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INDUSTRY PROFILE

The word confectionery is derived from Latin word


CONNECTION which means preparation and this is derived from
CONFICERE which means to make up
! CONFECTIONER" is of two types#
$ !u%ar Confectionery
& F'avor Confectionery
1. Sugar Confectionery: -
!u%ar confectionery means sweets( in which su%ar is the
main in%redient Either they consist in very CRI!T)L from dispersed in
a su%ar so'ution and *avor( such as choco'ate creams or fondants or
there may su%ar maintained in a so'ution of carefu' +'end of the
di,erent types as su%ar +oi'ed sweets( to,ees or carame's Fats( nuts
are emp'oyed to o+tain a variety of *avors and te-tures +efore the $.
th
century( sweets( candies were the monopo'y of the apothecaries who
made them to hide the taste of the dru%s
. F!a"or Confectionery: -
F'avor confectionery consists of pastries and fancy cakes
havin% *avored as their +asis sweetened and mi-es with various dairy
products such as +utter and e%%s
C#OCOL$TES:-
Choco'ates are derived from COCO) /E)N seed of tree
T0EO/RO1)( ori%ina''y wi'd in Centra' )merica and is now cu'tivated
in
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Tropica'+e't Cocoa powder contains cocoa +utter added to
compensate for increased +u'k( due to inc'usion of su%ar Eatin%
choco'ates can +e divided two types#
1o'ded Confectionery
Covertures Confectionery
Covertures for coverin% fruits( nuts( +iscuits( preserves
and other center needs hi%h proportion of +utter than choco'ate for
mo'din% into +'ocks
The manufacture of su%ar coated nuts etc( known as
2R)3EE! is said to have +een introduced +y a Roman( 45LI5!
2R)3)T5! /on+ons were 6rst made in the $7
th
century( 8asti''es in
the $9
th
century The %reat present day vo'ume of manufacture is due
to introduction of automatic and semi automatic machines( a+out the
midd'e of the century
CONFECTIONERY INDUSTRY IN INDI$
The industry may +e +road'y c'assi6ed into sectors vi:(
Or%ani:ed sector and unor%ani:ed sector There are sis main forms
producin% confectionery in or%ani:ed sector They are as fo''ows#
$ Nutrine Confectionery Co ;8< Ltd(
& 8arry Confectionery
7 Cad+ury=s
> 8ar'e
9 Nationa' 8roduct
? Rava'%on
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Each company is having its own specialization in their
respective felds. Nutrine Confectionery Co. Ltd., is the single largest
and an organized sector in manufacturing confection and chocolates
in India. Nutrine is ob the shopping list of almost multinational
confectionery marets.
!or confectionery products re"uires lot of #servicing$, in
the distribution networ and it should be made available at the
retailer counter, confectionery is bought on impulse and therefore
e%icient distribution holds ey to success in this investment.
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CO%P$NY PROFILE
Nutrine Confectionery Company 8rivate Limited ;NCC8L<
was founded in $.9& +y / @enkatrama Reddy( a %raduate from the
Nationa' 5niversity durin% the Chance''or ship of !ri Ravindranath
Ta%ore a No+'e Laureate Late !ri /@enkatrama Reddy( popu'ar'y
known as /@Reddy( had foresi%ht a+out the needs and demands of
confectionary in India and ventured to setup a factory when 8)RR"
confectionery was the market 'eader and 8arry=s *a% was *yin% hi%h
NCC8L has a'ways +e'ieved in hi%h 'eve's of Conservatism
The company was set up as a sma'' unit with a capita' of Rs 9 Lakhs to
manufacture various types of candies )fter the demise of !ri
/@Reddy in $.?>( the +usiness was taken over +y his son !ri @
2waraknath Reddy ho'ds a master de%ree in Chemica' en%ineerin%
from Louisiana 5niversity( 5!) /efore takin% over the reins of the
company( he %ained considera+'e e-perience in the 6e'd of
confectionery production when he worked for certain confectionery
units in 5!) he a'so had a short stint at addisons under the
'eadership of !ri )nantharama Arishnan Neverthe'ess e-pertise %ained
+y him in the 6e'd of confectionery manufacture at Nutrine +etween
$.9? and $.B.( has he'ped to %uide the company to its present
position of market 'eader
)t present( 1r @ @ikram Reddy( nephew of !ri @
2warakanath Reddy( 'ooks after the day to day mana%ement of the
company 1r @ikram Reddy ho'ds a post%raduate de%ree in
mana%ement from 5!) 0e has +een %roomed under 1r
2warakanath Reddy ho'ds since $.CC and present'y the
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1ana%in% 2irector of the company 1r @ikram Reddy has the admira+'e
support of other directors( 1r @1adhusudhan Reddy and 1r@ 2inesh
Reddy
1rA!ivamohan Reddy( E-ecutive 2irector( is in char%e of
operations and a'' the departments other than 6nance under his
contro'
The 6nance department is 'ead +y 1r!@asudevan( a
chartered accountant( who is with the company since &9 years 0e has
Dointed the company as mana%ement trainee and his risen to the
position of E-ecutive @ice president 0e has the support of a %ood
team of professiona's and senior e-ecutives who are the company
since three decades
The 1r !heads the marketin% team 3opa'akrishnan @8
;sa'es< and a+'y supported +y )rea !a'es 1ana%ers( Eona' !a'es
1ana%ers and others
!enior @iceFpresident ;production<( 1r
0)nanthapadmana+han( a %raduate in Chemistry( posses 'on%
e-perience in the production mana%ement and senior @iceFpresident
;Research and 8roducts<( 1r 3 Lakshminarayanan a%ain a Chemistry
%raduate with a 'ot of e-posure in the su%ar industry( has +een
specia'i:in% in deve'opment of various products for Nutrine today
1r!RRaDu( a 83 2ip'oma ho'der in 1ateria's
1ana%ement( is in char%e of materia's department and 1r
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/3iasuddin( a 'aw %raduate and a dip'oma ho'der in 8ersonne'
1ana%ement( is headin% the 8ersonne' 2epartment
NCC8L has around $&GG emp'oyees under its direct
emp'oyment and over 9G(GGG fami'ies direct'y and indirect'y %rowin%
with it in the country
From a sma'' unit manufacturin% on'y candies( Nutrine has %rown to +e
a mu'ti product( mu'tiFmarket %iant and has reached the position of
sin%'e 'ar%est manufacturer of confectionery and to,ees in India
Nutrine has wide ran%e of more than 9G varieties of
candies( to,ees( 'o:en%es etc +ein% the 'eader in the industry for more
than a decade Nutrine has a'ways endeavored to satisfy the
customers= chan%es wants and desires with its own emphasis on
Hua'ity( ran%e and cost e,ectiveness
The company has centra'i:ed manufacturin% unit at
Chittoor and a'so uti'i:es the services of Do+ workers NCC8L enDoys a
hi%h market share of 79I to >GI in confectionery in the or%ani:ed
sector in India The stren%th of Nutrine 'ies in its manufacturin%
capa+i'ities and a'so to a 'ar%e e-tent to its marketin% ski''s Nutrine=s
product ran%e is avai'a+'e throu%h a net work of 79 depots and CJFs(
&CGG distri+utors and stockiest and $(9G(GGG dea'ers
The company has moderni:ed its p'ant +y importin%
sophisticated candy manufacturin% machinery from Ro+ert /osch of
3ermany for makin% hy%ienic confectionery The machines imported
automatic wei%hin% and packin% machine Kith the use of these
machines( Nutrine is a+'e to produce %ood Hua'ity confectionery with
e-actin% standards Kith sustained supported from the va'ued
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stockiest( Nutrine is %rowin% stron%er in the market and retainin% its
no$ position Kith the faci'ities avai'a+'e and those to +e inc'uded in
the comin% years( Nutrine wi'' emer%e as one of the +i%Ffood %iants in
the country in the ne-t few years
TOPIC DESCRIPTION
$ STUDY ON PROFIT$&ILITY %$N$'E%ENT IN NUTRINE
CONFECTIONERY CO%P$NY LI%ITED
O()ecti"e*:
$ To understand( to ana'y:e and to su%%est methods of
improvin% pro6ta+i'ity mana%ement
& to identify the key factors a,ectin% the pro6ta+i'ity
7 To have an insi%ht into the mana%ement of pro6t in an
or%ani:ation
Li+itation*:
$ Con6dentia'ity was a constraint for data co''ection
& Inter company comparisons of the data are not done
7 There is a time constraint as the proDect was done on'y
for a period of two months
> Ratios are ca'cu'ated from past 6nancia' statements and
they may not necessari'y re*ect the company=s 6nancia'
position statements and they may not necessari'y
re*ect the company=s 6nancia' position and
performance in the future
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PROFIT$&ILITY %$N$'E%ENT
8ro6t is the primary o+Dect of a +usiness It is a si%na' for
the a''ocation of resources and a yardstick for Dud%in% mana%eria'
eLciency The +asic 6nancia' o+Dective of companies is to ma-imi:e(
whither socia''y accepta+'e 'imits( pro6ts from the use of funds
emp'oyed +y them No company can survive 'on% without pro6t( for
pro6t is the u'timate measure of its e,ectiveness
The crucia' measure of the e,ective performance of a
+usiness is pro6t( which is rea''y a measure of how we'' +usiness is
performed economica''y Therefore pro6t is the dominant %oa' in
+usiness and pro6t makin% shou'd +e the main o+Dective in terms of
which the %enera' e,ectiveness of the enterprise can +e measured
1c)'phine pointed out that pro6t cou'dn=t i%nored since it
is +oth a measure of the success of the +usiness and the means of its
surviva' and %rowth 8ro6ta+i'ity of tota' capita' emp'oyed is the
o+Dective of an enterprise and a criterion of eLcient operations In fact
pro6ts are usefu' +eacon towards which a 6rm=s capita' shou'd +e
directed it means( pro6t is the en%ine that drives the +usiness
enterprise to achieve it=s o+Dectives and is the reward for
entrepreneurship Khat is de+ata+'e and disputa+'e to day is the
distri+ution of the share of pro6ts amon%st various se%ments of the
society Even in tota''y p'anned economies( pro6t criterion has of 'ate
+een accepted as the +asis of eLciency and a measure of return to
capita' To the mana%ement and the owners( actua' and potentia'
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perhaps( the sin%'e and 'ost important statistica' measure is the 6%ure
of net pro6t In this measure 'ies the resu'ts of past decisions( the
indecision of mana%ement=s performance and the +asis ofva'uin%the
owner=s eHuity of the 6rms 8rofLie 0armon remarks
/ecause pro6t %enera'i:es a'' aspects of +usiness operations
inc'udin% Hua'ity of output 8ro6t is used mere'y as the %enera'i:in%
and stimu'atin% indicator of eLciency as a device of ratin% and
operations of enterprise The overa'' o+Dective of the +usiness is to
earn at 'east satisfactory return on the funds invested in it( consistent
with maintainin% a sound 6nancia' position !atisfactory returns
depends upon severa' factors inc'udin% the nature of +usiness(
phi'osophy of +usiness and risk invo'ved is +usiness etc
To the 6nancia' mana%er pro6ts are the test of eLciency
and measure of contro'( to the owners a measure of worth of their
investment( to the creditors the mar%in of safety( to the emp'oyees
source of frin%e +ene6ts( to the customers demand for price cut( and
6na''y to the country( pro6ts are an inde- to economic pro%ress(
nationa' income %enerated and rise in the standard of 'ivin% )
+usiness enterprise is thus a+'e to dischar%e its o+'i%ations to the
various interested se%ments of the society on'y throu%h pro6ts The
capacity of an undertakin% to %enerate pro6t depends upon the way
the di,erent activities of the undertakin% the mana%ed The capacity
depends on chan%es that take p'ace within and without Ki'son and
Tom+ have c'assi6ed these chan%es into two cate%ories#
$ Chan%es occurrin% independent'y of mana%eria' action and
& Chan%es resu'tin% direct'y from mana%ement initiative
In the short run even without any mana%ement action the
concern may %et %ood 6nancia' resu'ts due to some favora+'e
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conditions /ut in the( 'on% run mana%ement action has a stron% and
continuous impact of 6nancia' resu'ts
Every +usiness undertakin% shou'd +e interested in 'on% M
run prosperity( which can +e achieved throu%h pro6t p'annin% and
contro' 8'annin%
for pro6ts is an important mana%ement responsi+i'ity +ut unfortunate'y
it is not %iven much importance as it warrants
PROFIT$&ILITY %$N$'E%ENT: -
The term pro6ta+i'ity is composed of two words 8ro6ts
and a+i'ity The word pro6t has +een de6ned in a num+er of ways
The meanin% of pro6t di,ers accordin% to the use and purpose of the
6%ures To o+tain Npro6t= from accountin% point of view( tota' e-penses
are deducted from the tota' revenues for a %iven period The term
Oa+i'ity re*ects the power of the enterprise to earn pro6ts This a+i'ity
is a'so referred to as earnin% power or Operatin% performance of the
concerned investment The word pro6ta+i'ity may +e de6ned as the
a+i'ity of a %iven investment to earn a return from its use If an
enterprise fai's to make pro6t( capita' invested is eroded and if this
situation pro'on%s( the enterprise u'timate'y cease to e-ist 8ro6ta+i'ity
means the pro6t makin% capacity of the enterprise The state of
pro6ta+i'ity is a varia+'e thin% 'ike the temperature and humidity of a
day
8ro6ta+i'ity is ana'y:ed throu%h the computation of ratios
In computin% pro6t ratios two issues as %iven +e'ow are to +e
considered
$ Khat sha'' +e the +asis of pro6ta+i'ityP
& 0ow pro6ta+i'ity is measuredP
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The pro6ta+i'ity can +e measured either on the +asis of
operatin% pro6t or net pro6t It may +e said that the operatin% pro6t
re*ects pro6t from the
main +usiness for which the enterprise was 'aunched and o,ers the
most re'ia+'e measure for the 'on%Fterm perspective In other words
the net pro6ts re*ect the net operatin% and nonFoperatin% income It
eHuips the ana'yst with the most re'ia+'e measure of pro6ta+i'ity from
the shortFterm point of view 0owever the 6%ure of net pro6t may
assume any of the fo''owin%
$ Net pro6t /efore Interest and Ta-es ;N8/IT<
& Net 8ro6t /efore Ta-es /ut )fter Interest ;N8/T<
7 Net 8ro6t )fter Ta-es ;N8)T<
8ro6ta+i'ity can +e measured in terms of di,erent
components of income statements and +a'ance sheets 1ore
common'y used measures of pro6ta+i'ity are#
$ 8ro6ta+i'ity in terms of tota' investment
& 8ro6ta+i'ity in terms of sa'es
7 8ro6ta+i'ity in terms of shareho'ders and investment
> 8ro6ta+i'ity from creditors point of view
) we'' or%ani:ed pro6t p'annin% pro%ramme wi'' he'p
towards maintainin% a 'eve' of 8ro6t which wi'' ensure the continuation
of the +usiness and fu'6'' ness of other responsi+i'ities Thus pro6t
p'annin% and contro' may +e de6ned as a systematic and formu'ated
approach for accomp'ishin% the p'annin%( coordination and
responsi+i'ity of mana%ement In the words of /eyerond and Trawick(
8ro6t p'annin% is the mana%ement of devisin% and eva'uatin%
a'ternative courses of action and u'timate'y decidin% upon a speci6c
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p'an which inte%rated individua' se%ment p'ans into a cohesive
coordinated company p'an
8ro6t Dust does not happen They are and must +e
procured There is no %uarantee of pro6t production in any particu'ar
vo'ume of %oods and services and hi%h vo'ume +ut that does not 6ve
any promise of fair return 1ana%ement must p'an and ana'y:e its
pro6t performance Certain'y pro6t %rowth coup'ed with a hi%h 'eve'
and a+i'ity to maintain reasona+'e pro6ts he'ps towards
;i< Ensurin% that shareho'ders receive adeHuate
dividends
;ii< 8reservin% the asset worth of the +usiness
;iii< 3eneratin% out of pro6ts a suLcient cash *ow to provide capita'
e-pansion
;iv< 8rovidin% funds for the research and
deve'opment of new and improved products to rep'ace e-istin%
products +efore they %o into dec'ine
In other words( pro6t p'annin% aids in acHuirin% men(
materia's( methods( machines and money in advance In order to
numerise the pro6t p'an( a master p'an is prepared It summari:es the
o+Dectives of a'' departments and su+mits of an or%ani:ation
This master +ud%et is further supp'ement +y various su+
+ud%ets( cash +ud%et( etc( These +ud%ets serves as too's of pro6t
contro' and act as !tandards a%ainst which present performance is
measured and compared and necessary corrective actions are taken to
rectify the deviations if any
The eLciency of +usiness concern is measured +y the
amount of pro6t it earned ) +usiness cannot continue to e-ist if it
'oses money or if the money if makes is not suLcient to meet the
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norma' risk to +e taken 8ro6t are usefu' intermediate +acon towards
which a 6rm=s capita' shou'd +e directed
The pro6t of a concern not on'y a,ects its proprietors +ut
a'so the income ta- authorities 1ana%ers directors etc who are to +e
paid a percenta%e of the net pro6t Therefore the Huestion is# what is
pro6tP Low has not de6ned The word of pro6t even the accountants
are not unanimous on this matter The word pro6t is various'y de6ned
It is said( 3enera''y speakin%( the pro6t of a +usiness durin% a %iven
period is the e-cess of income of over e-penditure for the period
8ro6t is the positive J fruitfu' di,erence +etween tota'
revenue and tota' e-penses over a period of time the word 8ROFIT
has +een viewed in a num+er of ways The meanin%s 8ROFIT di,er
accordin% to use J purpose of the 6%ures In the view of 6nancia'
mana%ement( pro6ts are the test of eLciency
J measure of contro' They are( to owners( a measure of worth of their
investment to the creditors( a mar%in of safety( to the emp'oyees a
source of frin%e +ene6tsQ t the %overnment a emp'oyees measure of
ta-a+'e capacity J the +asis of 'e%is'ative actionQ to the customers a
demand for price cut J 6na''y to the country )n inde- to the economic
powersQ nationa' income %enerated J raise in the standard of 'ivin%
8ro6t is the primary motivates force for an economic activity
+usiness undertakin% essentia''y +ein% an economic or%ani:ation has
to ma-imi:e the we'fare of the interest of the mem+ers associate with
it To this end( the +usiness undertakin% has to earn surp'us of pro6t
are savin%s from its operations In other words( it recipe from operation
shou'd +e mote than the e-penses over a period of time( usua''y an
accountin% year pro6ts are essentia''y for a company to survive J %row
over a 'on% period of time /ut it wou'd +e wron% to assume that every
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action initiated +y the mana%ement of company shou'd +e aimed at
ma-imi:ation of pro6ts( irrespective of socia' conseHuences
8ro6ts are the report card of the past( the inventive %o'd
star for the future If an enterprise fai's to make pro6t( capita' invested
is eroded and if this situation pro'on%s( the enterprise u'timate'y sei:es
to e-it
There are 7 measura+'e concepts of pro6t#
$CCOUNTIN' PROFIT:
In accountin%( the word pro6t is a'most invaria+'y with
some Hua'ifyin% words of phrases In the report of a specia' committee
of the )merican institute of )ccounts the word pro6t is modi6ed inn 7G
di,erent ways )ccordin% this report the accountants usua''y means +y
the term pro6t( the e-cess of the se''in% price over the cost of
anythin%
In the assets J 'ia+i'ities view( earnin%s are eHua' to the
di,erence +etween revenue and cost of earnin% that revenue In this
sense( accountin% pro6t is known as the e-cess of tota' revenues over
their tota' costs of durin% a %iven period
Thus( accountin% pro6t 'ies in the di,erence +etween
the current va'ues of sa'es the historic cost of e-pensed the retained
capita' %ains ie the di,erence +etween proceeds from irre%u'ar
disposa' of assets M historic cost M depreciation of irre%u'ar'y disposed
assets
ECONO%IC PROFIT:
To determine the economic pro6t a competitive or norma'
rate of payment for services of capita' supp'ied +y the 6rm must +e
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su+tracted from the pro6t for the period as determined +y conventiona'
accountin% methods The capita' supp'ied +y the 6rm is the market
va'ue of 'and( p'ant eHuipment and the workin% capita' net of amounts
+orrowed a%ainst the physica' assets In theory of income distri+ution(
economists c'assify income of the company accordin% to the nature of
its sources( wa%es or income from direct 'a+or( interest is the income
from 'ettin% other peop'e use one=s money( rent is the e-cess of the
va'ue produce +y the productive factor over the payment needed to
induce it as work( pro6t is the e-cess of income over cost of
production
In this sense( Economic 8ro6t is the residence of income
after a'' the contractua' and non M contractua' payments have +een
made from the revenue rea'i:ed durin% a %iven period of time
SOCI$L PROFIT:
!ocia' pro6t may +e de6ned as the di,erence +etween
socia' +ene6ts and socia' costs TechniHue R )ccountin% methodo'o%ies
adopted for
measurin% contri+utors towards socia' responsi+i'ities and community
aren=t yet esta+'ished with re'ative de%ree of con6dence and accuracy
TYPES OF $CCOUNTIN' PROFIT:
In +usiness the term 8ROFIT( INCO1E J E)RNIN3!
are simi'ar and their used interchan%ea+'y 3enera''y the income
statement can +e 1u'tip'e step income statement or !in%'e step
income statement The pro6t under mu'tip'e step income statement is
determined in various steps 'ike 3ross 8ro6t after ta- and the pro6t
avai'a+'e to the shareho'ders
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'ROSS PROFIT:
!a'es and other direct revenues are compare with the cost
of %oods so'd to %ive %ross pro6t ;if cost of %oods so'd e-ceeds the
sa'es revenue J other operatin% revenue when there wi'' +e a %ross
'oss<
8ro6ta+i'ity is a re'ative term and pro6t and its re'ation with
the other o+Dects +y which the pro6t is a,ected can achieve its
measurement
)ccordin% to !am R 3oodman( pro6t is a residua' it is a
static historica' term mote %eared to a reportin% function than to
decision make in the further di,erentiates pro6t from pro6ta+i'ity
sayin%( pro6t is an owners oriented concept and is tied into he
ownership shares of nationa' income and the provision on the other
hand( as a concept is a%ain two 'eve's of pro6t which 'ead themse'ves
to +e 'east num+er of a'ternative accountin% measure the pro6t is
direct'y attri+uta+'e to the e-istence of a product and identify mar%ina'
contri+utions It is essentia''y an interna' measure of new wea'th
creation Thus( whereas the accountin% concept of pro6t measures
what have +een accumu'ated(
the ana'ytica' concept of pro6ta+i'ity is concerned with future
accumu'ation of wea'th
$CCOUNTIN' PROFIT$&ILITY:
) measure of pro6ta+i'ity is the over a'' measure of
eLciency In %enera' terms eLciency in +usiness is measured +y the
input M output ana'ysis /y measurin% the out put as proportion of the
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input and company resu'ts of simi'ar other 6rms of periods the re'ative
chan%e in its pro6ta+i'ity can +e esta+'ished
The income ;output< as compared to the capita' emp'oyed
;input< indicates pro6ta+i'ity of a 6rm This is known as return on
investment ;ROI< or return on capita' emp'oyed The overa''
pro6ta+i'ity ratio has two components ie net pro6t ratio ;operatin%
pro6t< sa'es mu'tip'ied +y turnover ratio ;sa'es R capita' emp'oyed<
loyed CapitalEmp
ofit Operating
loyed CapitalEmp
Sales
X
sales
rofit Operatingp Pr
=
8ro6ta+i'ity can a'so +e measured in other terms as#
PROFIT$&ILITY INTER%S OF S$LES:
This can +e o+tained +y ca'cu'atin% the capita' turnover
ratio( %ross pro6t ratio( operatin% ratio
PROFIT$&ILITY IN TER%S OF S#$RE#OLDERS IN,EST%ENT:
It assessed in terms of earning power of the company, as mared net profit
after ta! to share ho"der#s in$estment %net worth&, e'(ity di$idend percentage ) co$er for
preferences sharing di$idend*
PROFIT$&ILITY INTER%S OF CREDITORS ,IE-:
The de%ree of cover which net pro6t provides to interest is
the inde- of mar%in of safety avai'a+'e to creditors
SOCI$L PROFIT$&ILITY:
8rimary %oa' of a +usiness 'ies in ma-imi:in% the 'on% term
wea'th or economic we'fare of its mem+ers( consistent with socia' and
economic responsi+'e cost on the +usiness 6rm +y the community in
which it operates means car diner ri%ht'y o+served in this re%ard the
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darkness of avarice has +een dispe''ed +y the 'i%ht at a new kind of
socia' responsi+i'ity
In the words of earnest da'e the socia' o+Dectives appear
to ur%e he e-ecutive to assume an in6nite'y +road M %au%e +urden of
responsi+i'ities to a'' of the various pu+'ic whom he dea's Therefore(
it shou'd +e indispensa+'e for every company to state its 6nancia'(
persona'( marketin% and socia' o+Dectives in a simp'e and concise form
we'' in a simp'e and concise form we'' in advance and these o+Dectives
in a simp'e and concise form we'' in advance and these o+Dectives
shou'd +e updated in the 'i%ht of dayFtoFday chan%es They shou'd +e
a'so pu+'ished so that they may ena+'e every emp'oyee to know as to
what the o+Dectives are( and Dud%e how they in*uence his Do+
,$LUE $DDED PROFIT$&ILITY:
The concept of va'ue added is a concept +roader than the
concept of pro6t @a'ue added is a +asic and +road measure of
performance of an enterprise In India( the presentation of va'ue added
statement is neither statutory not deemed to +e an o+'i%ation( which
wou'd otherwise have compe''ed the companies to compute the va'ue
added to disc'ose such statement in their annua' reports
In a deve'opin% economy the rea' pro6ta+i'ity of an
industry needs to +e assured not on'y on the +asis of its increasin%
pro6t in a+so'ute terms( on ins increasin% rate of return on investment
in re'ative terms +ut a'so on the +asis of va'ue added +y an industry to
the %ross nationa' product
There are two methods of ca'cu'atin% va'ue added# the
su+tractin% and additive method @a'ue added can +e re%arded as
18
sa'es 'ess +rou%ht in costs( whi'e it can a'so +e e-pressed as pro6t
+efore fa- p'us emp'oyee costs( depreciation and interest
No enterprise can survive or %row( if it fai's to %enerate
wea'th )n enterprise may e-ist with out makin% pro6t +ut cannot
survive without addin% va'ue The enterprise( not makin% pro6t is
+ound to +ecome sick +ut not addin% va'ue may cause its death over a
period of time
RETURN ON C$PIT$L E%PLOYED:
There is no consensus on the de6nition of Ncapita'
emp'oyed= In simp'e words it means the investment made in the
+usiness /ut the investment means di,erent thin% to di,erent
persons The fo''owin% are three most popu'ar concepts of capita'
emp'oyed
'ROSS C$PIT$L E%PLOYED:
It assumes that the current 'ia+i'ities are a'so a form of
capita' and a'' funds are e,ective'y emp'oyed 3ross capita' emp'oyed
is the tota' 6-ed and current assets( thus
3ross Capita' Emp'oyed S Fi-ed assets T Current assets
NET C$PIT$L E%PLOYED:
On the assumption that either on'y shortFterm creditors or
on'y shortFterm de+tors shou'd +e
Net Capita' Emp'oyed S 3ross Capita' emp'oyed M Current 'ia+i'ities
Or
19
Net Capita' Emp'oyed S Fi-ed assets T Current assets M Current
'ia+i'ities
Or
Net Capita' Emp'oyed S Fi-ed assets T Korkin% Capita'
S#$RE#OLDERS E.UITY OR NET -ORT#:
The share ho'ders of a company may comprise eHuity
shareho'ders and preference shareho'ders
!hort ho'der=s eHuity S EHuity share capita' T 8reference share capita'
T !hare premium T Reserve and !urp'us M )ccumu'ated 'oss
The assets communicate the 6nancia' facts a+out an
enterprise or economic entity to those who have an interest in
interpretin% and usin% those facts This serves as means for ana'y:in%
and contro''in% operations of the enterprise and for p'annin% future
actions
The techniHue used to appraise the eLciency of the use of
assets in %eneratin% earnin%s is turnover of assets In %enera'( turnover
measure the eLciency with which the assets are used and he'p in
disc'osin% under or over investment in assets The turnover of assets is
ana'y:ed in this study shows the re'ationship +etween the rupee va'ue
of sa'es and assets emp'oyed in the +atteries unit se'ected for this
study The 'ar%er the rupee va'ue of sa'es made per rupee of invested
capita'( the more wi'' +e the earnin% on each rupee invested in the
assets of the +usiness
The operationa' eLciency of an enterprise( or its
earnin%s performance( shou'd a'so +e evo'ved +y inter F company or
inter F period comparison of Nassets turnover=( if there are variations
takes p'ace in the pro6t mar%in to o,set such chan%es
20
The operatin% assets a'one a,ect direct'y the net sa'es of
the company !o( operatin% assets turnover has +een ca'cu'ated to
e-amine the 'eve' of eLciency in the uti'i:ation of operatin% assets
The ratio is o+tained +y dividin% net sa'es for a %iven
period +y
operatin% assets emp'oyed in the +usiness durin% that period
ssets OperatingA
Netsales
io urnoverrat ingassetst Thusoperat =
In the denominator of this ratio operatin% assets are the
tota' of a'' the assets e-c'udin% intan%i+'e and 6ctitious assets
PROFIT %$R'IN:
8ro6t mar%in is the return %enerated +y a company=s
assets and represents the di,erence +etween revenues and tota'
e-penditure In a manufacturin% concern the pro6t mar%in resu'ts from
sa'es of its products In fact it is the key 6%ure in the income statement
or pro6t and 'oss account pro6t mar%in 6%ures can +e +est eva'uated
+y e-pressin% them as percenta%e of net sa'es ;ie sa'es minus sa'es
returns( discounts and re+ates etc( which %ives a pro6t<
Operatin% pro6t is the di,erence of net sa'es and tota'
operatin% cost Operatin% pro6t mar%in varies with disproportionate
variations in sa'es
revenue in comparison to costs and vice versa The pro6t mar%in ratio
has +een arrived at +y dividin% the amount of operatin% pro6t +y the
amount of sa'es
Netsales
ofit Operating
in ofitM
Pr
arg Pr =
21
The ratio shows operatin% pro6t mar%in on net sa'es in
which mana%ement and shareho'ders are very much interested
RETURN ON LON' TER% IN,EST%ENT:
The ratio indicates the earnin% capacity of the 'on%Fterm
investment and faci'itates the mana%ement in takin% decisions re'atin%
to capita' e-penditure and is a'so of interest to 'on%Fterm investors
The ratio is ca'cu'ated +y dividin% the net pro6t +efore interest +ut
after ta- with 'on%Fterm investment the amount of 'on%Fterm
investment is arrived at as fo''ows#
$ Net worth of +usiness after deductin% de+it +a'ance of pro6t and
'oss account and misce''aneous e-penditure
& )ddin% 'on%Fterm +orrowin%s in the form at secured and
unsecured 'oans
R$- %$TERI$L CONSU%ED:
The term raw is used in a +roader sense( as this cate%ory
inc'udes a'' the materia's used in production( whether in natura' state
or char%ed +y previous processin% In other words( raw materia's are
the materia's used in the manufacturin% process
SELLIN' $ND DISTRI&UTION E/PENSES:
These e-penses are e-penses incurred for the operation of
se''in% and distri+ution of the output
PROFIT $FTER INTEREST &UT &EFORE T$/:
!ome ferti'i:er companies have +een p'ayin% corporation
ta- on the pro6t earned +y them from year to year( where as other
22
companies were e-empt from it either +ecause of 'oss or +ecause of
their pro6t +ein% e-empt from ta-
PRO,ISION FOR T$/$TION:
8rovision for ta-ation is separate'y shown in the pro6t and
'oss account and it is deducted from preFta- pro6t after ta-
Ta-ation a,ects he +usiness operations indirect'y hi%h
ta-ation encoura%es companies towards uneconomica' operations(
e-cessive spendin% and mote overhead e-penditure and towards a
%reater use of +orrowed funds Instead of raisin% funds from the
shareho'ders( issuin% de+entures may +e resorted to 6nance additiona'
reHuirements of funds( as the interest on the po'icy re%ardin% dividend
payments and retained earnin%
PROFIT $FTER INTEREST $ND T$/:
In this measure interest and ta& are deducted from
operating income, which are e"ual to the sum of dividends
'(aid)provided for* and retained earnings. It is indicative of
management+s ability to operate the business with su%icient success
not only to recover from revenue of the period, the cost of
merchandise or service the e&penses of operating the business
'including depreciation and the cost of the borrowed funds, but also
leave a margin of reasonable compensation to the owners for
providing their capital at ris. ,he ratio of proft after interest and ta&
to sales is essentially e&pressed the cost)prise e%ectiveness of the
operation.
COST TRENDS $ND PROFIT$&ILITY:
)n attempt to know the proportion of various costs to sa'es
may not provide e-act idea re'atin% to various costs /ut it wou'd %ive
a +road re'ative
23
idea re%ardin% the trend of percenta%es of various costs to sa'es It is
+ecause( the pro6t and pro6ta+i'ity not on'y depends on sa'es +ut a'so
the +ehavior of various costs or e'ements of tota' cost 2o this
proportion may %ive a re'ative idea re%ardin% the pro6ta+i'ity of a
concern The cost trends of the samp'e units have +een studied on the
fo''owin% heads
$ 1anufacturin% Cost
& Operatin% E-penses
7 Interest Char%es
> 2epreciation
9 !a'aries and Ka%es
%$NUF$CTURIN' COST:
It is e&pressed in percentage. ,he percentage arrived at
by dividing manufacturing cost by total cost. ,he cost of goods sold is
taen as manufacturing cost. -dding operating e&penses to the cost of
goods sold arrives at the total cost. ,he impact of increase or
decrease in value of stocs ate deducted or added to operating
e&penses. (roft and loss account appended.
OPER$TIN' E/PENSES:
.
Operatin% E-penses p'ays a vita' ro'e in %ivin% the resu'ts
of the +usiness Thou%h the +usiness is havin% pro6t +y its tradin%
operations ;ie %ross pro6t< 2i,erence +etween sa'es and cost of
%oods so'd the net resu't may +e ne%ative +ecause of heavy operatin%
e-penses
DISPOS$L OF SURPLUS:
24
In 6nancia' mana%ement( dividend decision of the 6rm is an
important aspect to determine the amount of earnin%s to +e
distri+uted to shareho'ders and amount to +e retained in the 6rm
retained earnin%s are the most si%ni6cant interna' sources of 6nancin%
for the %rowth of the 6rm In the other hand(
dividends are distri+uta+'e from shareho'der=s point of view( as they
trend to increase their current wea'th Thus these tow o+DectivesF
distri+utions of dividends and retention of earnin%s for %rowth are in
con*ict The 6nancia' mana%er must +e very carefu' in decidin% the
a''ocation of earnin%s +etween dividends and retention of earnin%s as
this decision a,ects the va'ue of the 6rm and as a resu't the 6rm=s cost
of capita'
One of the important o+Dectives of dividend po'icy is to
ma-imi:e the va'ue of the 6rm to its shareho'ders !hareho'ders wea'th
inc'udes not on'y the market price of stock +ut a'so current dividend
There is a controversy re%ardin% the impact of dividend on the market
va'ue of the security Khether dividend po'icies rea''y a,ect the market
price of common stocksP Theoretica' ar%uments have +een deve'oped
that dividends do not a,ect market price On the other hand the
preponderance of evidence su%%ests the dividend po'icies have
profound e,ect on a 6rm=s position in the stock market Therefore the
mana%ement shou'd deve'op such a dividend po'icy( which divides the
net earnin%s into dividends and retained earnin%s in an optimum way
to achieve the o+Dective of ma-imi:in% the shareho'ders wea'th
4O0N)/RITT)IN( supportin% a sta+'e dividend po'icy has said( Even
sta+i'ity acts as a +ui'tFin sta+i'i:er( for it 'eads to cushion the e,ect of
chan%es in income or a%%re%ate
25
demand over economic cyc'e 2ividend represents cash out*ow
Therefore adeHuate cash shou'd +e avai'a+'e for payin% dividend
CO%%ON SI0E $N$LYSIS:
Common si:e ana'ysis can make a comparison +etween
di,erent si:e 6rms much more meanin%fu' since the num+ers are
+rou%ht to a common +ase percent In the word of Rah 0 3arison
) common si:e statement is one that shows the separate items
appearin% on it in percenta%e form( rather than in
do''ar from each item is stated as a percenta%e of sum tota' of which
that item is a part( percenta%e of common si:e statement is known as
@ertica' )na'ysis
Common si:e statements are often ca''ed component
percenta%e or $GG percenta%e statement +ecause each statement is
reduced to the tota' of $GG
This type of ana'ysis 6rst converts each rupee into the
statement to percenta%e of the tota' amount of the %roup of which it is
a part )s a resu't the re'ative importance of each individua' amounts
stands out c'ear'y
26
RESE$RC# %ET#ODOLO'Y
Financia' 1ana%ement is responsi+'e for maintainin% not
on'y the credit standin% of enterprise +ut a'so for %eneratin% the ri%ht
amount of funds of the ri%ht time It p'ays an e-treme'y crucia' ro'e in
the continuity and %rowth of a +usiness No +usiness can +e procured(
esta+'ished without adeHuate 6nancia' resources
Thou%h the avai'a+i'ity of 6nance is of %reat importance(
securin% the reHuired 6nance from the ri%ht source is of prime concern
Improper mana%ement of capita' 'eads not on'y to 'oss of pro6t +ut
a'so the u'timate fai'ure of the +usiness Finance 1ana%ement has a'so
viewed as an inte%ra' part of the overa'' mana%ement rather than as
sta, especia''y concerned with funds raisin% operations In other
words( 6nancia' mana%ement is direct'y concerned with the over a''
mana%ement of an enterprise and takin% po'ity decisions re'atin% to
the 'ine of +usiness si:e of 6rm( type of eHuipment used( e-tent of
de+t( 'iHuidity etc( which in turn determine the si:e of the pro6ta+i'ity
Therefore( Financia' 1ana%ement assumes a %reater si%ni6cance in
any industry
/ut +y and 'ar%e +usiness undertakin%s in India have not
%iven due importance to Financia' 1ana%ement without any factua'
information on the Financia' 1ana%ement practices it is diLcu't to
evo've norms for sound and eLcient Financia' 1ana%ement 0ence
there is a need for study of 6nancia' mana%ement practices in IN2I)
This study is +ased in the data co''ected form primary and
secondary sources /oth Hua'itative data re'atin% to the workin% of
/atteries Company their cost of production( 6nancia' performance and
other re'ated
27
aspects were co''ected from individua' +atteries company throu%h
interview method
)n e,ort was a'so made to 'earn front the e-ecutive
persona' as to how they perceive the 6nancia' mana%ement and how
they dea' with it !econdary data inc'udes annua' reports of seven
years company pro6'e( or%ani:ation chart
SOURCE OF D$T$:
!econdary source of data from the pu+'ished annua' reports of
NCCL
TOOLS $ND TEC#NI.UES OF $N$LYSIS:
The fo''owin% too's and techniHues of 6nancia' ana'ysis are
used as measures of Dud%in% the de%ree of eLciency of 6nancia'
mana%ement The 6%ures of annua' reports have +een rounded o, to
two decima' p'aces in crores of rupees The ana'ysis of data is carried
out throu%h 6nancia' ratios
T#E PROFIT$&ILITY R$TIOS C$LCUL$TED C$N &E
CL$SIFIED $S FOLLO-S:
$ 8ro6ta+i'ity in re'ation to !a'es
& 8ro6ta+i'ity in re'ation to Investment
7 8ro6ta+i'ity in re'ation to Tota' Cost
The ratios calculated under the frst category are:
$ Overa'' 8ro6ta+i'ity Ratio
& Tota' )ssets Turnover Ratio
7 3ross 8ro6t Ratio
> Net 8ro6t Ratio
28
9 Cash 8ro6t Ratio
? Operatin% 8ro6t 1ar%in
C Korkin% Capita' Turnover Ratio
B 8)I/T to !a'es
. 8)T)I to !a'es
$G Raw materia's to !a'es
$$ !e''in% J 2istri+ution to !a'es
$& Operatin% E-penses to !a'es
The ratios calculated under the second category are:
$ Return on LoanFterm Investments
& Return on )ssets
7 Return on Net worth
The ratios calculated under the third category are:
$ Cost of 3oods so'd to Tota' Cost
& Interest to Tota' Cost
7 2epreciation to Tota' Cost
> Ka%es J !a'aries to Tota' Cost
9 Raw materia's to Tota' Cost
? Operatin% E-penses to Tota' Cost
C !e''in% J 2istri+ution to Tota' Cost
B Raw materia's to Cost of 3oods so'd
Other ratios calculated are:
$ Interest Covera%e Ratio
& 2ividend Cover Ratio
7 Earnin%s 8er !hare
> Cash Earnin%s 8er !hare
9 2ividend 8er !hare
? 2ividend 8ayout Ratio
29
PURPOSE1 SI'NIFIC$NCE $ND PROCEDURE OF FINDING THE
RATIO MENTIONED ABOE:
1. O,ER$LL PROFIT$&ILITY R$TIO:
The overa'' 8ro6ta+i'ity indicates the speed at which the
capita' emp'oyed in the +usiness rotates 0i%her the rate of rotation
%reater wi'' +e the pro6ta+i'ity The ratio is ca'cu'ated as fo''ows#
100
Pr
Pr X
ssets OperatingA
ofit Operating
yRatio ofitabilit Overall =
Operatin% 8ort is o+tained when Operatin% E-penses are
deducted from 3ross 8ro6t
Operatin% )ssets is o+tained when the surp'us carried to
/a'ance !heet is added to the Tota' )ssets
. TOT$L $SSETS TURNO,ER R$TIO:
The tota' )ssets Turnover Ratio indicates the 6rm=s a+i'ity
in %eneratin% sa'es from a'' 6nancia' resources committed to tota'
)ssets Thus(
100 X
s TotalAsset
Sales
atio sTurnoverR TotalAsset =
Tota' assets inc'ude Net Fi-ed )ssets( Current )ssets and 1isce''aneous
)ssets
30
2. 'ROSS PROFIT %$R'IN:
The 3ross 8ro6t 1ar%in re*ects the eLciency with which
the mana%ement produces each unit of pro6t The ratio indicates the
avera%e spread +etween cost of %oods so'd and the sa'es revenue )
hi%h 3ross 8ro6t 1ar%in is a si%n of %ood mana%ement )'so a hi%h
%ross pro6t mar%in re'ative to the industry avera%e imp'ies that the
6rm is a+'e to produce at re'ative'y 'ow cost Thus(
100
Pr
arg Pr X
Sales
ofit Gross
in ofitM TheGross =
/ross (roft is obtained when the cost of goods sold is
deducted from sales.
3. NET PROFIT %$R'IN:
It esta+'ishes a re'ationship +etween Net 8ro6t and sa'es
and indicates mana%ement=s eLciency in manufacturin%(
administerin% and se''in% the products This ratio is the overa''
measure of the 6rm=s a+i'ity to turn each rupee sa'es into net pro6t
) hi%h Net 8ro6t 1ar%in indicates an advanta%eous
position of ht 6rm in the face of fa''in% se''in% prices( risin% costs of
production or dec'inin% demand of the products The Net 8ro6t 1ar%in
is ca'cu'ated as#
100
Pr
arg Pr X
Sales
ax ofitAfterT
in ofitM Net =
Net 8ro6t 1ar%in is o+tained when operatin% e-penses(
interest( ta-es are su+tracted from the 3ross 8ro6t
4. C$S# PROFIT %$R'IN:
The Cash 8ro6t 1ar%in is ca'cu'ated as
100
Pr
arg Pr X
Sales
ofit Cash
in M ofit Cash =
31
Cash 8ro6t is the pro6t +efore interest( 2epreciation and
ta-
5. OPER$TIN' PROFIT %$R'IN:
100
Pr
arg Pr X
Sale
ofit Operating
in ofitM Operating =
Operatin% 8ro6t is o+tained when operatin% e-penses are
su+tracted from 3ross 8ro6t
6. -OR7IN' C$PIT$L TURNO,ER R$TIO:
The ratio indicates whether or not workin% Capita' has
+een e,ective'y uti'i:ed in makin% sa'es
If the 6rm can achieve hi%her vo'ume of sa'es with
re'ative'y sma'' amount of workin% capita'( then is is an indication of
the operatin% eLciency of the company the ratio is ca'cu'ated asQ
100 X
ital or!ingCap
Sales
Ratio er italTurnov or!ingCap =
Korkin% capita' a'so referred as Net Current )ssets is
o+tained +y su+tractin% current 'ia+i'ities from current assets
8. P$I&T TO S$LES:
The ratio is ca'cu'ated as
100 X
Sales
"A#$T
9. P$T$I S$LES:
The ratio is ca'cu'ated as
32
100 X
Sales
"ATA#
1:. R$- %$TERI$LS TO S$LES:
The term Nraw materia's= is used in a +roader sense as this
cate%ory inc'udes a'' materia's used in production whether in natura'
state of chan%ed in previous process The ratio is ca'cu'ates as
100 X
Sales
ls Ra%Materia
0ere the Raw materia's constitute of Raw 1ateria's(
8ackin% 1ateria's and Krappin% materia's
11. SELLIN' ; DISTRI&UTION TO S$LES:
!e''in% J 2istri+ution E-penses inc'ude a'' e-penses
incurred for the operation of se''in% and distri+ution of the output The
ratio is found as #
100 X
Sales
on &istributi Sellingand
1. OPER$TIN' E/PENSES TO S$LES:
This ratio e-p'ains the chan%es in the pro6t mar%in ;E/IT to
!a'es< ratio The ratio is ca'cu'ated as#
100 X
Sales
xpenses OperatingE
Operatin% E-penses inc'ude a'' e-penses such as
depreciation( !a'ary J /ene6ts( rent( !e''in% J distri+ution and to
other administrative e-penses
33
12. RETURN ON LON'-TER% IN,EST%ENT:
Lon%FTerm investments inc'ude network and Lon%FTerm
The ratio is ca'cu'ated as#
100 X
ments Term#nvest 'ong
E$#T

This ratio indicates whether the 6rm has raised adeHuate


Lon%FTerm funds to meet its reHuirements
13. RETURN ON TOT$L $SSETS:
This ratio indicates the operatin% eLciency of the 6rm The
ratio is ca'cu'ated as#
100 X
s TotalAsset
"ATA#
Tota' assets inc'ude Fi-ed( Current and 1isce''aneous
)ssets( 8)T)I in the 8ro6t o+tained deductin% interest and Ta-
14. RETURN ON NET-ORT#:
This ratio inc'uded how we'' the 6rm has used the
resources of owners and hence this is one of the most important
re'ationship in 6nancia' ana'ysis The ratio is ca'cu'ated as#
100 X
Netorth
"ATA#
Net worth inc'udes !hare Capita' and Reserves J !urp'us
34
15. COST OF 'OODS SOLD TO TOT$L COST:
Cost of %oods so'd form a part of Tota' cost The ratio
indicates the e-tent of cost of %oods so'd in tota' cost The ratio is
ca'cu'ated as#
100 X
TotalCost
sSold CostfoGood
Tota' Cost inc'ude cost of %oods so'd and operatin%
e-penses 'ike administrative e-penses
16. INTEREST TO TOT$L COST:
Tota' Cost is arrived when operatin% e-penses are added to
cost of %oods so'd The ratio is ca'cu'ated as#
100 X
TotalCost
#nterest
18. DEPRE$TION TO TOT$L COST:
2epreciation forms a part of operatin% E-penses The ratio
is ca'cu'ated as#
100 X
TotalCost
on &epre(iati
0ere Tota' Cost is o+tained when Cost of %oods so'd and
operatin% e-penses are added
19. -$'ES ; S$L$RIES TO TOT$L COST:
Ka%es J !a'aries( which form a part of Operatin%
E-penses( inc'ude factory esta+'ishment( wa%es and +onus 8rovident
Fund( Korkmen we'fare e-penses etc the ratio is ca'cu'ated as#
35
100
)
X
TotalCost
Salaries ages
Tota' Cost is arrived +y addin% of operatin% e-penses to
cost of %oods so'd
:. R$-%$TERI$LS TO TOT$L COST:
Raw materia's in a +road sense inc'ude the materia's used
in production( which may +e in natura' state or chan%ed in previous
process The ratio is founded as#
100 X
TotalCost
ls Ra%materia
Raw materia's from a maDor part of cost of %oods so'd
which is a%ain a part of Tota' Cost !o this ratio %ives the proportion of
raw materia's in Tota' Cost
1. OPER$TIN' E/PENSES TO TOT$L COST:

Operatin% e-penses inc'ude direct 'a+our and overheads
The operatin% e-penses form a part of tota' cost !o this ratio %ives the
ratio of
operatin% e-penses in tota' cost It is found as#
100 X
TotalCost
xpenses OperatingE
. SELLIN' $ND DISTRI&UTION TO TOT$L COST:
!e''in% J 2istri+ution E-penses inc'ude a'' e-penses
incurred for the operation of se''in% and distri+ution of the output The
ratio is found as#
100 X
TotalCost
on &istributi Sellingand

36
!e''in% and 2istri+ution form a part of operatin% e-penses as we'' as
Tota' Cost This ratio is used to the know e-tent of se''in% and
distri+ution in tota' cost

2. R$- %$TERI$LS TO COST OF 'OODS SOLD:

Raw materia's form a maDor part of cost of %oods so'd The
ratio indicates the proportion of raw materia's in cost of %oods so'd It
is ca'cu'ated as#
100 X
ssold Costofgood
ls Ra%materia
3. INTEREST CO,ER$'E R$TIO:
This ratio is very important from the 'enders point of view
It indicates whether the 6rm wou'd earn suLcient pro6ts to pay the
interest char%es periodica''y It is ca'cu'ated as#
100 X
on &epre(iati E$#T
#nterest
o verateRati #nterestCo
+
=
4. DI,IDEND CO,ER R$TIO:
This ratio is ca'cu'ated as#
100 X
on &epre(iati E$#T
&ividend
+
5. E$RNIN'S PER S#$RE:
Earnin%s per share shows the pro6ta+i'ity of the 6rm on a
per share +asis( it does not re*e- how much is paid as dividend and
how much is retained in the +usiness This ratio is ca'cu'ated as#
37
ofShares No
"AT
E"S
*
=
Earnin%s per share ca'cu'ations made over years indicate
whether or not the 6rm=s earnin%s power on per share +asis has
chan%ed over that period
6. C$S# E$RNIN'S PER S#$RE:
ofShares No
ofit Cash
das s(al(ulate Thisratioi
*
Pr
Cash pro6t is the pro6t +efore interest( depreciation and
ta-
8. DI,IDEND PER S#$RE:
2ividend 8er !hare is more usefu' to the investor than
Earnin%s per !hare 2ividend per share is the earnin%s distri+uted to
ordinary share ho'ders divided +y num+er of shares Thus(
ofshares No
&ividend
&"S
*
=
9. DI,IDEND P$YOUT R$TIO:
This ratio indicates what proportion of Earnin%s 8er share
has +een used for payin% dividend The ratio is ca'cu'ated as#
rshare Earnings"e
rshare &ividend"e
&"OR =
38
2:. SELLIN' $ND DISTRI&UTION TO OPER$TIN'
E/PENSES:
!e''in% and 2istri+ution form a part of operatin% e-penses
This ration shows the e-tent of se''in% and distri+ution in operatin%
e-penses Thus( the ratio is
100 X
xpenses OperatingE
on &istributi Sellingand
TREND ANA!"#I#
In 6nancia' ana'ysis the direction of chan%es over in period
of years is of crucid importance Time serves or trend ana'ysis of ratios
indicates the direction of chan%e Trend ana'ysis of ratios adds
considera+'e si%ni6cance to the 6nancia' ana'ysis
Trends $alculated:
a% $a&ital Trend:
It %ives the picture of whether the company increase or
decrease their capita' over the period of study
'% #ales Trend:
!a'es trend %ives picture whether the company sa'es are
increasin% or decreasin%
c% (BT Trend:
8ro6t /efore Ta- trend ana'ysis ena+'es us to know the
chan%es occurred in the pro6ts earned +y the company
39
T$&LE 1:
RETURN ON C$PIT$L E%PLOYED
OPER$TIN' PROFIT TO OPER$TIN' $SSETS
Year Operating Profit Operating Assets Ratio in %
1997-98 -6603171 - 353818545 100.00 -
1998-99 16677284 100.00 405958180 114.74 4.11
1999-00 32796033 196.65 398189550 112.54 8.24
2000-01 43797308 262.62 326418354 92.26 13.42
2001-02 92470520 554.50 473087966 113.71 19.54
2002-03 112919225 677.01 464094926 131.17 24.33
2003-04 45548379 273.12 418314013 118.23 10.88
2004-05 101208267 606.86 383700046 108.45 26.38
)*+*,
Ratio in %
0
10
20
30
19
98-
99
19
99-
00
20
00-
01
20
01-
02
20
02-
03
20
03-
04
20
04-
05
Ratio in % -
Inference:
There is an increasin% trend in the ratio e-cept in the year
&GG7FG> the ratio is varyin% +etween >GBI in $..BF.. to &97GI in
&GG>F&GG9 the avera%e va'ue recorded to +e $&?&I
The decrease in the ratio in &GG7FG> is due to decrease in
sa'es and a'so an increase in the cost of %oods so'd in that year
40
T$&LE :
TOT$L $SSETS TURN O,ER R$TIO
S$LES TO TOT$L $SSETS
Year Sales Total Assets Ratio in %
1997-98 797276659 100.00 354349470 100.00 2.25
1998-99 954301316 119.70 406834105 114.81 2.35
1999-00 1021126098 128.08 399065774 112.62 2.56
2000-01 1231544506 154.47 351006479 99.06 3.51
2001-02 1435280683 108.02 4979676691 140.53 2.88
2002-03 1699707479 213.19 464478911 131.08 3.66
2003-04 1350101632 164.34 418705678 118.06 3.22
2004-05 1299916703 163.04 384092111 108.39 3.38
.98
Ratio in %
0
1
2
3
4
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in % 2.25
Inference:
)t the ratio as increasin% trend for the 6rst four years of
study and then its *uctuatin% The avera%e va'ue is recorded to +e
&.BI This imp'ies that the company %enerates the sa'es of Rs &.B
for one rupee investment in 6-ed and current assets to%ether
The ratio ran%ers from &&9 in $..CF.B to 79$ in &GGGFG$
The *uctuatin% trend is due to the reason that the trend of
sa'es is not proportionate to the trend of tota' assets
41
T$&LE 2:
'ROSS PROFIT %$R'IN
'ROSS PROFIT TO S$LES
Year Gross Profit Sales Ratio in %
1997-98 166990221 100.00 797276659 100.00 21.32
1998-99 267022708 157.08 954301316 119.70 27.98
1999-00 250358346 147.28 1021126098 128.08 24.52
2000-01 30484374 17.93 1231544506 154.47 2.48
2001-02 395190637 232.48 1435280683 180.02 27.53
2002-03 512760451 301.64 1699707479 213.19 30.17
2003-04 389209295 228.96 1350101632 169.34 28.83
2004-05 403843212 237.57 1299916703 163.04 31.07
-.+-.
Ratio in %
0
10
20
30
40
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
There is a *uctuatin% trend in the ratio The ratio chan%ed
+etween &>BI in &GGGFG$ to 7$GCI in &GG>FG9
The decrease in the ratio in &GGGFG$ is due to decrease in
%ross pro6t which is a%ain due to increase in cost of %oods so'd This is
+ecause of increase in factory rent and cost of repairs to machinery
42
TAB!E .:
NET (ROFIT MARGIN
(AT TO #A!E#
Year PAT AI Sales Ratio in %
1997-98 8072770 100.00 797276659 100.00 1.04
1998-99 24654953 307.89 954301316 119.70 2.6
1999-00 3793505 46.99 1021126098 128.08 0.37
2000-01 30776546 381.24 1231544506 154.47 2.5
2001-02 53219301 659.24 1435280683 180.02 3.71
2002-03 52212025 646.77 1699707479 213.19 3.07
2003-04 18038795 223.44 1350101632 169.34 1.34
2004-05 62710235 776.83 1299916703 163.04 4.82
-+.*
Ratio in %
0
2
4
6
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in % 1.04
Inference:
The ratio is s'i%ht'y *uctuatin% The avera%e va'ue is
recorded to +e &>7I the ratio chan%ed +etween G7CI in $...FGG to
>B&I in &GG>FG9
The decrease in the ratio in $...FGG is due to decrease in
%ross pro6t as we'' as operatin% pro6t
43
T$&LE 4:
C$S# PROFIT %$R'IN
C$S# PROFIT TO S$LES
YEAR CASH PROFIT (PBIDT) RATIO I %
1997-98 90187953 100
1998-99 63567821 70.4
1999-00 115935695 128.5
2000-01 128658809 142.6
2001-02 181107923 200.8
2002-03 190909495 211.6
2003-04 97782260 108.4
2004-05 149620488 165.9
8.9
RATIO IN %
0
50
100
150
200
250
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
RATIO IN %
Inference:
This ratio shows a *uctuatin% trend with 'ess *uctuation
1ore variation is seen in the year$..BF.. and &GG7FG> The ratio
ran%ed +etween ???I in $..BF.. to $&?&I in &GG$FG& The avera%e
va'ue is recorded to +e B.&I
The variation in the years $..BF.. and &GG7FG> is due to
decrease in +oth cash pro6t and sa'es )'so decrease in cash pro6t is
found to +e of %reater
proportion compared to that of sa'es
44
T$&LE 5:
OPER$TIN' PROFIT %$R'IN
OPER$TIN' PROFIT TO S$LES
Year Operating Profit Operating Assets Ratio in %
1997-98 -6603171 - 797276659 100 0
1998-99 16677284 100 954301316 119.7 1.75
1999-00 32796033 196.65 10211206098 128.08 3.21
2000-01 43797308 262.62 12315440506 154.47 3.57
2001-02 92470520 554.5 1435280683 180.02 6.44
2002-03 112919225 677.01 1699707479 213.19 6.64
2003-04 45548379 273.12 1350101632 164.34 0.34
2004-05 101208267 606.86 1299916703 163.04 7.79
Ratio in %
0
2
4
6
8
10
19
98-
99
19
99-
00
20
00-
01
20
01-
02
20
02-
03
20
03-
04
20
04-
05
Ratio in % 0
Inference:
It is evident from the ta+'e that the ratio is showin% an
increasin% trend throu%hout the period of study e-cept in the year
&GG7FG> This is +ecause of the reduction of operatin% pro6t in the year
&GG7FG> The avera%e va'ue is recorded as >$GI and the ratio ran%ed
+etween $C9I in $..BF.. to CFC.I in &GG>FG9
The decrease in the operatin% pro6t in the year $..CF.B is
due to increase in factory rent in the year &GG7FG> is due to increase in
wa%es and sa'aries and a'so increase in cost of %oods so'd
45
T$&LE 6:
-OR7IN' C$PIT$L TURNO,ER R$TIO
S$LES TO -OR7IN' C$PIT$L
Year Sales !or"ing Capital Ratio in %
1997-98 797276659 100 143719438 100 5.55
1998-99 954301316 119.7 131009322 91.14. 7.28
1999-00 1021126098 128.08 137670508 95.77 7.42
2000-01 1231544506 154.47 87938508 61.17 14.00
2001-02 1435280683 108.02 93985091 65.38 15.27
2002-03 1699707479 213.19 140424609 97.69 12.10
2003-04 1350101632 164.34 155439198 108.13 8.69
2004-05 1299916703 163.04 112091189 78.67 11.49
1:.2
Ratio in %
0.00
5.00
10.00
15.00
20.00
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
Korkin% capita' turn over ratio is showin% a *uctuatin%
trend The ratio ran%es +etween 999I in $..CF.B to $9&CI in &GG$F
G& The avera%e va'ue recorded as $G&7I
It can a'so inferred that the ma-imum and minimum
workin% capita' turnover ratio is in the ma-imum and minimum sa'es
period
46
TO&LE 8:
P$I&T TO S$LES
Year PAT AI Sales Ratio in %
1997-98 8072770 100 797276659 100 1.01
1998-99 34854953 431.76 954301316 119.7 3.65
1999-00 17909369 221.85 1021126098 128.08 1.75
2000-01 59861193 741.52 1231544506 154.47 4.8
2001-02 90091957 1116 1435280683 180.02 6.28
2002-03 93506199 1158.29 1699707479 213.19 5.5
2003-04 26408795 327.13 1350101632 169.34 1.96
2004-05 91510235 1133.57 1299916703 163.04 4.04
3.:1
Ratio in %
0
2
4
6
8
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
Korkin% capita' turn over ratio is showin% a *uctuatin%
trend The ratio ran%es +etween 999I in $..CF.B to $9&CI in &GG$F
G& The avera%e va'ue recorded as $G&7I
It can a'so inferred that the ma-imum and minimum
workin% capita' turnover ratio is in the ma-imum and minimum sa'es
period
47
T$&LE 9:
P$T$I TO S$LES
Year PAT AI Sales Ratio in %
1997-98 8072770 100 797276659 100 1.04
1998-99 24854953 307.89 954301316 119.7 2.61
1999-00 3793505 46.99 1021126098 128.08 0.37
2000-01 30776546 381.24 1231544506 154.47 2.5
2001-02 53219301 659.24 1435280683 180.02 3.71
2002-03 52212025 646.77 1699707479 213.19 3.07
2003-04 18038795 223.44 1350101632 169.34 1.34
2004-05 62710235 776.83 1299916703 163.04 4.82
.32
Ratio in %
0
1
2
3
4
5
6
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% increasin% trend The avera%e va'ues
recorded as &>7I and the ratio ran%es from G7CI to 7C$I
48
T$&LE 1::
R$- %$TERI$LS TO S$LES
Year RA! #ATERIA$ Sales Ratio in %
1997-98 330044480 100 797276659 100 41.4
1998-99 333505624 101.05 954301316 119.7 34.95
1999-00 389864889 108.12 1021126098 128.08 38.18
2000-01 504838432 152.96 1231544506 154.47 40.99
2001-02 573993119 173.91 1435280683 180.02 39.99
2002-03 635662834 192.6 1699707479 213.19 37.4
2003-04 438198844 132.77 1350101632 169.34 32.46
2004-05 400873987 121.46 1299916703 163.04 30.84
26.:2
Ratio in %
0
10
20
30
40
50
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% a decreasin% trend The avera%e va'ue
is re%arded as 7CG7I The ratio ran%ed from 7GB>I in &GG>FG9 to
>$>GI in $..CF.B
The decrease in trend is +ecause of the percenta%e of
increase in sa'es from year to year is more than that of increasin% raw
materia's from year to year
49
T$&LE 11:
SELLIN' $ND DISTRI&UTION TO S$LES
Year
SE$$IG %
DISTRIB&TIO Sales Ratio in %
1997-98 135646861 100 797276659 100 17.01
1998-99 157482509 116.1 954301316 119.7 16.5
1999-00 135339532 99.77 1021126098 128.08 13.25
2000-01 158044935 116.51 1231544506 154.47 12.83
2001-02 264759284 195.18 1435280683 180.02 13.71
2002-03 234293976 172.72 1699707479 213.19 15.58
2003-04 234293976 172.72 1350101632 169.34 17.35
2004-05 182497835 134.54 1299916703 163.04 14.04
14.:2
Ratio in %
0
5
10
15
20
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The trend of the ratio is *uctuatin% The ratio ran%ed from
$&B7I in $..CF.B to $C79I in &GG7FG> The avera%e va'ue is
recorded to +e $9G7I
That is se''in% and distri+ution e-penses formed on an
avera%e $9G7I on sa'es throu%hout the period of study
50
T$&LE 1:
OPER$TI,E E/PENSES TO S$LES
Year
OPERATIG
E'PESES Sales Ratio in %
1997-98 176593400 100 797276659 100 22.1
1998-99 25034524 14.18 954301316 119.7 26.2
1999-00 217562313 123.2 1021126098 128.08 21.3
2000-01 250287066 141.73 1231544506 154.47 20.3
2001-02 302720117 171.42 1435280683 180.02 21
2002-03 399841226 226.42 1699707479 213.19 23.5
2003-04 343660916 194.6 1350101632 169.34 25.4
2004-05 302634945 171.37 1299916703 163.04 23.2
.9
Ratio in %
0
5
10
15
20
25
30
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% a increasin% trend The ratio ran%ed
from &G7&I in &GGGFG$ to &?&7I in $..BF.. the avera%e va'ues are
recorded to +e &&.&
51
T$&LE 12
RETURN ON LON'-TER% IN,EST%ENT
E&IT TO LON' - TER% IN,EST%ENTS
Year EBIT
$OG ( TER#
I)EST#ET Ratio in %
1997-98 41441871 100 286863036 100 14.45
1998-99 65417183 158.05 138886084 48.42 47.36
1999-00 73185237 176.6 308883158 107.68 23.69
2000-01 86464727 208.64 240400704 83.8 35.96
2001-02 118944091 287.01 362815727 126.48 32.78
2002-03 123917079 209.01 345503958 120.44 35.87
2003-04 49888752 120.38 329589448 14.89 15.14
2004-05 106301298 256.59 297156221 103.59 35.77
2:.1:
Ratio in %
0
10
20
30
40
50
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The return of 'on%Fterm investment is shown in the a+ove
ta+'e the trend of the ratio is *uctuatin% and ran%ed +etween $>F>9I
in $..CF.B to 79CCI in &GG>FG9 The avera%e va'ue is recorded to +e
7G$GI
The *uctuatin% trend is due to +oth 8/I)T and 'on%Fterm
investment
52
T$&LE 13:
RETURN ON $SSETS
P$T$I TO TOT$L $SSETS
Year PAT AI Total Assets Ratio in %
1997-98 8072770 100 354349470 100 2.28
1998-99 24854953 307.89 406834105 114.81 6.12
1999-00 3793505 46.99 399065774 112.62 0.95
2000-01 30776546 381.24 351006479 99.06 9.43
2001-02 53219301 659.24 4979676691 140.53 11.24
2002-03 52212025 646.77 464478911 131.08 11.25
2003-04 18038795 223.44 418705678 118.06 4.31
2004-05 62710235 776.83 384092111 108.39 16.34
6.63
Ratio in %
0
5
10
15
20
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
There is an increasin% trend of the ratio e-cept in the year
$...FGG and &GG7FG> This is due to decrease in the sa'es and increase
operatin% e-penses The avera%e va'ue recorded is CC>I The ratio
from G.9I in $...FGG to $?F79I in &GG>FG9
There is a proportionate in the ratios of +oth 8)T and
operatin%
53
T$&LE 14:
RETURN ON NET -ORT#
P$T$I TO NET -ORT#
Year PAT AI ET !ORTH Ratio in %
1997-98 8072770 100 106169150 100 7.8
1998-99 24854953 307.89 108116289 101.83 22.99
1999-00 3793505 46.99 105647314 99.51 3.78
2000-01 30776546 381.24 119247988 112.32 25.81
2001-02 53219301 659.24 161645375 152.25 32.92
2002-03 52212025 646.77 196976875 185.53 26.51
2003-04 18038795 223.44 204329579 192.47 8.83
2004-05 62710235 776.83 223258672 210.29 8.09
19.59
Ratio in %
0
10
20
30
40
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The a+ove ta+'e indicates return on net worth There is a
*uctuatin% trend throu%hout the period of study The ratio ran%ed
+etween CBI in $..CF.B to 7&.&I in &GG$FG& The avera%e va'ue is
recorded to +e $.9.
The *uctuations in 8)T)I compared to that of net worth is
more
54
T$&LE 15:
COST OF 'OODS SOLD TO TOT$L COST
Year
COST OF
GOODS SO$D TOTA$ COST Ratio in %
1997-98 627286438 100 803879838 100 78.03
1998-99 687478608 109.6 712373132 88.63 96.49
1999-00 770767752 122.87 988330065 122.94 77.99
2000-01 927760132 147.9 1698527884 211.19 54.6
2001-02 1040090046 165.81 1342810163 167.04 77.46
2002-03 1186947028 189.22 1586499455 199.36 74.82
2003-04 960892337 153.18 1304553253 162.28 73.66
2004-05 896073491 142.85 1198708436 149.12 74.75
64.98
Ratio in %
0
20
40
60
80
100
120
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The trend of the ratio is a'most constant throu%hout the
period of the study The avera%e va'ue is recorded as C9.BI The ratio
ran%ed from C7??I in &GG7FG> to .?>.I in $..BF..
+e can a"so infer that the cost of goods so"d forms a ma,or part of tota"
cost*

55
T$&LE 16:
INTEREST TO TOT$L COST
Year ITEREST TOTA$ COST Ratio in %
1997-98 33369101 100 803879838 100 4.15
1998-99 30642230 91.83 712373132 88.63 4.3
1999-00 55275868 165.65 988330065 122.94 5.59
2000-01 26603534 79.73 1698527884 211.19 2.24
2001-02 28852134 86.46 1342810163 167.04 2.15
2002-03 30410880 91.13 1586499455 199.36 1.92
2003-04 23479959 7.036 1304553253 162.28 1.8
2004-05 14791063 44.33 1198708436 149.12 1.23
2.92
Ratio in %
0
1
2
3
4
5
6
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio showin% decreasin% trend e-cept in the year
$...FGG The avera%e va'ue is recorded to +e &.&I The ratio ran%ed
from $&7I in &GG>FG9 to 999I in $...FGG
The decreasin% trend is due to decrease in the interna'
depth This de+t shows and improvement in decreasin% de+t in the 'ast
year of the study
56
T$&LE 18:
DEPRECI$TION TO TOT$L COST
Year DEPRECIATIO TOTA$ COST Ratio in %
1997-98 25696227 100 803879838 100 3.2
1998-99 26643003 103.68 712373132 88.63 3.74
1999-00 42750458 166.37 988330065 122.94 4.33
2000-01 42194082 164.2 1698527884 211.19 2.48
2001-02 62163832 241.92 1342810163 167.04 4.63
2002-03 66992416 260.71 1586499455 199.36 4.22
2003-04 47693508 185.61 1304553253 162.28 3.66
2004-05 43319190 168.58 1198708436 149.12 3.61
3.73
Ratio in %
0
1
2
3
4
5
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio showin% increasin% trend throu%hout the study
This is due to percenta%e of increase in depreciation is mote than the
percenta%e of increase in tota' cost The ratio ran%ed from &>BI in
&GGGFG$ to >?7I in &GG$FG& the avera%e va'ue is recorded to +e
7C7I
57
T$&LE 19:
-$'ES $ND S$L$RIES TO TOT$L COST
Year
!AGES %
SA$ARIES TOTA$ COST Ratio in %
1997-98 30800721 100 803879838 100 3.8
1998-99 35707607 115.93 712373132 88.63 5.01
1999-00 38134322 123.81 988330065 122.94 3.86
2000-01 42406391 137.68 1698527884 211.19 2.5
2001-02 49686668 161.32 1342810163 167.04 3.7
2002-03 58297486 189.27 1586499455 199.36 3.67
2003-04 61560374 199.87 1304553253 162.28 4.72
2004-05 60733417 197.18 1198708436 149.12 5.06
3.:3
Ratio in %
0
1
2
3
4
5
6
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% an increasin% trend The avera%e
va'ues is recorded to +e >G>I the ratio ran%ed from &9GI in &GGGFG$
to 9G?I in &GG>FG9
58
T$&LE ::
R$- %$TERI$L TO TOT$L COST
Year
RA!
#ATERIA$S TOTA$ COST Ratio in %
1997-98 330044480 100 803879838 100 41.06
1998-99 333505624 101.05 712373132 88.63 46.81
1999-00 389864889 118.12 988330065 122.94 36.45
2000-01 504838432 152.96 1698527884 211.19 30
2001-02 573993119 173.91 1342810163 167.04 42.75
2002-03 635662834 192.6 1586499455 199.36 40.07
2003-04 438198844 132.77 1304553253 162.28 33.59
2004-05 400873987 121.46 1198708436 149.12 33.44
28.3:
Ratio in %
0
10
20
30
40
50
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% an decreasin% trend The ratio ran%ed
+etween 7GI in &GGGFG$ to >?B$ in $..BF.. The avera%e va'ues is
recorded to +e 7B>GI
59
T$&LE 1:
OPER$TIN' E/PENSES TO TOT$L COST
Year
OPERATIG
E'PESES TOTA$ COST Ratio in %
1997-98 176593400 100 803879838 100 21.99
1998-99 250345424 114.7 712373132 88.63 35.14
1999-00 217562313 123.2 988330065 122.94 22.01
2000-01 250287066 141.73 1698527884 211.19 14.74
2001-02 302720117 171.42 1342810163 167.04 22.54
2002-03 399841226 226.42 1586499455 199.36 25.2
2003-04 343660916 194.6 1304553253 162.28 26.34
2004-05 302634945 171.37 1198708436 149.12 25.25
3.14
Ratio in %
0
10
20
30
40
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% the constant trend in a'most a'' the
years of study The avera%e va'ue is recorded to +e &>$9I The ratio
ran%ed +etween $>C>I in &GG$FG& to 79$>I in $..BF..
60
T$&LE :
SELLIN' $ND DISTRI&UTION -IT# TOT$L COST
Year
SE$$IG %
DISTRIB&TIO TOTA$ COST Ratio in %
1997-98 135646861 100 803879838 100 16.87
1998-99 157482509 116.1 712373132 88.63 22.1
1999-00 135339532 99.77 988330065 122.94 13.69
2000-01 158044935 116.51 1698527884 211.19 9.3
2001-02 264759284 195.18 1342810163 167.04 14.65
2002-03 234293976 172.72 1586499455 199.36 16.69
2003-04 234293976 172.72 1304553253 162.28 17.96
2004-05 182497835 134.54 1198708436 149.12 15.22
14.81
Ratio in %
0
5
10
15
20
25
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% an *uctuatin% trend The ratio ran%ed
+etween .7GI in &GGGFG$ to $?BCI in $..CF.B the avera%e va'ue is
recorded to +e $9B$I
61
T$&LE 2:
R$- %$TERI$LS TO COST OF 'OODS SOLD
Year
RA!
#ATERIA$S
COST OF
GOODS SO$D Ratio in %
1997-98 330044480 100 627286438 100 52.61
1998-99 333505624 101.05 803879838 109.6 48.5
1999-00 389864889 118.12 712373132 122.87 50.58
2000-01 504838432 152.96 988330065 147.9 54.41
2001-02 573993119 173.91 1698527884 165.81 55.19
2002-03 635662834 192.6 1342810163 189.22 53.55
2003-04 438198844 132.77 1586499455 153.18 45.6
2004-05 400873987 121.46 1304553253 142.85 44.74
4:.54
Ratio in %
0
10
20
30
40
50
60
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
Ratio is showin% a *uctuatin% trend throu%hout the period
of study The ratio ran%ed from >>FC>I in &GG>FG9 to 997$.I in &GG$F
G& The avera%e va'ue is recorded to +e 9G?9I
62
T$&LE 3:
INTEREST CO,ER$'E R$TIO
INTEREST TO &&IT < DEPRECI$TION
Year ITEREST
EBIT(
DEPRECIATIO Ratio in %
1997-98 33369101 100 15745644 100 2.12
1998-99 30642230 91.83 38854180 246.76 0.79
1999-00 55275868 165.65 30434779 193.29 1.82
2000-01 26603534 79.73 44270645 281.16 0.6
2001-02 28852134 86.46 55780259 354.26 0.51
2002-03 30410880 91.13 56924663 361.53 0.53
2003-04 23479959 7.036 1995244 12.67 11.77
2004-05 14791063 44.33 62982108 399.99 0.23
.2:
Ratio in %
0
5
10
15
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% the decreasin% trend e-cept in the
year &GG7FG> the avera%e va'ue recorded is &7GI and the ratio is
ran%ed from G&9I in &GG>FG9 to $$CCI in &GG7FG>
The decreasin% trend is due to decrease in the interna'
de+t The ma-imum and minimum va'ues are recorded in the two
consecutive years This shows an improvement in decreasin% the de+t
in the 'ast year of the study
63
Ta(!e 4:
DI,IDEND CO,ER R$TIO
DE,IDEND TO E&IT < DEPRECI$TION
Year DI)IDED
EBIT(
DEPRECIATIO Ratio in %
1997-98 2070000 100 15745644 100 0.13
1998-99 3105000 150 38854180 246.76 0.08
1999-00 4140000 200 30434779 193.29 0.14
2000-01 0 0 44270645 281.16 0
2001-02 8280000 400 55780259 354.26 0.15
2002-03 8280000 400 56924663 361.53 0.15
2003-04 4140000 200 1995244 12.67 2.07
2004-05 16560000 800 62982108 399.99 0.26
:.26
Ratio in %
0
0.5
1
1.5
2
2.5
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% an upward trend The avera%e va'ue
recorded is G7C The ratio ran%ed +etween G on &GGGFG$ to &GCI in
&GG7FG>
In the year &GGGFG$ the dividends were not issued and the
increasin% trend of the ratio is due to the %radua' increase of the share
capita' +y decreasin% the e-terna' de+t which is an encoura%e a+'e
trend
64
T$&LE 5:
E$RNIN'S PER S#$RE
P$T TO NU%&ER OF S#$RES
Year PAT AI O OF SHARES Ratio in %
1997-98 8072770 100 207000 100 39
1998-99 24854953 307.89 207000 100 12.07
1999-00 3793505 46.99 414000 200 9.16
2000-01 30776546 381.24 414000 200 74.34
2001-02 53219301 659.24 414000 200 128.55
2002-03 52212025 646.77 828000 400 63.05
2003-04 18038795 223.44 828000 400 21.79
2004-05 62710235 776.83 828000 400 75.74
55.35=
Ratio in %
0
50
100
150
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% an increasin% trend e-cept in the
years $...FGG and &GG7FG> the avera%e va'ue is recorded as ??>?I
the ratio ran%ed from .$?I in $...FGG to $&B99I &GG$FG&
The variation in the ratio is due to variation in 8)T and
sa'es
65
T$&LE 6:
C$S# E$RNIN'S PER S#$RE
C$S# PROFIT TO NU%&ER OF S#$RES
Year
CASH PROFIT
(PBIDT) O OF SHARES Ratio in %
1997-98 90187953 100 207000 100 435.69
1998-99 63567821 70.48 207000 100 307.09
1999-00 115935965 128.55 414000 200 208.04
2000-01 128658809 142.66 414000 200 310.77
2001-02 181107923 200.81 414000 200 437.46
2002-03 190909495 211.68 828000 400 230.57
2003-04 97782260 108.42 828000 400 118.09
2004-05 149620488 165.9 828000 400 180.7
68.44
Ratio in %
0
100
200
300
400
500
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The trend of the ratio is decreasin% in the ear'y years of
study and 'ater it is increasin% The avera%e ratio is recorded as
&CB99I The ratio ran%ed +etween $$BG.I in &GG7FG> to >7C>?I in
&GG$FG&
Cash earnin%s per share decreased in the year &GG7FG>
due to decrease in %ross pro6t( operatin% pro6t and nonFoperatin%
pro6t
66
T$&LE 8:
DI,IDEND PER S#$RE
DI,IDEND TO NU%&ER OF S#$RES
Year DI)IDED O OF SHARES Ratio in %
1997-98 2070000 100 207000 100 10
1998-99 3105000 150 207000 100 15
1999-00 4140000 200 414000 200 10
2000-01 0 0 414000 200 0
2001-02 8280000 400 414000 200 20
2002-03 8280000 400 828000 400 10
2003-04 4140000 200 828000 400 5
2004-05 16560000 800 828000 400 20
11.4
Ratio in %
0
5
10
15
20
25
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio is showin% an upward trend The avera%e va'ue
recorded is $$&9 the ratio ran%ed from G in the year &GGGFG$ to &G in
the year &GG$FG& and &GG7FG>
In the year &GGGFG$ dividends were not issued and the
increasin% trend of the ratio is due to %radua' increase of share capita'
+y increasin% the e-terna' de+t which is an encoura%e a+'e trend
67
T$&LE 9:
DI,IDEND P$YOUT R$TIO
DI,IDEND PER S#$RE TO E$RNIN'S PER S#$RE
Year
DI)IDED PER
SHARE
EARIGS PER
SHARE Ratio in %
1997-98 10 100 39 100 25.64
1998-99 15 150 120.07 307.87 7.24
1999-00 10 100 9.16 23.49 109.17
2000-01 0 0 74.34 190.62 0
2001-02 20 200 128.55 329.62 15.56
2002-03 10 100 63.05 161.67 15.86
2003-04 5 50 21.79 55.87 8.95
2004-05 20 200 75.74 194.21 26.41
5.1:
Ratio in %
0
20
40
60
80
100
120
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
This ratio is showin% an upward trend The avera%e va'ue is
recorded as &?$GI The ratio ran%ed +etween C&>I in $..BF.. to
$G.$CI $...FGG
The increasin% trend is due to %radua' increase in share
capita' +y increasin% the e-terna' de+t which is an encoura%e a+'e
trend
68
T$&LE 2::
SELLIN' $ND DISTRI&UTION TO OPER$TIN' E/PENSES
Year
SE$$IG %
DISTRIB&TIO
COST OF
GOODS SO$D Ratio in %
1997-98 135646861 100 627286438 100 100
1998-99 157482509 116.1 803879838 109.6 109.6
1999-00 135339532 99.77 712373132 122.87 122.87
2000-01 158044935 116.51 988330065 147.9 147.9
2001-02 264759284 195.18 1698527884 165.81 165.81
2002-03 234293976 172.72 1342810163 189.22 189.22
2003-04 234293976 172.72 1586499455 153.18 153.18
2004-05 182497835 134.54 1304553253 142.85 142.85
Ratio in %
0
50
100
150
200
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
Ratio in %
Inference:
The ratio shows a +it constant trend The avera%e
va'ue is ?9?GI the ratio ran%ed from ?G7GI in &GG>FG9 to C?B$I in
$..CF.B
69
TREND $N$LYSIS
1. C$PIT$L TREND
Year CAPITA$ PERCETAGE
1997-98 286863036 100
1998-99 309346084 107.84
1999-00 308883158 107.68
2000-01 240400704 83.8
2001-02 362815727 126.48
2002-03 345503958 120.44
2003-04 329589448 114.89
2004-05 297156221 103.59
Inference:
,here is a 0uctuating trend in the capital amount. ,he
capital has decreased in the year 1222324 and measured in the year
1221325. ,he increase is due to increase of share capital.
70
. S$LES TREND:
Year SA$ES RATIO I%
1997-98 797276659 100
1998-99 954301316 119.7
1999-00 1021126098 128.08
2000-01 1231544506 154.47
2001-02 1435280683 180.02
2002-03 1699707479 213.19
2003-04 1350101632 164.34
2004-05 1299916703 163.04
Inference:
The sa'es have increased up to &GG&FG7 and 'ater they
have increased The decrease in sa'es in &GG&FG7 is due to decrease in
the capita' amount in that year
71
5.P$I&T TREND:
Year PAIBT RATIO I%
1997-98 8072770 100
1998-99 34854953 431.76
1999-00 17909369 221.85
2000-01 59861193 741.52
2001-02 90091957 1116
2002-03 93506199 1158.29
2003-04 26408795 327.13
2004-05 91510235 1133.57
Inference:
The pro6t +efore ta- has increasin% trend up to &GG&FG7
/ut 'ater it drops to minimum va'ue of 7&C$7 in &GG7FG> The
decreasin% in &GG7 is due to hi%h operatin% e-penses and decrease in
sa'es
72
FINDIN'S
The Lon%FTerm Lia+i'ities ;e-terna' de+t< are decreasin% year
after year and share capita' ;interna' eHuity<is %radua''y
increasin%
The company maintains reserves Jsurp'us in an increasin% trend
Tota' Lia+i'ities are a'so in decreasin% trend
In the composition of manufacturing e&penses, selling and
distribution e&penses, e&cise duties, pacing charges, licenses,
watch and ward, conversion e&penses. -mong these entire
e&penses e&cise duties and conversion charges constitute for
about 627 on an average.
8aw 9aterials forms 5:.257 in sales, 5;.<27 in ,otal Cost and
=2.>=7 in the cost of goods sold.
Employee salary ? benefts are in an increasing trend.
@elling ? Aistribution e&penses are around on an average
>=.>27 in the ,otal Bperating E&penses and the e&penses are
bout 1<7 on an average in the sales.
Aepreciation is on an average 5.:57 in total cost.
-ll the proft margin ratios are almost increasing tend e&cept in
the year 122532< and 466;366.
Aividend per share, earnings per share ? dividend payout ratio
are in an increasing trend e&cept in the year 122532<.
- variation was observed in the year 466;366 and 122532< with
respect to all the ratios calculated.
Aue to decrease in sales in 466;366 'though the gross
proft 9oderate* and the high operating e&penses. ,he operating
proft dropped to a ma&imum value.
73
In this year in cost of goods sold the cost of pacing
9aterials and e&cise duties increased, which decreased the gross
proft. In addition to that employees salary and benefts also
increased. In the year resulting in the increase of operating e&penses,
thus Aecreasing the operating proft 'by <27 compared to the
previous year '122132<**
-lmost every item under non3operating incomes also
decreased, especially machine hire collection and lease rentals
terminated in the year which made the non3operating proft to
decrease about 527 of the average non3operating proft through the
study.
74
CONCLUSIONS
The company has +een consistent'y maintainin% its reserves
simu'taneous'y reducin% its e-terna' 'ia+i'ity
The manufacturin% e-penses are a+out CGI of tota' sa'es
In manufacturin% e-penses( the cost of the e'ements such as
e-cise duty( wa%es and sa'aries( raw materia's increases in the
'ast two years of the study( amon% which conversion char%es can
on'y +e contro''a+'e
The se''in% and distri+ution e-penses are ?GI of the tota'
operatin% e-penses
In the year &GG7FG> a'' ratios are showin% a variation with a
avera%e va'ue
75
SU''ESTIONS
The professiona' mana%ement sty'e of consistent'y maintainin%
its reserves and surp'us is to +e continued to the future years
Conversion char%es of the manufacturin% e-penses are to +e
contro''ed to increase the %ross pro6t
The varia+'e portion of the se''in% and distri+ution e-penses(
which are contro''a+'e( can +e reduced to decrease the operatin%
e-penses and increase the operatin% pro6t
76
&I&LIO'R$P#Y
FINAN$IA! MANAGEMENT
FI1 8andey( @ikas pu+'ishin% 0ouse 8vt 'td
FINAN$IA! MANAGEMENT
F1" Ahan J 8A 4ain( Tata 1c 3raw 0i'' 8u+'ishin% Co(
'td
ADAN$ED A$$O/NTAN$"
F!8 4ain J AL Naran%( Aa'yani 8u+'ications
FINAN$IA! MANAGEMENT
F!N 1aheswari( !u'tan 8u+'ications
77