INTRODUCTION

The financial statement provides the basic data for financial performance analysis.
The financial statements provide a summarized view of the financial position and operations
of a firm. Financial analysis (also referred to as financial statement analysis or accounting
analysis) refers to an assessment of the viability, stability and profitability of a business. The
analyst first identifies the information relevant to the decision under consideration from the
total information contained in the financial performance. Therefore, much can be learnt about
a firm from a careful examination of its financial performance as invaluable documents and
performance reports.
The analysis of financial performance is an important aid to financial analysis. They
provide information on how the firm has performed in the past and what is its current
financial position. Financial analysis is the process of identifying the financial strengths and
weakness of the firm from the available accounting data and financial performance. The
analysis is done by establishing relationship between the different items of financial
performance.
The focus of financial analysis is on key figures in the financial performance and the
significant relationship that exists between them. The analysis of financial performance is a
process of evaluating relationship between component parts of financial performance to
obtain a better understanding of the firms position and performance.
The first task of financial analyst is to select the information relevant to the decision
under consideration from the total information contained in the financial statement. The
second step involved in financial analysis is to arrange the information in a way to highlight
significant relationships. The final step is interpretation and drawing of inferences and
conclusions. In brief, financial analysis is the process of selection, relation, and evaluation.
NEED OF STUDY
The Financial Performance is mirror which reflects the financial position and
strengths or weakness of the concern. The Non- Banking Financial Company has been
witnessed intense competition from domestic banks and international banks. Every business
needs to view the financial performance analysis.

The study on effectiveness of operational and financial performance of Sundered

finance limited is conducted to measure the overall performance of company. The financial
analysis strengths the firms to make their best use, and to be able to spot out financial
weakness of the firm to state suitable corrective actions.
This study aims at analyzing the overall financial performance of the company by
using various financial tools like Comparative Analysis, common size statement analysis,
Ratio Analysis, and Cash Flow Analysis.
OBJECTIVE OF THE STUDY
The following are the objectives of the study:
To measure the profitability of the firm.
To measure the managerial efficiency of the firm.
To forecast the future prospects of the firm.
To determine efficiency of utilization of fixed assets.
To evaluate the financial position (both liquidity & solvency).
To know the position of working capital.
To indicate future trends of the items in financial performances.
To analyze the performance of a business by establishing Relationships between the
items of balance sheet and the profit & loss account.

SCOPE OF THE STUDY

Financial performances provide meaningful, useful and valuable information
periodically regarding financial position and further prospects of the business
concern.
Various parties (for management, for the creditors & investors) interested can utilize
the information provided by the financial performances in MADHUCON SUGAR &
POWER LIMITED.
The study was limited to five years for the purpose of carrying out of the analysis.
The data available in the financial analysis have been grouped and arranged properly.
The interpretation stage of accounting process demands the person to posses some
specialized knowledge, specialized skills, analytical abilities, reasoning etc., an
accountant, who records, classifies and summarizes the transactions of financial
nature will, treats the liabilities as burdens and the assets as strengths of the
organization.

RESEARCH METHODOLOGY
.A research design is the arrangement of conditions for collection and analysis of data
in a manager that aims to combine for collection and analysis of data relevance to the
research purpose with economy in procedure.
SOURCES OF DATA
Data we collected based on two sources.
Primary data.
Secondary data.
Primary data
The Primary data are those informations, which are collected afresh and for the first
time, and thus happen to be original in character.
3

In this project the primary data has been collected by directly consulting the manager
Secondary Data
The Secondary data are those which have already been collected by some other
agency and which have already been processed. The sources of Secondary data are Annual
Reports, browsing Internet, through magazines.
1. It includes data gathered from the annual reports of Madhucon sugar and power
Industries limited.
2. Articles are collected from official website of Madhucon sugar and power Industries
limited.

LIMITATIONS OF THE STUDY

The current study is based mainly on the annual reports and audited accounts as
provided by the company. So the scope of the study falls within limitations of the
accounting practical of the company.
Some information has obtained through oral discussion with the management of the
company. So there might be an element of personal biases.
The current study is mainly concerned with the internal analysis and does not
conclude the external analysis. The data taken for comparison is only for five years
i.e. limited period of time.
One of the main limitations of financial analysis is that it involves analyzing the
financial performances prepared on the basis of historical data and at a point of time.
Therefore, it fails to indicate the future trends of the items of financial performances.

INTRODUCTION
India has been known as the original home of sugar and sugarcane. Indian mythology
supports the above fact as it contains legends showing the origin of sugarcane. India is the
second largest producer of sugarcane next to Brazil. Presently, about 4 million hectares of
land is under sugarcane with an average yield of 70 tonnes per hectare.
India is the largest single producer of sugar including traditional cane sugar
sweeteners, khandsari and Gur equivalent to 26 million tonnes raw value followed by Brazil
in the second place at 18.5 million tonnes. Even in respect of white crystal sugar, India has
ranked No.1 position in 7 out of last 10 years.
Traditional sweeteners Gur & Khandsari are consumed mostly by the rural population
in India. In the early 1930s nearly 2/3rd of sugarcane production was utilised for production
of alternate sweeteners, Gur & Khandsari. With better standard of living and higher incomes,
the sweetener demand has shifted to white sugar. Currently, about 1/3rd sugarcane production
is utilised by the Gur & Khandsari sectors. Being in the small scale sector, these two sectors
are completely free from controls and taxes which are applicable to the sugar sector.
The advent of modern sugar processing industry in India began in 1930 with grant of
tariff protection to the Indian sugar industry. The number of sugar mills increased from 30 in
the year 1930 - 31 to 135 in the year 1935-36 and the production during the same period
increased from 1.20 lakh tonnes to 9.34 lakh tonnes under the dynamic leadership of the
private sector.
The era of planning for industrial development began in 1950-51 and Government
laid down targets of sugar production and consumption, licensed and installed capacity,
sugarcane production during each of the Five Year Plan periods. The targets and
achievements during various plan periods are given below.
Sugars are a major form of carbohydrates and are found probably in all green plants.
They occur in significant amounts in most fruits and vegetables. There are three main simple
sugars sucrose, fructose and glucose. Sucrose is in fact a combination of fructose and glucose
and the body quickly breaks down into these separate substances.

The Need for Energy

All energy stored in food is derived originally from the sun and it is made by green
plant life. The sun's energy acts upon the green chemical "chlorophyll" in the leaves of plants
to produce sugars and starches from the carbon-dioxide in the atmosphere and the water from
the roots by a process known as Photosynthesis. These carbohydrates (starches and sugar)
acts as a plants food and energy supply. The energy need of human body is largely dependent
on the carbohydrates that are derived from plants.
A Balanced Diet
A balanced diet can come from a variety of different foods, calculated to give the
desired levels of carbohydrates, proteins, fats, vitamins and minerals. Nutritional scientists
advocate that carbohydrates should provide at least 50% of over energy requirements.
History
The discovery of sugarcane, from which sugar as it is known today, is derived dates
back unknown thousands of years. It is thought to have originated in New Guinea, and was
spread along routes to Southeast Asia and India. The process known for creating sugar, by
pressing out the juice and then boiling it into crystals, was developed in India around 500 BC.
Its cultivation was not introduced into Europe until the middle-ages, when it was
brought to Spain by Arabs. Columbus took the plant, dearly held, to the West Indies, where it
began to thrive in a most favorable climate.
It was not until the eighteenth century that sugarcane cultivation was began in the
United States, where it was planted in the southern climate of New Orleans. The very first
refinery was built in New York City around 1690; the industry was established by the 1830s.
Earlier attempts to create a successful industry in the U.S. did not fare well; from the late
1830s, when the first factory was built. Until 1872, sugar factories closed down almost as
quickly as they had opened. It was 1872 before a factory, built in California, was finally able
to successfully produce sugar in a profitable manner. At the end of that century, more than
thirty factories were in operation in the U.S.

Manufacturing Process and Technology

Sugar (sucrose) is a carbohydrate that occurs naturally in every fruit and vegetable. It
is a major product of photosynthesis, the process by which plants transform the sun's energy
into food. Sugar occurs in greatest quantities in sugarcane and sugar beets from which it is
separated for commercial use. The natural sugar stored in the cane stalk or beet root is
separated from rest of the plant material through a process known as refining.
For sugarcane, the process of refining is carried out in following steps:
Pressing of sugarcane to extract the juice.
Boiling the juice until it begins to thicken and sugar begins to crystallize.
Spinning the crystals in a centrifuge to remove the syrup, producing raw sugar.
Shipping the raw sugar to a refinery where it is washed and filtered to remove
remaining non-sugar ingredients and color.
Crystallizing, drying and packaging the refined sugar
Beet sugar processing is similar, but it is done in one continuous process without the
raw sugar stage. The sugar beets are washed, sliced and soaked in hot water to separate the
sugar -containing juice from the beet fiber. The sugar-laden juice is then purified, filtered,
concentrated and dried in a series of steps similar to cane sugar processing.
For the sugar industry, capacity utilization is conceptually different from that
applicable to industries in general. It depends on three crucial factors the actual number of ton
of sugarcane crushed in a day, the recovery rate which generally depends on the quality of the
cane and actual length of the crushing season.
Since cane is not transported to any great extent, the quality of the cane that a factory
receives depends on its location and is outside its control. The length of the crushing season
also depends upon location with the maximum being in south India.
Sugarcane in India is used to make either sugar, khandsari or gur. However, sugar
products produced worldwide are divided into four basic categories : granulated, brown,
liquid sugar and invert sugar.

Granulated: Granulated sugar is the pure crystalline sucrose. It can be classified into seven
types of sugar based on the crystal size. Most of these are used only by food processors and
professional bakers. Each crystal size provides unique functional characteristics that make the
sugar appropriate for the food processor's special need.
Sugar Industry in India
Sugar consumption rate is highest in India as shown in the statistics received from USDA
Foreign Agricultural Service. However, as per production is concerned, India has notched up
2nd position following Brazil, the largest sugar producer in the world.
The Indian sugar industry uses sugarcane in the production of sugar and hence maximum
number of the companies is likely to be found in the sugarcane growing states of India
including Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Andhra Pradesh.
Uttar Pradesh alone accounts for 24% of the overall sugar production in the nation and
Maharashtra's contribution can be totaled to 20%.
There are 453 sugar mills in India. Co-operative sector has 252 mills and private sector has
134 mills. Public sector boasts of around 67 mills.
Beginning of Sugar Industry in India
Sugar is made from sugarcane, which was arguably discovered thousands of years ago
in New Guinea. From there, the route was traced to India and Southeast Asia. It was India
which began producing sugar following the process of pressing sugarcane to extract juice and
boil it to get crystals.
It was in 1950-51 the government of India made serious industrial development plans
and set the targets for production and consumption of sugar. It projected the license and
installment capacity for the sugar industry in its Five Year Plans.
Types of Sugar Industry in India
The sugar industry can be divided into two sectors including organized and
unorganized sector. Sugar factories belong to the organized sector and those who produce
traditional sweeteners fall into unorganized sector. Gur and khandsari are the traditional
forms of sweeteners.
8

Manufacturing Process followed in Sugar Industry in India

Several steps are usually followed to produce sugar. These steps can be mentioned as
below:
Extracting juice by pressing sugarcane
Boiling the juice to obtain crystals
Creating raw sugar by spinning crystals in extractors
Taking raw sugar to a refinery for the process of filtering and washing to discard
remaining non-sugar elements and hue
Crystallizing and drying sugar
Packaging the ready sugar
Machinery Suppliers for Sugar Industry in India
Some of the suppliers that offer cutting-edge machines to the companies involved in
sugar industry of India are:
Sakthi Sugars Ltd
Sri Sujay Engineering Products
Sri Vijayalakshmi Industries
Murthy Industries
Parveen Perforaters & Allied Industries
Aeromen Engg Co
Kamla Foundry & Workshop
Tinytech Plants
Baba Vishwakarma Engineering Co. (P) Limited
About Andhra Pradesh Sugar Industry
Andhra Pradesh (AP) abounds in maximum number of private sector sugar companies in
India along with Tamil Nadu and Karnataka. In the year 1933-34, vacuum process was
adopted for sugar manufacturing in the state. Previously, the state government was planning
to support Cooperative sector as against other sectors. However, with passing time, a

considerable change in the policy was noticed. Letters of Intent (L.O.I.) were given to the
deserving entrepreneurs including 20 LOIs to the private sector companies.
This gradually resulted in major benefits for the state government as well as for India
as a whole. Today, Andhra Pradesh sugar industry ranks 3rd in terms of recovery and 5th in
terms of cane crushing. As per production capacity is concerned, Andhra Pradesh stands at
the position 5 in India.
The agricultural laborers who do sugarcane harvesting and cultivation are employed
in the sugar industry in Andhra Pradesh. Today, the unprecedented growth of this industry in
the state has led to the consolidation of village resources and has facilitated communication,
employment and transport system here.
Types of Sugar Industry in Andhra Pradesh
Andhra Pradesh sugar industry can be classified into two parts such as organized
sector including sugar mills and unorganized sector including manufacturers of gur (jaggery)
and khandsari. The unorganized sector is often referred to as the rural industry. The rural
industry plays major role in the level of production.
Directorate of Sugar and Commissionerate of Cane in Andhra Pradesh
Belonging to Industries and Commerce Department, the Directorate of Sugar and
Commissionerate of Cane has been vested with the power to guide and deal with the sugar
factories in Andhra Pradesh. It is the responsibility of the department to encourage sugarcane
farmers and to help this developing industry contribute effectively towards Gross State
Domestic Product (GSDP). The department also takes care of the technological
advancements of the industry.
Some of the major players in the Andhra Pradesh sugar industry are listed below:
Bhagwathi Khandasari Sugar Mills
Bhagwati Khandsari Sugar Mills
Bhagwati Khandasari Sugar Mills
N C S Sugars Ltd
The Kirlampudi Sugar Mills Ltd
Tirumala Khandasari Udyog
List of Sugar factories in AP & TELANGANA
10

Factory Name
Empee Sugars & Chemicals Ltd.
Ganpati Sugar Industries Ltd.,
Gayatri Sugars Limited
GMR Industries Limited
GSR Sugars Limited
K.C.P. Sugar & Industries
Corporation Ltd
K.C.P. Sugar & Industries
Corporation Ltd
Kakatiya Cement Sugar & Industries
Ltd

Village
NAYUDUPET
Fasalwadi / Kulbugoor
ADLOOR
YELLAREDDY
Sankili, Regidi
MAAGI

Nearest City
Sangareddy
Kamareddy
MAAGI

Vuyyuru
LAKSHMIPURAM
P E R U VAN C H A

Khammam
P U N G A N U R - 517
247
Khammam
Visakhapatnam

KBD Sugars & Distilleries Ltd

Mudipapanapalli

Madhucon Sugars Limited

Navabharat Ventures Ltd
NCS Sugars Limited
Nizam Deccan Sugars Limited
Sarita Sugars Limited
Sree Rayalseema Sugar & Energy Ltd
Sri Sarvaraya Sugars Ltd
Sri Venkateswara Co-op. Sugar
Fct.Ltd

RAJESWARAPURAM
S AM ALK O T
Latchayyapeta
MOMBAJIPALLY
Prabhagiripatnam
Ponnapuram
CHELLURU
GAJULAMANDYAM

Tirupati

The Andhra Sugars Ltd- Unit -II

Taduvai

Kakinada,
Visakhapatnam

The Chittoor Co-Operative Sugars

Ltd
The Chodavaram Co-op Sugars Ltd
The Cuddapah Co-op Sugars Ltd
The Kovur Co-op Sugar Factory Ltd

Deccan
Nandyal
Chelluru

Chittoor
GOVADA
Doulathapuram
POTHIREDDIPURA
M

Chodavaram
Cuddapah
Kovur

11

STATE-WISE AREA, PRODUCTION AND YIELD OF SUGARCANE (CANE)

2014-15
STATE

AREA
% OF PRODUCTIO
(M.HECT TOTA N
S)
L
(M.TONNES)
AREA

%
OF YIELD
TOTAL
(KGS/HEC
PRODUCTI T)
ON

%
COVERAG
E UNDER
IRRIGATIO
N (1995-96)

(1)

(2)

(3)

(4)

(5)

(6)

(12)

ANDHRA
PRADESH

0.19

4.8

13.73

72263

95

ASSAM

0.03

0.8

1.29

0.5

43000

BIHAR

0.11

2.8

5.04

1.8

45818

22.4

GUJARAT

0.17

4.3

11.84

4.3

69647

100

HARYANA

0.14

3.5

7.55

2.7

53929

97.2

KARNATAKA 0.31

7.8

28.33

10.3

91387

100

MADHYA
PRADESH

1.5

2.11

0.8

35167

97.3

MAHARASHT 0.46
RA

11.6

38.18

13.8

83000

100

ORISSA

0.02

0.5

1.14

0.4

57000

100

PUNJAB

0.13

3.3

7.33

2.7

56385

94.9

RAJASTHAN

0.02

0.5

1.16

0.4

58000

96.4

TAMIL NADU 0.32

8.1

35.68

12.9

111500

100

UTTAR
PRADESH

1.96

49.4

119.97

43.4

61209

51.4

WEST
BENGAL

0.03

0.8

1.83

0.7

61000

70.9

OTHERS

0.02

0.5

1.07

0.4

ALL-INDIA

3.97

100

276.25

100

69647

88.5

0.06

12

INTRODUCTION
The Palair cooperative sugars Ltd, Was registered on 12th march, 1976 for
establishment of vacuum pan sugar factory of 1250 tones, crushing capacity per day at
Rajeswarapuram in Palair lake layout area in Thirumalaypalem taluk of Khammam District.
The factory is located in economically backward area what soil is suitable for on cane with
easy transport; the area of operation of the factory consists of 108 villages situated with in
radius of 35 Kms. From the factory. It has recently localized so far a total area of 10932 acres
for cultivation of cane around the factory. The area has been distributed into three blacks in
ordered to irrigation of soil. The total cost of the project is about Rs. 10-00 crosses. The
crushing capacity of the project is 1.62,500 Metric tones in a annulment 1, 38, 125 Quintals
sugar production in a year.
Product

Sugar

Bi-products

Bagasse
Molasses
Filter cake

Bagasse is used as firewood to run Boilers

Molasses is used in the manufacturing of Distillers like Alcohol and spirits, Ethanol etc.,
Filter cake is used as manure for the agriculture.
Objectives of the Company
Manufacturing of white crystal sugar
To promote the agriculturists in that particular area
To utilize the harvest of sugar cane in that area
Improving the cultivation methods through giving better support to the farmers.
Issuing loans to farmers for productive and other similar purposes
To encourage self help thrift and co-operations among members

13

To undertake such other activities as are incidental and conducive to the development
of sugar cane, sugar and allied industries.
Progress in the post-dependence period before 1932, there were only 32 factories
producing about 1.6 lack tonns of sugar. India had to import annually 6 lakhs tonns of sugar.
The industry was granted tariff protection in 1932. As a result, production rose to 10 lakhs
tonns by 1937 and the number of operating factories to 137.
During the 1950's production of sugar was a little more than one million tonns the
government provided incentives for higher production and the output progressively increased
to nearly 4 million tonns in 1970-71, about 12 million tonns in 1990-91 and 16 million tonns
in 1995-96. [But declined to 12.7 million tonns during 1996-97]
INCLUDE EXPORTS:
Because of frequent controls decontrols, and re-controls by the government and
artificial regulation of market supplies by the industry and because of many administrative
blunders, sugar prices rose to record height and shot up to between 8/- o 11/- per kg in
different parts of the country in the eighties (80's), consequently, the govt, re-introduced the
dual price mechanism with partial control under this system the govt, fixed ratio of pay and
free sale sugar quota. The ratio was 45:55. It was received to 28:72. The increase in the free
sale sugar quota to 7.2% was to give boost to sugar production by sugar mills. The levy sugar
is sold to consumers thought fair price shops at lower price.
The free sale sugar quota is sold by sugar factories at higher prices in the open
market. The production and supply of sugar has been quite comfortable during the last two
decades. Sugar output during 1990-91 was nearly 12 million tones and registered a record
high 15.3 million tonns during 1996-97 while production of sugar was steadily rising,
consumption too-had been rising but at a lower rate. As a result the stocks at the lose of the
sugar year was increasing 2.2 million tonns in the beginning of 1990-91 and 7.1 million tonns
in 1996-97. Despite huge supplies stocks the country was unable to export much because the
price of Indian sugar was much higher than international price.
Sugar scam in 93-94 during 1991-93 and 1993-94 there was and unexpected problem
for the Indian sugar industry. Because have climatic and the unfavorable conditions, average
under sugarcane came down considerably specially in Maharastra and production of sugar
declined to 10.6 and 9.8 million on tonns respectively.
14

At one time the govt was confident that the supply position and price of sugar had
sky-rocketed (Rs. 18 to Rs 20 per kg.) at the end of 1993-94 and in the first quarter of 199495. Thus forcing the govt, to import large quantity of sugar just the mere information that
India was entering the international price of sugar to the great disadvantage of India. This was
referred to as the sugar muddle or the sugar scam.
The sugar industry was deli censed in August in 1998. However, this announcement
was not received with much enthusiasm by the sugar units. This is partly due to the fact that
delicenscement the with withdrawal of incentives that free licensing policy had provided and
partly because even in the post deli censing scenario, a number of controls remain. The post
deli censing controls one as follows.
Policy of sugarcane fixed by the govt.
Most stated enforce there own sugarcane price (SAP)
The SAP has to be paid to farmers within 15 days of purchase.
30% of sugar production has to be farmers within 15 days purchase.
30% of sugar production has to be sold to govt. at officially -determined below cost
prices.
The sale of the remaining 70% is controlled through a system of monthly
quotas fixed by
The centers.
Sugar miles obliged to sell at least 45% of the quota every for night.
30% levy sugar also subject to monthly release orders.
Price and movement of molasses controlled by state government.
Export of sugar subject to the approval of the centra! government.Export of molasses
has to be cleared by state govt.
PROBLEMS OF SUGAR INDUSTRIES:
Problems of mounting losses.

15

Fixation of high sugarcane prices by the state govt.

The question of minimum economic size.
Old machinery.
Low sugar recovery.
Failure to follow a consistent policy.
Completion from cheaper import.
SUGAR LICENSING POLICY:
The govt. Of India issues periodically guidelines for licensing new sugar factories and for
expansion of existing sugar factories. The guidelines (announced in July 1990) where
designed to give a boost to the sugar industry.

Licenses for new factories would be issued subject to the provision that there is no sugar
factory with in a radius of 15 km.

The new sugar factories would be licensed for a minimum crushing capacity of 2500 tons
per day.

New licensed would be issued on the condition that cane prices would be payable on the
basis of sucrose content of the sugarcane.

Preference in licensing is to given to proposals from the co-operative and the public
sector rather than from the private sector.

Licenses are to be given liberally for the manufacture of the industrial alcohol through the
conversion of molasses; this is to boost production and export of industrial alcohol.

SUGAR DEVELOPMENT FUND:

The sugar development fund was setup in 1982. Under the sugar less act
and is funded by transfer of proceeds of sugar was imposed at the rate of Rs. 14
per quintal on sugar produced by all sugar factories. The fund is utilized for
advancing loans on short terms for the revalidation and modernization of sugar
industry and for development of sugar cane in the sugar factory area. The sugar
16

development fund makes grants for undertaking research projects for

developments of sugar industry.
The fund is also defray expenditure for the purpose of building have and maintenance
of buffer stocks of sugar with a view to stabilizing its price. The total allocation credited to
the fund til! 1996 Amount to Rs 1,6607- crores. The fund has so far sanctioned loans
amounting

to

Rs.

960/-

crores

for

sugarcane

development

and

for

modernization/rehabilitation of sugar factories.

Government sugar industry to study the development and growth of sugar industry in
India vis-a-vis other sugar producing countries and suggest modifications amendments or
repeal of any existing laws and controls in order to increase production and efficiency, the
govt, of India had constituted a high-powered committee under the chairmanship of
"B.B.Mahajan". The "Mahajan committee" submitted its report in April 1998.
Major recommendations of the committee are:

Complete control of sugar in order to provide level paying field to the domestic industry
vis-a-vis imported sugar,

Discontinuation of supply of sugar through the public distribution system (P.D.S) for
plugging the leakages on account of P.D.S. sugar finding way to open market.

Setting of a sugarcane pricing board to determine every September the advance price
(S.M.P) for the ensuring crushing season.

Minimum distance of 15 km. Between an existing sugar mill and a new sugar mill for
which license is to be issued in order to ensure viability of both the mills.

Continue of import of sugar under open general license (O.G.L) in order to product the
consumers against any unusual rise in prices.
The sugar industry is essential an Agro Industry and therefore it should be centrally

located within the vast area of cane cultivations otherwise it wilt increase the cost of
transport. It should be established at a place where Agronomic conditions favored to the
development of sugarcane plantation and where climatic conditions rainfall, land fertility and
irrigation facilities as such as to ensure burnt supply of sugar cane with high yield. As per the
norms of the govt, the industry should have basic infrastructure facilities such as:
17

Transport:
The transport system by road any by vial should be satisfactory so that there is ability to
supply abundant quantity of sugar cane and other items such as machinery, sulpher, line, coal
and heavy chemicals used in manufacturing process.
Market:
The

factory should

preferable

by

near commercial

enter for large-scale

consumption as well as export.

Water availability:
Portable water good for boilers as well as dirking should be available in large form
arrives clam and or from sub-soil.
Surroundings:
Surroundings should be healthy for employees and worker men's the location should
not be near marshy lands or in slum area.
Market for the disposal of lye products.
Disposal of effluents offer treatment in early way
Labor availability.
Lands should be free from mills dates etc....it is good for health and Storing.
Layout of factory:
Factory area should be sufficient land for the factory colony officer.
Boilers may be in the straight line with mills.
Energy station must be jute clear.
Sufficient space must be near to left in the machinery layout for future Expansion.
Juice weighting must be near to mills house.
Cane yard must be very big.

18

Every employ has been paid Rs.2 & matching contribution of Rs.5/- from the
management. Both contributions shall be sent to the labor department for every year
i.e. 31" Dec. subsequently the labor department has been sanction the welfare
scholarship to the employee's children.
If any employee is suffering chronic deceives, the labor department to be sanction
more than 10.00/- to the employ on production of medical certificates from the
doctors.
The management is providing drinking water to employ in various places of the
factory.
Suppurate toilets to employee
The management provides safety belts to the employ who are working more then 12
feets.
The management provided crlouses to the electrical staff to avoid the short circuits.
The management provided some important slogans in factory premises to avoid the
dangerous accidents.
The management provided content facility by giving subsidy rates.
The management provided separate rest rooms to the employ & workers for the
purpose of dining.
The management provided primary school up to 5lh class to the employees children in
the colony.
The management & employ conduct the sports and also cultural activities on 15th
Aug. every year to improve co-ordination & co-operation among the employees.
WELFARE MEASURES TO THE EMPLOYES:
Providing quarters (as per their category)
Shoes for the purpose of safety measures
Two pair of uniform for every year

19

If any employees met with the accident the management immediately give the first aid
and take the patient to Khammam Govt. Head Quarters hospitals & provide 2 persons
to assist them for during the hospitalization.
As per the orders of the labor department i.e. assists commissioner of labor & deputy
commissioner & deputy commissioner we have to pay the compensation to the person
who met with the accident.
The factory management has been sanctioned towards the future expenses an amount
of 500/- to the person who died artificially or accidentally.
Their cases have been recommended to the labor department for the compensation as
per the factory act.
The management every year has been sanction productivity linked incentive (bonus)
to employee for every year depending upon the percentage of the recovery.
The labor department has been introduced the filarial fund to the employee & worker
of the factory industry
The final step in sugar recovery is allowed to take place by cooling is crystallizes.
Separate the molasses from the surface of crystals for removal much as possible leaving only
a very thin form of lose molasses adhering
The sugar leaving the centrifugal is hot at 60 -70 deg. C and contains 0.5 to 1 .5-% moisture,
and as such it, conveyors are of their design
screw or scroll conveyor
gross hopper conveyor
belt or salt conveyor
The graders is used for obtaining the sugar from consists of mixture of netegogenuous
crystals and need to be well seined and graded before it is marketed after grading , 3 sized of
sugar will come out big size , small size, medium size
The final molasses is one of bi-products, which separates from the sugar in the final
stage is used in manufacturing of alcohol an spirits etc.,

20

The under slimed principle involved in the multiple effect evaporation is that direct
steam is used only once and the vapor produced by its boiling juice is repeatedly used for
boiling the juice in the succeeding vessels. The hot clarified juice C 15 o brick heating tubes
and will overflow apart into the canal for the outlet called unsulphured syrup (having bricks
X 60 degrees) the percentage of evaporation is 60-15/60X100=75%
The evaporation or concentration of clarified juice is the separation of water by
evaporation process at temperature between 60 deg. And 130 deg., normally conducted as
multiple evaporation in 4 to 5 steps, the condensed water contains small of these imparities in
the condensed water becomes more important as the factory is use high pressure water
becomes more important as the factory is use high pressure in the steam generation plants.
The condensation contains oxygen, co2, so2 ammonia, organic acids, adlcyas and
methyl and other alcohol. The vapor line juice heater installed between the last vessel of the
evaporator and condenser esan heat the cold juice to about 10 c rise this method of vapor
heating gives the highest saving because it recones in the direct way heal which would other
wise be lost in waste water it saves more cooling water, steam and fuel then mixed juice is
heated to the same temperature by vapor bled from the preceding russels.
The loss of juice condenses, vapor is called entertainment, the entertainment of
particles from the evaporator can give heavy loss of sugar. After evaporation the subsequent
process is changing the thick juice into crystal form through the vacuum pans.
The juice canes out from first mills called primary juice similarly the juice comes out
from last mill is called miced juice the juice will be analyzed at the final baggage which is
one of bi product is analyzed for moisture percent & sugar percent and sugar cane should not
exceed 1.1% as fees the standard from
The juice extracted by the mills is passed through a metal striver to remove suspended
impurities the operation is carried out near the mill to that the strainer substance consisting of
quest-quest readily returned to the mill intermediate carrier for subsequent extraction of the
juice.
Cane + water = juice + baggage.
Baggage is used as fuel to run the boilers juice is normally weighted as mixes juice it
can be takes to obtain find the correct specific gravity followments can be used for this
21

application. The juice comes from raw juice tanks after weightment will go to raw juice
heaters there it will be heated up to 60-70c and then it goes to juice sulfuric and there it will
be mixed with milk of lime and so, gas and after wards it is again heated up to 100c at juice
heaters in order to obtain are paid setting and separations of the precipitants out of the two
types heaters.
The sulfur furnace is made of cost iron and the body of the furnace is cane a water
focker for cooling the large pipe through which the funnel escape to the gas main called the
sublimation is also having water jacket the object of this sublimetor is also to catch a large
part of the sublimed sulfur. After, the juice is sucked up by vacuum and filtration are mixed
with the mixed juice the reside comes from that called "filter cake" and it is sent out as one
bi-product and which is used as fertilizer.
Required Machinery Supplied by These machineries are bought from the companies,
which are given below.
M/s Buckar Wolt India ltd., (Pune)
The Nijam Sugar Factory, sugar machinery division, Nagarjuna Sagar.
BHELLtd.,Hyd
Bellies India Ltd., Calcutta.
ISCEC John Thomson water tube boiler.

PRODUCTION PROCESS:
In the beginning of production process, sugar canes are loaded into a container, cane
carrier carries them into cane kicker. It helps to maintain a uniform level of sugar canes. Cane
cutters cut the whole cane into small pieces and even cut the layer of the cut cane.
Those small pieces are send into crusher. By crushing that small pieces of sugar cane
more juice

22

Will be extract. The mill entrant the more juice which goes to process of
manufacturing of sugar. There will be 4 mills, in each mill there are three volues. The
prepared cane to 1SI mill and there it will be crushed. The product canes from discharge
rollers of 1st mill is called primary juice. Life wise the primary baggage passes through
remaining 3 mills.either hot water or cold water or both are used as macuration water, which
is used at the 4lh mill for extraction of more juice.
Vacuum pans
Condensation plant
Water cooling system
Cooling, curing and drying
Sugar dryers
Gardens
Molasses weighment
Steam power plant (boilers)
Chimney
Power plant
Miscellaneous items
Sugar muter
Sugar elevators
Diesel generation
Final molasses storage tank
Furnace of oil storage tank
Baggage elevator

23

CONTENTS (OR) RAW MATERIALS OF SUGAR:

Sugar cane and
Chemical
LIST OF CHEMICALS WHICH IN VQLVES IN THE PRODUCTION PROCESS:
Burnt lime
Sulfur (so 2)
Sodium exhamata phosphate
Viscosity reducer
Anti sealant
Descalant
Hydrogen peroxide (H2O2)
LIST OF MECHINERY, WHICH INVOLVES IN THE PRODUCTION PROCESS
Cane carrier
Cane kicker
Cane levelers
Cane cutter
Crusher
Mills
Juice wiggling scale
Juice Heaters
Sulfur burner
Filter presser
24

Carbonation plant
Evaporation plant
Syrup treatment plant

SUGAR MANUFACTURING PROCESS

Sugar occurs in greatest quantities in sugarcane and sugar beet from which it in
separated for commercial use. The process of refining is carried out in the following steps. (2)
Processing of sugarcane to extract the juice.
Boiling the juice until it begins to thicken and the sugar begins to crystallize.
Spinning the crystals in a centrifuge to remove the syrup, producing taw sugar.
Shipping the raw sugar to a refinery where it is washed and filtered to remove.
Remaining non-sugar ingredients and color.
Crystallizing drying and packaging the refined sugar.
SHARE CAPITAL:
Government:
1. No. Of shares:

88.568

2. Value of each share:

Rs. 500.00

3. Total share value:

Rs.442.84 lakhs

Other Members:
25

1. No. Of shares:

14.190

2. Value of each share:

Rs. 500.00

3. Total share value:

Rs.70.95 lakhs

The factory had commenced its trial crush during 1983-84 and commercial crush during 1984
- 85 season.
COMPUTERIZATION:
There are 3 computers in the office for the purpose of some official works and office
information like giving permits, salaries to employees and workers etc, but the management
did not computerize the company only one person is there to operate the computers at the
office timings 9 to 6 clock.
MADHUCON SUGAR INDUSTRY LIMITED
During the year 2001-02 MADHUCON sugars limited was incorporated to purchase
and takeover the sick sugar mill namely the plair co-operative sugars limited. Established in
1982. At the time of taking over, the company had net profit in the first year of operation
itself.
Later the companys name was changed as MADHUCON SUGAR INDUSTRIES
LIMITED. This company is one of the companies in Group Company of MADHUCON
projects limited which is having diversified activities of construction of infrastructures
projects like roads, buildings, flyovers, granites, sugar and allied products.
MADHUCON GROUP is working on projects in various core sectors of nation as
importance like highways, irrigation, producing the construction materials, power houses, all
of which, no need to are so essential now for the all round infrastructures development of the
nation.
ABOUT MADHUCON SUGAR INDUSTRIES LTD:
Madhucon sugar and power industries limited was registered on 5th November 2002,
which was purchased under private scheme with capacity of 1250 tones per day. The factory
is located at Rajeswarapuram village in khammam district. The factory and service area

26

consists of 207 villages situated in radius of 35 kms. And the company has 5.577 registered
cane formers.
Madhucon sugar and power industries is one of the group companies of infrastructure
projects like roads, bridges, canals buildings, flyover, granites, sugar and allied products.
The group turnover is around 600 cores an d earning reasonable profits. The present
market price of MADHOCON PROJECTS LIMITED share of rupees 200 each is coating
around rupees 300.
History :
Madhucon Projects Limited, Hyderabad, the flagship company of Madhucon Group was
established in 1983. It was converted into a Private Limited Company in 1990 and became a
Public Limited listed Company in 1995. We acquired a truly wide and solid base of
experience in major areas of industrial and infrastructure construction- Highways, Irrigation,
Property Development etc.
THE FOLLOWING ARE BOARD OF DIRECTORS OF COMPANY

DESIGNATION
Chairman

NAME
SRI NAMA SEETHAIAH

Executive director

SRI NAMA KRISHNAIAH

company

also

Director

SRI K. SRINIVASA RAO

purpose to

setup now

Auditors

KOTTA & COMPANY

project for

CHARTERED ACCOUNTS

production

The

the
of

alcohol/ethanol from molasses and cereal gains with installed capacity of 65KLPD.
REVIEW OF OPERATION:
During the year under review, our company crushed 147315.741 MTS (Previous
period 259114.156 MTS) of sugarcane and produced 1,09,450 Qts (Previous period 156737
Qtls) sugar, 7170.670 MTs (Previous Period 11999.67 M.Ts) Molasses and achieved the
turnover of Rs. 1921.18 Lakhs (Previous period 3243.08 Laksh). After providing depreciation
of Rs. 129.97 Lakhs (Previous period Rs. 146.97 Lakhs) net loss is Rs. 77.44 lakhs (Previous
27

year profit of Rs. 4.68 Lakhs). The company could able to crush only 1,47,315.741 MT,
though the cane was available to the extent of 2,70,000 MT for the season. The company sent
the balance cane to other nearby sugar Mills for crushing. This was happened because of
Mechanical problems of the existing sugar mil. The Turnover of the company has come down
because of not selling of sugar and Molasses stocks because of adverse market conditions.
Your directors are hopeful for the improved situation from the ensuing Financial Year.
Directors are happy to inform that the new sugar Mill with the crushing capacity of
3500 M. Ts per day has been completed in all respects and commissioned successfully during
the year 2012-11.
Directors would like to inform that the cane availability for the season 2013-12 will
be around 70,000 M. Ts. This is happening because of shifting of farmers from sugar cane to
paddy crop because of higher realizations. However your Directors are initiated various
developmental works by way of extending financial assistance and subsidies in the form of
cash and cane seed at free of cost to the cultivators and also providing financial assistance for
digging wells, providing PVC pipes, Fertilizers, Weedicides, cane seeds etc to improvise the
cane cultivation area. Your Directors are hopeful of improved cane availability to the extent
of 5, 00,000 M, Ts per annum during the next 3 to 4 years.
Directors are also happy to inform that the 20 MW Co-Gen plant will likely to be
commissioned by September, 2013 and the company has entered into power purchase
Agreement with A.P Transco for a short period of 2 Months. After the operations of the
power plant are stabilized and achieved the targeted rate of production, the company is
proposing to sell power on long term basis with PTS India Limited, because of higher price
realizations. Once the power plant is commissioned with the rated capacity your Directors are
confident of achieving better financial performance during the year 2013-12.
Though the financial tie-up has been completed for 65 KLPD Distillery plant, the
implementation work for the plant has not yet been started. The company has obtained
certificate for Certificate for Establishment for Distillery plant form Government of Andhra
Pradesh and likely to get certificate For Manufacturing of Distillery from prohibition and
Excise department, Government of Andhra Pradesh. The project implementation work is
likely to start from November 2014 and expected its commercial operations by July 2015.
EMPLOYEE RELATIONS:
28

The relations with the employees continue to be cordial. Our Directors express their
appreciation for the dedicated services of the Employees and officers of the company for
fulfilling the objectives and attaining the goals of the company.
None of the employees of the company was in receipt of remuneration, which in the
aggregate exceeded the limits specified under sub-section (2A) of section 217 of the
companies Act, 1956.

Management team:
Founder

Sri Nama Nageswara Rao

Sri N. Krishnaiah, Whole Time Director

Sri N. Seethaiah, Director
Sri S. Vaikuntanathan, Director
Promoters
Madhucon Infra Ltd. , a subsidiary of Madhucon Projects Ltd.
N. Seetaiah & Associates
Vision
To become a leading power generation company delivering sustainable and quality
power to the nation.
Mission
To establish higher capacity power plants of excellence, utilizing the state-of-the-art
technology, process and efficient project management methods.
Consistently deliver quality power to customers and become a partner of choice.
Cultivate a culture of sustainability and growth in all operations of the company.
Sustain professional competence at all levels through continuous training.
29

Commitment to preserve environment and caring for the community.

Divisions
To facilitate concentrated working and fast expansion, Madhucon has set up 7
Operating Divisions.
BOT Projects
Highways & Airports
Irrigation
Hydel Power
Property Development
Water Resources
Overseas Projects
Joint ventures & consortiums partners
Sinohydro Corporation, Beijing, China (a US$2 Billion company) specializing in Water
Resources Projects (Madhucon-Sinohydro JV)
Binapuri Sdn Bhd, Malaysia, experts in Highways and Property Development
(Madhucon-Binapuri JV)
Kanchanjunga

Constructions,

Nepal,

leading

Construction

Company

(Madhucon-Kanchanjunga JV)
Special strengths:
We are well equipped for infrastructure construction, particularly in the areas of
Expressways and Toll Roads; we have built hundreds of kilometers of Roads, including
National and State Highways and Expressways. Equally noteworthy are our projects in the
irrigation, property development and railway sectors.
Future outlook:

30

Madhucon Projects Limited is one of the top players in India in the construction
engineering sector. Madhucon desires to participate in a big way in the Property Development
sector as well. With the increasing impetus being given by the Government of India in its
yearly budget for infrastructure development, Madhucon aspires to bag several prestigious
projects.
Madhucon is also studying the overseas markets and keenly watching the
developments with a view to make an entry into the world markets at an appropriate time.
Group of Companies
Madhucon Group
Madhucon Projects Limited
Madhucon Infra Limited
Madhucon Granites
Madhucon Sugar & Power Industries Limited
Simhapuri Energy Limited
PT Madhucon Indonesia
PT Madhucon Sriwijaya Power

31

INTRODUCTION
Financial Performance is the process of managing the financial resources, including
accounting and financial reporting, budgeting, collecting accounts receivable, risk
performance, and insurance for a business.
The financial performance system for a small business includes both how you are
financing it as well as how you manage the money in the business.
In setting up a financial performance system your first decision is whether you will
manage your financial records yourself or whether you will have someone else do it for you.
There are a number of alternative ways you can handle this. You can manage everything
yourself hire an employee who manages it for you keep your records in-house, but have an
accountant prepare specialized reporting such as tax returns or have an external bookkeeping
service that manages financial transactions and an accountant that handles formal reporting
functions. Some accounting firms also handle bookkeeping functions. Software packages are
also available for handling bookkeeping and accounting.
Bookkeeping refers to the daily operation of an accounting system, recording routine
transactions within the appropriate accounts. An accounting system defines the process of
identifying, measuring, recording and communicating financial information about the
business. So, in a sense, the bookkeeping function is a subset of the accounting system. A
bookkeeper compiles the information that goes into the system. An accountant takes the data
and analyzes it in ways that give you useful information about your business. They can advise
you on the systems needed for your particular business and prepare accurate reports certified
32

by their credentials. While software packages are readily available to meet almost any
accounting need, having an accountant at least review your records can lend credibility to
your business, especially when dealing with lending institutions and government agencies.
Setting up an accounting system, collecting bills, paying employees, suppliers, and
taxes correctly and on time are all part of running a small business. And, unless accounting is
your small business, it is often the bane of the small business owner. Setting up a system that
does what you need with the minimum of maintenance can make running a small business
not only more pleasant, but it can save you from problems down the road.
The basis for every accounting system is a good Bookkeeping system. What is the
difference between that and an accounting system? Think of accounting as the big picture of
how your business runs -- income, expenses, assets, liabilities -- an organized system for
keeping track of how the money flows through your business, keeping track that it goes
where it is supposed to go. A good bookkeeping system keeps track of the nuts and bolts -the actual transactions that take place. The bookkeeping system provides the numbers for the
accounting system. Both accounting and bookkeeping can be contracted out to external firms
if you are not comfortable with managing them yourself.
Even if you outsource the accounting functions, however, you will need some type of
Recordkeeping Systems to manage the day-to-day operations of your business - in addition to
a financial plan and a budget to make certain you have thought through where you are headed
in your business finances. And, your accounting system should be producing Financial
Performance. Learning to read them is an important skill to acquire.
Another area that your financial performance system needs to address is risk. Any
good system should minimize the risks in your business. Consider implementing some of
these risk performance strategies in your business. Certainly, insurance needs to be
considered not only for your property, office, equipment, and employees, but also for loss of
critical employees. Even in businesses that have a well set up system, cash flow can be a
problem.
There are some tried and true methods for Managing Cash Shortages that can help
prevent cash flow problems and deal with them if they come up. In the worst case you may

33

have difficulties meeting all you debt obligations. Take a look at Financial Difficulties to
learn more about ways to manage situations in which you have more debt than income.
It is possible you may even be at the a point where you want to sell the business or
simply close it and liquidate assets. There are financial issues involved for these
circumstances too. So, be certain that you know what steps you need to take in order to
protect yourself financially in the the long run.
Clearly, financial performance encompasses a number of crucial areas of your
business. Take time to set them up right. It will make a significant difference in your stress
levels and in the bottom line for your business.
Financial Planning
Financial planning is often thought of as a way to manage debt, but a good financial
plan really is a way to make certain that you have financial security throughout your life.
Many small business owners consider their business as their investment in their future, but
that is a huge risk to take. As any economist will tell you, diversification is the only sure way
to create security in the long run. Your business is one stream of income. Putting together a
financial plan that allows for multiple streams of income is what provides you security in the
longer term.
The essential components of a good financial plan are investing, retirement planning,
insurance, borrowing and using credit, tax planning, having a will, and ensuring the right
people receive your assets. Financial planning is the process of meeting your life goals
through the proper performance of your finances. Life goals can include buying a home,
saving for your child's education or planning for retirement.
The financial planning process involves gathering relevant financial information,
setting life goals, examining your current financial status and coming up with a plan for how
you can meet your goals given your current situation and future plans.
There are personal finance software packages, magazines and self-help books to help
you do your own financial planning. However, you may decide to seek help from a
professional financial planner if

34

you need expertise you don't possess in certain areas of your finances. For example, a
planner can help you evaluate the level of risk in your investment portfolio or adjust
your retirement plan due to changing family circumstances.

you want to get a professional opinion about the financial plan you developed for
yourself.

you don't feel you have the time to spare to do your own financial planning.

you have an immediate need or unexpected life event such as a birth, inheritance or
major illness.

you feel that a professional adviser could help you improve on how you are currently
managing your finances.

you know that you need to improve your current financial situation but don't know
where to start.
A financial planner is someone who uses the financial planning process to help you

figure out how to meet your life goals. The planner can take a "big picture" view of your
financial situation and make financial planning recommendations that are right for you. The
planner can look at all of your needs including budgeting and saving, taxes, investments,
insurance and retirement planning. Or, the planner may work with you on a single financial
issue but within the context of your overall situation. This big picture approach to your
financial goals may set the planner apart from other financial advisers, who may have been
trained to focus on a particular area of your financial life.
In addition to providing you with general financial planning services, many financial
planners are also registered as investment advisers or hold insurance or securities licenses
that allow them to buy or sell products. Other planners may have you use more specialized
financial advisers to help you implement their recommendations. With the right education
and experience, each of the following advisers could take you through the financial planning
process. Ethical financial planners will refer you to one of these professionals for services
that they cannot provide and disclose any referral fees they may receive in the process.
Similarly, these advisers should refer you to a planner if they cannot meet your financial
planning needs.
35

Accountant
Accountants provide you with advice on tax matters and help you prepare and submit
your tax returns to the Internal Revenue Service. All accountants who practice as Certified
Public Accountants (CPAs) must be licensed by the state(s) in which they practice.
Estate Planner
Estate planners provide you with advice on estate taxes or other estate planning issues
and put together a strategy to manage your assets at the time of your death. While attorneys,
accountants, financial planners, insurance agents or trust bankers may all provide estate
planning services, you should seek an attorney to prepare legal documents such as wills,
trusts and powers of attorney. Many estate planners hold the Accredited Estate Planner (AEP)
designation.
Financial Plan
Many financial planners have earned the Certified Financial Planners certification, or
the Chartered Financial Consultant (ChFC) or Personal Financial Specialist (CPA/PFS)
designations. Financial planners can take you through the financial planning process.
Insurance Agent
Insurance agents are licensed by the state(s) in which they practice to sell life, health,
property and casualty or other insurance products. Many insurance agents hold the Chartered
Life Underwriter (CLU) designation. Financial planners may identify and advise you on your
insurance needs, but can only sell you insurance products if they are also licensed as
insurance agents.
Investment Adviser
Anybody who is paid to provide securities advice must register as an investment
adviser with the Securities and Exchange Commission or relevant state securities agencies,
depending on the amount of money he or she manages. Because financial planners often
advise people on securities-based investments, many are registered as investment advisers.
Investment advisers cannot sell securities products without a securities license. For that, you
must use a licensed securities representative such as a stockbroker.
36

Stock broker
Also called registered representatives, stockbrokers are licensed by the state(s) in
which they practice to buy and sell securities products such as stocks, bonds and mutual
funds. They generally earn commissions on all of their transactions. Stockbrokers must be
registered with a company that is a member of the National Association of Securities Dealers
(NASD) and pass NASD-administered securities exams.
The government does not regulate financial planners as financial planners instead; it
regulates planners by the services they provide. For example, a planner who also provides
securities transactions or advice is regulated as a stockbroker or investment adviser. As a
result, the term "financial planner" may be used inaccurately by some financial advisers. To
be sure that you are getting financial planning advice, ask if the adviser follows the six steps.
The Financial Planning Process Consists of the Following Six Steps
1. Establishing and defining the client-planner relationship
The financial planner should clearly explain or document the services to be provided
to you and define both his and your responsibilities. The planner should explain fully
how he will be paid and by whom. You and the planner should agree on how long the
professional relationship should last and on how decisions will be made.
2. Gathering client data, including goals
The financial planner should ask for information about your financial situation. You
and the planner should mutually define your personal and financial goals, understand
your time frame for results and discuss, if relevant, how you feel about risk. The
financial planner should gather all the necessary documents before giving you the
advice you need.
3. Analyzing and evaluating your financial status
The financial planner should analyze your information to assess your current situation
and determine what you must do to meet your goals. Depending on what services you

37

have asked for, this could include analyzing your assets, liabilities and cash flow,
current insurance coverage, investments or tax strategies.
4. Developing and presenting financial planning recommendations and/or
alternatives
The financial planner should offer financial planning recommendations that address
your goals, based on the information you provide. The planner should go over the
recommendations with you to help you understand them so that you can make
informed decisions. The planner should also listen to your concerns and revise the
recommendations as appropriate.
5. Implementing the financial planning recommendations
You and the planner should agree on how the recommendations will be carried out.
The planner may carry out the recommendations or serve as your "coach,"
coordinating the whole process with you and other professionals such as attorneys or
stockbrokers.
6. Monitoring the financial planning recommendations
You and the planner should agree on who will monitor your progress towards your
goals. If the planner is in charge of the process, she should report to you periodically
to review your situation and adjust the recommendations, if needed, as your life
changes.
Best Practices When Approaching Financial Planning

Set measurable goals.

Understand the effect your financial decisions have on other financial issues.

Re-evaluate your financial plan periodically.

Start now - don't assume financial planning is for when you get older.

Start with what you've got - don't assume financial planning is only for the wealthy.

Take charge - you are in control of the financial planning engagement.

Look at the big picture - financial planning is more than just retirement planning or
tax planning.
38

Don't confuse financial planning with investing.

Don't expect unrealistic returns on investments.

Don't wait until a money crisis to begin financial planning.

You are the focus of the financial planning process. As such, the results you get from

working with a financial planner are as much your responsibility as they are those of the
planner.
To achieve the best results from your financial planning engagement, you will need to
be prepared to avoid some of the common mistakes by considering the following advice

Set measurable financial goals

Set specific targets of what you want to achieve and when you want to achieve results.

For example, instead of saying you want to be "comfortable" when you retire or that you
want your children to attend "good" schools, you need to quantify what "comfortable" and
"good" mean so that you will know when you've reached your goals.

Understand the effect of each financial decision

Each financial decision you make can affect several other areas of your life. For

example, an investment decision may have tax consequences that are harmful to your estate
plans. Or a decision about your child's education may affect when and how you meet your
retirement goals. Remember that all of your financial decisions are interrelated.

Re-evaluate your financial situation periodically

Financial planning is a dynamic process. Your financial goals may change over the

years due to changes in your lifestyle or circumstances, such as an inheritance, marriage,

birth, house purchase or change of job status. Revisit and revise your financial plan as time
goes by to reflect these changes so that you stay on track with your long-term goals.

Start planning as soon as you can

Don't delay your financial planning. People who save or invest small amounts of

money early, and often, tend to do better than those who wait until later in life. Similarly, by
39

developing good financial planning habits such as saving, budgeting, investing and regularly
reviewing your finances early in life, you will be better prepared to meet life changes and
handle emergencies.

Be realistic in your expectations

Financial planning is a common sense approach to managing your finances to reach

your life goals. It cannot change your situation overnight it is a lifelong process. Remember
that events beyond your control such as inflation or changes in the stock market or interest
rates will affect your financial planning results.

Realize that you are in charge

If you're working with a financial planner, be sure you understand the financial planning
process and what the planner should be doing. Provide the planner with all of the relevant
information on your financial situation. Ask questions about the recommendations offered to
you and play an active role in decision-making.

40

LIMITATIONS (STUDY OF FINANCIAL POSITION)

1. ONLY INTERIM REPORTS
Only interim performance dont give a final picture of the concern. The data given in
these performance is only approximate. The actual position can only be determined when the
business is sold or liquidated.

2. DONT GIVE EXTRA POSITION

The financial performance are expressed in monetary values, so they appear to give
final and accurate position. The values of fixed assets in the balance sheet neither represent
the value for which fixed assets can be sold nor the amount which will be required to replace
these assets.
3. HISTORICAL COSTS

41

The financial performance are prepared on the basis of historical costs or original
costs. The value of assets decreases with the passage of time current price changes are not
taken into account. The performance are not prepared keeping in view the present economic
conditions. The balance sheet loses the significance of being an index of current economic
realities.
4. ACT OF NON MONITORY FACTORS IGNORED
There are certain factors which have a bearing on the financial position and operating
results of the business but they dont become a part of these performance because they cant
be measured in monetary terms. Such factors may include in the reputation of the
performance.
NO PRECISION
The precision of financial statement data is not possible because the performance deal
with matters which cant be precisely stated. The data are recorded by conventional
procedures followed over the years. Various conventions, postulates, personal judgments etc.
Types of Ratios
Ratio Analysis has been divided mainly into 3 ratios they are
1) Liquidity Ratios
Liquidity refers to the ability of the concern to meet its current obligations as and
when these become due. The short - term obligations are met by realizing amounts from
current, floating or circulating assets. The current assets should either be liquid or nearly
liquid. If current assets can pay off current liabilities, then liquidity position will be
satisfactory.
Current Ratio
The current ratio is calculated by current assets by dividing current liabilities. Current
assets include cash and those assets which can be converted into cash with in a year such a
marketable securities, debtors, inventories.
Current liabilities include creditors, bills payable, accrued expenses, short term bank
loan, income tax liability and long-term debt maturing in current years. The current ratio is a
42

measure of the firm short-term solvency. Its is test of quantity not quality. The current ratio is
a crude and quick measure of firms liquidity.
Quick Ratio
Quick ratio is calculated by dividing liquid assets by current liabilities. Liquid assets
are obtained by subtracting inventories from current assets. This establishes the relation
between quick or liquid assets and current liabilities. An asset is said to be liquid if it can be
converted into cash with in short period of time with out loss of value cash in hand, cash at
bank are liquid assets. Quick assets are book debts and marketable securities.
Absolute Liquid Ratio or Cash Ratio
Cash ratio is calculated by dividing cash and marketable securities by current
liabilities. Trade investment or marketable securities are equivalent of cash therefore they
may be included in computation of cash ratio.
Inventory Turnover Ratio
It establishes relationship between cost of goods sold during a given period and the
average amount of inventory held during that period. It refers to the no. Of times that the
stock is turned over on an average in a year. This ratio assists the financial manager in
valuating inventory policy. Inventory turnover ratio is also known as stock velocity,
indicating whether inventory is effectively used or not.
Debtors Turnover Ratio
The ratio is calculated by dividing credit sales by average debtors. This indicates the
number of times average debtors turned over during the year.

Creditors Turnover Ratio

The term creditor includes, trade creditors and bills payable. Incase the details
regarding credit purchases, opening and closing balances of creditors are not available, then
instead of credit purchases, total purchases may be taken and in place of average creditors,
the balance may be substituted.
Leverage Ratios
43

To judge the long-term financial position of the firm, financial leverage or capital
structure, ratios are calculated. These ratios indicate mix of funds provided by owners and
lenders. As a general rule, there should be an appropriate mix of debts and owners equity in
financing the firms assets. The process of magnifying shareholders return through the
employment of debt is called financial leverage & trading on equity.
Debt Equity Ratio
This is calculated by dividing total debts by networth. This relationship describes the
lender contribution for each rupees of the owners contribution is called debt equity ratio.
This is also known as external equity ratio. This ratio is calculated to analyze the efficiency of
capital structure of the firm.
Proprietary Ratio
It is a variant of debt equity ratio. If establishes relationship between the proprietors
or shareholders funds and the total assets of the firm.
Interest Coverage Ratio
The ratio is calculated by dividing EBIT by interest and loan installment. This is
known as Time interest earned ratio This ratio measures the debt servicing.
Capacity of a firm in so far as fixed interest on long-term loan is considered. Since
taxes are computed after interest, interest coverage ratio is calculated in relation to before tax
earnings.

2) Profitability Ratios
The primary objective of a business under taking is to earn profits. Profits to the
performance are the test of efficiency and measurement of control. Generally profitability
ratios are calculated either in relations to sales or in relation to investment.
Gross Profit Ratio

44

This ratio is calculated by dividing gross profit by sales. It shows profit relative to
sales after the deductions of productive cost, and indicates the relations between production
and selling price.
Net Profit Ratio
This ratio is calculated by dividing net profit by sales. Net profit is obtaining when
operating expenses; interest and taxes are subtracted from years gross profit. So, net profit
ratio is measured by dividing profit after taxes by sales. This ratio also indicates the firms
capacity to stand with adverse economic conditions. This ratio is an overall measure of firms
ability to turn each rupee sales into net profit.
Return on Total Assets Ratio
This ratio is calculated by dividing net profit after tax by total assets. Total assets are
the sum of all fixed assets and current assets and investment. The conventional approach of
calculating the return on total assets is to divide profit after tax by total assets.
Fixed Assets Ratio
This ratio is calculated by dividing cost of goods sold by fixed assets. Assets rise to
generate sales therefore a firm should manage its assets efficiently to maximize sales. If the
firm wishes to know its efficiency of utilizing fixed assets then it has to go for fixed assets
ratio.
Methods or Devices of Financial Analysis
The analysis and interpretation of financial performance is used to determine the
financial position and results of operations as well. A number of methods or devices are used
to study the relationship between different performance. An effort is made to use those
devices, which clearly analyze the position of the enterprise. The following methods of
analysis are generally used
1. Comparative performance
2. Trend Analysis
3. Common size performance
4. Funds Flow Analysis
45

5. Cash Flow Analysis

6. Ratio Analysis
7. Cost Volume Profit Analysis
1. Comparative Performance
The comparative financial performance are performance of the financial position at
different periods of time. The elements of financial position are shown in a comparative form
so as to give an idea of financial position at two or more periods. Any statement prepared in a
comparative form will be covered in comparative performance. From practical point of view,
generally, two financial performance (balance sheet and income statement) are prepared in
comparative form for financial analysis purposes. Not only the comparison of the figures of
two periods but also be relationship between balance sheet and income statement enables an
in depth study of financial position and operative results. The comparative statement may
show
(i)

Absolute figures (rupee amounts).

(ii)

Changes in absolute figures i.e., increase or decrease in absolute figures.

(iii)

Absolute data in terms of percentages.

(iv)

Increase or decrease in terms of percentages.

Comparative Balance Sheet

The comparative balance sheet analysis is the study of the trend of the same items,
group of items and computed items in two or more balance sheets of the same business
enterprise on different dates. The changes in periodic balance sheet items reflect the conduct
of a business. The changes can be observed by comparison of the balance sheet at the
beginning and at the end of a period and these changes can help in forming an opinion about
the progress of an enterprise. The comparative balance sheet has two columns for the data of
46

original balance sheets. A third column is used to show increases in figures. The fourth
column may be added for giving percentages of increases or decreases.
2. Trend Analysis
The financial Performance may be analyzed by computing trends of series of
information. This method determines the direction upwards or downwards and involves the
computation of the percentage relationship that each statement item bears to the same item in
the base year.
The information for a number of years is taken up an one year, generally the first year,
is taken as a base year. The figures of the base year are taken as 100 and trend ratios for other
years are calculated on the basis of base year.
3. Common-Size Performance
The Common-size performance, balance sheet and income performance are shown in
analytical percentages. The figures are shown as percentages of total assets, total liabilities
and total sales. The total assets are taken as 100 and different assets are expressed as a
percentage of the total similarly, various liabilities are taken as a part of total liabilities.
These performance are also known as component percentage or 100 percent
performance because very individual item is stated as a percentage of the total 100. The
shortcoming in comparative performance and trend percentages where changes in items could
be compared with the totals has been covered up. The analyst is able to assess the figures in
relation in total values. The common-size performance may be prepared in the following way
The totals of assets and liabilities are taken as 100.
The individual assets are expressed as a percentage of total assets i.e., 100 and
different liabilities are calculated in relation to total liabilities.
4. Funds Flow Analysis
The funds flow statement is a statement, which shows the movement of funds and is
report of the financial operations of the business undertaking. It indicates various means by
which funds were obtained during a particular period and the ways in which these funds were
employed. In simple words, it is a statement of sources and applications of funds.

47

Meaning and Definition of Funds Flow Performance

Funds flow statement is a method by which we study changes in the financial position
of business enterprises between beginning and ending financial performance dates. It is a
statement showing sources and uses of funds for a period of time.
I.C.W.A. in Glossary of Performance Accounting terms defines funds flow
performance as A Statement prospective or retrospective, setting out the sources and
applications of the funds of an enterprise. The purpose of the statement is to indicate clearly
the requirement of funds and how they are proposed to be raised and the efficient utilization
and application of the same.
Limitations of Funds Flow Statement
The funds flow statement has a number of uses, however, it has certain limitations
also they are
1. It should be remembered that a funds flow statement is not substitute of an income
statement of a balance sheet. It provides only some additional information as regards
changes in working capital
2. It cannot reveal continues changes.
3. It is not an original statement but simply arrangement of data given in financial
performance.
4. It is essential historic in nature and projected funds flow statement cannot be prepared
with much accuracy.
5. Changes in cash are more important and relevant for financial performance than the
working capital.

5. Ratio Analysis
The ratio analysis is one of the most powerful tools of financial analysis. It is the
process of establishing and interpreting various ratios. It is with the help of ratios that the
financial performance can be analyzed more clearly and decisions made from such analysis.

48

Meaning
A ratio is a simple arithmetical expression of the relationship of one number to
another. It may be defined as the indicated quotient of two mathematical expressions.
The following are the four steps involved in the ratio analysis.
1. Selection of relevant data from the financial performance depending upon the objective of
the analysis.
2. Calculation of appropriate ratios from the above data.
3. Comparison of the calculated ratios with the ratios of the same firm in the past, or the
ratios developed from projected financial performance or the ratios of some other firms or
the comparison with ratios of the industry to which the firm belongs.
4. Interpretation of the ratios.

49

DATA ANALYSIS AND INTERPRETATION

CURRENT RATIO
CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES
Yr.

Current Assets

Current Liabilities

Ratio

2009-2010

38,73,44,261

15,81,19,445

2.44

2010-2011

60,95,08,473

9,42,04,564

6.47

2011-2012

42,48,51,427

12,54,72,620

3.38

2012-2013

7,20,21,081

1,60,65,621

4.48

2013-2014

9,13,28,208

4,71,17,199

1.93

Current Ratio
7
6
5
4
3
2
1
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:
As a Rule, a current ratio of 2:1 (or) more is considered satisfactory. When compared
to 2011, there is an increase in provision for income tax and sundry creditors in liabilities
account and also there is an increase in advance tax paid and sundry debtors account.
Further there is a decrease in bank and cash balance. This has resulted in the decrease
in the ratio. But still the ratio is above the benchmark level of 2:1which shows the
comfortable position of the firm.

50

QUICK RATIO
QUICK RATIO = QUICK ASSETS / QUICK LIABILITIES
Yr.

Quick Assets

Quick Liabilities

Ratio

2009-2010

14,74,56,317

15,81,19,445

0.93

2010-2011

27,89,98,1760

9,42,04,564

2.96

2011-2012

17,68,81,461

2,54,72,620

6.94

2012- 2013 7,20,21,081

1,60,65,621

4.48

2013-2014

4,71,17,199

19.38

91,32,28,208

2:1which shows the comfortable position of the firm.

Quick Ratio
25
20
15
10
5
0
2009-2010

2010-2011

2011-2012

2012- 2013

2013-2014

Interpretation:
When compared to 2011, there is an increase in provision for income tax and sundry
creditors in liabilities account and also there is an increase in advance tax paid and sundry
debtors account.
Further there is a decrease in bank and cash balance. This has resulted in the decrease
in the ratio.
51

DEBTORS TURNOVER RATIO

TURNOVER RATIO = (NET SALE /AVG. Debtors)*100

Yr.

Net sale

Avg.Debtors

Ratio

2009-2010

2,90,34,089

1,02,08,744

2.84

2010-2011

3,63,09,834

2,83,44,133

1.28

2011-2012

5,38,99,084

5,89,02,926

0.91

2012-2013

7,27,28,759

3,22,66,565

2.25

2013-2014

5,55,50,649

3,78,56,420

1.46

Turnover Ratio
3
2.5
2
1.5
1
0.5
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:
The higher the value of debtors turnover, the more efficient the performance of credit.
There is a decrease in 2012 as compared to 2011 and this is due to the decrease in PLF bonus
to an extent of Rs.60,00,000/- i.e. lesser income from services.

52

NET PROFIT RATIO

NET PROFIT RATIO = NET PROFIT AFTER TAX / INCOME FROM Services
Yr.

Net profit after tax

Income from service

Ratio

2009-2010

2,90,34,089

1,27,93,761

2.26

2010-2011

3,63,09,834

2,11,23,474

1.71

2011-2012

5,38,99,084

1,51,25,942

3.56

2012-2013

7,27,28,759

1,69,29,227

4.29

2013-2014

5,55,50,649

1,82,59,580

3.04

NET PROFIT RATIO

5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:
This 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
shareholder funds. High net profit ratio will help the firm survive in the fall of income from
services, rise in cost of production (or) declining demand.
The decrease in net profit ratio in 2012 is only because of decrease in PLF bonus to an
extent of Rs.58, 00,000/-.
RETURN ON TOTAL ASSETS RATIO
53

RETURN ON TOTAL ASSETS RATIO = NET PROFIT AFTER TAX / TOTAL

Yr.

Net profit after tax

ASSETS

Total assets

Ratio

2009-2010

1,27,93,761

5,49,50,020

0.23

2010-2011

2,11,23,474

7,85,62,171

0.26

2011-2012

1,61,25,942

8,84,38,107

0.18

2012-2013

1,69,29,227

8,91,58,391

0.18

2013-2014

1,82,59,580

10,63,85,201

0.17

RETURN on Total Assets Ratio

0.3
0.25
0.2
0.15
0.1
0.05
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:
It is the ratio between net profit and total assets. This ratio indicates the return on
total assets in the form of profits.
The reason for decrease in ratio is because of increasing trend in total assets at the
same time decrease in net profit in 2012.

FIXED ASSETS RATIO

54

FIXED ASSETS RATIO = FIXED ASSETS /CAPITAL EMPLOYED

Yr.

Fixed Assets

Capital Employed

Ratio

2009-2010

2,90,34,089

2,05,88,705

1.41

2010-2011

3,63,09,834

1,99,98,020

1.81

2011-2012

5,38,99,084

1,86,72,761

2.88

2012-2013

7,27,28,759

1,71,37,310

4.24

2013-2014

5,55,50,649

1,50,56,993

3.68

FIXED Assets Ratio

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

.Interpretation:
Fixed assets are 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 total
assets. The ratio indicates the amount of sale for one rupee investment in fixed assets.
Increase in ratio indicates good trend and further it indicates optimal utilization of the
services

OPERATING PROFIT RATIO

55
2004

2003

2002

OPERATING PROFIT RATIO = OPERATING PROFIT / INCOME FROM SERVICES

Yr.

Operating Profit

Income from services

Ratio

2009-2010

1,87,93,761

2,90,34,089

0.64

2010-2011

3,39,78,152

3,63,09,834

0.93

2011-2012

2,53,84,599

5,38,99,084

0.47

2012-2013

2,72,71,086

7,27,28,759

0.37

2013-2014

3,15,86,718

5,55,50,649

0.56

Operating Profit Ratio

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:
It establishes the relationship between cost of goods sold and other operating expenses
on one hand and the sales on the other. The two basic elements of this ratio are operating cost
and net sales. Decrease in this ratio is due to the additional maintenance fee paid as per the
new contract entered.
WORKING CAPITAL TURNOVER RATIO
56

WORKING CAPITAL TURNOVER RATIO = SALES / NETWORKING CAPITAL

Yr.

Sales

Net Working capital

Ratio

2009-2010 2,90,34,089

2,82,96,650

1.02

2010-2011 3,63,09,834

5,06,70,199

0.71

2011-2012 5,38,99,084

3,78,80,730

1.42

2012-2013 7,27,28,759

5,59,55,460

1.29

2013-2014 5,55,50,649

4,42,11,009

1.25

WORKING Capital Turnover Ratio

1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:
Initially, the ratio is high due to greater income from services and less capital. The
company has fewer ratios due to increase in its capital by issue of equity shares. It maintained
a balanced capital and income in the year 2012.

CAPITAL TURNOVER RATIO

57

CAPITAL TURNOVER RATIO = NET SALE/CAPITAL EMPLOYED (CAPITAL+ RESERVES

AND SURPLUS)

Yr.

NET SALE

Capital employed

Ratio

2009-2010

2,90,34,089

4,88,90,745

0.59

2010-2011

3,63,09,834

6,76,79,219

0.53

2011-2012

5,38,99,084

5,33,01,834

1.01

2012-2013

7,27,28,759

7,02,31,061

1.03

2013-2014

5,55,50,649

5,64,73,652

0.98

CAPITAL Turnover Ratio

1.2
1
0.8
0.6
0.4
0.2
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:

58

Initially, the ratio is high due to greater income from services and less capital. The
company has fewer ratios due to increase in its capital by issue of equity shares. It maintained
a balanced capital and income in the year 2012.

12. Reserves & Surplus to Capital Ratio

Reserves & Surplus to Capital Ratio = Reserves and Surplus/Capital
Yr.

Reserves and surplus

Capital

Ratio

2009-2010

4,68,10,825

20,79,720

22.51

2010-2011

6,55,99,299

20,79,920

31.53

2011-2012

3,45,82,554

1,87,19,280

1.84

2012-2013

5,15,11,781

1,87,19,280

2.75

2013-2014

3,77,54,372

1,87,19,280

2.01

Reserves & Surplus to Capital Ratio

35
30
25
20
15
10
5
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:
In 2012, bonus shares and dividend was distributed out of reserves and surpluses.
59

RATIO OF CURRENT ASSETS TO FIXED ASSETS

Ratio of Current Assets to Fixed Assets = Current Assets / Fixed Assets
Yr.

Current Assets

Fixed Assets

Ratio

2009-2010

3,43,61,315

2,05,88,705

1.66

2010-2011

5,85,74,151

1,99,98,020

2.92

2011-2012

6,97,65,364

1,86,72,761

3.73

2012-2013

7,20,21,081

1,71,37,310

4.20

2013-2014

9,13,28,208

1,50,56,993

6.06

RATIO OF CURRENT ASSETS TO FIXED ASSETS

7
6
5
4
3
2
1
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

60

Interpretation
In 2011, the company has more fixed assets than current assets. Afterwards it
increased its current assets more and more and increasing its working capital ability also.
Decrease in fixed assets is less due to its depreciation.

FINDINGS
This cash ratio implies the ready cash availability in the company.
Distribution of dividends has taken place in the year 2012 and hence the decrease in
the ratio when compared to the ratio is 2012.
The higher the value of debtors turnover, the more efficient the performance of credit.
There is a decrease in 2012 as compared to 2011 and this is due to the decrease in
PLF bonus to an extent of Rs.60,00,000/- i.e. lesser income from services.
This 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 shareholder
funds.
High net profit ratio will help the firm survive in the fall of income from services, rise
in cost of production (or) declining demand.
The decrease in net profit ratio in 2012 is only because of decrease in PLF bonus to an
extent of Rs.58, 00,000/-.

61

SUGGESTIONS
The profitability of the company is increasing every year continuously from the years
with the turnover increasing.
The profitability as compared to the turnover is going on balance with the
administrative and other costs.
The current ratio of the company as discussed is always much high than the standard
norms, which is also not favorable for the company, this means that the big amount of
money is not being utilized effectively as most of the cash is tied up in debtors and
inventories.
The company should improve upon its credit policies and holding of inventories, as
the company can save the cost of working capital by reducing the same.
The company should also review the opportunities and threats to its business in the
long term perspective.
The company is diversifying in various aspects. While the only threat to the company
in this field is from unorganized sector producing cheaper and as the liability of excise
duty is not there resulting in low cost of production.
This can be overcome by the company by maintaining its quality standards, as the
consumer now - a - days are ready to pay for the quality products.

62

CONCLUSITION
Comparative Performance
Comparative balance sheet revels that there was no change in share capital as there
was no fresh issue of shares. It can be seen that the company is heading in the path of
progress and prosperity during the recent years, as this can be justified by the financial
figures of the company. The company has generated the funds by raising unsecured long-term
loans. Company has consistently invested in the purchase of fixed assets. The current assets
are always more than the current liabilities, which show that the liquidity position of the
company is sound.
Common Size Performance
Comparison of the common size balance sheet reveals that the proportion of the share
capital as part of total assets has decreased as part of total assets. An increasing and
decreasing trend was maintained in the case of reserves and surplus. Similar trend could be
viewed in case of fixed assets and consistency was maintained in case of investments.
Current liabilities have increased till 2011-2012 and after that declined in 2012 11 and again
increased in 2013 12 and 2014 13 and once again declined in the year 2013 12 and 2014

13.

similar

position

can

be

viewed

in

case

of

current

assets.

Ratio Analysis
After going through the depth analysis it can be drawn that the company is heading
towards the path of progress and prosperity during the recent years, as this can be justified by
the financial figures and from the fact of the company is growing. After the analytical study
of financial performance Leo Labs Ltd., and interpretation of various ratios, it can be
concluded that the liquidity position of the company is better. From the interpretation of
current ratio, it has been observed that the current ratio of the company was above standards,
which shows the liquidity position is better. The quick ratio, gives a picture of the
organization ability to pay its short term liabilities through short term assets.
63

BIBILOGRAPHY

BOOKS
AUTHORS
An overview on financial statements and ratio Chidamaram Ramesh Kumar, Anbumani N
analysis
financial statement analysis
Financial Management
Financial Management
Research Methodology
Financial Management

George Foster
Prasanna Chandra
I.M. Pandey
CR Kothari
S.N Maheswari

REFERRED WEBSITES
www.googlefinance.com
www.madhucon.com
www.madhucongroups.com
www.accountingformanagement.com
www.accountingmaster.com

64