PROJECT REPORT ON

FINANCIAL PERFORMANCE ANALYSIS IN

KESORAM CEMENTS, NIZAMABAD
Project Report submitted to J awaharlal Nehru Technological University, Hyderabad,
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





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. of
Business 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: Signature
Date:
Name of the Candidate:
Hall Ticket No.:
Email-Id:













COMPANY CERTIFICATE






























CERTIFICATE

This is to certify that the project report entitled CUSTOMER RELTIONSHIP MANAGEMENT BIG
BAZAR is being submitted by Mr./Ms.------------------------------- (H.T.No. ------------------) in partial fulfillment
for the award of the Masters Degree in Business Administration (MBA) during the academic year 2014 to
the JNTUH is a recorded of bonafide work carried out by him/her under the guidance and supervision.
The results embodies in this project have not been submitted to any other university or institute for
the award of any degree or diploma.

Signature of the Internal guide Signature of the HOD
( ) ( )

Signature of the External Examiner Signature of the Principal
(Dr.B.R.VIKRAM)





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 the
construction 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 necessary
infrastructure 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


ABSTRACT
























INDEX
























LIST OF TABLES
























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 firms

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:


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 statements 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 firms financial position on a given date that

Shows total assets = total liabilities + owners 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 firms
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 firms

position and performance.




Need for Study



_ Need Of Financial Management Study to Diagnose the Information Contain In

Financial Statement. So as To Judge the Profitability and Financial Position of the

Firm.

_ Financial Analyst Analyses the Financial Statements with Various Tools Of

Analysis Before Commanding Upon The Financial Health Of The Firm.

_ Essential to Bring Out the History.

_ Significance and Meaning of the Financial Statements.








































Objectives:

1. To understand the financial statements of Kesoram cement.


2. To study the change in assets and liabilities of the company.


3. To study the liquidity position of the firm.


4. To study the financial health of the company using ratio analysis.


5. To study the profitability of the company.


6. To offer suggestions to the company.







































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 firms liquidity)

Bond holders: interested in the cash-flow ability of the firm (appraisal of firms 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 firms profitability and financial condition).

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

performance (appraisal of firms 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.


Sources of Data


Data we collected based on two sources.

_ Primary Data.

_ Secondary Data.


Primary Data


The Primary Data Are Those Informations, 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 Firms Financial Position

a. Balance Sheet.

b. Income Statements.













13

Limitations of Financial Statement:

Each Project Gives Rise to Its Own Unique Risks And Hence Possess Its Own Unique

Challenges.

1. Only Interim Reports:

Only interim statements dont give a final picture of the concern. The data given in

This statement is only approximate. The actual position can only be determined when the

Business is sold or liquidated.

2. Dont Give Extra Position:

The Financial Statements Are Expressed In Monetary Values, So They Appear To

Give Final And Accurate Position. The Values Of Fixed Assets In The Balance Sheet

Neither Represent The Value For Which Fixed Assets Can Be Sold Nor The Amount Which

Will Be Required To Replace These Assets.

3. Historical Costs:

The Financial Statements Are Prepared On The Basis Of Historical Costs Or

Original Costs. The Value of Assets Decreases with the Passage of Time Current Price

Changes Are Not Taken Into Account. The Statements Are Not Prepared Keeping In View

The Present Economic Conditions. The Balance Sheet Loses The Significance Of Being An

Index Of Current Economic Realities.

4. Act of non monitory factors Ignored:

There are certain factors which have a bearing on the financial position and

operating results of the business but they dont become a part of these statements because

they cant be measured in monetary terms. Such factors may include in the
reputation of the management.

No Precision:

The precision of financial statement data is not possible because the statements deal with

matters which cant be precisely stated. The data are recorded by conventional procedures

followed over the years. Various conventions, postulates, personal judgments etc.
Industry Profile:


In the most general sense of the word, cement is a binder, a substance which

sets and hardens independently, and can bind other materials together. The word "cement"

traces to the Romans, who used the term "opus caementicium" to describe masonry which

resembled concrete and was made from crushed rock with burnt lime as binder. The

volcanic ash and pulverized brick additives which were added to the burnt lime to obtain a

hydraulic binder were later referred to as cementum and cement. Cements used in

construction are characterized as hydraulic or non-hydraulic.

The most important use of cement is the production of mortar and concretethe bonding of

natural or artificial aggregates to form a strong building material which is durable in the

face of normal environmental effects.

Concrete should not be confused with cement because the term cement refers only to the dry

powder substance used to bind the aggregate materials of concrete. Upon the addition of

water and/or additives the cement mixture is referred to as concrete, especially if aggregates

have been added.

It is uncertain where it was first discovered that a combination of hydrated non-hydraulic

lime and a pozzolan produces a hydraulic mixture (see also: Pozzolanic reaction), but

concrete made from such mixtures was first used on a large scale by engineers. They used

both natural pozzolans (trass or pumice) and artificial pozzolans (ground brick or pottery) in

these concretes. Many excellent examples of structures made from these concretes are still

standing, notably the huge monolithic dome of the Pantheon in Rome and the massive Baths

of Caracalla. The vast system of Roman aqueducts also made extensive use of hydraulic

cement. The use of structural concrete disappeared in medieval Europe, although weak

pozzolanic concretes continued to be used as a core fill in stone walls and columns.


Modern cement

Modern hydraulic cements began to be developed from the start of the Industrial Revolution

(around 1800), driven by three main needs:

Hydraulic renders for finishing brick buildings in wet climates

Hydraulic mortars for masonry construction of harbor works etc, in contact with sea water.

Development of strong concretes.



In Britain particularly, good quality building stone became ever more expensive during a

period of rapid growth, and it became a common practice to construct prestige buildings

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 515 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 the

twelve 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. Belite

develops 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


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
compositions produce high ultimate

strength, but as slag content is increased, early strength is reduced, while sulfate resistance

increases and heat evolution diminishes. Used as an economic alternative to Portland

sulfate-resisting and low-heat cements.

Portland fly ash cement contains up to 30% fly ash. The fly ash is pozzolanic, so that

ultimate strength is maintained. Because fly ash addition allows lower concrete water

content, early strength can also be maintained. Where good quality cheap fly ash is

available, this can be an economic alternative to ordinaryPortland cement.

Portland pozzolan cement includes fly ash cement, since fly ash is a pozzolan, but also

includes cements made from other natural or artificial pozzolans. In countries where

volcanic ashes are available (e.g. Italy, Chile, Mexico, and the Philippines) these cements

are often the most common form in use.

Portland silica fume cement. Addition of silica fume can yield exceptionally high

strengths, and cements containing 5-20% silica fume are occasionally produced. However,

silica fume is more usually added to Portland cement at the concrete mixer.

Masonry cements are used for preparing bricklaying mortars and stuccos, and must not be

used in concrete. They are usually complex proprietary formulations containing Portland

clinker and a number of other ingredients that may include limestone, hydrated lime, air

entrainers, retarders, water proofers and coloring agents. They are formulated to yield

workable mortars that allow rapid and consistent masonry work. Subtle variations of

Masonry cement in the US are Plastic Cements and Stucco Cements. These are designed to

produce controlled bond with masonry blocks.

Expansive cements contain, in addition to Portland clinker, expansive clinkers (usually

sulfoaluminate clinkers), and are designed to offset the effects of drying shrinkage that is

normally encountered with hydraulic cements. This allows large floor slabs (up to 60 m

square) to be prepared without contraction joints.

White blended cements may be made using white clinker and white supplementary

materials such as high-purity metakaolin.

Colored cements are used for decorative purposes. In some standards, the addition of

pigments to produce "colored Portland cement" is allowed. In other standards (e.g. ASTM),

pigments are not allowed constituents of Portland cement, and colored cements are sold as

"blended hydraulic cements".

Very finely ground cements are made from mixtures of cement with sand or with slag or

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
2
O
4
(CaO Al O
3
or CA in Cement chemist notation, CCN) and mayenite Ca
12
Al
14
O
33
(12 CaO 7
Al O
3
, or C
12
A
7
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


(AlO2)6SO4 or C4A3 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
2
2
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.




























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.


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.



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.


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 the

twenties when the Industrial House of Birlas 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%


Process and Quality Control:

It has been the endeavor of Kesoram to incorporate the Worlds 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+



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 operating

efficiency. This eliminates variation and ensures consistency in the quality of Clinker.

Physical Characteristics:


Ope 43

Is 8 112-89

Birla

Supreme

43 grade

Ope 53 gr

Is 12269-87

Birla
Supreme

Gold 53 gr

Setting time

a. Initial (mats)

b. final (mats)

Fincncssm 2/Kg

Soundness

a. le-chart (mm)

b. autoclave (%)

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:


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

<1.6

Max 4.0

<1.5

Insoluble residue %

Max 2.0

<0.8

Max 2.0

< 0.6

Magnesium oxide %

Max 6.0

< 1.3

Max 6.0

< 1.3

Lime saturation factor

0.66-1.02

0.8-0.9

0.8-1.02

0.88-0.9

Alumna: iron ratio

MinO.66

1.5-1.7

MinO.66

1.5-1.7

Sulfuric anhydride %

Max 2.5/3

1.6-2.0

Max 2. 5/3

1.6-2.0

Alkalis Chlorides

Max 0.05

Max 0.01

Max 0.05

Max 0.4



Kesoram Cement - advantages:

Helps in designing sleeker and more elegant.

Structures, giving greater flexibility in design concept.

Due to its fine quality, super fine construction can be achieved.. Its gives
maximum

strength at Minimum use of cement with water in the water cement ratio, especially the 53

grade Birlas supreme-gold.

Feathers in Kesoram's cap:

Kesoram has outstanding track record, achieving over 100% capacity utilization I

productivity and energy conservation. It has proved its distinction by bagging several

national and state awards, noteworthy being.

NATIONAL:

1. National productivity award for 1985-86

2. National productivity award for 1986-87

3. National award for mines safety for 1985-86

4. National award for mines safety for 1986-87

5. National award for energy conservation 1989-90










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:




Kesoram cement uses most modern technology and the computerized control in the

plant. A team of dedicated and well- experienced experts manages the plant.

The quality is maintained much above the bureau of Indian standards.

The raw materials used for manufacturing cement are:

Lime stone

Bauxite

Hematite

Gypsum

Environmental and Social Obligations:

For environmental promotion and to keep up the ecological balance, this section

has planted over two lakhs trees .on social obligation front ,this section has undertaken

various social welfare programs by adopting ten nearly villages, organizing family welfare

campus, surgical camps, animal health camps blood donation camps, children immunization

camps, seeds, training for farmers etc were arranged.

Welfare and Recreation Facilities:

For the purpose of recreation facilities 2 auditoriums were provided for playing

indoor games, cultural function and activities like drama, music and dance etc.

The industry has provided libraries and reading rooms. About 1000 books are available in

the library. All kinds of newspaper, magazines are made available.

Canteen is provided to cater to the needs of the employees for supply of snacks, tea,

coffee and meals etc.

One English medium and one Telugu medium school are provided to meet the

educational requirements.

The company has provided a dispenser with a qualified medical office and

paramedical staff for the benefit of the employees. The employees covered under ESI

scheme have to avail the medical facilities from the ESI hospital.
Competitions in sports and games are conducted every year for august
15
th
Independence Day and January 26
th
, republic day among the employees.
Electricity:

The power consumption per ton of cement has come down to 108 units
against 113 units last year, due to implementation of various energy saving
measures. The performance of captive power plant of this section continues to be
satisfactory. Total power generation during the year was 84 million units last year.
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 employees

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 of
the

Govt.

State

3

1991

Pundit Jawaharlal Nehru rolling trophy
for

best

State

4

1993

National productivity effort Indira
Gandhi

national award

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






9

1995-

1996

Best effort of an industrial unit to

development rural economy
shri.S.R.Rungta

award for social

National

10

1996

Awareness for best rural
development

efforts

State

11

1999

Best workers welfare best family
welfare

award

State

12

2001

First prize for mine environment
&pollution control for the 3
rd
year in
succession

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 FAPCCI
award

for best rural development in the state

State

















LITERATURE REVIEW

Financial Performance Analysis:


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.

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

performance by Myers


Financial Performance:

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

carry out 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 firms 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 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.

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




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

Externa
l

Analysi
s
Internal

Analysi
s
Horizonta
l

Analysis
Vertical

Analysis


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

analysis 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.



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 years 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

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 position

3. Profitability of the concern.




39

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 firms

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.


40

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 firms funds will be unnecessarily tied up in current assets.

Therefore it is necessary to strike a proper balance high liquidity and lack of liquidity.


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 assets
Current ratio = -----------------------
---
Current liabilities
Current ratio is a measure of the firms 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 of

2 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.

Quick ratio = Quick Assets / Current Liabilities



41

(Quick Assets = Current assets Inventory)

One defect of the current ratio is that it fails to convey any information on the composition

of the current assets of the firm. A rupee of cash is considered equivalent to a rupee of

inventory of receivables. But it is not so. A rupee of cash is more readily available to meet

current liabilities than a rupee of say inventory. This implies the usefulness of the current

ratio.

The Acid test ratio measures the firms ability to convert its current assets quickly into

cash in order to meet its current liabilities.

A quick ratio of 1 to 1 is considered to represent a satisfactory current financial condition. It

is an important index of the firms liquidity.


Leverage Ratios:

Leverage ratios identify the source of a firms capital owners or outside creditors.

Financial leverage refers to the use of debt in financing non-current assets. If the return on

assets exceeds the cost of debt, the leverage is successful i.e., it improves return on equity.

Debt Equity Ratio:

The Debt Equity is determined to analyze the soundness of the long term financial

policies of the organization. It is also known as Internal External Equity Ratio.

It is calculated as follows:

Debt Equity Ratio = Total long term debt / Share holders funds.

Equity Ratio:

This ratio is also called as proprietary ratio establishes a relationship between share holders

funds to total assets of company. Equity Ratio is calculated by dividing share holders fund

by total assets.

Fixed Asset Ratio:

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

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

position of the company.

Activity Ratios:

They are primarily used for studying a firms working capital situation. A well managed

firm should have good activity ratios.





42

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 reveals

the 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 firms 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.





43

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.































DATA ANALYSIS & INTERPRETATION































45

Comparative Balance Sheet of Kesoram in the Year between 2008-2009

(Rupee in crores)


Years

Changes

Particulars


2008


2009


In Rupees


In Percentage

Liabilities



\Share Capital


45.74


45.74


0.00


0.00

Reserves & Surplus


930.85


1280.24


349.39



Revaluation Reserves


5.33


4.12


-1.21


-22.70

Loans



Secured Loans


971.06


1536.27


565.21


58.21

Un Secured Loans


121.29


434.16


312.87


257.95

Deferred Tax
Liabilities


0.00


0.00


0.00


0.00

Current Liabilities



Provisions


330.39


345.29


14.90


4.51

Current Liabilities


570.67


665.87


95.20


16.68


Total


2975.33


4311.69


1336.36


44.91

Assets



Net Block


1084.24


1804.35


720.11


66.42

Capital Wip


634.59


864.85


230.26


36.28

Investments


47.83


61.78


13.95


29.17

Current Assets



Inventories


442.17


589.06


146.89


33.22

Sundry Debtors


273.07


380.17


107.10


39.22

Cash & Bank Balances


40.36


56.57


16.21


40.16

Total Current Assets


755.60


1025.80


270.20


35.76

Loans & Advances


452.89


554.62


101.73


22.46

Fixed Deposits


0.18


0.28


0.10


55.56

Total


2975.33


4311.69


1336.36


44.91









46

Interpretation of comparative balance sheet of 2008-2009:

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

crores.

_ 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., in

Rupees 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.



























47

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

(Rupees in crores)



Years


Changes

Particulars


2009


2010


In Rupees


In Percentage

Liabilities



Share Capital


45.74


45.74


0.00


0.00

Reserves & Surplus


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








48

Interpretation of comparative balance sheet of 2009-2010:

_ 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.































49

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

Revaluation Reserves


3.39


2.89


-0.50


-14.75

Loans



Secured Loans


1863.72


2371.83


508.11


27.26

Un Secured Loans


1262.50


1627.44


364.94


28.91

Deferred Tax
Liabilities


0.00


0.00


0.00



Current Liabilities



Provisions


357.34


14.94


-342.40


-95.82

Current Liabilities


1076.88


1139.02


62.14


5.77


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








50

Interpretation of comparative balance sheet of 2010-2011:

_ 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 loans
and

Advances increased 34.65 % i.e., in Rupees 230.46 crores.

_ The overall financial position was UN satisfactory.































51

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

Revaluation Reserves


2.89


2.70


-0.19


-6.57

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

Current Liabilities


1139.02


1800.10


661.08


58.04


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










52

Interpretation of comparative balance sheet of 2011-2012:

_ 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

Advances increased 165.55 % i.e., in Rupees 719.49 crores.

_ The overall financial position was UN satisfactory.































53

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

(Rupees in crores)

Particulars


2008


Change Percentage


2009


Change Percentage

Liabilities



Share 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
Liabilities


0.00


0.00


0.00


0.00

Current Liabilities



Provisions


330.39


11.10


345.29


8.01

Current Liabilities


570.67


19.18


665.87


15.44


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

Cash & Bank Balances


40.36


1.36


56.57


1.31

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












54

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 is

decreased to 1.06 % in the year 2009.

_ Reserves & surplus contributed to 31.29 % in the total liabilities in the year 2008 it is

decreased to 29.69 % in the year 2009.

_ Secured loans were 32.64 % in the total liabilities in the year 2008 it is increased to

35.63 % in the year 2009.

_ Current Liabilities shown to 19.18 % in the total liabilities in the year 2008 it is

decreased 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 the

year 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.




















55

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


(Rs in crores)

Particulars


2009


Change Percentage


2010

Change
Percentag
e


Liabilities



Share Capital


45.74


1.06


45.74


0.75

Reserves & Surplus


1280.24


29.69


1491.11


24.44

Revaluation Reserves


4.12


0.10


3.39


0.06

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

Current Liabilities


665.87


15.44


1076.88


17.65


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

Sundry Debtors


380.17


8.82


542.89


8.90

Cash & Bank Balances


56.57


1.31


80.14


1.31

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











56


Interpretation of common size balance sheet of 2009-2010

_ Share capital was recorded 1.06 percent in the total liabilities in the

year 2009 it is decreased to 0.75 % in the year 2010.

_ Reserves & surplus contributed to 29.69 % in the total liabilities in the

year 2009 it is decreased to24.44 % in the year 2010.

_ Secured loans were 35.63 % in the total liabilities in the year 2009 it is

increased to 30.55 % in the year 2010.

_ Current Liabilities shown to 15.44 % in the total liabilities in the year

2009 it is decreased to 17.65 % in the year 2010.

_ Provisions 8.01 in the total liabilities in the year 2009 it is decreased

to 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 is

decreased to 0.84 % in the year 2010.

_ Sundry debtors were 8.82 in the total liabilities in the year 2009 it is

increased to 8.90 % in the year 2010.



















57

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


(Rupees in crores)

Particulars


2010


Change Percentage


2011

Change
Percentag
e


Liabilities



Share Capital


45.74


0.75


45.74


0.71

Reserves & Surplus


1491.11


24.44


1251.62


19.39

Revaluation Reserves


3.39


0.06


2.89


0.04

Loans



Secured Loans


1863.72


30.55


2371.83


36.75

Un Secured Loans


1262.50


20.69


1627.44


25.22

Deferred Tax Liabilities


0.00


0.00


0.00


0.00

Current Liabilities



Provisions


357.34


5.86


14.94


0.23

Current Liabilities


1076.88


17.65


1139.02


17.65


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

Cash & Bank Balances


80.14


1.31


71.88


1.11

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











58

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.

_ Secured loans were 30.55 % in the total liabilities in the year 2010 it is increased to

36.75 % in the year 2011.

_ Current Liabilities shown to 17.65 % in the total liabilities in the year 2010 it is

also17.65 % in the year 2011.

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

year 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 % in

the 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.



















59

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

(Rupees in crores)

Particulars


2011


Change
Percentage


2012

Change
Percentag
e


Liabilities



Share Capital


45.74


0.71


45.74


0.63

Reserves & Surplus


1251.62


19.39


866.57


11.99

Revaluation Reserves


2.89


0.04


2.70


0.04

Loans



Secured Loans


2371.83


36.75


3177.92


43.97

Un Secured Loans


1627.44


25.22


927.42


12.83

Deferred Tax Liabilities


0.00


0.00


0.00


0.00

Current Liabilities



Provisions


14.94


0.23


407.26


5.63

Current Liabilities


1139.02


17.65


1800.10


24.91


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

Cash & Bank Balances


71.88


1.11


69.59


0.96

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


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 is

decreased to 0.63% in the year 2012.

_ Reserves & surplus contributed to 19.39 % in the total liabilities in the year 2011 it

is decreased to 11.99 % in the year 2012.

_ Secured loans were 36.75 % in the total liabilities in the year 2011 it is increased to

43.97 % in the year 2012.

_ Current Liabilities shown to 17.65 % in the total liabilities in the year 2011 it is

increased 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 the

year 2012.

_ Fixed Assets were 57.21 in the total liabilities in the year 2011 i.e., decreased to

49.63 % 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 to

9.32 % in the year 2012.


















61


Trend Analysis

Share Capital:-


Year

Amount
(In
Crores)


Trend %

Increase/Decrease
Base 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.

Reserves & Surplus:-


Year

Amount
(In
Crores)


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 the

firm.

Investments:-


Year

Amount
(In
Crores)


Trend %

Increase/Decrease
Base Year Previous Year

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 2009

and 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.

Net Current Assets:-


Year

Amount
(In
Crores)


Trend %

Increase/Decrease

Base Year

Previous Year

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.

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 satisfactory

from 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.







66





















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

Total
Quick
Assets

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

0.62

2011-12

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

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

of Kesoram are cant 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


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 holders fund. So we can interpret that the firms

assets are financed more by the external funds rather than by the internal funds.

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


1.38

2010-11


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 companys 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?

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) * 100

Net 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


-5.22

2011-12


-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 from

2007-2008 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.

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


38.62

2008-09


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. Higher

the 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 its 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?















72






















Return on Capital Employed Ratio:-


Year


PBIT


Capital Employed

Return On Capital
Employed Ratio

2007-08

602.61

981.92

61.37

2008-09

565.57

1330.10

42.52

2009-10

550.35

1540.24

35.73

2010-11

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.

Findings:
_ The Share capital remains constant. Share capital is unchanged all the years from

2008-2012.

_ Reserves & surplus were recorded an increasing trend in the period between 2008

and 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 long

term 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 heavy

increase of manufacturing & administrative expenses.

_ ROI is highest in the year 2007-2008 as 38.62 %. The ROI is negative in the years

2010-2011 & 2011-2012 as -21.67 & -41.65 respectively.

_ 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.

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

2011 & 12.










76

Suggestion:

_ The organization should adopt an appropriate capital structure.

_ The companys 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 the

current 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 & administration

expenses as it is impacting the operating and net profit of company.































77

ANNEXURE



Profit And Loss Account of Kesoram Cement:



INCOME:
Sales
Turnover
Excise Duty
NET SALES
Other
Income
TOTAL
INCOME
EXPENDITU
RE:
Manufacturing
Expenses
Material
Consumed
Personal
Expenses
Selling
Expenses
Administrativ
e Expenses
Expenses
Capitalized
Provisions
Made TOTAL
EXPENDITU
RE Operating
Profit
EBITDA
Depreciation
Other Write-
offs EBIT
Interes
t EBT
Taxes
Profit and
L
o
s
s

f
o
r

t
h
e

Y
e
a
r
Mar'12
12
Months

6282.6
0
364.40
5918.2
0 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

5750.7
2
352.84
5397.8
8 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

5051.5
1
300.89
4750.6
2 0.00

4810.19


139.74

2955.50

232.94

586.67

172.19

0.00

0.00

4087.04

663.5
8
723.1
6
172.8
0 0.00
550.3
5
109.2
1
441.1
4
238.1
6

202.98
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

3
4
5
7
.
0
0

4
5
4
.
2
9

3
0
0
2
.
7
1

0
.
0
0

3020.20


441.13

1184.48

153.44

450.19

99.07

0.00

0.00

2328.32

6
7
4
.
3
9

6
9
1
.
8
8

8
9
.
2
7

0
.
0
0

6
0
2
.
6
1

5
4
.
2
6

5
4
8
.
3
5

1
6
9
.
1
8

379.17

Non
Recurri
ng Items

-11.42 70.63 32.28 -40.23 4.02

Other Non
Cash
Adjustments
Other
Adjustments
REPORTED
PAT

12.76

0.00

-
379.7
4

0.91 2.07

0.00 0.00

-210.21
237.3
4

4.65 0.17

0.00 0.00

378.74 383.35




78

Balance Sheet Of Kesoram:


Years

Particulars

2008

2009

2010

2011

2012

Liabilities


Share Capital

45.74

45.74

45.74

45.74

45.74

Reserves & Surplus

930.85

1280.24

1491.11

1251.62

866.57

Revaluation Reserves

5.33

4.12

3.39

2.89

2.7

Loans


Secured Loans

971.06

1536.27

1863.72

2371.83

3177.92

Un Secured Loans

121.29

434.16

1262.5

1627.44

927.42

Deferred Tax
Liabilities

0

0

0

0

0

Current Liabilities


Provisions

330.39

345.29

357.34

14.94

407.26

Current Liabilities

570.67

665.87

1076.88

1139.02

1800.1


Total

2975.33

4311.69

6100.68

6453.48

7227.71

Assets


Net Block

1084.24

1804.35

3431.82

3691.72

3587.21

Capital WIP

634.59

864.85

412.83

437.81

680.65

Investments

47.83

61.78

51.43

65.82

66.36

Current Assets


Inventories

442.17

589.06

916.19

1118.55

995.16

Sundry Debtors

273.07

380.17

542.89

631.34

673.58

Cash & Bank
Balances

40.36

56.57

80.14

71.88

69.59

Total Current Assets

755.6

1025.8

1539.22

1821.77

1738.33

Loans & Advances

452.89

554.62

665.06

434.6

1154.09

Fixed Deposits

0.18

0.28

0.31

1.76

1.07

Total

2975.33

4311.69

6100.68

6453.48

7227.71




















79


KEY ITEMS
201
2
Preference
Dividend 0

Equity Dividend 4.57
2011
201
0

0 0

25.16
25.1
6

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








































80

BIBLIOGRAPHY


Sl.
No.

Books:

Author Name

1.

Financial Management

Khan & JAIN
2.

Financial Management

I.M.Pandey
3.

Management Accounting

R.P.Trivedi




Websites &
Search
Engines 1.
www.kesor
am.com.
2.
www.moneycont
rol.com. 3.
www.googlefina
nce.com.


Annual reports of Kesoram cement limited 2008-2012.



































8
1