Ratio analysis Tirupati Cotton Mills Ltd

Ratio analysis Tirupati Cotton Mills Ltd

INTRODUCTION

ABOUT RATIO ANALYSIS: The ratio analysis is the most powerful tool of financial analysis.several ratios to be calculated from the accounting data can group into various classes according to financial activity or function to be evaluated.DEFINITION: The indicate quotient of two mathematical expressions and the relationship between two or more things. It evaluates financial position and performance of the firm. As started in the beginning many diverse groups of people are interested analyzing financial information to indicate the operating and financial efficiency and growth of firm. These people use ratios to determine those financial characteristics of firm in which they interested with the help of ratios one can determine. The ability of the firm to meet current obligation The extent to which the firm has used its long-term solvency by borrowing funds. The efficiency with which the firm is utilizing its assets in generating the sales revenue. The overall operating efficiency and performance of firm.

The information contained in these statements is used by management, creditors, investors and others to form judgment about the operating performance and financial position of firm. Uses of financial statement can get further insight about financial strength and weakness of the firm if they properly analyze information reported in these statements. Management should be particularly interested in knowing financial strength of the firm to make their best use and to be able to spot out financial weaknesses of the firm to take suitable corrective actions. The further plans firm should be laid down in new of the firms financial strength and weaknesses. Thus financial analysis is the starting point for making plans before using any sophisticated forecasting and planning procedures. Understanding the past is a prerequisite for anticipating the future.

REVIEWOFLITERATUREFINANCIALANALYSIS: Financial analysis is the process of identifying the financial strengths and weakness of the firm. It is done by establishing relationships between the items of financial statements viz., balance sheet and profit and loss account. Financial analysis can be undertaken by management of the firm, viz., owners, creditors, investors and others.

Objectivesofthefinancialanalysis:Analysis of financial statements may be made for a particular purpose in view.1. To find out the financial stability and soundness of the business enterprise.2. To assess and evaluate the earning capacity of the business3. To estimate and evaluate the fixed assets, stock etc., of the concern.4. To estimate and determine the possibilities of future growth of business.5. To assess and evaluate the firms capacity and ability to repay short and long term loans.

Partiesinterestedinfinancialanalysis:The users of financial analysis can be divided into two broad groups. Internalusers1. Financial executives 2. Top management Externalusers1. Investors 2. Creditor. 3. Workers 4. Customers 5. Government 6. Public 7. Researchers

SignificanceoffinancialanalysisFinancial analysis serves the following purpose: Toknowtheoperationalefficiencyofthebusiness: The financial analysis enables the management to find out the overall efficiency of the firm. This will enable the management to locate the weak Spots of the business and take necessary remedial action. Helpfulinmeasuringthesolvencyofthefirm: The financial analysis helps the decision makers in taking appropriate decisions for strengthening the short-term as well as long-term solvency of the firm.Comparisonofpastandpresentresults: Financial statements of the previous years can be compared and the trend regarding various expenses, purchases, sales, gross profit and net profit can be ascertained. Helpsinmeasuringtheprofitability: Financial statements show the gross profit, & net profit. Interfirmcomparison: The financial analysis makes it easy to make inter-firm comparison. This comparison can also be made for various time periods. BankruptcyandFailure: Financial statement analysis is significant tool in predicting the bankruptcy and the failure of the business enterprise. Financial statement analysis accomplishes this through the evaluation of the solvency position.

Helpsinforecasting: The financial analysis will help in assessing future development by making forecasts and preparing budgets.

METHODSOFANALYSIS: A financial analyst can adopt the following tools for analysis of the financial statements. These also termed as methods of financial analysis. A. Comparative statement analysis B. Common-size statement analysis C. Trend analysis D. Funds flow analysis E. Ratio analysis

NATUREOFRATIOANALYSIS Ratio Analysis is a powerful tool of financial analysis. A ratio is defined as "the indicated quotient of mathematical expression" and as "the relationship between two or more things". A ratio is used as benchmark for evaluating the financial position and performance of the firm. The relationship between two accounting figures, expressed mathematically, is known as a financial ratio. Ratio helps to summarizes large quantities of financial data and to make qualitative judgment about the firm's financial performance.

The persons interested in the analysis of financial statements can be grouped under three head owners (or) investors who are desired primarily a basis for estimating earning capacity. Creditors who are concerned primarily with Liquidity and ability to pay interest and redeem loan within a specified period. Management is interested in evolving analytical tools that will measure costs, efficiency, liquidity and profitability with a view to make intelligent decisions.

STANDARDSOFCOMPARISON

The ratio analysis involves comparison for an useful interpretation of the financial statements. A single ratio in itself does not indicate favorable or unfavorable condition. It should be compared with some standard. Standards of comparison are: 1. Past Ratios 2. Competitor's Ratios 3. Industry Ratios 4. Projected Ratios

PastRatios: Ratios calculated from the past financial statements of the same firm. Competitor'sRatios: Ratios of some selected firms, especially the most progressive and successful competitor at the same point in time.IndustryRatios: Ratios of the industry to which the firm belongs.ProjectedRatios: Ratios developed using the projected financial statements of the same firm.TIMESERIESANALYSIS

The easiest way to evaluate the performance of a firm is to compare its present ratios with past ratios. When financial ratios over a period of time are compared, it is known as the time series analysis or trend analysis. It gives an indication of the direction of change and reflects whether the firm's financial performance has improved, deteriorated or remind constant over time.

CROSSSECTIONALANALYSIS Another way to comparison is to compare ratios of one firm with some selected firms in the industry at the same point in time. This kind of comparison is known as the cross-sectional analysis. It is more useful to compare the firm's ratios with ratios of a few carefully selected competitors, who have similar operations.

INDUSTRYANALYSIS To determine the financial conditions and performance of a firm. Its ratio may be compared with average ratios of the industry of which the firm is a member. This type of analysis is known as industry analysis and also it helps to ascertain the financial standing and capability of the firm & other firms in the industry. Industry ratios are important standards in view of the fact that each industry has its characteristics which influence the financial and operating relationships.

TYPESOFRATIOS Management is interested in evaluating every aspect of firm's performance. In view of the requirement of the various users of ratios, we may classify them into following four important categories: 1. Liquidity Ratio 2. Leverage Ratio 3. Activity Ratio 4. Profitability Ratio

3.1LiquidityRatio It is essential for a firm to be able to meet its obligations as they become due. Liquidity Ratios help in establishing a relationship between cast and other current assets to current obligations to provide a quick measure of liquidity. A firm should ensure that it does not suffer from lack of liquidity and also that it does not have excess liquidity. A very high degree of liquidity is also bad, idle assets earn nothing. The firm's funds will be unnecessarily tied up in current assets. Therefore it is necessary to strike a proper balance between high liquidity. Liquidity ratios can be divided into three types: 3.1.1 Current Ratio 3.1.2 Quick Ratio 3.1.3 Cash Ratio

3.1.1CurrentRatio Current ratio is an acceptable measure of firms short-term solvency Current assets includes cash within a year, such as marketable securities, debtors and inventors. Prepaid expenses are also included in current assets as they represent the payments that will not made by the firm in future. All obligations maturing within a year are included in current liabilities. These include creditors, bills payable, accrued expenses, short-term bank loan, income-tax liability in the current year. The current ratio is a measure of the firm's short term solvency. It indicated the availability of current assets in rupees for every one rupee of current liability. A current ratio of 2:1 is considered satisfactory. The higher the current ratio, the greater the margin of safety; the larger the amount of current assets in relation to current liabilities, the more the firm's ability to meet its obligations. It is a cured -and -quick measure of the firm's liquidity. Current ratio is calculated by dividing current assets and current liabilities. Current Ratio = _Current Assets__ Current Liabilities

3.1.2QuickRatio Quick Ratio establishes a relationship between quick or liquid assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is the most liquid asset, other assets that are considered to be relatively liquid asset and included in quick assets are debtors and bills receivables and marketable securities (temporary quoted investments).

Inventories are converted to be liquid. Inventories normally require some time for realizing into cash; their value also has a tendency to fluctuate. The quick ratio is found out by dividing quick assets by current liabilities. Quick Ratio = Current Assets-Inventories Current Liabilities

Generally, a quick ratio of 1:1 is considered to represent a satisfactory current financial condition. Quick ratio is a more penetrating test of liquidity than the current ratio, yet it should be used cautiously. A company with a high value of quick ratio can suffer from the shortage of funds if it has slow- paying, doubtful and long duration outstanding debtors. A low quick ratio may really be prospering and paying its current obligation in time.

3.1.3CashRatio Cash is the most liquid asset; a financial analyst may examine Cash Ratio and its equivalent current liabilities. Cash and Bank balances and short-term marketable securities are the most liquid assets of a firm, financial analyst stays look at cash ratio. Trade investment is marketable securities of equivalent of cash. If the company carries a small amount of cash, there is nothing to be worried about the lack of cash if the company has reserves borrowing power. Cash Ratio is perhaps the most stringent Measure of liquidity. Indeed, one can argue that it is overly stringent. Lack of immediate cash may not matter if the firm stretch its payments or borrow money at short notice. Cash Ratio= Cash and bank balances + Current Investment Current liabilities

3.2LEVERAGERATIOS Financial leverage refers to the use of debt finance while debt capital is a cheaper source of finance: it is also a riskier source of finance. It helps in assessing the risk arising from the use of debt capital. Two types of ratios are commonly used to analyze financial leverage.

1. Structural Ratios & 2. Coverage ratios.

Structural Ratios are based on the proportions of debt and equity in the financial structure of firm. Coverage Ratios shows the relationship between Debt servicing, Commitments and the sources for meeting these burdens.

The short-term creditors like bankers and suppliers of raw material are more concerned with the firm's current debt-paying ability. On the other hand, long-term creditors like debenture holders, financial institutions are more concerned with the firm's long-term financial strength. To judge the long-term financial position of firm, financial leverage ratios are calculated. These ratios indicated mix of funds provided by owners and lenders.

There should be an appropriate mix of Debt and owner's equity in financing the firm's assets. The process of magnifying the shareholder's return through the use of Debt is called "financial leverage" or "financial gearing" or "trading on equity". Leverage Ratios are calculated to measure the financial risk and the firm's ability of using Debt to share holder's advantage. Leverage Ratios can be divided into five types.

3.2.1 Debt equity ratio. 3.2.2 Debt ratio. 3.2.3 Interest coverage ratio 3.2.4 Proprietary ratio. 3.2.5 Capital gearing ratio.

3.2.1Debtequityratio It indicates the relationship describing the lenders contribution for each rupee of the owner's contribution is called debt-equity ratio. Debt equity ratio is directly computed by dividing total debt by Net worth. Lower the debt-equity ratio, higher the degree of protection. A debt-equity ratio of 2:1 is considered ideal. The debt consists of all short term as well as long-term and equity consists of net worth plus preference capital plus Deferred Tax Liability. Long term Debts Debt equity Ratio = Share holder funds (Equities)

3.2.2Debtratio Several debt ratios may used to analyze the long-term solvency of a firm. The firm may be interested in knowing the proportion of the interest-bearing debt in the capital structure. It may, therefore, compute debt ratio by dividing total debt by capital employed on net assets. Total debt will include short and long-term borrowings from financial institutions, debentures/bonds, deferred payment arrangements for buying equipments, bank borrowings, public deposits and any other interest-bearing loan. Capital employed will include total debt net worth. Debt Debt Ratio= Equity

3.2.3InterestCoverageRatio The interest coverage ratio or the time interest earned is used to test the firms debt servicing capacity. The interest coverage ratio is computed by dividing earnings before interest and taxes by interest charges. The interest coverage ratio shows the number of times the interest charges are covered by funds that are ordinarily available for their payment. We can calculate the interest average ratio as earnings before depreciation, interest and taxes divided by interest.

Interest coverage ratio= EBIT Interest

3.2.4Proprietaryratio The total shareholder's fund is compared with the total tangible assets of the company. This ratio indicates the general financial strength of concern. It is a test of the soundness of financial structure of the concern. The ratio is of great significance to creditors since it enables them to find out the proportion of share holders funds in the total investment of business. Net worth Proprietary Ratio = -------------------------------------- x 100 Total tangible assets

3.2.5Capitalgearingratio: This ratio makes an analysis of capital structure of firm. The ratio shows relationship between equity share capital and the fixed cost bearing i.e., preference share capital and debentures. Equity capital Capital gearing ratio = P.S capital +Debentures +Loans

3.3ACTIVITYRATIOS Turnover ratios also referred to as activity ratios or asset management ratios, measure how efficiently the assets are employed by a firm. These ratios are based on the relationship between the level of activity, represented by sales or cost of goods sold and levels of various assets. The improvement turnover ratios are inventory turnover, average collection period, receivable turn over, fixed assets turnover and total assets turnover. Activity ratios are employed to evaluate the efficiency with which the firm manages and utilize its assets. These ratios are also called turnover ratios because they indicate the speed with which assets are being converted or turned over into sales. Activity ratios thus involve a relationship between sales and assets. A proper balance between sales and assets generally reflects that asset utilization. Activityratiosaredividedintofourtypes:3.3.1 Total capital turnover ratio 3.3.2 Working capital turnover ratio 3.3.3 Fixed assets turnover ratio 3.3.4 Stock turnover ratio

3.3.1Totalcapitalturnoverratio: This ratio expresses relationship between the amounts invested in this assets and the resulting in terms of sales. This is calculated by dividing the net sales by total sales. The higher ratio means better utilization and vice-versa. Some analysts like to compute the total assets turnover in addition to or instead of net assets turnover. This ratio shows the firm's ability in generating sales from all financial resources committed to total assets.

Sales Total assets turnover = ---------------------------- Capital employed.

3.3.2Workingcapitalturnoverratio: This ratio measures the relationship between working capital and sales. The ratio shows the number of times the working capital results in sales. Working capital as usual is the excess of current assets over current liabilities. The following formula is used to measure the ratio:

Sales Working capital turnover ratio = ------------------------------- Working capital

3.3.3Fixedassetturnoverratio: The firm may which to know its efficiency of utilizing fixed assets and current assets separately. The use of depreciated value of fixed assets in computing the fixed assets turnover may render comparison of firm's performance over period or with other firms. The ratio is supposed to measure the efficiency with which fixed assets employed a high ratio indicates a high degree of efficiency in asset utilization and a low ratio reflects inefficient use of assets. However, in interpreting this ratio, one caution should be borne in mind, when the fixed assets of firm are old and substantially depreciated, the fixed assets turnover ratio tends to be high because the denominator of ratio is very low Net sales Fixed asset turnover ratio = ------------------------- Fixed assets

3.3.4Stockturnoverratio Stock turnover ratio indicates the efficiency of firm in producing and selling its product. It is calculated by dividing the cost of goods sold by the average stock. It measures how fast the inventory is moving through the firm and generating sales. The stock turnover ratio reflects the efficiency of inventory management. The higher the ratio, the more efficient the management of inventories and vice versa .However, this may not always be true. A high inventory turnover may be caused by a low level of inventory which may result if frequent stock outs and loss of sales and customer goodwill. Cost of goods sold Stock turnover ratio = ------------------------------ Average stock

Opening stock + Closing stock Average stock = -------------------------------------------- 2

3.4PROFITABILITYRATIOS A company should earn profits to survive and grow over a long period of time. Profits are essential but it would be wrong to assume that every action initiated by management of a company should be aimed at maximizing profits. Profit is the difference between revenues and expenses over a period of time. Profit is the ultimate 'output' of a company and it will have no future if it fails to make sufficient profits. The financial manager should continuously evaluate the efficiency of company in terms of profits. The profitability ratios are calculated to measure the operating efficiency of company. Creditors want to get interest and repayment of principal regularly. Owners want to get a required rate of return on their investment. Generally, two major types of profitability ratios are calculated: Profitability in relation to sales Profitability in relation to investment

ProfitabilityRatioscanbedividedintosixtypes:3.4.1 Gross profit ratio 3.4.2 Operating profit ratio 3.4.3 Net profit ratio 3.4.4 Return on investment 3.4.5 Earns per share 3.4.6 Operating expenses ratio

3.4.1Grossprofitratio First profitability ratio in relation to sales is the gross profit margin the gross profit margin reflects. The efficiency with management produces each unit of product. This ratio indicates the average spread between the cost of goods sold and the sales revenue. A high gross profit margin is a sign of good management. A gross margin ratio may increase due to any of following factors: higher sales prices cost of goods sold remaining constant, lower cost of goods sold, sales prices remaining constant. A low gross profit margin may reflect higher cost of goods sold due to firm's inability to purchase raw materials at favorable terms, inefficient utilization of plant and machinery resulting in higher cost of production or due to fall in prices in market.

This ratio shows the margin left after meeting manufacturing costs. It measures the efficiency of production as well as pricing. To analyze the factors underlying the variation in gross profit margin, the proportion of various elements of cost (Labor, materials and manufacturing overheads) to sale may study in detail. Gross profit Gross profit ratio = ------------------------x 100 Net sales

3.4.2OperatingprofitratioThis ratio expresses the relationship between operating profit and sales. It is worked out by dividing operating profit by net sales. With the help of this ratio, one can judge the managerial efficiency which may not be reflected in the net profit ratio. Operating profit Operating profit ratio = ---------------------------x 100 Net sales

3.4.3Netprofitratio Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross profit. Net profit margin ratio established a relationship between net profit and sales and indicates management's efficiency in manufacturing, administering and selling products. This ratio also indicates the firm's capacity to withstand adverse economic conditions. A firm with a high net margin ratio would be in an advantageous position to survive in the face of falling selling prices, rising costs of production or declining demand for product This ratio shows the earning left for share holders as a percentage of net sales. It measures overall efficiency of production, administration, selling, financing. Pricing and tax management. Jointly considered, the gross and net profit margin ratios provide a valuable understanding of the cost and profit structure of the firm and enable the analyst to identify the sources of business efficiency / inefficiency. Net Profit Net Profit Ratio = --------------------------- x 100 Net sales

3.4.4Returnoninvestment: This is one of the most important profitability ratios. It indicates the relation of net profit with capital employed in business. Net profit for calculating return of investment will mean the net profit before interest, tax, and dividend. Capital employed means long term funds.

E.B.I.T Return on investment = ---------------------------------------- x 100 Capital employed

3.4.5Earningspershare This ratio is computed by earning available to equity share holders by the total amount of equity share outstanding. It reveals the amount of period earnings after taxes which occur to each equity share. This ratio is an important index because it indicates whether the wealth of each share holder on a per share basis as changed over the period.

Net profit Earnings per share = ------------------------------------ x 100 Number of equity shares

3.4.6Operatingexpensesratio It explains the changes in the profit margin ratio. A higher operating expenses ratio is unfavorable since it will leave a small amount of operating income to meet interest, dividends. Operating expenses ratio is a yardstick of operating efficiency, but it should be used cautiously. It is affected by a number of factors such as external uncontrollable factors, internal factors. This ratio is computed by dividing operating expenses by sales. Operating expenses equal cost of goods sold plus selling expenses and general administrative expenses by sales. Operating expenses Operating expenses ratio = ----------------------------- x 100 Sales

NEEDS FOR STUDY

The prevalent educational system providing the placement training at a company being a part of the curriculum has helped in comparison of theoretical knowledge with practical. It has led to note the convergences and divergence between theory and practice. The study enables us to have access to various facts of the organization. It helps in understanding the needs for the importance and advantage of materials in the organization, the study also helps to exposure our minds to the integrated materials management the various procedures, methods and technique adopted by the organization. The study provides knowledge about how the theoretical aspects are put in the organization in terms of described below To pay wages and salaries. For the purchase of raw materials, spares and components parts. To incur day-to-day expenses. To meet selling costs such as packing, advertising. To maintain inventories and raw materials, work-in-progress and finished stock.

SCOPEOFTHESTUDY

The scope of the study is limited to collecting financial data published in the annual reports of the company every year. The analysis is done to suggest the possible solutions. The study is carried out for 4 years (2011 15). Using the ratio analysis, firms past, present and future performance can be analyzed and this study has been divided as short term analysis and long term analysis. The firm should generate enough profits not only to meet the expectations of owner, but also to expansion activities.

OBJECTIVESOFSTUDY

1. To study and analyze the financial position of the Company through ratio analysis. 2. To suggest measures for improving the financial performance of organization. 3. To analyze the profitability position of the company. 4. To assets the return on investment. 5. To analyze the asset turnover ratio. 6. To determine the solvency position of company. 7. To suggest measures for effective and efficient usage of inventory.

Limitation of Study

1. The study is being done from the annual reports provided by the company only2. Confidential matters like financial position, soundness etc. or naturally not disclosed fully. This is certainly set back while drawing the conclusion3. The limited time does not allowed to do more analysis

ResearchMethodologyResearchDesign In view of the objects of the study listed above an exploratory research design has been adopted. Exploratory research is one which is largely interprets and already available information and it lays particular emphasis on analysis and interpretation of the existing and available information. To know the financial status of the company. To know the credit worthiness of the company. To offer suggestions based on research finding. DataCollectionMethodsPrimaryData Information collected from internal guide and finance manager. Primary data is first hand information. SecondaryData Company balance sheet and profit and loss account. Secondary data is second hand information. DataCollectionTools To analyze the data acquire from the secondary sources Ratio Analysis The scope of the study is defined below in terms of concepts adopted and period under focus. First the study of Ratio Analysis is confined only to the Tirupati cotton mills ltd. Secondly the study is based on the annual reports of the company for a period of 4 years from 2011-12 to 2014-15 the reason for restricting the study to this period is due time constraint.

INDUSTRY PROFILEOVERVIEW OF TEXTILE INDUSTRY There were various stages from a historical perspective where the textile industry evolved from being a domestic small-scale industry, to the status of supremacy it currently holds. The cottage stage was the first stage in its history where textiles were produced on domestic basis. During this period cloth was made from materials including wool, flax and cotton. The material depended on the area where the cloth was being produced, and the time they were being made. In the latter half of the medieval period in the northern parts of Europe, cotton came to be regarded as an imparted fiber. During the later phase of the 16th century was grown in the warmer climes of America and Asia. When the Romans ruled, wool, leather and linen were the materials used for making clothing in Europe, while flax was the primary material used in the northern parts of Europe. A variety of processes and innovations were implemented for the purpose of making clothing during this time. These processes were dependent on the material being used, but there were three basics steps commonly employed in making clothing. These steps included preparing material fibers for the purpose of spinning, knitting and weaving. During the Industrial Revolution, new machines such as spinning wheels and handlooms came into the picture. A number of new innovations led to the industrialization of the textile industry in Great Britain. Clothing manufactured during the Industrial Revolution formed a big part of the exports made by Great Britain. They accounted for almost 25% of the total exports made at that time, doubling in the period between 1701 and 1770. In the Industrial Revolution era, a lot of effort was made to increase the speed of the production through inventions such as the flying shuttle in 1773, the flyer-and-bobbin system, and Roller Spinning machine by John Wyatt and Lewis Paul in 1738. Lewis Paul later came up with the carding machine in 1748 and in 1764 the sampling jenny was also developed. The water frame was invented in 1771 by Richard Arkwright. The power loom was invented in 1784 by Edmund Cartwright. In the initial phases, textile mills were located in and around the rivers since they were powered by water wheels. After the steam engine was invented, the dependence on the rivers ceased to a great extent. Today, modern techniques, electronics and innovation have led to a competitive, low predict textile industry offering almost any type of cloth or design a person could desire. With its low cost labor base, China has come to dominate the global textile industry.TEXTILE INDUSTRY IN INDIA

The chakra or the spinning-wheel will help to redeem man from the evils of poverty and ignorance. Gandhi stressed the use of the spinning-wheel as an occupation supplementary to agriculture. India Textile Industry is one of the leading textile industries in the world. Though was predominantly unorganized industry even a few years back, but the scenario started changing after the economic liberalization of Indian economy in 1991. The opening up of economy gave the much-needed thrust to the Indian textile industry, which has now successfully become one of the largest in the world.VARIOUS CATEGORIES Indian textile industry can be divided into several segments, some of which can be listed as below: Cotton Textiles Silk Textiles Woolen Textiles Readymade Garments Hand-crafted Textiles Jute and Coir etcCURRENT SCENARIO The Indian textile industry is one of the major sectors of Indian economy largely contributing towards the growth of the countrys industrial sector. As per the Ministry of Textiles, the Indian textile industry contributed about 14% to industrial production, 4% to the countrys GDP and 17% to the countrys export earnings in 2013. It provides direct employment to over 35 million people and is the second largest provider of employment after agriculture.India enjoys a significant lead in terms oflabor cost per hourover developed countries like US and newly industrialized economies like Hong Kong, Taiwan, South Korea and China. As per data from National Bureau of Statistics, due to steep wage inflation, the average wage cost in China stood at US$ 450 per month in 2012 as against US$ 200 per month in India.

According to the Ministry of Textiles, the domestic textile and apparel industry in India is estimated to reach US$ 141 billion by 2021 from US$ 58 billion in 2011. Apparel exports from India is expected to increase to US$ 82 billion by 2021 from US$ billion 31 billion in 2011. Total cloth production in India is expected to grow to 112 square meters by FY17 from 62 billion square meters in FY12. India is rich in traditional workers adept at value-adding tasks, which could give Indian companies significant margin advantage. However, India's inflexible labor laws have been a hindrance to investments in this segment. Unlike in home textiles, garment capacities are highly fragmented and leading Indian textile companies have been slow to ramp up their apparel capacities, despite strong order flows from overseas buyers who are trying to diversify out of China The textile industry aims to double its workforce over the next 3 years. As a thumb rule, for every Rs. 1 lack invested in the industry, an average of 7 additional jobs is created. Growing at a rapid pace, the Indian Market is being flocked by foreign investors exploring investment purposes and with an increasing trend in the demand for the textile products in the country, a number of new companies and joint ventures are being set up in the country to capture new opportunities in market. Textile exports did remarkably well in an otherwise dull exports scenario in FY14. A weaker rupee and firm overseas demand helped the sector add US$ 4 billion to overall exports of US$ 312 billion, second only to engineering goods. Readymade garments, which accounts for nearly half of all textile exports at US$ 14.9 billion, grew 15.5%. Cotton yarn and fabrics grew 18% to US$ 8.9 billion, while manmade textiles grew nearly 13% to US$5.7 billion. Most companies in the sector timed their expansion plans FY04 onwards, so as to avail themselves of the funding under TUF (Technology Up gradation Fund, offering loans at 6% subsidy). This led to the apex-spending phase in the textile sector peaking in the last three fiscals. However, with the slump in demand for textile products from the overseas markets, a number of companies had to defer their expansion plans due to large under-utilized capacities. Relatively lower cost of cotton helped the margins of export dependant textile industry in the second half of FY14. However, since these trends are temporary in nature, pressure on margins could increase the debt levels for players in the sector. Textile exports in FY15 are expected to grow by 25% to US$ 50 bn. Incremental capital investments in debt reliant textile industry could, however, remain subdued given banks unwillingness to lend to the sector and higher cost of funds. This is in view of the improved sector outlook, near full use of existing capacities and continued subsidy benefits under the Revised Restructured Technology Up gradation Fund Scheme notified in October 2013..India and China are currently competing in the same categories (premium segment) of apparels and home textiles and given Indias established presence in the high end segment, India could gain significant market share in US apparel imports. However, the ongoing economic slowdown in the US could result in lower orders from US retailers that, in turn, may result in lower capacity utilization and impact profitability of textile companies in India.

Key Points

SupplyDespite some pick-up in demand from both global and domestic markets, most new capacities in the apparel and home textile segments are not operating at full capacities.

DemandHigh for premium and branded products due to increasing per capita disposable income.

Barriers to entrySuperior technology, skilled and unskilled labor, distribution network, access to global customers

Bargaining power of suppliersBecause of oversupply in the unorganized market like that of denim, suppliers have little bargaining power. However, premium products and branded players continue to garner higher margins.

Bargaining power of customersDomestic customers - Low for premium and branded product segments. Global customers- High due to presence of alternate low cost sourcing destinations

CompetitionHigh. Very fragmented industry. Competition from other low cost producing nations is likely to intensify.

JOB OPPORTUNITIES As per the 12th Five Year Plan, the Integrated Skill Development Scheme aims to train over 26,75,000 people within the next 5 years (this would cover over 2,70,000 people during the first two years and the rest during the remaining three years). This scheme would cover all sub-sectors of the textile sector, such as textiles and apparel, handicrafts, handlooms, jute and sericulture.

OBJECTIVES OF TEXTILE INDUSTRY

1. To have sustainable growth and development of Textiles Sector in the country. Overall capacity addition in the Textile Industry to be increased by 10% per year.2. To achieve the turnover of Rs.2014crores by the year 2014 & Rs.2, 245 cores by 2016-17.3. To expand spinning capacity from existing level 6.40 lacks spindles to 12.68 lack spindles and 338 looms to 736 by 2013-144. To increase the market share of yarn of NTC from existing 0.4% to 1% in the next 5 years.5. To improve the exports from the presents Rs.50 cores per annum to Rs.50 cores by 2013-36. To ensure integrated development and promotion of jute sector. Jute production to grow at 3.6% per year.7. to develop Sericulture & Silk Sector Raw silk production targeted to grow at an annual average rate of 4.5% during 2010-158. To promote Growth and Development of technical textiles in India. Production of technical textiles to grow at 11% per year 2012-13 and thereafter at 6 to 8% per year till 2020.9. To develop Wool & Woolen Textiles Sector. Wool production grows 1% per year.10. To develop and modernize the decentralized Power looms Sector. Power loom cloth production targeted to grow at 10% per year.11. To develop handloom sector and ensure welfare of weavers. Handloom cloth production projected to grow at an annual average rate of 5%.12. To develop Handicrafts Sector and ensure welfare of artisans. To achieve production and export growth rate of 15% per year.13. To improve the functioning of PSUs and to make all PSUS profitable by 2015-16.

FUNCTIONS OF TEXTILE INDUSTRY1. To formulate appropriate policy for all sectors of textiles and fibers.2. To promote domestic and foreign direct investments in the textiles sector.3. To improve the technology in the textiles sector.4. To increase the production of textiles.5. To raise productivity, improve quality and reduce contamination in cotton.6. To strengthen, modernize and expand the market base of the power loom sector.

7. To promote exports of all types of textiles and handicrafts items.

8. To promote R&D in textiles sector.

9. To strengthen data base.

10. To increase productivity, production and diversity of jute goods.

11. To increase production and productivity in the silk sector. 12. To develop and strengthen the power loom sector by modernizing and encouraging adoption of advanced technology.

13. To formulate regulatory framework and standards for technical textiles.

OUTLOOK FOR TEXTILES INDUSTRY IN 2015 The cotton industry is presently facing challenges like slow demand and a loss in margins, but a recovery is expected on account of facing cotton prices, through this could be negated by further volatility in input costs or force movements. Weak demand for cotton and cotton products last year was mainly a result of surplus inventories prompting mills to postpone further buying in the backdrop of uncertainty in overseas demand for textiles. Due to the current situation, instead of adding capacity here, garment manufacturers are looking at the option of setting up capacity or outsourcing job work to Bangladesh to benefit from the lower cost of production. Position difficulties for textile units, the agency said refinancing risks would increase for distressed textiles companies in 2014, as the Reserve Bank of India and the Finance Ministry have rejected the proposal for reconstructing of textile loans. The National Textile Corporation Limited (NTC) is a Central Public Sector Enterprise under the ministry of Textile which was incorporated in April 1968 for managing the affairs of sick textile undertakings, in the private sector, taken over by the Government. Starting with 16 mills in 1968, this number gradually rose to 103 by 1972-73. In the year 1974 all these units were nationalized under the Sick Textile Undertakings (Nationalization) Act 1974. The number of units increased to 119 by 1995 and 1 new mills were controlled by NTC (HC) Ltd with the help of 9 subsidiary Corporations, with an authorized capital of Rs 10 cores which was raised from time to time and which is now Rs.5000 cores and the paid up share capital of the corporation is Rs.3062.16crores as on 31.03.2013. NTC has so far closed 78 mills and has transferred 2 mills in the State of Pondicherry to the state Government of Maharashtra. NTC is to modernize/set up 24(22+2) mills by itself through generation of funds from sale of its surplus assets.

JOINT VENTURE It was also decided to modernize 16 mills through JV route by including private partners with NTC stake of 51%. NTC has finalized 3 parties namely M/s Alok Industries, M/s Pantaloon Retail India Ltd (consortium) and M/s Bhaskar Industries Ltd (consortium) for mills to be revived and run through Joint Venture. NTC has not transferred the ownership of the land in the arrangement but is only giving a right to use of the land to Joint Venture Companies (JVC) in Which NTC is the major shareholder with 51% stake with 5 out of 8 directors on the Board of JVC.SALE OF ASSETS (LAND) THROUGH E-AUCTIONING NTC for the first time in Indian history sold its prime lands of transparent system, permitting parties to improve bids through reverse auction, and fetched record returns for them. The funds are being utilized for the revival of the company. INDUSTRY PRODUCTS Popular products of family brands like Shahzada Mahamanthri have been revived in a new look. In addition to it NTC has recently launched a new range of bed linen and bath end support from Rosebay Interior India Ltd.VISION OF INDUSTRY To be a world class eco-friendly integrated Textile Company, catering primarily to the clothing needs of the nation.MISSION OF INDUSTRY To be a leading textile enterprise steadily improving capacity utilization, economy of operations, productivity, quality, brand image, market share & export.

OBSTRUCTS & CHALLENGES OF INDUSTRY Sickness Obsolete technology Cotton grown per hectare of land is very low Competition from man-made fibersDOMESTIC MARKET NTC is manufacturing Yarn & Fabric in 22mills (5 fully modernized and 17 I process of modernization) through the country. The details of countries yarns as well as different products of fabrics being produced are enclosed. In addition to this the activities of Readymade garments like shirts, Trousers Kurt Pajama, Ladies Top, Undergarments Nigh ties, jackets, Coats etc. is also carried out by NTC.INTERNATIONAL MARKET NTC has been products like Grey Satin, Dyed mulls, Towels, Yarn to US, UK, Singapore, Malaysia, China and Germany. The main objective of NTC is to provide quality fabric to consumers at reasonable prices and to meet the requirement of common man by manufacturing Bed to Bath fabrics.RETAIL MARKETING DIVISION The Retail Marketing Division at NTC (HO) is looked after by Sh. Alokendra Banerjee, Director (Marketing). There are 86 show rooms and 09 Exhibition-Cum-Sales Centers controlled by Regional/Sub offices as detailed below:1. NTC Sub Office, Delhi - 272. NTC Western Region, Mumbai - 08 (+)09 (Exhibition-cum-sales centers) 3. NTC Southern Region, Coimbatore - 334. NTC Sub Office, Kolkata - 18 YearQuantity (in lakh bales of 170 kegs)Value(in Rs./crores)

2005-060.5044.40

2006-070.8366.31

2007-0812.111089.15

2008-099.14657.34

2009-1047.003951.35

2010-1158.005267.08

2011-1285.008365.98

2012-1350.009267.12

2013-1468.008123.16

2014-1572.158926.03

COTTON EXPORTS FROM INDIA

CURRENT FACTORS IN INDIAN TEXTILE INDUSTRY: India retained its position as worlds second highest cotton producer. Acreage under cotton reduced about 1% during 2012-13 The production of cotton which was growing up over the years has decreased in 2012-13.Philosophy:1) Assemble best people , delegate authority and dont interfere people make the difference 2) Business heads are entrepreneurs 3) Mistakes are facts of life. It is response to the error that counts.Success:1. Create your luck by hard work 2. Trust + delegation = growth. Work Culture: Commitment, Creativity, Efficiency Team spirit.SWOT ANALYSIS OF TEXTILE INDUSTRY IN INDIA STRENGTHS:- Indian Textile Industry is an Independent & Self-Reliant industry. Availability of low cost and skilled manpower provides competitive advantage to industry. India has great advantage in sampling sector and has a presence in all process of operation and value chain. India is one of the largest exporters of yarn in international market and contributes around 25% share of the global trade in cotton yarn. Industry has large and diversified segments that provide wide variety of products. WEAKNESSES:- Indian Textile Industry is highly Fragmented Industry. Industry id highly dependent on cotton. Lower productivity in various segments. There is Declining in mill segment. Unfavorable labor law. Lacking to generate Economies of scale. OPPORTUNITIES:- Growth rate of Domestic Textile Industry is 6-8% per annum. Large potential Domestic and International Market. Product development and diversification to cater global needs. Market is gradually shifting towards Branded Readymade Garment. Greater investment and FDI opportunities are available. THREATS:- Competition from other developing countries, especially china. Geographical Disadvantages. International labor and environment laws. To balance the demand and supply. To make balance between price and quality.

THE ROAD AHEAD With the increase in investments in the industrial production, and the positivity observed by the textile sector has resulted in progress and development of the sector. Integrating the spectral needs and continued investments with technical advancements will completely modernize the industry china across the country, and further assist in reaping benefits for the Indian Textile sector.

COMPANY PROFILETIRUPATI COTTON MILLS Tirupati cotton mills were established by M/s P.Suryanarayana & Sons Pvt. Limited in Suryanarayanapuram, Renigunta, Chittoor District; Andhra Pradesh in the year 1956 with a licensed capacity of 30320 spindles and installed of 21040 spindles to manufacture cotton yarns. The commissioned capacity was further increased to 27860. The mill was inaugurated by Shri N. Sanjeevaiah Reddy, Chief Minister of Andhra Pradesh on 29th Aug, 1957.TAKE OVER BY NTC The mill was taken over by Central Government. Under an ordinance promulgated during 1972 and subsequently the mill was nationalized under the provision of sick textile undertaking (Nationalization) Act 1974 with effect from 1/4/1974 however the physical position was take over on 23rd September 1974.

LOCATION The mill was situated at 2.5 km away from Renigunta and 13 km away from Tirupati on the State Highway y no.32 towards Chennai. The mill is well connected by road, rail and air.LAND PROPERTY The mill has 89.40 Acres of land out of which 5.22 Acres of land acquired by Govt. of AP for laying bypass road (Renigunta to Chandragiri) and the mill has received Rs.3.13 lacks (under protest) towards compensation and the same as sent to holding company, New Delhi, under advise of the Head office, Bangalore. The residential accommodation provided to employee occupied 27.04 acres of land identified is to be extent of 47.44 acreWELFARE Mill has totally 103 quarters provided to officers, staffs and workers out of which 68 quarters are occupied .All quarters including guest house are in dilapidated condition which require major repairsFINANCIAL PERFORMANCE The Tirupati Cotton Mill was one of the profits making unit in the NTO up to 1993. The sale turnover was of Rs.178.29 Lacks during the year 1974-75 and was at Rs.120 Lacks during the year 1994-95 due to various reasons, the working of the mills receding and it incurring losses. As on 31st March, 1988 the mill had an accumulated loss of Rs.12.15 Cores with negative net worth of Rs.10.45 Cores. And present running with loss of Rs.8.27 Cores in during the year 2015. CAPTIVE GENERATING CAPACITY The mill has self-generating capacity to the tune of 1354 HP to meet out power requirement during power cut/shutdowns.

PRESENT PERFORMANCE OF THE MILLS The mill could always achieve capacity utilization of around 60% only and one of the major reasons is attributed to the non-availability of power to run the entire capacity of the mills. The mill earns a contribution of only 50-60% of its Wages/Salary and claims the balance amount towards shortfall in Wages/Salary commitments. The performance in the major areas of operations is enclosed.ORGANIZATIONAL CHART

K.BALASUBRAMANIN(GM)

SV.KRISHNA VUNNI(AAM)MV. RAMA RAO(PM)S. PRATAP(AEM)DOMINIC AROKYARAJ (SM)

V.ERR ANNA&K.ASWINI(ACCOUNTANTS)V.RADHIKASALES (DEPT)K.N.REDDY(CASHIER)A.RAVIPRAKASH &V.RADHIKA(PRODUCTION & COTTON CLERKS)C.VENKATESWARALU(SENIOR ACCOUNTANT)RAMKUMARMOHAN(SUPERVISORS)V.MUTHU(HEAD TIME KEEPER)J.ARAVINDAN(GENERAL CLERK)P.NAGENDRA(CLERK)R.RAJENDRANG.RAVI(ELECTRICIANS)K.MUNI REDDYM.KODANDAREDDYP.VENKATESH(SHIFT IN CHARGERS)

COMPANY OBJECTIVES Fulfillment of market strategies. Market leadership. Low cost and energy efficiency operations. Consistent quality.COMPANY GOALS1. Zero defective products.2. Cost effectiveness productivity.3. Safety, high efficiency.4. The most competitive & reasonable price5. Products quality guarantee.6. Prompt & superior service.7. Punctual delivery.PLANT AND MACHINERY OF THE MILLS The mill equipped with following machineries:-1. BLOW ROOMa) Reiter Blow Room 1957 year make single line with double sketchers for processing cotton (poor condition) b) Lakshmi Reiter Blow Room 1991 year single line sketcher exclusively for synthetic process (good condition).2. CARDING CONDITIONa) Lakshmi Reiter makes cards C 1/3 1991/1992 9 Nos. Goodb) Toyoda makes Cards 1957 year LCC converted 2 Nos. V Poorc) Toyoda makes Cards 1957 year IRHP converted8 Nos. V Poord) Toyoda makes Cards 1957 year SHIP Converted9 Nos. V Poor Total 28 Nos.3. DRAW FRAMESa) LR make Draw frames DO6 model year 2 Nos. Avg. With 3/3 drafting.b) LR makes Draw frames DO2 model 1976 year 2 Nos. V. Poor. With 3/5 drafting.c) LR makes Draw frames DO2s model 1978 year 2 Nos. Avg. With 3/5 drafting.Total Draw Frames6 Nos. 4. SIMPLEX a) LR make LF 1400 model 1990/91/92 year 6 Nos. Goodb) TOYODA make 1957 year with UTM 620 2 Nos.Poordrafting systemc) Texaco Howa make 1989 year with SKF1 Nos.Poor 1600 drafting system5. SPINNINGa) LR makes G 5/1 1992 year with each machine 5 Nos. Avg. Having 864 spindles, drafting 7 lift and 42 mm Ring Diameter.b) MEI Ring Frames 1980 year with 440 spindles Nos. Poor each UT 620 Drafting 7 lift 42mm Ring Diameterc) Zingers Ring Frames 1976 year with 400 spindles 12Nos. Poor each, PK 211E Drafting, 7 lift 42mm Ring Diameterd) OM Ring Frames 1957 year with 400 spindles 15Nos. Pooreach, PK 211E Drafting, 7 lift 42mm Ring Diameter.e) Temuco Ring Frames 1957 year with 400 spindles13Nos.V Poor each, PK 211-9, UT 3E-3, Kunal-1 Drafting, 7 lift 42mm Ring Diameter.f) NMM Ring Frames 1964 year with 452 spindles 9Nos. V Poor each, UT 620 Drafting, 7 lift 42mm Ring Diameter.Thus the numbers of Ring Frames are 66 with 27860 total spindles

6. CONE WINDINGa) The mill has padmatex 138 Model 1990 year 1 Nos.Avg. auto corner with 60 drums capacity with splices.b) Textual make 1976/78/87/94 year with 120 drums each 4 Nos.Poorc) Brady make 1980/81/85 year within 120 drums each 3 Nos. Poor7. DOUBLINGa) Doublers winder Kapitsa makes with 80 drums 1 Nos. V Poorb) NMM make 1964 year with 340 spindles each with 3 Nos.Poor dry process, 8 lift and Ring Diameter. (RF Converted). The above machines are suitable to produce Cotton, Hosiery and Synthetic Yarns. The production capacity being 5500 Kgs of Yarn per day.LABOR FORCE The present strength of workers is 127 consisting of 24 permanent, 103 badly and about 100 casual workers. The total strength of staff & officers of our mill is 16. PLANS UNDER CONSIDERATION FOR EXPANSION OF THE MILLS NTC, under modified Draft rehabilitation scheme (MS-10), prepared by NITRA and approved by the Board in the year 2010 included modernization of Tirupati Cotton mills also with 58752 in new 2 sheds, rising the spindle age to 84672, with an estimated cost of Rs.225.20 cores. As the above scheme did not go through, a revised MDRS -12 was submitted to MOT for modernization of this mill will a reduced capacity of 24480 spindles in the existing shed only with and estimated out-lay of Rs.67.15 cores. The present company share is 1.82% through across world; it is proposal to increase 3 to 4% in the year 2020.

MODERNIZATION After Nationalization of the mill, National Textile Corporation has taken first phase of modernization during 1975 with an outlay of Rs.92.41 lacks. The second phase of modernization was done during 1982 with an outlay of Rs.69.92 lacks. The third phase of modernization was carried out during 1991-92 with the assistance from financial institutions at an outlay of Rs.425 lacks. The total amount spent was Rs.587.03 lacks. The mill is proposed for interim-modernization with an investment out-lay of Rs.173.58 lacks.COMPANY AUTONOMOUS MAINTENANCE Initial clean-up Action for easy clean inspection Improve tentative standards General inspection Autonomous inspection Standardization Full autonomous maintenance COMPANY VISION The cotton yarn industries fortunes are closely linked to fluctuations in the cotton market any upward movement of the cotton prizes puts pressure on profit margins of mills operating in the intensely competitive yarn market. At the same time new entrance with modern mills have the advantage better productivity and quality after lower prices and the credit facilities to achieving market entity. This is increased expectation in terms of quality, price & delivery hence they have been, Strengthen the business systems for cotton purchase. Reduce operational costs by improving the productivity of machinery & employer. Retain our relationship by improving consistency.

COMPANY MISSION The company primary mission is to achieve customer satisfaction through the collective commitment of employees that is manufacturing and marketing of cotton products and services.COMPANY PLC

TOP 10 TEXTILE COMPANIES IN INDIa1. ARVIND MILLS2. BOMBAYDYEING3. GRASIMINDUSTRIES4. RAYMOND5. RELIANCE TEXTILES6. JCT LIMITED7. LAKSHMI MILLS8. MYSORE SILK (KSIC)9. VARDHMAN GROUP OF COMPANIES10. FABINDIA

AWARDS AND HONOURS NCQC PAR EXCELLENT AWARD 2009 KOLKATA. CCQC EXCELLENT AWARD 2007 (QCFI) HYDERABAD. CCQC DISTINGUISHED AWARD 2006 (QCFI) HYDERABAD. NCQC DISTINGUISHED AWARD 2006 (QCFI) KANPUR. TOP AWARD IN TPM BY ABK-AOTS DOSOKAI CHENNAI. PRODUCT PROFILE The Cotton Mill product only single type of product .The product is name COTTON YARN. The raw materials of the cotton mill are only COTTON and the sources of Cotton were required from the Cotton Corporation of India Ltd.TYPES OF COTTON (IN COUNTS)1. 40 S Carded Cone Yarn2. 2/40s Carded Cone Yarn3. 40s Carded Plain hand Yarn4. 2/40s Carded Plain hand Yarn5. 40s Carded assessed hunk Yarn6. 2/40s Carded assessed hunk Yarn7. 42s Carded cone Yarn The above seven product are produced in Cotton Mill, because the Cotton Mill way only single product. Company was not importing and exporting the product because the products are utilized only within the country .It means local domestic market within the India.MARKET AREA OF THE PRODUCT The Cotton Mill sold the product within the India. Their mainly selling areas of the Cotton Mill was Ekambarakuppam (In Andhra Pradesh) Cheerala (In Andhra Pradesh) Ichala Karunji (In Maharashtra) Malegaon (In Maharashtra) The above all areas are the main areas to sell the product and also to move the product within the overall India.

MODE OF SALESThe Mode of Sales is two types. Direct Sales Consignment Sales DIRECT SALES Direct Sales means selling the products directly to the consumers and other cloth to the companies. There is no mediate/ blocked to sell the product. CONSIGNMENT SALES No credit sales accept even for the Govt organization also. Not some companies has to receivables the credit sales they are;- NHD(national Handloom Development Company) KHDC(Karnataka Handloom Development Company) The above companies are to facilitate the credit sales within 60 days, because these companies are required more products from the Cotton Mills products.

PRODUCTION The licensed capacity for manufacturing cotton yarn is 30,320 spindles. The production started with commissioned capacity of 6000 spindles which used to last increased to 21,040 spindles and subsequently to 29,668 spindle of the production manufactured to the company The cotton is measured in kg only. The present machines can produce 5,500kgs of yarn per day within an average count of the product of 40 % per day. The Tirupati Cotton Mill area only profit earns company in Andhra Pradesh.

QUALITY POLICY TIRUPATI COTTON MILL aim is to achieve customer satisfaction through the collective commitment of employees is manufacturing and marketing of cotton products and services. To accomplish above TCM focus on, Establishing supervisor specifications for our products & proceed. Employing state-of art technologies and robot principles. Implementing methods and techniques to monitor quality level. Providing prompt after sales service.They believe that effective implementation techniques will result in Consist and better quality product. Lesser accidents. Higher employee morale.Strengths: Strong and well organized customer base. Full agonized in restructure in place. Proven field performance in all users segment.

DATA ANALYSIS AND INTERPRETATIONS 4.1 LIQUIDITY RATIOS 4.1.1 CURRENT RATIOThe ratio between all current assets and all current liabilities. Another way of expressing liquidity. It is a measure of the firms short-term solvency. It indicates the availability of current assets in rupees for every one rupee of current liability. A ratio of greater than one means that the Firm has more current assets than current claims against them. Current AssetsCurrent ratio = ----------------------------------------- Current Liabilities

Table 4.1.1 CurrentRatio S.NOYearCurrent AssetsCurrent LiabilitiesCurrent Ratio

12011-125,73,59,6013,06,75,6801.86

22012-135,54,25,6193,66,02,2731.51

32013-146,20,39,9473,57,66,5351.73

42014-155,98,55,2872,70,11,4702.21

Graph 4.1.1 Current ratio

Interpretation: The standard for current ratio is 2:1 normally. During the year 2011-12 the ratio is decreased to 1.86 during the year 2012-13 the ratio decreased to 1.51 during the year 2013-14 the ratio is increased to 1.73 during the year 2014-15 the ratio is increased to 2.21. The ratio 2014-15 exactly ratio so the ratio was satisfactory.

4.1.2.Quick ratio: Quick ratio establishes a relationship between quick, or liquid, assets and current liabilities. An Asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Current Assets InventoriesQuick Ratio = _______________ Current liabilities

Table 4.1.2 Quick RatioS.NOYearQuick AssetsCurrent LiabilitiesQuick Ratio

12011-124,52,74,6673,60,75,6801.25

22012-132,76,37,4993,66,02,2730.75

32013-145,27,91,1743,57,66,5351.47

42014-153,79,04,6682,70,11,4701.40

Graph 4.1.2 Quick ratio

Interpretation: The standard normal for the quick ratio 1:1.quick ratio decreased in the year 2011-12 to 1.25 from 0.75. Then, it decreased to 0.75 in the year 2012-13. And it has increased to 1.47 in the year 2013-14 and then it decreased to 1.40 in the year 2014-15. However the ratio was above the standard normal so the ratio was satisfactory.

4.1.3. Cash ratio:

The ratio between cash plus marketable securities and current liabilities.Cash Ratio = cash & Bank balances Current liabilities

Table 4.1.3 Cash Ratio S.NOYearCash& Bank BalancesCurrent LiabilitiesCash Ratio

12011-1225,99,9433,60,75,6800.07

22012-1319,77,0553,66,02,2730.04

32013-1423,94,3513,57,66,5350.06

42014-155,26,1642,70,11,4700.01

Graph 4.1.3 Cash Ratio

Interpretation: The standard normal for the cash ratio 0.05:1. During the year 2011-12 the ratio was 0.07and the next year 2012-13 the ratio was decreased to 0.04. During the year 2013-14 the ratio was increased to 0.06 but the next year 2014-15 the ratio was very low. The company is failed to keeping sufficient cash and bank balances, marketable securities.

4.1.4. NET WORKING CAPITAL RATIO: The difference between current assets and current liabilities excluding short-term bank borrowing is called net working capital or net current assets.

Net working capital ratio = Net Working Capital Net assets

Net Working Capital = Current Assets - Current LiabilitiesNet Assets = Total Assets - DepreciationTotal assets = Fixed Assets + Current Assets

Table 4.1.4 Net working capital ratio S.NOYearNet Working CapitalNet AssetsNet Working Capital Ratio

12011-122,66,83,9214,19,93,6670.63

22012-131,88,23,3465,66,59,2320.33

32013-142,62,73,4125,93,00,8710.44

42014-153,28,43,8175,32,54,6930.61

Graph 4.1.4 Net Working Capital Ratio

Interpretation: Net working capital ratio is 0.63 in 2011-12 but decreased to 0.33 in the next year 2012-13. From that year the ratio decreased to 0.33 in 2012-13 and next year increased to 0.44 in 2013-14 also and increased to 0.61 in 2014-15 but condition of business working capital is not shortage.

4.2 LEVERAGE RATIOS

4.2.1 Debt RatioIf the firm may be Interested in knowing the proportion of the interest bearing debt in the capital structure.

Total Debt Debt ratio = ----------------------------------------- Total Debt + Net Worth

S.NOYearTotal DebtTotal Debt + Net WorthDebt Ratio

12011-1220,03,49,48930,43,47,1330.65

22012-1341,16,74,64171,86,84,3540.57

32013-1451,17,06,12388,34,14,4420.57

42014-151,49,07,78648,31,00,0810.03

Table 4.2.1 Debt ratio

Graph 4.2.1 Debt ratio

Interpretation: This ratio gives results relating to the capital structure of a firm. Debt ratio is 0.08 in the year 2011-12 it increased to 0.65. During the year 2012-13 the ratio is decreased to 0.57 &the next year same ratio 2013-14 to 0.57.again it is decreased to 0.03. From the above in fluctuating trend we can conclude that the companys dependence on debt is decreasing. It is better position in collection of debt.

4.2.2 Debt Equity Ratio Debt equity ratio indicates the relationship describing the lenders contribution for each rupee of the owners contribution is called debt- equity ratio. Debt equity ratio is computed by dividing Long term Liabilities divided by Equity. Lower debt equity ratio higher the degree of protection. A debt-equity ratio of 2:1 is considered ideal. LONG TERM LIABILITIESDebt Equity Ratio = ---------------------------------------- EQUITY

Table 4.2.2 Debt equity ratioS.NOYearLong Term LiabilitiesNet WorthDebt Equity Ratio

12011-1220,03,49,48910,39,97,6441.92

22012-1341,16,74,64130,70,09,7131.34

32013-1451,17,06,12337,17,08,3191.37

42014-151,49,07,78646,81,92,2950.31

Graph 4.2.2 Debt equity ratio

Interpretation: The ratio gives results relating to the capital structure of a firm. Debt equity ratio is the year 2011-12 increased to 1.92 & the next year 2012-13 ratio is decreased to1.34.the next year 2013-14 the ratio is increased to 1.37. The next year 2014-15 the ratio is decreased to 0.31. It is not better position in collection of debt funds.

4.2.3 Proprietary Ratio This ratio indicates the general financial strength of the concerned firm. It is also test the soundness of the financial strength (structure of the firm).

Net worth Proprietary Ratio = -------------------------------------- x 100 Total tangible assets

Table 4.2.3 Proprietary Ratio S.NOYearNet WorthTotal Tangible AssetsProprietary Ratio

12011-1210,39,97,64487,27,33811.91

22012-1330,70,09,7131,71,03,00017.95

32013-1437,17,08,3193,66,87,77510.13

42014-1546,81,92,2952,42,64,11219.29

Graph 4.2.3 Proprietary Ratio

Interpretation: This ratio indicates the general financial strength of the concerned firm. During the year 2011-12 the ratio is 11.91 & the next year 2012-13 increased to 17.95.during the year 2013-14 decreased to 10.13 & the next year 2014-15 increased to 19.25. The financial structure is not better position.

4.3 ACTIVITY RATIOS

4.3.1 Inventory Turnover Ratio: It indicates the firm efficiency of the firm in producing and selling its product. It is calculated by dividing the cost of goods sold by the average inventory.

Cost of goods sold Inventory Turnover Ratio = ------------------------------ Average stock

S.NOYearCost Of Goods SoldAverage StockInventory Turnover Ratio

12011-123,25,67,16534,08,0169.55

22012-1332,03,71,08165,39,0244.89

32013-1423,28,12,32185,44,1032.72

42013-1530,93,41,43192,38,7413.34

Table 4.3.1 Inventory Turnover Ratio

Graph 4.3.1 Inventory Ratio

Interpretation: The above table shows the inventory turnover ratio. The highest ratio was recorded as 9.55 during the year 2011-12, and the lowest ratio was recorded as 2.72 during the year 2013-14. By seeing this ratio we can say that the company is showing that finished stock is rapidly turnover into sales.

4.3.2 Debtors turnover ratio: It is found out by dividing the credit sales by average debtors. Debtors turnover indicates the number of times debtors turnover each year.

SalesDebtors turnover ratio = _________________ Average Debtors

Table 4.3.2 Debtors Turnover RatioS.NOYearSalesAverage DebtorsDebtors Turnover Ratio

12011-1235,60,19,0324,42,65,8088.04

22012-1336,01,60,5082,10,20,65117.13

32013-1426,14,10,5803,26,57,4258.00

42014-1535,65,74,5502,83,80,06212.56

Graph 4.3.2 Debtors Turnover Ratio

Interpretation: Generally more the ratio better is the cash position of the company. In 2011-12, the companys debtors turnover ratio was reduced as 8.00 times, which increased to 17.13 times in 2012-13.the debtors turnover ratio of the company increasing and decreasing year by year it reveals that the management is showing better performance to connect the debts in time.

4.3.3 Fixed Asset Turnover Ratio: The ratio is supposed to measure the efficiency with which fixed assets are employed a high ratio indicates a high degree of efficiency in asset utilization and a low ratio reflects inefficient use of assets. However, in interpreting this ratio, one caution should be borne in mind. When the fixed assets of the firm are old and substantially depreciated, the fixed assets turnover ratio tends to be high because the denominator of the ratio is very low.

Net SalesFixed Asset Turnover Ratio = __________ Net Fixed Asset

S.NOYearNet SalesFixed AssetsFixed Assets Turnover Ratio

12011-1235,60,19,0322,07,09,74617.19

22012-1336,01,60,5083,78,35,8879.51

32013-142,61,41,05,6803,30,27,4587.91

42014-1535,65,74,5504,04,10,8768.82

Table 4.3.3 Fixed Assets Turnover Ratio

Graph 4.3.3 fixed assets turnover ratio

Interpretation: The above table shows the fixed assets turnover ratio during the period 2011-12 to 2014-15.the lower ratio was recorded as 7.91 times in 2013-14, and the highest ratio was recorded as 17.19 times in 2011-12. It is decreasing by every compare to previous year. The company doesnt show the interest turning out the fixed assets.

4.3.4 Total Assets Turnover Ratio: This ratio ensures whether the total asset has been effectively used or not. This is also test of managerial efficiency and business performance. Higher total capital turnover ratio is always required in the interest of the company. Sales Total assets turnover = ---------------------------- Total Assets

Table 4.3.4 Total Assets Turnover RatioS.NOYearNet SalesTotal AssetsTotal Assets Turnover Ratio

12011-1235,60,19,0327,80,69,3474.56

22012-1336,01,60,5089,32,61,5063.86

32013-1426,14,10,5809,50,67,4062.74

42014-1535,65,74,55080,66,1644.44

Graph 4.3.4 Total Assets Turnover Ratio

Interpretation: The above ratio shows the total assets turnover ratio, the highest ratio was recorded as 4.56 times in 2011-12, and the lowest ratio was recorded as 2.74 times in 2013-14.

4.3.5 Working capital turnover ratio: The term net working capital refers to the difference between current assets and current liabilities. A positive net working capital will arise when current assets are more than current liabilities. A negative net working capital occurs when current liabilities are more than current asset. This ratio calculated as under. Sales Working capital turnover ratio = ------------------------------- Working capital

Table 4.3.5 Working Capital Turnover RatioS.NOYearNet SalesWorking Capital Working Capital Turnover Ratio

12011-1235,60,19,0322,12,83,92116.72

22012-1336,01,60,5081,88,23,34519.13

32013-1426,14,10,5802,62,73,4129.94

42014-1535,65,74,5503,28,43,81610.85

Graph 4.3.5 Working Capital Turnover Ratio

Interpretation: When compared to 2011-13 the net working capital turnover ratio is decreased in 2011-12 and few percentages increased in 2012-13 year. The highest value recorded as 19.13 in the year 2011-2 and lowest value recorded as 9.94 percentages in 2012-13.

4.3.8 Capital turnover ratio: The ratio obtains by dividing sales with the capital employed.

Sales Capital turnover ratio = ---------------------------- Capital employed

Table 4.3.6 Capital Turnover RatioS.NOYearNet salesCapital employeeCapital turnover ratio

12011-1235601903230,43,47,1331.16

22012-1336016050871,86,84,3540.50

32013-1426141058088,34,14,4420.29

42014-1535657455048,31,00,0810.73

Graph 4.3.6 Capital Turnover Ratio

Interpretation: Capital turnover ratio is 1.16 in the year 2011-12 and it decrease 0.50 in the year 2012-13 and it is decreased to 0.29 in the year 2013-14 and it is increased to 0.73 in the year 2014-15.

4.4 PROFITABILITY RATIOS

4.4.1 Gross Profit Ratio: This ratio shows that the margin left after meeting manufacturing costs. It measures the efficiency of production as well as pricing. Gross profit Gross profit ratio = ------------------------x 100 Net sales

Table 4.4.1 Gross Profit RatioS.NOYearGross ProfitNet SalesGross Profit Ratio

12011-123,05,51,86635,60,19,0328.58

22012-133,97,89,42736,01,60,50811.04

32013-142,85,98,2592,61,410,58010.94

42014-154,72,33,11835,65,74,55013.25

Graph 4.4.1 Gross Profit Ratio

Interpretation: The above table shows the gross profit ratios. The highest gross profit ratio was recorded as 13.25% in 2013-14 and the lowest gross profit ratio was recorded as 8.58% in 2011-12 by seeing this ratio, we can say that the gross profit of the firm is bad because the cost of goods sold is increasing every year.

4.4.2 Net Profit Ratio: This ratio indicates the firms capacity to with stand adverse economic conditions. A firm with a high net margin ratio would be in an advantageous position to survive in the face falling selling prices, rising costs of production or declining for the product.

Net Profit Net Profit Ratio = --------------------------- x 100 Net sales

Table 4.4.2 Net Profit RatioS.NOYearNet ProfitNet SalesNet Profit Ratio

12011-124,19,51535,60,19,0320.11

22012-134,42,68936,01,60,5080.12

32013-145,64,82426,14,10,5800.21

42014-156,48,92035,65,74,5500.18

Graph 4.4.2 Net Profit Ratio

Interpretation: The above table shows the net profit percentage. 2011-13 the net profit every year increase few percentage and 2013-14 net profit decreased compare to previous year. The company maintaining the smooth growth percentage in net profit.

4.4.3 Return on Investment: The conventional approach of calculated ROI is to divide PAT by investment.

E.B.I.T Return on investment = ---------------------------------------- x 100 Capital employed

Table 4.4.3 Return on InvestmentS.NOYearE.B.I.TCapital EmployedReturn On Investment

12011-122244690630,43,47,1337.37

22012-135226697871,86,84,3547.27

32013-146469860588,34,14,4427.32

42014-158271596648,31,00,08117.12

Graph 4.4.3 Return on Investment

Interpretation: Return on investment is increases in all years. But, in the year 2014-15, it reached to highest is 17.12 in the year 2014-15.

4.4.4 Return on Equity Share HoldersFund The return on equity share holders fund explains about the return of share holders with they get on their investment.

Net profit Return on equity share holders fund = ------------------------------------ x 100 Number of equity shares

Table 4.4.4 Return on Equity Share Holders FundS.NOYearNet ProfitEquity Share Holders FundReturn On Equity Share Holders Fund Ratio

12011-1241951510,39,97,6440.40

22012-1344268930,70,09,7130.14

32013-1456482437,17,08,3190.15

42014-1564892046,81,92,2950.13

Graph 4.4.4 Return on Equity Share Holders Fund

Interpretation: Return on equity in the year 2011-12 is 0.40 and it is decreased suddenly to 0.14 in the year 2012-13 and the next year increased to 0.15 in 2013-14. During the year decreased to 0.13 in 2014-15.return on equity of the company is at does not satisfactory

FINDINGS The current ratio of the company is well the standard 2:1 throughout the study period. It decreases from 2.21times to 1.51 times which indicates the firm is in a very good position to meet its short term obligations. Generally the quick ratio standard is 1:1 throughout the study period it from 1.48times to 0.76times. It shows that the company is maintaining sufficient investments in quick assets. The debit ratio of the company slightly increased from 0.90 to 0.94 times, but not up to the standard ratio 1:3. It is mainly caused by decrease in total tangible assets. The stock turnover ratio of the company has been increased from 27.22 times to 95.50 times. It indicates the company sale has been increasing rapidly. The fixed assets turnover ratio is increasing from 7.91 times to 17. Times fixed assets turnover ratio is increasing year by year and it reveals that the company is showing better performance in turning out its fixed assets.

SUGGESTIONS The company shall maintain the stable financial position. So that, the company can earns better profits. The company may increase investment in current assets to meet its short-term obligations. He company needs to adopt sales forecasting and budgetary control methods to check the rising expenses. The company may increase its capital employed turnover ratio by increasing sales every year.

CONCLUSION

Liquidity ratios, both current ratio and quick ratio are showing effectiveness in liquidity as in all the years current ratio is greater than the standard 2:1 and quick ratio is greater than the standard 1:1 ratio.

The firm is maintaining a low cash balance and marketable securities which means they done cash payments.

Debt equity ratio, solvency ratio and interest coverage ratio are showing an average increase in the long term solvency of the firm. The proprietary ratio is showing an average increase which means, the shareholders have contribute more funds to the total assets.

Average payment period of the firm is showing the credit worthiness of the firm to its suppliers.

Fixed assets turnover ratio is showing that the firm needs lesser investment in fixed assets to generate sales.

The gross profit ratio, net profit ratio is showing the increasing trends. The profitability of the firm the increasing.

The interest that has to be paid is very less when compared to the sales. The firm is not utilizing the debt conservatively.

The firm is retaining much of the earnings (based on dividend payout ratio).

The company financial performance is very good and also they will increase their business year by year by expanding their branches.

BALANCE SHEET AS AT 31ST MARCH, 2012 particularsSchedule no31.03.201231.03.2011

I. SOURCE OF FUNDS

a. Shareholder Funds 11,35,34,0001,35,34,000

i. Share capital

ii. Share, pending allotment(state GOVT) -

iii. Advance against equity - -

iv. Reserves & surplus 29,04,63,6449,04,63,644

b. Loan Fund

1) Secured loan 3 - -

2) Unsecured loan 420,03,49,48915,57,99,161

c. Deferred tax liability - -

TOTAL30,43,47,13325,97,96,805

II. Application Funds

a) Fixed assets 5

i. Gross block6,24,03,1946,82,55,395