INDUSTRY PROFILE

A Study on RATIO ANALYSIS A Study on RATIO ANALYSIS

INTRODUCTION

Ratio Analysis of financial statements stands for the process of determining and presenting relationship of items and group of items in the statements.

There are different ratios which an analyst can employ depending on the purpose for which the analysis is made. A creditor, who likes to know the ability to meet its current obligations, may think of current and liquid ratios, similarly, managers and investors who want to know operationally efficiency may think of return on investments, turnover and fixed assets, earnings per share, book value per share and dividend per share.

Ratio analysis is a powerful tool of financial analysis. It is a process of identifying the financial strength and weakness of the firm by properly establishing relationship between the items of Balance sheet and Profit and Loss a more meaningful understanding of the financial position and performance of a firm.

A ratio is a mathematical relationship between the two related items expressed in quantitative form. A ratio is used as an index yard stick for evaluating the financial position and performance of a firm.

REQUISITE FOR RATIO ANALYSIS:

The requisition of Ratio Analysis to come in to being caused by the following facts.

Business facts displayed in Balance sheet and Profit and Loss account do not convey any pompous individually. Their significance lies in the fact that they are inter-related. From this time on word, there is need for fixing relationship between various but related items.

Ratio Analysis as a tool for the interpretation of financial statements is also important because ratios help the analyst to have a profound cautiously in to the data given statements figure in their peremptory forms shown in financial statements are neither significant nor to enable to the compared.

Uses of ratio Analysis

The nature of ratio Analysis will differ depending on the purpose of the analyst. Ratio Analysis the starting point for making plans before using any sophisticated fore casting and budgeting procedures . The Ratio analysis is useful for the following reasons.

SHARE HOLDERS / INVESTORS:

Investors or Shareholders, who have invested their money in the firm's shares, are most concerned about the. firm's earnings. They restore more confidence in those firms that show steady growth in earnings .As such, they concentrate on the analysis of the firm's present and future profitability. They are also interested in the firm's financial position to the extent it influences the firm's earnings ability. Owners or Investors desire primarily a basis for estimating capacity.

Creditors:

Creditors are concerned primarily with liquidity and ability and to pay interest on redeems loan with a specified period.

Long-Term Creditors:

The Long term creditors are interested in the long term solvency and survival. They analyses about firm's solvency and profitability overtime, its ability to generate cash, to be able to pay interest and repay principal and relationship between various sources of funds.

Employees:

The employees are also interested in the financial position of the concern especially profitability. Their wages increase, the amount of fringe benefits are related to the volume of profits earned by the concern. The employees make use o( information available in financial statements.

Government:

Government is also interested to know the strength and weakness of the firm. Government makes the future policies, plans on the basis of financial information available from various units of the company.

Management:

Finally management of the firm or Executives would be interested in every aspect of the financial analysis. It is their overall responsibilities to see at the resources of the firm are used most effectively, and the firm's financial conditi~n is sound. Through financial analysis they try to seek answers to the following questions:

Is the firm in a position to meets it current obligations. What sources of Long-term finance are employed by the firm and what is the relationship between them? Is there any danger to the solvency of the firm due to the employment of excessive debt how efficiently does the firm uses its assets are the earnings of the adequate?

Do Investors consider the firm prof1table and safe for the purpose of investing their money in the shares of the firm? Financial analysis may not provide exact answers to these questions, but it does indicate what can be expected in the future. Standards of comparison

A single ratio in itself does not indicate favorable or unfavorable condition. It should be compared with some standards of comparison may consist of ratios calculated from the past financial statements of the same firm.

Ratios developed using the projected or Performa financial statements of the same firm.

Ratios of some selected firms, especially the most progressive and successful at the same point of time.

Ratios of the industry to which the firm belongs.

The easiest way to evaluate the performance of a firm is to compare its present ratios with the past ratios. When financial ratios over a period of time are compared, it gives an indication oJ the direction of change and reflects whether the firm's financial position and performance has improved, deteriorated constant over time. This kind of comparison is valid only when the firm's accounting policies and procedures have not changed over time. Sometimes, Future ratios are used as the standard comparison. Future ratios can be developed projected or Performa financial statements. The comparison of the past ratios with future ratios shows the firm's relative strengths and weakness in the past and the future. If the future ratios indicate weak financial position, corrective actions.

Another way of comparison is to compare the ratios of one firm with some related firms in the same industry at the same point of time. In most of the cases, it is more useful to compare firm's ratios with the ratio of a few carefully selected competitors who have similar operations. This kind of comparison indicates the relative financial position and performance of the firm. A firm can easily resort to such a comparison, as it is not difficult to get the published financial statements of the similar firms.

To determine the financial condition and performance of a firm, its ratios may be compared with average ratios of the industry of which the firm is a member. Industry ratios are important standards in view of the fact that each industry as its characteristics which influence the financial operating relationships.

But there are certain practical difficulties in using industrial ratios.

It is difficult to get average ratios in the industry.

Even if industry ratios are available, they are averages -averages of the ratios of strong and weak firms. Sometimes the spread may be so wide that the average may not be little utility.

The averages will be meaningless and the comparison futile, if the firm with in the same industry widely differ in their accounting policies and parties.

If it is possible to standardize the accounting data for the companies in the industry and eliminate extremely strong and extremely weak firms, the industry ratios will prove to useful in evaluating the financial condition and performance of a firm.

It is difficult to get average ratios in the industry.

Even if industry ratios are available, they are averages -averages of the ratios of strong and weak firms. Sometimes the spread may be so wide that the average may not be little utility.

The averages will be meaningless and the comparison futile, if the firm with in the same industry widely differ in their accounting policies and parties.

If it is possible to standardize the accounting data for the companies in the industry and eliminate extremely strong and extremely weak firms, the industry ratios will prove to useful in evaluating the financial condition and performance of a firm.

Types of Ratios

Several ratios can be calculated from the accounting data contained in the financial statements. These ratios can be grouped in to various classes according to the financial activity or function to be evaluated. As stated earlier, the parties that generally undertake financial analysis are shortterm creditors, Long-term creditors, owners and Management. Shortterm creditor's main interest is in the liquidity position of the short -term solvency of the firm. Long-term creditors .on the other hand, are more interested in the long -term solvency and profitability of the firm. Similarly, owners concentrate on the firm's profitability analysis and analysis of the firm's financial conditions. Management is interested in evaluating every activity of the firm. They have to protect the interest of all parties and see that the firm grows profitability.

In view of the requirements of the user of ratios we may classify them as follows: Traditional classification

Balance sheet Ratios:

Balance sheet Ratios aeal with the relation between two balance sheet items . Both the items must however pertain to same Balance sheet. Ex. Current Ratio

Profit and Loss Account

These ratios deal with the relationship between two profit and loss account items, both the items must belong to the same Profit and Loss Account. Ex. Gross Profit Ratio

Composite or Mixed Ratios:

These ratios exhibit statement item and a Balance sheet item.

Ex. Stock Turnover Ratio

CLASSIFICATION OF RATIOS:

RA TIOS may be classified in a number of was keeping in VIew of the particular purpose. Rations indicating profitability are calculated on the basis of the profit and loss account, those indicating financial position are computed on the basis of the balance sheet and those which show operating efficiency or productivity or effective use or resources are calculated on the basis of figures in the profit and loss account and the balance sheet. This classification is rather crude and unsuitable to determine the profitability and financial position of the business. To achieve this effectively, ratios may be classified as:

1. LIQUIDITY RATIOS

2. LEVERAGE RATIOS

3. ACTIVITY RATIO

4. PROFITABILITY RATIOS

Liquidity Ratios: It is extremely essential for a firm to be able to meet its obligations as they become due. Liquidity Ratios measure the ability of the firm to meets its current obligations. In fact, analysis of liquidity needs the preparation of Cash Budgets and Cash flow statements .But liquidity ratios, by establishing in a relationship between Cash and other Current obligations provide a quick measure of liquidity.

Also that it is not too much meets its obligations, due to lack of sufficient liquidity, will result in bad credit rating, loss of creditors' confidence, or even in lawsuits resulting in the closure of the Company. A very high degree of liquidity is also bad. Therefore, it is necessary to strike a proper balance between Liquidity.

The ratios, which measured and indicate the extent of firm's liquidity, are known was liquidity ratios or short-term solvency ratios commonly used liquidity ratios included.

Current Ratio (Or) Working Capital Ratio

Quick Ratio (Or) Acid Test Radio

Cash Position Ratio (Or) Super Quick Ratio

Leverage Ratios:

The long term creditors like Debentures holders, financial Institutions, etc. , are more concerned with the firm's long -term financial strength. To judge the long-term financial position of the firm, Leverage or capital structure ratios are calculated. These ratios indicate the funds provided by the owners and creditors. As a general, there should be an appropriate mix of the debt and owner's equity in financing the firm's assets.

Firm with low leverage have less risk of loss, but they also have lower expected returns. Conversely firms high leverage ratios have risk of large losses.

But also have a chance of earning huge profits. Therefore, before deciding whether a firm should have debt, must balance with higher expected returns against increased risks. The most commonly examined leverage ratios are:

i) Debt Equity Ratio

ii) Fixed Assets Ratio

iii) Current Assets to Fixed Assets Ratio

Activity Ratios

The funds of creditors and owners are interested in various kinds of Assets to generate sales and profit. The better the management of Assets, the larger will be the amount of sales. Activity ratios are employed to evaluate the efficiency with which the firm manages and utilizes its assets. These ratios are also called Turn over ratios because they indicate the speed with which assets are being converted or turn over in to sales. Activity ratios thus involve a relationship between sales and the various assets .A proper balance between Sales and Assets generally reflects that assets are managed well.

Following are some of the important activity ratios.

i) Total assets turnover ratio

ii) Fixed assets turnover ratio

iii) Current assets turnover ratio

iv) Stock turnover ratio

v) Debtors turnover ratio

vi) Creditors turnover ratio

Profitability Ratios:

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 the company should be aimed at maximizing profits, irrespective of social consequences.

Profit is the difference' between total Revenues and total Expenses over a period of time. Profits are the ultimate output of a company and it will have no future if it fails to make sufficient profits. There fore, the Financial Manager should continuously evaluate the efficiency of the company. Besides management of the company, creditors and owners are also interested in the profitability of the firm.

Generally, two major types of profitability ratios are calculated.

1. Profitability in relation to sales.

2. Profitability in relation to Investment.

A company should be able to produce adequate profit on each rupee of sales .If sales do not generate sufficient profits, it would be very difficult for the firm to cover the operating expenses and interest charges and as a result will fall to earn any profits for owners. Some of the profitability ratios are:

i) Gross Profit Ratio

ii) Operating Ratio

iii) Operating Profit Ratio

iv) Net Profit Ratio

Significance of Ratio Analysis The ratio Analysis is the most powerful tool of the financial analysis. The many diverse groups of people are interested in analyzing the financial information to indicate the operating efficiency and the various aspects of the firm's financial position. These people use ratios to determine a particular financial characteristic of the firm in which they are interested. With the help of ratios one can determine.

1. The ability of the firm to meet its current obligations.

2. The extent to which the firm is utilizing its long-term solvency by borrowing funds.

3. The efficiency with which the firm is utilizing its various assets in generating sales Revenue.

4. The overall operating efficiency and performance of the firm.

A short-term creditor will be interested in current financial position of the firm, while a long-term creditor will pay more attention to the solvency of the firm and also be interested in profitability of the firm. The equity share holders are generally concerned with their return and many bother about the .firm's financial condition only when their earnings are depressed. In fact, it has to be realized that the short-term and the long term financial position and the profitability of the firm are based on every kind of financial analysis, the emphasis would differ. In credit Analysis, the analyst will usually select a few important ratios. He may use the Current Ratio or Quick- Asset Ratio to judge the firm's liquidity or Debt-paying ability.

The ratio Analysis is also useful in security analysis. The major focus on security analysis is on the long-term profitability. From time to time, Management uses ratio Analysis to determine the firm's financial strength and weakness and accordingly takes action to improve the firm's position.

The ratio of a firm in itself does not reveal anything. For meaningful interpretation, the ratios of the firm should be compared with the ratios of similar firms and industry. This comparison will reveal whether the firm is significantly out have like. The firm should undertake a detailed analysis to spot out the trouble areas.

The Ratio Analysis will reveal the financial condition of the firm more reliably when trends in ratios over time are analyzed. The significance of trend analysis of ratios lies in the fact the analyst can know the direction of movement, i.e., whether the movement is favorable or unfavorable.

Limitations of Ratio Analysis:

The Ratio Analysis is a widely used technique to evaluate the financial position and performance of a business. But there are certain problems in using ratios. The following are the limitations of the Ratio Analysis. It is difficult to decide on proper basis for comparison:

The comparison is rendered difficult because of differences in situations of two companies or one company over years.

The price level changes make the interpretations of ratios invalid.

The differences in definitions of items of Balance sheet and income statements make the interpretation of ratios difficult.

The ratios calculated at a point of time are less informative and defective as they suffer from short-term changes.

The ratios are generally calculated from past financial statements and thus are no indications of the future.

A single ratio usually does not convey much sense. To make a better interpretation a number of ratios have to be calculated which are likely to confuse the analyst than helping him in making any meaningful conclusion.

Like financial statements, ratios also suffer from the inherent weakness of accounting records such as their historical nature. Ratios of the past are not necessarily .true indicators of the future. ~ Ratio Analysis is merely a tool of financial statements. Hence, ratios become useless if separated from the statements from which they are computed.

Ratios are only means of financial analysis and not an end in it self. Ratios have to be interpreted and different people may interpret the same ratio in different ways.

INDUSTRY PROFILEORIGIN:

Rayalaseema is economically backward area in Andhra Pradesh was rarefied region for industries. A dynamic entrepreneur Sri S.P.Y.REDDY who is basically a Mechanical Engineer started unit at Nandyal, which manufactures black pipes in 1977. The determination and hard work of Sri S.P.Y.REDDY helped him to over come the problems faced by the company in the initial years, and with financial assistance from local commercial banks. The company could over come the problems of the merger and is running smoothly.

Late the company started manufacturing PVC pipes, which terminated the manufacturing of black pipes. This resulted in the formation of a PVT Ltd., Company called SUJALA PIPES PVT LTD., with Sri S.P.Y.REDDY as the managing director.

The only major competitors to the company are Sudhakar Pipes, Maharaja Pipes. The only backdrop to it is the competition from local brands. As the majority of customers belong to farmers, they consider than quality. The company has to make aware of the companys quality standards to them.

Nandi has its origins in the year 1979, when Mr.S.P.Y.REDDY, a technocrat left his job at Bhaba Atomic Research Centre, Mumbai to start a plastic containers unit in Anantapur. The company has grown at a fast pace and Mr.REDDY who sensed an opportunity in making pipes for irrigation started manufacture of PVC Pipes in year 1984 and has fast become leading manufacturer in Andhra Pradesh and later in India. With annual consumption of 50,000 tones of resin, Nandi group is one of the biggest plastic processors in Asia. The group has either setup or acquired plants in different geographical locations of South India to improve operational efficiency and to enhance customer satisfaction. Nandi group sells PVC pipes under 4 brands of which Nandi brand is the most Prominent.

Plastic have become synonymous with modern living. It is undoubtedly a product, which has penetrated extensively into the common mans life. No wonder the industry has achieved in terms of supply of raw material expansion and diversification of processing capabilities and manufacturing of processing machinery and equipment.

This versatile material with its superior qualities such as light weight, easy process ability corrosion resistance, energy conservation, no toxicity etc., many substitute to a large extent many conventional and costly industrial materials like wood, metal, glass, jute lather etc., in the future. The manifold applications of plastics in the field of automobiles, electronics, electrical, packaging and agriculture give enough evidence of the immense utility of plastics. At 80 percent of total requirement for raw material and almost all types of plastic machines required for the industry are indigenously available. The present investment in all the three segments of the industry namely production of raw materials, expansion and diversification of processing capacities, manufacturing of processing machinery and ancillary equipment is Rs. 1,250 crores and it provides employment to more than eight lakh people.

On account of their inherent advantage in properties and versatility in adoption and use, plastics have come to play a vital role in a variety of applications, the world over. In our country, plastics are used in making essential consumer goods of daily use for common man such as baskets, shopping bags, water bags, water bottles, school bags, Tiffin boxes, hair combs, tooth brushes, spectacle frames and fountain pens, they also find applications in field like packaging, automobiles, and transportation, engineering, electronics, telecommunications, defense, medicine, and building and construction. Plastics are growing in importance in agriculture and water management.

The Govt of India recognizing the importance of plastics in agriculture appointed on March 7th, 1981 a National Committee on the use of plastics in agriculture under the chairmanship of Dr.G.V.K.Rao. This committee has forecast a tremendous growth of drip irrigation through a net work of plastic pipes and tubes. In its opinion large scale adoption of irrigation would lead to sports in demand for PVC pipes, L.D.P.E tubes and polypropylene emitters. The committee made a number of recommendations for promoting the use of plastics. The implementation of recommendations would go along away in increasing the consumption of plastics, which at present is very low. The rigid pipes, flexible pipes and sheeting, which are being used for agricultural operations to carry out water place to place and also lining of ponds and reservoirs to reduce seepage and most important in drip irrigation system.

Export of Plastics Goods:

Plastics have excellent potentialities. Our country is equipped with all kind of processing machinery and skilled labor and undoable, and extra to boost export, finished plastics products will yield rich divided.

Today India exports plastic products to as many as 80 countries all over the world. The exports, which were stagnant at around rest 60-70 cores per annum double to 129 craters. The Plastic Industry has taken up the challenge of achieving an export target of Rs.17 crores.

Major export markets for plastic products and linoleum are Australia, Bangladesh, Canada, Egypt, Hong Kong, Italy, Kuwait, Federal Republic of Germany, Sri Lanka, Sweden, Taiwan, U.K., U.S.A., and Russia.

With view to boosting the export, the plastics and linoleums export promotion council has urged the government to reduce import duty of plastic raw material, supply indigenous raw materials at international prices, fix duty, draw backs on weighted average basis and charge freight rate on plastic products on weights basis instead of volume basis.

Prospects:

The Production of various plastics a raw materials in the country is expected to double by the end of seventh plan, the consumption of commodity plastics including LDPE, HDPE, PP, PS AND PVC is immense scope for the use of plastics in agriculture, electronics, automobile, telecommunications and irrigation and thus, the plastic industry is on the threshold of an explosive growth.

Role of Plastics in the National Economy:

Plastics are got perceived as just simple colorful household products in the mind so common person. A dominant part of the plastics of the percent and future find their utilization in the areas.

Agriculture, forestry and water management. Electronics and Telecommunications, buildings, construction and.

Food processing and packaging.

Power and Gas Distributor.

Importance of Pipes Industry:

We shall look at the basic data about plastics and particularly those properties, which are so, fuse in practical working with plastics. Plastics are man-made materials. The oldest raw material for producing plastics is carbonaceous material obtained from coal tar (Benzene, Phenol).

Today the majority of raw materials are obtained from petrol chemical source and they can be economically produced in large quantities.

Plastics have changed our world and day-by-day they are becoming important. They own their success to whole series of advantage, which they have over conventional materials such as:

Lightweight Excellent Mould Ability

Attractive Colors

Low Energy Requirements for Convention

Low Labor and Cost of Manufacture

Low maintenance & High strength weight ratio

Economic Role:

Agriculture is the chief occupation in India. For the developing countries like India modernization of the agriculture practices assumes pivotal places in improving the economic status and the process of modernization. Includes usage of higher productive plastics supplement to greater extent manufacturing of tools required for new agricultural practices.

The usage of poly vinyl chloride pipes in agricultural fields, lesser water seepage, which was predominant in earlier practices, with services of P.V.C pipes, water can be transported efficiently with lesser from the place of higher potential to the place of lower water potential.

Presently the revolutionary tried in water management speaks much about drip irrigation, which is developed in Israel and is practiced by all agricultural based nations in the world. Drip irrigation greatly P.V.C pipes as core tools of implementation with the services of this sort, P.V.C pipes one way or the other strengthening the hands of countrys economy.

A part with the referred P.V.C pipes supplemented with fitting is used in houses for electrical connection and other domestic purposes. A part from these two applications it has got wide applications even in industrial sectors. P.V.C pipes with much unique heart, chemical and physical characteristics serve many industrial purposes.

Even characteristics of weight and low price attract many more applications. Ragid PVC pipes have been manufactured in India from the 60s on imported extrusion lines and there after indigenous plan were few pipes manufactures upto 1979-83. When many extrusion lines were imported from batten field. Cincinnati, Kraaus maffi etc, the Govt allowed the imports of sophisticated and high output plants, which were not available indigenously.

PVC Pipes in India:

Pipes products have found wide acceptance in India and abroad. PVC is one of the more versatile plastics. It can be extruded, molded, calendared and thermoformed into a multitude of furnished products. The PVC resin can be formulated to give a wide range of properties ranging from hand, tough materials for load bearing application lime pipes, windows and doors to flexible materials for products a due as wire and cable insulation and shooting and flooring.

PVC products cater to both interiors and exteriors. In interiors it can be used for flooring, profile and cable tray, wall covering modular office systems, houses and furniture. For exteriors it is used for doors and windows, fencing partitions and paneling, roofing and rain systems.

The other external applications are in the field of irrigation, portable water supplies. In the field of irrigation there are several methods to irrigate the fields. There are minor irrigation projects and major irrigation projects apart from individual sources like wells, tube wells, bore wells. Major irrigation sector small projects will have canals and lift irrigation schemes etc., will have pipelines. Cement and GI pipes were the pipes used in conventional methods of irrigation. Now-a-days PVC pipes replaced the conventional pipes and they constituted almost 90% in this respect.

Drip irrigation popular in the agricultural sector especially in the field of horticulture commercial cropping and greenply houses. The drip irrigation concept is becoming more popular with its advantages like highly yield, water conversion, less labour cost, less fertilizer, less past management costs, less power costs and many more advantages. The demand for this concept is increasing at a place of 30% - 40% per annum.

Agriculture a sunrise industry in the Indian economy is mainly dependent on the PVC pipes for the seawater sector and pumping to their aqua ponds. They are using pipelines of four to five kilometers of 10-16 diameters pipes.

The state Govt of A.P is using rigid PVC pipes for the irrigation water supplies for the past few years.

COMPANY PROFILE MONARCH PIPES:

Monarch Pipes Ltd., was incorporated in the year 1986. The factory is situated at Nh 7, Hampapuram Village, Rathadu Mandalam, Nandipur District. It was taken over by Nandi Pipes.

In annual production capacity is 16000 Mts, and it is one of the leading manufactures of PVC pipes in the South India. The company is equipped with technical collaboration from Batten field of West Germany. It has made possible few other small ventures. Pipes are sold under brand names of MONARCH, KOHINOOR and KRISHNA.

Monarch pipes with their good quality trouble free services durability and economical use or a better choice than mild steel, Galvanized steel, cast iron and plastic pipes. The company is managed by a term of professionals under the guidance of a young, experienced and well qualified dynamic managing director Mrs.Sreedhar Reddy.

Nandi PVC Pipes Ltd., Nandyala a premier enterprise of Nandi Group is the will known manufacturer of the largest and most comprehensive range of UPVC Pipes in India. Nandi Gold Pipes, with a diameter up to 400 are suitable for water Transportation, Irrigation, Plumbing, Drainage, Cable Ducting, Bore Wells, Transfer of Industrial effluents an Electrical Conduits.

The gamut of products cover all applications in Which PVC pipes can be used. Nandi UPVC systems are more cost effective than conventional GI, CI or AC systems besides being light in weight, durable and no corrosive. They are also easy to handle, offer excellent flow characteristics and can be transported and installed anywhere. With world class quality and customized product development support, they enjoy the satisfaction of millions of customers.

Mission Statement:

The mission statement of Nandi PVC Pipes Pvt Ltd., is as follows:

To be preferred supply chain partner to out customer. To be recognized as the best in the world at we do.

To create new values in the quality for our customers and employees.

Vision Statement:

The vision statement of Nandi PVC Pipes Pvt Ltd is as follows:

Creating new values in quality by working together for you

BOARD OF DIRECTORS

S.P.Y.REDDY

Sri S.P.Y.REDDY locally well known industrialist with the base at Nandyal, Kurnool District who has been successfully entrepreneur and management. Is technically qualified person with B.E. MECHANICAL from R.E.C (Warangal) and with work experience at BAARC (Bombay). He has daringly ventured and established industries.

NANDI MILK

MAHANANDI MINERALS WATER

NANDI INFOSYS

NANDIONLINE SERVICES

MONARCH PIPES LTD

INTEGRATED THERMOS PLASTICS LTD

NANDI PVC PRODUCTS

PROMOTER:

Sri Sridhar Reddy, a Computer Engineer and a student of IIM, Ahmadabad as been entrusted the management of Monarch Pipes Ltd., Hampapuram and great assistance and a young up coming engineer and industrialist.

BRANCHES PONDICHERY

SALEM

BELLARY

MADURAI

GOA

SIZES:

Various sizes ranging to 10 inches pipes are offered to the customers. Even pipes with different gauges and sizes are manufactured to suit specific conditions. DETAILS OF NANDI PVC PIPES PIPE DIAMETER CLASS

FLOW RANGE

MMINCHESCLASSPRESSURE LITRE / SEC

200.55100.07 -0.13

250.755100.13-0.25

3215100.25-0.50

401.25360.50-1.00

501.5341.00-1.80

632241.980-3.00

752.5243.00-5.00

903245.00-15.00

1104248.00-15.00

14052415.00-20.00

16062420.00-30.00

18072430.00-40.00

20082440.00-50.00

22592450.00-60.00

250102460.00-70.00

PACKNG:

Packing plays less important role into the products like PVC Pipes because the hallow space inside can be utilized. For the purpose of cubic space utilization in trucks, while transport. Organization is adopting the technique like pipes in pipes. PAYMENT PERIOD:

For monarch brand and company adopts zero credit policy and goods are not delivered unless cash remittances are made. For monarch and sagar brands credit is entitled up to a week. The difference between these brands is due to brand image.

COVERAGE:

At present Andhra Pradesh, parts of southern states of Karnataka, Tamilnadu and Kerala are ambit of Sujala Pipes Pvt Ltd. The extended the sales in the below regions as shown below.

1979

-Nandyal Region (Poly Phone Pipes)

1984 - 1985-Rayalaseema Regions (PVC Pipes)

1985 1986-Telangana Regions

1986-1987-Karnataka and Andhra Pradesh

1988-1991-Tamilnadu and Karnataka

1991-1994-Kerala

TRANSPORTATION:

The transportation department of Sujala Pipes Pvt Ltd. Is very admirable. This unique strength of the organization enables the dealers to reduce inventory levels to the minimum. Thus dealers are also supplemented with dealers to reduce inventory levels to the minimum. Thus dealers are also supplemented with the benefit of the lower tied up capital in the form of inventory.

Ingredients:

PVC Resin D.B.L.S

T.B.L.S

L.S

C.S

Stearic Acid

Hydro Carbon

Calcium Carbonate

GENERAL INFORMATION ABOUT THE COMPANY

The company is equipped with sophisticated laboratory to carry all tests to ascertain out going quality level of pipes. A Nandi pipe has got I.S.I Trade mark, this speaks for itself for the quality of the pipes. Numbers of statistical quality control techniques are applied to sustain the quality level of the product. Managers at the company are dynamic and are well educated supervisory staff or intermediate managerial staff are able in talking their area not highly educated. Most of the employees are skilled is uniqueness of workers in Sujala Pipes Pvt., Ltd. There is non-indulgence in trade union activities.

As the company is located in Industrial Estate of Nandyal. It is facilitated with good communication networks. Which includes telecom; fax machine and Internet Company has also got the support of electronic date processing. Companys major settings.

The Companys major strength is considered to be transportation vehicles.

A unique cash out flow justifies it self by providing good reputation of the company through improved customer service.

`The unit also has world class quality assurance systems ensuring products of uncompromising excellence, meeting all relevant ISI, BS,DIN, and ASTM standards. In addition to these features, extensive R&D facilities provide reliable and committed support for new product development, implying the even if a Nandi Customer is unable to acquire his precise requirement from our elaborate ranges, Nandi also could supply customized products as per his own exclusive specifications. Such relentless pursuit of quality and readiness to adopt and innovate, the propelled the Nandi to the forefront of this product category in India.

FUNCTIONAL DEPARTMENTS OF THE COMPANY FINANCIAL DEPARTMNET:

Through initially the company approached the external sources for financial status of the company is the very sound and is being run only with self financial excepting for loans taken for hypothecation of machinery and stock from SBI Nandyal.

The company follows cash and carry policy for Nandi Brand. The product is not delivered until the cash is paid and financial department with the help of marketing department look after this transaction.

MARKETING DEPARTMENT:

Marketing manager who reports to executive director and assistant marketing manager who reports and 20 salesmen headed by 30 sales representatives who are headed by assistant marketing heads the marketing department. Marketing mix and advertising particulars of Sujala Pipes Pvt Ltd. Shows the departments effective management of the marketing department in the organization.

PERSONAL DEPARTMENT:

The personal department consists the details of the executives and workers of the organization. The organization is formed with Sri S.P.YREDDY as the Managing Director and executive director who reports managing director. Two marketing managers, financial manager, public relations officer and quality control officer who all reports to executive director, other than executives there are thousand works in organization panel consisting of managing director, executive director and managers of concerned departments makes the recruitment and selection of persons A part from the attractive salaries company provides health card facilities. PURCHASING DEPARTMENT:

The perplexing situation i.e., conformed by manufactures of the PVC pipes is scarcity of resin. Though the govt of India has taken various steps to improve supply conditions of PVC resin. The Indian manufacturers could meet only 50 percent of demand of demand of remaining 50 percent is met from imports.

The lead time for the acquisition of raw materials is 4 days.

The following lines highlight the human resources policies and practices.

Effective utilization of manpower.

To provide good working condition.

To promote industrial development.

Channels of Distributing:

Nandi PVC Pipes Pvt.,Ltd has got zero level and single level channel of distribution.

Nandi PVC Pipes Pvt.,Ltd. Has an extensive network of 350 dealers in Andhra Pradesh and who are directly serviced by company sales force and 620 dealers in South India. THE MAJOR PETROCHEMICAL COMPANIES ARE:

Sri ram vinyl Ltd.

Chem Past Ltd.

Reliance Petrochemical Ltd.

National Organic Chemical Industries Ltd.

Indian Petrochemical Industries Ltd.

PROCESS:

The main raw materials are HDPE granules, PP granules. The manufacturing for pipes consist of mixing various resins along with coloring material in a mixture and the prepared material is fed to the extruder. In the extruder, the material is heated to the required politicizing temperature (1900 Centigrade to 2300 Centrigrade) the extruded through the die hard to from the pipe. The hot pipe coming out of the extruder is cooled in a water bath to retain the final shape. The pipe coming out of the extruder is guided through the water bath to retain the final shape. The pipe coming out of the extruder is guided through the water bathe suitable traction system. ORGANIZATION STRUCTURE

REVIEW OF LITERATURE

Review of Literature refers to the collection of the results of the various researches relating to thepresent study. It takes into consideration the research of the previous researchers which are related to the present research in any way. Here are the reviews of the previous researches related with the present study:

Bollen (1999) conducted a study on Ratio Variables on which he found three different uses ofratio variables in aggregate data analysis: (1) as measures of theoretical concepts, (2) as a means to control an extraneous factor, and (3) as a correction for heteroscedasticity. In the use of ratios as indices of concepts, a problem can arise if it is regressed on other indices or variables that contain a common component. For example, the relationship between two per capita measures may be confounded with the common population component in each variable. Regarding the second use of ratios, only under exceptional conditions will ratio variables be a suitable means ofcontrolling an extraneous factor. Finally, the use of ratios to correct for heteroscedasticity is also often misused. Only under special conditions will the common form forgers soon with ratio variables correct for heteroscedasticity. Alternatives to ratios for each of these cases are discussed and evaluated.

Cooper (2000) conducted a study on Financial Intermediation on which he observed that the quantitative behavior of business-cycle models in which the intermediation process acts either as a source of fluctuations or as a propagator of real shocks. In neither case do we find convincing evidence that the intermediation process is an important element of aggregate fluctuations. Foran economy driven by intermediation shocks, consumption is not smoother than output, investment is negatively correlated with output, variations in the capital stock are quite large, and interest rates are procyclical. The model economy thus fails to match unconditional moments forthe U.S. economy. We also structurally estimate parameters of a model economy in which intermediation and productivity shocks are present, allowing for the intermediation process topropagate the real shock. The unconditional correlations are closer to those observed only when the intermediation shock is relatively unimportant.

Gerrard (2001) conducted a study on The Financial Performance on which he found that Using ratio analysis the financial performance of a sample ofindependent single-plant engineering firms in Leeds is examined with regard to structural and locational differences in establishments. A number of determinants of performance are derived and tested against the constructed database. Inner-city engineering firms perform relatively less well on all indicators of performance compared with outer-city firms. The study illustrates the importance of using different measures of performance since this affects the magnitude and significance of the results. Financial supports necessary to sustain engineering in the inner city in the long run.

Schmidgall (2003) conducted a study on Financial Analysis Using the Statement of Cash Flow son which he observed that Managers use many financial ratios to judge the health of theirbusinesses. With the recent requirement of a statement of cash flow (SCF) by the Financial Accounting Standards Board, managers now have a new set of ratios that will give a realisticpicture of the business. The ratios include cash flow-interest coverage, cash flow-dividend coverage, and cash flow from operations to cash flow in investments. These ratios areparticularly useful because they show changes in a hotel or restaurant's cash position over time, rather than at a given moment, as is the case with many other ratios.

Marinade (2003) conducted study on Corporate Financial Structures on which he observed that the financial structure of a sample of Indian non-financial companies using a new and unique dataset consisting of a panel containing the published accounts of almost 900 companies thatpublished a full set of accounts every year during 1989-99.

In a new departure in the literature, the dataset includes quoted and unquoted companies. We compare the sources-uses approach to analyzing company financial structures with the asset-liability approach. We use both approaches to characterize and to compare the financial structures of Indian companies over time; between quoted and unquoted companies; and between companies which belong to a business group and those that do not. Finally, we compare our results to those obtained previously for India and forthe industrial countries.

McMahon (2005) conducted a study on Financial Information on which he found that financial statements mean little to the uninitiated. This paper, explains, in layman's terms, how to understand financial information. It covers measures of profitability. The second article will cover measures of company liquidity and the use of financial ratios. This paper continues to explain how to interpret and understand financial information. It deals with measures of liquidity, solvency and fund flows and describes how to establish standards against which a companys financial ratios can be compared.

Lee (2008) conducted a study on Financial Risk on which he observed that Financial researchers, including those concentrating on the lodging industry, use various financial risk measures fortheir studies. Examples of those risk measures are beta, earnings variability, bankruptcyprobability, debt-to-equity ratio and book-to-market ratio. The purpose of this study is, first, to descriptively investigate various financial risk measures used in the lodging financial literatureby performing factor analysis and identifying four distinct risk groups. Second, this study examines the predictive ability of the four risk groups for lodging firm performance. The findings of this study suggest that strategic and stock performance risk factors better represent a lodging firm's financial risk than do bankruptcy and firm performance risk factors, and also, ROA than ROE better estimates lodging firm performance in terms of their relationships with financial risk factors.

Johnson (2009) conducted a study on Financial Ratio patterns on which he found that theproperties and characteristics of financial ratios have received considerable attention in recent years with interest primarily focused on determining the predictive ability of financial ratios and related financial data. Principal areas of investigation have included the prediction of corporatebond ratings, and the anticipation of financial impairment]. Related studies have examined the characteristics of merged firms the differences in financial ratio averages among industries whether firms seek to adjust their financial ratios toward industry averages the relationshipbetween accounting-determined and market-determined risk measures, and the influence offinancial ratios on analysts' judgments about impending bankruptcy The general conclusion to emerge from these various research efforts is that a number of financial ratios have predictive and descriptive utility when properly employed.

To summarize the literature, Ratio analysis is a key dimension of financial management, suggesting a relationship between profit and loss as mentioned in the balance sheet of an organization. Its appropriate use will go toward giving a true picture of the financial health of the unit. Its benefits can be seen in areas of management, production, marketing, personnel management etc

RESEARH METHODOLOGY

Research in common parlance refers to a search for knowledge. Research as a scientific and systematic search for pertinent in formulation on a specific topic. In fact, research is an art of scientific investigation. It is a careful investigation or inquiry. Data Sources

Primary Data:

The data has been gathered through interactions and discussion with the finance department and executive.

Secondary Data:

Referred standard texts and reference books for collecting the information regarding the theoretical aspects, of the topic.

Annual reports and other magazines published by the company are used for collecting the required information.

NEED FOR THE STUDY

The present study on the ratios of NANDI PVC PIPES is to get the appropriate information of the organization. It help to know the historical position as well as the current financial possibility through search for new facts in any branch of knowledge.

SCOPE OF THE STUDY

The present study is confined to only Nandi PVC pipes pvt limited. The time period considered for performing the study is five years. On operating cycle calculation has been analyzed taking into consideration the information both past and present with respect to performance of the company.

OBJECTIVES OF THE STUDY The main objective of the present study is to find out the financial position of the company.

To know the liquidity position of the firm.

To evaluate the profitability of the firm.

To evaluate the firm efficiency in utilizing of assets.

LIMITATIONS OF THE STUDY

The present study is subjected to the following limitations: Confidential matters like financial position soundness etc. are naturally not disclosed fully. This is set back while drawing the conclusion.

The information from annual reports is insufficient to calculate few ratios.

Since the study covers only SRI NANDI PVC PVT LTD, It does not represent the over all scenario of the Nandi industry.

DATA ANALYSIS AND INTERPRETATION

LIQUIDITY RATIOS

1. Current Ratio

Current ratio expresses relationship between current assets and current liabilities. It is computed by dividing current assets and current liabilities. A higher current ratio indicates sign 2:1 is considered an ideal current ratio in ideal situation. For only one of worth of current liabilities, company should be maintained two of worth of current assets.

Table: 4.1

Years Current Assets (Rs. in Lakhs)Current Liability Current Ratio

(Rs. in Lakhs)

2009-1016137.548106.451.99

2010-1118321.769202.111.99

2011-1226196.8310188.342.57

2012-1326616.989319.382.86

2013-1435973.8410109.383.56

Graph: 4.1

Interpretation

The current ratio of Nandi Industries Pvt Ltd varied from 1.99 to with an average of 3.56 during the study period. In the above table and chart, the ratio of current assets and current liabilities should be 2:1 according to the financial report of the company that the firm is liquid and has ability to pay its current obligations in time.

2. Quick Ratio

Quick ratio express relationship between quick assets and current liabilities. It is obtained by measures quick assets by current liabilities. A quick ratio of 1:1 is considered adequate. For every one rupee current liabilities there should be maintained one rupee of worth of quick assets.

Table: 4.2

Years

Current Assets (Rs. in Lakhs)

Inventory

(Rs. in Lakhs)

Current Liabilities

Quick Ratio

2009-10

16137.547085.18

8106.451.99

2010-11

18321.76

9194.09

9202.111.99

2011-12

26196.83

10736.86

10188.342.57

2012-13

26616.98

12102.91

9319.382.86

2013-14

35973.84

14436.48

10109.382.56

Graph: 4.2

InterpretationThe quick ratio of Nandi Industries Pvt Ltd varied from 1.99 to 2.86 with an average of 1.11. It was above standard norm of 1:1 for the entire period. It conforms that the liquidity position of this Nandi Industries Pvt Ltd in terms quick ratio was more than the standard except in the 2010-11 financial year. The firms capacity of pays of currant obligations immediately and is a test of liquidity. The high quick ratio is an indicate of the firm is liquid and has the ability to meet is current liabilities.

3. Cash Ratio

This ratio is also called "Absolute Liquidity Ratio" or "Super Quick Ratio". Since cash is the most liquid asset, a financial analysis may examine cash ratio and its equivalent to liabilities. Trade investment or marketable securities are equivalent of cash, the reform, they may be included in the computation of cash ratio is,

Table: 4.3

Years

Cash+MS

(Rs. in Lakhs)

Current Liabilities

(Rs. in Lakhs)Cash Ratio

2009-10

247.72

8681.59

0.03

2010-11

350.67

9556.53

0.04

2011-12

2650.37

10826.59

0.25

2012-13

420.1

10030.68

0.04

2013-14

3463.66

10109.38

0.34

Graph: 4.3

InterpretationThe cash ratio of Nandi Industries Pvt Ltd was started low at first by 0.03in the year 2009-10 andThen it was increased by 0.25 in the year 2011-12, it was fatly decreased by 2012-13 by 0.04 and it increased in 2013-14. So, it will increase in future also.

4.Net Working Capital Ratio:

Working capital turn over ratio indicates velocity of the utilization of net working capital. This ratio indicates number of times the working capital is turned over in the course of year. This ratio measures the efficiency with which the working capital is being used by a firm.

Table: 4.4

YearsNet working Capital

(Rs. in Lakhs)

Net Assets

(Rs. in Lakhs)

NWC Ratio

2009-10

7455.95

28680.37

0.26

2010-11

8765.23

32901.4

0.27

2011-12

15470.24

40386.36

0.38

2012-13

16586.3

43836.66

0.38

2013-14

25865.46

54106.44

0.48

Graph: 4.4

Interpretation

The NWC ratio of Nandi Industries Pvt Ltd was started with 0.26 in the first year 2009-10 and it was increased same like another two years respectively. The NWC ratio was increased to 0.38 by the year 2011-12 and it was constant to next 2012-13 and it increased in 2013-14 year. The average NWC ratio of Nandi Industries Pvt Ltd is 0.45 for during period.

LEVERAGE RATIO1. Debt Ratio

Several debt ratios may be 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 a capital structure. It may therefore, compute debt ratio by dividing total debt by capital employed. Capital employed will include total debt and net worth.

Table: 4.5

Years

Total Debt

Capital Employed

Debt Ratio

2009-10

20999.21

28680.31

0.73

2010-11

24931.96

32901.40

0.76

2011-12

31301.36

40386.36

0.78

2012-13

32679.87

43836.66

0.75

2013-14

41229.73

53755.86

0.76

Graph: 4.5

Interpretation

The debt ratio of Nandi Industries Pvt Ltd was started with 0.73 at first year 2009-10. It was increased to 0.76, 0.78, 0.75 and 0.76 by remaining year's i.e.2010-11, 2011-12, 2012-13 and 2013-14 respectively. The last year it was increased with 0.76. The average debt ratio of Nandi Industries Pvt Ltd is 0.75 for the above study period.

2. Debt Equity Ratio: The relationship describing the leader's contribution for each rupee of owner's contribution is called Debt Equity Ratio. The debt equity measures the long term financial solvency of a business concern. The ratio is also popularly known as External or Internal equity ratio. This ratio can also be viewed as including the relative proportion of debt amends equity in financing the assets of the business unit.

Table: 4.6

Years

Total Debt

Net worth

Debt Equity Ratio

2009-10

20999.21

7781.10

2.69

2010-11

24931.96

7969.42

3.13

2011-12

31301.36

9095.07

3.45

2012-13

32679.87

11156.07

2.93

2013-14

41229.73

12526.13

3.29

Graph: 4.6

InterpretationThe debt equity ratio of Nandi Industries Pvt Ltd was started with 2.69 at first time in the year 2009-10 and then it was increased up to 3.45 in the year 2011-12. It was decreased by 2.93 in the year 2012-13 and it increased by 3.29. The average debt equity ratio of Nandi Industries Pvt Ltd is 3.09 during the Study period.

3. Capital Employed To Net Worth RatioThis ratio is also known as equity ratio. This is yet another way of expressing relationship between debt and equity. This to know how much funds ate being contributed together by lenders and owners for each rupee of owner's contribution.

Table: 4.7

Years

Capital Employed

Net worth

Capital Employed to Net Worth Ratio

2009-10

22264.36

6136.54

3.63

2010-11

28256.36

7781.10

3.63

2011-12

32283.34

7969.42

4.06

2012-13

40386.36

9095.07

4.45

2013-14

53755.86

12526.13

4.29

Graph: 4.7

InterpretationThis ratio of Nandi Industries Pvt Ltd was started with 3.63 at first year 2009-10 and it was increased up to 4.45 in the year 2012-13 it decreased by 4.29 in the year 2013-14. The average of this ratio of Nandi Industries Pvt Ltd is 4.09 during the study period.

ACTIVITY RATIOS

1. Inventory Turnover Ratio

It indicates whether inventory is efficiently used or not the purpose is to see whether only the required minimum funds have been locked up to inventory. This ratio implies number of times stock has been turned over during a period and evaluates efficiency with which a firm is able to manage its inventory.

Usually a high inventory turn over ratio indicated efficient management of inventory. A low inefficient management of inventory indicating over investment in inventories, debt business, poor quality of goods, stock accumulation and low profit as compared to total investment.

Table: 4.8

Years

Sales

(Rs. in Lakhs)

Inventory

(Rs. in Lakhs)

InventoryTurnover Ratio

2009-10

28608.02

7085.18

4.04

2010-11

30295.60

9194.09

3.30

2011-12

36936.10

10736.86

3.47

2012-13

46365.12

12102.91

3.83

2013-14

64471.61

14436.48

4.46

Graph: 4.8

InterpretationThe inventory turn over ratio of Nandi Industries Pvt Ltdwas started with 4.04 at 2009-10. It was decreased by 3.30 at 2010-11 and slowly fluctuation by next 2 years. It was increased by 3.83 i.e., 2012-13 and it increased by 4.46. The average ratio of Nandi Industries Pvt Ltd is 3.82 for the above study period.

2. Debtors Turnover Ratio

Debtors turn over ratio indicate this ratio the relationship between sales and average debtors. It is showing by dividing credit sales. Higher turn over ratio indicated better performance and lower turn over ratio indicated inefficiency. It includes debtors as well as the bills receivables.

Table: 4.9

Years

Sales

(Rs. in Lakhs)

Debtors

(Rs. in Lakhs)

Debtors Turnover Ratio

2009-10

28608.00

7197.89

3.97

2010-11

30295.60

6707.59

4.52

2011-12

36936.00

7667.92

4.82

2012-13

46365.00

8814.31

5.26

2013-14

64471.61

11966.16

5.38

Graph: 4.9

InterpretationThe debtors turn over ratio of Nandi Industries Pvt Ltd was started with 3.97 by the year 2009-10. It was going up to, increased by 4.52 to 4.82 and it stands at last by 5.38 in the years 2010-11, 2011-12 and 2013-14 respectively. The debtors turn over ratio average of Nandi Industries Pvt Ltd is 4.79 for the above study period.

3. Net Assets Turnover Ratio

Assets are used to generate sales. Therefore, a firm should manage its assets efficiently to maximize sales. The relationship between sales and assets is called assets turn over ratio.

Table: 4.10

Years

Sales (Rs. in Lakhs)

Net assets

(Rs. in Lakhs)

Net Assets Turnover Ratio

2009-10

28608.00

28680.37

1.00

2010-11

30295.60

32901.40

0.92

2011-12

36936.00

40386.36

0.91

2012-13

46365.00

43836.66

1.07

2013-14

64471.61

61074.35

1.07

Graph: 4.10

InterpretationThe net assets turn over ratio of Nandi Industries Pvt Ltd was 1.00 in the year 2009-10. It was increased and decreased by 0.92 and 0.91 in the years2010-11 to 2011-12 respectively. Then it was increased in the year 2013-14 by 1.07. The average of net assets turn over ratio of Nandi Industries Pvt Ltd is 0.99 during the above study period.

4.Fixed Assets Turnover RatioThis ratio is calculated by dividing Sales into Net Fixed Assets. This ratio expressed the number of times fixed assets are being turn over in a stated period. This ratio shows how well the fixed assets are being used in business. The higher ratio is shows that better utilization of the plants and equipment another a low ratio indicated that fixed assets are not being efficiently utilized.

Table: 4.11

Years

Sales

(Rs. in Lakhs)

Net Fixed Assets

(Rs. in Lakhs)

Fixed Assets Turnover Ratio

2009-10

28608.00

20719.42

1.39

2010-11

30295.60

24129.72

1.26

2011-12

36936.00

.24912.53

1.48

2012-13

46365.00

27242.36

1.70

2013-14

64471.61

28665.35

2.25

Graph: 4.11

InterpretationThe Fixed Assets Turn over Ratio of Nandi Industries Pvt Ltd was started with 1.39 in the year 2009-10. Then it was increased and decreased by 1.26 by the years 2010-11 respectively. At last it was increased by 1.48 to 1.70 in the years 2011-12 and 2012-13 respectively and it increased by 2.25 in the year2013-14. Then the average of this ratio of Nandi Industries Pvt Ltd is 1.61 during the above study period.

5. Current Assets Turnover RatioThis ratio is calculated by dividing sales into current assets. This ratio expressed the number of times current assets are being turn over in a started period. This ratio shows how well the current assets are being used in business. The higher ratio is showing that better utilization of the current assets another a low ratio indicated that current assets are not being efficiently utilized.

Table: 4.12

Years

Sales

(Rs. in Lakhs)

Current assets

(Rs. in Lakhs)

Current Assets Turnover ratio

2009-10

28608.00

16137.54

1.77

2010-11

30295.60

18321.76

1.65

2011-12

36936.00

26196.83

1.41

2012-13

46365.00

26616.98

1.74

2013-14

64471.61

35973.84

1.79

Graph: 4.12

InterpretationThe current assets turn over ratio of Nandi Industries Pvt Ltd was started with 1.77 in the year 2009-10 and it was decreased by 1.65 and 1.41 i.e. 2010-11 and 2011-12 respectively. Then it may increased by 1.79 in the year 2013-14. The average current assets turn over ratio of Nandi Industries Pvt Ltd 1.67 during the above study period.

6. Working Capital Turnover RatioThe ratio expressed the relationship between sales and working capital. A higher working capital turn over ratio indicated more efficiency, the lesser investments in working capital and greater the profit.

Table: 4.13

Years

Sales

(Rs. in Lakhs)

Net Current Assets

(Rs. in Lakhs)

Working Capital Turnover Ratio

2009-10

28608.00

7455.95

3.84

2010-11

30295.60

8765.23

3.46

2011-12

36936.00

15470.24

2.39

2012-13

46365.00

16586.3

2.80

2013-14

64471.61

25100.51

2.57

Graph: 4.13

InterpretationThe Working Capital Turn over of Nandi Industries Pvt Ltd was started with 3.84 in the year 2009-10. Then it was decreased by 3.46 in the year 2010-11. At the last three years i.e.2011-12, 2012-13 and 2013-14 it was decreased by2.39, 2.80 and 2.57 respectively. The average of Working Capital Turn over Ratio of Nandi Industries Pvt Ltd is 3.01 during the study period.

PROFITABILITY RATIOS

1. Gross Profit Ratio

This ratio established a relationship between gross profit into sales. It is calculated by gross profit by sales. It indicates the position of trading result. The higher gross profit ratio is indicated better performance and lower gross profit ratio is shown unfavorable.

Table: 4.14

Years

Gross profit

(Rs. in Lakhs)

Net Sales

Gross Profit Ratio

2009-10

34742.20

31587.00

1.00

2010-11

60991.00

33589.00

1.81

2011-12

216164.00

41045.00

5.27

2012-13

400144.00

49472.00

8.10

2013-14

480022.00

64471.61

7.44

Graph: 4.14

InterpretationThe Gross Profit Ratio in the year 2008-09 is 1.00, and it is increased in the next year 2010-11 by 1.81 respectively. Later it is increased in the year2011-12 and 2012-13 by the values of 5.27 and 8.10 respectively later it decreased by 7.44 it has to increased in future.

2. Net Profit Ratio

Net profit ratio is established a relationship between net profit after tax in to sales. This ratio is very useful to the proprietors invests because it reveals over all profitability concern. This ratio indicated the efficiency of the management in manufacturing, selling and distribution, administration and other expensive actives. The higher net profit ratio indicated the better performance because it uses idea of improves efficiency of the concern.

Table: 4.15

Years

Net Profit After tax

Net Sales

Net Profit Ratio

2009-10

2552.80

21024.15

0.12

2010-11

2698.38

28608.29

0.10

2011-12

1163.79

30295.60

0.04

2012-13

2591.74

46365.63

0.06

2013-14

1835.29

64471.61

0.02

Graph: 4.15

INTERPRETATIONThe above graph shows the Net Profit Ratio of five years from 2010-14. This shows the relation between Profit after Tax and Net Sales. The Net Profit Ratio in the year 2009-10 is 0.12 and it decreased in the years 2012-13 and 2013-14 by 0.06, 0.02 respectively, the profit must be increase in future.

FINDINGS

Current ratio is 2.65 in 2012-13 and 3.56 in 2013-14, because of increase in current assets and current liabilities.

The Quick ratio is fluctuating year by year.

Networking capital ratio shows an increasing trend.

Debt ratio is increased by 0.73, 0.76, 0.77 i.e., 2010-2011 and suddenly decreased in 2014 is 0.76.

The inventory turnover ratio was started with 4.04 at 2010-11 it was decreased by 3.30 i.e., 2011-12 and slowly fluctuating by next two years. It was increased by 4.46 i.e., 2013-14.

Net assets turnover ratio is also fluctuating year by year i.e., 1.00, 0.92, 0.91, 1.07, and 1.07 it is constant trend.

The current assets turnover ratio is decreased by 1.86, 1.77, 1.65, 1.41, later it increased to1.74 and 1.79 in the year 2013-14 and 2014-15.

The working capital turn over ratio is fluctuating year by year i.e., 3.83, 3.46, 2.79 and 2.57.

The gross profit ratio is increasing from 2010-2011, 2013-2014 decrease year by year.

Net profit ratio shows an average of decreasing trend.

SUGGESTIONS The company should maintain adequate cash to meet daily business obligations.

The company is suggested to improve the net profit by increasing the volume of sales as it is found that sales percentage is fluctuating over the years.

The earning per share is fluctuating year by year the management should concentrate to build optimum capital structure to maximize the earning per share.

The management should relay more on internal funds than external funds which make the company strong in financial solvency.

The firm is investing most of the debt funds in improving the fixed assets it will be suggestible to continue the same to have a financial soundness.

CONCLUSION

It is concluded that, the firms overall financial performance is very good. If the credit collection period could be reduced. The company has to increase the current ratio. Then only the liquidity position of a company is good. The company can perform still better in current ratio. The ratios are fluctuating year by year in order to maintain good position of the ratios in feature.

BIBLIOGRAPHY . FINANCIAL MANAGEMENT

I.M. Pandey . FINANCIAL ACCOUNTING & ANALYSIS S.P. Jain & K.L. Narang . FINANCIAL MANAGEMENT S.P. Khan & P.K. Jain . FINANCIAL MANAGEMENT

Prasanna ChandraWeb sites

www.google.comwww.money controwork

www.nandipipes.comNANDI PVC PIPES PVT LTD BALANCE SHEET FOR THE 2009-14

ANNEXURE - I (Rs. In lakes)PARTICULARSS.NO

2009-10Rs.

2010-11Rs.

2011-12Rs.

2012-13Rs.

2013-14Rs.

Source of funds

1 . Share holders funds

1

3976.30

3976.30

3976.36

3976.36

3976.36

a) Share capital

2

3804.70

3993.00

5109.64

7179.70

8549.77

b) Reserve & Surplus

2. Loan funds

a) Secured loans

3

10986.30

9244.80

16382.92

17832.23

22645.54

b) Unsecured loans

4

9588.74

15079.10

13733.65

12271.32

15460.46

3. Deferred tax liability

424.17

618.07

1184.79

2576.32

3123.73

Total

28680.37

32901.40

40386.36

43836.66

53755.86

Application of funds

1 .Fixed assets

a) Gross block

5

20021.36

25035.99

31824.32

35516.23

38974.86

b) Less: Depreciation

5417.03

6510.29

7666.24

9127.98

10834.88

c) Net block

14604.33

18525.70

24158.09

26380.35

28239.98

d) Capital work in progress

6015.10

5604.02

754.45

862.01

425.37

2. Investments

6

589.83

-

-

-

-

3. Current assets, loans and

Advances

a) Inventories

7

7085.18

9194.09

10736.86

12102.91

14436.48

b) Sundry debtors

8

7197.89

6707.59

7667.92

8814.31

11966.16

c) Cash & bank balances

9

247.72

350.67

2650.37

420.10

3463.66

d) Loans and advances

10

1616.75

2080.42

5241.68

5289.66

6108.54

16137.54

18321.76

26196.83

26616.98

35973.84

Less: Current liabilities

a) Current liabilities

11

8106.45

9202.11

10188.34

9319.38

10109.38

b) Provisions

586.14

354.42

538.25

711.30

774.95

Net current assets

8681.59

9556.53

10826.59

10030.68

10983.33

4. Miscellaneous expenditure

12

7455.95

8765.23

15470.24

16586.30

25100.51

(Adjustment)

10.17

6.45

3.59

-

Total

28680.37

32901.40

40386.36

43836.66

53755.86

PROFIT & LOSS ACCOUNT

(Rs. In Lakhs)

PARTICULARS

S.NO

2009-10Rs.

2010-11Rs.

2011-12Rs.

2012-13Rs.

2013-14Rs.

Income

Sales

31587.0

33589.00

41045.00

49472.00

68046.95

Less: Exercise duty

2979.50

3294.08

4109.00

3107.00

3575.34

Sales(net)

28608.7

30295.60

36936.00

46365.00

64471.61

Other income

13

62.34

77.70

33.59

93.21

210.18

Increase(decrease) in stocks

14

879.63

741.46

471.20

14.16

246.82

Total29550.6731114.7637441.0046473.0064434.97

Expenditure

Raw material consumed

15

15484.0

18264.94

19232.00

24779.00

39775.51

Manufacturing expenses

16

0

6479.97

8629.00

8874.00

10101.71

Cost of material sold

4403.50

276.10

644.00

659.16

608.33

Salaries, wages and other

Allowances

17

954.90

1254.33

1449.00

1862.53

2142.75

Other expenses

18

1612.60

1879.07

2331.00

2479.56

2745.53

Interest and financial charges

19

989.50

1257.86

1832.00

2302.59

4608.48

Depreciation

852.50

1103.6

1156.00

1512.99

1641.84

Total

24298.0030606.85

35276.00

42471.50

61612.15

Profit before tax

3474.20

609.91

2164.00

4001.44

2822.82

Provision for current tax

272.42

52.78

242.00

453.41

318.20

Less: MAT credit entitlement

-

-52.78

242.00

453.41

109.14

Provision for fringe benefit tax

-

-

17.21

1392.16

546.78

Provision for deferred tax

1108.60

193.89

566.00

17.54

14.41

Profit after tax

2104.10

415.02

1580.00

2591.74

1835.29

Balance brought forward from

604.21

748.77

837.00

858.92

1242.48

previous year

Profit available for appropriation

2698.30

1163.79

2417.00

3395.20

3087.77

Appropriations

Transfer to Debenture

Redemption Reserve

-

-

93.75

187.50

468.75

Transfer to general reserve

1500.00

100.00

1000.00

1500.00

1000.00

Proposed dividend

397.64

198.82

397.00

397.64

397.64

Tax on dividend

51.97

27.88

67.09

67.58

67.58

Balance carried to balance sheet

748.77

837.10

858.00

1242.48

1143.80

Basic diluted earning per share

2698.30

1163.79

2417.00

3395.20

3087.77

No. of shares used in computing

5.27

1.04

3.98

6.52

4.62

basic.

EPS.

397.63

397.63

397.63

397.63

397.63

MANUFACTURER

MANUFACTURER

CONSUMER

DEALER

MANAGING DIRECTOR

FINANCIAL MANAGER

PRODUCTION MANAGER

MARKETING MANAGER

PERSONAL

RELATION OFFICER

ACCOUNTS MANAGER

PRODUCTION INCHARGE

QUALITY CONTROLLER

REGIONAL MANAGER

PERSONAL OFFICER

Accounts Officer

Operator

Lab Technician

Sales Officer

EMBED Equation.DSMT4

CONSUMER

EMBED Equation.DSMT4

EMBED Equation.DSMT4

EMBED Equation.DSMT4

EMBED Equation.DSMT4

EMBED Equation.DSMT4

EMBED Equation.DSMT4

EMBED Equation.DSMT4

EMBED Equation.DSMT4

EMBED Equation.DSMT4

EMBED Equation.DSMT4

EMBED Equation.DSMT4

EMBED Equation.DSMT4

VISWAM DEGREE AND PG COLLEGE ANGGALLU, MADANAPALLE Page 4038Viswam Degree and PG College, Angallu, Madanapalle 24

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