65747174 Financial Statement Analysis on Nalco 09 10

SUMMER TRAINING REPORT

ON FINANCIAL STATEMENT ANALYSIS

Submitted In Partial Fulfillment For The Award Of The Degree

Of

Post Graduate Diploma in Management In

2010-2012

EXTERNAL GUIDE INTERNAL GUIDEMR.S.B.DASH DR.A.K.MOHANTY(MANAGER FINANCE),NALCO FACULTY GUIDE,KBS

Acknowledgement

Working on this project was a delightful and an enduring experiences as I gained

a lot of insights into practicalities of core HR practices and could be regarded as

a learning experience on my part.

First of all, I would like to thank my project guide Mr.S.B. DASH(MANAGER

FINANCE), NALCO for assigning me the given project report and for devoting

his precious time in assisting me for compiling the entire report he could be

regarded as one of living inspiring models who guided me in every stage of my

project & also I would like to thank all executive and non-executive of finance

Department of NALCO for their co-operation and valuable guidance in completion

of this dissertation.

I would also grateful to Dr.A.K.Mohanty (Faculty Guide, KBS), for devoting his

time and extending his cooperation for working on this project.

DELARATION

I here by declared that I have worked on the topic “financial statement analysis” from 16th May 2011 to 16th July 2011.

All the information that has been collected, analyzed and documented for the project is authentic possession to me.

I would like to categorically mention that the work here has neither been purchased nor acquired by any other unfair means.

The data and information existing in this report are accurate and update to the current data, to the best of our knowledge.

However, for this purpose of the project, information already compiled in many sources has been utilized.

All information in this report is true representation of what I have experienced during the project.

Partha sarathi patala singh.

BONAFIDE CERTIFICATE

Certified that this project report “ FINANCIAL STATEMENT ANALYSIS” is the bonafide work of “ PARTHA SARATHI PATALA SINGH ”who carried out the project work under my supervision.

SIGNATURE SIGNATURENAME: S.B.DASH NAME: Dr. A.K MohantyFinance Manager, NALCO FACULTY GUIDE Professor, KBS

TABLE OF CONTENTS

CHAPTERS SUBJECT PAGE NO.

CHAPTER-I Introduction 2-5

CHAPTER-II Industry overview 06-49

CHAPTER-III Objectives 50

CHAPTER-IV Methodology 51

CHAPTER-V Result and Discussion 52-91

CHAPTER-VI Summery,conclusion and recommendations 92-96

CHAPTER-1

INTRODUCTION

Financial statement analysis is defined as the process of identifying financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account.There are various methods or techniques that are used in analyzing financial statements, such as comparative statements, schedule of changes in working capital, common size percentages, funds analysis, trend analysis, and ratios analysis.Financial statements are prepared to meet external reporting obligations and also for decision making purposes. They play a dominant role in setting the framework of managerial decisions. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of immense use in making decisions through analysis and interpretation of financial statements.

Following are the most important tools and techniques of financial statement analysis:

1. Horizontal and Vertical Analysis.2. Ratios Analysis.

*Horizontal and Vertical Analysis :

Horizontal Analysis or Trend Analysis:

Comparison of two or more year's financial data is known as horizontal analysis, or trend analysis. Horizontal analysis is facilitated by showing changes between years in both rupees and percentage form.

Trend Percentage:

Horizontal analysis of financial statements can also be carried out by computing trend percentages. Trend percentage states several years' financial data in terms of a base year. The base year equals 100%, with all other years stated in some percentage of this base.

Vertical Analysis:

Vertical analysis is the procedure of preparing and presenting common size statements.Common size statement is one that shows the items appearing on it in percentage form as well as in dollar form. Each item is stated as a percentage of some total of which that item is a part. Key financial changes and trends can be highlighted by the use of common size statements.

2. Ratios Analysis.

Ratio analysis is the method or process by which the relationship of items or

group of items in the financial statement are computed, determined and

presented. Ratio analysis is an attempt to derive quantitative measure or guides

concerning the financial health and profitability of business enterprises. Ratio

analysis can be used both in trend and static analysis. There are several ratios at the

disposal of an annalist but their group of ratio he would prefer depends on the

purpose and the objective of analysis. While a detailed explanation of ratio analysis

is beyond the scope of this section, we will focus on a technique, which is easy to

use. It can provide you with a valuable investment analysis tool.

This technique is called cross-sectional analysis. Cross-sectional analysis compares

financial ratios of several companies from the same industry. Ratio analysis can

provide valuable information about a company's financial health.

SCOPE OF THE STUDY :

This is a study of financial statement analysis, particularly in

preference to NALCO. The above company is a large public sector

company having engaged in production of Aluminum products.

Being capital intensive manufacturing concern, the particular

company was selected for the purpose of the study.

The period covered by the study extends to 5 years from 2005-06 to

2009-10.

By this study company can know its growth in the current scenario.

The study helps to find out the solution of the problem where more

investors could pay their attention towards the NALCO.

SIGNIFICANCE OF THE STUDY :

There are various advantages of financial statements analysis.

The major benefit is that the investors get enough idea to decide

about the investments of their funds in the specific company.

Secondly, regulatory authorities like International Accounting

Standards Board can ensure whether the company is following

accounting standards or not.

Thirdly, financial statements analysis can help the government

agencies to analyze the taxation due to the company.

CHAPTER-2

HISTORY OF THE COMPANY

*INTRODUCTION TO ALUMINUM

Date of Discovery: 1825

Discoverer: Hans Christian Oersted

Name Origin: From the Latin Word Alumen

Uses: Airplanes, Soda, Cans

Obtained From: Bauxite

HISTORY OF ALUMINIUM Aluminium is the youngest metal in use by humans. Unlike copper, gold and iron, aluminium can not be extracted from the ground and purified by simple technologies, such as strong fire or remelting

processes. Aluminium production became possible only when the production of electricity became possible, only when chemistry advanced enough.Here aluNET International pays tribute to those who worked to create the next age. Humanity moved beyond the age of stone to the age of copper, then to the age of iron and steel, now is the turn of ages once again and aluminium comes to name the

The discovery of Aluminium - Birth and initial growth The ancient Greeks and Romans used aluminium in medicine as an astringent, and in dyeing processes.It is doubtful whether you entered a museum with ancient Greek, Roman or Chinese pottery and you did not see aluminium in use. Aluminium-bearing clays to make pottery, and aluminium salts to make dyes can be found on such ancient pottery of all ancient cutlures contains aluminium. Those cultures of course did not know, or so we suppose, that an element called aluminium gave those special properties to their creations.

In the middle ages aluminium was one of the elements which acquired an alchemical symbol, as alchemist thought that they can use a metal they had not

seen in their ancient pursuit concerned with, for instance, the transformation of other metals into gold.

It was not, however until much later that aluminium began to be thought as a metal separate and self contained for use such as other ferrous and non ferrous metals. In 1761 de Morveau proposed the name "alumine" for the base in alum. Later yet, in 1807, Davy proposed the name alumiuim for the metal, undiscovered at that time, and later agreed to change it to aluminum. Shortly thereafter, the name aluminium was adopted by IUPAC to conform with the "ium" ending of most elements. Aluminum is the IUPAC spelling and therefore the international standard.

Aluminium was also the accepted spelling in the U.S.A. until 1925, at which time the American Chemical Society decided to revert back to aluminium, and to this day Americans still refer to aluminium as "aluminum".

But lets revert back to history. Aluminium was first isolated by Hans Christian Oersted in 1825 who reacted aluminium chloride (AlCl3) with potassium amalgam, an alloy of potassium and mercury. Heating the resulting aluminpressure caused the mercury to boil away leaving

aluminium metal. The metal was born for uses, which at that time no one could have thought of.pressure caused the mercury to boil away leaving aluminium metal. The metal was born for uses, which at that time no one could have thought of.

The conquest of space, safe packaging and other forntiers, we know consider everyday life conviences could have not been possible without the use of this metal.

But lets take a detailed look at the history of aluminium, which is celebrating only 190 years since its birth, making it the most recently discovered metal in common use.

Aluminium only exists naturally in combination with other materials – silicates and oxides. These are very stable and it took many years of painstaking research to "unlock" the metal, from natures protective arms.

GROWTH OF ALUMINIUM INDUSTRY:

The Aluminium Industry has developed to the point where scores of companies in some 35 countries are smelting aluminium and thousands more are manufacturing the many end products to which aluminium is so well suited. For its first half century the aluminium industry pursued the dual role of improving and enlarging production processes to reduce the price of the metal and, at the same time, proving the worth and feasibility of aluminium in a wide range of markets. Such was the dynamic approach of the The production of primary aluminium is a young industry - just over 100 years old. industry to this problem that the consumption of aluminium gained the remarkable record of doubling every ten years. The strong demand for aluminium stimulated the rapid expansion of productive capacity to meet it.

The first World War had a dramatic effect on aluminium production and consumption. In the six years between 1914 and 1919 world output soared from 70,800 tonnes to 132,500 tonnes a year and it is a striking testimony to the adaptability of the metal that after the very large expansion occasioned by war the ground was held. Once the changeover to civilian production had been carried through the increased capacity was occupied before very long in supplying the normal demands of industry. And this happened again, on a much larger scale, as a result of the second World War.

World production of primary aluminium increased from 704,000 tonnes in 1939 to a peak of 1,950,000 tonnes in 1943, after which it declined considerably. At the end of World War II, the western world industry had

completed an unprecedented threefold expansion in capacity in the space of four to five years. Civilian markets had to be developed for this new capacity. The demand for aluminium proved to be elastic and the expanded facilities were working at near capacity in a matter of a few years.

Constant research and product development throughout the 1950's, 60's and 70's led to an almost endless range of consumer goods incorporating aluminium. Its basic benefits of lightness, strength, durability, formability, conductivity and finishability made it a much sought after product. The necessity for the industry itself to pioneer the use of aluminium led to an integrated structure in the major companies from the mining of bauxite to, in some cases, the finished consumer product. As the total world production soared, countries with raw materials and especially those with cheap energy resources, began to enter the market with primary metal for others to further the process. Today a significant proportion of metal is marketed in this way

ALUMINIUM INDUSTRY IN INDIA:

1 Hindalco Industries Ltd Largest integrated aluminium manufacturers in the country; part of the Aditya Birla Group; products: alumina chemicals, primary aluminium, extrusions, rolled products, wire rods, aluminium foil, aluminium wheels, copper cathodes; based in Mumbai (Aluminium Non-Ferrous Metals)

2 National Aluminium Company Ltd (NALCO)Public sector company which is Asia's largest integrated aluminium manufacturer, with activities that include bauxite mining, alumina refining, aluminium smelting & casting, power generation, rail & port operations; based in Bhubaneswar (Orissa)(Aluminium Minerals and Mining )

3 Vedanta Resources plc Leading integrated metals & mining group located in London, UK, but whose operations are mainly in India; has interests in aluminium (BALCO, MALCO), copper (Sterlite, Konkola, CMT) & zinc (Hindustan Zinc Ltd)(Minerals and Mining Non-Ferrous Metals Aluminium)

4 Bharat Aluminium Company Co Ltd (BALCO) Integrated aluminium producers whose activities include mining, smelting, refining & fabrication; based in New Delhi; part of Vedanta Resources; has an alumina production capacity of 200,000 tpa & smelting capacity of 100,000 tpa

(Aluminium )

5 Jindal Aluminium Ltd Largest manufacturer of aluminium extruded profiles in India having 6 extrusion presses under one roof; manufactures bars, rods & tubes, structure, architectural, moulding, transport, industrial & general products; located in Bangalore(Aluminium)

6 Apar Industries Ltd Manufacturers of transformer oil & specialty oils, overhead power transmission & distribution aluminium conductors & specialty polymer; corporate office is in Mumbai; products include industrial & automotive oils, nitrile rubber, latices etc (Lubricants Aluminium Miscellaneous Supplies)

7 Century Extrusions Ltd (CEL) Manufacturers of aluminium extrusions based in Kolkata; has an installed capacity of 7,500 MT; product categories: architectural applications, transport, electricals, electronics & communications, industrial applications(Aluminium )

8 Alufluoride Ltd Manufacturers of aluminium fluoride based in Visakhapatnam, Andhra Pradesh; has an installed capacity of 5,000 tonnes(Aluminium)

9 Bhoruka Aluminium Ltd ISO certified manufacturer of aluminium extrusions; part of the Bhoruka group; supplies its products to the industrial, transportation, building & construction, electricals & electronics, solar, and interiors sectors(Aluminium)

10 Karshni Aluminium Co Pvt Ltd ISO certified manufacturer of industrial and domestic aluminium ladders, aluminium doors and windows, curtain walls and structural glazings; based in Ghaziabad, Uttar Pradesh; has in-house powder coating & anodising facilities(Building Materials Aluminium)

11 Madras Aluminium Company Ltd (MALCO) Primary aluminium producers whose activities include mining, refining, smelting & power generation; based in Salem, Tamil Nadu; part of the Vedanta Group; produces ingots, wire rods & busbars; has a 40,000 tpa smelter & a 80,000 tpa refinery

(Aluminium )

12 Manaksia Ltd Multi-division and multi-location conglomerate in Kolkata; formerly known as Hindusthan Seals Ltd; specialises in the manufacture of packaging products (crowns, closures and metal containers), metal products and fast moving consumer goods etc(Packaging Personal Care Products Aluminium)

13 SP Fabricators Pvt Ltd Company belonging to the Shapoorji Pallonji group; provides architectural aluminium products including curtain wall, structural glazing, cladding, windows & doors system, skylights etc; has fabrication & glazing facilities at Navi Mumbai(Aluminium)

14 Sudal Industries Ltd Manufacturers of aluminium extrusions based in Nashik, Maharashtra; offers products for automotive, building & construction, electrical, marine

& transport needs, including channels, bars, round tubes etc; ISO 9001 certified(Aluminium)

CONSUMPTION OF ALUMINIUM IN INDIA:

India the second most populous country in the world, with almost one billion citizens has an annual aluminium consumption of 0.5 kg per year whereas the global average is 20 times that figure, Indian aluminium industrial analysts forecast 7-8 per cent annual growth.

India’s transport sector is expected to be the driving force behind the move, since it consumed 20 per cent of 540,000 tons produced in the subcontinent during the 1997-98 fiscal year.

According to industry statistics road transport uses about 95 per cent of the total consumption of aluminium in the transportation sector with the rest going into rail, shipping and aviation. For example India’s scooter manufacturing sector, which produces about five million scooters annually, consuming about 47,250 tons of aluminium over the past fiscal year.

ABOUT THE COMPANY

Nalco was established on 7th January 1981. It has started its Aluminum exports from its smelter plant in September 1988. The Aluminum manufactured in NALCO was registered in London Metal Exchange (LME) in 1989. NALCO produces ingots, sows ingots, billets & wire rods etc. The ingots & sows are exported normally of LME grade i.e. conforming to the specification: Al. 99.7 pct min, Fe. 0.20 pct max and Si. 0.10 pct max. But the production of other metal like billets & wire rods are exported on the basis of future market situation & availability of products of required quality.The export of metal in domestic & international market is set at the

beginning of the financial year by considering the production schedule of

the year. However there are some other constraints which are also

considered while setting the target i.e. the domestic & export market

scenario prevailing them, production plan, the commercial consideration,

salability and maintenance of Nalco’s presence in these markets.

Depending on the above export target & revision there of from time to

time order booking/ contract for forward/ current month are done. The

export & movement of metal by rail are decided in the beginning of the

month in a meeting held with smelter plant.

Generally an export of metals is done from its three ports located in

Kolkata, Paradip and Visakhapatnam. All exports are occurred on CIF or

C&F basis. The exports are made against contract entered into by NALCO

with overseas customers and against firm’s financial arrangements mostly

in the form of irrevocable letter of credit. The contracts are entered into

only with its registered customer through the process of limited tender

floated by NALCO.

Landmark Events1975- Discovery of bauxite in the East Coast

1979- Preparation of Nalco's Feasibility Report-July

1980- Investment decision by the Government-Jan

1981-Indo-French Collaboration Agreement-Jan. Formation of the

company-Jan. Foundation Stone laid by Late Smt.Indira Gandhi –March

1982- Signing of major Euro-Dollar Loan agreement -Feb. Civil Work Starts

-Feb.

1985- Commissioning dates Port Facilities-Sept. Bauxite Mines-Nov.

1986- Alumina Refinery-Sept. Captive Power Plant- Sept

1987- Smelter Plant- March Commencement of sale of Aluminum- May,

1987

1988- Commencement of Alumina export-Jan. Commencement of

Aluminum export-Sept. First Mines Safety award First CAPEXIL Export

award

1989- London Metal Exchange Recognition -May Dedicated to Nation by

Late Shri Rajiv Gandhi-June

1992- Star Trading House Status-Jan

1994- Indira Gandhi Rajbhasa Award. Indira Priyadarsini Vrikshamitra

Award.

1996-97- FICCI Award for Pollution Control and Environment. Excellent

Public Sector Enterprise Award.

1997- Environment Protection Award by IIEE-Dec

1997-98- Gem Granite Environment & Sri SitaramRungta Memorial Social

Awareness Award.

1998- Best Occupational Health Service Award by Govt. of Orissa.

1998-99- First EEPC Export Award. Best Exporter Award of the year.

1999-2000- Best Exporter Award of the year.

2000-01- Best Exporter Award of the year.

2000- Pollution Control excellence award for CPP. Indira Gandhi

Paryavaran Puraskar Award.

2000-01- FIMI Environment Award.

2001- Rajbhasa Shield by Ministry of Mines.

2002- State Pollution Control Excellence Award.

2002-03- FIEO Niryat Shree Award.

2004- Capexil’s Highest Export Award.

LOCATIONS OF NALCO

Nalco projects mostly located in backward districts of Orissa were expeditiously completed on schedule on the very difficult logistics of project management. The Mines and Alumina Refinery Complex has located at Damanjodi in Koraput District. This is a picture sque valley of this beautiful district at the foot of Panchpatmali Hills. A 16 km long uphill road connects the plateau of Panchapatmali, where the bauxite Mines of Nalco is located. Damanjodi is 12 Km. from Semiliguda, a small town located on the NH-43 that connects Vizianagarm of Andhra Pradesh with Jagdalpur of Chatisgarh. The Vizianagaram is a distance of 135 Km.. There is of course a passenger rail service from Koraput to Visakhapatnam through the most enchanting hilly terrains of Aruku Valley and Anantagiri. Damanjodi is also connected by Rail Transport from Bhubaneswar, Rayagada, Visakhapatnam, Sambalpur & Kolkata. It is also connected by bus service from Berhampur, Cuttack, Bhubaneswar, Angul & Samabalpur. Its Smelter Plant and CPP are located at Angul, while the corporate head quarter is located at Bhubaneswar, the capital city of Orissa.

PLANT LOCATION SITES

Process of Aluminum Production

Smelters in Asia: -

Bahrain------------------------------------- Alba

Azerbaidjan-------------------------------- Sumgait Aluminum

India----------------------------------------- Nalco, Balco, Hindalco, Malco, Indalco

ndonesia----------------------------------- Inalum

Iran------------------------------------------ Iralco

Japan---------------------------------------- Kambara.

U.A.E--------------------------------------- Dubai

Aluminum Smelter The 2,30,000 tpa capacity Aluminum Smelter is

located at Angul in Orissa. Based on energy efficient

state-of-the-art technology of smelting and pollution

control, the Smelter Plant is in operation since early 1987. Presently, the

capacity is being expanded to 3,45,000 tpa.

SMELTER PLANT:

The year ended with all the 800 pots in operation. Smelter

plant has exceeded the rated capacity with highest ever cast metal

production at 2,98,207 MT.

The Metal purity and pot productivity during the year has also

increased to 99.74 % and 1.375 MT/pt/day respectively from 99.77

% and 1.367 MT/pot/day achieved last year Zero Discharge of

industrial effluents was achieved in the year.

ALLUMINIUM PRODUCTION IN('000MTs)

0

100

200

300

400

500

2009-10 2008-09 2007-08 2006-07 2005-06

PRODUCTION

EXPORT

DOMESTIC

The salient features:

Advanced 180 KA cell technology

Micro-processor based pot regulation system

Fume treatment plant with dry-scrubbing system for pollution

control and fluoride salt recovery

Integrated facility for manufacturing carbon anodes, bus bars,

anode tems etc.

4 x 35 tone and 4 x 45 tone furnaces and 2 x 15 tph and 2 x 20 tph

ingot casting machines

4 x 45 tonne furnaces and 2 x 9.5 tph wire rod mills

2 x 45 tonne furnaces and 60/42 per drop billet casting machine

2 x 1.5 tonne induction furnace with a 4 tph alloy ingot casting

machine

26,000 tpa strip casting machines With the acquisition and

subsequent merger of International Aluminum Products Limited

(IAPL) with Nalco, the 50,000 tpa export-oriented Rolled Products

Unit is all set to produce foil stock, fin stock, can stock, circles, coil

stock, cable wraps, standard sheets and coils

Captive Power Plant

Close to the Aluminum Smelter at Angul, a

Captive Power Plant of 720 MW capacity,

comprising 6 x 120 MW clusters, has been established for firm supply of

power to the Smelter. Presently, the capacity is being expanded to 960

MW.

CAPTIVE POWER PLANT (CPP)

CPP Generated 6671MU of Net power being the highest since

inception. Productivity of plant has improved with plant load factor

at 76.47% as compared to 75.15% in the previous year. CPP also

achieved the ‘Zero Discharge’ status with commissioning of ash

pond over flow recycling system.

POWER IN MILLION UNIT'S

0

10002000

30004000

50006000

7000

2009-10 2008-09 2007-08 2006-07 2005-06

GENERATION

SALES


Micro-processor based burner management system for optimum

thermal efficiency

Computer controlled data acquisition system for on-line

monitoring

Automatic turbine run-up system

Specially designed barrel type high pressure turbine

Electrostatic precipitators with advanced intelligent controllers

Wet disposal of ash

The water for the Plant is drawn from River Brahmani through a 7 km long

double circuit pipeline. The coal demand is met from a mine of 3.5 million

tpa capacity opened up for Nalco at Bharatpur in Talcher by Mahanadi

Coalfields Limited. The Power Plant is inter-connected with the State Grid.

Bauxite Mines

On Panchpatmali hills of Koraput district in Orissa, a fully mechanized

opencast mine of 4.8 million tpa capacity is in operation since November,

1985, serving feedstock to Alumina Refinery at Damanjodi located on the

foothills. Presently, the capacity is being expanded to 6.3 million tpa.

MINES:

Panchapatmali Buxite mines achieved the rated capacity of

4.8million tones of Buxite production for the first time since

commissioning of the expansion project. Annual buxite

transportation at 48,54,253 MT & excavation of 47,78,816 MT have

been the highest since inception.

Buxite Production (in ‘000 MTs)

BUXITE PRODUCTION IN('000MTs)

4500

4550

4600

4650

4700

4750

4800

2009-10 2008-09 2007-08 2006-07 2005-06


Area of deposit - 16 sq. km.

Resource - 310 million tones

Ore quality - Alumina 45%, Silica 2%

Mineralogy - Over 90% gibbsitic

Over burden - 3 meters (average)

Ore thickness - 14 meters (average)

Transport - 14.6 km long single flight multicurve cable belt

conveyor of 1800 tph

Alumina Refinery

The 15,75,000 tpa Alumina Refinery, having three

parallel streams of equal capacity, is located in

the picturesque valley of Damanjodi in Koraput

district. In operation since September, 1986, the

Refinery is designed to:

Provide Alumina to the Company's Smelter at

Angul

Export the balance Alumina to overseas

markets through Visakhapatnam Port

Presently, the capacity is being expanded to 21,00,000 tpa.

Production of Alumina Hydrate at 15,90,100MT and Calcined Alumina of

15,50,100 MT have been the highest since inception. Similarly the Power

Generation of 386.16 at steam generation plant of Refinery has been the

highest ever since inception.

ALUMINA IN('000MTs)

0

500

1000

1500

2000

2009-10 2008-09 2007-08 2006-07 2005-06

porduction

export

salient features:

Atmospheric pressure digestion process

Pre-desilication and inter-stage cooling for higher productivity

Energy efficient fluidised bed calciners

Advanced red mud disposal system

Co-generation of 3x18.5 MW power by use of back pressure

turbine in steam generation plant

Port Facilities

On the Northern Arm of the Inner Harbor

of Visakhapatnam Port on the Bay of

Bengal, Nalco has established

mechanized storage and ship handling

facilities for exporting Alumina in bulk

and importing Caustic Soda.

The company has registered a net profit of Rs.2381 crores in

2007-08 against Rs.1562 Crores in 2006-07 registering an increase

of 52.43 % .The sales turnover has also been showing an increasing

trend. In 2007-08 it has increased to 24.25 % over the last years

sales turnover of Rs.5423 crores.


Maximum ship size - 35000 DWT

Alumina reception - 48 x 53 tonne pay-

load wagons

Alumina storage - 3 x 25000 ton RCC

Silos

Ship loading rate - 2200 tph

These facilities are being upgraded to handle higher volumes of

exports, following expansion of production capacities

Port Facilities, Visakhapatnam :

in MT2003-2004

2004-2005

2005-20062006-2007

2007-2008

Alumina Export

4,79,620 4,95,723 6,70,120 10,37,287 9,34,874

Aluminium Export

55,729 73,711 57,370 52,730 59,046

+39,456* +45,157* +45,002*+3910**+28,486*+26,086**

+20,143*+50,529**

Caustic Soda Import

1,23,108 1,22,838 1,80,491 2,28,716 1,86,394

Rolled Products Unit

Nalco has set up a 50,000 MT per annum Rolled Products Unit,

integrated with the Smelter Plant at Angul, for production of Aluminum

cold rolled sheets and coils from continuous caster route, based on the

advanced technology of FATA Hunter, Italy.

Brownfield Expansions:

Creditably, except for the part funding of the capital cost of the original

project to the tune of Rs.1288.62 crore by way of equity, Nalco has not

depended on the Government budgetary support at any point of time –

not even for the Rs.3600-crore 1st phase expansion project. Continuing

with its self-propelled growth, now the 2nd phase expansion is under

implementation at an investment of Rs.4092 crore, which is scheduled to

be completed by 2009 end. NALCO is presently undergoing its 2nd phase

expansion with an investment of more than Rs.5000 crore, which is

scheduled to be completed by this year end. At the same

time, plans are afoot to set up Smelter and Power Plants in Indonesia and

South Africa by the company.

Unit Original Capacities

After 1st Phase Expansion

After 2nd Phase Expansion

Bauxite Mines 24,00,000 MT 48,00,000 MT 63,00,000 MT

Alumina Refinery 8,00,000 MT 15,75,000 MT 21,00,000 MT

Aluminum Smelter 2,30,000 MT 3,45,000 MT 4,60,000 MT

Power Plant 600 MW 960 MW 1200 MW

Now, plans are afoot for 3rd phase expansion, which is likely to entail

expenditure to the tune of Rs.6000 crore. Under this expansion, the

bauxite mining capacity shall be enhanced to around 90 lakh tonnes,

alumina refining to 30 lakh tonnes, aluminum smelting to 6.3 lakh tonnes

and power generation to 1700 MW per annum.

SEGMENTS:

Different segments of the company went into production in a phased manner starting from November 1985. NALCO is a multi unit, multilocational company having its plant in four different places. The integrated project has five segments.

SEGMENT CAPACITY LOCATION

1. Bauxite Mine 2,40,000 TonesAt: Panchapatmale Dist : Koraput

2.Alumina Refenary

8,00,000 TonesAt: DamonjodiDist : Koraput

3.Aluminium Smelter

2,18,000TonesAt: AngulDist : Angul

4.Captive Power Plant

720 MWAt: AngulDist: Angul

5. Port Facilities 3,75,000 Tones1,46,000 Tones

At: Visakhapatnam State : AndhraPradesh

PRODUCT PROFILE

1. Aluminium metal Ingots Sows Billets Wirerods Alloy wire rods Cast strips

2. Alumina & Hydrate

Calcined Alumina Alumina Hydrate

3. Zeolite-A

4. Special Products Specialty Hydrate/Alumina (Alumina Chemicals)

5. Rolled Product

Aluminium Rolled Products

1. Aluminium metal

ALUMINIUM SOW INGOTS

1.

Billets

PRODUCT

CODE

PRODUCT

QUALITY SPECIFICATIONSPRODUCT DESCRIPTI

ON

BH10 BH10 Log

length

%Si-0.38 to 0.48,%Fe-0.15 to 0.25,%Cu-0.02 max,%Mn-0.03

max,%Mg-0.47 to 0.57,%Zn-0.03

BH10 GR.BILLETS HOMOGENI

PRODUCT CODE

PRODUCT QUALITY SPECIFICATIONSPRODUCT

DESCRIPTION

SC20CG Grade Aluminium Sow Ingots

% Al. Purity - 99.00 to 99.499, % Si - >0.15,% Fe- >0.35, Wt. Upto 750 Kg. (Confirming to one

or more of the specifications given)

CG AL. SOW. INGOT (UPTO

750 KG.)

SE07EC Grade

Aluminium Sow Ingots

99.70 min % Al.=100 - %(Fe+Si+Cu), % Si - <=0.10,% Fe- <= 0.20, Wt. upto 750 Kg.

EC AL.SOW INGOT (UPTO

750 KG.)

SE10EC Grade

Aluminium Sow Ingots

% Al. Purity - >=99.50, % Si - <=0.15,% Fe- <= 0.35, Wt. upto 750 Kg.

EC AL.SOW INGOT (UPTO

750 KG.)

SH30HP grade

Aluminium Sow Ingot

% Al. Purity ->=99.850, % Si - <=0.10,% Fe- <=0.12, Wt. upto 750 Kg.

HP3 ALUMINIUM SOW INGOT

SH40HP grade

Aluminium Sow Ingot

% Al. Purity - 99.80 to 99.849, % Si - <=0.15,% Fe- <=0.15, Wt. upto 750 Kg.

HP ALUMINIUM SOW INGOT

SL10LP grade

Aluminium Sow Ingot

% Al. Purity - >= 99.00 , % Si - > 0.35, Wt. upto 750 Kg.

LP AL.SOW INGOT

SL11LP grade

Aluminium Sow Ingot

% Al. Purity - 98.000 to 98.999 , % Fe - <= 1.30, Wt. upto 750 Kg.

LP AL.SOW (ALM>=98%, Fe <=1.3%)

SL12LP grade

Aluminium Sow Ingot

% Al. Purity - >= 97.00 , % Fe - > 1.30 & <= 2.00, Wt. upto 750 Kg.

LP AL.SOW(ALM>=97%, Fe>1.3

& <=2%)

SL13LP grade

Aluminium Sow Ingot

% Al. Purity - >= 97.00 , % Fe - > 2.00, Wt. upto 750 Kg.

LP AL. SOW(ALM>97

%, Fe>2%)

SL14LP grade

Aluminium Sow Ingot

% Al. Purity - < 97.00 , Wt. upto 750 Kg.LP AL.

SOW(ALM<97% )

max,%Ti-0.02 max,%Cr-0.03 max,% Other Impurities each - 0.03

max,% Other Impurities Total- 0.10 max.

SED LOG LENGTH

BH20BH20 Log

length


max,%Mg-0.58 to 0.70,%Zn-0.03 max,%Ti-0.02 max,%Cr-0.03 max,

% Other Impurities each - 0.03 max,% Other Impurities Total- 0.10

max.

BH20 GR.BILLETS HOMOGENISED LOG LENGTH

BH61BH61 Log

length

%Si-0.40 to 0.80,%Fe-0.70 max.,%Cu-0.15 to 0.40,%Mn-0.15 max,%Mg-0.80 to 1.20,%Zn-0.25 max,%Ti-0.15 max,%Cr-0.04 to 0.35,% Other Impurities each - 0.05 max,

% Other Impurities Total- 0.15 max.

6061 GR.HOMO.LOG.BILLET

BH63BH63 Log

length

%Si-0.20 to 0.60,%Fe-0.35 max.,%Cu-0.10 max,%Mn-0.10 max,

%Mg-0.45 to 0.90,%Zn-0.10 max,%Ti-0.10 max,%Cr-0.10 max,%

Other Impurities each - 0.05 max,% Other Impurities Total- 0.15

max. Not meeting any of specifications of Billets like

BH10/BN10/CH10/CN10/BH20/BN20/CH20/CN20 but only meeting the

specifications of BH63/BN63/CN63/CH63.

6063 GR. BILLET-

HOMONS LOG

LENGTH

BH82BH82 Log

length

% Si-0.70 to 1.3,% Fe-0.50 max,% Mn-0.40 to 1.0,% Mg-0.60 to 1.2

HOMO.LOG BILLET

BN10BN10 Log

length




max.

BN10 GR.BILLET

UNHOMOGENISED LOG

LENGTH

BN20 BN20 Log

length


max,%Mg-0.58 to 0.70,%Zn-0.03

BN20 GR.BILLETS UNHOMOGE

max,%Ti-0.02 max,%Cr-0.03 max,% Other Impurities each - 0.03

max,% Other Impurities Total- 0.10 max.

NISED LOG LENGTH

BN60BN60 Log

length

Not meeting any of specifications of Billets like

BH10/BN10/CH10/CN10/BH20/CH20/

CN20/BN20,BH63/CH63/CN63/BN63/

BH82/CH82/CN82/BN82/BH61/CH61/CN61/BN61

OFF GRADE BILLET(BN6

0)

BN61BN61 Log

length


% Other Total- 0.15 max.

6061 GR.NON-

HOMO.LOG BILLET

BN63

BN63 Log

Impurities

length







6063 GR.AL.ALLO

Y BILLET-UNHOMO

BN82BN82 Log

length


NON-HOMO.LOG BILLET(BN8

2)

CH10CH10 Cut

Length


max,%Mg-0.47 to 0.57,%Zn-0.03 max,%Ti-0.02 max,%Cr.-0.03 max,


max.

BH10 GR.BILLETS HOMOGENISED CUT LENGTH

CH20 CH20 Cut


BH20 GR.BILLETS

Length



max.

HOMOGENISED CUT LENGTH

CH61CH61 Cut

Length



6061 GR.HOMO.CUT BILLET

CH63CH63 Cut

Length







6063 GR.BILLETS HOMOGENISED CUT LENGTH

CH82CH82 Cut

Length


HOMO.CUT BILLET

CN10CN10 Cut

Length




max.

BN10 GR.BILLETS HOMOGENISED CUT LENGTH

CN20CN20 Cut

Length




max.

BN20 GR.BILLETS UNHOMOGENISED CUT

LENGTH

CN60 CN60 Cut

Not meeting any of specifications of Billets like

OFF GRADE

Length

BH10/BN10/CH10/CN10/BH20/CH20/CN20/ BN20,BH63/CH63/

CN63/BN63/BH82/CH82/CN82/ BN82/BH61/CH61/CN61/BN61

BILLETS

CN61CH10 Cut

Length



6061 GR.NON-

HOMO.CUT BILLET

CN63CN63 Cut

Length







6063 GR.BILLETS UNHOMOGENISED CUT

LENGTH

CN82CN82 Cut

Length


NON-HOMO.CUT

BILLET

PRODUCT

CODE

PRODUCT

QUALITY SPECIFICATIONPRODUCT DESCRIPTI

ON

WA10Alloy Wire rod

% Si-0.50 to 0.90,% Fe- <=0.30,% Mg-0.60 to 0.90,% Cu-0.10 max.,%

Mn-0.03 max.,% Cr- 0.03 max.,% Zn- 0.10 max.,% B- 0.06

max.,UTS-13Kg/Sq.mm min., Elongation( on 250mm gl)- 7

min.,Conductivity ( % IACS)- 54 min.

ALLOY WIRE ROD

6201(F)AS FAB.

WA20Alloy Wire rod

% Si-0.50 to 0.90,% Fe- <=0.30,% Mg-0.60 to 0.90,% Cu-0.10 max.,%

Mn-0.03 max.,% Cr- 0.03 max.,% Zn- 0.10 max.,% B- 0.06

max.,UTS-16Kg/Sq.mm min., Elongation( on 250mm gl)- 14

min.,Conductivity ( % IACS)- 50 min.

ALLOY W/R 6201-T4(AS SOLN.TRTD)

WC10

CG Wire rod in coil form

Electrical Conductivity % IACS - < 61.00

C.G.AL.WIRE ROD

BELLOW 61% COND.

WE10

EC Wire rod in coil form

Electrical Conductivity % IACS - >= 61.50

EC AL. WIREROD

(61.5% COND.)

WE20

EC Wire rod in coil form

Electrical Conductivity % IACS - 61.00 to 61.499

EC AL. WIREROD

(61% COND.)

WIRE RODS

Cast strips

Product

code

Product

Quality SpecificationsProduct

Description

CS03

Aluminium Cast

Strips

Alloy-AA3003,%Si-0.60 max.,%Fe-0.70 max.,%Cu-0.05 to

0.20,%Mn-1.00 to 1.50,%Zn-0.10 max.,%OI each-0.05 max.,%OI total-0.15 max,crown : 0 to 1%

(positive crown only).

AL. CAST STRIP ALLOY

AA3003(CS03)

CS10

Aluminium Cast

Strips

Alloy-AA1050,% Si-0.25 max.,% Fe-0.40 max.,% Cu-0.05 max.,% Mn-0.05 max.,% Mg- 0.05 max.,% Zn- 0.05 max.,%V- 0.05 max.,% Ti-0.03 max.% OI each- 0.03 max. % Al.-99.50 min, crown : 0

to 1 % (positive crown only).


AA1050(CS10)

CS11

Aluminium Cast

Strips

Alloy-AA1100,%( Si+ Fe) - 0.95 max.,% Cu-0.05 to 0.20.,% Mn-

0.05 max.,% Zn- 0.10 max.,% OI each- 0.05 max., %OI total - 0.15 max., % Al.-99.00 min,crown : 0



AA1100(CS11)

CS12

Aluminium Cast

Strips

Alloy-AA1200,%( Si+ Fe) - 1.00 max.,% Cu-0.05 max.,% Mn-0.05 max.,% Zn- 0.10 max.,% Ti-0.05 max.% OI each- 0.05 max., %OI

total - 0.15 max. % Al.-99.00 min ,crown : 0 to 1 % (positive crown

only).


AA1200(CS12)

CS35

Aluminium Cast

Strips

Alloy-AA1235,%( Si+ Fe) - 0.65 max.,% Cu-0.05 max.,% Mn-0.05

max.,% Mg- 0.05 max.,% Zn- 0.10 max.,%V- 0.05 max.,% Ti-0.06 max.% OI each- 0.03 max., % Al.-99.35 min, crown : 0 to 1 %

(positive crown only).


AA1235(CS35)

CS50

Aluminium Cast

Strips

Alloy-AA5050,% Si - 0.40 max.,% Fe-0.70 max.,% Cu-0.20 max.,%

Mn-0.10 max.,% Mg- 1.10 to 1.80,% Cr- 0.10 max.,% Zn- 0.25 max.,% OI each- 0.05 max.,%OI

total- 0.15 max., crown : 0 to 1 % (positive crown only).


AA5050(CS50)

CS52

Aluminium Cast

Strips

Alloy-AA5052,% Si - 0.25 max.,% Fe-0.40 max.,% Cu-0.10 max.,%

Mn-0.10 max.,% Mg- 2.20 to 2.80,% Cr- 0.15 to 0.35,% Zn-

0.05 max.,% OI each- 0.05 max.,%OI total- 0.15 max., crown : 0



AA5052(CS52)

CS80

Aluminium Cast

Strips

Alloy-AA8011,% Si - 0.50 to 0.90,% Fe-0.60 to 1.00,% Cu-

0.10 max.,% Mn-0.20,% Mg- 0.05 max.,% Cr- 0.05 max.,% Zn- 0.10 max.,%Ti-0.08 max.,% OI each-

0.05 max.,%OI total- 0.15 max.,crown : 0 to 1 % (positive

crown only).


AA8011(CS80)

CS86

Aluminium Cast

Strips

Alloy-AA5086,% Si - 0.40 max.,% Fe-0.50 max.,% Cu-0.10 max.,% Mn-0.20 to 0.70,% Mg- 3.50 to 4.50,% Cr- 0.05 to 0.25,% Zn- 0.25 max.,%Ti-0.15 max.,% OI

each- 0.05 max.,%OI total- 0.15 max,crown : 0 to 1 % (positive

crown only).


AA5086(CS86)

2 Alumina & Hydrate.

Calcined Alumina

Type : Coarse Alumina(Sandy Type)

Physical Specifications :

BET SURFACE AREA:60-80 M2 / GM

LOI (300-1000 deg C):0.5 - 1%

BULK DENSITY:0.95 - 1.05 T/M3

Typical Maximum

ALPHA CONTENT% - 10

GRAIN SIZE :

+ 125 Micron (%) - 15

- 45 Micron (%) 10 12

Chemical Specifications :

Typical Maximum

P2O5 % 0.0015 0.002

Na2O % 0.38 0.50

Fe2O3 % 0.01 0.015

SiO2 % 0.012 0.02

ZnO % 0.0005 0.0008

CaO % 0.042 0.05

TiO2 % 0.0013 0.002

V2O5 % 0.0015 0.002

K2O % 0.0015 0.002

Ga2O % - 0.012

Alumina Content % 98.7 98.5(minimum)

Alumina Hydrte

PRODUCT CODE AH 10

CHEMICAL FORMULA Al2O3 3H2O

APPERANCE WHITE POWDER

PHYSICAL PROPERTIES TYPICAL RANGE

* L O I (110-1000 deg. C) 34 - 36 36 max

* MOISTURE (%) 3 - 6 8 max

GRANULOMETRY

* - 45 MICRON (%) 3 – 6 7max

CHEMICAL PROPERTIES

A l2 O3 (%) 65 +/- 0.5 64.5 min

Na2O (% ) TOTAL 0.23 - 0.30 0.33 max

Fe2O3 (%) 0.005 - 0.008 0.016 max

SiO2 (%) 0.007 - 0.010 0.016 max

CaO (%) 0.026 - 0.030 0.033 max

Na2O (%) SOLUBLE 0.015 - 0.025 0.030 max

HYDRATE CONTENT (%) 99.0 98.5 min

BRIEF OVERVIEW OF ALUMINA REFINERY PROCESS

Nalco’s Alumina Refinery, was set up with the technical collabaration of Aluminium Pechiney, France, having an installed capacity of 0.8 million MTPY with two streams each of 0.4 million MTPY rated capacity. The plant was commissioned in the year of 1987.

Debottlenecking of the alumina refinery was done in the year 1999-2000 to increase plant capacity from 0.8 to 1.05 million MT per year, by making necessary changes at various units to realise higher liquor productivity and increased flow throughput.

In expansion of alumina refinery, one more stream of debottlenecked hydrate circuit was added up to the existing two streams, having capacity of 5,25,000 MTPY. Hence, after expansion, plant installed capacity reached to 15, 75,000 MTPY.Third stream under expansion was commissioned in the month of Dec’01.

Nalco’s alumina plant was designed with atmospheric pressure digestion (due to its primarily Gibbsitic bauxite), being the second plant with such type of digestion after Frigua plant in Africa. After digestion the design provided removal of coarse sand particle in sand separation, dilution followed by desilication, before settling in flat bottomed settlers and a continuous European high solid nucleation based precipitation. It also incorporates Circulating Fluid Bed (CFB) type energy efficient Calcination to produce sandy type Smelter grade alumina. Besides the above, the alumina plant has a coal based Steam generating plant and co-generating backpressure type cost effective Turbogenerators.

The process in its original form is now primarily limited to basic chemistry. The major reactions involved in the process are as follows:

Digestion reaction : Al (OH)3 + NaOH NaAl(OH)4

Silica Dissolution : Al2O3, 2SiO2, 2H2O + 6NaOH 2NaAl(OH)4 + 2Na2SiO3 + H2O

Desilication Reaction : 6NaAl(OH)4 + 6 Na2SiO3 3(Na2O,Al2O3,2SiO2,2H2O),Na2X + 12NaOH

Where X = CO3-2, 2AlO2

-, 2OH-, 2Cl-, SO3-2 etc. or a mixture of these anions

Precipitation reaction : NaAl(OH)4 Al(OH)3 + NaOH

Carbonation reaction : 2NaOH + CO2 Na2CO3 + H2O

Causticisation reaction : Na2CO3 + Ca(OH)2 CaCO3 + 2 NaOH

Brief description of the process units are as follows:

Bauxite handling & crushing :

Run off Mine (ROM) Bauxite, crushed in primary crusher in Mines to a size of –150 mm, is received at Alumina plant and stacked in stock piles with the help of a Stacker. This bauxite is then reclaimed from pile with the help of Bucket Wheel Reclaimer and fed to Vibrating screen & Hammer Crushers (secondary crushing unit) to get a size of D(85) = 30 mm and to store in day silos for feeding to process.

Grinding & Pre-desilication

Bauxite is wet ground with hot and diluted caustic (Spent Liquor having caustic concentration around 150 gm/litre) in closed circuit Ball mill. In the grinding coarse grinding has been adopted so that sand separation could be introduced saving energy for grinding and at the same time optimizing settler/ washer capacity.The ground slurry is heated to 100- 102oC and sent to a series of 3 tanks, where at the conditions maintained, a part of the silica that has already dissolved in the caustic solution during grinding precipitates out as sodalite.

A part of hot and concentrated caustic (Green liquor having concentration around 225 gpl) is then added to the pre-deslicated slurry and the resultant slurry is classified in Hydrocyclones. Coarser fraction is sent back

to the mill and cyclone overflow, slurry with finer fraction after addition of balance Green liquor are fed to the digestors.

Digestion

In digestors (vigorously agitated steam heated tanks), bauxite slurry (ground & classified) is retained at a temperature of 105 deg C & kept under constant agitation for a period of about 2-3 hours for dissolution of tri-hydrate alumina (gibbsite) in caustic. During this process, along with alumina, the kaolinite

(reactive silica) remaining after pre-desilication also gets dissolved in liquor to form sodium silicate. Desired level of saturation (Al2O3/Na2O), called Ratio Ponderal (RP) is maintained by adjusting Bauxite to Green liqour ratio in Ball Mills.

Sand separation, Sand washing and Dilution:

After digestion, slurry is stripped of coarse particles (known as sand) by passing it through hydrocyclones to avoid excessive abrasion in the equipment & piping as well as to avoid quick settling in Settlers/washers. Segregated sand is washed in multistage cyclones to recover entrained soda. The comparatively high concentration of caustic in slurry after sand separation is disadvantageous to the downstream operations like desilication, settling, filtration and precipitation. Hence, after removal of sand, slurry is diluted to about 145 gpl with low caustic liquor generated in mud washer train while washing mud with water for recovering impregnated liquor.

Desilication :

After dilution, slurry is fed to desilicator for removal of reactive silica, which got dissolved during digestion step and detrimental to product quality and also causes scaling of equipment & piping throughout the plant. Desilication is carried out in a series of agitated steam heated tanks at a temperature of 103 deg C for a period of about 8 to 10 hours. Almost all the dissolved silica precipitates out as a complex compound called “Sodalite” making the liquor part of slurry free from undesirable silica which would have otherwise contaminated the product during precipitation step.

Settling & Mud washing, Causticisation and Flocculation :

After desalination, slurry is fed to settlers for separation of solid

(digestion residue & desilicated product known as red mud) from liquor saturated with alumina in large flat bottomed tanks with rake mechanism. Flocculants are added to facilitate settling. In the settlers, liquor is collected in over flow and mud in the under flow.

The underflow of the settlers, called “Mud” containing considerable amount of entrained soda, is washed with pond return water in 6 stages of counter current washing. These washers are mechanically identical to settlers, only with a different function to perform. Washed mud withdrawn from the sixth washer is pumped to Mud disposal tanks from where along with sand it is pumped to TTD (Thickened tailing Disposal) tanks for further washing and disposal to red mud pond. The recovered low concentration liquor is used for dilution of slurry before desilication.

In the washer train, 3rd washer overflow is allowed to react with lime slurry for causticisation of carbonate formed in the circuit. The reaction with lime decomposes sodium carbonate into sodium hydroxide and precipitates out other impurities like V2O5, P2O5 etc as their calcium salts. The causticised slurry is fed to a settler as the overflow and the underflow mud is sent to mud washing circuit.

Flocculation unit is to prepare flocculant solution from wheat bran to use as settling aid in settlers & washers.

During the process of desilication and settling, substantial amount of dissolved alumina precipitates out due to high residence time, low caustic concentration and high alumina to caustic ratio. Precipitated alumina gets lost with red mud.

Security filtration :

The traces of solid present in settler over flow, commonly known as pregnant liquor, is still not acceptable as it upsets product quality in terms of Fe2O3 content. Hence it is filtered in pressure filters to remove traces of mud particles and to get clear sodium aluminate liquor. Lime slurry is used as filter aid. As this unit essentially secures product quality from impurities, the unit is also called “Security filtration unit”.

Heat exchange

The temperature of clear aluminate liquor is still about 100 deg.C, does not allow recovery of alumina in precipitation. Hence, it is passed through plate heat exchangers to bring down temperature close to 60 deg C in three stages. The first stage exchanges heat with “3rd washer overflow”, Second stage with “spent liquor” and in the third with “cooling water” for precise temperature control. The control on this unit is a prime factor influencing both productivity and grain size of the product.

Seeding, Precipitation, Classification and Hydrate filtration :

Cold pregnant liquor is then mixed with seed hydrate already available in precipitators. Hydrate, thus mixed with pregnant liquor, acts as seed and enhances precipitation process when fed into the precipitators. Precipitators are a series of agitated high volume tanks containing about 700-750 gpl solids in suspension. The seeded slurry continuously flows from one precipitator to another by gravity flow. A portion of the slurry from 4 or 5 precipitators are fed to Inter stage Coolers (exchangers) for cooling with water. The cooled slurry is then discharged to the next tank. Interstage coolers have helped in improving the liquor productivity due to reduced temperature across the precipitation even with higher feed temperature to reduce soda content in product alumina.

Aluminate liquor, which attains high degree of supersaturation after cooling, hydrolyses in precipitators, accelerated by the presence of seed hydrate. The process yields Alumina Hydrate in crystallised form. The yield of Hydrate (as Al2O3) in Kg/M3 of aluminate liquor is known as liquor productivity. Lower temperatures in precipitation helps achieving higher liquor productivity, wheras it also leads to a finer granulometry and higher soda content in product.

A part of the precipitated hydrate slurry is classified in classifiers to get –45 micron size particle of 3-4% in the coarse underflow slurry. Classification is facilitated by injection of spent liquor and dilution of feed, if required. The classified slurry is filtered in vacuum disc filters. The cake is known as first stage product Hydrate. Balance part of precipitated hydrate slurry is filtered in vacuum precipitation. Filtrate obtained from the vaccum disc filters, commonly known as spent liquor, is passed through cyclones (spent liquor solid separation cyclones) for recovering fine suspended hydrate particles and then heated up with exchange of heat from aluminate liquor and sent to evaporation unit for further use.

Second stage filtration & Calcination :

The Product hydrate obtained from disc filter after classification of precipitated slurry and filtration is again repulped, filtered on rotary vacuum drum filter, washed with sodic condensate to make hydrate free from soluble soda. The wash filtrate taken out from washing zone of the filter is used for repulping of first stage product hydrate and main filtrate is sent to mud washing circuit after separation of solid. The cake known as “product hydrate” is sent to Calcination or Hydrate storage depending on requirement.

“Product hydrate” is calcined in Circulating Fluid Bed type Calciners between 900-1000 deg C using heavy fuel oil. Apart from surface moisture, the water of crystallisation in Hydrate is also drivenoff during Calcination, leaving behind sandy, metallurgical grade alumina.

Evaporation :

The spent liquor preheated through Plate Heat Exchangers (PHE) is concentrated in six effect evaporators, to raise its concentration from about 150 gpl to 225 gpl. The output liquor called as “Green liquor” is sent to Ball mills for grinding & digestion of Bauxite thereby, completing the circuit. Soda lost in the process is made up with addition of fresh caustic soda in this unit.

Steam & Power Plant

Four Coal fired boilers with three back pressure type turbo generators have been installed to supply steam and power to the plant. The boilers and the TGs are of 200 TPH and 18.5 MW capacity respectively. At any point of time three boilers & three TGs are kept in service.

Steam is generated at 68 Kg/cm2 and the process requirement is met by passing through the TGs and supplying at two different pressures, i.e. 11 Kg/cm2 and 6 Kg/cm2. During the reduction in pressure, power is generated. This is a proven method of power generation at the lowest cost.

The plant power requirement is mostly met through Captive generation. However, generation is kept synchronized with the state grid and a small amount of power is drawn from the grid. During minor fluctuations and in some major failures of the grid for short duration, some of the non-critical loads are thrown off through load shedding scheme and the plant is automatically operated on Island mode.

NALCO’s PRESENT SITUATION

National Aluminium Company Limited (NALCO), during four years, has

crossed all the previous records in areas of sales turn over, gross

margin, export earning, profit before tax and after tax.but in the

current year Nalco faced very crucial situation.

Highest export turnover of Alumina in 2006-07 at Rs. 1463.88 crore has

been recorded, surpassing the previous highest of Rs 1386.09 crore in

2005-06.

Highest ever domestic sale of metal of 2, 61,636 MT in 2006-07 was

registered, surpassing the previous best of 2, 58,094 MT in 2005-06.

NALCO has produced 46, 23,278 tonnes of bauxite, 14, 75,200 tonnes

of Alumina and 3,58,734 tonnes of aluminium during 2006-07.

NALCO’s gross sales turnover was all time high at Rs. 6514.51 crore in

2006-07 against Rs. 5287.36 crore in 2005-06.

Nalco has reported a 52.39% jump in net profit to Rs. 2380.70 crore

during 2006-07 fiscal, as against Rs. 1562.20 crore achieved in the

previous year. The company also registered the highest-ever turnover

of Rs. 6516.78 crore, recording an increase of 22.40% over the

previous year’s figure of Rs. 5324.16 crore.

Nalco achieves Rs. 446.66 crore net profit in Q1 of 2007-08 with a sales

turnover of Rs. 1287.12.

Nalco achieves Rs. 439.73 crore net profit in 2nd quarter of 2007-08

with a sales turnover of Rs. 1432.12 crore.

Nalco has bagged the prestigious Industrial Trade Quality Achievement

Award, for the highest-ever production and export performance during

2006. The award has been instituted by the Council for Industrial &

Trade Development (CITD).

For excellence in export, Nalco has bagged the prestigious Niryat Shree

award, instituted by the Federation of Indian Export Organization

(FIEO).

NALCO bagged the Top CAPAXIL Export Award for 2006-07 and for the

19th Year in succession.

Nalco has signed a Memorandum of Understanding with the Ministry of

Mines, Govt. of India, for the financial year 2007-08. Nalco has

projected more than 100% capacity utilization of its aluminium smelter

and alumina refinery. The company has also projected higher financial

targets and financial commitments to ensure smooth completion of its

2nd phase expansion project in time.

Nalco has paid Rs. 84 crore as Govt.’s share in 2nd interim dividend of

15% on a total paid up capital of Rs. 644.31 crore for the 2006-07

fiscal. Earlier, the Company had paid an interim dividend of 35% in the

month of February. Together, the pay-out works out to Rs. 322.15 crore

as 50% interim dividend, out of which Govt.’s share is Rs. 281 crore.

During 2004-05 and 2005-06 the company had paid 40% and 50%

dividend, respectively, on the same paid-up capital.

National Aluminium Company Limited (NALCO) has sponsored 82

students for industrial training in the state run ITIS for the academic

year 2007-08. NALCO would contribute Rs. 35 Lakh for fully-funded

training of these students who come from land displaced families at

Angul.

NALCO has sponsored 461 wards of such displaced families, out of

which 425 have been provided employment and absorbed in

Company’s rolls.

NALCO has planted 3, 99,300 nos. of trees in all its units, compared to

2, 74,246 nos. in 2005-06.

NALCO has been playing a catalytic role in improving the quality of life

of people. It has been adjudged the best Mother Plant in Orissa for the

growth of ancillary and down stream industry.

ACHIEVEMENTS:

1ST mines safety award in 1988.

Best eco-friendly award for the year 1994-95 to the mines and refinery complex by the Orissa safety awards committee.

Indira priyadarshini vrikshyamitra Award from the govt of India to the company for eco friendliness.

FICCI Environment Award for the environment conservation 1996-97

WEC-IIEE-EAENP environment award for contributing towards environment protection around NALCO.

The prestigious Misrillal Jain award instituted by the FIMI for its outstanding contribution to the national goal of sustainable development through environmental conservation and rational utilization of natural resources by bauxite mine.

Pollution control excellence award by the state of Orissa pollution control board.

Special commendation award under golden peacock environment management awards.

1998 scheme by world environment foundation.

The Best Exporter of Odisha for the year 2000-01 for 3rd time in succession along with certificate of excellence, instituted by the Directorate of Export promotion Marketing, Govt. of Odisha, for its outstanging experts of metallurgical production.

The top export award of engineering export promotion council (EEPC) for the 4th time in succession.

The prestigious “Niryat shree” award for excellence in export for the year 2003-04 and 2004-05 from the federation of Indian export organization(FIEO)

The prestigious quality award of Indian institution of metals for the year 2003.

The best enterprise award by the forum of women public sector(WIPS) for making excellent contribution to the growth and development of women and impacting their live significantly in and around the organization.

The award for excellence, instituted by the institute of marketing and management New Delhi.

The best exporter of award, 2003 of Orissa.

The prestigious indira Gandhi paryabaran puraskar for the year 2003, for its outstanding contributions in the field of environment management.

The excellent performance award in national convention of quality circles -2003, held in December 4-7, 2003 at Madurai.

All India export excellence award from EEPC for the year 2003 -04

The prestigious CII national award for “Excellence in energy management” for the year 2004.

The prestigious five star export house status, in accordance with the provisions under the exim policy of ministry of commerce, govt of India

The refinery complex has received “best state safety award” fro the director of factories and boilers, Orissa.

Top exporter gold trophy of EEPC, eastern region under large enterprise category for the year 2004-05

Star performer award of EEPC, southern region.

Best mother plant award at EXPO-ORISSA 2006.

Dun & Bradstreet- American express corporate award as the top Indian company in the Non- ferrous metals sector

Cll eastern region award for “Best practices in safety, occupational

health &Environment” for alumina refinery complex.

The highest export award of chemical & allied products export promotion council, in the mineral and ore sector, for the year 2004-05. The company has bagged this award for a record 18th time in succession.

SOME OTHER IMPORTANT AWARDS AND RECOGNITION:

Receipt of various awards during the year as detailed bellow stands ample testimony for the excellent performance of your company in various fields:

Export award from CAPEXIL for the year 2005-06 for the 19th year in succession.

‘Niryat Shree’ Award for 2003-04 and 2004-05 from Federation of Indian Export Organitions (FIEO).

Top Exporter Gold Trophy of EEPC, Eastern Region under large Enterprise category for the year 2004-05.

Star performer Award of EEPC, southern region.

Dun & Bradstreet – American Express Corporate Award as the top Indian company in the non-ferrous metals sector.

Best Mother Plant Award at EXPO-ODISHA 2006.

Cll Eastern Region Award for “Best practices in safety, Occupational Health & Environment” for Alumina Refinery

THE PROGRESS OF NALCO IN THE ECONOMY OF ORISSA

As the time is very short, it is difficult to represent all the supports given by NALCO that lead to better economic betterment of Orissa. So I have taken utmost attempts to highlights the achievements of NALCO in the above stated topic within the stipulated time.

In 1975 the Indian Govt. discovers over 1000 million tones of bauxite reserve in the East Coast, which is pushing the country in the 5th

rank in the world bauxite map, with a total estimated reserve of 2900

million tones. As the major step towards exploiting these vast bauxite deposits, the Govt. of India in Jan. 7,1981 established the National Aluminum Company Limited (NALCO) with its registered office at Bhubaneswar. The foundation store of the giant project was laid by the Prime Minister late Smt. Indira Gandhi on 29th March 1981 at Damanjodi in the district of Koraput of Orissa.

Since that day NALCO has been playing a vital role to improve the economic condition of Orissa. At present investment in Orissa touches about Rs 4,05,000 Cr. Taking advantage of its rich mineral deposits, Orissa has attracted investment proposals of an astronomical Rs. 4,05,000 Cr. So far and in all meetings expression is “Look at NALCO” ITS STUPENDOUS SUCCESS. IT’S COMMITMENT TO COMMUNITY AROUND….”

Since its inception in 1981 as a public sector company of the significant contribution to the economies of the centre as well as the state through export earning, payment of dividend, taxes and duties, employment generation and regional development. The community developmental activities undertaken by NALCO include especially at Damanjodi and Angul periphery regions.

In its journey of 26 years towards corporate excellence, NALCO has given top priority to social sector development. The company spends 1% of its net profit every year on periphery development in its areas of operation. It provides additional funds as and when required for special projects contributes to Chief Minister Relief Fund and Prime Minister National Relief Fund at time of calamity. Besides these, NALCO spends more than Rs. 100 lakhs every year sponsoring seminars, cultural programmes and sports events all over the state. The company has appointed sports persons and organized state and zonal level tournaments too. It is also committed to develop “ The Ananda Bazzar of Lord Jagannath Temple” at Puri.

NALCO is perceived as a symbol of “Oriya Pride” because it is considered as one of the few industrial units that carries out its entire manufacturing process within the state. NALCO has come forward to represent a better quality of life for communities residing in the vicinity of its plants and facilities. Creation of infrastructure in and around the village for communication, education, health care and drinking water get priority in the periphery development plans of the company. Community participation in innovative farming, pisciculture, social forestry and sanitation programmes apart, encouragement to sports, art culture and literature are all a part of Nalco’s deep involvement with the life of the community. Successful operation of the company has led to employment and income generation for the local people in many significant ways. Near about 7,000 people are working as employees Nalco. Most of them are from our state Orissa. Nalco has taken as a model for other industries in the backward state like Orissa. Orissa has received considerable benefits

owing the presence of Nalco Apart from Nalco’s PDP, the company also supplies cheap power supply to the Orissa grid and provides direct and indirect employment opportunities to thousand of workers.

In pursuit of technological excellence NALCO has not lost the sight of its social responsibilities. For NALCO, Success is not all about production and profit, but also carrying for the people around it, through education, health care, water supply, infrastructure for communication, social forestry culture and sports.

CHAPTER-3

OBJECTIVE OF THE STUDY:

The project work is designed to fulfill the following objectives:

* To assess the significance financial statement of the company by selecting few important parameters such as, annual report, comparative balance sheet and income statement, ratio analysis, etc.

* Prepare and interpret financial statements in comparative and common-size form of NALCO.

* Examine the liquidity position of NALCO

* To suggest the steps to be taken to increase the efficiency in management of financial statement.

* Compute and interpret financial ratios that would be most useful to a common stock holder.

CHAPTER-4

RESEARCH METHODOLOGY

Data are collected from both primary and secondary sources. Separate personal interview were made with the staff attached with cash management. The primary data was collected from the officer of the finance section of the company and the secondary data was collected from the annual report of NALCO. The data consists of 5 years annual report of NALCO(from 2005-06 to 2009-10).

Ratio analysis and trend analysis are the tools for the measurement degree of efficiency of financial statement analysis. Here the different ratios regarding debt-equity, credit turnover,average collection period,operating profit etc. are taken for analysis.

LIMITATIONS OF STUDY :

This project has been completed in 8 weeks and has been conducted in NALCO. The main objective of this project is to study the financial statement policy of the company. The study is confined how the company implementing its financial statement policy in NALCO. During this period my prime objective was to study the financial statement in NALCO and thus only secondary data was mainly used moreover only selective techniques were taken into consideration in the study and not all the

techniques were used thus limiting the depth of the study and thus the results found from it.

CHAPTER-5

DATA ANALYSIS AND INTERPRETATION

Financial performance at a glance: (Rs. In Crore)Sl.

No

Particulars 2005-06

2006-07

2007-08

2008-09 2009-10

A.

B.

Income Statement

1. Export2. Domestic

Sales3. Gross Sales4. Net Sales5. Operating

Profit6. Earning

Before Interest. Dep. Tax

7. Profit Before Tax.

8. Net Profit

Balance Sheet1. Equity Capital2. Reserve &

Surplus3. Net Worth4. Loans

Outstanding5. Net Fixed

Assets

2306.20

3,018

5,324

4,889

2,679

2,811

2,430

1,562

644.31

5249

5893

-

2,586

3,929

6,515

5,940

3,631

3,942

3,620

2,381

644.31

7051

7,695

-

2,134

3,340

5,474

4,989

2,313

2,754

2,467

1,632

644.31

8230

8,874

-

2,085

3,446

5,531

5,108

1,804

2,204

1,927

1,272

644.31

9126

9770

-

2,209

3,102

5,311

5,055

1,102

1,476

1,155

814

644.31

9751

10,395

-

6. Net Current

Assets7. Capital

Employed

3944

2357

6301

3711

3755

7466

3531

3500

7031

4032

2596

6628

4836

2990

7826

Table-1

FINANCIAL YEARS 2009-2010 2008-09 2007-08 2006-07 2005-06CURRENT ASSETS 5209.64 4528.81 5041.33 4974.08 3297.08CHANGE IN % 157 137 153 151 100

CURRENT ASSETS

0

1000

2000

3000

4000

5000

6000

2009-2010 2008-09 2007-08 2006-07 2005-06

CURRENT ASSETS

CHANGE IN %

CURRENT ASSET Current Assets are required in the form of cash & bank balances, debtors & receivables, Inventories etc to manage the operating activities of the company and to loan more and more Operating Profit for the survival and growth of business.In the financial year2005-06 it was 3297.08cr and in the financial year 2006-07 4974.08cr which is increased by 50% So, increased requirement of Current Asset suggests that the organisation is efficient enough to invest more and more funds in operating activity of the organization.TABLE-1.1

FINANCIAL YEARS 2009- 2008- 2007- 2006- 2005-06

10 09 08 07

INVENTORIES 944.9 841.9 686.65 634.96 590.78CHANGE IN % 160 142 116 107 100

INVENTORIES

0

200

400

600

800

1000

2009-10 2008-09 2007-08 2006-07 2005-06

INVENTORIES

CHANGE IN %

INVENTORIESInventories are required in the form of Raw Materials stories and spare parts and finished goods to maintain stories and spare parts and finished goods to maintain the operating efficiency of the organisation. In the financial year 2005-2006 it was Rs 590.78 Crores and increased Rs 634.96 crores in financial year 2006-2007 by 12%, increased to Rs 686.65 crores in financial year by 20%, increased to Rs 686.65 crores in financial year 2007-08 by 30% and increased to Rs841.9 crores by 59% in financial year 2008-09 and in the 09-10 increased to 944.9.So ,the increasing trend of investment in inventories shows the operating efficiency of organisation in relation to store management and sales.

Table-1.2

FINANCIAL YEARS2009-10

2008-09

2007-08

2006-07

2005-06

SUNDRY DEBTORS 181.50 26.5 60.65 34.13 29.42CHANGE IN % 616.4 90 206 116 100

SUNDRY DEBTORS

0

100200

300400

500600

700

2009-10 2008-09 2007-08 2006-07 2005-06

SUNDRY DEBTORS

CHANGE IN %

SUNDARY DEBTOR Debtors and receivable are the result of credit sales .The company needs to Sell on credit basis to increase its volume of sales. But the volume of debtors and receivables depends upon policy of the company either huge in volume in conservative approach or less in volume in aggressive approach. Again the volume of debtors and receivables depends on efficiency of the business in collection.

In the financial year 2005-2006 it was Rs 29.42crores and increase to Rs 34.13 crores by 29% in financial year 2006-2007 , and increase to 60.63 crores in financial yea2007-08 crore, decreased to Rs 26.5 crores by 55.9% in financial year and increased to Rs 181.50 Crores. It reveals that the organisation is adopting aggressive policy providing credit facilities and increased the efficiency on debt collection by which it faled less volume of sales in last 5 years.

TABLE-1.3

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06CASH & BANK BALANCES 3152.35 2869.04 3516.46 3686.53 2193.71CHANGE IN % 144 131 160 168 100

CASH & BANK BALANCE

0500

1000150020002500300035004000

2009-10 2008-09 2007-08 2006-07 2005-06

CASH & BANKBALANCES

CHANGE IN %

CASH AND BANK BALANCES Cash and bank balances are the most liquid form of Assets needed by the organisation to meet transaction motive, speculative motive and precautionary motive. But if there is idle amount cash and bank balances, those will adversely affect the profitability due to unnecessary carrying cost . In the financial year 2005-2006 cash and bank balances are Rs 2193.71crores , increased to Rs 3686.53crores in financial year 2006-2007 by 168%, decreased to Rs 3516.46 crores by 160% in financial year 2007-08, increased to Rs 2869.04 by 366% in financial year 2008-09 by 131% in financial year 2009-10 increased to Rs 3152.35. It reveals that during the last 5 years the most liquid balances needed more more to meet various transaction and precautionary motive of organisation. As the organisation is growing with it’s transactional volume it needed more and more cash and bank balances.

TABLE-1.4


2008-09

2007-08

2006-07

2005-06

OTHER CURRENT ASSETS 145 175.35 236.47 212.04 118.62CHANGE IN % 122 148 200 179 100

OTHER CURRENT ASSETS

0

50

100

150

200

250

2009-10 2008-09 2007-08 2006-07 2005-06

OTHER CURRENTASSETS

CHANGE IN %

OTHER CURRENT ASSETS

As the organisation is growing , the other current assets are required more and more to meet operational urgency of the organisation from year to year.

TABLE-1.5


2008-09

2007-08

2006-07

2005-06

LOANS & ADVANCES 785.59 616.02 541.1 406.42 364.55CHANGE IN % 215 169 148 111 100

LOANS & ADVANCES

0

200

400

600

800

1000

2009-10 2008-09 2007-08 2006-07 2005-06

LOANS & ADVANCES

CHANGE IN %

LOANS AND ADVANCES

Loans and advances are required to maintain the increased growth rate of operational activities by way of advance payment for the acquisition raw materials and other operational requirements. In the financial year 2005-2006 it was Rs 364.95 crores and increased to Rs 406.42crores in financial year 06-07 by 4% and increased to Rs 541.1crores in financial year 2007-08 by 16%, increased to Rs 616.02crores in financial year 2008-09 by 54% and increased to Rs 785.59crores by 32% in financial year 2008-09. So it suggests the operational requirement on advancing in various segments increased to cope with increased growth rate of organisation.

TABLE-2

FINANCIAL YEARS2009-2010 2008-09 2007-08 2006-07

2005-06

LIABILITIES & PROVISIONS 2219.93 1933.24 1540.88 1218.61 940.15CHANGE IN % 225 196 156 130 100

LIABILITIES & PROVISIONS

0500

10001500

20002500

2009-2010

2008-09 2007-08 2006-07 2005-06



company’s liabilities and provisions are increasing year by year.it happen due to company’s healthy performance.

Table-2.1

FINANCIAL YEARS 2009-10 2008-09 2007-082006-07

2005-06

CURRENT LIABILITIES 1849.95 1603.4 1318.31 872.02 607.33CHANGE IN % 306 265 218 144 100

CURRENT LIABILITY

0

500

1000

1500

2000

2009-10 2008-09 2007-08 2006-07 2005-06

CURRENT LIABILITIES

CHANGE IN %

CURRENT LIABILITY

Current liabilities and provision current liabilities are the short term sources availed by the organisation to financial it’s working capital. The organisation based on Conservative approach on financing working capital

needs less amount and the organisation based on aggressive approach needs more and more current liabilities to finance working capital. Recent trend of current liabilities and provision reveals that the organisation started increased the current liability and provision from financial year 2006-07 onwards. It was Rs 872.02 crores which was more by 42% in comparison to financial year 2005-06and increased to Rs 1318.31 crores in financial year 2007-08 by 114% and in financial year it increased to Rs 1603 crores by 160%. So , it suggests that the organisation utilised more and more funds from current obligates to finance it’s working capital needs.

TABLE-2.2


2008-09

2007-08

2006-07

2005-06

PROVISIONS 369.98 329.84 222.57 346.59 332.82CHANGE IN % 110 98 66 104 100

PROVISIONS

050

100150200250300350400

2009-10 2008-09 2007-08 2006-07 2005-06

PROVISIONS

CHANGE IN %

PROVISION

Provisions are created out of profit to meet contingencies in near future. When the operating activities increased , the organisation is to keep required provisions to meet the uncertainties in future periods. In the financial year 2005-06, provisions were Rs 332.82 crores it increased to Rs 346.59 crores in financial year 2006-07 by 75%, increased to Rs 346.59 by 82% in financial year 2006-07, increased to Rs 222.57 by 17% financial year 2007-08, but decreased in comparison to provisions year 2006-07 and in financial year 2008-09 it increased to Rs 329.84 by 73%. So, recent trend of provision shows that organisation safeguarded the organisation against the future contingencies resulted form growing operational activities.

TABLE-3

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06TOTAL CURRENT ASSETS 5209.64 4528.81 5041.33 4974.08 3297.08LIABILITIES 1849.95 1603.4 1318.31 872.02 607.33PROVISIONS 369.98 329.84 222.57 346.59 332.82NET CURRENT ASSETS 2989.75 2595.57 3500.45 3755.47 2356.93CHANGE IN % 127 110 148 159 100

NET CURRENT ASSETS

0

1000

2000

3000

4000

5000

6000

2009-10 2008-09 2007-08 2006-07 2005-06

TOTAL CURRENT ASSETS

LIABILITIES

PROVISIONS

NET CURRENT ASSETS

CHANGE IN %

NET CURRENT ASSETS

Net working capital suggested the fund used from the own sources of business to finance total current asset need of organization. In the financial year 2005-06 it was Rs2356.93crores it increased to Rs3755.47crores in financial year 2006-07 by 59% and decreased to Rs3500.45 crores in 07-08 and decreased to Rs2595.57 crores in 08-09 but increased 28% 2989.75 in comparison to financial year 09-10. The recent trend of Net working capital shows that organization is capable enough to invest more and more amount from own source to finance total need of current asset which is good symptom of growth and stabilization.

RATIO ANALYSIS:

1. LIQUIDITY RATIO:

TABLE-4

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06TOTAL CURRENT ASSETS 5209.64 4528.81 5041.33 4974.08 3297.08TOTAL CURRENT LIABILITIES 2219.93 1933.24 1540.88 1218.61 940.15CURRENT RATIO 2.34 2.34 3.27 4.08 3.50

CURRENT RATIO

Current ratio establishes relationship of current asset requirement in the organization and the current liabilities through which the organization obtains funds to finance its current Assets in general, the ratio required general 2:1. In the financial year 05-06 the ratio 3.5 in financial 2006-07 4.08 and in financial year 07-08 3.27 and in 08-09 ratio is 2.34 and in 09-10 it is remain same 2.34. the trend of current ratio in recent period sours that the organization is not consistently marinating the thumb rule 2:1 but on the other hand it adopts conservative policy to finance working capital with higher required ratio which reflects the liquid position is steady and stable to support its operating activities. Maintained in recent year above the thumb rule 2:1 which suggests stabilized liquid position to meet the organizational obligation arise out of current situation.

TABLE-5

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06CURRENT ASSETS 5209.64 4528.81 5041.33 4974.08 3297.08INVENTORY 944.92 841.9 686.65 634.96 590.78

CURRENT LIABILITY 1849.95 1603.4 1318.31 872.02 607.33QUICK RATIO 2.30 2.29 3.30 4.97 4.45

QUICK RATIO The formula of quick ratio is current asset-inventory/current liability. Suggest the availability of liquid funds to met the current obligation the ratio is above the thumb rule 1:1.in the year 05-06 ratio was 4.45 and it was increased to 4.97 in the financial year 06-07.but in the 07-08 and 08-09 years ratio decreased 1.67 and 0.99 respectively.but in the 09-10 year it has slightly increased to 0.01.

TABLE-6

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06CURRENT ASSETS 5209.64 4528.81 5041.33 4974.08 3297.08CURRENT LIABILITIES 1849.95 1603.4 1318.31 872.02 607.33SALES 5311 5531 5474 6515 5324NWC TO SALES RATIO 0.63 0.53 0.68 0.62 0.50

NET WORKING CAPITAL TO SALES RATIO

Indicates the firm's ability to finance additional sales without incurring additional debt. Data shows 2008-09 it was good and the year 2009-10 it suggest that the company’s net working capital to sales ratio is not healthy and it should be considered.

2. PROFITABILITY RATIO:

TABLE-7

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06GROSS PROFIT 3168.22 2771.46 2427.56 2338.73 2046.95SALES 5311 5531 5474 6515 5324GROSS PROFIT MARGINE(GPM) 0.59 0.50 0.44 0.35 0.38

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GROSS PROFIT MARGINE(GPM)

The gross profit marginis the ratio of gross income or profit to sales.This ratio indicates how much of every rupees of sales is left after cost of goods sold.In the year 09-10 gross profit increased to 396.76 or the 59%. Company’s gross profit increasing year over year which is great impact by the company’s sound performance.

TABLE-8

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06OPERATING PROFIT(EBIT) 1157 1931 2469 3620 2430SALES 5311 5531 5474 6515 5324OPERATING PROFIT MARGINE(OPM) 0.21 0.34 0.45 0.55 0.45

OPERATING PROFIT MARGINE(OPM)

The operating profit margin is the ratio of operating profit to sales i.e OPM=EBIT/SALES. This is a ratio that indicates how much of each amount of sales is left over after operating expenses. The OPM in the year 09-10 is 0.21 and the year 2008-09 is 0.34,in the year 2007-08 is 0.45 and in the year 2006-07 is 0.55 and in the year 2005-06 is 0.45.

TABLE-9

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06NET PROFIT AFTER TAXES 814 1272 1632 2381 1562SALES 5311 5531 5474 6515 5324NET PROFIT MARGINE(NPM) 0.15 0.22 0.29 0.36 0.29

NET PROFIT MARGINE(NPM)

The net profit margin is the ratio of net income to sales and it indicates how much amount of sales is left over after all expenses.In the above analysis we find that the company’s net profit is decreasing the management of the company should scrutiny.

TABLE-10

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06NET PROFIT AFTER 814 1272 1632 2381 1562

TAXESTOTAL ASSETS 11056 10391.16 9481.88 8685.08 7241.08RETURN ON TOTAL ASSETS 0.07 0.12 0.17 0.27 0.21

RETURN ON TOTAL ASSETS(ROA)

In the year 2009-10 it comes down because of decrease in profit after tax by 458 same situation for the rest of the period we can see in the above table.profit after tax plays a important role return on total assets.

TABLE-11

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06NET PROFIT AFTER TAXES 814 1272 1632 2381 1562STOCK HOLDER’S EQUITY 644.31 644.31 644.31 644.31 644.31RETURN ON EQUITY 1.26 1.97 2.53 3.69 2.42

RETURN ON EQUITY(ROE)From the last 4 years Return on equity of share holder is quite satisfactory, the data suggest that the ROE is decreasing in the last year 2009-10 1.26 in comparison to 2009-08 it is reduced to 0.71.ROE is measurably affected due to decrease in profit after tax.

TABLE-12

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06Earnings Available for CommonStockholder’s

814.22 1272 1631 2381 1562Number of Shares of Common Stock Outstanding

644309628 644309628 644309628 644309628 644309628

EARNING PER SHARE 12.64 19.75 25.32 36.96 24.25

EARNING PER SHARE(EPS)As we discussed in the previous table Profit after tax is decreasing from last four years I,e2010-09 to 2006-07. EPS of shareholder are quite satisfactory and its depend on the company’s annual return

TABLE-13

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06Market Price Per Share of Common Stock

161.34 151.64 137.73 119.43 91.46EARNING PER SHARE 12.64 19.75 25.32 36.96 24.25P/E RATIO 12.76 7.67 5.43 3.23 3.77

PRICE/EARNINGS RATIO(P/E)

P/E ratio is the ratio of the price per share of common stock to the earning per share of common stock. market price/share price-earning ratio= --------------------- earning per shareThough earning per share are reported in the income statement, the market price per share of stock is reported in the financial statements. It is sometimes used as a proxy for investors assessment of the company’s ability to generate cash flow in the future.

3. ACTIVITY RATIO:

TABLE-14

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06COST OF GOODS SOLD

2142.78 2759.54 3046.44 4176.27 3277.05INVENTORY 944.9 841.9 686.65 634.96 590.78INV.TURNOVER RATIO 2.26 3.27 4.43 6.57 5.54

INVENTORY TURNOVER RATIO

The ratio indicates the efficiency of the firm’s inventory management it is calculated by dividing the cost of goods sold by average inventory. Inventory turnover ratio= ---- Cost of goods sold ------------------

Average inventory

Cost of goods sold means sales minus gross profit and average inventory means average of opening and closing inventories.

TABLE-15

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06NET ANNUAL SALES

5055 5108 4989 5940 4889DEBTOR 181.50 26.5 60.65 34.13 29.42DEBTOR TURNOVER RATIO 27.85 192.75 82.25 174.04 166.17

DEBTORS TURNOVER RATIO

Debtor turn over ratio indicate the velocity of debt collection of firm. The liquid position of the firm depends on the quality of debtor to a great extent. Debtors turn over ratio is one of the ration which financial analyst apply to judge the quality or liquidity of debtors. The debtors turn over ratio is calculated by dividing net annual sales by total debtors. This ratio indicates the number of times debtors are converted into sales during a year. The higher the value of debtors turn over ratio the most efficient the Management of credit and a symbol of quick collection of cash from debtors. A low ratio reflects the payment by debtors is being delayed.

TABLE-16

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06ACCOUNTS RECEIVABLE 360 360 360 360 360DEBTOR TURNOVER RATIO 27.85 192.75 82.25 174.04 166.17AVERAGE COLLECTION PERIOD 13DAYS 2DAYS 4DAYS 2DAYS 2DAYS

AVERAGE COLLECTION PERIOD

If the average collection period is more, then the size of receivables will

be more. It also determines the time allowed for availing discount. The

concern should try to keep average collection period under control.

Average collection period is calculated by dividing days in year by debtors

turn over ratio. The average collection period measures the quality of

debtors since it indicates the speed of their collection. The shorter the

average collection period, the better the quality of debtors, since a short

collection period implies the prompt payment by debtors.

TABLE-17

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06SALES 5311 5531 5474 6515 5324NET FIXED ASSETS 4836 4032 3531 3711 3944FIXED ASSETS TURN OVER 1.09 28.69 66.54 37.43 32.03

FIXED ASSETS TURNOVER RATIO

The fixed assets turnover ratio measures the efficiency with which the firm is utilizing its investments in fixed assets. It also indicates the adequacy of sales in relation to the investment in fixed assets. Dividing shares calculate the fixed turnover with net fixed assets i.e., the depreciated value of the fixed assets. SalesFixed assets turnover ratio= -------------------- Net fixed assets

TABLE-18

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06SALES 5311 5531 5474.45 6514.51 5287.36WORKING CAPITAL 3359.69 2595.57 3500.45 3755.47 2356.93WORKING CAPITAL TURNOVER RATIO 1.581 2.131 1.564 1.735 2.243

WORKING CAPITAL TURNOVER RATIO

0

10002000

30004000

50006000

7000

2009-10 2008-09 2007-08 2006-07 2005-06

SALES

WORKING CAPITAL

WORKING CAPITAL TURNOVER RATIO

The ratio relates sales and working capital invested in the organization. More is the ratio more efficient the organization is to generate revenues by utilization of working capital invested in the organization . In the recent years organization was quite efficient in financial year 2005-06 as the rational 2.24 which suggests that organization generatal revenues 2.24 times of working capital invest in the organization. But than after it reduced it’s ratio to 1.73 in financial year 2006-07. so, the organization to look into the idle amount of current assets remain in working capital position; so that organization can control the requirement of working capital and which can improve the ratio of working capital turnover.

TABLE-19

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06SALES 5311 5531 5474 6515 5324TOTAL ASSETS 11056 10391.16 9481.88 8685.08 7241.08TOTAL ASSETS TURN OVER 0.48 0.53 0.57 0.75 0.73

TOTAL ASSETS TURNOVER RATIO

The total asset turn over of the financial year in 2009-10 is 0.48,in 2008-09 is 0.53,in 2007-08 0.57 in 2006-07 is 0.75, in 2005-06 the total turn over asset is 0.73.

4. FINANCIAL LEVERAGE RATIO:

TABLE-20

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06TOTAL LIABILITIES 2219.93 1933.24 1540.88 1218.61 940.15TOTAL ASSETS 11056 10391.16 9481.88 8685.08 7241.08DEBT RATIO 0.20 0.18 0.16 0.14 0.12

DEBT RATIO

The debt ratio shows the proportion of a company's assets which are financed through debt. If the ratio is less than 0.5, most of the company's assets are financed through equity. If the ratio is greater than 0.5, most of

the company's assets are financed through debt. Companies with high debt/asset ratios are said to be "highly leveraged," not highly liquid. A company with a high debt ratio (highly leveraged) could be in danger if creditors start to demand repayment of debt. Company pay the debt at the right time which is shows the good attitude.

TABLE-21

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06LOANS & OUTSTANDING - - - - -NETWORTH 10395 9770 8874 7695 5893DEBT-EQUITY RATIO - - - - -

DEBT-EQUITY RATIO

D-E ratio indicates the relatives uses of debt and equity as sources of capital to finance the company’s assets,evaluated using book values of the capita sources.

TABLE-22

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06EBIT 1157 1931 2469 3620 2430INTEREST 2 4 2 - -TIMES INTEREST EARNED RATIO(TIE) 578.5 482.75 1234.5 - -

TIMES INTEREST EARNED RATIO(TIE)The times-interest earned ratio also referred to as the interest coverage ratio compares the earnings available to meet the interest obligation with the interest obligation. EBITTimes interest earned ratio= --------------------- INTEREST

TABLE-23

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06PROFIT AFTER TAX 814 1272 1632 2381 1562

NETWORTH 10395 9770 8874 7695 5893

RETURN ON CAPITAL 7.83 13.01 18.39 30.94 26.50

EMPLOYED

RETURN ON CAPITAL EMPLOYED PATRETURN ON CAPITAL EMPLOYED= ----------------- *100 NETWORTH*100.Return on capital employed is decreasing year over year which should be considered.

TABLE-24

FINANCIAL YEARS 2009-10 2008-09 2007-08 2006-07 2005-06

EBIT 1157 1931 2469 3620 2430LEASE PAYMENT - - - - -

INTEREST 2 4 2 - -

FIXED-CHARGE COVERAGE RATIO

578.5 482.75 1234.5 - -

FIXED-CHARGE COVERAGE RATIO EBIT+LEASE PAYMENTFCCR= ------------------------------- INTERST+LEASE PAYMENT

The fixed charge coverage ratio expands on the obligations covered and can be specified to include any fixed charges such as lease payments and preferred dividends.

COMPARATIVE STATEMENTSBALANCE SHEET 2010-09

COMPARATIVE BALANCE SHEET

FINANCIAL YEARS 2010 2009

Difference in RS(Crore)

Difference in %

SOURCES OF FUNDS Shareholders' s Fund: Share Capital 644.31 644.31 - -Reserves and Surplus 9751.2 9125.5 625.7 6.85

10395.51 9769.81Loans Funds: Secured loans Deferred Tax Liability(Net) 632.59 621.35 11.24 1.80

Total 11028.10 10391.16 636.94 6.12APPLICATION OF FUNDS Fixed Assets: Gross Block 11017.96 9899.84Less:Depreciation 6181.65 5868.3 313.35 5.33Less:Impairment Net Block 4836.31 4031.54 804.77 19.96Fixed Assets awaiting disposal 1.03 0.99 0.04 4.04Capital work-in progress 2243.40 2867.13 -623.73 -21.75

Total fixed asset 7079.71 6899.66 180.05 2.66Investments 986.75 895.93 678.87Current Assets, Loans and Advances: Inventories 944.92 841.9 103.02 12.23Sundry Debtors 181.78 26.5 155.28 585Cash and Bank Balances 3152.75 2869.04 283.71 9.88Other Current Assets 145 175.35 -30.35 -17.30Loans and Advances 785.59 616.02 169.57 27.52Total current asset 5209.64 4528.81 680.83 15.03

Less:Current Liabilities & Provisions Current Liabilities 1849.95 1603.4 246.55 15.38Provisions 369.98 329.84 40.14 12.16

Total current liability 2219.93 1933.24 286.69 14.82

Net Current Assets 2989.71 2595.57 394.36 15.19Total 11056.17 10391.16 665.01 6.39

Reserve and surplus has increased to 625.27cr by 6.85% which is good for the company it could help in meet the future uncertainty.Inventories is also increased in the same year by 103.02cr 12.23%.Total current liability increased to 286.69 in the year 09-10.

But in the same year net current assets increased to 394.36 or 15.19%.

COMPARATIVE STATEMENTSBALANCE SHEET 2009-08




Difference in %

SOURCES OF FUNDS Shareholders' s Fund: Share Capital 644.31 644.31 Reserves and Surplus 9125.5 8230.14 895.36 10.88 9769.81 8874.45 895.36 10.09Loans Funds: Secured loans Deferred Tax Liability(Net) 621.35 607.43 13.92 2.29

Total 10391.16 9481.88 909.28 9.59APPLICATION OF FUNDS Fixed Assets: Gross Block 9899.84 9137.26 762.58 8.35Less:Depreciation 5868.3 5606.31 261.99 4.67Less:Impairment Net Block 4031.54 3530.95 500.59 14.18Fixed Assets awaiting disposal 0.99 0.86 0.13 15.12Capital work-in progress 2867.13 2334.59 532.54 22.81

Total fixed asset 6899.66 5866.4 1033.26 17.61Investments 895.93 115.03 780.9 678.87Current Assets, Loans and Advances: Inventories 841.9 686.65 155.25 22.61Sundry Debtors 26.5 60.65 -34.15 -56.31Cash and Bank Balances 2869.04 3516.46 -647.42 -18.41Other Current Assets 175.35 236.47 -61.12 -25.85

Loans and Advances 616.02 541.1 74.92 13.85Total current asset 4528.81 5041.33 -512.52 -10.17

Less:Current Liabilities & Provisions Current Liabilities 1603.4 1318.31 285.09 21.63Provisions 329.84 222.57 107.27 48.20


Net Current Assets 2595.57 3500.45 -904.88 -25.85Total 10391.16 9481.88 909.28 9.59

There is increased in fixed asset Rs 1033.26 crores that by 17.61% and increased in reserve & surplus by Rs 895.36 crores that 10.09%. There is decreased in current asset by Rs 512.52 crores by 10.17% and increased in current liability by Rs 392.36crore by 25.46

It reveals that organization used working capital funds over fixed Asset and also it increases it’s reserve and surplus which stabilizes the financial position for future period.

COMPARATIVE BALANCE SHEET 2008-07




Difference in %

SOURCES OF FUNDS Shareholders' s Fund: Share Capital 644.31 644.31 Reserves and Surplus 8230.14 7050.91 1179.23 16.72 8874.45 7695.22 1179.23 15.32Loans Funds: Secured loans Deferred Tax 607.43 612.74 -5.31 -0.87

Liability(Net)

Total 9481.88 8307.96 1173.92 14.13APPLICATION OF FUNDS Fixed Assets: Gross Block 9137.26 9034.06 103.2 1.14Less:Depreciation 5606.31 5312.18 294.13 5.54Less:Impairment 11 -11 -100.00Net Block 3530.95 3710.88 -179.93 -4.85Fixed Assets awaiting disposal 0.86 1.2 -0.34 -28.33Capital work-in progress 2334.59 840.41 1494.18 177.79

Total fixed asset 5866.4 4552.49 1313.91 28.86Investments 115.03 Current Assets, Loans and Advances: Inventories 686.65 634.96 51.69 8.14Sundry Debtors 60.65 34.13 26.52 77.70Cash and Bank Balances 3516.46 3686.53 -170.07 -4.61Other Current Assets 236.47 212.04 24.43 11.52Loans and Advances 541.1 406.42 134.68 33.14Total current asset 5041.33 4974.08 67.25 1.35

Less:Current Liabilities & Provisions Current Liabilities 1318.31 872.02 446.29 51.18Provisions 222.57 346.59 -124.02 -35.78


Net Current Assets 3500.45 3755.47 -255.02 -6.79Total 9481.88 8307.96 1173.92 14.13

Increase the reserve fund by Rs 1179.23 crores ie 15.32 increase by fixed asset position by Rs 1313.911 ie 28.86% Increase in current assets Rs 134.68 ie 33.19% and increase in currant liability by Rs 332.27 crores. Which shows that organization is on policy on finance it’s fixed asset from working capital position without availiy liability from other source and increase it’s profitability by increasing more and more reserves & surplus for future periods.

COMPARATIVE INCOME STATEMENT 2010-09

COMPARATIVE INCOME STATEMENT



Difference in %

INCOME: Gross Sales 5311 5517.52 -206.52 -3.74299Less:Excise Duty 256 423 -167 -39.4799Net Sales 5055 5094.52 -39.52 -0.77574Finished goods internally consumed/capitalised 24.20 26.44 -2.24 -8.47201Accretion/(Decretion)to stock of finished/internally products/work-in-process Other income 468.75 495.84 -27.09 -5.46346Total income 5547.9 5616.8 -68.9 -1.22668EXPENDITURE: Decretion/(Accretion)to stock of finished/intermediary products/work-in-process 21.63 -85.35 106.98 -125.343Raw materials consumed 782.30 696.76 85.54 12.27682Power & Fuel 1601.14 1311.55 289.59 22.07998Repairs & Maintenance 296.37 250.52 45.85 18.30193Other Manufacturing Expenses 210.78 174.98 35.8 20.45948Employee's Remuneration & Benefits 843.60 771.06 72.54 9.407828Administrative Expenses 115.29 103.33 11.96 11.57457Other Expenses 127.59 123.1 4.49 3.647441Selling and Distribution Expenses 89.04 84.33 4.71 5.585201Interest & Financing Charges 2.28 3.96 -1.68 -42.4242Provisions -3.91 -3.23 -0.68 21.05263Depreciation 319.39 272.44 46.95 17.23315Impairment Total expenditures 4405.46 3703.45 702.01 18.95557PROFIT FOR THE YEAR 1143.15 1913.35 -770.2 -40.254Add:(less):Prior Period Adjustments(Net) 11.71 13.81 -2.1 -15.2064Add:Extraordinary

Income(Net)PROFIT BEFORE TAX 1154.86 1927.16 -772.3 -40.0745Less:Provision for Tax Current 315.31 634.92 -319.61 -50.3386 Fringe Benefit(FBT) 0 10.87 -10.87 -100 Deferred 39.25 13.91 25.34 182.1711 Earlier years -13.92 -4.81 -9.11 189.3971 340.64 654.89 -314.25 -47.9852PROFIT AFTER TAX 814.22 1272.27 -458.05 -36.0026Balance of profit brought forward from previous year 10.79 15.39 -4.6 -29.8895Transfer from Capital Reserve 0.04 0.04 0 0Transfer from General Reserve Transfer from Debenture Redemption reserve Less:Provision for differential actuarial liability Amount available for appropriation 825.05 1287.7 -462.65 -35.9284APPROPRIATIONS: Interim dividend 96.25 225.51 -129.26 -57.319Proposed final dividend 64.43 96.65 -32.22 -33.3368Tax on dividend 27.38 54.75 -27.37 -49.9909Transfer to General Reserve 630.00 900 -270 -30 818.45 1276.91 -458.46 -35.9039Balance of Profit Carried to Balance Sheet 6.60 10.79 -4.19 -38.8323Earning per share 12.64 19.75 -7.11 -36

decrease by sales in Rs 206.52ie 3.74% but expenditure increased much more by rs 702.01 crores ie 18.9512% which result negatively and the operating profit decreased in Rs 772.3 crores by ie 40.23% and the profit after tax reduced by Rs 458.05crores ie 36.00%. So the operating expenditure must be taken care of to improve profitability of the organization.


2009-2008




Difference in %

INCOME: Gross Sales 5517.52 5474.45 43.07 0.79Less:Excise Duty 423 485.65 -62.65 -12.90Net Sales 5094.52 4988.8 105.72 2.12Finished goods internally consumed/capitalised 26.44 31.65 -5.21 -16.46Accretion/(Decretion)to stock of finished/internally products/work-in-process Other income 495.84 554.77 -58.93 -10.62Total income 5616.8 5575.22 41.58 0.75EXPENDITURE: Decretion/(Accretion)to stock of finished/intermediary products/work-in-process -85.35 -21.85 -63.5 290.62Raw materials consumed 696.76 574.36 122.4 21.31Power & Fuel 1311.55 994.69 316.86 31.86Repairs & Maintenance 250.52 231.54 18.98 8.20Other Manufacturing Expenses 174.98 163.82 11.16 6.81Employee's Remuneration & Benefits 771.06 552.97 218.09 39.44Administrative Expenses 103.33 106.74 -3.41 -3.19Other Expenses 123.1 113.97 9.13 8.01Selling and Distribution Expenses 84.33 84.74 -0.41 -0.48Interest & Financing Charges 3.96 1.51 2.45 162.25Provisions -3.23 -0.35 -2.88 822.86Depreciation 272.44 281.1 -8.66 -3.08Impairment Total expenditures 3703.45 3083.24 620.21 20.12PROFIT FOR THE YEAR 1913.35 2491.98 -578.63 -23.22Add:(less):Prior Period Adjustments(Net) 13.81 -25.39 39.2 -154.39Add:Extraordinary Income(Net)

PROFIT BEFORE TAX 1927.16 2466.59 -539.43 -21.87Less:Provision for Tax Current 634.92 849.8 -214.88 -25.29 Fringe Benefit(FBT) 10.87 10.64 0.23 2.16 Deferred 13.91 -5.31 19.22 -361.96 Earlier years -4.81 -20.06 15.25 -76.02 654.89 835.07 -180.18 -21.58PROFIT AFTER TAX 1272.27 1631.52 -359.25 -22.02Balance of profit brought forward from previous year 15.39 36.12 -20.73 -57.39Transfer from Capital Reserve 0.04 0.04 0 0.00Transfer from General Reserve Transfer from Debenture Redemption reserve Less:Provision for differential actuarial liability Amount available for appropriation 1287.7 1667.68 -379.98 -22.78APPROPRIATIONS: Interim dividend 225.51 289.94 -64.43 -22.22Proposed final dividend 96.65 96.65 0 0.00Tax on dividend 54.75 65.7 -10.95 -16.67Transfer to General Reserve 900 1200 -300 -25.00 1276.91 1652.29 -375.38 -22.72Balance of Profit Carried to Balance Sheet 10.79 15.39 -4.6 -29.89Earning per share 19.75 25.32 -5.58 -22.02

Increase by sales in Rs 105.72 ie 2.12% but expenditure increased much more by rs 620.21 crores ie 20.12% which result negatively and the operating profit decreased in Rs 578.63 crores by ie 23.22% and the profit after tax reduced by Rs 359.25 crores ie 22.00% and the profit after tax reduced by Rs 359.25cures by 22.00%. So the operating expenditure must be taken care of to improve profitability of the organization.

COMPARATIVE INCOME STATEMENT2008-07




Difference in %

INCOME: Gross Sales 5474.45 6514.51 -1040.06 -15.97Less:Excise Duty 485.65 574.32 -88.67 -15.44Net Sales 4988.8 5940.19 -951.39 -16.02Finished goods internally consumed/capitalised 31.65 12.35 19.3 156.28Accretion/(Decretion)to stock of finished/internally products/work-in-process Other income 554.77 401.65 153.12 38.12Total income 5575.22 6354.19 -778.97 -12.26EXPENDITURE: Decretion/(Accretion)to stock of finished/intermediary products/work-in-process -21.85 -15.13 -6.72 44.42Raw materials consumed 574.36 557.59 16.77 3.01Power & Fuel 994.69 851.02 143.67 16.88Repairs & Maintenance 231.54 230.34 1.2 0.52Other Manufacturing Expenses 163.82 152.66 11.16 7.31Employee's Remuneration & Benefits 552.97 392.88 160.09 40.75Administrative Expenses 106.74 85.37 21.37 25.03Other Expenses 113.97 72.55 41.42 57.09Selling and Distribution Expenses 84.74 76.98 7.76 10.08Interest & Financing Charges 1.51 1.12 0.39 34.82Provisions -0.35 5.25 -5.6 -106.67Depreciation 281.1 306.13 -25.03 -8.18Impairment 11 -11 -100.00Total expenditures 3083.24 2727.76 355.48 13.03

PROFIT FOR THE YEAR 2491.98 3626.43 -1134.45 -31.28Add:(less):Prior Period Adjustments(Net) -25.39 -6.03 -19.36 321.06Add:Extraordinary Income(Net) PROFIT BEFORE TAX 2466.59 3620.4 -1153.81 -31.87Less:Provision for Tax Current 849.8 1248.97 -399.17 -31.96 Fringe Benefit(FBT) 10.64 7.03 3.61 51.35 Deferred -5.31 -17.3 11.99 -69.31 Earlier years -20.06 0.32 -20.38 -6368.75 835.07 1239.02 -403.95 -32.60PROFIT AFTER TAX 1631.52 2381.38 -749.86 -31.49Balance of profit brought forward from previous year 36.12 10.49 25.63 244.33Transfer from Capital Reserve 0.04 0.04 0 0.00Transfer from General Reserve 23.04 -23.04 -100.00Transfer from Debenture Redemption reserve Less:Provision for differential actuarial liability -23.04 23.04 -100.00Amount available for appropriation 1667.68 2391.91 -724.23 -30.28APPROPRIATIONS: Interim dividend 289.94 322.15 -32.21 -10.00Proposed final dividend 96.65 161.08 -64.43 -40.00Tax on dividend 65.7 72.56 -6.86 -9.45Transfer to General Reserve 1200 1800 -600 -33.33 1652.29 2355.79 -703.5 -29.86Balance of Profit Carried to Balance Sheet 15.39 36.12 -20.73 -57.39Earning per share 25.32 36.96 -11.64 -31.49

Decrease in sales by Rs 951.39 ie 16.00% on the other hand operating expenditure increasing by Rs 355.48 ie 13.05% which result before tax profit decrease by Rs 1153.81 crores by 31.87%. Again the tax liability decreased by Rs 749.86 crores resultes decrease in after tax profit by Rs 749.86 that 31.49%. So, both decrease in sales and increase in operating expences are reason of lowering the profitability of the organization.

COMMONSIZE STUDY ON Financial positionBALANCE SHEET

Financial year ended 31-3-10,31-3-09 & 31-3-08

COMMON SIZE BALANCE SHEET AS ON 31.03.2010 & 31.03. 2009FINANCIAL YEAR 2010 2009 LIABILITIES Amount(Rs.cr) % Amount(Rs.cr) %Shareholders' s Fund: Share Capital 644.31 5.827606 644.31 6.20Reserves and Surplus 9751.27 88.19754 9125.5 87.81Total shareholders

fund 10395.58 94.02515 9769.81 94.01Loans Funds: 0 Secured loans 0 0 Deferred Tax Liability(Net) 660.59 5.974854 621.35 5.97

Current Liabilities & Provisions Current Liabilities 1849.95 16.73229 1603.4 15.42Provisions 864.98 7.823505 329.84 3.17


TOTAL LIABILITY 11056.17 100 10391.16 100 APPLICATION OF FUNDS Fixed Assets: Gross Block 11017.96 99.6544 9899.84 95.26Less:Depreciation 6181.65 55.91131 5868.3 56.47Less:Impairment 0 Net Block 4836.31 43.74309 4031.54 38.79Fixed Assets awaiting disposal 1.03 0.009316 0.99 0.009Capital work-in progress 2243.40 20.29093 2867.13 27.59

Total fixed asset 7079.71 64.03402 6899.66 66.39Investments 986.75 8.924881 895.93 8.62Current Assets, Loans and Advances: 0

Inventories 944.92 8.54654 841.9 8.10Sundry Debtors 181.78 1.64415 26.5 0.25Cash and Bank Balances 3152.35 28.51213 2869.04 27.60Other Current Assets 145 1.311485 175.35 1.68Loans and Advances 785.59 7.105444 616.02 5.92Total current asset 5209.64 47.11975 4528.81 43.58

TOTAL ASSETS 11056.17 100 10391.16 100

COMMON SIZE BALANCE SHEET AS ON 31.03.2009 & 31.03. 2008FINANCIAL YEAR 2009 2008 LIABILITIES Amount(Rs.cr) % Amount(Rs.cr) %Shareholders' s Fund: Share Capital 644.31 6.20 644.31 5.85Reserves and Surplus 9125.5 87.81 8230.14 74.66

Total shareholders fund 9769.81 94.01 8874.45 80.51

Loans Funds: Secured loans Deferred Tax Liability(Net) 621.35 5.97 607.43 5.51

Current Liabilities & Provisions Current Liabilities 1603.4 15.42 1318.31 11.96Provisions 329.84 3.17 222.57 2.02


TOTAL LIABILITY 10391.16 100 9481.88 100.00 APPLICATION OF FUNDS Fixed Assets: Gross Block 9899.84 95.26 9137.26 82.89Less:Depreciation 5868.3 56.47 5606.31 50.86Less:Impairment Net Block 4031.54 38.79 3530.95 32.03Fixed Assets awaiting disposal 0.99 0.009 0.86 0.01Capital work-in 2867.13 27.59 2334.59 21.18

progress

Total fixed asset 6899.66 66.39 5866.4 53.22Investments 895.93 8.62 115.03 1.04Current Assets, Loans and Advances: Inventories 841.9 8.10 686.65 6.23Sundry Debtors 26.5 0.25 60.65 0.55Cash and Bank Balances 2869.04 27.60 3516.46 31.90Other Current Assets 175.35 1.68 236.47 2.15Loans and Advances 616.02 5.92 541.1 4.91

Total current asset 4528.81 43.58 5041.33 45.74TOTAL ASSETS 10391.16 100 9481.88 100

1. Share holders fund commenting to 81% in 2008, 94% in 2009 and 94% in the year 2010. It suggests that organization is utilizing mainly share holders fund without using outside liability. So, organization financial the business on traditional pattern.

2. Current liability and provisions amounting to 24% of total fund in the year 2010, 19% in 2009 and 14% in financial year 2008.

3. Current Asset position 47% of total fund in 2010, 44% in 2009 and 46% in 2008. So, it reveals that the organization is increasing it’s investment from 47% to 46% during last 3 years on investment on working capital.

4. Fixed Asset investment in 2010 64%, in 2009 66% and in 2008 53%. So, the organization users more funds on fixed Assets from 53% to 64% of total fund during last 3 years.

5. So, organization uses only own resources to finance fixed assets as well as healthy financial position of the company.

COMMON SIZE STUDY ON Financial positionFinancial year ended 31-3-10,31-3-09 & 31-3-08

INCOME STATEMENT

COMMON SIZE INCOME STATEMENT AS ON 31-03-2009 & 31-03-

2008FINANCIAL YEAR 2010 % 2009 %PARTICULARS Rs(crores) Rs(crores) INCOME: Gross Sales 5331.40 5517.52 Less:Excise Duty 255.74 423 Net Sales 5055.66 5094.52 Finished goods internally consumed/capitalised 24.20 26.44 Accretion/(Decretion)to stock of finished/internally products/work-in-process Other income 468.75 495.84 Total income 5548.61 100 5616.8 100EXPENDITURE: Decretion/(Accretion)to stock of finished/intermediary products/work-in-process 21.63 0.40 -85.35 -1.52Raw materials consumed 782.30 14.67 696.76 12.40Power & Fuel 1601.14 30.03 1311.55 23.35Repairs & Maintenance 296.78 5.56 250.52 4.46Other Manufacturing Expenses 210.78 3.95 174.98 3.12Employee's Remuneration & Benefits 843.60 15.82 771.06 13.73Administrative Expenses 115.29 2.16 103.33 1.84Other Expenses 127.59 2.39 123.1 2.19Selling and Distribution Expenses 89.04 1.67 84.33 1.50Interest & Financing Charges 2.28 0.04 3.96 0.07Provisions -3.91 -0.07 -3.23 -0.06Depreciation 319.39 5.99 272.44 4.85Impairment Total expenditures 4405.46 82.61 3703.45 65.94PROFIT FOR THE YEAR 1143.15 17.39 1913.35 34.06Add:(less):Prior Period Adjustments(Net) 11.71 0.21 13.81 0.25Add:Extraordinary Income(Net) PROFIT BEFORE TAX 1154.86 17.60 1927.16 34.31Less:Provision for Tax 0 Current 315.31 5.91 634.92 11.30 Fringe Benefit(FBT) 0 0 10.87 0.19 Deferred 39.25 0.73 13.91 0.25 Earlier years -13.92 -0.26 -4.81 -0.09 340.64 6.38 654.89 11.66

PROFIT AFTER TAX 814.22 11.22 1272.27 22.65

INCOME STATEMENTCOMMON SIZE INCOME STATEMENT AS ON 31-03-2009 & 31-03-

2008FINANCIAL YEAR 2009 % 2008 %PARTICULARS Rs(crores) Rs(crores) INCOME: Gross Sales 5517.52 5474.45 Less:Excise Duty 423 485.65 Net Sales 5094.52 4988.8 Finished goods internally consumed/capitalised 26.44 31.65 Accretion/(Decretion)to stock of finished/internally products/work-in-process Other income 495.84 554.77 Total income 5616.8 100 5575.22 100EXPENDITURE: Decretion/(Accretion)to stock of finished/intermediary products/work-in-process -85.35 -1.52 -21.85 -0.39Raw materials consumed 696.76 12.40 574.36 10.30Power & Fuel 1311.55 23.35 994.69 17.84Repairs & Maintenance 250.52 4.46 231.54 4.15Other Manufacturing Expenses 174.98 3.12 163.82 2.94Employee's Remuneration & Benefits 771.06 13.73 552.97 9.92Administrative Expenses 103.33 1.84 106.74 1.91Other Expenses 123.1 2.19 113.97 2.04Selling and Distribution Expenses 84.33 1.50 84.74 1.52Interest & Financing Charges 3.96 0.07 1.51 0.03Provisions -3.23 -0.06 -0.35 -0.01Depreciation 272.44 4.85 281.1 5.04Impairment Total expenditures 3703.45 65.94 3083.24 55.30PROFIT FOR THE YEAR 1913.35 34.06 2491.98 44.70Add:(less):Prior Period Adjustments(Net) 13.81 0.25 -25.39 -0.46Add:Extraordinary Income(Net) PROFIT BEFORE TAX 1927.16 34.31 2466.59 44.24Less:Provision for Tax

Current 634.92 11.30 849.8 15.24 Fringe Benefit(FBT) 10.87 0.19 10.64 0.19 Deferred 13.91 0.25 -5.31 -0.10 Earlier years -4.81 -0.09 -20.06 -0.36 654.89 11.66 835.07 14.98PROFIT AFTER TAX 1272.27 22.65 1631.52 29.26

1. Total expenditure in financial year ended 31.3.10 was 83%, in financial 31.3.09 it was 66% and in financial year 31.03.08 it was 55%.

2. The resulting profit before tax for the year ended 31.3.2010 was 18%, in 31.3.2009 34% and in 31.3.2008 44%.

3. Tax liability for the year 09-10 was 6%, tax liability for the year ending 31.3.2009 12% of total revenue, in 31.3.2008 15%.So, it controls tax burden from 6% of total fund to 15% during last 3 year.

4. Profit after tax was 12% Profit after tax in the financial year ending 31.3.2009 was 23%, in 31.3.2008 29%.

5. Overall result of profit after tax reduced from 26% to 11% during last 3 year.

6. The decrease in profit after tax is mainly due to increase in operating expenses of the organization which should be looked into to control the same and to increased volume of profit to the organization.

CHAPTER-5

Findings

The financial statement analysis in 2008-09 is relatively high enough as NALCO is not dependent on long-term sources of raising funds.The ratio is decreasing over the period due to increase in current liabilities.

1. The debt-equity ratio indicates that NALCO achieved zero debt

status on 25.03.05 after repayment of all loans.

2. The interest coverage ratio is higher than the requirement. This is an indicative feature for higher safety margin to its lenders on terms of recovering interests.

3. The inventory is continuously increasing throughout the period, which is good because less money is blocked in inventories.

4. The rising debtors turnover ratios shows the decrease in debtors with out hampering the sales.

5. The return on investment in 2005-06 is more convincing and the ratio is higher than that of other years.This is favourable for NALCO.

6. Current Year, Company has increased its production of special grade alumina from 450 to 7450 tones.

Summary; Conclusions and Recommendations

SUMMARY

The importance of financial statement analysis lies in the fact that it presents facts on a comparative basis and enables the drawing of inference regarding the performance of a firm.Analysis is relevant in assessing the performance of a firm in respect of the following aspects:

Liquidity position

Profitability ratio

Last five years comparative balance sheet

Over all profitability

Shareholder’s ratio.

Financial statements contain a wealth of information, which if properly analyzed and interpreted, can provide valuable insights into a firm’s performance and position; analysis of financial statements is of interest to several groups for variety of purposes. The principal tool of financial statement analysis is financial ratio analysis, which essentially involves a study of analysis between various items or groups of terms in financial statements. During the tenure of my study I have taken of following secondary data:

Annual report.

Annual account.

Balance Sheet.

Profit and loss account.

The tools, which are used for the study, are:

Liquidity ratios.

Through tabulation the data are put in the form of tables

SUGGESTIONS/RECOMMENDATIONS

1. NALCO should have control over increase inventory level and other current assets, which should be consistently to forecast sales.

2. The management of NALCO should revise the credit policy and involve in a strategy to remove weakness of credit policy, this may improve control over the collection department.

3. NALCO should follow a trend volume business and should keep required volume of inventory that suits to its forecasted sales so as to give up a high inventory ratio.

4. Since NALCO produces different varieties of products, their profit margin should be evenly balanced, so as to give a sound gross and net profit margin.

5. The management of NALCO may be directed to counter check and

provide additional control over the cost of producing goods. This may improve the operating efficiency.

6. Proper monitoring of accumulating of goods may prove to yield good return on investment.

7. NALCO seems to be upgrading its technology obsolescence from time to time. NALCO requires strategy of expansion and diversification to be evolving as a major competitor in aluminium industry. Thus borrowing of loans may be compulsory for further expansion and diversification. As the interest coverage ratio is sufficiently high, the analyst for NALCO recommends borrowing of funds. This may increase the working capital of NALCO to match with the foreseeing future prospects.

8. Since NALCO is centralized cash managed company as it showed better performance in overall liquidity position, it should open up its avenues in new emerging technology in different products it produces.

9. The export can be improved in calcinated alumina and aluminium standards and sow ingots better than earlier.

10. Company should increase its actual production of rolled products so that it will help to increase net profit of the company.

11. Company must take some steps to sale its rolled product.

CONCLUSION

The “financial statement Analysis’’ plays a vital role in helping the financial manager and top management of company to plan and control their financial structural operations. An efficient analysis would therefore highlight the pitfalls in management in terms of financial matters such as income, expenditure, export and domestic sales , profitability, fund availability, liquidity etc. This gives an idea about controllable and uncontrollable variables. These can be re-examined and integrated to evolve idea, which can give efficient financial decision. A sound financial decision gives the way for higher profitability and performance. It is nothing but a fine-tuning of control system in financial structure.

The suggestions should be emphasize the control system that should be adopted by NALCO. This may prove to be corrective measures for improving the financial structure of NALCO. But the fact remains that the suggestions, which will be accepted an d fully implemented in NALCO, will only be decided by relevant financial system that followed by Nalco and its adaptability in the aluminium complex of NALCO. I would like to conclude that NALCO has travelled long distance in pursuit of excellence in all the areas of its performance, for which it has become a world-class company.

Organization is based on traditional approach on financing total funds that is shareholders fund.

Organization is based on financing it’s working capital on conservative approach.

The organization is consistently improving it’s reserve and surplus which is good sign Of strengthening future financial stabilities.

Operating expenses of organization are to be controlled to improve the profitability of the organization.

Idleness of current assets should be reduced by effective use in operational positions.

REFERENCES

BOOKS :

1. Sharma & Gupta. Financial Management,

Kalyani Publishers,

Ludhiana.

2.I.M Pandey. Financial Management

Vikas Publishing House Pvt. Ltd.,

New Delhi

3. Dr. S.N.Maheshwari. Financial Management Principle and practice

Sultan Chand & Sons,

New Delhi

Annual Report Of NALCO 2009-2010Annual Report Of NALCO 2008-2009 Annual Report Of NALCO 2007-2008Annual Report Of NALCO 2006-2007Annual Report Of NALCO 2005-2006

News Papers

The Economic Times Business Standard Financial Express

WEBSITES:

www.google.com www.nalcoindia.com www.nalco.com www.newsindia.com

ADDENDUM

As we discussed the various ratios we find that in the year 2006-07 it has increased or decreased measurably, we found some reason possibly which would be cause for volatility in ratios subject to theory:

The net profit of the year 2006-07 was increased by 819cr or by 52.43%.

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http://www.nalco.com/

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Net sales were increased to 1053cr or by 21.53%.

Operating profit was increased to 952cr or by 35.33%.

EBIT were increased to 1190cr or by 48.97%.

Net current assets were increased to 1398cr or by 59.31% which is good for the organization.

The debt-equity ratio indicates that NALCO achieved zero debt status on 25.03.05 after repayment of all loans.

65747174 Financial Statement Analysis on Nalco 09 10

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Transcript of 65747174 Financial Statement Analysis on Nalco 09 10