Financial Statement Analysis1

INTRODUCTION
The analysis of financial statements is a process of evaluating the various

financial statements like balance sheets, annual reports the relationship between
component parts of financial statements to obtain better understanding of the firm’s
position and performance. The first task of the financial analyst is to select the
information relevant to the decision under consideration from the total information
container in the financial statement. The second step is to arrange the information in
a way to highlight significant relationship. The final step is interpretation and
drawing of inferences and conclusions. “Financial analysis is the process of
selection, relation and evaluation”.
Financial statements summarize the economic consequences of the business

activities of the enterprise and events that influence its performance. They show the
financial position of the enterprise at the end of the reporting period, and the
performance and cash flows for the reporting period. They provide information that is
useful evaluate the performance of the enterprise and to predict its future performance.
The financial statement, the end products of a financial accounting system, may be
perceived as a model that captures the economic reality of the enterprise.
Financial statements are prepared primarily for decision making. They play a
dominant role in setting the framework of managerial decision. How ever, the
information provided in the financial statement is of immense use in making decisions
through analysis and interpretation of financial statements. Financial analysis is “the
process of identifying the financial strength and weakness of the firm by properly
establishing relationship between the items of the balance sheet and profit and loss
account”.
Analysis of financial statements can provide valuable insights into a firm’s

performance. Analysis of financial statement is of interest to lenders, investors,
security analysts, managers, and others.
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Financial statement analysis may be done for a variety of purpose, which may
range from simple analysis of short term liquidity position of the firm in various areas.
It is helpful in assessing corporate excellence, judging credit worthiness, forecasting
bond ratings, evaluating intrinsic value of equity shares, and assessing the market risk
Financial statements:
The accountant prepares two principal statements, the balance sheet and the
profit and loss account, and an ancillary statements, the cash flow statement.
1. Balance sheet
2. profit and loss account
Balance sheet:
The balance sheet shows the financial condition of a business at a given point
of time. It consists of mainly two objects these are as fallows
1. Assets
2. Liabilities
The balance sheet is also called statement of financial position. Its shows the
assets, liabilities and capital as a particular date. It indicates what the firm owns and
how these assets are financed in the form of liabilities or owner ship interest.
Features of balance sheet:
1. Balance sheet is prepared as specific date. Hence, it shows financial position of

the enterprise on that date.
2. Balance sheet is usually in two columns which illustrate relation ship between
the assets and liabilities,
3. Financial position of the firm is shown in the balance sheet on going concern
value.
Evaluation of balance sheet:

Balance sheet provides the useful information about the firm’s resources and
obligation. It reflects economic results of management policies. It contains
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information about liquidity as well as solvency position of the firm which is useful to
creditors.
Income statement:
Income statement is also called profit and loss statement, is a performance
report which records changes in income, expenses, profit and loss, as a result of
business operations during the year between the two balance sheet dates.
The income statement is commonly divided into four types.
1. Gross profit section.
2. Operating profit section.
3. Final net profit or net loss section.
4. Appropriation section.
The gross profit section shows the profit on the cost of goods Sold. The
operating profit section list the operating income, expenses and residual as operating
profit. In final net profit section, all adjustment in respect of non operating surplus/
deficit are made to this figure of profit which gives of profit or net loss. The lost
section depicts the disposal of final net profit in the form of divided declared and the
darning retained. The amount retained earnings increases the aggregate ownership
interest in the enterprise.
Meaning and concept of financial analysis:

The term ‘financial analysis’ also known as analysis and interpretation of
‘financial statements’, refers to the process of determining financial strength and
weakness of the firm by establishing strategic relationship between the items of the
balance sheet, profit and loss account and other operative data.
The purpose of financial analysis is to diagnose the information contained in
financial statement so as to judge the profitability and financial soundness of firm the
analysis and interpretation of financial statements is essential to bring out the mystery
behind the figures in financial statements. Financial statements analysis is an attempt
to determine the significance meaning of the financial statement data so earnings,
ability to pay interest and debt maturities and profitability of a sound dividend policy.
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The term financial statement analysis includes both analysis and
interpretation. A distinction should, therefore, be made between two terms. While the
term ‘analysis’ is used to mean the simplification of financial data by methodical
classification of the data given in the financial statements. ‘Interpretation means
exploring the meaning and significance of the data so simplified.
Objects of financial analysis:

Analysis of financial statement may be made for a particular purpose in view.
How ever, the following are generally considered to be the objectives of financial
analysis.
1. To find out the financial stability and soundness of the business enterprise.
2. To assess and evaluate the earning capacity of the business.
3. To estimate and evaluate to the fixed assets, stock, etc., of the concern.
4. To estimate and determine the possibilities of the future growth of business
5. To assess and evaluate the firm’s capacity and ability to repay short term and
long term loans
6. To evaluate the administration efficiency of the business enterprise.
Importance financial analysis:

Analysis of financial statement is carried out to measure the enterprise
liquidity, profitability, solvency and other indicators to assess its operator efficiency,
financial position and performance. Financial analysis serves the following purpose.
To know the operational:

The financial analysis enables the management to find out the overall
efficiency of the firm.
Helpful in measuring the solvency of the firm:-

It should satisfy it self that is current resource are sufficient to meet its
current liabilities. This is possible through the calculation of liquid ratios.
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Comparison of past and present results:
Financial statement of the previous years can be compared and the trend
regarding various expenses, purchases, sales, gross profit and net profit can be
ascertained.
Help in measuring the profitability:

Financial statements show the gross profit, net profit and debt and other
expenses. The relationship of these can be established with sales by calculating
operating ratios.
Inter firm comparison:

Various financial characteristics like profitability, liquidity, solvency or
different firm can be compared.
Helps in judging the solvency of the undertaking:

Creditors are always interested in knowing the solvency i.e., capacity of the
business to repay their loans. Through financial analysis it is possible to know
1. Whether current assets are sufficient to meet current liabilities.
2. Proportion of liquid assets to current assets.
3. Future prospects of the business.
4. Whether debentures and other loans are secured or not.
5. Managerial efficiency of the company.
Bankruptcy and Failure:

Financial statement analysis accomplishes this through the evaluation of
solvency position.
Helps in forecasting:
The financial analysis will help in assessing future developing by making
forecasts and preparing budgets.
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TYPES OF FINANCIAL ANALYSIS
On the basis of On the basis of

material used modus operand
External Internal Horizontal Vertical

analysis Analysis Analysis Analysis
Types of financial analysis

We can classify various types of financial analysis in to different categories
depend upon
1. material used
2. method of operation
On the basis of material

External analysis
This analysis is done by outsiders who don’t have access to the detailed
internal accounting records of the business firm. These outsiders include investors,
potential investors, creditors, potential creditors, government agencies, credit
agencies, and the general public. For financial analysis, these external parties to the
firm depend almost entirely on the published financial statements.
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Internal financial analysis
The analysis conducted by persons who have access to the internal accounting
records by business firm is known as internal analysis. Such an analysis can therefore,
be performed by executives and employees of the origination as well as government
agencies which have statuary powers vested in them.
On the basis of modus operand

Horizontal analysis
Horizontal analysis refers to the comparison of financial data of a company for
several years. The figures of the various years are compares with standard or base
year. A base year is a year chosen a beginning point. This type of analysis is also
called dynamic analysis as it is based on the data from year to year rather than on data
of any one year.
Vertical analysis:
Vertical analysis refers to the study of relationship of the various items in the
financial statements of the accounting period. In this type of analysis the figure from
financial statement of a year are compares with a base selected from same year’s
statement. It is also known as static analysis common size financial statements and
financial ratios are the two tools employed in vertical analysis since vertical analysis
considered data for one time period only, it is not very conductive to a proper analysis
of financial statement.
Methods of financial analysis

The analysis and interpretation of financial statements is used to determine the
financial position and result of operation as well. A number of methods or devices are
used to study the relationship between different statements.
1. Comparative balance sheet statement

2. comparative income statement
3. Trend analysis
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4. Common size statement
5. Fund flow statement
6. Cash flow statement
7. Ratio analysis
Comparative statement:
The comparative financial statements are statements of the financial position at
different period of time. The elements of shown in a comparative form as to give an
idea of financial position at two or more periods.
From particular point of view generally two financial statements are prepared
in comparative from for financial analysis purpose. Not only has the comparison of
the two figured of the two periods but also relationship between balance sheet and
income statement enables an in depth study of financial position and operation
result. Comparative statement may shown
1. Absolute figures.
2. Change in absolute figures that are increase.
3. Absolute data in terms in percentage.
4. Increase or decrease in terms of percentage.
Note: The increase or decrease during the second year over the first year can be
calculated as fallows
Percentage of increase/decrease= (difference amount/ previous year)*100
Common size statement:

The common size statement, balance sheet and income statements are
shown in analytical percentages of total assets, total liabilities total assets. The
common size percentage method represents a type of ratio analysis. The Preparation
common size statement by using two steps they are as fallows:
1. State the total of the statement as 100 percentages.

2. Compute the ratio of each item to the total in the statement.
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Trend analysis
Trend analysis depicts behavior of the ratio over a period of time and the
trend in the operation of the enterprise. This is horizontal analysis of financial
statement, often called as pyramid method of ratio analysis. It is dynamic analysis
depicting the changes over a stated period. The method of analysis is one of
‘direction’.
1. Selection of a base year.

2. Assignment of an index number of 100 to each item of the base year.
3. Calculation of percentage relationship that each item bears to the same item in
the base year.
Funds flow statements:

It is designed to highlight changes in the financial condition of a business
concern between two points of time which generally conform to beginning and
ending financial statement dates. Fund flow statements are also termed as ‘statement
of sources and application of funds’ ‘statement of changes in working capital’
‘statement of changes in financial position. Statement of funds supplied and applied
statement of funds generally and expanded.
Although financial statement useful information to the management and

describe the nature of change in ownership as a result of the period’s productive and
commercial activities, the statement fail to mirror the funds changes that have taken
place over to describe the sources from which additional funds were put, because the
ultimate success of a business enterprise depend on where got and where gone
situations.
Cash flow statement

An analysis of cash flow of a concern during a specified period, presented in
the form of a statement is known as cash flow analysis. The cash flow of the concern
in the near future says for a period of six months or one year, can be prepared based
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on the past trends and expectations of the concern regarding factors that would
affects its cash receipts and cash payment.
Cash flow is the receipt and the payment of amount of money and that it
implies more than our accrual or a financial obligation, hence cash flow is a
movement of cash flow which is a real one. It is helpful to classify cash flows into
three classes namely cash flows from operating activities, cash flow from investing
activities and cash flow financing activities.
 Operating actives involve producing and selling goods and services.

 Investing activities involve acquiring and disposing fixed assets.
 Financing activities involve raising money from lenders and shareholders.
Ratio analysis
The ratio is simple mathematical expression. It is a number expressed in
terms of another number, expressing the quantitative relationship between the two
ratio analysis is the technique of interpretation of financial statements with the help
of various meaningful ratios.
Ratios don’t add to any information that is already available, but they shows
the relationship between two items is a more meaningful way which help to draw
certain conclusion comparison with related facts is the basis of ratio analysis.
The various methods or techniques used in analysis financial statement, such

as comparative statement, trend analysis, common size statement, working capital,
funds flow and cash flow analysis, cast volume profit 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 statements can be
analyzed more clearly and decision made from such analysis.
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The relationship between two figures of the balance sheet is established, the
ratios thus calculated is called “balance sheet ratio”. Generally it can be used for the
following purposes
1. Comparison of a firm with its own performance in the past.

2. Comparison of one firm with another firm in the industry.
3. Comparison of one firm with the industry as a whole.
4. Comparison of an achieved performance with predetermined standard.
5. Comparison of one department of concern with another department.
The ratio is an arithmetical relationship between two figures. Financial ratio
analysis is a study of ratios between various items or groups of items in financial
statements. Financial ratios have been classified in several ways those are as fallows:
 Liquidity ratios
 Leverage ratios
 Turnover or activities ratios
 Profitability ratios
Method of ratio analysis

Percentage method
The relationship between two figures is presented in percentage. In this way it
is a common to present gross profit, net profit, expenses operating ratio by percentage
method.
Rate method
According to this method, one figure is expressed in terms of the other
relative figure. It is customary to calculate stock turnover, current and liquid ratios
according to rate method.
Ratio method
The relationship between two figures presented in ratio.
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Limitation of financial statement analysis
Financial analysis is a powerful mechanism of determining financial
strength and weakness of a firm. But, the analysis is based on the information
available in the financial statement.
1. It is only a study of interim reports.

2. Financial analysis is based upon only monetary information and non monetary
factors are ignored.
3. It doesn’t consider changes in price levels.
4. As the financial statements are prepared on the basis of going concern. It
doesn’t give exact position. The accounting concepts and conventions cause a
serious limitation to financial analysis.
5. Change in accounting procedure by a firm may often make financial analysis
misleading.
6. Financial only a means and not an end in itself the analyst has to make
interpretation and draw his own conclusion different people may interpret the
same analysis in different ways.
Nature of financial statement analysis

According to the American institute of certified public accounts, financial
statement reflects ‘a combination of recorded facts, accounting conversation and
personal judgments and the judgments and the judgments and conversions applied
affect them materially’. This implies data exhibited in the financial statements are
affected by recorded facts, accounting conventions and personal judgments.
Recorded facts
The term recorded facts means facts, which have been recorded in the
accounting books. Facts which have not been recorded in the financial books are not
depicted in the financial statements how ever material they might be.
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Accounting conventions
Accounting conventions imply certain fundamental accounting principles
which have been sanctified by long usage for example, on accounts of the conventions
of ‘conservations’ provisions made of expected losses but expected profit are ignored.
This means that the real financial position of the business may be much better than
what has been shown by financial statements.
Personal judgment
Personal judgments have also an important bearing on financial statements.
For examples, the choice of selecting a method of depression lies on the accountant.
Similarly the mode of amortization of fictitious assets also depends on the personal
judgment of the accountant.
Objectives of study
1. A theoretical frame work of financial statement analysis.
2. To study the financial strength and weakness of “Bharathi soap works”.
3. To examine the moment of comparative balance sheet and comparative income
statement and common size and trend analysis of “Bharathi soap works”.
4. To evaluate the financial position of the company.
5. To offer suggestion based on findings and suggestions and conclusion of study.
Needs of the financial analysis
1. To know the purpose of each companies.

2. To know the liquidity position of the company.
3. To know the solvency position of the company.
4. To know the profitability performance of the company.
5. To know the funds flow and cash flow analysis represents the figures continues
the condensed report of the position, development, and problems of the
concern.
Methodology
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Methodology describes the method of achieving objectives through collection
of data. The data collected can be either primary or secondary. The above information
is carried on with the cooperation of management of ‘Bharathi soaps works’.
Primary data
Most of the information is collected from internal interviews and discussion
with various officials in the finance department and concerned execution of other
department.
Secondary data
The information is collected from the financial statements and its information
brochures of the organization. The data collected from various years books, published
articles and published annual reports of ‘Bharathi soaps works’ and other material.
Methods of data collection

The data collected from the company files, financial assets, balance sheet and
other library book and other articles and from the corporate websites e.t.c.
Data analysis
The analyses used in the study are tabulation of data charts and graphs and
mathematical tools or representation and schedule of ratio, cash flow, and fund flow.
 Limitation
 Significance
 presentation
LIMITATIONS OF THE STUDY
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1. Much information could not gather as the policy constraints stood in the way of
access to get the direct information.
2. Two months is too short for such extensive study. All the details are not
revealed as some matters are confidential.
3. Bharathi soaps limited is an up coming company and it has huge numbers of
competitors at this stage. This reason stood in the way of access to get the
information directly and also in the depth particular can’t be revealed for the
fear of competition of other companies.
Firms may window dress thus the financial statement in order to show a roses
picture. In such a case, the whole exercise of analysis the statement become useless in
order. In order to draw some meaningful out of the analysis.
Price level changes

Financial statements don’t take into accounts changes in price level analysis
of such a statement not gives a true picture of the state of affairs.
Interpretations of results
A problem may arise on two accounts interpretations of ratio on its own and
interpretation of all the ratios taken together it is difficult to describe the optimum
level of ratio in spite of the presence of the industry averages.
SIGNIFICANCE OF STUDY
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The study provided an insight into the various aspects of financial statements
analysis hence in the company can make necessary changes in the policy relating to it.
1. Studies of this type are more useful to academicians and scholars to make
future insight into the various aspects of the ‘financial statement analyses in
other similar organization
2. Studies of this type are also useful to competitors to make necessary steps to
improve ‘financial statement analyses.
3. Studied of this type are also useful policy makes necessary in the police
relating to the ‘financial statement analysis.
PRESENTATION OF STUDY
1. In the first chapter various theoretical aspects relating to ‘financial statement

analysis’ and objectives of the study, needs of the study, significance of the study,
limitations of study.
2. In the second chapter consists of industry and company profile.
3. In the third chapter consists of financial statement analysis in “Bharathi
soap works”.
4. In the fourth chapter consists of findings, suggestion and conclusion of the
study.
INDUSTRY PROFILE
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INTRODUCTION
Soap is a product that many people might take of granted of consider rather
ordinary, but for some, lathering up can be a treasured part of a morning or nightly
routine.
Scented or unscented, in bars gels, a liquids soap is a part of our daily lives. In
the united states, soap is a $ 1.3091 million (us$)* industry with over 50 mass market
brands. But in some markets the sales potential for a soap is only beginning to be
realized. At the end 2000, soap was a $1.032 million (US$) business in India. IFF’s
marketing experts offer the following overview of this growing category.
India is a vast country with a population of 1,030 million people. Household

penetration of soaps is 98%. People belonging to different income levels use different
brands, which fall under different segments (see table below), but all income levels
use soaps, making it the second largest category in India (detergents are number one).
Rural consumers in India constitute 70% of the population. Rural demand is growing,
with more and more soap brand being launched in the discount segment targeted the
lower socio-economic strata of consumers.
• Soap price (per 75 gram cake)

• Segment in rupees in US$
• Carbolic*5.00 10cents
• Discount 7.00 15 cents
• Popular 11.00 23 cents
• Premium 17.00 36 cents
• Super premium 35.00 75 cent
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HISTORY OF SOAP IN INDIA:-
During the British rule in India, lever brother England introduced modern soaps
by importing and marketing them in India. However, north west soap company
created the first soap manufacturing plant in India, which was situated in the city of
meerut, in the state of uttar pradesh. In 1897, they started marketing cold process
soaps. During world war I, the soap industry floundered, but after the ware, the
industry flourished all over the country.
Mr.Jamshedji tata set up India’s first indigenous soap manufacturing unit when
he purchased ok coconut oil mills at cochin, kerala around 1918. ok mills crushed and
marketed coconut oil for cooking and manjfactured crude cold process laundry soaps
that were sold locally, it was renamed the tata oil mills company and its first branded
soaps appeared on the market in the tata oil mills company its first branded soaps
appeared on the market in the early 1930’s. soap became a necessity for the moneyed
class by around 1937.
Cold process soaps are manufactured by mixing all ingredients (soap base,
perfume, fillers, actives, etc.) in a large pot and heating them, up to 70 degrees while
they are stirred manually. Once the mixture is ready, the soap is plodded based on its
with the logo by a machine and not manually.
Brand positioning then and now soap manufacturers originally targeted their
products to the lowers income strata in urban as well as rural areas, positioning their
brands as a way to remove dirt and clean the body. For some brands, that positioning
persists even today with a focus on removal of body odor and keeping the user
healthy. However soap positioning are moving towords skin care as a value-added
benefits.
The detergent was improved 22 times during its first 21 years on the market,
and procter & Gable still strives for perfection. Each year, researchers duplicate the
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mineral content of water from all parts of the United State and wash 50,000 loads of
laundry to test the detergent’s consistency and performance.
The history of soap ?

A soap-like material found in clay cylinders during the excavation of ancient
Babylon is evidence that soap making was known as early as 2800 B.C.
The history of soap making

B. J. Johnson Company was making soap entirely of vegetable oils, palm and
olive. The soap they produced became so popular, the renamed their company after
the soap Palmolive.
How does soap clean?

You may use it every day, but do you know how it works? Learn about
emulsions, micelles, and soap scum! Then check out links to sites about bubbles, soap
making, and the regulation of soap chemistry.
After expanding at a snail’s pace, the market for personal wash products
appears to have come to grinding halt in 2001. after posting modest single digit
growth in 1997-2000 figures for the first seven months suggest that market for
detergent soaps has actually shrunk. Estimates about the extent of declines in market
size vary, Hindustan lever, which straddles. The category with 60% market share by
value, say the market shrunk by 4.5% in value terms in the first half of 2001.
The Indian Soap and Detergent Manufactures Association, puts the decline at
1%. Other industry sources suggest that the extent of “De-growth” in the first eight
months of 2005 could be as high as 7%.
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DEVELOPMENT OF THE DETERGENT INDUSTRY
Although the start of the synthetic detergent industry is not shrouded in the
veils of history as were the beginnings of the soap industry, it is nevertheless not easy
to pinpoint exactly when the detergent industry, as such, came into being. The primary
problem is to decide exactly what is being referred to as a synthetic detergent. The
term itself leads to confusion. In the INDIA the words surfactant or syndet are being
used, whilst in Europe the term 'tenside' (for tensio-active material) is coming into
fashion.
But if the shrinking market size suggest that Indian consumers are actually
been cutting back on there use of detergent soaps, this is not really the case. In volume
terms, the market for detergent soaps has continued to show a growth of 10% in the
first eight months of 2005
The major players have certainly managed to sell more detergent soaps by
volume but price competition in the segment and slew of promotional campaigns have
reduced the effective realization per unit sold. This has probably neutralized the gains
from volume expansion.
DEFINITIONS
Many definitions of synthetic detergent have been proposed, all of which are
very wide. The Comiti International de Dirivis Tensio Actifs has after several years of
deliberation agreed on the following definitions:
Detergent: Product the formulation of which is specially devised to promote the

development of detergency. Note: A detergent is a formulation comprising essential
constituents (surface active agents) and subsidiary constituents (builders, boosters,
fillers and auxiliaries).
Surface Active Agent: Chemical compound which, when dissolved or

dispersed in a liquid is preferentially absorbed at an interface, giving rise to a number
of physico-chemical or chemical properties of practical interest. The molecule of the
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compound includes at least one group with an affinity for markedly polar surfaces,
ensuring in most cases solubilization in water, and a group which has little affinity for
water. Note: Compositions in general are usually mixtures of such compounds.
Amphiphilic Product: Product comprising in its molecule, at the same time one
or more hydrophilic groups and one or more hydrophobic groups. Note: surface active
agents are amphiphilic products.
SYNTHETIC DETERGENTS
The term "synthetic detergent" is used throughout this article, for a material
which cleans (or is used for cleaning), but in this definition soap is not included. Even
so, this is still a wide definition, because, of course, it can refer to the active
ingredient, or the solid, liquid, paste or powder compounded from this active matter.
However, this should not lead to confusion, as the industry itself as yet makes no
distinction in terminology between the basic material and the ready-for-use product.
The first synthetic detergents which fall into our definition of the term seem to
have been developed by the Germans in the First World War period to allow fats to be
utilized for other purposes. These detergents were of the short-chain alkyl naphthalene
sulphonate type, made by coupling propyl or butyl alcohols with naphthalene and
subsequent sulphonation, and appeared under the general name of Nekal. These
products proved to be only fair to moderately good detergents, but good wetting
agents and are still being produced in large quantities for use as textile auxiliaries.
In the late 1920s and early 1930s long-chain alcohols were sulphonated and
sold as the neutralized sodium salts without any further additions except for sodium
sulphate as an extender.
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In the early 1930s long-chain alkyl aryl sulphonates with benzene as the
aromatic nucleus, and the alkyl portion made from a kerosene fraction, appeared on
the market in the USA. Again, these were available as the sodium salts extended with
sodium sulphate. Both the alcohol sulphates and the alkyl aryl sulphonates were sold
as such as cleaning materials, but did not make any appreciable impression on the
total market. At the end of the Second World War alkyl aryl sulphonates had almost
completely swamped the sales of alcohol sulphates for the limited uses to which they
were applied as general cleaning materials, but the alcohol sulphates were making big
inroads into the shampoo field. An exception was Teepol, a secondary alcohol
sulphate which remained popular for some years.
In common, however, with other chemical developments during this century,

progress was not in one direction only. The limiting factor is always the availability of
raw materials in a particular country. Con-currently with the above developments,
there were developed, both in Germany and the USA, the lgepon type of compounds
of which lgepon-T, the sodium salt of oleyl tauride is an example, and in Germany the
Mersolates, which are alkane sulphates. In the United Kingdom, Teepol, a secondary
olefine sulphate from petrochemical sources, was manufactured in large quantities and
is still being produced in England and western Europe to this day.
Each of these basic materials has its advantages and disadvantages, but in
considering the feasibility of production the following factors must be taken into
account:
Availability of raw materials;
Ease of manufacture;
Cost of raw materials;
Cost of manufacture;
Suitability of finished product.
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We have purposely placed suitability last, as it is only too true that not always
is the best material made available.
As a result of its ease of manufacture and versatility, the alkyl benzene

sulphonate very quickly gained a foothold in the market, and after the last war the
existing keryl benzene was very quickly replaced by an alkyl benzene made from
propylene tetramer coupled to benzene (PT benzene).
This PT benzene very quickly displaced all other basic detergents and for the
period 1950-65 considerably more than half the detergents used throughout the world
were based on this.
SYNTHETIC DETERGENTS PRODUCTION:-
To give an idea about the enormous rise in synthetic detergent production,

Table-1 compiled from figures submitted by the American Soap and Detergent
Association and the German firm of Henkel & Cie shows both soap and detergent
sales in the USA for various years to 197
These figures reveal that immediately after the Second World War synthetics
started making inroads into the production of soap, which now seems to have settled
down to a constant whereas synthetics have increased enormously
By 1959 although the US per capita consumption had somewhat levelled out,
total production was still rising as shown in Table 2 which has been compiled from
the 1963 Census of Manufacturers by the Bureau of Census of the US Department of
Commerce and from the Henkel figures
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PRODUCTION OF DETERGENTS IN FIGURES:-
Comparative Domestic Domestic

Production Figures for detergents detergents
Synthetic Detergents (solid) (liquid )
1950 (1000 tons) 1200 354
1960 (1000 tons) 1425 640
1970 (1000 tons) 2672 1773
1980 (1000 tons) 3000 2228

1990 (1000 tons) 3780 2872
2000 (1000 tons) 4280 3287
2007 (1000 tons) 4500 3885
GRAPHICAL REPRESENTATION OF PRODUCTION
TURNOVER IN INDIA:-
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5000
4500
4000
3500
domestic
3000 detergents(soli
d)
2500
domestic
2000 detergents(liqu
1500 id)
1000
500
0
2000
1950
1960
1970
1980
1990
2007
The broad picture that appears from Table 2, is that while solid detergents
(among which of course powders are included) are making great strides
forward, the liquid detergents are increasing at a much faster rate.
LOW PRICED BRANDS

Industry player commonly attribute the de-growth in thesoap market to down
trading. Detergent soaps are the highest penetrated product with in the FMCG market,
reaching an estimate 95% of the urban and 87% of the rural house holds. The fairly
25
high contribution from the rural markets makes this category sensitive to the fortune
of the agricultural economy.
The prolonged drought in north and west of the country (until 2000) and the
sharp fall in farm disposable income has probably persuaded low income house holds
to the down trend, that is shift from high to low price brands.
This is indeed supported by the fact that with in detergent soaps, it is the
discount segment (soaps that cost between 5-10 per 75gms) that has registered the
highest growth rate over the past years. HLL to appears to endorse the phenomenon of
down trading. “There has been an inter-spectral shift in the soap market, with
consumer down trading from premium and popular to discount soaps” explains the
company’s spokesperson.
However Mr. Hosherder.K press Godrej consumer care, begs to differ “We
think consumers have already pre-committed there incomes for installments on
durables. The substitution of soap with shampoos for hair wash has also impacted the
growth” he said
26
MORE OFFERINGS:-
This is despite the fact that this usually sleepy category has seen a spate of new
players debut new offers in recent times. Over the past couple of years, NIRMA has
lunched a slew of low priced soaps under the banner of NIRMA.
Henkel spik has made a maiden foray in to the market with a far range of
detergent soaps. The market leader HLL to relaynced several detergent soaps.
WASHING IMPROVEMENTS
After the war, when detergents started appearing in appreciable quantities on
the retail market, it was noted that white cotton goods were not being washed as white
as they should be. This was explained by the fact that although the active material was
able to lift the dirt from the cloth it could not keep it in suspension. Hence small spots
of dirt were being re-deposited uniformly over the whole surface area of the cloth
while in the wash-tub or machine, thus giving the cloth a grey appearance.
BETTER QUALITY
The crowded market place has also brought a few benefits to the consumer
marketers of soap have tried to woo consumers through un graded offerings and better
quality soaps. Aided by low input prices, the marketers of detergents have increased
the content in their brands, to offer better quality soaps at a low price. Industry
watchers say the content in some brands has risen from 50-60% of earlier to 70%of
late. Therefore, per unit realization an soaps have declined, the marketers of soap have
actually sacrificed a part of their margins on hiking the content.
TOUGH TIMES A HEAD

With competitive pressures on the rise and a large number of brands jostling
for consumer attention in sluggish market likely to remain a different one for most
players. Smaller players such as Godrej Consumer and Henkel Spic have been in a
position to report rebust sales growth in the category over the past years despite the
bruising competition.
27
However, this is partly due to a relatively small base of comparison. Unless the
market expands, the frenetic promotional activity may soon tell on the growth rate of
players. And when it comes to sustaining a high decipel promotional campaign,
HLL’s size certainly gives is the where withal to do it.
RURAL REVIVAL
It appears that a genuine boost to the market size for detergent soaps will still
have to come from a survival in rural demand. Evidence from the past does appear to
suggest that a sharp rise in rural incomes would have a cascading affect on market in
1999, after a year of sluggish growth in 1998, demonstrated that a recovery in
agricultural output does have on indirect impact on sales volumes of FMCG products.
This year, reports of a good monsoon in the northern & western parts of the
country have sparked off speculation about a revival in FMCG growth rates. The fact
these two regions account for 60% of the demand for FMCG strengthens this
agreement. However, it appears to be a bit early in the day to call it revival. For one,
while the northern & western regions have received satisfactory rein, southern India
has been the victim of very erratic monsoon.
Second, given that the good monsoon in the current year succeeds two or three
consecutive years of drought in some regions, there could be a substantial time tag
before higher rural incomes translates into better FMCG demand.
Third, farm product prices have dropped sharply in response to built up of

surplus grain stocks. Therefore, even if a good monsoon translate into agricultural
output, there is the question of whether this will actually expand or shrink farm
incomes.
These factors suggest that it may be premature to take investment exposures in

companies focused on detergent soaps in the hope of revival. If may be better to wait
for concrete signs of o pickup in rural demand, which is certainly some way off.
28
THE SOAP MARKET; NOT EXACTLY BUILDING:-
Year Volume Growth(%) Realization(Rs/tons) Growth(%)
2003 4,32,254.0 3.6 46,237.00 10.5

0
2004 4,48,141.0 3.7 52,155.00 12.8
0
2005 4,56,040.0 1.8 53,443.00 2.5
0
2006 4,71,000.0 3.3 56,203.00 5.2
0
2007 4,98,800.0 4.8 56,320.00 0.2
0
CARBOXYMETHYLCELLULOSE (CMC)
The sodium salt of car boxy methyl cellulose (CMC) had been known to
industry for many years and, in fact, a French patent had been applied for in 1936,1
using CMC as an additive to washing materials. However, this patent was not
developed extensively until the Second World War, when CMC was used in Germany
on a moderately large scale, initially as an extender for soap which was in short
supply, and then as an additive to the synthetic detergents being produced as a
wartime substitute for soaps. When intelligence reports on the German industry were
published, the use of CMC as an additive to synthetic detergent powders was noted
and investigated and it was found that this addition eliminated the redeposit ion
problem.
29
BUILDERS
Despite the considerable advances made in the production of the active

detergent matter, by the end of the Second World War progress in the use of
detergents for heavy-duty (cotton) washing was still relatively slow, although they had
already displaced soaps to a considerable extent in the field of fine laundering and
dish-washing. To improve the heavy-duty washing properties, manufacturers turned
for analogies to the soap industry. Soap for cotton washing had for many years been
'built' with alkaline materials such as carbonates, silicates, borax, and
orthophosphates. All of these singly and in combination were tried with moderate
success. Condensed phosphates had started appearing on the market in increasing
quantities and from 1947 onwards heavy-duty detergent formulations were introduced,
initially with tetra sodium pyrophosphate and then with sodium tripolyphosphate with
startling success. With the advent of CMC and tripolyphosphate builders the detergent
industry established itself and has never looked back. The production figures of
tripolyphosphate in the INDIA are enlightening.
ENVIRONMENTAL ISSUES
Propylene tetramer benzene sulphonate held almost undisputed sway as the

major ingredient used in washing operations till the early 1960s. Around this time it
was noted, however, that sewage treatment problems were arising. The amount of
foam on rivers was increasing and where water was being drawn from wells located
close to household discharge points, the water tended to foam when coming out of the
tap. This was attributed to the fact that propylene-based alkyl benzene sulphonates are
not completely degraded by the bacteria naturally present in effluents, and was further
narrowed down to the fact that it is the branched-chain formation of the alkyl benzene
which hinders the attack by the bacteria. However, fatty acid sulphates were found to
degrade very easily, and since all naturally occurring fatty acids from which fatty
alcohols are produced are of the straight-chain variety (as also are the Ziegier alcohols
which started appearing in commercial quantities at about this time), it seemed
possible that a straight-chain alkyl benzene might be degradable.
30
Methods of test were developed and it was, in fact, proved that linear alkyl
benzene is biodegradable. Germany introduced legislation prohibiting the discharge of
non-biologically degradable material into sewer systems. In the USA detergent
manufacturers agreed voluntarily to switch over from PT benzene to linear alkyl
benzene by June 1965. In the United Kingdom a similar type of 'gentleman's
agreement' was entered into.
The change to linear alkyl benzene (which can be considered as a return to a

purified form of the keryl benzene in use twenty years previously) gave some rather
surprising results. It was found that the detergency in a heavy-duty formulation using
linear alkyl benzene sulphonate was approximately 10 per cent better than when using
PT benzene sulphonate, solutions of the neutralized sulphonic acid had a lower cloud
point, and pastes and slurries had a lower viscosity. The first two results were
obviously advantageous and a lower viscosity in slurries had an advantage when the
product was spray-dried to a powder, but when the LAS was sold as a liquid or paste
detergent, this lower viscosity had to be overcome as sales appeal was lost. The
manufacture of powders based on LAS posed some problems, however. Powders
became sticky and lost their free-flowing characteristics, whether made by spray-
drying or one of the other methods.
Mausner and Rainer' have indicated that the actual isomer distribution of the
linear alkylate has an effect on the stickiness of the powder, with the 2-phenyl isomer
giving the greatest tendency to stickiness and the 5- or 6-phenyl isomer the least.
Additives to overcome this tendency have therefore been developed.
The switch to linear alkyl benzene is not, however, complete. In many parts of
the world where the problem of sewage treatment is not serious, the PT benzene is still
being used in ever-growing quantities. Also the Ziegler alcohols are now
competitively priced with the linear alkyl benzenes, and alkane sulphonates are
reappearing. Having successfully coped with the problem of biodegradation the
industry faced a new attack. It appeared that in certain lakes and ponds algae started
reproducing at an unprecedented rate. This was blamed on the extensive use of
31
phosphates which are a food for these organisms, and again the detergent industry
became the whipping boy, because tremendous amounts of sodium tripolyphosphate
are used and then discharged down the sewer. (The term eutrophication, meaning
nutrition by chemical means, has been applied to this phenomenon.) It is not clear
whether the blame should be taken solely by the detergent industry, as concurrently
with the increase in the use of detergent phosphates there was an increase in the use of
phosphate fertilizers, which also find their way into natural water systems. However,
with the big international preoccupation with ecology the detergent industry is
searching for an efficient substitute for sodium tripolyphosphate.
To date a complete replacement has not been found but in the Scandinavian
countries particularly, formulations of household powders are beginning to appear
with appreciable portions of the phosphate replaced by NTA (nitrilo triacetic acid)
which is a better sequestering agent than tripolyphosphate but has none of the other
properties exhibited by the phosphate. There are fears that in time the extended use of
NTA might bring new problems of this sort, as it contains nitrogen which is again a
good fertilizer and nutrient for algae.
The search is still going on for a phosphate substitute. NTA on its own will
only partially replace phosphates. A mixture of NTA and borax has been suggested as
a complete replacement but here again the borax might produce more problems than
the phosphate is alleged to produce. Some of the hydroxy-polycarboxylic acids not
containing nitrogen are also being considered.
Enzymes
The biggest single revolutionary trend in the detergent industry in the latter
years has been the use of enzyme additives. Enzymes as aids to washing are not new
to the industry. Proteolytic enzymes had been tried as additives to washing powders in
Germany in the 1920s with only moderate success and again in Switzerland in the
1930s. Enzymes, which can be called organic catalysts, tend to hasten reactions and
32
the proteolytic enzymes convert or 'break down' proteins wholly or partially into
amino acids. The action is rather slow and the production costs high, but with
improved methods of production and purification, strains of enzymes, usually in
admixture with a proportion of amylase which breaks down starches, were developed
which were relatively fast acting. These were added initially to 'pre-soak' detergents
and found immediate acceptance in the European countries where washing habits
were such that washing was normally soaked for a period prior to the wash proper.
Better and better strains of enzymes were developed, with stability to a wider
pH spectrum, stability against perborate and quicker action. In the United States
detergent manufacturers resisted the incorporation of enzymes into their powders for
some years after this type of powder had almost completely swept the board in Europe
but in 1968 enzymatic powders started appearing there as well. The position at present
is that enzymatic powders are now holding a large proportion of the household
detergent market and formulations appeared made for machine washing. Some
washing-machine manufacturers are now producing automatic washing machines with
a 'Bio' programme which allows the washing to remain in contact with the detergent
solution for an extended period of time at a relatively low temperature before
beginning the washing and heating cycle. The future of enzymes is at the moment
obscure as the production of enzymatic powders has raised its own problems, and one
Scandinavian firm has already decided to withdraw its powder containing enzymes
from the market, but other large firms are taking enzymes out of some of their
powders while forging ahead with others.
33
COMPANY PROFILE
INCEPTION
Sri.A.Manickavel, Proprietor of BHARATHI SOAP WORKS. came to Guntur
on 1980 with Rs 2000/- cash and brought some detergent cakes cases from Chennai by
train and he delivered the soaps by rickshaw canvassing door to door. He got good
response in Guntur. Then he planed to start a factory at Guntur with initial capital
investment o f 65000/- and started business on 8-7-1981.
In the initial stage he run his factory with 12 workers with manual labour. Later
with his hard work he earned and shifted to Gorantla village Guntur Mandal in
1985.In the factory, Manickvel has introduced power mortars in Guntur for the first
time.
VISION
The company is planning to introduce quality liquid blue and toilet soaps in the
short period. Bharathi soap works is future planning to install automatic machine and
the introducing latest technology for using the raw material available with in the
international market.
MISSION
M/S. Bharathi soap works mission is the competitive the multi national
companies. Products like Rin, Nirma etc.
34
POLICIES
Quality policy: Now a day in this cut throat competition intangible resource of
quality will enhance the position of company. So that this is our policy. The company
edge over reaming organization in the industry. The policy is-
“Satisfy our customer by providing quality and service to strive towards

continua improvement of the company”.
Quality objectives of organization

1) To improve sales compared with previous financial
2) To improve the consumer satisfaction level.
3) To reduce the wastage in production process.
4) To update the knowledge of the employees.
5) To create better industrial relations in organization.
6) To provide better career opportunities to each and every employee.
HISTORY AND MILESTONES OF COMPANY

BHARATHI SOAP WORKS. Started in Guntur on 1980 with Rs 2000/- cash and
brought some detergent cakes cases from Chennai by train and It delivered the soaps
by rickshaw from door to door. It got good response in Guntur. Then It planed to start
its business in Guntur with initial capital investment o f 65000/- and started business
on 8-7-1981.
In the initial stage It run with 12 workers with manual labour. Later it grows
and shifted to Gorantla village, Guntur Mandal in 1985.In this factory, Manickvel has
introduced power mortars in Guntur for the first time.
35
GROWTH AND EXPANSION OF BHARATHI SOAP WORKS:-
M/S.BHARATHI SOAP WORKS is expanding its production capacity and
supply of from time to time. Initially M/S Bharathi soap works capital investment
Rs.65000/- but now the investment reached Rs.196.23 lakhs during the year 2006-07.
With good marketing and promotion activities its present turnovers reached to Rs.8.71
crores for the year 2006-07 when compared to Rs.lakhs at the initial stage.
36
ORGANIZATION CHART
MANAGING
DIRECTOR
LEGAL IN
MANAGER
CHARGE
FINANCE PRODUCTION MARKETING

MANAGER MANAGER MANAGER
TRANSPORTATION
ACCOUNTANT WORKERS EXECUTIVES EMPLOYEE
37
(1) COMPANY (C.M.D):-
Sri.A.Manickavel, Proprietor of BHARATHI SOAP WORKS. came to

Guntur on 1980 with Rs. 2000/- cash and brought some detergent cakes cases from
Chennai by train and he delivered the soaps by rickshaw canvassing door to door
sales.
He is most popularized social worker and philanthropist in Guntur. He directly

and indirectly helped, helping the needy like missions and charity institutions, home
for the aged and mentally challenged persons. He is also Hon. President of TAMIL
CULTURAL ASSOCIATION.
(2) MARKETING MANAGER (A.MARIMUTHU)

Mr.A.MARIMUTHU, Marketing manager of BHATRATHI SOAP WORKS.
He is the one great person of soap marketing. He introducing new marketing strategies
in the soap market. He involves market research on customers, investigating their
needs, and then making tactical decisions about product design,pricing,promotion and
distribution. The principles of marketing in providing the needs of the customer
satisfaction, the needs of the organization such as products and markets and the
influence of the market such as products and their competitors and legal factors.
The marketing Principles of soaps are:

• Products and markets
• Co-ordinated marketing
• Policy
• Efficiency
• Competitors legal factors soap factors
• Who and what they are stature law and trade awareness of changing.
38
FUNTIONAL ACTIVITIES:-
(1) MARKETING:-
The company introduces the new marketing strategy that is selling of soaps by
rickshaw canvassing door to door selling. To give the quality soaps to middle and low
class people with low price that sway the company has to increased its marketing and
promotional activities when we go to report shows that company has increased sales
to Rs.10,11,99,577.00/- when compared to 24,00,000/- in the initial stage of the
company.
The first step in developing a marketing strategy is to understand Your customers,

enabling reaction to their changing needs and the changing dynamics of the market.
Advertising and selling, on the other hand are just two of the many marketing
activities. In most cases, marketing performances are all those connected with
identifying the particular wants and needs of a objective market of customers, and
then going about satisfying those customers better than the competitors. This involves
doting market research on customers, investigating their needs and then making
tactical decisions about product design, pricing, promotion and distribution.
Initially the products were sold at Guntur and Prakasam District only. But now
his hard work and maintaining quality he has got very good market reputation all over
Andhra Pradesh by appointing, salesmen at different areas. Through his good
management and organization. It acquired a good position in the detergent industry.
39
PRODUCTS
SI NO BRAND NAME
1 BLUE DIAMOND
2 MAGIC
3 BHAVANI
4 SUPER POWER BINKA
5 SAREGAMA
6 TRIPLE X MAHA BAR
7 XXX RUF & TUF
8 TRIPLE X DETERGENT POWDER
PRODUCTION
Production management has a number of functions to carry out the
transformation process effectively. The functions incorporate different roles that are
interdependent but which can be grouped under five main headings.
(1) Product: - The role of production management is to ensure that the

product is manufactured as per specifications and the plan.
(2) Plant: - In order to make the product plant and equipment is required
productions management has to consider that the plant meets
specification and is in keeping with the requirements.
(3) Process: - There are many ways of producing the product6, and
operations management has the responsibility of choosing the best way.
(4) Program:-The production program ensures that the schedules of
production are met.
(5) People :-production depends on people and their skills and motivation.
Work process of the soaps
40
There are several stages in the soap processing from the beginning till the
finishing stage.
1) Mixing raw materials
2) Pladder
3) Chips
4) Soap bar
5) Bar cutting
6) Stamping on the bar
7) Covering of the bar with rapper
8) Soap cack packing
9) Sealing
Raw material
From the following raw material where use for manufacture detergent
cakes and powder
1. ACID SLURRY / SULBHONIC ACID

2. ALFA OLEBIN SULPHONATE (A.O.S)
3. SODIUM SILICATE (NaS12)
4. SODA ASH (Na2CO3)
5. SOAP STON POWDER
6. CHINNA CLOY
7. SODIUM TRI-POLPHOSPHATE
8. COLOR (STPP)
9. PERFUME
10. CALCIUM CANBONATE (CaCO3)
All the above items are supplied by mahaveer Surfactants Pvt.Ltd. Pundichery. The
above mentioned products are also available at Andhra Pradesh, Tamil Nadu, Kolkata,
Maharastra.
FUNCTIONS OF FINANCE:-
41
A financial manager must adjust his functions to his environment or attempt to change
in order to contribute to the achievement of organizational objectives.
⇒ Management of cash
⇒ Management of Accounts Receivables
⇒ Management of inventory
⇒ Capital structure
Management of cash:
Management of cash brings into sharp focus on the trade-off between risk and
return faced by the financial manager M/S Bharathi Soap works financial manager
will faced the ultimate risk, if cash is not available to meet bills as they are presented
due date. Cash should be managed and near cash efficiently. Efficient handling of
cash follows balances, the principal task of cash management can be taken up.
ACCOUNTS RECEIVABLES
The company has date to date sales by cash and carry system. The management
of accounts receivables involves many complex and interrelated decisions. This
decisions involves risk and uncertainty. Bharathi soaps look over the company lowers
the credit standards, the company lowers the probability of collection and raises the
cost of collection.
Management of inventory
Investment on inventories is costly and also risk of less. Finance manger
should pay attention to inventory control and to look equal balance of
inventories.
Capital structure
42
The capital structure decisions are concerned with the optimum mix of equity
capital. Because bharathi soaps has only proprietor capital some amount from banks
nearly 1 crore and term loans 3.71 lakhs and proprietor capital is 3.48 lakhs. The
company main object is to maximization owner’s wealth.
The turnover for the past 8 years is furnished in the table.

Year Products Sales turnover
1999-2000 Detergent & powders Rs.52,18,496.20
2000-01 ” Rs.70,71,870.00
2001-02 ” Rs.66,40,219.00
2002-03 ” Rs.77,91,690.60
2003-04 ” Rs.1,60,85,051.07
2004-05 ” Rs.6,09,56,134.06
2005-06 ” Rs.7,27,69,815.33
2006-07 ” Rs.8,71,19,174.47
2007-08 “ Rs. 10,11,99,557.00
HR FUNCTIONS
a. To recruiting the employees
b. To give training and develop the employee
c. To give welfare fund with in the time.
d. To give compensation in any accident.
At Present 75 workers are at production department and 5 employees at office, 2

employees at canteen and 16 employees at motor transport workers. The company
provides complete facilities to its workers and employees. As it provides complete
assistance and facilities tot the employees, workers dedicatedly contributed to increase
its production and market share.
Employees Departments
5(Five) - Office
2(Two) - Canteen
16(Sixteen) - Motor transport
75(seventy five) - Production
43
A Study on financial statement analysis and interpretations
Comparative balance sheet for the year 2003-04 in ‘Bharathi soap works’:
2003 2004 increase decrease %
fixed assets 6665260 9310175 2644916 39.6
Investment 547330 374157 370649 67.7
prepaid exp
current assets
deposits&advances 449819 566133 11613 25.
44
4 87
Cash in hand 15956 67226 51270 321.3
Cash at bank 20083 20082 8920 44.4
claimed depreciation
100% 46599 46599
barrel stock 15652
differed chit loss 213129
Sundry debt 493007 458625 34382 6.9
closing stock 2546310 3988470 1457813 213129 158
outstanding receipts 17200 25200 8000 46.60
Total assets 10801562 15085448 4283886 39.66
current liabilities:-
252983
trade creditors 2161357 4691194 6 117
road accident claim
provision 175773.3 175773
outstanding exp 201662 225477 23815 11.8
deposits received 30512 31628 1116 3.65
investment utilize reserve 52859 52859
517693
total current liabilities 2622164 5176931 1 197.43
Long term liabilities
LIC housing finance ltd 305124 315534 10410 3.41
Indian overseas bank 999887 1160725 160838 16.08
sundaram finance ltd 385460 703200 317740 82.4
Indian bank 21434 21434
Loan creditors 1919236 1649827 269409 14.03
white gold chits pvt ltd 400000 160000 240000 60
Indian overseas
bank term loan 721487
buragadda
investments units(p)ltd 380000
363583
Total liabilities 6653305 10289138 3 54.65
shares/funds
Share capital 4148256 4796311 648055 15.6
net profit 479244 691447 212204 44.2
Total 10801562 15085449 4283886 39.66
INTERPRETATION
Current financial position:
The comparative balance sheet for year 2003-04 reveals the current assets
have increasing percentage is 0.5%. The current liabilities decreasing in this year is
45
197.43% the current liabilities decreasing more than the current assets then the
working capital position positive. This is the good working capital position.
Long term financial position

The long term liabilities are increasing in during the study period is Rs 38400/- the
percentage is also changes in this year 9.56%. If the fixed assets increase is 39.6%.
That is share holders funds can used to investment in a fixed assets.
Profitability of the company

he share holders funds are increasing the year is 15.6%. The reserve and
surplus are same for the every year. The company has to maintain the profit Rs 2,
21,204/- that is 44.21%. It shows that the company has good profitable margin.
Comparative balance statement for the year 2004-05in ‘Bharathi soap works’:
particulars 2004 2005 increase decrease %
46
fixed assets 9310175 13543394 4233218 45.4
investment 374157 314810 59347 78.1
prepaid exp 147639
current assets:-
cash on hand 67226 39467 27759 41.2
cash at bank 20083 20083
barrel stock 15652 15652
claimed depreciation
100% 46599 46599
Sundry debtors 458625 136074 322551 70.3
differed chit loss 213129 213129
deposits&advances 566133 395326 170806 304.3
closing stock 3988470 3514455 474016 11.8
outstanding recap 25200 25200
total assets 15085449 18137762 3052313 20.23
current liabilities
trade creditors 4691994 5421089 729896 15.5
investment utilize reserve 52859 52859 52859
road accident claim
provision 175773 175773 175773
deposits received 31628 32744 1116 3.52
outstand exp 225477 519081 293604 130
central ex RG23C 27260 27260
5177 109005 57228 110.2
total current liabilities 731 41 10 1
long term liabilities
LIC Housing finance ltd 4796311 261594 4534727
Indian bank 21434 21434
Indian term bank loans 721487 2871099 2149612 297
white gold chits&finance
ltd 160000 160000
buraganda investment
chits ltd 380000 380000
loan creditors 1649827 1280521 369306 22.3
293 651 35797 122.
total long term liabilities 2748 2449 01 06
811 1741 93025 114.
total liabilities 0479 2990 11 69
shares/funds
Share capital 479632 5396506 600195 12.5
net profit 691447 1490610 799163 115.5
Total 15085449 18137762 3052313 20.23
Interpretation
Current financial position
47
The current assets have increased by 8.54% and the current liabilities have
increased by 110.21%. Where as the percentage of the liabilities is more. The
liquidity position of the company is good and to maintaining a good working capital.
The working capital is negative.
Long term financial position

The balance sheet of the company reveals that during year 2004-05There is
increased fixed assets 4233218 i.e. 45.4%. The long term liabilities to outsiders have
relatively decreased by 3579701 i.e. 122.06%. It shows that the sources company is
purchasing fixed assets by using long term sources and this is effect in the working
capital.
Profitability of the company

The working capital position is negative because the current liabilities are
more comparing to current assets. The company net profit is increase during the
study period is 115.5%. The working capital position is to maintain a positive way.
Comparative balance statement for the year (2005-06 in ‘Barathi soap works’:
particulars 2005 2006 increase decrease %
1338986
Fixed assets 13543393 26933262 9 98.8
48
investment 299157 44254 270556 85.9
prepaid exp 147639 1364363 1216724 82.4
current assets:-
cash on hand 39467 177044 137578 34.8
depreciation claimed 46599 46599
deposits&advance 395326 400360 5034 1.27
barrel stock 15652
Sundry debtors 136074 2101986 1965912 14.47
closing stock 3154455 5504258 2349803 74.4
prepaid sales tax 635878
Total current assets 3787573 8866125 5078552 134.08
105
total assets 18137761 37268004 19130243 .2
current liabilities
Sundry creditor 16027662
deposits received 32744
5190
outstanding exp 81 1018821 4997411 96.2
investment utilize reserve 52859 52859
loan creditors 1280521 1976521 69600
central ex RG23C 27260 27260
road acciddent claim
provision 175773
51435 54.
total current liabilities 9506124 4362623 01 11
LIC housing ltd 261594 188064 73530 28.1

IOB term loan 2871099 5267052 2395953 83.4
total long term liabilities 34448537 42612998 8164461 25.49

total liabilities 43954661 46975621 302096 6.87
shares/funds
manickavel capital
account 5396506 9788548 4392043 81.3
net profit 1490610 3651974 2161363 144.9
105
Total 18137761 37268004 19130243 .2
Interpretation
Current financial position
49
increased by 54.11%. Where as the percentage of the liabilities is less. The liquidity
position of the company is good. The working capital is negative. The current assets
are increased at the same time current liabilities are decreases.
Long term financial position:

The balance sheet of the company reveals that during year 2005-06ere is
increased fixed assets 13543393 i.e. 98.8%. The long term liabilities to outsiders have
relatively increased by 8164461 i.e., 25.49%. It shows that the sources company is
purchasing fixed assets by using long term sources and this effect the working capital.
Profitability of the company:

The net profit is increase 2161363 that is 144.9%. To invest maximum
amount in the current assets because for the daily usage purpose.
Comparative balance sheet for the year (2006-07) in ‘Bharathi soap works’:
2006 2007 INC DEC Percentage
50
(%)
Fixed Assets 26993262 33136153 6142891 22.7
Investment 44254 502055 457801 1034.4
Pre paid EX 1364363 425988 938375 68.7
Current Assets:-
Cash on hand 177043 285179 108136 61.00
Sunday debt 2101986 3561176 145991 69.40
Depreciation claimed 100% 46599 46599
closing stock 5504257 10175201 4670944 84.8
Deposits and advance 400360 412360 12000 2.9
prepared sales tax 635878
total current assets 8866123 14480515 4937071 55.68
Total Assets(A) 37268002 48544711 11276709 30.3
Current Liabilities
Sunday credits 16027662 16338858 311196 1.94
Deposits Received 32744 32774
Outstanding EXP 1018821 2861516 1842695 180.5
Investment 51tilize reserve 52859 52859
Central Ex RG23c 27260 27260
loan credits 1976520 3674300 1697779 85.8
Total current liabilities(B) 24402918 27153216 3851670 15.78
LIC Housing Finance
Limited 188064 108719 79345 42.1
Sundaram Home finance
limited 550276
Sundaram Finance Limited 795400 1007180 211780 26.6
Total current liabilities 24402918 27153216 3851670 15.78
total long term liabilities 3076536 18720871 79345 31.82
Share holders/funds
Share cap[ital 9788548 9571561 216987 2.2
profit/loss 19960605 29476642 9516037 47.6
Total 32825689 48544711 15719022 47.89
Interpretation
51
The current assets are increased by 55.68% the current liabilities have
increased by 15.78% where as the percentage of the liabilities is less. The working
capital decrease the percentage is 17.43%.

The balance sheet of the company reveals that during year 2006-07This is
increased the fixed assets 6142891 i.e., 22.7% while long term liabilities to outsiders
have relatively increased by 79345 i.e., 31.28%. It shows that the company is
purchasing fixed assets by using share holders funds.

The assets of the company increasing for comparing the previous year and
also liabilities are increases. The liabilities are increases more than the current assets
so the working capital is negative.
Comparative balance sheet for year ended 2007-08‘Bharathi soap works’
52
particulars 2007 2008 INC DEC Percentage
Fixed assets 33136154 41018702 7882549 23.78

Investment 502055 523402 213477 4.25
Prepaid expenses 425988 331972 94061 22.08
Current assets:-
cash on hand 285179 334397 49218 17.25
depreciation clamid
100% 46599
closing stock 10175201 10069612 105589 1.03
cash at IOB 2540803 2540803
Sundry debtotrs 3561177 1804037 1757140 49.34
deposits & advance 412360 469715 57355 13.9
Total current assets 14480515 15218564 738049 5.09
Total assets 48544713 57092640 8547927 17.61
Current liabilities
Sundry creditors 16338858 17183528 799650 48.8
deposits received 32744 32744
tulasi ram chits ltd 152650 152650
Out standing exp 2861516 3048595 187079 6.53
unsured loans 3067031 3067031
investment utilization 52859 52859
current liabilities 24942413 33106874 32.73
working capital(A-B) 15437838 23985766 8547927 55.37
LIC housing finance ltd 108719 23428 85291 78.4
sundaram home finance 550276 304312 245964 44.6
IOB term loans 4165649 3107399 1058250 25.4
loan creditors 3674300 3674300
total long term
liabilities 9506154 4362623 9705031 91.5
shares/funds
Share capital 95171561 19623142 1005681 105
Net profit 4542344 5705880 1163537 25.6
Total 48544713 57092640 8547927 17.61
Interpretation:
53
increased by 32.73%. Where as the percentage of the liabilities is more. The
liquidity position of the company is increases so the working capital is negative. The
working capital decreased comparing with previous year.

The balance sheet of the company reveals that during year 2006-07. There is
increased fixed assets 7882549 i.e. 23.78%. While long term liabilities to outsiders
have relatively increased is 6485224 i.e. 14.75% by using long term liabilities to
purchasing fixed assets.

The share holders funds are increasing the year is 105%. The gross profit of
the company is increases’ comparing with previous year is 25.6%.
Comparative income statement of (2003-04) in Bharathi soap works:
particulars 2003 2004 change %
54
income house property
rent received
Annam traders 12000 21900 9900 82.5
Silpa towers 21600
(-) 30% repairs & rent 3600 13050 9450 262.5
interest paid to LIC 30000 30000
- 21600 450 22050 102.08
income from business
interest received 21454 17678 (-)3776 17.68
remuneration received 18000 18000
capital received 81453 55701 (-)25752 31.61
remuneration received from
Annam traders 51000 71000 20000 39.21
advance tax 30000
difference in book 1
net profit 479244 691477 212233 44.28
(-) income from business 651152 883829 232678 35.73
651152 880221 229069 35.17
(-) depreciation as I.T act 395759 630452 234693 59.3
255393 349768 (-) 5625 2.2
(+) income house property 450
250218
Exemption u/s 80d 7074 7074
income from
Loan term capital gain 1143000
(-) index cost 1134692
8308
(+) income from business 226718 249768 23050 10.16
226720 258530 31810 14.03
income tax payable 42016 49066 7550 16.77
(-) rebate u/s 88 120000 43840 31840 265.33
surcharge @ 2% 600 49971 49371 82.28
(-) advance tax 36316 30000 (-)6316 17.39
Total income 5520 13840 8320 150.72
Interpretation:
• The income statement is compared with 2003-04 the company will be growing
statement the income of business is increased Rs 23050/- that is 10.16%.
55
• This is earning before income tax. The income of the profitability is increased
Rs 22050/- i.e. 102.06%.
• The depreciation of the assets is subtracted from E.B.I.T is 59.5% it is earning
after tax.
• The profit of the company increases is Rs 8320/- that is 150.72. The total
income is increases in maximum income are gain from house property.
Comparative income statement of (2004-05) in ‘Bharathi soap works’:
Particulars 2004 2005 chang %
56
e
income from house property
rent received
Annam tradery 21900 18600 -3300 15
Silpa tower 21600 27900 6300 29.16
Tuticorn 24000
ginning mill 6000
43500 76500 33000 75.86
(-) repairs 43050 41220 -1830 4.25
450 35280 34830 77.4
interest received 17678 27686 12008 67.9
eligible remuneration from detergent 18000
interest on capital 55701 51582 -4119 7.39
eligible remuneration from Annam
traders 71000
advance tax 30000
difference in books
Net profit 691447 3651974 2960527 428.76
inadmissible EXP 883829 655239 -228590 25.06
(-) income from individual 3607
880221 4307213 3426992 389.03
(-) deprecission as per I.P act 630452 1741886 111434 170.29
gross total income 249768 1963039 1713271 685.54
(+) income from house property 450 19029 18579 4120.66
Total income 250218 1944010 1693792 676.52
Interpretation:
57
• The total income is compared with 2004-05 in ‘Bharathi Soap Works’. The
income of house property is Rs 34830 that is 77.4%.
• The interests received from different sources are Rs 10008/- i.e. 67.9%. The
interest on capital is decreased comparing previous year is 7.39%. in
admission expenses are decreases the comparing with present year to
previous year that is 25.06%.
• The gross total income is increases in during the year that is 685.54%. The
total income is increases that are 676.52%. The maximum income is gain
from the house property.
Comparative income statement (2005-06) in ‘Bharathi soap works’:
58
2005 2006 change %
rent received
Annam traders 18600 12000 -6600 35.4
Silpa traders 27900 24500 -3400 12.19
Tuticorn 24000 24000
bharathi cotton 6000 6000
76500 56705 -19795 25.8
Deduction
Repairs 22950 17011 -5939 25.8
Interest 18270 12454 -5816 31.5
41220 29466 -11754 28.5
35280 27239 -8041 22.7
interest on capital 81268 48918 -32350 39
Net profit 3651974 4542353 890379 24.08
inadmissible expenses
donation 2500
c lisences & taxes 178625 25000 -153625 84.02
T.D.S & income tax 435872 1592785 7156913 1641.9
Mediaterm expenditure 8424
difference in book 1646 651 -995 60.44
sundry disallowances 30672
motor licence 11550
655239 1632486 977247 149.14
Net profit + indimmisible expenses 4307213 6174840 1867627 43.56
expenditure allable
rental income 36300 42000 5700 15.7
deprecision as per provision I.T 2440708 2229147 15851039 813.33
chit dividend 88319 116268 27949 31.04
inadmission exp - EXP allow 1741886 4019961 2278075 130.78
income from other sources
dividend received 6980 7411 431 6.17
interest received 3625 701 -2924 80.06
10605 8112
miscellence Exp 94000
104605 8112 -96493 92.24
(-) deduction u/s 80l & mediolaim u/s
80d 19029 115835 96806 508.72
Total income 1944010 3988396 2044386 105.16
Interpretation:
59
• The income statement is compared with 2005-06. The income of house
property is decreased by comparing with previous year 22.7%.
• The maximum income gain from business T.D.S and income tax is Rs
7156913/- is 1641.9%.
• The gross total income is increasing is 109.07% comparing with previous year.
• The expenses of business is decreasing in the year is 92.74%. The over all total
income is increased is Rs 2044386/- i.e. 105.16%.

Particulars 2006 2007 change percentage
60
rent receives
annum trader 12000 12000
silpa tower 24500
Tuticorn 24000 6000
bharathi cotton & gining (a) 6000 6000
4200 66500 24500 58.3
Deduction
Repairs 29466 17284 -273 0.92
municipal tax 9795 8884 -911 9.3
(b) 39261 26168 -13093 33.2
(a-b) 27239 40332 13093 48.08
interest received
guntur detergents 8565 18290 9725 113.5
annum trader 40353 128196 87843 217.86
(c) 48918 146486 97568 199.4
net profit(d) 4542354 5705880 1163526 25.6
(c+d) 4591272 5852366 1061094 23.41
Donation 2500 11840 9340 373.6
T.D.S &income tax 1592785 1871021 273236 117.4
difference book 651
C fee includes in license tax 25000 14529 -10471 41.88
renual fee paid 11550 40000 -28450 246.2
(e) 1632486 1937390 304904 18.6
(c+d+e) 6174840 7789756
expenditure allowed
rental income 42000 36000 -6000 14.2
lease rent 2112878 6000 -2106878 99.7
4019961 7747756 3727796 32.7
income other source
interest received 701 9527 8826 1259
8112 140250 132138 1628.9
Dedication 80c 2 80d 115835 108424 -7411 6.3
total income 3988400 7819914 3031514 96.06
Interpretation:
61
• The income statement is compared with year 2006-07 in ‘Bharathi Soap
Works’. The total turnover of company increases large with in five years.
• The income of the house properly is 58.3% but repairs of the company that is
9.3%.
• The income of business increases 25.6%. The maximum income is gain from
Guntur detergents is 217.86%. The total income is increases’ comparing with
present year to previous year is 96.06%.

particulars 2006 2007 change percentage
62
rent receives
annum trader 12000 12000
silpa tower 24500
Tuticorn 24000 6000
bharathi cotton & gining (a) 6000 6000
4200 66500 24500 58.3
Deduction
Repairs 29466 17284 -273 0.92
municipal tax 9795 8884 -911 9.3
(b) 39261 26168 -13093 33.2
(a-b) 27239 40332 13093 48.08
interest received
guntur detergents 8565 18290 9725 113.5
annum trader 40353 128196 87843 217.86
(c) 48918 146486 97568 199.4
net profit(d) 4542354 5705880 1163526 25.6
(c+d) 4591272 5852366 1061094 23.41
Donation 2500 11840 9340 373.6
T.D.S &income tax 1592785 1871021 273236 117.4
difference book 651
c fee includes in license tax 25000 14529 -10471 41.88
renual fee paid 11550 40000 -28450 246.2
(e) 1632486 1937390 304904 18.6
(c+d+e) 6174840 7789756
expenditure allowed
rental income 42000 36000 -6000 14.2
lease rent 2112878 6000 -2106878 99.7
4019961 7747756 3727796 32.7
income other source
interest received 701 9527 8826 1259
8112 140250 132138 1628.9
Dedication 80c 2 80d 115835 108424 -7411 6.3
total income 3988400 7819914 3031514 96.06
Interpretation:
• The income statement is compared with year 2007-08 in ‘Bharathi Soap

Works’. The total turnover of company increases large with in five years.
63
• The income of the house properly is 58.3% but repairs of the company that is
9.3%.
• The income of business increases 25.6%. The maximum income is gain from
Guntur detergents is 217.86%. The total income is increases’ comparing with
present year to previous year is 96.06%.
Common size statement balance sheet for the year (2003-04) in ‘Bharathi soap
works’:
Particulars 2003 % 2004 %

fixed assets 9310175 61.7 13543393 74.6
64
investment 374157 1.17 314810 1.73
prepaid ex 147639 0.81
current assets:
cash on hand 67226 44.5 39467 0.21
cash at bank 20083 0.133
claimed depreciation 100% 46599 0.3 46599 0.25
syndicate bank 20082
differed chit loss 213129
Sundry debtors 458625 3.04 136074 0.75
barrel stock 15652
deposits&advance 566133 3.75 395326 2.179
closing stock 3988470 26.4 3514455 19.3
outstanding exp 25200 0.16
total current assets 5421198 35.89 4131920 22.78
Total assets 15105531 100 18137761 100
current liabilities
trade creditors 4691194 31.09 5421089 29.8
investment utilise reserve 52859 0.35 52859 0.29
road accident claim
provision 175773 0.96 175773
deposits received 31628 0.2 32744 0.18
outstanding exp 225477 1.49 519081 2.86
central ex RG23C 27260 0.15
total current liabilities 5176931 34.27 6228806 34.34
long tern liabilities
LIC housing finance ltd 315534 31.7 261594 1.44
Indian overseas bank 1160725 7.6 1747635 9.63
sundaram finance ltd 703200 4.66 351600 1.93
Indian bank 214343 0.14
Indian term bank loans 721487 4.78 2871099 15.8
white gold chits&finance ltd 160000 1.06
Buraganda
investments&chits ltd 380000 2.51
loan creditors 1649827 10.9 1280521 7.05
Total liabilities 10482047 69.39 12741256 70.25
shares/funds
Share capital 4796311 31.7 5396506 29.7
net profit 691447 4.5 1490610 8.21
Total 15105531 100 18137761 100
Interpretation:
65
• The analysis of balance sheet for the year 2003-04 the total investment on
fixed assets is 61.7% in the year 2003 and 74.6% in the year 2004.
• The investment on closing stock is 26.4% in the year 2003 and 19.3% in the
year 2004.
• The sources are available from current liabilities most of available from trade
creditors is 31.09% in the year 2002 and 29.8 in the year 2003.
• The long term liabilities are available from the share holders funds are 31.7%
in 2003 and 29.7% in the year 2004.
• To invest maximum in closing stock because purposes daily activities
purposes.
works’:
66
fixed assets 13543393 74.66 26933262 72.76
investment 314810 1.73 44254 0.118
prepaid exp 147639 0.81 1364363 3.66
current assets
cash on hand 39467 0.22 177044 0.47
deprecision claimed at
100% 46599 0.26 46599 0.12
deposits&advances 395326 2.17 400360 1.07
barrel stock 15652 0.08
Sundry debtors 136072 0.75 2101986 5.64
closing stock 3514455 19.37 5504258 14.7
prepaid sales tax 635878 1.7
Total assets 18137761 100.04 37268004 100.2
current liabilities
Sundry creditors 5421089 29.8 1627662 43
outstanding exp 519081 2.86 1018821 2.733
investment utilize reserve 52859 0.29 52859 0.14
loan creditors 1280521 70.5 1976521 5.3
central ex RG23C 27260 0.15 27260 0.073
road accident claim
provision 175773 0.969
current current liabilities 7509327 41.40 4735867 12.71
LIC housing ltd 261594 1.44 188064 0.5
indian overseas bank 1747635 9.63 2093072 5.61
trade creditors 5421089 29.89
Sundaram finance ltd 351600 1.94 795400 2.13
IOB term loan 2871099 15.82 5267052 14.13
total long term liabilities 10653018 58.73 8343589 22.39
shares/funds
Share capital 5396506 29.76 9788548 26.6
net profit 1490610 8.21 3651974 9.7
Total 18137761 100.04 37268004 100.24
Interpretation:
67
• The current liabilities of 2004-05 year worked out to 12.71% of the total
resource while 2004-05 year the company current liabilities accounted for
12.27% 2004-05 year took long term loans to the extent of 26.6 funds.
• On the other hand 2004-05 year long terms liabilities stood 22.39% the
capital was 2004-05 year accounted for 26.6% while that of 2004 year capital
investment is 26.6%.
• From the above it can be concluded that the 2004-05 year is keeping more in
current assets. Leading to less return on its investment further 2004-05 year
capital structure is also defective since it is depending more on equity on the
other hand; 2005 year financial position is good. To comparing with previous
year.
Common size statement balance sheet for the year (2005-06) in “Bharathi soap
works”:
68
Fixed assets 26993262 72.4 33136153 68.2
Investment 44254 0.11 502055 1.03
Prepaid Ex 1364363 3.66 425988 0.87
current assets
cash on hand 177044 0.47 285179 0.58
Sundry debt 2101986 5.64 3561177 7.33
Depreciation claimed
(100%) 46599 0.12 46599 0.09
Deposits&advance 400360 1.07 412360 0.84
Closing stock 5504258 14.7 10175201 20.9
Prepaid Sales Tax 635878 1.7
Total Assets 37268004 99.87 48544712 99.84
Current liabilities
Sundry credits 16027662 43 16338858 33.66
Deposits Received 32744 0.08 32744 0.06
Outstand Exp 1018821 2.73 2861516 5.89
Investment utilize
reserve 52859 14 52859 0.1
CentralEx RG23C 27260 0.073 27260 0.056
loan creditors 1976521 5.3 3674300 7.56
Total current liabilities 19135867 51.36 22987537 47.35
LIC Housing Finance
LTD 188065 0.5 108719 0.22
Indian Overseas bank 2093072 5.6 5611436 11.5
Sundaram home finance
ltd 550276 1.13
Sundaram Finance Ltd 795400 2.13 1007180 2.07
IOB term loan 5267052 14.13 4165649 8.58
Total Liabilities 27479456 73.73 11443260 23.74
Shares&funds
manckavel 9788548 26.2 9571561 19.7
Profit/loss 3651974 9.79 14113915 29.07
Total 37268004 99.87 48544712.04 99.84
Interpretation:
69
The analysis of balance sheet of 2005-06 as on 31 st December reveals that the
2006 year invested 1.03% of resource in current assets and 25.52% of resource in
fixed assets where as 2005 invested 74.3% in current assts as will fixed assets. .
The current liabilities of 2006 year worked out to 64.9% of the total resource
while 2005 year the company current liabilities accounted for 47.35% 2005-06 year
took long term loans to the extent of 47.35 funds. On the other hand 2006 year long
terms liabilities stood 0.54% the share holder funds was 2006 year accounted for
9.15% while that of 2006 year capital is 26.2%.
From the above it can be concluded that the 2006 year is keeping more in
current assets. Leading to less return on its investment further 2005 year capital
structure is also defective since it is depending more on equity on the other hand.
2005 year financial position is improved.
works’:
70
Particulars 2006 Percentage (%) 2007 percentage
Fixed Assets 35136153 72.3 41018702 71.84
investment 502055 1.03 523402 0.91
prepaid Exp 425988 0.87 331972 0.58
current assets:-
Depreciation
clamied100% 46599 0.10
closing stock 10175201 20.96 10069611 17.64
cash at IOB 2540803 4.45
Sundry debtors 3561177 7.3 1804037 3.15
deposits&advance 412360 0.84 469715 0.82
Total assets 48544712 100 57092639 100
Current liabilities:
Sundry creditors 1683858 3.46 17183528 30.09
tulasi ram chits ltd 156250 0.27
outstanding exp 2861516 5.89 3048595 5.33
Unsecured loans 3067031 5.37
investment utilization 52859 1.088
total current liabilities 10242413 21.19 33106874 64.9
LIC housing finance ltd
sundaram home finance
ltd 108719 0.22 23428 0.04
IOB term loans 1007180 2.07 927484 1.624
loan creditors 4165649 8.58 3107399 5.4426
total long term liabilities 3674300 7.56
19748537 65.63 37469498 65.63
Shares/funds
Share capiital 9571561 19.7 19623142 34.3
net profit 4542344 9.3 5705880 9.9
Total 48544712 100 57092639 100
Interpretation:
71
2007 year invested 0.91% of resource in current assets and 30.18% of resource in
fixed assets where as 2007 invested 30.18% in current assts as will fixed assets.
while 2007 year the company current liabilities accounted for 65.63% 2007 year
41.15% while that of 2007 year share holder’s funds is 34.3%.
works’:
72
Particulars 2007 Percentage (%) 2008 percentage
Fixed Assets 41018702 71.84 43415660 63.26
investment 523402 0.91 303402 0.44
prepaid Exp 331972 0.58 1617347 2.36
current assets:-
Cash in hand 334397 0.456 1062443 1.55
closing stock 10069611 17.64 19872779 28.96
cash at IOB 2540803 4.45 780.58 0.11
Sundry debtors 1804037 3.15 1757698 5.26
deposits&advance 469715 0.8 -- --
Total assets 57092639 100 68632104 99.24
Current liabilities:-
Sundry creditors 17183538 30.09 30053097 53.79
tulasi ram chits ltd 156250 0.27 -- ---
outstanding exp 3058595 5.33 22401527 3.51
Unsecured loans 3067031 5.37 2425381 3.58
Long term liabilities:-
LIC housing finance ltd -- --- --- --
sundaram home finance
ltd 23428 0.04 -- --
IOB term loans 927484 1.62 2332657 3.39
loan creditors 3107399 5.44 -- --
Bharthi soap work
finance --- --- 6000000 0.87
Shares/funds:
Share capital 19623142 34.3 13615412 5.48
Total 57092639 100 6832104 100
Interpretation:
73
2008 year invested 0.8% of resource in current assets and 63.6% of resource in fixed
assets where as 2008 invested 30.18% in current assts as will fixed assets.
while 2007 year the company current liabilities accounted for 43.79% 2008 year
41.15% while that of 2008 year share holder’s funds is 34.3%.
TREND ANALASIS OF BSW FOR THE YEAR 2003 TO 2008

Particulars 2003 % 2004 % 2005 %
74
Fixed assets 9317175 100 1354339 145.4 2693362 28.9
investments 176681 100 314810 178.1 44254 250.3
Prepaid expenses 147639 1364363
Current assets:-
Cash on hand 67226 100 39467 58.7 177044 263.3
Cash at bank 20083 100
depriciation climed(100%) 46599 100 46599 56499
sundry debtors 458625 100 136074 29.6 2101986 458.3
deposits and advances 566133 100 395326 69.8 400360 70.3
closing stock 39884870 100 3514455 88.1 5504258
outstanding expenses 25200 100 635878
Total assets 15085449 100 18137761 120.23 37268004 247
Current liabilities:-
BSW finance
sundry creditors 4691194 100 5421089 115.5 16027662 341.7
Investments utilize 52859 100 52859 585259
road accidents claim 1757731 100 1757731
deposits received 31628 100 32744 103.5 32744 103.5
outstanding expenses 225477 100 519081 230.2 1018821 451.9
central tax duties 27260
IOB term loans 27260 5267052
Long term liabilities:-
LIC housing finance 4796311 100 261594 5.45 188064 3.92
Indian oversis bank 1160725 100 1747635 150.45 2093072 180.3
Sundaram home finance
sundaram finance limited 703200 100 351600 50 795460 113.1
Indian bank term loans 21434 100 2871099 3.97
white gold chit finance 160000 100
Buruguda investments 380000 100
loan creditors 1649827 100 1280571 77.6 19135867 1159.5
manickval capital 4796311 100 5396506 112.5 9788548 16.44
Net profit 691447 100 140610 215.5 3651974 528.2
Total 15085449 100 18137761 120.23 37268004 247
2006 % 2007 % 2008 %
75
33136153 33.65 41018702 440.2 43415660 465.9
502055 284.2 523402 296.2 303402 171.7
425988 331972 1617347
285179 424.2 334397 497.4 1062443 1580
2540803 126.51 78058 388.7
46599
3561177 776.5 1804037 393.3 1757698 38.31
412360 72.8 469715 82.96 524715 92.7
10775201 27.01 10069611 26.75 19872779 49.8
3048595 12097.5
4944712 325.8 57092639 378.46 6863204 454.9
16338858 348.3 17183528 366.3 30053097 640

52859
32744 103.52 32744 103.52 32744 103.53

2861516 1269 3048595 1352.6 2401527 106.5
27260
4165649 3107399 2332657 50.6
156250 2425381
108718 2.26 3067031 0.488 9847778 848.4
5611436 483.4
550276 304312
1007180 143.22 927484 131.89 2903581 412.91
3674300 222.7
9571561 199.5 19623142 409.12 13615412 283.87
29476642 4263 5705880 825.2 4392926 635.3
Interpretation:
76
The analysis of current assets and current liabilities revels that the not
working capital decreased over the year. The fixed assets of company through
decline during the year 2002 increased substantially in the later year. More
particularly the company invested more amounts of cash at bank during 2003 and
2004.
Depositors received increasing by 3.6% in the year 2004 The study on the
other hand net profit increased 44.2% there is a two flood increases in the reserve
position of the company on the whole, share holders funds increased by 30.08%
during the period of study.
working capital decreased over the year. The total assets of the company increased
by 20.23% in the year 2004.
The fixed assets of the company increases during the year are 45.4%. The
investment of the company increases the 78.1 % in the year 2004.
Depositors received remained constant during the period of the study on the
other hand net profit increased 115.5% there is a two flood increases in the reserve
position of the company on the whole, share holders funds increased by 12.23%
during the period of study. Net profit increased by 15.5%.
Funds flow statement:
77
statement changes in working capital
previous year current year working capital

increase/ decrease
current assets **** ****
stock **** ****
cash **** ****
bank **** ****
bills receivable **** ****
prepaid expense **** ****
total assets(a) ***** *****
current liabilities
creditors **** ****
bills payable **** ****
outstanding expense **** ****
total liabilities(b) **** *****
working capital(a-b) **** ****

incre/decr in w.c **** ****
total ***** ***** *****
FUNDS FLOW STATEMENT
78
sources of fund amount application of funds amount
redemption of redeemable
issue of shares **** preference shares ****
issue of debenture **** redemption of debentures ****
long term borrowing **** payment of other long term loans ****
sale of fixed assets **** purchase of fixed assets ****
operating profit **** operating loss ****
decreasing w.c **** payment of dividends taxes ****
increasing w.c ****
**** ****
Funds flow statement for the year 2003-04:
79
particulars 2003 2004 increase decrease
current assets
sundary debt 458624 136073 322551
cash on hand 67225 39466 27759
cash at bank 20082 20082

deposits & adv 566133 395326 170807
closing stock 3988470 3514454 474016
outstanding rec 25200 25200
prepaid expen 147638 147638
total C.A 5141386 4248609
current liabilities
sundry debt 4691193 5421089 729896
out standing rept 225477 519080 293603
deposits received 31628 32744 1116
road accident claim 175773 175773
total C.L 5124071 6148686
net working capital 17315 -1900077

decreasing w.c 1917392 1917392
17315 17315 2065030 2065030
Funds from oparations
sources amount application amount

decreasing w.c 1917392 investment 645505
sales the fixed assets 4233218 Long term sources 1400242
issue of shares 600195 net profit 4705058
6750805 6750805
Interpretation
Above table shows that the current assets and current liabilities revels that the
net working capital decreased over the year. More particularly the company invested
more amounts of cash at bank during 2003 and 2004
In that period the sources founds revels that fixed assets are sold and increase
the long term source
Funds flow statement for the year 2004-05;
80
particulars 2004 2005 increases decreases
current assets
cash on hand 177043 285179 108136
deposits & advances 400360 41236 12000
sundry debt 2101985 3561176 1459191
closing stock 5504257 10175201 4670944
prepaid sales tax 635878 635878
prepaid expenses 934363 425983 508375
total current assets 9769538 14859904
current liabilities
sundry creditors 16027661 16338858 311197
deposits & advances 32744 32744
out standing expenses 1018821 2861515 1842694
total current liabilities 17079226 19233117
net working capital -7309688 -4373213

increase w.c 2936475 2936475
-4373213 -4373213 6250271 6250271

6750805 6750805
Interpretation
Above table shows that the current assets and current liabilities revels
that the net working capital decreased over the year. More particularly the company
invested more amounts of cash at bank during 2004 and 2005
In that period the sources founds revels that fixed assets are sold and
increase the long term source
Funds flow statement for the year 2005-06:
81
current assets
cash on hand 177043 285179 108136
sundry debt 2101985 3561176 1459191
closing stock 5504257 10175201 4670944
prepaid sales tax 635878 635878
prepaid expenses 934363 425983 508375
current liabilities
deposits & advances 32744 32744

increase w.c 2936475 2936475
-4373213 -4373213 6250271 6250271
Funds from operations

Sources Amount application amount
6750805 6750805
INTERPRETATION
working capital decreased over the year. The total assets of the company increased
by 20.23% in the year 2005-06.
Funds from operation sources of are increase than application of funds in the
year 2005-06.
Funds flow statement for the year 2006-07
82
current assets
cash in hand 285179 334397 49218
sundry debt 3561176 1804306 1756870
cash at bank 2540803 2540803
prepared expenses 425988 331972 94016
closing stock 10175201 10069611 105590
current liabilities
-4373213 -4373213 2988225 2988225
Funds from operation:

decreasing w.c 340849 long term investment 7080636
sale of fixed assets 7882548 net profit 1164114
investment 21348
8244745 8244745
INTERPRETATION
increased by 54.11%. Where as the percentage of the liabilities is less. The liquidity
position of the company is good. The working capital is negative. The current assets
are increased at the same time current liabilities are decreases.
Funds flow statement for the year 2007-08
83
current assets
cash in hand 285179 334397 49218
sundry debt 3561176 1804306 1756870
cash at bank 2540803 2540803
prepared expenses 425988 331972 94016
closing stock 10175201 10069611 105590
current liabilities
-4373213 -4373213 2988225 2988225
Funds from operation

decreasing w.c 340849 long term investment 7080636
sale of fixed assets 7882548 net profit 1164114
investment 21348
8244745 8244745
INTERPERTATION
The current assets have increased by 5.09% and the current liabilities
have increased by 32.73%. Where as the percentage of the liabilities is more. The
liquidity position of the company is increases so the working capital is negative. The
working capital decreased comparing with previous year
RATIO ANALYSIS
LIQUIDITY RATIOS
84
Liquidity ratios judge the firm’s ability to meet short-term obligations.
The firm has to maintaine 2:1 current ratio is better. These ratios give a good insight
into a firm’s ability to remain solvent in the events if advertising for this purpose;
Short-term resources are composed with short-term obligations.
CURRENT RATIO
Current assets
Current Ratio =
Current liabilitie s
This ratio relates current assets to current liabilities. It is found out

dividing current assets by current liabilities. It is the most commonly used measure of
short – term solvencies.
(Rs in 000’s)
Years Current assets Current liabilities Current ratio
2003-04 5141.386 4948.298 1.039
2004-05 4248.609 5972.913 0.711
2005-06 10228.609 17079.226 0.599
2006-07 14859.904 19233.117 0.772
2007-08 15550.534 20264.866 0.767
CURRENT RATIO
85
1.2
1.039
1
0.772 0.767
0.8 0.711
Ratios
0.599
0.6
0.4
0.2
0
2003-04 2004-05 2005-06 2006-07 2007-08
Years
INTERPRETATION:
The identified current ratio 2:1 is healthy liquidity position for every firm.
The current ratio has been fluctuating in the study period. In the year 2003-04 the
current ratio was recorded 1.039. In the year 2004-05 the current ratio fall down from
1.039 to 0.711 later on in the year 2005-06 the ratio slightly decreased from 0.711 to
0.599. Then after the ratio gone up from 2006-08 i.e., the ratio gone up from 0.599 to
0.769 the maximum current ratio recorded 1.0399 in the year 2003-04.The minimum
current ratio recorded 0.599 in the year 2005-06.
Above the changes occurred due to the inventory has been fluctuating and
Current liabilities has been increasing year to year during the study period.
QUICK RATIO / LIQUID RATIO
86
Liquid assets
Quick Ratio =
Liquid assets = Current assets – (Inventory + prepaid expenses)
This is a narrow measure of liquidity; this ratio concentrates on cash, marketable

receivables in relation to current obligation. Company actually maintained 1:1 ratio is
better to meet future requirements. So, it provides a more penetrating measure of
liquidity than current ratio.
(Rs in 000’s)
Years Liquid assets Current liabilities Current ratio
2003-04 1137.264 4948.298 0.220
2004-05 570.865 5972.913 0.095
2005-06 2679.388 17079.226 0.156
2006-07 4258.715 19233.117 0.221
2007-08 5148.951 20264.866 0.254
QUICK RATIO
Bar Chart – 4.2
87
0.3
0.254
0.25 0.22 0.221
0.2
Ratios
0.156
0.15
0.095
0.1
0.05
0
2003-04 2004-05 2005-06 2006-07 2007-08
Years
INTERPRETATION:
The standard quick ratio 1:1 is considered healthy liquidity position for every
company. The quick ratio has been varying through out the study period. The quick
ratio was noticed 0.220 in the year 2003-04. In the year 2004-05 the quick ratio fall
down from 0.220 to 0.095. Later on there is an improvement from the year 2005-08
i.e., the liquid ratio was increased from 0.095 to 0.254. The peak value of the quick
ratio was recorded 0.254 the trough value of the quick ratio was noticed 0.095 in the
year 2004-05.
Above the variations occurred due to the fact that the sundry debtors volume
fluctuated through out the study period.
88
CASH RATIO/ABSOLUTE LIQUID ASSETS RATIO
Cash & Marketable securities

CASH RATIO: =
This ratio is also known as super quick ratio. The firm must be maintained 0.5:1 cash
ratio is better. It reflects only the absolute liquidity available with the firm.
(Rupees in 000’s)
Years Cash and marketable Current liabilities Current ratio
securities
2003-04 87.307 4948.298 0.018
2004-05 39.466 5972.913 0.007
2005-06 177.043 17079.226 0.010
2006-07 285.179 19233.117 0.015
2007-08 2875.2 20264.866 0.142
89
CASH RATIO
0.16
0.142
0.14
0.12
Ratios
0.1
0.08
0.06
0.04
0.018 0.015
0.02 0.007 0.01
0
2003-04 2004-05 2005-06 2006-07 2007-08
Years
INTERPRETATION
The ideal absolute quick ratio 0.5:1 is considered satisfactory position for every
organization. The absolute quick ratio has been varying in the study period. In the year
2003-04 the absolute quick ratio was recorded 0.018. In the year 2004-05 the absolute
quick ratio fall down from 0.018 to 0.007. Later on the absolute quick ratio was
increased from the year 2005 to 2008.i.e, the ratio was increased from 0.007 to 0.142.
The highest ratio was noticed 0.142 in the year 2007-08. The lowest ratio was noticed
0.007 in the year 2004-05.
Above the changes happened owning to the reason that the cash volume has
been varying year to year in the study period. The company has maintained highest
cash volume in the year 2007-08.
90
PROPRIETORY RATIO
It expresses the relationship between the proprietor’s fund (shareholders fund)

and the total assets. It is calculated as follows:-
Share holders fund

Proprietory ratio = ×100
Total tangible assets
Share holders fund = Net worth
Years Net worth Total tangible assets Ratio

2003-2004 5487.757 14872.32 0.368
2004-2005 6887.115 18137.761 0.379
2005-2006 13440.521 37268.003 0.361
2006-2007 18656.267 48544.712 0.384
2007-2008 25329.022 57092.639 0.444
91
PROPRIETORY RATIO
0.5
0.444
0.45
0.379 0.384
0.4 0.368 0.361
0.35
Ratio
0.3
0.25
0.2
0.15
0.1
0.05
0
2003-04 2004-05 2005-06 2006-07 2007-08
Years
INTERPRETATION:
The proprietroy ratio has been increasing in the year period except the
year 2005-06. In the year 2003-04 the proprietory ratio was noticed 0.368. In the year
2004-05 the proprietory ratio gone up from 0.368 to 0.379. Then after in the year
2005-06 the propretory ratio fall down from 0.379 to 0.361. Later on the proprietory
ratio gone up from 0.361 to 0.444 since the year 2006-08.The maximum proprietory
ratio is 0.444 in the year 2007-08. The minimum proprietory ratio is 0.361 in the year
2005-06.
Above the changes occurred due to the reason that increase in networth more
than increase in total tangible assets.
92
WORKING CAPITAL TURNOVER RATIO
The working capital turnover ratio studies the velocity or utilization of the working
capital if the firm during the year.
Net Sales
Working capital turnover ratio = Networking capital
Networking capital = Current assets – Current liabilities.
(Rupees in 000’s)
Years Net sales Networking capital Ratio
2003-2004 8432.352 193.088 43.67
2004-2005 16085.051 -1724.304 -9.32
2005-2006 60953.134 -6850.611 -8.891
2006-2007 72769.815 -4373.213 -16.63
2007-2008 87119.114 -4714.332 -18.479
WORKING CAPITAL TURNOVER RATIO
93
50 43.67
40
30
Ratio
20
10
0
1 2 3 4 5
-10
-9.32 -8.891
-20 -16.63 -18.479
-30 2003-04 2004-05 2005-06 2006-07 2007-08
Years
INTERPRETATION
The working capital turnover ratio has been decreasing year to year in the study
period. In the year 2003-04 the working capital turnover ratio was recorded 43.67. The
working capital turnover ratio declined from 43.67 to -9.32 in the year 2004-05.
The working capital turnover ratio slightly increased from -9.32 to -8.891 in the year
2005-06. Later on the working capital turnover ratio fall down -8.891 to -18.479 from
tyear 2006-08. The peak value of the working capital turnover ratio recorded 43.67 in
the year 2003-04. The trough recorded -18.479 in the year 2007-08.
Above the fluctuations occurred due to the fact that the networking capital
gradually decreasing year to year in the study period.
NET PROFIT RATIO:
94
The net profit ratio reveals the overall profitability of the concern. It reveals the
efficiency of management in manufacturing, selling and administrative and other
activity of the firm.
Net profit
Net profit Ratio = ×100
Sales
(Rupees in 000’s)
Year Net Profit Net sales Ratio
2003-2004 691.447 8432.352 8.199
2004-2005 1490.610 16085.051 9.267
2005-2006 3651.973 60953.134 5.991
2006-2007 4542.353 72769.815 6.242
2007-2008 5705.880 87119.174 6.549
NET PROFIT RATIO
95
10 9.267
9
8.199
8
7 6.549
5.991 6.242
Ratios
6
5
4
3
2
1
0
2003-04 2004-05 2005-06 2006-07 2007-08
Years
INTERPRETATION
The net profit ratio has been varying in the study period. The net profit ratio
was noticed 8.199 in the year 2003-04. In the year 2004-05 the net profit ratio raised
from 8.199 to 9.267. Then after the net profit ratio falldown from 9.267 to 5.991 in the
year 2005-06. Later on the net profit ratio again increased from 5.991 to 6.549 from
the year 2006 to 2008. The highest value of net profit ratio was noticed 9.267 in the
year 2004-05. The lowest value of net profit ratio was noticed 5.991 in the year 2005-
06.
Above the variations occurred due to the reason that more increase in net sales
in proportion to increase in net profit.
FINDINGS:
96
 The current ratio identified ratio is 2:1 the company did not reach during the
study period because of current liabilities increasing value is grater than
current assets increasing volume.
 The liquidity ratio is increasing slightly. The liquidity ratio is unsatisfactory
because the current liabilities are increasing year to year. The liquidity assets
decreasing.
 The quick ratio is unsatisfactory. The current liabilities are increasing
during the year to year. The quick assets are decreasing the year to year. To
maintain the good quick assets by daily activities.
 The debt equity ratio is insufficient because the year 2006-07decreasing that
year. It is very least comparing previous years. If the cost of goods sold and
average inventory increase but debt equity is decreases.
 The working capital is negative instead of 2003-04 the net sales is increase
but current assets are decrease and current liabilities are increases.
 The fixed assets turnover ratio is insufficient the net sales and fixed assets
are increase but turnover is decreasing the highest fixed assets turnover in the
year 2004-05.
 The debt collection period is fluctuated in the study period. The highest
collection period is 19.85 and the lowest collection period is 6.70.
 The gross profit ratio slightly in the study period the highest gross profit
ratio is 38.74 and minimum gross profit ratio is 25.16. In the year 2007-08 the
net sales, gross profit increase but decrease the gross profit ratio because
increase the net sales of the company more than the gross profit.
 The net profit ratio fluctuated in the study period. The net profit ratio is
insufficient the maximum net profit ratio is 9.27 in the year 2004-05.
 The return on investment fluctuated during the study period. It is
insufficient the maximum satisfactory of rate of return is 18.13 in the year
2007-08
SUGGESTIONS
97
 It is suggested to B.S.W to increase the volume of the current assets it is butter
to meat the net working capital requirement.
 It is suggested to B.S.W to maintain the increase liquidity ratio. The liquidity
ratio at least tries to maintain the 1:1 ratio.
 It is suggested to the B.S.W to improve the quick ratio the company to improve
the quick assets to try to maintain the ratio 0.5:1.
 It is suggested to B.S.W debt equity ratio is 2:1 just try to maintain this ratio.
 It is suggested to B.S.W to maintain good debt equity but cost of good sold and
average inventory maintained was sufficient. To maintain in the same way.
 It is suggested to the B.S.W to improve the positive working capital and
decreasing the current liabilities. To maintain current assets and current liabilities
in proper way.
 It is suggested to B.S.W to maintain the fixed assets insufficient way. The sales
and fixed assets are maintained in a proper way.
 It is suggested to the company has to maintain the minimum collection period.
The best collection period in the year 2004-05.
 It is suggested to the B.S.W has to maintain maximum gross profit ratio. It is
decreasing in the year 2005-07 comparing with previous year to improve the
profit company.
 It is suggested to B.S.W to improve the net profit ratio. The minimum in the
year 2004-05. The maximum in the year 2006-07 to maintain in the same way.
 It is suggested to B.S.W better to invest the highest rate of return. In the year
2007-08 the rate on investment ratio is decrease comparing with previous years.
CONCLUSION
98
The project study conducted to analyzing and evaluating the financial
performance
Of the Bharathi Soap Works by using fallowing tools:
Comparative balance sheet
Comparative income statement
Common size statement
Trend analysis
Ratio analysis
The researcher observed that by using statement to know the trend of the
company. By using ratio analysis the how to fluctuating and by using ratio like
liquidity, leverage, turnover, and profitability ratio with in the study period the
investor suggested B.S.W that there is a need improvement of liquidity,
profitability, and turnover of the organization.
By using balance sheet, income statements to prepare comparative, common

size, funds flow, cash flow statement and ratio analysis by using these are to
obtained exact financial position of the company and liquidity of the company.
99
BIBLIOGRAPHY
Financial management - By Khan & Jain
Financial management - By I.M.Pandy
Financial management - By Prasana Chandra

Theory & practice
Financial management - By Ravi. M.Kishore
Financial management - S.N.Maheswar
Corporational financial - S.L.Kuchal
Management accounting - R.K. Sarma & Shasi

K.Gupta
100

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Financial Statement Analysis1

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INTRODUCTION

The analysis of financial statements is a process of evaluating the various

Financial statements summarize the economic consequences of the business

Analysis of financial statements can provide valuable insights into a firm’s

Features of balance sheet:

1. Balance sheet is prepared as specific date. Hence, it shows financial position of

Evaluation of balance sheet:

Meaning and concept of financial analysis:

Objects of financial analysis:

Importance financial analysis:

To know the operational:

Helpful in measuring the solvency of the firm:-

Help in measuring the profitability:

Inter firm comparison:

Helps in judging the solvency of the undertaking:

Bankruptcy and Failure:

On the basis of On the basis of

External Internal Horizontal Vertical

Types of financial analysis

On the basis of material

On the basis of modus operand

Methods of financial analysis

1. Comparative balance sheet statement

Common size statement:

1. State the total of the statement as 100 percentages.

1. Selection of a base year.

Funds flow statements:

Although financial statement useful information to the management and

Cash flow statement

 Operating actives involve producing and selling goods and services.

The various methods or techniques used in analysis financial statement, such

1. Comparison of a firm with its own performance in the past.

Method of ratio analysis

1. It is only a study of interim reports.

Nature of financial statement analysis

Needs of the financial analysis

1. To know the purpose of each companies.

Methods of data collection

LIMITATIONS OF THE STUDY

Price level changes

1. In the first chapter various theoretical aspects relating to ‘financial statement

India is a vast country with a population of 1,030 million people. Household

• Soap price (per 75 gram cake)

The history of soap ?

The history of soap making

How does soap clean?

Detergent: Product the formulation of which is specially devised to promote the

Surface Active Agent: Chemical compound which, when dissolved or

In common, however, with other chemical developments during this century,

Availability of raw materials;

Cost of raw materials;

Suitability of finished product.

As a result of its ease of manufacture and versatility, the alkyl benzene

SYNTHETIC DETERGENTS PRODUCTION:-

To give an idea about the enormous rise in synthetic detergent production,

Comparative Domestic Domestic

1960 (1000 tons) 1425 640

1970 (1000 tons) 2672 1773

1980 (1000 tons) 3000 2228

2000 (1000 tons) 4280 3287

2007 (1000 tons) 4500 3885

GRAPHICAL REPRESENTATION OF PRODUCTION

LOW PRICED BRANDS

working capital(a-b)

issue of debenture redemption of debentures

sale of fixed assets purchase of fixed assets

operating profit operating loss

decreasing w.c payment of dividends taxes