Professional Documents
Culture Documents
ANALYSIS
OF USHA
MARTIN
LIMITED
PROJECT
CONCLUDED BY :
ANKIT KEDIA
RANJAN KUMAR
MAMTA KUMARI
AMIT KUMAR
NITESH MITTAL
DECLARATION
Certificate of Guide
During their project they were assigned the project on”RATIO ANALYSIS
OF USHA MARTIN LIMITED,RANCHI(TATISILWAI).”They have
completed their project satisfactorily.This certificate is being issued for
academic purpose.
FINANCE DEPARTMENT
A Study on Ratio Analysis of UML, Ranchi
ACKNOWLEDGEMENT
There are times when one feels a sense of accomplishment combined with a
sense of gratitude. Writing the acknowledgement page in this project is one
among them. This project would have been a distant dream without the grace of
almighty. So, first and foremost, we, profusely thank god for his blessings and
grace, without which my project would not have seen the light of the day.
We would like thank HRD Manager, Mr. Arvind Kumar who provided us a
golden chance for training and our especial thanks to Mr. Rajeev Singh for his
guidance and appreciative support in spite of busy schedule at Usha Martin
Limited.
A Study on Ratio Analysis of UML, Ranchi
PREFACE
The summer training in this reputed Company had been a challenging and
exciting experience which brought us closer to the business organization.
Our Project topic is Ratio Analysis of Usha Martin Limited(Wire Ropes and
Speciality Product Division) in Finance department of USHA MARTIN
LIMITED,TATISILWAI,RANCHI,JHARKHAND.
A Study on Ratio Analysis of UML, Ranchi
INDEX
1COMPANY BACKGROUND
2. COMPANY PROFILE
4. FINANCIAL STATEMENT
5. CALCULATION OF RATIO
6. MAJOR LEARNING
7. FINDINGS
9. SWOT ANALYSIS
11. BIBLIOGRAPHY
A Study on Ratio Analysis of UML, Ranchi
CONTENT
1. INDUSTRY PROFILE
2. COMPANY BACKGROUND
3. SWOT ANALYSIS
4. FINANCE REVIEW
5. MAJOR LEARNING
6. FINANCIAL STATEMENT
8. FINDINGS
10. SUGGESTION
11. CONCLUSION
12. BIBLIOGRAPHY
A Study on Ratio Analysis of UML, Ranchi
CONTENT
1. COMPANY BACKGROND
2. COMPANY PROFILE
4. FINANCIAL STATEMENT
6. MAJOR LEARNING
7. FINDING
9. SWOT ANALYSIS
11. BIBLIOGRAPHY
A Study on Ratio Analysis of UML, Ranchi
INDUSTRY PROFILE
Though evidence indicates that iron and steel have been used for almost 6000
years, the modern form of iron and steel industry came into being only during
the 19th century. The growth and development of iron and steel industry in the
world until the Second World War was comparatively slower. But the industry
has grown very rapidly after the Second World War. World production of steel
which was only 28.3 MNT in 1900 rose to 695 MNT by 1992. The oil crisis of
the seventies affected the entire economy of the world including the steel
industry. The position started improving after 1983 peaked at 780 MNT in
1989. It started declining till 1994 (723 MNT), picked up again to 755.8 in
1995. The world steel production was around 900MNT in 2002.
A Study on Ratio Analysis of UML, Ranchi
Historical Background
Indian History:-
Indian History is also full of reference to the usage of iron and steel. Some of
the ancient monument like the famous iron pillar in New Delhi or the massive
beams used in the Sun Temple at Konark bears ample testimony to the
technological excellence of the Indian metallurgists.
The history of iron in India goes back to the ancient era. Our ancient literary
sources like the Rig Veda, the Atbara Veda, the Purina’s and other picas are
full of references to iron and to the uses in peace and war. According to one of
the studies, iron has been produced in India for over 3000years.
By the early 1950’s there were strong market as well as ideological pressures
for not only expanding the capacity of existing units but also building up new
plants in the public sector. In 1953, an agreement was signed with Kruoo-
Demage of Germany to set up a 1-MnT P/A plant at Rourkela for the
production of flat products. In 1956, two other agreements were concluded for
setting up 1-MnT P/A plant at Durgapur with the assistance from U.K. the 1
MnT steel plants at Bhilai, Durgapur and Rourkela came up in the early 1960’s
signifying an achievements, which could be considered unique for any
undeveloped or even developed nation at that point of time.
By the end of the 1960’s, Bhilai Steel Plant’s capacity increased to 2.5 MnT
P/A, Durgapur Steel Plant to 1.6 MnT P/A, and Rourkela Steel Plant to 1.8
MnT P/A. from the late 1950’s, plans were made to set up a public sector unit
at Bokaro, in Bihar. The Bokaro project however was fraught with delays. The
USA turned down technical assistance and funding, the USSR mover in and
wanted major changes in specifications before supplying technical expertise
and aid. Bokaro steel plant started rolling steel only in 19
Early Growth
Though the art of making iron was known to India from very ancient time, the
real development of the iron and steel industry started only since 1907 with the
A Study on Ratio Analysis of UML, Ranchi
The iron and steel industry of the country has made remarkable progress after
independence under the five-year plans. During second five-year plan, three
public sector steel plants were set up at Rourkela in Orissa with German
assistance, Bhilai in Madhya Pradesh with Russian assistance and Durgapur in
West Bengal with British assistance. Besides, the government gave financial
and other help to the three existing private sector iron and steel works for their
expansion, and all the private sector works expanded their capacity. Thus, the
second five-year plan period was the most memorable period in the
development of the Indian iron and steel industry.
During the third five-year plan, one more public sector steel plant was set up at
Bokaro in Bihar with Russian help. Besides, expansion was carried out in the
Tata Iron and Steel Company, Indian Iron and Steel Company and Mysore Iron
A Study on Ratio Analysis of UML, Ranchi
and Steel works. Again during third plan, the Iron & steel industry of the
country diversified its production, producing several types of iron and steel.
During the fourth plan, steps were taken for the maximization of the capacity of
the existing plants. Besides, plants were prepared for the setting up of three
more public sector steel plants at Salem in Tamil Nadu, Vijayanagar in
Karnataka and Vishakapattanam in A.P though there was expansion of
production, there was shortage of steel during the fourth plan period.
During the fifth plan, production was expanded, especially in the Bhilai
and Bokaro steel plants.
COMPANY PROFILE
Incorporated in 1960 Mr. B.K. Jhawar, the present chairman, pioneered it.It
was promoted to manufacture steel and wires ropes in a collaboration with
Martin Black of Scotland as a joint Indo-British venture. From 1st October
1997, this company has been merged with Usha Beltron Ltd which has been
renamed as wire and wire ropes division, within which six companies are
included.
A Study on Ratio Analysis of UML, Ranchi
Board of director
Chairman Mr. Prashant Jhawar
Director Mr.Brij K Jhawar
Director Mr. N. J. Jhaveri
Director Mr. U.V. Rao
Director Mr. A. K. Chaudhuri
Director Mr. Suresh Neotia
Director Mr. Ashok Basu
Director Mr. Salil Singhal
Managing Director Mr. Rajeev Jhawar
Jt. Managing Director Dr. P. Bhattacharya
Companies
USSIL
Usha siam steel industries (USSIL) was incorporated in
1980 as a joint venture between Usha martin industries,
India and leading industrialists in Thailand – promoted
by board of investment (BOI) for production of steel
wire and rope.
UM Singapore
Established in 2000, is a wholly owned subsidiary of
Usha Martin Limited, India. It has been operational as a
distribution center for Usha Martin Group’s core
business of steel wire ropes and related products in
South East Asia. It also has distribution set up in
Australia & Indonesia.
A Study on Ratio Analysis of UML, Ranchi
BWWR
Established in 2003, Brunton Wolf Wire Ropes FZCO is
a joint venture between Usha Martin Limited of India
and Gustav Wolf of Germany.BWWR is the first wire
rope factory set up in the middle east, situated in Jebel
Ali Free Zone Enterprise (FZE) with an annual capacity
of 12,000 MT. The product range includes general
engineering rope, elevator rope, crane rope, off-shore
application rope, etc.
UM Cables
A wholly owned subsidiary of Usha Martin Limited,
located at Silvassa, Western India, manufactures PIJF
Copper Telecom cables and Optical Fibre Cables and
has an annual capacity of 2.9 MCKM and 35000 RKM
respectively.
UMIL
Established in 1997, Usha Martin International Limited
is a wholly owned subsidiary of Usha Martin Limited,
formed to facilitate distribution & marketing of the
group’s wire & wire rope products in Europe. The
company also acquired in 2001 a Nottinghamshire based
A Study on Ratio Analysis of UML, Ranchi
COMPANY BACKGROUND
The Company is a part of the Usha Martin Group, which was formed in India
in the early 1960s with the establishment of Usha Martin Industries Limited
(UMIL), engaged in the manufacture of steel wires, wire ropes and other
related products. The group was promoted by Mr. B. K. Jhawar, who is the
Chairman of the Company. Usha Beltron Limited was incorporated on 21 May,
A Study on Ratio Analysis of UML, Ranchi
1986 as a joint venture between Usha Martin Industries Limited, Bihar State
Electronics Development Corporation Limited, AEG Kabel, Germany (now
Kabel and a member of the Alcatel group) and DEG, Germany, to manufacture
Jelly Filled Telephone Cables (JFTC). Pursuant to the Orders of the Hon'ble
High Court of Kolkata and Patna( Ranchi Bench) Usha Martin Industries
Limited merged with Usha Beltron Limited with effect from 15th May, 1998.
Thereafter the registered office was shifted from Tatisilwai, Ranchi, Bihar to
Kolkata in the State of West Bengal in the year 2000. The name of Usha
Beltron Limited was changed to Usha Martin Limited with effect from 1st
May,2003.
Vision:-
Mission:-
Quality policy:-
• Providing product & services that meet customer expectation .
• Continual improvement to our quality management system and process.
• Continues enrichment of the skills and knowledge through training and
training.
• Compliance to all applicable statutory and regulatory.
• Fostering the professional development of our employee.
• Our suppliers and customers are our partner in progress.
OWNERSHIP PATTERN
Pattern of Shareholding (as on 31.03.2009)
A Study on Ratio Analysis of UML, Ranchi
COMPETITORS INFORMATION:-
Tisco , Jamshedpur
Musco, Mumbai
Rinl, vizag
Siscol, salem
Facor, nagpur
Sun flags, Nagpur
INFRASTRUCTURAL FACILITIES :-
Usha martin is a huge conglomerate situated15km far from main city Ranchi. It
has been providing different infrastructural facility like;
➢ Accommodation for employees at lower rates.
➢ Officers association
➢ Workers association
➢ One guest house
➢ clubs for both executives & non executives
➢ medical facility
➢ fooding & transportation facility etc.
Delhi recently. The award has been given for outstanding work undertaken in Low
Birth Weight Project in rural Jharkhand. The other partners of the project were
Krishi Gram Vikas Kendra (implementing agency), ICICI Bank (strategic partner
and funding agency), Jharkhand Government (enabler and implementing partner),
Jharkhand Health Society, John Hopkins University (operations research design)
and CINI (conceptual and technical support).
‘Hard’ variables.
Strategy: plan leading to
allocation of resources.
Structure: Organization reporting lines, geography, etc.
Systems: formal and informal processes used.
‘Soft’ variables:
Staff: demographics of personnel.
Style: behavior of managers when interacting with others.
Skills: core competencies of the firm.
Shared Value: culture, which is actually the core element to it all.
ORGANISATIONAL STRUCTURE
A Study on Ratio Analysis of UML, Ranchi
A Study on Ratio Analysis of UML, Ranchi
Head of P & A
DGM HRD
senior Manager (HRD)
FRESH ENTRANTS
➢ Induction and orientation
COMPETENCE ENHANCEMENT
➢ Technical
➢ Multi skill training
➢ Managerial
A Study on Ratio Analysis of UML, Ranchi
SPECIFIC AREA
➢ Safety
➢ Environment
➢ Cost control and deduction
➢ Quality
FINANCE DEPARTMENT
DGM - Finance
Jr. Mgr
Finance Department
Each section maintains the books of the accounts. The following sections deal
with their related transactions.
1. Central accounts section.
2. Purchase accounts section.
3. Sales accounts section.
4. Capital project account section.
5. Pay and Establishment section.
6. Cost and Budget account section.
MARKETING DEPARTMENT
D G M Marketing D G M Marketing
A Study on Ratio Analysis of UML, Ranchi
MKtg – WR
MKtg - Sr. Mgr Pune Reg Mgr MKtg Shipment
HQ Mktg (North)
region)
Mumbai Jr.
Dy Dy Mgr Mgr Mgr
Mgr Jr. Mgr
Mgr
Major customers
Defense units.
Railways.
Engineering industries.
ESCORTS.
BEML units.
Automobiles / Foreign industries.
Buyer market.
Quick delivery.
Better quality
A Study on Ratio Analysis of UML, Ranchi
Market Segmentation
Market segmentation means dividing the market into different segments or
sector in Usha Martin Ltd., the market segmentation is on the basis of customer
wise and product wise.
By customer-wise
Defense sectors.
Railway sector.
Auto and Forging sector.
Engineering sector.
Trade sector.
By product-wise
Alloy steel.
Spring steel
Scraps Slag.
Promotional Activities
[
Kl8k.,m8,
The steel products are not perishable. So it need not have any proper packing
as compared to consumer products. Binding with wire is enough for packaging
the steel products and leveling is done by metal tag and in different colors.
SKILLS
A skill refers to how smart an employee does his work with available source.
In marketing department various steps are taken for staff to develop appropriate
new skills for marketing their products.
The Company as a whole is very much skilled with the availability of huge
manpower and resources. The company is capable of accepting and producing
any type of the product and executes it well before schedule and to the
expectation of the customers. The company is able to manufacture over 200
grades of alloy and special steels to meet the specific requirement of individual
customers.
The steps taken to improve necessary skills of the employees:
1) On the job training.
7 days training for transferred employees.
1-year probationary period for newly recruited employees.
Induction training to promoted employee from non-executive level to
executive level.
A Study on Ratio Analysis of UML, Ranchi
STYLE
STRATEGY:
Strategy refers to how an organization will attain its vision, mission and
respond to the threats and opportunities of the new capabilities needed in
different strategy is the determination of the basic long-term goals and
A Study on Ratio Analysis of UML, Ranchi
objectives of an enterprise and the adoption of the course of action and the
allocation of resources necessary for carrying out these goals.
1. Specializing in developing and marketing special alloy steels and
achieve possible market share in this niche are has been notable
strategy adopted by the company.
2. Market penetration by the best possible past optimization techniques
and achieving price excellence has been another strategy adopted by
the company.
3. Smart sizing of the company through introduction of Voluntary
Retirement Scheme and leveraging most advanced production has
been another major strategy adopted by the company.
4. Systemic intervention into all the processes through development and
implementation of various system has been another strategy adopted
by the company to streamline its operations.
5. Very good selection and development systems adopted coupled with
several employee welfare measures has been a notable strategy
adopted by the company for attracting and retaining the talent.
6. Discharging corporate social responsibility through several society
linkage programs in the area of health, education, and training has
been yet another significant strategy adopted by the company.
7. Discharging environmental safeguarding responsibility through
various eco-friendly measures has been another noted strategy
adopted by the company to discharge its social responsibilities to
protect the environment
A Study on Ratio Analysis of UML, Ranchi
SYSTEM
System refers to the formal process and procedure used to manage the
organization, including the management control systems, performance
management measurement and record systems, performance measurement and
reward systems, planning, budgeting resource allocation systems information
system and distribution systems.
The firm should, therefore classify investors to identify which items should
receive the most effort on controlling. The firm should be selective in its
approach to control investment in various types of inventories. These
analytical approaches are called ABC analysis and tend to measure the
significance of each item of inventories in terms of its value.
The high value items are classified as ‘A items’ and would be under the tightest
control ‘C items’ represent relatively least value and would be under simple
A Study on Ratio Analysis of UML, Ranchi
control. ‘B items’ fall in between these two categories and require reasonable
attention of control.
The ABC analysis concentrates on important items and is also known as
“control by importance and extension”. So the items are classified as per the
importance of their relative value this approach is also known as “proportional
value analysis”.
ABC Analysis:
Category A:
Representing the most important items. Generally consists of 15 and 25
percent of inventory items and accounts for 60 to 75 percent of annual usage
value.
Category B:
Representing items of moderate importance. Generally consists of 20 to 30
percent of inventory items and accounts for 20 to 30 percent of annual value.
A Study on Ratio Analysis of UML, Ranchi
Category C:
Representing items of least importance generally consists of 40 to 60 percent of
inventory items and accounts for 10 to 15 percent of annual value.
STAFF
Staffs refer to the company human resource, which includes the manpower
available in the entire organization.
The people in Organization are very dedicated and work towards the
improvement of the Organization. The skill levels of the workers are work
oriented and they are specialized in their respective field of work. Most of the
workers are well experienced and well trained.
The staffs are graded from L. I to L I I for non-executives and E1 to E9 for
Executives. The qualification for the non-executive employees are SSLC, ITI,
and for executives Diploma and any degree or higher.
There is totally around 2600 staff members are there. Their average age is 51
to 52. The duties and responsibilities of staff differ from department to
department like production department to other department.
SHARED VALUE
Strengths:-
It is the potency of the company, which makes the difference from others in the
industry, the important strengths of the company are:
• Well equipped chemical and metallurgical laboratories.
• Satisfied & loyal customers.
• Location advantage with proximity to major markets (north, south, east,
west).
The company is known for its quality of alloy & special steel.
Weakness:-
Opportunities are the openings or prospects for the future expansion or growth
of the company and to meet the objectives for which it is formed. This makes
avenue for the company to achieve goals.
• Growing in iron and steel market.
A Study on Ratio Analysis of UML, Ranchi
Threats:-
Threats are the fear or the pressures for which are uncertain to the company and
company has to be geared up to face and to cope up with the changes from the
current state.
• Upgraded technology used by other manufacturer helps in supplying the
rates which could eat the market share.
• Too many welfare activities lead to the increase in expectations of
employees this could at some point of time become a reason for
dispute.
• Competition.
Interpretation:
The net profit after tax was Rs. 14,48,327 thousand in the year 2007-08
which has been increased to 14,65,567 thousand in current year. The net
increased in profit after tax is 1.19% because of increase in sales. Cumulative
profit for the last year was 4,20,792 which has been decreased to 3,43,588.
It was a good experience for me in carrying out the project work. It helped me
to gain practical knowledge and exposure and acted as a stepping stone to
reach the ladder of corporate world.
During the course of 8 weeks I visited the plant of Usha Martin Ltd, where I
gained practical knowledge about the working process and functioning of the
organization in accordance with the present market trends.
The main purpose of the organization study was to get acquainted with
practical knowledge about the overall functioning of the organization.
This project has also provided an opportunity to study the human behaviour
and analyze different situations, which normally would come across while on
work in the office or factory environment.
INTRODUCTION
yielded to the highest extent. Once we analyze the financial data, it reveals
some interpretations to be drawn. No interpretations can be drawn, if the
analyst does not analyze the data. Analysis is an art that can be practiced and
learnt.
The report considers the different techniques of analysis and their respective
usefulness. Every analyst naturally starts taking some preventive actions once
he/she identifies some deviations in the system. But this is not correct and
hence we should be analyzing the statement continuously. In the same way
ratio analysis is used as strategy to imply some decisions. It states that
analyzing the financial statements and giving some financial instructions is of
utmost important.
Primary data:
Primary data may be described as those data that has been observed by the
researchers for the first time. The primary data was obtained through personal
interaction with company officials during the internship period.
A Study on Ratio Analysis of UML, Ranchi
Secondary data:
Secondary data are those data that have been complied already before
conducting the research. Secondary data may be internal data as well as
external data. Internal data are collected from the company’s records. External
data are collected from outside the company.
The various sources of secondary data are,
➢ Annual reports and financial statements of the company like (balance
sheet and profit and loss account)
➢ Company websites
Sampling Size
Sample size used in this project study relates to the financial figures, covering
the period from 2005-06 to 2008-09. Each data was already checked and
verified by the charted accountant; hence the data is straightaway taken for
analysis. The data is collected from the final account statements.
Comparatively covers the study purpose, no samples are required for the study
as it is concerned with the true financial data of the company.
Method of Study
Even though so many tools of analysis are available, but this study
uses comparative analysis, common size analysis, trend analysis
and ratio analysis only.
This report is based upon the data provided by the officers of the
company and financial reports of the company.
As the concept is vast, in depth study can not be done and wide
constraints are involved.
A number of techniques or methods are available for financial analysis, but the
financial statement must be made simpler as for as possible to make the reader
understand the operating result and the financial health of the business. The
analysis of financial statement consists of study of relationship and trends to
determine whether are not the financial position of the concern and its
A Study on Ratio Analysis of UML, Ranchi
operating efficiency has been satisfying. In the process of these analyses the
financial analyst used various techniques or tools or methods. The financial
analyst can adopt one more of the following techniques or tools of financial
analysis;
RATIO ANALYSIS
to assess the changes that have place over a period of time in the financial
activities of the business.
(9) Study of financial soundness:- Ratio analysis discloses the position of
business with different view-points. It discloses the position of business with
the liquidity point of view, solvency point of view, profitability point of view
etc. With the help of such a study we can draw conclusions regarding the
financial health of the business enterprise.
conclusion. For example, the current ratio of a firm may be quite satisfactory,
whereas the quick ratio may be unsatisfactory.
Classification of ratios
(A) Liquidity Ratios: - Liquidity refers to the ability of the firm to meet its
current liabilities. The liquidity ratios, therefore, are also called “Short – term
Solvency Ratios”. These ratios are used to assess the short-term financial
position of the concern. They indicate the firm’s ability to meet its current
obligations out of current resources.
“Liquidity is the ability of the firm to meet its current obligations as they fall
due”
Liquidity ratios include two ratios:-
• Current ratio or Working capital Ratio
(B) Solvency ratio or Leverage ratio:- Solvency means the ability of the
business to repay its outside liabilities. These liabilities may be short term or
long term. A company must have sufficient long term funds to meet its long
term liabilities. It includes:-
• Debt equity ratio
• Proprietary ratio
• Operating Ratio
• Return on Investment
A Study on Ratio Analysis of UML, Ranchi
CURRENT RATIO
The ratio explains the relationship between current assets and current liabilities
of a business. This ratio measures the solvency of the company in the short-
term. Current assets are those assets which can be converted into cash within a
year. Current liabilities and provisions are those liabilities that are payable
within a year.
• The formula for calculating the ratio is:-
• Current assets include those assets which can be converted into cash
within a year’s time.
✔ Current Assets = Cash in Hand + Cash at Bank + B/R + Short-
term Investments(Marketable Securities) + Debtors(Debtors-
Provision) + Stock(Stock of Finished Goods + Raw Material +
Work in Progress) + Prepaid Expenses.
• Current Liabilities include those liabilities which are repayable in a
year’s time.
SIGNIFICANCE
The ratio is used to assess the firm’s ability to meet its short-term liabilities on
time. A current ratio of 1.33:1 is supposed to be an ideal ratio. The higher the
ratio, the better it is. If the current ratio is less than 1.33:1 it indicates loss of
liquidity and shortage of working capital.
Current Assets
Inventories 26,21,667 33,90,551 53,24,181 40,37,100
Sundry debtors 19,82,492 22,69,104 25,63,505 32,28,548
Cash and bank 5,17,489 3,70,805 4,63,607 7,64,682
Other current assets 2,25,640 2,60,942 3,40,486 2,39,621
Loan and advances 16,48,665 21,19,931 40,24,216 27,80,155
Total current 69,95,953 84,11,333 1,27,15,995 1,10,50,106
assets(A)
Current Liabilities
Liabilities 37,69,487 46,12,543 86,09,576 98,12,920
Provision 2,10,109 2,62,565 3,81,723 3,73,392
Total current 39,79,596 48,75,108 89,91,299 1,01,86,312
liability(B)
Comments
The current ratio of UML is 1.76:1, 1.73:1, 1.41:1, 1.08:1 in financial year
2005-2006,2006-2007,2007-2008,2008-2009 respectively. As it is said that the
current ratio should be more than 1.33:1.The current ratio of UML is very
satisfactory in 2005-2006,2006-2007 &2007-2008.The current assets are on an
increase in this three years, in short it means that for every one rupee of current
liabilities there is 1.76 rupee of current assets in the year 2005-06. In the year
2006-07 for every one rupee of current liabilities there is 1.73 rupee of current
assets. And in the year 2007-08 for every one rupee of current liabilities there is
1.41 rupee of current assets. But in the year 2008-09 the current ratio has been
declined to 1.08 because of decrease in current assets and increase in current
A Study on Ratio Analysis of UML, Ranchi
QUICK RATIO
It is also called acid test ratio or liquid ratio. Quick ratio indicates whether the
firm is in a position to pay its current liabilities within a month or immediately.
As such , the quick ratio is calculated by dividing liquid assets (Quick Current
Assets) by current liabilities:-
Liquid assets means those assets which will yield cash very shortly. All current
assets except stock and prepaid expenses are included in liquid assets.
Liquid assets thus include cash, debtors, bills receivable and short-term
securities.
SIGNIFICANCE
An ideal quick ratio is said to be 1:1. If it is more, it is considered to be
better .The idea is that for every rupee of current liabilities, there should at least
be one rupee of liquid assets.
A Study on Ratio Analysis of UML, Ranchi
Comments
A Study on Ratio Analysis of UML, Ranchi
The above table and chart shows that the quick ratio of UML is very
satisfactory in 2005-06 & 2006-07 because it is more than 1:1. It shows that for
one rupee of current liabilities there is 1.10 rupee of quick assets in the year
2005-06 while in the year 2006-07 UML has 1.03 rupee of quick assets for
every one rupee of current liabilities. But in 2007-08 & 2008-09 it has been
declined to 0.82:1 & 0.69:1 respectively, because of increase in current
liabilities. But seeing the past record we can say that UML will recover its
position.
Long- term Loans:- These refer to long-term liabilities which mature after
one year. These include Debentures, Mortgage Loan , Bank Loan , Loan from
financial institutions and Public Deposits etc.
Shareholder’s Funds:- These include Equity Share Capital , Preference Share
Capital , Securities Premium , General Reserve , Capital Reserve , Other
Reserves and Credit balance of Profit & Loss Account. However , accumulated
A Study on Ratio Analysis of UML, Ranchi
Debt
Secured Loan 67,17,748 74,41,398 86,70,608 1,46,61,503
Unsecured Loan 1,58,367 52,340 7,61,414 -
Deferred Tax 13,35,064 14,34,331 14,67,708 12,21,053
Liability
Total Debt(A) 82,11,179 89,28,069 1,08,99,730 1,58,82,556
Equity Share Capital 2,21,920 2,40,045 2,50,920 2,50,920
Reserve & Surplus 56,05,048 69,36,730 84,04,090 99,11,836
Total Equity (B) 58,26,968 71,76,775 86,55,010 1,01,62,756
Ratio = A/B 1.41:1 1.24:1 1.26:1 1.56:1
(Rs. in thousand)
SIGNIFICANCE
This ratio is calculated to assess the ability of the firm to meet its long term
liabilities.Generally, debt-equity ratio of 2:1 is considered safe. The ideal ratio
is
2:1 , meaning that long term liabilities of the business should be two times of
the shareholders fund.
CHART NO-3.DEBT EQUITY RATIO
A Study on Ratio Analysis of UML, Ranchi
Comments
The above table and chart shows that the debt equity ratio of UML is 1.41:1 in
year 2005-06 which has been declined to 1.24:1 in year 2006-07. In 2007-08 &
2008-09 it has increased to 1.26:1 & 1.56:1. The reasons being continuous
increase in secured loans and reserves & surplus and decrease in unsecured
loans.
This ratio is a variation of the debt-equity ratio and gives the same indication as
the debt-equity ratio. In this ratio, total assets are expressed in relation to long
term debts . It is calculated as under:-
• Total Assets to Debt Ratio = Total Assets/ Debt or long-term Loans
SIGNIFICANCE
This ratio expresses the relationship between the long term loans and total
assets of a business enterprise. It measures the proportion of total assets
financed through long-term loans. If the percentage of total assets financed
A Study on Ratio Analysis of UML, Ranchi
Assets
Current Assets 69,95,953 84,11,333 1,27,15,995 1,10,50,106
Fixed Assets 95,42,787 1,09,70,665 1,44,90,841 2,33,10,700
Total Assets(A) 1,65,38,740 1,93,81,998 2,72,06,836 3,43,60,806
Debt
Secured Loan 67,17,748 74,41,398 86,70,608 1,46,61,503
Unsecured Loan 1,58,367 52,340 7,61,414 -
Deferred Tax 13,35,064 14,34,331 14,67,708 12,21,053
Liability
Total Debt(B) 82,11,179 89,28,069 1,08,99,730 1,58,82,556
Comments
The above table and chart shows that the total assets to debt ratio is increasing
from 2.01:1 to 2.50:1 in the year 2005-06 to 2007-08. But decreased to 2.16 in
the year 2008-09. The fixed assets are on an increasing trend throughout the
four years. The current assets decreased in the last year. Secured loans are on
an increasing trend and unsecured loans are on an decreasing trend throughout
the four years.
A Study on Ratio Analysis of UML, Ranchi
PROPRIETARY RATIO :-
This ratio indicates the proportion of total assets funded by owners or
shareholders.
• Formula for calculating this Ratio
SIGNIFICANCE
A higher proprietary ratio is generally treated an indicator of sound financial
position from long-term point of view, because it means that a large proportion
of total assets is provided by equity and hence the firm is less dependent on
external sources of finance. On the contrary, a low proprietary ratio is a danger
signal for Long-term lenders as it indicates a lower margin of safety available
to them. The lower the ratio, the less secured are the long-term loans and they
face the risk of losing their money.
(Rs. in thousand)
PARTICULARS 2005-2006 2006-2007 2007-2008 2008-2009
Shareholders Funds
Capital 2,21,920 2,40,045 2,50,920 2,50,920
A Study on Ratio Analysis of UML, Ranchi
Comments
The ratio shows a strong financial position of the company. The higher the
ratio, the better it is. The proprietary ratio of UML increased from 0.36:1 to
0.37:1 from year 2005-06 to 2006-07 and decrease to 0.33:1 & 0.30:1 in year
2007-08 & 2008-09. The share capital increased in first three years then it was
stable. The reserve increased in all four years. The current assets increased in
first three years but it decreased in last year. The fixed assets shows an
increasing trend from 2005-06 to 2008-09.
This ratio indicates the relationship between reserves and capital. More reserve
shows financial soundness of the firm, because it will be able to meet future
losses, if any out of reserves.
• Formula for calculating this Ratio:-
(Rs. in thousand)
Comments
The above table and chart shows that the reverse to capital ratio was 25.26 in
the year 2005-2006 which has been increased to 28.90 in next year and it has
further increased to 33.49 and 39.50 in the year 2007-08 & 2008-09
respectively. It is showing increasing trend in the reserve to capital ratio.
SIGNIFICANCE
A Study on Ratio Analysis of UML, Ranchi
This ratio indicates the speed with which the amount is collected from debtor.
The higher the ratio, the better it is, since it indicates that amount from debtors
being collected more quickly. The more quickly the debtors pay, the less is the
risk of bad debt and so it lower the expenses of collection and increase the
liquidity of the firm. A lower ratio will indicate the efficient credit sales
policies of the management. It means that credit sale have been made to
customers who do not decrease much credit.
Ratio = A/C 5.48 times 6.63 times 6.85 times 7.35 times
Comments
The above table and chart shows the increasing trend of debtors turnover ratio
of UML. Debtors turnover, which measures whether the amount of resources
tied up in debtors is reasonable and whether the company has been efficient in
converting debtors into cash. Higher the ratio, better the position. This shows
that money is being quickly recovered from the debtors. The ratio in case of
UML is very high i.e. the company is in very good position.
SIGNIFICANCE
A Study on Ratio Analysis of UML, Ranchi
Ratio = A/B 4.08 times 3.98 times 4.45 times 24.63 times
Comments
The above table and chart shows that the working capital turnover ratio is 4.08
times in the year 2005-06 which has been decreased to 3.98 times in the year
2006-07. The ratio increased to 4.45 times & 24.63 times in the year 2007-08
& 2008-09 respectively. It shows the efficient utilization of working capital.
SIGNIFICANCE
This ratio indicates whether stock has been efficiently used or not. It shows the
speed with which the stock is rotated into sales or the number of times the stock
is turned into sales during the year. The higher the ratio, the better it is, since it
indicates that stock is selling quickly. In a business where stock turnover ratio
is high, goods can be sold at a low margin of profit and even then the
A Study on Ratio Analysis of UML, Ranchi
profitability may be quite high. A low stock turnover ratio indicates that stock
does not sell quickly and remains lying in the godown for quite a long time.
Ratio = A/C 4.51 times 4.69 times 3.80 times 4.54 times
A Study on Ratio Analysis of UML, Ranchi
Comments
The above table and chart shows that the inventory turnover ratio is 4.51 times
in the year 2005-06 which has been increased to 4.69 times in the year 2006-
07. In the year 2007-08 inventory turnover ratio decreased to 3.80 times and
which has been increased to 4.54 times in the year 2008-09. This ratio indicates
how fast the inventory is converted into sales . here high ratio implies good
inventory management. In the year 2005-06 & 2006-07 the inventory
management is good. But it decreased in the year 2007-08 it the sign of
inefficient inventory management. But again it increased in the year 2008-09.
The average collection period represents the average number of days for which
a firm has to wait before their receivables are converted into cash. It measures
the quality of the debtor, generally, shorter the collection period, the better is
the quantity of the debtors. As a short collection period impels quick payment
by debtors. Similarly a high collection period impels in efficient collection
performance, which in turn adversely affect the liquidity or short term paying
capacity of a firm out of its current liabilities. Moreover, longer the collection
period, longer are the chances of bad debt. But precaution is needed while
interpreting a very short collection period because of very low collection period
may imply a firm conservative policy to sales on credit or its unavailability to
allow credit to its customers and thereby loosing sales and profit.
• Formula for calculating this Ratio:-Average collection period =
(average debtors/credit sales)×365
A Study on Ratio Analysis of UML, Ranchi
(Rs. in thousand)
A Study on Ratio Analysis of UML, Ranchi
Comments
As a standard, debtor collection period is not more than 90 days. Debtor
collection period of UML is satisfactory during the study period. It fluctuates
widely due to change in economic condition. The overall the average period
during the study period is below 90 days which shows consistent position.
Fixed Asset Turnover Ratio: The relationship between sales and assets is
called Assets Turnover Ratios. Fixed Assets Turnover Ratio expresses the
number of times fixed assets are being turned-over in a started period.
Comments : The ratio from the year 2005-2006 have decreased from 1.29 to
0.91 which is not good for the company but we hope that in future company
will overcome this situation.
Current Assets Turnover Ratio- Current assets turnover ratio express the
relation between sales and current assets.The firm can compute current assets
turnover ratio simply by dividing sales by current assets.
A Study on Ratio Analysis of UML, Ranchi
Comments-
From 2005-2006 the ratio is increased to 1.76 to 1.92 due to the increase in the
set sales or turnover of usha martin because of market condition and usha
martin policies.
A Study on Ratio Analysis of UML, Ranchi
Net credit
purchase(A)
Payable turnover ratio indicates the velocity with which the creditors are turned
over in relation to purchrsase.
Formula for calculating this ratio= Net Credit Annnual Shift/ Average trade
Creditors
Gross profit ratio measure the relationship of gross profit to net sales and is
usually represented as a percentage.Thus it is calculated by dividing the gross
profit by sales :
Formula for calculating this ratio :Gross profit Ratio = (gross profit/net
sales)*100
Significance- The gross profit ratio indicates the extent to which selling
prices of goods per units may decline without resulting in losses on operation
of a firm.
A low gross profit ,generally indicates high cost of goods sold due to
unfavourable purchasing policies,lesser sales, lower selling prices, excessive
competition,over- investment in plant and machinery.
Comment- G/P ratio is one of the very important ratio for measuring
profitability of a firm.A low gross profit ratio ,generally indicates high cost of
good sold due to unfavourable purchasing policies,lesser sales,lower selling
prices, excessive competition, over- investment in plant and machinery.
A Study on Ratio Analysis of UML, Ranchi
Operating Ratio
There is no rule of thumb for this ratio as it may differ from to firm depending
upon the nature of its business and capital structure . However ,75 to 85 %may
be considered to be a good ratio in case of manufacturing undertaking .So
being a manufacturing undertaking UML’s operating ratio is above 90 % which
is considered not only good but better.
Return on Investment
PARTICULARS 2005-2006 2006-2007 2007-2008 2008-2009
PBT 1007385 1383960 2007127
(+) Intrest 730630 713016 803752 2140412
PBIT(A) 1737988 2096976 2810897 1233483
Shareholders
fund(B)
Capital 221920 240045 250920 3373895
Equity Warrent 88740 33278 334950 250920
Reserve and 5605048 6936730 8404090 9911836
suurplus
Total(B) 5915708 7210053 8989960 10162756
SIGNIFICANCE- This ratio is one of the most important ratio used for
measuring the overall efficiency of a firm.
This ratio is of great important to the present and prospective shareholders as
well as the management of the company.
Formula for calculating this ratio= Net profit after tax preference
dividend/no of share equity.
Comment-E.P.S play a vital role to know about the net earning power of the
company.If the E.P.S of the company increased,net earning power of the
company also increased.From the above calculation we can says that during
2005-2006 E.P.S was 13.57 but in 2006-2007 E.P.S was 22.19.So compare to
2005-2006 and 2006-2007,it can be seen that net earning power of the company
has increased in 2006-2007.Again in 2007-2008, E.P.S was decrease upto 5.79
and in the year 2008-09 it again increase to 5.86.By seeing the past record we
can say that UML
to equity
shareholders(A)
Number of 47873356 47873356 250241780 250241780
equity shares(B)
Ratio = 2.54 3.92 1.00 1.00
(A/B)*100
(in times)
Dividend Per Share – Net profit after taxes belongs to shareholders out of
which dividend is declared. The dividend per share is the earnings distribution
to equity shareholders dividend by the number of equity shares.
Significance: Dividend per Share ratio indicates the dividend paid by the
company to its equity shareholders. Greater is the ratio better it is for the
company as it shows that the company is earning sufficient profit and the
investors would be loyal to the company.
Comment : In the year 2005-2006 the DPS was 2.54 and in year 2006-2007 it
was 3.92, but in the years 2007-2008 and 2008-2009 it decreased to Re.1 .The
reason behind this is Usha Martin issuing its shares at Rs. 5/share. But from
2007-08 Usha Martin divided its share into Re.1/share.
A Study on Ratio Analysis of UML, Ranchi
A Study on Ratio Analysis of UML, Ranchi
Ratio = A/B×100 5% 7% 9% 7%
Comments
The above table and chart shows that net profit ratio is in the increasing order
in the year 2005-06, 2006-07 & 2007-08. But it decreased to 7% in the year
2008-09 due to the increase in the expenditure. On the basis of the first three
year we can say that the company is having sufficient profit which can be
easily used at the time of crisis.
Net profit to net worth ratio = (net profit after interest but before
tax/net worth)×100
Net worth ratio = Equity and preference share capital + Reserves +
Accumulated Profit
Net worth
Share capital 2,21,920 2,40,045 2,50,920 2,50,920
Comments
The above table and chart shows that the net profit to net worth ratio is an
increasing trend. It increased from 17:1 to 23:1 from 2005-06 to 2007-08. But
A Study on Ratio Analysis of UML, Ranchi
net profit to net worth ratio decreased to 21:1 in the year 2008-09. The net
profit after interest but before tax and reserves increased from 2005-06 to 2008-
09. The share capital has increased in the year 2007-08 compare to year 2005-
06. And it has remained constant in the year 2008-09
Loan Funds:
Secured Loans 1,46,61,503 86,70,608 59,90,895 69.09
Unsecured Loans - 7,61,414 -7,61,414 -100
Net Deferred Tax Liabilities 12,21,053 14,67,708 -2,46,655 -16.81
Total 2,60,45,312 1,98,89,690 61,55,622 30.95
APPLICATION OF FUNDS
Fixed Assets:
Gross Block 1,93,83,467 1,68,07,170 25,76,297 15.33
Less: Depreciation 80,18,284 72,09,382 8,08,902 11.22
Impairment Loss 1,40,835 1,40,835 - -
Net block 1,12,24,348 94,56,953 17,67,395 18.68
Capital Work In Progress 1,20,86,352 50,33,888 70,52,464 140.09
Investment 18,63,513 16,58,014 2,05,499 12.39
Current assets, Loans and
advances:
Inventories 40,37,100 53,24,181 -12,87,081 -24.17
Sundry Debtors 32,28,548 25,63,505 6,65,043 25.94
Cash and Bank Balance 7,64,682 4,63,607 2,71,075 58.47
Other Current Assets 2,39,621 3,40,486 -1,00,865 -29.62
Loans and Advances 27,80,155 40,24,216 -12,44,061 -30.91
Total current assets 1,10,50,106 1,27,15,995 -16,65,889 -13.10
Less: Current Liabilities and 1,01,86,312 89,91,299 11,95,013 13.29
provisions
Net Current Assets 8,63,794 37,24,696 -28,60,902 -76.81
Miscellaneous Expenditure:
Deferred Revenue 7,305 16,139 -8,834 -54.74
Expenditure
Total 2,60,45,312 1,98,89,690 61,55,622 30.95
A Study on Ratio Analysis of UML, Ranchi
Loan Funds:
Secured Loans 86,70,608 74,41,398 12,29,210 16.52
Unsecured Loans 7,61,414 52,340 7,09,074 1,354.75
Net Deferred Tax Liabilities 14,67,708 14,34,331 33,377 2.33
Total 1,98,89,690 1,61,38,122 37,51,568 23.25
APPLICATION OF FUNDS
Fixed Assets:
Gross Block 1,68,07,170 1,57,39,283 10,67,887 6.78
Less: Depreciation 72,09,382 65,51,753 6,57,629 10.04
Impairment Loss 1,40,835 1,87,451 -46,616 -24.86
Net block 94,56,953 90,00,079 4,56,874 5.07
Capital Work In Progress 50,33,888 19,70,586 30,63,302 155.45
Investment 16,58,014 16,00,805 57,209 3.57
Current assets, Loans and
advances:
Inventories 53,24,181 33,90,551 19,33,630 57.03
Sundry Debtors 25,63,505 22,69,104 2,94,401 12.97
Cash and Bank Balance 4,63,607 3,70,805 92,802 25.02
Other Current Assets 3,40,486 2,60,942 79,544 30.48
Loans and Advances 40,24,216 21,19,931 19,04,285 89.83
Total current assets 1,27,15,995 84,11,333 43,04,662 51.17
Less: Current Liabilities and 89,91,299 48,75,108 41,16,191 84.43
provisions
Net Current Assets 37,24,696 35,36,225 1,88,471 5.33
Miscellaneous Expenditure:
Deferred Revenue 16,139 30,427 -14,288 -46.95
Expenditure
Total 1,98,89,690 1,61,38,122 3751568 23.25
A Study on Ratio Analysis of UML, Ranchi
Loan Funds:
Secured Loans 74,41,398 67,17,748 7,23,650 10.77
Unsecured Loans 52,340 1,58,367 1,06,027 66.95
Net Deferred Tax Liabilities 14,34,331 13,35,064 99,267 74.35
Total 1,61,38,122 1,41,26,887 20,11,235 14.24
APPLICATION OF FUNDS
Fixed Assets:
Gross Block 1,57,39,283 1,49,14,639 8,24,644 5.53
Less: Depreciation 65,51,753 58,79,443 6,72,310 11.43
Impairment Loss 1,87,451 1,88,024 -573 -0.3
Net block 90,00,079 88,47,172 1,52,907 1.73
Capital Work In Progress 19,70,586 6,95,615 12,74,971 183.29
Investment 16,00,805 15,25,755 75,050 4.92
Current assets, Loans and
advances:
Inventories 33,90,551 26,21,667 7,68,884 29.33
Sundry Debtors 22,69,104 19,82,492 2,86,610 14.45
Cash and Bank Balance 3,70,805 5,17,489 -1,46,684 -28.34
Other Current Assets 2,60,942 2,25,640 35,302 15.64
Loans and Advances 21,19,931 16,48,665 4,71,266 28.58
Total current assets 84,11,333 69,95,953 14,15,380 20.23
Less: Current Liabilities and 48,75,108 39,79,596 8,95,512 22.50
provisions
Net Current Assets 35,36,225 30,16,357 5,19,868 17.23
Miscellaneous Expenditure:
Deferred Revenue 30,427 41,988 -11,561 -27.53
Expenditure
Total 1,61,38,122 1,41,26,887 20,11,235 14.24
A Study on Ratio Analysis of UML, Ranchi
APPROPRIATION
Transfer to General Reserve 12,50,000 17,50,000 -5,00,000 -28.57
A Study on Ratio Analysis of UML, Ranchi
APPROPRIATION
Transfer to General Reserve 17,50,000 10,00,000 7,50,000 75.00
Proposed Dividend on Equity 2,50,242 1,87,681 62,561 33.33
Shares
Provision for Dividend Tax 42,529 31,897 10,632 33.33
Balance carried to Balance Sheet 4,20,792 2,09,186 2,11,606 101.16
written back
Profit brought forward from 4,14,004 4,03,112 10,892 2.70
previous year
PROFIT AVAILABLE FOR 14,28,764 10,52,753 3,76,011 35.72
APPROPRIATION
APPROPRIATION
Transfer to General Reserve 10,00,000 5,00,000 5,00,000 100
Proposed Dividend on Equity 1,87,681 1,21,683 65,998 54.24
Shares
Provision for Dividend Tax 31,897 17,066 14,831 86.90
Balance carried to Balance Sheet 2,09,186 4,14,004 14,40,009 12.63
Loan Funds:
Secured Loans 1,46,61,503 56.29 86,70,608 43.59
Unsecured Loans - 7,61,414 3.83
Net Deferred Tax Liabilities 12,21,053 4.69 14,67,708 7.38
Total 2,60,45,312 100.00 1,98,89,690 100.00
APPLICATION OF FUNDS
Fixed Assets:
Gross Block 1,93,83,467 1,68,07,170
Less: Depreciation 80,18,284 72,09,382
Impairment Loss 1,40,835 1,40,835
Net block 1,12,24,348 43.10 94,56,953 47.55
Capital Work In Progress 1,20,86,352 46.40 50,33,888 25.31
Investment 18,63,513 7.15 16,58,014 8.34
Current assets, Loans and
advances:
Inventories 40,37,100 53,24,181
Sundry Debtors 32,28,548 25,63,505
Cash and Bank Balance 7,64,682 4,63,607
Other Current Assets 2,39,621 3,40,486
Loans and Advances 27,80,155 40,24,216
Total current assets 1,10,50,106 1,27,15,995
Less: Current Liabilities and 1,01,86,312 89,91,299
provisions
Net Current Assets 8,63,794 3.32 37,24,696 18.72
Miscellaneous Expenditure:
Deferred Revenue 7,305 0.03 16,139 0.08
Expenditure
Total 2,60,45,312 100.00 1,98,89,690 100.00
A Study on Ratio Analysis of UML, Ranchi
Loan Funds:
Secured Loans 74,41,398 46.11 67,17,748 47.55
Unsecured Loans 52,340 0.32 1,58,367 1.12
Net Deferred Tax Liabilities 14,34,331 8.89 13,35,064 9.45
Total 1,61,38,122 100.00 1,41,26,887 100.00
APPLICATION OF FUNDS
Fixed Assets:
Gross Block 1,57,39,283 1,49,14,639
Less: Depreciation 65,51,753 58,79,443
Impairment Loss 1,87,451 1,88,024
Net block 90,00,079 55.77 88,47,172 62.63
Capital Work In Progress 19,70,586 12.21 6,95,615 4.92
Investment 16,00,805 9.92 15,25,755 10.80
Current assets, Loans and
advances:
Inventories 33,90,551 26,21,667
Sundry Debtors 22,69,104 19,82,492
Cash and Bank Balance 3,70,805 5,17,489
Other Current Assets 2,60,942 2,25,640
Loans and Advances 21,19,931 16,48,665
Total current assets 84,11,333 69,95,953
Less: Current Liabilities and 48,75,108 39,79,596
provisions
Net Current Assets 35,36,225 21.91 30,16,357 21.35
Miscellaneous Expenditure:
Deferred Revenue 30,427 0.19 41,988 0.30
Expenditure
Total 1,61,38,122 100.00 1,41,26,887 100.00
A Study on Ratio Analysis of UML, Ranchi
Trend Analysis
A Study on Ratio Analysis of UML, Ranchi
Shareholders’
Funds
Capital 2,50,920 113.07 2,50,920 113.07 2,40,045 108.17 2,21,920 100
Reserve and 99,11,836 176.84 84,04,090 149.94 69,36,730 123.76 56,05,048 100
Surplus
Loan Funds:
Secured Loans 1,46,61,503 218.25 86,70,608 129.07 74,41,398 110.77 67,17,748 100
Net Deferred Tax 12,21,053 91.46 14,67,708 109.94 14,34,331 107.43 13,35,064 100
Liabilities
Total 2,60,45,312 184.37 1,98,89,690 140.79 1,61,38,122 114.23 1,41,26,887 100
APPLICATION
OF FUNDS
Fixed Assets:
Gross Block 1,93,83,467 129.96 1,68,07,170 112.69 1,57,39,283 105.53 1,49,14,639 100
Net block 1,12,24,348 126.86 94,56,953 106.89 90,00,079 101.73 88,47,172 100
Capital Work In 1,20,86,352 1737.5 50,33,888 723.66 19,70,586 283.29 6,95,615 100
Progress 1
Current assets,
Loans and
advances:
Inventories 40,37,100 153.99 53,24,181 203.08 33,90,551 129.33 26,21,667 100
Sundry Debtors 32,28,548 162.85 25,63,505 129.31 22,69,104 114.46 19,82,492 100
Cash and Bank 7,64,682 147.77 4,63,607 89.59 3,70,805 71.65 5,17,489 100
Balance
Other Current 2,39,621 106.19 3,40,486 150.89 2,60,942 115.65 2,25,640 100
A Study on Ratio Analysis of UML, Ranchi
cc
SUGGESTIONS
• The company has to focus on the reducing cost by reducing the
unproductive expenses. For that purpose the company has to divide its
overheads into sub heads so the company can know that which expenses
A Study on Ratio Analysis of UML, Ranchi
is high and how can reduce. As well as the company should compare its
standard cost with actual cost. By doing this practice the company has
been successful in reducing many of the unnecessary expenses.
• There has been manpower rationalization i.e. a reduction in duplication
of work and consequent under utilization of human capacity. The result
of this was improved efficiency.
• UML is committed to add value to the products it makes, de-
bottlenecking its capacities with intelligence so that the production cost
gets reduced, utilizing the resources more efficiently.
• The company is focusing on its integrated steel and steel products
business with an increased focus on exports to neighbouring countries.
To improve competitiveness in the global market, the company has
planned to make strategic investment in steel to reduce the cost of
products by leveraging the availability of raw materials from within the
region. The company is also focusing on an improvement in the
realization of products like wires, wire ropes, strands and by migrating to
high value branded products.
• To meet the challenges of the loss of cable business, the company has
embarked on the strategy to make the use of productive assets for
diversification into value added products.
• The company is strengthening its international marketing capability
through an intelligent combination of initiatives like the expansion of its
distribution outlets marketing offices and strategic alliances.
A Study on Ratio Analysis of UML, Ranchi
• UML is a huge organization that has been the market leader for many
years and has stood the tests of time and emerged out of adverse and
unfavourable market situation successfully.
A Study on Ratio Analysis of UML, Ranchi
BIBLIOGRAPHY
➢ www.ushamartin.com
➢ Google search
A Study on Ratio Analysis of UML, Ranchi
CONCLUSION
➢ Usha martin limited is the only leading company in india and the 2nd
largest company in the world which deals in wire and wire ropes.
➢ The company has continued to pursue its long term strategy of creating a
critical mass intregated business of speciality steel and value added steel
product, with key focus on wire ropes, cords, strands, wire and bright
bars.
➢ The intergrated business of captive minerls ,speciality steel and global
wire ropes manufacturing, marketing and distribution with rich product
mix and focus on development has given significant strength of the
company.
➢ Capital expenditure programme to increase capacity in mining, power
generation, DRI, blast furnace route iron making, steel melting, stages of
implementation and is likely to be commissioned in phased manner in
current and next6 financial year.
➢ On standalone basis, the company achieved a net turnover of
Rs.2127.23Crs. with a growth of 28.5%over previous year. The gross
profit has also increased by 18.3%toRs.422.43Crs. from
Rs357.01Crs.The profit before tax and profit after tax,record in the year
by the company are Rs.214.04Crs.and Rs.146.56Crs.respectively. The
company has achived significant growth of 29.0% over previous year.
➢ On consolidated basis the company and its subsidiaries have achieved a
net turnover, profit before tax and profit after tax of Rs 2949.85Crs. and
Rs.280.59Crs.and Rs.185.34Crs. respectively.These figure are
significantly higher over those of previous year by 27.8%,13.7% and
5.7% respectively. Gross sales stood at Rs499.41Crs. which is higher by
30.0% over the previous year.
A Study on Ratio Analysis of UML, Ranchi
➢
STEPS TAKEN BY THE MANAGEMENT
➢ The company has become cost conscious and has embarked on the
exercise to cut the overheads. The expense item are broken down into
various subheads and an online cost management system has been
developed so that alert signals are received as soon as there is any major
deviation from the monitored budgets appropriate remedial action should
be taken. The company has been successful in reducing many of the
unnecessary expenses like reduction in travel expenses personal and
administration cost.
➢ There has been manpower rationalization i.e.reduction duplication of
work and consequent under utilization of human capacity. The result of
this was improved efficiency. Lower manpower and also surplus, which
was liquidated thus saving a budget Rs 150 Crore in recent in a year.
➢ UML is a huge Organisation that has been the market leader for many
years and has stored the rest of the time and emerged out of unfavourable
marketing situation successfully.
A Study on Ratio Analysis of UML, Ranchi
1960- The company was incorpated as Usha Martin Black Limited having
its wire rope plant at Ranchi. The name was change Usha Martin Ltd in
1979 and further changed to Usha Martin Industries Ltd in 1983.(UMIL)
1979-In order to obtain steady supply of wire rods for its wire rope
plant,UASL set up a wire Rod Rolling Mill at Jamshedpur.
2003-Usha Belton Ltd changed its name to “Usha Martin Limited”. UML
created Fine Cord Plasticated coated Fine wires, household wire, Polymer
coated wire, Fine Ropes & Bright manufacturing facilities in Tatisilwai-
Ranchi.
A Study on Ratio Analysis of UML, Ranchi
COMPANY PROFILE
➢ UML is the 2nd largest wire and rope manufacturer in the world
and has the largest variety in South East Asia.
➢ ICICI did the business process re-engineering in1996 and line system
was set up to enhance performance.
FINDINGS
➢ The liquidity ratio i.e. current ratio and quick ratio of UML are quite
healthy. The company can manage to use some portion of current
Assest in other Productive activities.
➢ The debt equity ratio is also in a higher side i.e. 2:1 or more than
that .The company has made strategic investment through the capital
expenditure which has financed through public borrowing when the
industry was in a recession. The management has taken a number of
steps to improve the ratio.
➢ Profitability Ratio is also satisfactory. The net profit ratio increased
from 2%to 8% over the period of last five years. The increase in the
profitability ratio should be maintained as it makes the Company
healthy.
➢ The reserve to capital ratio of UML has increased from 22%to 31%
from 2005-2006 to 2008-2009 which ensure that UML has sufficient
reserve which it can use at any point of prises in future time period.
➢ The working capital turnover ratio of any firm should be normal
Excess ratio indicates over trading while a lower ratio indicates
overtaking. The ratio in2005-2006 was 2.2 which increased to 4.45
which is quite high. This shows UML is utilizing their working
capital efficientlywhich results increase in the net turnover.
➢ The fixed assest ratio should always be more than 1:1 ratio less than 1
indicates that the firm is purchasing its fixed assest out of working
capital which is wrong policy. The ratio is 0.88:1 in 2004-2005 which
then increased to 1.14:1 in 2008-2009 which is greater than 1.this
shows better performance of UML.
A Study on Ratio Analysis of UML, Ranchi
FINDINGS
➢ The liquidity ratio i.e. current ratio and quick ratio of UML are quite
healthy. The company can manage to use some portion of current
Assest in other Productive activities.
➢ The debt equity ratio is also in a higher side i.e. 2:1 or more than
that .The company has made strategic investment through the capital
expenditure which has financed through public borrowing when the
industry was in a recession. The management has taken a number of
steps to improve the ratio.
➢ Profitability Ratio is also satisfactory. The net profit ratio increased
from 2%to 8% over the period of last five years. The increase in the
profitability ratio should be maintained as it makes the Company
healthy.
➢ The reserve to capital ratio of UML has increased from 22%to 31%
from 2005-2006 to 2008-2009 which ensure that UML has sufficient
reserve which it can use at any point of prises in future time period.
➢ The fixed assest ratio should always be more than 1:1 ratio less than 1
indicates that the firm is purchasing its fixed assest out of working
capital which is wrong policy. The ratio is 0.88:1 in 2004-2005 which
then increased to 1.14:1 in 2008-2009 which is greater than 1.this
shows better performance of UML.
A Study on Ratio Analysis of UML, Ranchi
RATIO ANALYSIS
(C)Importance to Government
Government is interested to know overall strength of the industry. Various
financial statement published by industrial units are used to calculate ratios for
determining short -term,long-term and overall financial position of the
concerns. Profitability indices can also prepared with the help of ratios.
Government may base its future policies on the basis of industrial information
available from various units. The ratios may be used as indicators of overall
financial strength of public as well as private sector. In the absence of the
reliable economic information, governmental plans and policies may not prove
successful.
A Study on Ratio Analysis of UML, Ranchi
STRENGTHS
➢ UML is the FOURTH largest producer or wire and wire ropes in the
world and the market leader in India for many years .
➢ UML was the first steel company in India to receive the JIIM award .
➢ UML is one of the few producers in the world that produces specific
wire and wire rope products .
➢ UML has environment management as one of the core priorities and its
practices confirm to the standards prescnbed by the various regularity
authorities , this proves UML’S concerns towards environment
protection and this as earned its goodwill among various securities of
society and Government .
A Study on Ratio Analysis of UML, Ranchi
WEAKNESSES
OPPORTUNITY
➢ UML can look for new range of products taking their feasibility with
diversification .
➢ Government is planning regarding the expensive hanging bridge like
nani bridge in uttar Pradesh , vidya sager setu on Hooghly river in
kolkata .
➢ New opportunity in the sail offshore field especially in oil drilling ropes
as reliance has found crude oil in Krishna – Godavari in
south Basin .
➢ Fishing developing in southern coastal cities so UML should take visit to
these markets .
➢ Comprtitors are not as strong as UML.
THREATS
SUGGESTION
DECLARATION
I…………………………………………..student of New Delhi Instution
of Management ………………batch(………………….) declare that
every part of the Project Report………………………………that I have
submitted is original.
I was in regular contact with the nominated guide and contacted ……..
times for discussing the project.
Faculty’s Comments:
……………………………………………………………………………
……………………………………………………………………………
……………………………………………………………………………
Shweta Singh