Financial Analysis of Kerala Clays and Ceramics Products LTD, Pappinissery, Kannur

CHAPTER 1 INTRODUCTION
Financial analysis of Kerala clays and ceramics products Ltd, Pappinissery, Kannur
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1.1 Topic: - Kerala Clay and Ceramics Products ltd.

Organization is the integration of various departments and its functions. Sound organization can contribute greatly the continuity and success of the enterprise. The better the organization, the fuller would be the achievement of the common objective. This particular study gives the clear idea about the functions, practices, fund utilization and the delegation of authority of Kerala Clay and Ceramics Products ltd. Pappinissery, Kannur and also the major issues facing by the company and by critically analyzing the issues, forming some suggestions also form part of reporting curriculum. Kerala Clay and Ceramics Products ltd are fully owned by the government of Kerala undertaking under the administrative control industries department. Kerala Clays & Ceramics Products Ltd. is an Undertaking of the Govt. of Kerala. It has mines rich in China Clay suitable for Ceramic, Rubber, Pesticides, and Ultramarine at Payangadi, Kannapuram and Nileshwar. It also has a refractory and production manufacturing unit at Mangathuparamba, a wire cut brick making unit at Kannapuram in Kannur district and an Aluminous Late rite mine at Karindalam in Kasaragod District. The KCCP ltd .is the first government company engaged in clay mining and processing in north Kerala. The company has four mines located in Nileshwar and Karindalam in Kasaragod district, Payangadi and Kannapuram in Kannur. KCCP is fully owned by the government of Kerala undertaking under the administrative control of industries dept. KCCP holds four valid mining leases for mining. The company enjoys good reputation as leading supplier for different grades of china clay (good Client ale). KCCP is an existing profit making company fully owned by the government of Kerala. The registration number of the company is 4000/84.the Company is engaged in mining purification of Kaolin.
1.2 Reason for selection of this topic:I selected this topic because to understand how funds are utilized for the day to day operations in mining sector. What is the organizational structure and how the wages are allocated to them.
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1.3 Why this topic is important to the company?

A financial analysis on Kerala Clays and Ceramics Product ltd are important for the company:
To study and present report about the financial operation of KCCP ltd. To understand various organizational practices. To study about different departments of the organization. To have an overall understanding of the organization, its culture and hierarchy. To study the overall performance of the company. To study about how the funds are allocated in the business.
1.4 Learning from the study

From this study I understood that Kerala clay and ceramics Ltd is a public sector undertaking which earns profit. The company has four mines located in Nileshwar and Karindalam in Kasaragod district, Payangadi and Kannapuram in Kannur. The company is engaged in mining purification of Kaolin. I came to know about the different products offered by KCCP. There are various departments in the company which is engaged in its daily concern. There is coordination and cooperation among the departments. I understood about the various organizational practices and how the funds are utilized for allocating in the business. The company maintains profit and loss a/c and balance sheet by which we can know whether the company is making profit or loss.
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CHAPTER 2 ORGANISATIONAL PROFILE
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2.1 Industry Profile:
2.1.1 About Clay Industry:Clay is a naturally occurring material composed primarily of fined grained minerals, which show plasticity through a variable range of water content and which can be hardened when dried or fired. Clay deposits are mostly composed of clay minerals (phyllosilicate minerals), minerals which impart plasticity and harden when fried or dried, and variable amounts of water trapped in the mineral structure by polar attraction. Organic materials which do not impart plasticity may also be a part of clay deposits.
Clay minerals are typically formed over long periods of time by the gradual chemical weathering of rocks minerals usually silicate-bearing by low concentrations of carbonic acids and other diluted solvents. These solvents usually acetic migrate through the weathering rock after leaching through upper weathered layers. In addition to the weathering process, some clay minerals are formed by hydrothermal activity. Clay deposits may be formed in place as residual deposits in soil, but thick deposits usually are formed as the result secondary sedimentary deposition process after they have been eroded and transported from their original location of formation. Clay deposits are typically associated with very low energy depositional environment such as large lakes and marine deposits.
Primary clays, also known as kaolin, are located at the site of formation. Secondary clay deposits have been moved by erosion and water from their primary location. Chemical Formula:-Al2O3.2SiO2H2O
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Rapid industrialization in Kerala assumes greater significance today in view of the many economic ills the state is confronted with. To achieve this, it is essential to focus our attention on both resources based and non-resources based industries. The state is enforced with variety of potential raw materials which also included clay resources.
Clay resources of the state companies are China clay, Title clay and Ball clay. The extensive availability of these clay resources in the state was greatly influenced the emergence growth of variety of industries like bricks, tiles, sanitary wares and beneficiated kaolin potteries.
Bricks, Tiles, potteries and earthen were necessarily traditional items and the tile clay resources. Sustain more than 250 units, spread all over the state. In the organized sector we have only few clay units .They are:1. 2. 3. 4. 5. English Indian Clay Ltd. Thiruvanandapuram (China Clay/Kaolin) Kerala ceramics Ltd. Kollam (China Clay/Kaolin, tableware, sanitary items.) Chalakkudy refractory Ltd. Trichur (refractory items) Kerala clays and ceramics product Ltd. Kannur(purified china clay) Common wealth Trust Ltd. Kozhikode(title unit)
Most of the industries in the state, manufacture conversionary items only. With the advancement of science and technology, the scope for utilizing the availability of clay resources for producing high value items has increased. China clay resources are largely available in Thiruvanandapuram, Kollam, Ernakulum and Kannur.
Kerala is a potential market of day based items like sanitary wares, table wares; etc. Thus the scope for manufacturing these items is high. Thus the basic point is that the available resources have to be utilized for industrial purpose. Organization like state IDC would assist prospective entrepreneurs in all prospective ways for developing and implementing the project. The state of Kerala is endowed with one of the best quality of China clay in the world.
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2.1.2 Origin of this industry:The use of ceramic goes as far back as civilization. The term ceramic is supposed to be derived from Greek word Keramic which means the art of the potter .Historically the ceramic industry originated in China and then migrated to other parts of the world. In India, the foundation of the ceramic industry dates back to 1958 when H&K Johnsons, set up their first plant at thane in Mumbai. For at most 25 years the Indian market has rules by H&R Johnsons and Simony Pilkington with their products. Ceramic wares includes materials like glazes tiles (for walls and flooring), sanitary wares, salt glazed pipes and also consumer products like crockery. China clay (Kaolin) is the main raw material, which is used for the manufacture of Ceramic ware. It is also used in the manufacture of rubber products, pesticides, textile and paper industries, insulators, ultramarine blue, pharmacy products, paints, etc. Many parts of our country are gifted with clay and mineral resources which influences greatly the growth of variety of industries. 2.1.3 Industrial Applications China clay is the heart of several industries like potteries, tiles, ceramics, glass and other.
1.Paints
China clay is used in wide varieties of paints like distemper, cement primer, wood primer, emulsion paint, texture coating, spray plaster, putties, fillers and undercoats. It is used in variety of papers. Cardboards, hardboards and others. It is used as filler in combination with other to impart strength and strictness. It is used for electrical emulsion, high voltage insulation compounds electrical wires, EPDN rubber and others. and It is used in toothpastes, cosmetics and soaps.
2.Paper 3.Plastics
4.Electrical Industry 5.Cosmetic soaps 6.White cement It is Used for construction works. 7.Pharmaceuticals Clay is used in tablets. industries 8.Agricultural It is used in industries. industries
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2.1.4 Growth and development of industry:(a) Development of China clay industry:The early history of the industry, is as would be expected, very much concerned with the discovery and production of China clays for use in ceramics. The story, though, starts thousands of years ago and thousands of miles away. China clay, the pure white porcelain used by the Chinese, was discovered many thousands of years ago have always been a much prized material. Despite many attempts to find sources elsewhere, it remained elusive until a few deposits were found in some parts of Europe and America early in the eighteenth century. The search to find deposits in England was increased. When China clay/Kaolin, was discovered in England, it was realized that it was a much finer quality than found elsewhere in Europe. A Quaker apothecary-cumpotter, William Cook worthy made the discovery in Cornwall in 1946.He experimented with various samples and in 1768 he took out a patent to use the material, soon and producing items at his Plymouth Porcelain Factory. Until that time English pottery had consisted of coarse earthenware and stoneware ceramics and had suffered considerable competition from elsewhere. As more potteries made use of porcelain, so as the demand grew by the early nineteenth century the Kaolin industry had become highly successful, with many of the potters owning rights to mine the material for them. In addition, by middle of the nineteenth century, China clay was increasingly being used as a raw material by the developing paper industry. Early in the twentieth century, the industry was made up of some seventy or so individual producers, each competing on price with little regard for marketing standards. There was almost no capital investment or product development and overproduction was great, wages were low and working conditions were poor. Despite this, by 1910, production was approaching a million tons a year and paper had completely overtaken ceramics as the prime user of China clay. Over 75% of output was exported, with North America and Europe being major markets. The China clay industry in Cornwall and Devon held a virtual monopoly on the supply of that mineral to the world market. Just after the First World War, the three leading producers joined forces forming English China clays Ltd in 1919, placing almost 50% of the industries capacities under one banner.
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(b) Growth and development of ceramics Industry:-
The world market for ceramics products is Rs1, 60,000 crores of which the Indian markets accounts for a mere 1,100 crores. In this small market, the organized sector with 31 companies account for 90% of the market, H&R Johnson and Simony Pilkington enjoyed a virtual monopoly in the Indian market for a long period. It was a new entrant spalek ceramic who introduced floor tiles for the first time in India. This led to the introduced of the totally new market for tiles in India. Several other players like Murudeshwar ceramics, Bell ceramics, Kajaria ceramics and Regency ceramics joined the fray. The new entrants completed with the established ones by using aggressive marketing strategies. The industry came into the limelight once after the initiation of liberalization and a gradual reduction in excise duty from a high 55% in 1993-94 which has been brought down to 25% recently. During the financial year 1995 and 1996 the industry grew by 30% and 19% respectively but after that the growth rate comes down mainly due to the overall down trend in the economy.
(c) Present status of industry:Today ceramic wares form an integral part of the housing budget of even a middle class family. The Indian economy is passing through a difficult period now and it reflects in the growth rate of ceramics industry also. Impressive growth of clay based ceramics industry is directly linked with utilization of clay since for most of the ceramic composition clay is added up to 50%; the expected growth of various clay based industries in the country is quite promising. The projection in major areas of utilization such as roofing and terracotta is 4-5%, verified tiles, and ceramic tiles 18-20%; sanitary ware 20-25% and paper industry is 18-20%. The world market for ceramic products is Rs 1, 60,000 crores of which the Indian markets accounts for a mere 1,100 crores. The many companies like H&R Johnson and Simony Pilkington companies lead the ceramics markets with their aggressive marketing strategies. The following companies dominate in the ceramics tiles: 1. 2. 3. 4. 5. 6. H&R Johnson Kajaria ceramics Simony Pilkington Spalek ceramics Bell ceramics Murudeshwar ceramics
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(d) Future of the Industry:The industrial scenario is encouraging due to the great housing shortage, because demand for ceramic wares is proportional to housing demand. The present housing of 42 million makes the future for the constructions and the housing sector looks rosy. India has a tremendous cost advantage because of its strategic location and abundant supply of raw materials like China clay, Silica, Calcite, dolomite and zirconium silicate. On the wages front also, India is at an advantage because Spanish and Italian wages, which are among the top producing nations are an average four to five times higher than these in India. Iran and Turkey are the main competitors in this region. The high demand for ceramics wares in neighboring countries in Gulf, Africa and South East Asia gives a big market for Indian ceramic industry in coming year.
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2.2 COMPANY PROFILE:2.2.1 History of the organization:Kerala Clays and ceramics products Ltd. (KCCP), Pappinissery, Kannur is a public company under public sector of Kerala with its registered office at Clay house Pappinissery, Kannur. Kerala clays and ceramics products Ltd, Pappinissery is engaged in mining and processing of china clay suitable for ceramics ,pesticides, rubber, paints, ultramarine blue, etc. KCCP was incorporated on June 27 in 1984. But its origin and history is associated with that name of late: Mr. Samuel Aron, an industrialist and social worker of Malabar origin. The north Malabar region of Kerala has abundant clay deposit, this clay is considered to be the best available in Asia. The processing of clay started under the private initiative of late Mr. Samuel Aron in the name of SUPER CLAY AND MINERALS PVT Ltd. Then the operations of the company were disturbed due to shortage of funds and it was closed down. And later the government of Kerala acquired the company under the name KERALA CLAY AND CERAMICS Ltd. under the provision of acquisition undertaking act. Government by notification NO:-47466/d3/83/10 dated 30th November 1983 issued by industries department handed over the company to Kerala state industrial Enterprises Ltd with effect from 5th November 1983, the new company Kerala clays and ceramics product Ltd was incorporated on 27th June 1984. The Kerala clays and ceramics product Ltd is the first government company engaged in clay mining and processing in North Kerala. The company has four mines located in Nileshwar and Karindalam in Kasaragod district, Payangadi and Kannapuram in Kannur. KCCP is fully owned by the government of Kerala undertaking under the administrative control of industries dept. KCCP holds four valid mining leases for mining. The company enjoys good reputation as leading supplier for different grades of china clay good Client ale. KCCP is an existing profit making company fully owned by the government of Kerala. The registration number of the company is 4000/84.the Company is engaged in mining purification of Kaolin.
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2.2.2 Location of company:The company is located in North Malabar, Kerala which has abundant clay deposits. The registered office of the company is situated at: CLAY HOUSE Pappinissery P.O Kannur district Kerala 670561 The company mines rich in China clay suitable for ceramic, rubber, pesticides, and ultra mine at Payangadi, Kannapuram, and Nileshwar. It also has a refractory and production manufacturing unit at Mangathuparamba, a wire cut brick cutting unit at Kannapuram in Kannur district and Aluminous Late rite mine at Karindalam in Kasaragod district. The company owns 414.62 acres of land and the unit is located at very convenient place. The location is also satisfactory from the point of view of availability of power, water, labour and infrastructure.
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2.2.3 Product Profile:-
OUR WIDE RANGE OF PRODUCTS
China clay
Ball clay
Fire clay
Refractory
Aluminious clay
Little 1st
Kerala special
Indian city Hindustan special
Payangadi Ball clay Ramapuram clay
Deluxe P1 Deluxe K1 Deluxe N1
MH Brick Side Arch End Arch Cupola Special Bricks Porcelain Grinding Balls Fire clay mortar Fire cut Bricks
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Board of Directors
Shri.P.Ramachandran (chairman) Shri.Anakai Balakrishnan (managing director)
Shri.R.Madhusoodhanan Nair Shri.J.Vijaya Mohanan Shri.C.Vasudevan Shri.A.V.Vijayan Smt.A.Madavi Smt.Moly Varghese
2.2.4 VISION AND MISSION (a) VISION:The Vision of the KCCP is to be a leader in processed china clay market in Asia to produce value added products with continuous improvement.
(b) MISSION:The mission of the KCCP is to provide consistently high quality products and material to our customers in a safely, timely and efficient manner, at the lowest possible cost and to ensure the growth and development of the company through the development of employees and to earn more profit without disturbing the nature. 2.2.5 Future plans of KCCP:1. Beneficiation plans at Reticulum. 2. Expansion of refractory division. 3. Purchase of additional mining land installation of an effluent treatment plant for Payangadi. 4. Purchase of additional mining and expansion of fabric unit.
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2.2.6 Organizational chart:-
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2.2.7 Social responsibilities Company is committed in discharging its social responsibilities as a good cooperate citizen. As part of its social responsibility following activities were conducted during the year. These are the latest social responsibilities offered by the company.
Continued payment of cash awards to meritorious students scoring top marks in S.S.L.C, Plus 2 and introduced cash awards to meritorious students in Degree, Professional Degree examinations.
Constructed an open well for providing drinking water to local residents of Madayi. Provided an open air class room for a school nearby Payangadi Mine by constructing benches in the open air and provided washing point for the students. Cleaned the surroundings of the primary health centers situated nearby all our production centers. Provided furniture for the industrial training institute, Payangadi. Provided pavement for the public nearby Nileshwar unit. Supplying Malayalam newspaper to all schools nearby our units. Providing financial assistance to palliative care society, Karindalam for the treatment of financially backward patients.
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2.3 DEPARTMENTAL PROFILE:2.3.1 Departmentalization:Departmentalization means dividing the large and complex organization and flexible administrative units. It is the organization wide division of work into various manageable units. It is the grouping of the activities and employers into the departments. It is the method of arranging the activities to facilitate the accomplishment of the organizational objectives.
Departmentalization is defined as the establishment of the distinct area, unit or sub system of an organization over which a manager has authority to perform specified activities and results. In simple words, the organizational process of determining how activities are to be grouped is called departments. The main purpose of dividing in operation is to achieve minimum cost through division of labour and specializations. KCCP has the following departments. 1. 2. 3. 4. 5. 6. 7. Production department Maintenance department Quality control department Marketing department Human resource department Finance department Administrative department
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(1) Production Department:-
Production is the process by which raw materials and other inputs are converted into finished products. Production is considered to be crucial in industrial organization. Production department is the department whose function is to convert a set of inputs into a desired output. A production system receives inputs in the form of material, personnel, capital, utilities and information. These inputs are changed in a conversion subsystem into desired products and services, which are called the output.
A portion of the output is maintained in the contract subsystem to determine if it is acceptable in terms of quantity, cost and quality. If the output is acceptable, no changes are required in the system. If however appropriate standards are not met then managerial corrective action is required. The control subsystem ensures a uniform level of system performance by providing feedback information. So that corrective actions can be taken by the managers. Production is one of the important activities of an organization. So it should be very effective. The various activities involved in production planning are designing the product and determining the equipment, designing the layout, deciding the sequence of operations, time quantity and quality.
KCCP Ltd Pappinissery is engaged in mining of processing of China clay suitable for ceramics, pesticides, rubber, paints, ultramarine blue etc. KCCP Ltd was incorporated in 1984.The company has four mines located in Nileshwar and Karindalam in Kasaragod district, Payangadi and Kannapuram in Kannur district. KCCP holds four valid leases for mining. The company enjoys good reputation as leading supplier of different grades of China clay, a good cliental. KCCP is an existing profit making company fully owned by government of Kerala. The registration number of the company is 4000/84.The Company is engaged in mining and purification of Kaolin. Production department is headed by Mr. Mohammed Basheer with along his team members.
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Production department Hierarchy
A.G.M Production
Mining Engineer
Ceramic Division
Mine Surveyor
Works Manager
Mines Manager
Supervisor
Mines Foreman
Workers
Workers
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(a) Products and Production process The products proposed to manufacture is ceramic wall and floor tiles. The name China clay was given to porcelain by Europeans because of the first porcelain seen in the western world came from China country. The Chinese know about the basic indegrients of porcelain, while clay called China clay and field pars petuntures, porcelain. In addition to these China has been found valuable for bathroom fixtures, floor and wall tiles. Hardness, strength and resistance corrosive are qualities that make porcelain users full in modern world. This is very much in demand. (b) Production process The excavated raw clay is undergone for sorting to remove sub-standard and other foreign material. Further it is bunged along with required quantity of water. The slurry is then passed through classifier to remove sandy particles. The slurry is then pass through a rotary screen and is then feeded to the 14 Hydro cyclone. The over flow comes to the 3 cyclone and overflow is received to the receiving tank. The under flow material comes to the filter press tank and de-watered. The cakes are fed to the clay shredder and are dried. The dried and packed materials are used for the supply for ceramic, ultramarine, rubber etc. The overflow slurry from 3 Hydro cyclones passed through an Electromagnetic separator and the first bleaching is done. After washing this slurry transferred to the second Bleaching Tank (Hydro Bleach). Then it is washed and transferred to the Pren Tank. The slurry is de-watered and is kneaded with suitable chemicals and is pumped to the spray dryer. Spray dried kaolin is conveyed to the automatic weighing and packing machine. Packed bags are stacked and are ready for palette loading for dispatches.
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(c) Product profile
China clay: China clay is cheaply available. It is found in manufacture of ceramics, paints, soaps, pharmacy products, papers, etc. With the increased trend it reduces the cost of consumer and other goods, which encourages the demand for clay. The China clay is being used as a bulk raw material; the requirement of the manufacture is also huge. The seasonal character of the industry is also plus factors as the requirement of few manufactures are during the offseason which helps the company in liquidating the available stock during that time. The trust for housing has created huge demand for ceramic goods. The low iron content, the higher plasticity and in suspensability of the companies clay provides much scope for the product. A laboratory testing in England reveals that it is the best clay available in entire Asia.
High Alumina Late rite (HAL):- High Alumina Late rite is considered as a waste raw material. Now finds its application in cement industry M/S Malabar cement Ltd. The state owned public sector alone requires an average 20000 metric tons of this material. Low Alumina Bauxite (LAB):- Bauxite available in this area reported to have an alumina content of less than 30% & hence is not good for extraction of Alumina. This also has a very high demand by the cement manufactures. The Bauxite bearing land is also rich in China clay below the Bauxite deposit and as such clay operation can continue along with Bauxite mining. Wire Bricks: These are usual in construction of house and building. On availability of Late rite has brought boom for this product. In view of difficulty in getting this and in view of economic in using wire cut bricks there are a sudden demand for this product. A few units are cone they are booked in with full orders. Fire Bricks: - The Mangathuparamba unit is engaged in the manufacturing of fire bricks, which are being used in furnace and boilers. These bricks can withstand a very high temperature. Porcelain grinding balls: - It is also produced at ceramic division Mangathuparamba. For this production China clay, ball clay and other crockery materials are used as raw materials.
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(2) Maintenance department Maintenance department is a service department. The maintenance department is responsible for the maintenance and modification of the plant and machinery. The main duty of the department is that all machines are available in a proper working condition throughout the year thereby ensuring high quality production. The department has to align the machines in a proper way and has to inspect them daily before the work start and even after the work ends. The maintenance department of KCCP is headed by Mr.Sreedaran.K the mechanical engineer along with team members.
Organizational hierarchy of Maintenance department Manager
Mechanical Engineer
Electrical Engineer
Senior Mechanic
Senior Electrician
Mechanic
Electrician
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Types of Maintenance department Preventive maintenance: - The maintenance department is responsible for the preventive maintenance of machinery in the plant. It involves lubrication from time to time i.e. overall maintenance. Scheduled maintenance: - The maintenance department keeps a schedule of the maintenance work to be carried out. The scheduled has been prepared based on the manufactures specification and the experience of the operating staff. Shut down maintenance: - It is normally carried down during the month of JuneJuly. The plant remains closed to about 4-5 weeks. It is remove the pores in the machineries, electric motors and plants. Break down maintenance: - This is carried down during emergencies when a machine breaks down. The maintenance department tries to prevent it.
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(3) Quality department Quality is the most important factor, which decides the ultimate fate of the firm, so it has a very important role to perform in the organization. The quality control department in KCCP assures quality of its products till it reaches the hands of the consumer. This adds to the companys reputation and goodwill. Quality control department of the KCCP is headed by Mr. P.S Joshi.
Organizational Hierarchy of Quality department
Quality control Manager
Quality control Supervisor
Quality control Assistants
Staffs
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Distribution channels of KCCP:The distribution channel inside Kerala is direct in nature. The products flow directly from the distributors to consumers. There exist no middlemen between the distributors and consumers.
(4) Marketing department:The modern market is consumer oriented market and it deals with customers. A satisfied customer is a good adviser of that product. So customer satisfaction is very important. The products are marketed by various divisions of the group. The products are classified into different groups as fast moving, slow moving and not moving goods. The flagship product of the company is China clay which fetches 70% of the total revenue. After establishment, The KCCP transformed as a leading supplier of different grades of China clay. The main markets of KCCP products in South India are Kerala, Tamilnadu, Maharashtra and Karnataka respectively in position and also Delhi, Gujarat and Orissa. More than 50% of sales are carried on August, September, October, November and December. The marketing system is the main system of KCCP. Marketing manager Mr.Anakai Balakrishnan manages the function of this department with the assistance of area manager and assistant marketing manager. Area manager is intended to control the external marketing functions and the internal marketing functions of marketing. The sales executives take action involvement. The main function of this department is to ensure uninterrupted distribution of products to the customers.
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Organizational hierarchy of marketing department. Managing Director
Area Manager
Sales Officer
Sales Executive
The following table shows moving products of KCCP:Moving products Little-1st Indian clay Hindustan clay Non moving products Kerala special
(a) Competitors:The KCCP has a very few competitors:1. English Indian Clay Ltd Trivandrum 2. Southern Clays Nileshwar 3. The Kerala ceramics Kundra
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(b) Major Customers: - The major customers for different types of clays are given below:(1) Nileshwar unit:1.Trade name Kerala special Main customers Agrevo India Ltd Ankles war Cut Fast Abrasive Tools, Chennai Carborandum Universal Ltd Thiruvattiyur and Hosur Indian clay Little 1st Main customers Murudeshwar ceramics, Hubli Ultramarine & Pigments Ltd, Ambattur E.I.D Parry (India) Ltd. W.S Industries (India) Ltd, Porur. Hindustan special Main customers Asian Polymers, Keeriyad, Kurlon Ltd ,Bangalore Anupama Coirs (pvt)Ltd, Calcutta hour Coir foams pvt Ltd, Hosur Century Fiber Plates(pvt)Ltd, Hyderabad Bharat motors, Tirunelveli, Grindwel& Norton Ltd, Bangalore.
(2) Payangadi unit:1.Trade name
(3) Kannapuram unit:1.Trade name
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(5) Human Resource Department:Personnel management is the management of humans among its participants and bringing about their utmost individual department resources in an organization and is concerned with the creation of harmonious working relationship among its participants and bringing about their utmost individual department. An organization performance and resulting productivity are directly proportional to the quantity and quality of human resources. The important task of personnel management is to help every person to grow. Personnel management is the function of business to create and retain the competent work force to the end that maximum human satisfaction and organizational objectives are achieved. Labour, as a factor of production is different from other factors like material, machinery and money in as much as it has a will of its own. The importance of humans factor in the efficient and successful management of industrial enterprises leads the management to think in terms of providing some machinery for managing men. Human resource management came to be gpized as an integral part of management set up. Development and upcoming of an organization is mainly dependent on the development of personnel in the Ltd has an excellent track record in human resources management and development motivation training and welfare are accorded top priority in developing human resources.
Objectives of personnel management of KCCP Ltd To help the organization to achieve the goals. To provide the organ with well trained and well motivated employees. To employ the skills and abilities of the employees efficiently. To keep the workforce fully satisfied and contended. To establish desirable working relationship between employers and employees.
The Personnel management is headed by Mr. Mohammed Basheer along with his team members.
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Organization chart of Human recourse management
Personal manager
Assistant manager
Senior Assistant
Clerk
Typist TT
Attender
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(b) Functions of Personnel management The main functions of personnel management in Kerala clays and ceramics Ltd are:1. Performance appraisal: - This process is concerned with continuous evaluation of employees work. It is the process of evaluating the performance and qualifications of the employees in terms of requirement of the job. In KCCP Ltd it is done through direct measurement of performance in accordance with their work and experience. 2. Recruitment and selection: - Recruitment is the process of discovering potential applicants for actual or anticipated organizational vacancies. Selection is the process of evaluating of potential employees in terms of job specification. Internal sources of recruitment: - It consists of already existing employees. Whenever vacancy occurs in the organization, the company promotes somebody within the organization, but in KCCP this type of recruitment is rarely followed. External sources of recruitment: - KCCP Ltd gives greater importance to external recruitment rather than internal recruitment. This is because company likes to introduce fresh brain in it, which will be able to undertake and succeed in completing more challenging assignments put before them and will lead the company to a successful stage. i. ii. iii. Recruitment and selection method followed by KCCP Ltd. The officials and staffs are recruited through public service commission (PSC). The workers are recruited in KCCP Ltd through employment exchanges.
3. Training: - Training is a process of learning a sequence of programmed behavior. It is the application of knowledge. Training is given to non-management workers while development program is for managers. Company having its own vocational training for the employees will be conducted at this centre. Officers get trained from these centers. Employees strength in KCCP Ltd UNIT Nileshwar Kannapuram Payangadi Mangathuparamba Pappinissery office Total 14 11 27 3 19 74 STAFF Male 121 43 153 12 --329 WORKERS Female 135 54 150 15 19 373
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(6). Finance department:Finance is an Integral part of modern economic life and occupies an important place in economic activities. Finance is life blood of business. Today the wheel of business revolves around the fulcrum of money. Financing is a management function of financial management. In this organization, senior finance manager Mr.Jiljith controls finance management. The accountant manager is immediately followed by assistants who help in carrying out the functioning of the department. The main function of the department is to manage the available finance efficiently and keep the books of accounts up to date. It is evident from the records that the company has made an increasing tendency in profit percentage. The company uses owned funds. Both internal and external auditing is done in the organization. The audit of the books of accounts is carried out once in a year. Organization chart of finance department Senior finance manager accounts
Manager accounts
Assistant manager accounts
Cashier
Commercial accountant
Clerk
Attender
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(7).Administrative department:Administrative department is considered to be the brain of every concern. It sets the goals and objectives to be accomplished and formulate plans and decisions. The administrative officer Mr. Mohammed Basheer heads this department in KCCP and is supported by assistant administrative officer. There are other two office assistants working as subordinates under assistant administrative officer. At KCCP, the administrative department looks after the personnel management functions also. Organization chart of administrative department Administrative officer
Office assistant
Around 300 workers are employed in the organization including 150 workers and 50 office staffs. The office hours in the company starts at 10 am and finishes at 5:30 pm. While the factory hours is from 8.30 am to 5.30 pm. It is obvious that there exist stronger industrial relationship between the organizations. Both the officers and workers are free to communicate with the managing director about their problems and suggestions. Hence it is clear that an open door policy of communication is followed. The general body meeting of the organization is conducted once in every month and management review meeting is conducted weekly. The management gives adequate weight age to employees suggestions in the meeting. The workers also have adequate participation in the decision making process. So they are more loyal to the company and no trade unions are allowed to grow within the concern. The company is undertaking various welfare measures to ensure safety and security to the workers. Monetary and non- monetary benefits are offered to them. The facilities such as medical allowance, free canteen services, etc are enjoyed by the employees. In case of any overtime work, extra charges are provided. The organization follows a time rate system of wage payment. They pay remuneration to the workers on monthly basis. Since the administrative department undertakes the functions of personnel department also, they manage the recruitment, selection and training of personnel. Selection of candidates is done through interviews and on the job training for six months is given to improve efficiency of recruits.
Financial analysis of Kerala clays and ceramics products Ltd, Pappinissery, Kannur Page 32
CHAPTER 3 RESEARCH OBJECTIVES AND SCOPE OF RESEARCH PROJECT
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3.1 Objectives of the research study:The primary objective of this research study is to study about the organization as a whole and also the finance department. To understand how the funds are obtained and allocated to various departments to run the company. Also we can understand what are the policies and principles applied by the management to run the company efficiently and effectively. To understand various organizational practices. To study about different departments of the organization. To have an overall understanding of the organization, its culture and hierarchy. To study the overall performance of the company. To study about how the funds are allocated in the business.
3.2 Scope of research project:The study aims at analyzing the overall performance of the KCCP Ltd, Pappinissery, Kannur. The main objective behind the study is the familiarization of various departments in the organization. It also aims to understand the various industrial applications of clays and its demand in the market. It also aims to understand how funds are acquired and allocated in the business.
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CHAPTER 4 RESEARCH METHODOLOGY AND LIMITATION
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4.1 Research design:They are various methods used for data collection. Mainly a data can be of two types: Primary data Secondary data.
Primary Data: Primary data are those data which are collected by the investigator himself. The primary data is obtained through: 1. Observation. 2. Interviewing the accounts manager. Secondary Data:Secondary datas are datas that have already been collected by researchers. Secondary data is collected from Websites Manuals Published books and magazines, companys broachers and annual reports and other published booklets.
4.2 Research Limitations: Though study is based on both primary and secondary data, inadequacy of secondary data may be reflected in the analysis. Collection of data could not be carried out owing to the time as officials were busy.
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Chapter 5 Data Analysis, Interpretation and Presentation
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5.1 Data Analysis:The data analysis has been done with the help of tools like ratio analysis, profit and loss a/c, balance sheet etc. The data collected have been analyzed using various ratios like liquidity ratios, activity ratios and solvency ratios. The data in profit and loss a/c and balance sheet has also helped in the analysis and interpretation of data.
5.2 Interpretation and presentation:Ratio Analysis: A. Liquidity ratios: Current Ratio = Current assets Current Liabilities Year 2007-2008 2008-2009 2009-2010 Current assets 524,92,194 645,97,941 735,80,459 Current liabilities 99,03,893 190,04,901 170,35,946 Ratio 5.30 3.39 4.31
Current asset ratio

6 5 4 3 2 1 0 99,03,893 524,92,194 2007-2008 190,04,901 645,97,941 2008-2009 170,35,946 735,80,459 2009-2010 Ratio
Chart no: 1 Interpretation: - The enterprise should have an ideal current ratio i.e. (2:1).The current ratio is satisfying. The ratio is fluctuating year by year as shown in the calculations. A low ratio indicates that a company may not be able to meet its current liabilities on time. High ratio indicates that funds are not utilized properly and are remaining idle.
Financial analysis of Kerala clays and ceramics products Ltd, Pappinissery, Kannur Page 38
Liquid Ratio = Liquid assets(Current asset-stock) Current liabilities
Year 2007-2008 2008-2009 2009-2010
Liquid Assets 455,59,936 570,36,105 606,16,599
Liquid liabilities 99,03,893 190,04,901 170,35,946
Ratio 4.60 3.00 3.55
Liquid asset ratio

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 99,03,893 455,59,936 2007-2008 190,04,901 570,36,105 2008-2009 170,35,946 606,16,599 2009-2010
Ratio
Chart no: 2 Interpretation: - In an enterprise quick ratio of (1:1) is favorable since for every rupee of current liabilities there is a rupee of current assets. Here I think even this ratio is declining, but it is satisfactory.
B. Solvency Ratios: Proprietary Ratio = Shareholders funds/Proprietary funds Total assets (excluding fictitious assets) Total assets 655,48,861 856,21,434 942,90,371 Ratio 0.85 0.78 0.83
Year 2007-2008 2008-2009 2009-2010
Shareholders funds 561,92,716 674,20,428 783,76,704
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Proprietory ratio
0.86 0.84 0.82 0.8 0.78 0.76 0.74 655,48,861 561,92,716 2007-2008 856,21,434 674,20,428 2008-2009 942,90,371 783,76,704 2009-2010 Ratio
Chart no: 3 Interpretation: - A high ratio indicates adequate safety for creditors. But a very high ratio indicates improper mix of proprietors funds and loan funds, which results in lower return on investment. C. Activity ratio: Inventory turnover ratio = Cost of goods sold Average stock/inventory Year Cost of goods sold Average stock 2007-2008 188,23,249 65,55,900 2008-2009 278,90,020 80,92,300 2009-2010 271,50,876 80,17,800
Ratio 2.87 3.44 3.38
Inventory turnover ratio

3.5 3.4 3.3 3.2 3.1 3 2.9 2.8 2.7 2.6 2.5 65,55,900 188,23,249 2007-2008 80,92,300 278,90,020 2008-2009 80,17,800 271,50,876 2009-2010
Ratio
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Chart no: 4 Interpretation: - It indicates whether the investment in stock has been efficiently used or not, the purpose being to check whether only the required minimum amount is invested in stocks. Higher ratio indicates that more sales are produced by a unit of investment in stocks. The ratio shows better performance if it increases, since it means that the investment in stock is leading to higher sales.
Working capital turnover ratio = Sales Working capital Year 2007-2008 2008-2009 2009-2010 Sales 529,79,763 658,75,463 640,93,427 Working capital 425,88,301 455,93,040 565,44,513 Ratio 1.24 1.44 1.13
Working capital turnover ratio

1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 425,88,301 529,79,763 2007-2008 455,93,040 658,75,463 2008-2009 565,44,513 640,93,427 2009-2010
Ratio
Chart no: 5 Interpretation: - It indicates the number of times a unit invested in working capital produces sales. The ratio indicates whether the working capital has been effectively utilized or not. Higher the ratio, the better it is.
Fixed assets turnover ratio = Net sales
Year 2007-2008 2008-2009 2009-2010
Net Sales 529,79,763 658,75,463 640,93,427
Net fixed assets (fixed assets- depreciation) Net fixed assets Ratio 130,56,667 4.05 210,23,493 3.13 207,09,912 3.09
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Fixed assets turnover ratio

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 130,56,667 529,79,763 2007-2008 210,23,493 658,75,463 2008-2009 207,09,912 640,93,427 2009-2010
Ratio
Chart no: 6 Interpretation: - Fixed assets turnover ratio establishes the relationship between fixed assets and Net sales indicating how efficiently they have been used in achieving the sales. It indicates whether the investment in fixed assets is judicious or not. A high ratio indicates efficient utilization of fixed assets and a low ratio indicates inefficient utilization. An increase in the ratio indicates that there is an improvement in the utilization of fixed assets and if there is a fall, indicates that fixed assets remained idle.
Current asset turnover ratio = Net sales Current assets Year 2007-2008 2008-2009 2009-2010 Net Sales 529,79,763 658,75,463 640,93,427 Current assets 524,92,194 645,97,941 735,80,459 Ratio 1.00 1.01 0.87
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Current assets turnover ratio

1.05 1 0.95 0.9 0.85 0.8 524,92,194 529,79,763 2007-2008 645,97,941 658,75,463 2008-2009 735,80,459 640,93,427 2009-2010 Ratio
Chart no: 7 Interpretation: - It indicates how efficiently current assets have been used in achieving the sales. The ratio should be compared to the previous years. This ratio is useful for those concerns where use of fixed assets is negligible. Higher the ratio better it is.
D. Profitability ratio: Gross profit ratio = Gross profit 100 Net sales Year Gross profit Net sales 2007-2008 341,56,514 529,79,763 2008-2009 379,85,443 658,75,463 2009-2010 369,42,551 640,93,427
Ratio 64.47 57.66 57.63
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Gross profit ratio

66 64 62 60 58 56 54 529,79,763 341,56,514 2007-2008 658,75,463 379,85,443 2008-2009 640,93,427 369,42,551 2009-2010 Ratio
Chart no: 8 Interpretation: - This ratio establishes relationship of gross profit on sales to net sales of a firm, which is calculated in percentage. Gross profit is a reliable guide to the adequacy of selling prices and efficiency of trading activities. Higher the gross profit ratio, better it is.
Net profit ratio = Net profit 100 Net sales Year 2007-2008 2008-2009 2009-2010 Net profit 120,03,064 202,14,288 210,62,330 Net sales 529,79,763 658,75,463 640,93,427 Ratio 22.65 30.68 32.86
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Net profit ratio

35 30 25 20 15 10 5 0 529,79,763 120,03,064 2007-2008 658,75,463 202,14,288 2008-2009 640,93,427 210,62,330 2009-2010 Ratio
Chart no: 9 Interpretation: - Net profit ratio establishes the relationship between net profits and sales, i.e., it shows the percentage of net profit earned on sales. It is the indicator of overall efficiency of the business. Higher the net profit ratio, better the business. It helps in determining the operational efficiency of the business. An increase in ratio over the previous period shows improvement in the operational efficiency and decline means otherwise.
Operating ratio = Cost of goods sold + Operating expenses 100 Net sales Year 2007-2008 2008-2009 2009-2010 COGS 188,23,249 278,90,020 271,50,876 Operating expenses 85,52,279 112,15,077 66,51,582 Net sales 529,79,763 658,75,463 640,93,427 Ratio 51.67 59.36 52.73
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Operating ratio
60 58 56 54 52 50 48 46 529,79,763 85,52,279 188,23,249 2007-2008 658,75,463 112,15,077 278,90,020 2008-2009 640,93,427 66,51,582 271,50,876 2009-2010
Ratio
Chart no: 10 Interpretation: - The operating ratio is computed to establish relationship between operating cost and net sales. It indicates the proportion that the cost of sales or operating cost bears to sales. This ratio is a test of the operational efficiency of the business. Lower the operating ratio, better it is because it would leave higher margin to meet interest, dividend, etc.
Earnings per share = Net profit after tax preference divident No of equity shares
Year 2007-2008 2008-2009 2009-2010
Net profit after tax

74,07,746 137,39,994 132,69,530
No of equity shares
131,815 131,815 131,815
Ratios
56.19 104.23 100.66
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131,940 131,920 131,900 131,880 131,860 131,840 131,820 131,800 131,780 131,760 74,07,746 2007-2008 137,39,994 2008-2009 132,69,530 2009-2010 Ratios No of equity shares
Chart no: 11 Interpretation: - It is the earnings of a company attributable to the equity shareholders divided by the number of equity shares. This ratio helps in evaluating the prevailing market price of share in the light of profit earning capacity. The more the earnings per share, better is the performance and prospects of the company.
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5.3 Fund Flow Statement for two years based on the balance sheet
Statement of changes in working capital Increase(+)Decrease(-) Cash and bank balance Inventories Sundry debtors Short term advances Total Less: Creditors and other liabilities Provisions Total Increase/decrease in working capital Current year(Rs) (2009-10) 72.83 54.02 (-)37.03 2.58 92.40 (-)19.69 (-)2.13 (-)21.82 114.22 in lakhs Previous year(Rs) (2008-09) 94.45 6.30 20.31 6.55 127.60 91.01 7.41 98.42 29.19
Sources of funds Funds generated from operations Profit before tax Depreciation
Current year 210.62 31.17 0.64 242.43
Previous year
Sale of fixed assets Application of funds Additions of fixed assets Dividend Taxation Increase in working capital
-----242.43 26.91 19.77 81.53 114.22 242.43
210.30 14.46 -----224.76 101.51 18.45 75.61 29.19 224.76
Interpretation: - This is the Fund flow statement of KCCP Ltd showing the statement of changes in working capital, Sources and application for current and previous financial years. In both Financial years the sources and application of funds are balancing.
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Chapter 6:FINDINGS, SUGGESSIONS AND CONCLUSIONS
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6.1 Findings: The enterprise should have an ideal current ratio i.e. (2:1).The current ratio is satisfying. The ratio is fluctuating year by year as shown in the calculations. A low ratio indicates that a company may not be able to meet its current liabilities on time. High ratio indicates that funds are not utilized properly and are remaining idle. In an enterprise quick ratio of (1:1) is favorable since for every rupee of current liabilities there is a rupee of current assets. Here I think even this ratio is fluctuating, but it is satisfactory. Proprietary ratio establishes the relationship between proprietors funds and total assets. A high ratio indicates safety to creditors. But a very high ratio indicates improper mix of proprietors funds and loan funds, which results in lower return on investment. The ratio is fluctuating. This is satisfactory. The stock turnover ratio is at satisfactory level. At the beginning it was low. This ratio shows how fast the stock is moving through the firm and generating sales. Higher the ratio, the more efficient management of inventories and, vice versa. It indicates the number of times a unit invested in working capital produces sales. The ratio indicates whether the working capital has been effectively utilized or not. Higher the ratio, the better it is. Here also the ratio is fluctuating. Only in 2008-09 the ratio is better. It indicates whether the investment in fixed assets is judicious or not. A high ratio indicates efficient utilization of fixed assets and a low ratio indicates inefficient utilization. An increase in the ratio indicates that there is an improvement in the utilization of fixed assets and if there is a fall, indicates that fixed assets remained idle. This ratio is declining year by year. It indicates how efficiently current assets have been used in achieving the sales. The ratio should be compared to the previous years. This ratio is useful for those concerns where use of fixed assets is negligible. Higher the ratio better it is. This ratio is fluctuating. This ratio establishes relationship of gross profit on sales to net sales of a firm, which is calculated in percentage. Gross profit is a reliable guide to the adequacy of selling prices and efficiency of trading activities. Higher the gross profit ratio, better it is. This ratio is declining. In 2007-08, Ratio was better.
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Net profit ratio establishes the relationship between net profit and sales. Higher the net profit ratio, better the business. It helps in determining the operational efficiency of the business. An increase in ratio over the previous period shows improvement in the operational efficiency and decline means otherwise. This ratio is increasing year by year. It indicates the proportion that the cost of sales or operating cost bears to sales. This ratio is a test of the operational efficiency of the business. Lower the operating ratio, better it is because it would leave higher margin to meet interest, dividend, etc. This ratio is fluctuating year by year. Earnings per share help in evaluating the prevailing market price of share in the light of profit earning capacity. This ratio shows an increasing trend i.e. this ratio is satisfactory. This ratio is also fluctuating.
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6.2 Suggestions: The company should try to maintain their liquidity position by maintaining their liquidity ratios at an optimum level. The company should maintain high proprietary ratio as it provides safety to the creditors and the ratio should not be very high as it indicates improper mix of proprietors funds and loan funds, which results in lower return on investment. It should maintain inventory turnover ratio constant and stock levels at the most optimum level. The company must maintain a high working capital ratio. The company must maintain a high fixed assets turnover ratio as it indicates efficient utilization of fixed assets and increase in the ratio indicates that there is an improvement in the utilization of fixed assets. The company must maintain a high current assets turnover ratio as it indicates efficient utilization of current assets for achieving the sales. The ratio should be compared to the previous years. Higher the ratio better it is. It is better for the company if it maintains high gross profit ratio. It is better for the company if it maintains high net profit ratio as it shows improvement in the operational efficiency of the company. It is better for the company to maintain low operating ratio as it would leave higher margin to meet interest, dividend, etc. The company must maintain high earnings per share as it is better for the performance and prospects of the company.
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6.3 CONCLUSIONS:-
The Financial analysis of Kerala clays and ceramics ltd. helped significantly to feel the real world industry and organizational climate. I was able to know how the firm made effective utilization of shareholders funds and borrowed funds for functioning of the organization. The employees are skilled, efficient, hardworking and loyal towards the management. KCCP ltd is the largest producer of China clay and has built a reputation as a top quality supplier to any ceramic industry in India. More over the company has been taking care of the environment. It is engaged in social responsibility activities which have further helped in building up their reputation. All the above ratios are satisfactory. It is a profit making concern.
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CHAPTER 7:LIMITATIONS
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Due to lack of time, I was not able to collect detailed information as the officials in the organization were busy with their routine tasks. The ratios are calculated on the information present in the balance sheet and the profit and loss account. The datas were insufficient. Only some ratios have been calculated as the information for their calculation was present. I have only three year balance sheet and profit and loss account of the firm, so I was only able to make calculations for only three years.
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ANNEXURE:-
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BIBLIOGRAPHY:-
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Annual Reports of the company. Google www.Keralaclays.in www.clayworld.com Library Reference books T.S. Grewals Analysis of Financial Statements.
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Financial Analysis of Kerala Clays and Ceramics Products LTD, Pappinissery, Kannur

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Financial Analysis of Kerala Clays and Ceramics Products LTD, Pappinissery, Kannur

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CHAPTER 1 INTRODUCTION

1.1 Topic: - Kerala Clay and Ceramics Products ltd.

1.3 Why this topic is important to the company?

1.4 Learning from the study

CHAPTER 2 ORGANISATIONAL PROFILE

2.1 Industry Profile:

(b) Growth and development of ceramics Industry:-

2.2.3 Product Profile:-

OUR WIDE RANGE OF PRODUCTS

Payangadi Ball clay Ramapuram clay

Deluxe P1 Deluxe K1 Deluxe N1

Shri.P.Ramachandran (chairman) Shri.Anakai Balakrishnan (managing director)

Shri.R.Madhusoodhanan Nair Shri.J.Vijaya Mohanan Shri.C.Vasudevan Shri.A.V.Vijayan Smt.A.Madavi Smt.Moly Varghese

2.2.6 Organizational chart:-

(1) Production Department:-

Production department Hierarchy

(c) Product profile

Organizational hierarchy of Maintenance department Manager

Organizational Hierarchy of Quality department

Quality control Manager

Quality control Supervisor

Quality control Assistants

Organizational hierarchy of marketing department. Managing Director

(2) Payangadi unit:1.Trade name

(3) Kannapuram unit:1.Trade name

Organization chart of Human recourse management

Assistant manager accounts

CHAPTER 3 RESEARCH OBJECTIVES AND SCOPE OF RESEARCH PROJECT

CHAPTER 4 RESEARCH METHODOLOGY AND LIMITATION

Chapter 5 Data Analysis, Interpretation and Presentation

Current asset ratio

Liquid Ratio = Liquid assets(Current asset-stock) Current liabilities

Year 2007-2008 2008-2009 2009-2010

Liquid Assets 455,59,936 570,36,105 606,16,599

Liquid liabilities 99,03,893 190,04,901 170,35,946

Ratio 4.60 3.00 3.55

Liquid asset ratio

Year 2007-2008 2008-2009 2009-2010

Shareholders funds 561,92,716 674,20,428 783,76,704

Ratio 2.87 3.44 3.38

Inventory turnover ratio

Working capital turnover ratio

Year 2007-2008 2008-2009 2009-2010

Net Sales 529,79,763 658,75,463 640,93,427

Fixed assets turnover ratio

Current assets turnover ratio

Ratio 64.47 57.66 57.63

Gross profit ratio

Net profit ratio

Year 2007-2008 2008-2009 2009-2010

Net profit after tax

Current year 210.62 31.17 0.64 242.43

-----242.43 26.91 19.77 81.53 114.22 242.43

210.30 14.46 -----224.76 101.51 18.45 75.61 29.19 224.76

Chapter 6:FINDINGS, SUGGESSIONS AND CONCLUSIONS

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