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A

Project report on

FINANCIAL ANALYSIS
at
ASHAPURA VOLCLAY LTD.

Submitted By:

Jyoti Gorasiya
Roll no.: 12
Batch: 2009-2014

For
Masters of Business Administration
Submitted to:
Dr. P. S. Hirani
Dept. of Commerce & Management.
1

CERTIFICATE

PREFACE
We, the student of M.B.A., are taught with all the little things theoretically about
managing a business and about administration an organization, but to know the real
happening of the world, Department of Commerce And Management have recommended
a practical project. This is with a view to strike a balance between the theory that is
taught at the classroom of a college and its application in the real life.
The importance of practical exposures cant be neglected. The practical aspect is
very essential not only to enhance the theoretical concepts but also to know the practical
problem and their remedies.
Many a times, we have heard that Knowledge is Power, but now a days a more
prevailing quote is Applied Knowledge is Power.
For example, swimming cannot be learnt unless and until we move from land to
water though we have read hundreds of books of swimming.
As swimming, Management functions cannot be understood properly without
practical application. So for management Applied Knowledge is Power seems to be
true. So for getting practical knowledge, we have taken training from the great company
Ashapura Volclay Ltd.

ACKNOWLEDGMENT
Any single person can not complete project successfully without getting support
from others. A lot of people contribute towards it, whether directly or indirectly. Our
project, as a part of MBA course is no different, and i would like to take this opportunity
to express our gratitude towards all the people who have made the difference.
I express my sincere gratitude to all faculties of Department of Commerce &
Management for their kind assistance and guidance in accomplishment of this project.
I specially thanks to Mr. D.S.Tripathi (Manager Hr & Admin), Mr. Mahesh
Chandani (GM Operations) & Mr. Mahesh Chauhan (Manager-Account) and all staff
of AVL. It is because of their guidance and co-operation without which it would not have
been possible for me to complete my project.
I thankfully recognize all those who have directly or indirectly contributed to the
success of this project by providing a wealth of information in the form of literature and
sharing of their experiences and opinions.

Jyoti Gorasiya

DECLARATION
I, Jyoti Gorasiya, student of 3 rd year, MBA (Int.) hereby declare that this project
work titled Financial Analysis at M/s. Ashapura Volclay ltd is my original work and is
being submitted in partial fulfillment for the award of the MBA of K.S.K.V. Kachchh
University. This report has not been submitted earlier either to this University or to any
other University/Institution for the fulfillment of the requirement of a course.

Facultys Signature

Students signature

TABLE OF CONTENTS

Preface............................................................................................................................................3
Acknowledgment............................................................................................................................4
Declaration.....................................................................................................................................5
Table Of Contents...........................................................................................................................6
List Of Tables.................................................................................................................................8
List Of Figures................................................................................................................................9
List Of Abbreviations...................................................................................................................10
Chapter 1......................................................................................................................................12
1.

Introduction..........................................................................................................................12
1.1. Objectives..........................................................................................................................12
1.2. Rationale............................................................................................................................13
1.3. Data Analysis.....................................................................................................................13
1.4. Plan Of The Study..............................................................................................................13
1.5. Concluding Observation....................................................................................................14

Chapter 2......................................................................................................................................15
2.

Company Introduction And Literature Survey......................................................................15


Section-I...................................................................................................................................15
2.1. Introduction Of Ashapura Group Industries......................................................................15
2.2. Profile Of Ashapura Volclay Ltd.......................................................................................17
2.3. CSR Activities By Ashapura...............................................................................................18
Section-II..................................................................................................................................20
2.1. Literature Review...............................................................................................................20

Chapter 3......................................................................................................................................22
3.

Departments..........................................................................................................................22

Chapter-4......................................................................................................................................32
4. Ratios Of Head Office..............................................................................................................32
Section-I...................................................................................................................................32
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4.1. Profitability Ratio Analysis................................................................................................32


Section-II..................................................................................................................................37
4.2. Capital Gearing Ratio........................................................................................................37
Section-III.................................................................................................................................43
4.3. Concluding Observations...................................................................................................43
Chapter-5......................................................................................................................................44
5. Ratios Of Branch......................................................................................................................44
Section-I...................................................................................................................................44
5.1

Liquidity Ratio Analysis...............................................................................................44

Section-II..................................................................................................................................47
5.2. Turnover Ratios.................................................................................................................47
Section-III.................................................................................................................................50
5.3. Profitability Ratio Analysis................................................................................................50
Section-IV.................................................................................................................................56
5.4. Concluding Observations...................................................................................................56
Chapter 6......................................................................................................................................57
6. Operating, Financial And Combined Leverage.........................................................................57
Chapter 7......................................................................................................................................60
7.Working Capital Management..................................................................................................60
Section-I...................................................................................................................................63
7.1. Concluding Observations...................................................................................................63
Chapter 8......................................................................................................................................64
8. Conclusions, Findings And Suggestioins..................................................................................64
References....................................................................................................................................67
Annexures.....................................................................................................................................68

LIST OF TABL
Table 4-1: Profitability Ratios Related to Investments of Ashapura Volclay Ltd., 20002009...................................................................................................................................34
Table 4-2: Profitability Ratios Related to Investments of Ashapura Volclay Ltd., from
F.Y. 2008-09 to 2010-11....................................................................................................34
Table 4-3: Profitability Ratios Related to Investments of Ashapura Volclay Ltd., from
F.Y. 2008-09 to 2010-11....................................................................................................36
Table 4-4: Various Amt. of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-11........39
Table 4-5: Capital Structure Ratios for Ashapura Volclay Ltd., from F.Y. 2008-09 to
2010-11..............................................................................................................................39
Table 4-6: EBIT & Sale of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-11...........42
Table 4-7: Interest Coverage Ratio of Ashapura Volclay Ltd., from F.Y. 2008-09 to 201011.......................................................................................................................................42
Table 5-1: Current assets of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11...................45
Table 5-2: Current liabilities of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.............45
Table 5-3: Short-term Solvency Ratios of Ashapura Volclay Ltd., F.Y.2008-09 to 201011.......................................................................................................................................46
Table 5-4 : Various amount for Turnover Ratios of Ashapura Volclay Ltd., F.Y.2008-09 to
2010-11..............................................................................................................................48
Table 5-5: Turnover Ratios of Ashapura Volclay Ltd., 2008-2011....................................49
Table 5-6 :G.P. &N.P. for Profitability Ratios Related to Sales of Ashapura Volclay ltd
from F.Y. 2008-09 to 2010-11............................................................................................52
Table 5-7: Profitability Ratios Related to Sales of Ashapura Volclay Ltd., from F.Y. 200809 to 2010-11.....................................................................................................................52
Table 5-8: Expenses of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-2011............54
Table 5-9: Expenses Ratio of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-11.......54
Table 6-1 : Amt. for Leverage of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-2011
...........................................................................................................................................57
Table 6-2: Operating, Financial and Combined Leverage for Ashapura Volclay Ltd., from
F.Y. 2008-09 to 2010-11....................................................................................................58
Table 7-1: Current assets of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.
(Amt. in
lakhs)
61
Table 7-2: Current liabilities of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.............62
Table 7-3: Working capital of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11................62
Y

LIST OF FIGURES
Figure 4-1:Ratios Related to Investments of Ashapura Volclay Ltd., from F.Y. 2008-09 to
2010-11..............................................................................................................................35
Figure 4-2: Ratios Related to Investments of Ashapura Volclay Ltd., from F.Y. 2008-09 to
2010-11..............................................................................................................................36
Figure 4-3: Capital Structure Ratios of Ashapura Volclay Ltd., 2008-09 to 2010-11.......40
Figure 4-4: Capital Structure Ratios of Ashapura Volclay Ltd., 2008-09 to 2010-11.......41
Figure 4-5: Interest Coverage Ratio of Ashapura volclay Ltd., 2008-09 to 2010-11........42
Figure 5-1: Short-term Solvency Ratios of Ashapura Volclay Ltd., from F.Y. 2008-09 to
2010-11..............................................................................................................................46
Figure 5-2: Turnover Ratios of Ashapura Volclay Ltd., from F.Y. 2008-2009 to 2010-11
...........................................................................................................................................49
Figure 5-3 : Profitability Ratios Related to Sales of Ashapura Volclay Ltd.,FY 2008-2009
to 2010-2011......................................................................................................................53
Figure 5-4: Expenses Ratio of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-11.....55
Figure 6-1: Leverage of Ashapura volclay Ltd., 2008-09 to 2010-11...............................58
Figure 7-1: Current assets of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.................61
Figure 7-2: Current Liabilities of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11..........62
Figure 7-3: Working Capital Of Ashapura Volclay Ltd., F.Y.2008-09 To 2010-11...........63

LIST OF ABBREVIATIONS

AVL :

Ashapura Volclay Ltd.

AML : Ashapura Minechem Ltd.


ACL :

Ashapura Claytech Ltd.

BSE :

Bombay Stock Exchange

R & D : Research & Development


GCL :

Geosynthetic Clay Liners

GRN :

Goods Received Note

MRS :

Material Requisition Slip

PO :

Purchase Order

LR :

Lorry Receipt

RTSE : Return on Total Shareholders Equity


ROE :

Return on Equity

ROCE : Return on Capital Employed


EAT :

Earning After Tax

EBT :

Earning Before Tax

EBIT : Earning Before Interest & Tax


QC :

Quality Control

OD :

Overdraft

GP :

Gross Profit

NP :

Net Profit

ICR :

Interest Coverage Ratio

D/E :

Debt Equity Ratio


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DFL :

Degree of Financial Leverage

DOL :

Degree of Operating Leverage

DCL :

Degree of Combined Leverage

HO :

Head Office

HR :

Human Resource

PF :

Provident fund

DET :

Diploma Engineering Trainee

GET :

Graduate Engineering Trainee

MT :

Metric Ton

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CHAPTER 1
1. INTRODUCTION
Sound financial management is crucial to the success of any business enterprise.
In other words, the financial performance of an industrial enterprise is influenced by the
sound financial management policies, decisions and practices it pursues in its business
decisions. The subject assumes greater significance now than ever before as they are
faced with demanding set of market forces like the commercial forces of price pressure,
reduced availability of credit, increasing employee costs, extended credit terms and
increasing competition.

In spite of such a great significance of the subject, a study of financial


management practices of Ashapura Volclay Ltd remains an unexplored field. It will help
to gain insights into the financial management practices followed in, ASHAPURA
VOLCLAY Ltd.

1.1. OBJECTIVES
The purpose of the study is to cover almost all the major aspects of financial
management, namely, profitability analysis, capital structure decisions, working capital
decisions.

The main objectives of the study are as follows:


1)
Capital Structure decisions Study financing pattern, capital structure
ratios, operating leverage and financial leverage.
2)
Financial Statement analysis Study of liquidity position, efficiency of
the business operations, profitability ratios.
3)

To know the Working Capital Management of Ashapura Volclay Ltd.

4)
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1.2. RATIONALE
The study has academic as well as practical significance. It will help in
understanding the practices company has adopted to improve financial as well as
operational performance. It highlights the function of the finance department. It also tries
to understand the future growth prospects of the company. The scope of the study is
limited to ASHAPURA VOLCLAY LTD financial performance for the three year period.

Analysis was done based on secondary data. Secondary data source includes
annual reports of the company, company press releases, Websites.

1.3. DATA ANALYSIS


This study mainly covers the financial ratios, for instance return on equity (ROE)
and return on capital employed (ROCE) have been the major ratios computed for
profitability analysis. Debt-equity ratio, long term funds to fixed assets ratio and interest
coverage ratio are the main ratios to understand capital structure decision. A set of ratios,
say, current ratio, liquid ratio, holding period of inventories, etc. have been calculated to
have insight about working capital management practices.

All these ratios are computed on a year-to-year basis for the ASHAPURA
VOLCLAY Ltd.

1.4. PLAN OF THE STUDY


The study has been divided in three parts. Part one of the study consists of two
chapters including the present one. The first chapter, dealing with introduction, outlines
the objectives and rationale of the present research study. It also provides methodology
and sources of data. Chapter two presents a brief profile of the company, ASHAPURA
VOLCLAY Ltd and literature review. Chapter three deals with information regarding
various departments.

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The core of the study would be found in part two. The subject matter of the part
two is divided in four chapters. Chapter four deals with ratios of head office. Chapter five
contains the discussion on ratio of branch. Chapter six deals with the leverage of the
AVL. The working capital management have been discussed in chapter seven.
Finally, part three presents the main conclusion of the study.
1.5. CONCLUDING OBSERVATION
The present study intends to have an insight into the financial management
practices of the ASHAPURA VOLCLAY Ltd. The study is conducted using their annual
financial data for the period from F.Y. 2008-2009 to 2010-11.
The data analysis is based on well accepted tools and techniques in financial
management and statistics. Financial ratios have been predominantly used for analysis.

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CHAPTER 2
2. COMPANY INTRODUCTION AND LITERATURE SURVEY
The present chapter deals with two sections. Section-I provides a brief profile of
Ashapura Volclay Ltd. Section II discusses important aspect of financial management
from selected major literature. This section covers significant findings in the field of ratio
analysis, working capital management and capital structure.
SECTION-I
2.1. INTRODUCTION OF ASHAPURA GROUP INDUSTRIES
Ashapura Group, India's largest multi-mineral solutions provider since 1960. Its
flagship company Ashapura Minechem Ltd. is listed on
India's premier exchanges. Ashapura Minechem Ltd.
which is a part of the BSE Midcap & BSE 500 indices
was ranked 4th in terms of Net Profit growth and 21st
in terms of Super Rank by Business Standard
(December 2006). The multinational group has mining
& mineral processing facilities in Belgium, Nigeria,
Oman and Malaysia; in India it operates from Gujarat,
Maharashtra, Karnataka, Kerala, Andhra Pradesh and
Orissa.
The Ashapura Group is one of the largest exporters of traded Bauxite in the world
and is amongst the world's top five Bentonite processing companies. Ashapura also
dominates the value added segments in the country for Bleaching Clay, Geosynthetic
Clay Liners, Clay Catalysts and Calcined Bauxite.
Research & Development (R&D) facility strive to keep the edge by producing
number of value added Bentonite products which are used in various industries such as
Oil Well Drilling, Iron & Steel, Foundry, Oil Bleaching, Iron Ore Pelletization, Civil
Engineering, Ceramics, Animal Feed etc. AML's products are exported to 23 countries in
all continents and account for nearly 84% of the Bentonite product exports from India.

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VISION, MISSION AND VALUES


Ashapurameans Hopes Realized.
Vision
To emerge as a world class company and preferred partner to diverse industries
through proactive customer support, innovation and cutting edge technology. Our
standards of integrity, reliability and social responsibility will become benchmarks for
other companies to emulate. The commitment, zeal and team spirit of our human
resources will enable us to transform this vision to reality.
Mission
We have a simple but unique mission statement: We will live up to our name
We will consistently work to realize hopes ours and those of our stake holders customers, business associates, shareholders, employees, community, governments.
Hopes fulfilled give rise to new hopes resulting in continuous improvement in the pursuit
of excellence. Vision
Our Values
Values
In times of constant change our values will remain constant integrity,
innovation, partnership, respect, responsibility, stability, transparency, zeal these will
create more value for our company and our customers.
Subsidiaries:
1 Ashapura International Limited
2 Ashapura Claytech Limited
3 Bombay Minerals Limited
4 Prashansha Ceramics Limited
5 Peninsula Property Developers Private Limited
6 Sharda Consultancy Private Limited
7 Ashapura Consultancy Service Private Limited
8 Ashapura Minechem (UAE) FZE
9 Ashapura Holdings (UAE) FZE
10 Ashapura Maritme FZE
11 Ashapura Aluminium Limited
12 Ashapura Industrial Finance Limited
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2.2. PROFILE OF ASHAPURA VOLCLAY LTD.


AVL. Is a joint venture company established by Ashapura Minechem Ltd. with
AMCOL Int. Corp. of USA for manufacturing Bentonite and clay based value added
products in India. It has a state-of the art bleaching earth manufacturing facility at Bhuj,
Gujarat, in technological collaboration with Japans Mizusawa Industrial Chemicals
Limited. AVL is the only company outside of Japan licensed to use the Galleon brand of
bleaching earth used worldwide to refine edible oil. The company also has the reputation
for being the first Indian company to manufacture Geosynthetic Clay Liners (GCL) in
technological collaboration with Colloid Environmental Technologies (CETCO), the
global leader in GCL technology, which is a subsidiary of AMCOL.

At Bhuj, is the world's second largest single location for


Bentonite based Bleaching Earth manufacturing facility. The
plant uses the world-class and unique filterless technology to
manufacture successful Bleaching Earth: Galleon V2 & V2 Super.
This plant is a pioneering Bleaching Earth project in India and
also manufactures the renowned ACTAL Grade of catalyst for the
petrochemical industry.
Achievements / Landmark of AVL :1999: Incorporation of Ashapura Volclay Limited
1999: Agreement with Mizusawa Industrial Corporation, Japan for Technology transfer
2001 : Start of Line 1 production at Bhuj, Gujarat with an annual capacity of 24,000 MT
p.a.
2004 : Trials for BTX Clay Catalyst
2005 : Increase in production capacity by introducing Line 2 production at Bhuj, Gujarat
with new annual capacity of 48,000 MT p.a.
2005 : New plant for BTX Clay Catalyst commences production
2005 : New Geosynthetic Clay Liner plant commences production
2007 : New plant at Dharur, Hyderabad with an annual capacity 24,000 MT p.a.
2008 : Commissioning of Antwerp Mineral Processing complex
2008 : New Multi-Mineral facility in Antwerp, Belgium to cater European Customers
2008 : JV in Malaysia with MPA Hudson
2010 : Increase in production capacity by introducing Line 3 production at Bhuj, Gujarat
with new annual capacity of 72,000 MT p.a.
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PRODUCT : Bleaching Earth


Bleaching Earth is manufactured from the best quality, selectively mined and
scientifically blended montmorillonite clays under stringent process controls. While
making Bleaching Earth special care is taken in maintaining the important properties like
absorptive capacity, acid properties, catalytic properties, ion exchange capacity and
particle size distribution.
A Bleaching Earth is used for the general purpose of

Decolourisation of animal, vegetable mineral oils and waxes

Enhance stability of the Refined Oil.

Bleaching earth :- Application

Refining of vegetable oils


Refining of hydrogenated Vanaspati ghee
Refining of Animal fats like fish oil, lard oil
Refining of mineral oils like
Insulating oil
Rolling oil
Lube oil
Waste oil
fatty acids used for paints, varnishes and soaps

Decolourising by removing colour pigments

Removal of gums(phospholipids) and soap contents and traces of heavy


metals in vegetable oils

Reducing and controlling different oil parameters

2.3. CSR ACTIVITIES BY ASHAPURA

The Hiralaxmi Memorial Craft Park:

With a noble vision to restore, preserve, and promote the rich cultural heritage of
Kutch Mr. Chetan Shah-Managing Director of Ashapura Group has dedicated this
craft center to the public on 18 th Dec,2005 in loving memory of his beloved
mother Pujya Hiralaxmi Baa.
To provide direct platform to artisans, trust invite then to show-case & sale their
artifacts. In order to do justice to the variety of arts, a time table on monthly
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rotation of artists has been worked out. The park is bridge between the artisans &
buyers. During their stay at Park, free lodging & boarding facilities provided by
the trust. The total amount of sales directly goes to artisans only.
Ashapura groups commercial activities commenced from Kutch only. As a
measure of gratitude towards Kutch, the management embarked on fulfilling its
social responsibilities in this area & Carrying out Cultural, Educational,
Agricultural, Social, Health & other activities for betterment of people of Kutch.

KNT (Kutch Navnirman Trust) Housing Colony :

110 houses have been constructed and donated free of charge to


the people who have lost their house in the earthquake. Apart from donating
house the Trust is fulfilling its social obligation by doing other social activities at
the Colony.

Ashapura Primary School: where the children of KNT and nearby


area are getting education with many curriculum activities.

Ashapura Ankur Balmandir : The children are learning with fun


and games.

Asha Gyan Library : More than 3000 books are there with daily
news papers and Magazines.

Asha Saptak Music Class: This center is well equipped with


music instruments for training to the children in vocal and plays music.

Asha Sarjan Tailoring Class: With a view to help the women. This
class is run by the trust. Women are able to generate an income and helpful to the
family.

Asha Anand Toys House: Toys for little children and games which
help in increasing the mental ability of children are kept in Toys House.

Ashapura Computer Class: A well equipped Computer Class is


being run by expert computer teacher.

ITI project:

Mr.Chetan Shah has dedicated great effort to the students of Kutch


for their employment or self employment.

With the partnership of Industrial Training Institute and Ashapura


Group, from technical training with stipulated stipend is provided to the students
in different trades like: Motor/ tuner fitter / electrician wireman / welder /
computer tailoring / irrigation etc.

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The Government of India have noted the efforts and introduced the
scheme of Upgrading of existing it is under Public Private Partnership across the
India.

Ashapura Womens Academy:

This project is dedicated to all women of the society with an aim


of women empowerment and women education.

Initially it has started the batches of Computer and Beauty parlor,


over whelming response received from the public. In future, new courses will be
added.

Airport Beautification:

Beautified an area of nearly 2 acres at Bhuj Airport with garden


development maintenance and land scaping.

Restoration of Historical Monuments:

The trust has restored historical place Nani Ba Vaav at Madhapar


which was totally collapsed during earth quake. The trust preserves history also.

SECTION-II
2.1. LITERATURE REVIEW
1.

Ratio Analysis
Paul Barnes in his article explains the importance of the financial ratios. He
suggests that financial ratios are used for all kinds of purposes. These include the
assessment of the ability of a firm to pay its debts, the evaluation of business and
managerial success and even the statutory regulation of a firm's performance. He also
argues that there is evidence that firms do adjust their financial ratios to align them with
industry benchmarks.

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2.

Working Capital Management


Working Capital is the amount of capital that a business has available to meet the
day to day cash requirements of its operations. It is concerned with the problem arise in
attempting to manage the current assets, the current liabilities and the inter relationship
that exist between them. Working Capital is the difference between resources in cash or
readily convertible into cash and organizational commitments for which cash will soon
be required or within one year without undergoing a diminution in value and without
disrupting the operation of the firm. It also refers to the amount of current Assets that
exceeds current Liabilities.

3.

Capital Structure
Capital Structure is a mix of debt and equity capital maintained by a firm. Capital
structure is also referred as financial structure of a firm. The capital structure of a firm is
very important since it related to the ability of the firm to meet the needs of its
stakeholders.

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CHAPTER 3
3. DEPARTMENTS

Human Resource & Admin.


Stores
Production
Quality control (Lab)
Electrical
Instrumentation
Mechanical Maintenance
System (computer)
Logistics & Dispatch(Container & Shipment)
Accounts(Finance)

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1. HR & Admin department


Organogram Chart

23

Functions of this department are as under :

Recruitment
Induction
Wages & Salary
Training & Development
PF & other legal activities
Transportation
Canteen
Security
Administrative (Hospitality Management)

2. Stores Department
Functions of Stores Department can be classified as under ;
(a) Material Planning :- This consists of ascertaining the need of the
various departments in the matter of materials and stores and devising such
policies that all the materials which have constant demand and also some critical
non-wearing materials are constantly available so that they are supplied to the
user departments without delay. This includes classification / categorization of
items, taking `make or buy' decision and also preparation of stores budget.
(b) Procurement of Stores :- This includes purchase of materials of
required quality and quantity at reasonable prices. This also includes, maintaining
constant touch with the market to ensure steady flow of materials.
(c) Receipt & Inspection of Stores :-This includes taking delivery of
materials from carrier, checking of quantity and quality.
(d) Store Keeping :- This includes stocking of materials in the wards, their
handling, issuing on demand and maintaining proper records.
(e) Distribution of Stores :- This includes timely dispatch and distribution
of materials to various users by adopting quick and right mode of transportation.
(f) Collection and disposal of scrap :- This activity is main revenue
earning activity of Stores Department these days.
(g ) Inventory Control :- This includes maintaining an economic level of
investment in inventories.
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(h) Cost Reduction :- Store Department can contribute a lot on cost


reduction.

3. Quality control
Quality is monitored by fully trained and qualified professionals, using state-ofthe-art equipments like Mastersizer, Spectrophotometer, BET Surface Area Analyzer,
Filtration Time Unit, XRF/XRD and ICP. Through its monitoring module, QC ensures
that the best quality raw material is processed under set and controlled parameters to
consistently produce the best quality Bleaching Earth.

4. Electrical department
Electrical department is responsible for providing electricity in plant as well as
office. In case the light went off, they provide electricity through generator but the
electricity should not stop otherwise it will cause great loss.

5. Instrumentation department
This department deals with different instruments of production process in
factory. It controls all the machineries through sensors. It uses both hardware and
software technology.

6. Production Department
Process in brief:

25

Raw clay (Bentonite)


salt from pulverizer
water

Dilute H2SO4

Water-treated
effluent

Spent acid: goes to ETP

Water

Spent acid: goes to ETP

Evaporation

Salt-reused in process

Granulation Plant:-

From the store department raw material is supplied to the plant through belt
conveyor. Granules contain some amount of moisture in the present state. Through the
belt conveyer the granules are brought to the primary crusher. The crushing here is very
hard as there is no liquid added; only it is in solid form. Then granules are brought to
secondary crusher, here water is added to increase the moisture content. At different
levels taps are provided as per the requirement of the moisture. Then the granules are
brought to primary granulator. There are 2 granulators; there are screws in it for making
granules in solid form of size 12 mm, water is added for moisture. Then it is further
carried; there is electromagnet in between to remove all unwanted particles like iron
particles. There is hopper for storing this granules, afterwards it is brought to secondary
26

granulator here acid is added; there are also 2 granulators. 75% concentrated acid is
added to retain the shape of the granules, the size of granules is 6 mm. then it is carried to
acid activation plant.

Acid activation plant:There are 16 reactors; in each reactor there is sulphuric acid and water. The acid
is 34% concentrated. Dilution process is carried on for making 34% concentrated. In this
process water and acid are added, here agitator circulates them and they are brought to
reactors through pipes. In reactors granules are added and acid is passed over their
surface. Heat up process is carried out in which steam is allowed to pass through them up
to 80 c temperature. Then by PLC, the value is shut-off & then the whole batch goes in
activation state in which acid is circulated for 14 hrs. After that washing process is
carried out. Firstly in wash A, granules are washed by acid water whose PH is 0.8, the
time required is 210 minutes. Then wash B is there, here PH is 2.35. Acid is drain after
the wash, which takes 1.5 hour, now only granules are left in reactors. Granules are
removed and they are carried for drying.

Pulverization & Dryer:In drying, water gas is used. Water gas has CO + H2 (carbon monoxide +
hydrogen). There is rotational dryer for drying granules. There are screw conveyers for
carrying granules. For fine particles, cyclone is there. From cyclone and conveyer it is
stored in hopper, Air cooling is there. Then pulverization process comes. Here granules
are put from hopper and there is vizer(like fan) for throwing granules, granules which are
below size goes to cyclone through blowers. Granules which are in powder form are
passed to classifier which acts like sieve. It separates the powder & particles. Then it
goes for packing, there are 2 machines for packing then it is stored and by demand it is
supplied.

By product of company is gypsum which is used in cement industry.

27

7. Maintenance Department
This department is accountable for maintenance of all the machineries of
production, vehicles, office equipments etc. If anything is not working properly then it
replaces it and tries to maintain efficiency of all instruments.

8. System (computer) Department


Computer has become an essential part in AVL and system department deals with
all the operations of computers. It also deals with internal connection of telephones.
Software developments and their maintenance are done internally as per the users
requirements

9. Logistics & Dispatch(Container & Shipment) Department


The service of this department starts with acquisition of raw material. It carries
raw material into AVL and also responsible for dispatching final products. Objective of
this department is to provide final product at proper time and in proper condition
especially in case of exports.

28

29

10. Finance Department


Husband and Dockery : Finance may be said to be the circulatory system of
the economic body , making possible the needed cooperation between many units of
activity.
One of the most important function of the top management is to raise finance at a
right time and in a right quantity and also to use it most effectively. In fact, this function
constitutes the core of financial management.
Finance department is the core part of AVL. Finance is essential to carry out any
transaction, small or big. The main function of AVLs finance department are billing, tax
payment, voucher entry, preparing of financial statement, cost analysis of company etc.
AVL used, specific software called Enterprise Resource Planning(ERP), for
maintaining their accounts and records . There are mainly two types of voucher entry :
1. Head office
2. Local
It generally used accounting vouchers like contra, receipt, payment, sales,
purchase, debit note, journal voucher etc. The company has different section available
under different head, for example, For entry of sale, groups are made for different
categories : 1) Export Sale 2) Local Sale 3) Sale of by-product i.e. Gypsum.

Purchase Process :
When need arise to any person or any department for any type of material or
goods, then first they have to inform it to store department and they have to fill Material
Requisition Slip(MRS).
The function of store department starts with checking whether demanded thing is
available with them or not. If that particular thing already exist in store department then
only they have to transfer it to the demanded person or dept, But if its not available, they
will go for quotation from different suppliers. The quotation which is lower in amount or
which is more convenient is selected and then they give purchase order. Purchase order is
required for the order more than value of Rs. 10000. There should be signature of
manager of store department, head of department who has demanded it & general
manager, if required. Purchase order is issued to make order of any product or thing. In
case of service, they issues work order if amount of service taken is more than Rs.5000.
30

On the receipt of goods, stamp of gate should be at the back side of bill. After that
store department verify the thing and if it is okay then they make Goods Received
Note(GRN) & give it to department who has demanded it.
In case of raw material, on the receipt of material they weigh it and compare it
with Lorry Receipt(LR) of transporter company and Then the material is tested in the
laboratory. If there is any change in the quantity or quality of the material then they issue
debit note to the supplier and afterwards make payment according to rules specified in
the purchase order.
Following terms can be mentioned in bill for payment:
If To be bill is specified in the bill then the company has to make
payment of transportation charge to raw material supplier.
If To pay is specified in the bill then the company has to make payment
of transportation charge to transporter.
If paid is specified in the bill then it means that transportation charges
are already included in the bill amount.
After all these process, entry of the transaction is done.

Controlling of AVL plant at Ler is done by Head Office at Mumbai. Sales of final
product are in the hands of H.O. So it would not enough to calculate only ratios of branch
so in addition to that I have also calculated a ratio of H.O. to analyze the overall
condition of AVL.

31

CHAPTER-4
4. RATIOS OF HEAD OFFICE
Ratio of head office are divided into 2 parts:

Profitability ratios

Capital gearing ratios

The different profitability ratios related to investments and their implications for the firm
are presented in Section-I. Section-II deals with capital gearing ratios of the firm.
Concluding observations are contained in Section-III.

SECTION-I
4.1. PROFITABILITY RATIO ANALYSIS
Profitability ratios of Ashapura Volclay Ltd. are analyzed in this chapter. These
ratios give one a feel the financial soundness of the firm and are important for both the
management and the shareholders of the company. The shareholders are eager to know
the profitability of the firm that they are the owners of while the management would
always like to keep itself updated about the profitability of the firm. The profits earned
by a firm determine the returns for the shareholders.
The present chapter discusses the profitability of Ashapura Volclay Ltd. for the
period from F.Y. 2008-09 to 2010-11.

PROFITABILITY RATIOS RELATED TO INVESTMENTS


The profitability ratios related to investments for the purpose of analysis have
been computed in two ways: (a) Return on capital employed (ROCE) and (b) Return on
total shareholders equity (RTSE). ROCE highlights how efficiently financial resources
are organized by the company. The return on the total shareholders equity indicates the
return provided to the equity owners.

32

Return on capital employed(ROCE) is the rate of return a business is making on


the total capital employed in the business. Capital will include all source of funding
(Share holders funds + Debt).To be consistent with this the return should be taken prior
to interest(the return to lenders)and tax.
The ROCE has been determined on the basis of operating profits, i.e., earnings
before interest and taxes.
Further, ROCE manifests how efficiently funds of owners and lenders are used.
ROCE should always be higher than the rate at which the company borrows, otherwise
any increase in borrowing will reduce shareholders' earnings. Whereas ROE is useful for
comparing the profitability of a company to that of other firms in the same industry.
Earning Per Share measures the profit available to the equity share holder on per
share basis. It is not the actual amount paid to shareholders as dividend but is the
maximum that can be paid to them.

The computation is done according to the following equations:


Return on Capital Employed = (EBIT Average total capital employed)
100.....................(4.1)

Return on Equity Share Capital = (Net profit after taxes Pref. Div. Equity Share
capital) 100.....................(4.2)

Return on Shareholders funds = (Net profit after taxes Shareholders funds)


100..........................(4.3)

EPS =Profit available for equity No. of Equity share ............(4.4)

33

Table 4-1: Profitability Ratios Related to Investments of Ashapura Volclay Ltd.,


2000-2009
(Figures are in Lakhs)

Year

EBIT

EAT

Share
Capital( Share
Of Rs. 10
Each)

2008-2009

19.88

17.40

17.93

17.22

27.61

62.76

2009-2010

23.26

12.33

17.93

35.64

19.06

72.63

2010-2011

18.59

9.42

17.93

42.91

52.62

113.46

Reser
ves

Long
Term
Liabilities

Capital
Employ
ed

Table 4-2: Profitability Ratios Related to Investments of Ashapura Volclay Ltd.,


from F.Y. 2008-09 to 2010-11
(Figures are in percentages)

Year

Return on Capital
Employed

Return on Equity share


capital

2008-09

31.67

97.04

2009-10

32.02

68.76

2010-11

16.38

52.54

Average

26.69

72.78

Maximum

32.02

97.04

Minimum

16.38

52.54

34

Figure 4-1:Ratios Related to Investments of Ashapura Volclay Ltd., from F.Y. 200809 to 2010-11

100
90
80
70
60
50
40
30
20
10
0

2008-09

Return on Capital Employed

2009-10

2010-11

Return on Total Shareholders' Equity

Observation :
Return On Capital Employed :This ratio is useful in finding out overall profitability of
the business. It shows the return earned on share capital, reserve, and long term funds.
The success or otherwise of the enterprise is judged with the help of this ratio. It is
perhaps the most important ratio from the view point of management. In 2008-09 it was
31.67%. In the second year it was 32.02% and in the last year, there was great fall in
return, it was minimum of last 3 year with value of 16.38%, half as compared to 200910.

Return on Equity share capital : It shows the rate of return earned on equity share
capital. In year 2008-09 it was 97.04%, maximum from all period. In year 2009-10 it was
68.76%. In last year, there was considerable fall in returns, it was 52.54%. So there is
decreasing trend in return. So its not satisfactory from view point of equity shareholders.
The company should find out ways to improve return and satisfy its shareholders.

35

Table 4-3: Profitability Ratios Related to Investments of Ashapura Volclay Ltd.,


from F.Y. 2008-09 to 2010-11
(Figures are in percentages)
Year

Return on Total
Shareholders' funds

EPS

2008-09

49.50

9.71

2009-10

23.04

6.88

2010-11

15.48

5.25

Average

29.34

7.28

Maximum

49.50

9.71

Minimum

15.48

5.25

Figure 4-2: Ratios Related to Investments of Ashapura Volclay Ltd., from F.Y. 200809 to 2010-11

50
45
40
35
30
25
20
15
10
5
0
Return on Total Shareholders' funds

2008-09
2009-10
2010-11

EPS

36

Observation :
Return On Shareholders funds: Shareholders funds include share capital and
reserves and surplus. It is of great practical importance to the prospective investors. In
year 2008-09, it was 49.50%. In 2009-10 it is decreased by 53% and arrived at 23.04%.
In year 2010-11, it has still decreased and arrived at 15.48%.
EPS : By comparing the EPS of the current year with those of past few years, the trend of
profitability can be ascertained and there is constant decrease in EPS in last 3 years. It
denotes that profitability is decreasing year by year. In 2008-09 it was 9.71 per share. In
2009-10 it was 6.88 per share and in 2010-2011 it was 5.25 per share.

SECTION-II
4.2. CAPITAL GEARING RATIO
Companies should strike out an optimum balance between over leveraging and
missing out the opportunity by staying away from debt. Capital structure decision of a
company is vital because they have influence on creating shareholders value.
The discussion in the present chapter relates to the capital structure decisions of
Ashapura Volclay Ltd. for the period from F.Y. 2008-09 to 2010-11. The different capital
structure ratios and their implications for the firm are presented.
The capital structure ratios are used to judge the soundness of a firm in terms of
the long-term financial strength. The long-term solvency of a firm can be judged by
using the ratios, namely Long-term Debt to Equity Ratio, Long-term Debt to Total Assets
ratio, and Long term debt to shareholders funds ratio.

1. DEBT EQUITY (D/E) RATIO: It is a measure of a company's financial leverage


calculated by dividing its total liabilities by shareholders' equity. It indicates what
proportion of equity and debt the company is using to finance its assets. A high
debt/equity ratio generally means that a company has been aggressive in financing its
growth with debt. This can result in volatile earnings as a result of the additional interest
expense.

Debt-Equity Ratio=Long term liabilities owners funds...................................


(4.5)
37

a) Long-Term Debt to Owners funds ratio: It is calculated by dividing

long term liabilities by shareholders funds. A higher a ratio means that


outside creditors have a larger claim than the owners of business.
Long term debt to owners fund ratio = Long term liability / shareholders
funds...................................................(4.6)
b) Long-Term Debt to Equity Capital ratio : A variation of the traditional
debt - equity ratio, this value computes the proportion of a company's longterm debt compared to the shareholders equity share capital. By using this
ratio, investors can identify the amount of leverage utilized by a specific
company and compare it to others to help analyze the company's risk
exposure. Generally, companies that finance a greater portion of their capital
via debt are considered riskier than those with lower leverage ratios.
Long-term debt to equity ratio = Long-term debt Shareholders equity
capital....................(4.7)

2. LONG-TERM FUNDS TO FIXED ASSETS RATIO:


Generally, the fixed asset of the business must be purchased out of the fixed
capital only, which includes share capital, reserves and long term liabilities. This ratio,
therefore, depict the relationship between fixed capital and fixed assets. Generally, The
ratio should be 1:1 or more i.e. the fixed capital should be more than fixed asset or
should at least be equal to fixed assets.
Long-term Funds-Fixed Assets (D/A) ratio = Long-term debt Fixed
assets..................(4.8)

3. PROPRIETARY RATIO :
The ratio shows the proportion of proprietors funds to the total assets employed
in the business. The proprietors funds or shareholders equity consist of share capital and
reserves and surplus.
The higher the ratio, the stronger the financial position of the enterprise, as it
signifies that the proprietors have provided larger funds to purchase the assets. This ratio
cannot exceed 100 percent; it means that the business does not use any outside funds.
There are no outside liabilities. Purchases are made for cash only and the firm carries on
the business entirely with owned funds. A very high ratio is therefore not desirable,
because it means that insufficient use is being made of outside funds.
38

Proprietary ratio = Proprietors funds Total Real Asset....................(4.9)


Table 4-4: Various Amt. of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-11
(Figures are in lakh)

Year

Owners
fund/Pro
prietors
fund

Total
Real
Asset

Long
term
Liab./
Loan

Long
term
Funds

Fixed
Assets

2008-09

35.15

98.67

27.61

62.76

55.78

2009-10

53.57

98.49

19.06

72.63

57.44

2010-11

60.84

137.34

52.62

113.46

84.16

Table 4-5: Capital Structure Ratios for Ashapura Volclay Ltd., from F.Y. 2008-09 to
2010-11
(Figures are in percentages)

Year

Long-term
Debt to
Equity
Capital
Ratio

Long term
debt to
owners
funds

Long-term
Debt to
Fixed
Assets ratio

Proprietary
Ratio

2008-09

1.54

0.78

1.13

0.36

2009-10

1.06

0.36

1.26

0.54

2010-11

2.93

0.86

1.35

0.44

Average

1.84

0.67

1.25

0.45

Maximum

2.93

0.86

1.35

0.54

Minimum

1.06

0.36

1.13

0.36

39

Figure 4-3: Capital Structure Ratios of Ashapura Volclay Ltd., 2008-09 to 2010-11
3
2.5
2
1.5
1
0.5
0
2008-09
2009-10
2010-11

Observation :
Long term Debt Equity Capital Ratio: This ratio shows the relation between long term
debt and equity capital .The higher ratio shows that outside creditors have larger claim
than the owners of business, this will result in increase in pressure and interference of
creditors. In the year 2008-09 it was 1.54 indicating that if there is Re.1 equity share then
there is long term debt of Rs.1.54. In the year,2009-10 this ratio has decreased and
arrived at 1.06. It is a good signal. In year 2010-11 it has against increased and became
maximum of last three years with value of 2.93.
Long term Debt owners Ratio: This ratio shows that it has gone down during the year
2009-10 as compared to previous year. This is a good sign, which signifies that the
company depends less upon outside funds. But, unfortunately, it rises again in 2010-11. It
has become maximum by 0.86. So company should try to decrease long term debt or
increase owners funds.
Long term funds fixed asset Ratio: This ratio is more than in last 3 years for AVL,
indicating that fixed funds are enough to purchase fixed assets. And they are not financed
by short term funds. In 2008-09, 2009-10 & 2010-11 it was 1.13, 1.26 and 1.35
respectively. So it is satisfactory.

40

Figure 4-4: Capital Structure Ratios of Ashapura Volclay Ltd., 2008-09 to 2010-11

0.6
0.5
0.4

2008-09
2009-10
2010-11

0.3
0.2
0.1
0

Proprietary Ratio
Observation :
Proprietary Ratio : This ratio is used to ascertain the proportion of owners funds in the
total real asset. In the year, 2008-09 it was 0.36, indicating that in total amount of real
asset, 36% part is of proprietors. So the higher the ratio, better it is. In the year 2009-10 it
is maximum, it is 0.54. But in 2010-2011 it is again declined and reached to 0.44. So the
company should try to increase reserve by transferring profit to reserves.

4.

INTEREST COVERAGE RATIO:


The interest coverage ratio is used to determine how easily a company can pay
interest on outstanding debt. It is calculated by dividing a company's earnings before
interest and taxes (EBIT) of one period by the company's interest expenses of the same
period as shown in Equation 4.10
Interest coverage ratio = EBIT Interest...............(4.10)
The interest coverage ratio measures the debt servicing capacity of a company on
interest payments on long term loans. The lower the ratio, the more the company is
burdened by debt expense. When a company's interest coverage ratio is 1.5 or lower, its
ability to meet interest expenses may be questionable. An interest coverage ratio below 1
indicates the company is not generating sufficient revenues to satisfy interest expenses.

41

Table 4-6: EBIT & Sale of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-11
(figures are in Lakhs)
Year

EBIT

Interest

2008-09

19.88

2.48

2009-10

23.26

2.47

2010-11

18.59

2.65

Table 4-7: Interest Coverage Ratio of Ashapura Volclay Ltd., from F.Y. 2008-09 to
2010-11
(Figures are in times)
Year

Interest Coverage Ratio

2008-09

8.02

2009-10
2010-11

9.42

Average from F.Y. 2008-09 to 2010-11

8.15

Maximum

9.42

Minimum

7.01

7.01

Figure 4-5: Interest Coverage Ratio of Ashapura volclay Ltd., 2008-09 to 2010-11

42

10
8

2008-09
2009-10
2010-11

6
4
2
0
Interest coverage ratio
Observation :

Interest Coverage Ratio : The range within which the interest coverage ratio (ICR) of
AVL has fluctuated during the period 2008-09 to 2010-11 is from 7.01 to 9.42. There is
not much higher change observed in this ratio. Average of last three years is 8.15 times. It
indicates that firm is able to pay interest 8.15 times.
SECTION-III
4.3. CONCLUDING OBSERVATIONS
The profitability analysis of AVL over the year 2008-09 to 2010-11 using ratio
analysis has given an important insight into the firm. The firms operational efficiency is
studied in terms of profitability. Profit margin of the company has deteriorated. So return
on capital employed, return on shareholders funds, return on share capital as well as
earning per share has declined. So the company must take some firm action to stop these
declining trend. The debt-equity ratio for AVL Ltd. for the entire period of study is higher than
1. It is not positive signal for the creditors. It means the owners are putting relatively less money
of their own. Also, the mean of long-term funds to fixed assets ratio is 1.25 during the period of
study, this implies that more long term funds are being used by the company to finance the fixed
assets. Finally the firm enjoys a satisfactory interest coverage ratio and thus the company is
considered to be able to pay its interest obligations in the future.

43

CHAPTER-5
5. RATIOS OF BRANCH
Ratio of branch has been divided into three parts:

Liquidity ratio

Turnover ratio

Profitability ratio

Now let us consider it one by one.

SECTION-I
5.1 LIQUIDITY RATIO ANALYSIS
Liquidity ratios are used to determine a company's ability to pay off its shortterms debts obligations. Generally, the higher the value of the ratio, the larger the margin
of safety that the company possesses to cover short-term debts.
Common liquidity ratios include the current ratio, the liquidity ratio. A company's
ability to turn short-term assets into cash to cover debts is of the utmost importance when
creditors are seeking payment. Bankruptcy analysts and mortgage originators frequently
use the liquidity ratios to determine whether a company will be able to continue.
The present chapter discusses the liquidity ratios of Ashapura Volclay ltd., For the
period 2008-09,2009-10,2010-11.Current ratio and Liquid ratio are presented in
Section-I and their implications for the firm discussed.
Current ratio and Liquid ratio constitute the short-term solvency ratios of a firm.
While current ratio measure the short-term solvency of the firm, the liquid ratio to
measure liquid position of business. The equations for computation of the same are
presented below.

Current Ratio = Current assets current liabilities...........................(5.1)


44

Liquid Ratio = Liquid assets Liquid liabilities................................(5.2)


Liquid asset=Current assets-Stock
Liquid liabilities=Current Liabilities-Bank overdraft
Table 5-8: Current assets of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.
(Amt. in lakhs)
Year

Current
Asset

Stock

Liquid
Asset

2008-09

12.66

8.34

4.31

2009-10

8.17

6.58

1.59

2010-11

12.93

9.81

3.12

Table 5-9: Current liabilities of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.


(Amt. in lakhs)
Year

Bank o.d.

2008-09

Current
Liab.
12.94

Liquid
Liab.
12.94

2009-10

7.19

7.19

2010-11

11.02

11.02

45

Table 5-10: Short-term Solvency Ratios of Ashapura Volclay Ltd., F.Y.2008-09 to


2010-11.
(Figures are in times)
Year

Current Ratio

Liquid Ratio

2008-2009

0.98

0.33

2009-2010

1.13

0.22

2010-2011

1.17

0.28

Average from F.Y.


2008-09 to 2010-11

1.09

0.27

Maximum

1.17

0.33

Minimum

0.98

0.22

Figure 5-6: Short-term Solvency Ratios of Ashapura Volclay Ltd., from F.Y. 2008-09
to 2010-11

1.2
1
0.8
0.6

2008-2009

2009-2010

2010-2011

0.4
0.2
0
Current Ratio

Liquid Ratio

Observation :
Current ratio : The standard current ratio of most of the company is 2:1i.e. the value of
current asset should be twice the current liabilities, but in AVL, short term financial
46

condition is not as per standard. AVL has tried to improve it, we can see from the ratios
that it has increased in last three years, in the last year 2010-2011 it has reached to 1.17
signifying that for every Re.1 of current liabilities the company is having Rs.1.17 worth
of current assets, but still it lower than standard. So the company should try to achieve
standard level of current ratio so that the company would be able to meet its current
liabilities with ease, as and when they arise.
Liquid ratio : The liquid ratio is a better indication of liquid position of the company and
shows the whether the company will be able to meet its current obligations due for
immediate payment at a short notice. No standard norm is available for this ratio.
However, it is believed that liquid asset should at least cover the liquid liabilities i.e. the
ratio should be 1:1. The ratio for AVL during 2008-09 was unsatisfactory and has
deteriorated to such an extent during 2009-10. During 2010-11 it has improved to some
extent but it is less than half of the standard ratio of 1:1. So the company should take
corrective steps immediately.

SECTION-II
5.2. TURNOVER RATIOS
Section-II deals with the turnover ratios for the company namely inventory
turnover ratio and total asset turnover ratio and fixed asset turnover ratio.

Inventory turnover ratio :


Inventory turnover ratio shows how many times a company's inventory is sold
and replaced over a period. The days in the period can then be divided by the inventory
turnover formula to calculate the days it takes to sell the inventory on hand or "inventory
turnover days". Cost of goods sold is used in the equation because sales are recorded at
market value, while inventories are usually recorded at cost. Also, average inventory is
used instead of the ending inventory level to minimize seasonal factors. A high ratio
implies either strong sales or ineffective buying. High inventory levels are unhealthy
because they represent an investment with a rate of return of zero.
Inventory turnover ratio = Cost of goods sold Average Inventory.......(5.3)

Total asset turnover ratio :


The amount invested in business are invested in all assets jointly and sales are
effected through them to earn profits. So in order to find out relation between total assets
47

to sales, total assets turnover is calculated. This ratio is important to know the overall
efficiency of the business. The higher this ratio, it shows that with less amount of
investment in total assets, the business has a capacity to sell more and as such its
profitability is also more.
Total asset turnover ratio =Sales/Total assets.........................................(5.4 )

Fixed Asset turnover :


To ascertain the efficiency and profitability of business, the total fixed asset are
compared to sales. The more the sales in relation to the amount invested in fixed assets,
the more efficient is the use of fixed assets. It indicates higher efficiency. If the sales are
less as compared to investment in fixed assets, it means that fixed assets are not
adequately utilized in business. If this ratio is low, it indicates that investment in fixed
assets is more than what is necessary and must be reduced. If this ratio is found to be
higher, it means the fixed assets are being used effectively to earn profits in the business.
The fixed asset in the denominator must be at their written down value i.e. value after
deducting depreciation.
Fixed Asset turnover ratio= Sales/Fixed assets...................................(5.5)

Table 5-11 : Various amount for Turnover Ratios of Ashapura Volclay Ltd.,
F.Y.2008-09 to 2010-11.
(Figures are in lakh)
Year

Cost of
goods sold

Average
inventory

Sales

Total Assets

Fixed
Asset

2008-09

46.22

79.12

72.54

59.63

46.97

2009-10

44.79

74.62

89.85

57.08

48.90

2010-11

70.24

81.9

115.17

88.77

75.83

48

Table 5-12: Turnover Ratios of Ashapura Volclay Ltd., 2008-2011


Year

Inventory
Turnover
Ratio

Fixed Asset
Turnover
Ratio

Total Asset
Turnover
Ratio

2008-09

0.58

1.54

1.22

2009-10

0.60

1.84

1.57

2010-11

0.86

1.52

1.30

Average

0.68

1.63

1.36

Maximum

0.86

1.84

1.57

Minimum

0.58

1.52

1.22

Figure 5-7: Turnover Ratios of Ashapura Volclay Ltd., from F.Y. 2008-2009 to 201011
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0

2008-09
2009-10
2010-11

Observation :
Inventory Turnover ratio : This ratio indicates the speed with which the stock is turned
over. The greater this ratio, the more efficient is the management of the sales. In the year
49

2008-09, the stock is turned over 0.58 times during the year or in other words the average
stock is sold out within 90 weeks. It shows that the company is not rapidly turning over
its stock. However, during last 2 year, stock turnover is indicating an increasing trend
which can be considered as a good signal. During 2010-11 average stock is sold within
60 weeks which is decreased by 30 weeks as compared to 2008-2009.
Total Asset Turnover ratio : Total asset turnover of AVL in 2008-09 is 1.22 which has
increased up to 1.57 which is good. But in 2010-11, it is decreased to 1.30. So AVL
should try to use all assets properly.
Fixed Asset Turnover ratio : The turnover ratio indicates whether the fixed assets are
effectively used or not. During 2008-09 it was 1.54, which is increased by 19 % in 200910 and reached to 1.84. But again in 2010-11 it has deteriorated and reached to 1.52.
Management of the company should try to utilize fixed asset more effectively.

SECTION-III
5.3. PROFITABILITY RATIO ANALYSIS
The present chapter analyses the profitability of Ashapura Volclay Ltd. over the
years 2008-09 to 2010-2011 using ratio analysis. In fact, no company can survive if it
concentrates only on social obligations. On the contrary, profitable companies only can
discharge their social responsibilities better. Financial management of resources in terms
of profitability constitutes the most important element of operational efficiency.
The profit test is more than a conventional test of economic efficiency, that is,
whether the resources are gainfully employed or not and whether the business enterprise
is operating competitively or not. It has a direct bearing on a companys ability to
function as a successful business firm. Further, their ability to tap capital market by
issuing equity shares and bonds/debentures would depend on their financial viability.
Above all, companies can discharge their social responsibilities only when they are
profitable.

PROFITABILITY RATIOS RELATED TO SALES


Sales related profitability ratios are based on the premise that a firm should earn
sufficient profit on each rupee of sales. If adequate profits are not earned on sales, there

50

will be difficulty in meeting the operating expenses and no returns will be available to
the owners. These ratios consist of
1.

Profit Margin

2.

Expenses Ratio
Profit Margin Ratios are discussed below while the Expenses Ratio would form
part of the discussion in the later half of the section.

1.

PROFIT MARGIN: The profit margin measure the relationship between profit

and sales. As the profits may be gross or net, there are two types of profit margins: Gross
Profit Ratio and Net Profit Ratio.
i.

Gross Profit Ratio:


It is the ratio of gross profit to net sales expressed as a percentage.
A financial metric used to assess a firm's financial health by revealing
the proportion of money left over from revenues after accounting for the
cost of goods sold. Gross profit margin serves as the source for paying
additional expenses and future savings. The ratio shows whether the
markup obtained on cost of production is sufficient or not. There is no
standard showing reasonableness of gross profit ratio. However, it must be
enough to cover its operating expenses. If this ratio is low, it indicates that
the cost of sales is high or that the purchasing is inefficient.

ii.

Net Profit Ratio:


It is the ratio of net profits to revenues for a company or business
segment - typically expressed as a percentage that shows how much of
each rupee earned by the company is translated into profits. This ratio
indicates what proportion of sales revenue is left to the proprietors after
all operating expenses are met. The higher this ratio, the better will be the
profitability.

Gross profit ratio = Gross profit Sales100. (5.6)

Net profit ratio = Net profit Sales 100.. (5.7)

51

Table 5-13 :G.P. &N.P. for Profitability Ratios Related to Sales of Ashapura Volclay
ltd from F.Y. 2008-09 to 2010-11
(Figures are in Lakhs)
iii.
iv.
v.
vi.

Year

Gross profit

Net profit

2008-09

26.33

17.22

2009-10

45.06

36.57

2010-11

44.93

34.27

vii.

Table 5-14: Profitability Ratios Related to Sales of Ashapura Volclay Ltd., from F.Y.
2008-09 to 2010-11
(Figures are in percentages)
Year

Gross Profit Ratio

Net Profit Ratio

2008-09

36.29

23.74

2009-10

50.15

40.70

2010-11

39.01

29.76

Average

41.82

31.40

Maximum

50.15

40.70

Minimum

36.29

23.74

52

Figure 5-8 : Profitability Ratios Related to Sales of Ashapura Volclay Ltd.,FY 20082009 to 2010-2011

60
50
40

2008-09
2009-10
2010-11

30
20
10
0
Gross Profit Ratio

Net Profit Ratio

Observation :
Gross Profit ratio: In AVL the gross profit ratio for the year 20008-09 was 36.29%. In
2009-10, it has achieved considerable growth and reached upto50.15%. But in 2010-11 it
has decreased and came to39.01%. The reason of decrease in profit of last year is mainly
due to increase in direct expenses.
Net Profit ratio : From the table, we can see that net profit has shown similar fluctuation
as gross profit. In 2008-09 it was 23.74%, in 2009-10 it increased by 71 % and reached
to 40.70%. Again due to increase in indirect expenses net profit ratio has reached to
29.76%.

2. EXPENSES RATIO: Another profitability ratio related to sales is the expenses ratio.
It is computed by dividing expenses by sales. The variants of expenses ratio discussed in
this study are:
a.
b.

Direct Expense Ratio


Indirect Expense Ratio
This ratio shows the relationship between expense and sales. It shows the
efficiency of management. The higher the ratio, the less will be the margin available to
proprietors. This ratio is usually expressed as a percentage.

53

Direct expense ratio = direct expenses Sales 100....(5.8)


Indirect expense ratio = indirect expenses Sales 100..(5.9)
Table 5-15: Expenses of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-2011
(Figures are in lakh)
Year

Direct Expenses
ratio

Indirect
Expenses ratio

2008-09

47.07

9.25

2009-10

43.03

8.75

2010-11

73.55

10.81

Table 5-16: Expenses Ratio of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-11
(Figures are in percentages)
Year

Direct Expenses ratio

Indirect Expenses
ratio

2008-09

64.89

12.75

2009-10

47.89

9.74

2010-11

63.86

9.39

Average

58.88

10.63

Maximum

64.89

12.75

Minimum

47.89

9.39

54

Figure 5-9: Expenses Ratio of Ashapura Volclay Ltd., from F.Y. 2008-09 to 2010-11.
70
60
50
2008-09
2009-10
2010-11

40
30
20
10
0
Direct Expenses ratio

Indirect Expenses ratio

Observation :
Direct Expense Ratio: Direct expenses of AVL includes manufacturing & processing
expenses, packing material, raw material purchase etc.
Direct expense ratio in year 2008-09 was 64.89%, indicating that out of sale of Rs.100
there is direct expense of Rs. 64.89. In the year 2009-10 there is decline in direct
expense, so direct expense ratio is 47.89%. Thus it is implied that the company is
working on reducing its expenses while maintaining and even increasing earnings. This
is a good signal for the firm as the direct expense has been declining, so it has increased
the part of profit. But in 2010-11, the direct expense ratio has increased and reached to
63.86%. So the company should try to reduce fluctuation of expenses.
Indirect Expense Ratio : Indirect expenses of AVL includes administrative cost,
depreciation, interest, personnel cost etc.
As similar to direct expenses, there is same fluctuation in indirect expense. The minimum
ratio is achieved in year 2009-10 with a value of 9.74%, which is 1.3 times less than the
maximum value of 12.75% in the year 2008-09. It has decreased by 24%. Its a good sign
which gives a firm larger percentage share of sales to meet financial liabilities like
interest, tax, dividend and so on. In last year, it has increased and reached to 9.39%.

55

SECTION-IV
5.4. CONCLUDING OBSERVATIONS
In this chapter i have calculated current ratio, liquid ratio in first section. Both of
these ratios need improvement, so AVL should try to either increase assets or decrease
liabilities for smooth operation of company. In second section we have calculated
different turnover ratios, namely, inventory turnover ratio, total asset turnover ratio, fixed
asset turnover ratio. Whether these ratios are satisfactory or not can be said only by
comparing it either with standard or with that of other firms in the same business. So
overall we can say company should try to operate more and more effectively. The direct
as well as indirect expense ratio has shown fluctuating trend in the last three years and
due to that reason profit margin of the company is unpredictable.

56

CHAPTER 6
6. OPERATING, FINANCIAL AND COMBINED LEVERAGE
This chapter deals with the risk aspects of the firm explained with the degree of
operating leverage, degree of financial leverage and degree of combined leverage.
Leverage ratios give an insight into the financing decisions of the firm. The
present section gives a framework for the different leverage ratios of the firm, Degree of
Operating Leverage, Degree of Financial Leverage and Degree of Combined Leverage.
The implications of each of these ratios will also be discussed.
Degree of Operating Leverage = % change in EBIT % change in
sales...............................(6.1)
Degree of Financial Leverage
EBIT.................................(6.2)

change

in

EPS

change

in

Degree of Combined Leverage


sales.................................(6.3)

change

in

EPS

change

in

Alternatively,
Degree of Combined Leverage = Degree of Operating Leverage Degree of Financial
Leverage......................(6.4)
Table 0-17 : Amt. for Leverage of Ashapura Volclay Ltd., from F.Y. 2008-09 to 20102011

Year

EBIT

Sales

EPS

2007-08

19.06

55.67

9.23

2008-09

19.88

77.93

9.71

2009-2010

23.26

96.84

6.88

2010-11

18.59

125.19

5.25

57

Table 0-18: Operating, Financial and Combined Leverage for Ashapura Volclay
Ltd., from F.Y. 2008-09 to 2010-11

Year

Degree of
Operating
Leverage

Degree of
Financial
Leverage

Degree of
Combined
Leverage

2008-09

0.12

1.20

0.14

2009-10

0.82

-1.71

-1.39

2010-11

0.68

1.18

0.80

Average from
F.Y. 2008-09 to
2010-11

0.54

0.22

-0.15

Maximum

0.82

1.20

0.80

Minimum

0.12

-1.71

-1.39

Figure 0-10: Leverage of Ashapura volclay Ltd., 2008-09 to 2010-11


1.5
1
0.5
0
-0.5

2008-09
2009-10
2010-11

-1
-1.5
-2

58

Observation :
Degree of Operating Leverage: For the period 2008-2009 to 2010-11, the degree of
operating leverage remains in the range of 0.12 to 0.82 with a high of 0.82 observed in
2009-10. The value of operating leverage remains positive in last 3 years. The positive
value of leverage is desirable for a company as it means higher sales convert into higher
EBIT. In the year2010-11,the DOL is positive with value of 0.68. The average operating
leverage value for the four year period 2008-2009 to 2010-11 is 0.54.

Degree of Financial Leverage: Degree of financial leverage is associated with the


financing activities of the firm and is concerned with the financing decisions. In the year
2008-09 it was 1.20. But From the table it is observed that in 2009-10 financial leverage
value is negative i.e. -1.71.This implies that in this year a positive change in EBIT
translated into a negative change in the EPS. In last year, 2010-2011 DFL is 1.18. The
average of last three years is 0.22.

Degree of Combined Leverage: The combined leverage have been calculated as the
product of financial leverage and operating leverage and are shown. It is a significant
ratio as it determines the effect of change in sales to change in EPS. For the period 20082009 to 2010-11, the combined leverage is in the range of -1.39 to 0.80. Negative
leverage is observed in the period 2009-2010,while it has a positive value of 0.14 & 0.80
for 2008-2009,2010-11 respectively. For an increase in operating leverage, the financial
leverage is desired to be reduced and vice versa for an optimal combined leverage. This
can be observed to be true from the values for the period. For instance, degree of
operating leverage increased from 0.12 in 2008-09 to 0.82 in 2009-10 while in the same
period degree of financial leverage decreasing from 1.20 to -1.71 and thus the degree of
combined leverage reduced from to 0.14 to -1.39.

Concluding observation : The degree of operating, financial and combined leverage give
an insight into the risk complexion of the company. The undesirable negative values for
the company are an area of concern and need to be looked into.

59

CHAPTER 7
7.WORKING CAPITAL MANAGEMENT
Working Capital is the amount of capital that a business has available to meet the
day to day cash requirements of its operations. It is concerned with the problem arise in
attempting to manage the current assets, the current liabilities and the inter relationship
that exist between them. Working Capital is the difference between resources in cash or
readily convertible into cash and organizational commitments for which cash will soon
be required or within one year without disrupting the operation of the firm. It also refers
to the amount of current Assets that exceeds current Liabilities.
Working Capital refers to that part of the firm capital, which is required for
financing Short-Term or Current Assets such as Cash, Marketable Securities, Debtors and
Inventories. Working Capital is also known as Revolving or Circulating Capital or Short
Term Capital.
The goal of working capital management is to manage the firms current assets
and current liabilities in such way that the satisfactory level of working capital is
mentioned. The current assets should be large enough to cover its current liabilities in
order to ensure a reasonable margin of the safety.
Constituents of Current Assets:

Cash in hand and Bank balance

Bills Receivable

Sundry Debtors

Short term Loans and Advances

Inventories of Stock as:

Raw Materials

Work in Process

Stores and Spaces

Finished Goods

Temporary Investments of Surplus Funds

Prepaid Expenses

Accrued Incomes
The term working capital refers to the net working capital. Net working capital is
the excess of current assets over current liabilities or say:
Net Working Capital = Current Assets Current Liabilities.
60

CONSTITUENTS OF CURRENT LIBILITIES:

Bills Payable

Sundry Creditors or Account Payable

Accrued or Outstanding Expenses

Short term Loans, Advances and Deposits

Dividends Payable

Bank Overdraft

Provision for Taxation.


The gross working capital concept is financial or going concern concept whereas net
working capital is an accounting concept of working capital.
Table 0-19: Current assets of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.
(Amt. in lakhs)
Year

Current Asset

2008-09

12.66

2009-10

8.17

2010-11

12.93

Figure 0-11: Current assets of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.

14
12
10

2008-09
2009-10
2010-11

8
6
4
2
0
Current Asset

61

Table 0-20: Current liabilities of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.


(Amt. in lakhs)
Year

Current Liab.

2008-09

12.94

2009-10

7.19

2010-11

11.02

Figure 0-12: Current Liabilities of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.

14
12
10

2008-09
2009-10
2010-11

8
6
4
2
0
Current Liab.

Table 0-21: Working capital of Ashapura Volclay Ltd., F.Y.2008-09 to 2010-11.


(Amt. in lakhs)
Year

Working capital

2008-09

-0.28

2009-10

0.98

2010-11

1.91

62

Figure 0-13: Working Capital Of Ashapura Volclay Ltd., F.Y.2008-09 To 2010-11.

2
1.5
2008-09
2009-10
2010-11

1
0.5
0

Working capital
-0.5
OBSERVATION :

WORKING CAPITAL : Working capital management is important aspect of financial


management. The study of working capital management of AVL has revealed that the Net
Working Capital was improving regularly from -0.28 lakh(negative) in 2008-09 to 1.91
lakh in 2010-11. In year 2008-09 the company has negative balance of working capital.
But AVL realized that in future it may have to face trouble so it was working on
improving working capital so it became positive in 2009-10 with value of 0.98 lakh and
in 2010-11 it reached to 1.91 lakh. It shows good liquidity position. Positive working
capital indicates that company has the ability of payments of short terms liabilities.
SECTION-I
7.1. CONCLUDING OBSERVATIONS
The major conclusions emerging from the above analysis are summarized in this
section. For smooth operation of company enough working capital is essential. The
company has tried for this and reached to positive working capital from negative in 3
years. But still company should try to bring up it.

63

CHAPTER 8
8. CONCLUSIONS, FINDINGS AND SUGGESTIOINS
Current ratio, liquid ratio are not satisfactory, so AVL should try to either increase
assets or decrease liabilities for smooth operation of company. Inventory turnover ratios
is showing increasing trend. Total asset turnover ratio, fixed asset turnover ratio have
fluctuation, so there is no particular trend. So overall we can say company should try to
operate more and more effectively.
The profitability analysis of AVL over the year 2008-09 to 2010-11 using ratio
analysis has given an important insight into the firm. The firms operational efficiency is
studied in terms of profitability. The direct as well as indirect expense ratio has shown
increasing trend in the last three years and due to that reason profit margin of the
company has deteriorated. So return on capital employed, return on shareholders funds,
return on share capital as well as earning per share has declined. So the company must
take some firm action to stop these declining trend.
The debt-equity ratio for AVL Ltd. for the entire period of study is higher than 1.
It is not positive signal for the creditors. It means the owners are putting relatively less
money of their own. Also, the mean of long-term debt to total assets ratio is 0.28 during
the period of study. This implies that more short-term financing is being used by the
company to finance the assets.
The degree of operating, financial and combined leverage give an insight into the
risk complexion of the company. The undesirable negative values for the company are an
area of concern and need to be looked into. Finally the firm enjoys a satisfactory interest
coverage ratio and thus the company is considered to be able to pay its interest
obligations in the future.
For smooth operation of company enough working capital is essential. The
company has tried for this and reached to positive working capital from negative in 3
years. But still company should try to bring up it.

64

Findings :

The ratio of returns on capital employed, which shows the overall profitability of
the business, having a continuous fall down in the years of study.

Because of decreasing trend in returns on equity share capital, AVL has not
proved good in satisfying its share holders.

While studying the financial analysis, it is observed that in most of the cases
company have a fluctuating trend so future is unpredictable.

The staff of AVL is very cooperative and supportive


All were ready to share which they know about the company and their
particular work.

The company has put its great efforts in minimizing the effect of pollution by
making their own gardens in the surroundings. Waste water of production, after
recycling, used in maintaining the gardens.

All the works are performed systematically by the use of ERP software, so
efficiency has increased.

Company follows a strict security. It is keeping continuous concentration on the


entry of someone as well as exit also.

65

Suggestions :

In production area, tank capacity is not enough to contain waste water so it cause
mud in the surrounding area so AVL should try to increase this capacity so that
cleanliness can be maintain.

The company should work upon in improving the current ratio and liquid ratio
either by increasing assets or decreasing liabilities, so that the company would be
able to meet its current liabilities with ease, as and when they arise.

Overall all the returns have fallen in the period of study, so its a crucial thing, for
that AVL should try to stop the declining trend and make improvement upon that.

Some sort of wideness is require in office building. So all can sit properly and
work efficiently in the cabin.

The road between Hiralaxmi Craft Park and unit of production, needs some
maintenance. Its very dusty.

AVLs debts are more in compare to equity so company has a more burden of fix
expenses. While on the other hand, certainity in profit is not there so it is an area
of concern and need to be looked into to avoid the future problems.

Management of the company should try to utilize assets more effectively to check
the deterioration in the turnover of the assets.

Company should have some sort of control over the expenses so that level of
profit can be maintained.

Overall, it was observed that the year 2008-09 was average. As compared to
2008-09, year 2009-10 was better. But company failed to maintain growing trend, again
in the year 2010-11 the financial condition of company has degraded.

66

REFERENCES
1.
2.

Advanced Accountancy-5,(Management accounting & Auditing) by Sudhir


Prakashan. Edition :2009-10. Page no : 151-252
Chakraborty, S. K., (1977) Corporate Capital Structure and Cost of Capital (Calcutta,
ICWA), pp. 62-65).

3.

Khan M.Y and Jain.P.K, 2007. Management Accounting:Text, Problems and cases

4.

Khan, M. Y and Jain,P.K (2007), Financial Management: Text, Problems and Cases (Tata
McGraw Hill, New Delhi).
Jain, P.K and Manoj Kumar (1997), Comparative Financial Management: Practices of
India and South East Asia, (Hindustan Publishing Corporation, New Delhi)
Khan, M. Y and P. K. Jain (2004), Financial Management: Text, Problems and Cases
(Tata McGraw Hill, New Delhi).

5.
6.

7.
8.
9.
10.
11.
12.
13.

Financial Management by B.S,Shah Prakashan Edition : 2010-11


Akanksha-Ashapura group newsletters. Volume: 2010/03
http://www.avlgalleon.com/
http://www.carerating.com/

http://www.ashapura.com/ashapuravolclay.htm
http://moneyterms.co.uk/roce/
http://www.financescholar.com/return-capital-employed.html

67

ANNEXURES
Profit & Loss A/C as on 31-3-2009
Particulars
Opening Stock
Stock(Finished Goods )
Stock(W.I.P.)
Stock(Raw Material )
Stock(Packing Material )
Stock(Stores & Spare )Other Mfg. E
Stock(Stores & Spare )-Rep.
to Plant
Stock(Fuel )
Direct Expenses
Manufacturing & Processing Exp.
Packing Material Consumption &
Exp.
Raw Material Purchase
Selling & Distribution Expenses
Gross Profit c/o
Total
Indirect Expenses
Administrative Cost
Depreciation
Interest (Indirect)
Personnel Cost
Prior Period Adjustments (net)
Net Profit
Total

(Amt. in lakhs)
Amou
nt (Rs)
7.48
0.46
3.72
1.03
0.46
0.28
1.08
0.45
47.07
19.08
2.54
25.37
0.08
26.33
80.89
9.25
1.27
5.06
0.01
2.73
0.18
17.22
26.47

Particulars
Direct Income
Sales

Amoun
t (Rs)
72.55
72.55

Closing Stock
Stock(Finished Goods )

8.34
1.91

Stock(Goods in transit)

2.44

Stock(W.I.P.)
Stock(Raw Material )
Stock(Packing Material )
Stock(Stores & Spare )Other Mfg. E
Stock(Stores & Spare )-Rep.
to Plant
Stock(Fuel )

0.97
0.63
0.41
0.32
1.52
0.14

Total
Gross profit b/f
Indirect Income
Other income

80.89
26.33
0.14
0.14

Total

26.47

Balance sheet as on 31-3-2009


Liabilities

Amt(Rs.)

Assets

Amt(Rs
.)
46.98

Shareholders Funds

Fixed Assets

Share Application

Investment

Deferred Tax Liability

Current Assets

8.36

Loan & Advances

4.30

Loan Funds

46.70

68

Current Liability & Provisions

12.94

Miscellaneous exp. Not written


off
Net Loss

Total

59.64

Total

Profit & Loss A/C as on 31-3-2010


Particulars
Opening Stock
Stock(Finished Goods )
Stock (Goods in transit)
Stock(W.I.P.)
Stock(Raw Material )
Stock(Packing Material )
Stock(Stores & Spare )Other Mfg. E
Stock(Stores & Spare )-Rep.
to Plant
Stock(Fuel )
Direct Expenses
Manufacturing & Processing Exp.
Packing Material Consumption &
Exp.
Raw Material Purchase
Selling & Distribution Expenses
Gross Profit c/o
Total
Indirect Expenses
Administrative Cost
Depreciation
Interest (Indirect)
Personnel Cost
Net Profit
Total

59.64
(Amt. in lakhs)

Amou
nt (Rs)
8.34
1.91
2.44
0.97
0.63
0.41
0.32
1.52
0.14
43.04
20.80
3.19
18.89
0.16
45.06
96.44
8.76
1.80
5.74
0.01
1.21
36.57
45.33

Particulars
Direct Income
Sales

Amoun
t (Rs)
89.86
89.86

Closing Stock
Stock(Finished Goods )

6.58
0.78

Stock(Goods in transit)

0.12

Stock(W.I.P.)
Stock(Raw Material )
Stock(Packing Material )
Stock(Stores & Spare )Other Mfg. E
Stock(Stores & Spare )-Rep.
to Plant
Stock(Fuel )

0.25
2.09
0.38
0.65
2.09
0.22

Total
Gross profit b/f
Indirect Income
Other income

96.44
45.06
0.27
0.27

Total

45.33

Balance sheet as on 31-3-2010


Liabilities
Shareholders Funds

Amt(Rs.)

Assets
Fixed Assets

Amt(Rs
.)
48.91

69

Share Application

Investment

Deferred Tax Liability

Current Assets

6.63

Loan & Advances

1.55

Loan Funds
Current Liability & Provisions

49.89
7.19

Miscellaneous exp. Not written


off

Net Profit
Total

57.09

Total

57.09

70

Profit & Loss A/C as on 31-3-2011


Particulars
Opening Stock
Stock(Finished Goods )
Stock(W.I.P.)
Stock(Raw Material )
Stock(Packing Material )
Stock(Stores & Spare )Other Mfg. E
Stock(Stores & Spare )-Rep.
to Plant
Stock(Fuel )
Stock (Goods in transit)
Direct Expenses

(Amt. in lakhs)
Amou
nt (Rs)
6.58
0.78
0.25
2.09
0.38
0.65
2.09
0.22
0.12
73.55

Manufacturing & Processing Exp.

26.72

Packing Material Consumption &


Exp.
Raw Material Purchase
Selling & Distribution Expenses
Trading Purchase
Gross Profit c/o
Total
Indirect Expenses
Administrative Cost
Depreciation
Interest (Indirect)
Personnel Cost
Net Profit
Total

4.49
41.34
0.47
0.53
44.93
125.06
10.81
1.88
7.20
0.03
1.70
34.27
45.08

Particulars
Direct Income
Sales
Operational Income

Amoun
t (Rs)
115.25
115.17
0.08

Closing Stock
Stock(Finished Goods )

9.81
2.27

Stock(W.I.P.)

0.63

Stock(Raw Material )
Stock(Packing Material )
Stock(Stores & Spare )Other Mfg. E
Stock(Stores & Spare )-Rep.
to Plant
Stock(Fuel )

3.06
0.55
0.68

Total
Gross profit b/f
Indirect Income
Other income

Total

2.28
0.34

125.06
44.93
0.15
0.15

45.08

Balance sheet as on 31-3-2011


Liabilities

Amt(Rs.)

Assets

Amt(Rs
.)
75.84

Shareholders Funds

Fixed Assets

Share Application

Investment

Deferred Tax Liability

Current Assets

9.83
3.10

Loan Funds

77.74

Loan & Advances

Current Liability & Provisions

11.03

Miscellaneous exp. Not written


71

off
Net Profit
Total

88.77

Total

88.77

72

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