SUMMER TRAINING PROJECT REPORT

A STUDY OF FINANCIAL PERFORMANCE

AT
S.E.C.L
UNDER THE GUIDANCE OF: PRESENTED BY –
Mrs. Anindita Sen Manoj Kumar Yadav
ROLL NO - 5023609044
 OBJECTIVES
• To study the financial statement
analysis needs and implications for
the S.E.C.L
• To critically analyze the financial
performance of S.E.C.L with the help
of ratios.
• To analyze the profitability
and solvency of the company
for the past 3 years.
• To evaluate the financial
statements of the past 3 years
 COAL INDIA LIMITED
• E.C.L. (1975) • W.C.L.(1975)
• B.C.C.L.(1973) •  S.E.C.L.(1986)
• C.C.L. (1975) • M.C.L.(1992)
• N.C.L. (1986) • C.M.P.D.I.L.(1975)
 
 S.E.C.L: A Profile
• The largest coal producing
company in the country.
• It is one of the eight subsidiaries
of CIL (A Govt. undertaking
under Ministry of Coal).
 South Eastern Coal fields Ltd.: A Profile
• SECL, Coal India’s premier coal
company is operating its coal mines
in the state of Madhya Pradesh and
Chhattisgarh state which is also
geographically located at the heart
of the country.
 S.E.C.L: A Profile
• The SECL family consists of 87590
employees as on 31st March 2005 who
are predominantly locals.
• SECL operates through 90 mines spread
over eight districts (three of Madhya
Pradesh and five of Chhatisgarh).
 Data Analysis
and
Interpretation
 Common Size Statement Analysis
Common size statements are particularly useful when
comparing data from different companies and also

to compare performance of a company over the

adjacent years.
 Key financial changes and trends can be highlighted
by the use of common size statements.
 Common Size Balance Sheet of
Liabilities 2007
S.E.C.L.
2008 2009 2010
Share Capital 3.75 3.23 2.94 2.62

Reserves &Surplus 38.79 36.78 36 36.64

Secured Loan 0.26 0.15 0.10 0.03

Unsecured Loans 3.65 2.88 3.11 2.26

Current Liabilities 33.65 38.20 46.21 46.61

Provisions 18.90 18.76 11.64 11.85

Total 100 100 100 100

 Common Size Balance Sheet of S.E.C.L.
Assets 2007 2008 2009 2010
Net Block 17.99 19.39 20.22 20.51
Capital WIP 3.23 3.25 4.43 5.11
Surveyed off Assets - - - 0.09
Investments 11.56 8.85 7.04 5.37
Deferred Tax Assets 3.34 2.67 0.47 0.59
Int. Accrued on
0.52 0.40 0.32 0.25
Investments
Inventories 5.30 4.65 4.04 4.69
Sundry Debtors 2.7 2.48 1.62 1.54
Cash and Bank 33.49 35.86 44.53 50.87
Loans and Advances 21.87 22.45 17.25 10.98
Total 100 100 100 100
Common Size Income Expense Statement of
S.E.C.L.
INCOME 2007 2008 2009 2010
Net Sales 90.16 89.19 89.63 89.37
Coal Issued for Other
0.59 0.69 0.59 0.55
Purposes
Accretion/Dectetion in stock 0.32 0.11 -0.27 1.30
Other Income 8.92 10.07 10.05 8.78
Total 100 100 100 100
 Common Size Income Expense Statement of
Purchase
S.E.C.L.
Expenditure (Direct) 2007
0.02
2008
0.02
2009
0.02
2010
0.01
Internal Consumption of Coal 0.8 0.61 0.59 0.54
Employees Remuneration & Benefits 28.63 30.41 39.37 31.05
Consumption of Stores & Spares 12.11 11.54 11.24 10.48
Power & Fuel 5.53 4.59 3.80 3.50
Repairs 1.71 1.50 1.33 1.28
Contractual Expenditure 6.68 7.08 7.70 8.47
Gross Profit 42.52 44.25 35.95 44.67
Expenditure ( Indirect)
Social Overheads 5.02 4.80 4.88 4.44
Other Expenditure 4.42 4.47 4.34 3.09
Interest 0.30 0.18 0.15 0.14
Financial Charges 0.01 0.01 0.01 0.01
Depreciation 3.1 4.45 3.54 2.31
Impairment loss on Fixed Assets 0.05 0.01 0.02 0.02
O.B.R. Adjustment 6.5 4.68 3.50 3.02
Write-Offs 0.01 0.01 0.01 0.01
Provisions (Net) 0.56 -0.09 0.26 0.17
Prior Period Expenses -0.56 0.09 0.05 0.35
Net Profit Before Tax 25.34 25.67 19.20 29.21
Provision for Current Tax 10.35 8.43 6.84 8.74
Provision for FBT 0.08 0.01 0.09 -
Provision for Deferred Tax -2.73 0.28 2.54 -.23
Income Tax For Early Years - - -1.09 0.54
Excess Provision for FBT write off - - 0.06 -0.02
Net Profit After Tax 17.63 16.86 10.89 20.20
Total 100 100 100 100
 Interpretation
 Contribution of R&S is constantly decreasing
during the last 4 years
 Significant increase in creditors
 Decrease in Provision shows the proper utilization
of provisions.
 Company had paid up most of its Secured loans,
hence less dependent on outside funds which is
on of the reasons of constant decrease in R&S.
 Interpretation
 Continuous increase in FA
 Continuous increase in Cash result
from pulling back of the Investment
 Sales or almost constant
 Decrease in Internal Consumption of
Coal
 Interpretation
 Employee remuneration in
2009 is very high.
 Financial Statement Trend Analysis
 Trend Analysis is facilitated by showing changes
between years.
 Can be stated as indexing the statements for a
base year or stated as the % of change over the
years.
 Helps the analyst to gain perspective and to gain
a feel for the significance of the changes that are
taking place
 Trend Analysis
Base Year 2007
Liabilities 2007 2008 2009 2010
Share Capital 100 100 100 100
Reserves &Surplus 100 110.19 118.45 135.41
Secured Loan 100 65.64 50.38 15.03
Unsecured Loans 100 91.61 108.34 88.76
Current Liabilities 100 128.09 170.20 192.83
Provisions 100 115.33 78.63 89.85
Total 100 116.20 127.62 143.35
 Trend Analysis
Base Year 2007
INCOME 2007 2008 2009 2010
Net Sales 100 113.57 134.18 148.20
Coal Issued for Other 100 119.52 135.92 138.76
Purposes
Accretion/Deccretion in 100 42.11 (13.27) 604.80
stock
Other Income 100 129.65 151.92 147.20
Total 100 114.81 134.98 149.53
 Expenditure (Direct) 2007 2008 2009 2010
Purchase 100 87.86 135.35 78.52
Internal Consumption of Coal 100 120.96 136.66 139.61
Employees Remuneration & Benefits 100 121.92 185.60 162.70
Consumption of Stores & Spares 100 109.46 125.31 129.47
Power & Fuel 100 95.06 92.74 94.70
Repairs 100 100.66 105.11 111.65
Contractual Expenditure 100 121.75 155.11 189.62
Gross Profit 100 113.58 108.47 149.26

Expenditure ( Indirect)
Social Overheads 100 109.73 131.32 132.17
Other Expenditure 100 116.05 132.66 169.16
Interest 100 69.66 66.12 67.91
Financial Charges 100 53.19 32.30 135.34
Depreciation 100 164.62 153.90 111.48
Impairment loss on Fixed Assets 100 (11.80) 21.30 47.67
O.B.R. Adjustment 100 83.23 73.29 69.86
Write-Offs 100 18.41 84.36 67.58
Provisions (Net) 100 (18.28) 64.66 46.78
Prior Period Expenses 100 544 522 834
Net Profit before tax 100 116.29 102.25 172.22

Provision for Current Tax 100 93.53 89.12 126.00

Provision for FBT 100 105.25 139.17 -
Provision for Deferred Tax 100 214 431 116.11
Income Tax For Early Years 100 - - -
Excess Provision for FBT write off 100 - - -
Net Profit after tax 100 118.90 116.88 154.32
 Brief overview of Income Statement
EXPENDITURE 2007-08 2008-09 200-10 INCOME 2007-08 2008-09 2009-10

7181.59
Operating Expense 4487.98 Net SALES

Gross Profit

Non Operating Expense Other Incomes 870.34

NPBT

Tax Provision

NPAT
8051.94
 Interpretation
 35 % Increase in Reserves.
 85% Secured Loans Paid Up.
 Current Liabilities Doubled.
 CWI increases by 126% .
 Heavy decrement of stock in 2009.
 Interpretation
 Debtors Showing Favorable Trend
 Cash and Bank Doubled up
 Increasing Trend in Income
though there is a Decrement of in 2009.
 Interpretation
Employee Expenditure in 2009
shows the extra expenses for
deployment of employee in
Newly started Projects.
 Interpretation
Gross Profit, NPBT, NPAT all are
showing a slight depression in the
2009 and shows heavy recovery in
the Next Year.
Ratio Analysis
  Current Ratio:

[Current Ratio = Current Assets / Current Liabilities]

Or
[Current Assets : Current Liabilities]
 Despite the
Current Ratio
A
being less than 2
the company’s
liquidity position
is sound.
 Liquidity Ratio / Acid Test Ratio:
[Liquid Ratio = Liquid Assets / Current
Liabilities]
Liquid Ratio of 1:1
is considered
satisfactorily
 Debt to Equity Ratio:
 [Debt Equity Ratio = External Equities / Internal
Equities]
Or
[Outsiders funds / Shareholders funds]
As a long term financial ratio it may be calculated as
follows:
[Total Long Term Debts / Total Long Term Funds]
Or
The company’s Ratio
of 0.06 indicates a
moderate level of debt
in the company.
Reduction of Debt –
Equity Ratio shows
that the company has
liquidated its debt in
time
Proprietary/Equity Ratio:
Proprietary or Equity Ratio
=
Shareholders funds / Total Assets
Creditors loan is
safe because
Proprietary Ratio is
0.39 as against the
satisfactory ratio of
0.5 times.
Reduction of Debt Ratio from
0.07 in 09-10 to 0.05 in 09-10
shows that the company is
continuously relying on own
funds.
For every rupee of owner’s
contribution. Re 0.81 is contributed
together by lenders and owners.
This reflects that the company is not
dependent on borrowed capital.
 This ratio shows the efficiency of capital
employed in the business by computing
how many times capital employed is
turned over in a stated period

The Company is using is capital efficiently

The Higher Gross Profit Ratio indicates efficient
utilization of production capacity
The Higher NP Ratio indicates the Company has Lower
Non Operating Expenses and High Sales Efficiency
RoI is Quite high which indicates good
Financial Performance of the Company

For every 1Rs. Investment The company

is generating Avg. 50p.
 Findings
 SECL is showing a constant growth from past two years as
far as sales are concerned.
 Profit before tax is growing continuously, which is
showing sound financial position of the company
Growing production indicate that demand is increasing
and consumption of coal is also increasing
 Major portion is from equity share capital and free
reserves
 Unpaid Unsecured Loans comprises of Mostly Loans from
the Holding Company
 LIMITATIONS
• Time has been a limiting
  factor and it has
been difficult to analyze the various aspects
of finance with the prescribed time.
• Financial statements are only in terms of
reports. They are not final because the
exact finanacial position can be known only
when the business is closed.
 LIMITATIONS
• Financial statements are
  prepared on the basis
of certain accounting concepts and conventions.
Any changes in the method or procedure of
accounting limits the utility of financial
statements.
• The authenticity of the financial statements has
not been checked with the book of accounts of
the company.
 Recommendations
 S.E.C.L should concentrate to pay off its short term
debt by more flexible payment policies.
 Large Amount of Funds are stuck in the form of Cash
and Bank Balances it should be invested some place more
profitable
 S.E.C.L. has been concentrated in payment of Secured
Loans but left out loans form the Holding company it
should be paid of as well.
 Conclusion
As SECL enters a new fiscal year, we believe the company is
ideally positioned to drive strong growth in 2010 and
beyond. Despite certain shortcomings in the final
quarter of 2009, SECL displays strong momentum.
Given the company’s objective to continually meet
customer needs, we fell that South Eastern Coalfields
Limited will continue be a successful company and an
attractive investment for potential investors and for
existing shareholders