A PROJECT ON

FINANCIAL STATEMENT ANALYSIS AND

RATIO ANALYSIS OF RAMCO CEMENT

SUBMITTED BY

SHWETA. R. PEDNEKAR

T.Y.MBS (Semester-v)

SPECIALISATION : FINANCE

Div: B Roll No: 34

*2016-2017*

UNDER THE GUIDANCE OF

PROF. UTPALA VANMALI

SUBMITTED TO

UNIVERSITY OF MUMBAI

NIRMALA MEMORIAL FOUNDATION COLLEGE OF

COMMERCE AND SCIENCE

90 FEET ROAD, ASHA NAGAR, THAKUR COMPLEX,

KANDIVALI (E), MUMBAI 400 101.

 DECLARATION

I, Ms. SHWETA R PEDNEKAR of T.Y.B.M.S. ( Bachelor Degree of

Management Studies Semester - v ) hereby declare that I have completed
the project on FINANCIAL STATEMENT ANALYSIS AND RATIO
ANALYSIS OF RAMCO CEMENT in the academic year 2016-2017.

The information submitted in the project are true and original and whenever
the matter is collected from published books, magazines etc, the same is
mentioned in the references given.

__________________
____________________

Date of submission Shweta R pednekar

 ACKNOWLEDGEMENT

I extent my gratitude to prof. Utpala Vanmali for providing guidance and

support during the course of project. She has been a great help through the
making of the project. I thank the University of Mumbai for giving me the
opportunity to work on such a relevant topic.

I also want to thank my college faculties the librarian and the Principal
Dr. T. P. Madhu Nair for their help and others who are indirectly responsible
for the completion of this project. In addition I take this opportunity to
thank our BMS coordinator Prof. Dr. Poonam Kakkad for being there
always to guide me and for extending her full support.

Date :

Mumbai

___________________

(Shweta R Pednekar)
 CERTIFICATE

This is to certify that the project titles as FINANCIAL STATEMENT

ANALYSIS AND RATIO ANALYSIS OF RAMCO CEMENT has been

completed by Ms. Shweta Pednekar of T.Y.BMS (Semester v) examination

specialisation in FINANCE in academic Year 2016-2017.

________________
________________

(Prof. Utpala Vanmali) External Examiner

Project Guide

___________________
__________________

(Dr. T. P. Madhu Nair ) (Prof. Dr. Poonam kakkad)

 EXECUTIVE SUMMARY

This study provides a systematic financial analysis of Ramco Cement. That shows

how the company provides finance to their organization from different sources.

To our knowledge, this is first study using different analysis to find the conclusion and

Suggestions to the Ramco Cement company we used such analysis like Comparative

analysis , Common size analysis, Trend analysis and Ratio Analysis etc.

The Data of this project is used as like profit & Loss of Ramco Cement and Balance

Sheet of Ramco Cement which is useful to entire project and with the help of that we

came to our conclusion, status and company profile of the Ramco Cement.
 A Study on
Financial statement
analysis and ratio analysis
of
Ramco cement
The term Financial performance analysis and interpretation of financial statements,
refers to the process of determining financial strength and weaknesses of the firm by
establishing strategic relationship between the items of the balance sheet, profit and loss
account and other operative data.

Financial Performance analysis is a process of evaluating the relationship between

component parts of a financial statement to obtain a better understanding of a firms
position and performance.

The purpose of financial analysis is to diagnose the information contained in financial

statements so as to judge the profitability and financial soundness of the firm. Just like a
doctor examines his patients by recording his body temperature, pressure etc.

Before making his conclusion the illness and before giving his treatment. A financial
analyst analyses the financial statement with various tools of analysis before
commenting upon the financial health or weaknesses of an enterprise.

The analyst and interpretation of financial statement is essential to bring out the mystery
behind the figures in financial statements.

Financial statements analysis is an attempt to determine the significance and meaning

of the financial statement data so the forecast may be made of the future earnings, ability
to pay interest and debt maturities (both current and long term) and profitability of a
sound dividend policy

Business concern needs finance o meet their requirements in the economic world. Any
kind of business activity depends on the finance. Hence, it is called as lifeblood of
business organization whether the business concerns are big or small , they need finance
to fulfill their business activities.

In the modern world, all the activities are concerned with the economic activities and
very particular to earning profit through any venture or activities. The entire business
activities are directly related with making profit. ( According to the economic concepts
of factors of production, rent given to landlord, wage given to labor , Interest given to
capital and profit given to shareholders or proprietors)
Financial statement analysis

Meaning and defination

According to Hamptons John, the financial statement is an organized collection of data

according to logic and consistent accoumting procedures. Its purpose is to convey an
understanding of financial aspects of a business firm.It may show a position at a moment
of time as in the case of a balance sheet or may reveal a service of activities over a given
period of time, as in the case of an income statement.

Financial statement are the summary of the accounting process,which provides useful
information to both internal and external parties. John N. Nyer also defines it Financial
statements provide a summary of the accounting of a business enterprise, the balance-
sheet reflecting the assets,liabilities and capital as on a certain data and the income
statement showing the results of operations during a certain period.

Financial statements generally consist of two important statements

1. The income statement or profit and loss account.

2. Balance sheet or the position statement.

Financial Performance refers to the act of performing financialactivity. In broader sense,

financial performance refers to the degree to which financial objectives being or has
been accomplished.It is the process of measuring the result of a firms policies and
operations in monetary terms. It is used to measure firms overall financial health over a
given period of time and canalso be used to compare similar firms across the same
industry or tocompareindustries or sectors in aggregation.
FINANCIAL PERFORMANCE ANALYSIS

The term Financial performance analysis also known as analysis and interpretation of
financial statements, refers to the process of determining financial strength and
weakness of the firm by establishing strategic relationship between the items of the
balance sheet, profit and loss account and other operative data. Analyzing financial
statements by Metcalf and Titard Financial analysis is a process of evaluating the
relationship between component parts of a financial statement to obtain a better
understanding of a firms position and performance by Myers

Financial performance:

The word Performance is derived from the word Perfourmen ,which means to do, to
carry out or to render. It refers the act of performing execution, accomplishment,
fulfillment etc. In border sense, performance refers to the accomplishment of a given
task measured against preset standards of accuracy, completeness, cost and speed. In
other words, it refers to the degree to which an achievement is being or has been
accomplished. In the Words if FrichKohlar The performance is a general term applied
to a part or to all the conducts of activities of an organization over a period of time often
with reference to past or projected cost efficiency, management responsibility or
accountability or the like. Thus, not just the presentation, but the quality of results achive
refers to the performance. Performance is used to indicate firms success , conditions,
and compliance.

Financial performance refers to the act of performing financial activity. In broader sense,
financial performance refers to the degree to which financial objectives begin or has
been accomplished. It is the process of measuring the results of a firms policies and
operations in monetary terms. It is used of measure firms overall financial health over a
given period of time or sectors in aggregation. The purpose of financial analysis is to
diagnose the information contained in financial statements so as to judge the profitability
and financial soundness of the firm. Financial statements analysis is an attempt to
determine the significance and meaning of the financial statement data so that forecast
may be made of the future earnings, ability to pay interest and depts. Maturities (both
current and long term) and profitability of a sound divided policy

Significance of Financial Performance Analysis

Interest of various related group is affected by the financial performance of a firm.

Therefore, these groups analyze the financial performance of the firm. The type of
analysis varies according to the specifies interest of the party involved.

1. Trade Creditors :
Interested in the liquidity of the firm ( appraisal of firms liquidity)

2. Bond Holders :
Interested in the cash flow ability of the firm ( appraisal of firms capital
structure, the major sources and uses of funds, profitability over time, and
peojection of future profitability).

3. Investors :
Interested in present and expected future earnings as well as stability of these
earnings ( appraisal of firms profitability and financial condition).

4. Management:
Interested in internal control, better financial condition and better performance
(appraisal of firms present financial condition, evaluation of opportunities in
relation to this current position, return on investment provided by various assets
of the company, etc)
Limitations of Financial Statement:

Each project Gives Rise to its own Unique risks and hence possess its own unique
challenges

Only Interim Reports:

Only Interim statements dont give a final picture of the concern. The data given
in thesestatements is only approximate.The actual position can only be
determined when the business is sold or liquidated.
Dont Give Extra Position:
The Financial Statements are expressed in Monetary values, so they appear to
give final and accurate position.The value of assets can be sold nor the amount
which willl be required to raplace these assets.
Historical Costs
The Financial Statements are prepared on the basis of historical costs or original
costs. The value of assets decreases with the passage of time current price
changes are not taken into account. The statements are not prepared keeping in
view the present Economic conditions.The balance sheet loses the significance
of being an index of current economic realities.
Act of Non monitory factors ignored:
There are certain factors which have a bearing on the financial positions and
operating results of the business but they dont become a part of these statements
because they cant be measured in monetary terms.such factors may include in
the reputation of the management.
No Precision
The precision of financial statement data is not possible because the statements
deal with matters which cant be precisely stated. The data are recorded by
conventional procedures followed over the years.Various
conventions,postulates,perdonal judments etc.
 Chapter 2
Review of literature

A. Goel V.K. and Navi N.K (1976) in their study on productivity trends in cement
industry in India revealed that there was a healthy picture of the cement industry
 during the period of 1951-52 to 1974-75. The profit margin in the cement industry
was to the of 20percent during the period. There has been a sharp decline in above
the ratios of net worth to total liabilities and the acid tests ratio. After 1974-75 the
industry incurred losses due to its internal techno-economics and non-viability

B. Jayant Sathaye (2005) the study revealed that, the Indian cement industry has
grown rapidly over the past few decades and there have been significant investments
in new cement kilns and associated production equipment. This has led to a situation
where Indias cement industry in made up of both some of the worlds most energy-
inefficient plants as well as some of the worlds best practice facilities.

C. Alovsat Muslumov (2005)2 concluded that the privatization was associated with a
declining value added and shareholders profitability in Turkish cement industry. A
decline in the value added and shareholders profitability were mainly caused by the
decrease in return on assets. The decline in the return on asset was traced to
declining asset productivity. These results are not consistent with previous cross-
sectional privatization studies and a number of country studies.

D. Hajihassani (2012) presented A Comparison of Financial Performance in Cement

Sector in Iran. This study presents comparison of financial performance for the
period 20062009 by using financial ratios and measures of cement companies
working in Iran. Financial ratios are divided into three main categories and measures
including two indicators. This work concludes that the performance of cement
companies on the basis of profitability ratio is different than on the basis of liquidity
ratio, leverage financial.

E. Mistry Dharmendra S (2011) found that Liquidity is closely related with the
profitability of the Indian Cement Industry as compared to the Total Assets,
Inventory Turnover Ratio, Debt-Equity Ratio and Operating Expenses Ratio.
F. S. Chandrakumarmangalam and P. Govindasamy (2010) investigate the
relationship between the leverage (financial leverage, operating leverage and
combined leverage) and the earning per share, and this study also explains the
relationship between the Debt equity ratio and Earning per Share and how effectively
the firm be able debt financing, the results suggest that the leverage and profitability
and growth are related and the leverage is having impact on the profitability of the
firm

G. L.G.Burange and Shruti Yamini (2008) in their study computed the Annual
Compound Growth Rates (ACGR) as per semi log method for 37 years from 1970-
71 to 2006-07. According to the study the performance of primary indicators in the
Indian cement industry has been very impressive during the period 1970-71 to 2006-
07.

H. Hiral Shah and Heinz Telser (2006) revealed that the Indian cement plants, which
are technical, advanced, manned by skilled personnel, and supported by an
increasing consumption, are operating at close to the maximum rated capacities.
Furthermore, the annual growth figures of seven to eight percent are expected to
prevail in the coming years.

I. Kulansizoglu (2007) concluded that the cement industry has gradually become more
competitive over time since the sign of parameter of time trend in their supply
equation is negative and the parameter itself, although small in absolute value, is
statistically significant. The competition Authority dummy turned out to be
statistically in-significant even when they assume that it might have a logged impact.

J. Chakraborty (2010) employed two performance measures, including ratio of profit

before interest, tax and depreciation to total assets and ratio of cash flows to total
assets and two leverage measures, including ratio of total borrowing to assets and
ratio of liability and equity, and reported a negative relation between these ones.
Objectives of Ramco cement

To study in detail about ramco cement.

To study financial statement analysis of Ramco Cement
To study financial health of the company using ratio analysis
 Chapter 3

RESEARCH METHODOLOGY
Methodology is an essential part of research to find answer to research objectives and
initiate the same. Therefore, it figures as the important part of any study. This focuses
on the design and research method utilized in the study. In addition procedure followed
to collect, process and analyze data is presented

Sources of Data

Data was collected based on source.

Secondary Data.

SECONDARY DATA

The secondary data are those which have already been collected by some other agency
and which have already been processed. The sources of secondary data re annual reports,
browsing internet, through magazines.

o It Includes data gathered from the annual reports of Ramco Cement.

o Articles are collected from official website of Ramco.

Company profile of Ramco Cement

 Madras Cements Ltd is the flagship company of the Ramco Group, a well-known
business group of South India. It is headquartered at Chennai. The main product of the
company is Portland cement, manufactured in five state-of-the art production facilities
spread over South India, with a current total production capacity of 10.49 MTPA. The
company is the fifth largest cement producer in the country. Ramco Group is the most
popular cement brand in South India. The company also produces Ready Mix Concrete
and Dry Mortar products, and operates one of the largest wind farms in the country.

Integrated Cement Plants

Ramasamy Raja Nagar, Virudhunagar, Tamil Nadu

Alathiyur, Ariyalur District, Tamil Nadu

Ariyalur, Govindapuram, Ariyalur District, Tamil Nadu

Jayanthipuram, Andhra Pradesh

Mathodu, Chitradurga District, Karnataka

Packing Terminals

Nagercoil Packing Unit, Kumarapuram, Aralvaimozhi, Kanyakumari District,

Tamil Nadu
Hyderabad Packing Plant, Pochampally Road, Malkapur, Nalgonda District,
Andhra Pradesh

State-of-the-Art Research Centre

Ramco Research Development Centre (RRDC), Chennai

MISSION
 To continuously improve productivity through quality, technology renewal and
customer focused operations.

To position ourselves in the cement business as a pace setter and grow in the same
and related business.

To seek green field locations for growth on the basis of developed synergies of the
existing operations.

To continuously seek quality enhancement in product, processes and responses to

various stakeholders.

To update management practices on a continuous basis and maintain a culture of

professional management.

To conserve, protect and enhance quality of life for our employees and community.

To preserve the credence in our motto "our real resources are the human assets"

COMPANY HISTORY

In 1950's, investment in Cement Industry was not attractive due to price controls and the
massive investments required. Only those entrepreneurs who were not profit minded but
cared for country's development came forward in investing in Cement Industry. When
Shri Manubai Shah, Central Minister for Industries in late fifties came to Madras to meet
the Industrialists, he called upon Shri P A CRamasamy Raja and requested him to start a
cement factory in TN . This was readily accepted by Shri PACR and this marked the
birth of "Madras Cements Ltd" in 1961.

On the night of September 3, 1962, while the whole city slept, PACR lay on his bed in
the Madras General Hospital, seriously ill. As all his near and dear watched with tears in
their eyes, PACR summoned his son Ramasubrahmaneya Rajha, to his bedside. "There is
no more hope", he whispered :"You should take care of everything from now".
My main concern is for Madras Cements. I have taken a lot of money as shares from
well wishers I have not paid them back any dividends as yet. This has to be taken care of
immediately ...."PACR's last wish was dutifully fulfilled by the present chairman
Shri.P.R.Ramasubrahmaneya Rajah.

Today Madras Cements Ltd is not only one of the most respected cement companies in
the country but also leads in giving the best return for the investors. With a cement
capacity of 10.49 millions tons per annum,(Mtpa) the company is the sixth largest
producer of cement in India. It is also one of the largest wind energy producer in the
country with a capacity of 45 MW. The first plant of MCL at Ramasamy Raja Nagar,
near Virudhunagar in Tamil Nadu commenced its production in 1962 with a capacity of
200tonnes, using wet process. In 70's, the plant switched over to more efficient dry
process. A second kiln was also added to bring the total capacity to 12 lakh ton per
annum. The second venture of MCL is its Jayanthipuram plant near Vijayawada in A.P
set up in 1987 . The 16 lakh ton per annum plant employs the latest state of art
technology. The third venture of MCL is at Alathiyur in TN set up in 1997 and expanded
by addition of another line in 2001. The 30 lakh ton per annum plant is the most modern
plant in the country .In 2000 , MCL acquired Gokul Cements situated in Mathod in
Karnataka whose capacity is 600 TPD. Being a eco-friendly company, MCL set up the
Ramco Winfarm in 1993 at Muppandal TN. This was followed by windfarms in
Poolavadi near Coimbatore in 1995 and Oothumalai in 2005. The combined capacity of
these two put together is about 45 MW .In the year 1999, MCL commissioned the most
sophisticated Ready Mix Concrete Plant in Medavakkam in South Chennai. In 2002, a
state-of-art Dry Mortar plant was commissioned near Sriperumpudur, Tamilnadu which
manufactures dry mortar, cement based putty and tile fix compound.
Birth of the first Ramco Venture

His visited Britain and other European countries to see firsthand working of the mills.
There he had the chance to meet many business magnates .He returned to India full of
ideas .After returning to Rajapalayam, he put his plans into action. To start they yarn
mill, he found that he needed Rs.5 lakhs, which in 1936 was a huge sum.

It was considered a Herculean task to raise such a big capital .But the determined Raja
was not deterred. He decided to make the shareholders

Rajapalayam Mills Ltd.,

Thanks to his illustrious background and his own reputation, he got the required capital
ready, in next to no time. On September 05, 1938, the State Minister for labor, V.V. Giri
inaugurated the mill and Rajapalayam Mills Ltd commenced operations. There was no
looking back for Ramasamy Raja after this. The Mill was a grand success .He followed
up this with other successful ventures. He started Rama Raju Surgical Cotton Mills
along with his son-in-law Rama Raju.

Ramco Cements Ltd

At that time, Cement was not considered as a favorable venture due to price controls.
Shri.Manubai Shah, Central Minister for Industries called upon Ramasamy Raja and
appealed to him to start a cement factory. This was how Madras Cements Ltd came into
being in 1961.Ramasamy Raja needed one crores as capital. The State Government for
the first time in the history of India, invested Rs.10 lakhs An indication of the total trust
and implicit faith the Government had in him. Concern for Shareholders and Workers
Ramasamy Raja had the well being of the people upper-most in his mind .He was very
particular that the funds of his share holders be utilized usefully. He showed high
concern for his workers.
AWARDS & ACHIEVEMENTS:-

AWARDS:
4 Leaves Award
Centre for Science and Environment
National Award for Energy Conservation
Confederation of Indian industry
Best Energy Efficient Unit
National Council for Cement and Building Materials
Corporate Performance Award
Economic Times
Best Improvement in Energy Performance
International Congress on Chemistry of Cement
The Analyst Award
The Institute of Chartered Financial Analysts of India
Best all round Industrial performance
Federation of AP Chambers of Commerce & Industries
Visvesvariah Industrial Award
All India Manufacturers Organization
Business Excellence Award
Industrial Economist
Export Performance Award
CAPEXIL
State Safety Awards
Tamil Nadu & AP Government
Good Industrial Relations Award
Tamil Nadu & AP Governments
INDUSTRY PROFILE
CEMENT INDUSTRY IN INDIA

The Cement industry in India has come a long way since 1914, when the first cement
plant was commissioned with a production level of 1000tons/ annum. The first true
Portland cement was manufactured in Calcutta presently called as Kolkata. India is the
second largest cement producer in the world. As cement is a basic construction material
with virtually no substitute, it is used worldwide for all construction work. Thus the
growth in the construction industry has a direct relation with the production and
consumption of cement.

India is the second largest cement producer in the world with a production level of about
99 million tons (about 5% of world production ~2000 million tons). The installed
capacity is about 119 million tones and at an expected 10 % growth rate the production
is likely to grow to about158.5 million tons at the end of 2006-2007.Over the years, the
growth of the industry has been uneven. With traditionally cement deficit regions
covering the most of the major growth centers of the country. Cement industry in India
has made tremendous strides in technological up gradation and assimilation of latest
technology.

At present ninety three per cent of the total capacity in the industry is based on modern
and environment-friendly dry process technology and only seven per cent of the capacity
is based on old wet and semi-dry process technology.

The major players of Indian cement industry are Madras cements, ACC, India cements,
Gujarat Ambuja, Ultratech, Grasim, JK group, Jaypee group, Century textiles, Birla
Corporation, Lafarge. There is tremendous scope for waste heat recovery in cement
plants and thereby reduction in emission level. Cement plants in the country have mostly
changed from the wet process to the energy efficient dry process. In India, the cement
factories are localized in the states of Tamil Nadu, Madhya Pradesh, Gujarat, Bihar,
Rajasthan, Karnataka and Andhra Pradesh.

Cement Industry
Cement industry is one of the important industries to country development in the light of
the main important basis for construction industry and also the important indicator
showing domestic economic growth. In the past, the domestic demand of cement used to
be up to 36 million tons. But, the severely negative effects from economic crisis in 1997
have caused real estate and
construction industry subdued; the domestic demand of cement has shrunk and been in
oversupply atmosphere.

Until 20012003, the government has launched many economic actuating policies. This
has made real estate and construction industry recovered and the demand of cement has
been increasing gradually from 21 million tons in 2001 to 25 million tons and 26.82
million tons in 2002 and 2003 respectively; and the price level is higher in line with
increase production cost.
Cement Industry originated in India when the first plant commenced production in
1914 at Porbandar, Gujarat. The industry has since been growing at a steady pace, but
in the initial stage , particularly during the period before Independence, the growth had
been very slow. Since indigenous production was not sufficient to meet the entire
domestic demand, the Government had to control its price and distribution statutorily.
Large quantities of cement had to be imported for meeting the deficit. The industry was
partially decontrolled in 1982 and this gave impetus to its pace of growth. Installed
capacity increased to more than double from 27 million tons in 1980-1981 to 62 million
tons in 1989-1990.

The cement industry responded positively to liberalization policy and the Government
decontrolled the industry fully on 1st March 1989. From 1991 onwards cement industry
got the status of a priority industry in schedule III of the industry policy statement,
which made it eligible for automatic approval for foreign investment up to 51% and also
for technical collaboration on normal terms of payment of royalty.
Major players in Indian cement sector:-

Lafarge
Gujarat Ambuja Cement
Ultratech Cement
India Cements
Century Cements
Jaypee Group
Madras Cements
Birla Corporation Limited
Jk cements
Dalmia cements
Chettinad cements

Balance Sheet - The Ramco Cements Ltd.

( Rupees in crores )
Particulars Mar'16 Mar'15 Mar'14 Mar'13
12 Months 12 Months 12 Months 12 Months
Liabilities
Share Capital 23.81 23.81 23.8 23.8
Reserves & Surplus 3068.82 2621.38 2458.28 2346.96
Net Worth 3092.63 2645.19 2482.08 2370.76
Secured Loan 1071.69 1629.09 1650.32 1252.33
Unsecured Loan 688.58 634.54 593.65 728.81
TOTAL LIABILITIES 4852.9 4908.82 4726.05 4351.9
Assets
Gross Block 7415.99 7106.54 6637.25 6404.34
(-) Acc. Depreciation 2511.09 2231.02 1996.18 1810.79
Net Block 4904.9 4875.52 4641.07 4593.55
Capital Work in Progress 146.84 262.66 354.24 157
Investments 365.37 355.83 283.41 265.77
Inventories 549.02 520.58 685.53 594.75
Sundry Debtors 468.48 380.22 303.96 302.81
Cash and Bank 90.77 61.85 44.61 53.96
Loans and Advances 499.79 613.62 555.74 503.54
Total Current Assets 1608.06 1576.27 1589.84 1455.06
Current Liabilities 2128.5 1999.14 2037.68 1932.21
Provisions 43.77 162.32 104.83 187.27
Total Current Liabilities 2172.27 2161.46 2142.51 2119.48
NET CURRENT ASSETS -564.21 -585.19 -552.67 -664.42
Misc. Expenses 0 0 0 0
TOTAL ASSETS 4852.9 4908.82 4726.05 4351.9

Profit & Loss Account of Ramco Cement :-

( Rupees in crores )
Mar'16 Mar'15 Mar'14 Mar'13
Particular 12Months 12Months 12Months 12Month
INCOME:
Sales Turnover 4153.4 4181.9 3683.51 3830.8
Excise Duty 557.65 537.01 0 0
NET SALES 3595.75 3644.89 3683.51 3830.8
Other Income 0 0 0 0
TOTAL INCOME 3687.09 3731.77 3769.23 3872.66
EXPENDITURE:
Manufacturing Expenses 599.05 772.66 907.96 876.85
Material Consumed 779.32 913.31 938.63 751.65
Personal Expenses 259.23 228.68 221.83 196.02
Selling Expenses 0 0 0 0
Administrative Expenses 899.18 1017 1052.05 1000.37
Expenses Capitalized 0 0 0 0
TOTAL EXPENDITURE 2536.78 2931.65 3120.47 2824.89
Operating Profit 1058.97 713.24 563.04 1005.91
EBITDA 1150.31 800.12 648.76 1047.77
Depreciation 267.04 249.88 306.29 280.58
Other Write-offs 0 0 0 0
EBIT 883.27 550.24 342.47 767.19
Interest 180.23 193.81 188.13 178.51
EBT 703.04 356.43 154.34 588.68
Taxes 144.78 114.08 16.64 184.56
Profit and Loss for the Year 558.26 242.35 137.7 404.12
Non Recurring Items 0 0 0 -0.47
REPORTED PAT 558.26 242.35 137.7 403.65
KEY ITEMS
Preference Dividend 0 0 0 0
Equity Dividend 56.93 28.48 19.78 59.71
Equity Dividend (%) 239.1 119.61 83.1 250.88
Shares in Issue (Lakhs) 2380.77 2380.77 2379.69 2379.69
EPS - Annualized (Rs) 23.45 10.18 5.79 16.96
 CHAPTER 4
Data Analysis & Interpretations

Methods of financial analysis :-

The following methods of analysis are generally used :

o Comparative Statements.
o Common-size statements.
o Trend analysis.
 o Ratio Analysis.

Comparative Statement Analysis :-

The comparative financial statements are statements of the financial

position at different periods of time. The elements of financial position
are show in Comparative Statement provides an idea of financial
position at two or more periods. Generally two financial statements
(balance sheet and income statement) are prepared in comparative
form for financial analysis.

1. Comparative balance sheet ,and

2. Income statement.

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 enterprises on different dates.
The change in periodic balance sheets itmesre4flect the conduct of a
business the changes can be observed by comparison of the balance
sheet at the beginning and t the end of a period and these changes
can help forming an opinion about the progress of an enterprise.

Comparative Balance sheet of Ramco Cement for the year 2015-2016

( Rupees in Crores )

Particulars Years Change

2015 2016 In Rupees In %
 12 Months 12 Months
Liabilities
Share Capital 23.81 23.81 0 0

Reserves & Surplus 2621.38 3068.82 447.44 17.06

Net worth 2645.19 3092.63 447.44 16.91
Secured Loan 1629.09 1071.69 -557.4 -34.21
Unsecured Loan 634.54 688.58 54.04 8.51
TOTAL LIABILITIES 4908.82 4852.9 -55.92 -1.13
Assets
Gross Block 7106.54 7415.99 309.45 4.35
(-) Acc. Depreciation 2231.02 2511.09 280.07 12.55
Net Block 4875.52 4904.9 29.38 0.60
Capital Work in
262.66 146.84 -115.82 -44.09
progress
Investments 355.83 365.37 9.54 2.68
Inventories 520.58 549.02 28.44 5.46
Sundry Debtors 380.22 468.48 88.26 23.21
Cash and Bank 61.85 90.77 28.92 46.75
Loans and Advances 613.62 499.79 -113.83 -18.55

Total Current Assets 1576.27 1608.06 31.79 2.01

Current Liabilities 1999.14 2128.5 129.36 6.47

Provisions 162.32 43.77 -118.55 -73.03

Total current Liabilities 2161.46 2172.27 10.81 0.50

NET CURRENT ASSETS -585.19 -564.21 20.98 -3.58
TOTAL ASSETS 4908.82 4852.9 -55.92 -1.13

Interpretations:
Reserves & Surplus is increased to 447.44 crores i.e. 17.06 %
Total liabilities are decreased to -55.92 crores i.e. -1.13 %
Fixed assets has increased by 29.38 crores i.e. 0.60 %
Working capital has decreased by -115.82 an decreased of -44.09 %
Investment were increased to 2.68 % i.e. 9.54 crores.
Sundry Debtors were increased by 23.21 % i.e. 88.26 crores.
Provisions decreased by 118.55 crores i.e. 73.03%
 Total current Assets & Total current Liability increased by 31.79 & 10.81 i.e.
2.01 & 0.50 Respectively.
Total Assets decreased by 1.13 % i.e. 55.92 crores.

Comparative Balance sheet of Ramco Cement in the year 2014-2015

(Rupees in Crores)

Particulars Years change

2014 2015 In Rupees In %
12
12 Months
Months
Liabilities
Share Capital 23.81 23.81 0 0

Reserves & Surplus 2458.28 4726.05 2267.77 92.25

Net worth 2482.08 4726.05 2243.97 90.40
Secured Loan 1650.32 4726.05 3075.73 186.37
Unsecured Loan 593.65 4726.05 4132.4 696.10
TOTAL LIABILITIES 4726.05 4726.05 0 0
Assets
Gross Block 6637.25 7106.54 469.29 7.07
(-) Acc. Depreciation 1996.18 2231.02 234.84 11.76
Net Block 4641.07 4875.52 234.45 5.05
Capital Work in
354.24 262.66 -91.58 -25.85
progress
Investments 283.41 355.83 72.42 25.55
Inventories 685.53 520.58 -164.95 -24.06
Sundry Debtors 303.96 380.22 76.26 25.08
Cash and Bank 44.61 61.85 17.24 38.64
Loans and Advances 555.74 613.62 57.88 10.41

Total Current Assets 1589.84 1576.27 -13.57 -0.85

Current Liabilities 2037.68 1999.14 -38.54 -1.89

Provisions 104.83 162.32 57.49 54.84

Total current
2142.51 2161.46 18.95 0.88
Liabilities
NET CURRENT
-552.67 -585.19 -32.52 5.88
ASSETS
TOTAL ASSETS 4726.05 4351.9 -374.15 -7.91

Interpretations:

Reserves & Surplus is increased to 2267.77 crores i.e. 92.25 %

There is no change in Total liabilities.
Fixed assets has increased by 234.45 crores i.e. 5.05 %
Working capital has decreased by 91.58 an decreased of 25.85 %
Investment were increased to 25.55 % i.e. 72.42 crores.
Sundry Debtors were increased by 25.08 % i.e. 76.26 crores.
Provisions increased by 57.49 crores i.e. 54.84%
Total current Assets decreased by 0.85% i.e. & Total current Liability increased
by 18.95 i.e. 0.88%.
Total Assets decreased by 7.91 % i.e. 374.15 crores.
 In
Particular 2015 2016 Rupees In %

12Months 12Months
INCOME:
Sales Turnover 4153.4 4181.9 28.5 0.68
Excise Duty 557.65 537.01 -20.64 -3.70
NET SALES 3595.75 3644.89 49.14 1.36
Other Income 0 0 0 0
TOTAL INCOME 3687.09 3731.77 44.68 1.21
EXPENDITURE:
Manufacturing
Expenses 599.05 772.66 4153.4 28.98
Material
Consumed 779.32 913.31 133.99 17.19
Personal 259.23 228.68 -30.55 -11.78
Expenses
Selling Expenses 0 0 0 0
Administrative
Expenses 899.18 1017 117.82 13.10
Expenses
Capitalized 0 0 0 0
TOTAL
EXPENDITURE 2536.78 2931.65 394.87 15.56
Operating Profit 1058.97 713.24 -345.73 -32.64
EBITDA 1150.31 800.12 -350.19 -30.44
Depreciation 267.04 249.88 -17.16 -6.42
Other Write-offs 0 0 0 0
EBIT 883.27 550.24 -333.03 -37.70
Interest 180.23 193.81 13.58 7.53
EBT 703.04 356.43 -346.61 -49.30
Taxes 144.78 114.08 -30.7 -21.20
Profit and Loss
for the Year 558.26 242.35 -315.91 -56.58
Non Recurring
Items 0 0 0 0
REPORTED PAT 558.26 242.35 -315.91 -56.58
Comparative Income Statement of Ramco cement for the year 2015-16
Interpretation

The company net sales is increased by 28.5 crores an increased of 0.68 %.

There is 1.21% increased in total income i.e. 44.68 crores.
There is not selling and capitalized expenses.
Total expenditure is increased by 394.87 crores as an increased in 15.56 %.
Operating profit has decline by 32.64%
Interest increases by 7.53 % i.e. by 13.58 crores.
Profit after tax is decline by 56.58 % i.e. 315.91
Comparative Income Statement of Ramco cement for the year 2014-15
( Rupees in crores )

Particulars Years Change

Mar'14 Mar'15 in rupees in %
12Months 12Months
INCOME:
Sales Turnover 3683.51 4153.4 469.89 12.75
Excise Duty 0 557.65 557.65 0
NET SALES 3683.51 3595.75 -87.76 -2.38
Other Income 0 0 0 0
TOTAL INCOME 3769.23 3687.09 -82.14 -2.17
EXPENDITURE:
Manufacturing
907.96 599.05 -308.91 -34.02
Expenses
Material Consumed 938.63 779.32 -159.31 -16.97
Personal Expenses 221.83 259.23 37.4 16.85
Selling Expenses 0 0 0 0
Administrative
1052.05 899.18 -152.87 -14.50
Expenses
Expenses
0 0 0 0
Capitalized
TOTAL
3120.47 2536.78 -583.69 -18.70
EXPENDITURE
Operating Profit 563.04 1058.97 495.93 88.08
EBITDA 648.76 1150.31 501.55 77.30
Depreciation 306.29 267.04 -39.25 -12.81
Other Write-offs 0 0 0 0
EBIT 342.47 883.27 540.8 157.91
Interest 188.13 180.23 -7.9
EBT 154.34 703.04 548.7 355.51
Taxes 16.64 144.78 128.14 770.07
Profit and Loss for
137.7 558.26 420.56 305.41
the Year
Non Recurring
0 0 0 0
Items
REPORTED PAT 137.7 558.26 420.56 305.41

Interpretation
COMMON SIZE STATEMENT ANALYSIS

The common size statements, balance sheet n and income

statement are show in analytical percentages. The figures are
shown as percentages of total assets, total liabilities and total
sales. Total assets are taken as 100 and different assets are
expressed as percentage of the total similarly, various liabilities are
taken as a part of total liabilities.

COMMON SIZE BALANCE SHEET

A statement in which balance sheet items are expressed as the

ratio of each asset total assets and the ratio of each liquidity is
expressed as a ratio of total liabilities is called common size
balance. The common size balance sheet can be used to compare
companies of differing size. The comparison of figures in different
periods is not useful because total figures may be affected by a
number of factors. It is not possible to establish standard norms for
 various assets. The trends of figures from year to year may not be
studied and even they may not give proper results.

Common size Balance sheet of Ramco Cement for 2015-2016

( Rupees in crores)

Particulars 2015 Change in % 2016 Change in %

Liabilities

Share Capital 23.81 0.48 23.81 0.49

Reserves &
53.40 63.23
Surplus 2621.38 3068.82
53.88 63.72
Net Worth 2645.19 3092.63
33.18 22.08
Secured Loan 1629.09 1071.69
Unsecured Loan 634.54 12.92 688.58 14.18
TOTAL
100 100
LIABILITIES 4908.82 4852.9
Assets
Net Block 4875.52 99.32 4904.9 91.07
Capital Work in
5.35 3.02
Progress 262.66 146.84
Investments 355.83 7.24 365.37 7.52
Inventories 520.58 10.60 549.02 11.31
Sundry Debtors 380.22 7.74 468.48 9.65
Cash and Bank 61.85 1.25 90.77 1.87
Loans and
12.50 10.29
Advances 613.62 499.79
Total Current
32.11 33.13
Assets 1576.27 1608.06
Provisions 162.32 3.30 43.77 0.90
Total Current
44.03 44.76
Liabilities 2161.46 2172.27
NET CURRENT
-11.92 -11.62
ASSETS -585.19 -564.21
Misc. Expenses 0 0 0 0

4908.82 100 4852.9 100

TOTAL ASSETS

Interpretations :-

Share capital was recorded 0.48 % in the total liabilities in the year 2015, it is
increased to 0.49 % i.e1 % in 2016.
Reserves & Surplus contributed to 53.40 % in the total liabilities in the year
2015, it is increased to 63.23 % in the year 2016.
Secured loans were 33.18 % in the year 2015 , it is decreased in 2016 as 22.08.
Current liabilities shown to 44.03 % in the year 2015 & it has increased to 44.76
% in the year 2016.
Provisions 3.03 % in the total liabilities in the year 2015 is decreased 0.90 % in
the year 2016.
Fixed assets were 99.32% in the year 2015 it has decreased to 91.07 %.
Investments were 7.24 % increased to 7.24 % in the year 2016.
Sundry debtors were 7.74 % in the year 2015 it is increased to 9.65 % in the year
2016.
Common size Balance sheet of Ramco Cement for 2014-2015
( Rupees in crores)
Particulars 2014 Change in % 2015 Change in %
Liabilities
Share Capital 23.8 0.50 23.81 0.48
Reserves & Surplus 2458.28 52.01 2621.38 53.40
Net Worth 2482.08 52.51 2645.19 53.88
Secured Loan 1650.32 34.91 1629.09 33.18
Unsecured Loan 593.65 12.56 634.54 12.92
TOTAL
100 4908.82 100
LIABILITIES 4726.05
Assets
Net Block 4641.07 98.20 4875.52 99.32
Capital Work in
7.49 262.66 5.35
Progress 354.24
Investments 283.41 5.99 355.83 7.24
Inventories 685.53 14.50 520.58 10.60
Sundry Debtors 303.96 6.43 380.22 7.74
Cash and Bank 44.61 0.94 61.85 1.25
Loans and Advances 555.74 11.75 613.62 12.50
Total Current Assets 1589.84 33.63 1576.27 32.11
Provisions 104.83 2.21 162.32 3.30
Total Current
45.33 2161.46 44.03
Liabilities 2142.51
NET CURRENT
-11.69 -585.19 -11.92
ASSETS -552.67
Misc. Expenses 0 0 0 0

4726.05 100 4908.82 100

TOTAL ASSETS

Interpretations :-

Share capital was recorded 0.50% in the total liabilities in the year 2014, it is
increased to 0.48 % i.e1 % in 2015.
Reserves & Surplus contributed to 52.01 % in the total liabilities in the year
2014, it is increased to 53.40 % in the year 2015.
Secured loans were 34.91 % in the year 2014 , it is decreased in 2015 as 33.18%.
Current liabilities shown to 45.33 % in the year 2014 & it has decreased to 44.03
% in the year 2015.
Provisions 2.21 % in the total liabilities in the year 2014 is decreased 3.30 % in
the year 2015.
Fixed assets were 98.20% in the year 2014 it has increased to 99.32 %.
Investments were 5.99 % increased to 7.24 % in the year 2015.
Sundry debtors were 6.43 % in the year 2014 it is increased to 7.74 % in the year
2015.
Common size Income Statement of Ramco cement for the year 2015-16

Rupees in crores
Particular 2015 2016
Rs % Rs. %

INCOME:
Sales Turnover 4181.9 100 4153.4 100
Excise Duty 537.01 12.84 557.65 13.42
NET SALES 3644.89 87.15 3595.75 86.57
Other Income 0 0 0 0
TOTAL INCOME 3731.77 89.23 3687.09 88.77
EXPENDITURE:
Manufacturing
772.66 18.47 599.05 14.42
Expenses
Material
913.31 21.83 779.32 18.76
Consumed
Personal
228.68 5.46 259.23 6.24
Expenses
Selling Expenses 0 0 0 0
Administrative
1017 24.31 899.18 21.64
Expenses
TOTAL
2931.65 70.10 2536.78 61.07
EXPENDITURE
Operating Profit 713.24 17.05 1058.97 25.49
EBITDA 800.12 19.13 1150.31 27.69
Depreciation 249.88 5.97 267.04 6.42
Other Write-offs 0 0 0 0
EBIT 550.24 13.15 883.27 21.26
Interest 193.81 4.63 180.23 4.33
EBT 356.43 8.52 703.04 16.92
Taxes 114.08 2.72 144.78 3.48
Profit and Loss
242.35 5.79 558.26 13.44
for the Year
Interpretations:-

Common size Income Statement of Ramco cement for
the year 2014-15

( Rupees in crores )

Particular 2014 2015

Rs % Rs. %
INCOME:
Sales Turnover 3683.51 100 4181.9 100
Excise Duty 0 0 537.01 12.84
NET SALES 3683.51 100 3644.89 87.15
Other Income 0 0 0
TOTAL INCOME 3569.22 96.89 3731.77 89.23
EXPENDITURE:
Manufacturing
907.96 24.64 772.66 18.47
Expenses
Material
938.63 25.48 913.31 21.83
Consumed
Personal
221.83 6.02 228.68 5.46
Expenses
Selling Expenses 0 0 0 0
Administrative
1052.05 28.56 1017 24.31908941
Expenses
TOTAL
3120.47 84.71 2931.65 70.10
EXPENDITURE
Operating Profit 563.04 15.28 713.24 17.05
EBITDA 648.76 17.61 800.12 19.13
Depreciation 306.29 8.31 249.88 5.97
Other Write-offs 0 0 0 0
EBIT 342.47 9.29 550.24 13.15
 Interest 188.13 5.10 193.81 4.63
EBT 154.34 4.19 356.43 8.52
Taxes 16.64 0.45 114.08 2.72
Profit and Loss
137.7 3.73 242.35 5.79
for the Year
Trend Statement Analysis:

Trend analysis is also termed as trend percentage. It is used for the purpose of
comparative study of financial statements over a number of years. In case of trend
analysis a minimum of three financial years data is must. Out of the periods under study,
one year is taken as the base year and each item in this year is taken as 100. Trend
Percentages are computed by divivng amount of each item in the statement of each
remaining year with the corresponding item in the base statement and the result is
expressed in percentage.

A downward trend will be clearly indicated by the trend percentages being less than100.
An upward trend will be indicated by the trend percentages being more than 100

The trend percentages facilities an efficient comparative study of the financial

performance of a business enterprise over a period of time. While preparing a trend
analysis the base year selected must be a representative of a normal year. During
inflationary periods the data over a period of time becomes incomparable unless the
absolute rupee is adjusted. Even though the trend percentages provide significant
information, undue important must not be laid down on the percentage when thereby is
a small number in the base year in such a case even a slight variation will be magnified
by the percentage change. Trend analysis might also be useful to compare such trends
with similar trends in business generally and the industry concerned in particular.
Trend Analysis Balance Sheet of Ramco Cement for years 2013 to 2016
( Rupees in crores )
Particulars 2013 2014 2015 2016
Rs. % Rs. % Rs. % Rs. %
Liabilities
Share Capital 23.81- 100 23.81 100.042 23.81 100 23.81 100
Reserves & Surplus 2346.96 100 2458.28 104.74 2621.38 111.69 3068.82 130.75
Net Worth 2370.76 100 2482.08 104.69 2645.19 111.57 3092.63 130.44
Secured Loan 1252.33 100 1650.32 131.77 1629.09 130.08 1071.69 85.57
Unsecured Loan 728.81 100 593.65 81.45 634.54 87.06 688.58 94.48
TOTAL LIABILITIES 4351.9 100 4726.05 108.59 4908.82 112.79 4852.9 111.51
Assets
Gross Block 6404.34 100 6637.25 103.63 7106.54 110.96 7415.99 115.79
(-) Acc. Depreciation 1810.79 100 1996.18 110.23 2231.02 123.2 2511.09 138.67
Net Block 4593.55 100 4641.07 101.03 4875.52 106.13 4904.9 106.77
Capital Work in
Progress 157 100 354.24 225.63 262.66 167.29 146.84 93.52
Investments 265.77 100 283.41 106.63 355.83 133.88 365.37 137.47
Inventories 594.75 100 685.53 115.26 520.58 87.52 549.02 92.31
Sundry Debtors 302.81 100 303.96 100.37 380.22 125.56 468.48 154.71
Cash and Bank 53.96 100 44.61 82.67 61.85 114.62 90.77 168.21
Loans and Advances 503.54 100 555.74 110.36 613.62 121.86 499.79 99.25
Total Current Assets 1455.06 100 1589.84 109.26 1576.27 108.33 1608.06 110.51
Current Liabilities 1932.21 100 2037.68 105.45 1999.14 103.46 2128.5 110.15
Provisions 187.27 100 104.83 55.97 162.32 86.67 43.77 23.37
Total Current
Liabilities 2119.48 100 2142.51 101.08 2161.46 101.98 2172.27 102.49
NET CURRENT
ASSETS -664.42 100 -552.67 83.18 -585.19 88.07 -564.21 84.91
TOTAL
ASSETS(A+B+C+D+E) 4351.9 100 4726.05 108.5974 4908.82 112.79 4852.9 111.51
INTERPRETATION :
Net worth has increases in following years . in 2014 4.69%,
in 2015 68 % & in 2016 30.44.
Fixed assets has increased in 2014, 2015 & 2016 as 1.03 % ,
6.13 % & 6.77 % respectively.
Working capital increased in 2014 & 2015 but decline in 2016
as 6.48 %
Total current Assets increased in 2014 by 9.26 % , in 2015
by 8.33% , in 2016 by 10.51 %
Provisions decline in following years.
Total current liability increased by 1.08 % , 1.98 % & 2.49% in
the year 2014 ,2015 & 16 respectively.
Total assets also increases in all the following years as 8.59%
, 12.79 % & 11.51 resp.

Trend Analysis of Profit and Loss Account of Ramco Cement

( Rupees in crores)
particular 2013 2014 2015 2016
Rs. % Rs. % Rs. % Rs. %
INCOME:
Sales Turnover 3830.8 100 3683.51 96.15 4181.9 109.16 4153.4 108.42
Excise Duty 0 100 0 0 537.01 0 557.65 0
NET SALES 3830.8 100 3683.51 96.15 3644.89 95.14 3595.75 93.86
Other Income 0 100 0 0 0 0 0 0
TOTAL
INCOME 3872.66 100 3769.23 97.32 3731.77 96.36 3687.09 95.20
EXPENDITURE:
Manufacturing
876.85 100 907.96 103.54 772.66 88.11 599.05 68.31
Expenses
Material
Consumed 751.65 100 938.63 124.87 913.31 121.5 779.32 103.68
Personal
Expenses 196.02 100 221.83 113.16 228.68 116.66 259.23 132.24
Selling Expenses 0 100 0 0 0 0 0 0
Administrative
1000.37 100 1052.05 105.16 1017 101.66 899.18 89.88
Expenses
TOTAL
EXPENDITURE 2824.89 100 3120.47 110.46 2931.65 103.77 2536.78 89.8
Operating Profit 1005.91 100 563.04 55.97 713.24 70.9 1058.97 105.27
EBITDA 1047.77 100 648.76 61.91 800.12 76.36 1150.31 109.78
Depreciation 280.58 100 306.29 109.16 249.88 89.05 267.04 95.17
EBIT 767.19 100 342.47 44.63 550.24 71.72 883.27 115.13
Interest 178.51 100 188.13 105.38 193.81 108.57 180.23 100.96
EBT 588.68 100 154.34 26.21 356.43 60.54 703.04 119.42
Taxes 184.56 100 16.64 9.01 114.08 61.81 144.78 78.44
Profit and Loss
404.12 100 137.7 34.07 242.35 59.96 558.26 138.14
for the Year

INTERPRETATION :
Sales have increased by 9.16 % & 8.42 % in the years 2015 and 2016
respectively. But decreased in 2014 by 3.85 %
Net income has decreased in all the following years as 2.68% , 3.64% &
4.8% respectively.
Total expenditure is increased in 2014 & 2015 as 10.46% & 3.77%
respectively and decreased in 2016 by 10.2%.
Operating profit is decreased in the year 2014 & 2016 as 44.03 & 29.1%
Respectively but increased in 2016 as 5.27%
 Net profit after tax an increased in 2016 as 38.3 and decreased in 2014 &
2015 as 65.89 & 39.97 res.

RATIO ANALYSIS

Ratios

Ratio Analysis is describing the significant relationship which exists between various
items of a balance sheet and a profit and loss account of a firm. As a technique of
financial analysis, accounting ratios measure the comparative significance of the
individual items of the income and position statements It is possible to assess the
profitability, solvency and efficiency of an enterprise through the technique of ratio
analysis.

1. Profitability: has the business made a good profit compared to its turnover?

2. Return Ratios: compared to its assets and capital employed, has the business
made a good profit?

3. Liquidity: does the business have enough money to pay its bills?

4. Asset Usage or Activity: how has the business used its fixed and current assets?

5. Gearing: does the company have a lot of debt or is it financed mainly by shares?

LIQUIDITY RATIOS:-

Current Ratio

Current Ratio = Current assets / Current Liabilities

Current ratio is a measure of the firms short term solvency. It indicates the availability
of current assets in rupees for every one rupee of current liability. A ratio of greater than
one means current that the firm has more current assets than current claims against the,
Current ratio of 2:1 or more is considered satisfactory. Current ratio represents a margin
of safety for creditors.

Current Ratio of Ramco Cement:-

( Rupees in crores )
Current
Years Current Assets Current Ratios
Liabilities
2012-
487.75 345.01
2013 1.41
2013-
406.67 304.65
2014 1.33
2014-
469.88 401.09
2015 1.17
2015-
486.74 362.66
2016 1.34

Current Ratio
1.6
1.4
1.2
1 Current Ratio
0.8
0.6
0.4
0.2
0
2012-2013 2013-2014 2014-2015 2015-2016

Interpretation :-
 As per standards rule of current ratio 2:1 where current assets double the current
liabilities is considered satisfactory. In the present analysis the current ratio of the
Ramco is not satisfactory. It was assed that the current ratio for all the five years is lower
than the standard rule i.e. 2:1 and it is 1.34 in the year 2015-16. This is highly
unsatisfactory.

Quick Ratio

Quick ratio also known as acid-test ratio establishes a relationship between quick assets
and the current liabilities. Cash is the most liquid asset. It is calculated by diving quick
assets by current liabilities.

Quick ratio =Quick Assets / Current Liabilities

The acid-test ratio measures the firms ability to convert its current assets quickly into
cash in order to meet its current liabilities. A quick ratio of 1:1 is considered to represent
a satisfactory current financial condition. It is an important index of the firms liquidity.

Quick Ratio of Ramco Cement

(Rupees in crores)
Total Quick Current
Years
Assets Liabilities Quick Ratio
2012-2013 403.65 2119.48 0.19
2013-2014 137.7 2142.51 0.06
2014-2015 242.35 2161.46 0.11
2015-2016 558.26 2172.27 0.25
 Quick Ratio
0.3

0.25

0.2
Quick Ratio
0.15

0.1

0.05

0
2012-2013 2013-2014 2014-2015 2015-2016

Interpretation :-
Usually a high quick ratio is an indication that the company is liquid and has the ability
to meet its current or liquid liabilities in time on the other hand a low Quick ratio
represents that the companys liquidity position is not good. The above table showing the
quick ratios of Ramco Cement are cant be considered satisfactory.

LEVERAGE RATIOS :-

Debt- Equity Ratio:

The Debt Equity is determined to analyze the soundness of the long term financial
policies of the organization. It is also known as Internal External Equity Ratio. It is
calculated as follow:

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

( Rupees in Crores )
Years Total Debt Shareholders fund Debt equity ratio

2012-2013 1,981.14 527.11 3.75

2013-2014 2,243.97 521.77 4.30

2014-2015 2,263.63 611.11 3.70

2015-2016 1,760.27 783.12 2.24

Interpretation :-
The debt- Equity Ratio accepted standard is 0.5. This ratio reflects the relative
contribution of creditors and owners of business in its financing. From the above it is
clear that the long term debt is more than that of the shareholders fund. So, we can
interpret that the firms assets are financed more by the external funds rather than by the
internal funds.

Debt equity ratio

5
4.5
4
3.5
3 Debt equity ratio
2.5
2
1.5
1
0.5
0
2012-2013 2013-2014 2014-2015 2015-2016
Fixed asset Ratio:

This ratio indicates the extent to which the assets of the companys can be lost without
affecting the interest of the creditors of the company. Higher the ratios better the long-
term position of the company.

Fixed Assets Ratio of Ramco Cement

Fixed Assets Ratio= Net Sales / Net assets
( Rupees in Crores )
Years Net Sales Net Assets Fixed Assets Ratio
2012-2013 3830.8 4593.55 0.83
2013-2014 3683.51 4641.07 0.79
2014-2015 3644.89 4875.52 0.74
2015-2016 3595.75 4904.9 0.73

0.86
0.84
0.82
0.8
0.78
0.76
0.74 Fixed Assets Ratio
0.72
0.7
0.68

Interpretation :-
This ratio indicates the extent to which the assets of the companys can be lost without
affecting the interest of the creditors of the company. Higher the ratios better the long-
term position of the company. The above tables shows fixed assets ratio in decreasing
trend.

ACTIVITY ANALYSIS RATIO

Total Assets Turnover Ratio:

The asset turnover ratio indicates how efficiently management is employing Assets.
Total Assets Turnover Ratio = Sales / Total Assets

Total Assets Turnover Ratio of Ramco Cement

(Rupees in crores)

Asset Turnover
Years Sales Total Assets
Ratio
2012-2013 3830.8 4351.9 0.88
2013-2014 3683.51 4726.05 0.77
2014-2015 3644.89 4908.82 0.74
2015-2016 3595.75 4852.9 0.74

0.9

0.85

0.8

0.75 Asset Turnover Ratio

0.7

0.65
2012-20132013-20142014-20152015-2016

Years
Interpretation :- The assets turnover ratio was 0.88 in the year 2012-2013, it decreased
to 0.77 in the year 2013-2014 and decreased to 0.74 in the year 2014-2015and it remains
same in 2015-16 .The current asset turnover ratio during the period under the study had a
decreasing trend.

OVERALL PROFITABILITY RATIOS :-

Net Profit Ratio :

Net Profit Ratio indicates net margin on sales..It is given by the following equation
Net Profit Ratio = ( Net Profit / Sales ) * 100

Net Profit Ratio Of Ramco Cement

(Rupees in Crores)
Years Net Profit Sales Net Profit Ratio
2012-2013 404.12 3830.8 10.54
2013-2014 137.7 3683.51 3.73
2014-2015 242.35 3644.89 6.64
2015-2016 558.26 3595.75 15.52
 Net Profit Ratio
18
16
14
12
10
8
6
4
2
0
2012-2013 2013-2014 2014-2015 2015-2016

Interpretation :-
It establishes a relationship between net profit after tax and net sales. The higher the
ratio the better is the profitability or performance of the business. The above table shows
that the net profit of ramco is fluctuating. Higher profit is in 2015-16 as 15.52, and
decreased in 2013-14 as 3.73.

Return On Investment Ratio

Return On investment = Net Profit / Share Holders Fund *100

Return on Investment of Ramco Cement

( Rupees in crores )
Shareholders Return On
Years Net Profit fund Investment
2012-2013 404.12 527.11 76.66
2013-2014 137.7 521.77 26.39
2014-2015 242.35 611.11 39.65
2015-2016 558.26 783.12 71.28
 Return On Investment
80
60
40
20
0
Return On Investment

years

Interpretation :-
The above tables reveals how well the resources of the firm are being used. From the
above table we can concern that return f investment is fluctuating. ROI is highest in the
year 2012-13 as 76.66 % but decreased in 2013-14 & 2014-15 as 26.39 &39.65
respectively. Again it increased as 71.28 in 2015-16. which is not good sign for
company

Interest Coverage Ratio (Times Interest Earned)

Indicates a company's capacity to meet interest payments. Uses EBIT (Earnings Before
Interest and Taxes)

Interest Coverage Ratio = EBIT

Interest Expense
Interest coverage ratio of Ramco Cement
(Rupees in crores)
Interest Interest
Years EBIT Expenses Coverage Ratio
2012-2013 767.19 178.51 4.29
2013-2014 342.47 188.13 1.82
2014-2015 550.24 193.81 2.83
2015-2016 883.27 180.23 4.90

Interest Covarage Ratio

5
4
3
2
1
0
2012-2013
2013-2014
2014-2015
2015-2016
Interest Covarage Ratio

Interpretation :-
In the above table The Interest coverage ratio is fluctuating. The Interest turnover ratio
was 4.29 in the year 2012-13, it decreased to 1.82 in the year 2013-142 and increased to
2.83 in the year 2014-15 and again increased 4.90 in the year 2015-16.
 Chapter 5
Findings & Suggestions
Findings :-
The share capital remains constant. Share capital is unchanged all the years from
2013 to 2016.
Current liabilities has fluctuating status . it increased in 2013 and decline in 2014
& 2015.
The debt equity ratio was shown under the standard ratio. It is clear that the long
term debt is more than that of the share holders fund. It indicates that the firm
heavily relying on external funds rather than the internal funds.

Suggestion:
The organization should adopt an appropriate capital structure
The companys debt equity ratio recorded more or less 3.75in the year 2013 & it
is increased to 2.24 in the 2016 ( current Year). The company should adopt a
better debt equity mix in the future to control the fluctuations in return.
The company should control fluctuations in cash and bank balances as it impacts
the current ratio of the company.
The company should heavy increase of manufacturing and administration
expenses it is impacting the operating & net profit of the company.
The company should use a just-in-time approach in managing raw-material,
which makes cash available for other operations
 Conclusion

The overall performance of Ramco Cements Limited is getting on a better

track. also the operating profits for the year were fall by 27.09% mainly on
due to sluggish market. Company maintains good liquidity position.

The recent boom in the housing, construction and retail sector in India
coupled with continued thrust of the Government on infrastructure projects
like metro projects in Chennai and Bangalore is expected to sustain healthy
growth of cement demand. During the year 2010-2011, Indian cement
industry has registered a growth of 15.45% in terms of cement production.
Almost all the major players in the industry including Ramco Cements Ltd
have announced substantial increase in capacity and the possibility of
oversupply situation cannot be ruled out.
 BIBLIOGRAPHY

Books

o Financial Management ---- Khan & Jain

o Management accounting ---- R. P. Trivedi

Websites & Search Engines

o www.moneycontrol.com
o www.googlefinance.com
o www.ramcocement.com