CHAPTER-1 INTRODUCTION

Meaning of Financial Analysis The first task of financial analysis is to select the information relevant to the decision under consideration to the total information contained in the financial statement. The second step is to arrange the information in a way to highlight significant relationship. The final step is interpretation and drawing of inference and conclusions. Financial statement is the process of selection, relation and evaluation. Features of Financial Analysis To present a complex data contained in the financial statement in simple and understandable form. To classify the items contained in the financial statement inconvenient and rational groups. To make comparison between various groups to draw various conclusions.

Purpose of Analysis of financial statements To know the earning capacity or profitability. To know the solvency. To know the financial strengths. To know the capability of payment of interest & dividends. To make comparative study with other firms. To know the trend of business. To know the efficiency of management. To provide useful information to management.

Procedure of Financial Statement Analysis The following procedure is adopted for the analysis and interpretation of financial Statements: The analyst should acquaint himself with principles and postulated of accounting. He should know the plans and policies of the managements that he may be able to find out whether these plans are properly executed or not. The extent of analysis should be determined so that the sphere of work may be decided. If the aim is find out. Earning capacity of the enterprise then analysis of income statement will be undertaken. On the other hand, if financial position is to be studied then balance sheet analysis will be necessary. The financial data be given in statement should be recognized and rearranged. It will involve the grouping similar data under same heads. Breaking down of individual components of statement according to nature. The data is reduced to a standard form. A relationship is established among financial statements with the help of tools & techniques of analysis such as ratios, trends, common size, fund flow etc. The information is interpreted in a simple and understandable way. The significance and utility of financial data is explained for help indecision making. The conclusions drawn from interpretation are presented to the management in the form of reports. Analyzing financial statements involves evaluating three characteristics of a company: its liquidity, its profitability, and its insolvency. A short-term creditor, such as a bank, is primarily interested in the ability of the borrower to pay obligations when they come due. The liquidity of the borrower is extremely important in evaluating the safety of a loan. A long-term creditor, such as a bondholder, however, looks to profitability and solvency measures that indicate the companys ability to survive over a long period of time. Long-term creditors consider such measures as the amount of debt in the companys capital structure and its ability to meet interest payments. Similarly, stockholders are interested in the profitability and solvency of the company. They want to assess the likelihood of dividends and the growth potential of the stock.

COMPANY PROFILE Chennai Port, the third oldest port among the 12 major ports, is an emerging hub port in the East Coast of India. This gateway port for all cargo has completed 128 years of glorious service to the nations maritime trade. Maritime trade started way back in 1639 on the sea shore Chennai. It was an open road stead and exposed sandy coast till 1815. The initial piers were built in 1861, but the storms of 1868 and 1872 made them inoperative. So an artificial harbour was built and the operations were started in 1881.The cargo operations were carried out on the northern pier, located on the northeastern side of Fort St. George in Chennai. In the first couple of years the port registered traffic of 3 lakh tonnes of cargo handling 600 ships. Being an artificial harbour, the port was vulnerable to the cyclones, accretion of sand inside the basin due to underwater currents, which reduced the draft. Sir Francis Spring a visionary skillfully drew a long-term plan to charter the course of the port in a scientific manner, overcoming both man-made and natural challenges. The shifting of the entrance of the port from eastern side to the North Eastern side protected the port to a large extent from the natural vulnerabilities. By the end of 1920 the port was equipped with a dock consisting of four berths in the West Quays, one each in the East & South Quay along with the transit sheds, warehouses and a marshalling yard to facilitate the transfer of cargo from land to sea and vice versa. Additional berths were added with a berth at South Quay and another between WQ2 & WQ3 in the forties. Indias Independence saw the port gathering development, momentum. The topography of the Port changed in 1964 when the Jawahar dock with capacity to berth 6 vessels to handle Dry Bulk cargoes such as Coal, Iron ore, Fertilizer and non hazardous liquid cargoes was carved out on the southern side. In tune with the international maritime developments, the port developed the Outer Harbour, named Bharathi Dock for handling Petroleum in 1972 and for mechanized handling of Iron Ore in 1974. The Iron ore terminal is equipped with Mechanized ore handling plant, one of the three such facility in the country, with a capacity of handling 8 million tonnes. The Chennai ports share of Iron ore export from India is 12%. The dedicated facility for oil led to the

development of oil refinery in the hinterland. This oil terminal is capable of handling Suezmax vessels. In 1983, the port heralded the countrys first dedicated container terminal facility commissioned by the then prime minister Smt.Indira Gandhi on 18th December 1983. The Port privatized this terminal and is operated by Chennai Container Terminal Private Limited. Having the capability of handling fourth generation vessels, the terminal is ranked in the top 100 container ports in the world. Witnessing a phenomenal growth in container handling year after year the port is added with the Second Container Terminal with a capacity to handle 1.5 M TEUs to meet the demand. To cater to the latest generation of vessels and to exploit the steep increase in containerized cargo the port is planning to welcome the future with a Mega Container Terminal, capable of handling 5 Million TEUs expected to be operational from 2013. The Chennai port is one among the major ports having Terminal Shunting Yard and running their own Railway operations inside the harbor on the East Coast. The port is having railway lines running up to 68 kms and handles 25% of the total volume of the cargo, 4360 rakes (239412 wagons) during 2009-10. The port with three Docks, 24 berths and draft ranging from 12m to 16.5m has become a hub port for Containers, Cars and Project Cargo in the East Coast. The port has handled an all time high of 61.06 Million tons of cargo registering an increase of 6.2% over previous year. An increase of 10.14% in handling of cars from 273917 Units in the year 2009-10 when compared with 248697 Units in the year 2008-09 and an increase of 6.39% in handling of containers from 1143373 TEUs in the year 2008-09 to 1216438 TEUs in the year 2009-10. The long term plan for Chennai Port envisages that the Port will mainly handle 4Cs i.e. Containers, Cars, Cruise and Clean Cargo. Future Plans Master plan for Port Railway, Realigning Rail and Road network. Dedicated Elevated Expressway from Chennai Port to Maduravoyalupto NH4 has been approved by the Government to enhance the hinterland connectivity.

 Development of Ro-Ro Terminal and a Multi-level car parking facility with a capacity of 5000 cars. Chennai Mega Container Terminal with a continuous quay length of 2 km with 18-22m side along draft. Capable of handling ultra large container ships carrying over 15000 TEUs. The break water extension from existing outer arm will be utilized to develop deep draft oil berth for handling VLCCs. PORT DETAILS: Geographical Location Latitude Longitude Climate Time Temperature Annual Rainfall Spring Tides 13 06 N 80 18 E Tropical +5 Hrs. 30 Minutes 30 C 18 C Min. About 125 Cms. 1.2 Metres Max.

Water Area Land Area -

-420.00 acres (169.97 hectares) 586.96 acres (237.54 hectares)

Navigation Channel:
Entrance Channel

Soil Length of Channel Depth of Inner Channel

Predominantly sandy and silt About 7 kilometres 18.6m at chart datum

Depth of Outer Channel Depth of Outer Channel Swell Allowance Width of Channel

19.2m at chart datum 19.2m at chart datum 3.00 Metres. The width of channel gradually increases from 244m to 410m at the bent portion, then maintains a constant width of 305m

Total Length of Breakwater:

Inner Harbour

Eastern Breakwater Northern Breakwater

Outer Harbour

1325 m 575 m

Eastern Breakwater Northern Breakwater Outer Arm Upper Pitch Revetment Port Entrances: Entrance in Bharathi Dock Entrance in Dr. Ambedkar Dock Storage Facilities: Transit Shed/over flow shed Warehouse Container Freight Station Open space Container parking Yard

590 m 460 m 1000 m 950 m

350 m 125 m

7 Nos. - 30,693 sq.mts 5 Nos. - 30,138 sq.mts 3 Nos. - 40,644 sq.mts 3,84,611 sq.mts 2,50,600 sq.mts

Mission & Vision

Mission: Achieve excellence in Port operations with State-of-the-Art technologies. Enhance competence and enthuse workforce to maximize customer satisfaction. Anticipate and adapt to the changing global scenario. Act as a catalyst for sustained development of the Region. Vision: To be recognized as a futuristic Port with foresight. Quality Policy: Provide efficient, prompt, safe and timely services at optimum cost Ensure quick turn round of vessels by providing facilities for efficient handling of cargo Maintain total transparency in all our transaction of the and Continually improve our services to meet the expectations of the port users, employees and the society

INDUSTRY PROFILE A port is a location on a coast or shore containing one or more harbors where ships can dock and transfer people or cargo to or from land. Port locations are selected to optimize access to land and navigable water, for commercial demand, and for shelter from wind and waves. Ports with deeper water are rarer, but can handle larger, more economical ships. Since ports throughout history handled every kind of traffic, support and storage facilities vary widely, may extend for miles, and dominate the local economy. Some ports have an important military role. Distribution Ports often have cargo-handling equipment, such as cranes (operated by longshoremen) and forklifts for use in loading ships, which may be provided by private interests or public bodies. Often, canneries or other processing facilities will be located nearby. Some ports feature canals, which allow ships further movement inland. Access to intermodal transportation, such as trains and trucks, are critical to a port, so that passengers and cargo can also move further inland beyond the port area. Ports with international traffic have customs facilities. Harbour pilots and tugboats may maneuver large ships in tight quarters when near docks. Types The terms "port" and "seaport" are used for different types of port facilities that handle ocean-going vessels, and river port is used for river traffic, such as barges and other shallowdraft vessels. Some ports on a lake, river (fluvial port), or canal have access to a sea or ocean, and are sometimes called "inland ports". A fishing port is a port or harbour for landing and distributing fish. It may be a recreational facility, but it is usually commercial. A fishing port is the only port that depends on an ocean product, and depletion of fish may cause a fishing port to be uneconomical. In recent decades, regulations to save fishing stock may limit the use of a fishing port, perhaps effectively closing it. A "dry port" is a term sometimes used to describe a yard used to place containers or conventional bulk cargo, usually connected to a seaport by rail or road. A warm water port is one where the water does not freeze in winter time. Because they are available year-round, warm water ports can be of great geopolitical or economic interest.
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Such

settlements

as VostochnyPort, Murmansk and Petropavlovsk-Kamchatsky in the terminus of the Alaska

Russia, Odessa in

Ukraine,Kushiro in Japan and Valdez at

Pipeline owe their very existence to being ice-free ports. A seaport is further categorized as a "cruise port" or a "cargo port". Additionally, "cruise ports" are also known as a "home port" or a "port of call". The "cargo port" is also further categorized into a "bulk" or "break bulk port" or as a "container port". A cruise home port is the port where cruise-ship passengers board (or embark) to start their cruise and disembark the cruise ship at the end of their cruise. It is also where the cruise ship's supplies are loaded for the cruise, which includes everything from fresh water and fuel to fruits, vegetable, champagne, and any other supplies needed for the cruise. "Cruise home ports" are a very busy place during the day the cruise ship is in port, because off-going passengers debark their baggage and on-coming passengers board the ship in addition to all the supplies being loaded. Currently, the Cruise Capital of the World is the Port of Miami, Florida, closely followed behind by Port Everglades, Florida and the Port of San Juan, Puerto Rico. A port of call is an intermediate stop for a ship on its sailing itinerary, which may include up to half a dozen ports. At these ports, a cargo ship may take on supplies or fuel, as well as unloading and loading cargo. But for a cruise ship, it is their premier stop where the cruise lines take on passengers to enjoy their vacation. Cargo ports, on the other hand, are quite different from cruise ports, because each handles very different cargo, which has to be loaded and unloaded by very different mechanical means. The port may handle one particular type of cargo or it may handle numerous cargoes, such as grains, liquid fuels, liquid chemicals, wood, automobiles, etc. Such ports are known as the "bulk" or "break bulk ports". Those ports that handle containerized cargo are known as container ports. Most cargo ports handle all sorts of cargo, but some ports are very specific as to what cargo they handle. Additionally, the individual cargo ports are divided into different operating terminals which handle the different cargoes, and are operated by different companies, also known as terminal operators or stevedores.

Milestones in the Indian Port Sector 1870 - Calcutta (Kolkata) Port is commissioned. The port which ranks among Indias oldest and only riverine port is situated 232 kilometres upstream from Sandheads, the longest pilotage distance in the world. 1875 - The first wet dock in India - Sasson Dock is constructed on the Bombay harbour and is followed by the Princes and Victoria Dock in 1880 and 1888 respectively, setting off the development of Bombay (Mumbai) port. 1881 - Madras (Chennai) port is commissioned, six years after the construction of the port was proposed by the Madras Chamber of Commerce and after the foundation stone was laid in 1875 by the Prince of Wales King Edward II. 1908 - The Indian Ports Act 1908 - the first-ever comprehensive Indian port law to be enacted for governing the administration of all ports in India. 1925 - Carriage of Goods By Sea Act was passed, which led adoption of uniform rules declaring minimum rights, liabilities and immunities of a common carrier to be attached to bills of lading. 1933 -Visakhapatnam (Vizag) Port is commissioned as a commodity port for export of manganese ore. The first major port to be set up along the coastline of Andhra Pradesh. 1948 - Dock Workers (Regulation of Employment) Act 1948 was enacted and laid the basis for creation of Dock Labour Boards at various major ports like Mumbai, Kolkata, Chennai and Visakhapatnam. 1955 - Kandla port is commissioned. The port located on the Gujarat coast was established to substitute the Karachi port, which became part of Pakistan following the partition of India. 1958 - Merchant Shipping Act 1958 is passed to regulate the Indian shipping industry and define provide measure of protection to coastal shipping. 1963 -Major Ports Trust Act 1963 passed by the Indian Parliament. The Major Port Trusts Act lays the basis for an institutional framework for creation of a port trusts for each major port.

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Goa, liberated from Portuguese rule becomes an integral part of India. The Mormugao (Goa) port, on the West Coast is declared a major port. 1966 - Paradip port incorporated as Indias Eighth Major Port.Indian Railways launch first-ever Container Service providing an integrated inter-modal door-to-door service 1971 - Cochin (Kochi) port received containers for the first time from a conventional general cargo vessel of the American President Lines (APL) 1974 - New Mangalore port is incorporate as ninth major port on Indias West Coast. The State of Karnataka gets its first major port. Tuticorin Port is incorporated as the 10th major port, second major port in Tamil Nadu. 1976 - Dredging Corporation of India is set up by Government of India to undertake dredging operation. 1977 - Calcutta Port Trust commissions Haldia Dock Complex as a satellite port. The port is 104 kilometres downstream of Calcutta. 1978 -Vadinar, a satellite port of Kandla located in Jamnagar district of Gujarat, is commissioned. 1982 - Indias first-ever State-level maritime board Gujarat Maritime Board (GMB) is formed to undertake comprehensive development of minor and other intermediate ports of Gujarat. 1986 - Inland Waterway Authority of India (IWAI) is constituted under the IWAI Act, entrusted with the responsibility of developing inland waterways in India. 1989 - Indias youngest and most modern major port Jawaharlal Nehru Port (NhavaSheva Port) at NhavaSheva, near Mumbai is commissioned in May, 1989 1991- Coastal Regulation Zone Act passed leading to creation of Coastal Regulatory Zone Authority requiring compliance of all Greenfield port projects. 1993 - Multimodal Transportation of Goods Act is passed with a view to rationalize customs documentation procedures as applicable to goods being moved through multiple modes of transportation, involving road, rail, coastal movement etc.
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1995 - The Government of Tamil Nadu converts the Tamil Nadu Port Department into Tamil Nadu Maritime Board (TMB). The Board is entrusted with the responsibility for development of minor ports in the state. World Bank comes out with India Port Sector - Strategy Report in March 1995 coming out with detailed recommendatory proposals on modalities of infrastructure financing and port reforms roadmap. 1996 - Government announces path-breaking policy guidelines for the first time opening up port sector for both overseas and domestic private sector investors. The Maharashtra Maritime Board (MMB) is constituted in November 1996. 1997 - Port (Laws) Amendment Act was introduced to give teeth to the new policy guidelines on private sector participation in port sector and a Tariff Authority for Major Ports (TAMP) established to regulate tariffs for major ports 1999 - Gujarat Infrastructure Development Act passed by Gujarat government paving way for privatization of port sector in the State. The first-ever BOT project involving private sector port developer P&O Ports (Australia) - NhavaSheva International Container Terminal (NSICT) becomes operational. 2000 - The Ministry of Shipping (holding charge for ports) is formed through bifurcation erstwhile Ministry of Surface Transport. PSA Corporation, Singapore and SICAL jointly establish Indias second private sector Container Terminal at Tuticorin Port 2002 - Indias first-ever corporatisedEnnore Port, near Chennai becomes operational. Global tender invited for Vallarpadam International Container Terminal, Cochin; Offshore Container Terminal, Mumbai Port, and conversion of dry bulk terminal into a container terminal, Jawaharlal Nehru Port Trust (JNPT). JM Baxi Group & Dubai Port Authority (DPA) consortia signs BOT agreement (VPT) to build Container Terminal in the outer harbor of Visakhapatnam Port.

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Ports in India: India has been rightly called a country of sub-continental proportions. This statement is true not only in terms of the vast geographic expanse of the country but also its maritime trade, which serves a vast land-locked hinterland that extends into Jammu & Kashmir in the North to landlocked countries like Bhutan, Nepal and Tibet (China) and North Eastern regions. The vastness of Indias Northern Gangetic plains, which encompass large agriculturally prosperous states like Madhya Pradesh, Uttar Pradesh, Rajasthan, Punjab, and Haryana coupled with long peninsular coastline of over 6,000 kilometres shared by nine littoral states of Gujarat, Maharashtra, Goa, Kerala, Tamil Nadu, Andhra Pradesh, Orissa and West Bengal form part of a formidable natural endowment, impregnated with the possibilities of economic growth that can push up India as a significant global maritime trading nation. Quite remarkably, some of Indias states, given the length of their coastline and many natural deep harbours have a maritime economic potential, which is comparable to some of the most favoured maritime nations of the world. The latent potential however, needs to be largely tapped in terms of building extensive coastal shipping networks, inland waterway linkages to hinterlands, coastal ferry services, cruise industry and other marine and offshore- based industries. As borne out by the experience of maritime development being witnessed in case of states like Gujarat, with about a dozen bustling ports and rapidly growing cargo traffic volumes, the potential for development of several under-developed ports along the coastline are immense, though some of the coastal states have been not very aggressive in pushing the development of their coastline port industry and trade. Often major ports in the state have tended to dominate market share of trade cargo originating from the regional hinterland,leaving little market space for the smaller regional ports. Despite significant growth of several captive minor ports, the gap between the inherent potential for development and actual performance of regional ports still remains to be bridged as one reviews the performance of the various major and minor ports. Major Port Profiles Kandla Port JNPT, NhavaSheva Mumbai Port
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 Mormugao Port New Mangalore Port Cochin Port Tuticorin Port Trust Chennai Port Visakhapatnam Port Paradip Port Kolkata Haldia Minor Ports in Tamil Nadu Tamil Nadu with a coastline of 992 kilometres has three major ports of TuticorinEnnore and Chennai and two intermediate ports of Cuddalore and Nagapattinam and seven other minor ports, which include the ports of Rameshwaram, Pamban, Kolachal, Kanyakumari and Valinokkam. The State is known for high level of investment under implementation in various industrial andinfrastructure projects, which signify good prospects for port development in the coming years. The Tamil Nadu Maritime Board (TNMB) constituted in 1995 is responsible for development and regulation of the ports sector in the state. The TNMB is conducting a detailed study for formulating a master plan for port development in the State. Total traffic handled at all the minor ports in Tamil Nadu grew from 0.2 million tonnes in 1990-91 to 0.5 million tonnes in 2001-02, representing an annualised growth rate of 11%. Two of the liquid bulk handling SBM jetties of Thirukkadaiyar and PY-3 oil fields has handled significant cargo volumes. Currently, around 0.35 million tonnes of crude oil, produced at the PY-3 oil fields, are loaded for coastal exports to Chennai Port for Chennai Oil Refinery, while Thirukkadaiyar handles naphtha imports for a captive power plant. New Port Projects The port of Thiruchopuram was to be developed for handling of 6.5 million tonnes of annual crude imports and 2.8 million tonnes of products exports. The project was tied to the 6.0 mtpa refinery project of Nagarjuna Oil Corporation. However, given the current glut in refining capacity in the country, the project is unlikely to come up in the near future.
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There are some proposals for setting up of captive facilities at few locations, such as the proposal of Chennai Petroleum Corporation Limited (CPCL) to set up a permanent jetty facility at Nagapattinam for receiving crude oil for its Cauvery basin refinery.

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Objective of the study Primary Objective: To study the segment wise financial performance of Chennai Port Trust. Secondary objectives: To analyze and identify the trend of future income. To study the liquidity position through various working capital related ratio. To analyze the asset position.

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NEED OF THE STUDY The study is conducted with the help of finance department of Chennai Port Trust which is located at Chennai. The scope of the study is entitled towards analyzing the current status in management of payables using recent financial statements of the company.

One of the most fundamental facts about business is that the financial analysis of the firm shapes its financial structure. Planning and control are the two most important ingredients to a Successful Business. A Business plan takes most of the guess work out of Business Strategy and Control through solid financial analysis. Financial Data provides a way to gauge where you are in your Strategic plan, telling you where changes in your plan are necessary. Because of this, Financial data Analysis and Management are Vitally important to running a successful business. Therefore in order to obtain a favorable financial structure, it is necessary to study the efficiency of the firm. Efficiency measurements imply prior knowledge of the inputs of an organization. To increase the level of output for a company to study the operating efficiency of the firm. The main problem in business that of making correct estimates for the future which cannot done unless data representing changes over a period are systematically and scientifically analyzed. The main purpose of the study is to identify the financial strength and weakness of the firm by properly establishing relationship between the items of the Balance Sheet, Profit and Loss account and Budget Estimate of the company. The Vital need for this study is to obtain the present performance of the company. The financial performance calculated is based on each and every activity of the company. The study helps in improving the operation efficiency of the company and also helps in finding the future expected income of the company. It also helps thereby preventing any loss due to wasteful activities.

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CHAPTER-2 REVIEW OF LITERATURE Financial Performance Analysis of Selected Software Companies HAMSALAKSHMI, M.MANICHAM, Finance India Vol. XIX No,3, September 2005 The study has been undertaken to examine and understand the management of finance playing a crucial role in growth. It is concerned with examining the structure of liquidity position, leverage position and profitability position of selected thirty four software companies in India quoted at BSEfora period of five years (1997-98 to 2001-2002). The study reveals that the liquidity position and working capital were favorable during the period of study. Regarding turnover ratios, the efficiency in management of fixed assets and total assets must be increased. With respect to debt financing. Return on Investment and Return On Equity proved that the overall profitability position of selected software companies had been increasing at a moderate rate. The developments will create large domestic demand over the next few years.

A Study on Financial Performance of The Select SarvodayaSanghams in Tamil Nadu N.MURUGA, Finance India Vol.XXIV NO.3,September 2010 Small-Scale and cottage industries plays significant role in the development of the rural economy. Their role in integrating the rural economy with the urban economy in an agro- based country like India is indispensable for the overall economic development of the country. These industries by promoting rural entrepreneurship contribute significantly to the social and economic development through labourabsorption , income distribution, poverty eradication, and removal of regional economic imbalances. Khadi and Village Industries, constituent of cottage industrial sector, playa very vital role in the rural economy by accommodating the surplus labour force in the rural areas.Khadi and village industries activities are promoted and carried out by various institutions such as co-operative institutions, public and private charitable trusts, individual proprietors, small-scale and cottage industrial units etc. Khadi craft,

Khadigramodyogbhavans,andSarvodayaSanghams with eight decades of dedicated service stand out among them.
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Short-term Solvency Position The Current ratio of all the sanghams under study are well above the conventional standard of 2:1 indicating high liquidity. This situation is very comfortable for the creditors. But then, it indicates that the sanghams have locked up their funds in the current assets. The quick ratio of the sanghams were much higher than the standard except KOSS. The sanghams have locked-up their funds in current assets, especially in inventory, which is likely to have adverse impact on their profitability. The structure of inventory revealed that there was a huge volume of finisheds goods indicating problem of poor demand in the market. The absolute liquidity ratio of the sanghams shows that the cash position of these sanghams was weak and inadequate to meet the short-term obligations. A substantial portion of the current assets has been in: the form of trade debtors and receivables affecting the turnover of working capital A very high degree of liquidity is bad, as idle assets earn nothing and affect profitability. There was also an unstable position in regard to liquidity. Hence, it is concluded that the liquidity management in these Sarvodayasanghams was poor. Long-term Solvency Position All the samples sanghams have used considerable proportion of debt in their total capital funds. The proportion varied from 65 percent to 87 percent. The proportion of debt to the total assets has, however, declined gradually and remained around one third in the total assets (35 per cent in KOSS and 30 Per cent in PSS). The average proportion of reserves to total capital fund varied between 61 per cent and 74 percent. The sanghams are not capital intensive. Yet have employed higher amount of debt capital in their business which is mostly used as operation capital. The higher proportion of debt capital affect the profitability of the sanghams. As it has to service the debt. Reserves constitute a higher proportion in the total capital fund. The reason is obvious, i.e. the sanghams being trust with service motive plough back the surplus. All the sanghams are having better interest coverage capacity (26.67 times to 13.58 times),which is much higher than the standard of six to seven times. This could be attributed to the decreasing trend in borrowing. Thus, there is no immediate threat to the long-term solvency
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of the sanghams. The ability of the sanghams to honour the long term obligations of the creditors was sufficient in terms of capital funds, total assets and surplus funds. The debt service capacity of the sanghams was also good in terms of interest coverage ratio. Profitability Position The gross-profit ratio of the sample sanghams has increased from 5.04 per cent to 14.00 per cent with notable fluctuations in one or two years. The operating profit ratio of the sanghams has also- increased during the study period (from 95.78 per cent to 99.59 per cent) Similarly, the operating expenses ratio of the sanghams reveals an increasing trend from 2.51 percent to 12.38 percent with notable fluctuations in one or two years. All these that factory and administrative expenses are not effectively managed by the sangham there has been a considerable increase in the operating and administrative expenses all the three sanghams during the period under review. The gross profit ratio while remained almost constant, the net profit ratio has shown a fluctuating trend from 1.07 per cent to 0.17 per cent, especially in the later years under study. This indicates that the management of the sangham has largely failed to bring down or control the operational expenses especially administrative expenses. Therefore, it can be stated that the high cost of production, inadequate demand for K & VI products and managerial competence are the major reasons for the low net profit ratio in all the sample sanghams. Profitability of the sanghams in terms of return on capital employed, return on capital fund and return on total assets has shown a fluctuating but decling trend, especially in the last four to five years. The results of these ratios imply that these sanghams are over capitalized. In other words, the capital and other resources are not effectively and profitability utilized. This is mainly due to the fact that the capital employed and the total assets were in the form of permanent assets, which are not fully utilized the manufacturing process. The slow and declining rates of inventory and debtors turnover also added to this problem. Hence, the profitability of the sanghams is not in proportion to quantum of capital employed and the total assets used.

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Predication of Financial Soundness The technique score was used to predict the financial soundness of the sanghams. As per the norm, the firm is considered as failing when score is below 1.21 and it is considered as healthy when it is above 2.90. The financial health of the sanghams was not sound in almost all the years under study. The values of score were between 1.23 and 2.90 in all the sanghams under review indicating a critical and poor financial soundness. The score turned very worse especially in the later years and it fell far below the standard prescribed, pointing the impending failure of the sanghams. Out of the three sanghams under review, KASS has already gone in to the state of bankruptcy, whereas the other two sanghams KOSS and PSS are likely to become bankrupt within another two to three years if the same trend continues. Liner programming- Product Profitability- Use of LPP Liner programming is applied to find out the optllnum model pertaining to product IX. Four different models are constructed to arrive at the required model, separately for textile and nontextile products for the sample sanghams VIZ.,KASS,KOSS and PSS, which results in maximum profit (more then the existing profit) from the existing level of operation. The models were run with the following assumptions:\ The number of units produced and sold is same; as such there is no closing or opening stock The fast moving, slow moving and non-moving status of products can be identified based on the average stock position. The product mix can be changed by suitably modifying the proportion of product combination There is no possibility for bringing change in the levels of efficiency The models run include: Model:1 Without introduction additional demand for products Model:2- Dropping of non-moving and reducing the quantum of slow- moving products Model:3- Modifying the product mix based on the customer base of product and
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Model:4 A variant of the third model with altered proportion of product mix.

From the results of linear programming models it is found that in the case of KASS the model 4 for textile-products and model 3 for non-textile products are profitable . Model 3 for both textile products and non-textile products are suitable in the case of KOSS. Model 4 both in case of textile-products and non-textile products are profitable to the PSS. Therefore, the models may be considered for implementation as these product mixes yield better results. Chien Ho and Song Zhu, 2004 Investigated the effectiveness of Greek banks according to their asset size. They used in their study if multi criteria methodology to classify Greek banks according to the return and operating factors and shown the difference of the banks profitability and efficiency between small and large banks. Elizabeth Duncan and Elliot,2004 Showed in their study that most previous studies considering company performance evaluation focus merely on operational efficiency and operational effectiveness which might directly influence the survival of the company. By using an innovative two stage data enveloped analysis model in their study, the empirical result of this study is that a company with better efficiency does not allows mean that it has better effectiveness. A proper in the difference of efficiency, customer service, a financial performance among Australian financial institution. English M and Talaring, 1992 Showed that all financial performance measures an interest margin, Return on asset and capital adequacy all positively correlated with customer service quality score. Generally the concept of efficiency can be regarded as the relationship between output of system and the corresponding input used in their production. Within the financial efficiency literature, efficiency is traded as a relative measure which deflects the derivation from maximum attainable output for a given level of input.
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CHAPTER-3 RESEARCH METHODOLOGY Research methods It denotes methods or techniques which are used by the researcher while performing the research operations. Research methods can be put in three groups: 1. Collection of data 2. Application of statistical techniques. 3. Evaluating the accuracy of the result obtained Research methodology Research methodology is the way to systematically solve the research problem. Research methodology has many dimensions and research methods constitute a part of that.

Definition: According to Clifford Woody, Research comprises defining and redefining problems, formulating hypothesis or suggested solutions calculating organizing and evaluating data, making deductions and reaching conclusions and at last, testing the conclusions to determine whether they fit the formulating hypothesis Research design for this study Analytical Research Design Analytical research is the type of research where the research has to use facts or informations already available and analyzes these to make a critical evaluation of materials . Analytical research attempts to explain why and how. It usually concerns itself with cause-effect relationships among variables. The researcher attempts to analyze the situation and make critical evaluation.

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Source of information There are numerous possible sources of data.The selection of the source of data for a particular study is important. It depends on the research objectives. Generally the source of data is classified into two categories Primary data Secondary data

The data used for this study were secondary in nature Secondary data Secondary data consists of information that already exists. The data collected from the purpose of this analysis is secondary. There was no need for collecting primary data as the study involves analysis of data available. The data has been collected through the annual report and statement available with the company. The study has been conducted for a period of four years starting from 2006 to 2010. Balance sheet Profit and loss account Other financial statements

Tools used for data analysis Variance analysis Linear Regression Overhead variance analysis

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VARIANCE ANALYSIS: A variance is defined as the difference between the actual amounts and the standard amounts. Variance can be calculated for both costs and revenues. Variance analysis in managerial accounting is basically associated with the outcome of the planned and actual results and the effects of their differences among the routine performance of a company. LINEAR REGRESSION: Linear regression analyzes the relationship between two variables, X and Y. For each subject (or experimental unit), know both X and Y. And we want to find the best straight line through the data. In some situations, the slope and/or intercept have a scientific meaning. In other cases, we use the linear regression line as a standard curve to find new values of X from Y, or Y from X. In general, the goal of linear regression is to find the line that best predicts Y from X. linear regression does this by finding the line that minimizes the sum of the squares of the vertical distances of the points from the line. Note that linear regression does not test whether our data are linear. It assumes that our data are linear, finds the slope and intercept that make a straight line best fit our data. The trend equation is Y=a+b(x) Where a= Y/N b=XY/X2

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CHAPTER-4 DATA ANALYSIS AND INTERPRETATION 4.1 Table Statement showing Operating Income for the year 2007-08 (Rs. In lakhs) Particulars Actual Cargo handling & Storage charges Port & Dock Railway earnings Estate rentals Container handling Total Operating Income Source: Secondary data 4.1.1 Chart showing Operating Income for the year 2007-08 28644.43 14695.87 5073.98 2471.15 11924.02 62809.45 25769.00 15070.70 4575.00 2530.00 9617.43 57472.13 2875.43 -744.92 498.98 - 58.85 2306.59 4877.23 11.15 Favourable -4.92 unfavourable 10.90 Favourable -2.32 unfavourable 23.98 Favourable 38.78 Revised Estimates 2007-08 Variance Percentage Remark

2875.43
3000 2000 1000 0 Port & Dock -1000

Variance
2306.59

498.98
Variance Railway earnings

-58.85 Estate rentals

-744.92

Container handling

Interpretation:
With reference to the above table it indicates that the budget variance for Operating Income for cargo handling storage charges and container handling and Railway earnings are favourable and others is unfavourable. Container handling are highest variance is Rs.2875.43 and port and dock is lowest variance Rs.744.92.

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4.2 Table Statement showing Operating Income for the year 2008-09 (Rs. In lakhs) Particulars Actual Cargo handling & storage charges Port & Dock Railway earnings Estate rentals Container handling Total Operating Income Source: Secondary data 4.2.1Chart showing Operating Income for the year 2008-09 16951.27 4834.60 1862.85 11608.73 67149.38 15430.00 5205.00 2537.30 13631.70 66226.00 1521.27 -371.00 -674.45 -2022.97 322.78 9.85 Favourable -7.67 Unfavourable -36.20 Unfavourable -17.42 Unfavourable -45.09 2008-09 Revised Variance Percentage Remark Estimates 31891.93 29422.00 1869.93 6.35 favourable

variance
2000 1500 1000 500 0 -500 -1000 -1500 -2000 -2500 Cargo handling & storage charges Port & Dock Railway earnings

1869.93

1521.27 -371 -2022.97

Estate rentals Variance

-674.45

Container handling

Interpretation: With reference to the above table it indicates that the budget variance for Operating Income for cargo handling storage charges and port and dock are favourable and others is unfavourable. Cargo handling storage charges are Rs.1869.93 is highest variance and container handling is lowest variance is Rs.-2022.97

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4.3. Table Statement showing Operating Income for the year 2009-10 (Rs. In lakhs) Particulars Actual Revised Estimates Cargo handling & storage charges Port & Dock Railway earnings Estate rentals Container handling Total Operating Income Source: Secondary data 4.3.1 Chart showing Operating Income for the year 2009-10 19597.93 4271.93 1668.15 13467.15 71835.05 17655.38 4962.20 1352.18 12682.24 76300.00 1942.55 -371.00 188.35 784.91 1632.66 11.00 Favourable -8.68 Unfavourable 13.92 Favourable 6.18 Favourable
19.71

2009-10 Variance Percentage Remark

32830.75

33743.00

-912.25

-2.77 Unfavourable

Variance
2000 1500 1000 500 0 -500 -1000

1942.55 784.91 -912.25 -371 188.35

Variance

Interpretation: With reference to the above table it indicates that the budget variance for Operating Income for port and dock ,estate rental and container handling are favourable and others is unfavourable. Port and dock are highest is Rs.1942.55 and cargo handling are lowest variance is Rs.-912.25.

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4.4 Table Statement showing Operating Income for the year 2010-11 (Rs. In lakhs) Particulars Actual Revised Estimates Cargo handling & storage charges 27934.17 35698.20 -7764.03 -27.78 unfavourable 2010-11 Variance Percentage Remark

Port & Dock Railway earnings Estate rentals Container handling Total Operating Income Source: Secondary data

19110.63 2867.79 1880.97 16597.57 68391.131

20567.50 4282.00 1856.50 14095.80 76500.00

-1456.87 -1414.21 24.47 2501.77 -8108.86

-7.63 Unfavourable -49.31 unfavourable 1.30 Favourable 15.07 Favourable -68.35

4.4.1 Chart showing Operating Income for the year 2010-11

variance
4000 2000 0 -2000 -4000 -6000 -8000

2501.77 24.47

-1456.87

-1414.21

-7764.03

Interpretation With reference to the above table it indicates that the budget variance for Operating Income for estate rental and container handling are favourable and others is unfavourable. Container handling are highest is Rs.2501.77 and cargo handling are lowest variance is Rs.-7764.03.

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4.5 Table statement showing Operating Income for the year 2011-12 (Rs. In lakhs) Particulars Departments Actual Revised Estimates Cargo handling, & storage charges Port & Dock Railway earnings Estate rentals Container handling Total Operating Income Source: Secondary data 17518.72 2219.83 1711.74 18297.20 62710.64 17900.00 1594.00 1930.00 18132.00 62181.00 -381.28 625.83 -218.26 165.20 529.64 -2.17 Unfavourable 39.26 Favourable -12.75 Unfavourable 0.91 Favourable 26.64 22963.15 22652.00 311.15 1.37 Favourable 2011-12 Variance Percentage Remark

4.5.1 Chart showing Operating Income for the year 2011-12

Variance
800 600 400 200 0 -200 -400 cargo handling, & storage charges Port & Dock Railway earnings Estate rentals Container handling

311.15

-381.28

625.83 -218.26 165.2

Variance

Interpretation With reference to the above table it indicates that the budget variance for Operating Income for cargo handling, Railway earning and container handling are favourable and others is unfavourable. Railway earning are highest is Rs.625.83 and Port and dock are lowest variance is Rs.-381.28

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4.6 Table showing Comparative Budget Deviation Analysis for Operating Income Department 2007-08 Cargo handling, & storage charges Port & Dock Railway earnings Estate rentals Container handling Total Operating Income Source: Secondary data -4.92 10.90 -2.32 23.98 38.78 9.85 -7.67 -36.20 -17.42 -45.09 11.00 -8.68 13.92 6.18
19.71

Deviation (in %) 2008-09 6.35 2009-10 -2.77 2010-11 -27.78 2011-12 1.37

11.15

-7.63 -49.31 1.30 15.07 -68.35

-2.17 39.26 -12.75 0.91

26.62

4.6.1 Chart Showing Comparative Budget Deviation Analysis for Operating Income
40 30 20 10 0 -10 -20 -30 -40 -50 2007-08 2008-09 2009-10 2010-11 2011-12 Estate rentals Container handling Railway earnings

cargo handling, & storage charges Port & Dock

Interpretation With reference to the above chart is indicates that the budget Deviation for Operating Income for during the year 2007-08 , 2009-10 and 2011-12 are favourable and others is unfavourable. 200708 are highest deviation 38.78% and 2010-11 are lowest deviation is Rs. -68.35.
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LINEAR REGRESSION

To find out the future of the company The trend equation is Y=a + b(x) Where a= b=

1 .2 .3

Table showing the Linear regression Year 2006 2007 2008 2009 2010 2011 TOTAL Income 43169.4 53497.2 62809.4 67149.4 71835 68391.1 366852 X -2 -1 0 1 2 3 3 XY -86339 -53497 0 67149.4 143670 205173 276157 X^2 4 1 0 1 4 9 19

Substitute the values of X2, Y, XY in equation 2 & 3 We get, a = a = 61142 b = b = 14534.58 Equation 1 becomes, Y= 61142 + 14534.58(X)
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Linear Regression
160000 140000 120000 INCOME 100000 80000 60000 40000 20000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 YEAR Income

Charting showing the future income of the company From the above table, income of the company for six year is taken as Y. In order to project the future income of the company we can use the statistical formula for trend equation which is given below: Y= a+ b (X) Here a = 61142 & b = 14534.58 Finding the income for the year 2012 we can take X= 4 Y= 61142 + 14534.58(X) Y=119280.2 Finding the income for the year 2013 we can take X= 5 Y= 61142 + 14534.58(X) Y=133814.8 Finding the income for the year 2014 we can take X= 6 Y= 61142 + 14534.58(X) Y=148349.4 INFERENCE It can be inferred that the company income is estimated to 119280.2 in the year 2012 and 113814.8 in the year 2013 and 148349.4 in the year 2014.
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OVER HEAD VARIANCEANALYSIS Variance is defined as the difference between actual and the standard amounts. Total expenditure variance Fixed cost overhead variance Variable cost overhead variance Semi variable cost overhead variance

Total expenditure variance Formula: Total expenditure variance = Revised total overhead Actual total overhead Fixed cost overhead variance Formula: Fixed cost overhead variance = Budgeted fixed overhead Actual fixed overhead Variable cost overhead variance Formula: Variable cost overhead variance = Budgeted variable overhead Actual variable overhead Semi variable cost overhead variance Formula: Semi variable cost overhead variance = Budgeted semi variable overhead Actual semi variable overhead

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Civil Engineering Department

Table showing the Civil Engineering Department Year Total Expenditure Variance 4914-3620.73 =1293.27 5611-4628.14= 982.86 7610-5381.36= 2228.64 6031-4771.01= 1259.99 Fixed Expenditure Variance 2908.2-2687.04 =221.16 2996.32-3406.44= (416.12) 2965.88-4047.69= (1081.76) 4444.72-1806.18= 2638.54 Variable Expenditure Variance 1257.35-721.04 =536.31 1344.58-1013.68 = 330.9 1445.97-1061.87 = 384.1 1714.58-100.3= 1614.28 Semi Variable Expenditure Variance 635.45-218.29 =417.16 276.1-207.53= 68.57 290.95-254.97= 35.98 25.35-11.88= 13.47

2006-2007 2007-2008 2008-2009 2009-2010

Inference From the above table it is inferred that the total expenditure variance is good for the year 20072008 (i.e) 982.86 and the fixed expenditure variance is adverse for the year 2008-2009 with (1081.76) and the variable expenditure variance is adverse for the year 2008-2009 with (384.1) and semi variable is good for the year 2009-2010 (i.e) 13.47.

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Accounts Department

Table showing the Accounts Department Year Total Expenditure Variance 4080-3963.9= 116.1 4177-4254.8= (77.8) 456668.29=(105.71) 4972-4771.01= 200.99 Fixed Expenditure Variance 1190.651131.6=59.05 1239.851416.15= (176.7) 1221.2-1536.56= (315.36) 1507.60-1783.63 = (276.03) Variable Expenditure Variance 4.95-32.19= (27.24) 64.5-68.45= (3.95) 87.2-153.21= 66.01 106.3-100.3= 6 Semi Variable Expenditure Variance 10.85-8.11= 2.74 12.35-10.03= 2.32 10.03-9.59=.44 12.05-11.88=017

2006-2007 2007-2008 2008-2009 2009-2010

Inference From the above table it is inferred that the total expenditure variance is adverse for the year 2008-2009 (i.e) 105.29 and the fixed expenditure variance is adverse for the year 2008-2009 with (315.36) and the variable expenditure variance is adverse for the year 2008-2009 with (66.01) and semi variable is good for the year 2007-2008 (i.e) 2.32.

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Mechanical and Electrical Department

Table showing the Mechanical and Electrical Department Year Total Expenditure Variance 12250-12267.63 =(11.63) 13296-13817.98 = (521.98) 16743-15664.35 =1078.65 17038-16271.49 =766.51 Fixed Expenditure Variance 6451.85-9835.04 =(3383.19) 9703.82-11278.25 =(1574.43) 10262.99-12575.63 =(2312.64) 1101.85-13607.86 = (2506.01) Variable Expenditure Variance 1645.8-2025.5 =(379.7) 2152.13-2090.5 =(61.63) 3596.75-2673.58 =923.17 3619.2-2650.61 =(968.59) Semi Variable Expenditure Variance 320.45-401.07 =(80.62) 418.95-449.23 =(30.28) 60.26-414.33 =(354.07) 408.35-13.02 =395.33

2006-2007 2007-2008 2008-2009 2009-2010

Inference From the above table it is inferred that the total expenditure variance is adverse for the year 2007-2008 (i.e) 521.98 and the fixed expenditure variance is adverse for the year 2006-2007 with (3383.19) and the variable expenditure variance is adverse for the year 2009-2010 with (968.59) and semi variable is adverse for the year 2007-2008 (i.e) 354.07.

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Traffic Department

Table showing the Traffic Department Year Total Expenditure Variance 6630.006538.66=91.34 6838-7872.22 =(1034.22) 7914-8256.76 =(342.76) 8720-10112.23 =(1392.23) Fixed Expenditure Variance 6210.3-6287.46 =(77.16) 6885.3-7639.08 =(753.78) 6930.78-8093.14 =(1162.36) 7937.3-9763.27 =(1825.97) Variable Expenditure Variance 19.95-41.99 =(22.04) 97.7-50.82 =46.88 97.37-40.96 =56.41 116-72.57 =43.43 Semi Variable Expenditure Variance 92.2-208.97 =(116.77) 95-168.75 =(73.75) 95.25-123.15 =(27.9) 221.67-110.55 =111.12

2006-2007 2007-2008 2008-2009 2009-2010

Inference From the above table it is inferred that the total expenditure variance is adverse for the year 2009-2010 (i.e) 1392.23 and the fixed expenditure variance is adverse for the year 2009-2010 with (1825.97) and the variable expenditure variance is adverse for the year 2006-2007 with (22.04) and semi variable is adverse for the year 2007-2008 (i.e) 116.77.

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Marine Department

Table showing the Marine Department Year Total Expenditure Variance Fixed Expenditure Variance 1730.35-1691.53 =38.82 1760.52-2129.08 =(368.56) 1789.15-2483.38 =(694.2) 3530.44-4768.71 =(1238.27) Variable Expenditure Variance 385.3-6.53 =378.77 1442.03-1794.03 =(352.8) 2024.75-1409.56 =615.19 2800.95-1875.3 =925.65 Semi Variable Expenditure Variance 8-3.48 =4.52 10-10.56 =(.56) 17.1-10.43 =6.67 31.11-17.22 =13.89

2006-2007 2007-2008 2008-2009 2009-2010

3126-2755.46 =370.54 3709-3431.28 =277.2 4469-3939.76 =529.44 8139.6661.23 =1477.77

Inference From the above table it is inferred that the total expenditure variance is adverse for the year 2009-2010 (i.e) 1392.23 and the fixed expenditure variance is adverse for the year 2009-2010 with (1825.97) and the variable expenditure variance is adverse for the year 2006-2007 with (22.04) and semi variable is adverse for the year 2007-2008 (i.e) 116.77.

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CHAPTER-5 FINDINGS By using the linear regression it is projected that the expected company income is estimated to 119280.2 in the year 2012, 133814.8 in the year 2013 and 148349.4 in the year 2014. From the budget variance table of Operating Income for cargo handling storage charges and container handling and Railway earnings are favourable and others is unfavourable. Container handling are highest variance is Rs.2875.43 and port and dock is lowest variance Rs.744.92 in the year 2007-2008 From the budget variance table of Operating Income for port and dock ,estate rental and container handling are favourable and others is unfavourable. Port and dock are highest is Rs.1942.55 and cargo handling are lowest variance is Rs.-912.25 in the year 20092010. From the budget variance table of Operating Income for estate rental and container handling are favourable and others is unfavourable. Container handling are highest is Rs.2501.77 and cargo handling are lowest variance is Rs.-7764.03 in the year 2010-2011. From the budget Deviation table of Operating Income for during the year 2007-08 , 200910 and 2011-12 are favourable and others is unfavourable. 2007-08 are highest deviation 38.78% and 2010-11 are lowest deviation is Rs. -68.35. The total expenditure variance is good for the year 2007-2008 (i.e) 982.86 and the fixed expenditure variance is adverse for the year 2008-2009 with (1081.76) and the variable expenditure variance is adverse for the year 2008-2009 with (384.1) and semi variable is good for the year 2009-2010 (i.e) 13.47 in the Civil Engineering department

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SUGGESTIONS: The company should have to concentrate more on diversified investment. The company should have to concentrate in reducing the expenses in all aspects When comparing to the last year the cash position of the company is higher so the company should maintain the same to meet its liabilities. When comparing to the last five years the current financial position of the company is low so the company should improve the financial status. The company can reinvest its retained earnings in its core business to increase its profit and its asset position.

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CONCLUSION The overall position of the company when compared to the previous year is weak. The profit of the company decreased in the current year. The liquidity position of the company is average. The net cash and cash equivalent of the company is decreased in the current year. When compared to the last five years the company has continuously increased the profit randomly but the current year profit is less when compared to the previous years.

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BIBLIOGRAPHY Reference books: Financial management by M.Y.KHAN & P.K.JAIN

Annual reports of the Chennai Port Trust: 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

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