Basaveshwar Engineering College, Bagalkot Ratio analysis projct on ratio analysis

FINANCIAL RATIO ANALYSIS OF SRI HALSIDHNATH S.S.K LTD

BASAVESWAR ENGNEERING COLLEGE BAGALKOTPage 1

TABLE INDEX

SL.NO CONTENTS

PAGENO.

1 PART – I

EXECUTIVE SUMMARY

2

PART – II

INDUSTRY PROFILE

3 PART – III

INTRODUCTION OF COMPANY

4

PART – IV

RESEARCH METHDOLOGY

OBJECTIVES OF THE STUDY

6

PART – V

WORKING CAPITAL MANAGEMENT

7

PART – VI

DATA ANALYSIS AND INTERPRETATION

8

PART – VII

FINDINGS

SUGGESTIONS &

CONCLUSIONS.

9

ANNEXURE

FINANCIAL STATEMENT.

BIBILOGROPHY.





INDUSTRIAL PROFILE

ABOUT THE SUGAR INDUSTRY IN INDIA:-

India has been known as the original home of sugar &sugar cane. Indian Mythology supports the above facts ass itcontains legends showing the origin of sugarcane India is the

second largest producer of sugarcane next to BRAZIL. Presentlyabove 4 million Hectors land is under the sugarcane with anaverage yield of 70 tons per hectors. India is the largest single

producer of the sugar including traditional trade Sugar sweeteners,Khandsari & gur equivalent to 26 million tonnes row value followed

by Brazil in second place at 18.5 million tonnes. Even in respect ofwhite crystal sugar. India has ranked No.1 position in 7 out of last10 years

HISTORY OF SUGAR INDUSTRY IN INDIA:-

Traditional sweeteners gur &khandsary are consumed mostly by the rural population in India. Inthe early 1930’s nearly 2/3rd of sugarcanes production ofalternates sweeteners gur & khandsari. With better standard ofliving & higher incomes, the sweetener demand has shifted to whitesugar. Currently about 1/3rd sugarcane production is utilized bythe Gur & Khandsari sectors. Being in the small scale sector, thesetwo sectors are completely free form controls & taxes which areapplicable to sugar sector.

The advent of the modern sugar processing

industry in India began 1930 with grant of tariff to the Indiansugar industry, The number of sugar mills increased from 30 inthe year 1930-31 to 135 in the year 1935-36 &the production



during the same period in created form 1.20 lakh tonnes to 9.34

lakh tonnes under the dynamic leadership of private sector.

The area of planning for industrialdevelopment began in 1950-51 & Government laid down targets of

sugar production & consumption, licensed & installed capacity,Sugarcane production during each of Five year plan periods.

NEED FOR THE STUDY

The study has been conducted for gaining practical knowledge

about Ratio analysis of Shri Halasidhnath Sahakari SakharKarkhana. Ltd.

The study is undertaken as a part of the MBA curriculum from

1st July 2010 to 20th August 2010 in the form of summer inplant training for the fulfillment of the requirement of MBA

degree.

TITLE OF THE PROJECT

“This project “A Study on ANALYSIS OF FINANCIAL PERFORMANCEON The BASIS OF FINANCIAL RATIO’S” of Halsidhanath SahakariSakhar Karkhana Ltd

OBJECTIVES:-

To study the profitability of

Halsidhanath Sahakari Sakhar Karkhana Ltd. Nipani.

To study the liquidity position.

To find activity turnover



To study operating efficiency of

Halsidhanath Sahakari Sakhar Karkhana Ltd Nipani.

SCOPE OF THE STUDY

The scope of the study is identified after and during the study

is conducted. The main scope of the study was to put intopractical the theoretical aspect of the study into real life work

experience. The study of Ratio analysis further the study isbased on last 5 years Annual Reports Shri HalasidhnathSahakari Sakhar Karkhana. Ltd.

LIMITATIONS OF THE STUDY

The analysis is limited to just five years of data study (from year2005 to year 2009) for financial analysis.

Limited interaction with the concerned heads due to their busy

schedule.

METHDOLOGY

In preparing of this project the information collected from thefollowing sources.

Primary data:



The Primary data has been collected from Personal Interaction with

Finance manager Mrs.S.M.Siragave and other staff members.

Secondary data:

The major source of data for this project was collected through

Balance sheet of SSHSKL

Profit and loss account of 5 year period from 2005-2009

SAMPLING DESIGN

Sampling unit : Financial Statements.

Sampling Size : Last five years financial statements.

Tools Used: MS-Excel has been used to create a Charts andcalculation.

Findings

Gross profit and net profits are decreased during the periodof study, which indicates that firm’s inefficient management

in manufacturing and trading operations.



Gross profit and net profits are increased during the period

of 2004-05 which indicates that firm’s efficient managementin manufacturing and trading operations.

Liquidity ratio of the firm is not better liquidity position inover the five years. It shows that the firm had not sufficient

liquid assets.

The inventory of the firm in the first year has been sold very

slow. And there is an increase in the movement of theinventories but it slightly decreased in the last year. This maybe a sign not good to the firm.

The fixed assets turnover ratioof the firm has in 2004-05 the ratio is 0.85 and it increase in

the next 3years continuously and it again decrease in2008-09.

The current assets turnover

ratio is increasing during the period of 2004-06 and again itdecrease in the period of 2006-07. And again increase innext two year slithightlliy.

Direct Material cost ratio of the

firm is has less material cost during the period of 2004-05 &2007-08 and it raised in the year of 2005-06 and 2008-09.

The cost of direct labour of thefirm in the year of 2004-05 is 4.94%and it increasingslithightlliy up to 2007-08 and it decrease in the next year.



The cost of manufacturing

overhead of the firm in the year of 2004-05 is 5.22% where itcompare to the next 3year it increase rapidly.

SUGGESTIONS

The profit Of the Company Is not in a good Position For That

company has to Take Alternative Actions such As

Increasing in Procurement in sugarcane ,

Production, and Control in Expenses Like,

Administrative, selling Etc.

The firms have low current ratio so it should increase its

current ratio where it can meet its short term obligationsmoothly.

Liquidity ratio of the firm is not better liquidity position in

over the five years. So I suggested that the firm maintainproper liquid funds like cash and bank balance.

CONCLUSION

This project of Ratio analysis in the production concern is not

merely a work of the project. But a brief knowledge and experienceof that how to analyze the financial performance of the firm. Thestudy undertaken has brought in to the light of the following



conclusions. According to this project I came to know that from the

analysis of financial statements it is clear that SHSSK Ltd. Havebeen incurring loss during the period of study. So the firm should

focus on getting of profits in the coming years by taking careinternal as well as external factors. And with regard to resources,the firm is take utilization of the assets properly. And also the firm

has a maintained low inventory.

INTRODUCTION OF CONCEPTS

India is developing country in which more than 70%population is dependent upon agriculture. In India Wheat, Cotton,Rice, Tobacco & Sugarcane are the some main crops. But the sugar

cane is one of the important agricultural productions. And or byusing the sugar We produce sugar. Which is very important item ofdaily meals? Sugar is mainly used for tea, Coffee and so many food

products. It is also important raw material for bakery industry. TheSugar is produced by so many co-operative and also private

factories. The first scheme of sugar factory in co-operative societyhas been introduced byMr.G.N. Sahastrabudhe & R.N. Hiremath in1912. But first Co-operative sugar factory started in 1918, by the

Lallubhai Samaldas & G. N. Sahastrabudhe in baramati. But due toLake Of sugar Cane the factory stopped its working in 1924.

After that, in co-operative field, under the guidance ofVilnalirao patil, Dr Dhanjay Gudgil Tried to start second

co-operative sugar factory. He was started pravar -co-operativeSugar factory in 1950 at loni this factory got success in market



therefore some other sugar Factories were going to start in Pune,

after, the late 1970 there was a rapid increase in trend ofco-operative sugar factory.

INDUSTRIAL PROFILE

ABOUT THE SUGAR INDUSTRY IN INDIA:-

India has been known as the original home of sugar &

sugar cane.indian Mythology supports the above facts as itcontains legends showing the origin of sugarcane India is thesecond largest producer of sugarcane next to BRAZIL. Presently

above 4 million Hectors land is under the sugarcane with anaverage yield of 70 tonnes per hectors. India is the largest singleproducer of the sugar including traditional trade Sugar sweeteners,

Khandsari & gur equivalent to 26 million tonnes row value followedby Brazil in second place at 18.5 million tonnes. Even in respect of

white crystal sugar. India has ranked No.1 position in 7 out of last10 years

HISTORY OF SUGAR INDUSTRY IN INDIA:-

Traditional sweeteners gur &khandsary are consumed mostly by the rural population in India. Inthe early 1930’s nearly 2/3rd of sugarcanes production ofalternates sweeteners gur & khandsari. With better standard ofliving & higher incomes, the sweetener demand has shifted to whitesugar. Currently about 1/3rd sugarcane production is utilized bythe Gur & Khandsari sectors. Being in the small scale sector, these



two sectors are completely free form controls & taxes which areapplicable to sugar sector.

The advent of the modern sugar processingindustry in India began 1930 with grant of tariff to the Indian

sugar industry, The number of sugar mills increased from 30 inthe year 1930-31 to 135 in the year 1935-36 &the production

during the same period in created form 1.20 lakh tonnes to 9.34lakh tonnes under the dynamic leadership of private sector.

The area of planning for industrialdevelopment began in 1950-51 & Government laid down targets of

sugar production & consumption, licensed & installed capacity,Sugarcane production during each of Five year plan periods.

MANUFACTURING PROCESS & TECHNOLOGY:-

Sugar (sucrose) is a carbohydrate thatoccurs naturally in every fruit & vegetable is a major product of

pirotosynthesis, the process by which plants transforms the sun’senergy into food. Sugar occurs in greatest quantities in sugarcane& sugar beets form which it is separated for commercial use. The

natural sugar stored in the cal stalk or beet root is separated fromrest of the plant material through a process known as refining

For sugarcane the process of retaining is carried out in followingsteps.

Pressing of sugarcane to extract the juice.

Boiling the juice unit it begins to thicken & sugar begin tocrystallize.



Spinning the crystal in a centrifuge to remote the syrup,

producing raw sugar.

Shipping the raw sugar to a refinery where it is wasted &

filtered to remove Remaining non –sugar ingredient & colour.

Crystallizing, drying & packing the refined sugar.

Beet sugar processing is the similar but it is alone in onecontinuous process without the raw sugar stage. The sugar beets arewashed sliced & soaked in hot water to separate the sugar containingjuice from the beet fiber. The sugar laden juice is the purified, filtered,

For the sugar industry, capacity utilization is conceptually different

from the applicable to industries in general. In depends on threecrucial factors the actual numbers of ton sugarcane crushed in a

day, the recovery rate which generally depends on the quality ofthe cane & actual length of the crushing season.

Since cane is not transported to any great extent, thequality of the cane that a factory receiver on its location & it

outside its control. The length of the crushing season also dependsupon location with the maximum being in south Indian. sugarcane

in India is used to make either sugar, Khandsari or gur . Howeversugar products produced are divided into four basic categories;Granulated, brown, liquid, sugar, and invert sugar.

PFROFILE OF THE COMPANY



Name of the factory Shree Halasidnath Sahakari

Sakhar Karkhana LTD.

Address Shree Halasidnath Sahakari

Sakhar Karkhana LTD.

Shankaranand nagar,Nipani.

TAL:-Chikodi.DIST:-Belgaum

PIN:-591237.

Year of Establishment APRIL-1981.

1st Crushing Season JANUARY-1983.

Register Number DSK/REG-2/80-81.

Register Date 22-04-1981.

Phone Number STD CODE (08338)

Chairman-220355

Office-222090

FAX Number (08338)221315



BACKGROUND & INCEPTION COMPANY.

Halsidhanath sahakari sakhar karkhana is placed 3 kmaway from Nipani in north side at Shankaranandnagar , Tal:chikodiDist: belgaum. Halsidhanath sahakari sakhar karkhana is the

support pillar to the sugar cane producer farme’s in the Nipani area.The karkhana wa started by the some social worker’s in nipani

area with a view to provide an good option to the former in thisarea like sugarcane.

Mr. Baburao Budihalkar was the chief promoter in thisproject But, some other The foundation of karkhana building was

held on 9-11-1982. The chief guest for this function wasShri.Rajiv Gandhi who was the prime minister of India in that time.The Karkha started its regular working on 30-9-1989. The delay

was due to the changing political conditions in Karnataka state.

The Karkhana developed a very good rapport with the farmers inthis area and worked for their progress . So, the karkhana is



operating in entire Chikkodi taluka

andAlur,Bhairapur,Kanagala,Shippur,Karajaga,Rashing,Bad,Nangnur,Mattiwade,Hitani,Shekinhasur,Konankeri, sadlaga thirteen(13) vill

ges in Hukkeri taluka. Only Belgum in Belgum laluka and Soudattiin Raibag Taluka all these part of Belgaum district in the Karnatakastate. And Arjuni, Chikhali, Gorambe, Shendur, Shankarwadi,

Vandur all these eight (8) villages in Kagal taluka is a part ofKholapur district in the Maharashtra state Thus, it will comprise ofpart of Belgaum district and part of Kolhapur district, from two

adjoining states.

OBJECTIVES AND FUNCTIONS:-

The principle object of the karkhana will be to promote theinterests of all its members to attain their social andeconomic betterment through self help and mutual aid inaccordance with the co-operative principles.To prepare and implement the programme for harvesting andtransportation of sugarcane on behalf of the member’s fromtheir field to factory in supply of sugarcane to factory forcrushing and to avoid probable losses of sugar in cane.To manufacture sugar, Jaggery and its allied by productsfrom the sugarcane supplied by the members and other andto sale these products at good price.To install the factory for manufacture sugar on large scalebasis and to take all necessary steps to run it efficiently



To install the necessary machinery required for producing ofbagasse, molasses, Press-mud etc.To ruchase the means of transportation and to run, to giveand to take on hire basis.To install research centers and to assist the existing researchinstitutions and to undertake research work helpful tosugarcane, sugar and allied industry.

NATURE OF THE BUSINESS CARRIED:-

S.H.S.S.K.LTD. is co-operative sector firm.

It is a manufacturing company It produces sugar, molasses Andsupplies sugar tp Nipani, Chikodi Taluka, Raibag Taluka, saudatti,and Hukkeri Taluka. It operates within Karnataka as well as outside

Karnataka.

Nature of business carried Shri Halasidhanath sahakari SakharKarakhana Ltd is involved in the activity of manufacturing whitecrystal sugar products which is the main product. The process of

production involves conversion of.

Raw sugar cane to sugar,

Raw sugar to refined sugar, Molasses, Bagasses are its by

products.

MOLASSES: Molasses is mainly used for the manufacture ofethyl alcohol(ethanol)yeast and cattle feed.

BAGASSES: Bagasses is usually as a combustible in the

furnaces to produce steam which in turned is used togenerate the power, it is also used as raw materials for the

production of paper and as feedstock for the cattle.



PRODUCT PROFILE

Shri Halasidhanath Sahakar Sakhari Karakhana Ltd established forthe purpose of sugar while producing the sugar some raw juice

and raw bagasses become molasses and some other by-product.

The Shri Halasidhanath Sahakar SakhariKarakhana Ltd is producing following product

1) Sugar

A) Medium-30B) Small-30C) Levy

2) Molasses3) Compost4) Bagasses

AREA OF OPREATION

The Shri Halasidhanath Sahakar Sakhari Karakhana Ltd has wide

range of area of operation for continuous and regular flow of sugarcane from different authorized area within the 80 kms. Around thespot of plant includes some region of two states from Maharashtra

and Karanataka under.

SR.NO NAME OFTALUKA

DISTRICT NUMBER

1 Chikodi Belgaum 43



2 Hukkeri Belgaum 05

3 Raibag Belgaum 04

4 Belgaum Belgaum 01

5 Jamkhandi Baglkot 01

6 Athani Belgaum 05

7 Kagal Kholapur 09

TOTAL 68

OWNERSHIP PATTERN

Shri Halasidhanath Sahakar Sakhari Karakhana Ltd established inthe year 1981 at Hala sugar gram of chikodi Taluka. It was resolved

to collect the share of established this sugar factory in co-operativebasis. Let the late Baburao B patil Budhialkar and other social

workers and leader working in co-operative sector also comeforward to assist team in the starting this factory. It is jointventure with share capital of Rs. 104940000 contributed by

18990 share holders. The company was established in the yearApril 1981 & started the crushing in January 1983. The company isregistered under the provision of companies Act-1956.

THERE IS TOTALLY 15 BOD’S.



Grower member will elect 12 BOD’S

1 Director will be elected by the co-operative.

1 Director nominated by the principal of financial agency.

Apart from this 14 director, managing director will be

deputed by the government

PRESENT BOARD OF DIRECTORS ELECTED DIRECTOR

Shri. D.A.Chougale ManagingDirector

Shri. Babasaheb .S. Saasne Chairman

Shri .Ramagounda .R. Patil Vice- Chairman

Shri .Ganesh .P. Hukkeri Director

Shri .Appasaheb .S. Jolle Director

Shri. Annasaheb .A. Patil Director

Shri. Vishawanath .S. Kamate Director

Shri. Malagounda .P. Patil Director

Shri. Anand .D. Ginde Director

Shri. Chandrakant .S. Kotiwale Director

Shri. Ramagounda .B. Patil Director

Shri. Ramagounda .Y. Patil Director

Shri. Kanthinath .G. Chougale Director



MEMBERSHIP OF SHARE CAPITAL:-

The membership of Shri Halsidhanath SahakariKarakana Ltd has been accepted by different individuals and firmscategorized into three classes as under

‘A’ Class involves the grower (farmers of agricukturist)

‘B’ Class involves the institute and non-grower

These are:-

1. Co-operative Societies2. The belgaum District Central Co-operative Bank Ltd.

3. Karnataka State Agro –Industrias Co-operation,Bangalor.

‘C’ Class involves the state government of karnakata.

The above said members born their share as share capital

as

Sr

No

Member class No of Shares Share

capital

1 A Grower

B co-operative society

15,924 613.52



COMPETITORS INFORMATION

The main competitors are as follows

Doodh Ganga Shakari Sakhare Karkhane, LtdCrashing capacity-5500 TCD

Recovery -11.5%Sugar production -10000 Qtls (per day).

Venkateshwer Sugar LtdCashing capacity -2500 TCDRecovery -10.5%

Sugar production -3000 qtls (par day).

Renuka Sugar LtdCrashing capacity -10000 TCDRecovery -11.2%

2 Non-Grower 3065 60.06

3 C Government ofKaranataka

1375.82

Total 18990

1049.40



Sugar production -14000 Qtls (par day).

INFRASTRUCTURAL FACILITY

CATEEN

The management provides multi-purpose cooking range,utensils, working capital, and installation of gas equipment free

building expenditure towards purchase of furniture. Actualexpenditure towards consumption of water, electricity and gas,annual subsidy. the rates of foodstuffs in the canteen are fixed on

no –no profit basis. The workers who are working in theproduction department are entitled for Tea free at cost while they

are on duty.

TRNSPORTATION

Up to 40 km. three transportation facilities is providedto farmers rate structure of vehicles as per kilometres

Sr.

No

KM Rate per

km

Sr No KM Rate

per km

1 5 45.56 11 55 156.77

2 10 57.76 12 60 166.83



3 15 73.12 13 65 174.02

4 20 86.34 14 70 183.80

5 25 98.16 15 75 192.75

6 30 106.30 16 80 199.12

7 35 117.45 17 85 209.24

WATER

It is established the river Vedganga. there is

sufficient supply of water required for production process.

POWER

There is provision electricity from KPTCL. & company

generates its own power through boilers during crushing ofsugarcane.

ACHIEVEMENTS

In 1996-97 from South Indian Sugar TechnologistsAssociation (SISTA) for best achievement award in cane

development.

FATURE GROWTH AND PROSPECTUS



To undertake such activities as are identical and conductive

to the development the society.

To inn coverage for other crops where sugarcane not grown.

To expand crushing capacity.

WORKFLOW MODEL (END TO END MODEL )



Heating 65 C->Lime +SO2application

APPLICATION OF 7’S MODEL

OF MC, KENSEY’S



Strategic planning refer to the management processes in

organization which helps in management to determine the futureimpact of change and take the currentdecisions to reach designed

future. The management literature is replace which instance oforganization which have fade stress in strategic planning but nothave been phenomenally successfully.

Consultants at the Mc.Kensy‘s company very well

known management consultancy firm the created states developthe 7’ s frame work towards the end of 7 ‘s diagnose the causes of

organizational problems and to formulate problems for important.The following is the 7’s frame related to the Mc. Kenny’s 7’s framework

According to waterman organizational change is

not simply matter of structure although structure is a significantvariable in the management of change. Again it is not a simplerelationship between strategy and structure although strategy is

also critical as put.

In their view effective organizational change may beunderstood to be a complex relationship between strategy,

structure, system and style, skill, staff, and super ordinate goals.The framework suggests that there is a multiplicity of factors thatinfluence an organization and ability to change and its proper

mode of change.



STRUCTURE OF ORGNIGIATION

SHARE HOLDER

CHAIRMAN

MANAGING DIRECTOR

BOARD OF DIRECTOR



SHARE SECTION

Head: - M.T. PATIL

According to by-law, the factories authorized sharecapital is Rs 20 crores. Atresent the number of shareholders is18990 and capital collected from all the shareholders. i.e. Rs

10,49,40,000/-

The membership of Shri Halsidhanath SahakariKarakana Ltd has been accepted by different individuals and firmscategorized into three classes as under

‘A’ Class involves the grower (farmers of agricukturist)

‘B’ Class involves the institute and non-grower

These are:-

4. Co-operative Societies5. The belgaum District Central Co-operative Bank Ltd.



6. Karnataka State Agro –Industrias Co-operation,

Bangalor.

‘C’ Class involves the state government of karnakata.

The above said members born their share as share capitalas

TIME OFFICE LABOUR WELFARE DEPARTMENT

Sr

No

Member class No of Shares Share

capital

1 A Grower

B co-operative society

15,924 613.52

2 Non-Grower 3065 60.06

3 C Government of Karanataka 1 375.82

Total 189901049.40

NAME OF

THE

DEPT

PERMA

NENT

SEATION

AL

GOV

T

CONSTR

U

CTUAL

DAILY

WAGE

S

CONTR

ACT

TOTA

L

TimeOffice

6 4 - - - 3 13



HEAD: - S.G. MORE.

Time office is one of the main part of the factorybecause in time office all records regarding many types of

Security 13 - - 6 - 3 22

Store 6 5 - 1 - 9 21

Civil 4 - - - - - 4

Environment

3 3 - 1 - 9 16

Administ

rative

15 3 1 5 - 6 30

GeneralA/C

10 - - - - 3 13

Cane A/C 7 2 - 1 - 6 16

Vehicle 7 4 - - - - 11

Medical 1 - - 1 - - 2

Agriculture

28 62 - 5 2 39 136

Engineer 90 70 - 3 3 41 207

Manufacturer

8 99 - - 2 38 147

TOTAL 198 252 1 23 7 157 638



departments and about the details of their employees are recorded

so it must require in each and every organization.

There is no special department like HRD or Personalmanagement in the factory time and labour welfare office is there,

in this office there is labour welfare officer & head time keeper,shift time keeper and wage clerk is there.

WELFARE FACILITY

To take care of all the workers, the organization willprovide the some following facility those are:-

A. Bonus is 08.33%based on theworker salary.

B. Quarter, hospital etc. facilityand allowances

C. Canteen facilityD. Promotion facilityE. Permanent employees get one

increment every year.F. School facility to the workerchildren.

G. And medical facility are availableif any accident occurs.

PURCHASE SECTION

Purchasing plays an important and significantrole in processing industry. Purchasing is tough task, which is to be

performed very carefully. It functions on the principal of “ Money



saved in purchased is money gained in sales”. Profit can also be

earned in purchasing process by the purchase manager by hisknowledge about the entire market.

STORE DEPARMENT:-

THE WORKING FLOW CHART SHOWN BELOW

In this factory the store department incharge will be Shri Kadam sir under their the information will be

here.

Main Points:-

The store keeper will check the

supplier quantity and afterwards send to the respectivesection wise. For ex.:- Cement, Belt etc After this the

material verification will be taken by under chief enginee

The store keeper will entry thepurchased material in a book in systematic manner.

The daily transactions will beheld in the books of power house main panel board.

Store department is just like a

godown because in department all materials which areneeded to the factory are stored.



The store house which contains

the 21 heads. They are follows:-

Heads :-

1. Oil and lubricants Ex :- Bearingoil, Greece, etc being purpose machinery.

2. Manufacturing goods Ex:-

Chemical, sulphur etc uses of sugar processing.3. Hardware Ex:- Nutbolt, chain,MS bar etc uses of machinery maintenance.

4. Welding materials Ex:-Welding rod, screen, black glass uses of welding purpose.

5. Drawing materials Ex:-Ammonia paper, Dressing paper, etc machinerymaintenance of engineering department.

6. Electrical goods Ex:- Pressuregauge, vacuum gauge, temperature gauge etc formachinery maintenance.

7. Tools and tackles Ex:- Spaner,screw driver etc.

8. Transmission of goods Ex:-Bearing oil, oil seal, bearing glue

9. Iron and steel These are used

for machinery maintenance of engineering department.10. Building materials Ex:-Cement, steel, stone crystal, sand etc uses of concrete

foundation for machinery.



11. Machinery and machine spare

Ex:- Bearing, coupling, nutbolt etc.12. Pipe and pipe fitting Ex:-

pipe, bend, flang etc13. Furniture and fixtures Ex:-Chairs, tables etc

14. Stationary Ex:- Log book ,indent book, bucket etc.

15. Rubber goods Ex:- Bush,

rubber belt, wheel, ordinary material.16. Library Ex:- Books.

17. Vehcle spare18. Medical Ex:- Druds, tablets,syringe, salines etc.

19. Printing Ex:- Log, book,store recipt book etc..

20. Computer spare Ex:-

Ribbon, cartridge, pen drive etc.

SALES SECTION

The main product of H.S.S.K.Ltd is sugar and

by-Bagasses, Molasses, and press mud. These all are sold bycalling tenders. Because the factory has no right to sale these

products directly in the open market. The Office Superintendentdoes this work and sales officer with the help of sugar directorsBangalore Central Govt. fixes the selling quantity.

There are two types of sales:-

A. Free sale--------- 90% of the

produced sugar.



B. Levy sale--------10% of the

produced sugar.

The factories’ by-products like,

A. Bagasses-------used in paperindustry.

B. Molasses-------used indistilleries.

C. Press-Mud-----used in

fertilizer.

SECURITY SECTIONThere are 22 security guards and their function are,

1) Checking in-out persons and

vehicles.2) Protecting and securing properand best use of assets of the factory.

3) Maintaining the belowmentioned registers,

A. Attendance registers.

B. Visitors register.C. Vehicle register.

D. Workers get passE. Bagasse, Molasses, Press-Mudget pass.

Cane Development Section



Department-Structure

Chief of C.D.OFor Manager

C.D.O

Assistants

AssistantC.D.OWorkers

Cane-Inspector

Field-Offices

The duty of C.D.O (Cane Development Officer) isto develop the growth of sugarcane by providing training andseeds to the farmers.



Cane development process:-

Providing training to the

farmers.

Providing seeds on loan basis.

Seeds are developed in the firmand distributed to farmers.

Early detection and pests and

crop decreases and providing solution

Cane-Verities:-

Karnataka Hybrid Seeds.

Coimbatore

Coimbatore Cadlar

Coimbatore Melattur.

ENGINEERING-DEPARTMENT

HEAD:-M Umapati

It is very important department to any factory,

because engineer only have capacity to run the productionsmoothly. In this factory this section has217 employee The main

functions of this section as follows,

1. To take of all the divisions likeboiler, mill, electricity etc.



2. To ensure that all machineries

are in good condition.3. They inform board of

management about scares materials and make them topurchase that material.

4. The repair the broken down

machines and make them to work properly.

Department-Structure

Assistant Electrical Environmental Work-ShopCivil

Engineer Engineer Engineer Engineer

Engineer

Supervisor Supervisor Supervisor SupervisorSupervisor



Worker Worker Worker Worker

worker

During off season their functions are,

1. Maintenance of all themachineries currently.

2. Overhauling of the machineries.3. Machinery erection.

PRODUCTION DEPARTMENT



The Chief Engineer, chief

chemist and Civil engineer from the structure of theproduction

The chief engineers work is to

technical and mechanical works and improve them to

increase the production capacity.

The chief chemist work is toinstruct how where & when to use chemical in the production

process.

The civil engineers work is to

plan where to situate the machineries and also they adviseuseful suggestions to make the production very easy andsmooth.

COMPARATIVE STUDY OF PRODUCTION OF SUGAR

Sr.No

YEAR SHARE

CAPITAL

SUGARCANE

CRUSHING

SUGAR

PRODUCTION

RECOVERY

RATE



Cane Yard:- In this collect

sugarcane from the farmers.

Cane weight:- In this theymeasure sugarcane including vehicle after unloading the

cane. they measure vehicle weight and they deduct thatweight in the total weight. Thus they get the actual weight of

the cane. They prepare 3 weight receipts with the help ofcomputers, one goes to cane a/c, another goes to farmersand third one goes to transfot office.

A/C (In MT) (In qtl)

12004-05 837.13 141430.852

151480 10.71

2

2005-06 972.40 210556.428

239950 11.40

32006-07 1049.40 241130.000

275240 11.41

4

2007-08 1125.40 113345.000

132920 11.82



Cane Carrier:- The unloaded

cane is put down in carrier and carrier is driven by the motorIt is concerned to cane cutter.

Cane cutter:- there are two

types cane cutter,1) 1st cutter---In this cane cuts

into 12 to 20 inches.2) 2nd cutter---In this cane cuts

into 12 to 20 inches.

After cutting cane is forwarded in fibriser. The fidrised caneis taken into mill section.

Mill Section: - In this section,the cane is squeezed. Whatever the quantity of juice quizzed

in the mill is pumped into clarification house. At this timethey get the by- product called bagasse.

Dorr:- The juice has come by-

product like press mud and bagasse before it is taken storedin the Dorr. After storing in the Dorr these are separated and

move down ward.

Evaporators:- After

classification of the juice stored in Dorr. Then it is taken into Evaporators to evaporate that the water evaporation juiceis taken into pan section.

Pan Section:- In this section

again syrup (juice) is boiled or heated by the steam. In thissection they remove water, which is mixed in the syrup.

After that make crystals.



Centrifugals:- This is last

process in producing sugar in this section factory gets amain by-product molasses and stores it in storage tank.

They produce mainly 3 types of

sugar,

1) L30: This is big crystal.2) L30: This is medium crystal.3) L20: This is small crystal.

GODOWN

After packing the sugar in the gunny, they are stored in thegodown. In the godown they maintain register consisting the

records of stock, dispatch and closing balance.Factory has 4 largeGod owns and their capacity is given below,

STORE

HOUSE

CSPSCITY (In qtl bags)

2 1lakhs

2 70000



SKILL

Skill is the distinctive capabilities or competence of theorganization as a whole, Skills developed are,

Product quality awareness.

Time management.

Result orientation.

Dedication.

This type of training also known as job instruction training isthe most commonly used method. Under this method, the

individual is placed on a regular job though the skill necessary toperform that job. The trainee learns under the supervision of aqualified worker of instructor. On-the-job training has the

advantage of giving firsthand knowledge and experience under theactual working condition. While the trainee learns how to performjob, he is also a regular worker rendering the services for which he

paid. The problem of transfer of trainee is also minimized as theperson learns on-the –job training methods includes job rotations,

coaching job instruction or training through step-by-step andcommittee assignment.

STYLE

Style includes two things, one management style andorganizational culture. Management style the way in which the

managerial personnel behave and collectively spend their time toachieve organizational goals, it consists the way of lending.

motivating and the style of leadership in the management. Here



they usually use authoritative style means top to down decision

making parameter pertaining to day-to-day operation but theyallow subordinates to participate in the decisions affecting their

interest and ask their suggestions for their decisions. This makesorganization more effective.

SRTATEGY

Strategy means the actions which a company plans in to or

anticipates of changes in its external environment. In other words itis the determination of basis long term objectives or courses ofaction and allocation of resources to achieve the organizational

goals’. They are as follows,

Waste Elimination S.H.S.S.K. Ltd.

Produces molasses and sell it to liquor industries. And it uses

biogases boilers in order to generate energy for factory duringcrushing process.

Cost Reduction: They arereducing the intake of employees and reducing the number ofemployees in order to reduce cost. They are not depending onK.P.T.C.L. for power while crushing process is carrying on. Theyproduce energy by boilers.

SYSTEM

A system includes formal and informalprocedures that support the strategy and structure. In other words,

it is the processes and flows that shown how an company gets itsday-to-day things done. This includes the procedures and the

routines that will characterized how important work to be done. i.e.



financial system, hiring, promotion and performance appraisal

system and information system etc.

PRODUCTION PROCESS:-

Pressing of sugarcane to extract

the juice.

Boiling the juice until it begins

to thicken and sugar begins to crystallizes.

Spinning the crystals in acentrifuge to remove the syrup, producing raw

sugar.

Shipping the raw sugar to a

refinery where it is washed and filtered to removeremaining non-sugar ingredients and color crystallizing,and drying packing the refined sugar.

INVENTORY CONTROL SYSTEM

Here in stored department the inventory control used FIFO.Here the method FIFO is appropriate because the sugarcane is not

a durable commodity it is better to crush the sugarcane freshly. Itis not stored for a long time because it turned in too dry sooner.

STAFF

Staffs refer to the people in the enterprise and theirsocialization into the socialiseational culture. Productive high

performing employees are the companies



most valuable assets. The company follows a progressive policy

taking keen interest in its personnel and well beings and progress,which builds a strong sense of belongingness.

Technical Department:-A. Machine shop and maintenance

quality assurance.B. LaboratoryC. Tool room

D. Manufacturing engineeringdepartments

E. Production planning and control

F. Research and development

Non-TechnicalDepartment:-A. AdministrationB. Clerical

DUTIES AND RESPONSIBILITIES:-

Technical Staff:-

Operators/Technicians:-

Carry out the work as per the

instruction and job allocation.

In process inspection wherever

applicable.



Maintenance in charge:-1. Planning of preventing

maintenance.

2. Attending breaks down

maintenance.

3. Taking corrective action for

reduce break down.

4. Planning spares and raising

purchase intend.

5. Maintaining the quality record.

SHARED VALUE

There are values shares by the members of the organization.It is the super ordinate goal that is centrally responsible for

providing a core mission to the organization Used as an umbrella,which embraces all the other managerial activities. In short it says

what does the organization stands for and what is believes in. Adevoted and sincere contribution to the mankind through thevarious business activities of the company and compromise to the

quality.

1. Continues growth is the mainforce behind the achievement of S.H.S.S.K ltd.

2. Customer satisfaction throughquality services.

3. Quick decision and execution

with speed.



SWOT ANNALYSIS OF THE COMPANY



STRENGHTS

Produces good quality of sugar.

It’s near the river of the

Vedganga so there is availability of the sufficient water.

SHSSK is not dependent of

KPTCL for supply of power while production is carrying on the

generator through rower.

WEAKNESS:-

Since it is agro based industry

monsoon effects its production.

Lack of good administration.

Lack of infrastructure.

Backward technology andcomplexity

OPPORTUNITIES:-

Possibility of willingco-operation by bank.

Arrangement for KPTCL grid.

THREATS:-

Competition from the domestic

player.



Due to unfavorable Govt. Polices,

factory has to sell sugar below its production cost.

RESEARCHON

FINANCIALANALYSI



.

NEED FOR THE STUDY

The study has been conducted for gaining practical knowledgeabout Ratio analysis of Shri Halasidhnath Sahakari Sakhar

Karkhana. Ltd.

The study is undertaken as a part of the MBA curriculum from

1st July 2010 to 20th August 2010 in the form of summer inplant training for the fulfillment of the requirement of MBAdegree.

TITLE OF THE PROJECT

“This project “A Study on RATIO ANALYSIS of Halsidhanath

Sahakari Sakhar Karkhana Ltd” is considered as an analyticalresearch

OBJECTIVES

To study the profitability of

Halsidhanath Sahakari Sakhar Karkhana Ltd. Nipani.

To study the liquidity position.

To find activity turnover



To study operating efficiency of

Halsidhanath Sahakari Sakhar Karkhana Ltd Nipani.

SCOPE OF THE STUDY

The scope of the study is identified after and during the study

is conducted. The main scope of the study was to put intopractical the theoretical aspect of the study into real life workexperience. The study of Ratio analysis further the study is

based on last 5 years Annual Reports Shri HalasidhnathSahakari Sakhar Karkhana. Ltd.

LIMITATIONS OF THE STUDY

The study duration (summer in plant) is short.

The analysis is limited to just five years of data study (from year

2005 to year 2009) for financial analysis.

Limited interaction with the concerned heads due to their busy

schedule.

METHDOLOGY

In preparing of this project the information collected from thefollowing sources.

Primary data:

The Primary data has been collected from Personal Interaction withFinance manager Mrs.S.M.Siragave and other staff members.

Secondary data:

The major source of data for this project was collected through

Balance sheet of SSHSKL

Profit and loss account of 5 year period from 2005-2009



SAMPLING DESIGN

Sampling unit : Financial Statements.

Sampling Size : Last five years financial statements.

Tools Used: MS-Excel has been used for calculations.

THEORETICAL FRAME WORK

INTRODCTION:- Finance is life blood of the business. Thefinancial management is the study about the process of procuring

and judicious use of financial resources is a view to maximize thevalue of the firm. There by the value of the owners i.e. theexample of equity share holders in a company is maximized. The

traditional view of financial management looks into the followingfunction that a finance manager of a business firm will perform.

1. Arrangement of short-term andlong-term funds from the financial institutions.



2. Mobilization of funds through

financial instruments like equity shares, bond Preference shares,debentures etc.

3. Orientation of finance with theaccounting function and compliance of legal provisions relatingto funds procurement, use and distribution. With increase in

complexity of modern business situation, the role of thefinancial manager is not just confirmed to procurement offunds, but his area of functioning is extended to judicious and

efficient use of funds available to the firm, keeping in view theobjectives of the firm and expectations of providers of funds.

DIFINATION:-

Financial Management has been defined differently by different

scholars.

1) Howard and Upton:-“Financial Management is the application of the planningand control function to the finance functions”

2) Bringham:- “FinancialManagement is an area of financial decision makingharmonizing, individual motives and enterprise goals”

MEANING OF RATIOS

Financial Statement contains a wealth of information which, ifproperly analyzed and interpreted, can provide valuable insightsinto a firm’s performance and position. Analysis Soft financial

statements is of interest to (short terms well as long term)



investors, security analysts, managers, and others financial

statement analysis may be done for a variety of purpose, whichmay range from a simple analysis of the short -term liquidity

position of the firm to a comprehensive assessment of thestrengths and weaknesses of the firm in various areas.

The principal tool of financial statementanalysis is financial ratio analysis. An absolute figure does not

convey much meaning. Ti, there for, become necessary to study acertain figure in relation to some other relevant figure to arrive atcertain conclusion e.g. If we give the figure of only gross profit

earned by certain firm, we cannot say

whether the gross profit is heavy, reasonable or sufficientfor this purpose we must take into consideration the figure of sales.

Thus, the gross profit to is required to be studied in relation tothe sales to decide the percentage of gross profit to sale on thebasis of percentage we can conclude whether the gross profit

earned is reasonable or otherwise. Thus the relationship betweenthe two figures expressed mathematically is called a ratio.

OBJECTIVES OF RATIO ANALYSIS:-

The study of financial statement

of any corporate will help in knowing its present and future

earning capacity.

The study of financial resources

can help in knowing whether a company can pay its long-termor short-term liabilities.



It’s very use full to know how

much working capital is employed in business and sameeffectively used.

It’s use full to measure earning

capacity and its comparison to other competitive units.

Help full to known marginal

efficiency.

Use full to future planning.

INTERPRETATION OF RATIOS

The benefit of the ratio analysis depends to great extentupon their correct interpretation. Interpretation requires

considerable ability on the part of the analyst. He has to decidewhether the relationship disclosed by the ratio is satisfactory or not.He has to base his decision on experience, or on comparison may

be interpreted in any one of the following ways.

1) BASED ON SINGLE RATIOAND GROUP RATIOS:-

The interpretation may be based on individual ratio e.g. If current

ratio persistently falls and goes below one, it can be interpreted asan indication of short-term insolvency. However, one cannot getthe position corrected by

studying individual ratio in isolation. It is therefore a commonpractice to study

and interpret a set of several related ratios e.g. for short-termsolvency both the



ratios, whose significance is not fully understood , are made more

meaningful

by the computing and study of additional relevant ratios.

2) COMPARISON OVERTIME:-

Ratio analysis is primarily useful for studying trends,

indicating rise, decline or stability over a period of time. For thispurpose, ratios by themselves are of no particular significance. For

reveling such trends, the same ratio or a group of ratios is studiedover period of years. Thus the movements in the ratios, rather thanthe ratios themselves, are important.

3) INTER-FIRMCOMPARISON:-

Ratios of undertakings are compared with the respectiveratios of other firm in the same industry and with the industry on

average An immense benefit is likely to from such comparison asthe concerns similarly situated are as a matter of fact , “to sail inthe same boat.”

PROCEDURE OFANALYSIS:-

First or all the depth, object and extent of analysis must bedetermined, so that necessary information can collect. The analysis

is required to go through various financial statements of thebusiness and collect other required information from themanagement. The analysis is required to rearrange the data given



in the financial statements in a manner, which will help the to

analysis the statements easily and conveniently. After analyzing thestatement the interpretation is made and the conclusions are drawn.

TYPES OF RATIOS:-Classification of ratios is done in two ways.

A. According to nature of items.B. According to purpose of the

function.

A) According to nature of items:-

1) Balance Sheet Ratios:- The

ratios exhibiting the relationship between two item orgroup of items in the balance sheet e.r. Relation betweencurrent Assets and Current Liabilities.

2) Revenue Statement or Profit andloss account ratios:- The ratios disclosing the relationship

between two items or group of items in the profit and lossaccount it. Relationship between Sales and Gross profit.

3) Inter Statement or Composite

Ratio:- The ratios indicating the relationship of certainitems in the balance sheet with some figures in therevenue statements i.e. Net Profit and Capital or Sales

and Fixed Assets.B) Functional Classification:-

Liquidity Ratios; - These ratios

measure the liquid position of the enterprise i.e. whetherthe current assets to pay current liabilities as and when



they mature. Thus, these ratios indicates short-term

solvency of the business

Leverage Ratios; - Theyindicate the relative use of debt and equity in financingassets of the firm. The extent, to which the practice of

trading on equity can be carried on safety, can be knownthrough these ratios.

Activity Ratios:- These ratiosmeasure the efficiency in the employment of funds in the

business operations. They respect the company’s level ofactivities in relation to its turnover.

Profitability Ratios:- Thereratios measure overall performance. And profits earning

Capacity of the business. They reveal the effect of thebusiness transaction on the profit position of the

enterprise.

PROFITABILITY RATIO:-

1) Gross Profit Ratio:- This ratio

reflects the efficiency with which the management produces

each unit product. The ratio is calculated as under:

Gross Profit Ratio= Profit

Sales

It is the ratio which is most commonly employed by accountantsfor comparing the earnings of business for one period with those

of other or earnings of one concern with of another in the same



industry. It indicates the degree to which selling prices goods per

unit may decline without in losses on operations for the firm.

2) Net Profit Ratio:-Net Profit is that proportion of net saleswhich remains to the owners or the shareholders after all costs.Charges and expenses including income-tax have been deducted.

It is calculated as under.

Net profit (after tax)

Sales

It differs from the ratio of operating profit is to net sales in asmuch as it is calculated after adding non-operating incomes, like

interest, dividends on investment etc. To operating profit anddeducting non-operating expenses such as loss on sale of oldassets, provisions for legal damages etc. from such profits.

LIQUIDITY/SOLVENCY RATIO:-

1) Current Ratio or working

capital Ratio or 2:1 Ratio:- It is a ratio of current assets tocurrent liabilities. The ratio is calculated by dividing the current

assets by the current liabilities.

Current Assets

Current liabilities

Certain authorities have suggested that in order to ensure solvencyof a concern. Current assets should be at least twice the liabilitiesand therefore. his ration is known as 2:1 ratio.



2) Liquid Ratio or Acid Test Ratio

or Quick Ratio:- The current Ratio fails to serve as a realistic

guide to the solvency of the concern, as the major portion onthe current assets may comprise of such assets which cannot

be converted immediately cash (e.g. stock) to meet theimmediate liabilities. It this ratio is 1:1, it is considered that allclaims will be met when they arise.

Quick / Liquid Assets

Current liabilities

ACTIVITY RATIO

1) Inventory Turnover Ratio:- Theterm “Inventory Turnover “ refers to the number of times in ayear inventories are sold and replaced.

Inventory Turnover Ratio:- Cost of Goods Sold or sales

Average Inventory at cost

It is Indication of the velocity with which merchandize movesthrough the business. This is a test of inventory to discoverpossible trouble in the form of over stocking or over valuation. It

assists the financial manager in evaluating inventory policy.

2) Operating Ratio:- The ratioshows the percentage of net sales i.e. observed by the cost of

goods sold operating. Naturally higher the ratio, the lessfavorable it is. Because it would leave a small margin to meetinterest, dividends and other corporate needs.



Operating Ratio = Cost Goods Sold + Operating Expenses

Net Sales

3) Fixed Assets TurnoverRatio:-The ratio measures the efficiency in the utilization offixed assets. This ratio indicates whether the fixed assets are

being fully unitized A high ratio is an index of the vestment infixed asset. Normally standard ratio taken as five times.

Fixed Assets Turnover Ratio = SalesNet Fixed Assets

4) Total Assets Turnover Ratio:-The ratio is arrived at by dividing sales by the total assets i.e.

SalesTotal Assets

The ratio indicates the sales generated per rupee of investment in

total assets. Thus, it aims to point out the efficiency or inefficiencyin the used of total assets or capital employed. Increase in ratioindicates that more revenue is generated per rupee of total

investment in assets.

LEAVERGE RATIO:-



1) Debt Equity Ratio:- It measure

of the relative claims of creditors and owners against the assetsof the firm.

Total Debts

Net worth owner’s Equity

The term “total debt” includes all debts i. e. long – term, shortterm mortgages. Bills, debentures etc. whereas the term net worth

means equity share capital, reserves and surplus i.e. proprietor’s.Funds or equity 1:1 ratio is acceptable.

2) Fixed Assets to worth Ratio:-

Fixed assets

Net worth

It indicates that the company has used short term funds for

acquiring fixed assets, which policy is not desirable. To the extentfixed assets exceed the amount of capital and reserves, the

working capital are depleted. When the amount of proprietor’sfund exceeds the value of fixed Assets i.e. when the percentage isless than 100, a part of the working capital is supplies by the

shareholders. Provided that there are no other non-current assets.





DATA ANALIYSIS ANDINTERPRETATION

1) PROFITABILITY RATIO:-

Gross Profit

Gross Profit Ratio = X 100

Sales

YEAR GROSS PROFIT SALES GROSS PROFITRATIO

2004-057,00,15,301.58

301002504.06

23.26

2005-0641317359.41

302304793.75

13.66



2006-073,79,03,469.81

337985566.07

11.02

2007-086,09,91,621.57

349546301.04

17.44

2008-095,44,14,256.14

430543494.12

12.63

INTERPRETATION:-

The Gross-Profit Margin ratio of SHSSKL has ups and downin these five years period. The gross profit measures the relationbetween the sales and profits. The gross-profit ratio in the year2004-05 is 23.26 and next year 2005-06 is 13.66 and in 2006-07its 11.22 then in 2008its become 17.44 and in 2008-09 it is 12.63.

C) Net Profit Margin Ratio:-

Net Profit

Net Profit Ratio = X 100

Sales

YEAR NET PROFIT SALES GROSS-NETRATIO



2004-05 14569011.39 301002504.06 4.84

2005-06 4053781.26 302304793.75 1.34

2006-07 1179916.79 337985566.07 0.34

2007-08 2178816.70 349546301.04 0.62

2008-09 1653143.88 430543494.12 0.38

INTERPRETATION

The net profit is the indicative of the management’sability to operate the business with sufficient success. In the abovebar diagram it shows that the net profit ratio of SHSSKL hasincreased 4.84 in 2004-05 but it decreased in the next years 1.34



in 2004-05 and it again decreased in 2006-07.then it increased0.62 and it again decreased 0.38.in 2008-09.

LIQUIDITY RATIO

CURRENT RATIO:-

Current Ratio = Current Assets

Current Liabilities

YEAR Current Assets CurrentLiabilities

RATIO

2004-05

308321871.3 454294589.7 0.67

2005-06

265422636.1 563620481.6 0.47

2006-07

875637598.7 623087336.2 1.40

2007-08

446111012.4 565628200.9 0.78

2008-09

471836449.8 542837550.5 0.86



S

INTERPRETATION:-

An ideal current ratio is 2: 1 Thus 2 is theconsidered as a safe margin from the above diagram it determinesthat the firm has safe margin in1.4 2006-07 and in 2004-06 it has0.67&0.47 moreover it has not safe margin 2007-09 e.i to 0.78&0.86

Liquidity Ratio

Liquidity Ratio = Liquid Assets

Liquid Liabilities

Liquid Assets= Current Assets-Inventories

Liquid-Liabilities = Current Liabilities - Bank-overdraft

Years Liquid assets LiquidLiabilities

Ratio

2004-2005 110024781.8 454294589.7 0.24

2005-2006 37885949.4 563620481.6 0.067

2006-2007 496655612.5 623087336.2 0.79

2007-2008 102195141.3 565628200.9 0.18

2008-2009 163116368.5 542837550.5 0.30



INTERPRETATION:-

Usually, a high acid test ratio is an indication of that firm’

s better liquidity position. From the above table it determines thatthe firm has 0.24 &0.067 in the year 2004-06 and it increased 0.79in 2006-07 and it again decreased 0.18 in 2007-08 then again

raised0.30 in 2008-09

ACTIVITY RATIO

INVENTORY TURN-OVER RATIO

Sales

Inventory Turn-Over ratio=

Average Inventory

Opening-Stock + Closing-Stock

Average Inventory =

2

Years Average Inventory Sales InventoryTurn-Over ratio

2004-2005192353685.5

301002504.061.56



INTERPRETATION: -

This means that the inventory in the first year has been sold1.56

very slow in 2004-05 And it again increase in 2005-08 e.i 1.28,1.04, 1.02.and in last year it again decreased 1.4 in 2008-09

FIXED ASSETS TURN-OVERRATIO

Sales

2005-2006 234674943.5302304793.75

1.28

2006-2007 324789674.5337985566.07

1.04

2007-2008 342085995.0349546301.04

1.02

2008-2009 305513910.0430543494.12

1.40



Fixed assets turn-over ratio =

Fixed-Assets

INTERPRETATION:-

The ratio indicates the extent to which the investment infixed assets contributed towards to sales. As the figure shows, in2004-05 the fixed assets turnover ratio is 0.85 and it increase inthe next 3years continuously with 0.83, 0.92, 0.94. And it againdecreases in 2008-09 e.i to 0.66.

YEARS SALES FIXED-ASSETS FIXED ASSETSTURN-OVERRATIO

2004-05 301002504.06 350064970.91 0.85

2005-06 302304793.75 361712835.66 0.83

2006-07 337985566.07 363487965.66 0.92

2007-08 349546301.04 371470849.66 0.94

2008-09 430543494.12 647506096.70 0.66



CURRENT ASSETSTURN-OVER RATIO

Sales

Current assets turn-over ratio =Current

Assets

INTERPRETATION:-

The current assets turnover ratio measures that how quicklythe short term obligations can be met. In the following graph it is

shown that there is increasing0.97, 1.13 in 2004-06 current assets

YEARS SALES CURRENTASSETS

CURRENT ASSETSTURN-OVERRATIO

2004-2005 301002504.06 308321871.3 0.97

2005-2006 302304793.75 265422636.1 1.13

2006-2007 337985566.07 875637598.7 0.38

2007-2008 349546301.04 446111012.4 0.78

2008-2009 430543494.12 471836449.8 0.91



turnover ratio. And it falls0.38 in 2006-07 and it increase

slightly0.78 to 0.91 in 2007-09.

Operating-Efficiency Ratio:-

1) Direct Material cost to sales= Direct Material cost *100

Net-sales

INTERPRETATION:- Direct Material cost to sales should be lowenough to leave portion of sales to give fair return to investorsfrom the above table show that 66.57 & 64.23 in the year 2004-05

YEARS DirectMaterial

SALES Percentage (%)

2004-2005 200389076.8 301002504.06 66.57

2005-2006 219224160.5 302304793.75 72.51

2006-2007 241453980.32 337985566.07 71.43

2007-2008 224546979.08 349546301.04 64.23

2008-2009 309403524.5 430543494.12 71.86



and 2007-08 it give the fair to the investors where as72.51, 71.43and 71.86. 2005-07and 2008-09 are not up to mark able .

2) Direct Labour cost to sales= Direct Labour cost *100

Net-sales

INTERPRETATION:- From the above table shows that the cost ofdirect labour of the firm in the year of 2004-05 is 4.94% where itcompare to the next 3year it increase5.60, 8.18 & 9.97. Slithightlliy.And it again decreases in the year of 2008-09. It shows that thefirm efficient utilized the labour in the year of 2004-05 and2005-06.

Factory Overhead to Sales:-

YEARS DirectLabour

SALES Percentage (%)

2004-2005 14885365.90 301002504.06 4.94

2005-2006 16958271.40 302304793.75 5.60

2006-2007 27661900.24 337985566.07 8.18

2007-2008 34862365.60 349546301.04 9.97

2008-2009 35562670.05 430543494.12 8.25



3) Factory Overhead to Sales =Factory Overhead cost *100

Net-sales

INTERPRETATION: - From the above table shows that the cost ofmanufacturing overhead of the firm in the year of 2004-05 is5.22% where it compare to the next 3year it increase 8.46,9.16,&9.16 in 2005-08. And it again decreases 6.79 in the year of2008-09.

YEARS FactoryOverhead

Net-SALES Percentage (%)

2004-2005 15712759.79 301002504.06 5.22

2005-2006 25581554.35 302304793.75 8.46

2006-2007 30966215.70 337985566.07 9.16

2007-2008 32038895.00 349546301.04 9.16

2008-2009 29269482.40 430543494.12 6.79



Findings

Gross profit and net profits are decreased during the period

of study, which indicates that firm’s inefficient managementin manufacturing and trading operations.

Gross profit and net profits are increased during the periodof 2004-05 which indicates that firm’s efficient managementin manufacturing and trading operations.

Liquidity ratio of the firm is not better liquidity position inover the five years. It shows that the firm had not sufficientliquid assets.

The inventory of the firm in the first year has been sold veryslow. And there is an increase in the movement of the

inventories but it slightly decreased in the last year. This maybe a sign not good to the firm.

The fixed assets turnover ratio

of the firm has in 2004-05 the ratio is 0.85 and it increase in



the next 3years continuously and it again decrease in

2008-09.

The current assets turnoverratio is increasing during the period of 2004-06 and again it

decrease in the period of 2006-07. And again increase innext two year slithightlliy.

Direct Material cost ratio of the

firm is has less material cost during the period of 2004-05 &2007-08 and it raised in the year of 2005-06 and 2008-09.

The cost of direct labour of the

firm in the year of 2004-05 is 4.94%and it increasingslithightlliy up to 2007-08 and it decrease in the next year.

The cost of manufacturingoverhead of the firm in the year of 2004-05 is 5.22% where it

compare to the next 3year it increase rapidly.



SUGGESTIONS

The profit Of the Company Is not in a good Position For Thatcompany has to Take Alternative Actions such As

Increasing in Procurement in sugarcane ,Production, and Control in Expenses Like,Administrative, selling Etc.

The firms have low current ratio so it should increase itscurrent ratio where it can meet its short term obligation

smoothly.



Liquidity ratio of the firm is not better liquidity position in

over the five years. So I suggested that the firm maintainproper liquid funds like cash and bank balance.

It should enhance its employee’s efficiency, more training

needed to its employees in order to increase its productioncapacity and minimize mistakes while performing the tasks,

also more safety precaution need to implement to theemployees who directly working on sugar production

process

CONCLUSION

This project of Ratio analysis in the production concern is not

merely a work of the project. But a brief knowledge and experienceof that how to analyze the financial performance of the firm. Thestudy undertaken has brought in to the light of the following

conclusions. According to this project I came to know that from the



analysis of financial statements it is clear that SHSSK Ltd. Have

been incurring loss during the period of study. So the firm shouldfocus on getting of profits in the coming years by taking care

internal as well as external factors. And with regard to resources,the firm is take utilization of the assets properly. And also the firmhas a maintained low inventory.

PROVISIONAL BALANCE SHEET AS AT 31st MARCH, 2005

LIABILITY AMOUNT ASSETS AMOUNT

SOURCES OF FUNDS FIXED ASSETS

Share capital 88846018.59 Gross block 350064970.



TRADING AND PROFIT & LOSS ACCOUNT AS ON 31-3-2005

09

Reserves and surplus 274191573.34Less:Depreciation

Net Block 350064970.09

Investment 6975000.00

CURRENT LIABILITIES CURRENT ASSETS

Working capital 279908387.08Inventories 198297089.

91

Statuary deposits 4508406.18 Cash in hand 374639.72

Deposit 7217637.93 Cash at bank 2879292.96

Suspense 14373128.04 Advances 60423970.91

Sundries 84028.25 Other assets 46346877.80

Other Sundries 3239794.41 Profit &lossAccount

152726340.15

loan funds 118309456.47

Cane bills and otherpayables

26653751.52

TOTAL 818088181.81

TOTAL 818088181.81



Expenditure AMOUNT Incomes AMOUNT

Opening stock 201471850.00Sugar sales 270160956.1

6

Other sales 30841547.90

Cost of production 212750813.48Closing stock 183235461.0

0

Gross profit 70015301.58

Total 484237965.06Total

484237965.06

Establishment charges 7247138.80 By gross profit 70015301.58

Travelling expenses 661534.60 Other income 2071499.26

Exp .on vehicle 762054.92

Printing andstationery

575316.06

Meetings &AGMExpenses

299139.58

Interest &Insurancecharges

35111966.31

Govt Tax & Other 121490.67

Social Expenses’ 198765.78

Rent rates & Taxes 1257774.92

Other managementExpenses

1001874.80

Bonus for the year2005

1600000.00

Depreciation 8680733.00




Net profit 14569011.39

TOTAL 72086800.84 TOTAL 72086800.84



Share capital 97239684.00 Gross block 361712835.66


LOAN FUNDS Net Block 361712835.66

Loans Investment 587259.00


Working capital 321283573.16Inventories 303308585.5

3


Deposit 7539531.49 Cash at bank 16549209.47

suspense 29044436.06 Advances 49015066.50

Sundries 120071494.29Other assets 37433717.42

Other Sundries 9966024.46 Profit &lossAccount

161706973.23




Cane bills and otherpayables

65201661.09

TOTAL 931031316.33

TOTAL 931031316.33



0



0


Total 589195771.75Total 589195771.7

5




Printing and 683769.76




stationery


385579.30


29539180.87




Other managementExp

605143.20


1700000.00

Bonus & Incentivepaid- 05

1618790.00



TOTAL 53288905.10 TOTAL 53288905.10



Share capital 104940110.00Gross block 363487965.6

6

Reserves and surplus 272212433.6 Less: ------------




2 Depreciation ---


Loans Investment 587259.00


Working capital 3261620.57 Inventories 378981986.28


Other funds 13747634.18 Cash at bank 3238097.38

Deposit payable 8619351.89 Advances 47810043.43

Advance from debtors 6317241.93 Receivables 45279858.83

Provisions forexpenses

164768060.10Profit &lossAccount

160527056.44

Other liability 2037609.50

Creditor 101250338.13

TOTAL 1000239879.90

TOTAL 1000239879.90





5



0


Total 700673937.07Total 700673937.0

7

AdministrationEmployee cost

10876604.35 By gross profit 37903469.81

AdministrationExpenses

7705246.66 Other income 11835306.34

Financial Expenses 29337549.35 Other Miscincome

1401824.00



TOTAL 51140600.15 TOTAL 51140600.15






Share capital 110288173.00Gross block 371470849.6

6


---------------------


Loans 26729775.00 INVESTMENT 1087259.00



4

Statuary deposits 160307605.18Cash in hand 1446247.76

Suspense 7820327.58 Cash at bank 5289323.68

Deposit 8237656.89 Advances 44575300.80

Sundries 120856075.80other assets 50884269.05

Other sundries 61753564.01 Profit &loss 158348240.3




Account 4

Cane bills and Otherpayable

73676864.17 investment 1087259.00

Creditor -------------------

TOTAL 977017361.43

TOTAL 977017361.43



4


Cost of production 249243488.47Work in progress 1893561.00

Gross profit 60991621.57 Closing stock 321483619.00

Total 672923481.04Total 672923481.0

4








834305.94


374096.00


42150121.77




Other managementExp

3513408.60


---------------

Bonus & Incentivepaid- 07

3873572.00



TOTAL 71357052.57 TOTAL 71357052.57



Share capital 110870645.0 Gross block 647506096.7



0 0

Reserves and surplus 537014300.20

Less:Depreciation

---------------------


Loans 85915406.30 INVESTMENT 600259.00



7


Suspense 3444808.93 Cash at bank 61187786.16

Deposit 8613186.089 Advances 49701553.25

sundries 121366173.13other assets 51695225.44

Other sundries 65532462.01 Profit &lossAccount

156695096.46

Cane bills and Otherpayable

32326689.23

Creditor -------------------

TOTAL 977017361.43

TOTAL 977017361.43






2


Cost of production 340402697.98Work in progress -----------

Gross profit 54414256.14 Closing stock 287650640.00

Total 718194134.12Total 718194134.1

2





672343.25


484440.00


43032479.08




Other managementExp

1367794.55

Bonus & Incentive 4700000.00



2008-09

Bonus & Incentivepaid

5015552.80



TOTAL 78730836,38 TOTAL 78730836,38

Technology

Basaveshwar Engineering College, Bagalkot Ratio analysis projct on ratio analysis