SUMMER TRAINING REPORT

ON

COMPARITIVE RATIO ANALYSIS

OF

MADHYA PRADESH STATE CIVIL SUPPLIES CORPORATION

Lakshmi narain college of technology and science

Guided by MR. SUBHASH KENDURKAR Submitted to submitted by Jagritee Singh

CONTENTS
1. Introduction- Profile of the company 2. Objectives of the company 3. Board of directors of the company 4. Research methodology (i) Financial position of the company (ii) Ratio Analysis (iii) Trading and profit & loss account (iv) Cash flow statement (v) Balance sheet of the company 5. How far the company is success in its operations? 6. SWOT Analysis 7. Scope for improvements in the company Findings & suggestions 8. Conclusion 9. Bibliography 10. Vote of thanks

ACKNOWLEDGEMENT

I wish to express my heartfelt appreciation to many who have contributed to this project both explicitly and implicitly. Words can never express the extent of indebtedness, but I still wish to express my deep sense of gratitude to all the respondents for their valuable time and corporation, which they had us. We express our sincere thanks to all the staff of MPSCSC, for providing me with all the information required.

Iam very grateful to Mr.Subhash Kendurkar sir, of head office Bhopal, who provides me this opportunity to do summer training at MPSCSC.

PREFACE

Management studies are expected to be not only theoretical but also practical to equip the students coming out of any managerial educational institutions after having been mounded and shaped with the knowledge of various managerial functions would be able to efficient to plan, organize, direct and control man, material and money and contributing their respective share in the achievement of both organization and individual motive. This would enrich not only the individuals but also the whole humanity at large. Finance is regarded as the life blood of a business enterprise. This is because the modern money market economy, finance is one of the basic foundations of all kind of activities. It is the master key, which provides access to the entire source being employed in manufacturing and merchandising activities. Hence effective management of every business enterprise is closely linked with efficient management of its finance. Thus, financial management is mainly concerned with the proper management of funds this financial manager must therefore realize that his action have far reaching consequences for the firms because this actions will influence the size, profitability, risk, growth, survival of the firm. Therefore he must have a clear understanding and a strong grasp of the nature and scope of finance function. Project work is one of the requirements for partial fulfillment of our curriculum of MBA. For specialization in finance we were sponsored to MPSCSC, Financial Institution. We hope our efforts to shape this project work will yield best possible result and will go a long way in this direction.

INTRODUCTION

Madhya Pradesh State Civil Supplies Corporation Limited" incorporated on 3rd April 1974 is a leading supply and distribution company, sponsored by the Govt. of Madhya Pradesh registered under The Companies Act. Spanning all over Madhya Pradesh, the MPSCSC has 7 Regional Offices, 48 District Offices.

Company Profile
Profile:

MPSCSC is the main agency for Food grains Procurement and the Public Distribution System. It procures and moves about 1.5 millions tones annually of wheat, rice, coarse grains and sugar right up to the remotest parts of Madhya Pradesh through an efficient distribution network. It thus has a sound institutional interface with farmers' cooperatives, Mandies (APMCs), Food grain Trading Agencies and the more than 24,000 (retail) Fair Price Shops spread out all over M.P.

ESSENTIAL SUPPLIES UNDER PUBLIC DISTRIBUTION SYSTEM:

Under this scheme Wheat and Rice are lifted from F.C.I Base Depots as per allotment, and transported to 185 issue Centres of MPSCSC for storage, from where it is subsequently sold to lead/link societies, on the basis of Delivery Order. In most tribal areas the food grains are transported through self owned mobile vehicles. Sugar is received from Sugar Factories of Maharashtra/ U.P. by rail/ road and is transported to Issue Centres and dependent districts. PROCUREMENT:

Under the Price Support Scheme (P.S.S.) procurement of Paddy and Wheat is undertaken by the MPSCSC. Paddy is procured from farmers by societies/corporation and sent for storage as required for milling to private millers. The millers deposit rice at FCI. MPSCSC pays cost of paddy, bonus and incidentals to societies for procurement, milling charges to millers, transportation charges for transportation of paddy and rice; the corporation provides gunny bags. Under decentralized procurement, at around 35 districts, wheat is procured through societies as an agent of FCI. MPSCSC pays cost of wheat, bonus and incidentals to societies for procurement, transportation charges for transportation of wheat; the corporation provides gunny bags.

DOMESTIC TRADING: Pulses (lentils), Soybean and other agricultural produce is also procured by MPSCSC from time to time. The MPSCSC is involved in commercial procurement and sale of (SKO) kerosene (under the Parallel Marketing Scheme). TRANSPORTATION:

MPSCSC has acquired useful experience in bulk handling, storage and transportation contracting. It also owns a fleet of 58 trucks which are deployed for maintaining food security in tribal areas

Commercial Operation

Commercial Operations: MPSCSC indulges itself in sale and purchase of various items of commercial importance namely, food grains, tea, soap, iodized salt, and kerosene. The notable foodgrain items include wheat, chana, mung, masoor, urad, soybean, and paddy. Depending on the crop season the corporation identifies the mandies on the basis of quality and quantity of foodgrains that come to various mandies. In these selected mandies, the grains are purchased directly from farmers, through open tenders (boli) and stored in warehouses of MP State Warehousing Corporation. These commodities are sold in open market through tender at favorable times

Products
Products of Madhya Pradesh The economy of Madhya Pradesh is based substantially on its diverse agriculture and about 80% of the population depends on it. Main crops of the state are Soybean, Pulses, Paddy and wheat. About 88% of the total national production of soyabean is produced in M. P. Total Soyabean production in 2010-2011 was 4.028 million metric tons. Madhya Pradesh also excels in the production of pulse, lentils, gram, linseed, ramtil etc. Total pulse production in 1997-98 was 3.225 million metric tons. 22% of the total agricultural land is used for paddy production. Eastern M. P. is the main area for paddy production. Total paddy production in 1997-98 was 6.388 million metric tons. Wheat is another major crop produced in Western M. P. in the Rabi season. Total wheat production in 1997-98 was 7.366 million metric tons.

OBJECTIVES
The Name of the company is MADHYA PRADESH STATE CIVIL SUPPLIES CORPORATION LIMITED. The Registered office of the company will be situated in the state of Madhya Pradesh. The objects for which the company is established are: The main objects to be pursued on its incorporation are:1. To undertake the business of purchasing, storing, distributing, stocking and movement of food grains, other stuffs and edible commodities such as wheat, jowar, maize, bajra, paddy of all kinds, rice, pulses of all kind of including whole grains of pulses, oil seeds and edible oils of all kinds in the state of Madhya Pradesh and elsewhere i.e. whole of India and abroad. 2. To plan, formulate and setup mills or assist in the setting up of rice mills, flour mills and other similar undertakings for the processing and manufacturing food grains and other food stuffs, and all matters connected therewith. 3. To acts as the agents of government of Madhya Pradesh in the matter of procurement and distribution both wholesale and retail of foodgrains and food stuffs. 4. To carry on the business of manufacturers, wholesalers and retail dealers in bread, flour, grain, pulses ant the sale of other foods and articles which may be conveniently sold therewith. 5. To carry on the business of importers, exporters, stockiest, agents, distributors and dealers in food grains, pulses and provisions in all its.

branches ,in particular as importers and exporters and dealers in all kind of foodstuff, food product, agricultural and garden produce, provisions and other allied articles and commodities of personal and household use and consumption

6. To maintain, run, acquire, or take over agricultural farms, dairy farms, poultry farms, and farms and gardens of all kind and description and to deal in all types of agricultural and garden produce and its products and bye products. 7. To carry on the business of cold storage, refrigerating, cooling, dehydrating, preserving, canning of any products on companys own account or as contractors for any authorities i.e. Government companies or corporation or individuals. 8. To undertake procurement, import, processing supply and distribution of such essential commodities as may be identified by Government from time to time. 9. To make such other arrangement as to ensure the availability of essential commodities in the market as may be deemed necessary. 10. To undertake and promote trade in any commodity which may be considered feasible commercially or which may be considered necessary to either maintain line of supply or to maintain price in the market. 11. To carry out all such activities and trade practices as may ensure suitable prices to the primary producers of commodities and protect the consumer from vagaries of speculative trade.

The other objects of the company are:1. To manufacture, buy, stock, sell, import, export, hire, install, operate and generally deal in any material of any description, which in the opinion of the company may be dealt with conveniently by the company in furtherance of the objects of the company. 2. To act as agent for government or other authorities or any manufactures, merchants and other and to transact and carry on agency business of every kind and of any description relating to the purpose of the company. 3. The liability of the member is limited 4. The authorized share of the company is 30, 00, 00,000 (Rupees thirty crores) divided into 3, 00,000 (three lakh) equity shares of Rs 1,000 each.

BOARD OF DIRECTORS OF THE COMPANY

Mr. Paras Chandra Jain Chairman Mr. Ashok Das Vice chairman Mr. Anil Shrivastava Director

RESEARCH METHODOLOGY

Research:
is defined as human activity based on intellectual application in the investigation of matter. The primary purpose for applied research is discovering, interpreting, and the development of methods and systems for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe. Research can use the scientific method, but need not do so.

Basic research:

Basic research (also called fundamental or pure research) has as its primary objective the advancement of knowledge and the theoretical understanding of the relations among variables It is exploratory and often driven by the researchers curiosity, interest, and intuition. Therefore, it is sometimes conducted without any practical end in mind, although it may have confounding variables (unexpected results) pointing to practical

applications. The terms basic or fundamental indicate that, through theory generation, basic research provides the foundation for further, sometimes applied research. As there is no guarantee of short-term practical gain, researchers may find it difficult to obtain funding for basic research.

Research methods
The goal of the research process is to produce new knowledge, which takes three main forms
y y y

Exploratory research, which structures and identifies new problems Constructive research, which develops solutions to a problem Empirical research, which tests the feasibility of a solution using empirical evidence

DATA COLLECTION

PRIMARY DATA:
In primary data collection, you collect the data yourself using methods such as interviews and questionnaires. The key point here is that the data you collect is unique to you and your research and, until you publish, no one else has access to it. There are many methods of collecting primary data and the main methods include:
y

questionnaires

y y y y y y

discussion focus group interviews observation case-studies critical incidents Portfolios.

Primary Data collection for project:

We used discussion methods as well as kept an observation on the organization working for our primary data collection.

SECONDARY DATA:
Secondary data is data collected by someone other than the user. Common sources of secondary data for social science include censuses, surveys, and organizational records. Primary data, by contrast, are collected by the investigator conducting the research. Secondary data analysis saves time that would otherwise be spent collecting data, and often provides a larger and higher-quality database than would be feasible for any individual researcher to collect. For analysts of social and

economic change, secondary data is usually essential, since it is impossible to conduct a new survey that can adequately capture past change. Secondary data The data already available are called secondary data. To avoid duplicating efforts, running up unnecessary costs and tiring the informants, it is recommended wherever possible to rely on existing information (secondary data) such as: Published statistics: Census, housing and social security data, and so on Published texts: Theoretical work, secondary analyses by experts and reports Media: Documentaries for example, as a source of information Personal documents: Diaries Case studies and literature Reviews. For collecting the secondary data, the literature review has been done, case studies have been carried out, published texts and statistic have been used, media (specially internet) and personal contacts have also been utilized. Secondary data are also helpful in designing subsequent primary research and can provide a baseline with which the collected primary data results can be compared. Therefore, it is always wise to begin any research activity with a review of the secondary data

Secondary Data collection for project: In the project I use following rources for my primary data collection: y Annual Reports y Internet y Manuals

FINANCIAL POSITION OF THE COMPANY FOR THE YEAR (2007-08)

TURNOVER:

The current turnover of the company for the year 09-10 was 3200.96 crores.Which is more then 37.22% as compare to previous year where the turnover was 2332.68 crores. PROFIT BEFORE TAX: Profit before tax of the corporation fot the year 09-10 was 19.60 crores which is more then 19.88% as compared to the previous year where the profit before tax was 16.35 crores

Financial Status And Comparitive Analysis Operating Results

(2007-08) 4457.46 (-)567.03 (2008-09) 1634.85 (-)310.09 (2009-10) 1959.96 (-)756.60

Profit or Loss in the year Provision For ear income and exp.and dividend Provision for tax Provision for tax and previous year income exp. And dividend before p&l

(-)1581.25 2350.90

(-)499.90 824.96

(-)513.64 689.72

Imp. Financial ratio:

Per share income Current ratio 3448.87 1.56:1 1234.79 1.88:1 1148.99 3.73:1

Profit before tax%

To sale From gross fixed assets Invested capital 4.78 620.48 32.28 0.70 226.17 2.55 0.61 189.88 1.30

Value of business
Sale
93093.85 233267.58 320096.06

Closing stock 13232.81 Opening 5501.66 stock Value

47134.51 13232.81

110419.45 47134.51

FINANCIAL ANALYSIS Financial analysis:

refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Based on these reports, management may:
y y y

Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods;

Issue stocks or negotiate for a bank loan to increase its working capital;

y y

Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.

Goals
Financial analysts often assess the firm's: 1. Profitability - its ability to earn income and sustain growth in both shortterm and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term; 3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations; Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time. 4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of both the income statement and the balance sheet, as well as other financial and non-financial indicators.

FINANCIAL ANALYSIS TOOLS

With the help of very tools we find the financial status as well as perform the financial analysis of the ccmpany. The various financial analusis tolls are:

1.Trading and profit loss Account 2.Ratio Analysis 3.Cash Flow Analysis 4.Balance Sheet

TRADING & PROFIT AND LOSS ACCOUNT

Trading Account As already discussed, first section of trading and profit and loss account is called trading account. The aim of preparing trading account is to find out gross profit or gross loss while that of second section is to find out net profit or net loss. Preparation of Trading Account Trading account is prepared mainly to know the profitability of the goods bought (or manufactured) sold by the businessman. The difference between

selling price and cost of goods sold is the,5 earning of the businessman. Thus in order to calculate the gross earning, it is necessary to know: (a) cost of goods sold. (b) sales. Total sales can be ascertained from the sales ledger. The cost of goods sold is, however, calculated. n order to calculate the cost of sales it is necessary to know its meaning. The 'cost of goods' includes the purchase price of the goods plus expenses relating to purchase of goods and brining the goods to the place of business. In order to calculate the cost of goods " we should deduct from the total cost of goods purchased the cost of goods in hand. We can study this phenomenon with the help of following formula: Opening stock + cost of purchases - closing stock = cost of sales As already discussed that the purpose of preparing trading account is to calculate the gross profit of the business. It can be described as excess of amount of 'Sales' over 'Cost of Sales'. This definition can be explained in terms of following equation: Gross Profit = Sales-Cost of goods sold or (Sales + Closing Stock) -(Stock in the beginning + Purchases + Direct Expenses) The opening stock and purchases along with buying and bringing expenses (direct exp.) are recorded the debit side whereas sales and closing stock is recorded on the credit side. If credit side is Jeater than the debit side the difference is written on the debit side as gross profit which is ultimately recorded on the credit side of profit and loss account. When the debit side

exceeds the credit side, the difference is gross loss which is recorded at credit side and ultimately shown on the debit side of profit & loss account. Usual Items in a Trading Account: A) Debit Side 1. Opening Stock. It is the stock which remained unsold at the end of previous year. It must have been brought into books with the help of opening entry; so it always appears inside the trial balance. Generally, it is shown as first item at the debit side of trading account. Of course, in the first year of a business there will be no opening stock. 2. Purchases. It is normally second item on the debit side of trading account. 'Purchases' mean total purchases i.e. cash plus credit purchases. Any return outwards (purchases return) should be deducted out of purchases to find out the net purchases. Sometimes goods are received before the relevant invoice from the supplier. In such a situation, on the date of preparing final accounts an entry should be passed to debit the purchases account and to credit the suppliers' account with the cost of goods. 3. Buying Expenses. All expenses relating to purchase of goods are also debited in the trading account. These include-wages, carriage inwards freight, duty, clearing charges, dock charges, excise duty, octroi and import duty etc. 4. Manufacturing Expenses. Such expenses are incurred by businessmen to manufacture or to render the goods in saleable condition viz., motive power,

gas fuel, stores, royalties, factory expenses, foreman and supervisor's salary etc. Though manufacturing expenses are strictly to be taken in the manufacturing account since we are preparing only trading account, expenses of this type may also be included in the trading account. (B) Credit Side 1. Sales. Sales mean total sales i.e. cash plus credit sales. If there are any sales returns, these should be deducted from sales. So net sales are credited to trading account. If an asset of the firm has been sold, it should not be included in the sales. 2. Closing Stock. It is the value of stock lying unsold in the godown or shop on the last date of accounting period. Normally closing stock is given outside the trial balance in that case it is shown on the credit side of trading account. But if it is given inside the trial balance, it is not to be shown on the credit side of trading account but appears only in the balance sheet as asset. Closing stock should be valued at cost or market price whichever is less. Valuation of Closing Stock The ascertain the value of closing stock it is necessary to make a complete inventory or list of all the items in the god own together with quantities. On the basis of physical observation the stock lists are prepared and the value of total stock is calculated on the basis of unit value. Thus, it is clear that stocktaking entails (i) inventorying, (ii) pricing. Each item is priced at cost, unless the market price is lower. Pricing an inventory at cost is easy if cost remains

fixed. But prices remain fluctuating; so the valuation of stock is done on the basis of one of many valuation methods. The preparation of trading account helps the trade to know the relationship between the costs be incurred and the revenues earned and the level of efficiency with which operations have been conducted. The ratio of gross profit to sales is very significant: it is arrived at : Gross Profit X 100 / Sales With the help of G.P. ratio he can ascertain as to how efficiently he is running the business higher the ratio, better will be the efficiency. Closing Entries pertaining to trading Account For transferring various accounts relating to goods and buying expenses, following closing entries recorded: (i) For opening Stock: Debit trading account and credit stock account (ii) For purchases: Debit trading account and credit purchases account, the amount being the et amount after deducting purchases returns. (iii) For purchases returns: Debit purchases return account and credit purchases account. (iv) For returns inwards: Debit sales account and credit sales return account (v) For direct expenses: Debit trading account and credit direct expenses accounts individually.

(vi) For sales: Debit sales account and credit trading account. We will find that all the accounts as mentioned above will be closed with the exception of trading account (vii) For closing stock: Debit closing stock account and credit trading account After recording above entries the trading account will be balanced and difference of two sides ascertained. If credit side is more the result is gross profit for which following entry is recorded. (viii) For gross profit: Debit trading account and credit profit and loss account If the result is gross loss the above entry is reversed.

Profit and Loss Account

The profit and loss account is opened by recording the gross profit (on credit side) or gross loss (debit side). For earning net profit a businessman has to incur many more expenses in addition to the direct expenses. Those expenses are deducted from profit (or added to gross loss), the resultant figure will be net profit or net loss. The expenses which are recorded in profit and loss account are ailed 'indirect expenses'. These be classified as follows: Selling and distribution expenses. These comprise of following expenses: (a) Salesmen's salary and commission (b) Commission to agents

(c) Freight & carriage on sales (d) Sales tax (e) Bad debts (f) Advertising (g) Packing expenses (h) Export duty Administrative Expenses. These include: (a) Office salaries & wages (b) Insurance (c) Legal expenses (d) Trade expenses (e) Rates & taxes (f) Audit fees (g) Insurance (h) Rent (i) Printing and stationery (j) Postage and telegrams (k) Bank charges Financial Expenses

These comprise: (a) Discount allowed (b) Interest on Capital (c) Interest on loan (d) Discount Charges on bill discounted

Maintenance, depreciations and Provisions etc. These include following expenses (a) Repairs (b) Depreciation on assets (c) Provision or reserve for doubtful debts (d) Reserve for discount on debtors. Along with above indirect expenses the debit side of profit and loss account comprises of various business losses also. On the credit side of profit and loss account the items recorded are: (a) Discount received (b) Commission received (c) Rent received (d) Interest received (e) Income from investments (f) Profit on sale of assets

(g) Bad debts recovered (h) Dividend received (i) Apprenticeship premium etc.

Madhya Pradesh state civil supplies corporation limited (P&l a/c for the year ended 31st march 2008)

Particulars

As at 31.03.10 in Rs

As at 31.03.09 in Rs

Income: Sale Income from sugar price Equalization fund FCI Business schemes Commissions Other income Increase or decreasing stocks Total: EXPENDITURE: Purchase 34,44,48,06,435 23,31,12,35,719 24,74,93,289 18,45,15,266 44,76,61,005 13,47,07,748 32,00,96,05,640 22,5704824 23,32,67,58,410 216046695

21,20,15,834 30,34,53,505 6,32,84,93,622 3,39,01,69,572 39,47,09,74,214 27,55,56,51,196

Operating expenses Selling expenses Establishment expenses Financial expenses Depericiation Claim of closing stock TOTAL:

2,20,81,12,732 67,48,59,680 39,89,46,967 1,54,42,63,866 3931736 56500 39274977916

2,00,07,74,428 47,18,69,156 24,88,91,900 1,28,51,23,635 3373577 70897635 27392166050

Profit before tax Income tax/Wealth tax Fringe benefit tax Deferred income tax In the previous year related appropriation In the year net profit or loss Proposed dividend Tax on dividend Balancing surplus Balancing surplus/(decrease) transferred to genrel secured

19,59,96,298 (5,40,06,734) 0 2642592 (47261935) 97370221 (24353157) (4044755) 68972309 68972309

16,34,85,146 (5,27,08,155) (14,66,308) 3512011 (8853891) 104640983 (18937047) (3218351) 82485585 82485585

CASH FLOW STATEMENT:

In financial accounting, a cash flow statement or statement of cash flows is a financial statement that shows how changes in balance sheet and income accounts affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International Accounting Standard 7 (IAS 7), is the International Accounting Standard that deals with cash flow statements.

People and groups interested in cash flow statements include: Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses Potential lenders or creditors, who want a clear picture of a company's ability to repay, Potential investors, who need to judge whether the company is financially sound Potential employees or contractors, who need to know whether the company will be able to afford compensation

CASH FLOW STATEMENT OF MPSCSC

(For the year ended 2009-2010)

09-10
Cash flow from operating Activity: Profit before tax Transactions Total Adjustment for; Depreciation Loss by fixed assets sold earned leaved in cashment provision Stock Interest exp. DEDUCTIONS: secured and surplus is transfered Profit on sale of fixed assets Income from interest Other provisions written off STOCK WRITTEN OFF 0 433598 4959379 13514843 0 3931737 42854 13480061 43557133 1544263866 195996298 -47261935 148734363

08-09

163485146 -8853891 154631255

3373577 0 9320781 16100877 1285123635

46825599 98524 74178698 1691214 0

Operating profit ADJUSTEMENTS FOR Decrease in debtors Decrease in loans & adv. Increase in current liabilities Decrease in FDR acured intrest DEDUCTIONS: Increase in stocks Increase in acuure nt. In FDR Increase in creditors Increase in in loan & advance Cash Generated from op. activities Net profit Cash flow from operating activity

1735102194

1345756090

0 0 2076885081 22

0 0 1001552632 68280006

6328493622 0 0 2748043889 -5264550214 -25648302 (a) 5290198516

3390169572 0 0 2698698013 -3673278857 84285391 -375756424

CASH FLOW FROM INVESTING ACTIVITY

Purchase of fixed assets Capital work in progress Sale of fixed assets Interest received Cash flow from investing activities

-33271136 -15287375 559413 4959379 -43039719

-2105267 0 194424 74178698 72267855

CASH FLOW FROM FINANCING ACTIVITY Interest exp. Short term loan Equity dividend payment Cash Flow from Financing Activities Net decrease in cash & cash equivalent Cash at beginning Cash at end of the period 1544263866 1285123635 4993765591 8471532 3700170424 14874031 1783634677 1798508708

8609207024 72002597 6992940561 1659702326 1798508708 3458211034

BALANCE SHEET:
In financial accounting, a balance sheet or statement of financial position is a summary of a person's or organization's balances. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a snapshot of a company's financial condition. Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time. A company balance sheet has three parts: assets, liabilities and ownership equity. The main categories of assets are usually listed first and are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities. Another way to look at the same equation is that assets equal liabilities plus owner's equity. Looking at the equation in this way shows how assets were financed: either by borrowing money (liability) or by using the owner's money (owner's equity). Balance sheets are usually presented with assets in one section and liabilities and net worth in the other section with the two sections "balancing."

Records of the values of each account or line in the balance sheet are usually maintained using a system of accounting known as the double-entry bookkeeping system. A business operating entirely in cash can measure its profits by withdrawing the entire bank balance at the end of the period, plus any cash in hand. However, many businesses are not paid immediately; they build up inventories of goods and they acquire buildings and equipment. In other words: businesses have assets and so they can not, even if they want to, immediately turn these into cash at the end of each period. Often, these businesses owe money to suppliers and to tax authorities, and the proprietors do not withdraw all their original capital and profits at the end of each period. In other words businesses also have liabilities.

Madhya Pradesh state civil supplies corporation limited

(Balance sheet as on 31st March 2008)

Sources of funds Share holder funds: Share capital Reserve & surplus

31.03.10

31.03.09

84744000 1400761575 1485505575

84744000 131789266 1416533266

Loan funds: Secure loans Unsecured loans 2616810584 10986162031 4993765591 13602972615 15088478190 USE OF FUNDS Fixed assets: Gross block (-) depreciation Net block Capital work in progress Investment Deffered tax assets 103222392 57684316 45538013 15287375 10 15843370 72284362 55917079 16367283 0 10 13200778 0 4993765591 6410298857

Current assets, loans (-) Current liabilities & Provisions Net current assets TOTAL:

20509695351 5497885929

9773455536 3392724750

15011809422 15088478190

6380730786 6410298857

RATIO ANALYSIS:
Ratio Analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions.However, ratio analysis is not an end itself. It only a means of better understanding of financial strengths and weakness of of a firm. Calculation of mere ratios mere ratios does not serve any purpose, unless several appropriate ratios are analysed and interpreted. The Balance Sheet and the Statement of Income are essential, but they are only the starting point for successful financial management. Apply Ratio Analysis to Financial Statements to analyze the success, failure, and progress of the business. Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance and condition with the average performance of similar businesses in the same industry. To do this compare the ratios with the average of business similar to own ratios for several successive years, watching especially for any unfavorable trends that may be starting. Ratio analysis may provide the all-important early warning indications that allow solving the business problems before they destroy business.

RATIO ANALYSIS

LIQUIDITY RATIO:
Liquidity means ability to clear the current liabilities. The arithmetical expression between the current liabilities And current assets is called liquidity ratio. the ideal ration is 2:1

1. Current Ratio Current ratio = current assets/ current liabilities For the year 2010 =20509695351/5497885929 = 3.73% For the year 2009 = 9773455536/3392724750 =0.28%

2. Liquid ratio or Quick ratio Liquid ratio = liquid assets/ current liabilities Liquid Assets = current assets stock + prepaid expenses Liquid assets For 2010= 20509695351-11041944683+160089 = 9467910757 For 2009 = 9773455536 4713454061+216952 = 5060218427

Liquid ratio for 2010 = 9467910757/ 5497885929 = 1.81

Liquid ratio for 2009 = 5060218427/ 3392724750 =2.94

PROFITABILITY RATIOS:
Profitability Ratios show how successful a company is in terms of generating returns or profits on the Investment that it has made in the business. If a business is liquid and efficient it should also be Profitable.

1. Gross profit ratio Gross profit ratio = gross profit/Net sales * 100 For the year 2010 = 195996298/32009605640 * 100 = 0.62% For the year 2009= /* 100 = 4.28%

2. Net profit ratio Net profit ratio = Net profit/Net sales * 100 For the year 2010 = 973702210/32009605640*100 = % For the year 2009 = 104640983/23326758410*100 = %

3. Operating profit ratio Operating profit ratio = operating profit/Net sales*100 Operating profit = Net profit interest received

Operating profit For 2010 = 291593652 148541845 = 143051807 For 2009 = 371673730 78142626 = 293531104 Operating profit ratio For the year 2010 = 143051807/8974319113*100 = 1.5% For the year 2009 = 293531104/8990260325*100 = 3.2%

4. Selling expense ratio Selling expense ratio = Selling expense/Net sales*100 For the year 2010 = 121171175/8974319113*100 = 1.39% For the year 2009 = 121902058/899026325*100 = 1.35%

5. Net profit to Fixed assets ratio Net profit to fixed assets ratio = Net profit before interest and tax/Net fixed assets For the year 2010 = 1730714121/45538013= 38.0 times For the year 2009 = 1444982080/16367283 =88.0 times

Fixed assets ratio Fixed assets ratio = long term loans/Net fixed assets For the year 2010 = 91359711/17731492 = 5.1 For the year 2009 = 52991455/19379970 = 2.73

Fixed assets turnover ratio Fixed assets turnover ratio = Net sales/Fixed assets For the year 2010 = 32009605640/45538013=702.92 For the year 2009 = 23326758410/16367283= 1425.20

Observations and findings

Some of the observations which were made during the comparative analysis of the ratios a Madhya Pradesh state civil supplies corporation are  Profit before tax for the year 2007-2008 was 44.57 crores which is less by 20.69% when compared to 2006-2007.  Profit before tax (in %) from various source are 1. Sales 2. Fixed assets 3. Scheduled capital  The reserves of the company increased by 22.15%.  The net worth of the company increased from 114.83 lakhs to 13808.73 lakhs. The increase of 20.52%shows good financial position of the company.  The net profit ratio of the company for the year 2007-2008 was 3.24%which is less as compared to the previous year (4.13%)  The earning per share of the company for the year 2007-2008 is 3440.87 lakhs which is less as compared to the previous year 20062007 (4385.84)  The current ratio changed from 1.59:1 to 1.56:1 for the year 20072008 6.25 4.97

775.67 620.47 49.05 32.28

CONCLUSION

From the entire study of the project of Madhya Pradesh state civil supplies corporation ltd I found that the comparative ratio analysis is a tool which gives a clear picture of the overall financial position of the company for the 2 years. Ratio analysis helps the top level management to formulate plans and policies for future.