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Submitted by
Ms. VINISHA.H
Prof.V.S.VINAYAGA
MOORTHY
(M.COM,MBA C.S)
PONDICHERRY UNIVRSITY
APRIL 2018
CERTIFICATE OF THE GUIDE
This is to certify that the Project Work titled “COST VOLUME PROFIT ANALYSIS OF
AACHI MASALA FOOD PRODUCTS PVT LTD” is a bonafide work of Ms. VINISHA.H
(Enroll No:0216370921) carried out in partial fulfillment for the award of degree of MBA in
FINANCE of Pondicherry University under my guidance. This project work is original
and not submitted earlier f o r the award of any degree / diploma or associateship of
any other University / Institution.
Place:
Date:
STUDENTS’ DECLARATION
I, Ms. VINISHA.H hereby declare that the Project Work titled “COST VOLUME PROFIT
ANALYSIS OF AACHI MASALA FOOD PRODUCTS PVT LTD” is the original work
done by me and submitted to the Pondicherry University in partial fulfillment of
requirements for the award of Master of Business Administration in FINANCE This is a
record of original work done by me under the supervision of
Prof.V.S.VINAYAGAMOORTHY (M.COM,MBA C.S)of Loyola college chennai.
Date :
I would like to thank the Co-Ordinator, Pondicherry University - Loyola college for
providing all the encouragement and valuable inputs to do the project work by organizing
seminars.
I also acknowledge with a deep sense of reverence, my gratitude towards my parents and
member of my family, who has always supported me morally as well as economically.
At last but not least gratitude goes to all of my friends who directly or indirectly
helped me to complete this project report.
Any omission in this brief acknowledgement does not mean lack of gratitude.
VINISHA.H
LIST OF CONTENTS
CHAPTER NO. TITLE PAGE
NO.
CHAPTER 1 INTRODUCTION
2.1.3 PRODUCTS
4.1 TABLES
4.2 FIGURES
5.1 FINDINGS
5.2 SUGGESTIONS
CHAPTER 6 CONCLUSION
APPENDIX
1. BIBLIOGRAPHY
LIST OF TABLES
TABLE NO TABLES PAGE NO.
2.3.1 45
BREAK EVEN SALES
LIST OF FIGURES
2.4.1 45
BREAK EVEN SALES
Margin of Safety
2. Operating Leverage.
This study also helps to understand the sales, profit and operating leverage of
AACHI MASALA FOOD PRODUCTS PVT.LTD.
CHAPTER-1
1.1 INTRODUCTION
Profit depends on a large number of factors, most important of which are the
cost of manufacturing and the volume of sales, volume of sales depends upon the volume
of production and market factors which turns in related to cost .
It can be helpful for the management to apply various financial tools such as
Financial Leverage an d Profit Volume Ratio.
PRIMARY OBJECTIVE
SECONDARY OBJECTIVE
To find out the break -even - point for the products of AACHI MASALA
FOOD PRODUCTS Pvt.Ltd.
To identify the margin of safety and its significance in AACHI MASALA FOOD
PRODUCTS Pvt.Ltd
This study predetermines the overhead rates that are related to a selected
volume of production.
CHAPTER-2
India is the world's second largest producer of food next to China, and has
the potential of being the biggest with the food and agricultural sector. The total food
production in India is likely to double in the next ten years and there is an opportunity for
large investments in food and food processing technologies, skills and equipment,
especially in areas of Canning, Dairy and Food Processing, Specialty Processing,
Packaging, Frozen Food/Refrigeration and Thermo Processing. Fruits & Vegetables,
Fisheries, Milk & Milk Products, Meat & Poultry, Packaged/Convenience Foods,
Alcoholic Beverages & Soft Drinks and Grains are important sub - sectors of the food
processing industry. Health food and health food supplements are another rapidly rising
segment of this industry which is gaining vast popularity amongst the health conscious.
India is one of the world’s major food producers but accounts for less than
1.5 per cent of international food trade . This indicates vast scope for both investors and
exporters. Food exports in 1998 stood at US $5.8 billion whereas the world total was US
$438 billion. The Indian food industries sales turnover is Rs 140,000crore (1crore = 10
million) annually as at the start of year 2000.
The industry has the highest number of plants approved by the US Food and
Drug Administration (FDA) outside the USA
India's food processing sector covers fruit and vegetables; meat and poultry; milk and milk
products, alcoholic beverages, fisheries, plantation, grain processing and other consumer
product groups like confectionery, chocolates and cocoa products, Soya - based products,
mineral water, high protein foods etc . We cover an exhaustive database of an array of
suppliers, manufacturers, exporters and importers widely dealing in sectors like the - Food
Industry, Dairy processing, Indian beverage industry etc. We also cover sectors like dairy
plants, canning, bottling plants, packaging industries, process machinery etc.
India is the second largest producer of food and holds the potential to be the
biggest on global food and agriculture canvas, according to a Corporate Catalyst India
(CCI) survey. The food industry in India comprises the food production industry and the
food processing industry. The food processing industry is one of the largest in India – it is
ranked fifth in terms of production, consumption, export and expected growth.
Consumer food industry mainly consists of ready to eat and ready to cook
products, salted snacks, chips, pasta products, cocoa based products, bakery products,
biscuits, soft drinks etc.
There are around 60,000 bakeries, several pasta food units and 20,000
traditional food units and in India. The bakery industry is among the few processed foods
segments whose production has been increasing consistently in the country in the last few
years. Products of bakery include bread, biscuits, pastries, cakes, buns, Rusk etc. This
activity is mostly concentrated in the unorganized sector. Bread and biscuits constitute the
largest segment of consumer foods with annual production of around 4.00 million tones.
Bread manufacturing is reserved for the small -scale sector. Out of the total production of
bread, 40% is produced in the organized sector and remaining 60% in the unorganized
sector, in the production of biscuits the share of unorganized sector is about 80%.
Indian Food Processing Industry
Largest producer of milk in the world - 105 million tones per annum.
India is the largest in the livestock population about 485 million tones per annum.
It is second largest producer of fruits & vegetables which accounts for 150 million
tons per annum.
Geographical distribution
Delhi, Mumbai, Kolkata, Gujarat, Hyderabad, Pune, all the major cities in the
country
The Indian food industry sales turnover is Rs 140,000crore annually as at the start
of year 2000.
The value of the Indian food industry has increased from Rs. 3 .09 trillion in 1993 -
94 to Rs. 3.99 trillion in 2000 -01.
Market Capitalization
The country’s GDP growth rate had increase from 3 .5 % in 2002 -03 to 9 % in
2006 - 07
The Indian agriculture sector has come a long way since the time of independence.
With the emergence of green revolution, India agricultural Industries have
transformed itself from a country of shortages to a land of surpluses. With the rapid
growth of the Indian economy, a shift is also being seen in the consumption pattern
of the country, from cereals to m ore varied and nutritious diet of fruit and
vegetables, milk, fish, meat and poultry products. All these efforts have resulted in
the development of a sunrise industry namely the Food Processing Industries.
In July 1988, The Ministry of Food Processing Industries (MFPI) was set up to give
an impetus to development of food processing sector in India. The Ministry
formulates and implements the policies & plans for the food processing industries
according to the overall national priorities and objectives. It acts as a catalyst for
bringing in greater investment into the sector while guiding and helping the industry
and even creating a conducive environment for healthy growth of the food
processing industry.
The Indian Food Processing Industry with its vast potential has emerged as one of
the major driver of economic growth and development.
In 2014, the Exports of agricultural products from India are expected to cross
around US $ 22 billion mark and would account for 5 % of the world’s agriculture
exports, Even the Exports of floriculture, fresh fruits and vegetables, processed
fruits and vegetables, animal products, other processed foods and cereals rose to US
$ 7891 .8 million in 2008 - 09 from US $ 7877. 07 million in 2007 - 08, according
to the Agricultural and Processed Food Products Export Development Authority
(APEDA).
Moreover, Indian Food Processing Industry has exported schedule products,
floriculture and seeds, fruits and vegetables, processed fruits and vegetables,
livestock products, other processed foods and cereals worth US $ 6. 53 billion from
2009 -2010, according to APEDA
ITC Limited
Amul
Milk food
Conagra Foods
Nissin Foods
Walmart
Venky's
SWOT ANALYSIS OF FOOD – PROCESSING INDUSTRY
Strengths
Priority sector status for agro -processing given by the central Government
Weaknesses
Lack of adequate quality control and testing methods as per international standards
Opportunities
Large crop and material base offering a vast potential for agro processing activities
Setting of SEZ/AEZ and food parks for providing added incentive to develop
Greenfield projects
Rising income levels and changing consumption patterns
THREATS
High taxation
High packaging
India has diverse agro - climatic conditions and has a large and diverse raw material
base suitable for food processing companies
Largest producer of milk in the world (105 million tones per annum).
Second largest producer of fruits & vegetables (150 million tones per annum).
Third largest producer of food grain (230 million tones per annum).
Aachi Group was found in the year 1995 by Mr. A.D.Padmasingh Isaac, a first generation
entrepreneur with BBA and hailing from Nazareth in Tirunelveli District of Tamil Nadu.
Undoubtedly, Aachi has come to rule the kitchen today!
The Aachi Group comprises of the following companies.
Aachi Masala Foods Private Ltd
Aachi Spices & Foods Pvt Ltd
Aachi Special Foods Pvt Ltd
Aachi has become a household name because of its excellent quality products catering to the
common people. The product range is so wide that no household can afford to miss Aachi
products from its kitchen.
The success of Aachi can be attributed to the following: Excellent Quality products, Strong
resources & Marketing Network, Continuous market analysis and Survey of customer needs,
Standardization & upgradation of products as per international standards and Excellent Brand
Recall.
Aachi Group’s turnover has been increasing at CAGR of 30% over the last three years which is
higher than that of the national average of 15% for Food Processing Industries. AACHI’s
products reach the consumers through 4000 Agents and 12 Lakh Retailers. The product range is
classified to be 8 divisions for easy distribution. It is expected to strive the magical figure of
Rs.1200 Crores in turnover by March 2017!
“Aachi products are now available in USA, Canada, U.K, Belgium, Holland, France, Denmark,
Sweden, Switzerland, Germany, Australia, New Zealand, Republic of South Africa, D.R. Congo,
Kenya, Tanzania, Papua New Guinea, Mozambique, Mauritius, Seychelles, United Arab
Emirates, Qatar, Kuwait, Kingdom of Saudi Arabia, Lebanon, Sri Lanka, Maldives, Singapore,
Malaysia, Thailand, Korea and Japan.“
Founder
MR. A. D. PADMASINGH ISAAC
CHAIRMAN & MANAGING DIRECTOR, AACHI GROUP OF COMPANIES, CHENNAI
A range of blended masalas adding an extraordinary flavour and taste to a million tongues is
what the (AACHI) MASALA KING crowns every ‘Queen of the Kitchen’ with. Aachi has made
a revolution in round masalas into tasty food. Yes, Mr.Isaac has made the lives of women easy
in the kitchen and brought ripples of happiness and satisfaction to all in the family.
STAFFS
Aachi has provided employment to several hundreds of women and a significant number
of physically challenged persons. About 5000 families rely on AACHI and 20,000 individuals
earn their livelihood because of Aachi!
Aachi has undertaken Rural Rejuvenation Program jointly with Isha Foundation. Mr. Isaac also
has plans to start a Micro Finance Institution with the support of generous overseas lending
agencies. This is expected to meet the credit requirements of the wide network of Retail outlets
numbering over a million! There are also plans to set up Aachi Institute of Retail Management to
meet Aachi Group’s manpower requirement. An Aachi School of Business Management is also
being planned to develop eminent entrepreneurs.
2.1.3 PRODUCTS
The company, which has produced some items in curry powder at first, is
now producing and distributing a wide range of products including the pickles. The
amiable labour management relationship has helped to grow a dedicated labour culture in
the company. The growth of our products depends by its good quality.
The recognition from the public is the best achievement of our firm . The
Supernova has well established itself in the market due to its high quality. The inspiration
from this recognition has leaded the company in the production of other products also. We
can assure that we are vowed to care in obtaining more and more good qualities for our
products. The important products of the company are the following: -
Gooseberry pickle
Mixed pickle
Ginger pickle
Mango curry
Sambar powder
Chicken masala
Chill y powder
Turmeric powder
Meat masala
Pepper powder
Fish masala
PRODUCTION DEPARTMENT
FINANCE DEPARTMENT
MARKETING DEPARTMENT
Company has very good sales promotion activities for increasing sales of the
products. The important one is advertisement. Advertisement is the key word to the
successful of the product in each and every company. It makes the knowledge about the
products and services.
News paper
Radio
TV
Outdoor displays
Advertisement copy includes broadly elements verbal and visual which are to be included
in the finished advertisement copy. Its main purpose is to attract attention, arose curiosity
and these by further reading. It presents message or appeal in gist at glance.
MANAGING DIRECTOR
DIRECTOR
PLANT
PURCHASE SUPERVISOR
MANAGER
H R EXECUTIVES SALES
EXECUTIVE
OFFICERS FOREMAN
WORKERS WORKERS
CHAPTER -3
REVIEW OF LITERATURE
Cost -volume -profit (CVP) analysis as an important tool that provides the
management with useful information for managerial planning and decision -making. Profit
of a business firm is the results of interaction of many factors. Such factors influencing the
level of profits, the following are considered the key factors:
1. Selling price
2. Volume of sales
5. Sales mix
CVP analysis focuses on prices, revenues, volume, costs, profits and sales
mix and on the inter-relationship between them during the short-run. The short-run is
generally considered a period of one year or less than one year during which the production
of a business enterprise cannot be increased and is limited to the available current operating
capacity of the enterprise . During the short - run, the capacity of the plant and machinery
cannot be increased (this is possible during the long -term only) and therefore, production
is limited in terms of available plant facilities. Similarly, it takes time to reduce the
capacity of plant and machinery and therefore, a business enterprise should operate during
the short -run relatively on a constant quantity of production resources. Besides, no
changes in cost and prices data can be generally made during the short -term as they might
have already been determined. During the short-run, however, some resources like
materials and unskilled labour can be increased at a short notice. Thus during the short -
inn, sales volume and short-run profitability can be the only vital area which may be found
uncertain. CVP analysis herein reveals the effect of changes in sales volume on the level of
profits. CVP analysis, in this way, is an integral part of financial planning and managerial
decision - making.
In CVP analysis, all expenses are classified into fixed and variable. Semi -
Variable expenses have to be divided into their fixed and variable elements. Total variable
costs are considered to be those costs that vary as the production volume changes. In a
factory, production volume is considered to be the number of units produced, but in a
governmental organization with no assembly process, the units produced might refer.
These steps are important prerequisites to any CVP analysis and a proper
understanding of them is essential for reliable conclusions. Based upon a knowledge of
fixed and variable cost elements and CVP analysis, it is possible to determine break -even
sales volume, to compute the sales needed to generate desired profits and to supply answers
to man y questions that arise It the course of management planning and decision - making.
Contribution margin is the excess of sales revenue over variable costs and
expenses. Under contribution margin concept, variable costs include all variable costs, i.e.
variable production costs and variable selling and administrative expenses, if any. From the
contribution margin, fixed costs and expenses are deducted giving finally operating income
or loss Contribution margin is thus used to recover/cover fixed costs. Once the fixed costs
are covered, any remaining contribution margin adds directly to the operating income of
the firm.
Contribution Margin Ratio (C/S ratio or P/V ratio)
The use of P/V ratio in specific analysis is based on the assumption that
except sales volume, other factors such as the unit selling price, percentage of variable cost
to sales, amount of fixed costs remain constant. If there are changes in any of these factors,
the effect of such change should be considered in making the analysis involving the P/V
ratio).
UNIT CONTRIBUTION MARGIN
While the P/V ratio is most useful when the increase or decrease in sales
volume is measured in terms of Rupees, the unit contribution margin is most useful when
increase or decrease m sales volume is measured in sales unit (quantities). If a business
firm has been able to cover fixed costs, the net income of t he firm will increase by unit
contribution margin multiplied by additional sales units.
Break-even in units = =
Contribution margin per unit S – VC
The contribution margin per unit is sales price per unit (S)
BREAK-EVEN CHARTS
The concept of the break-even point does not change when the analysis is
performed in sales rupees The break-even point merely identifies the amount of sales
rupees required to cover all costs but generates no profit.
1. This is the same as assuming the variable expense per unit is constant. The total fixed
expenses, within a relevant range of volume, do not change as sales volume the
following are the important assumptions in break - even analysis and break - even
charts.
2. The total revenues of the enterprise change in direct proportion to changes in unit sales
volume. This is the same as assuming that the average selling price is constant.
3. All costs are classified as fixed and variables.
4. It is assumed that all other costs, such as mixed costs, can be broken in to fixed and
variable cost elements.
5. The total expenses can be separated into variable expenses and fixed expenses per year.
6. The total variable expenses vary in direct proportion to changes in sales volume
changes.
7. For a multi -product firm, the sales mix remain constant for all volume levels under
consideration.
8. Production volume and sales volume are equal; in other words, inventory changes do no
effect profit.
9. Inventory quantities remain unchanged during the year. The number of units in
beginning works -in -progress and finished goods equal to the number of units in these
ending inventories.
ADVANTAGES OF BREAK-EVEN ANALYSIS
1. Break - even analysis provides a useful tool in demonstrating the relationship and
interaction of cost, volume, and profit. If properly utilized, it aids in establishing realistic
profit objectives and operating budgets.
4. Management is often confronted with the decision to increase sales volume with an
optimistic view towards enhancing profit. Profit enhancing is a possibility, provided costs
are controlled within prescribed limits. The break - even technique can be an important tool
in establishing expenditure constraints and control by adequate supervision.
5. An important influence on profit is the product sales mix with variable gross
margins. The break even chart can highlight problem areas requiring corrective
management action.
DISADVANTAGES OF BREAK-EVEN ANALYSIS
1. Break - even analysis is not a remedy for all problems faced by a business firm. It
cannot be used usefully without a thorough understanding of its concept and limitations.
2. The break -even chart generally reflects a number of estimates and judgments, and
the resultant data developed and their implication can be misleading. For example,
measuring costs and sales volume at a particular output level may be an inaccurate method
of assessment, particularly when the volume approaches the break - even point, which can
change depending on operating circumstances.
3. Usually, the break - even is developed at a point that represents a static position.
Changes in relationship factors should be correctly and logically reflected in a revised chart
or a series of charts.
4. The improper understanding and usage of the charts can lead to inadequate
decision making, inaccurate planning assumptions and possibly detrimental control actions.
3.1 RESERCH METHODOLOGY
PRIMARY DATA
The primary data has collected by observation and discussion with the finance
department.
SECONDARY DATA
Secondary data are collected from the company websites, journals, newspapers,
books and financial statements (2007 to 2011).
2. PV Ratio
3. Margin of Safety
4. Contribution
5. Operating Leverage.
BREAK EVEN ANALYSIS
The Break even analysis indicates at what level cost and revenue an in
equilibrium. It is a simple and easily understandable method of presenting to management
the effect of changes in volume on profit detailed analysis of breakeven data will reveal to
management the alternative decision which reduce or increase cost and which increase
sales and income. It is a device which portrays the effects of ant type of future planning by
evaluating alternative course of action.
Fixed Cost
Breakeven sales (in rupees) =
PV Ratio
There are multiple products with different has a direct effect on the fixed cost recovery and
total profits of the firm. Different products have different profits volume ratio because of
selling price and variable cost. The total profit depend to some extent upon the proportion
is the products are sold.
Fixed cost
MARGIN OF SAFETY
This is the difference between the sales and the breakeven point. If the
distance is relatively short it indicates that a small drop in production or sales will reduces
profit considerably. If the distance is long it means that the business can still making profit
even after a serious drop in production. It is important that there should be a reasonable
margin of safety otherwise reduces the level of production may prove dangerous.
*100
Sales
Operating leverage is determined by the firm's sales revenue and its earnings before
interest and tax (EBIT). The earnings before interest and taxes are called as operating profit
(EBIT). While financial leverage can be quite significant for the earning available to
ordinary shareholders.
Operating Leverage = Contribution
EBIT
3.1.2 LIMITATIONS
For this analysis last five years financial statement alone taken.
Study based only on the secondary data available from annual reports.
CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
Fixed Cost
Break even sales (in Rupees ) = PV Ratio
Particulars Rs.
Sales : 41,760,979.59
Fixed cost:
Selling and other expenses : 6,898,217.18
Variable Cost:
Consumption of Materials : 30,472,943.34
Contribution:
Sales : 41,760,979.59
(-) Variable Cost : 30,472,943.34
Contribution : 11,288,036.25
BREAK EVEN SALES
Break even sales = Fixed Cost/ PV Ratio : 6,898,217.18
27.03%
The Break Even Sales for the year MARCH-2013 is Rs. 25,520,596.30
BREAK EVEN POINT OF MARCH-2014:
Fixed Cost
Particulars Rs.
Sales : 57,351,783.26
Fixed cost:
Selling and other expenses : 8,187,873.13
Variable Cost:
Consumption of Materials : 40,748,969.09
Contribution:
Sales : 57,351,783.26
(-) Variable Cost : 40,748,969.09
Contribution : 16,602,814.17
BREAK EVEN SALES
Break even sales = Fixed cost/ PV Ratio : 8,187,873.13
28.94%
The Break Even Sales for the year MARCH-2014 is Rs. 28,292,581.65
BREAK EVEN POINT OF MARCH-2015:
Fixed Cost
Particulars Rs.
Sales : 76,839,874.88
Fixed cost:
Selling and other expenses : 12,927,325.71
Variable Cost:
Consumption of Materials : 57,391,254.65
Contribution:
Sales : 76,839,874.88
(-) Variable Cost : 57,391,254.65
Contribution : 19,448,620.23
BREAK EVEN SALES
25.31%
The Break Even Sales for the year MARCH-2015 is Rs. 51,075,960.92
BREAK EVEN POINT OF MARCH-2016:
Fixed Cost
Break even sales (in Rupees) = PV Ratio
Particulars Rs.
Sales : 97,619,705.02
Fixed cost:
Selling and other expenses : 18,216,410.50
Variable Cost:
Consumption of Materials : 70,204,027.46
Contribution:
Sales : 97,619,705.02
(-) Variable Cost : 70,204,027.46
Contribution : 27,415,677.56
BREAK EVEN SALES
The Break Even Sales for the year MARCH-2016 is Rs. 64,873,256.76
BREAK EVEN POINT OF MARCH-2017:
Fixed Cost
Particulars Rs.
Sales : 10,99,99,623.00
Fixed cost:
Selling and other expenses : 16,153,609.94
Variable Cost:
Consumption of Materials : 86,209,960.28
Contribution:
Sales : 10,99,99,623.00
(-) Variable Cost : 86,209,960.28
Contribution : 23,789,662.28
BREAK EVEN SALES
The Break Even Sales for the year MARCH-2017 is Rs. 74,716,049.67
TABLE NO.4.1
1 2013 65562502552
6 2014 62606521525
5 2015 51225022506
7 2016 27225652522
5 2017 27212270522
FIGURE NO.4.2
70000000
60000000
50000000
Series 1
40000000
Series 2
30000000 Column1
20000000
10000000
0
Category 1 Category 2 Category 3 Category 4
80000000 74716049.67
70000000 64873256.76
60000000
51075960.92
50000000
40000000
BREAK EVEN SALES
28292581.65
30000000
25520596.3
20000000
10000000
0
2013 2014 2015 2016 2017
INTERPRETATION
= 41,760,979.59-25,520,596.30
= 16,240,383.29
Sales
= 16,240,383.29
*100
41,760,979.59
=38.88 %
= 57,351,783.26-28,292,581.65
= 29,059,201.61
Sales
= 29,059,201.61
*100
57,351,783.26
=50.66 %
= 76,839,874.88-51,075,960.92
= 25763913.96
Sales
= 25763913.96
*100
76,839,874.88
=35.52 %
= 97,619,705.02-64,873,256.76
= 32,746,448.26
Sales
= 32,746,448.26
*100
97,619,705.02
=33.54 %
= 35,283,573.33
Sales
= 35,283,573.33
*100
=30.07 %
MARGIN OF SAFETY
1 2013 38.88
2 2014 50.66
3 2015 35.52
4 2016 33.54
5 2017 30.07
FIGURE NO.4.2.1
MARGIN OF SAFETY
60
50.66
50
40 38.88
35.52
33.54
30.07
30
MARGIN OF SAFETY
20
10
0
2013 2014 2015 2016 2017
INTERPRETATION
PV Ratio of March-2013:
41,760,979.59
PV Ratio : 27.03%
PV Ratio of March-2014:
57,351,783.26
PV Ratio : 28.94%
The PV Ratio for the year Mach-2014 is 28.94%.
PV Ratio of March-2015:
76,839,874.88
PV Ratio : 25.31%
97,619,705.02
PV Ratio : 28.08%
PV Ratio of March-2017:
10,99,623.00
PV Ratio : 21.62%
1 2013 27.03
6 2014 28.94
5 2015 25.31
7 2016 28.08
5 2017 21.62
FIGURE NO.4.2.3
35
28.94 28.08
30 27.03
25.31
25 21.62
20
10
0
2013 2014 2015 2016 2017
INTERPRETATION
o The volume of profit is increasing in the year 2014 to 28. 94% and decreased in
the year 2015 to 25 .31% again it increased to 28.08%.
= 11,288,036.25
344,219.62
= 32.79%
= 16,602,819.17
352,590.35
= 47.08%
OPERATING LEVERAGE
= 19,448,620.23
676,285.83
= 28.75%
= 27,415,677.56
1,762,473.25
= 15.55%
OPERATING LEVERAGE
= 23,789,662.28
1,650,143.75
= 14.41%
OPERATING LEVERAGE
1 2013 32.79%
2 2014 47.08%
3 2015 28.75%
4 2016 15.55%
5 2017 14.41%
FIGURE NO.4.2.4
OPERATING LEVERAGE
50 47.08
45
40
35 32.79
30 28.75
25
OPERATING LEVERAGE
20
15.55 14.41
15
10
0
2013 2014 2015 2016 2017
INTERPRETATION
The increase in the profit shows that the volume of income tax is increased.
It is indicated that from the financial statements 41,760,975. 59, 57,315,783 .26,
76,839,874.88, 97,619,705 .02 and 10,99,99,623 .00 are the net sales for the year 2013,
2014, 2015, 2016 and 2017 respectively.
It is found that 221,731.62, 236,098.35, 443,976. 83, 1,208,032 .25 and 1,104,989. 97 are
the net profit for the year 2013, 2014, 2015, 2016 and 2017 respectively.
It is inferred that from the above table 27.03%, 28. 94%, 25.31%, 28.08% and 21 .62%
are the Profit Volume ratio for the years of 2013, 2014, 2015, 2016 and 2017
respectively.
It is found that 32 .79%, 47.08%, 28. 75%, 15.55% and 14.41% are the operating
leverage for the years of 2013, 2014, 2015, 2016 and 2017 respectively.
5.2 SUGGESTIONS
The level of breakeven point is increased year by year from the analysis. The company is
not able to manage the breakeven point of the company. So it should take necessary steps
in cost of sales.
The level of profit volume ratio is in a variable manner, there is increase and decrease in
profit volume ration year by year. So the company should make high sales with reduced
cost to improve profit.
The fixed costs need to be reduced and cost control techniques can be adopted
which will increase the earnings.
The company can improve capital turnover in the way of sales at reasonable price.
The company can take necessary steps to invest certain amount into working capital. It will
very useful to maximize the profit.
Comparing the current assets and current liabilities there was a increase in the current asset
and also the in current liabilities, the company should manage to improve current asset and
decrease in liability by increasing sales and high profit.
CHAPTER-6
CONCLUSION
The study makes evident that the overall performance of the company with
regard to profitability is average but still, the performance of the company can be maximized
through careful measures of cost control which will enhance the operating efficiency of the
company. The company can reduce their costs, thereby the sales get increase due to their qu
alit y and also the performance will be improved in future.
The financial statements shows a sign of sickness in future, the company has to
undergo an improvements in several areas of management in the near future, the company has
to take some precautions to prevent the sickness, and if the company applies
recommendations of this study towards its management, the company will be back on to a
higher profitable position within short time.
APPENDIX
BIBILOGRAPHY
REFERENCES
www.google.com
www.aachigroup.com
www.wikipedia.com
SOURCES:
1. V.K SAXENA and C.D.VARSHID – Basic of Cost and Management Accounting, Sultan Chand &
Son, 3rd Edition 2005.
2. BHABATOR and BANERJEE – Cost Accounting Theory & Practice, Prentice Hell of India Private
Ltd, 12th Edition 2006.
3. M Y KHAN and P K JAIN – Basic Financial Management, Tata Me Graw Hill Publishing Company
Ltd, 2nd Edition 2005
4. G C BERI – Statistics for Management, Tata Me Graw Hill Publishing Company Ltd, 2nd Edition
2003
5. C R KOTHARI – Research Methodology & Techniques, Wishwa Prakashan, 2nd Edition 2002