CHAPTER I 1.1.

. INTRODUCTION OF THE STUDY FINANCIAL STATEMENT A financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It may show a position at a moment of time as in the case of a balance sheet, or may reveal a series of activities over a given period of time, as in the case of an income statement. Thus, the term financial statement generally refers to the basis statements; i) ii) iii) iv) The income statement The balance sheet A statement of retained earnings A statement of charge in financial position in addition to the above two statement. FINANCIAL ANALYSIS Financial analysis is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Financial analysts can also use percentage analysis which involves reducing a series of figures as a percentage of some base amount. For example, a group of items can be expressed as a percentage of net income. When proportionate changes in the same figure over a given time period expressed as a percentage is known as horizontal analysis. Vertical or common-size analysis, reduces all items on a statement to a common size as a percentage of some base value which assists in comparability with other companies of different sizes. As a result, all Income Statement items are divided by Sales, and all Balance Sheet items are divided by Total Assets.

Another method is comparative analysis. This provides a better way to determine trends. Comparative analysis presents the same information for two or more time periods and is presented side-by-side to allow for easy analysis. MEANING OF FINANCIAL ANALYSIS It is the process of identifying the financial strength and weakness of a firm from the available accounting data and financial statement. The analysis is done by properly establishing the relationship between the items of balance sheet and profit and loss account the first task of financial analyst is to determine the information relevant to the decision under consideration from the total information contained in the financial statement..

IMPORTANCE OF FINANCIAL STATEMENT ANALYSIS 1) RECORDING PAST DATA: All financial statements are essentially historically historical documents. They tell what has happened during a particular period of time. However most users of financial statements are concerned about what will happen in the future. Stockholders are concerned with future earnings and dividends. Creditors are concerned with the company's future ability to repay its debts. Managers are concerned with the company's ability to finance future expansion. Despite the fact that financial statements are historical documents, they can still provide valuable information bearing on all of these concerns. 2) CAREFUL SELECTION: Financial statement analysis involves careful selection of data from financial statements for the primary purpose of forecasting the financial health of the company. This is accomplished by examining trends in key financial data, comparing financial data across companies, and analyzing key financial ratios. 3) CONCERNED WITH RATIOS:

Managers are also widely concerned with the financial ratios. First the ratios provide indicators of how well the company and its business units are performing. Some of these ratios would ordinarily be used in a balanced scorecard approach. The specific ratios selected depend on the company's strategy. 4) VALUABLE IN USE: Comparison of one company with another can provide valuable clues about the financial health of an organization. Unfortunately, differences in accounting methods between companies sometime makes it difficult to compare the companies' financial data.. Some times enough data are presented in foot notes to the financial statements to restate data to a comparable basis.. 5) HELPS TO RAISE QUESTIONS:. They raise may questions, but they rarely answer any question by themselves. In addition to ratios, other sources of data should be analyzed in order to make judgments about the future of an organization. They analyst should look at industry trends, technological changes, changes in consumer tastes, changes in broad economic factors, and changes with in the firm . APPLICABILITY OF FINANCIAL ANALYSIS: I . TO MANAGEMENT 1) HELPFUL TO FRAME STRATEGY: Financial Analysis helps to analyze the problem and to frame the certain strategies in order to solve them. Most of the organizations are following the financial strategy but it will differ according to its nature .its aim to reduce the problem not to eliminate the problem fully.

2) REDUCES THE PERFORMANCE GAP:

In every organization the performance gap for instance if in one year performance will be high and in another year the performance will be low. By following the proper financial strategy the position can e analyzed easily. 3) IMPROVE THE PERFORMANCE: Financial Analysis helps to improve the performance and to make the performance further more better .Financial analysis helps to fill the gap & to act as a preventive force for the problem. Financial analysis predict the expenses and incomes of the organization.

4) FACILITATE THE PLANNING: Financial Analysis helps to plan for the future and make the company in to the action according to the action. In Financial Analysis various tools can be used such as Ratio analysis, comparative income statement and balance sheet etc.

5) PREDICT THE EXPENSES AND INCOME : Financial Analysis helps to predict the expenses and income and plan according to that. Financial Analysis makes the management to reduce the expenses and to earn the income .According to the management take the few steps to increase the performance. 6) SOLVE THE PROBLEM: Financial Analysis help to predict the problem on the side of management and investors and helps to reduce the problem .Based on the problem certain strategies are introduced .Not only the management but also for the customers and investors problem will not be increased .

II. TO SHARE HOLDERS :

1) CLEAR IDEA ABOUT THE COMPANY: Financial Analysis gives the clear cut idea about the company by specifying assets and liabilities of the concern. Financial Analysis makes the investors to think about their future and plan according to that. Some times it act as a preventive force . 2) HELPS TO TAKE DECISION: By seeing the company balance sheet the general public can take decision based on the balance sheet .Some times it enables the shareholders to create the willing ness among themselves . 3) HELPS TO EARN MORE RETURNS: Financial Analysis enables the public to earn more returns .For instance when the public investing profit making company they will get additional dividends. More and more the company gets the profit the share holder will get the additional dividends based on that. 4) ENABLES BETTER UNDERSTANDING: Financial Analysis enables the public for better understanding of the expenses and income of the concern . By this public can get the clear outline about the company and take the decision according to that.

5) FIT A PROPER SOLUTION: Financial Analysis fit a proper solution to the problem of the investors. For instance if the investors need to earn more returns means they can buy the shares of the profit making company and more returns.

This studying contain following analysis: 1) comparative analysis statement 2) Net Working Capital

3) Ratio analysis 4) Trend analysis. 5) Cash Flow Statement. 6) Common Size Statement

1)

Comparative financial statement: Comparative financial statement is those statements which have been designed

in a way so as to provide time perspective to the consideration of various elements of financial position embodied in such statements. In these statements, figures for two or more periods are placed side by side to facilitate comparison. But the

income statement and balance sheet can be prepared in the form of comparative financial statement i) Comparative income statement: The income statement discloses net profit or net loss on account of operations. A comparative income statement will show the absolute figures for two or more periods. The absolute change from one period to another and if desired. The change in terms of percentages. Since, the figures for two or more periods are shown side by side; the reader can quickly ascertain whether sales have increased or decreased, whether cost of sales has increased or decreased etc.

ii) Comparative balance sheet: Comparative balance sheet as on two or more different dates can be used for comparing assets and liabilities and finding out any increase or decrease in those items. Thus, while in a single balance sheet the emphasis is on present position, it is on change in the comparative balance sheet. Such a balance sheet is very useful in studying the trends in an enterprise.

2) Net Working Capital Analysis: Normally working capital refers to difference between current assets and current liabilities of the business concern.

Current Assets are cash , bank , debtors ,bills receivable, stock, prepaid expenses, advances, and short term investments.

Current Liabilities are sundry creditors ,bills payable, bank overdrafts , outstanding expenses, provisions, proposed dividends.

Net working capital statement or schedule changes in working capital is prepared to disclose net changes in working capital.

3) Ratio analysis: Ratio analysis is a widely used tool of financial analysis. The term ratio in it refers to the relationship expressed in mathematical terms between two individual figures or group of figures connected with each other in some logical manner and are selected from financial statements of the concern. The ratio analysis is based on the fact that a single accounting figure by it self may not communicate any meaningful information but when expressed as a relative to some other figure, it may definitely provide some significant information the relationship between two or more accounting figure/groups is called a financial ratio helps to express the relationship between two accounting figures in such a way that users can draw conclusions about the performance, strengths and weakness of a firm.

4) TREND ANALYSIS: Trend analysis is an important tool of horizontal financial analysis. This method plays a vital role to making a comparative study of financial statements of several periods .Trend analysis is carried out by calculating trend ratio (%) & plotting the accounting data on graph sheet.

5) CASH FLOW STATEMENT

In financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and cash out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet.[1] As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International Accounting Standard 7 (IAS 7), is the Indian Accounting Standard that deals with cash flow statements 6) COMMON SIZE STATEMENT A financial statement that has variables expressed in percentages rather than in dollar amounts. For example, items on an income statement are shown as a percentage of revenue or sales, and balance sheet entries are displayed as a percentage of total assets. Common-size statements are used primarily for comparative purposes so that firms of various sizes can be equated. Also called one hundred percent statement

ADVANTAGES OF FINANCIAL STATEMENT ANALYSIS 1) Financial statement analysis of firms presents you an intuition on how

the corporation is conducting its program. For stockholders who are interested in finding out whether the management is properly utilizing the corporations resources to create shareholder wealth, a financial analysis of a corporation will be able to help investors come to proper decision.

2)

Viability of a project can be found out through a financial statement

analysis which can be performed by financial analysts employed by the firm. Projects that would bring in the maximum amount of revenues over the course of time over similar projects are recommended by financial analysts to the management.

3)

Expected returns from projects are provided by financial analysts to the

management. Analysts employed by the business can also give the management suggestions on whether to issue new stocks or borrow money to fund new projects.

4)

Financial analysts will recommend whether a new project should be undertaken

or invest the money somewhere else, essentially performing capital budgeting decisions.

5)

Financial analysts who advice to their employers on what stocks might be a

good buy, these recommendations are usually private and only available within the company. A corporations stock price can be affected based on a financial analyst recommendations as these recommendations are used by stockholders to determine whether it is a good investment.

DISADVANTAGES OF FINANCIAL ANALYSIS:

1)

There are three main financial statements investors analyze. They are the

balance sheet, income statement and the cash flow statement. The balance sheet is a snapshot in time. It shows all the assets owned and liabilities owed for a company. 2) It also shows the amount of equity or ownership that is paid for by investors.

The income statement looks at the entire year. It starts with revenues and then deducts expenses for net income. 3) The cash flow statement shows where the cash is really coming by breaking

down cash flow into cash from operations, investing and financing. There are advantages and disadvantages to analyzing financial statements for investment decisions. 4) While financial statements are good for the data needed to conduct a thorough

ratio analysis, they are based on the accrual system of accounting, which is not market based. This is both an advantage and a disadvantage.

1.2.COMPANY PROFILE

COMPANY PROFILE TO BE IN BUSINESS, ONE HAS TO DO BEYOND BUSINESS

Every economy needs a thought leader to sensitize its citizen to issues, trend opportunities and to stimulate them towards positive action. For over 40 years, the SPIC group has been doing just that. It has shown countless Indian the way to better life by engaging in business which held immense potential not only for the company but also the country and the common good. In the early days of independences when most of India moved on two wheels of bicycle and manufacturing sector was still in its infancy. The group started manufacturing Lambert scooter in collaboration with innocent, Italy bringing in a revolution and changed the face of urban transport in the country. It is believed the business philosophy that A business venture is worthwhile only if it serves the interest of common man SPIC played a pivotal role in ushering the Green Revolution at critical moment when India was looking for self sufficiency in food. It contributed to the growth of Nations core sector of agriculture. As the group consolidated its principal business of fertilizer, it has also successful diversified in to following: Chemical Petrochemical Bio-technology Agri-business

SPIC with its overpowering sense of vision, a focus on building infrastructure, a culture of innovation, sprit of partnership and the most important of all, the human touch has changed the lives of million. SUCCESS COMES TO THOSE WHO DRE TO DREAM.

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A Tribute to the Founder: Late DR.M.A CHIDAMBARAMs dream of contributing to the growth of the Nations core sector - agriculture and improving the life of the farmer resulted in the creation of a vibrant organization SOTHERN PETROCHEMICAL INDUSTRIES CORPORATION LIMITED (SPIC) in 1969. He set up a giant fertilizers complex at Tuticorin and as its founder Chairman, he put SPIC firmly on the path to becoming a leader in fertilizer business. The Rs5000 core (US $ 1 billion) SPIC Group, with a

shareholders base of over 90,000 has emerged as a front ranking industrial conglomerate in India. This is so courtesy its professional management, led by Chairman and comprising Spics Working Directors.

Present chairman emeritus Dr. A.C. Muthiah son of Dr. M.A Chidambaram, who had chartered the groups growth, propelled it into becoming a leading industrial conglomerate in India and a major player in agriculture the nations co re sector, with significant presence also in chemicals, petrochemicals, Agri-business & life-sciences. Dr.A.C.Muthiah is a member of the Tamil Nadu planning commission representing the industry(2012). He is presently the chairman of the Indian institute of management (IIM)-Kozhikode. He was the president of the federation of Indian chambers of Indian chambers of commerce & industry (FICCI) in its platinum jubilee year (2003). Dr.A.C.Muthiah is keen sports enthusiast. He was the president of the board of control for cricket in India (BCCI) during 1999-2000. He was also a member of the executive board of the international cricket club, London during the above period.

Ashwin C. Muthiah son of Dr. A.C. Muthiah took over as chairman of SPIC Limited on 16th November 2011. With his vast experience and business acumen the group is on its way to attaining greater glory under his leadership.

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SPIC was incorporated on 18TH December in the year 1969, as a joint sector by Dr.M.A Chidambaram (Founder-Chairman SPIC) and associated and Tamilnadu industrial Development Corporation Limited (TIDCO), a state development institute, for manufacturing Nitrogenous and phosphoric fertilizers. Presently the company renowned brands are

Urea Di-ammonium phosphate(DAP) Complex fertilizers 20:20:0:13 Gypsum Sulphuric acid Phosphoric acid Aluminum fluoride

Vision: To attain leadership in fertilizers, Petrochemical, Biotechnology through and change management. Mission: To achieve corporate excellence in our business by offering quality products and services created and made available by an empowered workforce that is guided by durable values, reflecting an abiding concern for stake holders interest.

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Technology and Capacity: Plant Urea Complex fertilizers Ammonia Sulphuric acid Phosphoric acid Aluminum fluoride Product capacity(MTPA) 660,400 660,100 352,00 192,000 112,000 3500 Technical collaboration TOYO ENGINEERING CORPORATION JAPAN HITACHI ZOSEN , JAPAN KREBS,FRANCE DAVY McKEY,UK HITACHI ZOSEN JAPAN HITACHI ZOSEN JAPAN ALSEA ALUSSUISSE,SWITZERLAND

OTHER INTEREST: SPICs Associate Companies

Tamilnadu Petroproducts Limited Tamilnadu Petroproducts Limited (TPL), a corporate star, was born in the year 1984 with the objective of setting up a 50,000 MTA Linear Alkyl Benzene (LAB) project. TPL has since imprinted winning hall marks successively over the years in Corporate India and the Petrochemical Industry in Particular .Over more than a decade, TPL grew in strength, thinking differently, harnessing the resources by laying a fundamental platform for financial strength and responding to customers innovatively by bringing in new products and services TPL has surged ahead with laurels for a challenging & promising future, carrying the business commitment of the parameters, M/s SPIC Limited, who have diverse interest in fertilizers, petrochemicals and other services and Tamilnadu Industrial Development Corporation Limited (TIDCO),a state Govt. enterprise. With prime interest in promoting industries in the State of Tamilnadu. SPIC its boasts of a turnover close to US $800 billion and has been the principal force in TPL achieving corporate leadership in detergent business

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The LAB plant is located in the Manali Industrial Belt,25 KMS away from Chennai City. The various infrastructure facilities at Manali, The advantages of a metropolitan city, hitech communication interface and cosmopolitan culture, synergies with the vision of promoters business plans TPL continues to march ahead excellent track record and its achievements in a short time frame stand out distinctly, propelled by continuous up gradation of technology, Quality human resource and utmost customer satisfaction. TPLs total turnover for 2010 was Rs.974.69 crores and it increased in 2011 to Rs.1,184.62 crores

Manali Petrochemicals Limited (MPL) Manali Petrochemicals Ltd.(MPL) is a leader in the production and marketing of Propylene Oxide, Propylene Glycols and Polysols in India. Located at Manali in Chennai, India, MPL is engaged in the manufacturer of the above Petrochemical products. The company operates two grass root. production facilities at Manali to manufacture Propylene Oxide(PO),Propylene Glycol(PG) and Polysols. It markets its Polysols with Isocyanates sourced indigenously as well as imported from Japan and China and the prepolymers produced at MPL in meeting the demand of polyurethane industry in India. MPL Total turnover of 2010 is Rs.421.25 crores and its was increased 2011 is Rs.497.63 crores SPEL Semi Conductor Limited (SPEL) SPEL Semi Conductor is India's first & only Semiconductor IC Assembly & Test facility. SPEL pioneered the Outsourced Semiconductor Assembly & Test Services (OSAT) market in india and continues to steadily do so. SPEL is a trusted & Strategic contract manufacturing partner for many of the world's leading Semiconductor companies.

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Established in 1988 and listed on the Bombay Stock Exchange ever since, SPEL initially supplied to the domestic market. SPEL soon acquired the expertise to serve the global market. SPEL's Customers are some of the biggest Integrated Device Manufacturers (IDMS) and fables Companies in the United States and Asia. SPEL offers Packaging Technology for Semiconductors used in diverse end-market applications including Communications. Consumer Electronics and Computing. SPEL provides full turnkey solutions that include Wafer sort, Assembly, Test and Dropshipment services which help Customers accelerate time-to-revenue for their new products. SPEL also offers value added services such as package design, Failure Analysis and Fully Reliability Test, Test Program Development & Product Characterization. With its manufacturing facilities near Chennai, SPEL has 600 employees and offers more than 100k square feet of manufacturing space. SPEL is certified for the ISO 9001:2000,ISO 14001:2004,&TS 16949:2002. SPEL total turnover for Rs.87.16 crores and it increased in 2011 to Rs.91.33 crores. EDAC Engineering Limited (EDAC) EDAC Engineering Limited is a joint venture Construction Company having its Regd. Office in Chennai, incorporated in June 1987. The Company is jointly promoted by M/s. EDAC Universe Ltd, Singapore and M/s .Southern Petrochemical Industries Corporation Limited (SPIC),India. EDAC Engineering Limited since inception in 1987, with JV between Jurong Engineering Limited, Singapore and SPIC Limited was known as SPIC JEL Engineering Construction Limited till 2007. EDAC is a ISO 9001:2000 certified company for our Quality Management Systems, certified by DET NORSKE VERITAS (DNV) under RVA Scheme, the Netherlands. 2010 was

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Its core business is Power, Refinery, Oil & Gas and Process Plant Construction. We provide services from Engineering to Operation & Maintenance under single roof. The Company offers the following services to Power plants, Oil & Gas, Refinery, Petrochemical and other Industrial Plants:

Engineering Procurement Manufacturing / Fabrication Construction Operation and Maintenance in Refineries, Oil & Gas and Petrochemical plants

EDAC total turnover for 2010 was Rs.706.5 crores and it increased in 2011 to Rs.735 crores. Tuticorin Alkali Chemicals and Fertilizers Limited (TAC) The Company manufactures Soda Ash (the only manufacturer in India) by using Japanese Toyo Soda Dual Process. The other products manufactured by the Company are Ammonium Bicarbonate using the technology developed by in house R&D. . SPIC - ACHIEVEMENT: First to set up a joint venture fertilizer complex at Tuticorin in Tamil Nadu state, India Largest naphtha-based single-stream aluminum plant in Asia, when

commissioned. Largest urea plant of its kind in the world, when commissioned. First to introduce black DAP in India. First to introduce pipe reactor technology to manufacture black DAP. - First to produce aluminum fluoride from waste hydro fluosilic acid.

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SPIC - AWARDS: SPIC has bagged several prestigious Awards. Some of them are as follow: National Safety Award for best safety performance 2003 British Safety Council, UK Best technical innovation award 2003-04 Fertilizer Association of India Best environmental protection award 2003-04 Fertilizer Association of India Star Award 2003 National Safety Council, Tamil Nadu chapter Certificate of merit for ISO 9001 and ISO 14001 certification Indian Chemical Manufacturers' Association Commendation certificate for being among the top importers 2003-04 at Tuticorin Port Tuticorin Customs Commissioner ate Best importer award 2003-04 for fertilizer raw materials Tuticorin Port Trust FAI award for Environmental protection(NP/NPK plant

category) for the years 2004-05 and 2006-07 Award of honour - Safety Award 2005 from National Council, Tamilnadu

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1.3. INDUSTRY PROFILE INDIAN FERTILIZER INDUSTRY Fertilizer Industry The Indian fertilizer industry, which is the third largest manufacturer of nitrogenous and phosphatic fertilizers in the world, next only to China and USA, witnessed good growth during the period under review. At the national level, the total consumption of all nutrient based fertilizers in 2010-11 is estimated at 590 lakh tones compared to 533lakh tones in the previous year. Out of the 16 plant nutrients, Nitrogen, Phosphorous and Potash (NPK) are the major three nutrients that contribute more on the productivity. The governments aimed at achieving the maximum self sufficiency in the production of Nitrogenous Fertilizers.

O GOVERNMENT POLICES

Government of India introduced the new Nutrient Based Subsidy (NBS) Policy for phosphoric fertilizers effective April 1, 2010 with a view to deregulate the P&K fertilizers and move towards free market pricing. The salient features of NBS Policies are:

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 Subsidy is fixed based on the import parity price adjusted for MRP wherein 'P' is based on DAP, 'N' based on Urea and 'K' based on Potash and 'S' based on Sulphur. MRP is deducted from the import parity price to arrive at the Subsidy payable per nutrient. Under the NBS Policy, MRP has been decontrolled. In line with the new policy, the Government has announced the revised Subsidy rates for 'N', 'P', 'K' and 'S' for the year 2011-12

Sub

Subsidy
1200 1000 800 600 400 200 0 2004 2005 2006 2007 2008 2009 2010 118 158 184 304 1000

500 262

Regime

Average fertilizer subsidy Import of Urea, DAP and MOP

49234 12375 7683 9192 31108

7571

Urea

DAP

MOP

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The phased decontrol of farm gate prices and introduction of NBS for urea should result in lower dependence on subsidy as compared with the current dispensation and hence moderately ease the working capital position of urea manufacturers. While a 10% price increase (from the current level of Rs. 5,365/ton) is expected in FY2012, further increases in farm gate prices resulting from higher pricing freedom FY2013 onwards would augur well for the industrys profitability. The above move is an extension of gradual reforms undertaken by GoI in the fertilizer sector beginning with price decontrol and introduction of NBS for complex (NPK)fertilizers (including DAP) w.e.f 1-April-2010. The extension of these policies to urea is also expected to establish consistency with the policy for NPK fertilizers over the medium to long term; and hence promote balanced consumption of fertilizers.

The price decontrol for both urea and NPK fertilizers paves the way for a gradual move towards free market pricing for all fertilizers. In this regard, it takes comfort from the robustness of demand, which has remained strong despite the various rounds of price increases in NPK fertilizers since the April 2010 decontrol (adding up to 25-40% post decontrol)

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Overall, we see the phased price decontrol of urea and the introduction of a Nutrientbased subsidy (NBS) mechanism as a positive step towards market-linked Farm gate pricing. The mechanism would also establish consistency with the policy For NPK fertilizers, thereby promoting balanced nutrient consumption. Unlike in the Case of DAP/NPK, the raw material price for urea (i.e. gas) remains relatively stable (on a yearon-year basis), which along with the relatively stable subsidy levels (till 2014-15), should bring down the need to revise retail prices frequently. This would also result irrelatively stable profitability for the urea business.

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1.4. OBJECTIVES PRIMARY OBJECTIVES To Analyze on financial Statement with reference to Southern PetroChemical Industries

Corporation Limited.

SECONDARY OBJECTIVES To find out the current financial performance . To examine the financial position by calculating the financial ratios. To determine the liquidity position of the concern. To identify the changes in cash flow. To predict the future trend using Trend Analysis.

1.5.NEED FOR THE STUDY Financial Analysis is the powerful mechanism and it helps to ascertain the strength and weakness of the concern . It makes the organization to move forward and it makes the organization to take the decision according to the analyzed financial position. Various parties interested can utilize the information provided by the financial statement for the analysis and interpretation. Management will ale to take decisions for the creditors ,for investors , for owners, for stock exchange , for tax authorities, for government. It also helps the creditors in decision making.

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1.6. SCOPE OF THE STUDY It emphasis on the analyzing Financial performance It highlights the information which is gathered from balance sheet. It helps to find out the liquidity position. It determines the relationship between the numerical figures by computing accounting ratios. It facilitate to ascertain cash flow from operating and non operating activities.

1.7

LIMITATIONS

Financial Statements do not always disclose the correct financial position of business concerns as they are influenced by the personal opinions, judgements ,subjective views of the accountants of each concern. Information disclosed by profit and loss account may not be real profit as many items shown are not real but they are estimated. Time was one of the main limitations of this study. The analysis was done on the basis of 2005,2006,2008,2009,2010 & 2011 .one year 2007 was left because concern has faced higher risks in 2007 for the reconstruction purposes the whole year 2007 was skipped

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CHAPTER - II 2.1. REVIEW OF LITRATURE 1) FINANCIAL STATEMENT ANALYSIS: Book Name Author Name Publisher Page no : Accounting For Management , & Chapter : 8

: Dr. Wilson : Sci tech Publication (Pvt) Ltd First Edition 2010 : 8.1

Financial Statements are known as Trading And Profit & Loss Account and Balance Sheet. It is mandatory for a concern. It is compulsory to prepare the financial statements according to the Companies Act 1956. There is a need for preparing these statements for the assessment of tax also .These statements exhibit the profit position and financial strength of a company. It is useful for the owners , creditors, and General Public to find out the Profit position and financial status of the company. Sometimes It wont be sufficient for decision making. It facilitate financial planning and decision making 2) FINANCIAL ANALYSIS: Book Name Author Name Publisher Page No : Advanced Accountancy & Chapter 16

: T.S.Reddy & Murthy : Margham Publications , SECOND EDITION 2007 : 16.25

The primary function of accounting is to accumulate accounting data in a manner that the amount of profit made or loss suffered during a period can be determined . The manner in which the amount of profit or loss has been arrived at is disclosed in the 24

statement of accounts ,prepared at the end of the accounting year .The various items of income and expenditure which arose during the accounting period are detailed out therein Grouped under significant heads .It is also accompanied by a balance sheet , exhibiting assets and liabilities of the business as at the close of the period. In addition for showing the nature of economic activity to which the account pertains the revenue as well as different sections of manufacturing trading, profit & loss account & balance sheet are prepared to give the final results of the business.

3) WORKING CAPITAL SOURCE : http://en.wikipedia.org/wiki/Working_capital

Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is calculated as current assets minus current liabilities.. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.

4) RATIO ANALYSIS: SOURCE : : http://en.wikipedia.org/wiki/ratio It is the most widely used tool since it compares risk and return relationships of firms from various aspects. Ratio analysis is the method or process by which the relationship of items or group of items in the financial statements are computed. It is an attempt to derive quantitative measures or guides concerning the financial health and profitability of a business enterprise. It can be used both in trend and static analysis. There are several ratios at the disposal of an analyst but the group of ratios he would prefer depends on the purpose and objectives of analysis.

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5) Journal Source : FINANCIAL ECONOMICS Title : CASH FLOW

Publishing Year : 1987 Recent research has emphasized the impact of transaction costs on firm leverage adjustments. We recognize that cashflow realizations can provide opportunities to adjust leverage at relatively low marginal cost. We find that a firm's cashflow features affect not only the leverage target, but also the speed of adjustment toward that target. Heterogeneity in adjustment speeds is driven by an economically meaningful concept: adjustment costs. Accounting for this fact produces adjustment speeds that are significantly faster than previously estimated in the literature. We also analyze how both financial constraints and market timing variables affect adjustments toward a leverage target. 7) FINANCIAL PLANNING SOURCE :http://en.wikipedia.org/wiki/Financial_plan In general usage, a financial plan is a series of steps which are carried out, or goals that are accomplished, which relate to an individual's or a business's financial affairs. This often includes a budget which organizes an individual's finances and sometimes includes a series of steps or specific goals for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings. A financial plan sometimes refers to an investment plan, which allocates savings to various assets or projects expected to produce future income, such as a new business or product line, shares in an existing business.

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8) Journal Title Title Publication

: FINANCIAL STABILITY : Can Central Banks Monetary Policy be Described by a linear Taylor : ELSEVIER @ 2010

The original Taylor rule establishes a simple linear relation between the interest rate, & the output gap. An important extension to this rule is the assumption of a forward Looking behavior of central banks . Now they are assumed to target expected inflation & output gap instead of current values of these variables . Using a forward looking monetary policy can indeed be described by a linear Taylor rule or instead by a non linear rule .It also analyses whether that can be augumented with a financial conditions index containing information from some asset prices & financial variables. The result indicate that the monetary behaviour of the European central bank & Bank of England is best described by a non linear rule but the behaviour of the Federal Reserve of the United states can be well described by a linear Taylor rule .

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CHAPTER -III 3.1. RESEARCH METHODOLOGY

RESEARCH METHODOLOGY Research Methodology refers to a back philosophy of research .It is the way to systematically solve the research problem .It shows the details of data which have been used for the research problem. It shows the details of data which have been used for the research and procedures followed in the study . 3.2.RESEARCH DESIGN The research design is a frame work or blue print for conducting the research project. The research design to be followed by the researcher is descriptive research design. The descriptive research refers when the problem is known but its situation or circumstances is also known. DESCRIPTIVE RESEARCH: The descriptive research refers when the problem is known but its situation or

circumstances is also known . 3.3.DATA COLLECTION METHODS The term data refers to qualitative or quantitative attributes of variable or set of variables. Data are typically the results of measurements and can be basis of graphs ,images or observations of a set of variables . There are two types of data: primary data collection secondary data collection

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Primary data collection: Primary data collection involves the collection of data that not already exist. Primary Research is often undertaken after the researcher has gained some insight in to the issue by collecting secondary data .

Secondary data collection: Secondary data means researcher collects the data which is already exist

.Researcher reuse and repurpose information as secondary because it is easier and less expensive to collect. However it is less expensive as primary data The type of data used in this project is secondary data .The secondary data about the company profile and other details were collected from company website.

3.5 STATISTICAL TOOLS To analyze the data and to interpret the results , various tools are applied .They are

Ratio Analysis Comparative Analysis Statement of Changes in working Capital Cash flow analysis Trend Analysis

RATIO ANALYSIS Ratio analysis is a widely used tool of financial analysis. The term ratio in it refers to the relationship expressed in mathematical terms between two individual figures or group of figures connected with each other in some logical manner and are selected from financial statements of the concern. The ratio analysis is based on the fact that a single accounting figure by it self may not communicate any meaningful information

29

COMPARATIVE ANALYSIS Comparative statement analysis helps in bringing out the nature and trend of current changes affecting the enterprises. It helps in comparing various components of financial statement and finds out the increasing or decreasing in the items . The comparative analysis for the year 2008,2009,2010,2011 by comparing the base year 2006.

STATEMENT OF CHANGES IN WORKING CAPITAL: Statement of Changes in Working Capital helps to find out the changes in the working capital by comparing current assets & liabilities of the concern .It helps to find out increase & decrease of the working capital

CASH FLOW ANALYSIS Cash flow analysis is the study of the cycle of your business' cash inflows and outflows, with the purpose of maintaining an adequate cash flow for your business, and to provide the basis for cash flow management. In this research the operating activities, financing activities, & investing activities are segregated. TREND ANALYSIS Trend analysis is one of the important tool in measuring the financial performance of a company .In this analysis , the important items of the financial statements (balance sheet) for a long period can be taken for trend analysis . Trend Analysis is based on 2008 , 2009 , 2010 & 2011 by taking 2006 as base year.

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CHAPTER IV 4.1. DATA ANALYSIS AND INTERPRETATION DATA ANALYSIS: The data after collection has to be processed and analyzed in accordance with the outline laid down for the purpose at the time of developing research plan. This is essential for a scientific study & for ensuring that we have all the relevant data. Processing implies editing , coding & tabulation of collected data so that they are acquiescent to analysis. The term analysis refers to the computation of certain measures along with searching for patterns Thus in the process of analysis , relationships or differences supporting or conflicting with original or hypothesis should be subjected to original hypothesis should be subjected to statistical tests of significance to determine what validity data can be said to indicate any conclusions. INTERPRETATION: Interpretation is essential for the simple reason that the uselessness and utility of research findings lie in proper interpretation .It being considered a basic component of research process. The term financial analysis and interpretation refer to the process of determining the financial strengths and weakness of the firm by establishing a strategic relationship between components of financial statements and other operating data . Financial analysis means implication of financial data by methodological classification of data given in financial statement. Interpretation means explaining the meaning of and significance of data is so simplified

31

RATIO ANALYSIS Current Ratio: The ratio of current assets to current liabilities is also called current asset ratio. In order to measure the short term liquidity or solvency of a concern, comparison of current assets and current liabilities is inevitable. Formula: Current Ratio =Current Assets/ Current Liabilities Table.4.1.1 Current Assets Year 2005* - 2006* 2006* - 2008* 2008 - 2009 2009 - 2010 2010 - 2011 ( Rs In Lakhs) 79894.51 63934.23 62490.87 51368.28 64990.48 Current Liabilities ( Rs In Lakhs) 100307.42 86186.97 83844.69 79297.55 84864.34 Current Ratio 0.80 0.74 0.75 0.65 0.77

Note :* Financial Statement is prepared for 18 months Diagram .4.1.1

Current Ratio
2010 - 2011 2009 - 2010 0.65 0.75 0.74 0.8 0 0.2 0.4 0.6 0.8 1 Current Ratio 0.77

Year

2008 - 2009 2006 -2008 2005 - 2006

Current Ratio

INFERENCE The Current Ratio of the company in 2005 -2006 is 0.80, in 2006-2008 the Current Ratio is 0.74, in 2008 -2009 is 0.75, in 2009 -2010 is 0.65, in 2010 -2011 the current ratio is 0.77 compare to 2009 -2010 the current ratio in 2010 -2011 is increased.

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Liquid Ratio The term quick assets or liquid assets refers current assets which can be converted into cash immediately it comprises all current assets except stock and prepaid expenses it is determined by dividing quick assets by quick liabilities. Formula: Liquid Ratio = Liquid Assets/ Current Liabilities Table 4.1.2 Liquid Asset Year 2005* - 2006* 2006* - 2008* 2008 - 2009 2009 - 2010 2010 - 2011 ( Rs In Lacs) 12436.4 31392.39 40817.12 36451.51 27842.57 Current Liabilities ( Rs In Lacs) 100307.42 86186.97 83844.69 79297.55 84864.34 Liquid Ratio 0.12 0.36 0.49 0.46 0.33

Note : *Financial Statement is prepared for 18 months Diagram.4.1.2

Liquid Ratio
0.6 0.5 0.4 0.3 0.2 0.1 0

Liquid Ratio

0.49 0.36 0.12

0.46 0.33

2005 - 2006

2006 - 2008

2008 - 2009 Year

2009 - 2010

2010 - 2011

Liquid Ratio

INFERENCE: The Liquid Ratio in 2005 -2006 is 0.12, in 2006 -2008 is 0.36, in 2008 -2009 is 0.49, in 2009 -2010 is 0.46 & in 2010 -2011 is 0.33 .Compare to 2009 -2010 the Liquid Ratio in 2010 2011 is increased

33

Fixed Asset Ratio It expresses the relationship between the external equities and internal equities or the relationship between borrowed funds and owners capital. It is a popular measure of the long-term financial solvency of a firm. This relationship is shown by the debt equity ratio. Formula: Fixed Asset Ratio = Fixed assets / Long term Funds Table .4.1.3 Fixed Assets Year 2005* -2006* 2006* -2008* 2008 -2009 2009 -2010 2010 -2011 ( Rs In Lakhs) 145379.66 134214.37 126165.52 107716.26 84922.46 Long Term Funds ( Rs In Lakhs) 172491.7 209949.09 219994.63 167768.35 46560.69

Fixed Asset Ratio 0.84 0.64 0.57 0.64 1.82

Note : *Financial Statement is prepared for 18 months Diagram.4.1.3

Fixed Asset Ratio
2 1.5 1.82

Fixed Asset Ratio

1 0.5 0

0.84

0.64

0.57

0.64

20052006

2006 2008

2008 2009 Year

2009 2010

2010 2011

Fixed Asset TurnOver Ratio

INFERENCE: The Fixed Asset Ratio in 2005 -2006 is 0.84, in 2006 -2008 is 0.64 , in 20082009 is 0.57 , in 2009 2010 is 0.64, in 2010 -2011 is 1.82 . Thus the Fixed asset ratio is increased in 2010 -2011 compare to 2009 -2010

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Working Capital Turnover Ratio Working capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio indicates the number of times the working capital is turned over in the course of a year. It is a good measure over trading and under-trading. Formula : Sales / Working Capital Table 4.1.4 Working Sales Year 2005* - 2006* 2006* - 2008* 2008 - 2009 2009 - 2010 2010 - 2011 ( Rs In Lakhs) 327428.8 147749.87 37778.81 41706.51 172902.41 Capital ( Rs In Lakhs) 20412.91 22252.74 21353.82 27929.29 19873.86 Working Capital Turnover Ratio

16.04 6.64 1.77 1.49 8.70

Note :* Financial Statement is prepared for 18 months Diagram 4.1.4.

Working Capital Turnover Ratio
20 15 16.04

Working 10 Capital
5 0

6.64 1.77 1.49

8.7

2005 2006 2008 2009 2010 - 2006 - 2008 - 2009 - 2010 - 2011

Year
Working Capital Turnover Ratio

INFERENCE: In 2005 -2006 working capital turnover ratio is 16.04 , in 2006 -2008 is 6.64 ,in 2008 -2009 Is 1.77, in 2009 -2010 is 1.49, in2010 -2011 is 8.7, Compare to 2009 -2010 the working capital ratio is increased in 2010 -2011

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Debt Equity Ratio It expresses the relationship between the external equities and internal equities or the relationship between borrowed funds and owners capital. It is a popular measure of the long-term financial solvency of a firm. This relationship is shown by the debt equity ratio. Formula Debt Equity Ratio = Total Long term Debts/ Share Holder Funds Table 4.1.5 Total Long Term Debts ( Rs In Lakhs) 214914.25 209949.09 219994.63 167768.35 118647.66 Share Holder Funds ( Rs In Lakhs) 35815.69 35815.69 35815.69 43815.69 46460.69 Debt Equity Ratio 6.00 5.86 6.14 3.83 2.55

Year 2005 *-2006* 2006* -2008* 2008 -2009 2009 -2010 2010 -2011

Note : *Financial Statement is prepared for 18 months Diagram 4.1.5.

Debt Equity Ratio 7 6 5 Debt Equity 4 Ratio 3 2 1 0 6 5.86 6.14 3.83 2.55

2005 - 2006 - 2008 - 2009 - 2010 2006 2008 2009 2010 2011 Year Debt Equity Ratio

INTERFERENCE: The Debt Equity Ratio in 2005 -2006 is 6.00, in 2006 -2008 is 5.86, in 2008-2009 is 6.14, in 2009 -2010 is 3.83, in 2010 -2011 is 2.55. compare to 2009 -2010 the debt equity ratio in 2010 -2011 is decreased

36

Total Assets Turnover Ratio: This ratio is an indicator of how the resources of the organization utilized for increasing the turnover. It shows the ratio between the total assets and the net sales of the company. Formula Total Assets Turnover Ratio =Sales / Total Assets Table 4.1.6 Sales Year 2005 2006* 2006 2008* 2008 -2009 2009 - 2010 2010 - 2011 ( Rs In Lakhs) 327428.8 147749.87 37778.81 41706.51 172902.41 Total Assets ( Rs In Lakhs) 333131.19 301802.01 246217.92 182938.94 155140.4 Total Assets Turnover Ratio 0.98 0.49 0.15 0.23 1.11

Note : *Financial Statement is prepared for 18 months Diagram 4.1.6

Total Asset Turn Over Ratio
1.2 1 0.8 Total Asset 0.6 Turnover Ratio 0.4 0.2 0 0.98 1.11

0.49 0.15 0.23 Total Asset Turn Over Ratio 2005 2006 2008 2009 2010 2006 2008 2009 2010 2011

Year

INFERENCE The Total Asset Turnover Ratio in 2005 -2006 is 0.98, in 2006 -2008 is 0.49 , in 2008 -2009 is 0.15, & in 2009 -2010 is 0.23, in 2010 2011 is 1.11 .The Total Asset Turnover Ratio is increased in 2010 -2011 compare to 2009 -2010 37

Proprietory Ratio It expresses the relationship between shareholder funds and total tangible assets. The relationships comes to proprietory ratio Formula Share Holder Funds/ Total Tangible Assets Table 4.1.7 Shareholder Funds Year 2005* -2006* 2006* - 2008* 2008 -2009 2009 - 2010 2010 -2011 ( Rs In Lakhs) 35,815.69 35,815.69 35,815.69 43,815.69 46,560.69 Total Tangible Assets ( Rs In Lakhs) 333131.69 301802.01 246217.92 182938.94 155514.4 Proprietory Ratio 0.11 0.12 0.15 0.24 0.30

Note : *Financial Statement is prepared for 18 months Diagram 4.1.7

Proprietory Ratio
0.30 0.30 0.25 0.20 0.15 0.10 0.05 0.00 0.24 0.12 0.11 0.15

Properietory Ratio

2005 2006

2006 - 2008 2008 2009

2009 2010

2010 2011

Year
Proprietory Ratio

INFERENCE The propietory Ratio in 2005 -2006 is 0.11,in 2006 -2008 is 0.12, in 2008 -2009 is 0.15, in 2009 -2010 in 0.24,in 2010 -2011 is 0.30. compare to the previous years proprietory ratio is increased in 2010 -2011

38

Fixed Asset Turnover Ratio The ratio indicates the extent to which the investments in fixed assets contribute towards sales. If compared with a previous year. It indicates whether the investment in fixed assets has been judious Formula : Fixed Assets Turnover Ratio = Sales / Fixed Assets Table. 4.1.8

Net Sales Year 2005* -2006* 2006 *-2008* 2008 -2009 2009 -2010 2010 -2011 (Rs In Lakhs) 327428.8 147749.87 37778.81 41706.51 172902.41

Fixed Assets ( Rs In Lakhs) 145379.66 134214.37 126165.52 107716.26 82,507.11 Fixed Asset Ratio 2.22 1.10 0.30 0.39 2.10

Note : *Financial Statement is prepared for 18 months Diagram 4.1.8. Fixed Asset Turnover Ratio
2.5 2 1.5 1 0.5 0 2005 - 2006 2006 - 2008 2008 - 2009 2009 - 2010 2010 - 2011 1.1 0.3 0.39 2.22 2.1

Year
Fixed Asset Ratio

INFERENCE In 2005 -2006 the fixed asset turnover Ratio is 2.22 , in 2006 -2008 is 1.1 , in 2008 -2009 is 0.3, in 2009 -2010 is 0.39, in 2010 -2011 is 2.1 , Compare to 2009 -2010 the ratio in 2010 2011 is decreased 39

Capital Turnover Ratio The ratio indicates the relation ship between sales and Capital Employed .The turnover ratio occur by calculating this ratio Formula: Capital Turnover Ratio = Table 4.1.9 Capital Employed ( Rs In Lakhs) 225816.41 319956.21 400722.58 368952.87 314198.82 Net Sales/ Capital Employed

Year 2005* - 2006* 2006* - 2008* 2008 - 2009 2009 -2010 2010 -2011

Net Sales ( Rs In Lakhs) 327428.8 147749.87 37,778.81 41,706.51 172902.41

Capital Turnover Ratio 1.45 0.46 0.094 0.11 0.55

Note : *Financial Statement is prepared for 18 months Diagram 4.1.9

Capital Turnover Ratio
1.45 1.5

Capital Turn 1 over Ratio 0.5

0

0.46 0.094 0.11

0.55

2005 2006 2008 2009 2010 -2006 -2008 -2009 -2010 -2011

Year
Capital Turnover Ratio

INFERENCE The Capital Turnover Ratio of the company in 2005 -2006 is 1.45, in 2006-2008 is 0.46, In 2008 -2009 is 0.094, In 2009 -2010 the ratio is 0.11, In 2010 -2011 is 0.55.The Capital Employed Turnover Ratio is increased in 2010 -2011 compare to 2009 -2010

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Debts To Total Assets Ratio: The ratio indicates the relationship between Debt and Total Asset .This proportion occur by this ratio Formula Debts To Total Assets Ratio = Total Long Term Debts/ Total Assets Table 4.1.10 Total Long Term Debts Year 2005* - 2006* 2006 * - 2008* 2008 - 2009 2009 - 2010 2010 - 2011 ( Rs In Lakhs) 214914.25 209949.09 219994.63 167768.35 118647.66

Total Assets ( Rs In Lakhs) 333131.69 301802.01 246217.92 182938.94 155514.4 Debt To Total Assets Ratio 0.65 0.70 0.89 0.92 0.76

Note : *Financial Statement is prepared for 18 months Diagram 4.1.10

Debt To Total Assets Ratio

1 0.8 0.6 0.4 0.2 0 0.65 0.7 0.89 0.92 0.76

Debt To Total Assets Ratio

2005 - 2006 - 2008 - 2009 - 2010 2006 2008 2009 2010 2011

Year
Debt To Total

INFERENCE The Debt To Total Assets Ratio of the company in 2005 -2006 is 0.65, the ratio in 2006 -2008 is 0.70, in 2008 -2009 is 0.89, in 2009-2010 is 0.92, in 2010-2011 is 0.76.The Debt To Total Asset Ratio is decreased in 2010-2011 compare to ratio in 2009 -2010

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Interest Coverage Ratio The ratio indicates the relation ship between EBIT & Interest .The interest coverage Ratio occur by calculating this ratio Formula Interest Coverage Ratio = EBIT/ Interest Table: 4.1.11 Earnings Before Interest & Tax Year ( Rs In Lakhs) 2005* -2006* -38947.64 2006* -2008* -56410.36 2008 -2009 -70667.95 2009 -2010 -12456.57 2010 -2011 8198.36 Note : *Financial Statement is prepared for 18 months Diagram 4.1.11 Interest ( Rs In Lakhs) 29911.49 38234.81 12774.31 2049.51 2551.04 Interest Coverage Ratio -1.30 -1.48 -5.53 -6.08 3.21

Interest Coverage Ratio

Interest Coverage Ratio

4 2 0 -1.3 2005 -2 2006 -4 -6 -8 -1.48 2006 2008 3.21 2008 2009 -5.53 2009 2010 -6.08 2010 2011

Year

INFERENCE: The interest Coverage Ratio in 2005 -2006 is -1.30,in 2006 -2008 is -1.48, in 2008 2009 is -5.53, In 2009 -2010 is -6.08, In 2010 -2011 is 3.21. The Ratio Increased in 2010 -2011 compare to 2009 -2010 42

Table : 4.2.1 COMPARATIVE BALANCE SHEET OF SPIC (2005 -2006)

Particulars Current Assets Inventories Sundry Debtors Cash & Bank Balances Loans & Advances Total Current Assets Fixed Assets Investments Total Assets Current Liabilities Current Liabilities & Provisions Total Current Liabilities Share Holder Funds Share Capital Advance Share Capital Reserves & Surplus Total Share Holder Funds Loans Funds Secured Loans Unsecured Loan Total Loan Funds Less: Miscellaneous Expenditure Less: Profit & Loss Account Total Liabilities

*2005 (Rs In Lakhs) 14541.48 15101.08 416.91 104899.9 134959.37 128820.14 103507.36 367286.87 73553.95 73553.95 10054.77 2000 101446.48 113501.25 172985.92 40544.78 213530.7 748.46 32550.57 367286.87

*2006 Change (Rs In Lakhs) (Rs In Lakhs) Percentage 15749.44 16952.88 391.58 46800.61 79894.51 145379.66 107857.21 333131.38 100307.42 100307.42 12044.82 0 23770.82 35815.64 172491.7 42422.55 214914.25 396.96 17509.02 333131.33 1207.96 1851.8 -25.33 -58099.29 -55064.86 16559.52 4349.85 -34155.49 26753.47 26753.47 1990.05 -2000 -77675.66 -77685.61 -494.22 1877.77 1383.55 -351.5 -15041.55 -34155.54 8.30 12.26 -6.07 -55.39 -40.80 12.85 4.20 -9.30 36.37 36.37 19.79 -100 -76.57 -68.44 -0.29 4.63 0.65 -46.96 -46.21 -9.30

Note : *Financial Statement is prepared for 18 months

INFERENCE: The Above table shows The comparative balance sheet of the year 2005 to 2006 is as follows The share capital of the company has decreased in the year of 2005-06. The secured loan of the company has decreased in this year by 0.29%. .The fixed assets of the company has increased by 12.85%. The cash position of the company has decreased. The current liability and provisions of the company is fluctuating year after year.

43

Table : 4.2.2 THE COMPARATIVE BALANCE SHEET OF SPIC (2006 -2008) *2006 *2008 Change (Rs In Lakhs) (Rs In Lakhs) (Rs In Lakhs) 15749.444 16952.88 391.58 46800.61 79894.514 145379.66 107857.21 333131.384 16082.68 12001.25 19347.57 16502.53 63934.03 134214.37 103653.41 301801.81 333.236 -4951.63 18955.99 -30298.08 -15960.484 -11165.29 -4203.8 -31329.574

Particulars Current Assets Inventories Sundry Debtors Cash & Bank Balances Loans & Advances Total Current Assets Fixed Assets Investments Total Assets Current Liabilities Current Liabilities & Provisions Total Current Liabilities Loans Funds Secured Loan Unsecured Loan Total Loan Funds Share Holder Funds Share Capital Reserves & Surplus Total Share Holder Funds Less: Miscellaneous Expenditure Less: Profit & Loss Account Total Current Liabilities

Percentage 2.12 -29.21 4840.90 -64.74 -19.98 -7.68 -3.90 -9.40

101039 101039 172491.7 41690.97 214182.67 12044.82 23770.87 35815.69 396.96 17509.02 333131.38

86186.97 86186.97 209949.09 44181.66 254130.75 12044.82 23770.87 35815.69 139.97 74191.43 301802.01

-14852.03 -14852.03 37457.39 2490.69 39948.08 0 0 0 -256.99 56682.41 -31329.37

-14.70 -14.70 21.72 5.97 18.65 0 0 0 -64.74 323.73 -9.40

Note : *Financial Statement is prepared for 18 months INFERENCE: The Above table shows the comparative balance sheet of the year 2006 to 2008 is as follows The share capital of the company has no change. The secured loan of the company has increased in the year 2008 by 21.72%. .The fixed assets of the company has decreased

44

Table :4.2.3 THE COMPARATIVE BALANCE SHEET OF SPIC (2008 2009) 2008 (Rs In Lakhs) 16127.46 12001.25 19347.57 16457.95 63934.23 134214.37 103653.41 301802.01 85192.45 994.52 86186.97 12044.82 23770.87 35815.69 209949.09 44181.66 254130.75 139.97 74191.43 301802.01 2009 (Rs In Lakhs) 12064.77 5275.05 28772.3 16378.75 62490.87 126165.52 57561.53 246217.92 82457.01 1387.68 83844.69 12044.82 23770.87 35815.69 219994.63 51475.17 271469.8 0 144912.26 246217.92 Change (Rs In Lakhs) -4062.69 -6726.2 9424.73 -79.2 -1443.36 -8048.85 -46091.88 -55584.09 -2735.44 393.16 -2342.28 0 0 0 10045.54 7293.51 17339.05 -139.97 70720.83 -55584.09

Particulars Current Assets Inventories Sundry Debtors Cash & Bank Balances Loan & Advances Total Current Assets Fixed Assets Investments Total Assets Current Liabilities Liabilities Provisions Total Current Liabilities Share Holder Funds Share Capital Reserves & Surplus Total Share Holder Funds Loan Funds Secured Loan Unsecured Loan Total Loan Funds Less: Miscellaneous Expenditure Less: Profit & Loss Account Total Liabilities

Percentage -25.19 -56.05 48.71 -0.48 -2.26 -6.00 -44.47 -18.42 -3.21 39.53 -2.72 0 0 0 4.78 16.51 6.82 -100 95.32 -18.42

INFERENCE: The Above table shows the comparative balance sheet of the year 2008 to 2009 is as follows The share capital of the company has no changes. The secured loan of the company has increased in this year by 4.78%. .The fixed assets of the company has decreased by 6.00%. The cash position of the company has decreased. The current liability and provisions of the company is fluctuating year after year. 45

Table : 4.2.4 COMPARATIVE BALANCE SHEET OF SPIC ( 2009 2010) Particulars Current Assets Interest Inventories Sundry Debtors Cash & Bank Balances Loans & Advances Total Current Assets Fixed Assets Investments Total Assets Current Liabilities Liabilities Provisions Total Current Liabilities Share Holder Funds Share Capital Reserves & Surplus Total Share Holder Funds Loan Funds Secured Loans Unsecured Loans Total Loan Funds Less : Profit & Loss Account Total Liabilities INFERENCE: The Above table shows the comparative balance sheet of the year 2009 to 2010 is as follows The share capital of the company has increased in the year of 2010. The secured loan of the company has increased in this year by 91.71%. .The fixed assets of the company has increased by 58.88%. The cash position of the company has decreased. The current liability and provisions of the company is fluctuating year after year. 2009 2010 (Rs In Lakhs) (Rs In Lakhs) 6.56 12064.77 5275.05 28772.3 16372.19 62490.87 126165.52 57561.53 246217.92 83374.71 469.98 83844.69 12044.82 23770.87 35815.69 219994.63 51475.17 271469.8 144912.26 246217.92 6.35 10802.53 7171.39 18264.72 15123.27 51368.26 107716.26 23854.42 182938.94 78870.03 427.52 79297.55 18186.79 25628.9 43815.69 167768.35 49426.18 217194.53 157368.83 182938.94 Change (Rs In Lakhs) -0.21 -1262.24 1896.34 -10507.58 -1248.92 -11122.61 -18449.26 -33707.11 -63278.98 -4504.68 -42.46 -4547.14 6141.97 1858.03 8000 -52226.28 -2148.99 -54375.27 12456.57 -63378.98 Percentage -3.20 -10.46 35.95 -36.52 -7.63 -17.79 -14.62 -58.56 -25.70 -5.40 -9.03 -5.42 50.99 7.82 22.33 -23.74 -4.17 -20.02 8.60 -25.73

46

Table :4.2.5 THE COMPARATIVE BALANCE SHEET OF SPIC ( 2010 2011) 2010 2011 (Rs In Lakhs) (Rs In Lakhs) 6.35 10802.53 7171.39 18264.72 15123.27 51368.26 107716.26 23854.42 182938.94 76138.03 427.52 76565.55 18186.79 25628.9 43815.69 167768.35 52158.18 219926.53 157368.83 182938.94 0 16816.17 10926.52 9964.73 27283.06 64990.48 84922.46 5601.46 155514.4 84393.78 470.56 84864.34 17877.84 28682.85 46560.69 118467.66 54792.18 173259.84 149170.47 155514.4 Change (Rs In Lakhs) -6.35 6013.64 3755.13 -8299.99 12159.79 13622.22 -22793.8 -18252.96 -27424.54 8255.75 43.04 8298.79 -308.95 3053.95 2745 -49300.69 2634 -46666.69 -8198.36 -27424.54

Particulars Current Assets Interest Inventories Sundry Debtors Cash & Bank Balances Loan & Advances Total Current Assets Fixed Assets Investment Total Assets Current Liabilities Liabilities Provisions Total Current Liabilities Share Holder Funds Share Capital Reserves & Surplus Total Share Holder Funds Loan Funds Secured Loan Unsecured Loan Total Loan Funds Less: Profit & Loss Account Total Liabilities

Percentage -100 55.67 52.36 -45.44 80.40 26.51 -21.16 -76.52 -14.99 10.84 10.07 10.84 -1.70 11.92 6.26 -29.39 5.05 -21.22 -5.21 -14.99

INFERENCE: The Above table shows the comparative balance sheet of the year 2010 to 2011 is as follows The share capital of the company has decreased in the year of 2011. The secured loan of the company has decreased in this year by -29.39. .The fixed assets of the company has increased by -21.16. The cash position of the company has decreased. The current liability and provisions of the company is fluctuating year after year. 47

Table :4.3.1 STATEMENT SHOWING CHANGES IN WORKING CAPITAL 2005 -2006 *2005 Particulars Current Assets Inventories Sundry Debtors Cash & Bank Balances Loan & Advances Total Current Assets (A) Current Liabilities Current Liabilities & Provisions Total Current Liabilities (B) Net Working Capital ( A-B) Decrease In Working Capital Total (Rs In Lakhs) 14541.48 15101.08 416.91 104899.9 134959.37 *2006 (Rs In Lakhs) 15749.44 16952.88 391.58 46800.61 79894.51 Increase (Rs In Lakhs) 1207.96 1851.8 25.33 58099.29 Decrease (Rs In Lakhs)

73553.95 73553.95 61405.42 61405.42

100307.42 100307.42 -20412.91 81818.33 61405.42 3059.76 81818.33 111631.56

26753.47 26753.47 84878.09 111631.56

Note : *Financial Statement is prepared for 18 months

INFERENCE: From the above table shows that Net Working Capital for the year 2005 & 2006 is Rs 61405.42 & Rs (20412.92). Thus the Working Capital Of the Concern is decreased in 2006 Compare to the Net Working Capital In 2005.

48

Table : 4.3.2 STATEMENT SHOWING CHANGES IN WORKING CAPITAL 2006 -2008 *2008 * 2006 (Rs In Lakhs) (Rs In Lakhs) 15749.44 16952.88 391.58 46800.61 79894.51 16082.88 12001.25 19347.57 16502.53 63934.23 Increase (Rs In Lakhs) 333.44 4951.63 18955.99 30298.08 Decrease (Rs In Lakhs)

Particulars Current Assets Inventories Sundry Debtors Cash & Bank Balances Loans & Advances Total Current Assets (A) Less: Current Liabilities Current Liabilities & Provisions Total Current Liabilities (B) Net Working Capital (A -B) Decrease In Working Capital Total

101039 101039 - 21144.49 -21144.49

86186.97 86186.97 -22252.74 1108.25 -21144.49

14852.03

34141.46 1108.25 35249.71

35249.71 35249.71

Note : *Financial Statement is prepared for 18 months INFERENCE: From the Above Table it shows that the Net Working Capital For the year 2006 & 2008 is Rs 21144.49 & Rs -22252.74. Thus it is inferred that the Net Working Capital in 2008 is decreased compare to the Net Working Capital in 2006.

49

Table : 4.3.3 STATEMENT SHOWING CHANGES IN WORKING CAPITAL 2008 -2009

Increase Particulars Current Assets Inventories Sundry Debtors Cash & Bank Balances Loans & Advances Total Current Assets (A) Current Liabilities & Provisions Liabilities Provisions Total Current Liabilities (B) Net Working Capital ( A - B) Increase In Working Capital Total 2008 (Rs In Lakhs) 16127.46 12001.25 19347.57 16457.95 63934.23 2009 (Rs In Lakhs) 12064.77 5275.05 28772.3 16378.75 62490.87

Decrease

(Rs In Lakhs) (Rs In Lakhs) 4062.69 6726.2 9424.73 79.2

85192.45 994.52 86186.97 -22252.74 898.92 -21353.82

82457.01 1387.68 83844.69 -21353.82 -21353.82

2735.44 393.16

12160.17 12160.17

11261.25 898.92 12160.17

INFERENCE: From the Above Table it shows that the Net Working Capital For the year 2008 & 2009 is Rs (22252.74) & Rs (-21353.82). Thus it is inferred that the Net Working Capital in 2009 is increased compare to the Net Working Capital in 2008.

50

Table : 4.3.4 STATEMENT SHOWING CHANGES IN WORKING CAPITAL 2009-2010

Particulars Current Assets Interest Accrued on Investment Inventories Sundry Debtors Cash & Bank Bank Balances Loan & Advances Total Current Assets (A) Current Liabiities & Provisions Liabilities Provisions Total Current Liabilities (B) Net Working Capital ( A - B) Decrease In Working Capital Total

2009 Rs (In Lakhs) 6.56 12064.77 5275.05 28772.3 16372.19 62490.87

2010 Rs (In Lakhs) 6.35 10802.53 7171.39 18264.72 15123.27 51368.26

Increase (Rs In Lakhs)

Decrease (Rs In Lakhs) 0.21 1262.24

1896.34 10507.58 1248.92

83374.71 469.98 83844.69 -21353.82 -21353.82

78870.03 427.52 79297.55 -27929.29 6575.47 -21353.82

4504.68 42.46

6443.48 6575.47 13018.95

13018.95 13018.95

INFERENCE: From the Above Table it shows that the Net Working Capital For the year 2009 & 2010 is Rs (-21353.82) & Rs (-27929.29). Thus it is inferred that the Net Working Capital in 2008 is decreased compare to the Net Working Capital in 2006.

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Table: 4.3.5 STATEMENT SHOWING CHANGES IN WORKING CAPITAL 2010 2011 2010 Rs (In Lakhs) 2011 Rs (In Lakhs)

Particulars Current Assets Interest Accrued On Investments Inventories Sundry Debtors Cash & Bank Balances Loans & Advances Total Current Assets (A) Current Liabilities Liabilities Provisions Total Current Liabilities (B) Net Working Capital ( A - B) Increase In Working Capital Total INFERENCE:

Increase

Decrease

6.35 10802.53 7171.39 18264.72 15123.27 51368.26

0 16816.17 10926.52 9964.73 27283.06 64990.48

6.35 6013.64 3755.13 8299.99 12159.79

76138.03 427.52 76565.55 - 25197.29 5323.43 -19873.86

84393.78 470.56 84864.34 -19873.86 -19873.86 21928.56 21928.56

8255.75 43.04

16605.13 5323.43 21928.56

From the Above Table it shows that the Net Working Capital For the year 2010 & 2011 is Rs(25197.29) & Rs (-19873.86). Thus it is inferred that the Net Working Capital in 2011 is increased compare to the Net Working Capital in 2006.

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CASH FLOW STATEMENT FOR THE YEAR 2005 2006 Table : 4.4.1 Particulars A. CASH FROM OPERATING ACTIVITIES Profit /loss for the period/year Adjustment: Depreciation Loss On sale of assets Loss On sale of investments Inventories written off Dimuution in the value of investments Assets written off Miscellaneous expenditure written off Provision for doubt ful debts &advances Bad debts & advances written off Exchange difference interest & financial charges Net Gain on restructuring of float rate Income from investments interest income Operating Profit Before Working Capital Charges Adjustments : (increase)/Decrease in Sundry Debtors (increase)/Decrease in inventories (increase)/Decrease in loans & advances (increase)/Decrease in Liabilities & provisions Cash generated from operations Direct Taxes paid / Received Payments under voluntary retirement scheme NET CASH FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES Deletions /additions to fixed assets *2006 (Rs In Lakhs) *2005 (Rs In Lakhs)

-38947.64 8257.01 -5.38 -18.48 481.64 443.43 513.61 351.5 1191.04 7789.75 795.97 30078.62 -3040.61 -167.13 4227.77 221.25 13.69 427.54 2384.72 -1088.35 18227.86 21254.27 -251.35 46670.97 -164.51 7723.33 -3704.29 -1689.61 2032.15 21111.88 17750.13 25473.46 163.1 25636.56 3236.78 698.9 10340.06 15582.21

974.42

2744.35 3718.77

9177.83 12896.6 -199.09 -657.94 12039.57

-1373.46

-904.98

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Particulars Capital Work in progress /advances Particulars Adjustments for exchange fluctuation Proceeds from sales of fixed assets Interest Income NET CASH FROM INVESTING ACTIVITIES C. CASH FROM FINANCING ACTIVITIES Repayment of borrowings Proceeds From borrowings Share Capital Advance Dividend Paid Interest & Financial Charges Paid NET CASH FLOW ( A+B+C) Cash & Cash equivalents (opening balance) Cash & Cash equivalents (closing balance) Disclosure of non cash transaction

* 2006 164.71 780.7 189.94 167.13 -70.98

*2005 305.53 251.35 35.72 164.51 -147.87

-5608.17 -27.05 -19955.69 -25590.91 -25.33

-1057.7 4981.44 39.51 -21.06 18279.85 -14337.66 -2455.96

write off old subsidies 36954.74 write off old advances 6494.31 Restatement of liabilities 4885.57 Conversion of loan to investment 6379.06 Investments acquired on amalgamation 1590.66 Investments made Reduction in liability on restructuring Floating Rate Exchange (loss)/gain on restatement of liability Note : *Financial Statement is prepared for 18 months INFERENCE:

2000 21254.27 -756.85

From the above Table Net Cash from operating activities in 2005 is 12039.57 & in 2006 is 25636.56.In 2005 the Net Cash from investing activities is -147.87 & in 2006 the Net cash is -70.98.The Net cash from financing Activities in 2005 is -14337.66 & in 2006 is -25590.91 .Thus it is understood that The above table shows cash outflow for both the year

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CASH FLOW STATEMENT FOR THE YEAR 2006 - 2008 Table : 4.4.2 Particulars A. CASH FROM OPERATING ACTIVITIES Profit /loss for the period/year Adjustment: Depreciation Loss On sale of assets Loss On sale of investments Inventories written off Dimution in the value of investments Assets written off Provision of non moving inventories Miscellaneous expenditure written off Provision for doubt ful debts &advances Bad debts & advances written off Exchange difference interest & financial charges Net Gain on restructuring of float rate Income from investments interest income Operating Profit Before Working Capital Charges Adjustments : (increase)/Decrease in Sundry Debtors (increase)/Decrease in inventories (increase)/Decrease in loans & advances (increase)/Decrease in Liabilities & provisions Cash generated from operations Direct Taxes paid / Received Payments under voluntary retirement scheme NET CASH FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTMENT *2008 (Rs In Lakhs) *2006 (Rs In Lakhs)

-56410.36 12590.48 314.22 8554.20 937.89 256.99 3777.51 217.20 2495.63 38511.47 -2142.54 -276.66 60245.13 3834.77 4211.69 -1271.34 29038.77 19283.67 12695.45 16530.22 -762.39 15767.83 3704.29 1689.61 2032.15 21111.88 8257.01 508.23 -18.48 481.43 443.43 351.50 1191.04 7789.75 795.97 30078.62 -3040.61 -167.13

-38947.64

46670.97 7723.33

17750.13 25473.46 163.10 25636.56

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Particulars Deletions /additions to fixed assets including Capital Work in progress /advances Adjustments for exchange fluctuation Proceeds from sales of fixed assets Income from investments Purchase of investments Proceeds from sale of investments Interest Income NET CASH FROM INVESTING ACTIVITIES C. CASH FROM FINANCING ACTIVITIES Long term borrowings Dividend paid Deposits Paid Interest & Financial Charges Paid C. NET CASH FROM FINANCIAL ACTIVITIES NET CASH FLOW ( A+B+C) Cash & Cash equivalents (opening balance) Cash & Cash equivalents (closing balance) Disclosure of non cash transaction

*2008 (Rs In Lakhs)

*2006 (Rs In Lakhs)

-2175.45 436.04 842.40 -4350.40 276.66 -4970.75

1373.46 164.71 780.70 189.94 164.51 -70.98

3963.58 -15.95 -11.38 -937.18 -2999.07 -2999.07 9424.73 19347.57 28772.30

15235.14 -43.98 57.56 -11968.41 3165.19 -3165.19 18955.99 391.58 19347.57

Unpaid interest 11837.13 Exchange loss/ gain on restatement of FRN Liability -3723.86 Conversion of subsidy to investment 434.90 Note : *Financial Statement is prepared for 18 months INFERENCE:

26543.06 1830.12 4350.40

From the above Table Net Cash from operating activities in 2005 is 12039.57 & in 2006 is 25636.56.In 2005 the Net Cash from investing activities is -147.87 & in 2006 the Net cash is -70.98.The Net cash from financing Activities in 2005 is -14337.66 & in 2006 is -25590.91 .Thus it is understood that The above table shows cash outflow for both the years

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CASH FLOW STATEMENT FOR THE YEAR 2008 - 2009 Table :4.4.3 Particulars A. CASH FROM OPERATING ACTIVITIES loss for the period before exceptional item & tax Provision for dimunition in the value of investments Loss for the year before tax & after exceptional item Adjustment: Depreciation Loss On sale of assets Assets written off Loss On sale of investments Dimunition in the value of investments Provision for non moving inventories Miscellaneous expenditure written off Provision for doubt ful debts &advances Bad debts & advances written off Exchange difference interest & financial charges Income from investments interest income Operating Profit Before Working Capital Charges Adjustments : (increase)/Decrease in Sundry Debtors (increase)/Decrease in inventories (increase)/Decrease in loans & advances (increase)/Decrease in Liabilities & provisions Cash generated from operations Direct Taxes paid / Received NET CASH FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTMENT 2009 (Rs In Lakhs) 2008 (Rs In Lakhs)

-25894.92 44773.03 (70667.95) 8245.52 589.19 434.97 -143.49 44773.03 853.22 139.97 -98.28 8.23 6924.90 12774.31 -879.80 -2070.07 71551.50 883.55 6935.91 3209.48 1053.86 8214.46 2984.79 3868.34 -1068.14 2799.20 384.03 -1271.33 27973.43 -13747.36 12590.48 -11.08 325.26 8554.20 937.89 256.99 3777.51 217.20 -2495.63 38511.47 -2142.54 -276.66

-47856.16 8554.20 -56410.36

60245.13 3834.77

13338.77 17173.54 -762.39 16411.15

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Particulars Deletions /additions to fixed assets including Capital Work in progress /advances Adjustments for exchange fluctuation Proceeds from sales of fixed assets Income from investments Proceeds from sale of investments Interest Income NET CASH FROM INVESTING ACTIVITIES C. CASH FROM FINANCING ACTIVITIES Long term Borrowings Dividend Paid Deposit paid Interest & Financial Charges Paid NET CASH FROM FINANCING ACTIVITIES NET CASH FLOW ( A+B+C) Cash & Cash equivalents (opening balance) Cash & Cash equivalents (closing balance) Disclosure of non cash transaction Unpaid Interest Exchange (loss)/gain on restatement of liability Conversion of subsidy to investment

2009 (Rs In Lakhs)

2008 (Rs In Lakhs)

-1599.35 378.50 879.80 1897.44 2070.07 3926.46 3926.46

-2175.45 436.04 842.40 276.66

-620.35

3963.58 -15.95 -11.38 -937.18 2999.07 2999.07 9424.73 9424.73 19347.57 28772.30 11837.13 -3723.86 434.90

15235.14 -43.98 -57.56 -11968.41 3165.19 3165.19 -2455.96 18955.99 391.58 19347.57 26543.06 1830.12 4350.40

INFERENCE: From the above Table Net Cash from operating activities in 2008 is 16411.15 & in 2009 is 2799.20. In 2008 the Net Cash from investing activities is -620.35 & in 2008 the Net cash is3626.46 .The Net cash from financing Activities in 2008 is 3165.19 & in 2008 is2999.07 . Thus the Net Cash flow in 2008 & 2009 is 18955.99 & 9424.73 . Compare to 2008 the Net Cash flow in 2009 is is decreased.

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CASH FLOW STATEMENT FOR THE YEAR 2009 2010 Table : 4.4.4 Particulars A. CASH FROM OPERATING ACTIVITIES Loss for the period/year Add: Exceptional item Provisional for dimunition in the value of investment loss on sale of fixed assets Profit on sale of investments in a joint venture & in a wholly owned subsidiary company Excess liability for interest on loans written back Provision for claims no longer required written back Loss for the year before tax & after exceptional item Adjustment: Depreciation Loss On sale of assets Assets written off Profit On sale of investments Dimunition in the value of investments Excess liability for interest on loans written back Inventories provision write back Miscellaneous Expenditure written off Miscellaneous expenditure written off Provision for doubt ful debts &advances Bad debts & advances written off Exchange difference interest & financial charges Income from investments interest income Operating Profit Before Working Capital Charges Adjustments : (increase)/Decrease in Sundry Debtors (increase)/Decrease in inventories (increase)/Decrease in loans & advances (increase)/Decrease in Liabilities & provisions Cash generated from operations Direct Taxes paid / Received NET CASH FROM OPERATING ACTIVITIES 59 2009 (Rs In Lakhs) -8163.21 -30609.63 -1315.50 7694.45 2010 (Rs In Lakhs) -47856.16

9667.44 1980.42 -7781.92 30616.20 -17065.40 74.22 74.34 -2871.92 1029.67 -3123.22 253.46 -3750.95 882.72 -829.72 9365.19 3091.38 -1692.89 1187.89 1083.83 1691.98 2270.81 -820.57 -388.84 -1209.41

12590.48 -11.04 325.26 8554.20 937.89

256.99 3777.51 217.20 -2495.63 38511.47 -2142.54 -276.66 60245.13 3834.77 384.03 -1271.33 27973.43 13747.36 13338.77 17173.54 -762.39 2799.20

Particulars B. CASH FLOW FROM INVESTING ACTIVITIES Deletions /additions to fixed assets including Capital Work in progress /advances Adjustments for exchange fluctuation Proceeds from sales of fixed assets Income from investments Proceeds from sale of investments Interest Income NET CASH FROM INVESTING ACTIVITIES C. CASH FROM FINANCING ACTIVITIES Proceed from issue of preference share capital Long term Borrowings Dividend Paid Deposit paid Interest & Financial Charges Paid NET CASH FROM FINANCING ACTIV ITIES NET CASH FLOW ( A+B+C) Cash & Cash equivalents (opening balance) Cash balance regrouped from secured loans Cash & Cash equivalents (closing balance) Disclosure of non cash transaction Unpaid Interest Exchange (loss)/gain on restatement of liability Conversion of subsidy to investment INFERENCE

2010 (Rs In Lakhs)

2009 (Rs In Lakhs)

-1215.84 8017.89 882.72 10872.81 829.72 19386.66 19386.66

-2175.45 436.04 842.40 276.66 -620.35 -620.35

5000.00 35999.47 -3.65 -228.41 31231.53 31231.53 -13054.28 28772.30 2546.70 18264.72 28772.30 1821.10 2048.99 -

3963.58 -15.95 -11.38 -937.18 2999.07 2999.07 -9424.73 19347.57 28772.30 19347.57 11837.13 -3723.66 434.90

From the above Table Net Cash from operating activities in 2009 is 2799.20& in 2010 is1209.41. In 2009 the Net Cash from investing activities is 620.35& in 2010 the Net cash is 19386.66.The Net cash from financing Activities in 2009 is 2999.07 & in 2010 is 31231.53. Thus the Net Cash flow in 2009 & 2010 is -9424.73& -13054.28. Thus Compare to 2009 the cash flow in 2010 is decreased

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CASH FLOW STATEMENT FOR THE YEAR 2010 2011 Table : 4.4.5 Particulars A. CASH FROM OPERATING ACTIVITIES Loss for the period/year Add: Exceptional item Provisional for dimunition in the value of investment Profit on sale of fixed assets Profit on sale of investments in a joint venture & in a wholly owned subsidiary company Excess liability for interest on loans written back Provision for claims no longer required written back Profit /Loss for the year before tax & after exceptional item Adjustment: Depreciation Loss On sale of assets Impairment of assets Loss On sale of investments Dimunition in the value of investments Excess liability for interest on loans written back Provision for non - Inventories Provision for claims no longer required written back Provision for doubt ful debts &advances Unclaimed Credit balances written back Provisions no longer required written back Bad debts & advances written off Exchange difference interest & financial charges Income from investments interest income Operating Profit Before Working Capital Charges Adjustments : (increase)/Decrease in Sundry Debtors (increase)/Decrease in inventories (increase)/Decrease in loans & advances (increase)/Decrease in Liabilities & provisions Cash generated from operations 61 2011 (Rs In Lakhs) -2387.40 -3463.19 14048.95 8198.36 8894.90 4714.36 920 .02 -14031.95 260.31 119.22 -165.70 -120.34 0.98 -462.51 2551.04 -323.96 -381.80 1974.57 10172.93 -3824.60 -6349.86 11275.26 9194.77 12254.95 -2082.02 1692.89 1187.89 150.42 1691.98 1337.40 1753.98 9667.44 1980.42 -7781.92 30616.20 -17065.40 74.34 -2871.92 1029.67 -1818.09 -1305.13 253.46 -3750.95 2049.51 -882.72 -829.72 9365.19 3091.38 2010 (Rs In Lakhs) -8163.21

-30609.63 1315.50 7694.45 17085.40 2841.92 12456.57

Particulars Direct Taxes paid / Received NET CASH FROM OPERATING ACTIVITIES

2011 (Rs In Lakhs) -28.07 -2110.09

2010 (Rs In Lakhs) -388.84 -2142.82

B. CASH FLOW FROM INVESTING ACTIVITIES Deletions /additions to fixed assets including Capital Work in progress /advances Adjustments for exchange fluctuation Proceeds from sales of fixed assets Income from investments Proceeds from sale of investments Interest Income NET CASH FROM INVESTING ACTIVITIES C. CASH FROM FINANCING ACTIVITIES Proceed from issue of preference share capital Long term Borrowings Deposit paid Interest & Financial Charges Paid NET CASH FROM FINANCING ACTIV ITIES NET CASH FLOW ( A+B+C) Cash & Cash equivalents (opening balance) Cash balance regrouped from secured loans Cash & Cash equivalents (closing balance) Disclosure of non cash transaction Unpaid Interest Exchange (loss)/gain on restatement of liability Conversion of subsidy to investment INFERENCE From the above Table Net Cash from operating activities in 2010 is -2142.82& in 2011 is-2110.09. In 2010 the Net Cash from investing activities is 19386.66 & in 2011 the Net cash is 41255.17.The Net cash from financing Activities in 2010 is 31231.53& in 2011 is 46721.25. Thus the Net Cash flow in 2009 & 2010 is -13987.69& -7576.17. Thus Compare to 2010 the cash flow in 2011 is decreased.

-1314.60 9579.09 323.96 32284.91 381.81 41255.17 41255.17

-1215.64 8017.05 882.72 10872.81 829.72 19386.66 19386.66

-46555.68 -6.27 -159.30 46721.25 46721.25 -7576.17 15402.53 7826.36 2391.74 172.81 2745.00

5000 -35999.47 -3.65 -228.41 31231.53 31231.53 -13987.69 26643.52 2546.70 15402.53 1821.10 2048.99 3000.00

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TREND ANALYSIS Trend Analysis helps to make the comparative study & to analyze the financial performance for several years. It is performed for five years (2006 -2011) CALCULATION : Trend Analysis Equation: Y=a + b X y =n a + b X xy=aX+bX2 Table 4.5.1. THE SALES OF SPIC (2006 -2011)

Sales Year 2005 * - 2006* 2006* - 2008* 2008 - 2009 2009 - 2010 2010 - 2011 ( Rs In Lakhs) 329471.46 150578.55 39194.04 42125.90 173335.00

Note : *Financial Statement is prepared for 18 months Diagram:4.5.1 THE SALES OF SPIC (2006 -2011)
Sales (Rs In Lakhs)
350000 300000 329471.46

Sales (Rs In Lakhs)

250000 200000 150578.55 150000 100000 50000 0 2005 2006 2006 2008 2008 2009 2009 2010 2010 2011 39194.04 42125.9 173335

Year

INFERENCE : The Sales Volume in 2006 is Rs329471.46 Lakhs, Rs 150578.55 Lakhs In 2008 Rs 39194.04 Lakhs, In 2009 ,Rs 42125.9 Lakhs In 2010 , Rs 173335 In 2011. Compare to 2010 sales increased in 2011

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Table :4.5.2 PROFIT / LOSS OF SPIC ( 2006 -2011)

Year 2005* - 2006* 2006* - 2008* 2008 - 2009 2009 - 2010 2010 - 2011

Profit &Loss(Rs In Lakhs) -38947.64 -56410.36 -70667.95 -12456.57 8198.36

Note : *Financial Statement is prepared for 18 months Diagram:4.5.2

Profit/Loss (Rs In lakhs)
20000 10000 8198.36 2006 2008 2008 2009 2009 2010 -12456.57 2010 2011

Profit / Loss (Rs In Lakhs)

0 2005 -10000 2006 -20000 -30000 -40000 -50000 -60000 -70000 -80000 -56410.36 -70667.95 -38947.64

Year

Inference : The Loss has been incurred Rs 38947.64 Lakhs In 2006, Rs 56410.36Lakhs In 2008, Rs 70667.95, Lakhs In 2009,Rs 12456.57 Lakhs In 2010 , & RS 8198.36 Lakhs In 2011. The Loss has been reduced In 2011 compare to the previous years

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Table :4.5.3 PREDICTED PROFIT / LOSS OF SPIC ( 2011 -2016)

Year 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015 2015 - 2016

Profit / Loss (Rs In Lakhs) 6564.01 16235.4 25906.79 35578.18 45249.57

Diagram: 4.5.3
Profit / Loss (Rs In Lakhs) 45249.57 50000 35578.18 45000 40000 25906.79 35000 Profit / Loss ( 30000 16235.4 25000 Rs In Lakhs) 20000 6564.01 15000 10000 5000 0 2011 - 2012 - 2013 - 2014 - 2015 2012 2013 2014 2015 2016 Year

Inference : The Predicted Profit in 2012 is Rs 6564.01 Lakhs , Rs 16235.40 in 2013, Rs 25906.79 In 2014, Rs 35518.18 Lakhs In 2015, Rs 45249.57 in 2016. Compare to the 2012, 2013, 2014 & 2015 , The predicted Profit in 2016 has been increased.

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CHAPTER V

5.1. FINDINGS 1) From the analysis the Current Ratio is increased in 2010 -2011 compare to the previous years .Thus The maintainance of Current Assets & Current Liabilities are good.

2) From the above table & charts it is understood that the Liquid Ratio is increased in 2010 2011 compared to the previous years. Thus there is a proper maintainance of Liquid Assets and Current Liabilities

3) From the above data analysis it is ascertained that the Fixed Asset Ratio is increased in 2010 -2011 .Thus there is a proper proportion of fixed asset and long term funds

4) The working Capital Ratio is increased in 2010 -2011 .Compare to previous years .Thus there is a increased proportion but there is some deficit in working capital

5) From the above data interpretation it is shown that the debt equity ratio is decreased because of quick repayment of long term debts

6)

From the above analysis it is shown that Total Asset Turn over Ratio is increased in

2010 - 2011 because of the proper utilization of the assets.

7)

The propietory Ratio is increased in 2010 -2011. compare to the previous years .Thus

there is a good proportion of share holder funds and total tangible assets

8) From the above table and charts The fixed Asset Turnover ratio is increased because the sale of fixed asset was in a good condition in 2010 -2011. 9) From the data analysis it is understood that The Capital Employed Turnover Ratio is increased in 2010 -2011 compare to 2009 -2010

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10) It is known from the previous tables that the Debt To Total Assets Ratio of the company is decreased in the current year. Because of the proper proportion of debts and total assets.

11) It is understood from the data analysis that Interest Coverage Ratio is increased in the Current Year because the profit occurs in 2010 -2011

12) It is known that Comparative Balance sheet of the year 2005 -2006 is as follows the secured loan of the company has decreased in this year y 0.29%.The cash position of the company is decreased .Thus the secured loans are repayed quickly.

13) It is understood from the analysis Comparative Balance sheet of the year 2006 -2008 is as follows the secured loan of the company has increased in this year 2008 by 21.72%. .Thus there was not a proper repayment of secured loan .

14) It is understood from the analysis Comparative Balance sheet of the year 2008 -2009 is as follows the secured loan of the company has increased in this year 2009 by 4.78%.The Cash position was decreased. .Thus there was not a proper repayment of secured loan .

15) It is known from the data interpretation Comparative Balance sheet of the year 2009 2010 is as follows the secured loan of the company has increased in this year 2010 by 91.71%..The Cash position was increased. .Thus there was not a proper repayment of secured loan .

16) It is known from the data interpretation Comparative Balance sheet of the year 2010 2011 is as follows the secured loan of the company has decreased in this year 2011 by 29.39%..The Cash position was increased. .Thus there was a proper repayment of secured loan . 17) From the above table shows that Net Working Capital occurs deficit in 2006 due to the increase of Current liabilities over Current assets.

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18) From the above Analysis shows that Net Working Capital occurs more deficit in 2008 than 2006 due to the increase of Current liabilities over Current assets in 2008

19) From the above Analysis shows that Net Working Capital occurs less deficit in 2009 compare to 2008 due to the little bit decrease of Current liabilities over Current assets in 2009 than 2008.

20) From the above Data interpretation shows that Net Working Capital occurs more deficit in 2010compare to 2009 due to the increase of Current liabilities over Current assets in 2010

21) From the above Data interpretation shows that Net Working Capital occurs less deficit in 2011 compare to 2010 due to the little bit decrease of Current liabilities over Current assets in 2011.

22) From the above Data analysis Cash Out flow occurs in 2005 & 2006 due to the increase of cash expenses than cash receipts.

23) From the above Data analysis Cash Out flow occurs in 2005 & 2006 due to the increase of cash expenses than cash receipts.

24) From the above Data analysis Cash inflow occurs in 2006 & 2008 due to the decrease of cash expenses than cash receipts.

25) From the above Data analysis Cash inflow occurs in 2008 & 2009 due to the decrease of cash expenses than cash receipts.

26) From the above Data interpretation it is known that Cash outflow occurs in 2009& 2010 due to the increase of cash expenses than cash receipts.

27) From the above Data interpretation it is known that Cash outflow occurs in 2010 & 2011 due to the increase of cash expenses than cash receipts.

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28) From the tables and charts the sales is increased in 2011 due to the good sales methodology .

29) From the above analysis it is known that loss occurred all the years except in 2011 because it is a extra ordinary profit.

30) From the above tables & charts it is understood that predicted profit is higher in 2011 than previous years .

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5.2. SUGGESTIONS & RECCOMENDATIONS

1) The firm should speed up its sales to earn more profit and should increases its pace of production. 2) The liquidity position can be improved by avoiding more credit transactions 3) The Current Assets is more than Current Liabilities so Current Liabilities has to be controlled 4) The Expenses has to be reduced since its increase decreases the profit of the company. 5) The Capital Turnover can be increased by investment through expansion

70

5.3 .CONCLUSION The Project was done for evaluating the financial statement of Southern Petro Chemical Industries (SPIC) Chennai, gives clear idea about the financial position . The aim of the study to make the executive to access the implications of their decisions , evaluate & review the performance & implement corrective decisions by using analysis .

The financial position of the company is improved in 2011 -2012 compare to 2010 2011, the expenditure is 178634 in 2010 -2011 & 175621.43, the profit& loss in 2010 2011 is -2387.40 & 2806 in 2011 -2012. The miscellaneous expenditure is reduced compare to previous years. The concern can reduce the expenditures.

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APPENDIX BIBLOGRAPHY BOOKS: Arora ,P.N, & Arora .S Statistics for Management , Sultan Chand Publication Third Revised Edition 2006. Reddy, T.S . and Murthy, Advanced Accountancy,Margham ,Publication Second Revised Edition 2007 Wilson , Accounting For Management , Sci Tech Publication (PVT) Limited ,First Edition 2010. Kothari ,C.R., Research Methodology , New Age International Publishing Limited , New Delhi , Second Edition

WEBSITES: www.academon .com www.wikipedia.com

JOURNALS: Financial Economics Financial Stability

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