Financial performance ponni sugars

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
ERODE
By
THANGESHWARN. S
(Reg.No.1261236)
Of
TIRUCHENGODE – 637 215
A PROJECT REPORT
Submitted to the
FACULTY OF MANAGEMENTS STUDIES
Of
MASTER OF BUSINESS ADMINISTRATION
July - 2013

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

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.

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

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.

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

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

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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

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.

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.

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.

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.

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

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

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

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.

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

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
Quick Ratio or Acid Test Ratio
Quick Ratio or Acid Test
Ratio

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
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
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

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
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
Ratio
8.316077
10.94093
5.545088
29.02084
14.86798
ratio was (29.02084) in the
) recorded in the year 2011. The trend

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
Net Profit Margin
Net Profit Margin

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
CHART-4.1.6
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Return on Assets
Return on Assets

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
Equity Ratio
Equity Ratio

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
Fixed Assets Turnover
Fixed Assets Turnover

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
Total Assets Turnover
Total Assets Turnover

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
Inventory Turnover
Inventory Turnover

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
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

Year Closing inventory
2013
2012
2011
2010
2009
INFERENCE:
(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
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
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

Year Total overheads
2013
2012
2011
2010
2009
INFERENCE:
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

Year Production
overhead expenses
(budgeted)
2013
2012
2011 24657.11
2010 14407.15
2009
INFERENCE:
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
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

Year Prod
overhead
2013
2012
2011 24657.11
2010 14407.15
2009
INFERENCE:
year 2011. The lowest direct labour ratio was (
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
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

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.

0
50
100
150
200
250
300
350
400
450
2014 2015
CHART-4.1.16
2015 2016 2017 2018
TREND VALUESTREND VALUES

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.

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.

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.

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

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

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

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