work described in this project entitled -------------------------------------------

----------------------- carried out at ----------------------------------- . which is being submitted by me in

partial fulfillment for the award of degree of Master of Business Administration in the Dept. ofBusiness Management ,Vijay Rural Engineering College , Nizamabad to the Jawaharlal Nehru

Technological University Hyderabad, Kukatpally, Hyderabad (Telanagana.) -500 085, is the result

of investigations carried out by me under the Guidance of Mr./Ms. ----------------------------------------

----.

The work is original and has not been submitted in full /partial for any Degree/Diploma of

this or any other university or institution.

Place: SignatureDate:

Name of the Candidate:

Hall Ticket No.:

Email-Id:


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COMPANY CERTIFICATE


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ACKNOWLEDGEMENT

I take this opportunity to thank all who have rendered their full support to my work. The

pleasure, the achievement, the glory, the satisfaction, the reward, the appreciation and theconstruction of our project cannot be thought without a few, how apart from their regular schedule,

spared a valuable time for us. This acknowledgement is not just a position of words but also an

account of the indictment. They have been a guiding light and source of inspiration towards the

completion of the project.

I would like to express my hearted thanks to Mr. K.Narendhar Reddy Garu Chairman,

Mrs. Amrutha Latha Garu, Secretary and Dr. B.R.Vikram Garu, Principal- Vijay Rural

Engineering College for their kind consent to carry out this project and also providing necessaryinfrastructure and resources to accomplish my project work.

I express my profound sense of gratitude to Mr.---------------------------, Associate Professor

& Head of the Department of MBA, who has kindly permitted me to do major project in any area of

my choice and providing me all the facilities for the project.

I am deeply indebted to my project guide Mr. ----------------------------, Assistant Professor in

Department of MBA for his valuable guidance, meticulous supervision, support and sincere advice

to complete the project successfully.

And I would like to express my sincere thanks to all the staff members of MBA Department

for their kind cooperation in completion of this project.

Finally, I thank to one and all those who have rendered help directly or indirectly at various

stages of the project and also my family members for their care and moral support in finishing my

project.

STUDENT NAME

H.T.NO


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ABSTRACT


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LIST OF TABLES


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Introduction:-

The term financial performance analysis also known as analysis and interpretation

of financial statements , refers to the process of determining financial strength and

Weaknesses of the firm by establishing strategic relationship between the items of the

Balance sheet, profit and loss account and other operative data.

Financial performance analysis is a process of evaluating the relationship between

Component parts of a financial statement to obtain a better understanding of a fir m s

Position and performance.

The purpose of financial analysis is to diagnose the information contained in

financial statements so as to judge the profitability and financial soundness of the firm. Just

like a doctor examines his patient by recording his body temperature, blood pressure etc.

Before making his conclusion regarding the illness and before giving his treatment. A

Financial analyst analyses the financial statements with various tools of analysis before

commenting upon the financial health or weaknesses of an enterprise.

The analysis and interpretation of financial statements is essential to bring out the

mystery behind the figures in financial statements. Financial statements analysis is an

attempt to determine the significance and meaning of the financial statement data so that

forecast may be made of the future earnings, ability to pay interest and debt maturities (both

current and long term) and profitability of a sound divided policy.

Financial performance refers to the act of performing financial activity. In broader sense,

financial performance refers to the degree to which financial objectives being or has been

accomplished. It is the process of measuring the results of a firm's policies and operations in

monetary terms. It is used to measure firm's overall financial health over a given period of

time and can also be used to compare similar firms across the same industry or to compare

industries or sectors in aggregation.

In short, the firm itself as well as various interested groups such as managers,

shareholders, creditors, tax authorities, and others seeks answers to the

Following important questions:


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1. What is the financial position of the firm at a given point of time?

2. How is the financial performance of the firm over a given period?

Of time?

These questions can be answered with the help of financial analysis of a firm. Financial

analysis involves the use of financial statements. A financial statement is an organized

collection of data according to logical and conceptual framework 50 consistent accounting

procedures. Its purpose is to convey an understanding of some financial aspects of a

business firm. It may show a position at a moment of time as in the case of a balance sheet,

or may reveal a series of activities over a given period of time, as in the case of an income

statement.Thus, the term financial statement s generally refers to two basic statements:

The balance sheet and the income statement.

The balance sheet shows the financial position (condition) of the firm at a given point of

time. It provides a snapshot and may be regarded as a static picture.

Balance sheet is a summary of a firm s financial position on a given date that

Shows total assets = total liabilities + owner s equity.

The income statement (referred to in India as the profit and loss statement) reflects the

Performance of the firm over a period of time. Income statement is a summary of a firm s

revenues and expenses over a specified period, ending with net income or loss for the period.

However, financial statements do not reveal all the information related to the financial

operations of a firm, but they furnish some extremely useful information, which highlights

two important factors profitability and financial soundness. Thus analysis of financial

Statements is an important aid to financial performance analysis. Financial performance

analysis includes analysis and interpretation of financial statements in such a way that it

Undertakes full diagnosis of the profitability and financial soundness of the business.

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 fir m s

position and performance.


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Need for Study

_ Need Of Financial Management Study to Diagnose the Information Contain InFinancial Statement. So as To Judge the Profitability and Financial Position of the

Firm.

_ Financial Analyst Analyses the Financial Statements with Various Tools OfAnalysis Before Commanding Upon The Financial Health Of The Firm.

_ Essential to Bring Out the History. _ Significance and Meaning of the Financial Statements.


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Significance of Financial Performance Analysis

Interest of various related groups is affected by the financial performance of a firm.

Therefore, these groups analyze the financial performance of the firm. The type of analysis

varies according to the specific interest of the party involved.

Trade creditors: interested in the liquidity of the firm (appraisal of firm s liquidity)

Bond holders: interested in the cash-flow ability of the firm (appraisal of fir m s capital

structure, the major sources and uses of funds, profitability over time, and projection of

future profitability).

Investors: interested in present and expected future earnings as well as stability of these

earnings (appraisal of fir m s profitability and financial condition).

Management: interested in internal control, better financial condition and better

performance (appraisal of fir m s present financial condition, evaluation of opportunities in

relation to this current position, return on investment provided by various assets of the

company, etc)

Research Methodology

Research Design

This is a systematic way to solve the research problem and it is important

component for the study without which researches may not be able to obtain the format. A

research design is the arrangement of conditions for collection and analysis of data in a

manager that aims to combine for collection and analysis of data relevance to the research

purpose with economy in procedure.

Meaning of Research Design

The formidable problem that follows the task of defining the research problem is the

preparation of design of the research project, popularly known as the research design,

decision regarding what, where, when, how much, by what means concerning an inquiry of

a research study constitute a research design. A research design is the arrangement of

conditions for collection and analysis of data in a manager that aims to combine for

collection and analysis of data relevance to the research purpose with economy in

procedure.


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Sources of Data

Data we collected based on two sources.

_ Primary Data. _ Secondary Data.

Primary Data

The Primary Data Are Those Information s, which are Collected afresh and for the

First Time, And Thus Happen to Be Original in Character.

Secondary Data:

The secondary data are those which have already been collected by some other agency and

which have already been processed. The sources of secondary data are annual reports,

browsing internet, through magazines.

1. It includes data gathered from the annual reports of Kesoram.

2. Articles are collected from official website of Kesoram.

Methodology Used:

Types Of Financial Statements Adopted:

Following Two Types of Financial Statements Are Commonly Used in

Analyzing the Firm s Financial Position

a. Balance Sheet.

b. Income Statements.

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from the new industrial bricks, and to finish them with a stucco to imitate stone. Hydraulic

limes were favored for this, but the need for a fast set time encouraged the development of

new cements. Most famous was Parker's "Roman cement." This was developed by James

Parker in the 1780s, and finally patented in 1796. It was, in fact, nothing like any material

used by the Romans, but was Natural cement" made by burning septaria - nodules that are

found in certain clay deposits, and that contain both clay minerals and calcium carbonate.

The burnt nodules were ground to a fine powder. This product, made into a mortar with

sand, set in 5 15 minutes. The success of "Roman Cement" led other manufacturers to

develop rival products by burning artificial mixtures of clay and chalk.

John Smeaton made an important contribution to the development of cements when he was

planning the construction of the third Eddystone Lighthouse (1755-9) in the English

Channel. He needed a hydraulic mortar that would set and develop some strength in thetwelve hour period between successive high tides. He performed an exhaustive market

research on the available hydraulic limes, visiting their production sites, and noted that the

"hydraulicity" of the lime was directly related to the clay content of the limestone from

which it was made. Smeaton was a civil engineer by profession, and took the idea no

further. Apparently unaware of Smeaton's work, the same principle was identified by Louis

Vicat in the first decade of the nineteenth century. Vicat went on to devise a method of

combining chalk and clay into an intimate mixture, and, burning this, produced an "artificial

cement" in 1817. James Frost, working in Britain, produced what he called "British cement"

in a similar manner around the same time, but did not obtain a patent until 1822. In 1824,

Joseph Aspdin patented a similar material, which he called Portland cement, because the

render made from it was in color similar to the prestigious Portland stone.

All the above products could not compete with lime/pozzolan concretes because of fast-

setting (giving insufficient time for placement) and low early strengths (requiring a delay of

many weeks before formwork could be removed). Hydraulic limes, "natural" cements and

"artificial" cements all rely upon their belite content for strength development. Belitedevelops strength slowly. Because they were burned at temperatures below 1250 C, they

contained no alite, which is responsible for early strength in modern cements. The first

cement to consistently contain alite was made by Joseph Aspdin's son William in the early

1840s. This was what we call today "modern" Portland cement. Because of the air of

mystery with which William Aspdin surrounded his product, others (e.g. Vicat and I C

Johnson) have claimed precedence in this invention, but recent analysis of both his concrete


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and raw cement have shown that William Aspdin's product made at North fleet, Kent was a

true alite-based cement. However, Aspdin's methods were "rule-of-thumb": Vicat is

responsible for establishing the chemical basis of these cements, and Johnson established

the importance of sintering the mix in the kiln.

William Aspdin's innovation was counter-intuitive for manufacturers of "artificial cements",

because they required more lime in the mix (a problem for his father), because they required

a much higher kiln temperature (and therefore more fuel) and because the resulting clinker

was very hard and rapidly wore down the millstones which were the only available grinding

technology of the time. Manufacturing costs were therefore considerably higher, but the

product set reasonably slowly and developed strength quickly, thus opening up a market for

use in concrete. The use of concrete in construction grew rapidly from 1850 onwards, and

was soon the dominant use for cements. Thus Portland cement began its predominant role.It is made from water and sand.

Types of modern cement:

Portland cement:

Cement is made by heating limestone (calcium carbonate), with small quantities

of other materials (such as clay) to 1450C in a kiln, in a process known as

calcination, whereby a molecule of carbon dioxide is liberated from the calcium

carbonate to form calcium oxide, or lime, which is then blended with the other

materials that have been included in the mix . The resulting hard substance, called

'clinker', is then ground with a small amount of gypsum into a powder to make

'Ordinary Portland Cement', the most commonly used type of cement (often referred

to as OPC). Portland cement is a basic ingredient of concrete, mortar and most non-

speciality grout. The most common use for Portland cement is in the production

of concrete. Concrete is a composite material consisting of aggregate (gravel

and sand), cement, and water. As a construction material, concrete can be cast in

almost any shape desired, and once hardened, can become a structural (load bearing)

element. Portland cement may be gray or white. Portland cement blends These are

often available as inter-ground mixtures from cement manufacturers, but similar

formulations are often also mixed from the ground components at the concrete

mixing plant. Portland blast furnace cement contains up to 70% ground

granulated blast furnace slag, with the rest Portland clinker and a little gypsum. All


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other pozzolan type minerals which are extremely finely ground together. Such cements can

have the same physical characteristics as normal cement but with 50% less cement

particularly due to their increased surface area for the chemical reaction. Even with

intensive grinding they can use up to 50% less energy to fabricate than ordinary Portland

cements.

Non-Portland hydraulic cements

Pozzolan-lime cements. Mixtures of ground Pozzolan and lime are the cements used by the

Romans, and are to be found in Roman structures still standing (e.g. the Pantheon in Rome).

They develop strength slowly, but their ultimate strength can be very high. The hydration

products that produce strength are essentially the same as those produced by Portland

cement.

Slag-lime cements. Ground granulated blast furnace slag is not hydraulic on its own, but is"activated" by addition of alkalis, most economically using lime. They are similar to

pozzolan lime cements in their properties. Only granulated slag (i.e. water-quenched, glassy

slag) is effective as a cement component.

Super sulfated cements. These contain about 80% ground granulated blast furnace slag,

15% gypsum or anhydrite and a little Portland clinker or lime as an activator. They produce

strength by formation of ettringite, with strength growth similar to a slow Portland cement.

They exhibit good resistance to aggressive agents, including sulfate.

Calcium aluminate cements are hydraulic cements made primarily from limestone and

bauxite. The active ingredients are monocalcium aluminate CaAl 2O4 (CaO Al O 3

or CA in Cement chemist notation, CCN) and mayenite Ca 12 Al14 O33 (12 CaO 7

Al O 3 , or C 12 A7 in CCN). Strength forms by hydration to calcium aluminate

hydrates. They are well-adapted for use in refractory (high-temperature resistant)

concretes, e.g. for furnace linings. Calcium sulfoaluminate cements are made

from clinkers that include ye'elimite (Ca 4

(AlO 2)6SO 4 or C 4A3 in Cement chemist's notation) as a primary phase. They are

used in expansive cements, in ultra-high early strength cements, and in "low-

energy" cements. Hydration produces ettringite, and specialized physical

properties (such as expansion or rapid reaction) are obtained by adjustment of the

availability of calcium and sulfate ions. Their use as a low-energy alternative to

Portland cement has been pioneered in China, where several million tons per year

are produced. Energy requirements are lower because of the lower kiln

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temperatures required for reaction and the lower amount of limestone (which

must be endothermic ally decarbonated) in the mix. In addition, the lower limestone

content and lower fuel consumption leads to a CO 2 emission around half that

associated with Portland clinker. However, SO 2 emissions are usually significantly

higher.

"Natural" Cements correspond to certain cements of the pre-Portland era,

produced by burning argillaceous limestones at moderate temperatures. The level of

clay components in the limestone (around 30-35%) is such that large amounts of

belite (the low-early strength, high-late strength mineral in Portland cement) are

formed without the formation of excessive amounts of free lime. As with any

natural material, such cements have highly variable properties.

Geopolymer cements are made from mixtures of water-soluble alkali metal

silicates and aluminosilicate mineral powders such as fly ash and metakaolin.


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COMPANY PROFILE

Kesoram Cement Industry is one of the leading manufacturers of cement in India. It is a day

process cement Plant. The plant capacity is 8.26 lakh tones per annum It is located at

Basanthnagar in Karimnagar district of Andhra Pradesh. Basanthnagar is 8 km away from

the Ramagundam Railway station, linking Madras to New Delhi. The Chairman of the

Company is B.K.Birla,

History:

The first unit at Basanthnagar with a capacity of 2.1 lakh tones per annum

incorporating humble suspension preheated system was commissioner during the year 1969.The second unit was setup in year 1971 with a capacity of 2.1 lakh tones per annum went on

stream in the year 1978. The coal for this company is being supplied from Singgareni

Collieries and the power is obtained from APSEB. The power demand for the factory is

about 21 MW. Kesoram has got 2 DG sets of 4 MW each installed in the year 1987.

Kesoram Cement has setup a 15 KW captor power plant to

facilitate for uninterrupted power supply for manufacturing of cement at 24 th

august 1997 per hour 12 mw, actual power is 15 mw.

The Company was incorporated on 18th October, 1919 under the Indian

Companies Act, 1913, in the name and style of Kesoram Cotton Mills Ltd. It

had a Textile Mill at 42, Garden Reach Road, Calcutta 700 024. The name of the

Company was changed to Kesoram Industries & Cotton Mills Ltd. on 30th

August, 1961 and the same was further changed to Kesoram Industries Limited on 9th July,

1986. The said Textile Mill at Garden Reach Road was eventually demerged into a separate

company.

The First Plant for manufacturing of rayon yarn was established at Tribeni, District

Hooghly, West Bengal and the same was commissioned in December, 1959 and the second

plant was commissioned in the year 1962 enabling it to manufacture 4,635 metric tons per

annum (mtpa) of rayon yarn. This Unit has 6,500 metric tons per annum (mtpa) capacity as

on 31.3.2009.


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The plant for manufacturing of transparent paper was also set up at the same location at

Tribeni, District Hooghly, West Bengal, in June, 1961. It has the annual capacity to

manufacture 3,600 metric tons per annum (mtpa) of transparent Paper.

The Company diversified into manufacturing of cast iron spun pipes and pipe fittings at

Bansberia, District Hooghly, West Bengal, with a production capacity of 45,000 metric tons per annum (mtpa) of cast iron spun pipes and pipe fittings in December, 1964.

The Company subsequently diversified into the manufacturing of Cement and in 1969

established its first cement plant under the name 'Kesoram Cement' at Basantnagar, Dist.

Karimnagar (Andhra Pradesh) and to take advantage of favorable market conditions, in

1986 another cement plant, known as 'Vasavadatta Cement', was commissioned by it at

Sedam, Dist.

Gulbarga (Karnataka). The cement manufacturing capacities at both the plants were

augmented from time to time according to the market conditions and as on 31.3.2009

Kesoram Cement and Vasavadatta Cement have annual cement manufacturing capacities of

1.5 million metric tons and 4.1 million metric tons respectively.

The Company in March 1992, commissioned a plant at Balasore known as Birla Tyres in

Orissa, for manufacturing of 10 lakh mtp.a. automotive tyres and tubes in the first phase in

collaboration with Pirelli Ltd., U.K., a subsidiary company of the world famous Pirelli

Group of Italy - a pioneer in production and development of automotive tyres in the world.

The capacity at the said plant was further augmented during the year by 19 MT per day

aggregating to 271 MT per day production facility. The Greenfield Project of 257 MT per

day capacity in the State of Uttarakhand with a capex of about Rs.760 crores commenced

the commercial production in phases during the financial year 2008-09.The Company as on

31.3.2009 had the manufacturing capacities of 3.71 million tyres, 2.95 million tubes and

1.53 million flaps per annum in the Plants including at Uttarakhand Plant. It has small

manufacturing capacities of various Chemicals at Kharda in the State of West Bengal also.

It has the annual manufacturing capacities of 12,410 mtpa of Caustic Soda Lye, 5,045 mtpa

of Liquid Chlorine, 6,205 mtpa of Sodium Hypochlorite, 8,200 mtpa of Hydrochloric Acid,

3,200 mtpa of Ferric Alum, 18,700 mtpa of Sulphuric Acid and 1,620,000 m3pa of purified

Hydrogen Gas.


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The Company is a well-diversified entity in the fields of Cement, Tyre, Rayon Yarn,

Transparent Paper, Spun Pipes and Heavy Chemicals with two core business segments i.e.

Cement and Tyres.

In Spun Pipes & Foundries, a unit of the Company, work suspended from 2nd May, 2008

still commences till further notice.

The Company as of now is listed on three major Stock Exchanges in India i.e. Bombay

Stock Exchange Ltd., Mumbai, Calcutta Stock Exchange Association Ltd., Kolkata and

National Stock Exchange of India Ltd., Mumbai and at the Societe de la Bourse de

Luxembourg, Luxembourg.

A further expansion upto 1.65 million tons of cement per annum in Vasavadatta Cement at

Sedam in Karnataka as unit IV at the same site is in progress, with a 17.5 MW Captive

Power Plant, involving a capital expenditure of about Rs. 783.50 crores (including the cost

of Captive Power Plant).

The commercial production of cement in the aforesaid unit IV has commenced in June

2009. The work for the further expansion in the Tyres Section at Uttarakhand for radial

tyres with 100 MT per day capacity and bias tyres with 125 MT per day capacity involving

an estimated aggregate capital outlay of about Rs. 840 crores is under progress. The Board

has further approved a Motor Cycle Tyre Project of 70 MT per day capacity at the same site

involving a capital outlay of Rs.190 crore. The civil construction of both the Projects is in

full swing. The commercial production in both the Projects is likely to start by December

2009/ January 2010.

Birla Supreme in popular brand of Kesoram cement from its prestigious plant of

Basantnagar in AP which has outstanding track record. In performance and productivity

serving the nation for the last two and half decades. It has proved its distinction by bagging

several national awards. It also has the distinction of achieving optimum capacity

utilization.

Kesoram offers a choice of top quality portioned cement for light, heavy

constructions and allied applications. Quality is built every fact of the operations.


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The company has vigorously undertaking different promotional measures for

promoting their product through different media, which includes the use of news papers

magazine, hoarding etc.

Kesoram cement industry distinguished itself among all the cement factories in

Indian by bagging the National Productivity Award consecutively for two years i.e. for the

year 1985-1987. The federation of Andhra Pradesh Chamber & Commerce and Industries

(FAPCCI) also conferred on Kesoram Cement. An award for the best industrial promotion

expansion efforts in the state for the year 1984. Kesoram also bagged FAPCCI awarded for

Best Family Planning Effort in the state for the year 1987-1988.

One among the industrial giants in the country today, serving the nation on the

industrial front. Kesoram industry ltd. has a checked and eventful history dating back to thetwenties when the Industrial House of Birla s acquired it. With only a textile mill under its

banner 1924, it grew from strength to strength and spread its activities to newer fields like

Rayon, Transparent paper, pipes, Refractors, tyres and other products.

Looking to the wide gap between the demand and supply of vital commodity

cement, which play in important role in National building activity the Government of India,

had de-licensed the cement industry in the year 1966 with a review to attract private

entrepreneur to augment the cement production. Kesoram rose to the occasions and divided

to set up a few cement plants in the country.

Kesoram cement undertaking marketing activities extensively in the state of Andhra

Pradesh, Karnataka, Tamilnadu, Kerala, Maharashtra and Gujarat. In A.P. sales Depts., are

located in different areas like Karimnagar, Warangal, Nizamabad, Vijayawada and Nellore.

In other states it has opened around 10 depots.

The market share of Kesoram Cement in AP is 7.05%. The market share of the

company in various states is shown as under.

STATES

Karnataka

Tamilnadu

Kerala

Maharashtr a

MARKET SHARE

4.09%

0.94%

0.29%

2.81%


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Process and Quality Control :

It has been the endeavor of Kesoram to incorporate the World s latest technology in

the plant and today the plant has the most sophisticated.

X-ray analysis:

Fully computerized XRF and XRD X-RAY Analyzers keep a constant round the

clock vigil on quality.

Supreme performance:

One of the largest Cement Plants in Andhra Pradesh, the plant incorporate the latest

technology in Cement - making.

It is professionally managed and well established Cement Manufacturing Company

enjoying the confidence of the consumers. Kesoram has outstanding track record in

performance and productivity with quite a few national and state awards to its credit.

BIRLA SUPREME, the 43 Grade Cement, is a widely accepted and popular brand

in the market, commanding a premium.

However to meet the specific demands of the consumer, Kesoram bought out the 53

grade BIRLA SUPREME GOLD, which has special qualities like higher fineness, quick-

setting, high compressive strength and durability.

Supreme Strength:

Kesoram Cement has huge captive Limestone Deposits, which make it possible to

feed high- grade limestone consistently, its natural Grey colour is anion- born ingredient

and gives good shade.

Both the products offered by Kesoram, i.e. BIRLA SUPREME-43 Grade and

BIRLA SUPREME-GOLD-53 Grade cement are outstanding with much higher

compressive strength and durability.

The following characteristics show their distinctive qualities.

Comprehensive

Strength

Opc 43

grls 8112

1989

Birla

Supreme 43

grade

Opc 43 gr

Is 1226987

Birla

Supreme

Gold 53 gr

3 days mpa Min. 23 31 + Min. 27 38+

7 days mpa Min. 23 42+ Min. 37 48+

28 days mpa Min. 43 50+ Min. 53 60+


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D.C. SYSTEM:

Clinker making process is a key step in the overall cement making process. In the case of

BIRLA SUPREME/GOLD, the clinker-making process is totally computer. control. The

Distributed Control System (DCS) constantly monitors the process and ensures operatingefficiency. This eliminates variation and ensures consistency in the quality of Clinker.

Physical Characteristics:

Ope 43

Is 8 112-89

Birla

Supreme

43 rade

Ope 53 gr

Is 12269-87

BirlaSupreme

Gold 53 gr

Setting time

a. Initial (mats)

b. final (mats)

Fincncssm 2/Kg

Soundness

a. le-chart (mm)

Min30

Max 600

Min 225

Max 10

Max 0.8

120-180

180-240

270-280

1.0-2.0

0.04-0.08

Min 30

Max 600

. Min 225

Max 10

Max 0.080.

130-170

170-220

300-320

0.5-1.0

0.04-0.2

Supreme Expertise:

The Best Technical Team, exclusive to Kesoram, mans the Plant and monitors the process,

to blend the cement in just the required proportions, to make BIRLA SUPREME/GOLD OF

Rock Strength.

18 Million Tones of Solid Foundation:

Staying at the top for over a Quarter Century, Quarter Century is no less an achievement.

Infact. Kesoram is synonymous with for over 28 years.

Over the years, Kesoram has dispatched 18 million tones of cement to the nook and corners

of the country and joined hands in strengthening the Nation. No one else in Andhra Pradesh

has this distinction. The prestigious World Bank aided Ramagundam Super Thermal Power

Project of NTPC and Mannair Dam of Pochampad project in AP arc a couple of projects for

which Kesoram Cement was exclusively uses: to cite an example.

Chemical Characteristics:


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Opc 43 gr

Is 81 132-989

Birla

Supreme

43 grade

Ope 53 gr

Is 12269-

87

Birla

Supreme

Gold 53 gr.Loss on inflection % Max 5


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STATE

1. A.P. State productivity award for 1988

2. State award for best industrial management 1988-89.

3. Best industrial productivity award of FAPCCI (federation of A.P. chamber of

commerce and industry), 1991

4. Best management award of the state Govt. 1993

5. FAPCCI award for the workers welfare, 1995-96.

I.S.O. 9002

All quality systems of Kesoram have been certified under I.S.O. 9002/1.S. 4002, which

proves the worldwide acceptance of the products.

All quality systems in production and marketing of the product have been certified by B.I.S.

under ISO 9002/1S 14002.The first unit was installed at basanthnagar with a capacity of 2.5 lakhs TPA (tones per

annum) incorporating humble supervision, preheated system, during the year 1969.

The second unit followed suit with added a capacity of 2 lakhs TPA in 1971.

The plant was further expanded to 9 lakhs by adding 2.5 lakhs tones in august 1978, 1.13

lakhs tones in January 1981 and 0.87 lakhs tones in September 1981.

Power:

Singareni collieries make the supply of coal for this industry and the power was

obtained from AP TRANSCO. The power demand for the factory is about 21MW. Kesoram

has got 2-diesel generator seats of 4 MW each installed in the year 1987.

Kesoram cement now has a 15MWcaptive power plant to facilities for uninterrupted

power supply for manufacturing of cement.

Performance:

The performance of kersoram cement industry has been outstanding achieving over

cent percent capacity utilization all through despite many odds like power cuts and which

most 40% was wasted due to wagon shortage etc.

The company being a continuous process industry works round the clock and has

excellent records of performance achieving over 1005 capacity utilization.

Kesoram has always combined technical progress with industrial performance. The

company had glorious track record for the last 27 years in the industry.

Technology:


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This captive power plant is a major role in keeping power costs with in economic

levels.

The management has introduced various HRD programs for training and

development and has taken various other measures for the betterment of employee s

efficiency.The section has installed adequate air pollution control system and equipment and is

ISO14001 such as Environment management system is under implementation.

Awards:

Kesoram cement bagged many prestigious awards including national awards for

productivity, technology, conservation and several state awards since 1984. The following

are the some of important awards.

AWARDS OF KESORAM CEMENT:

No Year Awards

National/

State

1 1989-90 Management award community

Development

State

2 1991 Energy conservation may day award ofthe

State

3 1991 Pundit Jawaharlal Nehru rolling trophyfor

State

4 1993 National productivity effort IndiraGandhi

State

5 1994 Best management award State

6 1994-

1995

Best industrial rebellion award State

7 1995 Rural development by chief minister

Environment and mineral conservation

award

State

8 1995 Best industrial rebellion award State


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9 1995-

1996

Best effort of an industrial unit to

development rural economyshri.S.R.Rungta

National

10 1996 Awareness for best rural

development

State

11 1999 Best workers welfare best familywelfare

State

12 2001 First prize for mine environment

&pollution control for the 3 rd year in

State

13 2002 Vana mithra award from AP Govt State

14 2003 Company has got OHSAS-18001 State

15 2005 Certification from DNV, New Delhi. State

16 2006 Award for pollution control and

environmental protection FAPCCIaward

State


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LITERATURE REVIEW

Financial Performance Analysis:

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

financial statement s , refers to the process of determining financial strength and

weaknesses of the firm by establishing strategic relationship between the items of the

balance sheet , profit and loss account and other operative data.

Analyzing financial statements by Metcalf and Titard

Financial analysis is a process of evaluating the relationship between component

parts of a financial statement to obtain a better understanding of a firms position and

performan ce by Myers

Financial Performance: The word Performance is derived from the word parfourmen , which means to do , to

carry ou t or to render . It refers the act of performing, execution, accomplishment,

fulfillment etc. In border sense, performance refers to the accomplishment of a given task

measured against preset standards of accuracy, completeness, cost, and speed. In other

words, it refers to the degree to which an achievement is being or has been accomplished. In

the Words of Frich Kohlar The performance is a general term applied to a part or to all the

conducts of activities of an organization over a period of time often with reference to past or

projected cost efficiency, management responsibility or accountability or the like. Thus, not

just the presentation, but the quality of results achieved refers to the performance.

Performance is used to indicate fir m s success, conditions, and compliance.

Financial performance refers to the act of performing financial activity. In broader

sense, financial performance refers to the degree to which financial objectives being or has

been accomplished. It is the process of measuring the results of a firm's policies and

operations in monetary terms. It is used to measure firm's overall financial health over agiven period of time and can also be used to compare similar firms across the same industry

or to compare industries or sectors in aggregation.

The purpose of financial analysis is to diagnose the information contained in financial

statements so as to Jude the profitability and financial soundness of the firm. Just like a

doctor examines his patient by recording his body temperature, blood pressure, etc. Before


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making his conclusion regarding the illness and before giving his treatment, a financial

analyst analysis the financial statements with various tools of analysis before commenting

upon the financial health or weaknesses of an enterprise.

The analysis and interpretation of financial statements is essential to bring out the

mystery behind the figures in financial statements. Financial statements analysis is an

attempt to determine the significance and meaning of the financial statement data so that

forecast may be made of the future earnings, ability to pay interest and debt maturities (both

current and long term) and profitability of a sound divided policy.

Types of financial analysis:-

Financial analysis into different categories depending upon

(1) The material used and(2) The method of operation followed in the analysis or the modus operandi of

analysis

Types of financial analysis

On the basis of material used on the basis of modus operandi

External

Analysi

s

Internal

Analysis

Horizontal

Analysis

Vertical

Analysis


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1. On the basis of material used: - According to material used, financial analysis can

be of two types

External analysis

Internal analysis

External analysis:-

This analysis is done by outsiders who do not have access to the detailed internal

outsiders include investors, potential investors, Creditors, Potential Creditors, Government

Agencies, Credit Agencies and General Public. For financial analysis, these external parties

to the firm depend almost entirely on the published financial statements.

Internal analysis:-

This analysis is undertaken by the persons namely executives and employees of the

organization or by the officers appointed by government or court who have access to the

books of account ( internal accounting records) and other information related to the

business.

2. On the basis of modus operandi:-

According to the modus operandi financial analysis can also be of two types

a. Horizontal analysis

b.Vertical analysis

Horizontal analysis:-

Horizontal analysis refers to the comparison of financial data of a company for several

years. The figures for this type of analysis are presented horizontally over a number of

columns. The figures of the various years are compared with standard or base year. a base

year is year chosen as beginning point. This type of analysis is also called dynamic

analys is as it is based on the data from year to year rather than on data of any one year. The

horizontal analysis makes it possible to focus attention on items that have changed

significantly during the period under view.


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b. Vertical analysis:-

Vertical analysis refers to the study of relationship of the various items in the financial

statements of one accounting period. In this types of analysis the figures from financial

statement of a year are compared with a base selected from the same year s statement

Methods of financial analysis:-

The following methods of analysis are generally used:-

1. Comparative Statements.

2. Trend Analysis.

3. Common-Size Statements.

4. Funds flow Analysis.

5. Cash Analysis

6. Ratio Analysis

7. Cost-volume-Profit Analysis

Comparative statements:-

The comparative financial statements are statements of the financial position at

different periods of time .the elements of financial position are show in a

Comparative Statement provides an idea of financial position at two or more

periods. Generally two financial statements (balance sheet and income statement) are

prepared in comparative form for financial analysis.

The Comparative Statement May Show:-

1. Absolute figures (rupee amounts)

2. Changes in absolute figures i.e. increase or decrease in absolute figures.

3. Absolute data in terms of percentages.

4. Increase or decrease in terms of percentages.

The Two Comparative Statements Are:-

1. Comparative balance sheet, and

2. Income statement.

1. Comparative balance sheet:-

The comparative balance sheet analysis is the study of the trend of the same items, group of


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items and computed items in two or more balance sheets of the same business enterprise on

different dates. The change in periodic balance sheet items reflect the conduct of a business

the change can be observed by comparison of the balance sheet at the beginning and at the

end of a period and these changes can help in forming an opinion about the

progress of an enterprise.

Guide Lines for Interpretation of Comparative Balance Sheet:-

While interpreting comparative balance sheet the interpreter is expected to study the

following aspects:-

1. Current financial position and liquidity position

2. Long-term financial position3. Profitability of the concern.

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Common Size Statement:-

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

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

and total sales. The total assets are taken as 100 and different assets are expressed as a

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

Common Size Balance Sheet:-

A statement in which balance sheet items are expressed as the ratio of each asset to

total assets and the ratio of each liability is expressed as a ratio of total liabilities is called

common size balance. The common size balance sheet can be used to compare companies

of differing size. The comparison of figures in different periods is not useful because total

figures may be affected by a number of factors. It is not possible to establish standard norms

for various assets. The trends of figures from year to year may not be studied and even they

may not give proper results.

Trend Analysis of Balance Sheet:-

Trend analysis is Very important tool of horizontal financial analysis.

This analysis enables to known the change in the financial function and operating efficiency

in between the time period chosen.

By studding the trend analysis of each item we can known the direction of changes and

based upon the direction of changes, the options can be changed.

Trend =Absolute Value of item in the statement understudy *100

Absolute Value of same item in the base statement

Ratio Analysis:

Ratio analysis is used as a technique of analyzing the financial information, contained in the

balance sheet and profit and loss accounts, for a more meaningful understanding of the

financial position and performance of a firm.

The relationship between two accounting figures, expressed mathematically, is known as a

financial ratio. A ratio helps the analyst to make qualitative judgment about the fir m s

financial position and performance.

Several ratios can be calculated from the accounting data contained in the financial

statements. The parties which generally undertake financial analysis is short term

creditors, long-term creditors, owner and management. In view of the requirements of the

various ratios, ratios are classified into the following four important categories.


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Liquidity ratios

Leverage ratios

Activity ratios

Profitability ratios

Liquidity Ratios:

It is extremely essential for a firm to be able to meet its obligations as they become due.

Liquidity ratios measure the ability of the firm to meet its current obligations. A firm should

ensure that it does not suffer from lack of liquidity, and also that it does not have excess

liquidity. The failure of a company to meet its obligations due to lack of sufficient liquidity,

will result in a poor creditworthiness, loss of creditors confidence, or even in legal tangles

resulting in the closure of the company. A very high degree of liquidity is also bad; idle

assets earn nothing. The firm s funds will be unnecessarily tied up in current assets.Therefore it is necessary to strike a proper balance high liquidity and lack of l iquidity.

The most common ratios which indicate the extent of liquidity or lack of it are

Current ratio

Quick ratio

Other ratios include Cash ratio, Interval Measure and Net working capital ratio.

Current Ratio:

The current ratio is calculated by dividing current assets by current liabilities.

Current assetsCurrent ratio = --------------------------

Current liabilitiesCurrent ratio is a measure of the fir m s short term solvency. It indicates the availability of

current assets in rupees for every one rupee of current liability. A ratio of greater than one

means that the firm has more current assets than current claims against the, Current ratio of2 to 1 or more is considered satisfactory. Current ratio represents a margin of safety for

creditors.

Quick Ratio:

Quick ratio also known as acid-test ratio establishes a relationship between quick assets and

the current liabilities. Cash is the most liquid asset. It is calculated by dividing quick assets

by current liabilities.


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Quick ratio = Quick Assets / Current Liabilities

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Working Capital Turnover Ratio:

The working capital turnover ratio indicates whether or not working capital has been

effectively used in making sales.

Working capital turnover = Sales / Net current assets

Inventory Turnover Ratio:

This ratio also known as Stock Turnover Ratio establishes the relationship between costs of

goods sold or net sales during the given period and the average amt of stock held during the

period. This ratio reveals the number of times finished stock in turnover during a given

accounting period.

Higher the ratio the better is it because it shows the finished stock is rapidly turned

in to sales. On the other hand, a low stock turnover ratio is not desirable, because it revealsthe accumulation of stock.

Debtors Turnover Ratio:

This ratio indicates the velocity of debt collection of a company. In other words it shows

the number of times average turnover during a year.

A Higher Debtor Turnover Ratio indicates a more efficient is the management towards

debtors and low ratio ratio implies inefficient management of debtors.

Total Assets Turnover Ratio:

The asset turnover ratio indicates how efficiently management is employing Assets.

Total Assets Turnover Ratio = Sales / Total Assets

Profitability Ratios:

Profitability ratios are the ratios which measure a firm s overall effectiveness as revealed by

the returns generated on sales and investment.

General Profitability Ratios:

1. Gross Profit Ratio

2. Net profit Ratio

3. Operating or Expenses Ratio.


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Gross Profit Ratio:

Gross profit Ratio measures the relationships to net sales and is usually represented as a

percentage. It is a good measure of profitability.

The gross profit ratio indicates the extent to which selling price of goods per unit may

decline without resulting in losses on operation. Higher the gross profit betters the result.

Net Profit Ratio:

Net Profit Ratio indicates net margin on sales. It is given by the following equation.

Net Profit Ratio = (Net Profit / Sales) * 100

Operating or Expenses Ratio:

This ratio is complimentary of Net Profit Ratio. The more the net profit, the less the

Operating Ratio. Operating costs include the cost of direct materials, direct labors and other

overheads, viz., are generally excluded from operating costs. A comparison of the Operating

Ratio will indicate whether the cost efficiency is high or low in the figure of sales. This less

the ratio it depicts the efficiency of the management.


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DATA ANALYSIS & INTERPRETATION

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Interpretation of comparative balance sheet of 2008-2009:

_ Reserves & Surplus were increased to 37.53 % (percent) i.e., in Rupees 349.39crores.

_ Revaluation Reserves decreased to 1.21 % i.e., in Rupees 22.70 crores. _ Secured Loans are increased to 58.21 % i.e., in Rupees 565.21 crores. And UN

secured loans highly Increased to 257.95 %.

_ Current liabilities and Provisions are increased to 16.68 and 4.51 respectively i.e., inRupees 95.20 & 14.90 crores.

_ Fixed assets were highly increased to 66.42 % i.e., in Rupees 720.11 crores. _ Investments were increased to 29.17 % i.e., in Rupees 13.95 crores. _ Sundry debtors increased to 39.22 % i.e., in Rupees 107.10 crores. _ Current assets increased 35.76 % i.e., in Rupees 270.20 crores. And Loans &

Advances increased to 22.46 % respectively.

_ The overall financial position was satisfactory.


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Comparative Balance Sheet of Kesoram in the Year between 2009-2010

(Rupees in crores)

Years Changes

Particulars 2009 2010 In Ru ees In Percenta e

Liabilities

Share Capital 45.74 45.74 0.00 0.00

Reserves & Sur lus 1280.24 1491.11 210.87 16.47

Revaluation Reserves 4.12 3.39 -0.73 -17.72

Loans

Secured Loans 1536.27 1863.72 327.45 21.31

Un Secured Loans 434.16 1262.50 828.34 190.79

Deferred Tax Liabilities 0.00 0.00 0.00

Current Liabilities

Provisions 345.29 357.34 12.05 3.49

Current Liabilities 665.87 1076.88 411.01 61.73

Total 4311.69 6100.68 1788.99 41.49

Assets

Net Block 1804.35 3431.82 1627.47 90.20

Capital WIP 864.85 412.83 -452.02 -52.27

Investments 61.78 51.43 -10.35 -16.75

Current Assets

Inventories 589.06 916.19 327.13 55.53

Sundry Debtors 380.17 542.89 162.72 42.80

Cash & Bank Balances 56.57 80.14 23.57 41.67

Total Current Assets 1025.80 1539.22 513.42 50.05

Loans & Advances 554.62 665.06 110.44 19.91

Fixed Deposits 0.28 0.31 0.03 10.71

Total 4311.69 6100.68 1788.99 41.49


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_ Reserves & surplus increased to 16.47 % i.e., in Rupees 210.87 crores. _ Revaluation Reserves decreased to 17.72 % i.e., in Rupees 0.73 crores.

_ Secured loans increased to 21.31% i.e., in Rupees 327.45 crores. _ Current Liabilities were increased to 61.73 % i.e., in Rupees 411.01 crores, and

Provisions 3.49 % i.e., in Rupees 12.05 crores.

_ Fixed Assets were increased to 90.20 % i.e., in Rupees 1627.47 crores. _ Investments were decreased to 16.75 % i.e., in Rupees 10.35 crores. _ Sundry debtors were increased to 42.80 % i.e., in Rupees 162.72 crores. _ Current assets increased to 50.05 % i.e., in Rupees 513.42 crores. And loans and

Advances increased 19.19 % i.e., in Rupees 110.44 crores.

_ The overall financial position was satisfactory.


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Comparative Balance Sheet of Kesoram in the Year between 2010-2011

(Rupees in crores)

Years Changes

Particulars 2010 2011 In Rupees In Percentage

Liabilities

Share Capital 45.74 45.74 0.00 0.00

Reserves & Surplus 1491.11 1251.62 239.49 -16.06


Loans

Secured Loans 1863.72 2371.83 508.11 27.26

Un Secured Loans 1262.50 1627.44 364.94 28.91

Deferred Tax 0.00 0.00 0.00

Current Liabilities

Provisions 357.34 14.94 -342.40 -95.82


Total 6100.68 6453.48 352.80 5.78

Assets

Net Block 3431.82 3691.72 259.90 7.57

Capital WIP 412.83 437.81 24.98 6.05

Investments 51.43 65.82 14.39 27.98

Current Assets

Inventories 916.19 1118.55 202.36 22.09

Sundry Debtors 542.89 631.34 88.45 16.29

Cash & Bank Balances 80.14 71.88 -8.26 -10.31

Total Current Assets 1539.22 1821.77 282.55 18.36

Loans & Advances 665.06 434.60 -230.46 -34.65

Fixed Deposits 0.31 1.76 1.45 467.74

Total 6100.68 6453.48 352.80 5.78


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_ Reserves & surplus decreased to 16.06 % i.e., in Rupees 239.49 crores. _ Revaluation Reserves decreased to 14.75 % i.e., in Rupees 0.50 crores.

_ Secured loans increased to 27.26 % i.e., in Rupees 508.11 crores. _ Current Liabilities were increased to 5.77 % i.e., in Rupees 62.14 crores _ Provisions decreased to 95.82 % i.e., in Rupees 342.40 crores. _ Fixed Assets were increased to 7.57 % i.e., in Rupees 259.90 crores. _ Investments were decreased to 27.98 % i.e., in Rupees 14.39 crores. _ Sundry debtors were increased to 16.29 % i.e., in Rupees88.45 crores. _ Current assets increased to 18.36 % i.e., in Rupees 282.55 crores. And loansand


_ The overall financial position was UN satisfactory.


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Comparative Balance Sheet of Kesoram In The Year Between 2011-2012

(Rupees in crores)

Years Changes

Particulars 2011 2012 In Rupees In Percentage

Liabilities

Share Capital 45.74 45.74 0.00 0.00

Reserves & Surplus 1251.62 866.57 385.05 -30.76


Loans

Secured Loans 2371.83 3177.92 806.09 33.99

Un Secured Loans 1627.44 927.42 700.02 -43.01

Deferred Tax Liabilities 0.00 0.00 0.00

Current Liabilities

Provisions 14.94 407.26 392.32 2625.97


Total 6453.48 7227.71 774.23 12.00

Assets 0.00

Net Block 3691.72 3587.21 -104.51 -2.83

Capital WIP 437.81 680.65 242.84 55.47

Investments 65.82 66.36 0.54 0.82

Current Assets

Inventories 1118.55 995.16 -123.39 -11.03

Sundry Debtors 631.34 673.58 42.24 6.69

Cash & Bank Balances 71.88 69.59 -2.29 -3.19

Total Current Assets 1821.77 1738.33 -83.44 -4.58

Loans & Advances 434.60 1154.09 719.49 165.55

Fixed Deposits 1.76 1.07 -0.69 -39.20

Total 6453.48 7227.71 774.23 12.00


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_ Reserves & surplus decreased to 30.76 % i.e., in Rupee 385.05 crores. _ Revaluation Reserves decreased to 6.57 % i.e., in Rupees 0.19 crores.

_ Secured loans increased to 33.99 % i.e., in Rupees 806.99 crores. _ Current Liabilities were increased to 58.04 % i.e., in Rupees 661.08 crores _ Provisions increased to 2625.97 % i.e., in Rupees 392.32 crores. _ Fixed Assets were decreased to 2.83 % i.e., in Rupee 104.51 crores. _ Investments were increased to 0.82 % i.e., in Rupees 0.54 crores. _ Sundry debtors were increased to 6.69 % i.e., in Rupees 42.24 crores. _ Current assets decreased to 4.58 % i.e., in Rupees 83.44 crores. And loans and


_ The overall financial position was UN satisfactory.


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Common Size Balance Sheet of Kesoram For The Year 2008-2009

(Rupees in crores)

Particulars 2008 Change Percentage 2009 Change Percentage

LiabilitiesShare Capital 45.74 1.54 45.74 1.06

Reserves & Surplus 930.85 31.29 1280.24 29.69

Revaluation Reserves 5.33 0.18 4.12 0.10

Loans

Secured Loans 971.06 32.64 1536.27 35.63

Un Secured Loans 121.29 4.08 434.16 10.07

Deferred Tax 0.00 0.00 0.00 0.00

Current LiabilitiesProvisions 330.39 11.10 345.29 8.01


Total 2975.33 100.00 4311.69 100.00

Assets

Net Block 1084.24 36.44 1804.35 41.85

Capital WIP 634.59 21.33 864.85 20.06

Investments 47.83 1.61 61.78 1.43

Current Assets

Inventories 442.17 14.86 589.06 13.66

Sundry Debtors 273.07 9.18 380.17 8.82


Loans & Advances 452.89 15.22 554.62 12.86

Fixed Deposits 0.18 0.01 0.28 0.01

Total 2975.33 100.00 4311.69 100.00


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Interpretation of Common Size Balance Sheet of 2008-2009:

_ Share capital was recorded 1.54 percent in the total liabilities in the year 2008 it isdecreased to 1.06 % in the year 2009.

_ Reserves & surplus contributed to 31.29 % in the total liabilities in the year 2008 it isdecreased to 29.69 % in the year 2009.

_ Secured loans were 32.64 % in the total liabilities in the year 2008 it is increased to35.63 % in the year 2009.

_ Current Liabilities shown to 19.18 % in the total liabilities in the year 2008 it isdecreased to 15.44 % in the year 2009.

_ Provisions 11.10 in the total liabilities in the year 2008 it is decreased to 8.01 % in theyear 2009.

_ Fixed Assets were 36.44 in the total liabilities in the year 2008 i.e., decreased to 41.85% in the year 2009.

_ Investments were 1.61 in the total liabilities in the year 2008 it is decreased to 1.43 %

in the year 2009.

_ Sundry debtors were 9.18 in the total liabilities in the year 2008 it is decreased to 8.82% in the year 2009.


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Common Size Balance Sheet of Kesoram For The Year 2009-2010

(Rs in crores)

Particulars 2009 Chan e Percenta e 2010Change

Percenta Liabilities

Share Capital 45.74 1.06 45.74 0.75



Loans

Secured Loans 1536.27 35.63 1863.72 30.55

Un Secured Loans 434.16 10.07 1262.50 20.69

Deferred Tax Liabilities 0.00 0.00 0.00 0.00

Current Liabilities

Provisions 345.29 8.01 357.34 5.86


Total 4311.69 100.00 6100.68 100.00

Assets

Net Block 1804.35 41.85 3431.82 56.25

Capital WIP 864.85 20.06 412.83 6.77

Investments 61.78 1.43 51.43 0.84

Current Assets

Inventories 589.06 13.66 916.19 15.02

Sundr Debtors 380.17 8.82 542.89 8.90


Loans & Advances 554.62 12.86 665.06 10.90

Fixed Deposits 0.28 0.01 0.31 0.01

Total 4311.69 100.00 6100.68 100.00


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Interpretation of common size balance sheet of 2009-2010

_ Share capital was recorded 1.06 percent in the total liabilities in theyear 2009 it is decreased to 0.75 % in the year 2010.

_ Reserves & surplus contributed to 29.69 % in the total liabilities in theyear 2009 it is decreased to24.44 % in the year 2010.

_ Secured loans were 35.63 % in the total liabilities in the year 2009 it isincreased to 30.55 % in the year 2010.

_ Current Liabilities shown to 15.44 % in the total liabilities in the year2009 it is decreased to 17.65 % in the year 2010.

_ Provisions 8.01 in the total liabilities in the year 2009 it is decreasedto 5.86 %in the year 2010.

_ Fixed Assets were 41.85 in the total liabilities in the year 2009 i.e.,increased to 56.25 % in the year 2010.

_ Investments were 1.43 in the total liabilities in the year 2009 it isdecreased to 0.84 % in the year 2010.

_ Sundry debtors were 8.82 in the total liabilities in the year 2009 it isincreased to 8.90 % in the year 2010.


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Common Size Balance sheet of Kesoram for the year 2010-2011

(Rupees in crores)

Particulars 2010 Change Percentage 2011Change

Percenta Liabilities

Share Capital 45.74 0.75 45.74 0.71



Loans

Secured Loans 1863.72 30.55 2371.83 36.75

Un Secured Loans 1262.50 20.69 1627.44 25.22


Current Liabilities

Provisions 357.34 5.86 14.94 0.23


Total 6100.68 100.00 6453.48 100.00

Assets

Net Block 3431.82 56.25 3691.72 57.21

Capital WIP 412.83 6.77 437.81 6.78

Investments 51.43 0.84 65.82 1.02

Current Assets

Inventories 916.19 15.02 1118.55 17.33

Sundry Debtors 542.89 8.90 631.34 9.78


Loans & Advances 665.06 10.90 434.60 6.73

Fixed Deposits 0.31 0.01 1.76 0.03

Total 6100.68 100.00 6453.48 100.00

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Interpretation of Common Size Balance Sheet Of 2010-2011:

_ Share capital was recorded 0.75 percent in the total liabilities in the year 2010 it is

decreased to 0.71 % in the year 2011. _ Reserves & surplus contributed to 24.44 % in the total liabilities in the year 2010 it is

decreased to19.39 % in the year 2011.


_ Current Liabilities shown to 17.65 % in the total liabilities in the year 2010 it isalso17.65 % in the year 2011.

_ Provisions 5.86 in the total liabilities in the year 2010 it is decreased to 0.23 %in theyear 2011.

_ Fixed Assets were 56.25 in the total liabilities in the year 2010 i.e., increased to 57.21% in the year 2011.

_ Investments were 0.84 in the total liabilities in the year 2010 it increased to 1.02 % inthe year 2011.

_ Sundry debtors were 8.90 in the total liabilities in the year 2010 it is increased to 9.78% in the year 2011.


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Common Size Balance Sheet of Kesoram for the Year 2011-2012:

(Rupees in crores)

Particulars 2011 Change 2012Change

Percenta

LiabilitiesShare Capital 45.74 0.71 45.74 0.63



Loans

Secured Loans 2371.83 36.75 3177.92 43.97

Un Secured Loans 1627.44 25.22 927.42 12.83


Current Liabilities

Provisions 14.94 0.23 407.26 5.63


Total 6453.48 100.00 7227.71 100.00

Assets

Net Block 3691.72 57.21 3587.21 49.63

Capital WIP 437.81 6.78 680.65 9.42

Investments 65.82 1.02 66.36 0.92

Current Assets

Inventories 1118.55 17.33 995.16 13.77

Sundry Debtors 631.34 9.78 673.58 9.32


Loans & Advances 434.60 6.73 1154.09 15.97

Fixed Deposits 1.76 0.03 1.07 0.01

Total 6453.48 100.00 7227.71 100.00

60


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Interpretation of common size balance sheet of 2011-2012:

_ Share capital was recorded 0.71 percent in the total liabilities in the year 2011 it isdecreased to 0.63% in the year 2012.

_ Reserves & surplus contributed to 19.39 % in the total liabilities in the year 2011 itis decreased to 11.99 % in the year 2012.


_ Current Liabilities shown to 17.65 % in the total liabilities in the year 2011 it isincreased to 24.91 % in the year 2012.

_ Provisions 0.23 in the total liabilities in the year 2011 it is increased to 5.63 %in theyear 2012.

_ Fixed Assets were 57.21 in the total liabilities in the year 2011 i.e., decreased to49.63 % in the year 2012.

_ Investments were 1.02 in the total liabilities in the year 2011 it increased to 0.92 %in the year 2012.

_ Sundry debtors were 9.78 in the total liabilities in the year 2011 it is decreased to9.32 % in the year 2012.


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Trend Analysis

Share Capital:-

YearAmountIn Trend %

Increase/DecreaseBase Year Previous Year

2008 45.74 100.00 0.00 0.00

2009 45.74 100.00 0.00 0.00

2010 45.74 100.00 0.00 0.00

2011 45.74 100.00 0.00 0.00

2012 45.74 100.00 0.00 0.00

Trend Percentages in Share Capital:

_ Share capital shown a constant trend in the period 2008 and 2012. _ Share capital is 45.74 crores all the years from 2008-2012.


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Reserves & Surplus:-

YearAmount

In Trend %Increase/Decrease

Base Year Previous Year

2008 930.85 100.00 0.00 0.00

2009 1280.24 137.53 37.53 37.53

2010 1491.11 160.19 60.19 22.66

2011 1251.62 134.46 34.46 -25.73

2012 866.57 93.09 -6.91 -41.37

Trend Percentages in Reserves & Surplus:

_ Reserves & surplus shown an increasing trend in the period between 2008 and 2010. _ The average trend was 132.77 % till 2010. _ The Reserves & surplus was showing decreasing trend in the period 2011-2012 (i.e.

from 160.19 % in 2010 to 93.09 % in 2012).

_ The decreasing trend in Reserves & surplus indicates the decrease in profits of thefirm.


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Investments:-

YearAmount



2008 47.83 100.00 0.00 0.00

2009 61.78 129.17 29.17 29.17

2010 51.43 107.53 7.53 -21.64

2011 65.82 137.61 37.61 30.09

2012 66.36 138.74 38.74 1.13

Trend Percentages in Investments:-

_ The investments are shown an increasing trend in the period between 2008 2009and it is decreasing in the year 2010.

_ The average trend was 114.58. % till 2009. _ The investments increased in the periods 2011-2012 (i.e. from 107.53 % in 2010 to

138.74 % in 2012).

_ The overall trend in investments shown is satisfactory.


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Net Current Assets:-

YearAmount



2008 307.61 100.00 0.00 0.00

2009 569.54 185.15 85.15 85.15

2010 770.37 250.44 150.44 65.29

2011 1104.17 358.95 258.95 108.51

2012 686.13 223.05 123.05 -135.90

Trends in Net Current Assets:-

_ The NCA shown positive (increasing) trend. _ The NCA are increased to 358.95 % (the year 2011) compared with base year and

decreased in the year 2012 to 223.05 %.

_ The NCA shown increased trend from year and crossed 100 %. _ The overall trend was good.


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Ratio Analysis:-

Current Ratio:-

Current Ratio = Current Assets/ Current Liabilities

Current assets are cash in hand, Cash at bank, Marketable Securities(short term) short term

Investment, Bills receivables, sundry debtors, Inventories, (stock) Work in progress, prepaid

expenses. Current Liabilities are outstanding expenses, Bills payable, sundry Creditors,

short-term advances, income tax payable and Dividend payable.

Current Ratio of Kesoram:-

(Rupees in crores)

Year Current Assets Current Liabilities Current Ratio

2007-08 755.60 570.67 1.32

2008-09 1025.80 665.87 1.54

2009-10 1539.22 1076.88 1.43

2010-11 1821.77 1139.02 1.60

2011-12 1738.33 1800.10 0.97

Interpretation:-

As per the standard rule of current ratio i.e., 2:1 where current assets double the current

liabilities is considered satisfactory.

In the present analysis the current ratio of the Kesoram is not satisfactoryfrom the above table. It was assessed that the current ratio for all the five year is lower (less)

than the standard rule i.e., 2:1. And it is 0.97 in the year 2011-2012 (current year). This is

highly UN satisfactory.


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Quick Ratio:-

Quick ratio also known as acid-test ratio establishes a relationship between quick

assets and the current liabilities. Cash is the most liquid asset. It is calculated by dividing

quick assets by current liabilities

.

Quick ratio = Quick Assets / Current Liabilities

(Quick Assets = Current assets Inventory)

Quick Ratio of Kesoram:-

Rupees in crores)

Year Totaluick

Current Liabilities Quick Ratio

2007-08 333.43 570.67 0.58

2008-09 436.74 665.87 0.66

2009-10 623.03 1076.88 0.58

2010-11 703.22 1139.02 0.622011-12 743.33 1800.10 0.41

Interpretation:-

Usually a high Quick ratio is an indication that the company is liquid and has the ability to

meet its current or liquid liabilities in time on the other hand a low Quick Ratio represents


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that the company s liquidity position is not good. The above table showing the quick ratios

of Kesoram are can t be considered satisfactory.

Leverage Ratios:-

Debt-Equity Ratio:-

Debt-Equity Ratio = Total Long Term Debt/ Equity Share Holders Fund

Total Long term Debt= Debenture Capital + Long term loans from banks and financial

institutions + Public deposits.

Equity Share Holders fund = Equity + Reserves and Surplus.

Debt Equity Ratio of Kesoram:

(Rupees in crores)

Year Total Debt Share Holders Fund Debt Equity Ratio

2007-08 1092.35 981.92 1.11

2008-09 1970.43 1330.10 1.48

2009-10 3126.22 1540.24 2.03

2010-11 3999.27 1300.25 3.08

2011-12 4105.34 915.01 4.49


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Interpretation:-

The Debt-Equity Ratio accepted standard is 0.5. This ratio reflects the relative contribution

of creditors and owners of business in its financing. From the above it is clear that the long

term debt is more than that of the share holder s fund. So we can interpret that the firm sassets are financed more by the external funds rather than by the internal funds.


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Fixed Asset Ratio:-

Net Sales

Fixed Asset Ratio = ..

Net Assets

Fixed Asset Ratio of Kesoram;-

(Rupees in crores)

Year Net Sales Net Assets Fixed Assets Ratio

2007-08 3002.71 3587.21 0.84

2008 09 3897.97 3691.72 1.06

2009 10 4750.62 3431.82 1.382010-11 5397.88 1804.35 2.99

2011-12 5918.2 1084.24 5.46

Interpretation:

This ratio indicates the extent to which the assets of the company s can be lost without

affecting the interest of the creditors of the company. Higher the ratios better the long-term

position of the company.The above table shows fixed assets ratio in increasing trend. Which is good for the

company?


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Overall Profitability Ratios:-

Net Profit Ratio:

Net Profit Ratio indicates net margin on sales. It is given by the following equation.

Net Profit Ratio = (Net Profit / Sales) * 100Net Profit Ratio of Kesoram:

(Rupees in crores)

Year Net Profit Sales Net Profit Ratio

2007-08 379.17 3002.71 12.63

2008-09 414.32 3897.97 10.63

2009-10 202.98 4750.62 4.27

2010-11 -281.76 5397.88 -5.222011-12 -381.08 5918.2 -6.44

Interpretation:

It establishes a relationship between net profits after tax and net sales, and

indicates the efficiency of the management in manufacturing, selling, administrative and

other activities of the company.

The higher the ratio the better is the profitability or performance of the business.

The above table depicts the net profit Ratio of Kesoram has decreased every year from2007-2008 to 2011-2012.It further decreased to negative in the year 2010-11 to -5.22 and -

6.44 in the year 2011-2012. This shows constant decrease in the profits of the company.


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Return on Investment:-

Return on Investment:-

Net Profit

Return on Investment = . X 100

Share Holders Fund

Return on Investment Ratio of Kesoram:-

(Rupees in crores)

Year Net Profit Share Holders Fund Return On Investment

2007-08 379.17 981.92 38.622008-09 414.32 1330.10 31.15

2009-10 202.98 1540.24 13.18

2010-11 -281.76 1300.25 -21.67

2011-12 -381.08 915.01 -41.65

Interpretation:-

The above table reveals how well the resources of the firm are being used. Higherthe ratio, better the result. The above ratio implies how well the firm is growing in

terms of profitability and efficiency. From the above table we can concern that the return on

investment is in decreasing trend. ROI is highest in the year 2007-2008 as 38.62 %. But

there after it s decreased every year.

The ROI is negative in the years 2010-2011 & 2011-2012 as -21.67 & -41.65 respectively.

Which is not a good sign for the firm?


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Return on Capital Employed Ratio:-

Year PBIT Capital EmployedReturn On CapitalEmployed Ratio

2007-08 602.61 981.92 61.37

2008-09 565.57 1330.10 42.52

2009-10 550.35 1540.24 35.732010-11 16.05 1300.25 1.23

2011-12 -300.14 915.01 -32.80

Interpretation:-

The above table depicts return on Equity Capital Employed Ratio of Kesoram has decreased

every year from 2007-2008 to 2010-2011.It further decreased to negative in the year 2011-12 to -32.80.which shows constant decrease in the returns of the company.


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Findings:

_ The Share capital remains constant. Share capital is unchanged all the years from2008-2012.

_ Reserves & surplus were recorded an increasing trend in the period between 2008and 2010.It is showing decreasing trend in the period 2011-2012 (i.e. from 160.19 %

in 2010 to 93.09 % in 2012).

_ Current Liabilities were increased compared to base year i.e. 2008. _ Provisions increased to 2625.97 % i.e., in Rupees 392.32 crores in the current year. _ The current ratio for all the five year is lower (less) than the standard rule i.e., 2:1.

And it is 0.97 in the year 2011-2012 (current year).

_ The Debt-Equity Ratio was shown under the standard ratio. It is clear that the longterm debt is more than that of the share holders fund. It indicates that the firm

heavily relying on external funds rather than the internal funds.

_ The operating and net profit of Kesoram is in decreasing trend due to heavyincrease of manufacturing & administrative expenses.

_ ROI is highest in the year 2007-2008 as 38.62 %. The ROI is negative in the years2010-2011 & 2011-2012 as -21.67 & -41.65 respectively.

_ Return on Equity Capital Employed Ratio of Kesoram has decreased every yearfrom 2007-2008 to 2010-2011.It further decreased to negative in the year 2011-12 to

-32.80.

_ EPS of Kesoram has decreased every year from 2008-12.It is negative in the year2011 & 12.


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Suggestion:

_ The organization should adopt an appropriate capital structure. _ The company s debt-equity ratio is recorded more or less as 1.11 in the year 2008

and it is increased to 4.49 in the year 2012 (current year).The company should

adopt a better debt equity mix in the future to control the fluctuations in returns.

_ The company should control fluctuations in cash and bank balances as it impacts thecurrent ratio of the company.

_ The provisions are showing increasing trend which indicates risk of debtors. The

firm should implement an effective credit management policy. It should utilize its

idle funds by decreasing provisions.

_ The company should control heavy increase of manufacturing & administrationexpenses as it is impacting the operating and net profit of company.


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ANNEXURE

Profit And Loss Account of Kesoram Cement:

INCOME: Sales Turnover Excise Duty

NET SALES Other Income

TOTAL INCOME EXPENDITURE: Manufacturing Expenses Material Consumed Personal Expenses

Selling Expenses

Administrative Expenses Expenses Capitalized Provisions Made TOTAL EXPENDITURE Operating

Profit EBITDA Depreciation Other Write-offs EBIT Interest EBT Taxes Profit and

Loss f or the Year

Mar'12 12 Months

6282.60 364.40 5918.20 0.00

5961.29

819.03

3708.97

334.68

819.10

282.25

0.00

0.00

5964.03

-45.83 -2.74 297.4

0 0.00 -300.14 410.15 -710.29 -329.21

-381.08

Mar'11 12 Months

5750.72 352.84 5397.88 0.00

5487.33

748.03

3101.50

273.55

782.53

293.08

0.00

0.00

5198.70

199.18 288.64 272.59 0.00

16.05 239.83 -223.77 57.98

-281.76

Mar'10 12 Months

5051.51 300.89 4750.62 0.00

4810.19

139.74

2955.50

232.94

586.67

172.19

0.00

0.00

4087.04

663.58 723.16

172.80 0.00 550.35 109.21 441.14 238.1

6

202.98


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Mar'09 12 Months

4316.13 418.15 3897.97 0.00

3939.69

131.53

2293.59

186.90

488.46

161.79

0.00

0.00

3262.27

635.70 677.42 111.86 0.00 565.57 120.87 444.70 30.37

414.32

Mar'08 12 Months

3457.00 454

.29 3002.

71 0.00

3020.20

441.13

1184.48

153.44

450.19

99.07

0.00

0.00

2328.32

67

4.39 691.88 89.27 0.00 602.61 54.26

548.3

5 169.18

379.17


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Non Recurring Items

-11.42 70.63 32.28 -40.23 4.02

Other Non Cash Adjustments

Other Adjustments REPORTED PAT

12.76

0.00

-379.74

0.91 2.07

0.00 0.00

-210.21 237.34

4.65 0.17

0.00 0.00

378.74 383.35

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KEY ITEMS 2012Preference Dividend 0

Equity Dividend 4.57

2011 2010

0 0

25.16 25.16

2009 2008

0 0

25.16 25.16

Equity Dividend (%) 9.99 55 55 55 55

Shares in Issue (Lakhs) 457.43 457.43 457.43 457.43 457.43

EPS - Annualised (Rs) -83.02 -45.95 51.88 82.8 83.8


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BIBLIOGRAPHY

Sl.

No.

Books: Author Name

1. Financial Management Khan & JAIN2. Financial Management I.M.Pandey3. Management Accounting R.P.Trivedi

Websites & Search Engines 1.www.kesor am.com . 2.www.moneycontrol.com. 3.www.googlefinance.com .

Annual reports of Kesoram cement limited 2008-2012.


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Documents

Surya Raju Final