INTRODUCTION

The financial statement provides the basic data for financial performance analysis.

The financial statements provide a summarized view of the financial position and operations

of a firm. Financial analysis (also referred to as financial statement analysis or accounting

analysis) refers to an assessment of the viability, stability and profitability of a business. The

analyst first identifies the information relevant to the decision under consideration from the

total information contained in the financial performance. Therefore, much can be learnt about

a firm from a careful examination of its financial performance as invaluable documents and

performance reports.

The analysis of financial performance is an important aid to financial analysis. They

provide information on how the firm has performed in the past and what is its current

financial position. Financial analysis is the process of identifying the financial strengths and

weakness of the firm from the available accounting data and financial performance. The

analysis is done by establishing relationship between the different items of financial

performance.

The focus of financial analysis is on key figures in the financial performance and the

significant relationship that exists between them. The analysis of financial performance is a

process of evaluating relationship between component parts of financial performance to

obtain a better understanding of the firm’s position and performance.

The first task of financial analyst is to select the information relevant to the decision

under consideration from the total information contained in the financial statement. The

second step involved in financial analysis is to arrange the information in a way to highlight

significant relationships. The final step is interpretation and drawing of inferences and

conclusions. In brief, financial analysis is the process of selection, relation, and evaluation.

NEED OF STUDY

The Financial Performance is mirror which reflects the financial position and

strengths or weakness of the concern. The Non- Banking Financial Company has been

witnessed intense competition from domestic banks and international banks. Every business

needs to view the financial performance analysis.

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The study on effectiveness of operational and financial performance of Sundered

finance limited is conducted to measure the overall performance of company. The financial

analysis strengths the firms to make their best use, and to be able to spot out financial

weakness of the firm to state suitable corrective actions.

This study aims at analyzing the overall financial performance of the company by

using various financial tools like Comparative Analysis, common size statement analysis,

Ratio Analysis, and Cash Flow Analysis.

OBJECTIVE OF THE STUDY

The following are the objectives of the study:

To measure the profitability of the firm.

To measure the managerial efficiency of the firm.

To forecast the future prospects of the firm.

To determine efficiency of utilization of fixed assets.

To evaluate the financial position (both liquidity & solvency).

To know the position of working capital.

To indicate future trends of the items in financial performances.

To analyze the performance of a business by establishing Relationships between the

items of balance sheet and the profit & loss account.

SCOPE OF THE STUDY

Financial performances provide meaningful, useful and valuable information

periodically regarding financial position and further prospects of the business

concern.

Various parties (for management, for the creditors & investors) interested can utilize

the information provided by the financial performances in MADHUCON SUGAR &

POWER LIMITED.

The study was limited to five years for the purpose of carrying out of the analysis.

The data available in the financial analysis have been grouped and arranged properly.

The interpretation stage of accounting process demands the person to posses some

specialized knowledge, specialized skills, analytical abilities, reasoning etc., an

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accountant, who records, classifies and summarizes the transactions of financial

nature will, treats the liabilities as burdens and the assets as strengths of the

organization.

RESEARCH METHODOLOGY

.A research design is the arrangement of conditions for collection and analysis of data

in a manager that aims to combine for collection and analysis of data relevance to the

research purpose with economy in procedure.

SOURCES OF DATA

Data we collected based on two sources.

Primary data.

Secondary data.

Primary data

The Primary data are those information’s, which are collected afresh and for the first

time, and thus happen to be original in character.

In this project the primary data has been collected by directly consulting the manager

Secondary Data

The Secondary data are those which have already been collected by some other

agency and which have already been processed. The sources of Secondary data are Annual

Reports, browsing Internet, through magazines.

1. It includes data gathered from the annual reports of Madhucon sugar and power

Industries limited.

2. Articles are collected from official website of Madhucon sugar and power Industries

limited.

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LIMITATIONS OF THE STUDY

The current study is based mainly on the annual reports and audited accounts as

provided by the company. So the scope of the study falls within limitations of the

accounting practical of the company.

Some information has obtained through oral discussion with the management of the

company. So there might be an element of personal biases.

The current study is mainly concerned with the internal analysis and does not

conclude the external analysis. The data taken for comparison is only for five years

i.e. limited period of time.

One of the main limitations of financial analysis is that it involves analyzing the

financial performances prepared on the basis of historical data and at a point of time.

Therefore, it fails to indicate the future trends of the items of financial performances.

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INTRODUCTION

India has been known as the original home of sugar and sugarcane. Indian mythology

supports the above fact as it contains legends showing the origin of sugarcane. India is the

second largest producer of sugarcane next to Brazil. Presently, about 4 million hectares of

land is under sugarcane with an average yield of 70 tonnes per hectare.

India is the largest single producer of sugar including traditional cane sugar

sweeteners, khandsari and Gur equivalent to 26 million tonnes raw value followed by Brazil

in the second place at 18.5 million tonnes. Even in respect of white crystal sugar, India has

ranked No.1 position in 7 out of last 10 years.

Traditional sweeteners Gur & Khandsari are consumed mostly by the rural population

in India. In the early 1930’s nearly 2/3rd of sugarcane production was utilised for production

of alternate sweeteners, Gur & Khandsari. With better standard of living and higher incomes,

the sweetener demand has shifted to white sugar. Currently, about 1/3rd sugarcane production

is utilised by the Gur & Khandsari sectors. Being in the small scale sector, these two sectors

are completely free from controls and taxes which are applicable to the sugar sector.

The advent of modern sugar processing industry in India began in 1930 with grant of

tariff protection to the Indian sugar industry. The number of sugar mills increased from 30 in

the year 1930 - 31 to 135 in the year 1935-36 and the production during the same period

increased from 1.20 lakh tonnes to 9.34 lakh tonnes under the dynamic leadership of the

private sector.

The era of planning for industrial development began in 1950-51 and Government

laid down targets of sugar production and consumption, licensed and installed capacity,

sugarcane production during each of the Five Year Plan periods. The targets and

achievements during various plan periods are given below.

Sugars are a major form of carbohydrates and are found probably in all green plants.

They occur in significant amounts in most fruits and vegetables. There are three main simple

sugars sucrose, fructose and glucose. Sucrose is in fact a combination of fructose and glucose

and the body quickly breaks down into these separate substances.

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The Need for Energy

All energy stored in food is derived originally from the sun and it is made by green

plant life. The sun's energy acts upon the green chemical "chlorophyll" in the leaves of plants

to produce sugars and starches from the carbon-dioxide in the atmosphere and the water from

the roots by a process known as Photosynthesis. These carbohydrates (starches and sugar)

acts as a plants food and energy supply. The energy need of human body is largely dependent

on the carbohydrates that are derived from plants.

A Balanced Diet

A balanced diet can come from a variety of different foods, calculated to give the

desired levels of carbohydrates, proteins, fats, vitamins and minerals. Nutritional scientists

advocate that carbohydrates should provide at least 50% of over energy requirements.

History

The discovery of sugarcane, from which sugar as it is known today, is derived dates

back unknown thousands of years. It is thought to have originated in New Guinea, and was

spread along routes to Southeast Asia and India. The process known for creating sugar, by

pressing out the juice and then boiling it into crystals, was developed in India around 500 BC.

Its cultivation was not introduced into Europe until the middle-ages, when it was

brought to Spain by Arabs. Columbus took the plant, dearly held, to the West Indies, where it

began to thrive in a most favorable climate.

It was not until the eighteenth century that sugarcane cultivation was began in the

United States, where it was planted in the southern climate of New Orleans. The very first

refinery was built in New York City around 1690; the industry was established by the 1830s.

Earlier attempts to create a successful industry in the U.S. did not fare well; from the late

1830s, when the first factory was built. Until 1872, sugar factories closed down almost as

quickly as they had opened. It was 1872 before a factory, built in California, was finally able

to successfully produce sugar in a profitable manner. At the end of that century, more than

thirty factories were in operation in the U.S.

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Manufacturing Process and Technology

Sugar (sucrose) is a carbohydrate that occurs naturally in every fruit and vegetable. It

is a major product of photosynthesis, the process by which plants transform the sun's energy

into food. Sugar occurs in greatest quantities in sugarcane and sugar beets from which it is

separated for commercial use. The natural sugar stored in the cane stalk or beet root is

separated from rest of the plant material through a process known as refining.

For sugarcane, the process of refining is carried out in following steps:

Pressing of sugarcane to extract the juice.

Boiling the juice until it begins to thicken and sugar begins to crystallize.

Spinning the crystals in a centrifuge to remove the syrup, producing raw sugar.

Shipping the raw sugar to a refinery where it is washed and filtered to remove

remaining non-sugar ingredients and color.

Crystallizing, drying and packaging the refined sugar

Beet sugar processing is similar, but it is done in one continuous process without the

raw sugar stage. The sugar beets are washed, sliced and soaked in hot water to separate the

sugar -containing juice from the beet fiber. The sugar-laden juice is then purified, filtered,

concentrated and dried in a series of steps similar to cane sugar processing.

For the sugar industry, capacity utilization is conceptually different from that

applicable to industries in general. It depends on three crucial factors the actual number of ton

of sugarcane crushed in a day, the recovery rate which generally depends on the quality of the

cane and actual length of the crushing season.

Since cane is not transported to any great extent, the quality of the cane that a factory

receives depends on its location and is outside its control. The length of the crushing season

also depends upon location with the maximum being in south India.

Sugarcane in India is used to make either sugar, khandsari or gur. However, sugar

products produced worldwide are divided into four basic categories : granulated, brown,

liquid sugar and invert sugar.

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Granulated: Granulated sugar is the pure crystalline sucrose. It can be classified into seven

types of sugar based on the crystal size. Most of these are used only by food processors and

professional bakers. Each crystal size provides unique functional characteristics that make the

sugar appropriate for the food processor's special need.

Sugar Industry in India

Sugar consumption rate is highest in India as shown in the statistics received from USDA

Foreign Agricultural Service. However, as per production is concerned, India has notched up

2nd position following Brazil, the largest sugar producer in the world.

The Indian sugar industry uses sugarcane in the production of sugar and hence maximum

number of the companies is likely to be found in the sugarcane growing states of India

including Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Andhra Pradesh.

Uttar Pradesh alone accounts for 24% of the overall sugar production in the nation and

Maharashtra's contribution can be totaled to 20%.

There are 453 sugar mills in India. Co-operative sector has 252 mills and private sector has

134 mills. Public sector boasts of around 67 mills.

Beginning of Sugar Industry in India

Sugar is made from sugarcane, which was arguably discovered thousands of years ago

in New Guinea. From there, the route was traced to India and Southeast Asia. It was India

which began producing sugar following the process of pressing sugarcane to extract juice and

boil it to get crystals.

It was in 1950-51 the government of India made serious industrial development plans

and set the targets for production and consumption of sugar. It projected the license and

installment capacity for the sugar industry in its Five Year Plans.

Types of Sugar Industry in India

The sugar industry can be divided into two sectors including organized and

unorganized sector. Sugar factories belong to the organized sector and those who produce

traditional sweeteners fall into unorganized sector. Gur and khandsari are the traditional

forms of sweeteners.

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Manufacturing Process followed in Sugar Industry in India

Several steps are usually followed to produce sugar. These steps can be mentioned as

below:

Extracting juice by pressing sugarcane

Boiling the juice to obtain crystals

Creating raw sugar by spinning crystals in extractors

Taking raw sugar to a refinery for the process of filtering and washing to discard

remaining non-sugar elements and hue

Crystallizing and drying sugar

Packaging the ready sugar

Machinery Suppliers for Sugar Industry in India

Some of the suppliers that offer cutting-edge machines to the companies involved in

sugar industry of India are:

Sakthi Sugars Ltd

Sri Sujay Engineering Products

Sri Vijayalakshmi Industries

Murthy Industries

Parveen Perforaters & Allied Industries

Aeromen Engg Co

Kamla Foundry & Workshop

Tinytech Plants

Baba Vishwakarma Engineering Co. (P) Limited

About Andhra Pradesh Sugar Industry

Andhra Pradesh (AP) abounds in maximum number of private sector sugar companies in

India along with Tamil Nadu and Karnataka. In the year 1933-34, vacuum process was

adopted for sugar manufacturing in the state. Previously, the state government was planning

to support Cooperative sector as against other sectors. However, with passing time, a

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considerable change in the policy was noticed. Letters of Intent (L.O.I.) were given to the

deserving entrepreneurs including 20 LOIs to the private sector companies.

This gradually resulted in major benefits for the state government as well as for India

as a whole. Today, Andhra Pradesh sugar industry ranks 3rd in terms of recovery and 5th in

terms of cane crushing. As per production capacity is concerned, Andhra Pradesh stands at

the position 5 in India.

The agricultural laborers who do sugarcane harvesting and cultivation are employed

in the sugar industry in Andhra Pradesh. Today, the unprecedented growth of this industry in

the state has led to the consolidation of village resources and has facilitated communication,

employment and transport system here.

Types of Sugar Industry in Andhra Pradesh

Andhra Pradesh sugar industry can be classified into two parts such as organized

sector including sugar mills and unorganized sector including manufacturers of gur (jaggery)

and khandsari. The unorganized sector is often referred to as the rural industry. The rural

industry plays major role in the level of production.

Directorate of Sugar and Commissionerate of Cane in Andhra Pradesh

Belonging to Industries and Commerce Department, the Directorate of Sugar and

Commissionerate of Cane has been vested with the power to guide and deal with the sugar

factories in Andhra Pradesh. It is the responsibility of the department to encourage sugarcane

farmers and to help this developing industry contribute effectively towards Gross State

Domestic Product (GSDP). The department also takes care of the technological

advancements of the industry.

Some of the major players in the Andhra Pradesh sugar industry are listed below:

Bhagwathi Khandasari Sugar Mills

Bhagwati Khandsari Sugar Mills

Bhagwati Khandasari Sugar Mills

N C S Sugars Ltd

The Kirlampudi Sugar Mills Ltd

Tirumala Khandasari Udyog

List of Sugar factories in AP & TELANGANA

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Factory Name Village Nearest CityEmpee Sugars & Chemicals Ltd. NAYUDUPET  Ganpati Sugar Industries Ltd., Fasalwadi / Kulbugoor Sangareddy

Gayatri Sugars LimitedADLOOR YELLAREDDY

Kamareddy

GMR Industries Limited Sankili, Regidi  GSR Sugars Limited MAAGI MAAGIK.C.P. Sugar & Industries Corporation Ltd

Vuyyuru  

K.C.P. Sugar & Industries Corporation Ltd

LAKSHMIPURAM  

Kakatiya Cement Sugar & Industries Ltd

P E R U V A N C H A Khammam

KBD Sugars & Distilleries Ltd MudipapanapalliP U N G A N U R - 517 247

Madhucon Sugars LimitedRAJESWARAPURAM

Khammam

Navabharat Ventures Ltd S A M A L K O T VisakhapatnamNCS Sugars Limited Latchayyapeta  Nizam Deccan Sugars Limited MOMBAJIPALLY DeccanSarita Sugars Limited Prabhagiripatnam  Sree Rayalseema Sugar & Energy Ltd Ponnapuram NandyalSri Sarvaraya Sugars Ltd CHELLURU ChelluruSri Venkateswara Co-op. Sugar Fct.Ltd

GAJULAMANDYAM Tirupati

The Andhra Sugars Ltd- Unit -II TaduvaiKakinada, Visakhapatnam

The Chittoor Co-Operative Sugars Ltd

  Chittoor

The Chodavaram Co-op Sugars Ltd GOVADA ChodavaramThe Cuddapah Co-op Sugars Ltd Doulathapuram Cuddapah

The Kovur Co-op Sugar Factory LtdPOTHIREDDIPURAM

Kovur

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STATE-WISE AREA, PRODUCTION AND YIELD OF SUGARCANE (CANE)  2014-15  STATE AREA 

(M.HECTS)

% OF TOTAL AREA

PRODUCTION (M.TONNES)

% OF TOTAL PRODUCTION

YIELD (KGS/HECT)

% COVERAGE UNDER IRRIGATION (1995-96)

(1) (2) (3) (4) (5) (6) (12)ANDHRA PRADESH

0.19 4.8 13.73 5 72263 95

ASSAM 0.03 0.8 1.29 0.5 43000 -BIHAR 0.11 2.8 5.04 1.8 45818 22.4GUJARAT 0.17 4.3 11.84 4.3 69647 100HARYANA 0.14 3.5 7.55 2.7 53929 97.2KARNATAKA 0.31 7.8 28.33 10.3 91387 100MADHYA PRADESH

0.06 1.5 2.11 0.8 35167 97.3

MAHARASHTRA

0.46 11.6 38.18 13.8 83000 100

ORISSA 0.02 0.5 1.14 0.4 57000 100PUNJAB 0.13 3.3 7.33 2.7 56385 94.9RAJASTHAN 0.02 0.5 1.16 0.4 58000 96.4TAMIL NADU 0.32 8.1 35.68 12.9 111500 100UTTAR PRADESH

1.96 49.4 119.97 43.4 61209 51.4

WEST BENGAL

0.03 0.8 1.83 0.7 61000 70.9

OTHERS 0.02 0.5 1.07 0.4 - -ALL-INDIA 3.97 100 276.25 100 69647 88.5

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INTRODUCTION

The Palair cooperative sugars Ltd, Was registered on 12th march, 1976 for

establishment of vacuum pan sugar factory of 1250 tones, crushing capacity per day at

Rajeswarapuram in Palair lake layout area in Thirumalaypalem taluk of Khammam District.

The factory is located in economically backward area what soil is suitable for on cane with

easy transport; the area of operation of the factory consists of 108 villages situated with in

radius of 35 Kms. From the factory. It has recently localized so far a total area of 10932 acres

for cultivation of cane around the factory. The area has been distributed into three blacks in

ordered to irrigation of soil. The total cost of the project is about Rs. 10-00 crosses. The

crushing capacity of the project is 1.62,500 Metric tones in a annulment 1, 38, 125 Quintals

sugar production in a year.

Product : Sugar

Bi-products : Bagasse

Molasses

Filter cake

Bagasse is used as firewood to run Boilers

Molasses is used in the manufacturing of Distillers like Alcohol and spirits, Ethanol etc.,

Filter cake is used as manure for the agriculture.

Objectives of the Company

Manufacturing of white crystal sugar

To promote the agriculturists in that particular area

To utilize the harvest of sugar cane in that area

Improving the cultivation methods through giving better support to the farmers.

Issuing loans to farmers for productive and other similar purposes

To encourage self help thrift and co-operations among members

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To undertake such other activities as are incidental and conducive to the development

of sugar cane, sugar and allied industries.

Progress in the post-dependence period before 1932, there were only 32 factories

producing about 1.6 lack tonns of sugar. India had to import annually 6 lakhs tonns of sugar.

The industry was granted tariff protection in 1932. As a result, production rose to 10 lakhs

tonns by 1937 and the number of operating factories to 137.

During the 1950's production of sugar was a little more than one million tonns the

government provided incentives for higher production and the output progressively increased

to nearly 4 million tonns in 1970-71, about 12 million tonns in 1990-91 and 16 million tonns

in 1995-96. [But declined to 12.7 million tonns during 1996-97]

INCLUDE EXPORTS:

Because of frequent controls decontrols, and re-controls by the government and

artificial regulation of market supplies by the industry and because of many administrative

blunders, sugar prices rose to record height and shot up to between 8/- o 11/- per kg in

different parts of the country in the eighties (80's), consequently, the govt, re-introduced the

dual price mechanism with partial control under this system the govt, fixed ratio of pay and

free sale sugar quota. The ratio was 45:55. It was received to 28:72. The increase in the free

sale sugar quota to 7.2% was to give boost to sugar production by sugar mills. The levy sugar

is sold to consumers thought fair price shops at lower price.

The free sale sugar quota is sold by sugar factories at higher prices in the open

market. The production and supply of sugar has been quite comfortable during the last two

decades. Sugar output during 1990-91 was nearly 12 million tones and registered a record

high 15.3 million tonns during 1996-97 while production of sugar was steadily rising,

consumption too-had been rising but at a lower rate. As a result the stocks at the lose of the

sugar year was increasing 2.2 million tonns in the beginning of 1990-91 and 7.1 million tonns

in 1996-97. Despite huge supplies stocks the country was unable to export much because the

price of Indian sugar was much higher than international price.

Sugar scam in 93-94 during 1991-93 and 1993-94 there was and unexpected problem

for the Indian sugar industry. Because have climatic and the unfavorable conditions, average

under sugarcane came down considerably specially in Maharastra and production of sugar

declined to 10.6 and 9.8 million on tonns respectively.

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At one time the govt was confident that the supply position and price of sugar had

sky-rocketed (Rs. 18 to Rs 20 per kg.) at the end of 1993-94 and in the first quarter of 1994-

95. Thus forcing the govt, to import large quantity of sugar just the mere information that

India was entering the international price of sugar to the great disadvantage of India. This was

referred to as the sugar muddle or the sugar scam.

The sugar industry was deli censed in August in 1998. However, this announcement

was not received with much enthusiasm by the sugar units. This is partly due to the fact that

delicenscement the with withdrawal of incentives that free licensing policy had provided and

partly because even in the post deli censing scenario, a number of controls remain. The post

deli censing controls one as follows.

Policy of sugarcane fixed by the govt.

Most stated enforce there own sugarcane price (SAP)

The SAP has to be paid to farmers within 15 days of purchase.

30% of sugar production has to be farmers within 15 days purchase.

30% of sugar production has to be sold to govt. at officially -determined below cost

prices.

The sale of the remaining 70% is controlled through a system of monthly

quotas fixed by

The centers.

Sugar miles obliged to sell at least 45% of the quota every for night.

30% levy sugar also subject to monthly release orders.

Price and movement of molasses controlled by state government.

Export of sugar subject to the approval of the centra! government.Export of molasses

has to be cleared by state govt.

PROBLEMS OF SUGAR INDUSTRIES:

Problems of mounting losses.

Fixation of high sugarcane prices by the state govt.

The question of minimum economic size.

Old machinery.

Low sugar recovery.

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Failure to follow a consistent policy.

Completion from cheaper import.

SUGAR LICENSING POLICY:

The govt. Of India issues periodically guidelines for licensing new sugar factories and for

expansion of existing sugar factories. The guidelines (announced in July 1990) where

designed to give a boost to the sugar industry.

Licenses for new factories would be issued subject to the provision that there is no sugar

factory with in a radius of 15 km.

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

per day.

New licensed would be issued on the condition that cane prices would be payable on the

basis of sucrose content of the sugarcane.

Preference in licensing is to given to proposals from the co-operative and the public

sector rather than from the private sector.

Licenses are to be given liberally for the manufacture of the industrial alcohol through the

conversion of molasses; this is to boost production and export of industrial alcohol.

SUGAR DEVELOPMENT FUND:

The sugar development fund was setup in 1982. Under the sugar less act and is funded

by transfer of proceeds of sugar was imposed at the rate of Rs. 14 per quintal on sugar

produced by all sugar factories. The fund is utilized for advancing loans on short terms for the

revalidation and modernization of sugar industry and for development of sugar cane in the

sugar factory area. The sugar development fund makes grants for undertaking research

projects for developments of sugar industry.

The fund is also defray expenditure for the purpose of building have and maintenance

of buffer stocks of sugar with a view to stabilizing its price. The total allocation credited to

the fund til! 1996 Amount to Rs 1,6607- crores. The fund has so far sanctioned loans

amounting to Rs. 960/- crores for sugarcane development and for

modernization/rehabilitation of sugar factories.

Government sugar industry to study the development and growth of sugar industry in

India vis-a-vis other sugar producing countries and suggest modifications amendments or

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repeal of any existing laws and controls in order to increase production and efficiency, the

govt, of India had constituted a high-powered committee under the chairmanship of

"B.B.Mahajan". The "Mahajan committee" submitted its report in April 1998.

Major recommendations of the committee are:

Complete control of sugar in order to provide level paying field to the domestic industry

vis-a-vis imported sugar,

Discontinuation of supply of sugar through the public distribution system (P.D.S) for

plugging the leakages on account of P.D.S. sugar finding way to open market.

Setting of a sugarcane pricing board to determine every September the advance price

(S.M.P) for the ensuring crushing season.

Minimum distance of 15 km. Between an existing sugar mill and a new sugar mill for

which license is to be issued in order to ensure viability of both the mills.

Continue of import of sugar under open general license (O.G.L) in order to product the

consumers against any unusual rise in prices.

The sugar industry is essential an Agro Industry and therefore it should be centrally

located within the vast area of cane cultivations otherwise it wilt increase the cost of

transport. It should be established at a place where Agronomic conditions favored to the

development of sugarcane plantation and where climatic conditions rainfall, land fertility and

irrigation facilities as such as to ensure burnt supply of sugar cane with high yield. As per the

norms of the govt, the industry should have basic infrastructure facilities such as:

Transport:

The transport system by road any by vial should be satisfactory so that there is ability to

supply abundant quantity of sugar cane and other items such as machinery, sulpher, line, coal

and heavy chemicals used in manufacturing process.

Market:

The factory should preferable by near commercial enter for large-scale

consumption as well as export.

Water availability:

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Portable water good for boilers as well as dirking should be available in large form

arrives clam and or from sub-soil.

Surroundings:

Surroundings should be healthy for employees and worker men's the location should

not be near marshy lands or in slum area.

Market for the disposal of lye products.

Disposal of effluents offer treatment in early way

Labor availability.

Lands should be free from mills dates etc....it is good for health and Storing.

Layout of factory:

Factory area should be sufficient land for the factory colony officer.

Boilers may be in the straight line with mills.

Energy station must be jute clear.

Sufficient space must be near to left in the machinery layout for future Expansion.

Juice weighting must be near to mills house.

Cane yard must be very big.

Every employ has been paid Rs.2 & matching contribution of Rs.5/- from the

management. Both contributions shall be sent to the labor department for every year

i.e. 31" Dec. subsequently the labor department has been sanction the welfare

scholarship to the employee's children.

If any employee is suffering chronic deceives, the labor department to be sanction

more than 10.00/- to the employ on production of medical certificates from the

doctors.

The management is providing drinking water to employ in various places of the

factory.

Suppurate toilets to employee

The management provides safety belts to the employ who are working more then 12

feets.

The management provided crlouses to the electrical staff to avoid the short circuits.

The management provided some important slogans in factory premises to avoid the

dangerous accidents.

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The management provided content facility by giving subsidy rates.

The management provided separate rest rooms to the employ & workers for the

purpose of dining.

The management provided primary school up to 5lh class to the employees children in

the colony.

The management & employ conduct the sports and also cultural activities on 15th

Aug. every year to improve co-ordination & co-operation among the employees.

WELFARE MEASURES TO THE EMPLOYES:

Providing quarters (as per their category)

Shoes for the purpose of safety measures

Two pair of uniform for every year

If any employees met with the accident the management immediately give the first aid

and take the patient to Khammam Govt. Head Quarters hospitals & provide 2 persons

to assist them for during the hospitalization.

As per the orders of the labor department i.e. assists commissioner of labor & deputy

commissioner & deputy commissioner we have to pay the compensation to the person

who met with the accident.

The factory management has been sanctioned towards the future expenses an amount

of 500/- to the person who died artificially or accidentally.

Their cases have been recommended to the labor department for the compensation as

per the factory act.

The management every year has been sanction productivity linked incentive (bonus)

to employee for every year depending upon the percentage of the recovery.

The labor department has been introduced the filarial fund to the employee & worker

of the factory industry

The final step in sugar recovery is allowed to take place by cooling is crystallizes.

Separate the molasses from the surface of crystals for removal much as possible leaving only

a very thin form of lose molasses adhering

The sugar leaving the centrifugal is hot at 60 -70 deg. C and contains 0.5 to 1 .5-% moisture,

and as such it, conveyors are of their design

screw or scroll conveyor

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gross hopper conveyor

belt or salt conveyor

The graders is used for obtaining the sugar from consists of mixture of netegogenuous

crystals and need to be well seined and graded before it is marketed after grading , 3 sized of

sugar will come out big size , small size, medium size

The final molasses is one of bi-products, which separates from the sugar in the final

stage is used in manufacturing of alcohol an spirits etc.,

The under slimed principle involved in the multiple effect evaporation is that direct

steam is used only once and the vapor produced by its boiling juice is repeatedly used for

boiling the juice in the succeeding vessels. The hot clarified juice C 15 o brick heating tubes

and will overflow apart into the canal for the outlet called unsulphured syrup (having bricks

X 60 degrees) the percentage of evaporation is 60-15/60X100=75%

The evaporation or concentration of clarified juice is the separation of water by

evaporation process at temperature between 60 deg. And 130 deg., normally conducted as

multiple evaporation in 4 to 5 steps, the condensed water contains small of these imparities in

the condensed water becomes more important as the factory is use high pressure water

becomes more important as the factory is use high pressure in the steam generation plants.

The condensation contains oxygen, co2, so2 ammonia, organic acids, adlcyas and

methyl and other alcohol. The vapor line juice heater installed between the last vessel of the

evaporator and condenser esan heat the cold juice to about 10 c rise this method of vapor

heating gives the highest saving because it recones in the direct way heal which would other

wise be lost in waste water it saves more cooling water, steam and fuel then mixed juice is

heated to the same temperature by vapor bled from the preceding russels.

The loss of juice condenses, vapor is called entertainment, the entertainment of

particles from the evaporator can give heavy loss of sugar. After evaporation the subsequent

process is changing the thick juice into crystal form through the vacuum pans.

The juice canes out from first mills called primary juice similarly the juice comes out

from last mill is called miced juice the juice will be analyzed at the final baggage which is

one of bi product is analyzed for moisture percent & sugar percent and sugar cane should not

exceed 1.1% as fees the standard from

20

The juice extracted by the mills is passed through a metal striver to remove suspended

impurities the operation is carried out near the mill to that the strainer substance consisting of

quest-quest readily returned to the mill intermediate carrier for subsequent extraction of the

juice.

Cane + water = juice + baggage.

Baggage is used as fuel to run the boilers juice is normally weighted as mixes juice it

can be takes to obtain find the correct specific gravity followments can be used for this

application. The juice comes from raw juice tanks after weightment will go to raw juice

heaters there it will be heated up to 60-70c and then it goes to juice sulfuric and there it will

be mixed with milk of lime and so, gas and after wards it is again heated up to 100c at juice

heaters in order to obtain are paid setting and separations of the precipitants out of the two

types heaters.

The sulfur furnace is made of cost iron and the body of the furnace is cane a water

focker for cooling the large pipe through which the funnel escape to the gas main called the

sublimation is also having water jacket the object of this sublimetor is also to catch a large

part of the sublimed sulfur. After, the juice is sucked up by vacuum and filtration are mixed

with the mixed juice the reside comes from that called "filter cake" and it is sent out as one

bi-product and which is used as fertilizer.

Required Machinery Supplied by These machineries are bought from the companies,

which are given below.

M/s Buckar Wolt India ltd., (Pune)

The Nijam Sugar Factory, sugar machinery division, Nagarjuna Sagar.

BHELLtd.,Hyd

Bellies India Ltd., Calcutta.

ISCEC John Thomson water tube boiler.

PRODUCTION PROCESS:

21

In the beginning of production process, sugar canes are loaded into a container, cane

carrier carries them into cane kicker. It helps to maintain a uniform level of sugar canes. Cane

cutters cut the whole cane into small pieces and even cut the layer of the cut cane.

Those small pieces are send into crusher. By crushing that small pieces of sugar cane

more juice

Will be extract. The mill entrant the more juice which goes to process of

manufacturing of sugar. There will be 4 mills, in each mill there are three volues. The

prepared cane to 1SI mill and there it will be crushed. The product canes from discharge

rollers of 1st mill is called primary juice. Life wise the primary baggage passes through

remaining 3 mills.either hot water or cold water or both are used as macuration water, which

is used at the 4lh mill for extraction of more juice.

Vacuum pans

Condensation plant

Water cooling system

Cooling, curing and drying

Sugar dryers

Gardens

Molasses weighment

Steam power plant (boilers)

Chimney

Power plant

Miscellaneous items

Sugar muter

Sugar elevators

Diesel generation

Final molasses storage tank

Furnace of oil storage tank

Baggage elevator

CONTENTS (OR) RAW MATERIALS OF SUGAR:

22

Sugar cane and

Chemical

LIST OF CHEMICALS WHICH IN VQLVES IN THE PRODUCTION PROCESS:

Burnt lime

Sulfur (so 2)

Sodium exhamata phosphate

Viscosity reducer

Anti sealant

Descalant

Hydrogen peroxide (H2O2)

LIST OF MECHINERY, WHICH INVOLVES IN THE PRODUCTION PROCESS

Cane carrier

Cane kicker

Cane levelers

Cane cutter

Crusher

Mills

Juice wiggling scale

Juice Heaters

Sulfur burner

Filter presser

Carbonation plant

Evaporation plant

Syrup treatment plant

SUGAR MANUFACTURING PROCESS

23

Sugar occurs in greatest quantities in sugarcane and sugar beet from which it in

separated for commercial use. The process of refining is carried out in the following steps. (2)

Processing of sugarcane to extract the juice.

Boiling the juice until it begins to thicken and the sugar begins to crystallize.

Spinning the crystals in a centrifuge to remove the syrup, producing taw sugar.

Shipping the raw sugar to a refinery where it is washed and filtered to remove.

Remaining non-sugar ingredients and color.

Crystallizing drying and packaging the refined sugar.

SHARE CAPITAL:

Government:

1. No. Of shares: 88.568

2. Value of each share: Rs. 500.00

3. Total share value: Rs.442.84 lakhs

Other Members:

1. No. Of shares: 14.190

2. Value of each share: Rs. 500.00

3. Total share value: Rs.70.95 lakhs

The factory had commenced its trial crush during 1983-84 and commercial crush during 1984

- 85 season.

COMPUTERIZATION:

There are 3 computers in the office for the purpose of some official works and office

information like giving permits, salaries to employees and workers etc, but the management

did not computerize the company only one person is there to operate the computers at the

office timings 9 to 6 clock.

MADHUCON SUGAR INDUSTRY LIMITED

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During the year 2001-02 MADHUCON sugars limited was incorporated to purchase

and takeover the sick sugar mill namely the plair co-operative sugars limited. Established in

1982. At the time of taking over, the company had net profit in the first year of operation

itself.

Later the company’s name was changed as “MADHUCON SUGAR INDUSTRIES

LIMITED”. This company is one of the companies in Group Company of MADHUCON

projects limited which is having diversified activities of construction of infrastructures

projects like roads, buildings, flyovers, granites, sugar and allied products.

MADHUCON GROUP is working on projects in various core sectors of nation as

importance like highways, irrigation, producing the construction materials, power houses, all

of which, no need to are so essential now for the all round infrastructures development of the

nation.

ABOUT MADHUCON SUGAR INDUSTRIES LTD:

Madhucon sugar and power industries limited was registered on 5th November 2002,

which was purchased under private scheme with capacity of 1250 tones per day. The factory

is located at Rajeswarapuram village in khammam district. The factory and service area

consists of 207 villages situated in radius of 35 kms. And the company has 5.577 registered

cane formers.

Madhucon sugar and power industries is one of the group companies of infrastructure

projects like roads, bridges, canals buildings, flyover, granites, sugar and allied products.

The group turnover is around 600 cores an d earning reasonable profits. The present

market price of MADHOCON PROJECTS LIMITED share of rupees 200 each is coating

around rupees 300.

History :

Madhucon Projects Limited, Hyderabad, the flagship company of Madhucon Group was

established in 1983. It was converted into a Private Limited Company in 1990 and became a

Public Limited listed Company in 1995. We acquired a truly wide and solid base of

experience in major areas of industrial and infrastructure construction- Highways, Irrigation,

Property Development etc.

25

THE FOLLOWING ARE BOARD OF DIRECTORS OF COMPANY

The company also purpose to setup now project for the production of alcohol/ethanol

from molasses and cereal gains with installed capacity of 65KLPD.

REVIEW OF OPERATION:

During the year under review, our company crushed 147315.741 MTS (Previous

period 259114.156 MTS) of sugarcane and produced 1,09,450 Qts (Previous period 156737

Qtls) sugar, 7170.670 MTs (Previous Period 11999.67 M.Ts) Molasses and achieved the

turnover of Rs. 1921.18 Lakhs (Previous period 3243.08 Laksh). After providing depreciation

of Rs. 129.97 Lakhs (Previous period Rs. 146.97 Lakhs) net loss is Rs. 77.44 lakhs (Previous

year profit of Rs. 4.68 Lakhs). The company could able to crush only 1,47,315.741 MT,

though the cane was available to the extent of 2,70,000 MT for the season. The company sent

the balance cane to other nearby sugar Mills for crushing. This was happened because of

Mechanical problems of the existing sugar mil. The Turnover of the company has come down

because of not selling of sugar and Molasses stocks because of adverse market conditions.

Your directors are hopeful for the improved situation from the ensuing Financial Year.

Directors are happy to inform that the new sugar Mill with the crushing capacity of

3500 M. Ts per day has been completed in all respects and commissioned successfully during

the year 2012-11.

Directors would like to inform that the cane availability for the season 2013-12 will

be around 70,000 M. Ts. This is happening because of shifting of farmers from sugar cane to

paddy crop because of higher realizations. However your Directors are initiated various

developmental works by way of extending financial assistance and subsidies in the form of

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DESIGNATION NAME

Chairman

Executive director

Director

Auditors

SRI NAMA SEETHAIAH

SRI NAMA KRISHNAIAH

SRI K. SRINIVASA RAO

KOTTA & COMPANY

CHARTERED ACCOUNTS

cash and cane seed at free of cost to the cultivators and also providing financial assistance for

digging wells, providing PVC pipes, Fertilizers, Weedicides, cane seeds etc to improvise the

cane cultivation area. Your Directors are hopeful of improved cane availability to the extent

of 5, 00,000 M, Ts per annum during the next 3 to 4 years.

Directors are also happy to inform that the 20 MW Co-Gen plant will likely to be

commissioned by September, 2013 and the company has entered into power purchase

Agreement with A.P Transco for a short period of 2 Months. After the operations of the

power plant are stabilized and achieved the targeted rate of production, the company is

proposing to sell power on long term basis with PTS India Limited, because of higher price

realizations. Once the power plant is commissioned with the rated capacity your Directors are

confident of achieving better financial performance during the year 2013-12.

Though the financial tie-up has been completed for 65 KLPD Distillery plant, the

implementation work for the plant has not yet been started. The company has obtained

certificate for Certificate for Establishment for Distillery plant form Government of Andhra

Pradesh and likely to get certificate For Manufacturing of Distillery from prohibition and

Excise department, Government of Andhra Pradesh. The project implementation work is

likely to start from November 2014 and expected its commercial operations by July 2015.

EMPLOYEE RELATIONS:

The relations with the employees continue to be cordial. Our Directors express their

appreciation for the dedicated services of the Employees and officers of the company for

fulfilling the objectives and attaining the goals of the company.

None of the employees of the company was in receipt of remuneration, which in the

aggregate exceeded the limits specified under sub-section (2A) of section 217 of the

companies Act, 1956.

Management team:

Founder : Sri Nama Nageswara Rao

Sri  N. Krishnaiah, Whole Time Director

27

Sri N. Seethaiah, Director

Sri S. Vaikuntanathan, Director

Promoters

Madhucon Infra Ltd. , a subsidiary of Madhucon Projects Ltd.

N. Seetaiah & Associates

Vision

To become a leading power generation company delivering sustainable and quality

power to the nation.

Mission

To establish higher capacity power plants of excellence, utilizing  the state-of-the-art

technology, process  and  efficient  project management  methods.

Consistently deliver quality power to customers and become a partner of choice.

Cultivate a culture of sustainability and growth in  all operations  of the company.

Sustain professional competence at all levels through  continuous  training.

Commitment to preserve environment and caring  for the community.

Divisions

To facilitate concentrated working and fast expansion, Madhucon has set up 7

Operating Divisions.

BOT Projects

Highways & Airports

Irrigation

Hydel Power

Property Development

Water Resources

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Overseas Projects

Joint ventures & consortiums partners

Sinohydro Corporation, Beijing, China (a US$2 Billion company) specializing in Water

Resources Projects   (Madhucon-Sinohydro JV)

Binapuri Sdn Bhd, Malaysia, experts in Highways and Property Development

   (Madhucon-Binapuri JV)

Kanchanjunga Constructions, Nepal, a leading Construction Company

   (Madhucon-Kanchanjunga JV)

Special strengths:

We are well equipped for infrastructure construction, particularly in the areas of

Expressways and Toll Roads; we have built hundreds of kilometers of Roads, including

National and State Highways and Expressways. Equally noteworthy are our projects in the

irrigation, property development and railway sectors.

Future outlook:

Madhucon Projects Limited is one of the top players in India in the construction

engineering sector. Madhucon desires to participate in a big way in the Property

Development sector as well. With the increasing impetus being given by the Government of

India in its yearly budget for infrastructure development, Madhucon aspires to bag several

prestigious projects.

Madhucon is also studying the overseas markets and keenly watching the

developments with a view to make an entry into the world markets at an appropriate time.

Group of Companies

Madhucon Group

Madhucon Projects Limited

Madhucon Infra Limited

Madhucon Granites

Madhucon Sugar & Power Industries Limited

Simhapuri Energy Limited

PT Madhucon Indonesia

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PT Madhucon Sriwijaya Power

INTRODUCTION

Financial Performance is the process of managing the financial resources, including

accounting and financial reporting, budgeting, collecting accounts receivable, risk

performance, and insurance for a business.

30

The financial performance system for a small business includes both how you are

financing it as well as how you manage the money in the business.

In setting up a financial performance system your first decision is whether you will

manage your financial records yourself or whether you will have someone else do it for you.

There are a number of alternative ways you can handle this. You can manage everything

yourself hire an employee who manages it for you keep your records in-house, but have an

accountant prepare specialized reporting such as tax returns or have an external bookkeeping

service that manages financial transactions and an accountant that handles formal reporting

functions. Some accounting firms also handle bookkeeping functions. Software packages are

also available for handling bookkeeping and accounting.

Bookkeeping refers to the daily operation of an accounting system, recording routine

transactions within the appropriate accounts. An accounting system defines the process of

identifying, measuring, recording and communicating financial information about the

business. So, in a sense, the bookkeeping function is a subset of the accounting system. A

bookkeeper compiles the information that goes into the system. An accountant takes the data

and analyzes it in ways that give you useful information about your business. They can advise

you on the systems needed for your particular business and prepare accurate reports certified

by their credentials. While software packages are readily available to meet almost any

accounting need, having an accountant at least review your records can lend credibility to

your business, especially when dealing with lending institutions and government agencies.

Setting up an accounting system, collecting bills, paying employees, suppliers, and

taxes correctly and on time are all part of running a small business. And, unless accounting is

your small business, it is often the bane of the small business owner. Setting up a system that

does what you need with the minimum of maintenance can make running a small business

not only more pleasant, but it can save you from problems down the road.

The basis for every accounting system is a good Bookkeeping system. What is the

difference between that and an accounting system? Think of accounting as the big picture of

how your business runs -- income, expenses, assets, liabilities -- an organized system for

keeping track of how the money flows through your business, keeping track that it goes

where it is supposed to go. A good bookkeeping system keeps track of the nuts and bolts --

the actual transactions that take place. The bookkeeping system provides the numbers for the

31

accounting system. Both accounting and bookkeeping can be contracted out to external firms

if you are not comfortable with managing them yourself.

Even if you outsource the accounting functions, however, you will need some type of

Recordkeeping Systems to manage the day-to-day operations of your business - in addition to

a financial plan and a budget to make certain you have thought through where you are headed

in your business finances. And, your accounting system should be producing Financial

Performance. Learning to read them is an important skill to acquire.

Another area that your financial performance system needs to address is risk. Any

good system should minimize the risks in your business. Consider implementing some of

these risk performance strategies in your business. Certainly, insurance needs to be

considered not only for your property, office, equipment, and employees, but also for loss of

critical employees. Even in businesses that have a well set up system, cash flow can be a

problem.

There are some tried and true methods for Managing Cash Shortages that can help

prevent cash flow problems and deal with them if they come up. In the worst case you may

have difficulties meeting all you debt obligations. Take a look at Financial Difficulties to

learn more about ways to manage situations in which you have more debt than income.

It is possible you may even be at the a point where you want to sell the business or

simply close it and liquidate assets. There are financial issues involved for these

circumstances too. So, be certain that you know what steps you need to take in order to

protect yourself financially in the the long run.

Clearly, financial performance encompasses a number of crucial areas of your

business. Take time to set them up right. It will make a significant difference in your stress

levels and in the bottom line for your business.

Financial Planning

Financial planning is often thought of as a way to manage debt, but a good financial

plan really is a way to make certain that you have financial security throughout your life.

Many small business owners consider their business as their investment in their future, but

that is a huge risk to take. As any economist will tell you, diversification is the only sure way

32

to create security in the long run. Your business is one stream of income. Putting together a

financial plan that allows for multiple streams of income is what provides you security in the

longer term.

The essential components of a good financial plan are investing, retirement planning,

insurance, borrowing and using credit, tax planning, having a will, and ensuring the right

people receive your assets. Financial planning is the process of meeting your life goals

through the proper performance of your finances. Life goals can include buying a home,

saving for your child's education or planning for retirement.

The financial planning process involves gathering relevant financial information,

setting life goals, examining your current financial status and coming up with a plan for how

you can meet your goals given your current situation and future plans.

There are personal finance software packages, magazines and self-help books to help

you do your own financial planning. However, you may decide to seek help from a

professional financial planner if

you need expertise you don't possess in certain areas of your finances. For example, a

planner can help you evaluate the level of risk in your investment portfolio or adjust

your retirement plan due to changing family circumstances.

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

yourself.

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

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

major illness.

you feel that a professional adviser could help you improve on how you are currently

managing your finances.

you know that you need to improve your current financial situation but don't know

where to start.

A financial planner is someone who uses the financial planning process to help you

figure out how to meet your life goals. The planner can take a "big picture" view of your

33

financial situation and make financial planning recommendations that are right for you. The

planner can look at all of your needs including budgeting and saving, taxes, investments,

insurance and retirement planning. Or, the planner may work with you on a single financial

issue but within the context of your overall situation. This big picture approach to your

financial goals may set the planner apart from other financial advisers, who may have been

trained to focus on a particular area of your financial life.

In addition to providing you with general financial planning services, many financial

planners are also registered as investment advisers or hold insurance or securities licenses

that allow them to buy or sell products. Other planners may have you use more specialized

financial advisers to help you implement their recommendations. With the right education

and experience, each of the following advisers could take you through the financial planning

process. Ethical financial planners will refer you to one of these professionals for services

that they cannot provide and disclose any referral fees they may receive in the process.

Similarly, these advisers should refer you to a planner if they cannot meet your financial

planning needs.

Accountant

Accountants provide you with advice on tax matters and help you prepare and submit

your tax returns to the Internal Revenue Service. All accountants who practice as Certified

Public Accountants (CPAs) must be licensed by the state(s) in which they practice.

Estate Planner

Estate planners provide you with advice on estate taxes or other estate planning issues

and put together a strategy to manage your assets at the time of your death. While attorneys,

accountants, financial planners, insurance agents or trust bankers may all provide estate

planning services, you should seek an attorney to prepare legal documents such as wills,

trusts and powers of attorney. Many estate planners hold the Accredited Estate Planner (AEP)

designation.

Financial Plan

34

Many financial planners have earned the Certified Financial Planners certification, or

the Chartered Financial Consultant (ChFC) or Personal Financial Specialist (CPA/PFS)

designations. Financial planners can take you through the financial planning process.

Insurance Agent

Insurance agents are licensed by the state(s) in which they practice to sell life, health,

property and casualty or other insurance products. Many insurance agents hold the Chartered

Life Underwriter (CLU) designation. Financial planners may identify and advise you on your

insurance needs, but can only sell you insurance products if they are also licensed as

insurance agents.

Investment Adviser

Anybody who is paid to provide securities advice must register as an investment

adviser with the Securities and Exchange Commission or relevant state securities agencies,

depending on the amount of money he or she manages. Because financial planners often

advise people on securities-based investments, many are registered as investment advisers.

Investment advisers cannot sell securities products without a securities license. For that, you

must use a licensed securities representative such as a stockbroker.

Stock broker

Also called registered representatives, stockbrokers are licensed by the state(s) in

which they practice to buy and sell securities products such as stocks, bonds and mutual

funds. They generally earn commissions on all of their transactions. Stockbrokers must be

registered with a company that is a member of the National Association of Securities Dealers

(NASD) and pass NASD-administered securities exams.

The government does not regulate financial planners as financial planners instead; it

regulates planners by the services they provide. For example, a planner who also provides

securities transactions or advice is regulated as a stockbroker or investment adviser. As a

result, the term "financial planner" may be used inaccurately by some financial advisers. To

be sure that you are getting financial planning advice, ask if the adviser follows the six steps.

The Financial Planning Process Consists of the Following Six Steps

35

1. Establishing and defining the client-planner relationship

The financial planner should clearly explain or document the services to be provided

to you and define both his and your responsibilities. The planner should explain fully

how he will be paid and by whom. You and the planner should agree on how long the

professional relationship should last and on how decisions will be made.

2. Gathering client data, including goals

The financial planner should ask for information about your financial situation. You

and the planner should mutually define your personal and financial goals, understand

your time frame for results and discuss, if relevant, how you feel about risk. The

financial planner should gather all the necessary documents before giving you the

advice you need.

3. Analyzing and evaluating your financial status

The financial planner should analyze your information to assess your current situation

and determine what you must do to meet your goals. Depending on what services you

have asked for, this could include analyzing your assets, liabilities and cash flow,

current insurance coverage, investments or tax strategies.

4. Developing and presenting financial planning recommendations and/or

alternatives

The financial planner should offer financial planning recommendations that address

your goals, based on the information you provide. The planner should go over the

recommendations with you to help you understand them so that you can make

informed decisions. The planner should also listen to your concerns and revise the

recommendations as appropriate.

5. Implementing the financial planning recommendations

You and the planner should agree on how the recommendations will be carried out.

The planner may carry out the recommendations or serve as your "coach,"

36

coordinating the whole process with you and other professionals such as attorneys or

stockbrokers.

6. Monitoring the financial planning recommendations

You and the planner should agree on who will monitor your progress towards your

goals. If the planner is in charge of the process, she should report to you periodically

to review your situation and adjust the recommendations, if needed, as your life

changes.

Best Practices When Approaching Financial Planning

Set measurable goals.

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

Re-evaluate your financial plan periodically.

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

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

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

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

tax planning.

Don't confuse financial planning with investing.

Don't expect unrealistic returns on investments.

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

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

working with a financial planner are as much your responsibility as they are those of the

planner.

To achieve the best results from your financial planning engagement, you will need to

be prepared to avoid some of the common mistakes by considering the following advice

Set measurable financial goals

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

For example, instead of saying you want to be "comfortable" when you retire or that you

37

want your children to attend "good" schools, you need to quantify what "comfortable" and

"good" mean so that you will know when you've reached your goals.

Understand the effect of each financial decision

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

example, an investment decision may have tax consequences that are harmful to your estate

plans. Or a decision about your child's education may affect when and how you meet your

retirement goals. Remember that all of your financial decisions are interrelated.

Re-evaluate your financial situation periodically

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

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

birth, house purchase or change of job status. Revisit and revise your financial plan as time

goes by to reflect these changes so that you stay on track with your long-term goals.

Start planning as soon as you can

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

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

developing good financial planning habits such as saving, budgeting, investing and regularly

reviewing your finances early in life, you will be better prepared to meet life changes and

handle emergencies.

Be realistic in your expectations

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

your life goals. It cannot change your situation overnight it is a lifelong process. Remember

that events beyond your control such as inflation or changes in the stock market or interest

rates will affect your financial planning results.

Realize that you are in charge

38

If you're working with a financial planner, be sure you understand the financial planning

process and what the planner should be doing. Provide the planner with all of the relevant

information on your financial situation. Ask questions about the recommendations offered to

you and play an active role in decision-making.

LIMITATIONS (STUDY OF FINANCIAL POSITION)

1. ONLY INTERIM REPORTS

Only interim performance don’t give a final picture of the concern. The data given in

these performance is only approximate. The actual position can only be determined when the

business is sold or liquidated.

2. DON’T GIVE EXTRA POSITION

The financial performance are expressed in monetary values, so they appear to give

final and accurate position. The values of fixed assets in the balance sheet neither represent

39

the value for which fixed assets can be sold nor the amount which will be required to replace

these assets.

3. HISTORICAL COSTS

The financial performance are prepared on the basis of historical costs or original

costs. The value of assets decreases with the passage of time current price changes are not

taken into account. The performance are not prepared keeping in view the present economic

conditions. The balance sheet loses the significance of being an index of current economic

realities.

4. ACT OF NON MONITORY FACTORS IGNORED

There are certain factors which have a bearing on the financial position and operating

results of the business but they don’t become a part of these performance because they can’t

be measured in monetary terms. Such factors may include in the reputation of the

performance.

NO PRECISION

The precision of financial statement data is not possible because the performance deal

with matters which can’t be precisely stated. The data are recorded by conventional

procedures followed over the years. Various conventions, postulates, personal judgments etc.

Types of Ratios

Ratio Analysis has been divided mainly into 3 ratios they are

1) Liquidity Ratios

Liquidity refers to the ability of the concern to meet its current obligations as and

when these become due. The short - term obligations are met by realizing amounts from

current, floating or circulating assets. The current assets should either be liquid or nearly

liquid. If current assets can pay off current liabilities, then liquidity position will be

satisfactory.

Current Ratio

40

The current ratio is calculated by current assets by dividing current liabilities. Current

assets include cash and those assets which can be converted into cash with in a year such a

marketable securities, debtors, inventories.

Current liabilities include creditors, bills payable, accrued expenses, short term bank

loan, income tax liability and long-term debt maturing in current years. The current ratio is a

measure of the firm short-term solvency. Its is test of quantity not quality. The current ratio is

a crude and quick measure of firm’s liquidity.

Quick Ratio

Quick ratio is calculated by dividing liquid assets by current liabilities. Liquid assets

are obtained by subtracting inventories from current assets. This establishes the relation

between quick or liquid assets and current liabilities. An asset is said to be liquid if it can be

converted into cash with in short period of time with out loss of value cash in hand, cash at

bank are liquid assets. Quick assets are book debts and marketable securities.

Absolute Liquid Ratio or Cash Ratio

Cash ratio is calculated by dividing cash and marketable securities by current

liabilities. Trade investment or marketable securities are equivalent of cash therefore they

may be included in computation of cash ratio.

Inventory Turnover Ratio

It establishes relationship between cost of goods sold during a given period and the

average amount of inventory held during that period. It refers to the no. Of times that the

stock is turned over on an average in a year. This ratio assists the financial manager in

valuating inventory policy. Inventory turnover ratio is also known as stock velocity,

indicating whether inventory is effectively used or not.

Debtors Turnover Ratio

The ratio is calculated by dividing credit sales by average debtors. This indicates the

number of times average debtors turned over during the year.

Creditors Turnover Ratio

41

The term creditor includes, trade creditors and bills payable. Incase the details

regarding credit purchases, opening and closing balances of creditors are not available, then

instead of credit purchases, total purchases may be taken and in place of average creditors,

the balance may be substituted.

Leverage Ratios

To judge the long-term financial position of the firm, financial leverage or capital

structure, ratios are calculated. These ratios indicate mix of funds provided by owners and

lenders. As a general rule, there should be an appropriate mix of debts and owners equity in

financing the firm’s assets. The process of magnifying shareholder’s return through the

employment of debt is called financial leverage & trading on equity.

Debt Equity Ratio

This is calculated by dividing total debts by networth. This relationship describes the

lender contribution for each rupees of the owner’s contribution is called debt equity ratio.

This is also known as external equity ratio. This ratio is calculated to analyze the efficiency

of capital structure of the firm.

Proprietary Ratio

It is a variant of debt equity ratio. If establishes relationship between the proprietors

or shareholders funds and the total assets of the firm.

Interest Coverage Ratio

The ratio is calculated by dividing EBIT by interest and loan installment. This is

known as “Time interest earned ratio” This ratio measures the debt servicing.

Capacity of a firm in so far as fixed interest on long-term loan is considered. Since

taxes are computed after interest, interest coverage ratio is calculated in relation to before tax

earnings.

2) Profitability Ratios

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The primary objective of a business under taking is to earn profits. Profits to the

performance are the test of efficiency and measurement of control. Generally profitability

ratio’s are calculated either in relations to sales or in relation to investment.

Gross Profit Ratio

This ratio is calculated by dividing gross profit by sales. It shows profit relative to

sales after the deductions of productive cost, and indicates the relations between production

and selling price.

Net Profit Ratio

This ratio is calculated by dividing net profit by sales. Net profit is obtaining when

operating expenses; interest and taxes are subtracted from year’s gross profit. So, net profit

ratio is measured by dividing profit after taxes by sales. This ratio also indicates the firm’s

capacity to stand with adverse economic conditions. This ratio is an overall measure of firm’s

ability to turn each rupee sales into net profit.

Return on Total Assets Ratio

This ratio is calculated by dividing net profit after tax by total assets. Total assets are

the sum of all fixed assets and current assets and investment. The conventional approach of

calculating the return on total assets is to divide profit after tax by total assets.

Fixed Assets Ratio

This ratio is calculated by dividing cost of goods sold by fixed assets. Assets rise to

generate sales therefore a firm should manage its assets efficiently to maximize sales. If the

firm wishes to know its efficiency of utilizing fixed assets then it has to go for fixed assets

ratio.

Methods or Devices of Financial Analysis

The analysis and interpretation of financial performance is used to determine the

financial position and results of operations as well. A number of methods or devices are used

to study the relationship between different performance. An effort is made to use those

devices, which clearly analyze the position of the enterprise. The following methods of

analysis are generally used

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1. Comparative performance

2. Trend Analysis

3. Common – size performance

4. Funds Flow Analysis

5. Cash Flow Analysis

6. Ratio Analysis

7. Cost – Volume – Profit Analysis

1. Comparative Performance

The comparative financial performance are performance of the financial position at

different periods of time. The elements of financial position are shown in a comparative form

so as to give an idea of financial position at two or more periods. Any statement prepared in a

comparative form will be covered in comparative performance. From practical point of view,

generally, two financial performance (balance sheet and income statement) are prepared in

comparative form for financial analysis purposes. Not only the comparison of the figures of

two periods but also be relationship between balance sheet and income statement enables an

in depth study of financial position and operative results. The comparative statement may

show

(i) Absolute figures (rupee amounts).

(ii) Changes in absolute figures i.e., increase or decrease in absolute figures.

(iii) Absolute data in terms of percentages.

(iv) Increase or decrease in terms of percentages.

Comparative Balance Sheet

44

The comparative balance sheet analysis is the study of the trend of the same items,

group of items and computed items in two or more balance sheets of the same business

enterprise on different dates. The changes in periodic balance sheet items reflect the conduct

of a business. The changes can be observed by comparison of the balance sheet at the

beginning and at the end of a period and these changes can help in forming an opinion about

the progress of an enterprise. The comparative balance sheet has two columns for the data of

original balance sheets. A third column is used to show increases in figures. The fourth

column may be added for giving percentages of increases or decreases.

2. Trend Analysis

The financial Performance may be analyzed by computing trends of series of

information. This method determines the direction upwards or downwards and involves the

computation of the percentage relationship that each statement item bears to the same item in

the base year.

The information for a number of years is taken up an one year, generally the first year,

is taken as a base year. The figures of the base year are taken as 100 and trend ratios for other

years are calculated on the basis of base year.

3. Common-Size Performance

The Common-size performance, balance sheet and income performance are shown in

analytical percentages. The figures are shown as percentages of total assets, total liabilities

and total sales. The total assets are taken as 100 and different assets are expressed as a

percentage of the total similarly, various liabilities are taken as a part of total liabilities.

These performance are also known as component percentage or 100 percent

performance because very individual item is stated as a percentage of the total 100. The

shortcoming in comparative performance and trend percentages where changes in items could

be compared with the totals has been covered up. The analyst is able to assess the figures in

relation in total values. The common-size performance may be prepared in the following way

The totals of assets and liabilities are taken as 100.

The individual assets are expressed as a percentage of total assets i.e., 100 and

different liabilities are calculated in relation to total liabilities.

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4. Funds Flow Analysis

The funds flow statement is a statement, which shows the movement of funds and is

report of the financial operations of the business undertaking. It indicates various means by

which funds were obtained during a particular period and the ways in which these funds were

employed. In simple words, it is a statement of sources and applications of funds.

Meaning and Definition of Funds Flow Performance

Funds flow statement is a method by which we study changes in the financial position

of business enterprises between beginning and ending financial performance dates. It is a

statement showing sources and uses of funds for a period of time.

I.C.W.A. in Glossary of Performance Accounting terms defines funds flow

performance as A Statement prospective or retrospective, setting out the sources and

applications of the funds of an enterprise. The purpose of the statement is to indicate clearly

the requirement of funds and how they are proposed to be raised and the efficient utilization

and application of the same.

Limitations of Funds Flow Statement

The funds flow statement has a number of uses, however, it has certain limitations

also they are

1. It should be remembered that a funds flow statement is not substitute of an income

statement of a balance sheet. It provides only some additional information as regards

changes in working capital

2. It cannot reveal continues changes.

3. It is not an original statement but simply arrangement of data given in financial

performance.

4. It is essential historic in nature and projected funds flow statement cannot be prepared

with much accuracy.

5. Changes in cash are more important and relevant for financial performance than the

working capital.

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5. Ratio Analysis

The ratio analysis is one of the most powerful tools of financial analysis. It is the

process of establishing and interpreting various ratios. It is with the help of ratios that the

financial performance can be analyzed more clearly and decisions made from such analysis.

Meaning

A ratio is a simple arithmetical expression of the relationship of one number to

another. It may be defined as the indicated quotient of two mathematical expressions.

The following are the four steps involved in the ratio analysis.

1. Selection of relevant data from the financial performance depending upon the objective of

the analysis.

2. Calculation of appropriate ratios from the above data.

3. Comparison of the calculated ratios with the ratios of the same firm in the past, or the

ratios developed from projected financial performance or the ratios of some other firms or

the comparison with ratios of the industry to which the firm belongs.

4. Interpretation of the ratios.

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DATA ANALYSIS AND INTERPRETATION

CURRENT RATIO

CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES

Yr. Current Assets Current Liabilities Ratio

2009-2010 38,73,44,261 15,81,19,445 2.44

2010-2011 60,95,08,473 9,42,04,564 6.47

2011-2012 42,48,51,427 12,54,72,620 3.38

2012-2013 7,20,21,081 1,60,65,621 4.48

2013-2014 9,13,28,208 4,71,17,199 1.93

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

1

2

3

4

5

6

7

Current Ratio

Interpretation:

As a Rule, a current ratio of 2:1 (or) more is considered satisfactory. When compared

to 2011, there is an increase in provision for income tax and sundry creditors in liabilities

account and also there is an increase in advance tax paid and sundry debtors account.

Further there is a decrease in bank and cash balance. This has resulted in the decrease

in the ratio. But still the ratio is above the benchmark level of 2:1which shows the

comfortable position of the firm.

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QUICK RATIO

QUICK RATIO = QUICK ASSETS / QUICK LIABILITIES

Yr. Quick Assets Quick Liabilities Ratio

2009-2010 14,74,56,317 15,81,19,445 0.93

2010-2011 27,89,98,1760 9,42,04,564 2.96

2011-2012 17,68,81,461 2,54,72,620 6.94

2012- 2013 7,20,21,081 1,60,65,621 4.48

2013-2014 91,32,28,208 4,71,17,199 19.38

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

2009-2010 2010-2011 2011-2012 2012- 2013 2013-20140

5

10

15

20

25

Quick Ratio

Interpretation:

When compared to 2011, there is an increase in provision for income tax and sundry

creditors in liabilities account and also there is an increase in advance tax paid and sundry

debtors account.

Further there is a decrease in bank and cash balance. This has resulted in the decrease

in the ratio.

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DEBTORS TURNOVER RATIO

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

Yr. Net sale Avg.Debtors Ratio

2009-2010 2,90,34,089 1,02,08,744 2.84

2010-2011 3,63,09,834 2,83,44,133 1.28

2011-2012 5,38,99,084 5,89,02,926 0.91

2012-2013 7,27,28,759 3,22,66,565 2.25

2013-2014 5,55,50,649 3,78,56,420 1.46

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.5

1

1.5

2

2.5

3

Turnover Ratio

Interpretation:

The higher the value of debtors turnover, the more efficient the performance of credit.

There is a decrease in 2012 as compared to 2011 and this is due to the decrease in PLF bonus

to an extent of Rs.60,00,000/- i.e. lesser income from services.

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NET PROFIT RATIO

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

Yr. Net profit after tax Income from service Ratio

2009-2010 2,90,34,089 1,27,93,761 2.26

2010-2011 3,63,09,834 2,11,23,474 1.71

2011-2012 5,38,99,084 1,51,25,942 3.56

2012-2013 7,27,28,759 1,69,29,227 4.29

2013-2014 5,55,50,649 1,82,59,580 3.04

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.51

1.52

2.53

3.54

4.55

NET PROFIT RATIO

Interpretation:

This ratio is the overall measure of the firm’s ability to turn each rupee of income from

services in net profit. If the net margin is inadequate the firm will fail to achieve return on

shareholder funds. High net profit ratio will help the firm survive in the fall of income from

services, rise in cost of production (or) declining demand.

The decrease in net profit ratio in 2012 is only because of decrease in PLF bonus to an

extent of Rs.58, 00,000/-.

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RETURN ON TOTAL ASSETS RATIO

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

Yr. Net profit after tax Total assets Ratio

2009-2010 1,27,93,761 5,49,50,020 0.23

2010-2011 2,11,23,474 7,85,62,171 0.26

2011-2012 1,61,25,942 8,84,38,107 0.18

2012-2013 1,69,29,227 8,91,58,391 0.18

2013-2014 1,82,59,580 10,63,85,201 0.17

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.05

0.1

0.15

0.2

0.25

0.3

RETURN on Total Assets Ratio

Interpretation:

It is the ratio between net profit and total assets. This ratio indicates the return on

total assets in the form of profits.

The reason for decrease in ratio is because of increasing trend in total assets at the

same time decrease in net profit in 2012.

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FIXED ASSETS RATIO

FIXED ASSETS RATIO = FIXED ASSETS /CAPITAL EMPLOYED

Yr. Fixed Assets Capital Employed Ratio

2009-2010 2,90,34,089 2,05,88,705 1.41

2010-2011 3,63,09,834 1,99,98,020 1.81

2011-2012 5,38,99,084 1,86,72,761 2.88

2012-2013 7,27,28,759 1,71,37,310 4.24

2013-2014 5,55,50,649 1,50,56,993 3.68

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.5

1

1.5

2

2.5

3

3.5

4

4.5

FIXED Assets Ratio

.Interpretation:

Fixed assets are used in the business for producing the goods to be sold. This ratio

shows the firms ability in generating sales from all financial resources committed to total

assets. The ratio indicates the amount of sale for one rupee investment in fixed assets.

Increase in ratio indicates good trend and further it indicates optimal utilization of the

services

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OPERATING PROFIT RATIO

OPERATING PROFIT RATIO = OPERATING PROFIT / INCOME FROM SERVICES

Yr. Operating Profit Income from services Ratio

2009-2010 1,87,93,761 2,90,34,089 0.64

2010-2011 3,39,78,152 3,63,09,834 0.93

2011-2012 2,53,84,599 5,38,99,084 0.47

2012-2013 2,72,71,086 7,27,28,759 0.37

2013-2014 3,15,86,718 5,55,50,649 0.56

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.10.20.30.40.50.60.70.80.9

1

Operating Profit Ratio

Interpretation:

It establishes the relationship between cost of goods sold and other operating expenses

on one hand and the sales on the other. The two basic elements of this ratio are operating cost

and net sales. Decrease in this ratio is due to the additional maintenance fee paid as per the

new contract entered.

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WORKING CAPITAL TURNOVER RATIO

WORKING CAPITAL TURNOVER RATIO = SALES / NETWORKING CAPITAL

Yr. Sales Net Working capital Ratio

2009-2010 2,90,34,089 2,82,96,650 1.02

2010-2011 3,63,09,834 5,06,70,199 0.71

2011-2012 5,38,99,084 3,78,80,730 1.42

2012-2013 7,27,28,759 5,59,55,460 1.29

2013-2014 5,55,50,649 4,42,11,009 1.25

.

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

WORKING Capital Turnover Ratio

Interpretation:

Initially, the ratio is high due to greater income from services and less capital. The

company has fewer ratios due to increase in its capital by issue of equity shares. It maintained

a balanced capital and income in the year 2012.

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CAPITAL TURNOVER RATIO

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

RESERVES AND SURPLUS)

Yr. NET SALE Capital employed Ratio

2009-2010 2,90,34,089 4,88,90,745 0.59

2010-2011 3,63,09,834 6,76,79,219 0.53

2011-2012 5,38,99,084 5,33,01,834 1.01

2012-2013 7,27,28,759 7,02,31,061 1.03

2013-2014 5,55,50,649 5,64,73,652 0.98

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

0.2

0.4

0.6

0.8

1

1.2

CAPITAL Turnover Ratio

Interpretation:

Initially, the ratio is high due to greater income from services and less capital. The

company has fewer ratios due to increase in its capital by issue of equity shares. It maintained

a balanced capital and income in the year 2012.

12. Reserves & Surplus to Capital Ratio

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

Yr. Reserves and surplus Capital Ratio

2009-2010 4,68,10,825 20,79,720 22.51

2010-2011 6,55,99,299 20,79,920 31.53

2011-2012 3,45,82,554 1,87,19,280 1.84

2012-2013 5,15,11,781 1,87,19,280 2.75

2013-2014 3,77,54,372 1,87,19,280 2.01

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

5

10

15

20

25

30

35

Reserves & Surplus to Capital Ratio

Interpretation:

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

RATIO OF CURRENT ASSETS TO FIXED ASSETS

57

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

Yr. Current Assets Fixed Assets Ratio

2009-2010 3,43,61,315 2,05,88,705 1.66

2010-2011 5,85,74,151 1,99,98,020 2.92

2011-2012 6,97,65,364 1,86,72,761 3.73

2012-2013 7,20,21,081 1,71,37,310 4.20

2013-2014 9,13,28,208 1,50,56,993 6.06

2009-2010 2010-2011 2011-2012 2012-2013 2013-20140

1

2

3

4

5

6

7

RATIO OF CURRENT ASSETS TO FIXED ASSETS

Interpretation

In 2011, the company has more fixed assets than current assets. Afterwards it

increased its current assets more and more and increasing its working capital ability also.

Decrease in fixed assets is less due to its depreciation.

FINDINGS

58

This cash ratio implies the ready cash availability in the company.

Distribution of dividends has taken place in the year 2012 and hence the decrease in

the ratio when compared to the ratio is 2012.

The higher the value of debtors turnover, the more efficient the performance of credit.

There is a decrease in 2012 as compared to 2011 and this is due to the decrease in

PLF bonus to an extent of Rs.60,00,000/- i.e. lesser income from services.

This ratio is the overall measure of the firm’s ability to turn each rupee of income

from services in net profit.

If the net margin is inadequate the firm will fail to achieve return on shareholder

funds.

High net profit ratio will help the firm survive in the fall of income from services, rise

in cost of production (or) declining demand.

The decrease in net profit ratio in 2012 is only because of decrease in PLF bonus to an

extent of Rs.58, 00,000/-.

59

SUGGESTIONS

The profitability of the company is increasing every year continuously from the years

with the turnover increasing.

The profitability as compared to the turnover is going on balance with the

administrative and other costs.

The current ratio of the company as discussed is always much high than the standard

norms, which is also not favorable for the company, this means that the big amount of

money is not being utilized effectively as most of the cash is tied up in debtors and

inventories.

The company should improve upon its credit policies and holding of inventories, as

the company can save the cost of working capital by reducing the same. 

The company should also review the opportunities and threats to its business in the

long – term perspective.

The company is diversifying in various aspects. While the only threat to the company

in this field is from unorganized sector producing cheaper and as the liability of excise

duty is not there resulting in low cost of production.

This can be overcome by the company by maintaining its quality standards, as the

consumer now - a - days are ready to pay for the quality products. 

60

CONCLUSITION

Comparative Performance

Comparative balance sheet revels that there was no change in share capital as there

was no fresh issue of shares. It can be seen that the company is heading in the path of

progress and prosperity during the recent years, as this can be justified by the financial

figures of the company. The company has generated the funds by raising unsecured long-term

loans. Company has consistently invested in the purchase of fixed assets. The current assets

are always more than the current liabilities, which show that the liquidity position of the

company is sound. 

Common Size Performance

Comparison of the common size balance sheet reveals that the proportion of the share

capital as part of total assets has decreased as part of total assets. An increasing and

decreasing trend was maintained in the case of reserves and surplus. Similar trend could be

viewed in case of fixed assets and consistency was maintained in case of investments.

Current liabilities have increased till 2011-2012 and after that declined in 2012 – 11 and

again increased in 2013 – 12 and 2014 – 13 and once again declined in the year 2013 – 12

and 2014 – 13. A similar position can be viewed in case of current assets.  

 Ratio Analysis

After going through the depth analysis it can be drawn that the company is heading

towards the path of progress and prosperity during the recent years, as this can be justified by

the financial figures and from the fact of the company is growing. After the analytical study

of financial performance Leo Labs Ltd., and interpretation of various ratios, it can be

concluded that the liquidity position of the company is better. From the interpretation of

current ratio, it has been observed that the current ratio of the company was above standards,

which shows the liquidity position is better. The quick ratio, gives a picture of the

organization ability to pay its short – term liabilities through short – term assets.

 

61

 

BIBILOGRAPHY

BOOKS AUTHORS

An overview on financial statements and ratio

analysis

Chidamaram Ramesh Kumar, Anbumani N

financial statement analysis George Foster

Financial Management Prasanna Chandra

Financial Management I.M. Pandey

Research Methodology CR Kothari

Financial Management S.N Maheswari

REFERRED WEBSITES

www.googlefinance.com

www.madhucon.com

www.madhucongroups.com

www.accountingformanagement.com

www.accountingmaster.com

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