Project On Ratio Analysis

EXECUTIVE SUMMARY
The main concurrent project entitled Ratio Analysis carried out for the 8 weeks in BHARATH MINING AND MINERALS ISPAT LIMITED, DANAPUR, HOSPET. The main purpose has to analysis the liquidity and profitability position and impact liquidity and its profitability during the last five years. The required data for this purpose was collected mainly through the secondary sources, such as annual reports of the company. In addition certain information recording calculation, interpretation and analysis was discussed with finance manager in the company.
Financial Ratio analysis
OBJECTIVE OF THE STUDY:

The present study has been undertaken with the following objectives. 1. To study the growth and development of Bharat Mines and Minerals Ispat Pvt. Ltd. 2. To study the trends in finance and analyze various elements in financial analysis. 3. To evaluate the financial position of BMM ISPAT PVT.LTD. 4. To calculate and estimate the important financial ratios as a part of financial analysis in BMM ISPAT PVT.LTD. 5. To offer suggestions to improve financial position of the company. 6. To study the financial strengths and weaknesses of the firm.
SCOPE OF THE STUDY:

The study is undertaken on ratio analysis in BMM ISPAT PVT.LTD., a fast growing company in steel industry. The study covers a period of two financial years from 2007-08 to 2008-09. The Study is conducted at Danapur, Hospet, Head Office of the Company. It is based on the financial performance of the company for two years and considers major cash inflows and outflows.
METHODOLOGY OF STUDY:
The study conducted is descriptive. It is based on primary and secondary data. Primary data is collected through informal interviews with the concerned officials who are with the manager and the staff members. The secondary data collected from the communal reports of the company and through internet.
PLAN OF ANALYSIS
The study is done through the analysis of various books and accounts of the firm. The process of study includes following steps;
COLLECTION OF DATA
Data required for the study is collected from both primary and secondary sources.
Financial Ratio analysis 2
ANALYSIS OF DATA
Various ratios that are used to analyze the collected data such as cash ratio, cash flow from operation, cash to current debt coverage ratio, cash velocity ratio, current assets, cash flow ratio and cash to total assets ratio. Graphs are drawn to show effectiveness of the data. Interpretations are drawn based on calculated ratios. By making interpretations certain conclusions are made. By seeing the annual reports of the balance sheet and cash flow statement and profit and loss account.
LIMITATIONS OF THE STUDY

The study is concerned to BMM ISPAT PVT.LTD., Danapur, Hospet. The study is based on two years financial performance only Limitations of tools used for analysis. Findings of the study are based on material provided by BMM ISPAT PVT.LTD., Time constraint to study a vast topic of Ratio Analysis.
The Indian steel industry is organized in three categories i.e., main producers, other major producers and the secondary producers. The main producers and other major producers have integrated steel making facility with plant capacities over 0.5 mt and utilize iron ore and coal/gas for production of steel. The main producers are Tata Steel, SAIL, and RINL, while the other major producers are ESSAR, ISPAT and JVSL. The secondary sector is dispersed and consists of: (1) Backward linkage from about 120 sponge iron producers that use iron ore and non-coking coal, providing feedstock for steel producers; (2) Approximately 650 mini blast furnaces, electric arc furnaces, induction furnaces and energy optimizing furnaces that use iron ore, sponge iron and melting scrap to produce steel; and (3) Forward linkage with about 1,200 re-rollers that roll out semis into finished steel products for consumer use.
Sector structure/Market size

The steel industry in India has been moving from strength to strength and according to the Annual Report 2009-10 by the Ministry of Steel, India has emerged as the fifth largest producer of steel in the world and is likely to become the second largest producer of crude steel by 2015-16. Recently, Steel Minister, Mr Virbhadra Singh said that India will become the world's secondlargest steel producer by 2012, more than doubling its capacity to 124 million tonnes (MT) as part of the push being given to assist overall infrastructure development.
Production
Steel production rose 4.2 per cent to reach 60 MT in 2009-2010, according to the Ministry of Steel. The National Steel Policy 2005 had projected an annual steel consumption growth of 7 per cent based on GDP growth rate of 7-7.5 per cent and production of 110 MT of crude steel by 20192020. Nonetheless, with the current rate of ongoing Greenfield and Brownfield projects, the Ministry of Steel has projected that these growth trends are likely to be exceeded and it is envisaged that in the next five years demand will grow at higher annual average growth rate of over 10 per cent as compared to around 7 per cent growth achieved between 1991-92 and 2005-06.
Moreover, according to the ministry, the crude steel production capacity in the country by 2011-12 will be nearly 124 MT. According to the Ministry of Steel, 222 memorandum of understanding (MOUs) have been signed with various states for planned capacity of around 276 MT. Major investment plans are in Orissa, Jharkhand, Chhattisgarh, West Bengal, Karnataka, Gujarat and Maharashtra. According to the Annual Report 2009-10 by the Ministry of Steel, domestic crude steel production grew at a compounded annual growth rate of 8.6 per cent during 2004-05 and 2008-09.
Consumption
India's steel consumption rose 8 per cent in the year ended March 2010, over the same period a year ago on account of improved demand from sectors like automobile, infrastructure and housing. The countrys steel consumption increased to 56.3 MT in the 12 months to March 2010 from 52.3 MT in the previous year, as per the Ministry of Steel.
Investments
A host of steel companies have lined up major investment proposals. Furthermore, with an expanding consumer market, the Indian steel industry is likely to receive huge domestic and foreign investments. The domestic steel sector has attracted a staggering investment of about US$ 238 billion, according to the Minister of State for Steel, Mr A. Sai Prathap. This consists of nearly 222 MOUs signed between the investors and various state governments mostly in the states of Orissa, Jharkhand, Chhattisgarh and West Bengal.

SAIL is planning to set up a 12-million tonnes plant in Jharkhand. In December, Indias largest engineering conglomerate Larsen & Toubro (L&T) and state owned Nuclear Power Corporation of India Limited (NPCIL) formed a US$ 373.2 million joint venture for specialized steel and forging products.
Stainless steel manufacturer and exporter, Varun Industries, is setting up a US$ 171.8 million stainless steel-cum-alloy steel plant at Rohat, Jodhpur.
Tata Steel has entered into a joint venture with Japans Nippon Steel for production and sales of automotive cold-rolled flat products at Jamshedpur. The JV is expected to invest US$ 400 million to set up an automobile venture in India.
Steel major, JSW Steel has earmarked a cape of US$ 1.6 billion for 2010-11 and plans to increase capacity of its Bellary plant in Karnataka from 7 MT to 10 MT by end of 2010-11.
Government Initiative
As per the Press Information Bureau, during 2009, the government took a number of fiscal and administrative steps to contain steel prices. Central value added tax (CENVAT) on steel items was reduced from 14 per cent to 10 per cent with effect from February 2009. Moreover, in the Union Budget 2010-11, the government has allocated US$ 37.4 billion to the infrastructure sector and has increased the allocation for road transport by 13 per cent to US$ 4.3 billion which will further promote the steel industry.
2010 Budget Steel Industry Expectations

The steel industry in India is progressing with every passing year and has gradually emerged as the fourth biggest steel producer in the world besides being the second biggest manufacturer of crude steel. In the year 2009, the government owned Steel Authority of India (SAIL) outshined its international counterparts like Posco, Nippon and ArcelorMittal by registering a net revenue of USD571 million. The production of steel in India touched 27.49 million tonne in 2009 to meet the growing demand for total steel utilized in kitchen appliances, airports, retail stores, trains, etc. The demand for steel and its consumption is predicted to grow by 17% per annum till 2012. The increase in demand will be triggered by construction schemes valued around US$ 1 trillion.
Indian steel industry features among the world's largest iron-ore producers and saw a massive rise in its iron ore exports in 2009 by more than 20%. The sharp expansion of the industry has attracted an astounding FDI of over USD 237 billion. 2010 Budget Steel Industry Expectations of entrepreneurs and common man are higher tax exemptions in home loans where the purchasers is entitled for tax exemption up to Rs 1,50,000 under Section 80C. Such measures would indirectly have a positive impact on steel industry which is associated with realty business.
Key Drivers of Steel Industry

1) Construction:
The construction industry has been witnessing a growth rate of 12%-14% in recent times. Steel construction is now identified with speed and since India is in need of speedy project implementation, steel is the best alternative for fast track construction. With economy surging ahead and expected increase in income levels of population, it is believed that demand for steel from this sector will continue to grow at current rates if not improve
2) Automobile:
The domestic automobile industry has also grown at more than double-digit rates in the past five years. The Indian automobile sector is the second fastest growing market after China and has emerged as a prime demand driver for alloy steel. Automobile sector which is experiencing growth and competition is likely to be one of the major drivers for steel consumption in the coming years and most likely, its contribution in the overall demand pie is likely to improve from the current levels.
3) Auto components Industry:

During the last five years, auto components market has grown at 19% CAGR, led by both robust domestic demand as well as exports. India is fast emerging as hub for auto components. International companies such as General Motors, Ford, Daimler Chrysler, Toyota and Volkswagen
are outsourcing auto parts from India as it has cost advantage with regard to forgings and castings. Also, the growing domestic automobile industry, which relies on steel industry for its parts manufacturing, will enhance the demand for steel in India.
4) Infrastructure:
Infrastructure sector comprises of roads, railways, airports and power. The 11th Five-year plan has lined up huge investments in all the above related sectors of infrastructure. The sector wise anticipated investment are $200bn in power, $80bn in railways, $48bn in roads, $13bn in ports and $9bn in airports. Because of surge in the above activities, the demand for long products of steel will be increasing in years ahead.
5) Consumer Durables:
The consumer durables sector has also been witnessing robust growth. It has grown at an average of 10% per annum and is expected to grow at double-digit rates for coming years. The share of white goods and utensils is predominant in India. The domestic appliances market which includes spin driers of washing machine, almirahs, thermo ware, water filters, dishwashers, microwave ovens, catering equipments, cutlery, furniture etc have opened new opportunities for steel consumption, thus ensuring a steadily growing trend of steel off take.
6) Oil & Gas Industry:

Oil & gas sector is the major consumer of steel tubes and pipes. The pipe consumption in oil & gas sector is expected to grow at a rate of 25% CAGR as this sector is set to witness massive capital investment. Apart from laying cross-country pipelines, exploration and production activities are also experiencing strong growth in both international as well as domestic markets.
SWOT Analysis
Strengths
1. Availability of iron ore and coal: India has abundance of iron ore, coal & other raw materials required for iron & steel making. It has 4th largest iron ore reserves (13 bn tons) in the world. 2. Low labor wage rates: India has low unit labor cost, this gets reflected in low cost of production 3. Abundance of quality manpower: It has 3rd largest pool of technical manpower, next to United States & erstwhile USSR, capable of understanding and assimilating new technologies. 4. Mature production base
Weakness
1. Unscientific mining: India is deficient in raw materials required by the steel industry. Iron ore deposits are finite and there are problems in mining sufficient amounts of it. India's hard coal deposits are of low quality 2. Low productivity: According to an estimate crude steel output at the biggest Indian steelmaker is roughly 144 tonnes per worker per year, whereas in Western Europe the figure is around 600 tonnes. 3. Power shortages: Steel production in India is also hampered by power shortages. 4. Inadequate infrastructure: Insufficient freight capacity and transport infrastructure impediments to hamper the growth of Indian steel industry 5. Low R&D investments: There are inadequate investments in infrastructure. 6. High cost of debt: Since huge capital investment is required therefore cost of these debts is very high.
Opportunities
1. Unexplored rural market: The Indian rural market remains fairly unexposed to the multifaceted use of steel. 2. Growing domestic demand: There is enormous scope for increasing consumption of steel in almost all sectors in India. 3. Export Market Penetration: It is estimated that world steel consumption will double in next 25yrs. Quality improvement of Indian steel combined with low cost advantages will definitely help in substantial gain in export market. 4. Consolidation: As global companies have realized the threat of excess supply, they are looking at M&A (mergers and acquisitions) option to retain market share and improve margins.
Threats
1. Technological change: Technological changes force the industry structure to change. In India where capital itself is costly, technological obsolescence is a major threat. 2. Price sensitivity & Demand volatility: The demand for steel is derived demand and the purchase quantity depends on end-use requirements. The traders are price sensitive and buy when there are discounts.
3. Dumping of steel by developed countries: High quality products for developed countries available for imports at competitive prices. 4. Slow Industry Growth
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About BMM ISPAT PVT.LTD.:

Established in 1976, Bharat Mines and Minerals have now grown to become a force to reckon with. With a vision to export 4 million tons by 2008-09 of iron ore and make half million tons of steel by 2009-10, the organization aims to position itself as a major global steel player. With a vision to export 4 million tons by 2008-09 of iron ore and make half million tons of steel by 2009-10, the organization aims to position itself as a major global steel player. The brainchild of the Late Udaychand Singhi, Bharat Mines and Minerals, was incorporated to supply Iron Ore to MMTC. In 1998, his son, Mr. Dinesh Kumar Singhi steered the company to unparalleled growth by being the first mining company, establishing a power generation plant for captive use, and creating a steel plant from the captive ore mine. His youthfulness and dynamism reflected in the company's significant consistent growth in a span of 7 years. With an aim to make about half a million tons of steel by 2009-10. BMM ISPAT PVT.LTD., in its pursuit of excellence has focused on technological advancement, innovation, and quality product initiatives to boost customer satisfaction. The core value of the organization of Harnessing the natural bounty of iron ore resources to deliver value added quality products with a focus on continual improvement through strategic thinking, tenacity at work and ethical means delighting the customers and society as a whole has allowed it to empower itself market share thereby creating a superlative market . BMM ISPAT PVT.LTD., as Flagship company of the Group has successfully implemented Phase 1 of its Projects namely: - 25 MW Power Plant - 1.2 MTPA Beneficiation Plant - 1.2 MTPA Pellet Plant
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News and events of the BMM ISPAT PVT.LTD.,

BMM ISPAT PVT.LTD. has successfully commissioned the second kiln of 500t/day with preheating technology on 18th June 2009 . Earlier the first of 500t/day with preheating technology was put to commercial operation in February 09. BMM ISPAT PVT.LTD. creates a new opening by entering into the Pellet and beneficiation areas from January 2008. G overnment of Karnataka has given clearance for setting up 2 MTPA integrated steel plant at Danapura. BMM ISPAT PVT.LTD. has been awarded the CAPEXIL Special Exporter Award of iron ore in the year 2003-2004 from the Union Ministry of Commerce (INDIA) for its excellent performance in its field.
Vision and Mission:

Vision To develop business with domestic and international consumers by meeting their quality standards and schedules. To supply the highest quality of material and services in the Iron and Steel Industry. Mission To attain and maintain market leadership through technological and product superiority and maximize value-addition. To unearth natural resources of our planet in a responsible manner for the benefit of humanity while ensuring that minimal damage is caused to the environment.
Hedge over others

The core belief that has made BMM ISPAT PVT.LTD. Ispat what it is today is the employment of excellent corporate practices. The Board steers the Company in such a way as to ensure superior customer satisfaction. Honesty and integrity are the very elements that define the company's philosophy and its enviable profits. BMM ISPAT PVT.LTD. holds sizeable captive supplies of raw materials and power to be self-sustainable. The power plant of 25 MW capacities generates up to
80% of the 31 MW requirements. The planned 70 MW power plant will supply the growing needs of the company. The in-house steel plant, an initiative to build sustainability produces and supplies the desired TMT Rods, Billets and Pellets. The company's aim to beneficiate low grade iron ore, not only to enhance the value of low grade iron ore of 58 Fe content to productive steel and export grade of 63 to 64 Fe content, but also supports in creating a hazard free environment and minimizes pollution by clearing low grade ore. Government of Karnataka has given clearance for setting up 2 MTPA integrated Steel Plant at Danapura, adjacent to existing facility. All this and much more have empowered BMM ISPAT PVT.LTD. to have access to the resources it requires in a systematic, cost-effective, and efficient manner.
BMM ISPAT PVT.LTD. Management:

Dr Saibal Kanti Gupta Well recognized name in Indian and international steel industry. Formerly Professor at IIT, Mumbai. He held the highest offices as MD, Rourkela Steel Plant, CMD MECON, Executive Vice Chairman - JSW and is on Board of many steel plants. He provides direction on technology and markets in shaping future projects at BMM ISPAT PVT.LTD.. Mr. Dinesh Kumar Singhi The go-getter of BMM ISPAT PVT.LTD., Mr. Dinesh Kumar Singhi has exponentially transformed the outlook of the company and its clients. With his sheer dedication and perseverance, BMM ISPAT PVT.LTD. is poised to emerge as second largest steel industry in the state of Karnataka. A Mechanical Engineer with over 20 years of experience in mining, and power and steel sectors, he has brought in his industry knowledge and skill sets to the BMM ISPAT PVT.LTD., house. An aim of creating a job value to people in and around the plant, to utilize resources to the benefit of the nation, and to create cent percent self sustainability by initiating a captive power plant & production plants of sponge iron, TMT rods and Billets in-house has made him a pioneer of sorts in the industry. His dynamism and ethics has been very rewarding in terms of unparalleled profits, accolades and awards, and a superlative customer satisfaction.
Mrs. Snehalatha Singhi The brains behind the processes, Snehalatha Singhi is well-known for delivering innovative, multifaceted solutions. A keen observer and a perfectionist, she has been managing the daily undertakings of the organization in an extremely systematic and productive manner. Being a fashion designer, she brings in her creative genius into each sector she is a part of, be it management or administration. Constantly motivating the employees, Snehalatha Singhi is considered as a driving force in the success of BMM ISPAT PVT.LTD.. Mr. Laxmipat Dudheria One of the most experienced people in the BMM ISPAT PVT.LTD., stable, Laxmipat Dudheria has contributed immensely to the organizations profits. Being a Chartered Accountant with over 35 years in the industry has given him the know-how to create a unique business model for the company. Exuding confidence and dynamism, Mr. Laxmipat Dudheria is considered as a role model for every person in BMM ISPAT PVT.LTD., Mr. Mrutyunjaya Senapati has been the CMD of India's Premier design, engineering and consulting organization - MECON. He brings in more than 39 years varied experience in conceiving, executing and managing the projects not only in Iron and Steel but also infrastructure sector, environment, general engineering, development of SEZs. He has been successful in turnkey execution of projects and responsible for the growth of the company. Mr. Pratap Giri Subramanyam is a qualified chartered accountant and company secretary and senior investment banking professional with 20 years of experience. He is advisor to several companies including the Bangalore International Airport Ltd and is also a visiting faculty at IIM, Bangalore. He brings in advice in all strategic financial matters of the Company. Mr. G Subramanian has 38 years of experience in the Steel Industry in wide ranging fields like Blast Furnace, Sinter Plant and Pellet Plant etc. He has played the anchor role in BMM ISPAT PVT.LTD., from the start of the plant. It was with his leadership that the first stage of the plant came up with Sponge Iron Plant, Induction Furnace & Rolling Mill to produce TMT bars as well as setting up Power Plant He was the leader when BMM ISPAT PVT.LTD., setup, first time in India a Pellet Plant Complex with wet Grinding and Grate Kiln Technology of 1.2MT Capacity. Sri G Subramanian has taken over as Plant Director for Operation as well as New projects since August 09.
Senior Management:
Mr. Nanda Kumar Kadloor is the President - Manufacturing at BMM ISPAT PVT.LTD., and is committed in optimizing the production and aims for the phenomenal growth in a short time for the sponge iron division, power plant, induction furnace, continuous casting unit and rolling mill division. Being an M.Tech graduate from IIT Bombay, he has over 30 years of extensive experience in the steel industry and has officiated in several positions in various functions, like steel melting shop, hot rolled, cold rolled, galvanizing, color coating and harden tamper of steel strips. A man with multifaceted experience spanning project execution, manufacturing, operation, quality control, procurement, contracting, supply chain, marketing and top management. He possesses strong general management qualifications on manufacturing excellence, marketing innovation and supply chain logistics. He is committed to increasing the power and autonomy of all employees in this organization with the latest Value Creation management concept. Mr. Ganesh B K has 20 years of experience in the field of blast furnace, BFG fired power plants, Sinter plant, raw material handling, etc. He was also involved in coke-less cupola technology development at Agra. The area of experience spans projects execution from conceptual stage, operation & maintenance management, quality control, contract management and project purchases. Sri Ganesh B K has taken over as Associate Vice President for all the ongoing and future projects.
Future plans:
The boom in industrial growth in India has led to large demand of steel and related activities including mining. Having successfully completed 1st Phase, BMM ISPAT PVT.LTD, is embarked upon the 2nd Phase comprising: A 70 MW captive Power Plant (Completely with waste gases) 2 X 500 TPD Sponge Iron Plant. 1.2 million Tonnes per year Pellet Plant.
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1.2 million Tonnes per year Beneficiation Plant. 0.4 MTPA heat recovery coke oven Plant. Raw material handling system. Jack well & Pipeline and the water storage system. Railway siding at mines and at Danapura. Downhill Conveyer System to transport 2.0 Million Tonnes from the mines.
Awards:
BMM ISPAT PVT.LTD., has been awarded the CAPEXIL Special Exporter Award of iron ore in the year 2003-2004 from the Union Ministry of Commerce (INDIA) for its excellent performance in its field.
Some of the awards include

Eco-friendly Mines Environment Award Human Resource Development Award Safety Conscious Mines Award Welfare Amenities Award Safety Publicity and Propaganda Award Operation and Maintenance of Mining Machinery Award Over All mines Performance Award
Quality Certificate
HKT mining Pvt. Ltd. has obtained Quality Management Certificate ISO 9001-2000.
Potential in tonnes:
In our efforts to position ourselves as a company to definitely associate with, we have our brand appearance with a new sun like logo that is inspired by the Bher's atomic structure of Iron (Fe). Distinct and new age form, the new BMM ISPAT PVT.LTD. logo inherently displays dynamism and motion while the colors depict the stability, maturity and passion of the company.
The tagline POTENTIAL IN TONNES besides to the obvious natural potential also portrays the immense possibilities of growth intrinsic in the company and its people.
Products of the BMM ISPAT PVT.LTD.:

1) Iron ore exports:
Sincere efforts and a dynamic approach for the last 31 years enabled the entry of BMM ISPAT PVT.LTD. into global market and helped meet the target of 3 million tonnes of iron ore export in 2008. Today, BMM ISPAT PVT.LTD. stands strong with an aim to export 4 million tonnes of iron ore in 2008-09. And to achieve this target, has acquired small and medium sized mines around Bellary and Hospet. Infrastructure BMM ISPAT PVT.LTD. has always used the most environmental friendly procedures for Mining, with the help of highly mechanized mining infrastructure, which includes mines with high grade in Bellary - Hospet belt. To gain higher grades of iron ore BMM ISPAT PVT.LTD. initiated grade enhancement processes like beneficiation and pellet making. This process also supports in creating a hazard free environment and minimizes pollution by clearing low grade ore. Being one of the few exporters to have a plot for stacking and holding ore in Chennai ports, BMM ISPAT PVT.LTD. also operates from Panjim, Kakinada, Karwar and Mangalore. An acknowledgement to the intense research and efforts is winning the exporter of the year award from CAPELIX for FOUR CONSECUTIVE YEARS.
2) Power Plant:
An idea for a power plant was conceived in 2005 and executed in a span of 17 months. Company has put up a thermal plant for captive usage which meets 80% of the total requirement of 31 MW Infrastructure The 25 MW plant consists of turbine backed by one atmospheric fluidized bed combustion boiler and 2 waste heat recovery boilers. The company has installed one
atmospheric fluidized bed combustion (AFBC) boiler of 95 tonnes per hour (TPH) and 2 WHRB of 10 tonnes per hour (TPH) capacity.
3) Steel:
Steel The steel plant setup in 2006 as per BMM ISPAT PVT.LTD.'S aspirations now produces 75,000 TMT bars annually. BMM ISPAT PVT.LTD., manufactures high strength TMT steel bars for concrete reinforcement, which are internationally competitive and highly ductile for safety in structures. TMT Bars Steel for TMT bars is fully kilned in a furnace. The molten steel is void of slag with the inclusion of argon gas. The chemistry and temperature is homogenized to ensure uniform composition. The liquid steel is then tapped into the CONCAST. (Continuous Casting Machine). CONCAST Through a combination of primary and secondary solidification, the liquid steel is cast into billets. Automation and controlled heat transfer ensures their good quality. Billet Quality for TMT Steel No impurities Viz. Slag and refractory inclusions. No piping and blow holes. Superior Surface finishes without defects. Consistent properties throughout its length.
Properties of BMM ISPAT PVT.LTD. STEEL Steel is Corrosion Resistance, owing to its water quenching methods. With 0.25% carbon BMM ISPAT PVT.LTD. TMT has an excellent wielding ability. Stringent Control over chemical composition prevents brittleness. TMT bonds best with concrete to form strong reinforcement.
Infrastructure:
BMM ISPAT PVT.LTD. has a highly talented and skilled team to reach out the various objectives set in the different departments of Production, finance and marketing. To support a completely computerized corporate office has been set up.
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Iron Ore BMM ISPAT PVT.LTD. has always used the most environmental friendly procedures for Mining, with the help of highly mechanized mining infrastructure, which includes mines with high grade in Bellary - Hospet belt. To gain higher grades of iron ore BMM ISPAT PVT.LTD. initiated grade enhancement processes like beneficiation and pellet making. This process also supports in creating a hazard free environment and minimizes pollution by clearing low grade ore. Being one of the few exporters to have a plot for stacking and holding ore in marmagao and Chennai ports, BMM ISPAT PVT.LTD. also operates from Panjim, Kakinada, Karwar and Mangalore. Gao has a stacking capacity of 200,000 tonnes with jetty points to facilitate loading into barges. Power The 25 MW power plants consist of turbine backed by one atmospheric fluid bed of boilers and 2 waste heat recovery boilers. The company has installed one atmospheric fluidized bed coal (AFBC) boiler of 95 tonnes per hour (TPH) and 2 WHRB of 10 tonnes per hour (TPH) capacity.
Railway Sidning Water Supply Pipeline
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FINANCIAL RATIO ANALYSIS

INTRODUCTION:
As observed a basic limitation of the traditional financial statement comprising the balance sheet and the profit and loss account is that they do not give all the information related to the financial operation of the firm. Nevertheless, they provide some extremely useful information to the extent that the balance sheet mirrors the financial position on a particular date in terms of the profit and loss account shows the results of operations during a certain period in terms of the revenues obtained and the cost incurred during the year. Therefore, much can be learnt about a firm from a careful examination of its financial statements as invaluable documents/performance analysis. Users of financial statements can get further insight about financial strengths and weakness of the firm if they properly analyze information reported in these statements. Management should be particularly interested in knowing financial weakness of the firm to take suitable corrective action. The plans of the firm should be laid down in view of the firms financial strengths and weaknesses. Thus, financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedures. Understanding the past is a prerequisite for anticipating the future. Ratio analysis is a widely used tools of financial analysis. It is defined as the systematic use of ration to interpret the financial statements so that the strengths and weaknesses of the firm as well as its historical performance and current financial condition can be determined. Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the indicated quotient of two mathematical expressions and as the relationship between two or more things.
CLASSIFICATION OF RATIOS
The use of ratio analysis is not confined to financial manager only. They are different parties interested in the ratio analysis for knowing the financial position of a firm for different purposes. In view of various users of ratios, there many types, which can be calculated from the information given in the financial statements. The particular purpose of the user determines the particular ratios that might be used for financial analysis.
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Ratios can be classified as follows Ratios Ratios
Traditional Classification
Functional classification
1) Balance Sheet ratios 2) Profit & Loss A/c ratios 3) Composite/mixed ratios
1) Liquidity ratios 2) Leverage ratios 3) Activity ratios 4) Profitability ratios
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Functional classification in view of financial management
Liquidity ratios
Long term solvency ratio
Activity ratio
1. Current ration 2. Liquid ratio 3. Debtors turnover ration 4. Creditors turnover ratio 5. Inventory Turnover ratio
1. Debt equity ratio 2. Debt to total capital ratio 3. Interest coverage ratio 4. Cash flow/debt
Profitability ratio
1. Inventory turnover ratio 2. Debtors turnover ratio 3. Fixed assets turnover ratio 4. Total asset turnover ratio 5. Working capital turnover ratio 6. Capital employed turnover
1. Gross profit ratio 2. Operating ratio 3. Operating profit ratio 4. Net profit ratio 5. Expense ratio 6. Return on investment 7. Return on capital 8. Return on equity capital 9. Earnings per share 10. Price earning ration
Traditional classifications:
Balance sheet ratios:
Balance sheet ratios deal with the relationship between two balances sheet items. Profit and loss account or Revenue/Income statements ratios: These ratios deal with the relationship between two profit and loss account items. The items should belong to the same profit and loss a/c.
Composite or Mixed ratios:

These ratios exhibit the relation between a profit and loss a/c or income statement item and a balance sheet item.
Functional classification:
Liquidity ratios:
These are the ratios which measure the short term solvency or financial position of a firm. These ratios are calculated to comment upon the short term paying capacity of a concern or the firms ability to meet its current obligations.
Long term solvency and leverage ratios:

These ratios convey a firms ability to meet the interest costs and payments schedules of its long term obligations. These ratios measure the contribution of financing by owners as compared to financing by outsiders.
Activity ratios:
These ratios are calculated to measure the efficiency with which the resources of a firm have been employed. These ratios are also called turnover ratios, because they indicated the speed with which assets are being turned over into sales.
Profitability ratios:
These ratios measure the results of business operations or overall performance and effectiveness of the firm.
TYPES OF RATIOS:
Several ratios, calculated from the according data can be grouped into various classes according to financial activity or function to be evaluated. As stated earlier, the parties interested in financial analysis are short-term and long-term creditors, owners and management. Short-term creditor main interest is in the liquidity position or the short-term solvency of the firm. Long-term creditors on the other hand, are more interested in the long-term solvency and profitability of the firm. Similarly, owners concentrate on the firms profitability and financial conditions. Management interested in evaluating every aspect of the firms performance. They have to protect the interests of all parties and see that the firm grows profitable. In view of the requirements of the various users of ratios, we may classify them into the following four important categories: LIQUIDITY RATIOS LEVERAGE RATIOS ACTIVITY RATIOS PROFITABILITY RATIOS
LIQUIDITY RATIOS
It is extremely essential for a firm to be able to meet its obligations as they become due. Liquidity ratios measure the firms ability to meet current obligations. In fact, analysis of liquidity needs the preparation of cash budgets and cash and fund flow statements but liquidity ratios, by establishing a relationship between cash and other current assets to current obligation provided quick measures of liquidity. A firm should ensure that it does not suffer from lack of liquidity, will result in a poor creditworthiness, loss of creditors confidence, or even in legal tangles resulting in the closure of the company. A very high degree of liquidity is also bad idea assets earn nothing. The firms funds will be unnecessarily tied up in current assets. Therefore, it is necessary to strike a proper balance between high liquidity and lack of liquidity. The most common ratios, which indicate the extent of liquidity or lack of it, are: 1. CURRENT RATIO 2. QUICK RATIO
3. CASH RATIO
CURRENT RATIO:
The current ratio is calculated by dividing current assets by current liabilities. Current Assets CURRENT RATIO = Current Liabilities Current assets include cash and those assets, which can be converted into cash within a year, such as marketable securities, debtors and inventories. Prepaid expenses are also including in current assets as they represent the payments that will not be made by the firm in future. Current liabilities include creditors, bill payable, accrued expenses, short-term bank loan, and income tax liability and long-term debt maturing in the current year. The current ratio is a measure of the firms short-term solvency. The higher the current ratio, the large is the amount of rupees available per rupee of current liability, the more is the firms ability to meet the current obligations and the greater is the safety of funds of short -term creditors.
QUICK RATIO:
The quick ratio is calculated by dividing quick assets by current liabilities. Quick assets are those assets which can be converted into cash within a short period of time, say to six months. So, here the inventory which is with the long period does not include in the quick assets. Quick assets QUICK RATIO = Current liabilities Quick assets or liquid assets mean those assets, which are immediately convertible into cash without much loss. All current assets expect prepaid expenses and inventories are categorized in liquid assets. Current liabilities means those liabilities, which are payable within a short period.
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Normally, bank overdraft and cash credit facility, if they become permanent mode of financing are in current liabilities. As this ratio concentrates on cash, marketable securities and receivables in relation to current obligation, it provides a more penetrating measure of liabilities.
CASH RATIO:
The cash ratio is calculated by dividing cash + marketable securities by current liabilities. Cash + Marketable Securities CASH RATIO = Current liabilities Since each cash is liquid asset, a financial analyst may examine cash ratio and its equivalent to current liabilities. Trade investment or marketable securities are equivalent of cash therefore; they may be included in the composition of cash ratio.
LEVERAGE RATIOS
The short-term creditors like bankers and suppliers of raw material are more concerned with the firms current debt-paying ability. On the other, long-term creditors like debenture holders, financial institutions etc., are more concerned with the firms long -term financial strength. In fact, a firm should have strong short-term as well as long-term financial position. To judge the long term financial position of the firm, financial leverage, or capital structure, ratios are calculated. These indicate mix of funds provided by owners and lenders, as a rule, there should be an approximate mix of debt and owners equity in financing the firms assets. The manager in which assets are financed has a number of implications. First, between debt and equity, debt is more risky from the firms point of view. The firm has a legal obligation to pay interest on debt holders, irrespective of the profits made or losses incurred by the firm. If the train firm fails to debt holders in time, they can take legal action against it to get payment and in extreme cases, can force the firm into liquidation. Secondly, use of debt is advantageous for shareholders in two ways:
a. They can retain control of the firm with a limited stake and. b. Their earnings will be magnified, when the earns a rate of return on the total capital employed higher than the interest rate on the borrowing funds. The process of magnifying the shareholders return with debt is called financial advantage or financial gearing or trading on equity. Advantage ratio may be calculated from the balance sheet to determine the proportion of debt in total financing. Many variations of these ratios exist but all these ratios indicate the same thing-the thing extent to which the firm has relied on debt in financing assets. Leverage ratios are also computed from the profit and loss items by determining the extent to which operating profits are sufficient to cover the fixed charges.
DEBT-EQUITY RATIO:
The relationship describing the lender contribution for each rupee of the owners contribution is called DEBT-EQUITY RATIO. DEBT-EQUITY RATIO is directly computed by the following formula. DEBT DEBT-EQUITY RATIO = EQUITY
PROPRIETARY RATIO:
This ratio states relationship between share capital and total assets. Proprietors equity represents equity share capital, preference share capital, reserves, and surplus. The latter ratio is also called capital employed to total assets. EQUITY SHARE CAPITAL PROPRIETORY RATIO = TOTAL TANGIBLE ASSETS (OR)
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PROPRIETARY EQUITY
TOTAL TANGIBLE ASSETS
INTEREST COVERAGE RATIO:

This ratio indicates the extent to which earnings can decline without resultant financial hardship to the firm because of its inability to meet annual interest coast. For example, coverage of 5 times means that as fall earnings up to (1/5th) level would be tolerable, as earnings to service interest on debt capital would be sufficiently available. This ratio measured as follows: EARNING BEFORE INTEREST &TAXES (DEBIT) INTEREST COVERAGE RATIO = INTEREST CHARGES
FIXED ASSETS TO NET WORTH:

This ratio indicates the extent to which Equity capital is invested in the net fixed assets. It is expresses as follows: FIXED ASSETS FIXED ASSETS TO NET WORTH = NET WORTH NET WORTH is represented by Equity share capital plus reserves and surplus. If the fixed assets are more than the net worth, difficulties may arise, as the depreciation will reduce profit. This also means that creditors have contributed to fixed assets. The higher this ratio, the less will be the protection to creditors. If this ratio is too high, the firm may find it handicapped, as too much capital is tied up in fixed assets but not circulating.
ACTIVITY RATIOS
Funds creditors and owners are invested in various assets to generate sales and profit and profits. The better the management of asset, the large the amount of sales. Activity ratios are employed to evaluate the efficiency with which the firm managers and utilizes its assets. These
ratios are also called turnover ratios because they indicate the speed with which assets are being covered or turned over into sales. Activity ratio, thus involve as relationship between sales and assets. A proper balance between sales and assets generally reflects that assets are managed well. Several activity ratios can be calculated to judge the effectiveness of assets utilization.
INVENTORY TURNOVER RATIO:

Inventory turnover ratio indicates the efficiency of the firm in producing and selling its products. It is calculated by dividing cost of goods sold by the average inventory. The average inventory is the average of opening and closing balance of inventory. In a manufacturing, company inventory of finished goods is used to calculate inventory turnover. Cost of goods sold INVENTORY TURNOVER RATIO = Average inventory
DEBTORS TURNOVER RATIO:

A firm sells good for cash and credit. Credit is used marketing tool by a number of companies. When the firm extends credits to its customers, debtors (accounts receivable) are created in the firms accounts. The debtors are expected to be converted in to cash over a short period and, therefore, are included in current assets. The liquidity position of the firm depends on the quality of debtors largely. Financial analysis applies infrastructure ratios to judge the quality or liquidity of debtors. It includes: Debtors turnover Collection period and Credit sales DEBTORS TURNOVER RATIO = Avg. Accounts Receivable
DEBTORS COLLECTION PERIOD RATIO:

This ratio indicates the extent to which the debts have been collected in time. The debt collection period indicates the average debt collection period. This ratio is a good indicator to the lenders of the firm, because it explains to them whether their borrower is collecting from its debt in time. An increase in this period indicates blockage of funds in debtors. Months/Day (in a year) DEBTORS COLLECTION PERIOD RATIO = Debtors turn over (OR) Debtors X Months/Days (in a year)
Sale
WORKING CAPITAL TURNOVER RATIO:

Working capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio indicates the number of times the working capital is turned over in the course of a year. This ratio measures the efficient utilization. Of working capital and low ratio indicates otherwise. Nevertheless, very high working capital turnover ratios are not a good sanitation for any firm and hence care must be taken while interpreting the ratio. Making of comparative and trend analysis can at least use this ratio for different firms in the same industry and for various periods. This can be calculated as follows. Sales WORKING CAPITAL TURNOVER RATIO = Net working Capital NET WORKING CAPITAL = Current Assets Current Liabilities (Excluding Short-term bank borrowings)
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PROFITABILITY RATIOS
A Company should earn profits to survive and grow over a long period. Profits are essential, but it would be wrong to assume that every action initiated by management of a company should be aimed at maximizing profits, irrespective of social consequences. Profit is the difference between revenues and expenses over a period of time (usually a year). Profit is the ultimate output of a company and it will have no future if it fails to make sufficient profits. Therefore the financial manager should continuously evaluate to the efficiency of the measure the operating efficiency of the company. Besides management of the company, creditors want to get interest and repayment of principle regularly. Owners want to get a required rate of return on their investment. This is possible only when the company earns enough profits. PROFITABILITY IN RELATION TO SALES PROFITABILITY IN RELATION TO INVESTMENT
PROFITABILITY RATIOS IN RELATION TO SALES

1. GROSS PROFIT MARGIN 2. NET PROFIT RATIO 3. CASH MARGIN 4. OPERATING MARGIN
GROSS PROFIT MARGIN:

Gross profit margin reflects the efficiency with which the management products each unit product. This ratio indicates the average spread between the cost of goods sold and the sales revenue. When we subtract the gross profit margin from 100% we obtain the ratio of cost of goods to sales. Both this shows profits relative to sales after the dedication of production costs, and indicates the relation between production costs and selling price. A high gross profit margin relative to the industry average implies that the firm is able to produce at relatively lower cost. A high gross profit margin ratio is a sign of good management. A gross margin ratio may increase due to any of the following factors. Higher sales prices, cost of goods sold remaining constant, lower cost of goods sold, sales prices remaining constant, a combination of variations in
sales prices remaining constant, a combination of variations in sales price and costs, the margin widening, and increases in the proportionate volume of higher margin items. The analysis of these factors will reveal to the management that how a depressed gross profit margin can be improved. A low gross profit margin may reflect higher cost goods sold due to the firms inability to purchase raw materials at favorable terms, inefficient utilization of plant and machinery, resulting in higher cost of production. The ratio will also be low due to fall in prices in the market, or market reduction in selling price by the firm in an attempt to obtain large sales volume the cost of goods sold remaining unchanged. The financial manager must be able to detect the causes of a falling gross and initiator action to improve the situation. Sales Cost of goods sold (Or) Gross profit GROSS PROFIT MARGIN RATIO = Sales
NET PROFIT MARGIN RATIO:

Net profit is obtained when operation expenses, interest and taxes are subtract from the gross profit. If the non-operating income figure is substantial, it may be excluded from pat to see profitability arising directly from sales. Net profit margin ratio establishes a relationship between net profit and sales and indicated managements efficiency in manufacturing, administering and selling the products. This ratio is the overall measure of the firms ability to turn each rupee sales into net profit. If the net margin is inadequate, the firm will fail to achieve satisfactory return on shareholders funds. This ratio also indicates the firms capacity withstand adverse economic conditions. A firm with a high net margin ratio would be in an advantageous position to survive in the face of falling selling prices, rising costs of production or declining demands for the product. It would really be difficult for a low net margin firm to withstand these adversities. Similarly, a firm higher net profit
margin can make better use of favorable conditions such as rising selling prices; falling in costs of production or increasing demand for the product. Such a firm will be able to accelerate its profits at a faster rate than a firm with a low net profit margin will. An analyst will be able to interpret the firms profitability more meaningfully if he/she evaluates both the ratios-gross margin and net margin jointly. To illustrate, if the gross profit margin has increased over years, but the net profit margin has either remained constant or declined or has not increased as fast as the gross margin this implies that the operating expenses relative to sales have been increasing. The increasing expenses should be identified and controlled. Gross profit margin may decline due to fall in sales price or increase in the cost of production. Profit after tax NET PROFIT MARGIN RATIO = Sales
CASH MARGIN RATIO:

Cash profit excludes depreciation. It means net profit after interests and taxes but before depreciation. This ratio indicates the relationship between the profit, which accrues in cash and sales. Greater percentage indicates better position and vice-versa as it shows the correct profit earned by the firm. Cash profit CASH MARGIN RATION = Sales X 100
OPERATING MARGIN RATIO:

Operating margin ratio is also known as operating net profit ratio. It is the ratio of operating profit to sales. This ratio establishes the relationship between the total cost incurred and sales. Operating profit is the net profit after depreciation but before interests and taxes. The purpose of computing this ratio is to find out the overall operational efficiency of the business concern. It measures the constant this ratio is expressed as operating profit to sales.
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This ratio is expressed as operating profit to sales
Operating profit OPERATING MARGIN RATIO: = Sales X 100
PROFITABILITY RATIOS IN RELATION TO INVESTMENT:

1. RETURN ON INVESTMENT 2. RETURN ON NET WORTH 3. RETURN ON CAPITAL 4. RETURN ON GROSS BLOCK
1. RETURN ON INVESTMENT:
The term investment refers to total assets. The funds employed in net assets are known as capital employed. Net assets equal net fixed assets plus current assets minus current liabilities excluding bank loans. Alternatively, capital employed in equal to net worth plus total debt. The conventional approach of calculating return on investment (ROI) is to divide PAT by investment. Investment represents pool of funds supplied by shareholders and lenders, while PAT represents residual income of shareholders; therefore, is conceptually unsound to use PAT is affected by capital structure. It is therefore more appropriate to use one of the following measures of ROI for comparing the operating efficiency of firms. EBIT (1-T) ROI = ROTA = Total Assets
EBIT (1-T) ROI =RON = NET Assets

Where ROTA and RONA respectively return on total assets and return on net assets. RONA is equivalent of Return on Capital Employed.
2. RETURN ON NET WORTH:

NET WORTH is also known proprietors Net Capital Employed. The Return should be calculated with reference to profits belongings to shareholders, and therefore, profit shall be Net profit after interest and tax. The profit for this purpose will include even non-trading profit. This is given as follows. Net profit after interest & tax RETURN ON NET WORTH = Shareholders funds x 100
3. RETURN ON CAPITAL:
The ROCE is the second type of ROI. The term capital employed refers to long-term funds supplied by the creditors and owners of the fund. It can be computed in two ways. First, it is equal to non-current liabilities (long-term liabilities) plus owners equity Alternatively, it is equivalent to Net working Capital plus fixed Assets. Thus, the capital employed provides a basis to test the profitability related to the source of long-term funds. A comparison of this ratio with similar firms, with the industry average and overtime would provide sufficient insight onto how efficiency the long-term funds of owners and creditors are being used. The higher the ratio, the more efficient is the use of capital employed.
NET PROFIT AFTER TAX/EBIT ROC = Average Total Capital Employed X 100
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4. RETURN ON GROSS BLOCK:

This ratio establishes a relationship between net profit and gross fixed assets. This ratio emphasizes the profit on investment in fixed assets. This is express as follows: Net Profit RETURN ON GROSS BLOCK = Gross Block NET PROFIT is profit before Tax. Gross Block means Gross Fixed assets i.e., fixed assets before deducing depreciation. X 100
IMPORTANCE OF RATIO ANALYSIS

As a tool of financial management, ratios are of crucial significance. The importance of ratio analysis lies in the fact that is presents facts on a comparative basis and the enables the drawing inference regarding the performance of a firm. Ratio analysis is relevant in assessing the performance of a firm in respect to the following aspects. 1. Liquidity position 2. Long-term solvency 3. Operational efficiency 4. Overall profitability 5. Inter-firm comparison, and 6. Trend analysis
1. Liquidity position:
With the help of ratio analysis can be regarding the liquidity position of a firm. The liquidity position of a firm would be satisfactory if it is able to meet its current obligations when they become due. A firm can be said to have the ability to meet its short-term liabilities if it has sufficient liquid funds to pay the interest on its short-maturing debt usually within a year as well as to repay the principal. This ability is reflected in the liquidity ratio of a firm. The liquidity ratios are particularly useful in credit analysis by banks and other suppliers of short-term loans.
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2. Long-term solvency:
Ratio analysis is equally useful for assessing the long-term financial viability of a firm. This aspect of the financial position of a borrower is of concern to the long-term creditors, security analysts and the present and potential owners of a business. The long-term solvency is measured by the leverage/capital structure and profitability ratios, which focus on earning power and operating efficiency. Ratio analysis reveals the strength and weakness of a firm in this respect. The leverage ratios, for instance, will indicate whether a firm has a reasonable proportion of various sources of finance or if it is heavily loaded proportion of various sources of finance or if it is heavily loaded with debt in which case its solvency is exposed to serious strain. Similarly, the various profitability ratios which case its solvency are exposed to serious strain. Similarly, the various profitability ratios would reveal whether or not the firm is able to offer adequate return to its consistent with the risk involved.
3. Operational efficiency:
Another dimension of the usefulness of the ratio analysis, relevant from the viewpoint of management, is that it throws light on the degree of efficiency in the management and utilization of its assets. The various activity ratios measure this kind of operational efficiency.
4. Overall profitability:
Unlike the outside parties, which are interested in one aspect of financial position of a firm, the management is constantly concerned about the over-all profitability of the enterprises. That is, they are concerned about the ability of the firm to meet its short-term as well as long-term obligations to its creditors, to ensure a reasonable return to its owners to its owners and secure optimum utilization of the assets of the firm. This is possible if an integrated view is taken and the entire ratios are considered together.
5. Inter-firm comparison:
Ratio analysis not only throes light on the financial position of affirm but also serves as a stepping stone to remedial measures. This is made possible due to inter-firm comparison and
comparison with industry averages. A single figure of a particular ratio is meaningless unless it is related to some standard or norm. One of the popular techniques is to compare the ratios of a firm with the industry average. An inter-firm comparison would demonstrate the firms position via-its competitors.
6. Trend analysis:
Finally, ratio analysis enables a firm to consider the time dimension. In other words, whether the financial position of firm is a improving or deteriorating over the years. This is made possible by the use of trend analysis. The significance of a trend analysis of ratios lies in the fact that the analysis can know the direction of movement is, whether the movement is favorable or unfavorable. For example, the ratio may be low as compared to the norm but the trend may be upward. On other hand, though the present level may be satisfactory but the trend may be a declining one.
LIMITATIONS OF RATIO ANALYSIS:

Ratio Analysis is a widely used tool of financial analysis. Yet, it suffers from various limitations. The operational implication of this is that while using ratios, the conclusions should not be taken on their face value. Some of the limitations, which characterize ratio analysis, are; Difficulty in comparison Impact of inflation, and Conceptual Diversity
1. Difficulty in comparison:One serious limitation of ratio analysis arises out of the difficulty associated with their comparability. One technique that is employed is inter-firm comparison. Nevertheless, such comparison is vitiated by different procedures adopted by various firms. Difference in basis of inventory valuation (eg:-last in first out, average cost and cost); Different depreciation methods (i.e. straight line Vs written down basis); Estimated working life of assets, particularly of plant and equipment;
Amortization of deferred revenue expenditure such as preliminary expenditure and discount on issue of shares. Capitalization of lease Treatment of extraordinary items of income and expenditure; and so on secondly apart from different accounting procedures, companies may have different accounting procedures, implying differences in the composition of assets, particularly current assets. For these reasons, the ratio of two firms may not be strictly comparable.
2. Impact of inflation:
The second major limitation of the ratio analysis is a tool of financial analysis is associated with price level changes. This in fact is a weakness of the traditional financial statements, which are based on historical cost. An implication of this feature of the financial statements as regards ratio analysis is that assets acquired at different periods are, in effect, shown at different prices in the balance sheet, as they are not adjusted for changes in the price level. As a result, ratio analysis will not yield strictly comparable and therefore, dependable results.
3. Conceptual Diversity:The factor that influence the usefulness of ratios is that there is difference of opinion regarding the various concepts used to compute the Ratios. There is always room for diversity of opinion as to what constitutes shareholders equity, debt, assets, and profit and so on Finally, ratios are only a post-mortem analysis of what has happened between two balance sheet dates. For one thing, the position in the interim period is not revealed by ratio analysis. Moreover, they give no clue about the future. In brief, ratio analysis suffers from serious limitations. The analyst should not be carried away by its over simplified nature, easy computation with high degree of precision. The reliability and signification attached to ratios will largely depended upon the quality of data on which they are based. They are as good as the data itself. Nevertheless, they are an important tool of financial analysis.
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Precautions for use of ratios:

The calculation of ratios may not be a difficult task but their use is not easy. The information on which these are based on the constraints of financial statements, objectives for using them, the caliber of the analyst, etc, are important factors, which influence the use of ratios. Following guidelines/factors may be kept in mind interpreting various ratios. The reliability of ratio is linked to the accuracy of information in financial statements. Before calculating ratios one should see whether proper concepts and conventions are used for preparing financial statements of not. Competent auditors should properly audit the statements. The purpose of the user is also important for the analysis of ratios. A creditor, a banker, an investor, a shareholder, all has different objects for studying ratios. The purpose (or) object for which ratios are required to be studied should always be kept in mind for studying various ratios. Different objects may require the study of different ratios. Another precaution in ratio analysis is the proper selection of appropriate ratios. The ratios should match the purpose for which these are required. Calculating a large number or ratios without determining their need in the present context may confuse the thing used instead of solving them. Only those ratios should be selected which can throw proper light on the matter to be discussed. Unless otherwise the ratios calculated are compared with, certain standards one will not be reach at conclusions. These standards may be a rule of thumb as in current ratio (2:1), may be industry standards, may be projected ratios etc, the comparison of calculated ratios with the standard will help the analyst in forming his opinion about financial situation of the concern. The ratios are only the tools of analysis but their interpretation will depend upon the caliber and competence of the analyst. He should be familiar with various financial statements and the signification of changes etc. A wrong interpretation may create havoc for the concern since wrong conclusions may bad to wrong decisions. The utility of ratios is linked with expertise of the analyst. The ratios are only guidelines for the analyst; he should not base his decisions entirely on them. He should study any other relevant information, situation in the concern, general economic environment etc., before reaching financial conclusions.
The study of ratios in isolation may not always prove useful. The interpretation should use the ratios as guide and may try to solicit any other relevant information which helps is reaching a correct decision.
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1)
Current ratio:
Current assets Current liabilities (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Current assets 3,982.71 14,410.40 22,543.00
Current liabilities 2,466.28 2,589.72 11,833.14
Ratio 1.1648 5.5644 1.9050
Interpretation
As a rule, the current ratio with 2:1 (or) more is considered as satisfactory position of the firm. In the year 2007-08 it is more than the satisfactory level, the huge increase in current liabilities resulted in increase in the ratio, which is above the benchmark level of 2:1 which shows the comfortable position of the firm. And in the year 2008-09 the current ratio is below the satisfactory level. And the company should have to increase its current assets. GRAPHICAL REPRESENTATION
Current Ratio
6 5 4 3 2 1 0 2006-07 2007-08 2008-09 Current Ratio
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2)
Quick ratio:
=
Years 2006-07 2007-08 2008-09
Quick assets (Rs in lakhs) Current liabilities Quick assets 3,321.09 13,052.22 13,129.66 Current liabilities 2,466.28 2,589.72 11,833.14 Ratio 1.3466 5.0400 1.1095
Interpretation
Quick Assets = Current Assets Inventory
Quick ratio is the ratio of quick assets to current liabilities. A ratio of 1:1 for quick assets and current liabilities is considered as idle. A very high quick ratio is also not advisable as funds can be more profitability employed. Higher the ratio higher the short term solvency of the firm. The companys quick ratio in 2007-08 is 5.0400:1, which is higher than the standard ratio. And in the year 2008-09 the ratio is 1.1095:1, which is more nearer to the standard ratio. So the company has to maintain same level quick assets. GRAPHICAL REPRESENTATION
Quick Ratio
6 5 4 3 2 1 0 2006-07 2007-08 2008-09 Quick Ratio
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3)
Cash ratio:
Cash
Current liabilities (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Cash 1,413.85 167.67 1,546.78
Current liabilities 2,466.28 2,589.72 11,833.14
Ratio 0.5732 0.0647 0.1307
Interpretation
The cash ratio of the company in the year 2007-08 is 0.0647:1 and in the year 2008-09 is 0.1307:1, which are not meeting the standard cash ratio 0.5:1, which are not near to standard ratio 0.5:1 lack of immediate cash may not matter if the firm can stretch its payment or borrow money at short notice if it is not able to do this, firm should maintain adequate cash and bank balance to meet short term obligations. GRAPHICAL REPRESENTATION
Cash Ratio
0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 Cash Ratio
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4)
Networking capital ratio: Networking capital
=
Capital employed (Rs in lakhs) Years 2006-07 2007-08 2008-09 Networking capital 1516.43 11,820.14 10,709.86 Capital employed 30,950.75 60,770.56 79,413.81 Ratio 0.0489 0.1945 0.1348
Interpretation
This ratio shows the how much capital is used as working capital out of the total capital of the company. This ratio shows the how much capital is used as working capital out of the total capital of the company. In the year 2006-07 out total capital 4.89% and in the year 2007-08 out of total capital 19.45% and in the year 2008-09 out of total capital 13.48% capital is used as networking capital. GRAPHICAL REPRESENTATION
Networking capital Ratio

0.25 0.2 0.15 0.1 0.05 0 2006-07 2007-08 2008-09 Networking capital Ratio
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5)
Working capital turnover ratio:
Sales Networking capital (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Sales 2,770.17 12,092.17 35,826.94
Networking capital 1,516.43 11,820.14 10,709.86
Ratio 1.8267 1.0230 3.0651
Interpretation
The companys sales are increasing dramatically from year2006-07 2,770.17 lakhs 2007-08 12,092.17 lakhs to year 2008-09 35,826.94 lakhs. But the working capital of the company is decrease year to year. Working capital is used in the business for producing the goods to be sold. This ratio shows the firms ability in generating sales from all financial resources committed to working capital. The ratio indicates the account of one rupee investment in working capital. GRAPHICAL REPRESENTATION
Working capital turnover Ratio

3.5 3 2.5 2 1.5 1 0.5 0 2006-07 2007-08 2008-09 Working capital turnover Ratio
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6)
Debtors turnover ratio:
Sales Debtors (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Sales 2,770.17 12,092.17 35,826.94
Debtors 410.04 3,597.52 2,500.78
Ratio 6.7558 3.3612 14.3263
Interpretation
Debtors turnover ratio indicates the number of times the debtors turned each year. A high turnover indicates an efficient credit management system and the company is able to convert its receivables into cash. And the BMMs debtors turnover ratio has decreasing from the year 2006-07 6.7558 to year 2007-08 3.3612 and again increase to year 2008-09 14.3263. GRAPHICAL REPRESENTATION
Debtors turnover Ratio

16 14 12 10 8 6 4 2 0 2006-07 2007-08 2008-09 Debtors turnover Ratio
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7)
Average collection period:
Debtors *No. of days in a year Sales (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Debtors 410.04 3,597.52 2,500.78
Sales 2,770.17 12,092.17 35,826.94
Ratio 15 days 108 days 25 days
Interpretation
This ratio indicates the extent to which the debts have been collected in time. It gives the average debt collection period. We use this ratio to find out whether their borrowers are paying on time. From the table it is found that in the year 2006-07 it is 15days and in the year 2007-08 it is increase to108 days and in the year 2008-09 it is decreased to 25 days. GRAPHICAL REPRESENTATION
Average collection period

120 100 80 60 40 20 0 2006-07 2007-08 2008-09 Average collection period
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8)
Inventory turnover ratio:
Sales Avg. inventory (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Sales 2,770.17 12,092.17 35,826.94
Avg. inventory 661.61 1,358.18 9,413.34
Ratio 4.1870 8.9032 3.8059
Interpretation
This ratio indicates whether investment in inventory is efficiently used or not and whether the investment is within proper limits. From the table it is found that the Inventory turnover Ratio of BMM had some fluctuations in the starting of the study period then it had a decline in it. Hence the efficiency of inventory control in BMM shows a satisfactory position. GRAPHICAL REPRESENTATION
Inventory turnover Ratio

10 9 8 7 6 5 4 3 2 1 0 2006-07 2007-08 2008-09
Inventory turnover Ratio
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9)
Net asset turnover ratio[fixed assets turnover ratio]:
Sales Net assets (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Sales 2,770.17 12,092.17 35,826.94
Net assets 29,208.13 43,548.09 68,705.75
Ratio 0.0948 0.2776 0.5214
Interpretation
The fixed assets turnover ratio indicates the number of times fixed assets has been fixed over. The highest the ratio the more efficient has been the utilization of fixed assets. On the other hand a low turnover ratio might be an indication of over capitalization or inefficient use of fixed assets. From the above graph it can be interpreted that the ratio has been increasing for the past three years i.e. 2006-09. It indicates that the company is having more efficiency to utilize fixed assets. GRAPHICAL REPRESENTATION
Net asset turnover Ratio

0.6 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 Net asset turnover Ratio
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10)
Current asset turnover ratio:
Sales Current asset (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Sales 2,770.17 12,092.17 35,826.94
Current assets 3,982.71 14,410.40 22,543.00
Ratio 0.6955 0.8391 1.5892
Interpretation
The current assets turnover ratio indicates the number of times current assets has been utilized for short time. The highest the ratio the more efficient has been the utilization of current assets. On the other hand a low turnover ratio might be an indication of over capitalization or inefficient use of current assets. From the above graph it can be interpreted that the ratio has been increasing for the past three years i.e. 2006-09. It indicates that the company is having more efficiency to utilize current assets. GRAPHICAL REPRESENTATION
Current asset turnover Ratio

1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2006-07 2007-08 2008-09 Current asset turnover Ratio
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11)
Net profit ratio:
Net profit after tax Sales (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Net profit after tax 223.18 19,650.22 7,907.50
Sales 2,770.17 12,092.17 35,826.94
Ratio 0.0805 1.6250 0.2207
Interpretation
The net profit ratio is the overall measure of the firms ability to turn each rupee of income from services in net profit. If the net margin is inadequate the firm will fail to achieve return on shareholders funds. High net profit ratio will help the firm service in the fall of income from services, rise in cost of production or declining demand. This ratio establishes relationship between sales and net profit and it indicates the management efficiency in manufacturing, administrating and selling the products. From the above graph it can be interpreted that the ratio has been fluctuating from the three years. GRAPHICAL REPRESENTATION
Net profit Ratio

1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2006-07 2007-08 2008-09 Net profit Ratio
52
12)
Capital turnover ratio:
Sales Capital employed (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Sales 2,770.17 12,092.17 35,826.94
Capital employed 8,541.91 28,367.08 43,343.22
Ratio 0.3243 0.4262 0.8265
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company like profitability ratio. The sales are greatly increased compared with the previous year and the total capital employed includes capital and reserves & surplus. Due to huge increase in the net profit the capital employed is also increased along with sales. Both are affected in the increment of the ratio of current year. GRAPHICAL REPRESENTATION
Capital turnover Ratio

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 Capital turnover Ratio
53
13)
Return on investments:
Net profit after tax Share holders fund (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Share holders fund 8,541.91 28,367.08 43,343.22
Ratio 0.0261 0.6927 0.1824
Interpretation
This is the ratio between net profits and shareholders funds. The ratio is generally calculated as percentage multiplying with 100. The net profit is decreased due to the increase in the expenses and the shareholders funds are increased because of reserve & surplus. So, the ratio is fluctuated in the three years. GRAPHICAL REPRESENTATION
Return on investments Ratio

0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 Return on investments Ratio
54
14)
Proprietary Ratio:
Share holders fund Total assets (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Share holders fund 8,541.91 28,367.08 43,343.22
Total assets 33,190.82 57,958.49 91,248.75
Ratio 0.2573 0.4894 0.4750
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to total assets. It determines the long-term solvency of the firm. This ratio indicates the extent to which the assets of the company can be lost without affecting the interest of the company. There is increase in the capital from the year 2006-09. The share holders funds include capital and reserves and surplus. The reserves and surplus is increased due to the increase in balance in profit and loss account, which is caused by the increase of sales. The fixed assets are reduced because of the depreciation and there are major increments in the fixed assets. The current assets are increased compared with the year 2006. Total assets are also increased than precious years, which resulted an increase in the ratio than older.
Proprietary Ratio
0.6 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 Proprietary Ratio
55
15)
Reserves and surplus to capital ratio:
Reserves and surplus Capital (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Reserves and surplus 3539.91 23,365.08 33,343.22
Capital 5,002.00 5,002.00 10,000.00
Ratio 0.7076 4.6711 3.3343
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio indicates a conservative dividend policy and vice-versa. Higher the ratio better will be the position. The reserves & surplus is increased in the year 2009, due to the in the year 2008 the profit is increased. And the capital is increased from the year 2008. So the increase in the reserves & surplus caused a greater increase in the current years ratio compared with the older.
GRAPHICAL REPRESENTATION
Reserves and surplus to capital Ratio

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2006-07 2007-08 2008-09
Reserves and surplus to capital Ratio
56
16)
Return on total assets:
Net profit after tax Total assets (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Total assets 33,190.82 57,958.49 91,248.75
Ratio 0.0067 0.3390 0.0866
Interpretation
This is the ratio between net profit and total assets. The ratio indicates the return on total assets in the form of profits. The net profit is increased in the current year because of the increment in the sales due to the increase in Operations & Maintenance fee. The fixed assets are increased due to the major increments in fixed assets and the current assets are increased because of sundry debtors and that affects an increase in the ratio compared with the last years. GRAPHICAL REPRESENTATION
Return on total assets Ratio

0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2006-07 2007-08 2008-09 Return on total assets Ratio
57
17)
Debt equity ratio:
Total debt Total owners equity (Rs in lakhs)
Years 2006-07 2007-08 2008-09
Total debt 15,408.64 27,405.48 35,570.58
Total owners equity 8,541.91 28,367.08 43,343.22
Ratio 1.8038 0.9661 0.8206
Interpretation
The ideal ratio of Debt-Equity ratio is 1:2. BMM is not having any outside debt except from Banks. The ratio is ranging from1.8038, 0.9661 to 0.8206 which can be said well. GRAPHICAL REPRESENTATION
Debt-Equity Ratio
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2006-07 2007-08 2008-09
Ratio
58
SUMMARY
Sl No. Particulars Ratios 2006-07
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Current ratio Quick ratio Cash ratio Networking capital ratio Working capital turnover ratio Debtors turnover ratio Average collection period Inventory turnover ratio Net asset turnover ratio Current asset turnover ratio Net profit ratio Capital turnover ratio Return on investments Proprietary Ratio Reserves and surplus to capital ratio Return on total assets Debt equity ratio 1.1648 1.3466 0.5732 0.0489 1.8267 6.7558 15 days 4.1870 0.0948 0.6955 0.0805 0.3243 0.0261 0.2573 0.7076 0.0067 1.8038
2007-08
5.5644 5.0400 0.0647 0.1945 1.0230 3.3612 108 days 8.9032 0.2776 0.8391 1.6250 0.4262 0.6927 0.4894 4.6711 0.3390 0.9661
2008-09
1.9050 1.1095 0.1307 0.1348 3.0651 14.3263 25 days 3.8059 0.5214 1.5892 0.2207 0.8265 0.1824 0.4750 3.3343 0.0866 0.8206
59
Findings:
o The current ratio has increasing as 5.5644 during 2008 and decreased 1.9050 during 2009 of which indicates a continuous balancing in both current assets and current liabilities. o The quick ratio is also in a decreasing trend throughout the period 2006-09 resulting as 1.3466, 5.0400 and 1.1095. The companys present liquidity position is satisfactory. o The cash ratio has been decreased to 0.0647 in 2008 and increased to 0.1307 year 2009. o Networking capital ratio increased from 0.0489 to 0.1945 in 2008 and again decreased to 0.1348, in the year 2009. o The working capital ratio decreased from 1.8267 to 1.0230 in the year 2008 and increased in the year 2009 to 3.0651. o Debtors turnover ratio decreased from 6.7558 to 3.3612 in the year 2008 and increased in the year 2009 to 14.3263. o Average collection period increased from 15 days to 108 days in the year 2008 and decreased to 25 days in the year 2009. o Inventory turnover ratio increased from 4.1870 to 8.9032 and decreased to 3.8059 from year 2006-09. o The net asset turnover ratio [fixed assets turnover ratio] is in increasing trend from the year 2006-09 (0.0948, 0.2776 and 0.5214). It indicates that the company is efficiently utilizing the fixed assets. o The current asset turnover ratio is in increasing trend from the year 2006-09 (0.6955, 0.8391 and 1.5892). It indicates that the company is efficiently utilizing the current assets. o The net profit ratio is in fluctuation manner. It increased in the previous year and decreased in current year from 0.0805 1.6250 to 0.2207. o The capital turnover ratio is increased form 2006-09 (0.3243, 0.4262 to 0.8265). o The return on investment is increased from 0.0261 to 0.6927 increased to 0.1824 in current compared with the previous year. Both the profit and shareholders funds increase didnt cause an increase in the ratio.
60
o The proprietary ratio has shown an increasing trend from 0.2573 to 0.4894 after that the proprietary ratio is lightly decreased compared with the last year as 0.4894 to 0.4750. So, the long term solvency of the firm is decreased. o The Reserves and Surplus to Capital ratio is increased from 0.7076 to 4.6711 and decreased to.3343. The capital is constant, but the reserves and surplus is decreased in the current year. o Return on total assets shown an fluctuating trend in three years. o Debt equity ratio is decreased from three years.
61
Suggestions:
The current Ratio of 2:1 is considered normally satisfactory. BMM should try to improve the current ratio. So it should invest large amount in current ratio, in order to maintain liquidity and solvency position of the concern. BBM should try to match their Cash with the sales. In case of surplus Cash, it should be invested either in securities or should be used to repay borrowings. The company should try to prepare a proper ageing schedule of debtors. This will help them to reduce the bad debts and speed up collection efforts. The company should be prompt in making payments so as to enjoy cash discount opportunities The company should determine the optimum cash balance to be kept. The company followed an aggressive policy of financing working capital should try to finance 50% of their working capital using long term source and improve their status. The company should try to follow a matching policy for financing current Assets (i.e.) using both long term and short-term sources of finances. After the analysis of Financial Statements, the company status is better, because the Net working capital of the company is doubled from the last years position. The company profits are decreased in the current year; it is better to increase the sales. The company is utilising the fixed assets, which majorly help to the growth of the organisation. The company should maintain that perfectly. The performance of BMM regarding the traffic handled, labor productivity and the performance of plant is good. However, more facilities are yet to be provided to meet the requirements of increased traffic. The liquidity position of BMM is satisfactory at present. It is above the requirements during the years 2008 and 2009 as depicted by the Current and Quick ratio. It is better to maintain at the present position.
62
BALANCE SHEET AS AT 31ST MARCH, 2009

I SOURCES OF FUNDS Shareholders Funds: (a) Share Capital (b) Reserves & Surplus Share Application Money-Pending Allotment Loans Funds: (a) Secured Loans (b) Unsecured Loans Deferred Tax Liability(Net) Total I APPLICATION OF FUNDS Fixed Assets: (a) Gross Block (b) Less: Accumulated Depreciation (c) Net Block (d) Capital Work-in-Progress Investments Current Assets, Loans and Advances: (a) Inventories (b) Sundry Debtors (c) Cash and Bank Balances (d) Loans, Advance and Deposits Total (A) Less: Current liabilities and Provisions: (a) Current Liabilities (b) Provisions Total(B) Net Current Assets(A-B) Intangible Assets: (To the extent not written off or adjusted) Gross Carrying Amount Less: Cumulative Amortization Net carrying amount Miscellaneous Expenses Total
2008-09 10,000.00 33,343.22 43,343.22 500.00 24,741.40 10,829.18 35,570.58 2,272.01 81,685.82
2007-08 5,002.00 23,365.08 28,367.08 4,998.00 19,351.66 8,053.81 27,405.48 455.82 61,226.38
2006-07 5,002.00 3,539.91 8,541.91 7,000.20 11,034.05 4,374.60 15,408.65 111.85 31,062.60
II III
IV
II III
64,721.97 3,646.18 61,075.79 7,629.96 68,705.75 2,080.48 9,413.34 2,500.78 1,546.78 9,082.10 22,543.00 11,709.24 123.90 11,833.14 10,709.86
17,947.46 576.12 17,371.34 26,176.75 43,548.09 5,857.61 1,358.18 3,597.52 167.67 9,287.03 14,410.40 2,434.19 155.53 2,589.72 11,820.68
8,955.15 60.73 8,894.43 20,313.70 29,208.13 302.60 661.62 410.04 1,413.85 1,497.20 3.982.71 2,459.06 7.22 2,466.28 1,516.43
IV
273.76 (84.03) 189.73 81,685.82
36.83 (36.83) Nil 61,226.38 35.45 31,062.60

63
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009
I INCOME Sales Less: Excise Duty Net Sales Share of Income from Bharat Mines and Minerals Other Income EXPENDITURE Cost of Material Consumed Manufacturing Expenses Administration Expenses Employees remuneration & Benefits Selling and Distribution Expenses Financial Expenses Depreciation Amortization of Intangible Assets Miscellaneous Expenses Profit /(loss) for the year before Taxation Less: Prior Period Adjustments Profit before Income tax LESS:- Provision for Taxation: Provision for income tax Current year Fringe Benefit Tax Deferred Tax(As per AS 22) (excess)/Short Provision for tax Earlier Years Profit After Tax Profit brought forward from privious year PAT carried to Balance Sheet Earnings Per Share Basic & Diluted EPS 2008-09 39,003.93 3,176.99 35,826.94 9,100.93 178.85 45,106.72 22,440.02 4,665.42 974.21 1,133.06 3,300.47 1,538.38 1,749.87 47.20 35,848.63 9,258.09 64.44 9,188.65 33.33 15.77 1,190.67 41.39 7,907.50 Nil 7,907.50 15.64 2007-08 12,092.17 Nil 12,092.17 19,343.32 19.93 31,455.42 7,926.36 371.48 429.16 347.04 1,042.53 668.31 532.17 36.83 11,353.87 20,101.55 4.53 20,097.02 100.00 11.90 343.97 Nil 19,650.22 Nil 19,650.22 39.28 2006-07 2,770.17 Nil 2,770.17 Nil 440.70 3,210.88 2,174.74 543.26
II
67.84 25.86 58.57 12.22 2,882.48 328.39 155.62 172.77 145.73 4.60 110.49 Nil 223.18 3,316.73 3,539.91 0.45
III IV V
VI
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EXECUTIVE SUMMARY

Financial Ratio analysis

OBJECTIVE OF THE STUDY:

SCOPE OF THE STUDY:

LIMITATIONS OF THE STUDY

Financial Ratio analysis

Sector structure/Market size

Financial Ratio analysis

2010 Budget Steel Industry Expectations

Financial Ratio analysis

Key Drivers of Steel Industry

3) Auto components Industry:

6) Oil & Gas Industry:

Financial Ratio analysis

Financial Ratio analysis

Financial Ratio analysis

About BMM ISPAT PVT.LTD.:

Financial Ratio analysis

News and events of the BMM ISPAT PVT.LTD.,

Vision and Mission:

Hedge over others

BMM ISPAT PVT.LTD. Management:

Financial Ratio analysis

Some of the awards include

Products of the BMM ISPAT PVT.LTD.:

Financial Ratio analysis

Railway Sidning Water Supply Pipeline

Financial Ratio analysis

FINANCIAL RATIO ANALYSIS

Financial Ratio analysis

Ratios can be classified as follows Ratios Ratios

1) Liquidity ratios 2) Leverage ratios 3) Activity ratios 4) Profitability ratios

Financial Ratio analysis

Functional classification in view of financial management

Long term solvency ratio

Composite or Mixed ratios:

Long term solvency and leverage ratios:

Financial Ratio analysis

Financial Ratio analysis

TOTAL TANGIBLE ASSETS

INTEREST COVERAGE RATIO:

FIXED ASSETS TO NET WORTH:

INVENTORY TURNOVER RATIO:

DEBTORS TURNOVER RATIO:

DEBTORS COLLECTION PERIOD RATIO:

WORKING CAPITAL TURNOVER RATIO:

Financial Ratio analysis

PROFITABILITY RATIOS IN RELATION TO SALES

GROSS PROFIT MARGIN:

NET PROFIT MARGIN RATIO:

CASH MARGIN RATIO:

OPERATING MARGIN RATIO:

Financial Ratio analysis

This ratio is expressed as operating profit to sales

Operating profit OPERATING MARGIN RATIO: = Sales X 100

PROFITABILITY RATIOS IN RELATION TO INVESTMENT:

EBIT (1-T) ROI =RON = NET Assets

2. RETURN ON NET WORTH:

Financial Ratio analysis

4. RETURN ON GROSS BLOCK:

IMPORTANCE OF RATIO ANALYSIS

Financial Ratio analysis