ratio annalysis on sugar factory


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ratio annalysis on sugar factory

  1. 1. TITLE OF THE PROJECT “ A Study on RATIO ANALYSIS of SHREE Halasidhanath Sahakari Sakhar Karkhana Ltd”. <ul><li>Presented BY:- </li></ul><ul><li>BABASAB .S. PATIL </li></ul><ul><li>USN no:-2ba09mba07 </li></ul>
  2. 2. <ul><li>Sugar industries are brought prosperity as form 1850. </li></ul><ul><li>In India total sugar mills are 574 as per 2007-08 </li></ul><ul><li>India is the second largest producer of sugarcane next to Brazil. </li></ul><ul><li>Most of the sugar industries are located in Uttar Pradesh, Bihar, Maharashtra, </li></ul><ul><li>AandraPradesh, Karnataka and Tamilnadu . </li></ul><ul><li>The Indian sugar industry is a key driver of rural development, supporting Indian's economy growth. </li></ul><ul><li>Karnataka sugar industry ranked 3rd in terms of its contribution of sugar in the total Sugar production in the country. </li></ul><ul><li>Karnataka stands 4th in the cultivation of sugar cane. </li></ul>INDUSTRY PROFILE
  3. 3. COMPANY PROFILE <ul><li>SHREE HALASIDHANATH SAHAKARI SAKHAR KARKHANA LTD NIPNI is Established in the year of 22-04-1981. The company is registered under the provision of companies Act-1956 DSK/REG-2/80-81. The 1 st Crushing Season is started in 1983. The managing director of SHSSK Ltd is Shri .D.A. Chougale. The Company mainly producing sugar (white crystal sugar) and also producing by products like Bagasses & Molasses. The present turn over of the company is 43-45 Cororer. Total staff of the company is 638. The Area operation the factory can be covered in 68 villages including of that 43 villages from Chikodi. </li></ul>
  4. 4. OBJECTIVES OF THE STUDY <ul><li>To study the profitability of Halasidhanath Sahakari Sakhar Karkhana Ltd. Nipani. </li></ul><ul><li>To study the liquidity position. </li></ul><ul><li>To find activity turnover </li></ul><ul><li>To study operating efficiency of Halsidhanath Sahakari Sakhar Karkhana Ltd Nipani. </li></ul><ul><li>SCOPE OF THE STUDY </li></ul><ul><li>The main scope of the study was to put into practical the theoretical aspect of the study into real life work experience. The study of Ratio analysis further the study is based on last 5 years Annual Reports of Shri Halasidhnath Sahakari Sakhar Karkhana. Ltd.   </li></ul>
  5. 5. RESEARCH METHODOLOGY <ul><li>Sources of data collection: </li></ul><ul><li>Primary data :- The data required for the project was collected through the discussion with finance manager and Other staff of the company. </li></ul><ul><li>Secondary data:- The source of data for this project was collected through </li></ul><ul><li>Balance sheet of SSHSKL </li></ul><ul><li>Profit and loss account of 5 year period from 2005-2009 </li></ul>
  6. 6. DATA ANALYSIS & INTERPRETETION Gross profit Margin ratio: Gross profit ratio represents the relation between the profits and sale Gross Profit Margin = Gross Profit / Net Sales * 100 <ul><li>INTERPRETATION:- </li></ul><ul><li>The Gross-Profit Margin ratio of SHSSKL has ups and down in these five years period. The gross profit measures the relation between the sales and profits. The gross-profit ratio in the year 2004-05 is 23.26 and next year 2005-06 is 13.66 and in 2006-07 its 11.22 then in 2008its become 17.44 and in 2008-09 it is 12.63. </li></ul><ul><li>ANALYSIS:- From the above calculation the gross profit margin ratio in 2004-05 it is high so it good to the firm. As compare to other year it’s not up to mark able. </li></ul>YEAR GROSS PROFIT SALES G.P. RATIO 2004-05 7,00,15,301.58 30,10,02,504.06 23.26 2005-06 4,13,17,359.41 30,23,04,793.75 13.66 2006-07 3,79,03,469.81 33,79,85,566.07 11.02 2007-08 6,09,91,621.57 34,95,46,301.04 17.44 2008-09 5,44,14,256.14 43,05,43,494.12 12.63
  7. 7. Net Profit ratio This ratio measures the relationship between and net profit and net sales Net Profit Ratio = Net Profit / Net Sales*100 <ul><li>INTERPRETATION </li></ul><ul><li>The net profit is the indicative of the management’s ability to operate the business with sufficient success. In the above bar diagram it shows that the net profit ratio of SHSSKL has increased 4.84 in 2004-05 but it decreased in the next years 1.34 in 2004-05 and it again decreased in 2006-07.then it increased 0.62 and it again decreased 0.38.in 2008-09. </li></ul><ul><li>ANALYSIS:- from the above diagram it shows that the firm has efficient utilization of assets in 2004-05 compare to other years </li></ul>YEAR NET PROFIT SALES N.P.RATIO 2004-05 14,56,9,011.39 30,10,02504.06 4.84 2005-06 40,53,781.26 30,23,04793.75 1.34 2006-07 11,79,916.79 33,79,85,566.07 0.34 2007-08 21,78,816.70 34,95,46,301.04 0.62 2008-09 16,53,143.88 43,05,43,494.12 0.38
  8. 8. CURRENT RATIO The ratio measures the relationship between the current Assets and current Liabilities Current Ratio = Current Assets Current Liabilities <ul><li>INTERPRETATION:- </li></ul><ul><li>An ideal current ratio is 2: 1 Thus 2 is the considered as a safe margin from the above diagram it determines that the firm has safe margin in1.4 2006-07 and in 2004-06 it has 0.67&0.47 moreover it has not safe margin 2007-09 e.i to 0.78& 0.86 </li></ul><ul><li>ANALYSIS :- From the diagram it shows that the firm has safe margin in 2006-07. Compare to other years it has not safety margin </li></ul>YEAR Current Assets Current Liabilities RATIO 2004-05 30,83,21,871.3 45,42,94,589.7 0.67 2005-06 26,54,22,636.1 56,36,20,481.6 0.47 2006-07 87,56,37,598.7 62,30,87,336.2 1.40 2007-08 44,61,11,012.4 56,56,28,200.9 0.78 2008-09 47,18,36,449.8 54,28,37,550.5 0.86
  9. 9. Liquidity Ratio Liquidity Ratio = Liquid Assets Liquid Liabilities Liquid Assets= Current Assets-Inventories Liquid-Liabilities = Current Liabilities - Bank-overdraft <ul><li>INTERPRETATION:- </li></ul><ul><li>From the above table it determines that the firm has 0.24 &0.067 in the year 2004-06 and it increased 0.79 in 2006-07 and it again decreased 0.18 in 2007-08 then again raised0.30 in 2008-09. </li></ul><ul><li>ANALYSIS:- Usually, a high acid test ratio is an indication of that firm’s better liquidity position. So the firm has better liquidity position in 2006-07. </li></ul>Years Liquid assets Liquid Liabilities Ratio 2004-2005 11,00,24,781.8 45,42,94,589.7 0.24 2005-2006 37,88,5,949.4 56,36,20,481.6 0.067 2006-2007 49,66,55,612.5 62,30,87,336.2 0.79 2007-2008 10,21,95,141.3 56,56,28,200.9 0.18 2008-2009 16,31,16,368.5 54,28,37,550.5 0.30
  10. 10. ACTIVITY RATIO INVENTORY TURN-OVER RATIO:- Sales Inventory Turn-Over ratio= Average Inventory Opening-Stock + Closing-Stock Average Inventory = 2 <ul><li>INTERPRETATION: - </li></ul><ul><li>This means that the inventory in the first year has been sold 1.56 very slow in 2004-05 And it again increase in 2005-08 e.i 1.28, 1.04, 1.02.and in last year it again decreased 1.4 in 2008-09 </li></ul><ul><li>ANALYSIS:- The inventory in the 2004-05 has been sell 1.56 and in the year 2008-09 it shows that the firm has sufficient inventory of sugar. </li></ul>Years Average Inventory Sales Inventory Turn-Over ratio 2004-05 19,23,53,685.5 30,10,02,504.06 1.56 2005-06 23,46,74,943.5 30,23,04,793.75 1.28 2006-07 32,47,89,674.5 33,79,85,566.07 1.04 2007-08 34,20,85,995.0 34,95,46,301.04 1.02 2008-09 30,55,13,910.0 43,05,43,494.12 1.40
  11. 11. FIXED ASSETS TURN-OVER RATIO Net-Sales Fixed assets turn-over ratio = Fixed-Assets <ul><li>INTERPRETATION:- </li></ul><ul><li>The ratio indicates the extent to which the investment in fixed assets contributed towards to sales. As the figure shows, in 2004-05 the fixed assets turnover ratio is 0.85 and it decrease 0.83 in 2005-06 but it increase again in the next 2years continuously with 0.92, 0.94. And it again decreases in 2008-09 e.i to 0.66. </li></ul><ul><li>ANALYSIS:- By analyzing this ratio it shows that the firms fixed assets utilized efficiently . </li></ul>YEARS SALES FIXED-ASSETS F. A. T-O RATIO 2004-05 30,10,02,504.06 35,00,64,970.91 0.85 2005-06 30,23,04,793.75 36,17,12,835.66 0.83 2006-07 33,79,85,566.07 36,34,87,965.66 0.92 2007-08 34,95,46,301.04 37,14,70,849.66 0.94 2008-09 43,05,43,494.12 64,75,06,096.70 0.66
  12. 12. CURRENT ASSETS TURN-OVER RATIO Sales Current assets turn-over ratio = Current Assets <ul><li>INTERPRETATION:- </li></ul><ul><li>The current assets turnover ratio measures that how quickly the short term obligations can be met. In the following graph it is shown that there is increasing0.97, 1.13 in 2004-06 current assets turnover ratio. And it falls0.38 in 2006-07 and it increase slightly0.78 to 0.91 in 2007-09. </li></ul><ul><li>ANALYSIS:- The current assets turnover ratio measures that how quickly the short term obligations can be met. It shows that the current assets are promptly invested towards making sales. </li></ul>YEARS SALES CURRENT ASSETS C. A. T-O RATIO 2004-2005 30,10,02,504.06 30,83,21,871.3 0.97 2005-2006 30,23,04,793.75 26,54,22,636.1 1.13 2006-2007 33,79,85,566.07 87,56,37,598.7 0.38 2007-2008 34,95,46,301.04 44,61,11,012.4 0.78 2008-2009 43,05,43,494.12 47,18,36,449.8 0.91
  13. 13. Operating-Efficiency Ratio:- Direct Material cost to sales = Direct Material cost *100 Net-sales <ul><li>INTERPRETATION:- </li></ul><ul><li>Direct Material cost to sales should be low enough to leave portion of sales to give fair return to investors from the above table show that 66.57 & 64.23 in the year 2004-05 and 2007-08 it give the fair to the investors where as72.51, 71.43 and 71.86. 2005-07and 2008-09 are not up to mark able . </li></ul><ul><li>ANALYSIS:- By analyzing the above ratios it clearly shows that, the company’s profitability is not satisfactory in the year of 2005-07&2008-09.campare to other years. </li></ul>YEARS Direct Material SALES Percentage (%) 2004-2005 20,03,89,076.8 30,10,02,504.06 66.57 2005-2006 21,92,24,160.5 30,23,04,793.75 72.51 2006-2007 24,14,53,980.32 33,79,85,566.07 71.43 2007-2008 22,45,46,979.08 34,95,46,301.04 64.23 2008-2009 30,94,03,524.5 43,05,43,494.12 71.86
  14. 14. Direct Labour cost to sales Direct Labour cost to sales = Direct Labour cost *100 Net-sales <ul><li>INTERPRETATION:- </li></ul><ul><li>From the above table shows that the cost of direct labour of the firm in the year of 2004-05 is 4.94% where it compare to the next 3year it increase5.60, 8.18 & 9.97. Slithightlliy. And it again decreases in the year of 2008-09. It shows that the firm efficient utilized the labour in the year of 2004-05 and 2005-06. </li></ul><ul><li>ANALYSIS:- By analyzing the above table shows that the cost of direct labour of the firm in the year is increased in 2006-08 compare to other years. </li></ul>YEARS Di. Labour SALES Percentage (%) 2004-2005 14,88,5,365.90 30,10,02,504.06 4.94 2005-2006 16,95,8,271.40 30,23,04,793.75 5.60 2006-2007 27,66,1,900.24 33,79,85,566.07 8.18 2007-2008 34,86,2,365.60 34,95,46,301.04 9.97 2008-2009 35,56,2,670.05 43,05,43,494.12 8.25
  15. 15. Factory Overhead to Sales Factory Overhead to Sales = Factory Overhead cost *100 Net-sales <ul><li>INTERPRETATION: - </li></ul><ul><li>From the above table shows that the cost of manufacturing overhead of the firm in the year of 2004-05 is 5.22% where it compare to the next 3year it increase 8.46,9.16,& 9.16 in 2005-08. And it again decreases 6.79 in the year of 2008-09. </li></ul><ul><li>ANALYSIS:- By analyzing the above table it shows that the firm has high cost of manufacturing overhead in the year 2005-08 it s unfavorable to the company. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>YEARS F-Overhead Net-SALES Percentage (%) 2004-05 15,71,2,759.79 30,10,02,504.06 5.22 2005-2006 25,58,1,554.35 30,23,04,793.75 8.46 2006-2007 30,96,6,215.70 33,79,85,566.07 9.16 2007-2008 32,03,8,895.00 34,95,46,301.04 9.16 2008-2009 29,26,9,482.40 43,05,43,494.12 6.79
  16. 16. Findings <ul><li>Gross profit and net profits are decreased during the period of study, which indicates that firm’s inefficient management in manufacturing and trading operations. </li></ul><ul><ul><li>Liquidity ratio of the firm is not better liquidity position in over the five years. It shows that the firm had not sufficient liquid assets. </li></ul></ul><ul><li>  The current assets turnover ratio is increasing during the period of 2004-06 and again it decrease in the period of 2006-07. And again increase in next two year slithightlliy. </li></ul><ul><li>The inventory of the firm in the first year has been sold very slow. And there is an increase in the movement of the inventories but it slightly decreased in the last year. This may be a sign not good to the firm. </li></ul><ul><li>The fixed assets turnover ratio of the firm has in 2004-05 the ratio is 0.85 and it increase in the next 3years continuously and it again decrease in 2008-09. </li></ul><ul><li>Direct Material cost ratio of the firm is has less material cost during the period of 2004-05 & 2007-08 and it raised in the year of 2005-06 and 2008-09.  </li></ul><ul><li>The cost of direct labour of the firm in the year of 2004-05 is 4.94%and it increasing slithightlliy up to 2007-08 and it decrease in the next year. </li></ul><ul><li>The cost of manufacturing overhead of the firm in the year of 2004-05 is 5.22% where it compare to the next 3year it increase rapidly.   </li></ul>
  17. 17. <ul><li>SUGGESTIONS </li></ul><ul><li>The profit Of the Company Is not in a good Position For That company has to Take Alternative Actions such As </li></ul><ul><ul><ul><li>Increasing in Procurement in sugarcane , </li></ul></ul></ul><ul><ul><ul><li>Production, and Control in Expenses Like, Administrative, selling Etc. </li></ul></ul></ul><ul><li>The firms have low current ratio so it should increase its current ratio where it can meet its short term obligation smoothly. </li></ul><ul><li>Liquidity ratio of the firm is not better liquidity position in over the five years. So I suggested that the firm maintain proper liquid funds like cash and bank balance. </li></ul><ul><li>CONCLUSION </li></ul><ul><li>The study undertaken has brought in to the light of the following conclusions. According to this project I came to know that from the analysis of financial statements it is clear that SHSSK Ltd. Have been incurring loss during the period of study. So the firm should focus on getting of profits in the coming years by taking care internal as well as external factors. And with regard to resources, the firm is take utilization of the assets properly. And also the firm has a maintained low inventory. </li></ul>
  18. 18. Thank U......