A SUMMER TRAINING

PROJECT REPORT
ON
“RATIO ANALYSIS”
IN
UPPER DOAB SUGARMILL SHAMLI
For the partial fulfilment of the requirement for the degree of
MASTER OF BUSINESS ADMINISTRATION
(Session: 2017-19)

Under the guidance of: Submitted by:

Mohit Singhal Deepak Kumar
(HOD of MBA Deptt) (MBA 3rd Semester)
Roll no: 1733670003

Affiliated to Dr. A.P.J Abdul Kalam Technical

University Lucknow Formally AKTU
AKTU Code: 336
 ACKNOWLEDGEMENT

In writing this report entitled ‘‘UPPER DOAB SUGAR MILL’’, I have greatly benefited by

my visits to the company where I got the opportunity of studying the practical working of the

Human Resource department.

I would like to thanks our Director Dr. Gaurav Sinha & members of Roorkee Engineering

and Management Technology Institute for giving me chance to work on this project. I am

also thankful to our Head of Department and internal guide, Mr. Mohit Singhal, for their

effective guidance regarding the project and support.

My sincere and deepest thanks to MR. RAJAT LAL (Managing Director, UPPER DOAB

SUGAR MILL)

Last but not theleast I express my gratitude to my family and friends for providing me with

all the support during the study.

Deepak Kumar

ROLL NO. 1733670003

 DECLARATION

I hereby declare that the project titled “Ratio Analysis” is an original piece of research work

carried out by me under the guidance and supervision of Mr. Mohit Singhal. The

information has been collected from genuine and authentic sources. The work has been

submitted in partial fulfillment of MASTER OF BUSINESS ADMINISTRATION of Dr.

A.P.J Abdul Kalam Technical University Formally AKTU, LUCKNOW.

Place: Deepak Kumar

Date: Roll No. - 1733670003

 PREFACE

Beginning of a Finance project was entirely creative. Thus, does not come suddenly but it

comes by result of discussion consultation and contemplation problem unsolved here can

never be a satisfactory elimination later. But when I completed my project I felt lot more

confident. Now I can do a new job more confidently and in a better way.

Practical Training is essential part of a theory study. It familiarizes with the practical aspect

in the industry. And quality of the product in the industry.

Repairing this fact, I have thus industrial training report on “RATIO ANALYSIS” in

UPPER DOAB SUGAR MILL SHAMLI (U.P.).

 EXECUTIVE SUMMARY

Theoretical knowledge is always incomplete without its practical implication like gun

without bullet. Seeing the necessity of the practical knowledge the MBA curriculum is

designed in such a manner to impart the opportunity to students for enough exposure to the

corporate world.
TABLE OF CONTENT

  Company Profile.
  Ratio Analysis.
  Objective of Study.
  Scope of Study.
  Importance of study.
  Limitation of study.
  Need of study.
  Research Methodology.
  Data Analysis.
  Annexure.
  Summary and Suggestions.
  Conclusion.
 Bibliography.
 Company Profile

BOARD OF DIRECTORS: Shri R.C. Sharma-Chairman

Shri Rajat Lal-Managing Director
Shri Vivek Viswanathan-Joint Managing
Director
Shri Rahul Lal-Executive Director
Shri Hemantpat Singhania
Shri Radhika Viswanathan Hoon
Shri Ajit Hoon
Smt. Onke Aggarwal

COMPANY SECRETARY: Shri Ajay Kumar Jain

BANKERS: State Bank of India

Punjab National Bank

AUDITORS: M/S M.Sharan Gupta & Co. (Appointed w.e.f

14.03.18)
D-132, Barla Apartments, 43-I.P Extension,
Patparganj, Delhi- 110092

REGISTERED OFFICE: 4-A, Hansalaya, 15, Barakhamba Road

New Delhi 110001

MANUFACTURING UNITS: Upper Doab Sugar Mills,

Shamli-247 776 (U.P.)

Shamli Distillery & Chemical Works,

Shamli – 247776 (U.P)
 Managerial Staff
"Senior qualified and experienced professionals in their respective areas assist Board of
Directors." Details of Senior Management Personnel are as detailed below:

Sl No. Name Designation Age Qualifications Experience

1. Shri P.K.Goyal CFO cum 61 B.Sc., F.C.A., A.C.S. 36 Years

Company

Secretary
2. Shri S. Sen. Vice President 53 B.A. (Hons.) LLB, P.G. 30 Years

Sharma (Legal & Diploma in Personal &

Administration) Industrial Relations

3. Shri Sushil Vice President 60 B.Tech, B.O.E 27 Years

Garg (Engineering)

UDSM
4. Dr. Pradeep Vice President 56 M.Sc., Ph.D. 28 Years
Sachdeva (Cane) (Unn

Sugar Complex)
5. Shri Pankaj General Manager 46 B.Sc. ANSI 25 Years

Agarwal (Production)

UDSM
6. Shri Atul Goel G.M.(Production) 53 B.Sc. ANSI 32 Years

Unn Sugar

Complex
7. Shri Anil General Manager 47 B.Sc. Dip. In Mech. Engg. 28 Years

Gupta (Engg.) Unn

Sugar Complex
8. Shri General Manager 41 M.Sc. (Agronomy) 19 Years

R.S.Sahrawat (Cane) UDSM

9. Shri S.P. Singh General Manager 61 M.Sc., DIFAT 38 Years
 INTRODUCTION

Sir Shadi Lal Enterprises Limited was established in 1933 as a Corporate Body under the

name 'The Upper Doab Sugar Mills Limited' by the Rt.Hon'ble Sir Shadi Lal.

With the untiring efforts of all of them, the Company has become one of the efficient and

modern entities in Western Uttar Pradesh. All the working Directors of the Company are well

qualified and have an excellent understanding of the operation of the Company.

At present the Company has four manufacturing units comprising of two sugar units namely

Upper Doab Sugar Mills, Shamli (U.P.), Unn Sugar Complex, Unn (U.P.), and two distillery

units Shamli Distillery & Chemical Works, Shamliand Pilkhani Distillery & Chemical

Works, Pilkhani, District Saharanpur (U.P.)

Sir Shadi Lal Enterprises Limited started its business in the year 1933 with a Sugar Factory,

Upper Doab Sugar Mills with a cane crushing capacity of 600 TCD per day at Shamli (UP),

about 70 Kms. from Distt. Saharanpur (UP) and about 100 kms. from Delhi. The Company

has been constantly modernizing its plant & machinery in stages by adopting the latest

technology. Per constant improvements and expansion, the crushing capacity of the Sugar

Mill Plant at Shamli has increased to the present level of 6250 TCD per day. The capacity

utilization of the Plant for the last number of years has been more than 100%. Being a

seasonal industry, the Sugar Factory works for about 180–200 days in a year.

In September 2007, Sir Shadi Lal Enterprises Limited further expanded its cane crushing

capacity by acquiring assets of Unn Sugar Complex at Unn, (U.P.) from Monnet sugar Ltd.

with a cane crushing capacity of 4000 TCD per day.

Shamli Distillery unit was installed at Shamli,(U.P.) in the year 1945 with an installed

capacity of 6.60 lakhs gallons per annum. Subsequently, the capacity was increased in stages

as detailed below to reach its present level of 16.20 lakhs gallons per annum. Since this

distillery is located adjacent to the Sugar factory, it has an inherent advantage of procuring

molasses from the Sugar unit through pipelines.

In the year 2001, to increase the production capacity of Country Liquor and Indian Made

Foreign Liquor, the Shamli Distillery Unit renovated their existing Bottling Hall, which can

now produce more than 2 Million cases per annum.

At present, the unit is producing Indian Made Foreign Liquor, Country Liquor, malt,

Rectified Spirit, Denatured Spirit, Anhydrous Alcohol & Extra Neutral Alcohol.

The major expansion projects taken up by the Company at various stages for the Sugar Mill

at Shamli are summarized below: -

Year Expansion to (TCD)

1936-37 1200

1956-57 3000

1962-63 3810

1997-98 5000

2005-06 6250
Per constant improvement and expansion, the crushing capacity of the Sugar Mill Plant at

Shamli has increased to the present level of 6250 TCD per day. The capacity

utilization of the Plant for the last number of years has been more than 100%. Being a

seasonal industry, the Sugar Factory works for about 180-200 days in a year.

The segment–wise detailed management discussion and analysis is stated below:

Cane Price

U.P. Government has declared the State Advisory Price (SAP) for the season 2014-15 at Rs.

280/– per quintal for General variety, Rs. 290/– per quintal for early variety and Rs. 275/– per

quintal substandard variety. The FRP for the season 2014-15 declared by the Central Government

was Rs. 210/– per quintal linked to basic recovery of 9.50% subject to premium of Rs.2.21per

quintal of every 0.1% increase in recovery. The Sugar Mills of U.P. State opposed against the

SAP in the season 2014-15 declared by the State Government and sent notice for suspension of

operation for the season 2014-15. Many representations were made by the U.P. Sugar Mills

Association and there arrived a settlement between the private sugar Mills and U.P. Government,

by which the State Government allowed a relief of Rs.11.03 per quintal of cane in the shape of

Purchase Tax Rs. 2/– per quintal of cane, on Entry Tax Rs.2.73 per quintal on Society

Commission Rs. 6.30 per quintal of cane. The rebate of purchase of Rs. 2/– per quintal was also

given in the season 2014-15by the U.P. Government. The Entry Tax is collected from Customer

and deposited in Govt. Account. Therefore, the actual relief

was only Rs. 6.30 per quintal on Society Commission, which also will be reimbursed after

two months of submission of claim. The U.P. Govt. has also agreed that the Sugar Mills will

make payment of Rs. 280/– per quintal in two instalments. 1st instalment of Rs. 260/– will be

paid immediately at the time of purchase of cane and 2nd instalment of Rs. 20/– per quintal,

after closure of the season 2014-15. It has also been informed by the U.P. Govt. that to

review the further relief of Rs. 8.97 per quintal of cane (Rs. 20 – Rs. 11.03), the State Govt.

formed a Committee to determine the paying capacity of sugar mills. If the prices of sugar

falls below the level determined by the Committee, then the entire amount of Rs. 8.97 per

quintal will be borne by the Govt. and if the prices of sugar rises above the level, determined

by the Committee, the industry will bear the entire burden of balance amount. As agreed by

U.P. govt. the Committee will give its report within 3 months. No report or recommendation

for balance amount of Rs. 8.97 has been given by the Committee so far.

Sugar Production & Consumption

Indian Sugar Mills Association (ISMA), the apex representative body of sugar industry has

revised the sugar production estimate to238 Lac tones from 250 Lac tones for the sugar

season 2014-15 (from October, 2015 to September, 2016). In the last sugar season2014-15

the sugar production was 254 Lac tonnes. Due consideration has been given to weather

conditions prevailing in the last several months including heavy rain fall in certain parts of

U.P., availability of water in Maharashtra and north Karnataka and less availability of water

in Tamil Nadu. Despite downfall a downward revision in the output of sugar, supply will

continue to be ample in the country as the country has started with an opening stock of 107

Lac tones in October, 2015. In the first half of the reaching sugar year the sugar mills have

dispatched 125 Lac tones sugar for sale in the domestic market, due to better lifting during

the last few months following the improvement in the market sentiments. The Cabinet
Committee of Economic Affairs has, in February, 2016; approved subsidy of Rs.3300/– per

MT on export of raw sugar till the end of March, 2016 to bail out the cash starved sugar

industry. The idea was to increase export, which would clear the massive sugar stock lying

with the sugar mills and would ease the pressure on the domestic price. The subsidy would be

given on export of 40 Lac tonnes of raw sugar over a period of two years and quantum of

subsidy would be re–calculated periodically based on the dollar/rupee rate. In the hope of

export of sugar the prices of sugar have improved. While the mills were expecting good rates

of subsidy due to rupee/dollar fluctuations for the month of April & May, 2016 the Govt. cut

it down to Rs.2277/– per tonne in the month of May, 2016 after elections. This has adversely

affected the export of sugar. So far 4 Lac tones sugar has been exported which is just 10% of

the target and it is feared that with the consumption of approx.230–235 Lactones the sugar

stock will be much on the higher side at the end of September, 2016. Industry is also pursuing

with the Government to raise the import duty of sugar from 15% to 40% to discourage the

import of sugar.
 VISION

To establish an integrated sugar complex that would include the manufacture of sugar,

industrial & potable alcohol, ethanol, co-generation facilities and other related products.

MISSION

To achieve sustainable growth through:

• By constant up-gradation and modernization of plant and machinery, and adapting

modern business tools and techniques to our business operations.

• By creating an environment that fosters and encourages professional management. By

traversing the path from selling sugar as a commodity, to that of a branded product.

• By increasing the capacity of our distillery.

• By maximizing shareholder’s wealth.

 PROCURMENT OF SUGARCANE

Sugarcane is broadly classified into three varieties - early,

general and unapproved. Cane is sowed during February

and October every year. The first seed growth is known

as the plant and subsequent growth after harvesting from

the stem is known as Ratoon. The early variety has more

sugar content than the general variety. Cane Yard

Every farmer within the command area of the Mill is

provided with a calendar, which tells him when he can

expect a Mill Supply Ticket (Purchy), against which

he will deliver the sugarcane.

Cart-Weighment Cabin

He then harvests the cane and transports it either in a

bullock cart or tractor trolley to the mill. Cane is also

bought at the mill's own centers within the command

area. This cane is then transported in trucks or through

rail to the mill.

Trolley Weighment Cabin

 MANUFACTURING PROCESS

The manufacturing of sugar begins when harvested cane is received at the mill gate, after

which cane is weighed on the platform type weighbridges. This has the weight recording

arrangement linked to a computer that records the gross and net weights as well as the price

payable to the farmers. Cart cane gets unloaded directly into the cane carrier and tractor

trolleys whereas truck cane is unloaded with the help of overhead traveling cranes. Cane is

weighed using an electronic weighbridge and unloaded into cane carriers. It is then prepared

for milling by knives and shredders. Sugarcane juice is then extracted by pressing the

prepared cane through mills.

Each mill consists of three rollers:

1. Extracted juice mixed with water is weighed and sent to the boiling house for further

processing. Residual bagasse is sent to boilers for use as fuel for steam generation

2. This juice is heated and then treated with milk of lime and Sulphur dioxide. The treated

juice is then further heated and sent to clarifiers for continuous settling. The settled mud is

filtered by vacuum filters and filtered juice is returned to be further processed while the

Oliver cake is sent out.

3. The clear juice is evaporated to a syrup stage, bleached by Sulphur dioxide and then sent to
vacuumpans for further concentration and sugar grain formation. Crystals are developed to a

desired size and the crystallized mass is then dropped in the crystallizers to exhaust the

mother liquor of its sugar as much as possible. This is then centrifuged for separating the

crystals from molasses. The molasses is re-boiled for further crystallization.

Thus, the original syrup is desugarised progressively (normally three times) till finally, a

viscous liquid is obtained from which sugar can no longer be recovered economically. This

liquid, which is called final molasses, is sent to the distillery for making alcohol. The sugar

thus is separated from molasses in the centrifuge is dried, bagged (50 Kg and 100 Kg),

weighed and sent to storage houses. Sugar is made in different sizes and accordingly

classified into various grades i.e. large, medium and small.

BY - PRODUCTS OF THE SUGAR MAKING PROCESS

(i)Molasses

Molasses is the only by-product obtained in the preparation of sugar through repeated

crystallization. The yield of molasses per ton of sugarcane varies in the range of 4.5% to

5%. Molasses is mainly used for the manufacture of alcohol, yeast and castle seeds.

Alcohol in turn is used to produce ethanol, rectified spirit, potable liquor and downstream

value added chemicals such as acetone, acetic acid, butanol, acetic anhydride, MEG etc.

The state government controls the export of molasses through export licenses issued every

quarter. Molasses and alcohol-based industries were decontrolled in 1993 and are now being

controlled by respective state government policies. Nearly the industrial alcohol

manufacturers consume 90% of molasses produced and the remaining 10% is consumed by

the potable alcohol sector.

Molasses Storage Tank

(ii)Bagasse
Bagasse is a fibrous residue of cane stalk that is obtained after crushing and extraction of

juice. It consists of water, fiber and relatively small quantities of soluble solids. The

composition of bagasse varies based on the variety of sugarcane, maturity of cane,

method of harvesting and the efficiency of the sugar mill.

Bagasse is usually used as a combustible in furnaces to produce steam, which in turn is used

to generate power. It is also used as a raw material for production of paper and as feedstock

for cattle.

By making use of bagasse sugar mills have been successful in reducing their dependence on

the State Electricity Boards, for their power supply as it can procure up to 90-95% of its

total power requirement through captive generation from steam turbines.

Bagasse Yard
(iii)Press-mud
Press mud, also known as Oliver cake or press cake, is the residual output after the filtration

of the juice. It is mixed with spent wash from the distillery and cultivated to produce high

Bio-Composing Process
 TREND IN DOMESTIC SUGAR PRICE
The U.P. Government announced state advisory price (SAP) at Rs.315 per quintal of general
variety for the Sugar season 2017-18 Rs. 325 per quintal for ealy maturing variety and Rs.
310 per quintal for rejected variety as against the fair and remunerative price (FRP) of Rs.
255 per quintal announced by the central government. The Government has decided plans to
8% increase in the fair and remunerative price of sugarcane over the previous year. The new
FRP is to Rs. 275 per quintal. This increase is likely to result in the state government
increasing the SAP for next crushing season.
 COMPANY ETHICS & SOCIAL RESPONSBILITIES

The Management of this Company believes in ethical management practices and implements

them in true spirits. They are extremely sensitive towards their social commitment obligations

from the very beginning. Few years back, Company established a full-fledged Hospital with

adequate indoor beds and other equipment’s, like X-Ray Machine etc., at Shamli, known as Sir

Shadi Lal Memorial Hospital and the same was handed over to the State Government. A big

Community Hall costing more than Rs. 40 lakhs were built in the heart of the city of Shamli and

the Company contributed more than 50 per cent of the cost of construction.

The repair work of the roads of the command area is taken on a regular basis. Regular

donations are given to the various Voluntary Organizations and other welfare organizations,

for organizing Eye Camps, Family Planning Camps and other activities at Shamli. The

Company also undertakes on a regular basis recreational programs at Shamli and the

Exhibition at Muzaffarnagar.
 OUTLOOK AND CHALLENGES

Sugar Mills in U.P. have incurred heavy losses during the last few years. Even though the

Govt. has announced a few measures to assist the industry, the mills are still not able to

recover their cost. On one side cane price arrears of farmers have reached at an all-time high

while on the other side the sugar mills are defaulted in the payments of their loans leading

several mills becoming Non-Performing Assets (NPA) or are filing Corporate Debt Re-

structuring (CDR). The Centre had come up with a scheme for the industry whereby banks

would extend soft loan of Rs.6600 Crores to help in clearing cane price arrears. Out of this

only Rs.3000 Crores has been disbursed so far. The banks are reluctant to lend anymore

because they fear that it would add to their list of Non-Performing Assets. The balance cane

price outstanding in UP are Rs.8, 754/– crores as on 29.05.2016. The Hon’ble High Court at

Allahabad have directed the State Government vide its Judgement dated 30th May 2016 of

PIL filed by Shri. V.M. Singh that the entire cane price for the season 2014-15 be paid by

30th June 2016. Thereafter, the Cane Commissioner, UP has put pressure on the sugar mills

to pay the entire cane price in the month of June, 2016 by issuing Recovery Certificate and

lodging FIR against the sugar mills. Now on 1st July 2016 the Hon’ble High Court Allahabad

have directed the State Government that the necessary steps shall be taken to ensure the

payment of balance amount of sugar cane dues to the farmers by 24th July 2016. The Hon’ble

High Court has further directed the implement of the Union Government as a party

respondent to these proceedings and notice be issued to the Union Government. On 24th July,

2016, the court could not sit and the date of hearing was further extended.

Due to unreasonable cane price in U.P. which has aggravated by low sugar recovery and lack

of adequate opportunities to export sugar, the mills in U.P. continued to sink further in deeper

financial crisis. An independent report India Rating and Research (IND–RA) published titled
as 2016 Outlook Sugar Sector Highlights that “North south divergence (is) more distinct” It

also mentioned that “South based millers should stay afloat (and) north based millers

toslide.” The outlook revision reflects the improvement in the credit profiles of millers based

in south India from financial year 2016 levels. However, UTTAR PRADESH (U.P.) based

mills will likely to continue to struggle with high leverages. The report suggests that better

opportunities and prospects that would be available in the next year would benefit only south

based sugar mills, while the north based mills including those in U.P. would remain in red.

The main reason for that is extremely high cost of producing sugar in U.P. which at the

current cane price and sugar realization is Rs.3600/– per qtl. as compared to sugar producing

cost of around Rs.3000/ to 3200/– per qtl in Maharashtra and South India. With rationalized

sugar cane pricing policies being implemented by the respective State Governments of

Maharashtra and Karnataka, which produces almost 50% of the country’s sugar the U.P.

sugar Mills will suffer unless and until the cane pricing system is rationalized. The negative

outlook for north and U.P based sugar mills would change if “linkage formula” on cane

pricing is implemented. It is essential to implement a revenue sharing model for cane price

determination from the next sugar season. There is of course the overall euphoria that the

new regime of BJP led by Sh.Narendra Modi will be friendlier and could help the sugar

industry. The BJP led NDA Government has constituted a committee of Ministers to review

the problems of sugar industry to ensure the interest of consumers, cane farmers and sugar

mills. The committee has recommended further extend soft loan of Rs.4400crores to the

sugar industry to help in clearing the cane price arrears, increase in the import duty on import

of sugar from 15% to 40% to discourage the import of sugar and further continue subsidy of

Rs.3300 per MT on export of raw sugar and increase in the admixing of ethanol in petrol

from 5 % to 10 %. Of course, these are the welcome steps taken by the Union Government

which could help the cash starved the sugar industry.

 UNIT – UPPER DOAB SUGAR MILLS, SHAMLI

PARTICULARS SUGAR SEASON (2017-18)

– Gross Working days 214

– Cane Crushed (lacs/Qtls.) 115.63

– Average Cane Crush per Crop day (Qtls.) 54033

– Manufacturing losses (%) 1.99

– Steam Consumption cane (%) 51.40

– Average Sugar recovery (%) 10.87

– Total sugar produced (lacs/Qtls.) 12.56

UNIT – SHAMLI DISTILLERY & CHEMICAL WORKS,
SHAMLI
In Shamli Distillery, the production is 7066191 BL during the year 2014-15 as against

7333632 BL during the last financial year 2014-15. During the year 2014-15, Fermentation

% was 89.04 as against 89.05 during 2014-15. Distillation % was 98.05as against 98.05

during last year. Overall % was 86.95 during 2014-15 as against 89.96 during the year 2014–

13. During the year 2014-15, the recovery in AL was 21.80 as against 22.02 during last year.

Molasses rate was Rs. 388.03 per quintal during the year 2014-15 as against Rs.323.50 per

quintal during the year 2014-15. Shamli Distillery earned profit of Rs. 451.22 Lacs during the

year 2014-15 as against Rs. 350.42 Lacs during last year in 2014-15.

ALCOHOL & ETHANOL BLENDING

The Ethanol Blending Program is primarily based on indigenously produced ethanol from

sugarcane molasses, which beside segmenting fuel availability in the country would also

provide better returns for sugar cane farmers. The Indian Sugar industry has the capacity to

produce 250 crore Liters of alcohol annually and its major buyers are chemical industry with

demand of 60 crores Liters, Potable and Alcohol Industry which sources 110 crore Liters and

Oil companies need around 100crore Liters annually. The Government’s ambitious plan to

blend petrol with 5% Ethanol has fallen far short of target, creating problems for sugar mills,

which supply the alcohol, and the chemical industry, which is complaining that there is a big

shortage in the market. Against the requirement of 105 crore liters of ethanol for mandatory

5% blending with petrol, oil companies have contracted just 62 crore liters, half of which is

yet to be lifted from depots. Ethanol Blending Program was launched to promote green fuel

and reduce the oil import bill. The sugar industry has estimated that oil companies could
have easily saved Rs.370crore on their oil import bill if they had blended the 62-croreliter

supplied by sugar mills in the past year. While oil companies cite ‘procedural delays’ in lifting

the Ethanol offered by the supplier sugar mills, the latter is unable to regularize its ethanol

production and supply due to non-lifting by OMC. While the supply from the first tender was

purchased in the price band of Rs.39–42 per liter, oil firms decided in January, 2016 that they

would procure ethanol from only those bidders who match their benchmark price of Rs.44/– per

liter. On this basis, they also rejected 36 crore liters of ethanol supply from sugar mills. In the

meanwhile, the chemical industry filed three cases in the Competition Commission of India

(CCI). Two were quashed while one is with the Supreme Court. In its appeal to the apex court,

India Glycols has alleged cartelization by sugar mills and oil companies and submitted that with

limited availability of molasses –based ethanol in the country, any diversion of ethanol shall

adversely affect the very existence of the chemical industry in India. The ethanol blending

program has faced hassles from all corners, be it price issue with mills, procedural delays due to

inter–state policy mismatch and CCI case filed by the chemical industry. As there is surplus sugar

production, the Government should take steps for increasing the mandatory ethanol blending

from5% to 10%. This would divert surplus sugar to the ethanol production and will reduce

inventory level of sugar.

 Human Resources initiatives and Industrial Relations
The Company has, as always, stood by its commitment of harnessing and developing its

people resources in the best possible manner for achievement of its business goals and

objectives. All through the year the level of people engagement has been

of the highest order, which has impacted the process of business growth and up–gradation of

various systems in a significant way.

Training and Development of employees

The process of training and development has continued with a view to upgrading skills and

competencies of people. Employees across all levels including Senior, and Middle

Management have been through various developmental programs customized to meet the

individual and organizational needs. The organization has continuously worked towards

providing an enabling work environment, which encourages people to acquire newer skills

and knowledge to make them more effective, productive and tuned to the environmental

changes.
GENERAL SHAREHOLDER
INFORMATION

a) Annual General Meeting: 24th September, 2018 at 11.00 A.M

Next Annual General Meeting: P.H.D. House,

Opp. Asian Game Village, New Delhi – 110 016.

b) Financial Calendar (2018–2019)

Financial reporting for the: Upto 14th Aug 2018

Quarter ending 30th June, 2018

Financial reporting for the quarter: Upto 14th Nov. 2018

Ending 30th Sept., 2018

Financial reporting for the: Upto 14th February 2019

Quarter ending 31st Dec., 2018

Financial reporting for the: 30th May, 2019

Quarter ending 31st March, 2019

c) Date of Books closure: 12th September, 2018 to 24th September, 2018

(Both days inclusive)

d) Dividend payment date: NIL

e) Listing on Stock Exchange: Delhi Stock Exchange Ltd. DSE House,
3/1 Asaf Ali Road, New Delhi–110002

Bombay Stock Exchange Ltd.

25th Floor, P.J. Tower, Dalal Street,

Mumbai – 400001.

The Company has paid the listing fee to both the Stock Exchanges for the financial

year 2017-18.

f) Stock Code: 532879 of Bombay Stock Exchange Ltd

g) Corporate Identity Number: Our Corporate Identity No. is L51909DL1933

PLC009509, allotted by the Ministry of Company

Affairs, Government of India and our Company’s

Registration No. is 9509.

h) Market Price Data: The Market Price Data and Volume from 1st

April, 2017 to 31st March, 2018 on the Bombay Stock Exchange Limited, Mumbai is given

below:

MONTHS HIGH (RS.) LOW (RS.) NO. OF SHARES TRADED

APRIL,2017 143.00 95.50 286325
MAY,2017 142.90 106.10 139944
JUNE,2017 133.10 95.50 135024
JULY,2017 124.00 99.00 92535
AUGUST,2017 133.00 100.55 145302
SEPTEMBER,2017 172.00 108.00 409522

OCTOBER,2017 159.00 131.00 307435

NOVEMBER,2017 142.70 117.00 68277
DECEMBER,2017 133.50 67.10 290372
JANUANRY,2018 72.90 58.10 178744
FEBRARY,2018 65.00 50.50 45712
MARCH,2018 55.95 36.60 111210
Plant Location: i) Upper Doab Sugar Mills,

SHAMLI – 247 776 (U.P.)

ii) Shamli Distillery & Chemical Works,

SHAMLI – 247 776 (U.P.)

Address for Correspondence

REGISTERED OFFICE SHARE TRANSFER AGENT

4-A, Hansalaya, M/s Alankit Assignments Ltd.,

15, Barakhamba Road, ‘Alankit House’

NEW DELHI-110 001 2-E/21, Jhandewalan Extn.

NEW DELHI-110 055.

Telephones: Telephones:

011-23316409 011-23541234

011-23310414 011-42541234
Fax: 011-23322473 Fax: 011-42540064

Shareholders holding shares in electronic mode should address all their correspondence to

their respective Depository Participants.

 RATIO

ANALYSIS
 RATIO ANAYSIS

Introduction

The analysis of the financial statements and interpretations of financial results of a period of

operations with the help of 'ratio' is termed as "ratio analysis." Ratio analysis used to

determine the financial soundness of a business concern. Alexander Wall designed a system

of ratio analysis and presented it in useful form in the year 1909.

Meaning and Definition

The term 'ratio' refers to the mathematical relationship between any two inter-related

variables. In other words, it establishes relationship between two items expressed in

quantitative form.

According J. Batty, Ratio can be defined as "the term accounting ratio is used to

describesignificant relationships which exist between figures shown in a balance sheet and

profit and loss account in a budgetary control system or any other part of the accounting

management."

Analysis or Interpretations of Ratios

The analysis or interpretations in question may be of various types. The following approaches

are usually found to exist:

(a) Interpretation or Analysis of an Individual (or) Single ratio.

(b) Interpretation or Analysis by referring to a group of ratios.

(c) Interpretation or Analysis of ratios by trend.

(d) Interpretations or Analysis by inter-firm comparison.

Principles of Ratio Selection

The following principles should be considered before selecting the ratio:

(1) Ratio should be logically inter-related.

(2) Pseudo ratios should be avoided.

(3) Ratio must measure a material factor of business.

(4) Cost of obtaining information should be borne in mind.

(5) Ratio should be in minimum numbers.

(6) Ratio should be facilities comparable.

Advantages of Ratio Analysis

Ratio analysis is necessary to establish the relationship between two accounting figures to

highlight the significant information to the management or users who can analyze the

business situation and to monitor their performance in a meaningful way. The following are

the advantages of ratio analysis:

(1) It facilitates the accounting information to be summarized and simplified in a required

form.
(2) It highlights the inter-relationship between the facts and figures of various segments of

business.

(3) Ratio analysis helps to remove all type of wastages and inefficiencies.

(4) It provides necessary information to the management to take prompt decision relating to

business.

(5) It helps to the management for effectively discharge its functions such as planning,

organizing, controlling, directing and forecasting.

(6) Ratio analysis reveals profitable and unprofitable activities. Thus, the management can

concentrate on unprofitable activities and consider to improve the efficiency.

(7) Ratio analysis is used as a measuring rod for effective control of performance of business

activities.

(8) Ratios are an effective means of communication and informing about financial soundness

made by the business concern to the proprietors, investors, creditors and other parties.

(9) Ratio analysis is an effective tool which is used for measuring the operating results of the

enterprises.

(10) It facilitates control over the operation as well as resources of the business.

(11) Effective co-operation can be achieved through ratio analysis.

(12) Ratio analysis provides all assistance to the management to fix responsibilities.

(13) Ratio analysis helps to determine the performance of liquidity, profitability and solvency

position of the business concern.

Limitations of Ratio Analysis

Ratio analysis is one of the important techniques of determining the performance of financial

strength and weakness of a firm. Though ratio analysis is relevant and useful technique for
the business concern, the analysis is based on the information available in the financial

statements. There are some situations, where ratios are misused; it may lead the management

to wrong direction. The ratio analysis suffers from the following limitations:

(1) Ratio analysis is used based on financial statements. Number of limitations of financial

statements may affect the accuracy or quality of ratio analysis.

(2) Ratio analysis heavily depends on quantitative facts and figures and it ignores qualitative

data. Therefore, this may limit accuracy.

(3) Ratio- analysis is a poor measure of a firm's performance due to lack of adequate

standards laid for ideal ratios.

(4) It is not a substitute for analysis of financial statements. It is merely used as a tool for

measuring the performance of business activities.

(5) Ratio analysis clearly has some latitude for window dressing.

(6) It makes comparison of ratios between companies which is questionable due to

differences in methods of accounting operation and financing.

(7) Ratio analysis does not consider the change in price level, as such, these ratios will not

help in drawing meaningful inferences.

 CLASSIFICATION OF RATIOS

Accounting Ratios are classified based on the different parties interested in making use of the

ratios. A very large number of accounting ratios are used for determining the financial

position of a concern for different purposes. Ratios may be broadly classified in to:

(1) Classification of Ratios based on Balance Sheet.

(2) Classification of Ratios based on Profit and Loss Account

(3) Classification of Ratios based on Mixed Statement (or) Balance Sheet and Profit and Loss
Account.

This classification further grouped in to:

I. Liquidity Ratios

II. Profitability Ratios

III. Turnover Ratios

IV. Solvency Ratios

V. Overall Profitability Ratios

These classifications are discussed here under:

1. Classification of Ratios based on Balance Sheet:

Balance sheet ratios which establish the relationship between two balance sheet items.

For example, Current Ratio, Fixed Asset Ratio, Capital Gearing Ratio and Liquidity Ratio

etc.

2. Classification based on Income Statements:

These ratios deal with the relationship between two items or two group of items of the

income statement or profit and loss account. For example, Gross Profit Ratio, Operating

Ratio, Operating Profit Ratio, and Net Profit Ratio etc.

 3. Classification based on Mixed Statements:

These ratios also known as Composite or Mixed Ratios or Inter Statement Ratios. The inter statement

ratios which deal with relationship between the item of profit and loss account and

item of balance sheet. For example, Return on Investment Ratio, Net Profit to Total Asset

Ratio, Creditor's Turnover Ratio, Earning Per Share Ratio and Price Earnings Ratio etc.

Classification of Ratios by Statement

On the basis, of On the basis, of On the basis, of

Balance Sheet Profit and loss A/c Profit and Loss Account
And Balance Sheet
1.Liquid ratio 1. Gross Profit Ratio 1. Stock Turnover Ratio
2.Absolute Liquid Ratio 2. Operating Ratio 2. Debtors Turnover Ratio

3.Debt Equity Ratio 3. Operating Profit Ratio 3. Payable Turnover Ratio

Ratio

4.Proprietary Ratio 4. Net Profit Ratio 4. Fixed Asset Turnover Ratio

5.Capital Gearing Ratio 5. Expense Ratio 5. Return on Equity Ratio

6.Assets-Proprietorship Ratio 6. Interest Coverage Ratio 6. Return on Shareholder's Fund

7.Capital Inventory to 7. Return on Capital

Employed

8. Capital Turnover Ratio

8.Ratio of Current Assets to 9. Working Capital Ratio

Capital

9.Fixed Assets turnover ratio

10. Return on Total Resource

11. Total Assets Turnover

1. LIQUIDITY RATIOS

Liquidity Ratios are also termed as Short-Term Solvency Ratios. The term liquidity means

the extent of quick convertibility of assets in to money for paying obligation of short-term

nature. Accordingly, liquidity ratios are useful in obtaining an indication of a firm's ability to

meet its current liabilities, but it does not reveal h0w effectively the cash resources can be

managed. To measure the liquidity of a firm, the following ratios are commonly used:

(1) Current Ratio.

(2) Quick Ratio (or) Acid Test or Liquid Ratio.

(3) Absolute Liquid Ratio (or) Cash Position Ratio.

1.1. Current Ratio

Current Ratio establishes the relationship between current Assets and current Liabilities. It

attempts to measure the ability of a firm to meet its current obligations. To compute this ratio,

the following formula is used:

Current Ratio = Current Assets / Current Liability

The two basic components of this ratio are current assets and current liabilities. Current asset

normally means assets which can be easily converted in to cash within a year's time. On the

other hand, current liabilities represent those liabilities which are payable within a year. The

following table represents the components of current assets and current liabilities to measure

the current ratios:

Components of Current Assets and Current Liabilities

Current Assets Current Liabilities

1
Cash in Hand Sundry Creditor (Accounts Payable)
2 Cash at Bank Bills Payable
3
Sundry Debtors Outstanding and Accrue Expense
4
Bills Receivable Income Tax Payable
5
Marketable securities Short Term Advances

(Short-Term)
6
Other Short-Term Investments Unpaid or Unclaimed Dividend
7 Inventories: Bank Overdraft (Short-Term Period)
(a) Stock of Raw Material
(b) Stock of Work in Progress
(c) Stock of Finished goods

Interpretation of Current Ratio:

The ideal current ratio is 2: 1. It indicates that current assets double the current liabilities is

satisfactory. Higher value of current ratio indicates more liquid of the firm's ability to pay its

current obligation in time. On the other hand, a low value of current ratio means that the

firm may find it difficult to pay its current ratio as one which is generally recognized as the

patriarch among ratios.

Advantages of Current Ratios:

(1) Current ratio helps to measure the liquidity of a firm.

(2) It represents general picture of the adequacy of the working capital position of a company.

(3) It indicates liquidity of a company.

(4) It represents a margin of safety, i.e., cushion of protection against current creditors.

(5) It helps to measure the short-term financial position of a company or short-term

solvency of a firm.
Disadvantages of Current Ratio:

(1) Current ratios cannot be appropriate to all business it depends on many other factors.

(2) Window' dressing is another problem of current ratio, for example, overvaluation

of closing stock.

(3) It is a crude measure of a firm's liquidity only based on quantity and not quality of

current assets.

1.2. Quick Ratio (or) Acid Test or Liquid Ratio

Quick Ratio also termed as Acid Test or Liquid Ratio. It is supplementary to the current

ratio. The acid test ratio is a more severe and stringent test of a firm's ability to pay its short-

term obligations as and when they become due. Quick Ratio establishes the relationship

between the quick assets and current liabilities. To compute this ratio, the below presented

formula is used:

Liquid Asset (Current Assets - Stock and Prepaid Expenses)

Liquid Ratio =
Current Liabilities

 Quick Ratio can be calculated by two basic components of quick assets and current

liabilities.
 Quick Assets = Current Assets - (Inventories + Prepaid expenses)
 Current liabilities represent those liabilities which are payable within a year.
Interpretation:
The ideal Quick Ratio of 1:1 is satisfactory. High Acid Test Ratio is an indication that the

firm has relatively better position to meet its current obligation in time. Onthe other hand, a

low value of quick ratio exhibiting that the firm's liquidity position is not good.

Advantages

(I) Quick Ratio helps to measure the liquidity position of a firm.

(2) It is used as a supplementary to the current ratio.

(3) It is used to remove inherent defects of current ratio.

2. PROFITABILITY RATIOS

The term profitability means the profit earning capacity of any business activity. Thus, profit

earning may be judged on the volume of profit margin of any activity and is calculated by

subtracting costs from the total revenue accruing to a firm during a period. Profitability Ratio

is used to measure the overall efficiency or performance of a business.Generally, many ratios

can also be used for determining the profitability as the same is related to sales or

investments.

The following important profitability ratios are discussed below:

1. Gross Profit Ratio.

2. Operating Ratio.
3. Operating Profit Ratio.

4. Net Profit Ratio.

5. Return on Investment Ratio.

6. Return on Capital Employed Ratio.

7. Earnings Per Share Ratio.

8. Dividend Payout Ratio.

9. Dividend Yield Ratio.

low. Price Earnings Ratio.

11. Net Profit to Net Worth Ratio.

2.1. Gross Profit Ratio

Gross Profit Ratio established the relationship between gross profit and net sales. This ratio

is calculated by dividing the Gross Profit by Sales. It is usually indicated as percentage.

Gross Profit Ratio = Gross Profit / Net Salesx 100

Gross Profit = Sales - Cost of Goods Sold

Net Sales = Gross Sales - Sales Return (or) Return Inwards

Higher Gross Profit Ratio is an indication that the firm has higher profitability. It also reflects

the effective standard of performance of firm's business. Higher Gross Profit Ratio will be

result of the following factors.

(1) Increase in selling price, i.e., sales higher than cost of goods sold.

(2) Decrease in cost of goods sold with selling price remaining constant.

(3) Increase in selling price without any corresponding proportionate increase in cost.

(4) Increase in the sales mix.

A low gross profit ratio generally indicates the result of the following factors:

(l) Increase in cost of goods sold.

(2) Decrease in selling price.

(3) Decrease in sales volume.

(4) High competition.

(5) Decrease in sales mix.

Advantages

(1) It helps to measure the relationship between gross profit and net sales.

(2) It reflects the efficiency with which a firm produces its product.

(3) This ratio tells the management, that a low gross profit ratio may indicate unfavorable

purchasing and mark-up policies.

(4) A low gross profit ratio also indicates the inability of the management to increase sales.
 2.2. Operating Ratio

Operating Ratio is calculated to measure the relationship between total operating expenses

and sales. The total operating expenses is the sum of cost of goods sold, office and

administrative expenses and selling and distribution expenses. In other words, this ratio

indicates a firm's ability to cover total operating expenses. To compute this ratio, the

following formula is used:

Operating Ratio = Operating Cost x 100/ Net Sales

Operating Cost = Cost of goods sold + Administrative Expenses

+ Selling and Distribution Expenses

Net Sales =Sales - Sales Return (or) Return Inwards.

2.3. Operating Profit Ratio

Operating Profit Ratio indicates the operational efficiency of the firm and is a measure of

the firm's ability to cover the total operating expenses. Operating Profit Ratio can be

calculated as:

Operating Profit Ratio = Operating Profit / Net Sales x 100

Operating Profit = Net Sales - Operating Cost

 (Or)

= Net Sales - (Cost of Goods Sold + Office and

Administrative Expenses + Selling and

Distribution Expenses)

(Or)

= Gross Profit - Operating Expenses (Or)

= Net Profit + Non-Operating Expenses

- Non-operating income

2.4. Net Profit Ratio

Net Profit Ratio is also termed as Sales Margin Ratio (or) Profit Margin Ratio (or) Net

Profit to Sales Ratio. This ratio reveals the firm's overall efficiency in operating the

business. Net profit Ratio is used to measure the relationship between net profit (either

before or after taxes) and sales. This ratio can be calculated by the following formula:

Net Profit Ratio = Net Profit After Tax 100 / Net Sales

Net profit includes non-operating incomes and profits. Non-Operating Incomes such as

dividend received, interest on investment, profit on sales of fixed assets, commission

received, discount received etc. Profit or Sales Margin indicates margin available after

deduction cost of production, other operating expenses, and income tax from the sales

revenue. Higher Net Profit Ratio indicates the standard performance of the business concern.
 Advantages

(1) This is the best measure of profitability and liquidity.

(2) It helps to measure overall operational efficiency of the business concern.

(3) It facilitates to make or buy decisions.

(4) It helps to determine the managerial efficiency to use a firm's resources to generate

income on its invested capital.

(5) Net profit Ratio is very much useful as a tool of investment evaluation.

2.5. Return on Investment Ratio

This ratio is also called as ROL This ratio measures a return on the owner's or

shareholders’ investment. This ratio establishes the relationship between net profit after

interest and taxes and the owner's investment. Usually this is calculated in percentage. This

ratio thus can be calculated as:

Net Profit (after interest and tax)

Return on Investment Ratio = 100
Shareholders' Fund (or) Investments

Shareholder's Investments = Equity Share Capital + Preference Share

Capital + Reserves and Surplus

- Accumulated Losses

Net Profit = Net Profit - Interest and Taxes

Advantages

(1) This ratio highlights the success of the business from the owner's point of view.

(2) It helps to measure an income on the shareholders' or proprietor's investments.

(3) This ratio helps to the management for important decisions making.

(4) It facilitates in determining efficiently handling of owner's investment.

2.6. Return on Capital Employed Ratio

Return on Capital Employed Ratio measures a relationship between profit and capital

employed. This ratio is also called as Return on Investment Ratio. The term return means

Profits or Net Profits. The term Capital Employed refers to total investments made in the

business. The concept of capital employed can be considered further into the following ways:

(a) Gross Capital Employed

(b) Net Capital Employed

(c) Average Capital Employed

(d) Proprietor's Net Capital Employed

(a) Gross Capital Employed = Fixed Assets Current Assets.

(b)Net Capital Employed = Total Assets - Current Liabilities
Opening Capital Employed + Closing
(c) Average Capital Employed = Capital Employed / 2
Or
= Net Capital Employed + 1/2 of Profit
after Tax
(d)Proprietor's Net Capital = Fixed Assets + Current Assets
Employed - Outside Liabilities (both long-term and
short-term).

To compute this ratio, the below presented formulas are used:

Return on Capital Employed=Net Profit after Taxes x 100

Gross Capital Employed
 (Or)
= Net Profit after Taxes before Interest x
100 Gross Capital Employed
(Or)
= Net Profit after Taxes before Interest x
100 Average Capital Employed or
Net Capital Employed

2.7. Earnings Per Share Ratio

Earnings per Share Ratio (EPS) measures the earning capacity of the concern from the

owner's point of view and it is helpful in determining the price of the equity share in the

market place. Earnings per Share Ratio can be calculated as:

Earnings Per Share Ratio = Net Profit after Tax and Preference Dividend No. of
Equity Shares

Advantages
(1) This ratio helps to measure the price of stock in the market place.
(2) This ratio highlights the capacity of the concern to pay dividend to its shareholders.
(3) This ratio used as a yardstick to measure the overall performance of the concern.

2.8. Dividend Payout Ratio

This ratio highlights the relationship between payment of dividend on equity share capital

and the profits available after meeting tax and preference dividend. This ratio indicates the

dividend policy adopted by the top management about utilization of divisible profit to pay

dividend or to retain or both. The ratio, thus, can be calculated as

Dividend Payout Ratio = Equity Dividend

Net Profit after Tax and Preference Dividend
(Or)
= Dividend per Equity Sharex 100
Earning Per Equity Share
 2.9. Dividend Yield Ratio:
Dividend Yield Ratio indicates the relationship is established between dividend per share

and market value per share. This ratio is a major factor that determines the dividend income

from the investor point of view. It can be calculated by the following formula:

Dividend Yield Ratio = Dividend per Share x 100

Market Value per Share

2.10. Price Earnings Ratio

This ratio highlights the earning per share reflected by market share. Price Earnings Ratio

establishes the relationship between the market price of an equity share and the earning per

equity share. This ratio helps to find out whether the equity shares of a company are

undervalued or not. This ratio is also useful in financial forecasting. This ratio is calculated

as:

Price Earnings Ratio = Market Price per Equity Share /Earning per Share

2.11. Net Profit to Net Worth Ratio

This ratio measures the profit return on investment. This ratio indicates the established
relationship between net profit and shareholders' net worth. It is a reward for the assumption
of ownership risk. This ratio is calculated as:

Net Profit to Net Worth = Net Profit after Taxes x 100

Shareholders' Net Worth
Shareholder Net Worth = Total Tangible Net Worth
Total Tangible Net Worth = Company's Net Assets - Long-Term Liabilities (Or)
= Shareholders' Funds + Profits Retained in
business

Advantages
(1) This ratio determines the incentive to owners.
(2) This ratio helps to measure the profit as well as net worth.
(3) This ratio indicates the overall performance and effectiveness of the firm.
(4) This ratio measures the efficiency with which the resources of a firm have been

employed.
3. TURNOVER RATIOS

Turnover Ratios may be also termed as Efficiency Ratios or Performance Ratios or Activity

Ratios. Turnover Ratios highlight the different aspect of financial statement to satisfy the

requirements of different parties interested in the business. It also indicates the effectiveness

with which different assets are vitalized in a business. Turnover means the number of times

assets are converted or turned over into sales. The activity ratios indicate the rate at which

different assets are turned over. Depending upon the purpose, the following activities or

turnover ratios can be calculated:

1. Inventory Ratio or Stock Turnover Ratio (Stock Velocity).

2. Debtor's Turnover Ratio or Receivable Turnover Ratio (Debtor's
Velocity). 2 A. Debtor's Collection Period Ratio.
3. Creditor's Turnover Ratio or Payable Turnover Ratio (Creditor's
Velocity). 3 A. Debt Payment Period Ratio.
4. Working Capital Turnover Ratio
5. Fixed Assets Turnover Ratio
6. Capital Turnover Ratio.

3.1. Stock Turnover Ratio

This ratio is also called as Inventory Ratio or Stock Velocity Ratio.
Inventory means stock of raw materials, working in progress and finished goods. This ratio is

used to measure whether the investment in stock in trade is effectively utilized or not. It

reveals the relationship between sales and cost of goods sold or average inventory at cost

price or average inventory at selling price. Stock Turnover Ratio indicates the number of

times the stock has been turned over in business during a period. While using this
 ratio, care must be taken regarding season and condition, Price trend, supply condition etc.

To compute this ratio, the following formulae are used:

(1) Stock Turnover Ratio = Cost of Goods Sold

Average Inventory at
Cost

Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses - Closing Stock

(Or)

= Total Cost of Production + Opening Stock of Finished

Goods - Closing Stock of Finished Goods.

Total Coast of Production = Cost of Raw Material Consumed + Wages + Factory Cost

(Or)
= Sales - Gross Profit

Average Stock = Opening Stock + Closing Stock

(2) Stock Turnover Ratio = Net Sales

Average Inventory at Cost

(3) Stock Turnover Ratio = Net Sales

Average Inventory at Selling Price

(4) Stock Turnover Ratio =Net Sales

Inventory

Advantages
(1) This ratio indicates whether investment in stock in trade is efficiently used or not.
(2) This ratio is widely used as a measure of investment in stock is within proper limit or not.
(3) This ratio highlights the operational efficiency of the business concern.
(4) This ratio is helpful in evaluating the stock utilization.
(5) It measures the relationship between the sales and the stock in trade.
(6) This ratio indicates the number of times the inventories have been turned over in business
within aperiod.
 3.2. Debt's Turnover Ratio
Debtor's Turnover Ratio is also termed as Receivable Turnover Ratio or Debtor's Velocity.
Receivables and Debtors represent the uncollected portion of credit sales. Debtor's Velocity

indicates the number of times the receivables are turned over in business during a period. In

other words, it represents how quickly the debtors are converted into cash. It is used to

measure the liquidity position of a concern. This ratio establishes the relationship between

receivables and sales. Two kinds of ratios can be used to judge a firm's liquidity position

based on efficiency of credit collection and credit policy. They are (A) Debtor's Turnover

Ratio and (B) Debt Collection Period. These ratios may be computed as:

3.2.1. Debtor's Turnover Ratio =Net Credit

Sales Accounts Receivable
(Or)

= Average Accounts Receivable

Net Credit Sales = Total Sales - (Cash Sales + Sales Return)

Account Receivable = Sundry Debtors or Trade Debtors + Bills Receivable
Average Account Receivable = Opening Receivable + Closing Receivable
2
It is to be noted that opening and closing receivable and credit sales are not available,

the ratio may be calculated as

Debtor's Turnover Ratio = Total Sales

Accounts Receivable

3.2.2. Debt Collection Period Ratio

This ratio indicates the efficiency of the debt collection period and the extent to which the

debt has been converted into cash. This ratio is complementary to the Debtor Turnover

Ratio. It is very helpful to the management because it represents the average debt

collection period. The ratio can be calculated as follows:

(a) Debt Collection Period Ratio =Months (or) Days in a year

Debtor's Turnover
(Or)
(b) Debt Collection Period Ratio=Average Accounts Receivable (x) Months (or)

Days(yr) Net Credit Sales for the year

Advantages of Debtor's Turnover Ratio

(1) This ratio indicates the efficiency of firm's credit collection and efficiency of credit policy.

(2) This ratio measures the quality of receivable, i.e., debtors.

(3) It enables a firm to judge the adequacy of the liquidity position of a concern.

(4) This ratio highlights the probability of bad debts lurking in the trade debtors.

(5) This ratio measures the number of times the receivables are turned over in business during

a period.

(6) It points out the liquidity of trade debtors, i.e., higher turnover ratio and shorter debt

collection period indicate prompt payment by debtors. Similarly, low turnover ratio and

higher collection period implies that payment by trade debtors are delayed:

3.2.3. Creditor's Turnover Ratio

Creditor's Turnover Ratio is also called as Payable Turnover Ratio or Creditor's Velocity. The

credit purchases are recorded in the accounts of the buying companies as Creditors to

Accounts Payable. The Term Accounts Payable or Trade Creditors include sundry creditors

and bills payable. This ratio establishes the relationship between the net credit purchases and

the average trade creditors. Creditor's velocity ratio indicates the number of times with which

the payment is made to the supplier in respect of credit purchases. Two kinds of ratios can be

used for measuring the efficiency of payable of a business concern relating to credit

purchases. They are: (1) Creditor's Turnover Ratio (2) Creditor's Payment Period or Average

Payment Period. The ratios can be calculated by the following formulas:

 (1) Creditor's Turnover Ratio = Net Credit Purchases
Average Accounts Payable

Net Credit Purchases = Total Purchases - Cash Purchases

a Accounts Payable = Opening Payable + Closing Payable

2
(2) Average Payment Period = Month (or) Days in a year
Creditors Turnover Ratio
(Or)
= Average Trade Creditors x 365 / Net Credit Purchases

Significance: A high Creditor's Turnover Ratio signifies that the creditors are being

paidpromptly. A lower ratio indicates that the payment of creditors is not paid in time. Also,

high average payment period highlight the unusual delay in payment and it affect the

creditworthiness of the firm. A low average payment period indicates enhancing the

creditworthiness of the company.

3.2.4. Working Capital Turnover Ratio

This ratio highlights the effective utilization of working capital about sales. This ratio represents

the firm's liquidity position. It establishes relationship between cost of sales and networking

capital. This ratio is calculated as follows:

Working Capital Turnover Ratio = Net Sales

Working Capital

Net Sales = Gross Sales - Sales Return

Work Capital= Current Assets - Current Liabilities

Significance: It is an index to know whether the working capital has been effectively utilizedor

not in making sales. A higher working capital turnover ratio indicates efficient utilization of

working capital, i.e., a firm can repay its fixed liabilities out of its working capital. Also, a

lower working capital turnover ratio shows that the firm must face the shortage of working

capital to meet its day-to-day business activities unsatisfactorily.

3.2.5. Fixed Assets Turnover Ratio

This ratio indicates the efficiency of assets management. Fixed Assets Turnover Ratio is used to

measure the utilization of fixed assets. This ratio establishes the relationship between cost of

goods sold and total fixed assets. Higher the ratio highlights a firm has successfully utilized the

fixed assets. If the ratio is depressed, it indicates the underutilization of fixed assets. The ratio

may also be calculated as:

Fixed Assets Turnover Ratio = Cost of Goods Sold

Total Fixed Assets
(Or)
= Sales
Net Fixed Assets
Components of Fixed Assets (or) Non-Current Assets

(1) Goodwill (11) Preliminary Expenses

(2) Land and Building (12) Other Deferred Expenses
(3) Plant and Machinery (13) Government or Trust Securities
(4) Furniture and Fittings (14) Any other immovable Prosperities
(5) Trade Mark
(6) Patent Rights and Livestock
(7) Long-Term Investment
(8) Debt Balance of Profit and Loss Account
(9) Discount on Issue of Shares
(10)Discount on Issue of Debenture

3.2.6. Capital Turnover Ratio

This ratio measures the efficiency of capital utilization in the business. This ratio establishes the

relationship between cost of sales or sales and capital employed or shareholders' fund. This ratio

may also be calculated as:

(1) Capital Turnover Ratio =Cost of Sale / Capital

Employed (Or)
= Sales / Capital Employed
Capital Employed = Shareholders' Funds + Long-Term Loans

(Or)
= Total Assets - Current Liabilities
(2) Turnover Ratio = Cost of Sales / Shareholders' Fund

(Or)
= Sales / Shareholders' Fund
Components of Capital Employed (Shareholders' Fund + Long-Term Loans)

(1) Equity Share Capital

(2) Preference Share Capital

(3) Debentures

(4) Long-Term Loans

(5) Share Premium

(6) Credit Balance of Profit and Loss Account

(7) Capital Reserve

(8) General Reserve

(9) Provisions

(10) Appropriation of Profit

4. SOLVENCY RATIOS

The term 'Solvency' generally refers to the capacity of the business to meet its short-term and

long-term obligations. Short-term obligations include creditors, bank loans and bills payable etc.

Long-term obligations consist of debenture, long-term loans and long-term creditors etc.

Solvency Ratio indicates the sound financial position of a concern to carry on its business

smoothly and meet its all obligations. Liquidity Ratios and Turnover Ratios concentrate on

evaluating the short-term solvency of the concern have already been explained. Now under this

part of the chapter only the long-term solvency ratios are dealt with. Some of the important ratios

which are given below to determine the solvency of the concern:

(1) Debt - Equity Ratio

(2) Proprietary Ratio

(3) Capital Gearing Ratio

(4) Debt Service Ratio or Interest Coverage Ratio

 4.1. Debt Equity Ratio

This ratio also termed as External - Internal Equity Ratio. This ratio is calculated to ascertain the

Firm’s obligations to creditors in relation to funds invested by the owners. The ideal Debt Equity

Ratio is1: 1. This ratio also indicates all external liabilities to owner recorded claims. It may be

calculated as

(a) Debt - Equity Ratio = External Equities / Internal

Equities (Or)

(b) Debt - Equity Ratio = Outsider's Funds / Shareholders' Funds

The term External Equities refers to total outside liabilities and the term Internal Equities refers

to all claims of preference shareholders and equity shareholders' and reserve and surpluses.

(c) Debt - Equity Ratio = Total Long-Term Debt

Total Long-Term Funds
(Or)
(d) Debt - Equity Ratio = Total Long-Term Debt

Shareholders' Funds

The term Total Long-Term Debt refers to outside debt including debenture and long-term

loans raised from banks.

4.2. Proprietary Ratio

Proprietary Ratio is also known as Capital Ratio or Net Worth to Total Asset Ratio. This is one

of the variant of Debt-Equity Ratio. The term proprietary fund is called Net Worth. This ratio

shows the relationship between shareholders' fund and total assets. It may be calculated as:
Proprietary Ratio = Shareholders’ Fund
Total Assets

Shareholders' Fund = Preference Share Capital + Equity Share

Capital
+ All Reserves and Surplus

Total = Tangible Assets + Non-Tangible Assets+ Current Assets

Assets
(Or)

All Assets including Goodwill

Significance: This ratio used to determine the financial stability of the concern in

general.Proprietary Ratio indicates the share of owners in the total assets of the company. It

serves as an indicator to the creditors who can find out the proportion of shareholders' funds in

the total assets employed in the business. A higher proprietary ratio indicates relatively little

secure position in the event of solvency of a concern. A lower ratio indicates greater risk to the

creditors. A ratio below 0.5 is alarming for the creditors.

4.3. Capital Gearing Ratio

This ratio also called as Capitalization or Leverage Ratio. This is one of the Solvency Ratios.

The term capital gearing refers to describe the relationship between fixed interest and/or fixed

dividend bearing securities and the equity shareholders' fund. It can be calculated as shown

below:

Capital Gearing Ratio = Equity Share Capital /

Fixed Interest Bearing Funds

Equity Share Capital = Equity Share Capital + Reserves and Surplus

Fixed Interest Bearing Funds = Debentures + Preference Share Capital

+ Other Long-Term Loans

A high capital gearing ratio indicates a company is having large funds bearing fixed interest

and/or fixed dividend as compared to equity share capital. A low capital gearing ratio

represents preference share capital and other fixed interest bearing loans are less than

equity share capital.

4.4. Debt Service Ratio

Debt Service Ratio is also termed as Interest Coverage Ratio or Fixed Charges Cover Ratio.

This ratio establishes the relationship between the amount of net profit before deduction of

interest and tax and the fixed interest charges. It is used as a yardstick for the lenders to know

the business concern will be able to pay its interest periodically. Debt Service Ratio is

calculated with the help of the following formula:

Interest Coverage Ratio = Net Profit before Interest and Income Tax 100
Fixed Interest Charges
5. OVERALL PROFITABILITY RATIO

This ratio used to measure the overall profitability of a firm on the extent of operating efficiency it

enjoys. This ratio establishes the relationship between profitability on sales and the profitability on

investment turnover. Overall all Profitability Ratio may be calculated in the following ways:

Overall Profitability Ratio =Net Profit * Sales

Sales Total Assets

DU Pont Control Chart (or) DU Pont Analysis

ROI indicates the efficiency of the concern which depends upon the working operations of the

concern. Net Profit Ratio and Capital Turnover Ratio, as often called is usually computed based on the

chart represented by DU Pont. Thus, it is known as "DU Pont Chart." This system of control was

applied for the first time by DU Pont company of the United States of America. The DU Pont chart

helps to the management to identify the areas of problems for the variations in the return on

investment so that actions may initiated to improve the performance.

OBJECTIVE OF

THE STUDY
 OBJECTIVE OF THE STUDY

The major objectives of the resent study are to know about financial strengths and weakness

of UPPER DOAB SUGAR MILL through FINANCIAL RATIO.

The main objectives of resent study aimed as:

To evaluate the performance of the company by using ratios as a yardstick to measure the

efficiency of the company. To understand the liquidity, profitability and efficiency positions

of the company during the study period. To evaluate and analyze various facts of the

financial performance of the company. To make comparisons between the ratios

1. To study the present financial system at UPPER DOAB SUGAR MILL.

2. To determine the Profitability, Liquidity Ratios.

3. To analyze the capital structure of the company.

4. To offer appropriate suggestions for the better performance of the company.

5. To know whether the financial ratios of the company are ideal or not, which is the sign of a

healthy business enterprise.

SCOPE OF
THE
STUDY
 SCOPE OF THE STUDY

The scope of ratio analysis can be explained with the help of following points –

1. It is useful for inter firm comparison which implies that company compares its

performance with that of its industry peers.

2. It is useful in intra firm comparison which means that company will compare the

performance of various departments of the company to judge the best department within the

company.

3. It is useful in simplifying the accounting figures to make them understandable to a layman,

because it is easier to understand ratios then plain figures.

4. It is also useful in forecasting and planning for the future, also it helps in control by

comparing the actual performance with that of forecasted performance and looking for reason

for it.

5. It is also used for analysis of financial statements by various interested parties like

bankers, creditors, supplier etc.…. for taking future decision about the company.
IMPORTANCE

OF THE

STUDY
 IMPORTANCE OF THE STUDY

1. It simplifies the financial statements.

2. It helps in comparing companies of different size with each other.

3. It helps in trend analysis which involves comparing a single company over a period.

4. It highlights important information in simple form quickly. A user can judge a

company by just looking at few numbers instead of reading the whole financial

statements.
LIMITATION

OF THE

STUDY
 LIMITATION OF STUDY

Despite usefulness, financial ratio analysis has some disadvantages. Some key demerits of

financial ratio analysis are:

Ignorance of qualitative aspect

The ratio analysis is based on quantitative aspect. It totally ignores qualitative aspect which is

sometimes more important than quantitative aspect.

Ignorance of price level changes

Price level changes make the comparison of figures difficult over a period. Before any

comparison is made, proper adjustments for price level changes must be made.

No single concept

To calculate any ratio, different firms may take different concepts for different purposes.

Some firms take profit before charging interest and tax or profit before tax but after interest

tax. This may lead to different results.

Misleading results if based on incorrect accounting data

Ratios are based on accounting data. They can be useful only when they are based on reliable

data. If the data are not reliable, the ratio will be unreliable.

No single standard ratio for comparison

There is no single standard ratio which is universally accepted and against which a

comparison can be made. Standards may differ from Industry to industry.

Difficulties in forecasting

Ratios are worked out based on past results. As such they do not reflect the present and future

position. It may not be desirable to use them for forecasting future events.

Different companies operate in different industries each having different environmental

conditions such as regulation, market structure, etc. Such factors are so significant that a

comparison of two companies from different industries might be misleading.

Financial accounting information is affected byestimatesandassumptions. Accounting

standards allow differentaccountingpolicies,whichimpairscomparability and hence ratio

analysis is less useful in such situations. Ratio analysis explains relationships between past

information while users are more concerned about current and future information.
NEED

OF

STUDY
 NEED OF STUDY

1. The study has great significance and provides benefits to various parties whom directly

or indirectly interact with the company.

2. It is beneficial to management of the company by providing crystal clear picture

regarding important aspects like liquidity, leverage, activity and profitability.

3. The study is also beneficial to employees and offers motivation by showing how

actively they are contributing for company’s growth.

4. The investors who are interested in investing in the company’s shares will also get

benefited by going through the study and can easily take a decision whether to invest or

not to invest in the company’s shares.

 RESEARCH

METHODOLOGY
 RESEARCH METHODOLOGY

Research is a systematic method of finding solutions to problems. It is essentially an

investigation, a recording and an analysis of evidence for gaining knowledge.

A research methodology is a sample framework or a plan for study that is used as a guide for

conducting research. It is a blueprint that is followed in processing research work. Thus, in

good research methodology the line of action must be chosen carefully from various

alternatives

Per Clifford woody, “research comprises of defining and redefining problem,

formulating hypothesis or suggested solutions, collecting, organizing and evaluating

data, reaching conclusions, testing conclusions to determine whether they fit the

formulated hypothesis”

Objectives

• To study the performance management system.

• To determine the effectiveness of performance management system adopted.

• To determine the satisfaction of employees towards the various criteria employed for

measuring and evaluating the employee’s performance by the organization.

DATA COLLECTION METHOD

Per the required research for the project is both Primary and Secondary data collection

methods. We have used company website, annual report of UPPER DOAB

SUGAR MILL, SHAMLI some publications on the net and information related to

broacher for secondary data collection.

Primary Sources:

It refers to the statistical material which the investigator originates for himself for the enquiry

in hand. In other words, it is one which is collected by the investigator for the first time e.g. if

the cost of living of workers in a city are to be computed, then the information regarding the

facts collected by the investigators or enumerators would be termed as Primary data. In India,

there are various agencies which collect primary data e.g. National Sample Survey (NSS),

State Level Economic and Statistical Departments etc. When we use primary data, it is called

raw material. Per Wessel, "Data originally collected in the process of investigation are known

as primary data."

The use of primary sources is limited to interviews with some of the employees in the finance

department. The reason being, it is against the company’s policies and procedures to reveal

the sensitive financial information.

ADVANTAGES

 Degree of accuracy is quite high.



 It does not require extra caution.


 It depicts the data in detail.
  Primary source of data collection frequently includes definitions of various terms and

units used.

 For some investigations, secondary data are not available.

Secondary Sources:

Secondary sources of data include annual reports of UPPER DOAB SUGAR MILL,

SHAMLI. Statement of changes in working capital for the past five years is done using the

data taken from these financial reports. Similarly, time series analysis of operating cycle and

calculations of ratios is done. Apart from this, the website of UPPER DOAB SUGAR MILL,

SHAMLI is referred to know the products, product facilities, network etc.

It also contains charts & diagrams from the financial reports and annual reports which are

analyzed thoroughly in this report. Industry analysis is done based on the information

gathered from newspapers, websites of sugar mill.

Sources of secondary data:

1. Most of the calculations are made on the financial statements of the company provided

statements.

2. Referring standard texts and referred books collected some of the information regarding

theoretical aspects.

3. Method- to assess the performance of the company method of observation of the work in

finance department in followed.

Nature of Research

Descriptive research, also known as statistical research, describes data and

characteristics about the population or phenomenon being studied. Descriptive research

answers the questions who, what, where, when and how.

Although the data description is factual, accurate and systematic, the research cannot

describe what caused a situation. Thus, descriptive research cannot be used to create a causal

relationship, where one variable affects another. In other words, descriptive research can be

said to have a low requirement for internal validity.

Presentation of Data

The data are presented through charts and tables.

Tools and Techniques for Analysis

MS EXCEL is used to for analysis and interpretation of data.

SAMPLING PLAN

Method of data collection: -Primary & secondary

Research design: - Descriptive Research Design

Research Instrument: Annual Report

Sample: Factory Campus

 DATA

ANALYSIS
 LIQUIDITY RATIO

1. Current Ratio:

current assets
Current Ratio=
current liabilities

Where,
Current Assets = 2259650000
Current liabilities = 3594476000

Current Ratio = 2259650000 / 3594476000

Interpretation:

The ideal current ratio is 2: 1. It indicates that current assets double the current liabilities is

satisfactory.

0.63:1 is very low current ratio which means that THE UPPER DOAB SUGAR MILL is not

able to pay its liabilities on time.

 Ideal current ratio

current liabilities
33%
current assets
67%
 Upper Doab Sugar Mill

S Current Assets; 37%

Current Liabilities; 63%

2. Quick ratio:

Quick Ratio=Quick assets / Quick liabilities

Where,

Quick assets=Current Assets−Stock−Prepaid Expense

= 2259650000-1968305000
= 291345000

Current liabilities = 3594476000

Quick Ratio = 291345000 / 3594476000

Interpretation:

The ideal Quick Ratio of 1:1 is satisfactory.

0.08:1 is a low value of quick ratio which exhibiting that the UPPER DOAB SUGAR MILL

liquidity position is not good.

CHARTS

Ideal Ratio

Current Liabilities; 50% Quick assets; 50%

Upper Doab Sugar Mill

Quick Assets : 8 %

Current Liabilities : 92 %
 PROFITABILITY RATIO

1. Net Profit ratio:

Net Profit Ratio= (Net Profit / Net Sales) X100

Where
Net Profit = (238497000)
Net Sales = 3978892000
Net Profit Ratio=(238497000 / 3978892000) X 100

Interpretation

UPPER DOAB SUGAR MILL is in loss. It shows a negative net profit i.e. (5.99%) which

indicates that it does not have efficient management of the affair of business.
Chart

Net Profit Ratio

0.00%
2017-18
-0.02%

-0.04%

-0.06%
Net Profit Ratio
-0.08%

-0.10%

-0.12%

-0.14%

-0.16%

2. Gross Profit ratio:

Gross Profit Ratio=Gross Profit X 100

Net sales

Where Gross Profit = 157733000

Net Sales = 3978892000

Gross profit Ratio= (157733000/3978892000) X 100

Interpretation

UPPER DOAB SUGAR MILL has 3.96 % Gross Profit Ratio which indicates that it can

meet its operating expenses only and it is not in the position to meet its other expenses.

Chart
4.5

3.5

2.5 Column1
Column2
2
net profit ratio
1.5

0.5

0
2017-18
3. Operating Profit ratio:

Operating Profit Ratio=Operating Profit X 100

Net sales

Where Operating Profit= 6284000

And Net Sales = 3978892000

Operating Profit Ratio =(6284000 / 3978892000) X 100

Interpretation

UPPER DOAB SUGAR MILL shows a operating profit ratio i.e. 0.15% which indicates that

sugar mill is able to give minimum return to their investors.

Chart

operating profit ratio

operating profit
net sales
 4. Return on investment:

Returnon investment =Net Profit[EBIT] X 100

Shareholder fund

Where Net Profit [ EBIT] = (238497000)

Shareholder fund = (643146000)

Returnon Investment = (238497000/ 643146000) X 100

Interpretation

UPPER DOAB SUGAR MILL has a return on investment ratio i.e. 37.08% which indicates

that the investment made by the shareholder is utilized by the firm in sound manner.

Charts

40.00%

35.00%

30.00%

25.00%
Series 3
20.00%
Series 2
15.00% return on investment

10.00%

5.00%

0.00%
2017 - 18
 5. Earnings Per Share Ratio:

Earnings Per Share Ratio=(Net Profit after tax preference dividend

Number of equity shares) *100

Where

Net Profit after taxpreference dividend = (274437000)

Number of equity shares = 5250000

Earnings Per Share Ratio= (274437000 / 5250000) X 100

Interpretation

UPPER DOAB SUGAR MILL has a low earning as compared to its investment or capital

which refer that equity shareholder of this firm suffer a loss in their investment.
CHART

60

50

40

Column2
30
Column1
earning per share ratio
20

10

0
2017-18
 6. Dividend Payment Ratio:

Dividend Payment Ratio= (Dividend for

equity shares/
Earnings per X
share )100

Where

Dividend for equity shares= 0

Earnings per share = (45.42)

0
Dividend Payment Ratio= (45.42) X 100

Interpretation

UPPER DOAB SUGAR MILL has a zero or nil dividend payout ratio which indicate that

firm is not able to pay dividend on a regular basis to its shareholders.

 Chart

Dividend Payout Ratio

1
0.9
0.8
0.7
Dividend Payout
0.6 Ratio
0.5
0.4
0.3
0.2
0.1
0
2017-18
 ACTIVITY TURNOVER RATIO

1. Stock Turnover Ratio:

Stock Turnover Ratio=Cost of Goods Sold(COGS)

Average Investment

Where,
Cost of goods sold= Sales - Gross profit = 3978892000-157733000
=3821159000

Average Investment= opening + Closing / 2

= (1547001000 +1968305000) / 2
= 1757653000

Stock turnover Ratio= 3821159000 / 1757653000

Interpretation

UPPER DOAB SUGAR MILL stock turnover ratio is more than 1 which indicate that firm

have a good business, increase investment in stock and salable goods too.
2.5

1.5
Series 3
Series 2
1 stock turnover ratio

0.5

0
2017-18
 2. Debtor Turnover Ratio:

Debtor Turnover Ratio= Net Credit Sales / Average Account Receivable

Where,

Net Credit Sales = 3978892000

Average Account Receivable = opening + Closing / 2

= 16612000 + 49431000 / 2
= 33021500

Debt turnover Ratio= 3978892000/ 33021500

Interpretation

UPPER DOAB SUGAR MILL has more efficient management of debtor and debtors are in

highly liquidity form.

140

120

100

80 Series 3
Series 2
60
debtor turnover ratio

40

20

0
2017-18
 3. Creditor Turnover Ratio:

Net Credit Purchase

Creditor Turnover Ratio=
AverageTrade Creditors

Where,

Net Credit Purchase = 3821159000

Average Trade Creditor = opening + Closing / 2

= (1222705000+2109011000) / 2

= 1665858000

Creditor turnover Ratio= 3821159000 / 1665858000

Interpretation

UPPER DOAB SUGAR MILL sales are not satisfactory which indicates that firm is not able

to pay its creditor immediately.

2.5

1.5
Series 3
Series 2
1 creditor turnover ratio

0.5

0
2017-18
 4. Fixed Assets Turnover Ratio:

Fixed Assests Turnover Ration = Net Sales / Net Fixed Assests

Where,
Net Sales = 3978892000

Net Fixed Assets = 1106505000

Assets turnover Ratio= 3978892000 / 1106505000

Interpretation

The fixed assets turnover ratio is 3.59. It indicates that management is not able to utilize its

fixed assets on time.

 4

3.5

2.5
Series 3
2
Series 2

1.5 fixed assets turnover ratio

0.5

0
2017-18
 SOLVENCY RATIO

1. Debt Equity Ratio:

Debt Equity Ratio=Total Long Term Debt

Shareholder Fund
Where,

Total Long Term Debt = 414825000

Shareholder Fund = (643146000)

Debt Equity Ratio=414825000 / 643146000

Interpretation

UPPER DOAB SUGAR MILL has not a sound long term financial as it had taken too much

credit from outside and depend on outsiders.

600000000

400000000

200000000
Series 3
0 equity
2017-18
debt
-2E+08

-4E+08

-6E+08

-8E+08
 2. Proprietors Ratio:

Proprietors Ratio = Proprietor Fund

Total Assets

Where,

Proprietors Fund = (643146000)

Total assets = 3366155000

Proprietor Ratio= 643146000 / 3366155000

Interpretation

UPPER DOAB SUGAR MILL has a negative proprietor ratio which refer that the share of

owner fund is very less in relation to its assets.

 3.5E+09

3E+09

2.5E+09

2E+09
Series 3
1.5E+09 proprietor fund

1E+09 total asset

500000000

0
2017-18
-5E+08

-1E+09
 3. Capital Gearing Ratio:

Equity Share capital

+ Reserve capital &Surplus
Capital Gearing Ratio=
Preference Capital +
Long Term Debt Bearing
interest

Where,
Equity Share capital + Reserve and surplus = (643146000)

Total Long Term Debt = 414825000

Capital Gearing Ratio= 643146000 / 414825000

Interpretation

UPPER DOAB SUGAR MILL is said to be in negative gear as its preference share capital

and other fixed interest bearing loans are more than the equity capital and reserve.
600000000

400000000

200000000

0 Series 3
2017-18 total long term debt
-2E+08 euity share capital and reserves

-4E+08

-6E+08

-8E+08
ANNEXURE
 BALANCE SHEET
AS AT 31st MARCH, 2018

As at March 31, 2018

(RS.)
EQUITY AND LIABILITIES

Shareholders’ funds
Share capital 5,25,00,000
Reserves and surplus (695646000)
(643146000)
Non-current liabilities
Long - term borrowings 308592000
Other long term liabilities 9502000
Long-term provisions 96731000
Total non-current liabilities 414825000

Current liabilities
Short-term borrowings 1019072000
Trade payables 2109011000
Other current liabilities 457003000
Short-term provisions 9390000
Total current liabilities 3594476000
Total 3366155000

ASSETS

Non-current assets
Fixed assets
- Tangible assets 332931000
Non - Current Investments -
Deferred tax assets (net) 688111000
Long - term loans and advances 41097000
Other non-current assets 44366000
Total non-current assets 1106505000

Current assets
Inventories 1968305000
Trade Receivables 49431000
Cash and cash equivalents 15811000
Bank balance 185713000
Other current assets 40390000
Total current assets 2259650000
Total 3366155000
 CASH FLOW STATEMENT

A. CASH FLOW FROM OPERATING

ACTIVITIES:

Net Profit/ (Loss) before tax and exceptional

item as per Profit & loss account (2384.97)

Adjustments for: Depreciation 397.96

Interest (Net) 1709.59
Bad debts & claims written off (Net) 321.80
(Profit)/Loss on sale & Disposal of Fixed Assets
(Net) 17.36
Prior period adjustment (Net) -
Unclaimed Credit Balances Written Back (0.45)
Stores Written off 1.55
Operating Profit before working capital changes 62.84

Adjustment for: Trade and other receivables 123.93

Inventories (4214.59)
Trade Payables 8030.42

Cash generated from operations 4002.60

Interest paid (1063.60)

Direct tax paid 9.82
Net cash from operating activities 2949.42
B. CASH FROM INVESTING ACTIVITIES
Purchase of fixed assets (including intangible
assets) (167.14)
Capital advance (442.01)
Sale of fixed assets 3.84
Interest received 224.48
Net cash used in investing activities (380.83)
C. CASH FLOW FROM FINANCING
ACTIVITIES
Proceeds from fixed deposit (102.85)
Proceed s from term loan (1620.07)
Interest paid (782.20)
Net cash used in financing activities (2505.12)
Net increase in cash and cash equivalents 63.47
Opening balance of cash and cash equivalent 94.64
Closing balance of cash and cash equivalents 158.11
Note: Figures in bracket () denote Cash Outgoing.
 SUMMARY
&
SUGGESTIONS
 SUMMARY & SUGGESTIONS

This study gives in detail the analysis of various financial ratios based upon the past as well

as the present performance of UPPER DOAB SUGAR MILL, SHAMLI expressed in

financial data. Based upon the results from these financial ratios conclusions are driven out

that whether the company has been earning profits or not and that how much it has used these

results in its growth. So, the company can also manage each of its current assets namely

inventory management, cash management, accounts receivable management and its liabilities

like creditors, loans, bills payables etc. so that it can maintain an identical financial ratio for

each of its business aspects like solvency ratios, turnover ratios, profitability ratios

etc. The research methodology adopted for this study is mainly from secondary sources of

data which includes annual reports of UPPER DOAB SUGAR MILL, and website of the

company. The use of primary sources is limited to interviews with few employees in the

finance department and from the working process adopted in the company as interviewed

from employees. The study of financial ratio analysis has shown that UPPER DOAB

SUGAR MILL has an unhealthy base in meeting the identical financial ratios as well as has

increasing in loss from the past years. The company is face heavy losses. UPPER DOAB

SUGAR MILL sales position is also not good. Its bad performance is result in rise in price of

product and a bad financial as well as a profitable position in the market.

The operational areas of UPPER DOAB SUGAR MILL, SHAMLI and its performance has

been quite unsatisfactory only in some of the aspects it failed to achieve the ideal targets, so it

needs to look upon these areas and adopt certain measures which can be cost reduction,

efficient asset management, better inventory control, working capital management, managing

workforce, adopting suitable policies and there are other various sources also which can be

taken into consideration in order to enhance productivity as well as to increase the profits of

the firm by applying labor-intensive techniques or capital-intensive techniques which fits the

organization best. Also, we know that, a single ratio cannot be said to be good or bad, to

comment on the quality of a ratio it must be compared with some standard or benchmark.

These benchmarks can be:

1. Past Ratio: A ratio could be compared or benchmarked with past year’s ratio. It

ispopularly known as time-series analysis

2. Ratio of similar firms or industry average: A ratio could be compared with

theratios of similar firms in the same industry or by industry average in the same point

of time.

3. Rule of thumb: Certain “rule of thumb” based upon well proven conventions

haveevolved over a period which can serve this purpose well.

CONCLUSION
 CONCLUSION

Let us summarize our discussion on the structure and financing of current assets. The relative

liquidity of the firm's assets structure is measured by current to fixed assets or current asset to

total asset ratio. The greater this ratio, the less risky as well as the less profitable will be the

firm and vice versa. Similarly, the relative liquidity of the firm's financial structure can be

measured by short-term financing to total financing ratio. The lower this ratio the less risky

as well as profitable will be the firm and vice versa. In shaping its working capital policy, the

firm should keep in mind these two dimensions: relative asset liquidity (level of current

assets) and relative financing liquidity (level of short term financing of the working capital

management. A firm will be following a very conservative working capital policy if it

combines a high level of current assets with a high level of long term financing (or low level

of short term financing). Such a policy will not be risky at all but would be less profitable. An

aggressive firm on the other hand would combine low level of current assets with a low level

of long term financing (or high level of short term financing).

This firm will have low profitability and high risk. In fact, the firm may follow a conservative

financing policy to counter its relatively liquid asset structure in practice. The conclusion of

all this is that the considerations of assets and financing mix are crucial to the working capital

management which is a major constraint in the working out of the financial ratio analysis
BIBLIOGRAPHY .
 BIBLIOGRAPHY

Reference:

Financial management Financial I.M. Pandey

Management Analysis of R.K. Sharma & S.K. Gupta

financial Statements Financial D.K. Goel, Rajesh Goel, Shelly Goel

Accounting Mohammed Hanif, Amitabha Mukherjee

Reports:

Annual Reports of UPPER DOAB SUGAR MILL

General Articles of UPPER DOAB SUGAR MILL

Audited financial reports of UPPER DOAB SUGAR MILL

Website:

www.sirshadilal.com

www.profit.ndtv.com

www.moneycontrol.com

en.wikipedia.org

Newspapers:
  Times of India
 Economic Times
 The Hindu