Your SlideShare is downloading. ×

Financial performance ponni sugars

1,294

Published on

Published in: Technology, Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,294
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
78
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. A STUDY ON FINANCIAL PERFORMANCE OF PONNI SUGARS (ERODE) LTD AT K.S.RANGASAMY COLLEGE OF TECHNOLOGY (An Autonomous Institution Affiliated to Anna University, Chennai) FACULTY OF MANAGEMENTS STUDIES In partial fulfillment of the requirements for the award of the degree MASTER OF BUSINESS ADMINISTRATION A STUDY ON FINANCIAL PERFORMANCE OF PONNI SUGARS (ERODE) LTD AT ERODE By THANGESHWARN. S (Reg.No.1261236) Of K.S.RANGASAMY COLLEGE OF TECHNOLOGY TIRUCHENGODE – 637 215 (An Autonomous Institution Affiliated to Anna University, Chennai) A PROJECT REPORT Submitted to the FACULTY OF MANAGEMENTS STUDIES In partial fulfillment of the requirements for the award of the degree Of MASTER OF BUSINESS ADMINISTRATION July - 2013 A STUDY ON FINANCIAL PERFORMANCE OF PONNI SUGARS (ERODE) LTD AT K.S.RANGASAMY COLLEGE OF TECHNOLOGY (An Autonomous Institution Affiliated to Anna University, Chennai) In partial fulfillment of the requirements for the award of the degree
  • 2. BONAFIDE CERTIFICATE Certified that this project report titled “A STUDY ON FINANCIAL PERFORMANCE OF PONNI SUGARS (ERODE) LTD AT ERODE” is the bonafide work of Mr.THANGESHWARN. S, (Reg.No.1261236) who carried out the research under my supervision. Certified further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate. Director Supervisor Head of the Institution Submitted for the viva-voce examination held on ………………… Internal Examiner External Examiner
  • 3. K.S.RANGASAMY COLLEGE OF TECHOLOGY (Autonoums), TIRUGHENGODE. MBA Summer Project Work (Batch 2012-2014) Title of the project A study on financial performance of Ponni Sugars (Erode) Ltd at Erode. Name of the student and e-mail address S.Thangeshwaran Thangeshwaran91@gmail.com Name of the supervisor(s) Dr.M.VIJAYKUMAR MBA., M.Phil., Ph.D., Professor, Department of MBA, K.S.Rangasamy College of Technology. ABSTRACT The project entitled “A study on financial performance of Ponni Sugars (Erode) Ltd at Erode” attempted to analyze and describe of the sugar industry. It is found from the study that the company was with steady financial positions. From the analysis it is suggested that the company could maintain an optimum level of inventory to make good financial position. The company has to take appropriate steps to control the cost, increase the volume of sales, profit in the future years.
  • 4. DECLARATION I hereby declare that the project entitled “A STUDY ON FINANCIAL PERFORMANCE OF PONNI SUGARS (ERODE) LTD AT ERODE” in partial fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION is a record of original project work done by me, during my period of study in K.S.RANGASAMY COLLEGE OF TECHNOLOGY 2012 – 2014 under the guidance of Dr.M.VIJAYKUMAR MBA., M.Phil., Ph.D., Professor, Department of MBA, K.S.Rangasamy College of Technology and no part of it has been submitted for any other Degree or Diploma. Signature: Register No : 1261236 Name of the candidate : THANGESHWARAN. S DATE : PLACE : TIRUCHENGODE
  • 5. ACKNOWLEDGEMENT First and for most I dedicate this project work to my parents, who are responsible for all the outstanding performance in my life. I wish to express my sincere gratitude to our Correspondent Lion Dr.K.S.RANGASAMY M.J.F., K.S.R Educational Institutions, for providing an excellent environment and infrastructure at K.S.RANGASAMY COLLEGE OF TECHNOLOGY. I am deeply indebted to Dr. K. THYAGARAJAH M.E., Ph.D., SMIEEE, MISTE, Principal K.S.R COLLEGE OF TECHNOLOGY, for giving me permission to undertake this project. I regard my sincere and heartfelt thanks to our director of the Department Dr.A.LAKSHMI M.A., M.Phil., MBA., B.Ed., Ph.D., Director, Department of MBA who has been the key spring of motivation to us throughout the completion of our course and project work. I am highly indebted to provide my heart full thanks to my guide Dr.M.VIJAYKUMAR MBA., M.Phil., Ph.D., Professor, Department of MBA, K.S.Rangasamy College of Technology for his valuable ideas, encouragement and supportive guidance throughout the project. I would like to thank my parents and friends for their valuable support and contribution to the completion of my project.
  • 6. CONTENTS CHAPTER NO PARTICULARS PAGE.NO List of Tables Vii List of charts viii 1 INTRODUCTION 1.1 Introduction 1 1.2 Statement of the problem 2 1.3 Objectives of the study 2 1.4 Scope of the study 2 1.5 Limitations of the study 3 1.6 Chapterization of the study 3 2 CONCEPTS AND REVIEW 2.1 Concepts of the study 4 2.2 Review of the related literature 5 2.3 Company profile 6 2.4 Product profile 8 3 METHODOLOGY 3.1 Research Design 9 3.2 Data collection Details 10 3.3 Tools of the study 11 4 DATA ANALYSIS AND INTERPRETATION 4.1 Analysis of the data 19 5 RESULTS AND DISCUSSION 5.1 Findings of the study 37 5.2 Suggestions 39 5.3 Conclusion 39 REFERENCES 40 LIST OF TABLES
  • 7. TABLE NO PARTICULARS PAGE NO 4.1.1 Current ratios 20 4.1.2 Quick ratio or acid test ratio 21 4.1.3 Gross profit margin 22 4.1.4 Operating profit margin 23 4.1.5 Net profit margin 24 4.1.6 Return on assets 25 4.1.7 Equity ratio 26 4.1.8 Fixed assets turnover 27 4.1.9 Inventory turnover 28 4.1.10 Total assets turnover 29 4.1.11 Inventory to current assets 30 4.1.12 Inventory to net working capital 31 4.1.13 Over heads 32 4.1.14 Direct materials 33 4.1.15 Direct labour 34 4.1.16 Trend analyses 35
  • 8. LIST OF CHARTS TABLE NO PARTICULARS PAGE NO 4.1.1 Current ratios 20 4.1.2 Quick ratio or acid test ratio 21 4.1.3 Gross profit margin 22 4.1.4 Operating profit margin 23 4.1.5 Net profit margin 24 4.1.6 Return on assets 25 4.1.7 Equity ratio 26 4.1.8 Fixed assets turnover 27 4.1.9 Inventory turnover 28 4.1.10 Total assets turnover 29 4.1.11 Inventory to current assets 30 4.1.12 Inventory to net working capital 31 4.1.13 Over heads 32 4.1.14 Direct materials 33 4.1.15 Direct labour 34 4.1.16 Trend analyses 36
  • 9. CHAPTER-1 1. INTRODUCTION 1.1 INTRODUCTION The word ‘Performance is derived from the word ‘parfourmen’, which means ‘to do’, ‘to carry out’ or ‘to render’. It refers the act of performing; execution, accomplishment, fulfillment, etc. In border sense, performance refers to the accomplishment of a given task measured against preset standards of accuracy, completeness, cost, and speed. In other words, it refers to the degree to which an achievement is being or has been accomplished. In the words of Frich Kohlar “The performance is a general term applied to a part or to all the conducts of activities of an organization over a period of time often with reference to past or projected cost efficiency, management responsibility or accountability or the like. Thus, not just the presentation, but the quality of results achieved refers to the performance. Performance is used to indicate firm’s success, conditions, and compliance. Financial performance refers to the act of performing financial activity. In broader sense, financial performance refers to the degree to which financial objectives being or has been accomplished. It is the process of measuring the results of a firm's policies and operations in monetary terms. It is used to measure firm's overall financial health over a given period of time and can also be used to compare similar firms across the same industry or to compare industries or sectors in aggregation. The financial performance analysis identifies the financial strengths and weaknesses of the firm by properly establishing relationships between the items of the balance sheet and profit and loss account.
  • 10. 1.2 STATEMENT OF THE PROBLEM Financial performance are prepared to review the state of investment in a business and result achieved during specific period, financial performance analyses are also of great importance to the financial lenders. The financial performances are useful and meaningful only when they are analyzed. Sugar industries are of the developing industries in our country after liberalization. The government has opened new opportunities for the century old sugar industry. There is a vast home market and export potential for sugar industry. The process of consolidation and rationalization in the industry will continue. This will lead to greater challenges in matching the right companies and their product making facilities to the right market. On account of these facts, it is of considerable interest to study the sugar industry. 1.3 OBJECIVES OF THE STUDY To analyze the financial position of Ponni Sugars. To analyze different costs related to Financial performances. To forecast the future sales of Ponni Sugars. 1.4 SCOPE OF THE STUDY The basis for financial planning and analysis is financial information, financial need to predict compare and evaluate the forms earning ability. It is also required to aid in economics decision making, investment and Financial performances or accounting reports. They should be prepared very carefully and contain as much information as possible because they are useful to judge the financial efficiency of the company. The data about the sugar sector, the government policies with respect to the sector, and the information about the companies are all gathered from secondary sources, available on the websites, annual reports, data bank of the firm and software used by the firm.
  • 11. 1.5 LIMITATIONS OF THE STUDY Though there are many Sugars Mills in Tamil Nadu only one mill has been taken up for this study. The financial performance of the company is analyzed by using five years data alone. Ratios of the past are not true indicators of future. Financial analysis is based on monetary information and the non monetary information ignored. Any change in the methods or procedures of accounting system limits the utility of financial performances. It does not consider the price level change. Despite this, a sincere attempt is made. 1.6 CHAPERIZATION OF THE STUDY Chapter-1 Introduction of the project work includes introduction, statement of the problem, objectives of the study, scope of the study, limitations of the study and Chapterization of the study. Chapter-2 It deals with the concepts and review used in this project work. It includes concepts of the study, review of related literature, company profile and product profile. Chapter-3 It deals with research methodology followed in this project work. It includes research design, data collection details and tools used for the study. Chapter-4 It deals with of data analysis and interpretation. Chapter-5 It deals with results, findings, suggestions, and conclusion of the study.
  • 12. CHAPTER-2 CONCEPTS AND REVIEW 2.1 CONCEPTS OF THE STUDY FINANCIAL PERFORMANCE Finance is the life blood of a business. Finance is one of the basic foundations of all kinds of economic activities. Like any other functional management in a firm (such as production, making, sales etc.,) “finance” is a vital functional organization of the firm. If the finance function does not operate will, the whole organizational activity will be collapsed. The subject matter of financial management has been defined in many ways depending upon the study of the subject. The level of performance of a business over a specified period of time, expressed in terms of overall profits and losses during that time. Evaluating the financial performance of a business allows decision-makers to judge the results of business strategies and activities in objective monetary terms. Financial performance is prepared primarily for decision making. It plays a dominant role in setting the frame work of managerial decisions. But the information provided in Financial performance is not an end in itself as no meaningful conclusions can be drawn from these statements alone.
  • 13. 2.2 REVIEW OF RELATED LITERATURE G. Malyadri, and B. Sudheer Kumar (2013) found 15 at Indian sugar industry is highly stragmented with organize and un organized players. The unorganized players mainly produce gur and khandsari, the fess refined forms sugar. The sector has a number of transformational opportunities. These opportunities have remained largely untapped. The industry has the potential to cater to the large and growing domestic sugar consumption and emerge as a significant carbon credit and power producer. Further, the industry can improve its cost competitiveness through higher farm productivity and by managing the domestic production variation through international trade with a focus on countries in the Indian ocean. Thus, transformed sector would be fess cyclical with greater alignment between sugar cane and sugar prices, and will have stable diversified sources of revenue. This study we have used analysis of Indian Sugar Industry from Ratio’s Port Of View, Profitability Ratio, Turnover Ratio. Pany (1991) has sought to identify factors which influence corporate economic performance. Important industrial characteristics which have been used by industrial organization researchers as the determinants of financial performance are concentration, market share, industry growth, research and development expenditure, advertisement intensity, and size of firms in the industry. These characteristics may allow firms to be in a better position to implement their strategies successfully and profitability. Consequently, firms may reflect better performance on account of favorable industrial characteristics. Attwood, D. W. (1995) found the reasons why cooperative sugar factories in Maharashtra, India are given: (1) successful are examined. Two contradictory explanations are generally the cooperative spirit already prevalent in the village communities provided a sound basis for formal cooperatives; (2) village life is governed by a few wealthy and powerful leaders who also control the cooperatives. Both explanations are rejected. It is argued that despite a high level of inequality in the past and the present, informal cooperation has flourished in the villages. The success of the sugar cooperatives rests on the long- standing habit forming selective alliances to overcome serious technical obstacles in production. The large farmers depend on the cane supplied by the small farmers to maintain full capacity utilization, which enables the factories to pay high cane prices.
  • 14. 2.3 COMPANY PROFILE Ponni Sugars (Erode) Ltd is an off spring of Ponni Sugars and Chemicals Ltd (PSCL) under a Demerger Scheme sanctioned by the High Court of Madras on 10th September 2001. In terms of the Scheme, the company took over the business of Erode Under taking with concurrent transfer of major part of stakeholders’ interest in PSCL to the company. The Erode sugar mill was set up with 1250 TCD capacity in 1984 in a record time of 12 months. It achieved full capacity crushing during the very first year of its commercial operation that enabled declaration of a maiden dividend of 10% in that very first year, a record in the annals of sugar industry. It was a trendsetter in mobilizing surplus cane during its infancy stage from neighboring sugar mills and extending crushing season to well above industry average. Its capacity was expanded to 2500 TCD In 1994. The Erode sugar mill has successfully implemented an innovative Lift Irrigation Scheme by bringing in dry lands under cane cultivation, utilizing the effluent discharge of the neighbouring paper mill. This has helped secure multitudinal benefits – providing a dependable and perennial source of irrigation to farmers in the neighbourhood, increase of land value manifold in the region, transforming the livelihood of local rural population, resolving the raw material needs of sugar and paper mills and addressing ecological coners in effluent discharge. Right from its inception, Ponni was structured on the concept of total diversion of bagasse for paper. Accordingly it installed a coal fired boiler and later added a multi fuel boiler in place of conventional bagasse fired boilers. It has a bagasse tie up arrangement with Seshasayee Paper and Boards Ltd for a mutually beneficial and rewarding long term relationship. Ponni is an efficient and quality producer of sugar, catering to both domestic and international markets. It is a venerable partner for villagers growing sugarcane in its neighbourhood. It enjoys cordial relationship with employees. It firmly believes in transparent and fair dealings with all its stakeholders by following sound corporate governance norms both in letter and spirit.
  • 15. A COMPANY WITH A DIFFERENCE Innovative structuring as backward integration to paper. First to commit bagasse for paper and derive value addition. Pioneered long sugar season. Implemented a unique effluent irrigation scheme converting waste to wealth. ISO 9001:2008 certified for Quality Management system. ISO 14001:2004 certified for Environmental Management system. VISION To excel as trusted socially responsible and customer driven organization providing maximum value to all stakeholders. MISSION To manufacture quality products at competitive cost through technology and team work. VALUES Ethical practices Customer Focus Commitment and transparent management Empowerment and Accountability Adaptability to “Change” Innovation and Creativity Emphasis on human resources development, cost reduction, productivity enhancement and resource conservation.
  • 16. FACTORY FACTSHEET Year of Establishment 1984 Initial Capacity (TCD) 1250 Present Capacity (TCD) 3500 Factory Area (acres) 33.51 Colony Area (acres) 9.10 No of Employees Regular - 232 Seasonal – 95 327 No. of Employee Quarters No. of Cultivators 145 7475 Annual Cane Area under Registration (acres) 21300 2.4 PRODUCT PROFILE Ponni Sugars (Erode) Limited is an India-based company. The Company is engaged in the manufacture of sugar and its by-products. The Company’s products include sugar, bagasse and molasses. During the fiscal year ended March 31, 20012 (fiscal 2012), the Company crushed 745,644 tons of cane and produced 76464 tons of sugar. The Company’s plant is located in Namakkal District, Tamil Nadu.
  • 17. CHAPTER-3 RESEARCH METHODOLOGY 3.1 INRODUCTION Research is often described as an active, diligent and systematic process of inquiry aimed at discovering, interpreting and revising facts. This intellectual investigation produces a greater understanding of events, behaviors or theories and makes practical applications through laws and theories. The term research is also used to describe a collection of information about a particular subject, and is usually associated with science and scientific method. BASIC RESEARCH Basic research is also called as fundamental or pure research. Its primary objective is the advancement of knowledge and the theoretical understanding of the relations among the variables. It is exploratory and often driven by researcher s curiosity or interest. It is conducted without any practical end in mind. Basic research often lays down the foundation for further applied research. APPLIED RESEARCH Applied research is done to solve specific, practical questions. Its primary objective is not to gain knowledge for its own sake. It is usually descriptive in nature. It is almost always done on the basis of basic research. 3.2 RESEARCH DESIGN Research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to research purpose with economy in procedure.
  • 18. Descriptive research Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is descriptive of the state of affairs as it exists at present. In social science and business research we quite often use the term. Example post facto research for descriptive research studies. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening. 3.3 DATA COLLECTION DETAILS SECONDARY DATA Secondary data means data that already available i.e., they refer to the data which have already been collected and analyzed by someone else. When the researcher utilizes secondary data, then he has look into various sources from where he can obtain them. In this case he is certainly not confronted with the problems that are usually associated with the collection of original data. Secondary data may either be published data or unpublished data. In this study, the secondary data has been provided wherever required; the secondary data has been collected from various sources like Books, Journals, Newspapers, Abstract industries report and internet. The following are the sources of information and methodology used in this study. 1. Acquiring material from the various reports made available by the company specifically related to the sugar sector. 2. Acquiring material from the internet 3. Reviewing relevant books and business journals
  • 19. 3.4 TOOLS USED FOR DATA ANALYSIS Ratio analysis. Inventory ratio. Over heads. Forecasting the sales. RATIO ANALYSIS It is concerned with the calculation of relationships, which after proper identification & interpretation may provide information about the operations and state of affairs of a business enterprise. The analysis is used to provide indicators of past performance in terms of critical success factors of a business. This assistance in decision-making reduces reliance on guesswork and intuition and establishes a basis for sound judgments. LIQUIDITY MEASUREMENT RATIOS Liquidity means the ability of a concern to meet its current obligations as and when these become due. Thus the liquidity ratios indicate the ability of a concern to meet its short- term obligations. CURRENT RATIOS Current ratio is defined as the relationship between current assets and current liabilities. Thus the two basic components of current ratio are: current assets and current liabilities. “Current assets” consist of debtors, bills receivable, inventory, cash in hand, cash in hand, at bank, pre-paid expenses and short-term investments. Current ratio = Current assets/ Current liabilities Higher the ratio, the better it is, however but too high ratio reflects an in-efficient use of resources & too low ratio leads to insolvency. The ideal ratio is considered to be 2:1
  • 20. QUICK RATIO OR ACID TEST RATIO Quick ratio is a more rigorous test of liquidity than the current ratio. It can be ascertained by comparing the liquid assets to current liabilities. Liquid assets consist in hand and a bank, debtors less provision for bad and doubtful debts, realizable investment and other current assets which can be realized immediately. Quick ratio = liquid assets/ current liabilities The ideal ratio is 1:1. Another beneficial use is to compare the quick ratio with the current ratio. If the current ratio is significantly higher, it is a clear indication that the company's current assets are dependent on inventory. PROFITABILITY INDICATORS RATIOS Profitability is the ability of a business to earn profit over a period of time. The profitability ratios show the combined effects of liquidity, asset management (activity) and debt management (gearing) on operating results. The overall measure of success of a business is the profitability which results from the effective use of its resources. GROSS PROFIT MARGIN A company's cost of goods sold represents the expense related to labor, raw materials and manufacturing overhead involved in its production process. This expense is deducted from the company's net sales/revenue, which results in a company's gross profit. The gross profit margin is used to analyze how efficiently a company is using its raw materials, labor and manufacturing related fixed assets to generate profits. Gross Profit Margin = (Gross Profit/Net Sales)*100 Higher the ratio, the higher is the profit earned on sales.
  • 21. OPERATING PROFIT MARGIN By subtracting selling, general and administrative expenses from a company's gross profit number, we get operating income. Management has much more control over operating expenses than its cost of sales outlays. It Measures the relative impact of operating expenses. Operating Profit Margin = (Operating Profit/Net Sales)*100 Lower the ratio, lower the expense related to the sales. NET PROFIT MARGIN Net profit ratio establishes the relationship between net profit and sales. I indicate the efficiency of the management in manufacturing, selling, administration and other activities of the concern. Net Profit Margin= (Operating Profit/Net Sales)*100 Higher the ratio, the more profitable are the sales. RETURN ON ASSETS This ratio illustrates how well management is employing the company's total assets to make a profit. Return on Assets= Net Income / Average Total Assets Higher the return, the more efficient management is in utilizing its asset base.
  • 22. FINANCIAL LEVERAGE/GEARING RATIOS These ratios indicate the degree to which the activities of a firm are supported by creditors’ funds as opposed to owners as the relationship of owner’s equity to borrowed funds is an important indicator of financial strength. The debt requires fixed interest payments and repayment of the loan and legal action can be taken if any amounts due are not paid at the appointed time. A relatively high proportion of funds contributed by the owners indicate a cushion (surplus) which shields creditors against possible losses from default in payment. EQUITY RATIO This ratio measures the strength of the financial structure of the company. Equity Ratio= (Ordinary Shareholder’s Interest / Total assets)*100 A high equity ratio reflects a strong financial structure of the company. A relatively low equity ratio reflects a more speculative situation because of the effect of high leverage and the greater possibility of financial difficulty arising from excessive debt burden. OPERATING PERFORMANCE RATIOS These ratios look at how well a company turns its assets into revenue as well as how efficiently a company converts its sales into cash, i.e. how efficiently & effectively a company is using its resources to generate sales and increase shareholder value. The better these ratios, the better it is for shareholders. FIXED ASSETS TURNOVER This ratio is a rough measure of the productivity of a company's fixed assets with respect to generating sales.
  • 23. Fixed Assets Turnover= Sales / Net Fixed Assets High fixed assets turnovers are preferred since they indicate a better efficiency in fixed assets utilization. TOTAL ASSETS TURNOVER This ratio indicates the efficiency with which the firm uses all its assets to generate sales. Total Assets Turnover= Sales / Total Assets Higher the firm’s total asset turnover, the more efficiently its assets have been utilized. COST SHEET Cost Sheets are statements setting out the costs of a product giving details of all the costs. Presentation of costing information depends upon the method of costing. A cost sheet can be prepared weekly, monthly, quarterly or annually. In a cost sheet besides total expenditure incurred, cost per unit of output in case of each element of cost can be shown in a separate column. The cost sheet should give cost per unit in the previous period for the purposes of comparison. INVENTORY TURNOVER It measures the stock in relation to turnover in order to determine how often the stock turns over in the business. It indicates the efficiency of the firm in selling its product. Inventory Turnover= Sales / Average Inventory High ratio indicates that there is a little chance of the firm holding damaged or obsolete stock.
  • 24. INVENTORY TO CURRENT ASSETS It is the relationship between closing inventory and current assets. Inventory to Current Assets = Closing Inventory / Current Assets This ratio inventory indicates the amount of investment in inventory per rupee of current asset inventory. The higher the proportion of inventory to current asset the lower the liquidity as compared to other current asset. INVENTORY TO NET WORKING CAPITAL It is the relationship between inventory and net working capital. Inventory to Net Working Capital =Closing inventory/Net Working Capital This ratio shows the amount of inventory per rupee of equity and long-term financial position of current asset. A high ratio means greats amount of net working capital investment in inventory and a low ratio means a lower amount of net working capital investment in inventory. OVERHEADS Overhead is “the aggregate of indirect material cost, indirect wagers (indirect labor cost) and indirect expenses”. Over Heads = Total Overheads / Net sales*100
  • 25. DIRECT MATERIALS Refers to the cost of materials which become a major part of the finished product. Such materials can be identified in the product, measured and chargeable to the product. For example, Plywood, wooden battens, fabric for the seat and the back, nails, screws, glue. Overhead Rate = production Overhead Expenses (Budgeted) / anticipated Direct Material Cost*100 DIRECT LABOUR It is the cost of labour, which is directly engaged in the productive operations. In other words the worker who works directly with raw materials in converting them into finished goods represents direct labour. For example,Sawyers, drillers, assemblers, painters, polishers, upholsterers. Overhead Rate = production Overhead Expenses / Direct Labour Cost*100 TREND ANALYSIS This is best method for obtaining the trend values. It provides a convenient basis for obtaining the line of best fit in a series. Line of the best fit is a line from which the sum of the deviations of various points on either side is zero. The straight line trend has an equation of the types: Y=a+bx, where Y represents the estimated values of the trend, X represents the deviations in the time period: ‘a’ and ‘b’ are estimated by solving the following two normal equations. ∑ Y=Na+a∑X ∑XY=a∑X+b∑X2
  • 26. Where N represents number of years for which data is given. The variables X can be measured from any point of time as origin because the negative values of first half of the times series will equalize the positive values in the second half of the series which symbolically gives ∑x=0. When ∑x-0, the two normal equations for finding the constants ’a’ and ‘b’ will be ∑ Y=Na=a=∑Y/N=Y ∑XY=b∑x2=b=∑XY/∑X2
  • 27. CHAPTER-4 DATA ANALYSIS AND INTERPRETATION 4.1 ANALYSIS OF THE DATA Analysis of the data means studying the tabulated material in order to determine if he rent facts or meaning. It involves breaking down existing complex factors into simpler parts and putting the part together in new arrangement for purpose of interpretation. A plan of analysis can and should be prepared in advance before the actual collection materials. A preliminary analysis on the skeleton plan should, as the investigation proceeds, develop in to a complete, final analysis enlarge and reworked as and when necessary. The process requires flexible and open mind. No similarities, differences, trends and outstanding should go unnoticed, large division of materials should be broken down in to smaller unit and rearranged in new combinations to discover new factors and relationship. Data should studied from as many angles as possible to find out and news facts. When the plan of analysis has not been made before hand, there are four helpful modes to start with the analysis of data: To think term of significant tables that the data permit. To examine carefully the statement of the problem and the earlier analysis and to study the original records of the data.
  • 28. TABLE-4.1.1 LIQUIDITY MEASUREMENT RATIOS CURRENT RATIOS Year Current assents Current liabilites Ratio 2013 108.6 53.3 2.037523 2012 79.1 68.41 1.156264 2011 93.65 49.2 1.903455 2010 124.34 65.72 1.891966 2009 66.59 41.36 1.61001 INFERENCE: The above table reveals that the highest current ratio was recorded (2.037523) in the year 2013. The lowest current ratio (1.156264) recorded in the year 2012. The current ratio was fluctuating during the period 2009 to 2013. CHART-4.1.1 0 0.5 1 1.5 2 2.5 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Current ratios Current ratios
  • 29. TABLE-4.1.2 QUICK RATIO OR ACID TEST RATIO Year Liquid assets Current liabilities Ratio 2013 90.3 53.3 0.652345 2012 66.56 68.41 0.470107 2011 88.41 49.2 0.550203 2010 109.02 65.72 0.527237 2009 62.48 41.36 0.378868 INFERENCE: The above table indicates that the highest quick ratio was recorded (0.652345) in the year 2013. The lowest quick ratio (0.378868) recorded in the year 2012. The ratio was fluctuating trend during the study is from 2009 to 2013. CHART-4.1.2 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Quick Ratio or Acid Test Ratio Quick Ratio or Acid Test Ratio
  • 30. PROFITABILITY INDICATORS RATIOS Year Gross profit 2013 2012 2011 2010 2009 INFERENCE: The above table shows that the highest gross profit 2010. The lowest gross profit ratio ( fluctuating trend. The periods are 2009 to 2013. 0 5 10 15 20 25 30 Mar ' 13 Mar ' 12 TABLE-4.1.3 PROFITABILITY INDICATORS RATIOS GROSS PROFIT MARGIN ross profit Net sales 26.87 212.48 31.69 268.99 15.18 270.69 73.27 245.72 22.87 138.62 shows that the highest gross profit ratio was (29.81849 2010. The lowest gross profit ratio (5.607891) recorded in the year 2011. The trend is fluctuating trend. The periods are 2009 to 2013. CHART-4.1.3 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Gross Profit Margin Gross Profit Margin Ratio 12.6459 11.78111 5.607891 29.81849 16.49834 29.81849) in the year 2011. The trend is Gross Profit Margin
  • 31. OPERATING PROFIT MARGIN Year Operating profit 2013 2012 2011 2010 2009 INFERENCE: The above table shows that the highest operating profit year 2010. The lowest operating profit ratio ( is fluctuating trend. The periods are 2009 to 2013. 0 5 10 15 20 25 30 Mar ' 13 Mar ' 12 Operating Profit Margin TABLE-4.1.4 OPERATING PROFIT MARGIN perating profit Net sales 17.67 209.45 29.43 159.82 15.01 112.7 71.31 113.94 20.61 80.38 The above table shows that the highest operating profit ratio was year 2010. The lowest operating profit ratio (5.545088) recorded in the year 2011. The trend trend. The periods are 2009 to 2013. CHART-4.1.4 Mar ' Mar ' 11 Mar ' 10 Mar ' 09 Operating Profit Margin Operating Profit Margin Ratio 8.316077 10.94093 5.545088 29.02084 14.86798 ratio was (29.02084) in the ) recorded in the year 2011. The trend Operating Profit Margin
  • 32. TABLE-4.1.5 NET PROFIT MARGIN Year Net sales Sales Ratio 2013 14.09 212.48 6.631212 2012 28.24 268.99 10.49853 2011 13.53 270.69 4.998338 2010 69.52 245.72 1.251711 2009 18.72 138.62 0.512814 INFERENCE: The above table indicates that the highest net profit ratio was (10.49853) in the year 2012. The lowest net profit ratio (0.512814) recorded in the year 2009. The ratio trend is decreasing trend. The periods are 2009 to 2013. CHART-4.1.5 0 2 4 6 8 10 12 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Net Profit Margin Net Profit Margin
  • 33. TABLE-4.1.6 RETURN ON ASSETS Year Net Income Average Total Assets Ratio 2013 17.67 104.725 0.168728 2012 29.43 79.91 0.368289 2011 15.01 56.35 0.266371 2010 71.31 56.97 1.251711 2009 20.61 40.19 0.512814 INFERENCE: The above table shows that the highest return on to asset ratio was (1.251711) in the year 2010. The lowest return on asset ratio (0.168728) in the year 2013. The ratio trend is fluctuating trend. The periods are 2009 to 2013. CHART-4.1.6 0 0.2 0.4 0.6 0.8 1 1.2 1.4 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Return on Assets Return on Assets
  • 34. TABLE-4.1.7 FINANCIAL LEVERAGE/GEARING RATIOS EQUITY RATIO Year Ordinary Shareholder’s Interest Total assets Ratio 2013 3.58 209.45 1.709238 2012 1.19 159.82 0.744588 2011 1.48 112.7 1.313221 2010 1.79 113.94 1.571002 2009 1.89 80.38 2.351331 INFERENCE: The above table reveals that the highest equity ratio was (2.351331) in the year 2009. The lowest equity ratio was (0.744588) in the year 2012. The ratio was fluctuating trend during the study period 2009 to 2013. CHART-4.1.7 0 0.5 1 1.5 2 2.5 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Equity Ratio Equity Ratio
  • 35. TABLE-4.1.8 OPERATING PERFORMANCE RATIOS FIXED ASSETS TURNOVER Year Sales Net Fixed Assets Ratio 2013 212.48 133.09 1.596514 2012 268.99 44.17 6.08988 2011 270.69 45.21 5.987392 2010 245.72 47.03 5.22475 2009 138.62 47.71 2.905471 INFERENCE: The above table reveals that the highest fixed assets turnover ratio was (6.08988) in the year 2012. The lowest fixed assets turnover ratio (1.596514) in the year 2013. The ratio trend is fluctuating trend. The periods are 2009 to 2013. CHART-4.1.8 0 1 2 3 4 5 6 7 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Fixed Assets Turnover Fixed Assets Turnover
  • 36. TABLE-4.1.9 TOTAL ASSETS TURNOVER Year Sales Total Assets Ratio 2013 212.48 209.45 1.014466 2012 268.99 159.82 1.683081 2011 270.69 112.7 2.401863 2010 245.72 113.94 2.156574 2009 138.62 80.38 1.724558 INFERENCE: The above table reveals that the highest total assets turnover ratio was (2.401863) in the year 2011. The lowest total assets turnover ratio was (1.014466) in the year 2013. The ratio trend is fluctuating trend from 2009 to 2013. CHART-4.1.9 0 0.5 1 1.5 2 2.5 3 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Total Assets Turnover Total Assets Turnover
  • 37. TABLE-4.1.10 INVENTORY TURNOVER Year Sales Average Inventory Ratio 2013 212.48 36.915 5.755926 2012 268.99 23.47 11.46101 2011 270.69 33.29 8.131271 2010 245.72 44.845 5.479318 2009 138.62 25.46 5.444619 INFERENCE: The above table reveals that the highest Inventory turnover ratio was (11.46101) in the year 2012. The lowest Inventory assets turnover ratio was (5.444619) in the year 2009. The ratio trend is fluctuating trend from 2009 to 2013. CHART-4.1.10 0 2 4 6 8 10 12 14 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Inventory Turnover Inventory Turnover
  • 38. INVENTORY TO CURRENT ASSETS Year Closing inventory 2013 2012 2011 2010 2009 INFERENCE: The above table reveals that the highest (1.2428292) in the year 2009. The lowest the year 2013. The ratio trend is fluctuating trend from 2009 to 2013. 0 0.2 0.4 0.6 0.8 1 1.2 1.4 Mar ' 13 Mar ' 12 Inventory to Current Assets TABLE-4.1.11 INVENTORY TO CURRENT ASSETS losing inventory Current asset 51 108.6 47 79.1 113 93.65 125.73 124.34 82.76 66.59 reveals that the highest Inventory to current assets ratio was the year 2009. The lowest Inventory to current assets ratio was ( the year 2013. The ratio trend is fluctuating trend from 2009 to 2013. CHART-4.1.11 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Inventory to Current Assets Inventory to current assets Ratio 0.4696132 0.5941845 1.2066203 1.0111790 1.2428292 Inventory to current assets ratio was Inventory to current assets ratio was (0.4696132) in Inventory to current
  • 39. INVENTORY TO NET WORKING CAPITAL Year Closing inventory 2013 2012 2011 2010 2009 INFERENCE: The above table reveals that the highest (1.7687540) in the year 2009. The lowest (0.3949202) in the year 2013. The ratio trend is fluctuating trend from 2009 to 2013. 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 Mar ' 13 Mar ' 12 Inventory to Net Working Capital TABLE-4.1.12 INVENTORY TO NET WORKING CAPITAL losing inventory Net working captial 51 129.14 47 111.54 113 96.25 125.73 79.64 82.76 46.79 reveals that the highest Inventory to net working capital ratio was ) in the year 2009. The lowest Inventory to net working capital ratio was ) in the year 2013. The ratio trend is fluctuating trend from 2009 to 2013. CHART-4.1.12 Mar ' Mar ' 11 Mar ' 10 Mar ' 09 Inventory to Net Working Capital Inventory to net working capital Ratio 0.3949202 0.4213734 1.1740259 1.5787292 1.7687540 Inventory to net working capital ratio was Inventory to net working capital ratio was ) in the year 2013. The ratio trend is fluctuating trend from 2009 to 2013. Inventory to Net Working Capital Inventory to net working
  • 40. Year Total overheads 2013 2012 2011 2010 2009 INFERENCE: The above table reveals that the highest 2010. The lowest over heads ratio was ( fluctuating trend from 2009 to 2013. 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 Mar ' 13 Mar ' 12 TABLE-4.1.13 OVER HEADS Total overheads Net sales 2115 21911 2230 27557 2086 28095 1469.72 11951.7 1160.69 14127.87 reveals that the highest over heads ratio was (0.1229716 over heads ratio was (0.0742480) in the year 2011. The ratio trend is fluctuating trend from 2009 to 2013. CHART-4.1.13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Over Heads 30.6680472 Ratio 0.0965268 0.0809231 0.0742480 0.1229716 0.0821560 0.1229716) in the year ) in the year 2011. The ratio trend is 30.6680472
  • 41. Year Production overhead expenses (budgeted) 2013 2012 2011 24657.11 2010 14407.15 2009 INFERENCE: The above table reveals that the highest year 2012. The lowest direct materials ratio was ( is fluctuating trend from 2009 to 2013. 0 1 2 3 4 5 6 Mar ' 13 Mar ' 12 TABLE-4.1.14 DIRECT MATERIALS roduction overhead expenses (budgeted) Anticipated direct material cost 16994 7109 21857 4325 24657.11 6338 14407.15 8670.11 12947.9 4805.17 reveals that the highest direct materials ratio was ( direct materials ratio was (1.6617032) in the year 2010. The ratio trend is fluctuating trend from 2009 to 2013. CHART-4.1.14 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Direct Labour direct labour Ratio 2.3904909 5.0536416 3.8903613 1.6617032 2.6945768 direct materials ratio was (5.0536416) in the ) in the year 2010. The ratio trend direct labour
  • 42. Year Prod overhead 2013 2012 2011 24657.11 2010 14407.15 2009 INFERENCE: The above table reveals that the highest year 2011. The lowest direct labour ratio was ( is fluctuating trend from 2009 to 2013. 0 5 10 15 20 25 30 35 Mar ' 13 Mar ' 12 TABLE-4.1.15 DIRECT LABOUR roduction overhead expenses Direct labour cost 16994 989 21857 893 24657.11 804 14407.15 919.87 12947.9 883.33 reveals that the highest direct labour ratio was (30.6680472 direct labour ratio was (14.6580553) in the year 2009. The ratio trend is fluctuating trend from 2009 to 2013. CHART-4.1.15 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Direct Labour direct labour Ratio 17.1830131 24.4759238 30.6680472 15.6621587 14.6580553 30.6680472) in the ) in the year 2009. The ratio trend direct labour
  • 43. TABLE-4.1.16 TREND ANALYSES Year Sale x x2 xy 2009 138.62 -2 4 -277.24 2010 245.72 -1 1 -245.72 2011 270.69 0 0 0 2012 268.99 1 1 268.99 2013 212.48 2 4 424.96 Total ∑Y=1136.5 ∑x2=10 ∑xY=170.99 1136.5/5 =227.3 170.99/10 =17.099 TREND VALUES Year x Trend values 2014 -2 329.894 2015 -1 346.93 2016 0 365.092 2017 1 381.1991 2018 2 400.29 INFERENCE: The trend analysis is shows that there is a increase in the sales in year 2018. This shows there is a good sales position in the company.
  • 44. 0 50 100 150 200 250 300 350 400 450 2014 2015 CHART-4.1.16 2015 2016 2017 2018 TREND VALUESTREND VALUES
  • 45. CHAPTER-5 RESULTS AND DISCUSSION 5.1 FINDINDS OF THE STUDY The Current assets ratio of the company is highest in (2.03752) in the year 2013. The Quick ratio of the company is highest in (0.652345) in the year 2013. The Gross profit ratio of the company is highest in (29.81849) in the year 2010. The Operating profit margin of the company is highest in (29.02084) in the year 2010. The Net profit margin of the company is highest in (10.49853) in the year 2012. The Return on assets ratio of the company is highest in (1.251711) in the year 2010. The Equity ratio of the company is highest in (2.351331) in the year 2009. The Fixed assets turnover of the company is highest in (6.08988) in the year 2012. The Total assets turnover of the company is highest in (2.401863) in the year 2011. The Inventory turnover of the company is highest in (11.46101) in the year 2012. The Inventory to current assets of the company is highest in (1.2428292) in the year 2009. The Inventory to net working capital of the company is highest in (1.7687540) in the year 2009.
  • 46. The Overheads of the company is highest in (0.1229716) in the year 2010. The Direct materials of the company is highest in (5.0536416) in the year 2009. The Direct labour of the company is highest in (30.6680472) in the year 2011. The company will attain the maximum sales (400.29) in the year 2018.
  • 47. 5.2 SUGGESTIONS The company may decrease its inventory turnover on basis of order for sales and market potential. The company may reduce the variable expenses raw material consumed, power and fuel, employee expenses, administration and selling expenses it will leads to more operating profit. The company may continuously maintain its proper planning and control techniques in order to regulate and optimize the use of cash balance. The company may be maintained the current assets properly so that it will lead to better position of working capital. The company may reduce the creditor’s position by repaying the loans in short-period for in better position in future. 5.3 CONCLUSION Financial performance is basic instruments, which provides all information about the financial position and operational efficiency of the company. The current ratio, quick ratio, gross profit may increase in this respect. It is concluded that the overall financial performance was satisfactory as per analysis. The company has to take appropriate steps to control the cost, increase the volume of sales, profit in the future years. Ponni Sugars consists of high capital and investment but business performance will be only being in moderate level. If the firms concentrate more on the financial aspects and reduce the unwanted costs, will reach the higher profitable position in the near future.
  • 48. BALANCE SHEET (Rs crores) Particulars Mar'13 Mar'12 Mar'11 Mar'10 Mar'09 Liabilities 12 Months 12 Months 12 Months 12 Months 12 Months Share Capital 8.6 8.6 8.6 8.6 8.6 Reserves & Surplus 120.54 102.94 87.65 71.04 38.2 Net Worth 129.14 111.54 96.25 79.64 46.79 Secured Loan 80.31 48.28 16.45 34.3 33.58 Unsecured Loan 0 0 0 0 0 TOTAL LIABILITIES 209.45 159.82 112.7 113.94 80.38 Assets Gross Block 172.78 73.05 71.68 70.95 69.62 (-) Acc. Depreciation 39.69 28.88 26.47 23.92 21.91 Net Block 133.09 44.17 45.21 47.03 47.71 Capital Work in Progress 0.27 84.17 14.75 0 0.15 Investments 20.79 20.79 8.29 8.29 7.29 Inventories 73.83 46.94 66.58 89.69 50.92 Sundry Debtors 16.89 11.85 3.52 12.27 1.72 Cash and Bank 1.41 0.69 1.72 3.06 2.39 Loans and Advances 16.47 19.62 21.83 19.33 11.56 Total Current Assets 108.6 79.1 93.65 124.34 66.59 Current Liabilities 43.98 56.76 47.2 45.37 36.98 Provisions 9.32 11.65 2 20.35 4.38 Total Current Liabilities 53.3 68.41 49.2 65.72 41.36 NET CURRENT ASSETS 55.3 10.69 44.45 58.62 25.23 Misc. Expenses 0 0 0 0 0 TOTAL ASSETS(A+B+C+D+E) 209.45 159.82 112.7 113.94 80.38
  • 49. PROFIT AND LOSS ACCOUNT (Rs crores) Mar'13 Mar'12 Mar'11 Mar'10 Mar'09 Net Sales Turnover 212.48 268.99 270.69 245.72 138.62 Other Income 2.41 1.03 2.92 1.1 0.71 Total Income 214.89 270.02 273.61 246.82 139.33 EXPENSES Stock Adjustments -27.88 20.79 23.45 -39.08 -11.9 Raw Material Consumed 169.87 171.53 197.37 175.14 97.77 Power and Fuel 0 0 0 0 0 Employee Expenses 12.34 11 10.56 9.2 8.83 Administration and Selling Expenses 0 0 0 0 0 Research and Development Expenses 0 0 0 0 0 Expenses Capitalized 0 0 0 0 0 Other Expenses 31.28 33.98 24.13 27.19 21.05 Provisions Made 0 0 0 0 0 TOTAL EXPENSES 185.61 237.3 255.51 172.45 115.75 Operating Profit 26.87 31.69 15.18 73.27 22.87 EBITDA 29.28 32.72 18.1 74.37 23.58 Depreciation 11.61 3.29 3.09 3.06 2.97 EBIT 17.67 29.43 15.01 71.31 20.61 Interest 3.58 1.19 1.48 1.79 1.89 EBT 14.09 28.24 13.53 69.52 18.72 Taxes -6.95 8.33 9.03 18.56 6.46 Profit and Loss for the Year 21.04 19.91 4.5 50.96 12.26 Extraordinary Items 0 0 0 0 0 Prior Year Adjustment 0 0 0 0 0 Other Adjustments 0 0 0 0 0 Reported PAT 19.11 17.79 18.61 36.85 12.26 KEY ITEMS Reserves Written Back 0 0 0 0 0 Equity capital 8.6 8.6 8.6 8.6 8.6 Reserves and Surplus 120.54 102.94 87.65 71.04 38.2 Equity Dividend Rate 0 0 0 0 0 Agg. Non-Promoter Shares(lacks) 44.93 49.18 46.75 47.25 4.73 Agg. Non-Promoter Holding (%) 52.25 57.2 54.37 54.96 54.96 Government Share 0 0 0 0 0 Capital Adequacy Ratio 0 0 0 0 0 EPS (Rs.) 22.22 20.69 21.64 42.86 142.58
  • 50. REFERENCES BOOKS: Gokul Sinha ,Financial performance Analysis, Published by Asoke K.Ghosh, PHI learning Private Limited, New Delhi, 2010. M.Sarngadharan and S.Rajitha Kumar, Financial Analysis for Management Decisions, published by Asoke K.Ghosh, PHI learning Private Limited, New Delhi, 2011. D.Chandra Bose, Fundamentals of Financial Management, Published by Asoke K.Ghosh, PHI learning Private Limited, New Delhi, 2012. S.P.Jain and K.L.Narang, Cost Accounting, Published by Mrs.Usha Raj kumar for Kalyani Publishers, New Delhi, 2013. JOURNAL: G. Malyadri, and B. Sudheer Kumar, Indian sugar industry, published by International Journal of Management and Strategy, 2013. Kothari C.R., “Research Methodology – Methods & Techniques,Wishawa Prakashan, New Delhi, 2003. D. W. Attwood, cooperative sugar International Journal of Management and Strategy, 1995. WEBSITES: www.ponnisugars.com www.economictimes.indiatimes.com www.proquest.com

×