A STUDY ON FINANCIAL STATEMENT ANALYSIS

WITH REFERENCE TO

NAGARJUNA CONSTRUCTION COMPANY LTD HYDERABAD

A Project report Submitted to the Department of Commerce & Management Studies Andhra University, Visakhapatnam. In Partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

K.RAGHU VARMA REGD NO: 109283902017 Under the guidance of Sri.CH.V.SUBBA RAJU Director of Department of Management Studies

Department of Management Studies S.V.K.P &Dr.K.S.RAJU ARTS & SCIENCE COLLEGE

(Affiliated to Andhra University)

Penugonda - 534320 2009 2011

Department of Management Studies S.V.K.P &Dr.K.S.RAJU ARTS & SCIENCE COLLEGE

(Affiliated to Andhra University)

Penugonda - 534320 2009 2011

DECLARATION
I here by declare that this Project Report entitled FINANCIAL STATEMENT ANALYSIS Company Ltd,
WITH REFERENCE TO

Nagarjuna Construction from 10.05.2010

HYDERABAD

during

the

period

to10.07.2010 is a bonafIde work done by me under the guidance of Sri.CH.V.SUBBA RAJU, Director of Department of Management Studies in partial fulfillment for the award of the degree of Master of Business Administration by The Andhra University, Visakhapatnam. I also declare that this project is the result of my own effort and has not yet been submitted by any other to any other University for any award of the Degree or a Diploma. Station: Penugonda Date:
K.RAGHU VARMA (Regd.no.109283902017)

ACKNOWLEDGEMENT
I would like to express my deep sense of gratitude to Sri Dr.G.V.Subba raju, Director of Management Studies S.V.K.P
& Dr.K.S.RAJU ARTS & SCIENCE COLLEGE, PENUGONDA College for his encouragement and support for the completion of

this Project.

I would like to express my sense of gratitude to Mr.S.V.N.Bhanoji Rao. Senior General Manager(Finance). and Mr.Arun( Trainer ) for their valuable co-operation in completing my project work successful. I thank to all who helped me in successful completion of my project.

Finally I extend my whole hearted thanks to my parents, friends and well wishers and all those people who help me in many ways throughout the completion of my Project work.

K.RAGHU VARMA (Regd.no.109283902017)

CONTENTS

CHAPTER-I
OBJECTIVES OF THE STUDY SCOPE OF THE STUDY METHODOLOGY LIMITATIONS

CHAPTER-II
INDUTRY PROFILE

CHAPTER-III
COMPANY PROFILE

CHAPTER-IV
FINANCIAL STATEMENT ANALYSIS Comparative Statement Analysis Common Size Statements Trend Analysis Ratio Analysis

CHAPTER-V
FINDINGS& SUGGESTIONS BIBLIOGRAPHY

CHAPTER-I

OBJECTIVES OF THE STUDY

In pursuance of the study, the Fallowing objectives have been set out.

To present an overview of construction industry.

To study the financial performance of Nagarjuna Construction

Company Ltd with the help of ratio analysis.

To observe and analyze the changes that has been taken place in the

balance sheets of the company over a period of time and to interpret various ratios in accordance with the changed trends.

To know the liquidity position of the firm year by year.

METHODOLOGY OF THE STUDY

The study involves with both the primary data and the secondary data .The

primary data was obtained through personal co-ordination with the officials and staff of the finance department.

The secondary data was obtained from the companys balance sheets for the

past five years and from the office files and document.

The obtained data has been tabulated, following proper procedures of

tabulation to interpret the same, in order to draw meaningful conclusions.

The financial techniques used for analysis and interpretation are Comparative

Statement Analysis, Common-Size Statements, Trend analysis and Ratio analysis.

SCOPE OF THE STUDY

The study is confined to financial management and in particulars to the financial statement analysis The Management, Creditors, Investors and others to form judgment about the operating performance and financial position of the company, use the information contained in the Financial Statements. Management should be particularly interested in knowing the financial strengths of the company to make their best use and be able to spot out the financial weaknesses of the firm to take suitable corrective actions. The Financial Analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedures. Financial Analysis techniques like Comparative, Common size, and Trend Analysis helps them to take qualitative judgments. Thus, the Ratio or Financial Analysis can be done as observed in four types of ratios collectively called as Ratio Analyses. The ratio or financial analysis is a useful tool for analyzing the financial performance of the company.

LIMITATIONS OF THE STUDY

Through the project work has been completed successfully, a few limitations were observed. However, proper care has been taken to overcome the impact of limitation on the study.

Procuring all pertinent financial information was not possible, as it was

confidential in nature.

Information comparison was not possible due to paucity of time and non-

availability of data relating to others.

The data or figures taken for the study are the figures at the year-end. The

changes that have taken place in the year end throughout a financial year are not available, which may help in more accurate analysis of financial statements.

The smaller time frame available for understanding this study is also one of

the significant limitations of the study.

CHAPTER-II

Nature of the Industry

Goods and services: Houses, apartments, factories, offices, schools,

roads, and bridges are only some of the products of the construction industry. This industry's activities include the building of new structures, including site preparation, as well as additions and modifications to existing ones. The industry also includes maintenance, repair, and improvements on these structures.

Industry organization : The construction industry is divided into

three major segments. The construction of buildings segment includes contractors, usually called general contractors, who build residential, industrial, commercial, and other buildings. Heavy and civil engineering construction contractors build sewers, roads, highways, bridges, tunnels, and other projects related to our Nations infrastructure. Specialty trade contractors perform specialized activities related to all types of construction such as carpentry, painting, plumbing, and electrical work. Construction usually is done or coordinated by general contractors, who specialize in one type of construction such as residential or commercial building. They take full responsibility for the complete job, except for specified portions of the work that may be omitted from the general contract. Although general contractors may do a portion of the work with their own crews, they often subcontract most of the work to heavy construction or specialty trade contractors. Specialty trade contractors usually do the work of only one trade, such as painting, carpentry, or electrical work, or of two or more closely related trades, such as plumbing and heating. Beyond fitting their work to that of the

other trades, specialty trade contractors have no responsibility for the structure as a whole. They obtain orders for their work from general contractors, architects, or property owners. Repair work is almost always done on direct order from owners, occupants, architects, or rental agents.

Recent developments: The construction industry has been strongly affected by the credit crisis and recession that began in December 2007. Housing prices fell and foreclosures of homes rose sharply, particularly in overbuilt areas of the country. New housing construction, while still ongoing, dropped significantly. The recession is expected to impact other types of construction as well. Retailers are refraining from building new stores and State and local governments are reducing spending. However, as energy costs have risen, some companies are finding it necessary to build or renovate buildings that are not energy efficient. "Green construction" is an area that is increasingly popular and involves making buildings as environmentally friendly and energy efficient as possible by using more recyclable and earth-friendly products.

Working Conditions

Hours: Most employees in the construction industry work full time, and many work over 40 hours a week. In 2008, about 18 percent of construction workers worked 45 hours or more a week. Construction workers may sometimes work evenings, weekends, and holidays to finish a job or take care of an emergency. Rain, snow, or wind may halt construction work. Workers in this industry usually do not get paid if they can't work due to inclement weather. Work environment: Workers in this industry need physical stamina because the work frequently requires prolonged standing, bending, stooping, and working in cramped quarters. They also may be required to lift and carry heavy objects. Exposure to the weather is common because much of the work is done outside or in partially enclosed structures. Construction workers often work with potentially dangerous tools and equipment amidst a clutter of building materials; some work on temporary scaffolding or at great heights. Consequently, they are more prone to injuries than workers in other jobs. Data from the U.S. Bureau of Labor Statistics show that many construction trades workers experienced a work-related injury and illness rate that was higher than the national average. In response, employers increasingly emphasize safe working conditions and habits that reduce the risk of injuries. To avoid injury, employees wear safety clothing, such as gloves, hardhats, and devices to protect their eyes, mouth, or hearing, as needed.

Employment

Construction, with 7.2 million wage and salary jobs and 1.8 million self-employed and unpaid family workers in 2008, was one of the Nation's largest industries. About 64 percent of wage and salary jobs in construction were in the specialty trade contractors sector, primarily plumbing, heating, and air-conditioning; electrical; and masonry. Around 23 percent of jobs were in residential and nonresidential building construction. The rest were in heavy and civil engineering construction Distribution of wage and salary employment in construction by industry, 2008 (Employment in thousands) Industry Construction, total Construction of buildings Residential building Nonresidential building construction Heavy and civil engineering construction Utility system construction Highway, street, and bridge construction Land subdivision Other heavy and civil engineering construction Specialty trade contractors Building equipment contractors Foundation, structure, and building exterior contractors Building finishing contractors Other specialty trade contractors Employment Percent 7,214.9 1,659.3 832.1 827.2 970.3 451.3 328.9 80.8 109.3 4,585.3 2,023.1 987.8 912.8 661.6 100.0 23.0 11.5 11.5 13.4 6.3 4.6 1.1 1.5 63.6 28.0 13.7 12.7 9.2

Employment in this industry is distributed geographically in much the same way as the Nation's population. There were about 884,300 construction establishments in the United States in 2008: 269,700 were building construction contractors; 57,600 were heavy and civil engineering construction or highway contractors; and 557,000 were specialty trade contractors. Most of these establishments tend to be small; 68 percent employed fewer than 5 workers. About 12 percent of workers are employed by these very small contractors. Construction offers more opportunities than most other industries for individuals who want to own and run their own business. The 1.8 million self-employed and unpaid family workers in 2008 performed work directly for property owners or acted as contractors on small jobs, such as additions, remodeling, and maintenance projects. The rate of self-employment varies greatly by individual occupation in the construction trades, partially dependent on the cost of equipment or structure of the work.

Occupations in the Industry

Construction offers a great variety of career opportunities. People with many different talents and educational backgrounds managers, clerical workers, accountants, engineers, truck drivers, trades workers, and construction helpers find job opportunities in the construction industry.

Construction trades occupations: Most of the workers in construction

are construction trades workers, which include master, journey, and apprentice craft workers, and construction laborers. Most construction trades workers are classified as either structural, finishing, or mechanical workers, with some performing activities of more than one type. Structural workers build the main internal and external framework of a structure and can

include carpenters; construction equipment operators; brick masons, block masons, and stonemasons; cement masons and concrete finishers; and structural and reinforcing iron and metal workers. Finishing workers perform the tasks that give a structure its final appearance and may include carpenters; drywall installers; ceiling tile installers; plasterers and stucco masons; segmental pavers; terrazzo workers; painters and paperhangers; glaziers; roofers; carpet, floor, and tile installers and finishers; and insulation workers. Mechanical workers install the equipment and material for basic building operations and may include pipe layers, plumbers, pipe fitters, and steamfitters; electricians; sheet metal workers; and heating, air-conditioning, and refrigeration mechanics and installers. Construction trades workers are employed in a large variety of occupations that are involved in all aspects of the construction industry. Boilermakers make, install, and repair boilers, vats, and other large vessels that hold liquids and gases. Brick masons, block masons, and stonemasons build and repair walls, floors, partitions, fireplaces, chimneys, and other structures with brick, pre-cast masonry panels, concrete block, stone, and other masonry materials. Carpenters construct, erect, install, or repair structures and fixtures made of wood, such as framing walls and partitions, putting in doors and windows, building stairs, laying hardwood floors, and hanging kitchen cabinets. Carpet, floor, and tile installers and finishers lay floor coverings, apply tile and marble, and sand and finish wood floors in a variety of buildings. Cement masons, concrete finishers, segmental pavers, and terrazzo workers smooth and finish poured concrete surfaces and work with concrete to create sidewalks, curbs, roadways, or other surfaces. Construction equipment operators, also known as operating engineers, use machinery that moves construction materials, earth, and other heavy

materials and applies asphalt and concrete to roads and other structures. Drywall installers, ceiling installers, and tapers fasten drywall panels to the inside framework of residential houses and other buildings and prepare these panels for painting by taping and finishing joints and imperfections. Electricians install, connect, test, and maintain building electrical systems, which also can include lighting, climate control, security, and communications. Glaziers are responsible for selecting, cutting, installing, replacing, and removing all types of glass. Insulation workers line and cover structures with insulating materials. Painters and paperhangers stain, varnish, and apply other finishes to buildings and other structures and apply decorative coverings to walls and ceilings. Pipe layers, plumbers, pipe fitters, and steamfitters install, maintain, and repair many different types of pipe systems. They may also install heating and cooling equipment and mechanical control systems. Plasterers and stucco masons apply plaster, concrete, stucco, and similar materials to interior and exterior walls and ceilings. Roofers repair and install roofs made of tar or asphalt and gravel; rubber or thermoplastic; metal; or shingles made of asphalt, slate, fiberglass, wood, tile, or other material. Sheet metal workers fabricate, assemble, install, and repair products and equipment made out of sheet metal, such as duct systems; roofs; siding; and drainpipes. Structural and reinforcing iron and metal workers place and install iron or steel girders, columns, and other structural members to form completed structures or frameworks of buildings, bridges, and other structures. Lastly, construction laborers perform a wide range of physically demanding tasks at building and highway construction sites, such as tunnel and shaft excavation, hazardous waste removal, environmental remediation, and demolition. Many construction trades workers perform their services with the assistance of

helpers. These workers assist trades workers and perform duties requiring less skill. The construction industry employs nearly all of the workers in some construction craft occupations. Other industries that include large numbers of construction craft occupations are transportation equipment manufacturing; transportation, communication, and utilities; real estate; wholesale and retail trade; educational services; and State and local government. Percentage of wage and salary workers in construction craft occupations employed in the construction industry, 2008 Occupation Insulation workers Cement masons, concrete finishers, and terrazzo workers Structural iron and steel workers Drywall installers, ceiling tile installers, and tapers Plasterers and stucco masons Roofers Pipe layers, plumbers, pipe fitters, and steamfitters Electricians Brick masons, block masons, and stonemasons Glaziers Carpenters Carpet, floor, and tile installers and finishers Painters and paperhangers Percent 91.7 89.4 84.6 80.2 79.9 76.2 71.6 69.7 69.0 67.5 56.1 49.5 43.9

Mechanical and installation occupations: The construction industry employs a number of other workers apart from the construction trades. Elevator installers and repairers assemble, install, and replace elevators, escalators, moving walkways, and similar equipment in new and old

buildings. Heating, air-conditioning, and refrigeration mechanics and installers install systems that control the temperature, humidity, and the total air quality in residential, commercial, industrial, and other buildings. Material moving occupations use machinery to move construction materials, earth, and other heavy materials, and clean vehicles, machinery, and other equipment. Managerial occupations: First-line supervisors and managers of construction trades and extraction workers oversee trades workers and helpers and ensure that work is done well, safely, and according to code. They plan the job and solve problems as they arise. Those with good organizational skills and exceptional supervisory ability may advance to construction management occupations, including project manager, field manager, or superintendent. These workers are responsible for getting a project completed on schedule by working with the architect's plans, making sure materials are delivered on time, assigning work, overseeing craft supervisors, and ensuring that every phase of the project is completed properly and expeditiously. They also resolve problems and make sure that work proceeds without interruptions. Employment of wage and salary workers in construction, 2008 and projected changes, 2008-2018. (Employment in thousands) Employment, 2008 Occupation All occupations Management, business, and financial occupations Number Percent 7,214.9 571.4 100.0 7.9 Percent Change, 2008-18 18.5 21.6

Employment of wage and salary workers in construction, 2008 and projected changes, 2008-2018. (Employment in thousands) Employment, 2008 Occupation General and operations managers Construction managers Cost estimators Office and administrative support occupations Bookkeeping, accounting, and auditing clerks Executive secretaries and administrative assistants Secretaries, except legal, medical, and executive Office clerks, general Construction and extraction occupations First-line supervisors/managers of construction trades and extraction workers Brick masons, block masons, and stonemasons Carpenters Carpet, floor, and tile installers and finishers Cement masons, concrete finishers, and terrazzo workers Construction laborers Construction equipment operators Drywall installers, ceiling tile installers, Number Percent 121.2 176.9 128.0 699.6 141.0 75.9 151.9 159.2 4,741.7 442.1 110.5 721.0 79.4 184.7 771.0 297.5 151.3 1.7 2.5 1.8 9.7 2.0 1.1 2.1 2.2 65.7 6.1 1.5 10.0 1.1 2.6 10.7 4.1 2.1 Percent Change, 2008-18 7.8 26.1 32.6 15.8 19.4 17.5 8.2 19.7 18.0 22.7 14.3 15.2 13.3 13.9 26.0 18.1 15.5

Employment of wage and salary workers in construction, 2008 and projected changes, 2008-2018. (Employment in thousands) Employment, 2008 Occupation and tapers Electricians Painters and paperhangers Pipe layers, plumbers, pipe fitters, and steamfitters Roofers Sheet metal workers Helpers, construction trades Installation, maintenance, and repair occupations Heating, air conditioning, and refrigeration mechanics and installers Line installers and repairers Transportation and material moving occupations Truck drivers, heavy and tractor-trailer 484.0 197.6 398.0 113.5 107.9 349.2 545.8 178.6 83.5 251.8 104.0 6.7 2.7 5.5 1.6 1.5 4.8 7.6 2.5 1.2 3.5 1.4 15.3 8.2 21.6 6.5 10.1 21.0 28.6 42.8 21.4 12.6 15.6 Number Percent Percent Change, 2008-18

Training and Advancement Persons can enter the construction industry through a variety of educational and training backgrounds. Those entering construction out of high school usually start as laborers, helpers, or apprentices. While some

laborers and helpers can learn their job in a few days, the skills required for many trades workers jobs take years to learn and are usually learned through some combination of classroom instruction and on-the-job training. In a few cases, skills can be learned entirely through informal on-the-job training, but the more education a worker receives, generally the more skilled that worker becomes.

Construction trades, mechanical, and installation and repair occupation: Construction trades workers and mechanical and installation
occupations, such as carpenters, bricklayers, plumbers, heating, airconditioning, and refrigeration mechanics and installers, and other construction trade specialists most often get their formal instruction by attending a local technical or trade school, participating in an apprenticeship, or taking part in an employer-provided training program. In addition, they learn their craft by working with more experienced workers. Most construction trades workers' jobs require proficiency in reading and mathematics. Safety training is also required for most jobs; English language skills are essential for workers to advance within their trade. Apprenticeships are administered by local employers, trade associations, and trade unions and provide the most thorough training. Apprenticeships usually last between 3 and 5 years and consist of on-the-job training and 144 hours or more of related classroom instruction each year. In lieu of the hours of training, some apprenticeship programs now use competency standards, which make it possible to complete a program in a shorter time. Those who enroll in apprenticeship programs usually are at least 18 years old and in good physical condition. Many employers or programs require applicants to pass background checks.

Depending on the occupation, there may be technical or vocational schools that train students to perform a given occupation's tasks. Those who enter construction from technical or vocational schools also may complete apprenticeship training; technical or vocational school graduates progress at a somewhat faster pace because they already have had courses such as mathematics, mechanical drawing, and woodworking. A few occupations have licensing requirements. Crane operators, electricians, plumbers, and heating and air- conditioning mechanics and installers are required to have a license in most States; without a license, a contractor cannot operate in the State. There are often separate licenses for contractors and workers. Other occupations do not have strict licensing requirements but often have voluntary certifications. These certifications provide tangible evidence of knowledge and abilities to potential employers and consumers. Certification is administered by many associations that are related to specific trades, but also are offered by other organizations as well. Licensing and certification requirements include years of work experience and classroom instruction. Licenses and certifications need to be renewed on a regular basis. To further develop their skills, construction trades workers can work on different projects, such as housing developments, office and industrial buildings, or road construction. Flexibility and a willingness to adopt new techniques, as well as the ability to get along with people, are essential for advancement. Those who are skilled in all facets of the trade and who show good leadership qualities may be promoted to supervisor or construction manager. Construction managers may advance to superintendent of larger projects or go into the business side of construction. Some go into business for themselves as contractors. Those who plan to rise to supervisory

positions should have basic Spanish language skills to communicate safety and work instructions to Spanish-speaking construction workers. Outside the construction industry, construction trades workers may transfer to jobs such as construction building inspector, purchasing agent, sales representative for building supply companies, or technical or vocational school instructor. To advance to a management position, additional education and training are recommended. Laborers and helpers advance in the construction trades occupations by acquiring experience and skill in various phases of the craft. As they demonstrate ability to perform tasks they are assigned, they move to progressively more challenging work. As their skills broaden, they are allowed to work more independently, and responsibilities and earnings increase. They may qualify for jobs in related, more highly skilled occupations. For example, after several years of experience, painters' helpers may become skilled painters. Managerial occupations: Managerial personnel usually have a college degree or considerable experience in their specialty. Individuals who enter construction with college degrees usually start as management trainees or as assistants to construction managers. Those who receive degrees in construction science often start as field engineers, schedulers, or cost estimators. College graduates may advance to positions such as assistant manager, construction manager, general superintendent, cost estimator, construction building inspector, general manager or top executive, contractor, or consultant. Although a college education is not always required, administrative jobs usually are filled by those with degrees in business administration, finance, accounting, or similar fields. Opportunities for workers to form their own firms are better in construction than in many other industries. Construction workers may need

only a moderate financial investment to become contractors and they can run their businesses from their homes, hiring additional construction workers only as needed for specific projects. The contract construction field, however, is very competitive, and the rate of business turnover is high. Taking courses in business helps to improve the likelihood of success.

Outlook
Population growth, deteriorating infrastructure, and aging buildings will generate employment growth in the construction industry. Job opportunities are expected to be good for those construction workers with the most experience and skill. Employment change: The number of wage and salary jobs in the construction industry is expected to grow 19 percent through the year 2018, compared with the 11 percent projected for all industries combined. Employment in this industry depends primarily on the level of new construction as well as renovation activity on older buildings, which is expected to increase modestly over the coming decade. Residential construction is expected to grow moderately over the decade to meet the needs of a growing population. Particularly, as the oldest children of the baby boomers reach their peak house-buying years in the coming decade, demand for housing by them is expected to grow to meet their needs. Demand by an expanding older population for senior housing and healthcare residences will lead to growth in these areas. The renovation and expansion of older homes should prove relatively constant over the projection period. Employment is expected to grow in the nonresidential construction sector over the decade as well. Replacement of many industrial plants has

been delayed for years, and a large number of structures will have to be replaced or remodeled. There will also be a need for all types of medical treatment facilities to meet the demands of the growing elderly population. Construction of schools will continue to be needed, especially in the South and West, where the population is growing the fastest. However, the stress on many State and local governments budgets may be such that new construction for schools will be postponed for several years until the economy recovers. Employment in heavy and civil engineering construction is projected to increase due to growth in new highway, bridge, and street construction, as well as in maintenance and repairs to prevent further deterioration of the Nation's existing highways and bridges. Voters and legislators in most States and localities continue to approve spending on road construction, which will create jobs over the next decade. Another area of expected growth is in power line and related construction. Even with increased conservation and more efficient appliances, there is an increasing demand for power. Increase demand for workers will likely result from new power plant construction and connecting these new facilities to the current power grids. The largest number of new jobs is expected to be created in specialty trades contracting because it is the largest segment of the industry and because it is expected to grow about as fast as the rest of the construction industry. The number of jobs will grow as demand increases for subcontractors in new building and heavy construction, and as more workers are needed to repair and remodel existing homes, which specialty trade contractors are more likely to perform. Home improvement and repair construction is expected to continue even as new home construction slows. Remodeling should provide many new jobs because of a growing stock of

old residential and nonresidential buildings. Many older, smaller homes will be remodeled to appeal to more affluent buyers interested in more space and amenities. Remodeling tends to be more labor-intensive than new construction. In addition, the construction industry, as well as all types of businesses and institutions, is increasingly contracting out the services of specialty trades workers instead of keeping these workers on their own payrolls. Despite 19 percent overall employment growth of the construction industry, construction trades growth is expected to vary. For example, employment of rail-track laying and maintenance equipment operators; first line supervisors of construction trades; and pipe layers, plumbers, pipe fitters, and steamfitters is projected to grow faster than the industry average because their specialized services will be in greater demand. On the other hand, employment of structural iron and steel workers is expected to grow more slowly than the construction industry as a whole as workers become more productive. Nonetheless, nearly all construction trades are projected to experience some growth. Only helpers of roofers and of painters, paperhangers, plasterers and stucco masons are expected to experience a decline. Employment of construction managers is expected to grow as a result of the increasing complexity of construction work that needs to be managed, including the need to deal with the proliferation of laws dealing with building construction, worker safety, and environmental issues. Job prospects: Job opportunities are expected to be good, especially for experienced and skilled construction trades workers, because of the need to replace the large number of workers anticipated to leave these occupations over the next decade.

Experienced construction workers, and new entrants with a good work history or prior military service, should enjoy the best job prospects. A variety of factors can affect job prospects and competition for positions. Entering specialties requiring specific education, certification, or licensure are likely to improve job prospects for those willing to get the needed certifications, licenses, training, and education. Jobs that cause a worker to be at great heights, are physically demanding, or expose workers to extreme conditions are also more likely to have less competition for positions and often have high replacement needs. Occupations that have few training needs are likely to have increased competition and less favorable job prospects. Certain occupations should have particularly good job opportunities. Because of the difficulty in obtaining certification as a crane operator, some employers have been unable to fill some positions. Electricians, plumbers, pipe fitters, and steamfitters are also licensed occupations that should have a favorable outlook due to projected job growth. Roofers should have favorable opportunities due to job growth and difficult working conditions, which lead to high replacement needs. Boilermakers; brick masons, block masons, and stonemasons; and structural and reinforcing iron and rebar workers should have excellent opportunities because of the skills required to perform their duties and the difficult working conditions. Installation and maintenance occupations including line installers and heating and airconditioning mechanics and installers also should have especially favorable prospects because of a growing stock of homes that will require service to maintain interior systems. Construction managers who have a bachelor's degree in construction science, with an emphasis on construction management, and related work experience in construction management

services firms, should have especially good prospects as well. Employment growth among administrative support occupations will continue to be limited by office automation. Construction laborers needing less training should face competition for work due to few barriers to entrance to this occupation. The outlook for carpenters will be heavily dependent upon residential construction activity, which is unlikely to grow as fast as in recent years. Painters should have good opportunities because of demand for their work, while paperhangers should have less favorable opportunities because of the reduced demand for their work. The number of job openings in construction may fluctuate from year to year. New construction is usually cut back during periods when the economy is not expanding or interest rates are high.

Earnings
Industry earnings: Earnings in construction are higher than the average for all industries. In 2008, production or no supervisory workers in construction averaged $21.87 an hour, or about $842 a week. In general, the construction trades workers needing more education and training, such as electricians and plumbers, get paid more than construction trades workers requiring less education and training, including laborers and helpers. Average earnings of no supervisory workers in construction, 2008 Industry Total, private industry Construction Construction of buildings Nonresidential building Hourly $18.08 21.87 21.39 23.10 Weekly $608 842 813 914

Average earnings of no supervisory workers in construction, 2008 Industry Residential building Heavy and civil engineering construction Utility system construction Highway, street, and bridge construction Other heavy construction Land subdivision Specialty trade contractors Building equipment contractors Building finishing contractors Other specialty trade contractors Building foundation and exterior contractors Hourly 19.47 22.00 22.31 22.11 21.78 18.73 21.99 23.56 20.87 20.86 20.54 Weekly 707 924 941 931 947 702 835 918 783 795 747

Earnings also vary by the worker's education and experience, type of work, complexity of the construction project, and geographic location. Wages of construction workers often are affected when poor weather prevents them from working. Traditionally, winter is the slack period for construction activity, especially in colder parts of the country, but there is a trend toward more year-round construction, even in colder areas. Construction trades are dependent on one another to complete specific parts of a projectespecially on large projectsso work delays affecting one trade can delay or stop the work of another trade. Wages of selected occupations in construction appear in table.

Median hourly wages of the largest occupations in construction, May 2008 Heavy and civil Construction engineering Occupation Construction managers First-line supervisors/managers of construction trades and extraction workers Plumbers, pipe fitters, and steamfitters Electricians Operating engineers and other construction equipment operators Carpenters Cement masons and concrete finishers Painters, construction and maintenance Construction laborers Heating, air conditioning, and refrigeration mechanics and installers ** 18.54 18.25 19.08 19.17 17.41 15.41 14.35 19.42 17.13 16.84 14.29 18.50 16.85 15.46 13.57 18.72 16.87 15.85 13.71 20.48 20.02 18.98 18.88 22.83 21.26 21.27 22.85 21.78 21.69 21.94 22.32 28.49 28.10 27.49 27.95 $37.45 $39.87 Specialty trade $38.34 All $38.39

of buildings construction contractors industries

Benefits and union membership: About 17 percent of construction trades workers were union members or covered by union contracts, compared with 14 percent of workers throughout private industry. In general, union workers are paid more than nonunion workers and have better benefits. Many different unions represent the various construction trades and form joint apprenticeship committees with local employers to supervise apprenticeship programs.

CHAPTER-III

COMPANY PROFILE
The year 1978 saw Dr AVS Raju take that single step along with likeminded people to establish NCC. It was the vision of this simple man who believes in human values, common sense and value of time. It has been journey of excellence since then. Starting off with the corporate office in Hyderabad, regional offices were opened to facilitate the geographical spread of new projects. NCC was listed on the BSE & NSE stock exchanges in 1992. The year 1995 saw NCC crossing a turnover of Rs. One billon. The Property Division was established in 1996 followed by the Transportation Division in 1998. The Water, Electrical, Power, Irrigation, Metals, Oil & Gas Divisions ere established subsequently. The GDRs, of the Company are listed on the Luxembourg stock exchange. The enormous trust placed by foreign institutional investors is reflected by the investment of US $ 100 million as on date by the Blackstone group of USA. The Company has offices in Muscat (Oman) and Dubai (UAE) and has bagged projects in these countries. Today, NCC is the only construction company from India hailed as 'Best under a Billion' in Asia Pacific by Forbes Asia. It is ranked as the fastest growing construction company in the country by Construction World

- NICMAR and also as the 2nd largest company in terms of of turnover for the year 2006-07. It is also rated as one of India's most admired companies by Construction World and is the 4th fastest growing company in India across all sectors in a study conducted by Dalal Street Magazine. NCC has a super ranking of 103 among India's top 1000 companies. It has also been ranked third on the basis of total income in construction and allied activities sector by Dun and Bradstreet in their acclaimed publication "India's Top 500 companies" in 2006. The Company's projects have been recognized as the "Outstanding Structure of the Year" by the Indian Concrete Institute two years in a row. NCC was awarded a bonus of Rupees 20 million for early completion of its projects. Its turnover for the financial year 2006-07 stood at Rs.29 billion. Through the years and into the future, NCC continues to be on a steady drive towards perfection by maintaining old customs and adding new Endeavours-across decades, across countries, across disciplines. It has marched on, towards newer horizons and newer challenges. The saga of excellence continues...

High w a y s Bridg e s , f l y o v e r s a n d

Trans m i s s i o n a n d d i s t r i b

Housi n g p r o j

c t s Indus t r i a l b u i l d i n g s IT P a r k s Shop p i n g m a l l s Sport s BOP f o r t h e r m a l a n d h y d r o P r o j e c t s Tunn e l i n g o r

l e v a t e d c o r r i d o r s g n m e n t o f e x i s Oil & Gas t i n g h i g h w a y s

r s u p p l y p r o j e c t s

t i o n l i n e s a n d Tied u Electrical p w i t h P O S C O E & C EPC f o r s t e e l p l a n t s u b s t a t i o n s Proje c t Dams Lift i r r i g a t i o n Gravi t y i r r i g a t i o n

Buildings & Housing

Transportation Reali

New Divisions

Power

c BUILDINGS & HOUSING: o f m p l e x e s

a Syste A nation on speed requires to be fueled appropriately by civil H n m y p Hotel & industrial sinfrastructure,c by Products & services. r o Hospi t a l s E l e c t r i c l a n t s n s t r u c t i o n o f y p a s s e s o j e c t s d r o d i m p r o v e m e n t

In-built NCCs agenda is the aim to provide world-class infrastructural support to Indias growing industrial sector.
p Leveraging the synergy of its engineering expertise, on-the-field P r

Oil Water & a Treat Environment n m d e n g t a s p l p a i n p t e s l i Unde n Metals r e g r p o r u o n j d e c d t r s a Refin i e n r a y g e e s x p a n s i o n

Irrigation

Over b u r d e n r e m o v a l Coal e x c a v a t i o n

Mining l

e e c t r i f i c a t i o n

experience and creative capabilities to erect structures of global b standards has become second nature for NCC. NCC has won the coveted outstanding structure of the year award for two consecutive years from the Indian concrete institute for main athletic stadium and Shilpakala vedika, Hyderabad. Jayadeva institute of cardiology, Asias largest cardiac hospital at Bangalore has been built by NCC .All of which go to reiterate the

o j e c t s

companys commitment to provide quality construction services to the client. TRANSPORTATION: NCC brings to board a vast background of expertise in the area of transportation infrastructure. Roads Highways, Bridges, Flyovers, Railway tracks.The Company has delivered them all. In its drive to bring INDIA on par with global standards, The central government has identified high density corridors .NCC a performance leader in this area, has been awarded various contracts for the execution of high ways, bridges, flyovers and roads including the strengthening of existing stretches and multi laning of roads etc. The company has also received a bonus for early completion of one of its projects. WATER & ENVIRONMENT: Water is a life giving asset. It is life matter and matrix, mother and medium. its not just an amenity, its a treasure. NCC carries water from far of places to enrich the lives of people in villages, towns and cities. NCC also treats waste water and sewage lines for efficient environmental protection. Each completed assignment reinforces the companys commitment to developing quality intensive water and environmental project.

NCC features in the coveted LIMCA BOOK OF RECORDS for laying an 820km.Gravity based water supply system in Amaravati, Maharashtra. ELECTRICAL: Electricity wired us to the new world .Electricity propelled human progress .Electricity it is, that holds the power to brighten every life, every moment, it touches. In NCC s treasury of deliverables is the expertise in designing , engineering, erection , testing and commissioning of EHV /HV sub-stations and transmission lines .system improvement projects , project electrification (internal & external) of multi stored utility buildings and commercial complexes , industrial structures and township electrification form NCCS core competence . POWER: The performance of the power sector directly impacts the overall economy of the country as it is the most important constituent of infrastructure. Power also forms the key to economic development it turns the wheels of progress. It brightens the horizon of hope. The Indian governments current economic plan, with its emphasis on greater. Industrialization and infrastructure development has created tremendous demand on the generation &supply of power. NCCs power division has been mooted with the

express purpose of harnessing these business opportunities. The company has undertaken tunneling work for stage II of the 800 MW parfait hydro electric projects in Hibachi Pradesh as a joint venture with other companies. Also under execution, are the 100 MW sorang hydro electric projects in Himachal Pradesh, being developed on boot basis. NCC is actively bidding for balance of plant (Bop) works associated with major power projects. IRRIGATION: Cultivation is crucial labour of man. It results in by far the most sustainable products we need to lead a healthy life. Naturally a good irrigation plant forms the backbone of any economy. The full breadth of the companies resources and expertise has been brought into action to deliver wide ranging services to the irrigation sector including dams, lift irrigation projects canal and gravity irrigation projects. OIL&GAS: NCCs oil &gas division has been set up to cater to the infrastructure needs of the existing and upcoming players in the oil refinery sector. The company has taken the joint venture root to establish its presence in the area of refinery expansion projects in the country.

Gas pipeline is another area that proffers great business opportunities. NCC has fully geared itself to exploit its vast potential. INTERNATONAL: NCC launched its international operations in the year 2005 within three years; it has bagged orders in the areas of roads and highways, water supply in Oman and UAE.

VISION To be a world - class construction and infrastructure enterprise committed to quality, timely completion, customer satisfaction, continuous learning and enhancement of stake holders value. MISSION To build a strong future ensuring increased returns to shareholders and enhanced support to associates. To adopt latest technologies in the field of engineering, construction, operation & maintenance of infrastructure projects.

 To encourage innovation, professional integrity, up gradation of knowledge and skills of employees and a safe working environment. To be a responsible corporate citizen committed to the social cause. VALUES Openness and trust Integrity & reliability Teamwork & collaboration Commitment Creativity
HEALTH, SAFETY AND ENVIRONMENT: NCC is strongly committed to safety and accident prevention on project sites and work places to ensure that accidents do not take place, employees morale and satisfaction is improved, and in turn, the performance of Company is enhanced. One of our priorities is to protect the environment and the health and safety of the people who work for us. The effective management of health and safety and protection of the environment are integral to our business success. Everyone at NCC is accountable for health, safety and environment (HS&E) and we work hard to foster a culture where these three factors are taken into account wherever we operate.

NCC integrates HS&E into all areas of its operation, so that its sites are healthy and safe for all who work in them. NCC is committed to carrying out all its activities without detriment to the Environment.

CHAPTER-IV

FINANCIAL STATEMENT ANALYSIS

INTRODUCTION Financial statements are prepared primarily for decision making. They play a dominant role in setting the framework of managerial decisions. But the information provided in the financial statements is not an end in itself, as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of immense in making decisions through analysis and interpretation of financial statements. MEANING AND SIGNIFICANCE OF FINANCIAL STATEMENT ANALYSIS The term financial analysis also known as analysis and interpretation of financial statements, refers to the process of determining financial strengths 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 according to Metcalf and Titard, it is a process of evaluating the relationship between the component parts of financial statement to obtain a better understanding of the firms position and performance. The purpose of financial analysis is to diagnose the information contained in the balance sheets so as to judge the profitability and financial sound ness of the firm. Just like a doctor examines his patient by recording his body temperature, blood pressure etc. before making his conclusions 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 weakness of the enterprise. The analysis and interpretation of financial statements is essential

to bring out the mystery behind the figures in the financial statements. Financial statement analysis is an attempt to determine the significance and meaning of financial statement data so that forecast may be made of the future earnings, ability to pay interest and profitability of a sound dividend policy. The term financial statement analysis includes both analysis and interpretation. A distinction should, therefore be made between two terms. While the term analysis is used to mean the simplification of financial data by methodical classification of data in the financial statements. interpretation means, explaining the meaning and significance of the data so simplified. However, both analysis and interpretation are interlinked and complementary to each other. Analysis is useless without interpretation and interpretation without analysis is difficult or even impossible. METHODS OR DEVICES OF FINANCIAL STATEMENT ANALYSIS The analysis and interpretation of financial statements is used to determine the financial position and results of the operation as well. A number of methods or devices are used to study the relationship between different statements .an effort is made to use those devices, which clearly analyze the position of the enterprise. The fallowing methods of analysis are generally used 1. 2. 3. 4. 5. 6. Comparative statements. Common size statements. Ratio analysis. Trend analysis. Funds flow analysis. Cash flow analysis

7.

Cost-volume-profit analysis

USERS OF FINANCIAL STATEMENT ANALYSIS: Financial analysis is the process of identifying the financial strength and weaknesses of the firm by properly establishing relationships between the items of the balance sheet and profit and loss account. Financial analysis can be uncertain by management of the firm, or by parties out side the firm viz. owners, creditors, investors and others. The nature of analysis will differ depending on the purpose of the analyst. Trade creditors are interested in firms ability to meet their claims over a very short period of time. Their analysis will, therefore confine to the evaluation of the firm liquidity position. Suppliers of long -term debts are concerned with the firms long-term solvency and survival. They analyze the firms profitability over time, its ability to generate cash to be able to pay interest and repay principal and the relationship between various sources of funds. Investors who have interested their money in the firms shares are most concerned about the firms earnings. They restore more confidence in those firms that show steady growth in earnings .as such, they concentrate on the analysis of the firms present and future profitability. They also interested in the firms financial structure to the extent it influence the firms earnings ability and risk. Management of the firm would be interested in every aspect of the financial analysis. It is their over all responsibility to see that the resources of the firm are used effectively and efficiently, and that the firms financial condition is sound.

LIMITATIONS OF FINANCIAL ANALYSIS

Financial analysis is a powerful mechanism of determining financial strengths and weaknesses of a firm. But, the analysis is based on the information available in the financial statements. Thus, the financial analysis suffers from the serious inherent limitations of the financial statements .the financial analyst also to be careful about the impact of price level changes, window-dressing of financial statements, change in accounting policies of a firm, accounting concepts and conventions and personal judgment, etc. Some of the important limitations of financial analysis are: It is only study of interim reports. Financial analysis is based upon only monetary information and non-monetary It does not consider the changes in price levels. As the financial statements are on the basis of going concern, it does not give

factors are ignored.

the exact position, thus accounting concepts; conventions cause serious limitation to financial analysis. Changes in accounting procedure by a firm may often make financial analysis Analysis means not an end itself. The analyst has to make interpretation and misleading. draw his own conclusions. Different people may interpret the same analysis in different ways.

COMPARITIVE STATEMENTS The comparative financial statements are statements of the financial position at different periods of time. The elements of financial position are shown in a comparative form so as to give an idea of financial position at two or more periods. Any statement prepared in a comparative form will be covered in comparative statements. From practical point of view, generally one financial statement (balance sheet) is prepared in comparative from for financial analysis purpose. Not only comparison of the figures of two periods. But also the relationship between balance sheets enables an in-depth study of financial position and operative results. The comparative statement show: 1. 2. 3. 4. Absolute figures(rupee amounts) Changes in absolute figures i.e., increase or decrease in absolute figures. Absolute data in terms of percentages. Increase or decrease in terms of percentages. The analysts are able to draw conclusions when figures are given in a comparative position. The figures of sales for a quarter, half-year or one year may tell only the present position of sales efforts. When sales figures of previous periods are given along with figures of current periods, then the analyst will be able to study the trends of sales over different periods of time. Similarly, comparative figures will indicate the trend and direction of financial position and operating results. The financial data will be comparative only when some accounting principles are used in preparing these statements. In case of any deviation in the use of the accounting principles. This fact must be mentioned at the foot of the financial statements and the analyst should be careful in using these statements. I.e. comparative balance sheet.

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 changes in periodic balance sheet items reflect the conduct of a business. The changes can be observed by comparison of the balance sheet at the beginning and at the end of period and these changes can help in forming an opinion about the progress of an enterprise. The comparative balance sheet has two columns for the data of original balance sheets. A third column is used to show increases in figures. The fourth column may be added for giving percentages of increases or decreases. COMPARATIVE INCOME STATEMENT The income statement gives the results of the operation of the business. The comparative income statement gives an idea of the progress of a business over a period of time. The changes in absolute data in money values and percentages can be determined to analyze the profitability of the business. Like comparative balance sheet, income statement also has four columns. First two columns give figures of various items for two years .Third and fourth columns are used to show increase or decrease in figures in absolute amounts and percentages respectively.

COMPARATIVE INCOME STATEMENT OF NCCL FOR THE YEARS 2005 AND 2006 YEAR(AS ON 31st MARCH) Figures in million Net Sales 2004-05 Rs 11884.98 2005-06 Rs 18404.40 ABSOLUTE CHANGE CHANGE Rs 6519.42 % 54.85

(-) Cost of Goods Sold Gross Profit (-) Administrative Expenses Operating Profit (-) Non Operating Expenses (+) Non Operating Income - Loss/Profit Before Tax (-) Tax Profit After Tax

10406.91 1478.08 571.00 907.07 255.82 48.80 700.02 127.31 572.71

15803.37 2601.03 960.38 1640.65 398.52 20.25 1262.38 223.34 1039.04

5396.46 1122.96 389.38 733.58 142.7 -28.55 562.36 96.03 466.33

51.85 75.97 68.19 80.87 55.78 -58.50 80.33 75.43 81.42

INTERPRETATION:
1.

The comparative income statement reveals that there has been a modest increase

in the net sales of the company i.e. (54.85 %).when the cost of goods sold has also increased nearly by 51.85 %over the previous year. so the percentage of increase in the net sales, there by resulting in the increase of gross profit 75.97% approximately . 2. The administrative expenses have increased 68.19 % from the financial year

2004-05 to 2005-2006.which do not effect the overall financial position of the company. significantly there has been increasing in the operating profit of the company by nearly 80.87 %.which indicates the company to look into the causes of increase in the cost of goods sold and control is good. 3. The non operating expenses of the firm have been increased by 56%from the

financial year 2004-05 to 2005-2006.which helped the firm to improve profit after tax. 4. There was 75.43%tax for the financial year 2004-05 to 2005-2006.as the firm

incurred net profit. 5. It may be concluded that the overall profitability of the company during the

period from 2004-05 to 2005-2006 was good.

COMPARATIVE BALANCE SHEET OF NCCL FOR THE YEARS 2005 AND 2006

ASSETS (FIGURES IN 2004-05 MILLION) Current Assets Rs Inventories 1523.40 Sundry Debtors 1915.98 Cash and Bank Balances 1372.23 Other Current Assets 21.43 Loans & Advances 628.61 Total Current Assets 7461.65 Fixed Assets 1088.72 Capital-Work-In Progress 9.43 Investments 462.48 Miscellaneous Expenses 33.70 Grand Total 9055.98 LIABILITIES(FIGURES IN 2004-05 MILLION) Share Holder Funds Rs Share Capital 159.00 Reserves & Surplus 3087.38 Share Warrants Employee Stock Option Outstanding 8.47 Sub Total 3254.85 Long-Term funds Secured Loans 648.11 Unsecured Loans 1999.97 Differed Tax Liability 66.45 Sub Total 2714.53 Current Liabilities 2781.17 Provisions 305.43 Sub Total 3086.60 Grand Total 9055.58

2005-06 Rs 3892.59 3016.56 2809.06 38.63 5941.89 15698.73 1849.41 66.64 877.06 21.76 18513.60 2005-06 Rs 206.62 9212.31 31.51 9451..42 1779.27 2849.47 65.91 4694.65 3910.13 457.40 4367.53 18513.60

ABSOLUTE CHANGE Rs 2369.19 1100.58 1436.83 17.2 3313.28 8237.08 760.69 57.21 414.58 -11.94 9457.62 ABSOLUTE CHANGE Rs 47.62 6124.93 23.04 6196.57 1131.16 849.5 -0.54 1980.12 1128.96 151.97 1280.93 9457.62

CHANGE % 155.51 57.44 104.70 80.26 126.04 110.39 69.87 606.68 89.64 -35.43 104.43 CHANGE % 29.94 198.38 272.01 190.37 174.53 42.47 -0.81 72.94 40.59 49.75 41.49 104.43

INTERPRETATION:

1.

The comparative balance sheet for the years 2004-05 to 2005-2006 reveals the

fact that the current assets of the firm increased 110.39 % and the cash has increased by 104.70 %.the current liabilities of the firm have increased by 41.49 %. Which is less than the percentage of increase in the current assets.sothere was an improvement in current financial position of the firm during the period from 2004-05 to 2005-2006. 2. On the other hand, there has been increase in the inventories by 155.51 %.then

the liquidity position of the firm has been stronger. 3. 4. The fixed assets of the firm also increased by 69.87 %. There has been increase in the share capital of the firm by 29.94 %.the reserves

and surpluses of the firm mounted up by the 198.38 % .so this shows the increase in the profitability of the firm. 5. The overall assets of the company were increased by 110.39 % from the financial

year 2004-05 and 2005-2006. 6. The current financial position of the company is good. The short-term loans and

advances of the company have increased by 126.04 % .which reveals that some of working capital has been financed to clear of the long-term debts also. 7. So the overall financial position of the company was years 2005-2006. COMPARATIVE INCOME STATEMENT OF NCCL FOR THE YEARS 2006 AND 2007

YEAR(AS ON 31st MARCH) Figures in million Net Sales

2005-06 Rs 18404.40

2006-07 Rs 28710.52

ABSOLUTE CHANGE CHANGE Rs 10306.12 % 60.00

(-) Cost of Goods Sold Gross Profit (-) Administrative Expenses Operating Profit (-) Non Operating Expenses (+) Non Operating Income - Loss/Profit Before Tax (-) Tax Profit After Tax

15803.37 2601.03 960.38 1640.65 398.52 20.25 1262.38 223.34 1039.04

24572.27 4138.25 1440.70 2697.55 802.89 291.79 2186.45 1029.84 1156.61

8768.9 1537.22 480.32 1056.90 404.17 271.54 924.07 806.50 117.57

55.50 59.10 50.01 64.41 101.39 1340.93 73.20 361.10 11.31

INTERPRETATION:

1. The above income statement reveals that during the period from 2005-06 to 20062007 the net sales of the company recorded a growth of 60%.but the percentage increases in the cost of goods sold was more than the percentage increase in net sales. So the gross profit of the firm is increased by 59.10 %. 2. The hike in the administrative expenses by 50.01 % and the increase of cost of goods sold affected operating profit adversely. The operating profit and net sales is increased during the period from the year 2005-06 to 2006-2007.

3. During the period from 2005-06 to 2006-2007, the non-operating expenses and nonoperating income increased by 101.39 % and 1340.93 % respectively. The tax is increased 361.10 %. 4. The net profit of the company is also increased, as a consequence of increase in the cost of goods sold, increase in the administrative expenses and decrease in other incomes etc. During the period from 2005-06 to 2006-2007.net profit of the firm increased by 11.31 %.

5. It may be concluded that overall profitability of the company during the period from 2005-2007 was satisfactory.

COMPARATIVE BALANCE SHEET OF NCCL FOR THE YEARS 2006 AND 2007

ASSETS (FIGURES IN 2005-06 MILLION) Current Assets RS Inventories 3892.59 Sundry Debtors 3016.56 Cash and Bank Balances 2809.06 Other Current Assets 38.63 Loans & Advances 5941.89 Total Current Assets 15698.73 Fixed Assets 1849.41 Capital-Work-In Progress 66.64 Investments 877.06 Miscellaneous Expenses 21.76 Grand Total 18513.60 LIABILITIES(FIGURES 2005-06 IN MILLION) Share Holder Funds RS Share Capital 206.62 Reserves & Surplus 9212.31 Share Warrants Employee Stock Option Outstanding 31.51 Sub Total 9451..42 Long-Term funds Secured Loans 1779.27 Unsecured Loans 2849.47 Differed Tax Liability 65.91 Sub Total 4694.65 Current Liabilities 3910.13 Provisions 457.40 Sub Total 4367.53 Grand Total 18513.60 INTERPRETATION:

2006-07 RS 4040.54 5816.84 2434.00 92.98 8579.02 20963.38 4043.17 185.68 4767.63 9.90 29969.76 2006-07 RS 417.02 9914.31 54.25 4.76 10390.34 3819.57 7583.56 115.29 11518.42 6816.85 1244.15 8061.00 29969.76

ABSOLUTE CHANGE RS 147.95 2800.28 -375.06 54.35 2637.13 5264.65 2193.76 119.04 3890.57 -11.86 11456.16 ABSOLUTE CHANGE RS 210.40 702.00 54.25 -26.75 938.92 2040.30 4734.09 49.38 6823.77 2906.72 786.75 3693.47 11456.16

CHANGE % 3.80 92.83 -13.35 140.69 44.38 33.53 118.61 178.63 443.59 -54.50 61.87 CHANGE % 101.82 7.62 -84.89 9.93 114.67 166.13 74.92 145.35 74.33 172.00 84.56 61.87

1.

The total current assets, current liabilities of the firm have increased by 33.53 %,

84.56 % respectively during the period 2005-06 to 2006-2007.the current liabilities is higher than the current assets. Over the current liabilities certainly reveals the sound position of the working capital. 2. The sundry debtors of the company have increased by 92.83 %.but the cash and

bank balances and miscellaneous expenses are decreased. 3. 4. A slight increase in the inventory by 3.80 % from the year 2005-06 to2006-2007. Both the fixed assets and the long-term loans of the company have increased by

118.61 % and 145.35 % respectively. There has been increase in the share capital. 5. A slight increase of 7.62 % in the reserves &surpluses of the firm during the

period from the 2005-06 to 2006-2007 was due to deterioration in the net profit of the firm during the period. 6. The total assets and total liabilities of the firm have increased by 61.87 % during

the period from 2005-06 and 2006-2007. 7. The overall financial position of the company was satisfactory.

COMPARATIVE INCOME STATEMENT OF NCCL FOR THE YEARS 2007 AND 2008

YEAR(AS ON 31st MARCH) Figures in million Net Sales

2006-07 Rs 28710.52

2007-08 Rs 34729.38

ABSOLUTE CHANGE CHANGE Rs 6018.86 % 20.96

(-) Cost of Goods Sold Gross Profit (-) Administrative Expenses Operating Profit (-) Non Operating Expenses (+) Non Operating Income - Loss/Profit Before Tax (-) Tax Profit After Tax

24572.27 4138.25 1440.70 2697.55 802.89 291.79 2186.45 1029.84 1156.61

28952.45 5776.93 2179.05 3597.88 1201.50 55.56 2451.94 810.86 1641.08

4380.18 1638.68 738.35 900.33 398.91 -236.23 265.49 -218.98 484.47

17.82 39.59 51.24 33.37 49.70 -80.95 12.14 -21.26 41.88

INTERPRETATION:

1.

The above income statement reveals that the net sales of the company have

increased by 20.96 % during the period from 2006-07 to 2007-2008. It helped the concern to increase its gross profit by 39.59 % from the previous year. As the level of the net sales has increased by 17.82 % from the previous year .which is slightly lower than net sales. 2. The administrative expenses of the company have increased by 51.24 % from the

previous year. The increase in the net sales helped the operating profit to improve by 33.37 % during period from 2006-07 to 2007 -2008.

3.

The non-operating expenses have increased by 39.70 % during the period from

2006-07 to 2007-2008 .where as the non-operating incomes decreased 80.95 %.the tax to be paid has decreased by 21.26 % from the previous year. 4. The profit after tax of the concern has increased by 41.88 %during the period

from 2006-07 to 2007-2008.

5. good.

The overall profitability of the company during the period from 2006-2008 is

COMPARATIVE BALANCE SHEET OF NCCL FOR THE YEARS 2007 AND 2008 ASSETS (FIGURES IN ABSOLUTE 2006-07 2007-08 CHANGE MILLION) CHANGE

Current Assets RS Inventories 4040.54 Sundry Debtors 5816.84 Cash and Bank Balances 2434.00 Other Current Assets 92.98 Loans & Advances 8579.02 Total Current Assets 20963.38 Fixed Assets 4043.17 Capital-Work-In Progress 185.68 Investments 4767.63 Miscellaneous Expenses 9.90 Grand Total 29969.76 IABILITIES(FIGURES IN 2006-07 MILLION) Share Holder Funds RS Share Capital 417.02 Reserves & Surplus 9914.31 Share Warrants 54.25 Employee Stock Option Outstanding 4.76 Sub Total 10390.34 Long-Term funds Secured Loans 3819.57 Unsecured Loans 7583.56 Differed Tax Liability 115.29 Sub Total 11518.42 Current Liabilities 6816.85 Provisions 1244.15 Sub Total 8061.00 Grand Total 29969.76 INTERPRETATION:

RS 5492.74 8677.41 2329.84 60.95 14922.98 31483.92 5196.90 142.59 5648.01 42471.62 2007-08 RS 457.02 15209.18 54.25 2.66 15723.77 7188.27 1750.00 167.07 9105.24 15564.09 2078.22 17642.31 42471.62

RS 1452.20 2860.57 -104.16 -32.03 6343.96 10520.54 1153.73 -43.09 880.38 12501.86 ABSOLUTE CHANGE RS 40.66 5294.87 0 -2.1 5333.43 3368.70 -5833.56 51.78 -2413.18 8747.24 834.07 9581.31 12501.86

% 35.94 49.17 -4.27 -34.44 73.94 50.18 28.53 -23.20 18.46 41.71 CHANGE % 9.75 53.40 0 -44.11 51.33 88.19 -76.92 44.91 -20.95 128.31 67.03 118.86 41.71

1. The total current assets of the firm have increased by 50.18 %during the period 2006-07 to 2007-2008.while the current liabilities have increased by 118.86 %.the

short-term financial position of the firm was satisfactory resection of the fact that, the percentage increase in the current assets. 2. The liquidity position of the firm was stronger as the debtors and cash &bank balances recorded a growth of 49.17 %, 4.27 % respectively. The inventories of the firm have increased 35.94 % during the period from 2006-07 to 2007-2008.

3. During the period from 2006-07 to 2007-2008 ,the fixed assets have scaled by 28.53 %.where as long term funds have increased by 128.31 % .but the share holders funds have increased 51.33 % from the previous year. 4. During the period from 2006-07 to 2007-2008 the capital-work-in progress has decreased by 23.20 % and the investments increased by 18.46 %.

5. The reserves and surplus of the company were increased by 53.40 %from the previous year. So the profitability of the concern was good. 6. The overall financial position of the concern was satisfactory.

COMPARATIVE INCOME STATEMENT OF NCCL FOR THE YEARS 2008 AND 2009

YEAR(AS ON 31st MARCH) Figures in million Net Sales

2007-08 Rs 34729.38

2008-09 Rs 41514.08

ABSOLUTE CHANGE CHANGE Rs 6784.70 % 19.53

(-) Cost of Goods Sold Gross Profit (-) Administrative Expenses Operating Profit (-) Non Operating Expenses (+) Non Operating Income - Loss/Profit Before Tax (-) Tax Profit After Tax INTERPRETATION:

28952.45 5776.93 2179.05 3597.88 1201.50 55.56 2451.94 810.86 1641.08

34971.93 6542.15 2805.44 3736.71 1496.61 41.63 2281.73 743.14 1538.59

6019.48 65.22 626.39 138.83 295.11 -13.93 -170.21 -67.72 -102.49

20.79 13.24 28.74 3.85 24.56 -25.07 -6.94 -8.35 -6.24

1.

The above comparative income statement reveals that during the period from

2007-08 to 2008-2009.The net sales of the company recorded a growth of 19.53 % .but the percentage increase in the cost of goods sold was more than the percentage increase in the netsales.this caused the increase in the gross profit of the firm by 13.24 %. 2. The hike in the administrative expenses by 28.74 %and the increase the cost of

goods sold affected operating profit. The operating profit of the firm is slight increased by 3.85 % during the period from the year 2007-08 to 2008-2009.even though the net sales have increases. 3. During the period from 2007-08 to 2008-2009, the non-operating expenses

increased by 24.56% and the non-operating income decreased by 25.07 %.the tax is also decreased by 8.35 %. 4. The net profit of the company also suffered, as a consequence of increase in the

cost of goods sold, increase in the administrative expenses and decrease in other incomes etc.during the period from 2007-08 to 2008-2009,the net profit of the firm has decreased by 58.90 %. 5. It may be concluded that the overall profitability of the concern during the period

from 2007-2009 was satisfactory.

COMPARATIVE BALANCE SHEET OF NCCL FOR THE YEARS 2008 AND 2009

ASSETS (FIGURES IN 2007-08 MILLION) Current Assets RS Inventories 5492.74 Sundry Debtors 8677.41 Cash and Bank Balances 2329.84 Other Current Assets 60.95 Loans & Advances 14922.98 Total Current Assets 31483.92 Fixed Assets 5196.90 Capital-Work-In Progress 142.59 Investments 5648.01 Miscellaneous Expenses Grand Total 42471.42 LIABILITIES(FIGURES IN 2007-08 MILLION) Share Holder Funds RS Share Capital 457.02 Reserves & Surplus 15209.18 Share Warrants 54.25 Employee Stock Option Outstanding 2.66 Sub Total 15723.77 Long-Term funds Secured Loans 7188.27 Unsecured Loans 1750.00 Differed Tax Liability 167.07 Sub Total 9105.24 Current Liabilities 15564.09 Provisions 2078.22 Sub Total 17642.31 Grand Total 42471.62

2008-09 RS 7495.46 10260.34 1345.05 29.80 14484.05 33614.70 4592.16 281.15 7402.49 45890.50 2008-09 RS 457.70 16397.81 16855.51 8863.83 3575.00 187.84 12626.67 15541.47 866.85 16408.32 45890.50

ABSOLUTE CHANGE RS 2002.72 1582.93 -984.79 -31.15 -438.93 2130.78 -604.74 138.56 1754.48 3419.08 ABSOLUTE CHANGE RS 0.02 1188.63 -54.25 -2.66 1131.74 1675.56 1825.00 20.83 3521.39 -22.68 -1211.37 -1233.99 3419.08

CHANGE % 36.46 18.24 -42.26 -51.10 -2.94 6.76 -11.63 97.17 31.06 8.05 CHANGE % 0.004 7.81 7.19 23.30 104.28 12.47 38.67 -0.14 -58.2 -6.99 8.05

INTERPRETATION:

1.

The total current assets of the firm have increased by 6.76 % during the

period from 2007-08 to 2008-2009 .the current liabilities of the firm have decreased by 6.99 % during the period 2007-08 to 2008-2009. 2. The sundry debtors of the firm have increased 18.24 % .cash and bank

balances decreased 42.26 % during the period from 2007-08 to 2008-2009.the inventories of the firm is also increased 36.46 %.

3.

Fixed assets of the company have decreased by 11.63 % long term funds

of the company is increased 38.67 %. 4. A slight increase of 7.81 % in the reserves and surpluses of the firm

during the period 2007-08 to 2008-2009 was due to the determination in the net profit of the firm during the period.

5.

The total assets and total liabilities of the firm has slightly increase by

8.05 %during the period from 2007-08 to 2008-2009. 6. The overall financial position of the concern was satisfactory.
COMMONSIZE STATEMENTS

Preparation of comparative financial statements and the calculation of trend percentages of ratios, as methods of analyzing financial statements have one common short coming I .e the inability of the analyst to comprehend the changes that have taken place from year to year in relation to the total assets, total liabilities and capital or total net sales. The seriousness of this limitation is brought forth when a comparison is being made of two or more business units or of one unit with statements for an industry as whole, because there is no common base of comparison when dealing with absolute figures. However, in the case of balance sheet, items are shown in the form of percentage, i.e. percentages or ratios of total appropriate item (total assets, total liabilities and capital), a common base for comparison is provided. The statement in this form is designated as common-size statements Therefore common size statements are often called component percentage or 100 percent statements because cash statement is reduced to total of100 and each item is started as a percentage of total of 100.each percentage shows the relation of the individual item to its respective total. COMPUTATION OF COMMON-SIZE STATEMENTS 1. Total assets, total liabilities and capital and total net sales are started as

100percent. 2. The ratio of each statement item to the statement total is found out by dividing

individual money amounts by the total amount in the statement. COMMON-SIZE INCOME STATEMENT

The common-size income statement percentages show the amount or percentages of net sales that has been absorbed by each individual cost or expense item. A comparison of common-size income statement ratios is significant in as much as they show that a large particular or smaller relative amount of net sales figure was used in meeting costs or expenses, though percentages may be influenced by variations in sales prices, higher or lower cost of goods acquired or both. COMMON-SIZE BALACE SHEET The common size balance sheet percentages show the relation of each asset item to total assets and each liability and capital item to total liabilities and capital. As these percentages show the relationship balance sheet totals, variations from year to year do not necessarily indicate changes in money amounts. In fact the balance sheet common size ratios may reflect a change in the individual item, a change in total or a change in total or a change in both.

TREND ANALYSIS

The financial statements may be analyzed by computing the trends of series of information. This method determines the direction upward or downward and involves the computation of percentage relationship that each statement item bears to the same item in the base year. The information for a number of years is taken up to into one year .generally the first year is taken as the base year. The figures of the base year are taken as100 and the trend ratios for the other years are calculated on the basis of the base year. The analyst is able to see the trend of the figures, whether upward or down ward. For example, if sales figures for the year 2005 to 2010 are to be studied, then the sales of 2005 will be taken as 100 and the percentage of sales for all the other years will be calculated in relation to the base year. PROCEDURE FOR CALCULATING TRENDS One year is taken as the base year. Generally, the first or last is taken as base year. The figures of the base year are taken as 100. Trend percentage is calculated in relation to the base year .if a figure in the other years is less than the figure in the base year the trend percentages will be less than 100 and it will be more than the 100 if figure is more than the base year figure. Each years figure is divided by base years figures.

The base period should be care fully selected. The base period should be carefully selected the base period should be a normal period. The price level changes in the subsequent years may reduce the utility of trend ratios. The accounting procedures and conventions used for collecting the data and preparation of financial statements should be similar; otherwise the figures will not be comparable.

TREND PERCENTAGES OF NCCL FOR THE PAST FIVE YEARS (Base Year 2005)

SALES YEAR (AS AMOUNT ON (Rs.million st 31 ) MAR CH) TREND PERCENTA GE

STOCK AMOUNT (Rs.millio n) TREND PERCENTA GE

NET PROFIT AMOUNT (Rs.millio n) TREND PERCENTAGE

200405 200506 200607 200708 200809

11884.98

100

1523.40

100

572.71

100

18404.40

154

3892.59

255

1039.04

181

28710.52

241

4040.54

265

1156.61

201

34729.38

292

5490.74

360

1641.08

286

41514.08

349

7495.46

492

1538.59

268

INTERPRETATION:

1. There is a continuous and steady growth in the net sales of the company for the past five years. 2. The figures of the stock have also increased from 2005 to 2009.the increase in the stock in the year 2009 has more as compared to other years.

3. The figures of the net profit also increased from 2005 to 2009.the increase in the net profit in the year 2008 were more compared to other years. 4. The overall performance of the company was good.

RATIO ANALYSIS

Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements so that the strengths and weaknesses of a firm as well as its historical performance and current financial condition can be determined the term ratio refers to the numerical or qualitative relationship between two items or variables. This relationship can be expressed as fallows. Percentages say net profits are 35 percent pf sales (assuming net profits of rs.25, 000and the sales of rs.1, 00,000). Fraction (net profit is one fourth of net sales). Proportion of numbers (the relationship between net profits and sales is 1:4). The alternative methods of expressing items, which are related to each other. are For purpose of financial analysis, referred to as ratio analysis it should be noted that computing the ratios does not add any other information not already interpret in the above figures of profit and sales. What the ratios do is that they reveal the information in the more meaningful way so as to enable us to draw conclusions from them.

IMPORTANCE OF RATIO ANALYSIS:

As a tool of financial management, ratios are crucial significance. The importance of ratio analysis lies in the fact that it presents on a comparative basis and enables the drawing of inferences regarding the performance of a firm ratio analysis is relevant in assessing in the respect of the fallowing aspects. LIQUIDITY POSITION: suppliers of short term loans. With the help of the ratio analysis, conclusions can be drawn regarding the liquidity of a firm. The liquidity position of a firm would be satisfactory it is able to meet its current obligations when they become due. This ability is reflected in the liquidity ratios of a firm. The liquidity ratios are powerfully useful in the credit analysis by banks and other LONG-TERM SOLVENCY: Ratio analysis is equally useful for assessing the long-term financial viability of a firm. This aspect of a financial position of a borrower is of concern to the long-term creditors. Security analysis and present owners of the business. The long-term solvency is measured by the leverage /capital structure and profitability ratios with focus on earning power and operating efficiency. OPERATING EFFICIENCY: Yet another dimension of the usefulness of the ratio analysis, relevant from the view point of management, is that it throws light on the degree of efficiency in the management and the

utilization of its assets. The various activity ratios measure this kind of operational efficiency .in fact, the solvency of affirm is ,in the ultimate analysis, dependant upon the sales volumes generated by the use of assets total as well as its components. OVERALL PROFITABILITY: Unlike the outside parties, which are interested in one aspect of the financial position of the firm. The management is constantly concerned about the profitability of the enterprise. That is they are concerned about the ability of the firm to meet its short-term as well as long-term obligations to its creditors. To ensure a reasonable returns to its owners and secure optimum utilization of assets of the firm . This is possible if an integrated view is taken and all the ratios are considered together. INTER-FIRM COMPARISION: Ratio analysis is not only throws light on the financial position of a firm but also serves as a long stepping stone to remedial measures. This is made possible due to inter-firm comparison and comparison with industry averages. A single feature of a particular ratio is meaningless unless it is related to some standard or norm. One of the popular techniques is to compare to the ratios of the firm with the industry average. An inter-firm comparison would demonstrate the firms position vis -a- vis its competitors .if the results are at various either with the industry

average or with those of competitors, the firm can seek to identify the probable reasons and, in that light, take remedial measures. LIMITATIONS: Ratio analysis has a number of pitfalls and in many respects. It is equally important to have an idea of these. As it is to know that the mechanistic process of calculating the ratios and deriving the results. 1. Ratios are useful in so far as they give expression to a study of the relative aspect of a problem because ratio is meaningless by it and acquires significance only when it is studied along with the other ratios. Thus the experience of a firm over a period of time may be compared with that of the industry as a whole so that if deviations are detected, they can be investigated. Similarly, a change in the accounting policies by a firm will make inter-firm comparison meaningless. 2. Ratios are as a matter of fact tools of quantitative analysis and it is quite possible that qualitative factors may be override numerical aspects with the consequence that the conclusions from the ratio analysis may get distorted. Thus, despite the fact that credit may be granted to a customer on the basis of the information regarding the financial position of his business as gleaned from certain ratios,

ultimately the grant of credit depends upon the character and the managerial ability of the customer. 3. Another limitation of ratio analysis lies in the illusionary aspects of the accounting data. Which lend an air of precision to the arithmetical results due to the numerical nature of such data. In fact, data are usually estimates regarding the life of assets, proper rate of depreciating assets, provision for doubtful debts etc. hence the analyst should not feel unnecessarily elated with the result of his calculations. 4. In a way ratios are attempt to delve in the past as financial statements, from which they are derived historical documents. On the other hand, in the modern business it is more important to have an idea of probable happening in the future, rather than of those in the Past. From this point of view, ratios will have relevance only if they are able to give a linking of this future. TYPES OF RATIOS Several ratios calculated from the accounting data, can be grouped into various classes according to the financial activity or function to be evaluated. In view of requirements of the various users of ratios, we may classify them into the fallowing categories.

 Liquidity ratios. Leverage ratios. Turnover ratios. Profit margin ratios. Return on investment ratios. Valuation ratios. LIQUIDITY RATIO: The liquidity ratio measures the ability of a firm to meet its short-term obligations and reflect short-term strength or solvency of a firm. The fallowing are liquidity ratios. NET WORKING CAPITAL: Net working capital represents the excess of current assets over current liabilities. The term assets refer to the assets that can be converted into the cash with in very span of time and without diminution in the face value. Current liabilities are those liabilities, which has to be paid in the short period. Net working capital=current assets-current liabilities.

CURRENT RATIO:

It is the ratio of current assets to current liabilities. The current assets constitutes inventories, debtors, loans, advances and cash .where the current liabilities include creditors, advances and provisions. A current ratio of1.5:1desirable for the construction industry. Current ratio=Current assets / Current liabilities QUICK RATIO: It is the ratio of quick assets to quick liabilities. Quick assets include inventories and pre paid expenses as they take more time to convert into cash. To determine the quick liabilities, bank overdraft will be excluded from the current liabilities, as it is renewable. Quick ratio=quick assets/quick liabilities. Quick assets=current assets-current liabilities. Quick liabilities=current liabilities-bank over draft.

TURNOVER RATIO: Turn over ratios is concerned with measuring the efficiency in the asset management. These ratio measures how rapidly assets are converted into cash. These ratios are also expressing the relationship between the amount invested in the assets and the results accruing in terms of sales. INVENTORY TURNOVER RATIO:

It will be calculated by dividing the cost of goods sold to the average inventory. Cost of goods sold=net sales-gross profit. Average inventory=opening inventory + closing inventory/2. Inventory turn over ratio=cost of goods sold /average inventory. This ratio measures how quickly inventory is sold. It is the test of efficiency of inventory management. A high ratio is desirable; a low ratio implies that the stock is converting into cash slow rate. DEBTORS TURN OVER RATIO: It is determined by dividing the net credit sales by average debtors outstanding during the year. In case information on credit sales is not available. Sales can be taking as numerator. D4ebtors turn over ratio= net sales /average debtors. Net sales=gross sales-returns. Average debtors=opening debtors + closing debtors/2. The ratio measures how rapidly the debtors are collected. A high ratio is indicative of shorter time lag between credit sales and cash collection. A low ratio shows that the debts are not being collected rapidly.

WORKING CAPITAL TURNS OVER RATIO:

This ratio is defined as it is cost of goods sold to the working capital. Working capital turn over ratio=cost of goods sold/working capital. Working capital=current assets-current liabilities. Cost of goods sold=net sales-gross profit. A high working capital turnover ratio indicates that efficient utilization of firms funds. However, it should over-trading.

FIXED ASSETS TURNOVER RATIO: It is defined as nets ales to the gross fixed assets. Fixed assets turnover ratio=Net sales / Gross fixed assets (including depreciation).

It is used to highlight the extent of poor utilization of machinery and equipment. A low ratio is indicative of poor utilization of machinery and equipments .a high ratio is preferable. Some times the purchase of asset may not result in higher sales but may cause however in reduction in cost and thereby result in increase in profits.

LEVERAGE OR CAPITAL STRUCTURE RATIOS: Leverage ratios are designed to measure the contribution of the companys owners funds to the capital structure and contribution of outsiders funds to the capital structure. DEBT AND EQUITY RATIO: It reflects the relative claims or creditors and share holders against the assets of the business. Debt usually refers to the long-term liabilities. Equity includes equity and preference capital and reserves. Debt equity ratio = long term liabilities / share holders funds. A debt equity ratio of 2:1 is considered ideal. A firm with debt equity ratio of 2 or less expose it creditors to relatively lesser risks. A firm with high debt equity ratio exposes its creditors to greater risk. PROPRIETARY RATIO: It relates to the owners/ proprietary funds with total assets. The ratio indicates the proportion of total assets by owners. It will be computed by dividing proprietors funds by total assets. Proprietary ratio = net worth / fixed assets.

INTEREST COVERAGE RATIO:

This ratio indicates whether a business is earning sufficient profits to pay the interest charges. It is calculated as Interest coverage ratio = PBIT/Fixed interest charges. PBIT = Profit before Interest and Taxation. Fixed Interest Charges = Interest paid on term loans taken. A ratio around 6 is normally considered ideal. The higher the ratio, the better it is, as it indicates a greater margin of safety to the lenders of long term debt. OVERALL PROFITABILITY RATIOS: RETURN ON CAPITAL EMPLOYED RATIO: This ratio reveals the earning capacity of the capital employed in the business. It is calculated as Profit before interest and taxation / capital employed. Capital employed = equity share capital + preference share capital + reserves + long term loans and debentures - fictitious assets - non operating assets. The return on capital employed is exact measure of the firms ability to generate return for its share holders. ROCE tells us whether an investor is better of f continuing with his investment in the business or should he be looking for the other opportunities .it should be more than the cost of capital employed. The higher the ROCE the better it is.

RETURN ON NEWORTH: It indicates the return, which the share holders are earning on their resources invested in the business. It is calculated as Profit after tax / net worth. Where net worth=equity share capital + preference share capital + reserves fictitious assets. The return on the net worth measures the returns being earned by the investors for the funds invested by them .similarly, it estimates the earnings of investors in long-term debt from the numerator. Only the earnings accruing to equity and preference share holders are taken in the numerator. PROFITABILITY RATIOS: Profitability ratio measures the profitability of a concern. Generally they are calculated either in relation to sales or in relation to investments. GROSS PROFIT RATIO; Gross profit ratio is one of the most commonly used ratios. It reveals the results of trading operation of the business. It indicates the profitability of the core activity of the business. It is calculated as Gross profit / net sales. There is no ideal or standard gross profit ratio. The higher the ratio, the better will be the performance of the business. However, gross profit of the

current year must be compared with previous years to know the change in performance. NETPROFIT RATIO: It indicates the result of overall operation of the firm. While gross profit ratio indicates the extent of profitability of core business.net profit ratio tells us about the overall profitability .it is calculated as Profit after tax / net sales The higher the ratio, the more profitable is the business. However, one must look at the factors contributing to the net profit .for example; a low gross profit ratio coupled with a relatively higher net profit ratio may suggest that the business is earning profits from other income or from non-operating income. OPERARTING RATIO: It expresses the relationship between expenses incurred for running the business and the resultant net sales. It is calculated as Operating cost / net sales Operating cost = cost of goods sold + office and administration expenses + selling and distribution expenses. A low operating ratio is an indication of operating efficiency of the business. Lower the ratio better it is.

EARNING PER SHARE: It is the earnings accruing to the quit share holders on every one share held by them. In other words, earning per share is the net profit after tax and preferences divided that is earned on unit of equity share. It is calculated as Profit after tax preference dividend / number of equity shares The higher the EPS, the better the performance of the company. The EPS is one of the motivating factors in investment analysis and perhaps the most widely calculated ratio among all the ratios used the financial analysis. DIVIDEND PER SHARE: It is the amount of dividend payable to one equity share holder. It is calculated as Equity dividend / number of equity years From the investors point of view, the higher the DPS the happier the investor. However, the company must think of a large number of factors before declining dividend. The factors affecting the dividend policy must be clearly under stood. For example, if the company is embarking on huge extension plan, reducing the amount of dividend can reduce which requires raising additional funds from the market. The extent of additional capital to some extent.

NET WORKING CAPITAL OF THE NAGARJUNA CONSTRUCTIONCOMPANY LIMITED FOR THE YEARS 2005 TO 2009

NET WORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES

YEAR(AS ON 31st MARCH)

CURRENT ASSETS(Rs. million)

CURRENT LIABILITIES(Rs.million)

NET WORKING CAPITAL

2004-05 2005-06 2006-07 2007-08

7461.65 15698.73 20963.38 31483.92 33614.70

3086.60 4367.53 8061.00 17642.31 16408.32

4375.05 11331.20 12902.38 13481.61

40000 35000 30000

2008-09 25000

20000 15000 10000 5000 0 2005 2006 2007 2008 2009

C U R R E N T A S S E T S (R s . 17206.38 m i lli o n ) CURRENT L IA B IL IT IE S ( R s .m i lli o n ) N E T W O R K IN G C A P IT A L

INTERPRETATION: The Net Working Capital of the firm has been increasing considerably, it indicates the firm has been increasing its capacity to meet day-to-day activity and at the same time, increasing its credit worth ness.

CURRENT RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009

CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES

YEAR(AS ON 31st MARCH)

CURRENT CURRENT ASSETS(Rs.million) LIABILITIES(Rs.million)

CURRENT RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

7461.65 15698.73 20963.38 31483.92 33614.70

3086.60 4367.53 8061.00 17642.31 16408.32

2.417 3.590 2.600 1.784 2.084

4 3.5 3 2.5 2 1.5 1 0.5 0 2005 2.417

3.59

2.6 2.084 1.784

2006

2007

2008

2009

INTERPRETATION: A ratio of 1.5:1 is a desirable for the construction industry .the current ratio of the firm was not consistent with industry standards for all the years. It means the firm has been possessing excess funds as idle. Funds which were not put to productive use .but from the financial year 2009 the ratio was near to the standard ratio. It was a good sign for the company.

INTER-FIRM COMPARISION OF CURRENT RATIO

YEAR(AS ON 31St MARCH) CURRENT ASSETS

2008-2009 (Rs.million) NCCL 33614.70 GAMMON 1623.20 IVRCL 38255.20 NCCL 31483.92

2007-2008 (Rs.million) GAMMON 2634.00 IVRCL 28901.90

CURRENT LIABILITIE S

16408.32

290.20

15463.70

17642.31

318.20

9305.60

2.04 CURRENT RATIO

5.59

2.47

1.78

8.27

3.10

9 8 7 6 5 4 3 2 1 0 2009 2008

INTERPRETATION: The Current Ratio of Nagarjuna Construction Company Limited was scaled down and lowers than the current ratios of IVRCL and GAMMON both two financial years. And also near to the industry standards. It is depicting increased performance of the firm in managing the current assets and current liabilities over the other firms.

QUICK RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009 QUICK RATIO = QUICK ASSETS / QUICK LIABILITIES QUICK QSSETS = CURRENT ASSETS INVENTORIES PREPAID EXPENSES QUICK LIABILITIES=CURRENT LIABILITIES-BANK OVER DRAFT

YEAR(AS ON 31st MARCH)

QUICK QUICK QUICK ASSETS(Rs.million) LIABILITIES(Rs.million) RQTIO

2004-05 2005-06 2006-07 2007-08 2008-09

5905.74 12077.85 16862.42 25907.24 26041.18

3086.60 4367.53 8061.00 17642.31 16408.32

1.91 2.76 2.09 1.46 1.58

3 2 .5 2 1 .5 1 0 .5 0 2005 1.91

2.76

2.09 1 .5 8

1 .4 6

2006

2007

2008

2009

INTERPRETATION: A Quick Ratio of 1:1 is considered ideal the quick ratio of the firm was not satisfactory over a period of time except for the year 2008.where it is near to the standard ratio. During the year 2006, the quick ratio was very high and above the standard ratio, which is not advisable as the funds have been more productively employed.

INVENTORY TURN OVER RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009 INVENTORY TURN OVER RATIO = COST OF GOODS SOLD / AVERAGE INVENTORY COST OF GOODS SOLD = NET SALES GROSS PROFIT AVERAGE INVENTORY=OPENING INVENTORY + CLOSING INVENTORY/2

YEAR(AS ON 31st MARCH)

COST OF AVERAGE GOODS INVENTORY(Rs.million) SOLD(Rs.million)

INVENTORY TURNOVER RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

10406.86 15803.37 24572.27 28952.45 34971.93

1271.22 2707.99 3966.56 4766.64 6494.10

8.18 5.83 6.19 6.07 5.38

9 8 7 6 5 4 3 2 1 0

8 .1 8

5 .8 3

6 .1 9

6 .0 7 5 .3 8

2005

2006

2007

2008

2009

INTERPRETATION: The Inventory Turn over Ratio of the firm has been not steadily. The ratio not recorded a high growth in the year 2005 as compared to the other years. The ratio recorded a lowest growth in the year 2009.

DEBTORS TURN OVER RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009

DEBTORS TURN OVER RATIO = NET SALES / AVERAGE DEBTORS AVERAGE DEBTORS = OPENING DEBTORS + CLOSING DEBTORS / 2 YEAR(AS ON 31st MARCH) AVERAGE DEBTOR NET AVERAGE COLLECTION TURN SALES(Rs.million) DEBTORS(Rs.million) PERIOD(DAYS OVER ) RATIO

2004-05 2005-06 2006-07

10 9 2007-08 8 7 2008-09 6 5 4 3 2 1 0 2005 8.61

11884.98 18404.40 28710.52 34729.38

7.46

1379.61 2466.27 4416.70 7247.12

6.5

42 49 56 76 83
4.79 4.38

8.61 7.46 6.50 4.79 4.38

41514.08

9468.87

2006

2007

2008

2009

INTERPRETATION: There was considerable decline in the ratio from 2005 to 2009.due to substantial growth in the net sales of the company, the year 2005 recorded high debtor turn over ratio compare to other years.

WORKING CAPITAL TURN OVER RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009

WORKING CAPITAL TURN OVER RATIO = COST OF GOODS SOLD / WORKING CAPITAL COST OF GOODS SOLD = NET SALES GROSS PROFIT WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES WORKING CAPITAL TURN OVER RATIO

YEAR(AS ON 31st MARCH)

COST OF WORKING GOODS CAPITAL(Rs.million) SOLD(Rs.million)

2004-05 2005-06 2006-07 2007-08 2008-09

10406.86 15803.37 24572.27 28952.45 34971.93

4375.05 11331.20 12902.38 13481.61 17206.38

2.55 1.51 1.90 2.09 2.03

3 2.55 2.5 2.09 2 1.5 1 0.5 0 2005 2006 2007 2008 2009 1.51 1.9 2.03

INTERPRETATION: The Working Capital Turn Over Ratio of the firm was satisfactory over a period of time. it has been increasing continuously from the year 2007.the year 2005 recorded high working capital turn over ratio as compared to others. It means the firm has been utilizing its funds efficiently.

FIXED ASSETS TURN OVER RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009 FIXED ASSETS TURN OVER RATIO = NET SALES / GROSS FIXED ASSETS GROSS FIXED ASSETS = NET FIXED ASSETS + DEPRECIATION

YEAR(AS ON 31st MARCH)

FIXED ASSETS NET GROSS FIXED TURN OVER SALES(Rs.million) ASSETS(Rs.million) RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

11884.98 18404.40 28710.52 34729.38 41514.08

1665.06 2569.40 5006.67 6620.37 6232.78

7.13 7.16 5.73 5.24 6.66

8 7 6 5 4 3 2 1 0

7.13

7.16 6.66 5.73 5.24

2005

2006

2007

2008

2009

INTERPRETATION: If we compare the Fixed Assets Turn Over Ratio it was satisfactory .it means the fixed assets were being utilized efficiently. In the financial years 2005-2008.it was slowly decreases. In 2009 it is increased.

DEBT TO EQUITY RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009

DEBT TO EQUITY RATIO = LONG TERM LIABILITIES / SHARE HOLDER FUNDS SHARE HOLDERS FUNDS = EQUITY CAPITAL + PREFERENCE CAPITAL + RESERVES FICTIOUS ASSETS LONG TERM LIABILITIES = LONG TERM LOANS + DEBENTURES

YEAR(AS ON 31st MARCH)

LONG-TERM SHARE HOLDERS DEBT(Rs.million) EQUITY(Rs.million)

DEBT TO EQUITY RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

331.55 641.91 1536.71 1672.21 2312.28

3221.16 9429.66 10380.44 15723.77 16855.51

0.10 0.06 0.14 0.10 0.13

0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 2005 2006 2007 2008 2009 0.06 0.1 0.1 0.14 0.13

INTERPRETATION: There was a considerable decline in the debt-equity ratio of the firm from the financial year 2005-2009.as the proportion of long-term debt came down significantly in the capital structure of the firm. This determination makes good for the owners or share holders of the company. The ratio was declining over a period of time it was good sign for the company.

PROPRIETARY RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009 PROPRIETARY RATIO = NET WORTH / FIXED ASSETS NET WORTH = EQUITY CAPITQL + PREFERENCE CAPITAL +RESERVES FICTIOUS ASSETS

YEAR(AS ON 31st MARCH)

NET FIXED PROPRIETARY WORTH(Rs.million) ASSETS(Rs.million) RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

.

3221.16 9429.66 10380.44 15723.77 16855.51

1088.72 1849.41 4043.17 5196.90 4592.16

2.68 5.09 2.56 3.02 3.67

6 5.09 5

4 3.02 2.68 2.56

3.67

0 2005 2006 2007 2008 2009

INTERPRETATION: The higher the ratio the better it is from the view point of share holders and promoters. The proprietary ratio of the firm has recorded a high rate of growth from the year 2005-2006.it implies that the claim of the share holders has increased over the fixed assets of the firm. It has also reduced the debt burden for the company.

INTEREST COVERAGE RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009 INTEREST COVERAGE RATIO = PBIT / FIXED INTEREST CHARGES PBIT = PROFIT BEFORE DEPRECIATION AND TAX FIXED INTEREST CHARGES = INTEREST ON LONG-TERM LOANS

YEAR(AS PROFIT BEFOR FIXED INTEREST st ON 31 INTEREST&TAX(Rs.million) CHARGES(Rs.million) MARCH)

INTEREST COVERAG E RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

846.95 1479.33 2690.39 3171.38 3245.32

34.07 39.02 194.72 409.50 525.06

24.85 37.90 13.81 7.74 6.18

40 35 30 25 20 15 10 5 0 2005 24.85

37.9

13.81 7.74

6.18

2006

2007

2008

2009

INTERPRETATION: After studying the above ratio, it was evident that the company was in a better in the year 2006 to pay the interest charges. In the year 2009 the company was in a bad situation to pay the interest to the long-term lenders. As the interest charges very high.

ROCE RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009 RETURN ON CAPITAL EMPLOYED = PBIT / CAPITAL EMPLOYED CAPITAL EMPLOYED = EQUITY SHARE CAPITAL + PREFERENCE SHARE CAPITAL + RESERVES + LONG TERM LOANS AND DEBENTURES FICTITIOUS ASSETS NON OPERATING ASSETS :

YEAR(AS PROFIT BEFORE CAPITAL ROCE st ON 31 INTEREST&TAX(Rs.million) EMPLOYED(Rs.million) RATIO MARCH)

2004-05 2005-06 2006-07 2007-08 2008-09

846.95 1479.33 2690.39 3171.38 3245.32

5935.69 14124.31 21898.86 24829.11 29482.18

14 % 10 % 12 % 13 % 11%

0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 2005 2006 2007 2008 2009 10% 14% 12% 13% 11%

INTERPRETATION:

The Ratio reveals the overall profitability of the firm. If we examine the above table , we can conclude that returns on the capital employed were satisfactory for all the years and are according to industry standards.

RETURN ON NET WORTH OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009 RETURN ON NET WORTH = PROFIT AFTER TAX / NET WORTH NET WORTH = EQUITY SHARE CAPITAL +PREFERENCE SHARE CAPITAL + RESERVES FICTITIOUS ASSETS

YEAR(AS ON 31st MARCH)

PROFIT AFTER NET TAX(Rs.million) WORTH(Rs.million)

RETURN ON NET WORTH

2004-05 2005-06 2006-07 2007-08 2008-09

572.71 1039.04 1156.61 1641.08 1538.59

3221.16 9429.66 10380.44 15723.77 16855.51

18 % 11 % 11 % 10 % 9%

0.2 0.18 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0

18%

11%

11%

10%

9%

INTERPRETATION:
2005 2006 2007 2008 2009

INTERPRETATION: There was decreasing in return on the net worth from the financial years 2005-2009.the overall return on net worth ratio is good.

GROSS PROFIT RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009 GROSS PROFIT RATIO = GROSS PROFIT / NET SALES GROSS PROFIT = NET SALES COST OF GOODS SOLD NET SALES = GROSS SALES - RETURNS

YEAR(AS ON 31st MARCH)

GROSS NET PROFIT(Rs.million) SALES(Rs.million)

GROSS PROFIT RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

1478.12 2601.03 4138.25 5776.93 6542.15

11884.98 18404.40 28710.52 34729.38 41514.08

0.12 0.14 0.14 0.16 0.15

0.18 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 2005 2006 2007 2008 2009 0.12 0.14 0.14 0.16 0.15

INTERPRETATION:

The Gross Profit Ratio of the company has been steadily over a period of time. But the company has earning sufficient gross profit to meet its administrative and non-operating expenses.

NET PROFIT RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009 NET PROFIT RATIO = PROFIT AFTER TAX / NET SALES NET SALES = GROSS SALES - RETURNS

YEAR(AS ON 31st MARCH)

PROFIT AFTER NET TAX(Rs.million) SALES(Rs.million)

NET PROFIT RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

572.71 1039.04 1156.61 1641.08 1538.59

11884.98 18404.40 28710.52 34729.38 41514.08

0.04 0.05 0.04 0.04 0.03

0.06 0.05 0.04 0.03 0.02 0.01 0 2005 2006 2007 2008 2009 0.04 0.05 0.04 0.04 0.03

INTERPRETATION: The Net Profit Ratio of the firm was good from the financial years 2005-2009.the net profit ratio of the firm was relatively less than that of the gross profit of the ratio over a period of time, it means the company has been concentrating on the core business.

OPERATING RATIO OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009 OPERATING RATIO = OPERATING COST / NET SALES NET SALES = GROSS SALES - RETURNS

YEAR(AS ON 31st MARCH)

OPERATING NET COST(Rs.million) SALES(Rs.million)

OPERATING RATIO

2004-05 2005-06 2006-07 2007-08 2008-09

10621.11 16290.35 25169.26 29729.78 35891.43

11884.98 18404.40 28710.52 34729.38 41514.08

0.89 0.88 0.87 0.85 0.86

0.9 0.89 0.88 0.87 0.86 0.85 0.84 0.83 2005 2006 2007 2008 2009 0.85 0.89 0.88 0.87 0.86

INTERPRETATION:

The Operating Ratio of the firm has been satisfactory of the financial years 2005-2009.the financial year 2007-2008 recorded the lowest operating ratio compared to the other financial years.

EARNINGS PER SHARE OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009

EARNINGS PER SHARE = PROFIT AFTER TAX / NUMBER OF EQUITY SHARES

YEAR

EARNING PER SHARE(Rs)

2004-05 2005-06 2006-07 2007-08 2008-09

4.58 12.08 5.54 7.51 6.72

14 12 10 8 6 4 2 0 2005 2006 2007 2008 2009 5.54 4.58 7.51 6.72 12.08

INTERPRETATION: The Earnings per Share were satisfactory according to the industry standards for all the years. It is high earning per share in the year 2006.

DIVIDEND PER SHARE OF THE NAGARJUNA CONSTRUCTION COMPANY LIMITED FOR THE YEARS 2005 TO 2009

DIVIDEND PER SHARE = DIVIDEND ON EQUITY CAPITAL EMPLOYED / NUMBER OF EQUITY SHARES

YEAR 2004-05 2005-06 2006-07 2007-08 2008-09

DIVIDEND PER SHARE 60 % 80 % 40 % 65 % 55 %

0 .9 0 .8 0 .7 0 .6 0 .5 0 .4 0 .3 0 .2 0 .1 0 2005 60%

80% 65% 55% 40%

2006

2007

2008

2009

INTERPRETATION: The company distributed 80 % of the profits to the share holders in the year 2006.every year the company has been distributing much dividends to the share holders.

CHAPTER-V

FINDINGS
1. The Net Sales of the company have increased year by year. 2. The firm has been earning sufficient Gross Profit every year to meet

the operating and non-operating expenses. 3. The short term solvency position of the firm has become stronger.
4. The time log required for conversion of inventory into cash has been

decreasing over a period of time.

5. It is evident from the Fixed Assets turn over ratio of the firm that the

performance of the Fixed Assets of the firm was good in the financial year 2005-2006 compared to the other years.
6. The Rate of Returns to the share holder of firm where satisfactory

over a period of time.

7. It is evident from the common size income statement that the

percentage of the total expenses to the net sales was satisfied compared to its competitors IVRCL Infrastructure Projects Ltd and GAMMON INDIA Ltd.
8. The short-term solvency position of the firm was stronger than the

IVRCL and GAMMON over a period of time.

9. The Net Worth of the firm decreasing from the financial year 2005-

2009.
10. The firm Operating Cost is increased year by year. 11. The Earning per Share was satisfactory according to the industry

standards.
12. The company has distributed 80 % of the profits to the share holders

in the year 2006.

13. The overall performance of the company was satisfactory during the

period from 2004-2005 to 2008-2009.

SUGGESTIONS

1. The short term solvency position of the firm should be improved further. 2. The time period given to the debtors of the firm for repaying debts should be reduced to ensure prompt and quick payment. 3. The firm should manage its costs to enhance to the percentage of Net Profit to Net Sales. 4. The firm should increase its expenditure towards employees .so that they get motivated.

BIBLIOGRAPHY
1. FINANCIAL MANAGEMENT 2. MANAGEMENT ACCOUNTANCY 3. MANAGEMENT ACCOUNTANCY 4. FINANCIAL MANAGEMENT 5. BALANCE SHEETS 6. WEB SITES KHAN &JAIN SHARMA&GUPTA GOEL&MOHAN I.M.PANDEY NCCL INTERNET