Ratio analysis projct @ BEC DOMS

FINANCIAL RATIO ANALYSIS OF SRI HALSIDHNATH S.S.K LTD

PAGE
NO.
SL.NO CONTE NTS

1 PART – I

EXECUTIVE SUMMARY

PART – II

2 INDUSTRY PROFILE

3 PART – III

INTRODUCTION OF COMPANY

PART – IV

4 RESEARCH METHDOLOGY

OBJECTIVES OF THE STUDY

PART – V

6 WORKING CAPITAL MANAGEMENT

PART – VI

7 DATA ANALYSIS AND INTERPRETATION

PART – V II

8 FINDINGS

SUGGESTIONS &

CONCLUSIONS.
A NNEX URE

9 FINANCIAL STATEMENT.
BIBILOGROPHY.

TABLE INDEX

BASAVESWAR ENGNEERING COLLEGE BAGALKOTPage 1


INDUSTRIAL PROFILE
ABOUT THE SUGAR INDUSTRY IN INDIA:-
India has been known as the original home of sugar &
sugar cane. Indian Mythology supports the above facts ass it
contains legends showing the origin of sugarcane India is the
second largest producer of sugarcane next to BRAZIL. Presently
above 4 million Hectors land is under the sugarcane with an
average yield of 70 tons per hectors. India is the largest single
producer of the sugar including traditional trade Sugar sweeteners,
Khandsari & gur equivalent to 26 million tonnes row value followed
by Brazil in second place at 18.5 million tonnes. Even in respect of
white crystal sugar. India has ranked No.1 position in 7 out of last
10 years

HISTORY OF SUGAR INDUSTRY IN INDIA:-
Traditional sweeteners gur &
khandsary are consumed mostly by the rural population in India. In
the early 1930’s nearly 2/3rd of sugarcanes production of
alternates sweeteners gur & khandsari. With better standard of
living & higher incomes, the sweetener demand has shifted to white
sugar. Currently about 1/3rd sugarcane production is utilized by
the Gur & Khandsari sectors. Being in the small scale sector, these
two sectors are completely free form controls & taxes which are
applicable to sugar sector.

The advent of the modern sugar processing
industry in India began 1930 with grant of tariff to the Indian
sugar industry, The number of sugar mills increased from 30 in
the year 1930-31 to 135 in the year 1935-36 &the production



during the same period in created form 1.20 lakh tonnes to 9.34
lakh tonnes under the dynamic leadership of private sector.

The area of planning for industrial
development began in 1950-51 & Government laid down targets of
sugar production & consumption, licensed & installed capacity,
Sugarcane production during each of Five year plan periods.

NEED FOR THE STUDY

The study has been conducted for gaining practical knowledge
about Ratio analysis of Shri Halasidhnath Sahakari Sakhar
Karkhana. Ltd.
The study is undertaken as a part of the MBA curriculum from
1st July 2010 to 20th August 2010 in the form of summer in
plant training for the fulfillment of the requirement of MBA
degree.
TITLE OF THE PROJECT

“This project “A Study on ANALYSIS OF FINANCIAL PERFORMANCE
ON The BASIS OF FINANCIAL RATIO’S” of Halsidhanath Sahakari
Sakhar Karkhana Ltd

OBJECTIVES:-

To study the profitability of
Halsidhanath Sahakari Sakhar Karkhana Ltd. Nipani.

To study the liquidity position.

To find activity turnover



To study operating efficiency of
Halsidhanath Sahakari Sakhar Karkhana Ltd Nipani.

SCOPE OF THE STUDY

The scope of the study is identified after and during the study
is conducted. The main scope of the study was to put into
practical the theoretical aspect of the study into real life work
experience. The study of Ratio analysis further the study is
based on last 5 years Annual Reports Shri Halasidhnath
Sahakari Sakhar Karkhana. Ltd.

LIMITATIONS OF THE STUDY

The analysis is limited to just five years of data study (from year
2005 to year 2009) for financial analysis.
Limited interaction with the concerned heads due to their busy

schedule.

METHDOLOGY

In preparing of this project the information collected from the
following sources.

Primary data:



The Primary data has been collected from Personal Interaction with
Finance manager Mrs.S.M.Siragave and other staff members.

Secondary data:

The major source of data for this project was collected through

Balance sheet of SSHSKL
Profit and loss account of 5 year period from 2005-2009

SAMPLING DESIGN

Sampling unit : Financial Statements.
Sampling Size : Last five years financial statements.

Tools Used: MS-Excel has been used to create a Charts and
calculation.

Findings
Gross profit and net profits are decreased during the period
of study, which indicates that firm’s inefficient management
in manufacturing and trading operations.



Gross profit and net profits are increased during the period
of 2004-05 which indicates that firm’s efficient management
Liquidity ratio of the firm is not better liquidity position in
over the five years. It shows that the firm had not sufficient
liquid assets.

The inventory of the firm in the first year has been sold very
slow. And there is an increase in the movement of the
inventories but it slightly decreased in the last year. This may
be a sign not good to the firm.

The fixed assets turnover ratio
of the firm has in 2004-05 the ratio is 0.85 and it increase in
the next 3years continuously and it again decrease in
2008-09.
The current assets turnover
ratio is increasing during the period of 2004-06 and again it
decrease in the period of 2006-07. And again increase in
next two year slithightlliy.
Direct Material cost ratio of the
firm is has less material cost during the period of 2004-05 &
2007-08 and it raised in the year of 2005-06 and 2008-09.

The cost of direct labour of the
firm in the year of 2004-05 is 4.94%and it increasing
slithightlliy up to 2007-08 and it decrease in the next year.



The cost of manufacturing
overhead of the firm in the year of 2004-05 is 5.22% where it
compare to the next 3year it increase rapidly.

SUGGESTIONS

The profit Of the Company Is not in a good Position For That
company has to Take Alternative Actions such As
Increasing in Procurement in sugarcane ,
Production, and Control in Expenses Like,
Administrative, selling Etc.
The firms have low current ratio so it should increase its
current ratio where it can meet its short term obligation
smoothly.
over the five years. So I suggested that the firm maintain
proper liquid funds like cash and bank balance.

CONCLUSION

This project of Ratio analysis in the production concern is not
merely a work of the project. But a brief knowledge and experience
of that how to analyze the financial performance of the firm. The
study undertaken has brought in to the light of the following



conclusions. According to this project I came to know that from the
analysis of financial statements it is clear that SHSSK Ltd. Have
been incurring loss during the period of study. So the firm should
focus on getting of profits in the coming years by taking care
internal as well as external factors. And with regard to resources,
the firm is take utilization of the assets properly. And also the firm
has a maintained low inventory.

INTRODUCTION OF CONCEPTS
India is developing country in which more than 70%
population is dependent upon agriculture. In India Wheat, Cotton,
Rice, Tobacco & Sugarcane are the some main crops. But the sugar
cane is one of the important agricultural productions. And or by
using the sugar We produce sugar. Which is very important item of
daily meals? Sugar is mainly used for tea, Coffee and so many food
products. It is also important raw material for bakery industry. The
Sugar is produced by so many co-operative and also private
factories. The first scheme of sugar factory in co-operative society
has been introduced byMr.G.N. Sahastrabudhe & R.N. Hiremath in
1912. But first Co-operative sugar factory started in 1918, by the
Lallubhai Samaldas & G. N. Sahastrabudhe in baramati. But due to
Lake Of sugar Cane the factory stopped its working in 1924.

After that, in co-operative field, under the guidance of
Vilnalirao patil, Dr Dhanjay Gudgil Tried to start second
co-operative sugar factory. He was started pravar -co-operative
Sugar factory in 1950 at loni this factory got success in market



therefore some other sugar Factories were going to start in Pune,
after, the late 1970 there was a rapid increase in trend of
co-operative sugar factory.

INDUSTRIAL PROFILE
ABOUT THE SUGAR INDUSTRY IN INDIA:-
India has been known as the original home of sugar &
sugar cane.indian Mythology supports the above facts as it
contains legends showing the origin of sugarcane India is the
second largest producer of sugarcane next to BRAZIL. Presently
above 4 million Hectors land is under the sugarcane with an
average yield of 70 tonnes per hectors. India is the largest single
producer of the sugar including traditional trade Sugar sweeteners,
Khandsari & gur equivalent to 26 million tonnes row value followed
by Brazil in second place at 18.5 million tonnes. Even in respect of
white crystal sugar. India has ranked No.1 position in 7 out of last
10 years

HISTORY OF SUGAR INDUSTRY IN INDIA:-
Traditional sweeteners gur &
khandsary are consumed mostly by the rural population in India. In
the early 1930’s nearly 2/3rd of sugarcanes production of
alternates sweeteners gur & khandsari. With better standard of
living & higher incomes, the sweetener demand has shifted to white
sugar. Currently about 1/3rd sugarcane production is utilized by
the Gur & Khandsari sectors. Being in the small scale sector, these



two sectors are completely free form controls & taxes which are
applicable to sugar sector.

The advent of the modern sugar processing
industry in India began 1930 with grant of tariff to the Indian
sugar industry, The number of sugar mills increased from 30 in
the year 1930-31 to 135 in the year 1935-36 &the production
during the same period in created form 1.20 lakh tonnes to 9.34
lakh tonnes under the dynamic leadership of private sector.

The area of planning for industrial
development began in 1950-51 & Government laid down targets of
sugar production & consumption, licensed & installed capacity,
Sugarcane production during each of Five year plan periods.

MANUFACTURING PROCESS & TECHNOLOGY:-

Sugar (sucrose) is a carbohydrate that
occurs naturally in every fruit & vegetable is a major product of
pirotosynthesis, the process by which plants transforms the sun’s
energy into food. Sugar occurs in greatest quantities in sugarcane
& sugar beets form which it is separated for commercial use. The
natural sugar stored in the cal stalk or beet root is separated from
rest of the plant material through a process known as refining

For sugarcane the process of retaining is carried out in following
steps.

Pressing of sugarcane to extract the juice.
Boiling the juice unit it begins to thicken & sugar begin to
crystallize.



Spinning the crystal in a centrifuge to remote the syrup,
producing raw sugar.
Shipping the raw sugar to a refinery where it is wasted &
filtered to remove Remaining non –sugar ingredient & colour.
Crystallizing, drying & packing the refined sugar.

Beet sugar processing is the similar but it is alone in one
continuous process without the raw sugar stage. The sugar beets are
washed sliced & soaked in hot water to separate the sugar containing
juice from the beet fiber. The sugar laden juice is the purified, filtered,
For the sugar industry, capacity utilization is conceptually different
from the applicable to industries in general. In depends on three
crucial factors the actual numbers of ton sugarcane crushed in a
day, the recovery rate which generally depends on the quality of
the cane & actual length of the crushing season.

Since cane is not transported to any great extent, the
quality of the cane that a factory receiver on its location & it
outside its control. The length of the crushing season also depends
upon location with the maximum being in south Indian. sugarcane
in India is used to make either sugar, Khandsari or gur . However
sugar products produced are divided into four basic categories;
Granulated, brown, liquid, sugar, and invert sugar.

PFROFILE OF THE COMPANY



Name of the factory Shree Halasidnath Sahakari

Sakhar Karkhana LTD.

Address Shree Halasidnath Sahakari

Sakhar Karkhana LTD.

Shankaranand nagar,
Nipani.

TAL:-Chikodi.
DIST:-Belgaum

PIN:-591237.

Year of Establishment APRIL-1981.

1st Crushing Season JANUARY-1983.

Register Number DSK/REG-2/80-81.

Register Date 22-04-1981.

Phone Number STD CODE (08338)

Chairman-220355

Office-222090

FAX Number (08338)221315



BACKGROUND & INCEPTION COMPANY.

Halsidhanath sahakari sakhar karkhana is placed 3 km
away from Nipani in north side at Shankaranandnagar , Tal:chikodi
Dist: belgaum. Halsidhanath sahakari sakhar karkhana is the
support pillar to the sugar cane producer farme’s in the Nipani area.
The karkhana wa started by the some social worker’s in nipani
area with a view to provide an good option to the former in this
area like sugarcane.

Mr. Baburao Budihalkar was the chief promoter in this
project But, some other The foundation of karkhana building was
held on 9-11-1982. The chief guest for this function was
Shri.Rajiv Gandhi who was the prime minister of India in that time.
The Karkha started its regular working on 30-9-1989. The delay
was due to the changing political conditions in Karnataka state.

The Karkhana developed a very good rapport with the farmers in
this area and worked for their progress . So, the karkhana is



operating in entire Chikkodi taluka
andAlur,Bhairapur,Kanagala,Shippur,Karajaga,Rashing,Bad,Nangnur,
Mattiwade,Hitani,Shekinhasur,Konankeri, sadlaga thirteen(13) vill
ges in Hukkeri taluka. Only Belgum in Belgum laluka and Soudatti
in Raibag Taluka all these part of Belgaum district in the Karnataka
state. And Arjuni, Chikhali, Gorambe, Shendur, Shankarwadi,
Vandur all these eight (8) villages in Kagal taluka is a part of
Kholapur district in the Maharashtra state Thus, it will comprise of
part of Belgaum district and part of Kolhapur district, from two
adjoining states.

OBJECTIVES AND FUNCTIONS:-

The principle object of the karkhana will be to promote the
interests of all its members to attain their social and
economic betterment through self help and mutual aid in
accordance with the co-operative principles.
To prepare and implement the programme for harvesting and
transportation of sugarcane on behalf of the member’s from
their field to factory in supply of sugarcane to factory for
crushing and to avoid probable losses of sugar in cane.
To manufacture sugar, Jaggery and its allied by products
from the sugarcane supplied by the members and other and
to sale these products at good price.
To install the factory for manufacture sugar on large scale
basis and to take all necessary steps to run it efficiently



To install the necessary machinery required for producing of
bagasse, molasses, Press-mud etc.
To ruchase the means of transportation and to run, to give
and to take on hire basis.
To install research centers and to assist the existing research
institutions and to undertake research work helpful to
sugarcane, sugar and allied industry.

NATURE OF THE BUSINESS CARRIED:-

S.H.S.S.K.LTD. is co-operative sector firm.
It is a manufacturing company It produces sugar, molasses And
supplies sugar tp Nipani, Chikodi Taluka, Raibag Taluka, saudatti,
and Hukkeri Taluka. It operates within Karnataka as well as outside
Karnataka.

Nature of business carried Shri Halasidhanath sahakari Sakhar
Karakhana Ltd is involved in the activity of manufacturing white
crystal sugar products which is the main product. The process of
production involves conversion of.

Raw sugar cane to sugar,
Raw sugar to refined sugar, Molasses, Bagasses are its by
products.

MOLASSES: Molasses is mainly used for the manufacture of
ethyl alcohol(ethanol)yeast and cattle feed.
BAGASSES: Bagasses is usually as a combustible in the
furnaces to produce steam which in turned is used to
generate the power, it is also used as raw materials for the
production of paper and as feedstock for the cattle.



PRODUCT PROFILE

Shri Halasidhanath Sahakar Sakhari Karakhana Ltd established for
the purpose of sugar while producing the sugar some raw juice
and raw bagasses become molasses and some other by-product.

The Shri Halasidhanath Sahakar Sakhari
Karakhana Ltd is producing following product

1) Sugar
A) Medium-30
B) Small-30
C) Levy
2) Molasses
3) Compost
4) Bagasses

AREA OF OPREATION

The Shri Halasidhanath Sahakar Sakhari Karakhana Ltd has wide
range of area of operation for continuous and regular flow of sugar
cane from different authorized area within the 80 kms. Around the
spot of plant includes some region of two states from Maharashtra
and Karanataka under.

SR.NO NAME OF DISTRICT NUMBER
TALUKA

1 Chikodi Belgaum 43



2 Hukkeri Belgaum 05

3 Raibag Belgaum 04

4 Belgaum Belgaum 01

5 Jamkhandi Baglkot 01

6 Athani Belgaum 05

7 Kagal Kholapur 09

TOTAL 68

OWNERSHIP PATTERN

Shri Halasidhanath Sahakar Sakhari Karakhana Ltd established in
the year 1981 at Hala sugar gram of chikodi Taluka. It was resolved
to collect the share of established this sugar factory in co-operative
basis. Let the late Baburao B patil Budhialkar and other social
workers and leader working in co-operative sector also come
forward to assist team in the starting this factory. It is joint
venture with share capital of Rs. 104940000 contributed by
18990 share holders. The company was established in the year
April 1981 & started the crushing in January 1983. The company is
registered under the provision of companies Act-1956.

THERE IS TOTALLY 15 BOD’S.



Grower member will elect 12 BOD’S

1 Director will be elected by the co-operative.

1 Director nominated by the principal of financial agency.

Apart from this 14 director, managing director will be
deputed by the government

PRESENT BOARD OF DIRECTORS ELECTED DIRECTOR

Shri. D.A.Chougale Managing
Director

Shri. Babasaheb .S. Saasne Chairman

Shri .Ramagounda .R. Patil Vice- Chairman

Shri .Ganesh .P. Hukkeri Director

Shri .Appasaheb .S. Jolle Director

Shri. Annasaheb .A. Patil Director

Shri. Vishawanath .S. Kamate Director

Shri. Malagounda .P. Patil Director

Shri. Anand .D. Ginde Director

Shri. Chandrakant .S. Kotiwale Director

Shri. Ramagounda .B. Patil Director

Shri. Ramagounda .Y. Patil Director

Shri. Kanthinath .G. Chougale Director



MEMBERSHIP OF SHARE CAPITAL:-

The membership of Shri Halsidhanath Sahakari
Karakana Ltd has been accepted by different individuals and firms
categorized into three classes as under

‘A’ Class involves the grower (farmers of agricukturist)

‘B’ Class involves the institute and non-grower

These are:-

1. Co-operative Societies
2. The belgaum District Central Co-operative Bank Ltd.
3. Karnataka State Agro –Industrias Co-operation,
Bangalor.

‘C’ Class involves the state government of karnakata.
The above said members born their share as share capital
as

Sr Member class No of Shares Share
No capital

1 A Grower 15,924 613.52

B co-operative society



2 Non-Grower 3065 60.06

3 C Government of 1
Karanataka 375.82

Total 18990
1049.40

COMPETITORS INFORMATION

The main competitors are as follows
Doodh Ganga Shakari Sakhare Karkhane, Ltd
Crashing capacity-5500 TCD
Recovery -11.5%
Sugar production -10000 Qtls (per day).
Venkateshwer Sugar Ltd
Cashing capacity -2500 TCD
Recovery -10.5%
Sugar production -3000 qtls (par day).
Renuka Sugar Ltd
Crashing capacity -10000 TCD
Recovery -11.2%



Sugar production -14000 Qtls (par day).

INFRASTRUCTURAL FACILITY

CATEEN

The management provides multi-purpose cooking range,
utensils, working capital, and installation of gas equipment free
building expenditure towards purchase of furniture. Actual
expenditure towards consumption of water, electricity and gas,
annual subsidy. the rates of foodstuffs in the canteen are fixed on
no –no profit basis. The workers who are working in the
production department are entitled for Tea free at cost while they
are on duty.

TRNSPORTATION

Up to 40 km. three transportation facilities is provided
to farmers rate structure of vehicles as per kilometres

Sr. KM Rate per Sr No KM Rate
No km per km

1 5 45.56 11 55 156.77

2 10 57.76 12 60 166.83



3 15 73.12 13 65 174.02

4 20 86.34 14 70 183.80

5 25 98.16 15 75 192.75

6 30 106.30 16 80 199.12

7 35 117.45 17 85 209.24

WATER

It is established the river Vedganga. there is
sufficient supply of water required for production process.

POWER

There is provision electricity from KPTCL. & company
generates its own power through boilers during crushing of
sugarcane.

ACHIEVEMENTS

In 1996-97 from South Indian Sugar Technologists
Association (SISTA) for best achievement award in cane
development.

FATURE GROWTH AND PROSPECTUS



To undertake such activities as are identical and conductive
to the development the society.
To inn coverage for other crops where sugarcane not grown.
To expand crushing capacity.

WORKFLOW MODEL (END TO END MODEL )



Heating 65 C->Lime +SO2
application

APPLICATION OF 7’S MODEL

OF MC, KENSEY’S



Strategic planning refer to the management processes in
organization which helps in management to determine the future
impact of change and take the currentdecisions to reach designed
future. The management literature is replace which instance of
organization which have fade stress in strategic planning but not
have been phenomenally successfully.

Consultants at the Mc.Kensy‘s company very well
known management consultancy firm the created states develop
the 7’ s frame work towards the end of 7 ‘s diagnose the causes of
organizational problems and to formulate problems for important.
The following is the 7’s frame related to the Mc. Kenny’s 7’s frame
work

According to waterman organizational change is
not simply matter of structure although structure is a significant
variable in the management of change. Again it is not a simple
relationship between strategy and structure although strategy is
also critical as put.

In their view effective organizational change may be
understood to be a complex relationship between strategy,
structure, system and style, skill, staff, and super ordinate goals.
The framework suggests that there is a multiplicity of factors that
influence an organization and ability to change and its proper
mode of change.



STRUCTURE OF ORGNIGIATION

SHARE HOLDER

BOARD OF DIRECTOR

CHAIRMAN

MANAGING DIRECTOR



SHARE SECTION

Head: - M.T. PATIL

According to by-law, the factories authorized share
capital is Rs 20 crores. Atresent the number of shareholders is
18990 and capital collected from all the shareholders. i.e. Rs
10,49,40,000/-

The membership of Shri Halsidhanath Sahakari
Karakana Ltd has been accepted by different individuals and firms
categorized into three classes as under

‘A’ Class involves the grower (farmers of agricukturist)

‘B’ Class involves the institute and non-grower

These are:-

4. Co-operative Societies
5. The belgaum District Central Co-operative Bank Ltd.



6. Karnataka State Agro –Industrias Co-operation,
Bangalor.

‘C’ Class involves the state government of karnakata.
The above said members born their share as share capital
as

Sr Member class No of Shares Share
No capital

1 A Grower 15,924 613.52

B co-operative society

2 Non-Grower 3065 60.06

3 C Government of Karanataka 1 375.82

Total 18990
1049.40

TIME OFFICE LABOUR WELFARE DEPARTMENT

NAME OF PERMA SEATION GOV CONSTR DAILY CONTR TOTA
NENT AL T U ACT L
THE WAGE
DEPT CTUAL S

Time 6 4 - - - 3 13
Office



Security 13 - - 6 - 3 22

Store 6 5 - 1 - 9 21

Civil 4 - - - - - 4

Environm 3 3 - 1 - 9 16
ent

Administ 15 3 1 5 - 6 30
rative

General 10 - - - - 3 13
A/C

Cane A/C 7 2 - 1 - 6 16

Vehicle 7 4 - - - - 11

Medical 1 - - 1 - - 2

Agricultu 28 62 - 5 2 39 136
re

Engineer 90 70 - 3 3 41 207

8 99 - - 2 38 147
Manufact
urer

TOTAL 198 252 1 23 7 157 638

HEAD: - S.G. MORE.

Time office is one of the main part of the factory
because in time office all records regarding many types of



departments and about the details of their employees are recorded
so it must require in each and every organization.

There is no special department like HRD or Personal
management in the factory time and labour welfare office is there,
in this office there is labour welfare officer & head time keeper,
shift time keeper and wage clerk is there.

WELFARE FACILITY

To take care of all the workers, the organization will
provide the some following facility those are:-

A. Bonus is 08.33%based on the
worker salary.
B. Quarter, hospital etc. facility
and allowances
C. Canteen facility
D. Promotion facility
E. Permanent employees get one
increment every year.
F. School facility to the worker
children.
G. And medical facility are available
if any accident occurs.

PURCHASE SECTION

Purchasing plays an important and significant
role in processing industry. Purchasing is tough task, which is to be
performed very carefully. It functions on the principal of “ Money



saved in purchased is money gained in sales”. Profit can also be
earned in purchasing process by the purchase manager by his
knowledge about the entire market.

STORE DEPARMENT:-

THE WORKING FLOW CHART SHOWN BELOW

In this factory the store department in
charge will be Shri Kadam sir under their the information will be
here.

Main Points:-

The store keeper will check the
supplier quantity and afterwards send to the respective
section wise. For ex.:- Cement, Belt etc After this the
material verification will be taken by under chief enginee
The store keeper will entry the
purchased material in a book in systematic manner.
The daily transactions will be
held in the books of power house main panel board.
Store department is just like a
godown because in department all materials which are
needed to the factory are stored.



The store house which contains
the 21 heads. They are follows:-

Heads :-

1. Oil and lubricants Ex :- Bearing
oil, Greece, etc being purpose machinery.
2. Manufacturing goods Ex:-
Chemical, sulphur etc uses of sugar processing.
3. Hardware Ex:- Nutbolt, chain,
MS bar etc uses of machinery maintenance.
4. Welding materials Ex:-
Welding rod, screen, black glass uses of welding purpose.
5. Drawing materials Ex:-
Ammonia paper, Dressing paper, etc machinery
maintenance of engineering department.
6. Electrical goods Ex:- Pressure
gauge, vacuum gauge, temperature gauge etc for
machinery maintenance.
7. Tools and tackles Ex:- Spaner,
screw driver etc.
8. Transmission of goods Ex:-
Bearing oil, oil seal, bearing glue
9. Iron and steel These are used
for machinery maintenance of engineering department.
10. Building materials Ex:-
Cement, steel, stone crystal, sand etc uses of concrete
foundation for machinery.



11. Machinery and machine spare
Ex:- Bearing, coupling, nutbolt etc.
12. Pipe and pipe fitting Ex:-
pipe, bend, flang etc
13. Furniture and fixtures Ex:-
Chairs, tables etc
14. Stationary Ex:- Log book ,
indent book, bucket etc.
15. Rubber goods Ex:- Bush,
rubber belt, wheel, ordinary material.
16. Library Ex:- Books.
17. Vehcle spare
18. Medical Ex:- Druds, tablets,
syringe, salines etc.
19. Printing Ex:- Log, book,
store recipt book etc..
20. Computer spare Ex:-
Ribbon, cartridge, pen drive etc.

SALES SECTION

The main product of H.S.S.K.Ltd is sugar and
by-Bagasses, Molasses, and press mud. These all are sold by
calling tenders. Because the factory has no right to sale these
products directly in the open market. The Office Superintendent
does this work and sales officer with the help of sugar directors
Bangalore Central Govt. fixes the selling quantity.

There are two types of sales:-

A. Free sale--------- 90% of the
produced sugar.



B. Levy sale--------10% of the
produced sugar.

The factories’ by-products like,

A. Bagasses-------used in paper
industry.
B. Molasses-------used in
distilleries.
C. Press-Mud-----used in
fertilizer.

SECURITY SECTION
There are 22 security guards and their function are,
1) Checking in-out persons and
vehicles.
2) Protecting and securing proper
and best use of assets of the factory.
3) Maintaining the below
mentioned registers,
A. Attendance registers.
B. Visitors register.
C. Vehicle register.
D. Workers get pass
E. Bagasse, Molasses, Press-Mud
get pass.

Cane Development Section



Department-Structure

Chief of C.D.O
For Manager

C.D.O
Assistants

AssistantC.D.O
Workers

Cane-Inspector

Field-Offices

The duty of C.D.O (Cane Development Officer) is
to develop the growth of sugarcane by providing training and
seeds to the farmers.



Cane development process:-

Providing training to the
farmers.
Providing seeds on loan basis.
Seeds are developed in the firm
and distributed to farmers.
Early detection and pests and
crop decreases and providing solution

Cane-Verities:-

Karnataka Hybrid Seeds.
Coimbatore
Coimbatore Cadlar
Coimbatore Melattur.

ENGINEERING-DEPARTMENT

HEAD:-M Umapati

It is very important department to any factory,
because engineer only have capacity to run the production
smoothly. In this factory this section has217 employee The main
functions of this section as follows,

1. To take of all the divisions like
boiler, mill, electricity etc.



2. To ensure that all machineries
are in good condition.
3. They inform board of
management about scares materials and make them to
purchase that material.
4. The repair the broken down
machines and make them to work properly.

Department-Structure

Assistant Electrical Environmental Work-Shop
Civil

Engineer Engineer Engineer Engineer
Engineer

Supervisor Supervisor Supervisor Supervisor
Supervisor



Worker Worker Worker Worker
worker

During off season their functions are,

1. Maintenance of all the
machineries currently.
2. Overhauling of the machineries.
3. Machinery erection.

PRODUCTION DEPARTMENT



The Chief Engineer, chief
chemist and Civil engineer from the structure of the
production
The chief engineers work is to
technical and mechanical works and improve them to
increase the production capacity.
The chief chemist work is to
instruct how where & when to use chemical in the production
process.
The civil engineers work is to
plan where to situate the machineries and also they advise
useful suggestions to make the production very easy and
smooth.

COMPARATIVE STUDY OF PRODUCTION OF SUGAR

Sr. YEAR SHARE SUGARCANE SUGAR RECOVERY
No

CAPITAL CRUSHING PRODUCTION RATE



A/C (In MT) (In qtl)

1 151480 10.71
2004-05 837.13 141430.852

2 239950 11.40
2005-06 972.40 210556.428

3 275240 11.41
2006-07 1049.40 241130.000

4 132920 11.82
2007-08 1125.40 113345.000

Cane Yard:- In this collect
sugarcane from the farmers.
Cane weight:- In this they
measure sugarcane including vehicle after unloading the
cane. they measure vehicle weight and they deduct that
weight in the total weight. Thus they get the actual weight of
the cane. They prepare 3 weight receipts with the help of
computers, one goes to cane a/c, another goes to farmers
and third one goes to transfot office.



Cane Carrier:- The unloaded
cane is put down in carrier and carrier is driven by the motor
It is concerned to cane cutter.
Cane cutter:- there are two
types cane cutter,
1) 1st cutter---In this cane cuts
into 12 to 20 inches.
2) 2nd cutter---In this cane cuts
into 12 to 20 inches.

After cutting cane is forwarded in fibriser. The fidrised cane
is taken into mill section.

Mill Section: - In this section,
the cane is squeezed. Whatever the quantity of juice quizzed
in the mill is pumped into clarification house. At this time
they get the by- product called bagasse.
Dorr:- The juice has come by-
product like press mud and bagasse before it is taken stored
in the Dorr. After storing in the Dorr these are separated and
move down ward.
Evaporators:- After
classification of the juice stored in Dorr. Then it is taken in
to Evaporators to evaporate that the water evaporation juice
is taken into pan section.
Pan Section:- In this section
again syrup (juice) is boiled or heated by the steam. In this
section they remove water, which is mixed in the syrup.
After that make crystals.



Centrifugals:- This is last
process in producing sugar in this section factory gets a
main by-product molasses and stores it in storage tank.

They produce mainly 3 types of
sugar,
1) L30: This is big crystal.
2) L30: This is medium crystal.
3) L20: This is small crystal.

GODOWN

After packing the sugar in the gunny, they are stored in the
godown. In the godown they maintain register consisting the
records of stock, dispatch and closing balance.Factory has 4 large
God owns and their capacity is given below,

STORE CSPSCITY (In qtl bags)
HOUSE

2 1lakhs

2 70000



SKILL

Skill is the distinctive capabilities or competence of the
organization as a whole, Skills developed are,

Product quality awareness.
Time management.
Result orientation.
Dedication.

This type of training also known as job instruction training is
the most commonly used method. Under this method, the
individual is placed on a regular job though the skill necessary to
perform that job. The trainee learns under the supervision of a
qualified worker of instructor. On-the-job training has the
advantage of giving firsthand knowledge and experience under the
actual working condition. While the trainee learns how to perform
job, he is also a regular worker rendering the services for which he
paid. The problem of transfer of trainee is also minimized as the
person learns on-the –job training methods includes job rotations,
coaching job instruction or training through step-by-step and
committee assignment.

STYLE

Style includes two things, one management style and
organizational culture. Management style the way in which the
managerial personnel behave and collectively spend their time to
achieve organizational goals, it consists the way of lending.
motivating and the style of leadership in the management. Here



they usually use authoritative style means top to down decision
making parameter pertaining to day-to-day operation but they
allow subordinates to participate in the decisions affecting their
interest and ask their suggestions for their decisions. This makes
organization more effective.

SRTATEGY

Strategy means the actions which a company plans in to or
anticipates of changes in its external environment. In other words it
is the determination of basis long term objectives or courses of
action and allocation of resources to achieve the organizational
goals’. They are as follows,

Waste Elimination S.H.S.S.K. Ltd.
Produces molasses and sell it to liquor industries. And it uses
biogases boilers in order to generate energy for factory during
crushing process.
Cost Reduction: They are
reducing the intake of employees and reducing the number of
employees in order to reduce cost. They are not depending on
K.P.T.C.L. for power while crushing process is carrying on. They
produce energy by boilers.

SYSTEM

A system includes formal and informal
procedures that support the strategy and structure. In other words,
it is the processes and flows that shown how an company gets its
day-to-day things done. This includes the procedures and the
routines that will characterized how important work to be done. i.e.



financial system, hiring, promotion and performance appraisal
system and information system etc.

PRODUCTION PROCESS:-

Pressing of sugarcane to extract
the juice.
Boiling the juice until it begins
to thicken and sugar begins to crystallizes.
Spinning the crystals in a
centrifuge to remove the syrup, producing raw
sugar.
Shipping the raw sugar to a
refinery where it is washed and filtered to remove
remaining non-sugar ingredients and color crystallizing,
and drying packing the refined sugar.

INVENTORY CONTROL SYSTEM

Here in stored department the inventory control used FIFO.
Here the method FIFO is appropriate because the sugarcane is not
a durable commodity it is better to crush the sugarcane freshly. It
is not stored for a long time because it turned in too dry sooner.

STAFF

Staffs refer to the people in the enterprise and their
socialization into the socialiseational culture. Productive high
performing employees are the companies



most valuable assets. The company follows a progressive policy
taking keen interest in its personnel and well beings and progress,
which builds a strong sense of belongingness.

Technical Department:-
A. Machine shop and maintenance
quality assurance.
B. Laboratory
C. Tool room
D. Manufacturing engineering
departments
E. Production planning and control
F. Research and development

Non-Technical
Department:-
A. Administration
B. Clerical

DUTIES AND RESPONSIBILITIES:-

Technical Staff:-

Operators/Technicians:-
Carry out the work as per the
instruction and job allocation.
In process inspection wherever
applicable.



Maintenance in charge:-
1. Planning of preventing
maintenance.
2. Attending breaks down
maintenance.
3. Taking corrective action for
reduce break down.
4. Planning spares and raising
purchase intend.
5. Maintaining the quality record.

SHARED VALUE

There are values shares by the members of the organization.
It is the super ordinate goal that is centrally responsible for
providing a core mission to the organization Used as an umbrella,
which embraces all the other managerial activities. In short it says
what does the organization stands for and what is believes in. A
devoted and sincere contribution to the mankind through the
various business activities of the company and compromise to the
quality.

1. Continues growth is the main
force behind the achievement of S.H.S.S.K ltd.
2. Customer satisfaction through
quality services.
3. Quick decision and execution
with speed.



SWOT ANNALYSIS OF THE COMPANY



STRENGHTS

Produces good quality of sugar.

It’s near the river of the
Vedganga so there is availability of the sufficient water.
SHSSK is not dependent of
KPTCL for supply of power while production is carrying on the
generator through rower.

WEAKNESS:-

Since it is agro based industry
monsoon effects its production.
Lack of good administration.
Lack of infrastructure.
Backward technology and
complexity

OPPORTUNITIES:-

Possibility of willing
co-operation by bank.
Arrangement for KPTCL grid.

THREATS:-

Competition from the domestic
player.



Due to unfavorable Govt. Polices,
factory has to sell sugar below its production cost.

RESEA RCH
ON
FI NA NCI A L
A NA L Y SI



.

NEED FOR THE STUDY

The study has been conducted for gaining practical knowledge
about Ratio analysis of Shri Halasidhnath Sahakari Sakhar
Karkhana. Ltd.
The study is undertaken as a part of the MBA curriculum from
1st July 2010 to 20th August 2010 in the form of summer in
plant training for the fulfillment of the requirement of MBA
degree.
TITLE OF THE PROJECT

“This project “A Study on RATIO ANALYSIS of Halsidhanath
Sahakari Sakhar Karkhana Ltd” is considered as an analytical
research

OBJECTIVES

To study the profitability of
Halsidhanath Sahakari Sakhar Karkhana Ltd. Nipani.

To study the liquidity position.

To find activity turnover



To study operating efficiency of
Halsidhanath Sahakari Sakhar Karkhana Ltd Nipani.

SCOPE OF THE STUDY

The scope of the study is identified after and during the study
is conducted. The main scope of the study was to put into
practical the theoretical aspect of the study into real life work
experience. The study of Ratio analysis further the study is
based on last 5 years Annual Reports Shri Halasidhnath
Sahakari Sakhar Karkhana. Ltd.
LIMITATIONS OF THE STUDY

The study duration (summer in plant) is short.
The analysis is limited to just five years of data study (from year
2005 to year 2009) for financial analysis.
Limited interaction with the concerned heads due to their busy

schedule.

METHDOLOGY

In preparing of this project the information collected from the
following sources.

Primary data:

The Primary data has been collected from Personal Interaction with
Finance manager Mrs.S.M.Siragave and other staff members.

Secondary data:

The major source of data for this project was collected through

Balance sheet of SSHSKL
Profit and loss account of 5 year period from 2005-2009



SAMPLING DESIGN

Sampling unit : Financial Statements.
Sampling Size : Last five years financial statements.

Tools Used: MS-Excel has been used for calculations.

THEORETICAL FRAME WORK

INTRODCTION:- Finance is life blood of the business. The
financial management is the study about the process of procuring
and judicious use of financial resources is a view to maximize the
value of the firm. There by the value of the owners i.e. the
example of equity share holders in a company is maximized. The
traditional view of financial management looks into the following
function that a finance manager of a business firm will perform.

1. Arrangement of short-term and
long-term funds from the financial institutions.



2. Mobilization of funds through
financial instruments like equity shares, bond Preference shares,
debentures etc.
3. Orientation of finance with the
accounting function and compliance of legal provisions relating
to funds procurement, use and distribution. With increase in
complexity of modern business situation, the role of the
financial manager is not just confirmed to procurement of
funds, but his area of functioning is extended to judicious and
efficient use of funds available to the firm, keeping in view the
objectives of the firm and expectations of providers of funds.

DIFINATION:-

Financial Management has been defined differently by different
scholars.

1) Howard and Upton:-
“Financial Management is the application of the planning
and control function to the finance functions”
2) Bringham:- “Financial
Management is an area of financial decision making
harmonizing, individual motives and enterprise goals”

MEANING OF RATIOS

Financial Statement contains a wealth of information which, if
properly analyzed and interpreted, can provide valuable insights
into a firm’s performance and position. Analysis Soft financial
statements is of interest to (short terms well as long term)



investors, security analysts, managers, and others financial
statement analysis may be done for a variety of purpose, which
may range from a simple analysis of the short -term liquidity
position of the firm to a comprehensive assessment of the
strengths and weaknesses of the firm in various areas.

The principal tool of financial statement
analysis is financial ratio analysis. An absolute figure does not
convey much meaning. Ti, there for, become necessary to study a
certain figure in relation to some other relevant figure to arrive at
certain conclusion e.g. If we give the figure of only gross profit
earned by certain firm, we cannot say

whether the gross profit is heavy, reasonable or sufficient
for this purpose we must take into consideration the figure of sales.
Thus, the gross profit to is required to be studied in relation to
the sales to decide the percentage of gross profit to sale on the
basis of percentage we can conclude whether the gross profit
earned is reasonable or otherwise. Thus the relationship between
the two figures expressed mathematically is called a ratio.

OBJECTIVES OF RATIO ANALYSIS:-

The study of financial statement
of any corporate will help in knowing its present and future
earning capacity.
The study of financial resources
can help in knowing whether a company can pay its long-term
or short-term liabilities.



It’s very use full to know how
much working capital is employed in business and same
effectively used.
It’s use full to measure earning
capacity and its comparison to other competitive units.
Help full to known marginal
efficiency.
Use full to future planning.

INTERPRETATION OF RATIOS

The benefit of the ratio analysis depends to great extent
upon their correct interpretation. Interpretation requires
considerable ability on the part of the analyst. He has to decide
whether the relationship disclosed by the ratio is satisfactory or not.
He has to base his decision on experience, or on comparison may
be interpreted in any one of the following ways.

1) BASED ON SINGLE RATIO
AND GROUP RATIOS:-

The interpretation may be based on individual ratio e.g. If current
ratio persistently falls and goes below one, it can be interpreted as
an indication of short-term insolvency. However, one cannot get
the position corrected by

studying individual ratio in isolation. It is therefore a common
practice to study

and interpret a set of several related ratios e.g. for short-term
solvency both the



ratios, whose significance is not fully understood , are made more
meaningful

by the computing and study of additional relevant ratios.

2) COMPARISON OVERTIME:-

Ratio analysis is primarily useful for studying trends,
indicating rise, decline or stability over a period of time. For this
purpose, ratios by themselves are of no particular significance. For
reveling such trends, the same ratio or a group of ratios is studied
over period of years. Thus the movements in the ratios, rather than
the ratios themselves, are important.

3) INTER-FIRM
COMPARISON:-

Ratios of undertakings are compared with the respective
ratios of other firm in the same industry and with the industry on
average An immense benefit is likely to from such comparison as
the concerns similarly situated are as a matter of fact , “to sail in
the same boat.”

PROCEDURE OF
ANALYSIS:-

First or all the depth, object and extent of analysis must be
determined, so that necessary information can collect. The analysis
is required to go through various financial statements of the
business and collect other required information from the
management. The analysis is required to rearrange the data given



in the financial statements in a manner, which will help the to
analysis the statements easily and conveniently. After analyzing the
statement the interpretation is made and the conclusions are drawn.

TYPES OF RATIOS:-
Classification of ratios is done in two ways.
A. According to nature of items.
B. According to purpose of the
function.

A) According to nature of items:-

1) Balance Sheet Ratios:- The
ratios exhibiting the relationship between two item or
group of items in the balance sheet e.r. Relation between
current Assets and Current Liabilities.
2) Revenue Statement or Profit and
loss account ratios:- The ratios disclosing the relationship
between two items or group of items in the profit and loss
account it. Relationship between Sales and Gross profit.
3) Inter Statement or Composite
Ratio:- The ratios indicating the relationship of certain
items in the balance sheet with some figures in the
revenue statements i.e. Net Profit and Capital or Sales
and Fixed Assets.
B) Functional Classification:-

Liquidity Ratios; - These ratios
measure the liquid position of the enterprise i.e. whether
the current assets to pay current liabilities as and when



they mature. Thus, these ratios indicates short-term
solvency of the business

Leverage Ratios; - They
indicate the relative use of debt and equity in financing
assets of the firm. The extent, to which the practice of
trading on equity can be carried on safety, can be known
through these ratios.

Activity Ratios:- These ratios
measure the efficiency in the employment of funds in the
business operations. They respect the company’s level of
activities in relation to its turnover.

Profitability Ratios:- There
ratios measure overall performance. And profits earning
Capacity of the business. They reveal the effect of the
business transaction on the profit position of the
enterprise.

PROFITABILITY RATIO:-

1) Gross Profit Ratio:- This ratio
reflects the efficiency with which the management produces
each unit product. The ratio is calculated as under:

Gross Profit Ratio= Profit

Sales

It is the ratio which is most commonly employed by accountants
for comparing the earnings of business for one period with those
of other or earnings of one concern with of another in the same



industry. It indicates the degree to which selling prices goods per
unit may decline without in losses on operations for the firm.

2) Net Profit Ratio:-Net Profit is that proportion of net sales
which remains to the owners or the shareholders after all costs.
Charges and expenses including income-tax have been deducted.
It is calculated as under.

Net profit (after tax)

Sales

It differs from the ratio of operating profit is to net sales in as
much as it is calculated after adding non-operating incomes, like
interest, dividends on investment etc. To operating profit and
deducting non-operating expenses such as loss on sale of old
assets, provisions for legal damages etc. from such profits.

LIQUIDITY/SOLVENCY RATIO:-

1) Current Ratio or working
capital Ratio or 2:1 Ratio:- It is a ratio of current assets to
current liabilities. The ratio is calculated by dividing the current
assets by the current liabilities.

Current Assets

Current liabilities

Certain authorities have suggested that in order to ensure solvency
of a concern. Current assets should be at least twice the liabilities
and therefore. his ration is known as 2:1 ratio.



2) Liquid Ratio or Acid Test Ratio
or Quick Ratio:- The current Ratio fails to serve as a realistic
guide to the solvency of the concern, as the major portion on
the current assets may comprise of such assets which cannot
be converted immediately cash (e.g. stock) to meet the
immediate liabilities. It this ratio is 1:1, it is considered that all
claims will be met when they arise.

Quick / Liquid Assets

Current liabilities

ACTIVITY RATIO

1) Inventory Turnover Ratio:- The
term “Inventory Turnover “ refers to the number of times in a
year inventories are sold and replaced.

Inventory Turnover Ratio:- Cost of Goods Sold or sales

Average Inventory at cost

It is Indication of the velocity with which merchandize moves
through the business. This is a test of inventory to discover
possible trouble in the form of over stocking or over valuation. It
assists the financial manager in evaluating inventory policy.

2) Operating Ratio:- The ratio
shows the percentage of net sales i.e. observed by the cost of
goods sold operating. Naturally higher the ratio, the less
favorable it is. Because it would leave a small margin to meet
interest, dividends and other corporate needs.



Operating Ratio = Cost Goods Sold + Operating Expenses

Net Sales

3) Fixed Assets Turnover
Ratio:-The ratio measures the efficiency in the utilization of
fixed assets. This ratio indicates whether the fixed assets are
being fully unitized A high ratio is an index of the vestment in
fixed asset. Normally standard ratio taken as five times.

Fixed Assets Turnover Ratio = Sales
Net Fixed Assets

4) Total Assets Turnover Ratio:-
The ratio is arrived at by dividing sales by the total assets i.e.
Sales
Total Assets

The ratio indicates the sales generated per rupee of investment in
total assets. Thus, it aims to point out the efficiency or inefficiency
in the used of total assets or capital employed. Increase in ratio
indicates that more revenue is generated per rupee of total
investment in assets.

LEAVERGE RATIO:-



1) Debt Equity Ratio:- It measure
of the relative claims of creditors and owners against the assets
of the firm.

Total Debts

Net worth owner’s Equity

The term “total debt” includes all debts i. e. long – term, short
term mortgages. Bills, debentures etc. whereas the term net worth
means equity share capital, reserves and surplus i.e. proprietor’s.
Funds or equity 1:1 ratio is acceptable.

2) Fixed Assets to worth Ratio:-

Fixed assets

Net worth

It indicates that the company has used short term funds for
acquiring fixed assets, which policy is not desirable. To the extent
fixed assets exceed the amount of capital and reserves, the
working capital are depleted. When the amount of proprietor’s
fund exceeds the value of fixed Assets i.e. when the percentage is
less than 100, a part of the working capital is supplies by the
shareholders. Provided that there are no other non-current assets.



DATA ANALIYSIS AND
INTERPRETATION

1) PROFITABILITY RATIO:-

Gross Profit

Gross Profit Ratio = X 100

Sales

YEAR GROSS PROFIT SALES GROSS PROFIT
RATIO

23.26
7,00,15,301.58
2004-05 301002504.06

13.66
41317359.41
2005-06 302304793.75



11.02
3,79,03,469.81
2006-07 337985566.07

17.44
6,09,91,621.57
2007-08 349546301.04

12.63
5,44,14,256.14
2008-09 430543494.12

INTERPRETATION:-
The Gross-Profit Margin ratio of SHSSKL has ups and down
in these five years period. The gross profit measures the relation
between the sales and profits. The gross-profit ratio in the year
2004-05 is 23.26 and next year 2005-06 is 13.66 and in 2006-07
its 11.22 then in 2008its become 17.44 and in 2008-09 it is 12.63.

C) Net Profit Margin Ratio:-
Net Profit

Net Profit Ratio = X 100

Sales

YEAR NET PROFIT SALES GROSS-NET
RATIO



2004-05 14569011.39 301002504.06 4.84

2005-06 4053781.26 302304793.75 1.34

2006-07 1179916.79 337985566.07 0.34

2007-08 2178816.70 349546301.04 0.62

2008-09 1653143.88 430543494.12 0.38

INTERPRETATION
The net profit is the indicative of the management’s
ability to operate the business with sufficient success. In the above
bar diagram it shows that the net profit ratio of SHSSKL has
increased 4.84 in 2004-05 but it decreased in the next years 1.34



in 2004-05 and it again decreased in 2006-07.then it increased
0.62 and it again decreased 0.38.in 2008-09.

LIQUIDITY RATIO
CURRENT RATIO:-

Current Ratio = Current Assets

Current Liabilities

YEAR Current Assets Current RATIO
Liabilities

308321871.3 454294589.7 0.67

2004-05

265422636.1 563620481.6 0.47

2005-06

875637598.7 623087336.2 1.40

2006-07

446111012.4 565628200.9 0.78

2007-08

471836449.8 542837550.5 0.86

2008-09



S

INTERPRETATION:-

An ideal current ratio is 2: 1 Thus 2 is the
considered as a safe margin from the above diagram it determines
that the firm has safe margin in1.4 2006-07 and in 2004-06 it has
0.67&0.47 moreover it has not safe margin 2007-09 e.i to 0.78&
0.86

Liquidity Ratio
Liquidity Ratio = Liquid Assets

Liquid Liabilities

Liquid Assets= Current Assets-Inventories

Liquid-Liabilities = Current Liabilities - Bank-overdraft

Years Liquid assets Liquid Ratio
Liabilities
2004-2005 110024781.8 454294589.7 0.24

2005-2006 37885949.4 563620481.6 0.067

2006-2007 496655612.5 623087336.2 0.79

2007-2008 102195141.3 565628200.9 0.18

2008-2009 163116368.5 542837550.5 0.30



INTERPRETATION:-

Usually, a high acid test ratio is an indication of that firm’
s better liquidity position. From the above table it determines that
the firm has 0.24 &0.067 in the year 2004-06 and it increased 0.79
in 2006-07 and it again decreased 0.18 in 2007-08 then again
raised0.30 in 2008-09

ACTIVITY RATIO

INVENTORY TURN-OVER RATIO

Sales
Inventory Turn-Over ratio=

Average Inventory

Opening-Stock + Closing-Stock

Average Inventory =

2

Years Average Inventory Sales Inventory
Turn-Over ratio

192353685.5 1.56
2004-2005 301002504.06



2005-2006 234674943.5 1.28
302304793.75

2006-2007 324789674.5 1.04
337985566.07

2007-2008 342085995.0 1.02
349546301.04

2008-2009 305513910.0 1.40
430543494.12

INTERPRETATION: -
This means that the inventory in the first year has been sold1.56
very slow in 2004-05 And it again increase in 2005-08 e.i 1.28,
1.04, 1.02.and in last year it again decreased 1.4 in 2008-09

FIXED ASSETS TURN-OVER
RATIO
Sales



Fixed assets turn-over ratio =
Fixed-Assets

YEARS SALES FIXED-ASSETS FIXED ASSETS
TURN-OVER
RATIO

2004-05 301002504.06 350064970.91 0.85

2005-06 302304793.75 361712835.66 0.83

2006-07 337985566.07 363487965.66 0.92

2007-08 349546301.04 371470849.66 0.94

2008-09 430543494.12 647506096.70 0.66

INTERPRETATION:-

The ratio indicates the extent to which the investment in
fixed assets contributed towards to sales. As the figure shows, in
2004-05 the fixed assets turnover ratio is 0.85 and it increase in
the next 3years continuously with 0.83, 0.92, 0.94. And it again
decreases in 2008-09 e.i to 0.66.



CURRENT ASSETS
TURN-OVER RATIO
Sales

Current assets turn-over ratio =
Current
Assets

YEARS SALES CURRENT CURRENT ASSETS
ASSETS TURN-OVER
RATIO
2004-2005 301002504.06 308321871.3 0.97

2005-2006 302304793.75 265422636.1 1.13

2006-2007 337985566.07 875637598.7 0.38

2007-2008 349546301.04 446111012.4 0.78

2008-2009 430543494.12 471836449.8 0.91

INTERPRETATION:-

The current assets turnover ratio measures that how quickly
the short term obligations can be met. In the following graph it is
shown that there is increasing0.97, 1.13 in 2004-06 current assets



turnover ratio. And it falls0.38 in 2006-07 and it increase
slightly0.78 to 0.91 in 2007-09.

Operating-Efficiency Ratio:-

1) Direct Material cost to sales
= Direct Material cost *100
Net-sales

YEARS Direct SALES Percentage (%)
Material
2004-2005 200389076.8 301002504.06 66.57

2005-2006 219224160.5 302304793.75 72.51

2006-2007 241453980.32 337985566.07 71.43

2007-2008 224546979.08 349546301.04 64.23

2008-2009 309403524.5 430543494.12 71.86

INTERPRETATION:- Direct Material cost to sales should be low
enough to leave portion of sales to give fair return to investors
from the above table show that 66.57 & 64.23 in the year 2004-05



and 2007-08 it give the fair to the investors where as72.51, 71.43
and 71.86. 2005-07and 2008-09 are not up to mark able .

2) Direct Labour cost to sales
= Direct Labour cost *100

Net-sales

YEARS Direct SALES Percentage (%)
Labour
2004-2005 14885365.90 301002504.06 4.94

2005-2006 16958271.40 302304793.75 5.60

2006-2007 27661900.24 337985566.07 8.18

2007-2008 34862365.60 349546301.04 9.97

2008-2009 35562670.05 430543494.12 8.25

INTERPRETATION:- From the above table shows that the cost of
direct labour of the firm in the year of 2004-05 is 4.94% where it
compare to the next 3year it increase5.60, 8.18 & 9.97. Slithightlliy.
And it again decreases in the year of 2008-09. It shows that the
firm efficient utilized the labour in the year of 2004-05 and
2005-06.

Factory Overhead to Sales:-



3) Factory Overhead to Sales =
Factory Overhead cost *100

Net-sales

YEARS Factory Net-SALES Percentage (%)
Overhead
2004-2005 15712759.79 301002504.06 5.22

2005-2006 25581554.35 302304793.75 8.46

2006-2007 30966215.70 337985566.07 9.16

2007-2008 32038895.00 349546301.04 9.16

2008-2009 29269482.40 430543494.12 6.79

INTERPRETATION: - From the above table shows that the cost of
manufacturing overhead of the firm in the year of 2004-05 is
5.22% where it compare to the next 3year it increase 8.46,9.16,&
9.16 in 2005-08. And it again decreases 6.79 in the year of
2008-09.



Findings
Gross profit and net profits are decreased during the period
of study, which indicates that firm’s inefficient management

Gross profit and net profits are increased during the period
of 2004-05 which indicates that firm’s efficient management
over the five years. It shows that the firm had not sufficient
liquid assets.

The inventory of the firm in the first year has been sold very
slow. And there is an increase in the movement of the
inventories but it slightly decreased in the last year. This may
be a sign not good to the firm.

The fixed assets turnover ratio
of the firm has in 2004-05 the ratio is 0.85 and it increase in



the next 3years continuously and it again decrease in
2008-09.
The current assets turnover
ratio is increasing during the period of 2004-06 and again it
decrease in the period of 2006-07. And again increase in
next two year slithightlliy.
Direct Material cost ratio of the
firm is has less material cost during the period of 2004-05 &
2007-08 and it raised in the year of 2005-06 and 2008-09.

The cost of direct labour of the
firm in the year of 2004-05 is 4.94%and it increasing
slithightlliy up to 2007-08 and it decrease in the next year.
The cost of manufacturing
overhead of the firm in the year of 2004-05 is 5.22% where it
compare to the next 3year it increase rapidly.



SUGGESTIONS

The profit Of the Company Is not in a good Position For That
company has to Take Alternative Actions such As
Increasing in Procurement in sugarcane ,
Production, and Control in Expenses Like,
Administrative, selling Etc.
The firms have low current ratio so it should increase its
current ratio where it can meet its short term obligation
smoothly.



over the five years. So I suggested that the firm maintain
proper liquid funds like cash and bank balance.
It should enhance its employee’s efficiency, more training
needed to its employees in order to increase its production
capacity and minimize mistakes while performing the tasks,
also more safety precaution need to implement to the
employees who directly working on sugar production
process

CONCLUSION

This project of Ratio analysis in the production concern is not
merely a work of the project. But a brief knowledge and experience
of that how to analyze the financial performance of the firm. The
study undertaken has brought in to the light of the following
conclusions. According to this project I came to know that from the



analysis of financial statements it is clear that SHSSK Ltd. Have
been incurring loss during the period of study. So the firm should
focus on getting of profits in the coming years by taking care
internal as well as external factors. And with regard to resources,
the firm is take utilization of the assets properly. And also the firm
has a maintained low inventory.

PROVISIONAL BALANCE SHEET AS AT 31st MARCH, 2005

LIABILITY AMOUNT ASSETS AMOUNT

SOURCES OF FUNDS FIXED ASSETS

Share capital 88846018.59 Gross block 350064970.



09

Reserves and surplus 274191573.3 Less:
4 Depreciation

Net Block 350064970.
09

Investment 6975000.00

CURRENT LIABILITIES CURRENT ASSETS

Working capital 279908387.0 Inventories 198297089.
8 91

Statuary deposits 4508406.18 Cash in hand 374639.72

Deposit 7217637.93 Cash at bank 2879292.96

Suspense 14373128.04 Advances 60423970.9
1

Sundries 84028.25 Other assets 46346877.8
0

Other Sundries 3239794.41 Profit &loss 152726340.
Account 15

loan funds 118309456.4
7

Cane bills and other 26653751.52
payables

TOTAL 818088181.8 TOTAL 818088181.
1 81

TRADING AND PROFIT & LOSS ACCOUNT AS ON 31-3-2005



Expenditure AMOUNT Incomes AMOUNT

Opening stock 201471850.0 Sugar sales 270160956.1
0 6

Other sales 30841547.90

Cost of production 212750813.4 Closing stock 183235461.0
8 0

Gross profit 70015301.58

Total 484237965.0 Total
6 484237965.0
6

Establishment charges 7247138.80 By gross profit 70015301.58

Travelling expenses 661534.60 Other income 2071499.26

Exp .on vehicle 762054.92

Printing and 575316.06
stationery

Meetings &AGM 299139.58
Expenses

Interest &Insurance 35111966.31
charges

Govt Tax & Other 121490.67

Social Expenses’ 198765.78

Rent rates & Taxes 1257774.92

Other management 1001874.80
Expenses

Bonus for the year 1600000.00
2005

Depreciation 8680733.00



Net profit 14569011.39

TOTAL 72086800.84 TOTAL 72086800.84

PROVISIONAL BALANCE SHEET AS AT 31st MARCH, 2006

LIABILITY AMOUNT ASSETS AMOUNT

SOURCES OF FUNDS FIXED ASSETS

Share capital 97239684.00 Gross block 361712835.6
6

Reserves and surplus 270171150.6 Less:
0 Depreciation

LOAN FUNDS Net Block 361712835.6
6

Loans Investment 587259.00

CURRENT LIABILITIES CURRENT ASSETS

Working capital 321283573.1 Inventories 303308585.5
6 3

Statuary deposits 10513761.18 Cash in hand 717669.52

Deposit 7539531.49 Cash at bank 16549209.47

suspense 29044436.06 Advances 49015066.50

Sundries 120071494.2 Other assets 37433717.42
9

Other Sundries 9966024.46 Profit &loss 161706973.2
Account 3



Cane bills and other 65201661.09
payables

TOTAL 931031316.3 TOTAL 931031316.3
3 3

TRADING AND PROFIT & LOSS ACCOUNT AS ON 31-3-2006

Expenditure AMOUNT Incomes AMOUNT

Opening stock 182458909.0 Sugar sales 281761927.5
0 0

Other sales 205428665.2
5

Cost of production 365419503.3 Closing stock 286890978.0
4 0

Gross profit 41317359.41

Total 589195771.7 Total 589195771.7
5 5

Establishment charges 8198563.96 By gross profit 41317359.41

Travelling expenses 487622.01 Other income 11971545.7

Exp .on vehicle 1547647.76

Printing and 683769.76


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