Financial Performance

A STUDY ON FINANCIAL PERFORMANCE
(with special reference to RASHTRIYA ISPAT NIGAM LIMITED, Visakhapatnam)
A project report submitted to JNT University, Kakinada

in partial fulfillment for the award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
By
SITARAM.T
Regd.No: 09PD1E0043
Under the guidance of

Mr.M.Gangunaidu, M.A (Eco), M.B.A (Finance), (MHRM)
Asst. Professor, Dept. of MBA
Vignan’s Institute of Information Technology
Department of Management Studies

VIGNAN’S INSTITUTE OF INFORMATION TECHNOLOGY
(Approved by AICTE and Affiliated JNT University)
VISAKHAPATNAM
2008-2010
DECLARATION
I hereby declare that this project work entitled “A Study on Financial
Performance” in RASHTRIYA ISPAT NIGAM LIMITED. Submitted by me to the
JNT University, Kakinada in partial fulfillment for the award of Degree of MBA is
entirely based on my own study is being submitted for the first time and it has not
been submitted to any other university or institution for any degree or diploma
(Kanaka Mahalakshmi I)
CERTIFICATE
This is to certify that the project report titled “A Study on Financial
Performance” in RASHTRIYA ISPAT NIGAM LIMITED is being submitted by
Kanaka Mahalakshmi.I in partial fulfillment for the award of the Degree of MBA
has been carried out by his under my guidance and supervision.
Mr. J.Edukondala Rao Mr. M.Gangunaidu

(Head of the Department) (Project Guide)
ACKNOWLEDGEMENTS
I express my sincere thanks to my project guide Mr. M.Gangunaidu for
his valuable guidance and cooperation throughout the project work. I am also
thankful to our Head of the Department Mr.J. Edukondala Rao and all other
faculty members who helped me directly and indirectly for the successful
completion of my project work.
I am also thankful to our beloved Principal Prof.M.Ramjee for giving me
the permission to carry out the project work.
I also express my gratitude and heartfelt thanks to my company guide
Mr. Ramesh Kumar, Asst Manager (F&A), of Visakhapatnam Steel Plant,
Visakhapatnam, who is my project guide and who has been a constant source of
inspiration for me throughout the study of the project.
Finally I would like to express my gratitude and thanks my parents and
friends whose unremarkable encouragement had helped me throughout my
educational endeavor and to do this project work.
(Kanaka Mahalakshmi I)
CONTENTS
Declaration
Certificate
Acknowledgements
Contents
CHAPTER-I INTRODUCTION
CHAPTER-II ORGANISATION PROFILE
CHAPTER-III THEORETICAL FRAMEWORK
CHAPTER-IV DATA ANALYSIS AND
INTERPRETATION
CHAPTER-V SUMMARY AND
SUGGESTIONS
Bibliography
Introduction
Chapter-1
INTRODUCTION
Steel comprises one of the most important inputs in all sectors of the
economy. Economy of any country depends on the strong base of the iron and
steel industry. Steel is a versatile material with multitude of useful properties
making it indispensable for furthering and achieving continuing growth of the
economy-be it construction, manufacturing, infrastructure or consumable. The
level of steel consumption has long been regarded as an index of
industrialization and economic maturity attained by country.
Keeping in view the importance of steel, the integrated steel plants with
foreign collaborations were set up in the public sector in the post independence
era. The growth of any organization depends on the overall performance such as
production, marketing, human resource and financial performance of the
organization. The financial performance of any organization reflects the
strengths, weakness, opportunities and threats of the organization with respect to
profits Earned, investments, sales realization, turnover, return on investment, and
net worth of capital.
Finance plays an important role in any organization. The dictionary

meaning of finance is money affairs or the art of managing or administrating the
public money. Hence the name financial management could be referred to as
money management. The function of finance is not arranging funds for the
business organization but also it includes planning, forecasting of cash flow, both
receipts and payments, raising the funds, allocation of funds and financial
control.
Efficient management of financial resources and deliberate analysis

financial results are prerequisites for success of an enterprise. Financial
statements are the basis for decision making by the management and as well as
all other outsiders who are interested in the affairs of the firm.
Financial management involves the management of finance function. It is

concerned with the planning, organizing, directing and controlling the financial
activities of an enterprise. It deals mainly with raising funds in the most economic
and suitable manner; using these funds as profitably as possible; planning future
operations and controlling current performance and future developments through
financial accounting, cost accounting, budgeting, statistics and other means. It is
continuously with achieving an adequate rate of return on investment, as this is
necessary for survival and the attracting of new capital.
The financial manager must see that the funds are procured in a manner
that the risk, cost and control considerations are properly balanced in a given
situation and there is optimum utilization of funds. The financial manager
estimates the total requirements of funds, both in short period and long period.
The financial manager assesses the financial position of the company through
the working out of the return on capital, debt-equity ratio, cost of capital from
each source etc.., and comparison of the capital structure with that of similar
companies.
Introduction to Financial Analysis:
The terms ‘financial analysis’ also known as analysis and interpretation of

financial statements refers to the process of determining financial strength and
weaknesses of the firm by establishing strategic relationship between the items
of the balance sheet, profit and loss account and other operative data.
Financial analysis is the process of identifying the financial strength and

weakness of the firm by properly establishing between the items of the balance
sheet and profit and loss account. There are various methods or techniques used
in analysis financial statements such as comparative statements, trend analysis,
common size statements, schedule of changes in working capital, funds flow and
cash flow analysis – Cost Volume Profit Analysis and Ratio Analysis.
Need for the Study:
There is a special role of every industry barring up on the need essentiality

where everything has to be done in accordance with standards that are regulated
by the government. The main aim of any firm is to maximize the wealth of the
profits. Which in turn depend on successful sales activity? To generate sales,
investment of sufficient funds in current assets is required. The need of current
assets should be emphasized, as the sales don’t convert into cash immediately
but involved a cycle of operations, namely operating cycle.
Rashtriya Ispat Nigam limited is a multi-product steel-manufacturing unit

with varying cycle time for each product. The capital required by each
department in a large organization like RINL depends on the product target for
that year. To understand this, conceptual idea is not only sufficient but also it
needs a wide knowledge and understanding of the factors that are affecting
them. Especially VISAKHAPATNAM STEEL PLANT has emerged from loss to
profit making company.
Now, the study is all about analyzing, how this has been possible for a
company whose figures were budgeted to negative show finally ended with high
positively.
Here in this project an attempt is made by financial statements for knowing

the financial performance of the company.
Objectives of the Study:
 To know about Rashtriya Ispat Nigam Ltd

 To know the current position of various assets, liabilities and results of
operation activities
 To find out Financial Strengths and weaknesses of the firm
 To know the Liquidity Position of a firm
 To know the causes of changes in the Cash Position
 To find out important tools of Short-term, Long-term Financial

Planning
 To know the ability of the firm to meet its current obligations
 To know the overall operation efficiency and performance of the firm
 To find out foremost important Financial Decisions
 To know the detailed information about comparative and common size

balance sheets
 To examine profitability position of RINL, during the year 2004-2005 to

2008-2009.
 To know about steel scenario in India and world
Research Methodology:
Methodology is a systematic procedure of collecting information in order to
analyze and verify a phenomenon. The data can be collected through two
principle sources.
They are as follows:-
 Primary data
 Secondary data
Primary data:-
It is the information collected directly without any references. In this study

it is gathered through interviews concerned officers and staff either individually or
collectively, sums of the information has been verified or supplemented with
personal observation conducting personal interviews with the concerned officers
of finance department of Visakhapatnam steel plant.
Secondary data:-
The secondary data was collected from already published sources such
as, pamplets of annual reports, returns and internal records. The data collection
includes:-
• Collection of required data from annual records of RINL.
• Reference from textbooks and journals relating to financial performance

and management.
Data Sources:
DATA
SOURCES
PRIMARY SECONDARY
SOURCES SOURCES
INSIDE THE OUTSIDE THE

MANAGEMENT RESPONDENTS COMPANY COMPANY
ANNUAL TEXT BOOKS,

REPORTS JOURNELS
PERSONAL
OBSERVANCE
Limitations of the Study:
 The period of study that is 6 weeks as not enough to go in the detailed

aspects of the study.
 The study is carried basing on the information and documents provided by

the organization and based on the Interaction with various employees of
respective departments.
 Respondents may not provide accurate information due to various

reasons.
 Most of the matters related to budgets were confidential so it is not

possible to gather information.
 Time is a major constraint.
 Budgeting process is very dynamic.
 There was no scope of gathering current information as the auditing has

not been done at the time of project work.
Chapter-II
Organisat
ion Profile
Chapter-2
ORGANISATION PROFILE
Steel industry is the back bone of all industrial commercial activities.

Realizing these countries planners have been formulating and updating annual
plans for production of iron and steel. In this context a number of steel plants
were setup. The steel industry plays a vital role in the growth of nation's
economy. Steel is such a versatile commodity that every object we see in our day
to day life has used steel either directly or indirectly in its product To mention a
few it is used for such small items as nails, pins, needles etc., agriculture
implements boilers, ship fabrication, railway materials, automobile parts, etc. to
have machine structure.
The great investment that has gone into the fundamental research in iron
and steel technology has helped both directly and indirectly in many modem
fields of today's science and technology. It would have been very painful to
imagine the fate of today's civilization if steel has not been there. Steel is
versatile and indispensable item. The versatility steel has not been there. Steel is
versatile and indispensable item. The versatility steel can be traced mainly of
three reasons.
 It is only metallic item, which can be continently and economically

produced, in large quantities.
 It has got very good strength coupled with density and malleability.
 Its properties can be changed over a wide range. It alloys easily with many
of the common element.
The level of steel consumption has been regarded as an index of

industrialization and economic maturity attained by country. Keeping in view the
importance of steel, the integrated steel plants with foreign collaborations were
setup in the public sector in the post-independence era.
The growth of any organization depends on the over all performance such
as production, marketing, human resource and financial performance of the
organization. The financial performance of any organization reflects the
strengths, weaknesses, opportunities and threats of the organization with respect
to profits earned, investments, sales realization, turnover, returns on investment,
net worth of capital.
India's Steel Scenario:
Indian steel industry has always remained isolated and protected by

government, where the steel industry was never expected to generate profit from
business, but was expected to provide employment to the unemployed. Presently
India is operating with open-hearth furnaces. The existing equipment, energy and
labor in Indian steel industry are much low than developed countries.
Indian steel industry generates a significant amount of waste materials,

which can cause environmental problems. The four aspects of "Waste
Management” namely- residue reprocess, recycle and recovery do not hold much
ground in the Indian steel industry. The Indian companies cannot spend more for
pollution control. The energy consumption per tone is 50-100% higher than that
of the international norms.
The Indian steel industries have developed a bit in the recent years. The
production is growing on properly. Many techniques are being implemented in
the steel industries. The country's aim is to sell quality steel. The government is
also helping the steel industries in this basis. The apparent consumption of steel
is shown below.
The development of steel industry in India should be viewed in conjunction

with the type and system of government that had been ruling the country. The
production of steel in significant quality started after 1990. The growth of steel
industry can be started by dividing the period into pre and post independent era.
In the period of pre independence steel production was 1.5 million tones per
year, which was raised to 9.0 million tones of target by the seventies. This is the
present of the bold steps taken by the government to develop this sector.
World's demand for Steel:
The total demand for steel in world is expected to grow at an annual rate
of 1.7% between 1935 and 2000 A.D. as per the study concerned by china
economists. According to their estimation total demand in advanced industrial
countries on a whole is expected to grow at 0.6% annual rate following a 2.2%
rate between 1974 to 1984. steel demand is less developed countries on a whole
is expected to grow at a 5.5% annual rate up to 2000 following a 3.1 annual
growth rate between 1984-1994. Within the controlling plant economy the
Eastern Europe erstwhile USSR region may have 0.3% annual steel demand
growth. Steel demand in china. North Korea region would grow at 4.0 annual
rates up to the end of this century at a 7.5% per annual growth during 1974-
1980.
Highlights of present Steel Scenario:
 The world steel shows a low growth demand.

 There is a threat to steel industry from competitive products like plastics,
aluminum, etc.
 Developed countries slowly reduced the production of steel.
 Developing countries like China are planning to produce steel as much
large quantity then of present output of 80 Mt. per annum.
 India consciously and strategically decides to invest into steel production.
 Preference is given to superior quality products and high value item
production.
 Customer oriented approach in view of product oriented approach.
 Emergence of new technology like scraps preheating
Growth of Steel Industry:

The growth in a chronological order is depicted below:
S.No YEAR GROWTH
1 1830 Osier Marshall heathIer constructed the first manufacturing
plant at port-motor in Madras presidency.
2 1874 James erskin founded the Bengal frame works.
3 1899 Jamshediji TATA initiated the scheme for an integrated steel
plant.
4 1906 Formation of TISCO
5 1911 TISCO started Production.
6 1918 TISCO was founded
7 1940 Formation of Mysore iron and steel initiated at Bhadravathi in
Karnataka.
8 1951 – First five-year plan - The Hindustan steel limited (HSL) was
1956 born in the year 1954 with decision of setting up three plants
each with 1 million tones in got steel per year at Rourkela,
Bhilai, Durgapur. TISCO started its expansion program.
9 1956 – Second five-year plan - A bold decision was taken up to
1961 increase the ingot steel output in India to 6 million tones per
year and its production at Rourkela, Bhilai and Durgapur steel
plant started
10 1961 – Third five-year plan - During the plan the three steel plants
1966 under HSL, TISCO & TISCO were expanded*
11 1964 Bokaro steel plant came into existence.
12 1966 – Recession period - Till the expansion programmes were
1969 actively existed during this period.
13 1969 – Fourth five-year plan - Salem steel plant started. Licenses
1974 were given for setting up of many mini steel plants and re--
rolling mills government of India. Plants in south are each in
Visakhapatnam and Karnataka. SAIL was formed during this
period on 24th January 1973
14 1974- Fifth five-year plan - The idea of setting first integrated steel
1979 Plant, the first sea-based plant at Visakhapatnam took definite
shape. At the end of the fifth five year plan the totaled installed
capacity from six integrated plants was up to 10.6 million tons.
15. 1979 - Annual plan. The Erstwhile soviet union agreed to help in setting
1980 up the Visakhapatnam steel plant
16 1980 – Sixth five-year plan - Work on Visakhapatnam steel plant started
1985 with a big bang and top priority was accorded to start the plant.
Schemes for modernization of Bhilai steel plant, Rourkela steel
plant, Durgapur steel plant and TISCO were initiated. Capacity at
the end of sixth five-year plan from six integrated plants stood
11.50 million tones.
17 1985 – Seventh five-year plan - Expansion works at Bhilai and Bokaro
1991 steel plant completed. Progress of Visakhapatnam steel plant
picked up and the nationalized concept has been introduced to
commission the plant with 30 MT liquid steel capacities by 1990
18 1992 – Eight five-year plan - The Visakhapatnam steel plant was
1997 commissioned in 1992. The cost of plant has become around 8755
crores. Visakhapatnam steel plant started the production and
modernization of other steel plants is also duly engaged.
19 1997 – Ninth five-year plan - Restructuring of Visakhapatnam steel plant
2002 and other pubic sector undertakings.
The Major Steel and Related Companies in India:
 Bhart Refectories Ltd.

 Hindustan Steel works Construction Ltd
 Jindal Steel and Power Ltd
 Manganese ore(India) Ltd
 Metallurgical and engineering consultants India Ltd
 National Mineral Development Corporation
 Rashtriya Ispat Nigam Ltd
 Sponge Iron India Ltd
 Steel Authority of India Ltd
 TATA Iron steel Company
Steel Plants with Foreign Collaborations:

S.No Plant Collaboration Capacity of
Finished Steel Products
1 Rourkela Steel Plant West Germany
2 Bhilai Steel Plant Erstwhile USSR
3 Durgapur Steel Plant Britan
4 Bokaro Steel Plant Erstwhile USSR
S.No Plant Collaboration Capacity of Annual
Finished Steel Products Production
1 Rourkela Steel Plant West Germany 7,20,000 Tones

2 Bhilai Steel Plant Erstwhile USSR 7,70,000 Tones
3 Durgapur Steel Plant Britain 8,00,000 Tones
Problems of Steel Industry:
Lack of Raw Materials:
Non-availability of good quality raw material is another problem faced by

iron and steel industry. The modem giant blast furnace needs high-grade iron ore
and good metallurgical coal.
Further the industry is unable to get good quality coke and manganese is
which the principal raw materials next to iron ore are unfortunately most of our
resources of manganese ore are of poor quality besides the non availability of
good quality raw material, regular supplies of raw materials are very much
handicapped due to the absence of good transport facilities. Another problem
faced by the steel industry related to the difficulty in getting zinc supplies for the
continuous galvanizing line.
Lack of Technical Problems:
Bhilai had to execute orders for shipment of rails to Iran. South Korea and
Malaysia. Because of technical limitations, Rourkela plant is unable to substitute
aluminum of zinc for the production of galvanized sheet apart from source
internal technical problems; our technology in the field of steel production is not a
developed one when compared to other advanced countries.
Government Control and Pricing Policy:
Since 1941, India steel and iron industry was almost completely state
regulated. Both prices and distribution of steel were under control of government.
The Govt. decided to remove statutory control over the price and distribution of
all, but a few categories with effect from 1st march 26, 1964 the Govt. supervise
the steel and iron inducted according to the recommendation of Raja committee.
But Raj committee in fixing the steel price didn't regulate the price of raw
materials.
Profile of Visakhapatnam Steel Plant
Visakhapatnam steel plant the first coast based steel plant of India is
located 16 km south west of city of destiny i.e., Visakhapatnam Bestowed with
modern technologies, VSP has an installed capacity of 3 million tones per annum
of liquid steel and 2.56 million tones of saleable steel. At VSP there is emphasis
on total automation, seamless integration and efficient up gradations which
results in wide range of long and structural products to meet stringent demands
of discerning customers with in India and abroad. VSP products meet exacting
international quality standards such as JIS, DINAND BIS, and BS etc.
VSP has become the first integrated steel plant in the country to be
certified to all the three international standards for quality (ISO-9001) for
environment management (ISO-14001), for Occupational Health & Safety
(OHSAS-18001). The certificate covers quality system of all operational,
maintenance and service units besides purchase system, training and marketing
functions spreading over 4 regional marketing offices, 24 branch offices and
stock yard located all over the country.
VSP successfully installing and operating efficiently Rs460 crores worth

of pollution control and environment control equipments and converting the
barren land scope by planting more than 3 million plants has made the steel
plant, steel township and surrounding areas into a heaven of lush greenery.
BACKGROUND: Visakhapatnam steel plant
To meet the growing domestic needs of steel, government of India

decided to set up an integrated steel plant at Visakhapatnam. An agreement was
signed with erstwhile USSR in 1979 for co-operation in setting up 3.4 Mt
integrated steel plant at Visakhapatnam. The foundation stone for the plant was
laid by the then prime minister on 20th Jan '71.
The project was estimated to cost Rs. 3897.28 Crs based on prices as on
4th quarter of 1981. However, on completion of construction and commissioning
of the whole plant in 1992, the cost escalated to around 8500 Cr. Unlike other
integrated steel plants in India, Visakhapatnam Steel Plant is one of the most
modem steel plants in the country. The plant was dedicated to the nation on 1 st
august' 1992 by the Prime Minister, Sri. P.V.Narasimha Rao.
To operate the plant at international levels and attain such labor

productivity, the organizational man power has been rationalized. The plant has a
capacity of producing 3.0 Mt of liquid steel and 2.656 Mt of saleable steel.
VSP Technology: State-of-the-Art

 7m tall coke oven batteries with coke dry quenching.
 Biggest Blast Furnaces in the country
 Bell less top charging system in blast Furnace.
 100% slag granulation at the BF cast house.
 Suppressed combustion - LD gas recovery system.
 100% continuous casting of liquid steel.
 "Tempore" and "Stelmor" cooling process in LMMM & WRM.
 Extensive waste heat recovery systems.
 Comprehensive pollution control measures.
Major Sources of Raw material:
Iron Ore Lumps & Fines Bailadilla, M P
B F Lime Stone Jaggayyapeta, A P
SMS Lime Stone UAE
B F Dolomite Madharam, A P
SMS Dolomite Madharam, A P
Manganese Ore Chipurupalli, A P
Boiler Coal Talcher, Orissa
Coking Coal Australia
Medium Coking Coal Gidi/Swang/Rajarappa/Kargali

Major Units at VSP:
DEPARTMENTS ANNUAL UNITS (3.0 MT STAGE)
Cap. ('OOOT)
Coke Ovens 2,261 4 Batteries each of 67 ovens & 7 Mts
Height
Sinter Plant 5,256 2 Sinter machines of 312 Sqm grate area
Each
Blast Furnace 3,400 2 Furnaces of 3200 cu m volume each
Steel Melt Shop 3,000 3 LD Converters each of 133 Cum.
Volume and six 4 strand bloom casters
LMMM 710 4 Strand Finishing Mill
WRM 850 2 x 10 Strand Finishing Mill
MMSM 850 6 Strand Finishing Mill
Main Products of VSP:
Steel Products By Products

Angles Nut Coke
Billets Coke dust
Channels Coal Tar
Beams Anthracene Oil
Squares HP Naphthalene
Flats Benzene
Rounds Toluene
Re Bars Zylene
Wire rods Wash Oil
VISION:
To be a continuously growing world-class company.
We shall:
 Harness our growth potential and sustain profitable growth.
 Deliver high quality and cost competitive products and be the first choice
of customers.
 To create an inspiring work environment to unleash the creative energy of
people.
 Achieve excellence in enterprise management.
 Be a respected corporate citizen, ensure clean and green environment
and develop vibrant communities around.
MISSION:
To attain 16 million tones liquid steel capacity through technological up

gradation, operational efficiency and expansion, to produce steel at international
standards of cost of quality, and to meet the aspirations of the stakeholders.
OBJECTIVES OF VSP:
 Expand plant capacity to 6.3 Mt by 2010-11 with the mission to expand
further in subsequent phases as per the corporate plan.
 Towards growth-expand the plant capacity to 7Mt by 2011-12 and 10 Mt
By 2019-20.
 Be amongst top five lowest cost steel producers in the world by 2009-
2010.
 Achieve higher levels of customer satisfaction than competitors.
 Towards employees-make RINL the employer of choice. Upgrade the
skills and efficiency of employees through training and development and
maintain high levels of motivation and satisfaction.
 Be recognized as an excellent business organization by 2009-10.
 Instill right attitude amongst employees and facilitate them to excel in their
professional, personal and social life.
 Be proactive in conserving environment, maintaining high levels of safety
and addressing social concerns.
 Towards technology up-gradation and productivity-continuously upgrade
tec1mology and practice benchmarking to achieve international efficiency
levels. Adopt latest developments in information and communication
technology.
 Towards knowledge management-become a knowledge based and a
knowledge sharing company.
 Towards safety, environment and society-continue efforts towards safety
of employees, conversation of environment and be a good corporate
citizen.
Core Values:
 Commitment
 Customer Satisfaction
 Continuous Improvement
 Concern for Environment
 Creativity and innovation
Policies & Rules of RINL/VSP:
VSP takes all necessary actions for the fulfillment of regulatory

requirements. In this regard VSP follows the following policies.
1. Quality Policy:-
Continuously improve the quality of all materials processes and product
services for customers.
2. Environment Policy:-
Maintain high level of environmental consciousness amongst employees
and prevention of pollution by minimizing the emissions and discharge.
3. HR Policy:-
VSP believe that their employees are the most important resources, so it
provides good working environment that makes the employees committed and
motivated for maximizing productivity.
Land mark year of growth:

The year 2005-2006 saw the company registering then best ever sales
turnover of Rs.8482 cores a 3.6% growth over previous year. The company
stated a record net profit of Rs.1252.37 crores and this is the third consecutive
year that the company has been earning net profit with this the accumulated
losses have bought down with this accumulated losses have set up to out the
Rs.906 crores and your company is all shortly also your 'MINI RATNA' by the
government of India. It works under the following
Slogan:
“Let Excellence not only be our goal.
Let us make it our standard”
Organizational Structure of Visakhapatnam Steel Plant:

VISAKHAPATNAM STEEL PLANT has a well designed organizational
structure. It has centralized management structure. There is Chairman cum
Managing Director (CMD) as head; the main decisions are taken by him, in
accordance with steel industry (SAIL). These are 9 levels in organization from E-
O to E-9.
LEVELS NAME
E-9 General Manager
E-8 Joint General Manager
E-7 Dy. Additional Chief Manager
E-6 Additional Chief Manager
E-5 Dy. Chief Manager
E-4 Manager
E-3 Deputy Manager
E-2 Assistant Manager
E-l Junior Manager
E-0 Assistant Executive
VISAKHAPATNAM STEEL PLANT has tall/vertical organization

structure, where the power & authority flows from top to bottom. It has four main
departments, they are - Finance Dept., Marketing Dept., Human Resource dept,
and Production Department.
Man power at a glance as on 31-03-2009
Works Project Mines Other Total
Executives 3249 329 93 1547 5218
Non Executives 10476 63 267 120 12007
Total Employees: 17,225
Production Facilities:
The production facilities in the RINL are most modern amongst the steel
industry in the country. The know-how and the technology have been acquired
from different parts of the world from the reputed/established manufacturers.
Some of the production facilities in RINL are:

• 7 meter coke ovens of RINL are the tallest so far built in the
country.
• Base Mix Yard for sinter plant introduced for the first time in the
country helps in excellent blending of the faced material to sinter
machine and production of consistent good quality sinter.
• 3200 cubic meter two blast furnaces i.e., Godavari and Krishna with
bell less top charging equipment and 100% cast house slag granulation,
the biggest to be setup in the country have done away either the
conventional bell charging system.
• 100% continuous costing of liquid steel into blooms resulted in
lowest losses and better quality of blooms.
• RINL has sophisticated and latest features of automation of large
polling mills consisting of
• Light and Medium Merchant Mill (LMMM) which include billet and
bar mill
• Wire Road Mill (WRM)
• Medium Merchant and Structure Mill (MMSM)
• The operations of blast furnace, steel melting shop and rolling mills
have been entirely computerized to ensure consistent quality and
efficient performance.
Marketing network of Visakhapatnam Steel Plant:
The products are being sold through 35 marketing centers all over the
country with four stock yards at Mumbai, Kolkata, Chennai and Hyderabad. And
in other places, consignment agencies have been contracted.
Demand - Availability Projection:
• Demand- Availability of iron and steel in the country is projected by

Ministry of Steel annually.
• Gaps in Availability are met mostly through imports.
• Interface with consumers by way of Steel Consumer Council exists,
which is conducted on regular basis.
• Interface helps in redressing availability problems, complaints related to
quality.
Pricing & Distribution:
• Price regulation of iron & steel was abolished on 16.1.1992. ~

Distribution controls on iron & steel removed except 5 priority sectors,
viz. Defence, Railways, Small Scale Industries Corporations, Exporters
of Engineering Goods and I North Eastern region.
• Allocation to priority sectors is made by Ministry of Steel.
• Government has no control over prices of Iron & Steel.
• Open market prices are generally on rise.
• Price increases of late have taken place mostly in long products than
flat products.
Pollution control and Environmental protection:
Elaborate measures have been adapted to combat air and water pollution
in Visakhapatnam steel plant. In order to be eco friendly Visakhapatnam steel
plant has planted more than 3.4 million trees in area of 35 square kilometers and
incorporated various technologies at a cost of Rs.460 crores and control
measures.
Achievements and Awards of VSP:

The efforts of VSP have been recognized in various forms. Some of the
major awards received by VSP are in the area of energy conservation,
environment protection, safety, Quality, Quality circles, Rajbhasha, MOD, sports
related awards and a number of awards at the individual level.
Some of the important awards received by VSP are indicated below:
Award Purpose Year
Award of 'Certificate of Merit' of Global Human resources 2010-

Human Resource Development of Development April
Organization'(IFTDO)
NIPM certificate of Merit Best HR Practices 2010-

March
Udyog Ratan Award by the Delhi Telugu 2010-
Academy, Hyderabad. March
‘Public Relations National Awards-2009’ RINL bagged third prize in the 2009
‘Event Management’ category of
the ‘Public Relations National
Awards-2009’ at the 31st All
India Public Relations
conference held in Chandigarh
on 11th December, 2009.
10th National Management Quiz VSP won this Quiz successively 2009
for 3 in a row (2007, 2008 &
2009) achieving HAT-TRICK
which is a NATIONAL
RECORD.
Steel Minister’s Trophy for the year RINL bagged the First Steel 2010-
2006-07 Minister’s Trophy for the year Feb
2006-07 for being the best
integrated steel plant in the
country (Runner Up) in
November 2009.
Energy Award-CII VSP was adjudged ‘Energy 2009

Efficient Unit’ award by
Confederation of Indian Industry
Godrej Green Business Centre
at the 10th National award for
excellence in energy
Management in November 2009
International Convention on Quality Two QC teams i.e. “Sraddha” 2009
Control Circles (ICQCC) 2009 from CMM Dept. and “Akash’
Convention Organized By: : Productivity from ES&F dept consisting
Improvement Circles Association, Cebu, fourteen members and
Philippines VSP QC teams won Gold & coordinator presented QC case
Bronze medals at International QC studies during the competition.
convention During October'2009
Certification for CMMI Level 3 VSP has achieved a rare 2009
(version1.2) for its Information distinction of becoming
Technology the First Indian Steel Company
to be assessed and certified for
CMMI Level 3(version 1.2) for its
Information Technology
Department.
‘Rajbhasha Trophy’ for excellent for excellent performance of 2009

performance Hindi for the year 2007-08 by
Hindi Salahkar Samithi of
Ministry of Steel
VSP bags Top Assessee Award for

2007-08 for paying highest central
excise on the 65th Anniversary of
Central Excise Day, which was
celebrated at Vizag on 24th Feb’09 by
the Visakhapatnam Excise zone.
‘Rajbhasha Gourav Alankaran Sri PK Bishnoi was awarded

‘Rajbhasha Gourav Alankaran’
by Rasvarsha Sansthan,
Varanasi on this occasion for
excellent Support rendered by
him in propagation of Hindi
Recognition as one among “India’s best India's best companies to work 2009
companies to work for” – 2009 , Top 50 for -Study 2009 by Great Place
best companies to work for in India, Top To Work Institute & Economic
2 PSUs to work in India,4th rank in large Times ( total no of participated
organizations category (More than companies were 373)
10,000 employees), Top 6 in
manufacturing and production
Presented by Indian Institution 2008
Performance Excellence Award 2007
of Industrial Engineering for
Financial and Operational
Strength for 2006-07
Award for Exemplary usage of ICT by for its e-governance by 2008

PSU's Government of India during 11th
National Conference on e-
Governance
QCFI-NMDC Award for Best Quality QC Implementation 2008

Circle Implementation - PSU Category
Ispat Suraksha Puraskar Award by In group A (Scheme2) for the 2008

year 2007 for the zones coal
JCSSI
and coke,BF,Slag granulation
plant ,SP,RMHP & Rolling mills,
in which no fatal accidents
occurred during years 2006-07.
Total quality, latest technology, sophisticated equipment, up to date

knowledge, high skills, cost consciousness, production with less cost and
customer satisfaction have become the hallmark of VSP.
Financing and Accounting wing:

In RINL main function of the finance and Accounts Department is to look
after the treasury management and to render service in financial aspects for
effectively conducting the business of the company. The finance Department has
many sub sections. It has about 275 employees consisting of about 260
executives and 15 non executives. The entire department is headed by the
general manager. Finance and Accounting Department of RINL is divided into
several sections for administrative control and assignment of responsibilities and
fixing of accountability etc. To name a few are:
The following are the sections of finance and Account department in RINL.
1. Raw material Accounts

2. Stores Accounting
3. Sales Accounts
4. Pay and PF Accounts
5. Works accounts section
6. Operational Bills Accounts
7. General Accounts Section
8. Cash Section
9. Loans and Advances
10. Corporate Accounts
11. Internal Audit Section
12. Budget Section
13. Costing Section
14. Project Accounts
15. Concurrence Sections
Sources of Funds:
VSP raise its working capital from of 10 Bankers. The following are the 10
banks. Where funds for finance are raised.
1. State Bank of India

2. Canara Bank
3. UCO Bank
4. Bank of Baroda
5. Andhra Bank
6. State Bank of Hyderabad
7. Allahabad Bank.
8. HSBC
9. Industrial Development Bank of India (IDBI)
10. Indian Overseas Bank (IOB)
The Company Pays:
1. Excise duty - 2 Crores/day

2. Sales Tax - 12 Crores/month
3. Custom duty - 12 Crores/month
4. Employee salary - 35 Crores/month
5. Iron ore - 15 Crores/month
6. Railway freight - 50 Crores/month
7. Ocean Freight - 15 Crores/month
8. Coal Blast - 70 Crores/month
BOARD OF DIRECTORS
Expansion plan:
Product Capacity Capacity Additional Facilities Envisaged

(MT) (MT)
Present Future
Hot Metal 4.00 6.50 New BF with 3800 CuM Capacity
Charge 5.26 8.50 New Sinter Plant of 400 Sq.M. area
Sinter
Liquid Steel 3.70 6.30 SMS-2 with Two 150 CuM Converters,
Two 6 Std Billet Casters & One 6 std
Round Caster
Saleable 3.34 5.72 -
Steel
Wire Rod 1.05 1.65 New WRM of 600000T/ Annum
Bars& 1.95 3.40 New SBM of 750000T/ Annum New
Structural SM of 700000T/ Annum
Seamless - 0.30 Seamless Tube Plant of 300000T/
Pipes Annum
Special Bars 16mm 40mm -
(Plains)
The company started its commercial production in 1990-91

And its financial results
Gross Operating Interes Depreciatio

FY Net Profit
Sales Profit t n
90- 245 -88 192 197 -478
91
91- 772 -101 437 449 -987
92
92- 1185 -31 198 340 -568
93
93- 1751 114 346 340 -573
94
94- 2209 416 366 415 -364
95
95- 3039 633 407 430 -204
96
96- 3135 606 430 422 -246
97
97- 3071 460 198 439 -177
98
98- 2761 15 361 111 -457
99
99- 2973 252 382 432 -562
00
00- 3436 504 351 445 -291
01
01- 4081 690 290 475 -75
02
02- 5058 1162 187 455 521
03
03- 6169 2053 49 457 1547
04
04- 8181 3271 11 1006 2254
05
05- 8482 2336 31 416 1890
06
06- 9151 2219 48 315 1363
07
07- 10433 2994 31 471 1942
08
08- 10411 2027 88 240 1335
09
It can be seen from the above table, during the year 2002-03, the
company turned around by earning a net profit of Rs.521 Crores. In the same
year, it bagged the PRIME MINISTER TROPHY for its excellent performance in
the Steel Industry. In October 2003, RINL became a DEBT FREE COMPANY.
Performance of RINL at a glance:
Production Performance – (‘000 TONS’)
The production performance of VSP in the last four years is as follows:
LIQUID SALABLE
YEAR HOT METAL STEEL STEEL
2000-2001 3165 2909 2507
2001-2002 3485 3080 2757

2002-2003 3941 3356 3056
2003-2004 4055 3508 3169
2004-2005 3920 3560 3173
2005-2006 4153 3603 3237
2006-2007 4046 3606 3290
2007-2008 3913 3322 3074
2008-2009 3546 3145 2701
Commercial Performance:
The commercial performance of VSP for the past four years is as follows
(In crores)
SALES DOMESTIC
YEAR TURNOVER SALES EXPORTS
2000-2001 3436 3122 322

2001-2002 4081 3710 371
2002-2003 5059 4433 626
2003-2004 6174 5406 768
2004-2005 8181 7933 248
2005-2006 8469 8026 443
2006-2007 9131 8487 424
2007-2008 10433 9878 555
2008-2009 10411 10332 78
Financial Performance:
VSP had to bear the burnt of huge project cost right from the day of its
inception. This has affected the company’s balance sheet due to very high
interest burden. The company, in spite of making operating profit every year had
to report net loss during all financial years. This on the other hand had resulted in
making VSP to take great care in planning the financial resources.
GROSS CASH NET
Year MARGIN PROFIT PROFIT
2000-2001 504 153 (-) 291
2001-2002 690 400 (-) 75
2002-2003 1049 915 521
2003-2004 2073 2024 1547
2004-2005 3271 3260 2008
2005-2006 2383 2355 1252
2006-2007 2633 2584 1363
2007-2008 3515 3483 1943
2008-2009 2356 2267 1336
Financial Highlights:
2006-07 2007-08 2008-09
A OPERATING RESULTS (Rs Crs)
Turn Over 9151 10433 10411
Gross Income 9812 11337 11387
Gross Expenditure 7540 8310
Gross Profit 2271 3027
Profit Before Tax 2222 2995 2027
Net Profit After Tax 1363 1943 1336
B YEAR END FINANCIAL POSITION (Rs Crs)
Share Capital 7827 7827 7827
Reserves and Surplus 1711 3654 4593
Capital Employed 9427 9935
Net Worth 9523 11481 12420
Gross Block 8876 8901 9006
Depreciation 7085 7516 7750
Net Block 1790 1385 1256
Inventory 1203 1761 3215
C PROFITABILITY AND OTER RATIO
(i) Percentage Of 24.80 29.00
Gross Profit to Sales 14.90 18.60
Net Profit to Sales 23.80 26.40
Net Profit to Net Worth 14.30 16.90
Net Profit to Capital Employed 14.50 19.60
Gross Profit to Share Capital 29.00 38.70
Inventory Sales 13.10 16.90
Sales To Capital Employed 97.10 105.00
(ii) Ratio Of
Current Assets to Current Liabilities 3.70 3.60
Quick Assets to Current Liabilities 3.30 3.10
Chapter-III
Theoretical
Framework
Chapter 3
THEORITICAL FRAMEWORK
Introduction to Financial Statements:

Accounting process involved recording, classifying and summarizing
various business transactions. The aim of maintaining various records is to
determine profitability of the enterprise from operation of the business and also to
find out is financial position. Financial statements are in term reports, presented
annually and reflect a division of the life of an enterprise in to more or less
arbitrary accounting period more frequently a year. The financial statement is an
organized collection of data according to logical and consistent accounting
procedures its purpose is to convey of a business firm.
Definitions:
According to John N.Myer “The financial statements provide a summary

of the accounts of a business enterprise, the balance sheet reflecting the assets,
liabilities, and capital as on a certain date and the income statement showing the
results of operations during a certain period”.
Nature of Financial Statements:
The financial statements are prepared on the basis of recorded facts. The
recorded facts are those which can be expressed in monetary terms. The
statements are prepared for a particular period, generally one year. The
transactions are recorded in a chronological order as and when the events
happen. The financial statements by nature are summaries of the items recorded
in the business and there statements are prepared periodically generally for the
accounting period.
The following points explain the nature of financial statements:
1. Recorded Facts:
The term ‘Recorded facts; refers to the data taken out from the accounting
records. The records are maintained on the basis of actual cost data. The
figures of various accounts such as cash in hand, cash at bank, bills receivables,
Sundry debtors, fixed assets are taken as per the figure recorded in the
accounting books. As the recorded facts are not based on replacement costs the
financial statements do not show current financial condition of the concern.
2. Accounting Conversions:
Certain accounting converters are followed while preparing financial
statements. The conversion of valuating inventory at cost or market price,
whichever is lower, is followed. The valuing of assets at cost less depreciation
principle for balance sheet purposes statements comparable, simple and
realistic.
3. Postulates:
The accountants make certain assumption while making accounting

records. One of these assumptions is that the enterprise is treated as a going
concern. The other alternative to this postulate is that the concern is to be
liquidated the concern. So the assets are shows on a going concern basis. An
other important assumption is to presume that the value of money will remain in
the same in different periods.
4. Personal Judgments:
Even though certain standard accounting conversions are followed in

preparing financial statement but still personal judgment of the accountant plays
on important part.
Characteristics of financial statements:
The financial statements are prepared with a view to depict financial

position of a concern. The financial statements should be prepared in such a
way that they are able to give a clear and orderly picture of the concern. The
ideal financial statement has the following characteristics.
1. Depict true financial position:
The information contained in the financial statements should be such that

a true and correct idea is taken about the financial position of the concern.
2. Attractive:
The financial statements should be prepared in such a way that important
information is underlined so that it attracts the eye of the reader.
3. Comparability:
The results of financial analysis should be comparable. The financial

statements should be presented in such a way that they can be compared to the
previous year’s statements. Previous year’s figures in the balance sheet.
4. Brief:
If possible, the financial statements must be prepared in brief. The reader

will be able to form as idea about the figures.
Importance of financial statements:
Financial statements contain a lot of useful and valuable information

regarding profitability financial position and future prospective of business
concern. The utility of financial statement to different parties may be summarized
as follows:
1. Management:
The financial statements are useful for assessing the efficiency of different
cost centers. The management is able to decide the course of action to be
adopted in future.
2. Creditors:
The trade creditors are to be paid in a short period. The CRS will be
interested in current solvency of the concerns. The calculations of current ratio
and liquid ratio will enable the creditors to assess the current financial position of
the concerns in relation to their debts.
3. Investors:
The investors include both short-term and long term investors. They are
interested in the security of the principal amounts of loan and regular payments
by the concern. The investors will not only analyse the parent financial position
but will also study the future prospectus and expansion plans of the concern.
4. Government:
The financial statements are used assess tax liability of business

enterprises. The Government studies economic situation of the country from
these statements. These statements enable the government to find out whether
business is following various rules and regulations or not.
5. Trade Associations:
These associations provide service and protection to the members. They

may analyse the financial statements for the purpose of providing facilities to
these members. They may develop standard ratios and design uniform system
of accounts.
6. Stock Exchange:
The stock exchange deal in purchase and sale of securities of different

companies. The financial statements enable the stock broker to judge the
financial position of different concerns. The fixation of prices for securities etc. is
also based on the statements.
Limitations of Financial Statements:
Financial statements are relevant and useful for the concern, still they do
not present a final picture of the concern, and otherwise misleading conclusions
may be drawn. The financial statements suffer from following limitation:
1. Ignoring of non-monetary aspects:

These statements are prepared with the help of accounting information
which mainly consider monetary aspects only. The value of business depends
both on qualitative and quantitative factors.
2. Historical cost:
The statements are prepared on the basis of historical cost. The value of
fixed assets is at there original cost less depreciation. The balance sheet value
are not shown the value of assets may be sold more over they do not reflect the
market value which is as important factor in determining the solvency of an
enterprise.
3. Personal Judgment:
In preparing financial statements certain items are left to the personal

Judgment of the accountant. If any accountant is not following accounting
principles correctly his judgment will give wrong picture.
4. Conversion of Conservation:
Due to conversion of conservation the income statement may not

disclose true income of the business. This is due to ignorance of probable
incomes and accounting probable losses.
Financial Analysis:
Financial analysis is the process of identifying the financial strength and

weakness of the firm by properly establishing between the items of the balance
sheet and profit and loss account. There are various methods or techniques used
in analysis financial statements such as comparative statements, trend analysis,
common size statements, schedule of changes in working capital, funds flow and
cash flow analysis – Cost Volume Profit Analysis and Ratio Analysis.
Meaning and concept of financial analysis:
The terms ‘financial analysis’ also known as analysis and interpretation of

financial statements refers to the process of determining financial strength and
weaknesses of the firm by establishing strategic relationship between the items
of the balance sheet, profit and loss account and other operative data
Techniques of financial analysis
A financial can adopt one or more of the following techniques of financial

analysis:
Financial
Analysis
Techniques
Comparative
Trend Ratio Funds flow
Financial
Percentages Analysis Analysis
Statements
Common Size
Financial Ratio C.V.P Cash Flow
Statements Analysis Analysis

Comparative Financial Statements:
The statements which have been designed in a way so as to provide time

perspective to the consideration of various elements of financial position
embodied in such statements figures for two or more period side by side to
facilitate comparison.
Both the income statement and balance sheet can be prepared Ni

the form of comparative financial statements.
The comparative financial statements contain the following items.
i. Absolute figures (amount in Rs. /-) as given in the final accounts.

ii. Absolute figures expressed in terms of percentages.
iii. Increase of decrease in absolute figures in terms of money value.
iv. Increase or decrease in terms of percentages.
v. Comparison expressed in ratios.
vi. Percentages of totals.
Comparative Income Statements:
The income statement (profit & loss A/c) gives the results of the
operations during a definite period. It reveals the profit carried or loss incurred by
the cancers. The comparative study if income statement for more than 1 year
may enable us to know the program of the concern. First two columns gibe
figures of various items for two years. The third and fourth column used to show
increase or decrease in figures in absolute adopted in preparing comparative
balance sheet.
 In first step, find out the changes in absolute figures i.e., increase or
decrease should be calculated.
 In second step percentage of change should be calculated with the
help of following formula.
Change in amount
Percentage of change = x 100
Base year amount
Comparative balance sheet:
The balance sheet prepared on a particular date reveals the financial

position of the concern on the date to study the trends of business over a period
of time comparative balance sheet reveals the cause for changes in the financial
position on amount of various transactions. The comparative studies throw light
on financial policies adopted by management.
The comparative balance sheet consists of two columns for the original
data. A third column used to show increase or decrease in various items. A
south column containing the parentage of increase or decrease may be added.
Common Size Statements:
The common size statements, balance sheet and income statement are
shown in analytical percentages. The figures are shown as percentages of total
assets, total liabilities and sales. The total assets are taken as 100 and different
assets are expressed as percentage of the total. Similarly various liabilities are
taken as a part of total liabilities. These statements are also known as
component parentage or 100% statements because every individual item is
stated as a percentage of the total 100 the short statements because every
individual item is stated as a percentage of the total 100 the short-comings in
comparative statements and trend percentages where changes in item could not
be compared with the total have been covered up.
The common size statements may be prepared in the following way.
 The totals of assets or 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 that liability.
Common Size Income Statement:
The items in income statement can be shown as percentages of sales to

show the relation of each item to sales. A significant relationship can be
established between items of income statement and volume of sales. The
increase in sales will certainly increases selling expression and volume of sales.
The increase in sales will certainly increases selling expresses and not
administrative or financial expenses. In case the volume of sale increases to a
considerable extent, administrative and financial expenses may go up. In case
the sales are declining, the selling expenses should be reduced at once.
So, a relationship is established between sales and other in income

statement and this relationship is helpful in evaluating operational activities of the
enterprises.
Common Size Balance Sheet:
Statement in which balance sheet items are expressed as the ratio of

each asset to total assets and the ratio of each liability is expressed as a ratio of
total liabilities is called common size balance sheet. The common size balance
sheet is a horizontal analysis. The comparison of figures in different periods is
not useful becomes total figure may be affected by a number of factors. It is not
possible to establish standard norms for various assets. The trends of year to
year may not be studied and even they may not give proper results.
Analysis and the Interpretation of Financial Statements:

Financial Statements are indicators of the two significant factors:
1. Profitability
2. Financial soundness
Analysis and interpretation of Financial Statements therefore refer to
such a treatment of the information contained in the income statement and
balance sheet so as to afford full diagnosis of the profitability and financial
soundness of the business.
Cost-Volume-Profit Analysis:
Cost – Volume – Profit analysis is an important tool of profit planning. It

studies the relationship between cost, volume of production, sales and profit. It is
not strictly a technique used for analysis of financial statements. However, it is
an important tool for the management for decision making. Since the data is
provided both cost and financial records. It tells the volume of account of
variation in output, selling price and cost, and finally, the quantity to be produced
and sold to reach the target profit level.
Ratio Analysis:
Financial analysis depends to very large extents of the use of ratios

through there are other equality important tools of such analysis. Thus, a direct
examination of the magnitude of two released items is some what enlightening
but the comparison is greatly facilitated by expressing the relationship as a ratio.
Ratio analysis of business enterprises enters on efforts to derive

quantitative measures or guides concerning the expected capacity of the firm to
meet its future financial obligation or expectations present and past data are
used for the purpose and what ever extrapolations appear necessary. They are
made to provide no indication of feature performance. Alexander Walt, who
criticized the bankers for its lap sided development owing to their decisions
regarding the grant of credit on current ratios a lone, made the presentation of an
elaborate system of ratio analysis in1919.
Ratio:
Ratio is an expression of the quantitative relationship that exists between

the two numbers. The ratio is defined as “the indicated quotient of two
mathematical expressions” the ratio should be determined between related
accounting variables to be meaningful and effective.
Chapter-IV
Data Analysis &
Interpretation
Chapter 4
DATA ANALYSIS & INTERPRETATION
Organizations are purposive creations. They are created in order to

achieve particular task, which individuals cannot accomplish on their own. When
organizations are created the huge task of the organization is also sub divided
into smaller tasks, which can be handled, effectively be an individual or a group
of individuals. This in other words is called as activity analysis. Usually this leads
to departmentalization of organization. To carry out these activities, people are
required to take timely decisions in light of present objectives.
There are various tools to analyze the performance of an organization

of which some important aspects are considered in this project. They are:
• Comparative Statement Analysis
• Common Size Statement Analysis
Comparative statements:
Comparative statements show the financial condition of business at a
given point of time. The elements of financial position are shown in comparative
form so as to give an idea of financial of two or more periods is known as
comparative statements. Comparative statements not only shows the absolute
figures and exhibits changes in absolute figures of a company but also gives
absolute data in terms of percentages and change in percentages. It includes:
• Comparative Income Statement
• Comparative Balance Sheet
Comparative Income Statement:
This statement is prepared to study the changes in various incomes and
expenses between two periods on a specific date. It helps the management to
know the profitability position and reasons behind fluctuations in incomes and
expenses.
For the above purpose, we have taken into consideration of the five year
accounts viz., 2004-05 to 2008-09.
Comparative Income Statement of VSP Ltd.

For The Years 2008-2009 (Rs. In Crs)
(Increase/ %
PARTICULARS 2008 2009
Decrease) change
Income
Gross Sales 10433.07 10410.63 -22.44 -0.22
Less: Excise duty
1344.7 1282.25 -62.45 -4.64
recovered on sales
Net Sales 9088.37 9128.38 40.01 0.44
Internal Consumption 88.46 114.1 25.64 28.98
Interest Earned 724.64 787.21 62.57 8.63
Other revenue 91.27 75.02 -16.25 -17.80
Total 9992.74 10104.71 111.97 1.12
Expenditure
Raw Material Consumed 4280.22 5896.25 1616.03 37.76
Depletion / (Accretion) to
Stock of Semi- -343.17 -916.65 -573.48 167.11
finished/Finished goods
Employee's remuneration
1030.72 1156.68 125.96 12.22
& benefits
Stores & spares
364.06 501.23 137.17 37.68
consumed
Power & fuel 258.81 340.31 81.5 31.49
Repairs & Maintenance 125.79 149.81 24.02 19.10
Freight outward 306.96 286.53 -20.43 -6.66
Other expenses &
509.93 377.12 -132.81 -26.04
Provisions
Interest 31.57 88.14 56.57 179.19
Depreciation 471.55 240.46 -231.09 -49.01
Wealth Tax 0.48 0.89 0.41 85.42
Gross Expenditure 7036.92 8120.77 1083.85 15.40
Less: Inter account
adjustments- raw material 39.15 38.06 -1.09 -2.78
mining cost
Net Expenditure 6997.77 8082.71 1084.94 15.50
Profit for the year 2994.97 2022.00 -972.97 -32.49
Prior period adjustments-
0.39 4.59 4.2 1076.92
Net credit
Profit Before Tax 2995.36 2026.59 -968.77 -32.34
Provision For Taxation
Current Tax -1188.13 -746.38 441.75 -37.18
Fringe Benefit Tax -4.43 -4.66 -0.23 5.19
Earlier year adjustments 11.77 21.39 9.62 81.73
Deferred Tax 128.17 38.63 -89.54 -69.86
Profit After Tax 1942.74 1335.57 -607.17 -31.25
Balance of Profit brought
1 709.81 3 652.55 1942.74 113.62
forward from previous year
Amount available for
3 652.55 4 988.12 1355.57 36.57
appropriation
Interpretation:
From the above analysis we found that, during the financial year 2009, the
total income i.e. gross profit was increased to Rs.111.97Crs, i.e.1.12%; when
compared to the previous year 2008. Overall income position was good.
In comparison to the previous year i.e.2008, The Net Expenditure have

increased by Rs.1084.94Crs, i.e.15.50%, due to increase the expenditure like
Raw Material Consumed, Employee's remuneration & benefits, Stores & spares
consumed, Power & fuel. Increase in the expenditure resulted in fall in profit after
tax. The profit after tax is decreased to Rs.-607.17Crs, i.e. -31.25% as compared
to the previous year. The overall profitability is satisfactory.

(Increase/ %
Decrease) change
Income
Gross Sales 9150.57 10433.07 1282.5 14.02
Less: Excise duty recovered
1217.91 1344.70 126.79 10.41
on sales
Net Sales 7932.66 9 088.37 1155.71 14.57
Internal consumption 28.40 88.46 60.06 211.48
Interest earned 557.21 724.64 167.43 30.05
Other revenue 75.36 91.27 15.91 21.11
Total 8593.63 9992.74 1399.11 16.28
Expenditure
Raw materials consumed 3889.04 4 280.22 391.18 10.06
Stock of Semi- 23.76 -343.17 -366.93 -1544.32
Employees’ remuneration &
740.94 1 030.72 289.78 39.11
benefits
Stores & spares consumed 357.27 364.06 6.79 1.90
Power & fuel 242.95 258.81 15.86 6.52
Repairs & maintenance 109.70 125.79 16.09 14.67
Contributions to joint plant
0.76 _ -0.76 -1
committee funds
Freight outward 315.26 306.96 -8.3 -2.63
Other expenses & provisions 322.67 509.93 187.26 58.03
Interest & Finance charges 48.42 31.57 -16.85 -34.79

Depreciation 351.60 471.55 119.95 34.12
Wealth tax 0.52 0.48 -0.04 -7.69
Less: Inter account
adjustments-raw material 28.49 39.15 10.66 37.42
mining cost
Net expenditure 6374.40 6997.77 623.37 9.78
Profit for the year 2219.23 2994.97 775.74 34.96
Prior period adjustments- Net
3.11 0.39 -2.72 -87.46
credit
Profit Before Tax 2222.34 2995.36 773.02 34.78
Provision for Taxation
Current Tax 793.75 1188.13 394.38 49.69
Fringe Benefit Tax 4.21 4.43 0.22 5.23
Earlier years adjustments 86.38 -11.77 -98.15 -113.63
Deferred Tax -25.43 -128.17 -102.74 404.01
Net Profit 1363.43 1942.74 579.31 42.49
346.38 1709.81 1363.43 393.62
Balance carried to Balance
1709.81 3652.55 1942.74 113.62
Sheet
Interpretation:
total income i.e. gross profit was increased to Rs 1399.11Crs, i.e. 16.28%; when

increased by Rs.623.37Crs, i.e.9.78%, due to increase the expenditure like Raw
Material Consumed, Employee's remuneration & benefits, Stores & spares
consumed, Power & fuel. The profit after tax or net profit is Rs.1942.74Crs as
compared to Rs.1363.43Crs for the previous year. The overall profitability is
satisfactory.

(Increase/ %
Decrease) change
Income
Gross Sales 8490.88 9150.57 659.69 7.77
Less: Excise duty recovered 1176.73 1217.91
41.18 3.49
on sales
Net Sales 7314.15 7932.66 618.51 8.46
Interest earned 354.87 557.21 202.34 57.02
Other revenue 84.31 75.36 -8.95 -10.62
Total 7761.59 8593.63 832.04 10.72
Expenditure
Raw materials consumed 3584.62 3889.04 304.42 8.49
Stock of Semi- 65.85 23.76 -42.09 -63.92
572.34 740.94 168.60 29.46
benefits
Power & fuel 235.10 242.95 7.85 3.34
0.73 0.76 0.03 4.11
committee funds
Freight outward 306.71 315.26 8.55 2.79
Interest & Finance charges 31.06 48.42 17.36 55.89
Depreciation 415.57 351.60 -63.97 -15.39
Wealth tax 0.18 0.52 0.34 188.89
Less: Inter account
mining cost
Net expenditure 5878.90 6374.40 495.50 8.43
6.82 3.11 -3.71 -54.39
credit
Current Tax 474.97 793.75 318.78 67.12
Earlier years adjustments -- 86.38 86.38 _
Deferred Tax 158.23 -25.43 -183.66 -116.07
Net Profit 1252.37 1363.43 111.06 8.87
-905.99 346.38 1252.37 -138.23
346.38 1709.81 1363.43 3.94
Sheet
Interpretation:
total income i.e. gross profit was increased to Rs.832.04Crs, i.e. 10.72%; when

increased by Rs.495.50Crs, i.e. 8.43%, due to increase the expenditure like Raw
Material Consumed, Employee's remuneration & benefits, Stores & spares
consumed, Power & fuel. The profit after tax or net profit is Rs.1363.43Crs as
compared to Rs.1252.37Crs for the previous year. The overall profitability is
satisfactory.
(Increase/ %
Decrease) change
Income
Gross Sales 8181.34 8490.88 309.54 3.78
Less: Excise duty recovered 1176.73
821.50 355.23 43.24
on sales
Net Sales 7359.84 7314.15 -45.69 -0.62
Interest earned 158.59 354.87 196.28 123.76
Other revenue 120.90 84.31 -36.59 -30.26
Total 7646.15 7761.59 115.44 1.51
Expenditure
Stock of Semi- -310.39 65.85 376.24 -121.21
490.25 572.34 82.09 16.74
benefits
Power & fuel 216.06 235.10 19.04 8.81
0.76 0.73 -0.03 -3.95
committee funds
Freight outward 299.53 306.71 7.18 2.39
Other expenses & provisions 301.05 255.03 -46.02 -15.29
Depreciation 424.19 415.57 -8.62 -2.03
Wealth tax 0.12 0.18 0.06 50
Less: Inter account
mining cost
Net expenditure 4834.96 5878.90 1043.94 21.59
Profit for the year 2811.19 1882.69 -928.50 -33.03
1.44 6.82 5.38 373.61
credit
Profit after Prior Period
2812.63 1889.51 -923.12 -32.82
Adjustments
Depreciation short provided 0
558.87 -558.87 -100
in earlier years
Profit before Tax 2253.76 1889.51 -364.25 -16.16
Current Tax 87.18 474.97 387.79 444.82
Fringe Benefit Tax 0 3.94 3.94
Deferred Tax 158.49 158.23 -0.26 -0.16
Net Profit 2008.09 1252.37 -755.72 -37.63
Balance of (loss) brought
-2914.08 -905.99 2008.09 -68.91
-905.99 346.38 1252.37 -138.23
Sheet
Interpretation:
total income i.e. gross profit was increased to Rs.115.44Crs, i.e. 1.51%; when

increased by Rs.1043.94Crs, i.e.21.59%, due to increase the expenditure like
Raw Material Consumed, Employee's remuneration & benefits, Stores & spares
consumed, Power & fuel. Increase in the expenditure resulted in fall in profit after
tax. The profit after tax is decreased to Rs.-755.72Crs, i.e. -37.63% as compared
to the previous year. The overall profitability is satisfactory.

(Increase/ %
Decrease) change
Income
Gross Sales 6169.68 8181.34 2011.66 32.61
Less: Excise duty
706.18 821.50 115.32 16.33
recovered on sales
Net Sales 5463.50 7359.84 1896.34 34.71

Accretion/ (depletion) to
Stock of Semi- -25.60 310.39 335.99 -1312.46
Interest earned 31.19 158.59 127.40 408.46
Other revenue 138.25 120.90 -17.35 -12.55
Total 5612.34 7956.54 2344.20 41.77
Expenditure
Employees’ remuneration
481.15 490.25 9.10 1.89
& benefits
Stores & spares
347.73 313.46 -34.27 -9.86
consumed
Power & fuel 220.04 216.06 -3.98 -1.81
Contributions to joint
0.68 0.76 0.08 11.76
plant committee funds
Freight outward 255.65 299.53 43.88 17.16
Other expenses &
186.27 301.05 114.78 61.62
provisions
Interest & Finance
48.89 11.11 -37.78 -77.28
charges
Depreciation 457.27 424.19 -33.08 -7.23
Wealth tax 0.7 0.12 -0.58 -82.86
Less: Inter account
mining cost
Net expenditure 4112.17 5145.35 1033.18 25.12
46.42 1.44 -44.98 -96.89
Net credit
1547.18 2812.63 1265.45 81.79
Adjustments
Depreciation short
- 558.87 558.87 -
provided in earlier years
Profit before Tax 1547.18 2253.76 706.58 45.67
Current Tax - 87.18 87.18 -
Deferred Tax - 158.49 158.49 -
Net Profit 1547.18 2008.09 460.91 29.79
Balance of loss brought
forward from previous -4461.27 -2914.08 1547.19 -34.68
year
Balance of loss carried
-2914.09 -905.99 2008.10 -68.91
to Balance Sheet
Interpretation:
total income i.e. gross profit was increased to Rs.2344.20Crs i.e. 41.77%; when
increased by Rs.1033.18Crs , i.e. 25.12 %,due to increase the expenditure like
Raw Material Consumed, Employee's remuneration & benefits, Repairs &
maintenance, Freight outward, Other expenses & provisions. The profit after tax
or net profit is Rs.2008.09Crs as compared to Rs.1547.18Crs for the previous
year. The overall profitability is satisfactory.
Comparative Balance Sheet:
The comparative studies throw a lot on financial policies followed by

management. The Comparative Balance Sheet consists of two columns for the
original data. The third column is used to show increase or decrease in various
items. The fourth column shows percentage increase or decrease.
Comparative Balance Sheet of VSP Ltd.

INCREASE /DECREASE
AMOUNT(Rs) % CHANGE
ASSETS:
Current Assets:(C.A)
Cash & Bank Balances 7699.11 6624.17 -1074.94 -13.96
Sundry Debtors 93.41 191.27 +97.86 +104.76
Stock (Inventories) 1761.15 3215.28 +1454.13 +82.56
Loans & Advances 1958.49 1569.69 -388.80 -19.85
Other Current Assets 292.43 258.91 -33.52 -11.46
Total Current Assets 11804.59 11859.32 +54.73 +0.46
Miscellaneous Assets:
Deferred Revenue
0.00 0.00 0.00 0.00
Expenditure
Investments 0.05 0.05 0.00 0.00
Profit & Loss a/c ---- ---- ---- ----
Fixed Assets: (F.A)
Land-Free Hold 51.74 85.67 +33.93 +65.57
Land-Lease Hold 1.10 1.07 -0.03 -2.72
Railway Lines & Sidings 5.92 3.53 -2.39 -40.37
Roads, Bridges &
96.81 106.56 +9.75 +10.07
Culverts
Buildings 474.50 448.50 -26 -5.47
Plant & Machinery 600.81 468.36 -132.45 -22.04
Furniture & Fittings 5.36 6.12 0.76 14.17
Locomotives 11.08 9.69 -1.39 -12.54
Vehicles 3.80 4.80 1 26.32
Electrical Installations 59.68 54.63 -5.05 -8.46
Water Supply &
44.91 31.78 -13.13 -29.23
Sewerage systems
Miscellaneous Articles 25.42 32.32 6.90 27.14
Mining Lease Rights 3.51 3.22 -0.29 -8.26
Held For Disposal 0.04 0.05 +0.01 +25
Capital Work-in-
2087.19 4617.81 2530.62 +121.24
progress
Total Fixed Assets 3471.92 5874.11 2402.24 +69.19
TOTAL ASSETS
15276.51 17733.43 +2456.97 +16.08
[ C.A + F.A ]
LIABILITIES:
Current Liabilities:
(C.L)
Sundry Creditors 501.31 1149.44 +648.13 +129.28
Advances from
136.97 137.46 +0.49 +0.35
Customers
Other Advances 1.57 1.43 -0.14 -8.91
Earnest Money,
Security & Other 99.32 137.87 38.55 38.81
Deposits
Interest Accured but not
4.89 0.14 -4.75 -97.13
Due
Other Liabilities 866.09 1134.45 +268.36 +30.98
Total Current
1610.15 2560.79 950.64 59.04
Liabilities
Long Term Liabilities
& Provisions: (L.T.P)
Provisions 1581.47 1620.53 +39.06 +2.46
Secured Loans 332.78 907.72 +574.94 +172.76
Unsecured Loans 107.95 100.04 -7.91 -7.33
Deferred Tax Liability 163.12 124.49 -38.63 -23.68
Total Long Term
Liabilities & 2185.32 2572.78 +567.46 +25.96
Provisions
Share Capital &
Reserves: (CAP. &
RES.)
Share capital 7827.32 7827.32 0.00 0.00
Reserves & Surplus 3653.72 4592.59 +938.87 +25.69
Total Capital &
11481.04 12419.91 938.87 +8.17
Reserve
TOTAL LIABILITIES
[C.L + L.T.P + CAP. & 15276.51 17733.48 2456.97 +16.08
RES.]
Interpretation:
1. During the financial year 2009, the long-term liabilities were increased by
Rs 567.46 i.e.; 25.96% comparison to the previous year 2008.
2. In comparison to the previous year i.e.; 2008 the current liabilities were
increased by Rs.950.64 i.e.; by 59.04%.
3. The fixed assets have been increased by Rs.2402.24 in comparison to the
previous year i.e.; by 69.19%.
4. Current assets have been increased by Rs.54.73 in comparison to previous
year i.e.; 0.46% shows which that the working capital of the company is
strengthened.
5. The liquidity position of the company during the year 2008-2009 is
satisfactory.
INCREASE /DECREASE
AMOUNT(Rs) % CHANGE
ASSETS:
Cash & Bank Balances 7194.68 7699.11 +504.43 +7.01
Sundry Debtors 216.80 93.41 -123.39 -56.91
Loans & Advances 1518.90 1958.49 +439.59 +28.94
Other Current Assets 314.48 292.43 -22.05 -7.01
Deferred Revenue
14.95 0.00 -14.95 -100.00
Expenditure
Investments 0.05 0.05 0.00 0.00
Profit & Loss a/c ---- ---- ---- ----
Fixed Assets: (F.A)
Land-Free Hold 51.74 51.74 0.00 0.00
Land-Lease Hold 1.16 1.10 -0.06 -5.17
Roads, Bridges &
82.39 96.81 +14.42 +17.50
Culverts
Buildings 522.43 474.50 -47.93 -9.17
Plant & Machinery 926.29 600.81 -325.48 -35.14
Furniture & Fittings 3.95 5.36 +1.41 +35.70
Locomotives 16.21 11.08 -5.13 -31.65
Vehicles 1.96 3.80 +1.84 +93.88
Water Supply &
68.54 44.91 -23.63 -34.48
Sewerage systems
Miscellaneous Articles 28.15 25.42 -2.73 -9.70
Held For Disposal 0.00 0.04 +0.04 +100.00
Capital Work-in-
597.19 2087.19 +1490.00 +249.50
progress
Total Fixed Assets 2402.65 3471.92 +1069.27 +44.50
TOTAL ASSETS
12850.75 15276.51 +2425.76 +18.88
[ C.A + F.A ]
LIABILITIES
(C.L)
Advances from
119.91 136.97 +17.00 +14.18
Customers
Other Advances 2.02 1.57 -0.45 -22.28
Earnest Money,
Security & Other 82.54 99.32 +16.78 +20.33
Deposits
18.41 4.89 -13.52 -73.44
Due
Total Current
1011.53 1610.15 +598.62 +59.18
Liabilities
Provisions 1092.77 1581.47 +488.70 +44.72
Secured Loans 604.45 332.78 -271.67 -44.94
Unsecured Loans 312.51 107.95 -204.56 -65.46
Total Long Term
Liabilities & 2301.02 2185.32 -115.70 -5.03
Provisions
Share Capital &
Reserves: (CAP. &
RES.)
Share capital 7827.32 7827.32 0.00 0.00
Total Capital &
9538.20 11481.04 +1942.84 +20.37
Reserve
TOTAL LIABILITIES
[C.L + L.T.P + CAP. & 12850.75 15276.51 +2425.76 +18.88
RES.]
Interpretation:
1. During the financial year 2008, the long-term liabilities were decreased by
Rs 115.70 i.e.; 5.03% comparison to the previous year 2007.

4. Current assets have been increased by Rs.1356.49 in comparison to

previous year i.e.; 12.98% shows which that the working capital of the
company is strengthened.
satisfactory.

INCREASE /DECREASE
AMOUNT(Rs) % CHANGE
ASSETS:
Current Assets: (C.A)
Sundry Debtors 166.27 216.80 +50.53 +30.39
Stock (Inventories) 1218.35 1203.24 -15.11 -1.24
Loans & Advances 1061.32 1518.90 +457.58 +43.11
Other Current Assets 184.36 314.48 +130.12 +70.58
Deferred Revenue
24.87 14.95 -9.92 -39.89
Expenditure
Investments 0.00 0.05 +0.05 +100
Profit & Loss a/c ---- ---- ---- ----
Fixed Assets: (F.A)
Land-Free Hold 50.89 51.74 +0.85 +1.67
Land-Lease Hold 1.19 1.16 -0.03 -2.52
Roads, Bridges &
67.17 82.39 +15.22 +22.66
Culverts
Buildings 544.46 522.43 -22.03 -4.05
Plant & Machinery 1179.46 926.29 -253.17 -21.46
Locomotives 19.20 16.21 -2.99 -15.57
Vehicles 1.72 1.96 +0.24 +13.95
Water Supply &
73.71 68.54 -5.17 -7.01
Sewerage systems
Held For Disposal 0.01 0.00 -0.01 -100
Capital Work-in-
180.73 597.19 +416.46 +230.43
progress
Total Fixed Assets 2283.87 2402.65 +118.78 +5.20
TOTAL ASSETS
10535.87 12850.75 +2314.88 +21.97
[ C.L + F.A ]
LIABILITIES:
(C.L)
Advances from
120.19 119.91 -0.28 -0.23
Customers
Other Advances 1.60 2.02 +0.42 +26.25
Earnest Money,
Security & Other 68.89 82.54 +13.65 +19.81
Deposits
8.43 18.41 +9.98 +118.39
Due
Total Current
785.77 1011.53 +225.76 +28.73
Liabilities
Provisions 716.37 1092.77 +376.40 +52.54
Secured Loans 173.87 604.45 +430.58 +247.64
Unsecured Loans 369.44 312.51 -56.93 -15.41
Total Long Term
Liabilities & 1576.40 2301.02 +724.62 +45.97
Provisions
Share Capital &
Reserves: (CAP. &
RES.)
Share capital 7827.32 7827.32 0.00 0.00
Total Capital &
8173.70 9538.20 +1364.50 +16.47
Reserve
TOTAL LIABILITIES
[C.L + L.T.P+ CAP. & 10535.87 12850.75 +2314.88 +21.97
RES.]
Interpretation:
1. During the financial year 2007, the long-term liabilities were increased by Rs
724.62 i.e.; 45.97% comparison to the previous year 2006.

4. Current assets have been increased by Rs.2196.10 in comparison to

company is strengthened.

satisfactory.

For The Years 2005- 2006 (Rs. In Crs)
INCREASE /DECREASE
AMOUNT(Rs) % CHANGE
ASSETS:
Sundry Debtors 49.30 166.27 +116.27 +235.84
Stock (Inventories) 1257.53 1218.35 -39.18 -15.21
Loans & Advances 710.12 1061.32 +351.20 +49.46
Deferred Revenue
43.01 24.87 -18.14 -42.18
Expenditure
Investments 0.00 0.00 0.00 0.00
Profit & Loss a/c 905.99 0.00 0.00 -100
Fixed Assets: (F.A)
Land-Free Hold 51.71 50.89 -0.82 -1.58
Land-Lease Hold 1.22 1.19 -0.03 -2.46
Roads, Bridges &
62.84 67.17 +4.33 +6.89
Culverts
Buildings 568.88 544.46 -24.42 -4.29
Plant & Machinery 1492.25 1179.46 -312.79 -20.96
Locomotives 22.06 19.20 -2.86 -12.96
Vehicles 0.51 1.72 +1.21 +237.25
Water Supply &
85.70 73.71 -11.99 -13.99
Sewerage systems
Held For Disposal 0.00 0.01 +0.01 +100
Capital Work-in-progress 58.85 180.73 +121.88 +207.10
Total Fixed Assets 3449.16 2283.87 -1165.29 -33.78

TOTAL ASSETS
9498.90 10535.87 +1036.97 +10.92
[ C.A+ F.A ]
LIABILITIES:
(C.L)
Advances from
102.90 120.19 +17.29 +16.80
Customers
Other Advances 4.64 1.60 -3.04 -65.52
Earnest Money, Security
51.20 68.89 +17.69 +34.55
& Other Deposits
2.39 8.43 +6.04 +252.72
Due
Other Liabilities 332.94 311.62 -21.32 -6.40
Total Current Liabilities 712.46 785.77 +73.31 +10.29
Long Term Liabilities &
Provisions: (L.T.P)
Provisions 269.27 716.37 +447.10 +166.04
Secured Loans 88.94 173.87 +84.93 +95.49
Unsecured Loans 442.42 369.44 -72.98 -16.49
Deferred Tax Liability 158.49 316.72 +158.23 +99.83
Total Long Term
959.12 1576.40 +617.28 +64.36
Liabilities & Provisions
Share Capital &
Reserves: (CAP. &
RES.)
Share capital 7827.32 7827.32 0.00 0.00
Reserves & Surplus 0.00 346.38 +346.38 +100
Total Capital & Reserve 7827.32 8173.70 +346.38 +4.42
TOTAL LIABILITIES
[C.L + L.T.P + CAP. & 9498.90 10535.87 +1036.97 +10.92
RES.]
Interpretation:
617.28 i.e.; 64.36% comparison to the previous year 2005.
2. In comparison to the previous year i.e.; 2004-05 the current liabilities were
3. The fixed assets have been decreased by Rs.1165.29 in comparison to the

4. Current assets during the year 2006 have been increased by Rs.2202.36 in
comparison to previous year i.e.; 36.40% shows which that the working
capital of the company is strengthened.

satisfactory.

For The Years 2004- 2005 (Rs. In Crs)
PARTICULARS 2004 2005 INCREASE /DECREASE

AMOUNT(Rs) % CHANGE
ASSETS:
Sundry Debtors 85.62 49.30 -36.32 -42.42
Loans & Advances 550.90 710.12 +159.22 +28.90
Deferred Revenue
61.45 43.01 -18.44 -30.01
Expenditure
Investments 0.00 0.00 0.00 0.00
Profit & Loss a/c 2914.09 905.99 -2008.10 -68.91
Fixed Assets: (F.A)

Land-Free Hold 51.48 51.71 +0.23 +0.45
Land-Lease Hold 1.25 1.22 -0.03 -2.40
Roads, Bridges & Culverts 56.68 62.84 +6.16 +10.87
Buildings 593.55 568.88 -24.67 -4.16
Plant & Machinery 2385.18 1492.25 -892.93 -37.44
Locomotives 25.09 22.06 -3.03 -12.08
Vehicles 0.30 0.51 +0.21 +70.00
Water Supply & Sewerage
97.95 85.70 -12.25 -12.51
systems
Miscellaneous Articles 25.11 35.39 +10.28 +40.94
Held For Disposal 0.04 0.00 -0.04 -100.00
Capital Work-in-progress 25.25 58.85 +33.60 +133.07
Total Fixed Assets 6372.94 3449.16 -2923.78 -45.88
TOTAL ASSETS
9099.82 9498.90 +399.08 +4.38
[ C.A + F.A ]
LIABILITIES:
Current Liabilities: (C.L)
Sundry Creditors 470.76 218.39 -252.37 -53.61
Advances from Customers 210.96 102.90 -108.06 -51.22
Other Advances 0.75 4.64 +3.89 +518.67
Earnest Money, Security &
57.22 51.20 -6.02 -10.52
Other Deposits
1.14 2.39 +1.25 +109.65
Due
Other Liabilities 337.99 332.94 -5.05 -1.49
Total Current Liabilities 1078.82 712.46 -366.36 -33.96

Provisions: (L.T.P)
Provisions 156.51 269.27 +112.76 +72.05
Secured Loans 37.17 88.94 +51.77 +139.28
Unsecured Loans 0.00 442.42 +442.42 +100.00
Deferred Tax Liability 0.00 158.49 +158.49 +100.00
Total Long Term
193.68 959.12 +765.44 +395.21
Share Capital &
Reserves: (CAP. & RES.)
Share capital 7827.31 7827.32 +0.01 +0.01
Reserves & Surplus 0.00 0.00 0.00 0.00
Total Capital & Reserve 7827.31 7827.32 +0.01 +0.01
TOTAL LIABILITIES
[C.L + L.T.P + CAP. & 9099.82 9498.90 +399.08 +4.38
RES.]
Interpretation:
765.44 i.e; 395.21% comparison to the previous year 2004.
decreased by Rs.366.36 i.e.; by 33.96%.
3. The fixed assets have been decreased by Rs.2923.78 in comparison to the

4. Current assets have been decreased by Rs.3322.86 in comparison to

company is weakened.
5. The liquidity position of the company during the year 2004-05 is satisfactory.
Common Size Income Statement:
The items in the income statements can be shown as percentages of

sales to show the relation of each item to sales. A significant relationship can be
established between items of income statement and volume of sales. The
increase in sales will certainly increase selling expenses and volume of sales.
The increase in sales lead to an increase in selling expenses but not financial or
administrative expenses. In case the volume of sales increases to a considerable
extent, administrative and financial expenses may go up.
Common Size Income Statement of VSP Ltd.

%Change % change
in 2008 in 2009
Income
Gross Sales 10433.07 10410.63 104.41 103.03
Less: Excise duty
1344.7 1282.25 13.46 12.69
recovered on sales
Net Sales 9088.37 9128.38 0.01 90.34
Internal Consumption 88.46 114.1 0.89 1.13
Interest Earned 724.64 787.21 7.25 7.79
Other revenue 91.27 75.02 0.91 0.74
Total 9992.74 10104.71 100.00 100.00
Expenditure
Raw Material Consumed 4280.22 5896.25 42.83 58.35
Stock of Semi- -343.17 -916.65 -3.43 -9.07
Employee's remuneration
1030.72 1156.68 10.31 11.45
& benefits
Stores & spares
364.06 501.23 3.64 4.96
consumed
Power & fuel 258.81 340.31 2.59 3.37
Repairs & Maintenance 125.79 149.81 1.26 1.48
Freight outward 306.96 286.53 3.07 2.84
Other expenses &
509.93 377.12 5.10 3.73
Provisions
Interest 31.57 88.14 0.32 0.87
Depreciation 471.55 240.46 4.72 2.38
Wealth Tax 0.48 0.89 0.00 0.01
Less: Inter account
adjustments- raw material 39.15 38.06 0.39 0.38
mining cost
Net Expenditure 6997.77 8082.71 70.03 79.99
0.39 4.59 0.00 0.05
Net credit
Provision For Taxation
Current Tax -1188.13 -746.38 -11.89 -7.39
Fringe Benefit Tax -4.43 -4.66 -0.04 -0.05
Earlier year adjustments 11.77 21.39 0.12 0.21
Defferred Tax 128.17 38.63 1.28 0.38
Profit After Tax 1942.74 1335.57 19.44 13.22
Balance of Profit brought 17.11 36.15
1 709.81 3 652.55
Amount available for
3 652.55 4 988.12 36.55 49.36
appropriation
Interpretation:
The common size income statement reveals that there is decrease in other
revenue from 0.91% to 0.74%. The Internal Consumption is increased to 1.13%
from 0.89% and the Interest Earned is increased to 7.79% from 7.25% 2008-09.
Overall income position was good. The net expenditure was increased to 79.99%
from 70.03% due to increase the expenditure like Raw Material Consumed,
Employee's remuneration & benefits, Stores & spares consumed, Power & fuel
and Repairs & Maintenance. The profit after tax is decreased to 13.22% from
19.44% in 2008-09. The overall profitability is satisfactory.

% Change % Change
in 2007 in 2008
Income
Gross Sales 9150.57 10433.07 106.48 104.41
Less: Excise duty 1217.91 1344.70
14.17 13.46
recovered on sales
Net Sales 7932.66 9088.37 92.31 90.95
Interest earned 557.21 724.64 6.48 7.25
Other revenue 75.36 91.27 0.88 0.91
Total 8593.63 9992.74 100.00 100.00
Expenditure
Raw materials consumed 3889.04 4 280.22 45.25 42.83
Stock of Semi- 23.76 -343.17 0.28 -3.43
740.94 1 030.72 8.62 10.31
& benefits
Stores & spares
357.27 364.06 4.16 3.64
consumed
Power & fuel 242.95 258.81 2.83 2.59
0.76 _ 0.008 _
Freight outward 315.26 306.96 3.67 3.07
Other expenses &
322.67 509.93 3.75 5.10
provisions
Interest & Finance
48.42 31.57 0.56 0.32
charges
Depreciation 351.60 471.55 4.09 4.72
Wealth tax 0.52 0.48 0.006 0.004
Less: Inter account
28.49 39.15
adjustments-raw material 0.33 0.39
mining cost
Net expenditure 6374.40 6997.77 74.18 70.03
3.11 0.39 0.04 0.003
Net credit
Current Tax 793.75 1188.13 9.24 11.89
Earlier years adjustments 86.38 -11.77 1.01 0.12
Deferred Tax -25.43 -128.17 -0.29 1.28
Net Profit 1363.43 1942.74 15.87 19.44
forward from previous 346.38 1709.81 4.03 17.11
year
Balance carried to
1709.81 3652.55 19.89 36.55
Balance Sheet
Interpretation:
The common size income statement reveals that there is increase in other
revenue from 0.88% to 0.91%. The Internal Consumption is increased from
0.33% to 0.88% and the Interest Earned is increased to 7.25% from 6.48% 2007-
08. Overall income position was good. The net expenditure was decreased to
70.03% from 74.18% due to decrease the expenditure like Raw Material
Consumed, Stores & spares consumed, Power & fuel, Repairs & Maintenance
and Freight outward. The profit after tax or net profit is increased from 15.87% to
19.44% in 2007-08. The overall profitability is satisfactory.

% Change % Change
in 2006 in 2007
Income
Gross Sales 8490.88 9150.57 109.39 106.48
Less: Excise duty 1176.73 1217.91
15.16 14.17
recovered on sales
Net Sales 7314.15 7932.66 94.24 92.31
Interest earned 354.87 557.21 4.57 6.48
Other revenue 84.31 75.36 1.09 0.88
Total 7761.59 8593.63 100 100
Expenditure
Stock of Semi- 65.85 23.76 0.85 0.28
572.34 740.94 7.37 8.62
& benefits
Power & fuel 235.10 242.95 3.03 2.83
0.73 0.76 0.009 0.008
committee funds
Freight outward 306.71 315.26 3.95 3.67
Depreciation 415.57 351.60 5.35 4.09
Wealth tax 0.18 0.52 0.002 0.006

Less: Inter account
mining cost
Net expenditure 5878.90 6374.40 75.74 74.12
6.82 3.11 0.09 0.04
Net credit
Current Tax 474.97 793.75 6.12 9.24
Earlier years adjustments -- 86.38 1.01
Deferred Tax 158.23 -25.43 2.02 -0.29

Net Profit 1252.37 1363.43 16.14 15.87
-905.99 346.38 -11.67 4.03
346.38 1709.81 4.46 19.89
Sheet
Interpretation:
Overall income position was good. The net expenditure was decreased to
74.12% from 75.74% due to decrease the expenditure like Raw Material
Consumed, Stores & spares consumed, Power & fuel and Freight outward. The
profit after tax or net profit is decreased to 15.87% from 16.14% in 2006-07. The
overall profitability is satisfactory.

%Change % Change
in 2005 in 2006
Income
Gross Sales 8181.34 8490.88 106.99 109.39
Less: Excise duty 1176.73
821.50 10.74 15.16
recovered on sales
Net Sales 7359.84 7314.15 96.26 94.24
Interest earned 158.59 354.87 2.07 4.57
Other revenue 120.90 84.31 1.58 1.09
Total 7646.15 7761.59 100 100
Expenditure
Depletion / (Accretion)
to Stock of Semi- -310.39 65.85 -4.06 0.85
Employee’s remuneration &
490.25 572.34 6.41 7.37
benefits
Power & fuel 216.06 235.10 2.83 3.03
0.76 0.73 0.009 0.009
committee funds
Freight outward 299.53 306.71 3.92 3.95
Depreciation 424.19 415.57 5.55 5.35
Wealth tax 0.12 0.18 0.001 0.002
Less: Inter account adjustments-
24.22 24.48 0.32 0.31
raw material mining cost
Net expenditure 4834.96 5878.90 63.23 75.74
1.44 6.82 0.02 0.01
credit
2812.63 1889.51 36.78 24.34
Adjustments
Depreciation short provided in
558.87 0 7.31 0
earlier years

Current Tax 87.18 474.97 1.14 6.12
Fringe Benefit Tax 0 3.94 0 0.05
Deferred Tax 158.49 158.23 2.07 2.02
Net Profit 2008.09 1252.37 26.26 16.13
Balance of (loss) brought
-2914.08 -905.99 -38.11 -11.67
-905.99 346.38 -11.85 4.46
Sheet
Interpretation:
Overall income position was good. The net expenditure was increased to 75.74%
from 63.23% due to increase the expenditure like Raw Material Consumed,
Employee's remuneration & benefits, Stores & spares consumed, Power & fuel
and Repairs & Maintenance. Increase in the expenditure resulted in fall in profit
after tax. The profit after tax is decreased to 16.13% from 26.26% in 2005-06.
The overall profitability is satisfactory.

% Change % Change
in 2004 in 2005
Income
Gross Sales 6169.68 8181.34 109.93 102.83
Less: Excise duty
706.18 821.50 12.58 10.32
recovered on sales
Net Sales 5463.50 7359.84 97.35 92.50

Accretion/ (depletion) to
Stock of Semi- -25.60 310.39 -0.46 3.90
Interest earned 31.19 158.59 0.56 1.99
Other revenue 138.25 120.90 2.46 1.52
Total 5612.34 7956.54 100.00 100.00
Expenditure
481.15 490.25 8.57 6.16
& benefits
Stores & spares
347.73 313.46 6.19 3.94
consumed
Power & fuel 220.04 216.06 3.92 2.72
0.68 0.76 0.01 0.009
Freight outward 255.65 299.53 4.56 3.76
Other expenses &
186.27 301.05 3.32 3.78
provisions
Interest & Finance
48.89 11.11 0.87 0.14
charges
Depreciation 457.27 424.19 8.15 5.33
Wealth tax 0.7 0.12 0.01 0.001

Less: Inter account
mining cost
Net expenditure 4112.17 5145.35 73.27 64.67
46.42 1.44 0.83 0.02
Net credit
Adjustments 1547.18 2812.63 27.57 35.35
Depreciation short
- 558.87 - 7.02
provided in earlier years
Current Tax - 87.18 - 1.09
Deferred Tax - 158.49 - 1.99
Net Profit 1547.18 2008.09 27.57 25.24
Balance of loss brought
forward from previous -4461.27 -2914.08 -79.49 -36.62
year
Balance of loss carried
-2914.09 -905.99 -51.92 -11.39
to Balance Sheet
Interpretation:
revenue from 2.46% to 1.52%. The Internal Consumption is decreased to 0.08%
Overall income position was good. The net expenditure was decreased to
64.67% from 73.27% due to decrease the expenditure like Employee's
remuneration & benefits, Stores & spares consumed, Power & fuel, Repairs &
Maintenance and Freight outward. The profit after tax or net profit is decreased to
25.24% from 27.57% in2004-05. The overall profitability is satisfactory.
Common Size Balance Sheet:

Common size Balance Sheet reveals the cause for changes in the
financial position on amount of various transactions. The studies throw a lot on
financial policies followed by management. The Common size Balance Sheet
consists of two columns for the original data. The third column and fourth
columns are used to show percentage increase or decrease.
Common Size Balance Sheet of VSP Ltd.

2008 Percentag 2009

Percentage
Particulars e
Amount Amount %
%
ASSETS:
Cash & Bank Balances 7699.11 50.40 6624.17 37.35
Sundry Debtors 93.41 0.61 191.27 1.08
Stock (Inventories) 176.15 11.53 3215.28 18.13
Loans & Advances 1958.49 12.82 1569.69 8.85
Other Current Assets 292.43 1.91 258.91 1.46
Total Current Assets 11804.59 77.27 11859.32 66.87
Deferred Revenue
- - - -
Expenditure
Investments 0.05 0.01 - -
Profit & Loss a/c ---- ---- ---- ----
Fixed Assets: (F.A)
Land-Free Hold 51.74 0.34 85.67 0.48
Land-Lease Hold 1.10 0.001 1.07 0.006
Railway Lines & Sidings 5.92 0.04 3.53 0.019
Roads, Bridges & Culverts 96.81 0.63 106.56 0.60
Buildings 474.50 3.11 448.50 2.53
Plant & Machinery 600.81 3.93 468.36 2.64
Locomotives 11.08 0.07 9.69 0.05
Vehicles 3.80 0.02 4.80 0.03
Electrical Installations 59.68 0.39 54.63 0.31
Water Supply &
44.91 0.29 31.78 0.17
Sewerage systems
Mining Lease Rights 3.51 0.02 3.22 0.02
Held For Disposal 0.04 0.01 0.005 0.001
Capital Work-in-progress 2087.19 13.66 4617.81 26.04
Total Fixed Assets 3471.92 22.73 5874.11 26.04
TOTAL ASSETS
15276.51 100.00 17733.43 100.00
[ C.A + F.A ]
LIABILITIES:
Current Liabilities:(C.L)
Sundry Creditors 501.31 3.28 1149.44 6.48
Advances from Customers 136.97 0.90 137.46 0.78
Other Advances 1.57 0.01 1.43 0.04
99.32 0.65 137.87 0.77
& Other Deposits
4.89 0.03 0.14 0.001
Due
Other Liabilities 866.09 5.67 1134.45 6.39
Total Current Liabilities 1610.15 10.54 2560.79 14.431
Provisions 1581.47 10.35 1620.53 9.13
Secured Loans 332.78 2.18 907.72 5.12
Unsecured Loans 107.95 0.71 100.04 0.56
Deferred Tax Liability 163.12 1.07 124.49 0.70
Total Long Term Liabilities
2185.32 14.31 2752.78 15.51
& Provisions
Share Capital & Reserves:
(CAP. & RES.)
Share capital 7827.32 51.23 7827.72 44.14
Total Capital & Reserve 11481.04 75.15 12419.91 70.03
TOTAL LIABILITIES
[C.L + L.T.P + CAP. 15276.51 100.00 17733.48 100.00
& RES.]
Interpretation:
1. During the year 2008-09 the company is less traditionally financed as

compared to previous year. In 2008-09 the share capital consists of
70.03% of total investment while the percentage is in previous year 75.15
%. The company has relied less on shareholders fund in the current year.
2. In both the years the company has followed the policy of financing fixed
assets from long term funds. In the current year investments in fixed
assets are 26.04% while long term funds are 15.51% and these figures in
previous year is 22.73 and long term funds are 14.31% this shows that the
company in both the years have financed working capital from long term
sources.
3. The working capital position of the company in both the years is good. In
the previous year the company has 77.27% of current assets while current
liabilities are 10.54% of total investment. In the current year current assets
are 66.87 % while current liabilities are 14.43%. The working capital of the
company in the year 2009 is not much better than the year 2008.
4. The analysis of various figures shows that the company for both the years
has satisfactory long-term and short term financial position in comparisons
the previous year.

For The Years 2007-2008(Rs. In Crs)
2007 Percentage 2008 Percentage

Particulars
Amount % Amount %
ASSETS:
Sundry Debtors 216.80 1.69 93.41 0.61
Loans & Advances 1518.90 11.82 1958.49 12.82
Deferred Revenue
14.95 0.11 ---- ----
Expenditure
Investments 0.05 0.01 0.05 0.01
Profit & Loss a/c ---- ---- ---- ----
Fixed Assets: (F.A)

Land-Free Hold 51.74 0.40 51.74 0.34
Land-Lease Hold 1.16 0.01 1.10 0.01
Buildings 522.43 4.06 474.50 3.11
Plant & Machinery 926.29 7.21 600.81 3.93
Locomotives 16.21 0.13 11.08 0.07
Vehicles 1.96 0.02 3.80 0.02
Water Supply &
68.54 0.53 44.91 0.29
Sewerage systems
Held For Disposal ---- ---- 0.04 0.01
TOTAL ASSETS
12850.75 100.00 15276.51 100.00
[ C.A + F.A ]
LIABILITIES:
Other Advances 2.02 0.02 1.57 0.01
82.54 0.64 99.32 0.65
& Other Deposits
18.41 0.14 4.89 0.03
Due

Provisions 1092.77 8.50 1581.47 10.35
Secured Loans 604.45 4.70 332.78 2.18
Unsecured Loans 312.51 2.44 107.95 0.71
Total Long Term
2301.02 17.91 2185.32 14.31
Share Capital &
Share capital 7827.32 60.91 7827.32 51.23
TOTAL LIABILITIES
[C.L + L.T.P + CAP. 12850.75 100.00 15276.51 100.00
& RES.]
Interpretation:
1. During the year 2007-08 the company is more traditionally financed as

compared to previous year. In 2007-08 the share capital consists of
74.24% of total investment while the percentage is in previous year 74.21
%. The company has relied more on shareholders fund in the current year.
sources.
the previous year the company has 81.41% of current assets while current
liabilities are 16.37% of total investment. In the current year current assets
are77.27 % while current liabilities are 21.48%. The working capital of the
company in the year 2008 is much better than the year2007.
the previous year.


Particulars
Amount % Amount %
ASSETS:
Sundry Debtors 166.27 1.58 216.80 1.69
Loans & Advances 1061.32 10.07 1518.90 11.82
Deferred Revenue
24.87 0.24 14.95 0.11
Expenditure
Investments 0.00 0.00 0.05 0.01
Profit & Loss a/c 0.00 0.00 0.00 ----
Fixed Assets: (F.A)
Land-Free Hold 50.89 0.48 51.74 0.40
Land-Lease Hold 1.19 0.01 1.16 0.01
Roads, Bridges &
67.17 0.64 82.39 0.64
Culverts
Buildings 544.46 5.17 522.43 4.06
Plant & Machinery 1179.46 11.19 926.29 7.21
Locomotives 19.20 0.18 16.21 0.13
Vehicles 1.72 0.02 1.96 0.02
Water Supply &
73.71 0.70 68.54 0.53
Sewerage systems
Held For Disposal 0.01 0.00 0.00 ----
TOTAL ASSETS
10535.87 100 12850.75 100.00
[ C.A + F.A ]
LIABILITIES:
Advances
120.19 1.14 119.91 0.93
from Customers
Other Advances 1.60 0.01 2.02 0.02
68.89 0.65 82.54 0.64
& Other Deposits
8.43 0.08 18.41 0.14
Due
Provisions 716.37 6.80 1092.77 8.50
Secured Loans 173.87 1.65 604.45 4.70
Unsecured Loans 369.44 3.51 312.51 2.44
Total Long Term
1576.40 14.97 2301.02 17.91
Share Capital &
Share capital 7827.32 74.29 7827.32 60.91
TOTAL LIABILITIES
[C.L + L.T.P + CAP. 10535.87 100 12850.75 100.00
& RES.]
Interpretation:
1. During the year, i.e. 2007 the company is less traditionally financed as
compared to previous year. In 2007 the share capital consists of 74.21%
of total investment while the percentage is in previous year 77.58 %. The
company has relied less on shareholders fund in the current year.
previous year is 18.58 and long term funds are 9.39 this shows that the
funds also.
the current year the company has 76.31% of current assets while current
liabilities are 14.25% of total investment. In the year 2007 current assets
are 86.42% and current liabilities are 16.37%. The working capital of the
company in the year 2007 is much better than the year 2006.
the previous year.


Particulars
Amount % Amount %
ASSETS:
Sundry Debtors 49.30 0.52 166.27 1.58
Loans & Advances 710.12 7.48 1061.32 10.07
Deferred Revenue
43.01 0.45 24.87 0.24
Expenditure
Investments 0.00 0.00 0.00 0.00
Profit & Loss a/c 905.99 9.54 0.00 0.00
Fixed Assets: (F.A)
Land-Free Hold 51.71 0.54 50.89 0.48
Land-Lease Hold 1.22 0.01 1.19 0.01
Roads, Bridges &
62.84 0.66 67.17 0.64
Culverts
Buildings 568.88 6.00 544.46 5.17
Plant & Machinery 1492.25 15.71 1179.46 11.19
Locomotives 22.06 0.23 19.20 0.18
Vehicles 0.51 0.01 1.72 0.02
Water Supply &
85.70 0.90 73.71 0.70
Sewerage systems
TOTAL ASSETS
9498.90 100 10535.87 100
[ C.A + F.A ]
LIABILITIES:
Other Advances 4.64 0.04 1.60 0.01
51.20 0.54 68.89 0.65
& Other Deposits
2.39 0.02 8.43 0.08
Due

Provisions: (L.T.P)
Provisions 269.27 2.83 716.37 6.80
Secured Loans 88.94 0.94 173.87 1.65
Unsecured Loans 442.42 4.66 369.44 3.51
Total Long Term 959.12 10.10 1576.40 14.97
Share Capital &
Share capital 7827.32 82.40 7827.32 74.29
TOTAL LIABILITIES
[C.L + L.T.P + CAP. 9498.90 100 10535.87 100
& RES.]
Interpretation:
1. During the year, i.e. 2006 the company is less traditionally financed as
compared to previous year. In 2006 the share capital consists of 77.58%
of total investment while the percentage is in previous year 82.50%. The
company has relied less on shareholders fund in the current year. So
financial structure of current year is less safe as compare to previous year.
funds also.
the current year the company has 73.67% of current assets while current
liabilities are 10.33% of total investment. In the year 2006 current assets
are 76.31% and the current liabilities are 15.75%. The working capital of
the company in the year 2006 is much better than 2005.
the previous year.

Particulars
Amount % Amount %
ASSETS:
Cash& Bank Balances 1359.71 14.94 3932.61 41.40
Sundry Debtors 85.62 0.94 49.30 0.52
Loans & Advances 550.90 6.05 710.12 7.48

Deferred Revenue
61.45 0.67 43.01 0.45
Expenditure
Investments 0.00 0.00 0.00 0.00
Profit & Loss a/c 2914.09 32.02 905.99 9.54
Fixed Assets: (F.A)

Land-Free Hold 51.48 0.57 51.71 0.54
Land-Lease Hold 1.25 0.01 1.22 0.01
Buildings 593.55 6.52 568.88 6.00
Plant & Machinery 2385.18 26.21 1492.25 15.71
Locomotives 25.09 0.27 22.06 0.23
Vehicles 0.30 0.01 0.51 0.01
Water Supply
97.95 1.08 85.70 0.90
&Sewerage systems
TOTAL ASSETS
9099.82 100 9498.90 100
[ C.A+ F.A ]
LIABILITIES:
Other Advances 0.75 0.01 4.64 0.04
57.22 0.63 51.20 0.54
& Other Deposits
1.14 0.01 2.39 0.02
Due
Provisions 156.51 1.72 269.27 2.83
Secured Loans 37.17 0.41 88.94 0.94
Unsecured Loans 0.00 0.00 442.42 4.66
Total Long Term
193.68 2.13 959.12 10.10
Share Capital
&Reserves :( CAP.&RES.)
Share capital 7827.31 86.02 7827.32 82.40
TOTAL LIABILITIES
[C.L+ L.T.M + CAP. 9099.82 100 9498.90 100
& RES.]
Interpretation:
1. During the year i.e.; 2004 is less traditionally financed comparison to

previous year. In 2005 the share capital consists of 82.40% of total
investment while the percentage in previous year 86.01%. The company
has less relied on shareholders' funds in the current year compared to
previous year.
2. In both the years, the company has followed the policy of financing fixed
assets from long-term funds. In the year 2004 investments in fixed assets
are 37.34%, while long-term funds 0.41%. The figures in 26.57% and
long-term funds are 2.59%. This shows that both the years the company
has financed funds from long-term sources.
3. The working capital of the company is good in both the years. The current
assets comprise 62.45% and current liabilities are 13.56%. In the year
2005 current assets are 72.42% and current liabilities are 14.99%. The
working capital of the company in the year 2005 is much better than the
year 2004.
4. The analysis of figures shows that the company for both the years has
satisfactory long-term and short-term financial position in comparison of
previous year.
Ratio Analysis:
Financial analysis depends to very large extents of the use of ratios

through there are other equality important tools of such analysis. Thus, a direct
examination of the magnitude of two released items is some what enlightening
but the comparison is greatly facilitated by expressing the relationship as a ratio.
RATIO ANALYSIS
Various ratios are calculated in the following tables to understand the

performance of the company.
LIQUIDITY RATIOS
Current Ratio:
Formula:
Current Assets
Current Ratio =
Current Liabilities
Year Wise Current assets and Current liabilities
Years Current Assets (Cr) Current Liabilities (Cr) Ratio

2004-05 6047.52 1424.15 4.25
2005-06 8252.00 1587.86 5.20
2006-07 10448.1 2104.3 4.97
2007-08 11804.6 3191.62 3.70
2008-09 11859.32 2560.79 4.63
Interpretation:
The current ratio for the year 2008-09 was 4.63.that is for every rupee of
current liability the firm is holding 4.63 of Current Assets. It shows that the firm
was able to meet its obligations.
The current ratio of the year 2005-06 was highest current ratio 5.2
compare the all years, but coming to years it was falling down to 4.63 in the year
2008-09.
Quick Ratio:
Formula:
Quick Assets
Quick Ratio =
Current Liabilities
Year wise quick assets and current liabilities

Years Quick Assets Current Liabilities (Cr) Ratio
2004-05 4082.09 1424.15 2.87
2005-06 5971.71 1587.86 3.76
2006-07 7725.96 2104.30 3.67

2007-08 10043.4 3191.62 3.14
2008-09 8644.04 4181.32 2.06
Interpretation:
The quick ratio for the year 2008-09 was 2.06. That is, for every
one rupee of quick liabilities the firm holding 2.06 of quick assets. Quick ratio was
highest in the year 2005-06 was 3.76, but now was falling down to 2.06.
Cash Ratio:
Formula:
Cash & Marketable Securities

Cash Ratio =
Current Liabilities
Year wise current liabilities and cash position (Rs in Crores)
Years Cash Current Liabilities Ratio
2004-05 3932.6 1335.55 2.76

2005-06 5621.70 1587.86 3.54
2006-07 7194.66 2104.30 3.42
2007-08 7699.11 3191.62 2.41
2008-09 6624.17 4181.32 1.58
Interpretation:
The cash ratio for the year 2008-09 was 1.58 that is for every one rupee
of current liabilities the firm is holding 1.58 cash in its current assets. That is, the
firm is able to maintain nearly 50% of cash reserves in its current assets. This
could be obtained due to increase in its turnover. This indicates that’s the firm’s
cash position is satisfactory.
LEVERAGE RATIOS
Debt –Equity Ratio:
Formula:
Total Debt
Debt ratio =
Equity
Debt –Equity Ratio for last 5 years (Rs in Crores)
Years Total Debt Equity Ratio
2004-05 531.36 7827.31 0.067
2005-06 457.59 7827.31 0.059
2006-07 916.96 7827.31 0.0117

2007-08 440.73 7827.31 0.056
2008-09 1007.76 7827.31 0.12
Interpretation:
The Debt-Equity ratio for the year 2008-09 was 0.12. It is clear that from
debt-equity ratio that VSP`s lenders have contributed fewer funds than owners
have. Lender’s contribution is times of owner’s contribution for 2007-08.
This relationship describes the lender’s contribution for each rupee of the
owner’s contribution. Public sector companies are expected to maintain 1:1 ratio.
Under unfavorable conditions, firms desire to use a low debt-equity ratio. This
ratio shows that debt is of the equity. This less debt indicates less risk to
shareholders.
Proprietary Ratio:
Formula:
Equity share capital

Proprietary Ratio = X 100
Total tangible Assets
Proprietary Ratio for last 5 years
Years Shareholders funds Total net Assets Ratio
2004-05 7827.31 8549.89 91.54
2005-06 7827.31 1051.99 744.04
2006-07 7827.31 12836.46 60.97

2007-08 7827.31 15276.46 51.24
2008-09 7827.31 17733.43 44.13
Interpretation:
The Proprietary ratio for the year 2008-2009 was 44.13. This relation
describes shareholders contribution for each rupee of the total net assets. This
ratio reflects that the shareholder’s contribution was 44.13 of the total net assets.
This shows that the firm has increased it’s contribute to the assets.
Inventory Turnover Ratio:
Formula:
Net Sales
Inventory Turnover Ratio =
Inventories
Year Wise Inventory Turnover Ratio
Years Net Sales Inventories Ratio
2004-05 7359.84 980.82 7.50
2005-06 7305.71 1236.99 5.91
2006-07 7932.66 1210.80 6.55
2007-08 9088.37 1761.15 5.16

2008-09 9128.38 3215.28 2.83
Interpretation:
The Inventory turnover ratio for the year 2008-09 was 2.83 times. That
is, the firm is able to convert its inventory for nearly 6 times within a year.
Normally, higher the ratio indicates the better inventory management.

Though the ratio is not so high it is reasonably high. It shows that there is a rapid
turning of the inventory into receivables through sales.
Hence, it is evident that the increase in the ratio is obtained due to

increase in its turnover.
Debtors Turnover Ratio:
Formula:
Net Sales
Debtors Turnover Ratio =
Debtors
Year Wise Debtors Turnover Ratio
Years Net Sales Debtors Ratio
2004-05 7359.84 49.30 149.29
2005-06 7305.71 165.65 44.10
2006-07 7932.66 216.80 36.60

2007-08 9088.37 93.41 97.30
2008-09 9128.38 191.27 47.72
Interpretation:
The Debtors turnover ratio for the year 2008-09 was 47.92 times.
That is, the firm is able to convert Credit Sales (Debtors) into Cash.
Debtors Collection Period Ratio:
Formula:
365
Debtors Collection Period Ratio =
Debtors Turnover Ratio
Year Wise Debtors Collection Period Ratio
Years Days Debtors Turnover Ratio Ratio
2004-05 365 149.29 2.44
2005-06 365 44.10 8.25
2006-07 365 36.60 9.97
2007-08 365 97.30 3.75

2008-09 365 47.72 7.64
Interpretation:
The firm is able to turnover its Debtors for 7.64 times in a year. This
shows that the debt from the debtors is collected very soon. Debtors Collection
Period Ratio was highest in 2006-07, but it was falling next years.
Fixed Assets Turnover Ratio:
Formula:
Net Sales
Fixed Assets Turnover Ratio =
Net Fixed Assets
Year Wise Fixed Assets Turnover Ratio
Years Net Sales Net Fixed Assets Ratio
2004-05 7359.84 2441.30 3.01
2005-06 7305.71 2078.26 3.52
2006-07 7932.66 1790.46 4.43
2007-08 9088.37 1384.64 6.56

2008-09 9128.38 1256.25 7.24
Interpretation:
The ratio for the year 2008-09 was 7.24 times. Interpreting the
reciprocal of this ratio, one may say that for generating a sale of one rupee, the
company needs 0.43 times investment in fixed assets.
Working Capital Turnover Ratio:
Formula:
Net Sales
Working Capital Turnover Ratio =
Net Working Capital
Year Wise Working Capital Turnover Ratio
Years Net Sales Net Working Capital Ratio
2004-05 7359.84 4623.37 1.59
2005-06 7305.71 6664.14 1.10

2006-07 7932.66 8343.80 0.95
2007-08 9088.37 8612.97 1.06
2008-09 9128.38 7678.00 1.18
Interpretation:
The ratio for the year 2008-09 was 1.18 times. Interpreting the
reciprocal for the year 2007-08 only 1.06 of net current assets is used to
generate 1 rupee of sales.
PROFITABILITY RATIOS
Return on Capital:
Formula:
Net Profit after Interest

Return on Capital =
Before Tax Share Capital
Year Wise Return on Capital Ratio
Years Profit Before Tax Share Capital Ratio
2004-05 2253.77 7827.31 28.79

2005-06 1889.51 7827.31 24.14
2006-07 2222.34 7827.31 28.39
2007-08 2995.36 7827.31 38.27
2008-09 2026.59 7827.31 25.89
Interpretation:
The Return on capital in the year 2008-09 was 25.89%. This ratio
indicates that the firm is able to generate 25.89% of return earned on the book
value of share capital.
Chapter-V
Summary and
Suggestions
SUMMERY
This study concentrated on the financial state of affairs of the company

RINL.It involved study of Balance sheet profit and loss account and ratio analysis
and also their comparison over the last five years, it has presented a broader
picture of the financial position of the company. The study analyzed the
company’s success in being able to effectively manage its day to day
requirements pertaining to cash and funds flow and effectively channelizing the
short term and long term funds of the company to meet the requirements.
The performance of the Company in terms of both Production and Sales

Revenue has been satisfactory, the Company surrounded various adverse
situations during the past 25 years and has now been conferred the status of
Mini Ratna by now been conferred the status of Mini Ratna by Government of
India . The Company’s plan to expand its capacity to 6.3 mtpa of liquid steel has
been approved by Government of India and the project is under progress.
FINDINGS
 Fixed assets forms more than 25% to the total assets in the financial year
2008-09.
 The debt capital is less than the share capital so, it reveals that the
company in the high liquidity position.
 Working capital position of the company is in satisfactory position.
 Debt capital is less than the equity and it shows the economical strength
of the company.
 The analysis for the purpose of the investing in shares generally
concentrates on the return on equity of vsp, which is increasing; therefore
it is a good bet for investment subjected to availability of shares.
 Even though profit before tax (PBT) reduced by 969 crores in year 2008-
09 compared to last year, the company is in a good financial position.
 Finally total assets of the company increased by 16% as whole the
financial position is satisfied.
SUGGESTIONS
1) High profit realization by selling the products in higher margins will

eventually result in higher cash accrual and hence higher credit rating.
2) Since the firm performance is largely dependant on availability of raw

materials, In order to avoid the uncertainties in acquiring the raw
materials New and innovative steps will be taken to effectively utilize the
surplus funds.
3) The present level of the cash is Rs 7106 crores, this can be used in
expansion II in order to maintain the current ratio i.e., between current
assets and current liabilities at the optimum level.
4) The other main area where RINL has tremendous scope for improvement
is in manufacturing value added products. This will result in better sales
realization and higher profits.
5) Standardization of general stores material and spares and reduce the

number of items.
6) The company should take proper steps to reduce the expenses and
thoroughly seek for maximum gains.
CONCLUSION
The Visakhapatnam Steel Plant has been dedicated to nation in 1992 and
it is one of the major steel plants in the Asia and having much more capital
investment. We know that the Visakhapatnam Steel Plant as a large organization
might have long gestation period and while establishing the Visakhapatnam Steel
Plant so much of lands were taken from the local people and provided the jobs to
them in VSP thought they may not skillful. But the top management of VSP
conducts so many training and development programs to improve their
performance, not only this but also frequent technological changes due to the
above factors in the initial stage.
The VSP incurred some losses but with the remedial measures taken by
the top management the past scenario was changed and the organization was
stepped towards the profits and recorded 449.66 crores as a profit for the year
2002. However the top management must take care to improve the profitability
and must try to reduce / remove the accumulated losses, which is important for
the wealth of the organization.
BIBILOGRAPHY
 FINANCIAL MANAGEMENT I.M.PANDEY
 FINANCIALMANAGEMENT PRASANNA CHANDRA
OTHER SOURCES:
 Annual Reports of Rashtriya Ispat Nigam Limited
 Information from (www.vizagsteel.com)
 General Articles And Magazines Of Rashtriya Ispat Nigam Limited
 Newspapers: Deccan Chronicle, The Hindu.

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A STUDY ON FINANCIAL PERFORMANCE

(with special reference to RASHTRIYA ISPAT NIGAM LIMITED, Visakhapatnam)

A project report submitted to JNT University, Kakinada

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of

Department of Management Studies

I hereby declare that this project work entitled “A Study on Financial

Performance” in RASHTRIYA ISPAT NIGAM LIMITED. Submitted by me to the

This is to certify that the project report titled “A Study on Financial

Performance” in RASHTRIYA ISPAT NIGAM LIMITED is being submitted by

has been carried out by his under my guidance and supervision.

Mr. J.Edukondala Rao Mr. M.Gangunaidu

I express my sincere thanks to my project guide Mr. M.Gangunaidu for

completion of my project work.

I am also thankful to our beloved Principal Prof.M.Ramjee for giving me

the permission to carry out the project work.

I also express my gratitude and heartfelt thanks to my company guide

Mr. Ramesh Kumar, Asst Manager (F&A), of Visakhapatnam Steel Plant,

inspiration for me throughout the study of the project.

Finally I would like to express my gratitude and thanks my parents and

friends whose unremarkable encouragement had helped me throughout my

educational endeavor and to do this project work.

Finance plays an important role in any organization. The dictionary

Efficient management of financial resources and deliberate analysis

Financial management involves the management of finance function. It is

Introduction to Financial Analysis:

The terms ‘financial analysis’ also known as analysis and interpretation of

Financial analysis is the process of identifying the financial strength and

Need for the Study:

There is a special role of every industry barring up on the need essentiality

Rashtriya Ispat Nigam limited is a multi-product steel-manufacturing unit

Here in this project an attempt is made by financial statements for knowing

Objectives of the Study:

 To know about Rashtriya Ispat Nigam Ltd

 To find out Financial Strengths and weaknesses of the firm

 To know the Liquidity Position of a firm

 To know the causes of changes in the Cash Position

 To find out important tools of Short-term, Long-term Financial

 To know the ability of the firm to meet its current obligations

 To know the overall operation efficiency and performance of the firm

 To find out foremost important Financial Decisions

 To know the detailed information about comparative and common size

 To examine profitability position of RINL, during the year 2004-2005 to

 To know about steel scenario in India and world

They are as follows:-

It is the information collected directly without any references. In this study

• Collection of required data from annual records of RINL.

• Reference from textbooks and journals relating to financial performance

INSIDE THE OUTSIDE THE

ANNUAL TEXT BOOKS,

 The period of study that is 6 weeks as not enough to go in the detailed

 The study is carried basing on the information and documents provided by

 Respondents may not provide accurate information due to various

 Most of the matters related to budgets were confidential so it is not

 Time is a major constraint.

 Budgeting process is very dynamic.

 There was no scope of gathering current information as the auditing has

Steel industry is the back bone of all industrial commercial activities.

 It is only metallic item, which can be continently and economically

The level of steel consumption has been regarded as an index of

India's Steel Scenario:

Indian steel industry has always remained isolated and protected by