CHAPTER-1 INTRODUCTION

INTRODUCTION TO FINANCIAL STATEMENTS:

Financial statements are generally prepared on the basis of recorded facts. The recorded facts are those which can be expressed only in monetary terms. All the transactions are recorded in a chronological order throughout the year. Financial statements are prepared from the records which are based on historical costs. The financial statements are summarizes of the items recorded in the business and these statements are prepared periodically, generally for the accounting period. The financial statements are prepared mainly for decision-making purposes. The information given in the financial statements is of immense use is making decisions through analysis and interpretation of financial statements.

OBJECTIVES OF FINANCIAL STATEMENTS:

To provide reliable financial information about economic resources and obligations of a business firm. To provide other needed information about changes in such economic resources and obligations. To provide reliable information about changes in net resources (resources less obligations) arising out of business activities. To provide financial information that assists in estimating the earning potential of business. To disclose to the extent possible, other information related to the financial statement i.e. relevant to the need of the users of these statements.

INTRODUCTION TO FINANCIAL ANALYSIS: Analysis is the process of critically examining in detail accounting information given in the financial statements. For the purpose of analysis, individuals items are studied, their interrelationships with other elated figures established, the data is sometimes rearranged to have better understanding of the information with the help of different techniques or tools for ht purpose. Analyzing financial statements is a process of evaluating relationship between component parts of financial statements to obtain a better understanding of firms position and performance. Financial analysis is the process of identifying the financial strengths and weaknesses of a firm by properly establishing relationship between the items of the balance sheet and profit and loss account. From the definition, it is clear that analysis and interpretation of financial statement is the methodical classification of the data given in the financial statement into simple component parts of elements, and evaluation of the significance of the relationship between the classified component parts of elements, with a view to provide a full diagnosis of the profitability and financial statement of an enterprise.

SIGNIFICANCE OF FINANCIAL ANALYSIS: 1.

HELPS IN SCREENING: Financial statements can serve as a preliminary tool on the selection of investments. It greatly helps the investors in studying 3ps i.e. prospects, payment and protection. The prospects of a firm can be judge by looking to both its presenting and future profitability. The capacity can be judge on the basis of

present and prospective rigidity of the firms. The protection can be judged on the basis of tangible assets backing, which the firm enjoys. 2.

HELPS IN FORECASTING:

It can be used as a forecasting tool for future profitability and financial soundness of business.

3.

HELPS IN DIAGNOSIS:

It helps the management to identifying the factors responsible for creating managerial, operating and other problems.

INTRODUCTION TO FINANCIAL STATEMENTS ANALYSIS: Financial statement analysis is a process of evaluations of the relationship between components parts of a financial statement to obtain a better understanding of a firms position and performance. In this way, the main objective of financial statement analysis is to analyse and evaluate the information contained in financial statements to judge the profitability, solvency and financial soundness of a firm. A financial analyst analyses the financial statements with various tools of analysis before commenting upon the financial health or weakness of an enterprise. The analysis and interpretation of financial statements is essential to bring out the mystery behind the figures in financial statements.

MEANING OF FINANCIAL STATEMENTS ANALYSIS:

The term financial statements analysis refers to" the process of determining financial strengths and weaknesses of the firm by establishing relationship between the items of the balance sheet and profit and loss account".

OBJECTIVES OF FINANCIAL STATEMENTS ANALYSIS:

The basic objective of the analysis statements is to understand the information contained in financial statements with a view to know the weaknesses and strengths of the firm and to make a forecast about the future prospects of the firm and thereby enabling the financial analyst to take different decisions regarding the operation of the firm. However, some of the specific objectives of the analysis of financial statements can be identified as; To asses the current profitability position and operating efficiency of the firm and as of different departments. To find out the relative importance of different components of the financial position of the firm. To identify the reasons for change in the profitability position of the firm. To assess the short as well as long-term liquidity position of the firm

TYPES OF FINANCIAL STATEMENTS ANALYSIS: FINANCIAL STATEMENTS ANALYSIS

EXTERNAL ANALYSIS

INTERNAL ANALYSIS

1.

EXTERNAL ANALYSIS:
External analysis is one which is conducted by an outsider without having

any access to the basic accounting record of the firm. These include investors, potential investors, creditors, potential creditors, government agencies, credit agencies and the general public. 2.

INTERNAL ANALYSIS:
The financial statement analysis is said to be internal when it is done by a

person who has access to the books of the account and other related informations of the firms. This type of financial statement analysis is undertakes for measuring the operational and managerial efficiency at different hierarchy levels of the firms.

CHAPTER-2 RESEARCH DESIGN

STATEMENT OF THE PROBLEM:

Financial statement analysis is very important in financial management; this requires deep study on the analysis of the available statement and interpretation. It is very crucial to analyze the performance of a manufacturing industry. Analysis of financial performance is one of the major requirements for planning because owners, management, creditors, prospective investors, and employees are involved in the decision making process. Government and financial institutions require it, as they are interested to know the financial soundness of the company. Financial statements exhibit the occurrences in a given period of time. But there are certain important financial matters, which can be known only through analysis of these financial statements. Thus, it is important to know the behavior of items in the financial statements. This underlines the importance of financial statement analysis and the current study is conducted to investigate into financial statements to evaluate the performance and profitability of Karnataka Soaps and Detergents Ltd.

OBJECTIVES OF THE STUDY:

Following are the objectives of analyzing the financial statements: To analyze present and future earning capacity of profitability of KS&DL, To understand the short-term and long term solvency of KS&DL for the benefit of the debenture holders and trade creditors. To evaluate financial stability of KS&DL. To study the significance of financial data, and long term liquidity of its funds. To evaluate operational efficiency of KS&DL as a whole and of its various parts or departments.

SCOPE OF THE STUDY:

The scope of the study covers evaluating the financial performance by analyzing the financial statement of Karnataka Soaps and Detergent Limited which were collected from the present record and from discussion with the companys accountant. The study aims at analyzing the financial statement of Karnataka Soaps and Detergent Limited over last five years and interpreting the different ratios and suggesting remedies for better performance

RESEARCH METHODOLOGY TITLE OF THE STUDY

"A STUDY ON THE ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS WITH SPECIAL REFRENCE TO KARNATAKA SOAPS AND DETERGENTS LIMITED

Research Methodology:
The purpose of methodology is to describe the process involved in research work. This includes the overall research design, data collection method, the field survey and the analysis of data

RESEARCH DESIGN
A research design is a logically and systematic plan prepared for directing a research study. It specifies the objectives of the study, the methodology and the techniques to be adopted for achieving the objectives. It constitutes the blue print for the collection, measurement and analysis of data It is an outline that specifies the sources and the types of information relevant to the research question. It is a blue print specifying the methods to be adopted for gathering and analysis the data. It should facilitate in obtaining required information. It should suit to the availability of resources and time.

TYPE OF STUDY
The research is made in a descriptive way of study. The financial statements are analyzed through various tools of financial statements analyses. Analytical study which helps to analyze financial statement of the company.

SOURCES OF DATA
1. Primary data Primary data can collected through the information within the organization and through references of the officials of the company. 2. Secondary data Secondary data is obtained through the use of statistical techniques which are further used for planning of analysis.

PLAN OF ANALYSIS
The data collected from the secondary sources have to be processed & interpreted systematically it includes such as: Interpretation of the study for 5years. Application of ratio analysis for the period of the study Identification of the changes in the working capital with the increase or

decrease of the amount in the balance sheet of 5 years. Calculation of various ratios reflecting the current ratio, quick ratio, cash

ratio, inventory turnover ratio, creditors turnover ratio, average payment period, working capital ratio etc..

LIMITATION OF THE STUDY

The information is based on data supplied by factory personnel and the data restricted to KS&DL. Analysis in the study will be depended on the information provided by the company. The study is done only on the basis of financial statement of 5years only.

CHAPTER SCHEME
I. INTRODUCTION: This chapter includes definition of financial analysis, types of financial analysis, significance of financial analysis. Introduction, meaning, objectives, types, procedure, methods of financial statements analysis. II. RESEARCH DESIGN: Introduction, meaning, definition of research design.Nature/essential of a good research design. It also includes Title of the project, statement of the problem, objective of the study, research technique, sampling design, methods of data collection, tools of data collection, plan of analysis, limitations of the study, chapter scheme. III. COMPANY PROFILE: This chapter gives us the profile of KS&DL. It provides details regarding KS&DL, nature of its activities, organizational structure, functional departments, its vision and mission, business operations, product profile, market status, competitors, a brief SWOT analysis and future prospects for the growth of KS&DL. IV. ANALYSIS AND INTERPRETATION: This chapter focuses upon the data which is collected to know the liquidity position, comparative balance sheet and common size balance sheet. This chapter also shows various ratios like current ratio, liquidity ratio, turnover ratios and the liquidity position of KS&DL. V. FINDINGS AND RECOMMENDATIONS: This chapter of the study includes the findings of the overall study at KS&DL on basis of data analysis and the conclusion which is online with objectives of the research.

CHAPTER-3 COMPANY PROFILE

INDUSTRY PROFILE:
Soap is one of the commodities which have become an indispensable part of the life of modern world. Since it is non durable consumer goods, there is a large market for it. The whole soap industry is experiencing changes due to innumerable reasons such as government relations environment and energy problems increase in cost of raw material etc. The changing technology and ever existing desire by the individual and the organization to produce a better product at a more economical rate has also acted as catalyst for the dynamic process of change. More and more soap manufactures are trying to capture a commanding market share by introducing new products. The soap industry in India faces a cut throat competition with multinational companies dominate the market. The y are also fa cing severe threat fro mdynamic and enterprising new entrance especially during 1991-92.If we look back into the history of soaps & detergents, mankind knew about soaps nearly 2000 years back i.e. in 70 A.D. when Mr. Elder accidentally discovered the soap, when roasted meat over flowed on the glow in ashes. This lu mp like product was soap & had foaming & cleansing character. In 1192 A.D. the first commercial batch of soaps was made &marketed by M/s Bristol soap market in London, from there in 1662A.D. the first patent for making soap was taken in London. The world consumption of soap in 1884A.D. was said to be 2 lakh tonnes p.a.

HISTORY OF THE SOAP:

Soap manufacturing was started in North America. Some American companies with well known names were started 200 years ago. During middle age soap was made at various places in Italy, France, England & other countries. France became famous & many small factories were established there. In India the first soap industry was established by North West soap company in1897 at Meerut following the swadeshi movement. From 1905 on wards few more factories were setup. They are, Mysore soap factory at Bangalore Godrej soap at Bombay Bengal chemicals Tata oil mills 1930 lever brothers comp

THE INDIAN SOAP INDUSTRY SCENARIO:

The Indian soap industry has long been dominated by hand full of companies such as: 1. Hindustan levers limited 2. Tata oil mills (taken over by HLL) 3. Godrej soaps private limited. The Indian soap industry continued to flourish very well until 1967-68, but began to stagnate & soon it started to recover & experienced a short upswing in 1974. This increase in demand can be attributed due to; 1. Growth of population. 2. Inco me & consu mption increase. 3. Increase in urbanization. 4. Growth in degree of personal hygiene.

PRESENT STATUS:
Market scenario: India is the ideal market for cleaning products. Hindustan liver, which towers over the cleaning business, sells in all over the cleaning business but the tiniest of Indian settlements. The 7.4 lakhs tons per annum soap market in India in crawling along at 4%The hope lies in raising Rupee worth, the potential for which is high because the Indian soap market is pseudo in nature & it is amazingly complex being segmented not only on the basis of price benefits, but even a range of emotions within that outlining framework.

PROBLEMS OF SOAP INDUSTRY:

Soap industry faces some problems in case of raw materials. The major ingredients are soap ash linear alkyl, benzene& sodium. Tripoli phosphate poses number of serious problems in terms of availability. The demand supply gap for vegetable oil is 1.5 to 2 lakh tons & is met through imports. In recent times, caustic soda and soap ashes in the cheaper varieties of soaps are quite high.

COMPANY PROFILE

THE FOUNDERS OF MYSORE SANDAL SOAP:

Sir M. Visvesvaraya

Nalwadi krishnaraja Wodeyar

Sri S. G. Shastri

ABOUT KARNATAKA SOAPS AND DETERGENTS LIMITED:

Karnataka soaps and detergents limited [KS&DL] a Government of Karnataka undertaking is involved in the extraction of sandalwood oil and in the manufacture of soaps, Detergents, Incense sticks and sandal Talc, having over 9 decades of experience in this field. KS&DL today is one of the largest producers of sandalwood oil and sandal soap in the world, with a turnover of Rs.125crs. The sandal soaps of KS&DL have a definite niche in the soap market with the oldest known perfumery material sandalwood as its main ingredient. Sandal Soaps of KS&DL are probably the only soap in the world with pure natural sandalwood oil. KS&DL is the true inheritor of Indias golden sandalwood legacy, the sandalwood oil which is also known as Liquid Gold. Sandal wood oil is recommended in ancient ayurvedic texts for skin care, has excellent antiseptic properties and soothes prickly heat and other skin rashes too. This is the reason why soaps made out of sandalwood oil are used all over the world for nourishing and softening the skin. It was the availability of sandal wood oil, which became a reason to set up a soap factory. Government soap Factory in Bangalore was established by the Maharaja of Mysore Nalwadi Krishna raja Wodeyar and Diwan Sir M. Visvesvaraya during the year 1916. The soap making process was perfected under the stewardship of eminent scientist Shri S. G. Shastri. The sandalwood Oil Division in Mysore was established during the year 1916 and Sandalwood Oil Division at Shimoga was established during the year 1944.

RENAMING:
On 1st October 1980, the Government Soap Factory was renamed as Karnataka Soaps and Detergent Limited by integrating sandal oil factories at Mysore, Shimoga and Bangalore. The Company was registered as a public limited company. Today Company produces varieties of products in the toilet soaps, detergent, agarbathies and Cosmetics.

TRADEMAR OF KS & DL:-

THE SHARABHA The carving on the cover is the Sharabha, the trademark of KS & DL. The Sharabha is a mythological creation from the puranas which has a body of a lion and head of elephant, which embodies the combined virtues of wisdom and strength. It is adopted as an official emblem of KS& DL to symbolize the philosophy of the company.The Sharabha thus symbolized a power that removes imperfections and impurities.

SLOGAN:NATURAL PRODUCTS WITH EXOTIC FRAGRANCES

VISION STATEMENT:
Keeping pace with globalization, global trends and the states policy for technology in every aspect of governance. Ensuring global presence of Mysore Sandal products while leveraging its unique strengths to take advantage of the current technology scenario by intelligent and selective diversification. Further, ensure Karnatakas pre-eminent status as a proponent and provider of technology services to the world, nation, other states public and private sectors. Making all out efforts to achieve reasonable profits. Most importantly to earn the invaluable foreign exchange, both to the state and to the country.

MISSION STATEMENT: To serve the National economy. To attain self-reliance. To promote purity & quality products To maintain the Brand loyalty of its customers. To build upon the reputation of Mysore sandal soap based on pure sandal oil.

OBJECTIVES OF KS & DL: To attain self reliance. To promote and uphold its image as symbol of traditional products To promote purity and quality products and thus enhance age old charm of Sandalwood Oil. To build upon the reputation of Mysore Sandal soap based on pure sandal oil. To maintain the brand loyalty of its customer. To supply the products mentioned above at most reasonable and competitive rate.

POLICY OF KS&DL: Seek purchase of goods and services from environment responsible suppliers. Communicate its environment policy and best practices to all its employees implications. Set targets and monitor progress through internal and external audits. Strive to design and develop products, which have friendly environmental impact during manufacturing. . Reuse and recycle materials wherever possible and minimize energy consumption and waste.

COMPETITORS OF KS&DL PRODUCT AND SERVICES:KS&DL is facing cut-throat competition in national and international market. Some of its main competitors are: M/S. Hindustan Unilever Ltd M/S. Godrej Soaps Private Ltd M/S. Proctor& Gamble M/S. Wipro M/S. Nirma Soaps Private Ltd M/S. Jyothi Laboratories

DEPARTMENTS OF KS&DL:
Human Resources Department Production Department Marketing Department Finance\Accounts Department Research & Development Department Stores Department Welfare Department Maintenance Department Materials Department Management Information System Department

AN ISO-9001 AND ISO-14001 COMPANY:

KS & DL with a tradition of excellence of over eight decades is committed to customer delight, through total quality management and continuous improvement through the involvement of all employees. KS&DL

has got ISO 9002 certificate.The Company got itself upgraded to ISO-90012004, Quality Systems in the year 2004-05 The company is located in the heart of the Bangalore city. The management of the company took a decision to get the ISO-14001 and become model to other public sector for the techniques used and also to other Government units to spread the message of maintenance of environment. ISO-14001 and ISO-9001 will facilitate to improve the corporate brands in the global market and it will help the company to improve the profits, year after year on long-term basis. The environment management system adopted in the company through this motive as follows: Conservation of energy Conservation of Surrounding Conservation of resources

PRODUCT PROFILE:
KS&DL is the true inheritor of golden legacy of India. Continuing the tradition of excellence for over eight decades, using only the best East Indian grade Sandalwood oil & Sandalwood soaps in the world. The products produced at KS&DL are the Soaps, Detergents, Agarbathies and Sandalwood oil.

a) PRODUCT RANGE FROM THE HOUSE OF MYSORE

SANDAL SOAP:
o Mysore Sandal Soap (75gm,125gm & 150gm) As per weight its available of Rs.10, 20, 25 respectively. o Mysore Sandal Special Soap Available mostly in 75 grms pack and having sandalwood and almond oil as ingrediants.

o Mysore Sandal Baby Soap This soap is mainly for babies made of ingredients suitable for babies soft and sensitive skin.

o Three-In-One Gift Pack (SJR) 3Tabs

(150gm Each)

o Mysore Sandal Gold Soap

(125gm)

o Mysore Rose Soap

(100gm)

o Six-In-One Gift Pack- 6Tabs

(150gm Each)

o Mysore Sandal Gold sixes 6 Tabs

(125gm Each)

o Mysore Sandal Soap Bath Tablet Trio 3nos. (150gm Each)

b) DETERGENTS: KS&DL also manufactures high quality detergents applying the latest spray drying technology with well balanced formulation of active matters & other builders; they provide the ultimate washing powder. 1. Sensor Detergent Powder (1kg/2kg)

2. Mysore Detergent Powder (1kg/500gms)

3. Mysore Detergent bar 4. Mysore Detergent Cake

(250gms) (125gms/250gms)

c) AGARBATHIS:
1. Mysore Sandal premium 2. Mysore Rose 3. Suprabath 4. Parijata 5. Venkateshwar 6. Ayyappa 7. Chandhana 8. Mysore sandal 9. Nagachampa 10.sMysore Jasmine 11.Bodhisattva 12.Durga 13.Alif Laila

d) SANDALWOOD OIL:
In 5ml, 10ml,20ml, 100ml,500ml,2kg,5kg,20kg,and 25kg packing.

e) POWDERS:

1. Mysore Sandal Talk: Cooling & Healing, Fragrant freshness, Net. Wt 20gm, 60gm, 300gm and 1kg.

2. Mysore Sandal Baby Powder: Tender loving care for baby& Mummy. Net wt 100-400gms.

EXPORTS FROM KS&DL:

1. Middle East Countries. 2. Asian Countries. 3. American Countries. 4. European Countries. 5. Australia and New Zealand. 6. African countries.

PLANTS SITUATION:
Plants at Bangalore Soaps, Detergents,Fatty Acid, Plants at Mysore Sandalwood oil,Agarbathies Plants at Shimoga

OWNERSHIP PATTERN:
Wholly owned by Government of Karnataka.

PRESENT STATUS:
1. The company has entered into shampoo, dish wash, detergent bar & room refresher. 2. The company is striving to develop new perfumes for soaps detergents, agarbathies & shampoo. 3. The company wants to improve the existing products in terms of quality.

ACHIEVEMENTS AND AWARDS OF KARNATAKA SOAPS AND DETERGENTS LIMITED:

Government of Karnataka Dept of Industries and commerce State Export Promotion Advisory Board. EXPORT AWARD 1974-75 Geographical Indication GI-2005 ISO 9001-2000 in the year 1999 ISO 14001-2004 in the year 2000 FUTURE GROWTH AND PROSPECTUS: Introduction of anti-bacteria, herbal transparent soap, made out of 33 essential oil based Timely introduction and implementation of market driven decisions. Improvement in existing products Mysore Sandal classic improved moisturizers & skin conditions.

 Introduction of sandalwood powder in 50gms, 100gms to meet the growing demand for religious purpose. Introduction of new higher powered detergent powder for institutional sales in bulk packaging. To attain market leadership. Introduction of new trade schemes to increase sales. Aggressive advertisement and publicity as part of sales promotion. Reduction in distribution expenses. Cost-reduction in all areas.

BANKERS:
KARNATAKA SOAPS AND DETERGENTS LIMITED being a huge organization, should possess better banking facilitates to meet the timely requirements of capital of the company & to fulfill the financial obligations of supplies, customers & other personnel having relationship with the company. The Bankers of the company are: STATE BANK OF MYSORE CANARA BANK VIJAYA BANK SYNDICATE BANK

ORGANISATION CHART OF FINANCE FUNCTION:

The below chart shows the organisation structure of KS&DL . It shows the hierarchy in which the authority and responsibility flows at KS&DL. A typical organisation chart of finance function of a company is given

Managing Director

General Manager

AGM (Costing)/
AGM Junior (Bills) Officer

Manager
(PR&PF)

Manager
(LS)

AGM
(Accounts)/AGM (CE&C)

Junior Officer

Junior Officer

Sr Assistant

Sr Assistant

Sr Assistant

Jr Assistant

Jr Assistant

Jr Assistant

LEVELS OF ORGANISATION:
The organization of KS&DL consists of 4 levels, they are TOP LEVEL consisting of BODs and M.D SECOND LEVEL consisting of Directors of Finance and Special officers THIRD LEVEL consisting of senior managers, deputy managers and officers. FOURTH LEVEL consisting of clerks, Assistants and Attendees.

SWOT ANALYSIS:
1. STRENGTHS: The Mysore sandal soap contains pure sandal and almond oil. Certified by ISO. Worlds largest production of sandalwood oil. Brand name from decades in soap market. It has very good dealership network in south which ensures that the products reach every customer. Diversified product range helps the company to maintain stability.

2. WEAKNESSESS:
Distribution network is weak in north and east. Absence of television advertisement. High oriented cost due to excessive labour force. Neglecting freshness aspect.

 Low turnover resulting in low profit.

3. OPPORTUNITIES:
Traditional benefits that sandal is good for skin. Skin care is just gaining importance among consumers As a soap attribute. Government support and large production capacity. Advantages of being in the industry for a long time. Existence of vast market and huge demand.

4. THREATS:
There are other competitors such as Rexona, Moti, Santoor etc There is a need for renovation of plant and machinery. Government policy may reduce growth potential. Other sandal soaps in the market. Entry of new multinational in soap business.

CHAPTER-4 DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTERPRETATION

MEANING OF ANALYSIS:
Analysis is the process by which, the whole body of gathered data, facts, figures and ideas, is converted into meaningful and usable information.

MEANING OF INTERPRETATION:
Interpretation refers to the task of drawing inferences from the collected facts after analytical and/or experimental study. In short, it is a search for broader meaning of research findings.

MEANING OF ANALYSIS AND INTERPRETATION:

In the words of Kennedy and Memullar, "The analysis and interpretation of financial statements are an attempt to determine the significance and meaning of the financial statements data so, that a forecast may be made of the prospects for future earnings"

TECHNIQUES/TOOLS OF ANALYSIS AND INTERPETATION: 1. COMPARITIVE FINANCIAL STATEMENTS 2. COMMON MEASUREMENT STATEMENTS 3. TREND PERCENTAGE ANALYSIS 4. FUNDS FLOW STATEMENTS 5. CASH FLOW STATEMENTS 6. NET WORKING CAPITAL ANALYSIS 7. RATIO ANALYSIS

Among the various above techniques two tools have been selected in order to analyze the financial statement of KS&DL , the tools used are: 1. COMPARATIVE FINANCIAL STATEMENTS 2. RATIO ANALYSIS

1. COMPARATIVE FINANCIAL STATEMENTS: In comparative financial statements two or more balance sheets and or the income statement of a firm are presented simultaneously in columnar form. The financial data for two or more years are placed and presented

in adjacent columns and thereby the financial data is provided a times perspective in order to facilitate periodic comparison. In comparative financial statements, the balance sheet and the income statements for a number of years are presented in condensed form for year comparison and to exhibit the magnitude and direction of changes.

The comparative financial statements may be prepared to show; The absolute amount of different items in monetary forms. The amount of periodic changes in monetary terms. The percentage of periodic changes to reveal the proportionate changes. The comparative financial statement can be prepared for both balance sheet and the income statement. The analysts are able to draw useful conclusions when figures are given in a comparative position. The figures of sales for a quarter or half year or one year may tell only the present position of sales efforts.

COMPARATIVE BALANCE SHEET:

The comparative balance sheet analysis is the study of the trend of the same items, group of items and computed items in two or more balance sheets of the same business enterprise on different dates. The changes in periodic balance sheet items reflect the conduct of a business. The changes can be observed by comparison of the balance sheet at the beginning of the year and at the end of the year. These changes will help in forming an opinion about the progress of an enterprise. The comparative balance sheet has two columns for the data of columns for the data of original balance sheets. A third column is used to show increase in figures. The fourth and last column may be added for showing percentages of increases or decreases. This statement prepared on two or more different dates can be used for comparing sources of funds under that secured loans, unsecured loans and reserves & surplus. These statements also used to compare fixed and current assets, liabilities & provision and to find out increase/decrease in these items.

Below are the comparative analysis of the balance sheet for the past 4 to 5 years: On the bases of those we analyzed the performance of the company and changes in that.

COMPARITIVE BALANCE SHEET FOR THE YEAR 2006 & 2007

Particulars 1.Sources Of Funds a) Share capital b) Reserve & surplus c) Secured loans d) Unsecured loans Total APPLICATION OF FUNDS 1.Fixed assets a) Gross block b) Net block 2. Investment 3.Deferred tax assets 4. current assets Total Less: current liabilities & provision i) Liabilities Ii) provision Total profit & loss a/c Total As on 31-03-06 As on 31-03-07 Absolute changes % of changes

318221000 39448184 214405674 253853858

318221000 -

0 0 39448184

0 0 100 (6.76) (21.24)

199911435 199911435

(14494239) (5394239)

348447394 635943332 100 760760496 760760496

302808002 60360155 100 700225559 700225559

(45639320) (32341177) 0 (60534937) (60534937)

(13.96) (50.86) 0 (7.95) (7.95)

207051365 88833899 295885264 25572563 43605194

170706357 98239572 268945929 5326504 26492550

(36345008) 94.5673 (26939335) (20246059) (17112644)

(17.55) 10.58 (9.10) (79.17) (39.24)

INTERPRETATION: o There is decrease in fixed assets in 2006 to 2007 this shows the company
is not contributing amount for fixed assets out of profit and the companys liquidity position is not good when compare to 2006 as the company is concentrating on earning profit. The decreased %age of fixed assets is 13.96 and 50.86 in gross and net block respectively.

o In the sources of funds secured and unsecured loans are decreasing in the
year 2007 as compared to 2006 which is a good sign for the company. Secured loans are decreasing to zero and unsecured loans are decreased by 6.76%. Share capital of the firm remains constant. There are no reserve and surplus with the firm in both the years i.e 2006 & 2007.

o There is a decrease in the current assets from 2006 to 2007 with a percent
of 7.95 which shows a loss to the company.

o As seen in current liabilities companies position is good as they are

decreasing in the year 2007 as compared to 2006 with a percentage of changes 17.55, which is again good for the company.

o In the profit and loss account, in 2006 company had Rs.25572563 of

profit which become Rs.5326504 in the year 2007 i.e 79.17% of change . Overall company`s performance is satisfactory but company needs to give attention to some of its major areas like current assets and fixed assets as there is a decrease in current and fixed assets with a percentage change of 13.96 % and 50.86% respectively. There is a decrease in secured and unsecured loans with a percentage change of 100% and 6.76% respectively which is on the benefit side of the company .

COMPARITIVE BALANCE SHEET FOR THE YEAR 2007 & 2008

Particulars 1.Sources Of Funds e) Share capital f) Reserve & surplus g) Secured loans h) Unsecured loans Total APPLICATION OF FUNDS 1.Fixed assets c) Gross block d) Net block 2. Investment 3.Deferred tax assets 4. current assets Total Less: current liabilities & provision j) Liabilities Ii) provision Total MIS expenses Total

As on 31-03-07

As on 31-03-08

Absolute changes

% of changes

318221000 -

318221000 15070293 16629120

15070293 16629120 (6691599) 53286879

100 0 (34.97) (26.66)

199911435 199911435

129995436 479915849

302808002 60360155 100 700225559 700225559

293406486 58930969 100 816621470 816621470

(10401516) 89722330 116395911 116395911

(3.43) (3.70) 16.62 16.62

170706357 98239572 268945929 21166046 26492550

280039861 128527890 408567751 12931061 479915849

109335504 30288318 139621822 (8234985) (5326504)

17.42 31 52 (422) (100)

INTERPRETATION: o From the above table again is a decrease in the fixed assets from 2007 to
2008 this shows the company is not contributing amount for fixed assets out of profit. The decreased %age of fixed assets is 3.43 and 3.70 in gross and net block respectively.

o In the sources of funds secured and unsecured loans are increasing in the
year 2008 as compared to 2007 which is a not a good sign for the company. Secured loans are increased from zero to Rs.16629120 and unsecured loans are increased by 34.97%. Reserve and surplus are also increased by 100% from 2007 to 2008. Share capital of the firm remains constant.

o There is a increase in the current assets from 2007 to 2008 with a percent
of 16.62 which shows that the company`s liquidation position is becoming good.

o As seen in current liabilities companies position is not much better as

they are increasing in the year 2008 as compared to 2007 with a percentage of changes 17.42, which is again not good for the company. Overall the company`s performance is satisfactory as compared to the performance of 2007 as there is a decrease in unsecured loans but increase in secured loans with a percentage change of (34.97)% and 0% respectively. There is an increase in the current assets but decrease in fixed assets with a percentage change of 16.62% and (3.43) which is good on the side of current assets but not good in reference of fixed assets.

COMPARITIVE BALANCE SHEET FOR THE YEAR 2008- 2009

Particulars

As on 31-03-08

As on 31-03-09

Absolute changes

% of changes

1.Sources Of Funds i) Share capital j) Reserve & surplus k) Secured loans l) Unsecured loans Total APPLICATION OF FUNDS 1.Fixed assets e) Gross block f) Net block 2. Investment 3.Deferred tax assets 4. current assets Total Less: current liabilities & provision k) Liabilities Ii) provision Total MIS expenses Total

318221000 15070293 16629120 129995436 479915849

318221000 136826041 10365536 89995436 555408013

0 121755748 (6263584) (40000000) 75492164

0 807.91 (37.77) (30.66) 15.73

293406486 58930969 100 816621470 816621470

396106154 59055325 30000100 32146548 881689555 881689555

3699668 124356 30000000 32146548 65068085 65068085

1.26 0.21 30000000 100 7.96 7.96

280039861 128527890 408567751 12931061 479915849

308752365 166770640 475523005 28039490 555408013

28712504 38242750 66955254 15108429 75492164

10.25 29.75 16.38 116.83 15.73

INTERPRETATION: o In the sources of funds secured and unsecured loans are decreasing in the
year 2009 as compared to 2008 which is a good sign for the company. Secured loans are decreasing by 37.77 and unsecured loans are decreased by 30.66%. Share capital of the firm remains constant. Reserve and surplus are increased with an absolute change of Rs.121755748 the firm in the year 2009.

o The above table is showing a increase in the fixed assets from 2008 to
2009 this shows the company is contributing amount for fixed assets out of profit. The increased %age of fixed assets is 1.26 and 0.21 in gross and net block respectively. o From the above table, in the year 2009 the position of current assets is 88.16 which was 81.66 in 2008 and current liabilities is 30.87 and 28.00 in the year 2009 and 2008 respectively. All this is showing good results for the firm in accordance of current assets but not good in current liabilities position. o In 2009 company`s MIS expenses are increasing with a absolute changes of Rs. 15108429 and percent change of 116.83, it means company should control its undesired expenses. Overall the performance of KS&DL is pretty satisfactory, when compare to the year 2008.It indicate that, in both the year 2008-2009 the

company has a good liquidity position as there`s an increase in the fixed and current assets with a percentage change of 1.26% & 7.96% .The firm position also increasing in the side of sources of funds as there is a decrease in the secured loans with a change of (37.77)% decrease in the unsecured loans with (30.66)%. and also

COMPARITVE BALANCE SHEET FOR THE YEAR 20092010

Particular 1.Sources Of Funds m) Share capital n) Reserve & surplus o) Secured loans p) Unsecured loans Total APPLICATION OF FUNDS 1.Fixed assets g) Gross block h) Net block 2. Investment 3.Deferred tax assets 4. current assets Total Less: current liabilities & provision l) Liabilities Ii) provision Total profit & loss a/c Total

As on 31-03-09

As on 31-03-10

Absolute changes

% of changes

318221000 136826041 10365536 89995436 555408013

318221000 267719129 107204608 83506504 778420599

0 130893088 96839072 (6488932) 223012586

0 95.66 934.24 (7.21) 40.15

396106154 59055325 30000100 32146548 881689555 881689555

309623620 69775760 100 52504866 1091372587 1091372587

(13517466) 10720435 (30000000) 20358318 179683032 179683032

(4.56) 18.15 (99.99) 63.32 19.70 19.70

308752365 166770640 475523005 28039490 555408013

246650794 204956560 451607354 16374640 778420599

(62101571) 38185920 (23915651) (11664850) 223012586

(20.11) 22.89 (5.02) (41.60) 40.15

INTERPRETATION:
From the table of comparative balance sheet of year 2009-2010 o In the sources of funds secured loans are increasing highly and unsecured loans are decreasing in the year 2010 as compared to 2009 which is a not good for the company. Secured loans are increased by 934.247 and unsecured loans are decreased by (7.21). Reserve and surplus are increased with an absolute change of Rs.130893088 of the firm in year 2010. Share capital of the firm remains constant.

o The above table is showing a decrease in the fixed assets from 2009 to
2010 this shows the company is not contributing enough amount for fixed assets out of profit. The decreased %age of fixed assets is 4.56. o From the above table, in the year 2010 the position of current assets is 109.13 which was 88.16 in 2009 i.e there`s a increase and current liabilities is 30.87 and 24.66 in the year 2009 and 2010 respectively. All this is showing good results for the firm in both the cases, current assets and current liabilities. Overall the performance of KS&DL is satisfactory but when compared to 2009 it`s not good enough as there is an increase in secured loans but decrease in unsecured loans with a percentage change of 934.24% and (7.21)% respectively. companys liquidity position is also not satisfactory when compared to the year 2009 as there is a decrease in fixed assets gross block with a change of 4.56% but increase in current assets with a percentage of 19.70%.company`s current liabilities are also decreasing with a absolute changes of Rs.62101571 & percentage change of (20.11)% which is a good sign for the company.

COMPARITVE BALANCE SHEET FOR THE YEAR 20102011

Particular 1.Sources Of Funds q) Share capital r) Reserve & surplus s) Secured loans t) Unsecured loans Total APPLICATION OF FUNDS 1.Fixed assets i) Gross block j) Net block 2. Investment 3.Deferred tax assets 4. current assets Total Less: current liabilities & provision m) Liabilities Ii) provision Total profit & loss a/c Total

As on 31-03-10

As on 31-03-11

Absolute changes

% of changes

318221000 267719129 107204608 83506504 778420599

318221000 343479146 800922400 83506504 163989804

0 75760017 (27112208) 0 (27112208)

0 28.30 (25.29) 0 (14.22)

309623620 69775760 100 52504866 1091372587 1091372587

327262896 241431939 85830957 100 1239560593 1239560593

1739276 1584079 16055197 0 148188006 148188006

5.69 0.66 23.00 0 13.58 13.58

246650794 204956560 451607354 16374640 778420599

292361773 269166068 561527841 -

45710979 64209508 109920487 16374640

18.53 13.33 24.34 100

INTERPRETATION:
From the above table of 2010-2011 o In the sources of funds secured loans are decreasing and unsecured loans are also decreasing in the year 2011 as compared to 2010 which is good for the company. Secured loans are decreased by 25.29 and unsecured loans are decreased to zero (0). Reserve and surplus are increased with an absolute change of Rs.75760017 in the year 2011. Share capital of the firm remains constant.

o The above table is showing an increase in the fixed assets from 2010 to
2011 this shows the company is contributing enough amount for fixed assets out of profit. The increased %age of fixed assets is 5.69. o In the year 2011 the current assets are increasing with a percentage change of 13.58 and current liabilities are also increasing with a absolute change of Rs. 45710979 and a percentage change of 18-53. The overall performance of the firm is comparatively good in the last year as it has covered all of its unsecured loans and there is a decrease in the percentage of secured loans i.e 25.29%. Company is also contributing a good amount toward its assets as both of current and fixed assets are increased in the year 2011. So, the company`s liquidity position is good and the performance of the organization is also satisfactory.

2.RATIO ANALYSIS: RATIO:

Ratios are guides or shortcuts that are useful in evaluating the financial position and operations of a company and in comparing them to previous years or other companies. The primary purpose of ratios is to point out areas for further investigation. They should be used in connection with a general understanding of the company and its environment.

RATIO ANALYSIS:
Ratio analysis is an important means of expressing the relationship between two numbers. A ratio can be computed form any pair of numbers. To be useful, a ratio must represent a meaningful relationship, but use of ratios cannot take the place of studying the underlying data.

IMPORTANCE OF RATIO ANALYSIS:

Useful in financial position analysis Useful in simplifying accounting figures Useful in assessing the operational efficiency Useful in forecasting purposes Useful in locating the weak spots of the business Useful in comparison of performance

OBJECTIVES OF RATIO ANALYSIS:

To evaluate the profitability of the firm To evaluate and measure the financial strength of the firm To highlight the liquidity and profitability of the firm To know whether the firm is in a position to meet its current obligations To measure the firm's performance with the other firms in the same industry Ratio are a tool, which enables management to analyses business situations and to monitor their performance as well as that of their competitors Ratio analysis help the management to diagnose the situation, monitor the performance and help to plan forward Ratio analysis is of much help in financial forecasting and planning

CLASSIFICATION/TYPES OF RATIOS:
A. Profitability ratios B. Coverage ratios C. Turnover ratios D. Financial ratios E. Leverage ratios

A. PROFITABILITY RATIOS:

Profitability is the overall measure of the companies with regard to efficient and effective utilization of resources at their command. The following are the important profitability ratio; 1. Gross profit ratio 2. Operating ratio 3. Expenses ratio

4. Operating profit ratio 5. Net profit ratio 6. Return on capital employed /overall profitability ratio 7. Return on shareholders' fund 8. Return on total assets 9. Earnings per share 10.Dividend yield ratio

B. COVERAGE RATIOS: These ratios indicate the extent to which the interests of the persons entitled to get a fixed return (i.e., interest or dividend) or a scheduled repayment as per agreed terms are safe. The following are the important coverage ratio; 1. Fixed interest cover 2. Fixed dividend cover 3. Debt service coverage ratio C. TURNOVER RATIO: These ratios are very important for a concern to judge how well facilities at the disposal of the concern are being used or to measure the effectiveness with which a concern uses its resources at its disposal. The following is the important turnover ratios: 1. Sales to capital employed/capital turnover ratio 2. Sales to fixed assets/fixed assets turnover ratio 3. Sales to working capital/working capital turnover ratio 4. Total assets turnover ratio 5. Stock/inventory turnover ratio 6. Receivable/debtors turnover ratio 7. Creditors/account payable turnover ratio

D. FINANCIAL RATIOS: These ratios can be divided into two broad categories: 1. Liquidity ratios 2. Stability ratios 1. LIQUIDITY RATIOS: These ratios are calculated to judge the financial position of concern. It is decided to study the liquidity position of the concerns, in order to highlight the relative strength of the concerns in meeting their current obligations to maintain sound liquidity. Liquidity ratio consists of the following ratios; Current ratio/working capital ratio Liquid/acid test/quick ratio Absolute liquidity/super quick ratio Cash to fund expenditure for operations Ratio of inventory to working capital

2. STABILITY RATIOS:
These ratios help in ascertaining the long term solvency of a firm which depends on firm's adequate resources to meet its long term funds requirements. A stability ratio consists of the following ratios; Fixed assets ratio Ratio of current assets to fixed assets Debt equity ratio Proprietary ratio Capital gearing ratio

E. LEVERAGE RATIOS: The leverage ratios explain the extent to which the debt is employed in the capital structure of the concerns. The leverage ratios are divided in two broad categories. 1. Operating leverage 2. Financial leverage

CURRENT RATIO: This is the most widely used ratio. It is the ratio of current assets to current liabilities. It shows a firm's ability to cover its current liabilities with its current assets. Current ratio is sometimes to as working capital ratio or banker's ratio. Current ratio expresses the relationship of current assets to current liabilities. It is widely used as a broad indicator of a company's liquidity and short term debt paying ability. The current ratio formula is as follows;

CURRENT RATIO=CURRENT ASSETS / CURRENT LIABILITIES

Table 4.6 showing the current ratio for the last 5 years(in.Rs)

H YEARS

CURRENT ASSETS

Current liabilities 26,89,45,929 40,85,67,751 47,55,23,005 45,16,07,354 56,15,27,841

Current Ratio 2.6 1.9 1.8 2.4 2.2

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

70,02,25,559 81,66,21,470 88,16,89,555 1,09,13,72,587 1,23,95,60,593

4.6 GRAPH SHOWING CURRENT RATIO

3 2.6 2.5 2 1.5 1 0.5 0 2006-07 2007-08 2008-09 current ratio 2009-10 2010-11 1.9 1.8 2.4 2.2

ANALYSIS:
A Relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time as and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. The ratio equal or near to the rule of thumb is 2:1, i.e. current assets double the current liabilities is considered satisfactory.

INTERPRETATION:
It is inferred that current ratio was up to the standard in the year 2006-07, 2009-10, 2010-11 due to decrease in inventory and debtors. For the two years it is showing a decreasing trend due to drastic increase in current liabilities.

QUICK RATIO:
It is the ratio that expresses the relationship between quick or liquid assets and quick or liquid liabilities. Any asset is called liquid if it can be converted to cash without loss in value. Cash is the most liquid assets. They include all current assets except inventories or stocks and prepaid expenses since these are not easily available for the payment of current liabilities. It shows a firm's ability to meet current liabilities with its most liquid assets. 1:1 ratio is considered ideal ratio for a concern because it is wise to keep the liquid assets at least equal to the liquid liabilities at all times. Current liabilities include all those liabilities, which should necessarily be paid within a short period of one year. The quick ratio formula is as fallows;

QUICK RATIO= QUICK OR LIQUID ASSETS / CURRENT LIABILITIES

Table 4.7 showing the quick ratio for the last 5 years(in.Rs)
YEARS QUICK ASSETS 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 35,90,11,335 46,57,65,747 58,56,76,733 68,39,20,100 72,19,54,754 26,89,45,929 QUICK LIABILITIES QUICK RATIO 1.334

40,85,67,751 47,55,23,005 45,16,07,354 56,15,27,841

1.140 1.232 1.514 1.285

4.7 GRAPH SHOWING QUICK RATIO

1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2006-07 2007-08 2008-09 quick ratio 2009-10 2010-11 1.33 1.11 1.2 1.2 1.5

ANALYSIS:
A high acid test ratio is an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low quick ratio represents that the firms liquidity position is not good. As a rule of thumb or as a convention quick ratio of 1:1 is considered satisfactory. INTERPRETATION: It is inferred that the company has the ability to meet its current liquid liabilities as and when they become due as it has pretty good quick ratio above the normal standard of 1:1.

ABSOLUTE LIQUIDITY RATIO OR CASH RATIO:

Liquidity of a firm can be viewed from an extremely conservative point of view and the short term liquidity of a company may be measured through cash ratio. Cash ratio or absolute liquid ratio is the ratio which expresses the relationship between liquid assets and quick liabilities. Absolute liquid ratio is the most rigorous ratio to measure the liquidity of the firm. Absolute liquid assets include cash in hand and at bank and marketable securities or temporary investments.

The absolute liquid ratio formula is as follows;

CASH RATIO= ABSOLUTE LIQUID ASSETS / CURRENT LIABILITIES

Table 4.8 showing the cash ratio for the last 5 years
YEAR ABSOLUTE LIQUID ASSETS 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 19,57,15,651 31,23,45,581 33,43,85,423 25,51,32,909 28,53,59,727 CURRENT LIABILITIES 26,89,45,929 40,85,67,751 47,55,23,005 45,16,07,354 56,15,27,841 0.727 0.765 0.703 0.565 0.508 RATIO

4.8 GRAPH SHOWING CASH RATIO

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 cash ratio 2009-10 2010-11 0.565 0.508 0.727 0.765 0.703

ANALYSIS:
The acceptable norm for this ratio is 50% or 0.5:1 or 1:2 i.e. Re.1 worth absolute liquid assets are considered adequate to pay Rs.2 worth current liabilities in time as all the creditors are not expected to demand cash at the same time and then cash may also be realized form debtors and investors. INTERPRETATION: It is inferred that there was an increasing trend in first four years that is from 2006-2009. But in the previous year it has decreased to 0.508 which was a result of decrease in cash and bank balance accompanied with increase in creditors where company wont be able to meet its short term financial obligations. So it has to take steps to decrease creditors and also speed up its collection from debtors to improve its cash reserves.

STOCK OR INVENTORY TURNOVER RATIO:

The inventory turnover ratio also known as stock turnover ratio indicates whether inventory has been efficiently used or not. The purpose is to see whether only the required minimum funds have been locked up in inventory. Inventory turnover during the period and evaluates the efficiency with which a firm is able to manage its inventory.It denotes the speed at which the inventory will be converted into sales, thereby contributing for the profits of the concern. Here cost of goods include ( opening stock + purchases + manufacturing expenses - closing stock or sales - Gross profit) And average stock includes opening stock + closing stock 2 Inventory turnover ratio can be calculated as fallows;

INVENTORY TURNOVER RATIO= SALES / AVERAGE STOCK

Table 4.9 showing the Stock Turnover Ratio for the last 5 years
YEARS SALES AVERAGE STOCK 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 98,81,11,423 104,43,74,470 1,28,64,62,008 1,53,37,03,531 16,47,77,47,37 39,24,94,368 34,60,34,973 32,34,34,273 35,17,32,655 46,25,29,163 2.518 3.018 3.978 4.360 3.562 RATIO

4.9 GRAPH SHOWING INVENTORY TURNOVER RATIO

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2006-07 2007-08 2008-09 Inventory turnover ratio 2009-10 2010-11 2.518 3.018 4.36 3.978 3.562

ANALYSIS:
Inventory Turnover Ratio measures the velocity of conversion of stock into sales. A high inventory turnover/stock velocity indicates efficient management of inventory because more frequently the stocks are sold, the lesser amount of money is required to finance the inventory. A low inventory turnover indicates over-investment in inventory, dull business, poor quality of goods, stock accumulations, accumulations of obsolete and slow moving goods and low profits as compared to total investments. There are no rules of thumb or standard inventory turnover ratio for interpreting the inventory turnover ratio. INTERPRETATION: It is inferred that the inventory turnover ratio has been showing an increasing trend from past four years but there was a slight decrease in the previous year, which indicates that there is an efficient management of inventory and stocks are sold out within short span of time which reduces the warehouse cost and avoids the chances of obsolescence of stocks.

DEBTORS OR RECEIVABLE TURNOVER RATIO:

Debtor's turnover ratio indicates the velocity of data collection of firm. In simple words, it indicated the number of times average debtors are turned over during a year. This ratio indicates the speed at which the debtors are converted into cash. Usually a high ratio will be referred to high efficiency in debt collection and a low ratio for lower efficiency. High ratios indicates that debts are collected in short time period (i.e., there is little time gap between sales and payments.

The ratio is obtained by dividing the net credit sales by average debtors outstanding during that year. Debtors' turnover ratio can be calculated as fallows:
DEBTORS TURNOVER RATIO= NET CREDIT SALES / AVERAGE DEBTORS

Table 4.10 showing the Debtors Turnover Ratio for the last 5 years(in.Rs)
YEARS NET CREDIT SALES 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 98,81,11,423 1,04,43,74,470 1,28,64,62,008 1,53,37,03,531 16,47,77,47,37 AVERAGE DEBTORS 7,45,79,779 7,48,55,399 11,36,10,155 15,49,38,144 16,80,85,689 13.249 13.95 11.323 9.899 9.803 RATIO

4.10 GRAPH SHOWING DEBTORS TURNOVER RATIO

16 14 12 10 8 6 4 2 0 2006-07 2007-08 2008-09 Debtors turnover ratio 2009-10 2010-11 13.249 13.95 11.323 9.899 9.803

ANALYSIS:
The debtors turnover ratio indicates the number of times the debtors are turned over a year. Generally, the higher the debtors turnover the more efficient is the management of debtors similarly; low debtors turnover implies inefficient management of debtors or sales.

INTERPRETATION:
From the above table, it is seen that KS&DL has increased by almost 50% for the two years to 13.249 and 13.952 respectively. But in the year 20082009, 2009-2010 & 2010-11 it has gradually decreased to 11.323, 9.899 & 9.803.

It is inferred that it shows a decreasing trend from past three years which is not a good sign for a company. So it has to take steps to manage debtors through prompt collection so that it will be able to sell the goods on credit and there by gaining sales and profit.

CREDITORS OR ACCOUNT RECIEVABLE TURNOVER RATIO:

Debtor's turnover ratio indicates the velocity of data collection of firm. In simple words, it indicated the number of times average debtors are turned over during a year. This ratio indicates the credit facility enjoyed by a firm. It is calculated by taking into account the net purchase and average creditors. Creditors' turnover ratio can be calculated as fallows:

CREDITORS TURNOVER RATIO= NET PURCHASE / AVERAGE CREDITORS

Table 4.11 showing the Creditors Turnover Ratio for the last 5 years(in.Rs)
YEARS NET PURCHASE AVERAGE CREDITORS 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 36,72,38,387 50,70,94,587 54,14,33,115 80,19,28,342 77,53,83,439 4,53,54,445 4,75,84,558 7,01,84,312 6,97,71,274 6,44,60,999 8.09 10.65 07.71 11.49 12.02 RATIO

4.11 GRAPH SHOWING CREDITORS TURNOVER RATIO

14 12 10 8.09 8 6 4 2 0 2006-07 2007-08 2008-09 Creditors turnover ratio 2009-10 2010-11 7.71 11.49 10.65 12.02

ANALYSIS:
Generally higher the creditors velocity better it is or otherwise lower the creditors velocity less favorable are results.

INTERPRETATION
From the above table it has seen that KS&DL exhibits high creditors turnover ratio from 2006-08 where it has decreased gradually in the year 2008-09 and increased in 2009-10,2010-11 to 11.49 and 12.02 respectively.

WORKING CAPITAL TURNOVER RATIO:

Working capital turnover ratio indicates the velocity of the utilization of working capital. This ratio indicates the number of times the working capital is turned over in the course of a year. This measures the efficiency with which the working capital is being used by the firm. A higher ratio indicates efficient utilization of working capital and a low ratio indicates otherwise. Working capital turnover ratio can be calculated as fallows:
WORKING CAPITAL TURNOVER RATIO= SALES / NET WORKING CAPITAL

Table 4.12 showing the Working Capital Turnover Ratio

YEARS SALES NET WORKING CAPITAL RATIO

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

98,81,11,423 1,04,43,74,470 1,28,64,62,008 1,53,37,03,531 16,47,77,47,37

43,12,79,630 40,80,53,719 40,61,66,550 63,97,65,233 67,80,32,752

2.291 2.559 3.167 2.397 2.430

GRAPH SHOWING WORKING CAPITAL TURNOVER RATIO

3.5 3 2.559 2.5 2 1.5 1 0.5 0 2006-07 2007-08 2008-09 2009-10 2010-11 2.291 2.397 2.43 3.167

ANALYSIS:
A higher working capital ratio indicates efficient utilization of working capital and low ratio indicates otherwise. From the above table, KS&DL working capital turnover ratio in the year 2006-2007 was 2.291 and for next two years it has shown an increasing trend. It increased in the year 2008-2009 to 3.167 and decreased in the year 2009-2010 to 2.397 & 2010-11 to 2.430.

INTERPRETATION:It is inferred that working capital turnover ratio

shows an increasing trend, but it has decreased in the year 2009-2010 & 201011 which shows there is inefficient management of working capital in the previous year. The company should take steps to invest in current assets and other short term investment opportunities.

Chapter-5 Findings, suggestion and conclusion

5.FINDINGS, SUGGESTION AND CONCLUSION FINDINGS:

1. The Current Ratio of KS&DL even though it shows a decreasing trend in the years 2007-2008 and 2008-2009, it has increased in the year 20092010 to 2.417 which is above the standard or rule of thumb. The liquidity position of the organization is satisfactory as it is taking steps to improve its liquidity position and it has the ability to pay its current obligations in time. 2. The Quick Ratio of KS&DL has remained stable during all the years. It is just above the standard which shows that the company has ability to meet its current liquid liabilities. 3. During the year 2006-2009, the cash ratio has increased gradually for three years. But it decreased in the year 2009-2010 to 0.565 , 2010-2011 to 0.508 which is just above the standard rule and it has to improve its short term financial position.The reason for decrease is decreasing cash in the year 2009-2010, 2010-2011 and due to increase in creditors on the current liabilities side. 4. The Inventory Turnover Ratio of KS&DL in the year 2006-2007 was 2.518. Thereafter, inventory turnover ratio is showing an increasing trend which indicates efficient management of inventory as more frequently the stocks are sold, the lesser amount of money is required to finance the inventory. 5. The Debtors Turnover Ratio at KS&DL showed an increasing trend in the next two years. But in the year 2009-2010 and in the year 2010-2011 its showing a decreasing trend which indicates inefficient management of debtors.

6. The creditor`s turnover ratio at KS&DL in the year 2006-07 was 8.097 and later on it shows an increasing trend in the year 2007-08 and there was a constant increase in the year 2009-10 & 2010-11 as it indicates the creditors are paid in time and this earns a good reputation to company in the market. 7. The Working Capital Turnover Ratio of KS&DL was 2.291 2006-2007. Later it showed an increasing trend from 2007-2008 to 2008-2009. But in the year 2009-2010, the Working Capital Turnover Ratio has decreased to 2.40 which imply inefficient management of working capital. This is due to decrease in cash and bank balance.

SUGGESTIONS/RECOMMONDATIONS:

1. The liquidity position is showing relatively more the company can go for reducing the current assets and try to invest it in long term assets or long term revenue earning investments. 2. The company is suggested to have a continuous check of all cash and bank balance. In case if the cash is idle it can be brought to the notice and can be invested in various short term investment opportunities to earn returns. Forecasting of cash should be made to meet requirements of business. 3. Due to the shortage in cash the company is unable to have adequate inventory reserves which are hampering its optimum production capacity. So the company has to have efficient inventory reserves to increase its production. 4. The company is not able to generate income from other sources due to lack of skills of the investment analyst. So, the company should try improving its investment decisions to generate income from other sources.

5. As a part of recommendation it is advisable if KS&DL diverts a little portion of funds in undertaking expansion activities and ultimately enhancing its sales and profitability.

6. By adopting good planning towards recovery of debt that is by adopting Good Credit policy, Proper assessment of credit worthiness of its debtors, by adopting strict collection measures etc. the company can get into more profitability.

7. It is suggested to control over and under stocking of raw material using technical auditors and maintain a coordination between production

processes department and inventory handling department for efficient outcomes.

8. If the company maintains a favorable cash and bank balance it will help in smooth running of business and maintain balanced working capital.

CONCLUSION:
The overall performance of the organization is satisfactory, particularly the last two years trading profit is good but the trading profit is fluctuating every year. The company can increase its clientele base by doing certain promotional campaigns such as organizing corporate parties and advertising in a better manner. As a part of the study it can be concluded that the quick ratio overall the year have remains stable which is the good indication for the company`s position, since its able to meet its current liabilities. Also the creditor`s turnover ratio is a good indicator that the company is able to meet a timely payments and hence is enjoying a good reputation in the market. However as per the debtors position in the balance sheet effective management is required, so that a favorable trend and position can be observed overall the years. Also KSDL should try to have an efficient inventory reserve so that its productivity is increase and hence improve the investment decision and increase the income level from other sources. Last but not the least the company can device a competitive pricing strategy so that it can overcome price related hurdles that it has been facing over the years and hence leads to a successful organization, fulfilling its operational objectives.

BIBLIOGRAPHY:

REFERENCE BOOKS BBM Management Business Methods

AUTHOR

EDITION

PUBLISHER

Financial Reddy, Appannaiah, 1st Edition Satyaprasad Research Ramachandra, Chandrasekhar 1st Edition 1st Edition

Himalaya Publishing House, Delhi Himalaya Publishing House, Delhi

Cost

and

financial Jawahar lal

Himalaya house,delhi

publishing

analysis

Annual Reports Journals Internet references Company Web Site:

www.mysoresandal.co.in www.KSDL.com

APPENDIX AND ANNEXURE

BALACE SHEET AS AT 31ST MARCH (AMOUNT IN CRORES)

Particulars 1.Sources Of Funds u) Share capital v) Reserve & surplus w) Secured loans x) Unsecured loans

2007

2008

2009

2010

2011

31.82 19.99

31.82 1.51 1.66 13.00

31.82 13.68 1.04 9.00 3.21

31.82 26.77 10.72 8.35 5.25

31.82 34.34 8.00 8.35 6.14

Deferred tax liability (Net) 1.Fixed assets Gross block Less depreciation Net block Capital work in progress Total 2. current Assets Loans and Advances Inventories Sundary Debtors Cash and Bank Balance Loans and Advances Investments in gratuity fund Total

30.28 24.24 6.03 6.03

29.24 23.35 5.89 5.89

29.61 23.71 5.91 5.91

30.96 23.98 6.98 6.98

32.72 24.14 8.85 8.85

34.12 6.88 19.57 9.44 70.02

35.09 8.09 31.23 7.25 81.66

29.60 14.63 33.43 10.49 88.17

40.75 16.35 25.51 21.53 109.14

51.76 17.29 28.53 21.39 123.9

5
Less: Current Liabilities and Provision Current Liabilities Provision Net Curerent Assets (6) Less (7) Miscellaneous Expenditure Total Assets (Net)

17.07 29.26 9.82 43.13 2.12 51.81 11.59 40.81 1.29 47.99

30.88 16.67 40.62 2.80 61.96

24.67 20.50 63.98 1.64 77.84

29.23 26.91 67.80 82.52

PROFIT AND LOSS ACCOUNT (RS.IN LAKHS)

PARTICULARS INCOME(year) Net Sales

AMOUNT 2008

AMOUNT 2009

AMOUNT 2010

AMOUNT 2011

1,04,43,74,4 1,28,64,62,0 1,53,37,03,5 1,64,77,74,7 70 08 31 37 1,90,04,300 2,09,85,305 6,06,23,797 2,22,88,309

Other income

1,06,33,78,7 1,30,74,47,3 1,59,43,27,3 1,67,00,63,0 70 13 28 47

Increase/(-) Decrease in stock

4,73,09,343

2,64,66,726

7,03,74,213

5,32,86,174

1,11,06,88,1 1,28,09,80,5 1,66,47,01,5 1,72,33,49,2 13 87 41 21

EXPENDITURE Materials Consumed (include trading items) Other Expenditure

50,70,94,58 3 55,19,82,57 3 36,05,016

54,13,33,11 5 61,35,25,86 8 35,77,430

80,19,28,34 3 73,44,42,91 0 39,69,038

77,53,83,43 9 79,97,99,90 5 49,82,474

Depreciation

1,06,26,82,5 1,15,85,36,4 1,54,03,40,2 1,58,01,65,8 73 13 91 18

Operating Profit/Loss

4,80,05,540 46,08,734 4,33,57,146

12,24,44,17 4 45,08,734 11,79,35,44 0

12,43,61,25 0 72,76,261 11,70,89,98 8

14,31,83,40 2 82,97,546 13,48,85,85 7

Less: Interest and Finance charges PROFIT BEFORE TAX

Less: Provision for Taxation Current Tax

52,00,000

1,80,00,000

1,85,00,000

4,80,00,000

Fringe Benefit Tax Deferred Tax Asset Dividend Tax PROFIT AFTER TAX

23,01,452

70,98,690 3,21,46,548 45,96,941

21,28,828 2,03,58,318 11,68,14,47 8 1,40,78,609

89,30,375 87,04,083 9,31,12,149 14,41,082 1,59,11,050 7,57,60,017 26,77,19,12 9 34,34,79,14 6

3,58,55,694 66,40,886

8,82,39,809

Prior period income/(-) Expenditure Proposed dividend Tax of earlier year

2,70,48,785 2,20,99,794 2,03,96,797 1,37,30,643 12,17,55,74 8 1,50,70,293 13,68,26,04 1

13,08,93,08 7 13,68,26,04 1 26,77,19,12 9

Profit/loss brought forward previous year Profit/loss Carried to Balance sheet

(53,26,504) 1,50,70,293