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1.

INRODUCTION TO FERTILIZER INDUSTRIES


The growth figures but more Indian in economy terms posted of a remarkable recovery during 2009-2010, not only in terms of overall importantly certain fundamentals which justify optimism for the Indian economy in the medium to long term. Agriculture accounts for nearly 1/4th of India's GDP and more importantly, about 2/3rd of the country's population is dependent on agriculture and allied activities for their livelihood. As per statistics nearly 175 lakh MT of fertilizer nutrients are required every year in this country. The demand of fertilizers was so high that India had to import almost 30% of its requirement from other countries. Therefore, to achieve the economic growth, agriculture base of the country must be strengthened. To attain this objective, agriculture practices have to be improved from their traditional pattern to a higher technological track involving better irrigation and use of better quality seeds, fertilizers, insecticides & pesticides. Therefore, chemical fertilizers are key player in this process and fertilizer industries plays quite a major role in increasing food production in the country and also helps to modernize the out look of the common farmers and make them innovative and respective to the new technology change. A fertilizer is any material, organic, inorganic, natural or systematic, that is placed on or incorporated into the soil to supply plants with one or more of the chemicals elements necessary for normal growth. Fertilizer is the material, which supplies the chemicals elements required for plant growth. Primary nutrients like nitrogen, phosphates

and potassium (required for fertilizer land) are supplied through chemical fertilizer. Fertilizer response studies have proved that one-kg. Of Fertilizer nutrient application can INCREASE the food grain production by 8-10 kg. Fertilizer production is of permanent importance for this country because Fertilizer increases agriculture productivity. One hand population increasing but on the other hand the supply of land is totally inelastic i.e. fixed. So we have to produce more, without any increase in arable land area. This can be done if productivity goes up. And Fertilizer plays a major role in productivity escalation. As this is a vital commodity it is in the interest of nation that farmers get fertilizers at reasonable rate and in adequate quantity. Looking to the poor economic condition of Indian farmers Government of India framed fertilizer policy in 1977 based on Maratha Committee Report. The purpose behind introducing this policy was to supply fertilizer to poor farmers at a price they could afford, so as to increase the consumption of fertilizer, to increase food production, and ensure fair return to fertilizer producers. With this twin objective, Retention Price Scheme (RPS) for fertilizers came into picture. In this scheme Government has brought the fertilizer under the purview of Essential Commodities Act (ECA) in which the retail price of fertilizer to the farmer is notified by the Government of India from time to time. This retail price to the farmer is uniform throughout the country and is subject to local taxes applicable under the respective states. Further under ECA, the Government also operates a system of distribution control in which the manufacturers including the handling agents for the imported fertilizers are directed to sell specified quantities of fertilizers in given states/union territories. While doing so, the logistics of fertilizer distribution including storage, transportation, handling etc.

are also suitably regulated conforming to overall supply plans of the Government to meet the requirement in all the parts of the country. Now manufacturers also should get reasonable rate of return as an incentive for producing fertilizers. Manufacturers should get at least that much, which can enable them to remain in the industry. Government of India fixes the price of fertilizers in such a way that manufacturers cost of production including cost of marketing is covered and the manufacturer gets a 12% post tax return on net worth of the unit at a pre-defined capacity utilization. Norms are fixed for consumption of raw material, utilities, services, capacity utilization, depreciation etc. The price so fixed is called Retention Price (RP). This price is reviewed every three Years. In a nutshell fertilizers cannot be sold in open markets and producing unit has almost nil say in fixing fertilizer price. Then how to increase profits? By operating plants efficiently. The work of administering the Retention Price Scheme (RPS) is entrusted to Fertilizer Industry Co-ordination Committee (FICC) which works under the control of Department of Chemicals and Fertilizers.

1.1 FERTILIZER INDUSTRY SCENARIO IN INDIA


In India, first of all in 1906, a single super phosphate (SSP) manufacturing unit was set up at RANIPAT near CHANNI (MADRAS) with annual capacity of 6400tones per annum.

1. PUBLIC SECTOR
THE FERTILIZER AND CHEMICALS TRAVANCORE LTD. (FACT) HINDUSTAN FERTILIZER CORPORATION LTD. (HFC) MADRAS FERTILIZER LTD. (MFL) HINDUSTAN COPPER LTD. (HCL) NAIVELY LIGNITE CORPORATION LTD. (NLC) PYRITES, PHOSPHATES AND CHEMICALS LTD. (PPCL) PRADEEP PHOSPHATES LTD. (PPL) RASHTRIYA CHEMICALS AND FERTILIZERS LTD. (RCFL) NATIONAL FERTILIZER LTD. (NFL)

2. CO-OPERATIVE SECTOR
Those are only two fertilizer manufacturing societies in co-operative sector INDIAN FARMERS FERTILIZERS CO-OPERATIVE LTD. (IFFCO) KRISHAK BHARTI CO-OPERATIVE LTD. (KRIBHCO)

3. PRIVATE SECTOR
There are 17 companies in private sector, which are producing FERTILIZER . GUJARAT NARMADA VALLEY FERTILIZER CO. LTD. (GNFC) HINDUSTAN LEVER LTD.(HLL) HARI FERTILIZER ICI INDIA LTD. INDO GULF FERTILIZERS & CHEMICALS CORPORATION LTD MANGALORE CHEMICALS & FERTILIZER LTD. (MCFL)

SOUTHERN PETRO CHEMICALS INDUSTRIES CORPORATIONS LTD. NAGARJUNA FERTILIZER & CHEMICAL LTD. (NFCL) SHRI RAM FERTILIZER & CHEMICALS TUTICORIAN ALKALI CHEMICALS & FERTILIZER LTD. ZUARI AGRO CHEMICALS LTD BINDALI AGRO CHEMICALS LTD. CHAMBAL FERTILIZER & CHEMICALS LTD. COROMANDAL FERTILIZER LTD. (CFL) DEEPAK FERTILIZER & PETROCHEMICALS LTD. (DEPCL) E.D.I. PASSY (INDIA) LTD. GUJARAT STATE FERTILIZER COMPANY (GSFC) CORPORATIONS

The Role of the Fertilizer in the National Economy


Agriculture As a Industry Services Distribution network use promotes gas, domestic world credit banking services, research, transport storage services. and trade, Environment The proper use of fertilizers help in: and 1) Maintenance of soil structures. soil erosion and Degradation. Deforestation. and 3) Control of and 2) Prevention of can

critical Fertilizer in crop industry It promotes of food Foreign and exchange savings.

input

production. promotes agricultural growth, security rural upliftment.

sulphur etc.

1. KRIBHCO PROFILE

COOPERATIVE
A cooperative is an autonomous association of persons united voluntarily to meet their common social and cultural needs and aspirations through jointly owned and democratically controlled enterprises. Cooperatives are based on the values of self-help, selfresponsibility, democracy, equality and solidarity.

INTRODUCTION
Krishak Bharati Cooperative Limited (KRIBHCO), a premier Cooperative Society for manufacture of fertilizer, registered under Multi-State Cooperative Societies societies spread all over the country. KRIBHCO has sated up a Fertilizer Complex to manufacture Urea, Ammonia & Bio-fertilizers at Hazira in the State of Gujarat, on the bank of river Tapti, 15 Kms from Surat city on Surat Hazira State Highway. Late Smt. Indira Gandhi, former Prime Minister of India laid the Foundation Stone on February 5, 1982. Ten Seed Processing Plants are also in operation in various states. Act1985, was promoted by the Govt. of India, IFFCO, NCDC and other agricultural co-operative

HISTORY AND DEVELOPMENT


PROJECT ZERO DATE FOUNDATION STONE LAID BY PROJECT COMPLETION 31st MARCH, 1981 Late Smt. Indira Gandhi then the Prime Minister Of India on 5th February 1982 31st MAY 1985

TRIAL PRODUCTION AMMONIA UREA(STREAM 11/31) UREA (STREAM 21/41) FIRST RAKES DISPATCHED COMMERCIAL PRODUCTION

PHASE Ist 14th NOV1985 26th NOV. 1985 3rd DEC. 1985 1st FEB. 1986 1st MARCH 1986

PHASE IInd 30th NOV. 1985 1st DEC.1985 1st DEC. 1995

OBJECTIVES OF KRIBHCO
To increase the urea installed capacity, maintaining its market share. To ensure optimum utilisation of existing plant and machinery. To diversify into other core sectors like power, LNG terminal / port, chemicals etc. To under take the activities for the rural upliftment and agriculture development. To promote economic interest of its members by undertaking manufacturing of chemical fertilizer and allied product

MISSION OF KRIBHCO

To act as a catalyst to agricultural and rural development by selecting, financing and managing projects that are both socially desirable and commercially profitable. For doing Services to member of cooperative society by selecting financing

VISION OF KRIBHCO

They want to be a world class organization that represents the farmer community and maximizes returns to them through specialization in agricultural inputs and products and other diversified businesses that maximize stakeholder value

Research & Development:


The society has taken up a research & development project covering priority areas like fertilizers, bio-fertilizers, and treatment of wastes generated by fertilizers industry seeds and fertilizer, fertilizers marketing. Liquid based bio-fertilizers are being developed in place of carrier based bio-fertilizer.

Krishak Bharti Seva Kendra:


In order to provide all essential agro-inputs i.e. fertilizers, seeds, pesticides, micronutrients, soil testing tips, agriculture implements and technology information under one roof. KRIBHCO has been continuing its operation of service centre known as Krishak Bharati Seva Kendra.

2.1 PLANT CAPACITY & CONSULTANTS


PLANT AMMONIA UREA CAPACITY DAILY 2 X 1350 MT 4 X 1100 MT ANUUAL 1.003Million MT 1.729 Million * M.W.kellogg, USA *-FEDO, INDIA *SNAMPROGETTI, ITALY *PDIL, POWER 2 X 15 MWH 2 HAEVY WATER BIOFERTILIZER 250 MT PER YEAR * DAE X 55 INDIA SENIOR THERMAL ENGG.U.K SENIOR THERMAL ENGG.U.K. MT *PDIL * HTAS,DENMARK CONSULTANTS

PER YEAR

BIO-FERTILIZERS:KRIBHCO diversified into bio-fertilizers in 1995 in order to provide supplementary Nutrients at low cost through its Hazira plant with a production capacity of 100 MT PA. The plant capacity was enhanced to 250 MT PA in DECEMBER 1998. The types of BIOFERTILIZERS manufactured by KRIBHCO are Rhizobium, Azotobacter & PSM (Phosphate Solubilisig Microorganism) KRIBHCO is implementing two more bio-fertilizer plants of 300 MTPA capacity each.

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PRODUCTION

&SALES

OF

KRIBHCO

BIO-

FERTILIZERS (Qty. in MT)


The following are the Year wise details of Production and Sales of BioFertilizer Bio-fertilizer is also one of the product of the kribhco. It is also useful in the growth of the plant but it is a biofertilizer not a chemical. Like urea & ammonia. At the kribhco. hazira side bio-fertilizer plant is also situated under the

CAPACITY &SALES OF KRIBHCO UREA (Qty./Lakh/ MT)

KRIBHCO is also engaged in the production of urea. Urea is one of fertilizer which made from natural gas, water & other

utility. Most of the farmer are using urea as a fertilizer for the growth of their farming in the world.

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PRODUCTION (Qty/Lakh/MTS)

&SALES

OF

KRIBHCO

SEED

KRIBHCO is also making & selling SEED. It offer various kind of different SEED of high quality at a reasonable price.

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2.2 Performance Highlights


Highest Total Fertilizer Sales (Urea-38.47 MT, DAP-1.14 Lakh MT and MOP-0.90 Lakh MT.) (Previous best was 37.76 Lakh MT or Urea during 2008-2009) Highest Imported Fertilizers Handle (Previous best was 10.45 lakh MT during 20082009) Highest Seed Sales (Previous best sales was 1.96 lakh Qtls during 20082009) Highest KBSKs Turnover (Previous best was Rs. 63.14 crore during 20082009) Highest Operational Profit of Traded product (Previous best was Rs.3.80 crore during 2008-2009) Highest Daily Urea Production on 13.11.2009 (Previous best was 5564 on 28.10.2009) Highest Daily Ammonia production on 28.12.2009 (Previous best was 3433 MT on 25.12.2009) Highest Monthly Ammonia Production in December,2009 (Previous best was 104444 MT in October,2009) Highest Monthly Urea production in December,2009 (Previous best was 166960 MT in October,2009) 167901 MT 104740 MT 3452 MT 5638 MT 43.41 crore 74.97 crore 2.22 Lakh Qtls 12.12 Lakh MT 40.51 Lakh MT

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Organization Profile
1 2 Name of Organisation Plant Office Krishak Bharati Cooperative Limited, abbreviated KRIBHCO PO: Kribhco Nagar, Hazira Road, Surat 394 515 Phone-2320034 3 4 5 Head Office Registered Office Type of Organisation A-8-10, Sector 01, Noida, Distt. G. B. Nagar, U.P. 49-50, Nehru Palace, New Delhi-19 Society is registered under Multi-State Co-operative Societys Act-1984 and under the Administrative Control of Department of Chemical & Fertilizer, Govt. of India. 6 Product Manufacturing Nitrogenous Fertilizers and Allied Products Viz: Urea, 30 Ammonia Liquid, Bio-Fertilizer,

Mega Watt Power Plant, Operation and Maintenance of Heavy Water Plant of Department of Atomic Energy.

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Board of Directors
Bord of Directors Name

Chairman

:- Shri Chandra Pal Singh

Vice Chairman

:-

Shri R.K.Dhami

Directors

:- Shri V.R.Patel Shri V. Sudhakar Chowdary Shri Mathew C Kunnumkal Shri Deepak Sanghal Shri Shiv Narayan Prasad Mishra Shri S.S.Jamgod Shri Ponam Prabhakar

Managing Director

:-

Shri B.D.Sinha

Finance Director

:-

Shri R.Kamra

Marketing Director

:-

Shri N.Sambasiva Rao

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DEPARTMENT:Departments Finance and Accounting Personnel and Administration HRD Security Material Medical Mechanical Transportation Fire and safety Purchase and store Instrumentation Electrical/Civil MS System Laboratory Production (HAEP Plant) Phase-I and Phase-II Total Contract Labours Total Manpower No. of Employees 62 82 09 101 55 32 210 29 45 56 90 101 13 54 440 1374 1600 2974

SOURCES OF THE EQUITY:Government Of India IFFCO Other Societies : Rs. 450.00 Crores : Rs. 97.00 Crores : Rs. 38.70 Crores

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The following is the graphical representation of Sources of Finance:

450
GOI Iffco Other Societies

97

38.7

(Source: Annual Report of KRIBHCO)

About Kribhco
1. 2. Installed Capacity Plant Technology Ammonia T/day Urea 4 x 1100 T/day 3. Power & Off sites (a) 3 Boilers (One with Standby) Snamprogetti (ITALY) & PDIL (INDIA) : DCPL (INDIA) Foster Wheeler, UK 2 x 1350 : Urea 14,52,000 MT/Year (Plant Nutrient 6,67,920 MT of Nitrogen/Year) : Kellogg (USA) & FEDO (INDIA)

capacity of 275 MT of steam / boiler / hr. (b) 2 TG Sets with capacity of 15 MW each. 4. 5. 6. 7. Total Cost of Project Concreting Steel Cement : Rs. 890 Crores : 3,00,000 M3 : 58,000 MT : 1,50,000 MT BHEL, INDIA

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8. 9.

Heaviest Equipment Tallest Structure

: 410 MT Ammonia Converter : 150 Meters : 90 M Height x 26 M dia

10. Prilling Tower Asia) 12. Ammonia (Atmospheric)

11. Urea Silos (Largest in : 45,000 MT x 2 Nos. Storage : 10,000 MT x 2 Nos.

13. Bagging Capacity with : 6,000 MT in two shifts 16 bagging machines of each 1200 bags/hr. 14. Loading of Urea 15. Pollution Control : 6 trucks & 12 wagons : Exhaustive pollution control measure at source 16. Computerisation Programme of countrys installed to : 6 million tonnes/Year food grain Gas : 3.2 million M3/day : 25 MW : 9 million gallons/day bags : 1 lack/day with latest equipments & techniques. : For information processing, data logging & process control.

17. Share of KRIBHCO as % : 12% capacity of Urea. 18. Contribution countrys production 19. Natural Requirement 20. Power Consumption 21. Water 22. Empty requirements

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ORGANIZATION STRUCTURE OF THE COMPANY:

GOVERNMENT OF INDIA MINISTRY OF AGRICULTURE DEPT. OF FERTILISER & CHEMICAL CHAIRMAN BOARD OF DIRECTORS

MANAGING DIRECTORS

OPERATIONAL DIRECTORS

GM (P) JGM (P) CM (P)

GM (MATERIAL) JGM (MATERIAL) CM (MATERIAL)

GM (F&A) JGM (F&A) CM (F&A)

GM (P&A) JGM (P&A) CM (P&A)

GM (TECH.) JGM (TECH.) CM (TECH. )

GM (MS) JGM (MS) CM (MS)

GM Maintenan JGM ce Maintenan ce CM Maintenan ce

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2.3 SWOT ANALYSIS


Strength
Kribhco is having Sound financial position. The Management of Kribhco is very professional. Kribhco has larger proportion of reserves and surplus and further it has no debt capital. Kribhco has long standing reputation in the Indian Fertilizer Market. Kribhco is having own Training Centre for training of employees as well as apprentice students of different discipline. It is having a full support of the Government of India. Kribhco having strong and wide marketing network towards country. High Production capacity of Kribhco leads to low production cost. Savings in Production cost

Weaknesses
More government interference in the management. Kribhco is having overstaffing. Kribhco is having demotivated employees because of less job security and safety. Kribhco is having no debt capital so the advantage leverage can not be taken.

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because Kribhco is having own Nitrogen and Ammonia Plant. Capacity Utilization more than 100%. Since the starting of production, Kribhco plant has no major break down in Plant. Kribhco has extra land and fully developed infrastructure facilities so it can be further developed.

Opportunities
Investment in Oman Project will raise the profit of Kribhco. Expansion of existing plant at Hazira. Look for new Market with diversified product. Diversifying the business.

Threats
The price of the Raw material, Natural Gas, is increasing continuously. There is a chance of sharp reduction in Government subsidy in near future. In the era of Free Trade, the import of fertilizers may affect the business of the Kribhco.

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2. LITRATURE REVIEW
I had referred book of Management accounting by R.S.N.PILLAI and BAGAVATHI. From this book I had referred the theory of ratio analysis , chapter number 3 page no. 49. I had taken theory from this book. I had review the Classification of ratio 1. Balance sheet ratio. a. Current ratio b. Net working capital ratio c. Quick ratio d. Cash position ratio e. Proprietary ratio f. Debt equity ratio g. Solvency ratio 2. Profit and loss account ratio a. Gross profit ratio b. Net profit ratio 3. Profitability ratio related to investment a. Return on assets ratio b. Return on share holders equity c. Earning per share 4. Combined (Turnover) ratio a. Inventory turn over ratio b. Debtors turnover ratio c. Creditor turn over ratio d. Working capital turnover ratio. e. Fixed assets turn over ratio f. Capital turn over ratio Next I had referred book of financial accounting for management by ambrish gupta third edition. From this book I had referred the theory of common sized analysis chapter no. 18 page no.562 and trend analysis chapter no. 18 page no.568.

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I had referred the old project from the collage library to know the project format. I had also referred the companys annual reports of last four years and collect regarding the financial data for the purpose of analysis. 1. 27th Annual report of KRIBHCO, 2006-2007 2. 28th Annual report of KRIBHCO, 2007-2008 3. 29th Annual report of KRIBHCO, 2008-2009 4. 30th Annual report of KRIBHCO, 2009-2010

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3. THEORY OF FINANCIAL STATEMENT ANALYSIS


Definition of Financial statement
A financial statement is a formal record of the financial activities of a business, person, or other entity. For a business enterprise, all the relevant financial information, presented in a structured manner and in a form easy to understand, are called the financial statements. Financial statement analysis is defined as the process of identifying

Definitions of the Finance statement analysis:Financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. There are various methods or techniques that are used in analyzing financial statements, such as comparative statements, schedule of changes in working capital, common size percentages, funds analysis, trend analysis, and ratios analysis. Financial statements are prepared to meet external reporting obligations and also for decision making purposes. They play a dominant role in setting the framework of managerial decisions. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone.

Nature and component of Financial Statement :Companies issue annual reports after the close of each fiscal Year financial statement are at the center of the annual report. Other component of the annual report is the board of directors report, management discussion and analysis (MDA), corporate governance report and voluntary disclosures. Board of director report provides an analysis

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of the performance of the company during this fiscal Year covered in the report. MDA provides futuristic information such as management perceptions about the business averment in the next and subsequent fiscal Year company strategy to take advantage of future opportunities and to face potential threats, and the risk management strategy corporate governance code.

4.1 component of financial statement:(a) Balance sheet- which lists the assets, liabilities and equity at the balance sheet date, thus provides information on the financial position of the company at the end of the fiscal Year. (b) Income statement- Profit and loss account-which list out income and expenses for the fiscal Year and thus provides information on the operating result for the fiscal Year. (c) Cash flow statement- which present cash flow from operating activities, investing activities, and financial activities during the fiscal Year (d) Accounting policies and explanatory notes- which provide explanations and clarification to facilitated understanding of number appearing in financial statement and also additional information that is relevant user of financial statement.

a. BALANCE SHEET :The balance sheet is regarding as the most signification and basic financial statement of a firm. The balance sheet is prepared by a firm to present a summary of financial position at a give point of time, usually at the end of a financial Year. It present assets of the firm ( i,e. the resources of the firm), the liabilities of the firm(i,e. obligation) and the contribution of the owners firm. The balance sheet in fact balance the assets of the firm against its financing ( which can be debt and

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owners funds) i,e. the total value of the assets must be equal to total claim against the firm and the income statement can be stated as TOTAL ASSET= TOTAL CLAIM (DEBTS + SHAREHOLDER) = LIABILITIES + SHAREHOLDER EQUITY. It may be noted that the balance sheet relevant at a particular point of time. Before and which the position may be different, so, the balance sheet is status report.

b. INCOME STATEMENT :The INCOME STATEMENT is also known as the profit and loss account or the statement of earning summarizes the revenue, and expenses of the firm for an accounting period. It gives details of sources of the income and expenses and thus it provides the summary of the operating result of the firm for a specific period. It match the revenue with the costs that are incurred in generating the revenue and show the difference between the two as the net profit made net loss incurred during the period. Income statement depicts the earning capacity of the firm in terms of the net profit.

c. STATEMENT OF THE APPROPRIATION OF PROFIT :It is also called the profit and loss appropriation though it is to necessary as per the provision of the companies act, 1956 to prepare the statement, still most of the companies sprit the income statement into two part i,e. the income statement and profit and loss appropriation account where in it statement the firm. If there income statement a prior period item e.g. excess provision of income tax or providing statement ion for tax a previous Year than it is also shown in the P & L appropriation account. bifurcated in to two main part i,e. dividend to the share holders and the profit retained in

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d. STATEMENT OF CHANGE IN FINANCE POSITION (SCFP)


The balance sheet and the income statement are two common financial statement and are also know as traditional financial statement. The balance sheet depicts the financial position at a point of time and the income statement shows the net result of operation of the firm during a particular period but both the information regarding the change in financial position ever the period form a meter understanding of the financial position, it income statement essential to know the movement of the funds/cash during the period for the income statement purpose, another financial statement may be prepare and it income statement known as the SECP, the SCFP shown how the firm generated the fund during the period. A comparative review of these sources and uses of funds is known as SCFP. The SCFP can be prepared on two basis t.e. the working capital basis and cash basis. When SCFP prepare on the working capital basic, it is also termed as the funds flow statement. The SCFP prepare on the cash basic is also shown as the cash flow statement.

3.2

PARTIES

INTRESTED

IN

FINANCIAL

STATEMENT ANALYSIS
a. Mergers and acquisition :Restructuring of business involves mergers or acquisition. Both the parties use financial statement analysis to estimate the intrinsic value of business from there own perspective and based on there own assumption. Merchant, bankers use financial statements analysis to identify target companies for there claim

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b. Managers:manager pursues the core objective function of maximization of the firm. They use financial statement analysis to evaluate alternative strategies and to compare actual results of strategic decision with expected result. Managers use financial statement analysis to value business from investors perspective.

c. Financial management:Management use financial statement analysis to evaluate the financial management decision on the future profitability or risk. Managers also use financial statement analysis to estimate the intrinsic value of the equity shares to determine the timing for issuing equity share and the timing for buy back shares. Managers buy back shares when shares are under priced, t.e. when shares traded in the capital market at a price below the intrinsic value.

d. External auditor:An external auditor expresses his opinion on the true and fairness of the information provided in financial statement. He uses financial statement analysis to evaluate the reasonableness of the financial statement as a whole. He also use financial statement analysis to assess the ability of the company to sustain present level of activities. This is necessary to evaluate the validity of the going concern assumption.

e. Directors and top management:Directors and top management of a company that is engaged in different businesses or that has customers or assets in different geographic locations, use financial statement analysis to evaluate the performance of different businesses and geographical segments. financial statement analysis aids in understanding and appreciating financing, investing and operating activities.

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f. Employees and trade union


Employees use financial statement analysis to evaluate the sustainability and growth of the company. This helps them to plan their career. A trade union uses financial statement analysis to understand the profitability and the financial position of bargaining negotiations. the company. This understanding is essential to formulate the strategy in collective

g. Customers
Customers use financial statement analysis to evaluate the sustainability and growth of the company and its financial strength. This is important to assess the ability of the company to supply goods and services over a long period of time. Customers also use financial statements to estimate the profitability of products that the customer procures from the company.

h. Regulators and government


Regulators and government uses financial statement analysis for different purposes. For e.g , the income tax department uses financial statement analysis to evaluate the accuracy of the tax return. Government and regulators frame policies for different industries taking into account, among other things , the attractiveness of the industry and the financial position of reprehensive firms operating in the industry

3.3

TECHNIQUES OF FINANCIAL STATEMENT

ANALYSIS
The profession of accounting and finance has developed a number of tools and techniques aimed at carrying financial statement analysis. These are: Multi-step income statement Horizontal analysis Common-sized analysis

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Trend analysis Analytical balance sheet Ratio analysis Cash flow analysis Though all the above mentioned tools and techniques can be applied independent of each other, it needs to be understood that more often than not an integrated analysis of all.

1. Multi step income statements the profitability


The income statement would become much more informative about the profitability and will disclose the following intermediate profits leading up to profit after tax. a. Gross profit-GP b. Profit before depreciation-PBDIT c. Operating profit-OP or PBIT d. Profit before tax and extra ordinary items-PBTEOT e. Profit before tax-for the Year (PBT Y) f. Profit before tax-PBT g. Net profit-PAT

2. Horizontal analysis:
It facilitates current Years performance and financial position of the company over the previous Year. The methodology is to work out increase/decrease in each item of the balance sheet and profit and loss account of the current Year over those last Year and to express this as a percentage of last Years figure. The formula to calculate figure by horizontal analysis is as under: (current Years figure previous Years figure) X100 Previous Years figure

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3. Common sized analysis:


The tool is very useful in comparing the performance and financial position of two companies, either in the same industry or in different industries. Since no to balance sheets will have the same figures they cannot be compared and analyzed based on absolute figures. They have therefore to be converted in to what is known as common sized statements. Therefore it is also known as vertical analysis.

4. Trend analysis:
Trend analysis is an extension of horizontal analysis in that while the later compares only two years position, the former dose the same for more then two years. The methodology is very simple. The farthest of the base year figure is taken as 100 or just 1 and all successive years figures are accordingly restated, or indexed.

5. Analytical balance sheet:


Though the vertical balances sheet itself is more analytical than its horizontal counterpart, it can be made further analytical from the angle from the angle of the equity share holders. It shows the net assets processed by the owner of the company. It starts with the application of funds side as against the vertical balance sheet that starts with sources of fund side.

6. Ratio analysis:
Meaning: Ratio analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the items of the balance sheet and the profit and loss account. Users of ratio Analysis Trade Creditors: They are interested in firms ability to meet their claims over a very short period of time. Their analysis will,

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therefore confine to the evaluation of the firms liquidity position. Long term debt supplier: They are concerned with the firms long term solvency and survival. They analyze the firms profitability over time. Its ability to generate cash to be able to pay interest and repay principal and the relation between various sources of fund. Investors: They are the people who invested their money in the firms shares are most concerned about the firms earnings. They restore more confidence in those firms that show steady growth in earnings. They are interested in firms earning ability, risk, present and future profitability. Management: The management is interested in overall financial analysis. It is their responsibility to see that the resources are used effectively and efficiently. And firms financial condition is sound.

Standards of comparison may be


Past Ratios: i.e. ratios calculated from the past financial

statements of the firm. Competitors Ratios: i.e. ratios of some selected firms, especially the most progressive and successful competitor, at the same point of time. Industry Ratios: belongs. Projected Ratios: i.e. ratios developed using the projected or pro forma, financial statements of the firm. Following are the few ways of analyzing the firms financial ratio i.e. ratios of the industry to which the firm

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1. Time series or Trend analysis


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

2. Cross-sectional Analysis
Another way to evaluate the performance of the firm with some selected firms in the same industry at the same point of time. This kind of comparison is known as Cross-sectional Analysis. In most cases, it is more useful to compare the firms ratios with the ratios of few carefully selected competitors, who have similar operations.

3. Industry analysis
To determine the financial condition and performance of the firm, its ratios may be compared with average ratios of the industry. Industry ratios are important standards in view of the fact that each industry has its characteristic which influence the financial and operating relationships. There certain practical difficulties in using the industry ratios 1. It is difficult to get the average ratios of the industry. 2. Even if industry ratios are available, they are averages of the ratios of strong and weak firms. Sometimes the difference may be so wide that the average may be of little utility. 3. The comparison of the average will be meaningless, if firms within the industry widely differ in their accounting policies and practices.

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4. Pro forma or projected analysis


Sometimes further ratios are used as the standards of comparison. Future ratios can be developed from the projected or pro forma, financial statements. The comparison of current or past ratios with future ratios shows the firms relative strengths and weaknesses in the past and future. If the future ratios indicate weak financial position, corrective action should be initiated.

Cash flow statement:


Cash plays a very important role in the entire economic life of a business. A firm needs cash to make payments to its suppliers, to incur day to day expense and to pay salaries, wages, interest and dividends, etc. But many a times, a concern operates profitably and yet it becomes very difficult an adequate balance of cash. This may be because: a. Although huge profits have been earned yet cash may have not been received or b. Even if cash has been received, it may have drained out for some other purposes. A statement of changes in the financial position of the firm on cash basis is called a cash flow statement. A cash flow statement summarizes the causes of changes in cash position of a business enterprise between dates of two balance sheets. Cash flow statement is a statement of changes of financial position in business due to inflow or outflow of cash and their statement is required for short range business premises.

Advantages of Cash Flow Statement:A cash flow statement is of primary importance to the financial management. It is an essential tool short loan financial analysis. Their main users are as following:

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1. It helps the management in tacking short term financial decision. 2. Cash flow statement facilitates to prepare sound financial policy. 3. It also helps to evaluate the current cash position. 4. It helps in tacking loan from banks and another financial institution. The repayment capacity of the firm can understand by going through the cash flow statement.

Limitations of Cash Flow Statement:Cash flow statement is a useful tool of financial analysis. However it suffers from some limitations which are as follows. 1. Cash flow statement only reveals the inflow and outflow of cash balance. This statement may not depict the true liquid position. There are number of items like chaque, stamps, postal overdrafts include in cash. 2. A cash flow statement cannot be equated with the income statement. Hence cash flow does not mean net income of the business. 3. Working capital being a wider concept of fund, a fund flow statement statement. presents more complete picture then cash flow

4.4

OBJECTIVE OF FINANCIAL STATEMENT :-

1. Useful Information
The financial statement of business enterprise should provide information, within the limits if financial accounting that is useful to present financial position of company. Potential investor and creditors use these statements in making rational investment and credit decision. Financial statement should be comprehensible to investor and creditors who have a reasonable understanding of business and economic activities.

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2. Required and sufficient information


Financial statement of business enterprise should provide information that help investors and creditor to asses the prospect of receiving cash in form of dividend or interest and from the proceeds from the sale, redemption or maturely of security or loans. their prospects are ability to obtain enough cash through its earning and financial activities to meet its obligation.

3. Primary Information
The financial statement of a business enterprise should provide information about the economics resources of an enterprise which are sources of prospective cash inflow to the enterprise to its obligation to transfer economic resources to other which are cusses of prospective cash outflow from enterprise earning which are the financial result, which are the financial result of its operation investor and other events and conditions that effects the and creditors in assessing and enterprise income enterprise since that in information income statement useful to statement ability to pay cash dividend, and interest and to settle obligation.

4.5

LIMITATION OF FINANCIAL STATEMENT :because the actual gain or loss of a business can be determined only when it is sold or liquidated. The allocation of revenue cost to an account. Period involve personal judgment. The problem involve the achievement of satisfaction matching of cost with revenue and cost transaction flow continuously thought the life of a business enterprise yet they must be cut off at each balance sheet.

1. They are essentially internal report and therefore, can not be fined

2. The financial statement shows exact amount, which gives an impression of finality and which gives impression may ascribe to

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those amount the is own concept of value where as the statement may nave been set up on basic of value different value standard. Passels does the stated quay on assets represent the amount of cash that would realized on liquidation even the cash balance would be reduce in the expenses incidental to the basin come statement of a going concern concept where it income statement assumed that the enterprise statement will continue in business. Fixed assets are customarily stated at historical revenue in the income statement by why of deprecation.

3. Both the balance sheet and income statement reflect transaction that involves money value of the many date under in factionary condition. The deprecation against current revenue by companies may be in inactive of current economy realities and increase in sales volume stated in rupees may or may not be the result of a larger no. or unit. 4. Financial statement do not reflect many factory which affect financial condition and operating result, because they cannot be stated in term of money such

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5. RESEARCH METHODOLOGY
OBJECTIVES:
Primary objective: Financial statement analysis seeks to evaluate the performance, financial strength, ability to generate enough cash and the growth outlook of a company. Secondary objectives: Financial statement analysis helps the company to know the adequacy or profits earned by the company. We can know the financial strength of the company by analyzing financial statements. Analysis of financial statements helps to generate enough cash and cash equivalents and the timing and certainty of their generation The future growth outlook of company can be known by doing financial statement analysis.

Methodology:
The adoption of proper methodology is an essential step in conducting my project work. The tactical question is to be considering after finalizing our objective what sources are available? and what resources should be used? to acquire the desired information.

Research Design:
In the financial statement analysis of KRIBHCO within these four Years, descriptive research design is to be used to interpret the financial position of the company.

Data collection:
Data collection is the most important part of any project. And from where those data are taken is also very important. For my project work I have used secondary data as the main basic of my study. These data are

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collected from company and from internet. I had collected the last four Years annual report of the KRIBHCO from where I get profit & loss account and balance sheet of company that I had selected for my project work for financial statement analysis. Apart from balance sheet and profit and loss account of companies I had used internet a lot for get information for my project work. And I also used books for analyzing of the financial statements to gain more knowledge about financial ratios.

Period of Study:
The period of the study for project work is of six week only from 1st June 12th July.

Finding and analysis:


After collecting the data I did ratio analysis, trend analysis, common size statements and cash flow statement analysis. This gives the detail of the companys current and past position

Tools and Techniques of Final Statement:


1. 2. 3. 4. 5. Common size statement Trend analysis Analytical balance sheet Cash flow statement Ratio Analysis.

Interpretation of the Analysis:


In interpretation I have done intercompany comparison of four year data of krishak bharti co-operative ltd. Through this comparison I came to know about the financial performance of the krishak bharti co-operative ltd. within these four years.

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LIMITATIONS:
As the data available to me, has been taken from the secondary sources, it is not sure that collected data are accurate and complete. 1. It was not possible to collect some data which are very essential for analysis of financial statement during the project work due to the non-cooperation of higher and middle level management. 2. Due to lack of experience about financial statement analysis practically, it cant be said that the projection has been made totally correct and accurate. 3. As the time period is fixed, so financial statement analysis has been done only of four Years. This may led to misinterpretation of the industry.

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6. FINDINGS AND INTERPRETATION


6.1 COMMON SIZE ANALYSIS
COMMON SIZE BALANCE SHEET PARTICULARS 20062007 crore) SOURCES Share capital and 396.11 application money Reserve surplus Secured from bank Unsecured from bank Deferred balance FUND EMPLOYED APPLICATION Fixed Assets Gross Block 1115.1 844.77 1231.6 856.29 1264.1 881.17 1395.4 896.31 36.53 32.89 33.29 33.03 48.22 47.31 47.76 51.41 (including capital work in process) less:Depreciation 2312. 5 2603. 2 2646. 6 2714 tax 24.61 0 5.03 16.63 1.06 100 0.00 100 0.19 100 0.61 100 loan 0 223.96 91.91 0 0.00 8.60 3.47 0.00 loan 0.41 0.76 0.23 0.23 0.02 0.03 0.01 0.01 and 1891.4 1982.4 2158.7 2306.5 81.79 76.15 81.56 84.98 17.13 15.21 14.77 14.39 396.08 390.94 390.67 20072008 crore) 20082009 crore) 20092010 crore) 20062007 2007 2008 In % 2008 2009 In % 2009 2010 In %

(Rs. in (Rs. in (Rs. in (Rs. in In %

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Net Block (A) Investment (B) Deffered assets (C) Working Capital Current assets Less: Provision Net NET Capital (D) EMPLOYED (A+B+C+D) current

270.3 3 807.5 6 Tax 0

375.2 9 870.5 6 4.18

382.9 6 1203. 4 0

498.4 5 1406. 5 0 0.00 0.16 0.00 0.00 34.92 33.44 45.47 51.82

1577

1851.8

1568

1355.1 4 68.19 71.13 59.24 49.93

liabilities and 342.35 Working 1234. 7 5 ASSETS 2312. 498.58 1353. 2 2603. 2 507.76 1060. 2 2646. 6 546.05 809.0 9 2714 53.39 100 51.98 40.06 29.81 100 100 100 14.80 19.15 19.19 20.12

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COMMON SIZE PROFIT AND LOSS ACCOUNT

PARTICULARS

20062007

20072008

20082009

20092010

2006 2007

2007 2008

20082009

2009 2010

EARNINGS Sales Concession From Govt. of India net sales Other Revenue Accretion/ Decretion in Finished Good 83.21 2186.9 OUTGOING Raw Material, Packaging, stores, Power, etc.. PurchasesFertilizer ,Seeds Chemical Employees Remuneration 121.5 173.4 169.66 224.89 6.548 7.774 6.63 8.659 & 33.79 20.38 20.6 35.28 627.05 454.5 527.07 916.29 Fuel 825.43 1111.2 1501.7 966.46 44.48 49.82 58.68 37.21 -36.77 2460.2 -58.9 2910 -38.2 2863.7 4.484 -1.65 -2.3 -1.47 1855.6 248.11 2230.4 266.56 2559.1 409.75 2597.1 304.78 13.37 11.95 16.01 11.74 511.59 844.79 1046.7 959.69 27.57 37.88 100 100 40.9 36.95 100 100 1344 1385.6 1512.4 1637.4 72.43 62.12 59.1 63.05

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& Benefits Other Expenses Interest Expenses Deprecation Provision Tax(Net) Profit Tax After 193.24 209.2 250.13 228.17 10.41 9.379 9.774 8.786 for 17.63 38.29 22.79 62.94 27.53 19.21 30.62 24.6 2.064 2.822 0.751 0.947 1.47 5.32 10.38 5.18 0.079 0.239 0.95 1.022 0.406 0.199 1.076 1.179 362.27 420.89 404.25 467.45 19.52 18.87 15.8 18

ANALYSIS: The contribution of the share capital in total fund employed in the year 2006-2007 was 17.13%, which has been reduced to 14.39% in the year 2009-2010 and the proportion of reserve and surplus in total fund employed has been showing the increasing trend. The reason for decreasing in the share capital is that they have enough reserve and surplus and due to same their outside borrowings are also negligible. Net fixed assets have shown tremendous increase in the year of 200708 and 2009-10. The company has detached their old and unproductive assets and bought new and modern equipments that will enhance their production system. The company is undergoing new projects so it could be also one of the reasons for the increase in the fixed assets. The investment is also showing an increasing trend in the year 200809.

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The power and fuel expense shows the tremendous increase in the year 2008-2009. It is due to less supply of GAS by GAIL LTD, and so the company has to use NEPTHA, which is four times costlier then the GAS. The company purchases higher fertilizers, seed and chemical for resell in the year 2006-2007 AND 2009-2010. It is because the demand for fertilizers in these year. And the company is not able to fulfill the requirement.

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6.2 TREND ANALYSIS


Balance sheet
PARTICULARS 20062007 crore) SOURCES Share money Reserve surplus Secured from bank Unsecured loan 0 from bank Deferred balance FUND EMPLOYED APPLICATION Fixed Assets Gross (including capital work in process) 1115.1 less:Depreciation Net Block (A) Investment (B) Deffered 270.33 807.56 375.29 870.56 4.18 382.96 1203.4 0 498.45 1406.5 0 34.92 33.44 45.47 51.82 0.00 0.16 0.00 0.00 844.77 1231.6 856.29 1264.1 881.17 1395.4 896.31 36.53 32.89 33.29 33.03 48.22 47.31 47.76 51.41 Block 2312.5 2603.2 2646.6 2714 tax 24.61 0 5.03 16.63 1.06 100 0.00 100 0.19 100 0.61 100 223.96 91.91 0 0.00 8.60 3.47 0.00 loan 0.41 0.76 0.23 0.23 0.02 0.03 0.01 0.01 and 1891.4 1982.4 2158.7 2306.5 81.79 76.15 81.56 84.98 capital 396.11 396.08 390.94 390.67 17.13 15.21 14.77 14.39 and application 20072008 crore) 20082009 crore) 20092010 crore) 2006 In % 2007 2008 In % 2008 2009 In % 20092010 In %

(Rs. in (Rs. in (Rs. in (Rs. in 2007

Tex 0

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assets (C) Working Capital Current assets Less: current 342.35 498.58 1353.2 2603.2 507.76 1060.2 2646.6 546.05 809.09 53.39 51.98 40.06 29.81 2714 100 100 100 100 14.80 19.15 19.19 20.12 1577 1851.8 1568 1355.1 4 liabilities and Provision Net NET Capital (D) ASSETS 2312.5 EMPLOYED (A+B+C+D) Working 1234.7 68.19 71.13 59.24 49.93

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Profit and loss account


PARTICULARS 20062007 (Rs. crore) 20072008 In (Rs. crore) 20082009 In (Rs. crore) 20092010 In (Rs. crore) 200 6In 200 7 In % EARNINGS Sales Concession From Govt. of 511.59 India Other Revenue Accretion/ Decretion in Finished Good 83.21 2186.9 OUTGOING Raw Material, Packaging, stores, Power, etc.. PurchasesFertilizer ,Seeds & 100 72.48 84.06 627.05 454.5 527.07 916.29 146.1 3 Fuel 825.43 1111.16 1501.74 966.46 100 134.62 181.9 3 117.0 9 -36.77 2460.2 -58.9 2910 -38.2 100 2863.7 100 112.50 -44.19 133.0 6 -70.78 45.91 130.9 5 248.11 266.56 409.75 304.78 100 107.44 844.79 1046.72 959.69 100 165.13 204.6 0 165.1 5 187.5 9 122.8 4 1343.97 1385.62 1512.4 1637.39 100 103.10 112.5 3 121.8 3 20072008 In % 20082009 In % 2009 2010 In %

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Chemical Employees Remuneration & Benefits Other Expenses Interest Expenses Deprecation 17.63 1955.4 PROFIT BEFOR TAX Provision Tax(Net) Profit Tax Dividend Payout Contribution to 1.78 cooperative Education Fund Donation RETAINED PROFIT 0.25 112.3 0.4 127.76 0.4 175.98 0.4 100 147.82 100 113.77 160.00 100 103.37 138.7 6 160.0 0 156.7 1 128.0 9 160.0 0 131.6 3 1.84 2.47 2.28 78.91 79.2 71.28 77.67 100 100.37 90.33 98.43 After 193.24 209.2 250.13 228.17 100 108.26 for 38.29 62.94 19.21 24.6 100 164.38 50.17 129.4 4 64.25 118.0 8 231.53 22.79 2188.1 272.14 27.53 2640.6 269.34 30.62 100 2610.9 100 252.77 100 117.54 111.90 129.27 1.47 5.32 10.38 5.18 100 361.90 362.27 420.89 404.25 467.45 100 116.18 100 142.72 121.5 173.4 169.66 224.89 139.6 4 111.5 9 706.1 2 156.1 5 135.0 5 116.3 3 185.0 9 129.0 3 352.3 8 173.6 8 133.5 3 109.1 7

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ANALYSIS:Following information we get from trend profit and loss account and balance sheet. Base year: - I had taken 2006-2007 as a base year for trend analysis. I have done 4 year trend analysis. The sale revenue of the company is continuously increasing. It increased to 121.83% compare to base year. The power and fuel expense was very high in the year 2008-2009. It was 181.93% as compared to base year. This is mainly due to in this year company get less gas as compared to its requirement. So the company has to use NEPTHA as fuel in place of gas. The NEPTHA is four times costlier then gas so the cost is increase. The purchase of fertilizer, seed for resale is decreasing. But it was increased in the year 2009-2010. This is because the fertilizer industry of India is unable to fulfill high demand of these goods. So the company purchases these goods from abroad for resale. The employee remuneration shows increasing trend. It was increased to 185.09% in the year 2009-2010 with compared to base year 20062007. This is because of large number of employee need with continuous growth. Net profit after tax shows continuous increasing trend. But in 20092010 it was reduced even the sale is increased. It is because of less concession from government and reduction in other revenue. Share capital in decreased from 100% in 2006-2007 to 98.63% in 2009-2010. Reserve and surplus also continuously increasing trend. It shows very less utilization of the reserve and surplus. Reserve and surplus increased by 21.94% in 2009-2010 as comparing with base year 2006-2007. As the reserve and surplus are continuously increasing the share holders fund also increase. It shows good return to share holders as the net worth is increased.

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Secured loan from bank is taken for short period of time against the pledge of fixed deposits. It is of very minor amount. Secured loan is just remaining 56.10% outstanding in 2009-2010 as compare to base year. The total fund employed is increased to 117.36% in 2009-2010 as compared to base year. It can be seen that the major fund employed is from owners fund. The net asset is continuously increasing. It because of replacement of parts, replacement of old assets or some new expansions. The net fixed assets are increased to 184.39% in 2009-2010 as comparing with base year. Company has continuous rise in investment. The highest increase was in 2008-2009 to 1.49times as compared to base year. The current assets increase in 2007-2008 and then shows continuous decrease, which may be good sign as the working capital investment is reduced. It was reduced to 85.93% in 2009-2010 as compared with base year. The current liability is continuously increasing. The highest increase is in the year 2007-2008 by 45.63%.

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6.3 RATIO ANALYSIS


6.3.1 Balance sheet ratio:a. Current ratio
Current ratio is the most common ratio for measuring liquidity. Current ratio express the relationship between current assets and current liabilities. The current ratio is calculated by dividing current assets by current liabilities: Current ratio = Current assets Current liabilities Current assets include cash and those assets which can be converted in to cash within a Year such as marketable securities, debtors, inventories etc. Prepaid expenses are also included in current assets. All obligations maturing within a Year are included in current liabilities. Current liabilities include creditors, bills payable, accrued expenses, short term bank loan, income-tax liability and long term maturing in current Year. Current assets Rs. In crore Year 2006-2007 2007-2008 2008-2009 2009-2010 1577.00 1851.78 1567.97 1355.14 Current liabilities Rs. In crore 342.35 498.58 507.76 546.05 4.61:1 3.71:1 3.09:1 2.48:1 Current ratio

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Current ratio
5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2006-2007 2007-2008 2008-2009 2009-2010

Current ratio

INTERPREATION: As we know the ideal current ratio is 2:1. And in the Year 20062007 the current ratio is very high. One of the reasons is the dead stock lying in the inventory. More over the debtors turnover ratio was very low. Due to high dead stock in inventory and higher closing debtors the proportion of current assets is comparatively higher then other Years. In comparison of other Years we can see that the company is achieving ideal ratio. The KRIBHCO has higher current ratio in all years as compared to the ideal ratio. This shows the strong liquidity position of the company. But the higher ratio indicates higher cash blocking in current assets. Even the current ratio is decreasing the liquidity position of the company is strong. The ratio is coming nearer to ideal ratio, which shows good turnover of current asset.

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b. Net working capital ratio:The difference between current assets and current liability is called net working capital. It is measure the liquidity position of company. Net working capital ratio is calculated by dividing net working capital by net assets. Net working capital ratio = Net working capital Net assets Net capital Year 2006-2007 2007-2008 2008-2009 2009-2010 Rs. In crore 1234.65 1353.20 1060.21 809.09 2312.54 2603.23 2646.59 2713.99 0.53:1 0.52:1 0.40:1 0.30:1 working Net assets Rs. In crore Net working capital ratio

Net working capital ratio


0.6 0.5 0.4 0.3 0.2 0.1 0 2006-2007 2007-2008 2008-2009 2009-2010 Net working capital ratio

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INTERPREATION: The net working capital ratio of the company is reducing. The net working capital is reducing as compared to net assets. But the company has sufficient working capital. In before years the investment in working capital is very high due to blockage of capital in dead stock. Now a day the working capital ratio is decreasing, but the company has enough current assets to fulfill it current obligation. So even the working capital ratio is decreasing the companies financial position is not affecting. The financial position of company is improved. And the ratio shows the effective utilization of working assets.

c. Quick Ratio
Quick ratio establishes relationship between quick or liquid assets and current liabilities. The quick ratio is found out by dividing quick assets by current liabilities Quick ratio = (Current assets - Inventories) Current liabilities An asset is liquid if it can be converted into cash immediately without a loss of value. Cash is the most liquid asset. Other assets which are considered to be relatively liquid and included in quick assets are debtors, bills receivable and marketable securities. Inventories are considered to be less liquid. Inventories normally require some time for realizing into cash; their value also has a tendency to fluctuate.

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(Current assets - Current liabilities Inventories) Year 2006-2007 2007-2008 2008-2009 2009-2010 Rs. In crore 1326.09 1637.73 1382.46 1237.22 342.35 498.58 507.76 546.05 3.87:1 3.28:1 2.72:1 2.27:1 Rs. In crore Quick ratio

Quick ratio
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2006-2007 2007-2008 2008-2009 2009-2010 Quick ratio

INTERPRETATION: Current ratio may be misleading, in spite of favorable current ratio, a firm may not be able to pay off its creditor in time due to larger proportion of in stock in current assets in such a cash liquid ratio will be more reliable and safe guide. The quick ratio of 1:1 is considered satisfactory as a firm can easily meet all current climes. The quick ratio of KRIBHCO is higher than ideal ratio. The quick ratio of KRIBHCO is 2.27:1 in 2009-2010. It is lower as compared to past company ratio but it is higher than ideal ratio. It shows a sound financial position. The KRIBHCO sound liquidity position.

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The ratio of the company is lower in 2009-2010, but it shoes that the company has 2.27 times liquid assets as compared to its current liability. This shows the very sound liquidity position of the company.

d. Cash to Current Liabilities Ratio


Since cash is the most liquid asset, a financial analyst may be examining cash ratio and its equivalent to current liabilities. Trade investment or marketable securities are equivalent of cash; therefore, they may be included in the computation of cash ratio: Cash ratio = Marketable Securities = NIL Year 2006-07 2007-08 2008-09 2009-10 Cash Rs. In crore 802.41 905.04 834.56 822.27 Current Liabilities Rs. In crore 342.35 498.58 507.76 546.05 Cash Ratio 2.34:1 1.82:1 1.64:1 1.51:1 Position Cash + Marketable Securities Current Liabilities

Cash Position Ratio

Cash Position Ratio

2006-07

2007-08

2008-09

2009-10

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INTERPREATION: The ideal cash position ratio is 1:1. The companys cash position ratio is higher then the ideal ratio. It shows that the company has more cash on hand then current liability. So the company is able to pay its current liability in time. The ratio has decreasing trend throughout the last four years. The lowest cash position ratio is 1.51:1. This shows the company has 1.51 times cash on hand as compared to current liability. Even high cash on hand we can not say that the company has idle fund because the company have to pay its some creditors within three days. So the company must have to keep some higher case on hand fore emergency purpose.

e. Proprietary Ratio
Proprietary ratio is relates the share holder fund to total assets. This ratio shows the long term solvency of the business. It is calculated by dividing shareholders fund by the total assets. Proprietary Ratio = Share holders fund

Total assets or total resources share fund Year 2006-2007 2007-2008 2008-2009 2009-2010 Rs. In crore 2287.52 2378.51 2549.42 2697.13 holders Total assets or total Proprietary ratio resources crore) 2654.89 3101.81 3154.35 3260.04 0.86:1 0.77:1 0.81:1 0.83:1 (Rs. In

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Proprietary ratio
0.88 0.86 0.84 0.82 0.8 0.78 0.76 0.74 0.72 2006-2007 2007-2008 2008-2009 2009-2010 Proprietary ratio

INTERPREATION: The ideal Proprietary ratio is 1:3. The KRIBHCO has the ratio of 0.83:1 in 2009-2010. The average Proprietary ratio is 0.82:1. It shows higher utilization of Proprietary fund in company. Most of the assets are financed by the Proprietors. The company is very less depending on outside fund. This shows the long term solvency position of the company and the higher secure position of creditors. The fluctuation of the ratio is due to increase in the total assets. Shareholders und is also increasing. This states that there are no major fluctuation in this ratio.

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f. Solvency Ratio
It is also known as debt ratio. This ratio is found out between total asset and external liability of the company. External liability means all long and short period liability. Solvency Ratio= Total Liability Total Assets Total Liability Year 2006-2007 2007-2008 2008-2009 2009-2010 Rs. In crore 367.37 723.30 604.93 562.91 Total Assets Rs. In crore 2654.89 3101.81 3154.35 3260.04 0.14:1 0.23:1 0.19:1 0.17:1 Solvency ratio

Solvency ratio
0.25 0.2 0.15 0.1 0.05 0 2006-2007 2007-2008 2008-2009 2009-2010 Solvency ratio

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INTERPREATION: The solvency ratio shows the position of outside liability to total assets. We can see that the average solvency ratio is 18.25%. It means the company has average 18.25% outside liability to its total assets. It shows the higher utilization of owners equity and sound solvency position of KRIBHCO. We can see that the solvency ratio is lower, it shows that the company total liability is only 17% of its total assets in the year 2009-2010. It shows the sound financial position of company. The reducing ratio indicates the improvement in solvency position of the company.

6.3.2

Profit & Loss Account Ratio

a. Gross Profit Ratio


The gross profit ratio is also known as Gross Margin Ratio, Trading margin ratio etc. it is expensed as a Per cent ratio. The different between net sale and cost of goods sold is known is gross profit. It is generally contented that the margin of gross profit should be sufficient enough to recover all operating expenses and other expenses and also leave adequate amount Net Profit in relation to sale owners equity. Thus , in a trading business gross profit is net sales minus trading cost of sales. Cost of good sold=Opening stock + Purchases closing stock +All direct expenses Gross Profit Ratio = Gross Profit Net Sales

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Gross profit = net sales + closing stock opening stock purchase direct expenses Gross profit Year 2006-2007 2007-2008 2008-2009 2009-2010 Rs. In crore 486.29 627.98 471.41 676.42 Net Sales Rs. In crore 1855.56 2230.41 2559.13 2597.07 Gross profit Ratio In % 26.21 28.16 18.42 26.03

Gross profit Ratio


30 25 20 15 10 5 0 2006-2007 2007-2008 2008-2009 2009-2010 Gross profit Ratio

INTERPREATION: The average gross profit margin of the KRIBHCO is 24.71%. The gross profit ratio is decreased to 18.42% in the year 2008-2009. It was due to higher cost of production.

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In this year the company gets less supply of GAS from GAIL LTD. So the company uses NEPTHA in place of GAS. The NEPTHA is four times costlier then the GAS. So the gross profit margin is reduced. So for this reason even the sales is higher in this year the gross profit margin was very low.

b. Net Profit Ratio


Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross profit. The net profit ratio is measured by dividing profit after tax by sales Net Profit Ratio = PAT Sales Net profit ratio established a relationship between net profit and sales and indicates managements efficiency in manufacturing, administrating and selling the products. This ratio is the overall measure of the firms ability to turn each rupee sales into net profit. If the net profit is inadequate, the firm will fail to achieve satisfactory return on share holders fund. Net profit Year 2006-2007 2007-2008 2008-2009 2009-2010 Rs. In crore 193.24 209.20 250.13 228.17 Net sales Rs. In crore 1855.56 2230.41 2559.13 2597.07 Net profit Ratio In % 10.41 9.38 9.77 8.78

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Net profit Ratio


11 10.5 10 9.5 9 8.5 8 7.5 2006-2007 2007-2008 2008-2009 2009-2010 Net profit Ratio

INTERPREATION: The net profit ratio of KRIBHCO was fluctuating in nature. The net prof it ratio is lowest in the year 2009-2010. This is due to increase in operating expenses and reduction in the other revenue. In this year the sale was higher as compare to previous year. But the company gets less concession from the government of India. So the gross profit was also low. The prices are decided by government of India, and more over the company can not charge more then 12% margin. So the net profit margin level is also depending on the government policy regarding fertilizers.

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6.3.3

Profitability

ratio

related

to

investment
a. Return on Assets Ratio
Return on assets can be measured in term of relationship between net profit to total assets. This ratio is also known as profit to assets ratio. It measured the profitability of investments. The overall profitability can be known. Return on Assets= Net profit Total Assets There are various approaches possible to define net profit and assets, according to the purpose and intent of the calculated of the ratio. Net profit Rs. In crore 193.24 209.20 250.13 228.17 Total assets Rs. In crore 2654.89 3101.81 3154.35 3260.04 Return on assets In % 7.28 6.74 7.93 6.99 X 100

Year 2006-2007 2007-2008 2008-2009 2009-2010

Return on assets
8.5 8 7.5 7 6.5 6 2006-2007 2007-2008 2008-2009 2009-2010 Return on assets

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INTERPREATION: Return on assets shows the profitability on investment. We can see that the company has average 7.23% return on assets. There are ups and downs in ratio every Year. We can see that there are very negligible changes in the ratios. This ratio shows that the company has good return on assets. The ratio of the year 2007-2008 is reduced because the increase in assets is much more higher then the increase in net profit. The ratio for the year 2009-2010 is reduced due to less net profit margin. In the year 2009-2010 the companys dale was increased. But due to decrease in other revenue and increase in operating expense leads to reduction in ratio.

b. Return on shareholder Equity


The term net profit as used here means net income after payment of interest and tax including net non-operating income (Non-operating income minus non-operating expenses). It is the final income that is available for distribution as dividend to shareholder. Shareholder funds include both preference and equity share capital all reserves and surplus belonging to shareholder. Return on Shareholder Equity= Net profit Year 2006-2007 2007-2008 2008-2009 2009-2010 Rs. In crore 193.24 209.20 250.13 228.17 Net Profit X 100 Shareholder Fund share holders fund Rs. In crore 2287.52 2378.51 2549.42 2697.13 Return on share holders equity in% 8.45 8.8 9.81 8.46

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Return on shareholders equity


10 9.5 9 8.5 8 7.5 2006-2007 2007-2008 2008-2009 2009-2010 Return on equity

INTERPREATION: The average return on shareholders equity is around 8.88%. Return on shareholders equity had increasing trend from 20062007 to 2008-2009 but then it reduce from 9.81 in 2008-2009to 8.46 in 2009-2010. It is because the shareholders fund increase every Year but the net profit is not increasing in that proportion. In 2009-2010 the net profit was decrease. Hear we see that the return on shareholders equity was reduced in the year 2009-2010, but the share holders worth is increasing continuously. This indicates that the company is using the share holders fund efficiently.

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c. Earning per share


The profitability of the shareholders investment can also be measured in many other ways. One of such measure is to calculate the earning per share. The EPS calculation made over Years indicated whether or not the firms earning power on per-share basis has changed or over that period. The EPS is calculated by dividing the PAT by total number or ordinary shares outstanding. EPS = PAT No. of shares outstanding

PAT (IN RS. 000) YEAR 2006-2007 2007-2008 2008-2009 2009-2010 1932400 2092000 2501300 2281700

NO.OF EQUITY SHARE OUTSTANDING 396502 396477 391161 391308 EARNING PER SHARE (IN '000 Rs./SHARE) 4.9 5.3 6.4 5.8

EARNING PER SHARE (IN '000 Rs./SHARE)


7 6 5 4 3 2 1 0 2006-2007 2007-2008 2008-2009 2009-2010 EARNING PER SHARE (IN '000 Rs./SHARE)

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INTERPRETATION:(To calculate EPS all the shares are converted in to shares of Rs. 10000 each) The earning per share is Rs. 4900 in 2006-2007, 5300 in 20072008, 6400 in 2008-2009. We can see that the EPS is increasing over a period of time. But in 2009-2010 it reduced to Rs. 5800. It was due to decrease in sale, low profit margin and higher operating expenditure. This return is on the share of Rs. 10000. This shows the EPS is more then 50% of the face value of the share.

6.3.4

Combined(Turnover) Ratio

a. Inventory(Stock) turnover ratio


This is also known as stock Velocity. This ratio is calculated to consider the adequacy of the quantum of capital and its justification for investing in inventory. This ratio reveals the number of times finished stock is turned over during a given accounting period. This ratio is used for measuring the profitability. Stock Turnover Ratio = Cost of Goods Sold Average Inventory at cost Year Cost of Goods Average Sold Rs. In crore 2006-07 2007-08 2008-09 2009-10 145248.1 156566.27 200437.76 188274.84 Inventory Rs. In crore 10536.59 12,858.59 8,075.06 3,217.12 13.79 12.18 24.82 58.52 26.48 29.98 14.70 6.24 Ratio In times Conversion Period(Day)

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70 60 50 40 30 20 10 0 2006-07 2007-08 2008-09 2009-10 Ratio Conversion Period(Day)

INTERPREATION: This ratio indicates that how fast inventory is used/sold. A high ratio is good from the view point of liquidity and vice versa. A low ratio would indicate that inventory is not used/ sold/ lost and stays in a shelf or in the warehouse for a long time. KRIBHCO has a continuous increase in inventory turnover ratio that is visible from the above ratios of 2008-2009 and 2009-2010. It shows good liquidity of inventory. The inventory conversion period is decreasing. It shows the efficient utilization of inventory. During recent years the demand for urea has increased. The domestic industry is unable to fulfill the entire requirement as per demand. To fulfill this demand the company has adopted the policy to import of urea from abroad. And as all plants of KRIBHCO is working at more than 100% capacity. This is one the reason for good inventory conversion period.

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b. Debtors Turnover Ratio This is also called Debtor Velocity or Receivable Turnover. A firm sells goods on credit basis. When the firm extends credit to its customer, book debts are creating in the firm account. Debaters expected convert in to cash over short period and thus included the current assets. Debtors turnover establishes the relationship between net sales of the Year and receivable. That is, it measured the number of times the receivable rotate in Year in terms of sales. It shows how quickly debtors are converted into cash. Debtors Turnover = Credit Sales Average Debtors Average Debtors= Opening Balance +Closing Balance 2 Debtors Turnover = Total sales Rs.In YEAR 2006-2007 2007-2008 2008-2009 2009-2010 crore 1855.56 2230.41 2559.13 2597.07 Closing debtors Rs. crore 140.80 612.86 407.53 264.83 Debtors In turnover ratio In times 13.18 3.64 6.28 9.81 Total Sales Closing Debtors AVG. COLLECTION PERIOD(IN MONTH) (12/D.T.RATIO) 0.91 3.3 1.91 1.23

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14 12 10 8 6 4 2 0 2006-2007 2007-2008 2008-2009 2009-2010 DEBTORS TURNOVER RATIO AVG. COLLECTION PERIOD

INTERPRETATION: The debtors turn over ratio is 13.18 times in 2006-2007, which reduced to 3.64 times in 2007-2008. From 2007-2008 the companies debtors turn over ratio had increasing trend. It is 9.81 in 2009-2010. But it is very low as compared to 2006-2007. It shows that the debtors take time to convert in to cash. So the working capital investment is high. The debtors collection period is 3.3 month in 2007-2008, which is very higher as compared to other Year. In 2009-2010 average collection period is 1.23 month. In the year 2007-2008, due to drought the sale is low and the company can not recover the debt on time form the debtors. So this year the closing debtors were high, and have a very high turnover period. For this year we can see the debt collection period was of 3.3 month, which was very high. Some of the time the government does not make payment in time so the turnover ratio goes high.

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c. Creditor Turnover Ratio


This is also known as Account payable or creditors Velocity. A business firm usually purchases on credit good, raw materials and services from other firms. The amount of total payable of business concern depends upon the purchases policy of the concern, the quantity of purchases and supplier credit policy. Longer the period of outstanding payable is. Lesser is the problem of working capital of the firm. Payable turnover shows the relationship between net purchases for the whole Year and total payable. Creditor Turnover = Net Credit Purchases

Average Account Payable Average Account Payable = Month in a Year Creditors Turnover Ratio

Net

credit Avg. account payable Rs. In crore 3. 102.03 134.33 130.19 108.21

Creditors turnover ratio In times 2/3=4 14.24 11.66 15.83 17.40

Avg. period

payment to

purchase Rs. In crore Year 1. 2006-2007 2007-2008 2008-2009 2009-2010 1452.48 1565.66 2028.81 1882.75 2.

creditors (in month) 12/4=5 0.84 1.03 0.76 0.69

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20 18 16 14 12 10 8 6 4 2 0 2006-2007 2007-2008 2008-2009 2009-2010 Avg. payment period to creditors(in month) Creditors turnover ratio

INTERPRETATION: The creditors turnover ratio shows increasing trend. It shows the company pay off its creditors in time. In the Year 2009-2010 the creditors turnover ratio was 17.40 times. Similarly the payment period to creditors is less then one month. It is around 21 day in Year 2009-2010. In 2007-2008 the ratio is lowest 11.6 times. In this year these ratio slightly goes up. The company has to pay off its some of the creditors within three days. So the creditors policy also affects the creditors turnover ratio

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d. Working capital Turnover ratio


This ratio is a measure of the efficiency of the employment of the working capital. It indicates the number of times the working capital is turned over in the course of a Year. This ratio finds out the relation between cost of sales and working capital. It helps in determining the liquidity of a firm as it gives the rate at which inventory are converter to sales and then to cash. Working capital Turnover= Cost of Sales Net working capital Cost sales Rs. Year 2006-2007 2007-2008 2008-2009 2009-2010 crore 1870.60 1480.99 2689.11 2649.30 2312.54 2603.23 2646.59 2713.99 of Net capital In Rs. In crore Working 1.52 1.09 2.54 3.27 capital turnover ratio working

Working capital turnover ratio


3.5 3 2.5 2 1.5 1 0.5 0 2006-2007 2007-2008 2008-2009 2009-2010 Working capital turnover ratio

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INTERPRETATION: Working capital turnover ratio shows the increasing trend over a period of time. It increased from 1.52 times for the year 20062007 to 3.27 times for the year 2009-210. The higher ratio shows there is less investment in working capital and there is more profit. The higher trend indicated good return on sale and we need less working capital. So we can invest this fund somewhere else.

e. Fixed Asset Turnover Ratio


It also known as sales to fixed asset ratio. This measure the efficiency and profit e earning capacity of the firm. Higher the ratio, greater is the intensive utilization of fix assets lower ratio means under utilization of fix assets. Fixed Asset Turnover Ratio= cost of sales Net Fixed Assets (Net Fixed Assets=value of assets Depreciation) cost sales Rs. YEAR 2006-2007 2007-2008 2008-2009 2009-2010 crore 1870.60 1480.99 2689.11 2649.30 270.33 375.29 382.96 498.45 6.92 3.95 7.02 5.32 of Net Assets In Rs. In crore Fixed Fixed assets turnover ratio In times

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Fixed assets turnover ratio


8 6 4 2 0 2006-2007 2007-2008 2008-2009 2009-2010 Fixed assets turnover ratio

INTERPRETATION: The fixed assets turnover ratio of the company is fluctuating. The ratio has ups and downs due to increase in fixed assets over a period of time, but the sale is not increasing in that proportion. There are suddenly increase in fixed assets. It because of the machinery utilized in the plant is very costly. When some of the machinery was replaced of some plant has expansion then the company has to purchase new assets. In this time period the ratio gets major fluctuation due to change in assets value. The ratio decrease from 6.92 in 2006-2007 to 3.95 in 2007-2008. It was due to increase in net fixed assets by 105 crore, But again the ratio is reduced in 2009-2010 to 5.32 due to decrease in sale by 38 crore and increase in net fixed assets by 15.49 crore. In 2009-2010 the net fixed assets were increased by 116 crore.

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f.

Capital Turnover Ratio

Sometime the efficiency and effectiveness of the operation are judged by comparing the cost of sales or sales with amount of capital invested in the business and not with assets held in the business though in both cases the same result is expected. Capital invested in the business may be classified as long term and short term capital or as fixed capital and working capital or owned capital and loaned capital. All capital turnovers are calculated are to study the uses of various types of capital. Total Capital Turnover = Cost of sales Total Capital Employed Capital turnover = Cost of Sales Capital Employed Capital Employed= Share holders Fund + Long Term Loans (or) = Total assets Current Liabilities

cost of sales Rs. In crore YEAR 2006-2007 2007-2008 2008-2009 2009-2010 1870.60 1480.99 2689.11 2649.30

Capital employed Rs. In crore 2312.54 2603.23 2646.59 2713.99

Capital ratio 0.81:1 0.57:1 1.01:1 0.98:1

turnover

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CAPITAL TURNOVER RATIO


1.2 1 0.8 0.6 0.4 0.2 0 2006-2007 2007-2008 2008-2009 2009-2010 CAPITAL TURNOVER RATIO

INTERPRETATION: The capital turnover ratio of KRIBHCO is increased in 2008-2009 to 1.01 times due to increase in sale. But again it decreased to 0.98 in 2009-2010 due to decrease in sale. In 2007-2008 the capital turnover ratio is 0.57. In this Year we can say that the capital is not properly utilized. In this year there was a drought, so the sale was very low. In this Year there was higher level of stock in inventory and less debtors turnover. In these Year sale was also very low. If we see the overall performance then we can say that the KRIBHCO has good capital turnover ratio.

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7. CONCLUSION
The financial position of the company is very strong. KRIBHCO get its all fund from equity. proprietary fund. It has the debt equity ratio of 0:1 all the years. This shows the long term solvency position of the company. The company has to maintain certain critical items in store for the smooth and continuous running of plant. So this may be the reason of high current ratio in previous years. The company has huge working capital investment as we can see that the current assets are much higher then the current liability. The working capital turnover ratio was shows the increasing trend. This shows the efficient utilization of working capital. I find that the proportion of cash in current assets is high. It was higher then the total current liability. So the liquidity position of KRIBHCO is very strong. The company has very less total out side liability as compared with total assets. GAS is the essential inventory for production of urea. In the year 2008-2009 company get less GAS from its major supplier GAIL LTD. So the company uses NEPTHA in place of GAS. The NEPTHA is four times costlier then the GAS. So during this year the cost of production was very high. The major stack holding in the company is of government of India. The government has much interruption in the working of KRIBHCO LTD. The subsidy rate and the selling prices decided by the government of India, which restrict the revenue of the company. The company has increasing inventory turnover ratio and debtors turnover ratio. This shows the high liquidity of current assets. So the working capital requirement is reduced. And we can invest the idle fund some where else for productive use. The KRIBHCO is mostly using the

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The net worth of the company is increasing year to year, which shows good return to equity share holders. If we see analyze the previous years, we finds the higher investment of working capital in inventory in the year 2006-2007 and 2007-2008. It is necessary for the smooth running of the plant. The inventory includes the critical parts of the machinery which can be needed at any time.

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8. SUGGESTIONS
Considering the entire situation discussed above following points should be taken in to consideration for improvement in the financial position. The company has to control its operating expenses. The company has over staffing in some departments. So the company has to transfer the employees where they are needed. And stop recruiting new employees from out side. The company can use the debt fund at certain proportion. Because the increasing in equity capital will leads to increase in number of share holders. While the debt fund have no right in companys management. And the debt funds are available at very low cost. The government must have some rules in flavor of the company for concession received. Because even the company has increased in sale and production the government passed fewer subsidies. This leads to reduction in profit. The past ratio shows improvement in working capital utilization. The company has to tray to improve it more by effective utilization of current assets. The company have to expand their plant capacity of invest in a new plan. The reason is higher demand of fertilizers in India. And there are only four or five major players in this fertilizer industry. They are not able to full fill the demand. So the company has to import it from abroad. The main raw material for production is GAS. In the year 2008-2009 due to less supply from the GAIL LTD. the company has to utilize NEPTHA in place of GAS.NEPTHA is four times costlier than GAS. Due to these the production cost was very high.

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9. ANNEXTURE
BALANCE SHEET AS ON 31ST MARCH
(Rs. in lakhs)

Particular
Share Holders Fund: Share Capital Reserve & Surplus Share Application Money Secured Loans from Bank Unsecured bank Deferred tax liability Total Application of Fund: Fix Assets: Gross Block Less: Depreciation Net Block Capital cost) Investment A) Current Assets: Inventory Sundry Debtors(Unsecure) Cash & Bank balance Loans

2009-2010

2008-2009

2007-2008

2006-2007

39066.58 230646.26 0.00 22.81

39073.33 215867.72 1.00 23.00 9191.00 502.89 264658.61

39609.93 198243.15 0.00 75.63 22396.87 0.00 260323.58

39610.68 189141.73 0.00 40.69 0.00 2461.18 231254.28

From 0.00 1663.31 271398,96

129077.77 89690.86 39386.91

124060.19 88116.59 35943.60 2352.56 120341.80

122432.34 85629.82 36802.52 726.23 87056.46

111509.51 84476.54 27032.97 0.00 80756.46

Work-in-process(at 10457.69 140645.23

11792.02 26482.74 82227.13

18550.63 40752.96 83456.18

21404.82 61285.98 90504.27

25090.64 14079.60 80241.37

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Loans & Advances Less: B) Current Liabilities Current Liabilities Provisions Net Current Assets (A-B) Total

15012.27 135514.16 30685.19 23919.84 54605.03 80909.13 271398.96

14037.00 156796.77 29808.48 20967.64 50776.12 106020.65 264658.61

11983.23 185178.30 27506.06 22352.25 49858.31 135319.99 260323.58

38288.06 157699.67 18542.55 15692.27 34234.82 123464.85 231254.28

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PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH(Rs in lakh)
Particulars
Income revenue: Sales (Net of discount/rebates) Less: Excise Duty 164708.58 153219.90 140076.09 135383.39 (970.19) (1979.77) (1514.47) (986.29) from Operations/other

2009-10 2008-09 2007-08 2006-07

Concession/Remuneration from Govt. 95968.98 Of India Freight Subsidiary Other Revenue Accretion/Discretion in stocks 0.00 30478.17 (3819.58)

104672.55 84479.12 22463.25 0.00 40974.77 (5890.29) 0.00 11232.91

26656.83 42274.31 (3676.78) 8320.78

286365.96 290997.16 246020.7 218688.35 9 LESS: Cost of Operations/ outgoings Consumption of Raw Material & Stores, etc : Row Materials Packing sMaterials Chemicals & Catalysts Power, Fuel & Water Purchases of Products for resale: Seeds & Chemicals Urea, DAP & Other Fertilizers Employees Remuneration & Benefits Administration & Distribution Interest Depreciation/Amortization 518.31 3062.11 1037.52 2752.84 531.99 2279.20 147.25 1762.54 3390.20 88238.65 22488.73 2943.11 49764.35 16966.40 42863.27 2180.02 1403.93 43270.05 61303.10 17340.21 12149.55 42160.46 36220.55 59846.65 7013.08 1122.68 28663.58 78759.09 4425.19 846.43 63699.59 65404.97 47310.96 4138.33 724.75 3933.34 505.57 Other

40848.15 30793.20

Other Expenses on Manufacturing, 46766.67

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261110.66 264057.79 218878.1 195527.99 3 Net Profit of the year Prior (Net) Profit Before Tax Provision for Taxation Profit After Tax Profit Transferred to: Capital Repatriation Fund Dividend Equalization Fund Contribution Relief Fund Net Profit As Per the Malty State 22802.70 Co-operative Societies Act (MSCS Act) Less: Proposed Appropriations : Reserve Fund as per Bye-Law 58(i) of 5700.68 the Society Provision for Contribution to Co- 228.03 247.12 2471.25 40.00 7127.63 8648.36 -----184.07 1840.70 40.00 7920.50 3819.98 -----178.11 1781.10 25.00 7891.44 3482.57 ---------operative Education Fund Reserve Fund for Contingency as per 2280.27 Bye-Law 58(iii) of the Society Reserve for Donations Proposed Dividend General Reserve 40.00 7767.40 6786.32 ------6178.12 4601.75 4452.74 24712.48 18407.00 17810.96 to Prime Ministers 14.00 0.00 300.22 0.00 13.00 2500.00 13.00 1500.00 0.00 25277.12 2460.42 22816.70 26933.97 1921.27 25012.70 27213.54 23153.44 6293.54 3829.48 20920.00 19323.96 Period 25255.30 26939.37 (5.40) 27142.66 23160.36 70.88 (6.92)

Income/(Expenditure) 21.82

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CASH FLOW STATEMENT OF KRIBHCO


(Rupees in Lakh)

2009-2010 Particulars (A) Cash Flow from Operating Net Profit Before Tax 25,277.13 Activities: Adjustment for: Depreciation 3,062.11 Interest (Net) (7,172.83) Amounts charged-off 1.42 Assets written-off 58.89 Foreign Exchange Rate (26.46) Loss onFluctuations Assets Sale of Fixed (643.70) Dividend Income (14,549.05) (Net) Profit on sale of investment Liabilities/Provisions no longer (409.15) Prior Period Depreciation (14.65) required, written-back Total (19,693.42) Operating Profit before 5,583.71 Adjustment for: Working Capital Changes Inventories 6,668.11 Trade and Other 15,164.89 Trade Payable and Provisions 2,330.66 Receivables Total 24,163.66 Cash Generated from 29,747.37

2008-2009

2007-2008 2006-2007

26,933.96 2,752.85 (8,217.67) 209.74 22.43 65.86 12.83 (24780.02) (192.20) (726.43) 5.23 (30,847.38) (3,913.42) 2,938.72 19,416.13 2,935.14 25,289.99 21,376.57 (2,776.13) (184.07) (23.25) (2,983.45) 18,393.12

27,213.53 2,279.20 (8,364.19) 71.23 2.88 30.14 (13.24) (11,552.48) (454.95) (68.72) (18,070.13) 9,143.40 3,181.36 (21,300.44) 11,249.63 (6,869.45) 2,273.95 (7,247.47) (178.11) (25.00) (7,450.58) (5,176.63)

23,153.44 1,762.54 (6,562.26) 211.83 20.01 (1.46) 11.47 (11,534.49) (315.29) (0.14) (16,407.79) 6,745.65 (9,710.77) (19,359.95) 4,154.20 (24,916.52) (18,170.87) (3,823.16) (167.29) (17.61) (4,008.06) (22,178.93) (6,385.58) 16.39 4,810.83 11,534.49 6,614.60 16,590.73

Direct Operations(Net of Taxes Paid Contribution to Cooperative Refunds) Donations Paid Education Fund Total Net Cash from Operating (B) Cash Flow from (A) Activities Investing Purchase of Fixed Assets Activities: Proceeds from C.W.I.P. including Sale of Fixed Profit on sale of investment Assets Investments Dividend Received Interest received Net Cash from Investing Activities (B)

(1,785.03) (247.12) (46.75) (2,078.90) 27,668.46 (19,042.57) 5,031.81 (20,303.43) 14,549.05 9,753.58 (10,011.56)

(3,685.51) (12,965.20) 124.75 269.30 192.20 (33,285.34) (6,300.00) 24,780.02 11,552.48 9,978.67 6,929.05 (1,895.21) (514.37)

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(Rupees in Lakh)

Particulars (C) Cash Flow from Financing Proceeds from issue/repatriation of Share Activities: Proceeds from Short Term Loans Capital Interest Paid Dividend Paid Foreign Exchange Rate Fluctuations Net lncrease/(Decrease) in Cash and (C) Cash Equivalents (A+B+C) Cash and Cash Equivalents as at the Cash and Cash Equivalents as at the beginning of the year Net lncrease/(Decrease) in Cash and close of the year Cash Equivalents

2009-2010 2008-2009 2007-2008 2006-2007

(7.75) (9,191.10) (518.31) (7,132.72) 26.46

(533.60) 9,138.36 (1,037.53) (7,927.05) (65.86) (425.67)

(2.75) 34.95 (531.99) (7,880.18) (30.14) (8,410.11)

143.30 40.69 (147.25) (7,862.17) 1.46 (7,823.97)

Net Cash used in Financing Activities (16,823.51) 833.40 79,045.01 79,878.41 833.40

16,072.26 (14,101.11) (13,412.17) 62,972.75 79,045.01 77,073.86 62,972.75 ) 90,486.03 77,073.86

16,072.26 (14,101.11 (13,412.17)

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10. BIBLIOGRAPHY
Books: R.S.N.Pilli and Bagavati, 3rd edition 2006 reprint 2007, 2008, management accounting, S. Chand publisher.

Ambrish gupta, 3rd edition 2009, financial accounting for


management, Pearson education.

Websites: http://kribhco.net/english/vision.htm http://kribhco.net/english/mission.htm http://kribhco.net/english/introduction.h www.financialmanagementdevelopment.com

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