PROJECT REPORT 2011-2012: Profile of The Company at A Glance, MCL, Walayar

PROJECT REPORT 2011-2012
P.G.D.C.M.S MESKC Page 5

PROFILE OF THE COMPANY AT A GLANCE, MCL, WALAYAR
Name of the
company
Malabar Cements Ltd.
Date of
incorporation
April 1978
Date of
commencement
April 1984
Capital outlay 68 crores
Location 24 km east to Palakkad municipal town
Types of products 1. Malabar Cements
2. Malabar Classic
3. Malabar Aiswarya
Objectives 1. To provide employment opportunities for the
public
2. To achieve competitive strength through cost
reduction
3. To achieve high efficiency in productivity.
4. To improve employee morale
Awards and
recognitions
1. State award for the best performance and energy
conservation in 1995 from State Electricity
Inspectorate.
2. MCL is placed second among large scale
industries in marketing and substantial and
sustained effort in pollution control in 1996 from
Kerala State Pollution Control Board



3. trophy for second time for lowest accident
frequency rate achieved during the last 3 years
preceding the award year 1995-1996.
4. the company has been converted with the
prestige ISO 9002 certified by Bureau of Indian
Standards in January 1997 and is the first among
public sector cement plant to obtain the ISO
certification.
Special feature MCL is an ISO 9001-2000 certified company



CHAPTER III
REVIEW OF LITERATURE

INTRODUCTION TO FINANCIAL STATEMENTS
Financial statements (final accounts) are the final products of the accounting
process. Financial statements are the principal sources of financial information.
They are the statements containing financial information of a business
enterprise. Financial statements refer to a package of statements such as balance
sheet, income statement, statement of retained earnings, fund flow statement
and cash flow statement.
MEANING AND DEFINITION
Financial statements are the statements showing the financial position and result
of the business operations at the end of the accounting period. Financial
statements may be defined as statements containing summaries of detailed
information about the financial position and performance of the enterprise.
Financial statements include balance sheet and profit and loss accounts. Besides
there is also statement of retained earnings, fund flow statement and cash flow
statement etc.
NATURE OF FINANCIAL STATEMENTS
1. Recorded facts
The term recorded facts refers to the data drawn from accounting records.
Only those facts which have been recorded in the books are shown in the
financial statements.



2. Accounting Principles
In the preparation of financial statements certain accounting principles,
concepts and conventions are followed example: the principle of cost price or
market price whichever is less is followed for the valuation of stock.
3. Assumptions
Business transactions are recorded on the basis of certain assumptions. For
example while preparing financial statements accountant make many
assumptions like that the value of money remains constant.
4. Personal judgment
Financial statements are affected by personal judgment of accountant.
Example machinery valuation can be done by either straight line method or
written down value method, according to the discretion of the accountant.
OBJECTIVES OF FINANCIAL STATEMENTS
To provide information about the assets and liabilities of the firm.
To provide useful information to various parties interested in financial
statements.
To present true and fair view of the business.
To estimate the earning capacity of the enterprise.
To determine the debt capacity of the concern.
To decide about the future prospects of the business.
ANALYSIS AND INTERPRETAION OF FINANCIAL STATEMENTS
The analysis of financial statements provides valuable information for
managerial decisions. Financial analysis is the process of identifying the
strength and weakness of the business enterprise with the help of accounting
information provided by the profit & loss account and balance sheet.


The term interpretation means explaining the meaning and significance of the
classified data. Analysis and interpretation of financial statements are done to
judge their meaning and significance for the purpose of decision making.
The analysis and interpretation are necessary to bring about the mystery behind
the figures of financial statements.

OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS
To estimate the earning capacity of the business.
To assess the financial position and financial performance of the
business.
To ascertain the operating performance of the business.
To determine the solvency and liquidity of the business.
To determine the debt capacity of the firm.
To decide about the future prospects of the firm.
To make inter firm comparison.
To measure managerial efficiency of the firm.



TYPES OF FINANCIAL ANALYSIS
The graphical representation of financial statement analysis is as follows.

Analysis

On the basis
of information
used
On the basis of
objectives of the
analysis
On the basis of
modus operandi
of the analysis
1. External
analysis
2. Internal
analysis
1. Horizontal
analysis
2. Vertical
analysis
1. Short
term
analysis
2. Long term
analysis


LIMITATIONS OF FINANCIAL STATEMENT ANALYSIS
1. Suffer from the limitations of financial statement.
Financial statement suffers from a number of weaknesses. Hence analysis
based on those statements also suffers from such limitations.
2. Ignores price level changes
Financial statements are only a record of historical facts hence financial
analysis doesnt disclose current worth of the enterprise.
3. Ignores qualitative aspects
Financial analysis is the quantitative measurement of the performance of a
firm. It doesnt show the skill, technical knowhow and efficiency of its
employees and managers.
4. Spot symptoms but not diagnose
Financial analysis may spot symptoms of financial weakness and
operational inefficiency, but for final decision further investigation and
thorough diagnosis is required.
5. Personal judgment
Influence of personal judgment of the analyst affects the analysis and
interpretation of financial statements. There is scope for diversity of opinion
with regard to debt, asset and profits etc.



CHAPTER IV
ANALYSIS AND INTERPRETATION
This chapter is an attempt to analyze and interprets the financial position of
Malabar cements ltd by using various financial tools. To have a very clear
understanding of profitability and financial position of the business, financial
statements will have to be analyzed and interpreted. Financial analysis is the
process of identifying the strength and weakness of the company with the help
of accounting information provided by the financial statements.
(A) LIQUDITY RATIO
The term liquidity refers to the ability of a firm to meet its current obligations
when they becomes payable. Liquidity ratios are used to measure the liquidity
position or short term financial position of a firm. The important liquidity ratios
are current ratio and quick ratio.
(4.1)CURRENT RATIO
Current ratio is defined as the ratio of current assets to current liabilities. It
shows the relationship between total current assets and total current liabilities.
Current ratio measures the ability of a firm to pay its current liabilities out of
current assets. The objective of current ratio is to measure the margin of safety
available for short term creditors.
Generally a current ratio of 2:1 is considered as satisfactory or ideal. This means
that after paying of the current liabilities there should be sufficient margin.
Current ratio = current assets
Current liabilities



4.1 TABLE SHOWING CURRENT RATIO OF MCL, WALAYAR
(figures in lakhs)
Year Current assets Current liabilities Current ratio
2005 7001.76 2259.42 3.098
2006 7058.96 2191.02 3.227
2007 8228.44 2911.19 2.830
2008 8837.90 2827.92 3.126
2009 11997.36 3253.01 3.688

4.1 GRAPH SHOWING THE CURRENT RATIO OF MCL

INTERPRETATION
The ideal current ratio is 2:1. The current ratio of the concern is showing an
increasing trend (except2007). Higher the current ratio, better the result of the
firm but when the ratio exceeds the standard, it shows that the funds are not
being economically used in the firm. There are excessive inventories, sundry
debtors and cash and bank balance in the firm.

0
0.5
1
1.5
2
2.5
3
3.5
4
2005 2006 2007 2008 2009
CURRENT RATIO
CURRENT RATIO


(4.2)LIQUIDITY RATIO OR QUICK RATIO
Liquid ratio is the ratio of liquid assets to current liabilities. It establishes the
relationship between quick assets and current liabilities. It is the measure of the
instant debt paying ability of the business enterprise as if doesnt include
inventories and prepaid expenses the objective of computing this ratio is to
measure the ability of meeting its short term liabilities as and when they become
due without depending upon the realization of stock. A quick ratio of 1:1 is
considered as satisfactory. It means that the liquid assets are just equal to
current liabilities.
Liquid ratio = liquid assets
Current liabilities
4.2 TABLE SHOWING LIQUIDITY RATIO OF MCL, WALAYAR
(figures in lakhs)
Year Liquid assets Current liabilities Liquid ratio
2005 3362.8 2259.42 1.488
2006 3789.05 2191.02 1.7293
2007 3777 2911.19 1.297
2008 5619.08 2827.92 1.987
2009 8289.97 3253.01 2.548

.



4.2 GRAPH SHOWING LIQUDITY RATIO OF MCL.

INTERPRETATION
The ideal quick ratio is 1:1. The quick ratio of the concern is satisfactory as it
shows an increasing trend. The company has sufficient current assets and cash
balance to meet its current obligation and thereby it has a very good liquidity
position
(4.3)ABSOLUTE LIQUID RATIO
It is the ratio obtained by dividing cash in hand and cash at bank and marketable
securities by current liabilities. It is also known as cash position ratio. Only cash
and its equivalents are considered in current assets other than non cash items are
excluded.
Absolute liquid ratio = cash in hand + cash at bank + marketable securities
Current liabilities

0
0.5
1
1.5
2
2.5
3
2005 2006 2007 2008 2009
LIQUIDITY RATIO
LIQUIDITY RATIO


4.3 TABLE SHOWING ABSOLUTE LIQUID RATIO OF MCL,
WALAYAR (figures in lakhs)
Year cash and bank
balance
Current
liabilities
Absolute liquid
ratio
2005 485.10 2259.42 0.21
2006 568.08 2191.02 0.26
2007 1101.78 2911.19 0.38
2008 3311.27 2827.92 1.17
2009 5681.67 3253.01 1.75

4.3 GRAPH SHOWING ABSOLUTE LIQUID RATIO OF MCL.

INTERPRETATION
Even though the absolute liquid ratio shows an increasing trend in the past three
years, it has no sufficient liquid cash balances to pay of its obligations but after
2007, it has attained the sufficiency to pay off its obligations and in the year of
2009 it has more cash balance than what has been actually to be paid off (i.e.
3253). So the firm is performing better.
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2005 2006 2007 2008 2009
ABSOLUTE LQUID RATIO
ABSOLUTE LQUID RATIO


B) LEVERAGE RATIO OR SOLVANCY RATIO
The term solvency refers to the ability of a firm to pay off its outside liabilities.
Solvency may be short term solvency or long term solvency. The term solvency
generally refers to the ability of a company to repay the long term liabilities
along with the interest due on them regularly. It simply refers to the ability of a
concern to honor its long term obligations.
Important solvency ratios are debt equity ratio, total assets to debt ratio,
proficiency ratio and interest coverage ratio etc.
(4.4)DEBT EQUITY RATIO
Debt equity ratio is the ratio of long term debt to equity. It expresses the
relationship between debt (external equity) and equity (internal equity). The
objective of debt equity ratio is to measure the relative properties of debt and
equity in financing the assets of the firm.
It refers to the mix of owned capital and borrowed capital. Ideal debt equity
ratio is 1:1.
Debt equity ratio = Debt
Equity
Debt = long term debt (debentures, all long term loans, mortgage)
Equity = equity share capital + preference share capital + all reserves and
surplus



4.4 TABLE SHOWING DEBT EQUITY RATIO OF MCL, WALAYAR
(figures in Lakhs)
Year Debt Equity

Debt equity
ratio
2005 2154.86 7748.09 0.28
2006 3567.99 7411.96 0.48
2007 3634.54 7952.19 0.46
2008 2159.82 9925.19 0.22
2009 1921.48 12609.33 0.15

4.4 GRAPH SHOWING DEBT EQUTY RATIO OF MCL.

INTERPRETATION
The debt equity ratio of the company is not satisfactory. It doesnt satisfy the
standard of the debt equity ratio. The company depends more on owned capital
and less on outsiders fund. The company can earn more, if they keep a tradeoff
between debt and equity as the interest payable to outside funds are taxable. It is
0
0.1
0.2
0.3
0.4
0.5
0.6
2005 2006 2007 2008 2009
DEBT EQUITY RATIO
DEBT EQUITY RATIO


only possible when the company sale is increasing; as the sale of the company
is increasing they can make use of external fund also.
(4.5)FIXED ASSET TO NET WORTH RATIO
This ratio shows the relationship between the fixed assets and share holders
fund. The purpose of this ratio is to find out the percentage of the owners fund
invested in the fixed assets. There is no rule of thumb to interpret this ratio but
0.60 to 0.65 (60% to 65%) considered to be satisfactory in the case of industrial
undertakings.
Fixed assets to net worth ratio = fixed assets less depreciation
Share holders fund/ net worth
4.5 TABLE SHOWING FIXED ASSET TO NET WORTH RATIO OF
MCL, WALAYAR (figures in lakhs)
Year Fixed
assets
Share holders fund Fixed assets to net worth
ratio
2005 6046.94 7748.9 0.78/78%
2006 7018.59 7411.96 0.95/95%
2007 7112.04 7952.19 0.89/89%
2008 7149.79 9925.19 0.72/72%
2009 6934.3 12609.33 0.55/55%



4.5 GRAPH SHOWING FIXED ASSET TO NET WORTH RATIO OF
MCL.

INTERPRETATION
The ideal fixed asset to net worth ratio is 60% to 65%. Generally, the fixed
assets should be purchased out of share holders fund and balance to be set aside
for working capital for meeting day to day operations. The ratio shows an
increasing trend from 2007 onwards but when compared with its standard it is
good except in the year of 2009(0.55%). It will be better for the management to
keep the ratio within a range of 60-65%, then investment in both fixed asset and
working capital can be made possible.
(4.6)PROPRIETORY RATIO
Proprietary ratio establishes the relationship between shareholders or proprietors
fund and total asset. This ratio shows how much funds have been contributed by
the share holder towards total assets. This ratio shows the general financial
health of the firm. It is of immense importance in nature as far as the creditor of
the firm is concerned. Generally a ratio of 0.5:1 or above 50% is considered
satisfactory.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
2005 2006 2007 2008 2009
FIXED ASSETS TO NETWORTH RATIO
FIXED ASSETS TO
NETWORTH RATIO


Proprietary ratio = share holders fund
Total assets
4.6 TABLE SHOWING PROPRIETORY RATIO OF MCL, WALAYAR
(figures in lakhs)
Year Proprietors fund Total assets Proprietary
ratio
2005 7748.9 13247.02 0.58
2006 7411.96 14320.69 0.52
2007 7952.19 15614.45 0.51
2008 9925.19 16226.52 0.61
2009 12609.33 19135.36 0.66
4.6 GRAPH SHOWING PROPRIETORY RATIO OF MCL.

INTERPRETATION
The proprietary ratio of MCL shows an increasing trend from 2007 onwards.
The total assets of the organization are being financed by its share holders itself.
So the company has a high proprietary ratio and thereby it will result lesser risk
to towards to the creditors of the company. As the assets are being financed by
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2005 2006 2007 2008 2009
PROPRIETORY RATIO
PROPRIETORY RATIO


the share holders itself, company has a sound financial position and it also
contributes to the safety of the creditors of the organization.
(C) ACTIVITY RATIO
Activity ratios show how effectively a firm uses its available resources or
assets. These ratios indicate the speed with which the resources are converted in
to sales. This ratio indicates efficiency in asset management. Higher turnover
ratio means better use of firms resources. Higher the turnover ratio, better the
profitability of the concern as resources is being converted in to sales with
maximum speed.
(4.7)WORKIG CAPITAL TURNOVER RATIO
Working capital (C.A - C.L) is closely associated with sales. The relationship
between sales and working capital is called working capital turnover ratio. This
ratio shows how many times the working capital is turned over to produce sales.
The objective of computing working capital turnover ratio is to determine how
efficiently the working capital is utilized in business. Working capital turnover
ratio indicates whether working capital is effectively utilized in making sales. It
measures the efficiency in working capital management. Generally higher the
ratio the better is the utilization of working capital. The standard or ideal
working capital turnover ratio is for times.
Working capital turnover ratio = net sales
Working capital
Net sales = sales-sales return
Working capital = current assets-current liabilities



4.7 TABLE SHOWING WORKIG CAPITAL TURNOVER RATIO OF
Year Net sales Working
capital
Working capital
turnover ratio
(in times)
2005 16487.41 4742.34 3.48
2006 16752.83 4867.94 3.44
2007 22780.37 5317.25 4.28
2008 23969.71 6009.98 3.99
2009 25348.60 8744.35 2.90
4.7 GRAPH SHOWING WORKING CAPITAL TURNOVER RATIO
OF MCL.

INTERPRETATION
The working capital turnover ratio of the concern is not satisfactory because the
standard ratio is 7 or 8 times. It reveals that the company should take care of
their investment in current assets. Their investment in current assets is very
high. So it is better to make adjustments in investments in current assets. Higher
the investments in current assets lower the profitability. So it is better to keep a
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2005 2006 2007 2008 2009
WORKING CAPITAL TURNOVER RATIO
WORKING CAPITAL
TURNOVER RATIO


trade-off between profitability and liquidity and there by better use of working
capital also.
(4.8)FIXED ASSET TURNOVER RATIO
Fixed assets turnover ratio establishes the relationship between net sales and
fixed assets. It measures the efficiency with which a firm is utilizing its fixed
assets in producing sales. The ratio is calculated for determining to what extent
the investment in fixed assets has been achieving its objective of generating
sales.
Fixed assets turnover ratio = Net sales
Net fixed assets
4.8 TABLE SHOWING FIXED ASSET TURNOVER RATIO OF MCL,
WALAYAR (figures in lakhs)
Year Sales Fixed assets Fixed assets turnover
ratio
2005 16487.41 6046.94 2.73
2006 16752.83 7019.59 2.39
2007 22780.37 7112.04 3.20
2008 23969.71 7149.79 3.35
2009 25348.60 6934.30 3.66



4.8 GRAPH SHOWING FIXED ASSET TURNOVER RATIO OF MCL.

INTERPRETATION
The fixed asset turnover ratio of MCL shows an increasing trend. Initially it was
2.73 and in the last year it was 3.66. it shows an increasing trend over the last
five years
(D) PROFITABILITY RATIOS
The term profitability refers to the ability of the firm to earn maximum profit
from best utilization of its resources. Profitability ratios measure the ability of
the firm to earn an adequate return on sales, total assets and invested capital.
(4.9)NET PROFIT RATIO
Net profit ratio is the ratio of net profit earned by a business and its sales. It
measures overall profitability. The ideal net profit ratio is 5% to 10%
Net profit ratio = Net profit
Net sales
0
0.5
1
1.5
2
2.5
3
3.5
4
2005 2006 2007 2008 2009
FIXED ASSET TURNOVER RATIO
FIXED ASSET TURNOVER
RATIO


4.9 TABLE SHOWING NET PROFIT RATIO OF MCL, WALAYAR
(figures in lakhs)
Year Net profit Net sales Net profit ratio
(in percentage)
2005 -129.31 16487.41 -0.78
2006 -336.94 16752.83 -2.01
2007 540.23 22780.37 2.37
2008 2099.67 23969.71 8.76
2009 2820.24 25348.60 11.13
4.9 GRAPH SHOWING NET PROFIT RATIO OF MCL.

INTERPRETATION
During 2005 and 2006 the firm has incurred loss. From 2007 onwards the net
profit ratio of the concern shows an increasing trend. As per the last three years
the net profit of the company has increased and it has attained the standard only
for last two years. Higher the net profit ratio better to share holders. The last
two years shows an identity of efficient and reasonable return to owners and
better utilization of limited resources.
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2005 2006 2007 2008 2009
NET PROFIT RATIO
NET PROFIT RATIO


(4.10)RETURN ON SHAREHOLDERS FUND
This is the ratio of net profit to share holders fund. It measures the profitability
from the point of view of share holders. This ratio indicates how effectively the
share holders fund have been utilized by the company.
Return on share holders fund = net profit after interest and tax
Share holders fund
It is an index to know whether the owners are getting a satisfactory return on
their investments. A higher ratio indicates better utilization of owners funds
and higher productivity.

4.10 TABLE SHOWING RETURN ON SHAREHOLDERS FUND OF
Year Net profit Share holders fund Ratio
2005 -129.31 7748.9 -1.67
2006 -336.94 7411.96 -4.55
2007 540.23 7952.19 6.79
2008 2099.67 9925.19 21.13
2009 2820.24 12609.33 22.37



4.10 GRAPH SHOWING RETURN ON SHAREHOLDERS FUND OF
MCL.

INTERPRETATION
The return on share holders fund shows an increasing trend. During the period
of 2005 and 2006 there was no return to share holders as it shows a negative
return and there after an increasing trend. Higher the return, better to share
holders. So the share holders enjoying a high return in the years of 2007, 2008
and 2009
CONCEPT OF WORKING CAPITAL
Working capital is the capital required for the day to day working of an
enterprise. It is required for the purchase of raw materials and for meeting the
day to day expenditure on salaries, wages, rent, advertising etc. working capital
is the difference between inflow and out flow of fund.
The need for working capital arises because dont converted into cash
immediately; there is a time lag between sale of goods and receipts of cash.
Therefore, there is a need for working capital in the form of current assets to
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
2005 2006 2007 2008 2009
RETURN ON SHARE HOLDERS FUND
RETURN ON SHARE
HOLDERS FUND


deal with the problem arising out of lack of immediate realization of cash
against goods sold. Without working capital a firm cannot operate its business.
(4.11)SHEDULE OF CHANGES IN WORKING CAPITAL
Working capital means the excess of current assets over current liabilities.
Statement of changes in working capital is prepared to show the changes in
working capital between two balance sheet dates
As, working capital = current assets-current liabilities
An increase in current assets increases working capital
A decrease in current assets decreases working capital
An increase in current liabilities decreases working capital
A decrease in current liabilities increases working capital
Working capital is the life blood and controlling nerve of business. No business
can be successfully run without adequate amount of working capital. Hence it
becomes essential to forecast the required amount of working capital in the
future so that there is no difficulty in procuring the working capital.
4.11 STATEMENT SHOWING SCHEDULE OF WORKING CAPITAL
FOR THE YEAR 2005-2006(figures in lakhs)
Particulars

2005
(Rs in
lakhs)
2006
(Rs in
lakhs)
Effects on working
capital
Increase
Decrease
Current assets
Inventories 3638.96 3269.91 369.05
Sundry debtors 833.04 1093.97 260.93
Cash &bank 485.10 568.08 82.98


balance
Loans& advances 2044.66 2127.000 82.34
Total current assets 7001.76 7058.96
Current liabilities
Current liability
Including
creditors&bills
payable
2113.90 2069.10 44.80
Provision 145.52 121.92 23.60
Total current
liability
2259.42 2191.02
Net working
capital
4742.34 4867.94
Net increase in
Working capital
125.6 125.6
4867.94 4867.94 494.11 494.11

Particulars

2006
(Rs in
lakhs)
2007
(Rs in
lakhs)
Effects on working
capital
Increase
Decrease
Current assets
Inventories 3269.91 4451.44 1181.53
Sundry debtors 1093.97 741.78 352.18
Cash &bank
balance
568.08 1101.78 533.70


Loans& advances 2127.00 1933.43 193.57
Current liabilities
Current liability
Including
creditors&bills
payable
2069.10 2555.69 486.59
Provision 121.92 355.50 233.58
Total current
liability
2191.02 2911.19
Net working
capital
4867.94 5317.25
Net increase in
Working capital
449.31 449.31
5137.25 5317.25 1715.23 1715.23

Particulars

2007
(Rs in
lakhs)
2008
(Rs in
lakhs)
Effects on working
capital
Increase
Decrease
Current assets
Inventories 4451.44 3218.82 1232.62
Sundry debtors 1101.78 3311.27 2209.49
Cash &bank
balance
741.79 346.67 395.12


Loans& advances 1933.42 1961.14 27.71
Current liabilities
Current liability
Including
creditors&bills
payable
2555.69 2367.00 188.69
Provision 355.50 460.92 105.42
Total current
liability
2911.19 2827.92
Net working
capital
5317.19 6009.98
Net increase in
Working capital
692.72
6009.98 600.98 2425.35 2425.35

FOR THE YEAR 2008-2009 (figures in lakhs)
Particulars

2008
(Rs in lakhs)
2009
(Rs in
lakhs)
Effects on working
capital
Increase
Decrease
Current assets
Inventories 3218.82 3707.39 488.57
Sundry debtors 3311.27 5681.27 2369.95
Cash &bank
balance
346.67 176.87 169.8


Loans& advances 1961.14 2431.44 470.30
Total current
assets
8837.90 11997.36
Current
liabilities

Current liability
Including
creditors&bills
payable
2367.00 2677.20 310.20
Provision 460.92 575.81 114.89
Total current
liability
2827.92 3253.01
Net working
capital
6009.98 8744.35
Net increase in
Working capital
2734.37 2734.37
8744.35 8744.35 3329.26 3329.26

4.11 GRAPH SHOWING WORKING CAPITAL CHANGES OF MCL

0
500
1000
1500
2000
2500
3000
2005-2006 2006-2007 2007-2008 2008-2009
working capital change
working capital change


INTERPRETATION
As far as the working capital MCL Walayar is concerned, it shows an
increasing trend over the past 5 years. That means the company has enough
investments in current assets to overcome the time lag between sale of goods
and collection of cash balance. So the company can manage the day to day
operations such as wages payment, interest payment and other operating
expenses without any delay as it shows an increasing trend in the working
capital as shown in table (1)125.6 (2) 449.31 (3)692.79 and lastly 2737.57
lakhs. But it is essential to have a control on the increasing trend of working
capital of the company because large investments in current assets may affect
the profitability of the concern too.
COMPARITIVE BALANCE SHEET
A comparative balance sheet shows the assets, liabilities and owners equity of
the business enterprise at the beginning and at the end of the accounting period
with increase and decrease in absolute data in terms of rupees and percentages.
The single balance sheet focus on the financial status of the firm as on a
particular date , while comparative balance sheet focus on the changes that have
been taken place in one accounting period.
4.15 Comparative balance sheet (2005-2006)
Particulars Amount

2005 2006
Amount of
increase or
decrease
Percentage
of increase
or decrease
1.Fixed assets
Gross block 12512.14 13802.71 +1290.57 +10.31
-Depreciation 6476.14 6820.01 +343.47 +5.30


Net block 6035.54 6982.70 +947.10 +15.69
Capital work in
progress
10.34 35.89 +25.55 +247.09
Total fixed assets 6045.94 7018.59 +972.65 +16.09
2.Investments 1.00 1.00 0.00 0.00
3.Current assets &
loans and advances

Inventories 3638.96 3269.91 -369.05 -10.14
Sundry debtors 833.04 1093.97 +260.93 +31.32
Cash &bank balance 485.10 568.08 +82.98 +17.12
Loans &advances 2044.66 2127.00 +82.34 +4.03
Total current assets 7001.76 7058.96 +57.20 +0.82
4.Miscellanious
expenses
198.32 242.14 +43.82 +22.09
Total assets 13247.02 14320.69 +1073.67 +8.10
Capital &liabilities
Capital (share) 2599.87 2599.87 0.00 0.00
Reserves &surplus 5149.03 4812.09 -336.94 +6.54
Share holders fund 7748.9 7411.96 -336.94 -4.348
Secured loans
Loan fund 1910.82 3323.95 +1413.13 +73.95
Unsecured loan
Loan fund 244.04 244.04 0.00 0.00
Deferred tax liability 1083.84 1149.72 +65.88 +6.08
Current liabilities&
Provisions

Current liability 2113.90 2069.10 -44.80 -2.12
Provisions 145.52 121.92 -23.60 -16.822


Total current
liabilities &
Provisions
2259.42 2191.02 -68.40 -3.30
Total liability 13247.02 14320.69 +1073.67 +8.10

Particulars Amount

2006 2007
Amount of
increase or
decrease
Percentage
of increase
or decrease
1.Fixed assets
Gross block 13802.71 13905.31 +102.60 +0.74
-Depreciation 6820.01 7239.29 +419.28 +6.15
Net block 6982.70 6666.02 -316.68 -4.54
Capital work in
progress
35.89 445.02 +409.14 +1139.96
2.Investments 1.00 1.00 0.00 0.00
3.Current assets &
loans and advances

Inventories 3269.91 4451.44 +1181.53 +36.19
Sundry debtors 1093.97 741.78 -352.18 -32.19
Cash &bank balance 568.08 1101.78 +533.70 +93.95
Loans &advances 2127.00 1933.43 -193.57 -9.10
4.Miscellanious
expenses
242.14 273.97 +31.83 +13.15


Total assets 14320.69 15614.45 +1293.76 +9.03
Capital (share) 2599.87 2599.87 0.00 0.00
Reserves &surplus 4812.09 5352.32 +540.23 +11.23
Share holders fund 7411.96 7952.19 +540.23 +7.2
Secured loans
Loan fund 3323.95 2756.42 -567.53 -17.07
Unsecured loan
Loan fund 244.04 878.12 +634.08 +259.83
Deferred tax liability 1149.72 1116.53 -33.19 -2.89
Provisions

Current liability 2069.10 2555.69 +486.59 +23.52
Provisions 121.92 355.50 +233.58 +191.58
Total current
liabilities &
Provisions
2191.02 2911.19 +720.17 +32.87
Total liability 14320.69 15614.45 +1293.76 +9.03

Particulars Amount

2007 2008
Amount of
increase or
decrease
Percentage
of increase
or decrease
1.Fixed assets
Gross block 13905.31 14644.61 +739.30 +5.32
-Depreciation 7239.29 7801.67 +562.38 +7.77


Net block 6666.02 6842.94 +176.92 +2.65
Capital work in
progress
445.02 305.85 -139.17 -31.27
2.Investments 1.00 1.00 0.00 0.00
3.Current assets &
loans and advances

Inventories 4451.44 3218.82 -1232.62 -27.69
Sundry debtors 741.78 3311.27 +2209.49 +200.54
Cash &bank balance 1101.78 346.67 -395.12 -53.27
Loans &advances 1933.43 1961.14 +27.71 +1.43
4.Miscellanious
expenses
273.97 238.83 -35.14 -12.83
Total assets 15614.45 16226.52 +612.07 +3.92
Capital (share) 2599.87 2599.87 0.00 0.00
Secured loans
Loan fund 2756.42 635.40 -2121.02 -76.95
Unsecured loan
Loan fund 878.12 1524.42 +646.30 +73.60
Provisions

Current liability 2555.69 2367.00 -188.69 -7.38
Provisions 355.50 460.92 +105.52 +29.65


Total current
liabilities &
Provisions
2911.19 2827.92 -83.27 -2.86
Total liability 15614.45 16226.52 +612.07 +3.92

Particulars Amount

2008 2009
Amount of
increase or
decrease
Percentage
of increase
or decrease
1.Fixed assets
Gross block 14644.61 15196.88 +552.27 +3.77
-Depreciation 7801.67 8312.47 +510.80 +6.55
Net block 6842.94 6884.41 +41.47 +0.61
Capital work in
progress
305.85 48.69 -256.96 -84.02
Total fixed assets 7148.79 6933.30 -215 -3.01
2.Investments 1.00 1.00 0.00 0.00
3.Current assets &
loans and advances

Inventories 3218.82 3707.39 +488.57 +15.18
Sundry debtors 3311.27 5686.22 +2369.95 +71.387
Cash &bank balance 346.67 176.87 -169.8 -48.980
Loans &advances 1961.14 2431.44 +470.30 +23.98
4.Miscellanious
expenses
238.83 203.70 -35.13 -14.71


Total assets 16226.52 19135.36 +2908.84 +17.93
Capital (share) 2599.87 2599.87 0.00 0.00
Secured loans
Loan fund 635.40 0.00 -635.40 -100
Unsecured loan
Loan fund 1524.42 1921.48 +397.06 +26.05
Provisions

Current liability 2367.00 2677.20 +310.20 +13.11
Provisions 460.92 575.81 +114.89 +24.93
Total current
liabilities &
Provisions
2827.92 3253.01 +425.09 +15.03
Total liability 16226.52 19135.36 +2908.84 +17.93

INTERPRETATION
From the given statement it can be concluded that fixed assets in (2006) has
been increase by 16.09% as compared to 2005. The total value of the fixed
assets shows an increasing trend from year to year except in the last year (2009).
The value of investments remains the same for the last 5 years. The value of the
current assets is showing an increasing trend for the last 5 years. It is better to
keep a tradeoff between liquidity and profitability. So the company needs to
control the investments in current assets. Total assets of the company showing
an increasing trend from year to year (+8.10%, +9.03%, +17.93 %, +7.41%). As


far as the liability of the company is concerned, it shows an increasing trend
from year to year. The values of outside liabilities are increasing. So it is better
to keep a balance between borrowings and if there is excess cash balance, it is
better to pay off liabilities. In 2006 the total liability was increased by 8.10%
and in 2007 it was 9.03% and last year 15.03%. the financial position in the year
2009 is more satisfactory as compared to last 4 year



CHAPTER V
FINDINGS, SUGGETIONS AND CONCLUSION

FINDINGS
1. The funds are not being economically used as current ratio exceeds its
standard. The current ratio is above the standard.
2. The liquid ratio gives us a satisfactory result. The company has the ability
to pay off its short term obligations without converting its stock to cash as
it has good quick and absolute liquid ratios.
3. The company depends more on owned capital and less on outsiders fund.
So the company may lacks the possibility of enjoying trading on equity
and there by maximum return to share holders.
4. The fixed asset to net worth ratio of the concern is satisfactory as the
investment in fixed assets is financed by its equity fund; their fixed assets
are financed by share holders fund itself.
5. The proprietary ratio of the concern is satisfactory as it falls within the
standard. The company has a high proprietary ratio and it will absolutely
increase the confidence of creditors of the company.
6. The working capital turnover ratio of the company is not satisfactory as
the investment in current assets is very high. There exists the problem of
under utilization of funds. High investments in current assets may affect
the profitability of the concern also.
7. The net profit ratio of the company shows an increasing trend from 2007
onwards. The last 2 years shows an identity of the efficient and
reasonable use of available resources of the company.


8. Working capital of the company shows an increasing trend from year to
year. The company has sufficient cash balance to pay off its current
obligation without depending the investments in stock.
9. There is excess investments in current assets in the last 2 years
10. The overall profitability of the concern is showing an increasing trend
over the last 3 years.



SUGGESTIONS
1. It is better to have a control on the investments in current assets.
2. It is better to keep a tradeoff between profitability and liquidity.
3. Company has the opportunity of enjoying the benefit of trading on equity
as the sales shows an increasing trend. So it is better to make use of some
quantity of external fund also.
4. There should be control on the part of the company over the increasing
trend of working capital. Excess working capital(over investment in
current assets) also affect the profitability of the concern.
5. There exists excess liquid cash balance. So it is better to make investment
opportunities and there by company can earn a return on such idle funds.



CONCLUSION
The conclusion has been derived from the analysis of financial statements of the
Malabar Cements Ltd, Walayar. After going through the financial statements of
MCL, it is found that the company is running successfully and profitably. If the
company is able to withstand present competition, it can increase its profit in the
financial market also. It has a better industrial relationship as well as better
employee employer relationship. The financial position and achievements are
also satisfactory.

PROJECT REPORT 2011-2012: Profile of The Company at A Glance, MCL, Walayar

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PROJECT REPORT 2011-2012

P.G.D.C.M.S MESKC Page 5

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