Project on Ratio Analysis of Nirani Sugar Limited

Description
Ratio Analysis is one of the techniques of financial analysis where ratios are used as a yardstick for evaluating the financial condition and performance of a firm.

Ratio Analysis at NSL
EXECUTIVE SUMMARY
Ratio Analysis is one of the techniques of financial analysis where ratios are used as a
yardstick for evaluating the financial condition and performance of a firm. Analysis and
interpretation of various accounting ratios gives a better understanding of financial
condition and performance of firm. Trend ratios indicate the direction of change in the
performance – improvement, deterioration or constancy- over the year.
Objectives of the study:
. To help the management in its planning and forecasting activities.
!. To evaluate operational efficiency, liquidity, and solvency of "#$.
%. To help the management in having effective control over the activities of
different departments.
&. To compare the previous five years and present year performance of the
company.
'. To give suggestion and recommendation based on the study.
(or the study "irani sugars $td, is considered. The ratio analysis is done using the
)ncome statements and *alance #heets of the company between !++' to !++,.
-ata )nterpretation on trend ratio analysis is carried out at "#$ at .ulali cross Tq/
0udhol -ist/ *agalkot .arnataka #tate. (or study, of five years is considered and
compared it1s performance over the period of five years. (or result analysis and 0# 23cel
#oftware package are used. (rom the analysis, ) am able to indicate following finding of
the firm
. (rom the current ratio it is found that the ratio is not satisfactory because the 4
increase in current assets is less than the 4 increase in current liabilities during the
year !++'-!++,.The highest ratio recorded is %.+& in !++' and the lowest ratio
recorded is +.&! in the year !++5.And less than the standard ratio.
!. (rom the gross profit ratio it is found that the ratio is satisfactory during the last
three years from !++5 to !++,. The highest ratio recorded in the year !++6 is
!.7' and the lowest ratio recorded is +. in the year !++'.
%. (rom the operating profit ratio it is found that the ratio is highly satisfactory
during the considered financial years. The highest ratio recorded is ++.+6 in the
year !++5 and the lowest is 77.'7 in the year !++&.
Ratio Analysis at NSL
(inally study concluded by giving some suggestion in view of improving
performance and efficiency of the company.
Ratio Analysis at NSL
INTRODUCTION
Ratio analysis is a technique of analy8ing the financial statement of industrial
concerns. "ow a day this technique is sophisticated and is commonly used in business
concerns. Ratio analysis is not an end but it is only means of better understanding of
financial strength and and weakness of a firm.
Ratio analysis is one of the most powerful tools of financial analysis which helps
in analy8ing and interpreting the health of the firm. Ratio1s are proved as the basic
instrument in the control process and act as back bone in schemes of the business
forecast.
ith the he!" of #$tio %e c$& dete#'i&e
? The ability of the firm to meet its current obligation.
? The limit or e3tent to which the firm has used its borrowed funds.
? The efficiency with which the firm is utili8ing in generating sales revenue.
? The operating efficiency and performance of the company .
C!$ssific$tio& of R$tios
Ratios can be classified into different categories depending upon the basis of
classification.
I( TRADITIONA) C)ASSI*ICATION
Traditional 9lassification has been on the basis of financial statements, on which
ratio may be classified as follows.
. :rofit ; $oss account ratios.
2.g. <ross :rofit Ratio, "et :rofit Ratio, =perating Ratio etc
!.*alance sheet ratio.
2.g. 9urrent Ratio, -ebt 2quity Ratio, >orking 9apital Ratio etc
%. 9omposite?0i3ed ratio.
2.g. #tock Turnover Ratio, -ebtors Turnover Ratios, (i3ed Assets
Turnover Ratio etc
Ratio Analysis at NSL
II( *UNCTIONA) C)ASSI*ICATION O* RATIOS
(unctional ratios
. $iquidity ratios
a@ 9urrent Ratio
b@ Auick Ratio
!. $everage Ratios
a@ -ebt-equity Ratio
b@ 9urrent Asset to :roprietor1s fund Ratio
III( +RO,A,I)ITY RATIOS
a. <ross profit Ratio
b. =perating profit Ratio
c. Return on investment

IV( ACTIVITY RATIO
i. )nventory Turnover Ratio
ii. Asset Turnover Ratio/
a. (i3ed Asset Turnover Ratio
b. 9urrent Asset Turnover Ratio
iii. >orking 9apital Turnover Ratio.
Ratio Analysis at NSL
COM+ANY
+RO*I)E
Ratio Analysis at NSL
INDUSTRY +RO*I)E
The -isto#ic$! ,$c./#ou&d of the I&di$& Su/$# I&dust#y:
The sugar industry is proud to be an industry, which spreads the taste of sweetness
to the mankind. The history of origin of this industry is as old as the history of main him
self. #ugar is generally made from sugarcane and beet. )n )ndia, sugar is produced mainly
from sugarcane. )ndia had introduced sugarcane all over the worlds and is a leading
country in the making sugar from sugarcane.
B#aint Cishwamitra1 is known as the research person of the sugarcane in religious
literature. >e can find the e3ample of sugarcane in Cedic literature also as well as
sugarcane. >e can also find the reference of sugar and the sugarcane in :atanDali1s
0ahabashya and the treaty on the grammar of B:anini1. <reek traveler B"iyarchus1 and
9hinese traveler BTai-#ung1 have mentioned in their travelogue that the people of )ndia
used to know the methods of making sugar and Duice from sugarcane the great 2mperor
Ale3ander also carried sugarcane with him while returning to his country.
Thus from different historical references and from some B:uranas1 it can be
concluded that method of making sugar from sugarcane was known To the people of
*ihar. The historical evidences of sugar industry prospering in ancient)ndia concrete and
this has helped to develop and prosper the co-operative sugar movement in )ndia.
Ratio Analysis at NSL
N$tio&$! Sce&$#io Of Su/$# I&dust#y:
The first sugar mill in the country was set up in ,+% in the Enited :rovinces.
There are '77 installed sugar mills, of which &'% were in operation in the year !++!-+%
and utili8ed ,&.& million ton of sugarcane F7,4 of total cane production@ to produce
!+.& million tons of sugar. About ' lakhs workmen are directly employed in the sugar.
About ' lakhs workmen are directly employed in the sugar industry besides many in
industries, which utili8e by-products of sugar industry as raw material.

)ndia is the largest consumer and second largest producer of sugar in the world.
The )ndian sugar industry is the second largest agro-industry located in the rural )ndia.
)ndian sugar industry has been a focal point for socio-economic development in the rural
areas. About '+ million sugarcane farmers and a large number of agricultural laborers are
involved in sugarcane cultivation and ancillary activities, constituting 5.'4 of the rural
population. *esides, the industry provides employment to about ! million skilled?semi
skilled workers and others mostly from the rural areas. The industry not only generates
power for its own requirement but surplus power for e3port to the grid based on by-
product –*agasses. )t also produces ethyl alcohol, which is used for industrial and potable
uses, and can be used to the manufacture 2thanol, an ecology friendly and renewable fuel
for blending with petrol.
The sugar industry in the country uses only sugarcane as inputG hence sugar
companies have been established in large sugarcane growing states like Ettar :radesh,
0aharashtra, .arnataka, <uDarat, Tamilnadu, and Andhra :radesh. )n sugar year !++%-+&,
these si3 states contribute more than 6'4of total sugar production in the countryG Ettar
:radesh, 0aharashtra, and .arnataka together contribute more than 7'4of total
production. The government of )ndia licensed new units with an initial capacity of !'+
T9- up to the ,6+s and with the revision in minimum economic si8e to !'++ T9-, the
<overnment issued licenses for setting up of !'++ T9- plants thereafter. The government
de-licensed sugar sector in the year of .#eptember.,66.
The entrepreneurs have been allowed to set up sugar factories of e3pand the
e3isting sugar factories as per the techno-economic feasibility of the proDect. However,
they are required to maintain a radial distance of ' kms from the e3isting sugar factory.
Ratio Analysis at NSL
After de-licensing, a number of new sugar plants of varying capacities have been set up
and the e3isting plants have substantially increased their capacity.

There are '77 installed sugar mills in the country as on 0arch %
st
!++', with a
production capacity of 6+ lack 0Ts of sugar, of which only &'% are working. These
mills are located in 6 states of the country.
The secto# %ise b#e$. u"0s $s fo!!o%s/
T$b!e &o12
#l. "o. #ector "o of factories
. :rivate 6,
!. :ublic 7!
%. 9o-operative %'
Total '77
Ratio Analysis at NSL
TIT)E: +RO3ECT ON RATIO ANA)YSIS AT NS)
Objectives of the study:
7. To help the management in its planning and forecasting activities.

5. To evaluate operational efficiency, liquidity, and solvency of "#$.
6. To help the management in having effective control over the activities of
different departments.
,. To compare the previous five years and present year performance of the
company.
+. To give suggestion and recommendation based on the study.
)IMITATION O* T-E STUDY
@ The study is limited to few ratios because of non availability of detailed financial
data.
!@ The study is used on secondary data such as annual report of the company
%@ The reliability and accuracy of calculation depends more on information found in
profit and loss a?c and balance sheet.
&@ The study is confined only to a period of ' years.
MET-ODO)O4Y
The study is conducted at "irani #ugars $td, 0udhol.
TqG 0udhol, -ist/ *agalkot.
#=ER92# =( -ATA 9=$$29T)="

The data is collected in two types
@ :R)0ARI -ATA
!@ #29="-ARI -ATA
25 +#i'$#y d$t$:
)t will be collected with the help of interaction with the employee of "#$, and the
internal guide.
65 Seco&d$#y d$t$:
Ratio Analysis at NSL
Through Annual Reports of the company, 0aga8ine etc.
COM+ANY +RO*I)E
"ame of the company / ")RA") #E<AR# $)0)T2-. 0E-H=$
Address / ")RA") #E<AR# $)0)T2-.
C)"AIA. "A<AR, #I "=-77
"2AR .E$A$) 9R=##,
JA0A.HA"-) R=A-,
0E-H=$ – '65%%
-)#T/ *A<A$.=T
Regd. =ffice / K !+'%, High int- ))
&' :alace Road,
*angalore – '7+ ++
*ranch =ffice / *iDapur
#tatus of 9ompany / #ole trading concern.
9onstitution of the firm / Registered under companies act ,'7
(inancial )nstitutions / ..#.).-.9, )-*), *=),
..#.(.9
*ankers of the 9ompany / ).9.).9.) *ank Jamakhandi
#.*.) 0udhol *ranch.
)ndian *ank $okapur.
<rameen bank 0udhol.
:roducts / #ugar F$%+, 0%+, #%+@
0olasses, :ress 0ud, *agasse.
2lectricity.
:ress 0ud ? (ilter cake / This is also another type of product. )t is sold for Rs.!'+
per Ton.
#ugar #toring 9apacity / ! lakh *ags.
Ratio Analysis at NSL
-ISTORY O* NIRANI SU4ARS )TD(
0?s. ")rani #ugars $imited F"#$@, a company incorporated on the 7
th
-ec, ,,'
under the 9ompanies Act, ,'7 has applied for Term $oan of Rs. '.,+ crores to #ugar
-evelopment (undF#-(@ for meeting part of the capital cost of its proDect envisaging
moderni8ation ; up-gradation of e3isting sugar factory with an installed capacity of
!'+ T9- to %5'+ T9- with substantial investment at .ulali cross 0udhol Tq. -ist/
*agalkot, .arnataka #tate, "#$ has included in the scope of the proDect, the co-
generation of surplus power also at a total proDect cost of about Rs. ,5.++ crores. F#ugar
unit Rs. '%.++ crores and cogeneration unit Rs. &&.++ crores@. Total 9ost of the :roDect,
for the #ugar plant e3pansion Rs. '%++ $akhs,FRs. &!.++ 9rores for sugar and .++
crores loading from co-generation plant cost@ consisting of an 2quity 9ontribution of Rs.
'.%+ 9rores :romoters, Rs. '.,+ crores equity from #ugar development fund of <ovt. of
)ndia ; the balance of Rs. %.6+ crores funded through Term $oans from the (inancial
)nstitutions?*anks.
The funding for the cogeneration plant costing Rs. &&++.++ $akhs is envisaged by
obtaining Rs. %+6+ $akhs from )R2-A, Rs &&+.++ $akhs from promoter1s contribution
and Rs. 66+ $akhs from sugar development fund.
0?s. "irani #ugars $imited F"#$@ is a company registered under the )ndian
9ompanies Act, ,'7, initially as :rivate $imited 9ompany, vide registration certificate
number +6?,%&+ of ,,' dated +7.!.,,' by the registrar of companies in .arnataka,
*angalore, #ubsequently, the company has been converted into :ublic $imited 9ompany
vide 9ertificate of )ncorporation dated '.+!.!++! by R=9, .arnataka, *angalore.
The unit was originally established in the year ,,5-,6 as a modern .handasari
#ugar unit with a crushing capacity of '++ tones of cane per day and later converted into
white crystal sugar unit. This is one amongst the earliest .handasari unit in the country,
which started with a new technology like/
Ratio Analysis at NSL
Fa@ High pressure boiler F%!.+ ATA@
Fb@ 0ultiple effect pressure evaporator system with falling –film evaporator and also with
captive power generation.
#ubsequently making use of the <overnment of )ndia1s liberali8ed policy, vide
<ovt. of )ndia notification -9#?#?&?-T- +!-+7-,,6, which permitted .handasari
sugar units to use vacuum system, they moderni8ed the unit quickly by adding vacuum
pans and vacuum evaporators. The capacity of the plant was increased in stages to its
present capacity of !'+ T9- during !++'-+7. The plant runs fairly efficiently and is self
sufficient in fuel and power. )t has recorded an average sugar recovery of over percent
during ,,,-!+++ crushing season.
0?s. "irani #ugar $itd. "ow proposes to e3pand the sugar factory from the
present capacity of !'+ T9- to %5'+ T9- by adding a new plant of !'++ T9-,
retaining the e3isting plant also. Also 7 0> 9ogen wer :lant is part of the e3pansion.
The proDect appraisal was done by 0ilton 9onsultancy #ervices $imited, :une.
,AC74ROUND O* +ROMOTERS
The key promoter of the company also 9hairman of the company, 0r. 0urugesh R.
"irani is 0ember of the $egislative AssemblyF0$A@, <overnment of .arnataka.
+ROMOTERS :
0?s. "irani #ugars $imited promoted by the following -irectors /
. 0r. 0urugesh R. "irani, *.2., -.*.0 F0$A@
!. 0r. Hanumanth Rudrappa "irani, 0.9om $.$.*
%. 0rs. .amala 0urugesh "irani, *.A.
. 0r. 0urugesh R. "irani, aged about &+ years is the 9hief promoter and the
9hairman ; managing -irector of the company, is a Technical <raduate and is
the sitting $egislator F0$A@ representing *ilagi constituency in Assembly of
.arnataka, He hails from an agricultural family from *ilagi Taluk of *agalkot
-istrict. He started his carrier as an industrialist by settling up a modern
.handasari sugar plant at 0udhol. 0r. 0.R. "irani has also co-promoted a !'++
Ratio Analysis at NSL
T9- sugar plant at *adagandi village in *ilagi taluk vi8. *ilagi #ugars $imited in
which he holds the position of 0anaging -irector. This unit has Dust successfully
completed trial runs and started commercial operations Fduring January !++7@.
0rs. 0.R. "irani has also been recogni8ed and awarded *harat Edyog Ratna
award from govt. of )ndia. He has the credit of taken over a sick mini cement plant
of ++ T:- capacity at 0udhol and successfully put into commercial operation
with an increased capacity of !++T:- within a short span of time. His social
services contributed in setting up residential schools, -.2d. college at 0udhol.
!. 0r. Hanumanth R. "irani, aged about &+ years is a post –graduate in commerce
and also a leading advocate in *ilagi Tq. He is the brother of 0r. 0urugesh R.
"irani and is also actively involved in the day-to-day operations of the sugar
plant.
%. 0rs. .amala 0urugesh "irani aged about %! years is another director on the
*oard of the company and is the wife of 0r. 0urugesh R. "irani, who associates
0r. 0urugesh R. "irani and 0r. Hanamanth R. "irani in company matters.
As could be observed the company is a family concern and the overall
management of the 9ompany rests with 9hairman #hri. 0urugesh R. "irani who
is assisted by the other *oard of -irectors.
*$cto#s ,ehi&d Est$b!ish'e&t
. Abundant available of resources like raw materialFsugarcane@, labors Fskilled ;
semi skilled@, transportation facilities, banking facilities,
!. (ertile land with having irrigation facilities. F<$*9, .rishna River, <hataprabha
river@
%. "o strong competitors.
&. <ovt. #upport.
Ratio Analysis at NSL
+RODUCT +RO*I)E
+#oduct +#ofi!e:
0ain product –>hite 9rystal #ugar/
The main product of the sugar manufacturing process is white crystal sugar .This white
crystal sugar is manufacturing in the following grades/
$-%+ L $arge si8e sugarM
0-%+ L 0edium si8e sugarM
#-%+ L#mall si8e sugarM
#!-%+ L Cery small si8e sugarM
,y8 +#oducts of Su/$# C$&e:
The sugar mill produces many by-product along with sugar. A typical sugarcane
comprising of '+++ tons capacity can produce %&' on of sugar, 6+++ liters alcohol % tons
of yeast, ' tons of potash fertili8er, !' ton of press mud fertili8er and 5'+ kw of power
from bagasse.
Mo!$sses:
0olasses is the final effluent obtained in the preparation of sugar by repeated
crystalli8ation. 0olasses still contains some quantity of sugar, but this sugar cannot be
e3tracted by usual technology. )t is the end product from a refining process carried out to
yield sugar. #ucrose and invert sugars constitute a maDor portion F&+ to 7+4@ of 0olasses.
The yield of 0olasses per ton of sugarcane varies in range of %.'' to &.'4.
0olasses is mainly used for the manufacturing of ethyl alocoholFethanol@,Ieast
and cattle feed "#$ produces alcohol from the molasses left after the e3traction of sugar
from cane Duice cane be used both for portable purpose as well an industrial chemical.
(urther this alcohol can be again purified to produce fuel alcohol that cane be blended
with petrol. 2thanol is in turn used to produce portable liquor and down stream value
added chemical such as acetone, acid, butanol, acetic anhydride, etc. face stiff
competition form production through the petrochemical route.
Ratio Analysis at NSL
The government controls the e3pert of molasses through e3port license issued for
every quarter. 0olasses and alcohol crop based industries were decontrolled in ,,% and
being controlled by respective state government polices. "early 5+' of the alcohol
produced is consumed by portable alcohol sector.
The molasses prices that used to rule around !++ per ton during the yearly niceties
shot up to Rs.&++ per ton as a result of decontrol crop in ,,7, the prices came down to
Rs .&++ level. The increase in e3cise duty to specific rate of Rs.'++ per ton in ,,5
budget lend to sharp increase in molasses price.
,$/$sse:
*agasse is a fibrous residue of cane stalk that is obtained after crushing an
e3traction of Duice. )t consists of water, fiber an relatively small quantities of soluble
solids, the composition of bagasse various based on the variety of sugarcane, maturity of
cane, method of harvesting and the efficacy of the sugar mill, the usual bagasse
composition is given below.
9="T2"T RA"<2 )" 4
0oisture &7-'!
(iber &%-'!
#oluble solids !-7
*agasse is usually as a combustible in the furnaces to produce steam, which in
turn is used to generate power, it is also used as raw materials for production of paper and
as feedstock for cattle.
+o%e# 4e&e#$tio& +!$&t:
wer plant uses the fiber of the processed sugar cane Fbagasse@ as fuel to
generate electrically in an environmentally responsible manner. An integarated.! 0>
power generates and supplies electricity to the state grid produced for sugar cane waste
used to rotate turbines !&0> power is utili8ed in the plant remaining power is supplied
to .:T9$.
Ratio Analysis at NSL
A#e$ of o"e#$tio&84!ob$!9N$tio&$!9Re/io&$!:
"#$ manufacture is originally from .arnataka. The head office of "#$
umbai,*agalkot sameerwadi plant is main manufacturing plant.
0udhol
0ahalingapur
0alapure
#organvi
Roogi
Ettur
Jamakhandi
*asavanbagevadi
#ameerwadi
T$b!e of Su/$# C$&e C#ushed i& diffe#e&t ye$#
#l."o Iear 9ane 9rushed
F)n $akhs@
Recovery 4 -uration
F-ays@
,,,-!+++ &&'6,.'' 5.7 !++
! !+++-!++ ,+',5.6! 6.6 !!
% !++-!++! 5&'&5.'% ,.5' 6%
& !++!-!++% &'5%'.&% ,.7 !
' !++%-!++& !5,'&.77 ,.6' ,,
7 !++&-!++' 7%!%&.7+ 6.7 ''
5 !++'-!++7 &5&&+.5%+ +.+, 7%
6 !++7-!++5 %&!67%.5'+ !. !
, !++5-!++6 6%,+5.'&% !.'7 !%

Ratio Analysis at NSL
Ratio Analysis at NSL
,o$#d of M$&$/e'e&t
. #ri. 0urugesh R. "irani 9hairman ; 0anaging -irector
!. #ri. #angamesh R. "irani 23ecutive -irector.
%. #ri. Hanamanth R. "irani -irector.
&. #mt. .amala 0. "irani -irector.
Ratio Analysis at NSL
*UNCTIONA) DE+ARTMENTS
STUDY O* DE+ARTMENTS
Human Resource -epartment
! 0arketing -epartment
% :urchase -epartment
& 9ane -evelopment -epartment
' :roduction -epartment
7 (inance -epartment
5 #ales and -istribution -epartment
Ratio Analysis at NSL
-UMAN RESOURCE DE+ARTMENT
The Human Resource department is the primarily concerned with the human
constitution of an organi8ation. )t is concerned with the manpower recruitment,
remuneration, promotion, retirement etc., all related to human resource or labors of the
organi8ation.
The Human Resource -epartment refers to the systematic approach to the
problem of selection, training motivating and retaining personnel in any organi8ation. )t
also consider with planning, organi8ing, directing the personnel functions in the
organi8ation.
Ratio Analysis at NSL
The de"$#t'e&t is $!so co&ce#&ed %ith #ec#uit'e&t se!ectio& $&d "!$ce'e&t(
-evelopment and training to the workers.
! -evelopment evaluation of the workers.
% >age and salary administration.
)n "irani #ugars the personnel manager takes all the above responsibilities and
undertakes the activities concerned with him.
#uitable candidates are selected to a particular Dob according to their qualification
and e3perience.
There is no necessary to give training to the workers on separate machine other
than actual production process. Hence training is given on the Dob only.
0anager and supervisor are continuously inspecting every worker ti access their
performance and there is a better scope for hard workers.
Ratio Analysis at NSL
TIME O**ICE
Time office is one of the important sections of administration department. This
section maintains the attendance of workers. )t also shows records of a particular workers
about his working hours, dit, etc. it evaluates the workers punctuality, discipline and
uniforms and maintains documents and records for the future reference purpose.
*UNCTIONS
#howing the absenteeism report of H=-.
! To receive the attendance cards from the workers.
% To put attendance of the workers in he muster role.
)n time office there are & types of leaves.
SIC7 )EAVE/- employees are eligible to take have on the sickness. 6 days sick leave
shall be granted with full wages.
CASUA) )EAVE/- + days casual leave shall be granted with full wages or pay
including -A to the every workman.
+RIVI)E4ED )EAVE/- ' -ays privileged leave shall be granted with full wages or
pay including -A to the every workman for every completed year.
SECURITY O**ICE
#ecurity officer also one of the important section of the administration
department. There are totally %, guards
Ratio Analysis at NSL
DUTIES O* SECURITY O**ICER

. 0aintain the silencing in the factory area.
!. Time maintenance of workers.
%. Raw materials are checked according to the voucher.
&. )ncoming materials are checked, if they are right, they will records inward and
seal the bill and leave inside.
'. )f out going material from the industry that person must and should have got pass
and it is entered in outwards.
7. )f goods are returnable, it will be entered in return A?9 book.
5. All times of A?91s are submitted to 0.-. daily.
*ACI)ITY TO OR7ERS
. Availability of rest house with TC facility.
!. Availability of quarters.
%. :roviding ! wheelers for employees who are visiting the field to supervise and
check the availability cane.
&. 23ecutive levels are provided with & wheelers.
'. >eekly one holiday of any in a week
NATIONA) -O)IDAY
The industry can give the leave for the national holidays, fair days of national
holidays should be given to the employees, such as )ndependence day, Republic -ay,
<andhi Jayanti etc.
DUTIES O* TIME O**ICE
0aintenance of clock
! #equencing the punching cards
% #iren maintenance F signal value @
& =bservation of employees
' 0aintaining "otice *oard
7 Accepting leave letter application
5 =ver time requisition
Ratio Analysis at NSL
6 Absent statement
S-I*T OR7IN4
)n a shift of 6 hours factory is providing & types of shifts/-

st
shift & am – ! pm
!
nd
shift ! pm – 6 pm
%
rd
shift 6 pm – & am
<eneral shift 6.%+ am – '.%+ pm
The time office maintains register of muster role absenteeism, accident report file
and leave letter file.
O,3ECTIVES O* -UMAN RESOURCE DE+ARTMENT
. To maintain good relation between employer and employees.
!. To maintain good industrial relation.
%. To select right person at right Dob.
&. To cope with a chain.
'. To develop employees in organi8ation.
7. To full utili8ation of human resource.
*UNCTIONS O* -UMAN RESOURCE DE+ARTMENT
Recruitment
Job analysis and Dob description
:romotion
>ages and salary administration
Training and development
Records and incentives
>elfare maintenance
Ratio Analysis at NSL
-( R( D
NUM,ER O* OR7ERS
=fficers !&
Regular 5!
Trainees %'
-aily wages with order 5
Total '7&
Ratio Analysis at NSL
II MAR7ETIN4 DE+ARTMENT
Ratio Analysis at NSL
M$#.eti&/ +#ocess
The term marketing has been derived from the word 0AR.2T. 0arket is
generally understood as a place or geographical area where buyers and sellers meet and
enter in to transactions involving transfer of ownership of goods, service, and securities.
*e$tu#es of M$#.eti&/
)t is consumer oriented.
! )t starts and ends with consumer.
% 0arketing is a system
& )t is a goal oriented.
' 23change process is the essence of marketing.
7 )t is the guiding element of business.
Ratio Analysis at NSL
MAR7ETIN4
0arketing is a social and managerial process by which individual and group
obtains what they need and what through creating, offering and e3changing products of
values with others. This marketing is important element in every organi8ation, which
should be maintained compulsory in a systematic manner.
This section will take care of all sale transactions like sale of sugar, molasses,
*agasse and scrap material. This section works by 5 employees including sales manager.
The factory has sold the sugar according to central government notification. The central
government sends the notice to the factory every month regarding sale of sugar, without
notice the sugar is not sold to anybody. The government is giving permission for a
particular period, particular for sale of sugar. The sugar is sold to the buyer who quotes
highest price. )n this section, some records like sale of sugar register, molasses register,
*agasse registers and scrap material registers are maintained.
+RODUCT O* SA)E
The organi8ation undertakes selling activities in two methods/-
*REE SA)E/- free sale of sugar is being done to bulk purchases on the basis of
tenders called, collected, negotiated and sold.
! )EVY SA)E/- This is being sold to the government of .arnataka on levy basis.
The government then distributes the same to the public through public distribution
outlets at predetermined reasonable price.
Ratio Analysis at NSL
+URC-ASE DE+ARTMENT
:urchase success and failure of any company depends on the cost of materials, the
proper buying of materials and procurement of materials at the right time from the right
source is having greater importance in any business. There is a need for separate
department for buying the materials known as :urchasing department.
The purchase section also connected to administrative department. )n this section
% workers are working including purchase officers. This section is purchasing all types of
materials for the factory, plant and machinery.
This department also maintains the quality of raw materials, by taking the sample
of cane to laboratory test then if the raw material will below standard then will be
reDected, otherwise the raw material will be purchased at the particular price.
*UNCTIONS O* +URC-ASE DE+ARTMENT/-
• Receiving purchasing requisition
• -etermining the volume of materials to be ordered
• :lacing orders
• )nviting tenders and quotations from different suppliers
• 9hecking and passing bills for payment.
• Receiving and inspecting materials.
Ratio Analysis at NSL
:UA)ITIES O* +URC-ASE MANA4ER
)n "irani )ndustry the purchase has to follow the following qualities.
• <ood knowledge of industry and material used in the industry.
• Administrative and organi8ing ability
• Honesty and integrity
• .nowledge and contract of law
• .nowledge of economic principles and demand and supply
• .nowledge of government policies
RES+ONSI,I)ITIES O* +URC-ASIN4 MANA4ER
• :urchasing of materials at right time and in proper way from right source.
• Receiving or matterials.
• #toring of materials.
• )ssuing of materials.
• Accounting of materials.
• .eeping proper records of material purchased.
• :roperly planned for material required.
• 9o-ordination and co-operation between different departments.
Ratio Analysis at NSL
CANE DEVE)O+MENT DE+ARTMENT
Ratio Analysis at NSL
O,3ECTIVES O* CANE DEVE)O+MENT DE+ARTMENT
• To get high yield of sugarcane to the factory in right time.
• To improve variety of cane
• To develop the backward area
• To provide all facilities like seeds, fertili8ers, unloading and loading charges
• To maintain registration of cane, gang and plantation.
• To undertake seed distribution programme
The soil of this area is varying alluvial fertile soil is there on the bank of .rishna
and <hataprabha rivers. (urther upwards, there is a medium deep black soil, vary fertile
well drained light to medium clay soil, which has received heavy application if from yard
0anu science last +-! years also is presently in some parts.
The main function of cane development department is to arrange for raw material,
which is required to the factory. (or this the order is received by priority basis F that is
growers who grows sugar cane first in his lead @. They also provide a loading gang with 6
to + members per village and also a bonded tractor for transportation.
SU4AR CANE VARIETIES
At present 9=9-75, 9=9-6+ are very popular sugar cane varieties growing in
this area. The factory had introduced a new variety of sugar cane that is 9=9 – 67+%!
two years back. Here more than 6'4 of sugar cane is of variety 9=9 – 75 which is
mainly grown in this area.
S() NAME O* T-E VARIETY AREA IN -A ;+5 ;R5
9=-9-75 '% ha 7+.+!4
! 9=-6+ &6+ ha !&.,,4
% 9=-67+%! ,! ha &.,,4
Ratio Analysis at NSL
+RODUCTION DE+ARTMENT
The production department is center of the center organi8ation. The main function
of the production department is (unctions/-
? To maintain close and co-ordinates relationship with all others.
? To upgrade the technical efficiency of the production.
? To flow up the daily production schedule of as per plan.
? To produce the future needs of the company and to promote the organi8ation.
O,3ECTIVES
To plan and meet the production requirements as per customer specification
through the continuous improvement in the planning processing and optimum
utili8ation of resource.
To identify control the customer supplied products.
To produce for future needs and customers specification.
This department is one of the core parts in every organi8ation and it plays a vital
role in the organi8ation, smooth going, basically, in every sugar industry production is
divided in to two sections.
• 2ngineering section
• 0anufacturing section
Ratio Analysis at NSL
+RODUCTION +ROCESS
Ste" 2( weighing of sugar cane, it means, when the sugar cane comes to the factory.
After weighing of sugar cane the unloaded carrier cane weigh bridge.
Ste" 6( )n the ne3t step sugar cane go to the cane cutter machine and it cuts the fine
pieces after that, there are % mills and ' mills tandem that is sequential mill.
Ste" <( After the milling of sugar cane there is a separation of baggasse and Duice milk,
baggasse will be used as a fuel. There are 5 boilers. They used as a fuel and there is
production steam and steam is used to produce the electricity.
Ste" =. The Duice, weighing takes place and there are mi3ing the Duice and there is
addition of phosphoric. After heated of Duice milk 5' 9 that Duice is called as Raw Duice.
Additional of milk of lime and #=! is called #ulfur and this again goes to Duice
heater it heated up to +& 9.
Ste" >. Then the ne3t step, the Duice sent to clarifier and in that there is a separation of
dust and clear transferals Duice.
9lear Duice sends to N*hoomi $abhO. This is the produce fertili8er. 9lear Duice
will be thick. )t calls as syrup. Again add to the milk and #=! then it is called syrup
suplitation.
Ste" ?. sulpitation comes to the pan boiling station and this there are % categories, A,*
and 9 first of all the sulpitation goes to the NAO category.
And the pan boiling directly goes to pan crystal. Raw sugar goes to the
centrifugal machine routed to the high speed of around !++ rbm. )t will be separated
sugar crystal and molasses.
Ste" @. )n this, the sugar crystal downs and passes through grass happer. )n the grass
happer the sugar goes to the one place to another place.
Ratio Analysis at NSL
After there is gradation, in that there are % grades. )t will be divide the % grades/- high
grade, small grade, low grade.
Ste" A. And then the sugar goes to the different vessels. )n that, package of sugar. )n this
there are ! types packing e3porting and domestic is different.
*INIS-ED +RODUCTS
(inished product is sugar. There are % types of finished sugars, High Auality,
0iddle Auality and $ow Auality.
These are % types of bye products
• 0olasses
• *agasse
• (ilters mud
EN4INEERIN4 SECTION
This section is assisted by workshop. )t maintains all the work connected with
plant and machinery.
OR7S-O+:-
)n this workshop machinery work is done. The spares, materials are fabricated
using the lather machines in the workshop, shaping like square cutting etc is also done in
the workshop. (ollowing machines are used in this workshop.
• ! lathe machines for round Dob
• redial drilling machines for drilling hole
• shaping machine of %!P for right angle planning
• hacksaw machine for cutting
• grinding machine for tool grinding
Ratio Analysis at NSL
MANU*ACTURIN4 SECTION
The manufacturing section again divided in to % sub sections.
• $aboratory
• 0anufacturing process
• <o down
)A,ORATORY
The factory has a separate well equipped laboratory. The main activity of the lab
is to check the content of sugar in the sugarcane and also fi3ing the correct shape and
si8e of sugar. The lab prepares hourly reports which advice on the addition of other
chemicals in he production.
OT-ER CONCERNED ACTIVI4IES O* T-E )A,ORAORY
• )t determines the percentage of water content in the dilution of Duice.
• )t determines as well as maintaining the temperature of boiling Duice.
• 9hoice of color and si8e of sugar.
• To manage time and quality.
• )t decided the percentage and contents and chemicals to be added during
production.
• To finds the :H of water through universal indicator.
Ratio Analysis at NSL
C-EMICA) DE+ARTMENT
C-EMICA)S USED IN +RODUCTION
9austic #oda F #odium 9arbonate @
>ashing soda F #odium *icarbonate @
9ommon salt F sodium 9hloride @
:hosphoric Acid F To maintain the :H @
Ammonium *i-fluoride
(ormalin quality maintain and preservative
0ill sanitation chemical to prevent the generation of bacteria and germs
Hydrous - Esed for 9olor
Ciscosity - Esed for reducer
0isopropile - Esed for Alcohol
9ommercial H9$
*leaching wder - #hining purpose
$ed Acitate -(or laboratory purpose
Ratio Analysis at NSL
+#ocess
Ratio Analysis at NSL
*INANCE DE+ARTMENT
Ratio Analysis at NSL
SA)ES AND DISTRI,UTION DE+ARTMENT
SA)ES MAN4EMENT +RACTICE O* NIRANI SU4ARS
The marketing department of "irani #ugars is working in two ways.
. (ree #cale
!. $evy #cale
The out put of the factory produced is sold to public and <overnment in the ratio
of &+ / 7+ all the functions of marketing department are generally done by the sales
manage who is in charge of assistant manager.
The factory has big market area for sugar in *agalkot, *iDapur and *elgum
-istricts. $ittle in local area covered by local sugar dealers. The bi-products is also sold
in large volume to biscuits, chocolate and wine industries and also is used by distilleries.
SA)ESMANS-I+ AT NIRANI SU4ARS
)t is the duty of marketing manager to appoint sales representatives salesmanship
is not necessary at "irani #ugar, because the reasons are
*ecause their product is available at ever corner of the district
As the product is not a lectury one so it is not necessary to appoint sales man.
As the product is an essential one salesman are not required to approach the
customers at their door step and induce them to purchase their product.
Ratio Analysis at NSL
SOT ANA)YSIS
Ratio Analysis at NSL
SOT ANA)YSIS
STREN4T-S
? The :romoter are young political background and have vast industrial e3perience
in the field of #ugar and are having good relationship with the local farmers. This
may help them in sugarcane procurement.
? "o difficulty is envisaged in availability of raw material i.e. sugar cane, as the
proDect is coming up in the area of sugar cane growing belt with a good irrigation
facilities and good recovery.
? The area will not suffer draught as the $ift irrigation system of Almatti -am as
already implemented hence the #ugar recovery in the area is good.
? The co-generation of power of 7 0> will improve the profitability of the
company.
? The by-product vi8. molasses will bring additional revenue as it will be sold to
distillery units as raw material.
EA7NESSES
? 9o-<en plant being capital intensive, economics of operations suffer in case of
shortened season.
? <overnment policy of full decontrol of sugar during !++%-+&.
? #ugar imports will have bearing on the profit margins of the company.
? Any disturbance in the co-gen plant would interrupt sugar manufacturing
operations totally. The cost of such interruptions can be e3tremely high on account
of production loss, machine failure, spillage of Duice, sugar and quality
degradation.
? The promoters are having political background and changing loyalties by the local
farmers may affect them in sugarcane procurement.
Ratio Analysis at NSL
O++ORTUNITIES
? #etting up of further down stream proDects like manufacture of ethanol or a
distillery for manufacture of liquor.
T-REATS
? Raw material, cane, being a agricultural product its availability and prices are
dependent upon vagaries of monsoon.
? Tough competition from other sugar factories.
? (ailure to adopt modern technology.
? Enable to satisfy the needs of workers, this might make them to leave the
organi8ation.
Ratio Analysis at NSL
Visio& of Ni#$&i Su/$#s )td(
. To establish production 5,'++ T.9.- at 0udhol.
!. To produce &+ 0egawatt electricity.
%. To produce !,+++ liters of distillery unit..
&. To produce +,+++ ton *io fertili8ers.
'. To establish agricultural development and resource center at 0udhol.
7. :lan to establish "irani 2ducation )nstitution in *ilagi and 0udhol.
5. CiDaya 9o-operative 9redit society. CiDayanagar 0udhol.
6. To implement highly technical "irani 2ducational institutes 0udhol ; *ilagi
Ratio Analysis at NSL
MISSION
? >e will provide products of superior quality at competitive price and ensure
sustained profitability and growth.
? >e will protect the interest of all concerned promoters, shareholders, customers,
distributors, employees and community.
? >e believe in fair trade practice, standards and strive for total customer1s
satisfaction, keeping the environment eco friendly.
? >e believe that our people are most valuable assets for personal and
organi8ational growth.
? >e will treat our people with dignity and look after the safety and welfare of
individuals and there families.
? >e provide electricity which is maDor necessity for the country.
? #ugar industries are providing ethanol which can be added in diesel and diesel is
maDor requirement of the company.
O,3ECTIVES O* NIRANI SU4ARS )TD
. 0a3imum, effective and efficient utili8ation of available resources.
!. To manufacture good quality sugar and bi-products.
%. >elfare of agriculturists
&. To provide comparative market rate to the farmers.
'. :roper co-ordination and co-operation among its members.
7. To maintain proper means of transportation to the farmers during season.
5. :rovide modern techniques and methods and of cultivation and to supply seeds,
fertili8ers to the farmers.
6. To undertake such other activities as are incidental and conductive to the
development of society.
Ratio Analysis at NSL
DATA INTER+RETATION
B RATIO ANA)YSIS
Ratio Analysis at NSL
INTRODUCTION
Ratio analysis is a technique of analy8ing the financial statement of industrial concerns.
"ow a day this technique is sophisticated and is commonly used in business concerns. Ratio
analysis is not an end but it is only means of better understanding of financial strength and and
weakness of a firm.
Ratio analysis is one of the most powerful tools of financial analysis which helps in
analy8ing and interpreting the health of the firm. Ratio1s are proved as the basic instrument in
the control process and act as back bone in schemes of the business forecast.
ith the he!" of #$tio %e c$& dete#'i&e
? The ability of the firm to meet its current obligation.
? The limit or e3tent to which the firm has used its borrowed funds.
? The efficiency with which the firm is utili8ing in generating sales revenue.
? The operating efficiency and performance of the company .
C!$ssific$tio& of R$tios
Ratios can be classified into different categories depending upon the basis of
classification.
I( TRADITIONA) C)ASSI*ICATION
Traditional 9lassification has been on the basis of financial statements, on which
ratio may be classified as follows.
2( +#ofit B )oss $ccou&t #$tios(
2.g. <ross :rofit Ratio, "et :rofit Ratio, =perating Ratio etc
6(,$!$&ce sheet #$tio(
2.g. 9urrent Ratio, -ebt 2quity Ratio, >orking 9apital Ratio etc
<( Co'"osite9MiCed #$tio(
2.g. #tock Turnover Ratio, -ebtors Turnover Ratios, (i3ed Assets
Turnover Ratio etc
Ratio Analysis at NSL
II( *UNCTIONA) C)ASSI*ICATION O* RATIOS
*u&ctio&$! #$tios
6( )iDuidity #$tios
c@ 9urrent Ratio
d@ Auick Ratio
6( )eve#$/e R$tios
c@ -ebt-equity Ratio
d@ 9urrent Asset to :roprietor1s fund Ratio
III( +RO,A,I)ITY RATIOS
a. <ross profit Ratio
b. =perating profit Ratio
c. Return on investment

IV( ACTIVITY RATIO
i. )nventory Turnover Ratio
ii. Asset Turnover Ratio/
c. (i3ed Asset Turnover Ratio
d. 9urrent Asset Turnover Ratio
iii. >orking 9apital Turnover Ratio.
Ratio Analysis at NSL
ANA)YSIS B INTRE+RETATION
I( )iDuidity R$tio
$iquidity ratio measures the ability of the firm to meet its current obligation
Fliabilities@. )n fact analysis of liquidity needs the preparation of cash budget and cash and
fund flow statement but liquidity ratio, by establishing a relationship between cash and
other current asset to current obligation, to provide a quick measure of liquidity. A firm
should ensure that it doesn1t suffer lack of liquidity and also that it dose not have e3cess
liquidity.
The common liquidity ratios are/-
2( Cu##e&t R$tio
9urrent ratio may be defined as the relationship between current asset and
current liabilities. This is a measure of general liquidity ; is most widely used to make
analysis of short-turn financial position or liquidity of firm. )t is calculated by dividing
the total current assets by total current liabilities.
9urrent Ratio Q 9urrent Assets
9urrent $iabilities
Ratio Analysis at NSL
TA,)E82(2 Cu##e&t R$tio

Ye
$#
Cu##e&t Cu##e&t R$tio
Assets )i$bi!ities
!++&-+' &%++57+,% &!+''&7 %.+&
!++'-+7 %&%77'!,% !!&5'6+%' .'
!++7-+5 %%7%6,%!7 6+!67!+ +.&!
!++5-+6 &56!75 676'%6&+ +.&6
!++6-+, %&,%&'57 55&'%+,6 +.&'
CURRENT RATIO
3.04
1.5
0.42
0.48 0.45
0
0.5
1
1.5
2
2.5
3
3.5
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
INTER+RETATION
The above table shows that "#$1s current ratio has decreased from %.+& to .' in the year
!++' and !++7 and in the year !++5 it was drastically fluctuated to +.&! and then the year
!++6 it raise to +.&6 but again decreased to +.&' in the !++, .
The company had the fluctuation of !&.!+4 increase in current assets and 6.64 in
current liabilities. in the year !++, the current assets has decreased by 7.%64 and
+.6!4 in current liabilities.
An ideal current ratio is !/ for every one rupee of current liabilities, current assets of
doable rupee are available. The current ratio determines margin of safety for creditors,
there has been decrease in the ratio during !++, compared with !++6.
Ratio Analysis at NSL
6( :uic. R$tio9Acid Test R$tio
Auick ratio establishes relationship between quick or liquid assets ; current
liabilities. )t is also known as acid test ratio. An asset is said to be liquid if it can be
converted into case within short period of time without loss of value. The prepaid
e3penses and stock were e3cluded.
Auick ratio Q Auick asset
9urrent $iabilities
TA,)E82(6 :uic. R$tio

Iear Auick 9urrent Ratio
Assets $iabilities
!++&-+' !6&!6,!6%5 &!+''&7 !.+
!++'-+7 55,,!,55 !!&5'6+%' +.5,
!++7-+5 %6%%!57 6+!67!+ +.5
!++5-+6 !56%5,% 676'%6&+ +.'
!++6-+, 5+56& 55&'%+,6 +.!!
QUICK RATIO
2.01
0.79
0.17 0.15 0.22
0
0.5
1
1.5
2
2.5
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEAR
R
A
T
I
O
Ratio
INTER+RETATION:
The above table shows that the quick assets of "#$ has decreased from !.+ to +.5, in the
year !++' and !++7 and had drastical fluctuation to +.5 and +.' in the year !++5 and
!++6 and had slight raise to +.!! in the year !++,.
The company had fluctuation 5.',4 decrease in quick asset and and 6.64 increase in
current liabilities and in the year !++, there was increase in quick asset %%.'74 and
+.6!4 decrease in current liabilities.
Ratio Analysis at NSL
This ratio measures firm1s ability to serve short term liabilities. The ideal quick ratio is
NO . a low quick ratio represents that firm1s liquidity poison is not good.
II( )eve#$/e R$tios
$everage ratios are also known as capital structure ratio. These ratios indicate
mi3 of funds provided by owners ; lenders. As a general rule these should be appropriate
mi3 debt ; owners equity in financing the firm1s assets.
$everage ratios are calculated to Dudge the long long-term financial position of
the company. #ome of the popular leverage ratios are/
a( Debt8EDuity R$tio
-ebt-2quity ratio shows the relative contribution of creditors and owners. -ebt-
2quity also known as 23ternal-)nternal equity ratio. )t is calculated to measure the
relative claims of outsiders against firm assets.
-ebt-2quity Ratio Q Total -ebt
"et >orth
TA,)E86(2 Debt EDuity R$tio
Iear Total -ebt "et >orth Ratio
!++&-+' ''&+!&, &%+'!&!, +.7
!++'-+7 &,,!&7!,% 7%5,&5 +.7!
!++7-+5 '&5767&5 '766!6+57 +.'!
!++5-+6 '7'+,!577 '5+666'6 +.6!
!++6-+, 7!5%,575 '5!77+65 +.,%
Ratio Analysis at NSL
INTER+RETATION
The table shows that the total debt ratio of "#$ had increase in the year !++' and
!++7 from +.7 to +.7! and had fluctuation to +.'! in the year !++5 and further increased
to +.6! in the !++6 and +.,% in the year !++,. The company had increase in the total
debt by %.!54 and +.!%4 in net worth and in the year !++, the debt was increased by
.+!4 and +.664 in net worth.
-ebt equity ratio measures ultimate solvency of the company.)t provides a margin of
safety to creditors,thus when the ratio is smaller the creditors are more secured . An
appropriate debt equity ratio is +.%%.A ratio higher than this is an indication of risky
financial policies.
Ratio Analysis at NSL
b( Cu##e&t Assets to +#o"#ieto#0s fu&ds #$tio
This ratio is calculated by dividing total current assets by shareholders funds. )t
indicates the e3tent to which proprietor funds are invested in current assets. There is no
rule of thumb for this ratio ; depending upon the nature of the business there may be
different ratios for different firms.
9A to ratio Q 9urrent Assets
:roprietors (und
TA,)E86(6 Cu##e&t Assets to +#o"#ieto#s *u&d

Iear 9urrent Assets :roprietors (und Ratio
!++&-+' &%++57+,% !5%%'+++ .,5
!++'-+7 %&%77'!,% !5&+++++ .'6
!++7-+5 %%7%6,%!7 !5'%++++ .''
!++5-+6 &56!7& !6+6&,' .,!
!++6-+, %&,%&'57 !!%,6%!5& .'7
C/A TO PROPRIETARY RATIO
1.97
1.58 1.55
1.92
1.56
0
0.5
1
1.5
2
2.5
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
Ratio Analysis at NSL
INTER+RETATION
The table of current assets to proprietory ratio shows that the ratio has been decreased by .,5
to .'6 in the year !++' and !++7 and .'' in the year !++5 and then raise to .,! in the year
!++6 and then decreased to .'7 in the year !++,.
There was raise in current asset by !&.!+4 in the year !++6 and proprietary fund by +.!!4 and
further in !++, there was decrease by 7.%64 in current asset and there was increase by !.5%4
in proprietary fund
This ratio indicates the e3tent to which proprietors fund are invested in current asset
Ratio Analysis at NSL
III(+#ofit$b!i!ity R$tios
The primary obDective of a business undertaking is to earn profits. :rofit is the
difference between revenue ; e3penses over a period of time. :rofit is output of a
company ; company will have no further if it fails to make sufficient profit :rofits are
thus a useful measure of overall efficiency of a firm.
These ratios are calculated to measure the operating efficiency of the company.
*eside management, creditors, owners are also interested in the profitability of the
company. <enerally profitability ratios are calculated either in relation to sales or in
relation to investment. The various profitable ratios are/
I I& Re!$tio& to S$!es

$5 4#oss +#ofit R$tio
<.:.Ratio measures the relationship between gross profits ; salesG it is usually
represented in percentage. Thus <ross profit margin highlights the production efficiency
at a concern
<.:.Ratio Q <ross :rofit R ++
#ales
<.:.Ratio indicate the e3tent to which selling price of goods per unit may decline
without resulting in losses on operations of firm. )t reflect efficiency with which firm
produces the product.
Ratio Analysis at NSL
TA,)E8<(2 4#oss +#ofit R$tio

Iear <ross :rofit #ales Ratio
!++&-+' %!+&66&7 !7,6&!&,' +.
!++'-+7 ,,,!!%! 7!!7567&! +.,
!++7-+5 65'7, ',!'%!76,
%.6
!++5-+6 ,6'7&,5 &'%&%'!% !.7'
!++6-+, 5,'%6,6 5%7!+7,65 +.6
GROSS PROFIT RATIO
0.11 0.19
13.8
21.65
10.8
0
5
10
15
20
25
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
INRTE+RETATION
The above table shows the gross profit ratio of "#$ the table indicates that the ratio in the
year !++' was +. and in the year !++7 it raised to +.,.further it had drastical change in
gross profit to %.6 in the year !++5 and !.7' in the year !++6 ,but decreased to +.6 in
the year !++,.
The company had fluctuated by increase of !+.+74 in gross profit and decrease by !%.&5
4 in the year !++6 and in the year !++, there is decrease in gross profit by 6.,54 and
increase in sales by 7!.%74.
The gross profit indicates the degree to which the selling price of goods per unit may
decline without resulting in losses on operation of the firm .)t reflects the efficiency with
which firm produces its products.
Ratio Analysis at NSL
b5 O"e#$ti&/ R$tio
)t is the relation between cost of goods sold ; operating e3penses on one hand ;
the sales on the other hand. )t measures the cost of operations per rupee of sales.
=perating Ratio Q =perating 9ost R ++
#ales
TA,)E8<(6 O"e#$ti&/ R$tio
Iear =perating 9ost #ales Ratio
!++&-+' 5,7!+!7+ !7,6&!&,' 77.'7
!++'-+7 &,6',+%%% 7!!7567&! 6+.+5
!++7-+5 ',!,,5'6% ',!'%!76, ++.6
!++5-+6 &&5!+++&, &'%&%'!% ,6.7!
!++6-+, '&'%'%' 5%7!+7,65 5&.+&
OPERATING RATIO
66.56
80.07
100.8
98.62
74.04
0
20
40
60
80
100
120
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
INTRE+RETATION
The above table shows the firm1s operating ratio increasing drastically from 77.'7 in the
year !++' to 6+.+5 and ++.6 in the years !++7 and !++5 but further fluctuating to ,6.7! in
the year !++6 and 5&.+& in the year !++, .
There is a decrease in operating cost by !&.'64 and ,!.%&4 in sales but in the year !++,
there was increase by !.,%4 in operating cost and 7!.%74 in sales.
An increase in the ratio over a previous period is an indication of improvement in a
operational efficiency of a concern the higher the ratio is more successful the business is
,but a lower ratio indicates large amount of manufacturing e3penses.
Ratio Analysis at NSL
6( +#ofit$bi!ity i& #e!$tio& to I&vest'e&t
$( Retu#& o& sh$#eho!de#s I&vest'e&t:
Return on shareholders investments, popularly known as R=). )t is the
relationship between net profit after ta3 ; shareholders funds. Thus this ratio is
considered as affective indicator of the company1s profitability because it reflects the
success of management in the efficient utili8ation of the owner1s investment.
R=)Q. "et :rofit after Ta3 R ++
#hareholders fund

TA*$2-%.% Return on shareholder investment
Ye$# S$!es Cu##e&t Assets R$tio
!++&-+' !7,6&!&,' &%++57+,% +.7!
!++'-+7 7!!7567&! %&%77'!,% .6
!++7-+5 ',!'%!76, %%7%6,%!7 .57
!++5-+6 &'%&%'!% &56!7& .+,
!++6-+, 5%7!+7,65 %&,%&'57 !.
INTRE+RETATION:
Ratio Analysis at NSL
The above table reveals that there is increase in the return on investment from !+4 in the
year !++' to !,4 in the year !++7 but fell down to 5.+4 in the year !++5 .(urther in the
year !++6 there was a drastical raise to !&.&4 but fluctuated to +.+&4 in the year !++,.
Through the analysis we found that in the year !++, the net profit was decreased by
,,.6!4 and increased shareholders fund by +.5%. This ratio is used to measure the overall
efficiency of a concern ,the higher the ratio the better the results will be as this ratio
reveals how well the resources of a concern are being used.

Ratio Analysis at NSL
IV( Activity R$tios:
(unds are invested in various assets in business to make sales ; earn profit. The
efficiency with which assets are managed directly affects the volume of sales. The better
the management of assets, the larger is the amount of sales ; the profit. Activity ratio
measures the efficiency or effectiveness with which a firm manages its resources or
assets. These ratios are also called turnover ratio because they indicate the speed with
which assets are converted or turned over into sales.
The various activity ratios are/
$( I&ve&to#y Tu#&ove# R$tio:
)nventory turnover ratio indicates the number of times stock has been turned over
during the period ; evaluates efficiency with which a firm is able manage inventory.
The ratio is calculated by dividing the net sales divided by average inventory at
cost.
)TRQ "et #ales .
Average )nventory at 9ost
Average inventory should be taken for calculating stock turnover ratio. Adding the
stock in the beginning ; at the end of period ; dividing it by ! to calculate average
inventory.

Ratio Analysis at NSL
TA*$2-&. )nventory turnover ratio
Iear "et #ales Average )nventory Ratio
!++&-+' !7,6&!&,' &,+&+''7 .6
!++'-+7 7!!7567&! &&+&'5% !.&&
!++7-+5 ',!'%!76, %!7&++6+ .,
!++5-+6 &'%&%'!% &6&7!%+&& +.,&
!++6-+, 5%7!+7,65 %5,%&&%& .,&
INVENTORY TURNOVER RATIO
1.81
2.44
1.9
0.94
1.94
0
0.5
1
1.5
2
2.5
3
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
INTER+RETATION:
The table shows the increase in the inventory turnover ratio from .6 to !.&& in the year
!++' and !++7 .)n the year !++5 there was a fluctuation to ., and further to +.,& in the
year !++6,but in the year !++, there was a drastical increase to .,&.
The company had !%.&54 decrease in net sales and increase by ''.++4 in average
inventory but in the year !++, there was increase in net sales by 7!.%74 and decrease by
!.5%4 in average inventory.
)nventory turnover ratio signifies the liquidity of the inventory. A high ratio implies good
inventory management ,a low ratio results in blocking of funds in inventory. The
reference value of this ratio , and the ma3imum conversion period is %66.

Ratio Analysis at NSL
b( Assets Tu#&ove# R$tio:
Assets are used to generate sales. Therefore a firm should manage its assets
efficiency to ma3imum sales. Assets turnover ratio shows relationship between sales ;
assets. The various assets turnover ratio are/MM
i( *iCed Assets Tu#&ove# R$tio:
This ratio establishes the relationship between the costs of goods sold and fi3ed assets. )t
can be calculated by ,
(i3ed Assets Turnover Ratio Q #ales
(i3ed Assets
TA,)E : =(6 *iCed Assets Tu#&ove# R$tio
Iear #ales "et (i3ed Assets Ratio
!++&-+' !7,6&!&,' '!%'6'%' +.'
!++'-+7 7!!7567&! '%!7,+',' .7
!++7-+5 ',!'%!76, '766!6757 .+&
!++5-+6 &'%&%'!% '5+666'6 +.6+
!++6-+, 5%7!+7,65 '5!77+65 .!,
F/A TURNOVER RATIO
0.51
1.16
1.04
0.8
1.29
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
R
A
T
I
O
Ratio
Ratio Analysis at NSL
INTRE+RETATION:
The table reveals that there is increase in fi3ed asset turnover ratio from +.' in the year
!++' to .7 in the year !++7 but decreased to .+& in the year !++5 and drastical
fluctuation to +.6 in the year !++5 and raise in the year to .!, in the year !++,.
The company had !%.&54 decrease in net sales and increase in fi3ed assets by +.!%4 in the
year !++6 and further in the year !++, it had increase net sales by 7!.%74 and increase by
+.64 in fi3ed assets.
=ne of the cautions to be kept in mind that when fi3ed assets are old and substantially
depreciated the ratio tenders to be high,because,the denominator of the ratio will be low.
Ratio Analysis at NSL
ii( Cu##e&t Assets Tu#&ove# R$tio:
This ratio is indicates how many net sales are made for every rupee of investment in
current assets.
9urrent Assets Turnover Ratio Q #ales
9urrent Assets
TA,)E: =(< Cu##e&t Assets Tu#&ove# R$tio

C/A TURNOVER RATIO
0.62
1.81 1.76
1.09
2.11
0
0.5
1
1.5
2
2.5
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
YEAR
R
A
T
I
O
Ratio
INTRE+RETATION:
The table reveals that the current ratio has drastical increase from +.7! the year !++' to
.6 in the year !++7 but again there was a decrease to .57 in the year !++5 and .+, in
the year !++6. *ut there was a drastical increase of ratio to !. in the year !++,.
The company had decrease of !%.&54 in net sales and increase in current assets by
!&.!+4 . )n the year !++, there was increase in net sales by 7!.%74 and 7.%64 decrease
in currents asssets.
Ye$# Net +#ofit Sh$#eho!de# *u&d R$tio
!++&-+' &%+'!&!, !5%%'+++ !+4
!++'-+7 7%5,&5 !5&+++++ !,4
!++7-+5 '!&',%6 !5'%++++ 5.+4
!++5-+6 '+&'575 !6+6&,' !%.&4
!++6-+, ,&!% !!%,6%!5& +.+&4
Ratio Analysis at NSL
d( o#.i&/ C$"it$! tu#&ove# R$tio:
A firm may also related net current assets to sales. >orking capital turnover ratio
indicates the velocity of the utili8ation of net working capital.

>orking 9apital Turnover RatioQ #ales
"et 9urrent Assets
TA,)E:=(= o#.i&/ C$"it$! Tu#&ove# R$tio

Iear #ales "et 9urrent Assets Ratio
!++&-+' !7,6&!&,' &'67&!&'.' .!!
!++'-+7 7!!7567&! 7!'!,%+7.& %.%5
!++7-+5 ',!'%!76, !!6665+'&5 +.!
!++5-6 &'%&%'!% 6,+5!'6.' '.!%
!++6-+, 5%7!+7,65 5!7,+6'%.& 6.'
Ratio Analysis at NSL
INTER+RETATION
The table reveals that the working capital turnover ratio of "#$ in the year !++' was
.!! and increased to %.%5 in the year !++7.but in the year !++5 there was a drastical
fluctuation to +.! in the year !++5 further there was a high increase in working capital
turnover ratio to '.!% in the year !++6 and 6.' in !++,.
There is decrease in net sales by !%.&54 and ,&.6+4 in net current assets in the year
!++6 and in the year !++, the net sales increased by 7!.%74 and decreased by %6.674 in
net current assets.
The assets turnover ratio measures the efficiency of a firm in managing and utili8ing the
assets.Higher turnover ratio,more efficient is the management utili8ation of the assets
while low turnover are indicative of under utili8ation of available resources and presence
of idle capacity. )n operational terms, it implies that firm can e3pand its activity level
without requiring additional capital investments.
Ratio Analysis at NSL
*INDIN4S
B
SU44ESTIONS
Ratio Analysis at NSL
*INDIN4S

I ( )I:UIDITY RATIO:
. (rom the current ratio it is found that the ratio is not satisfactory because the 4
increase in current assets is less than the 4 increase in current liabilities during the
year !++'-!++,.The highest ratio recorded is %.+& in !++' and the lowest ratio
recorded is +.&! in the year !++5.And less than the standard ratio.
!. (rom the quick ratio it is found that the ratio is not satisfactory because the ratios
recorded during the year were less than the standard ratio.)n the year !++6 the
ratio recorded is +.' and the ratio recorded highest was !.+ in the year !++'.
II ( )EVERA4E RATIO:

. (rom the debt equity ratio it is found that the ratio recorded during the year
!++',!++7,; !++5 is satisfactory as the ratios are near to the standard ratio but
during the year !++6;!++, it is not satisfactory as the ratios are very high
compared to the standard ratio.
!. (rom the current assets to proprietors fund ratio is not satisfactory as the
proprietory funds invested in the current assets is less in the year !++, is less
compared to previous years .The highest ratio recorded is .,5 in the year !++'
and the lowest ratio recorded is .'' in the year !++5.
III ( +RO*ITA,I)ITY RATIOS:

. (rom the gross profit ratio it is found that the ratio is satisfactory during the last
three years from !++5 to !++,. The highest ratio recorded in the year !++6 is
!.7' and the lowest ratio recorded is +. in the year !++'.
!. (rom the operating profit ratio it is found that the ratio is highly satisfactory
during the considered financial years.The highest ratio recorded is ++.+6 in the
year !++5 and the lowest is 77.'7 in the year !++&.
Ratio Analysis at NSL
%. (rom the return on investment it is found that the ratio calculated for the
considered financial years is good . The ratio is satisfactory as the return on
investment is effective and good,comparing the previous years.
IV ( ACTVTY RATIOS :
. (rom the inventory turnover ratio it is found that the ratio is not satisfactory as the
inventory holding period is very high,compared during the financial years.
!. (rom the fi3ed assets turnover ratio it s found that the ratio is satisfactory as the
ratios are raising yearly during the comparative years.
Ratio Analysis at NSL
Su//estio&
. The company may improve its current ratio by decreasing the current liabilities
because in the year !++6-+, current assets are decreased and it may also improve
its quick ratio.
!. The company may decrease its total debt as there is increase in total debt the year
!++6-+,. The company may increase its investment in current assets.
%. $ong terms solvency of the company has to be improved by limiting amount
invested by outsiders to the amount invested by the owner of the company . this
can be achieved by purchasing the shares gradually.
&. The proper management of the inventory can improve liquidity position and
efficiency of the company.
Ratio Analysis at NSL
CONC)USION
#tuday of ratio analysis of nirani sugars $td. Reveals the performance of the
company in terms of financial aspects. )t is found that there is increase in sales gross
profit during !++' to !++,. The cash balance is also increased for the above saied years
this is due to company1s revised policy in debt collection. )t is also observed that the
current ratio is not so satisfactory which creates chunks in the current assets in the form of
sundry debtors and inventory.
Ratio Analysis at NSL
Refe#e&ces
@. Annual reports of "irani sugars ltd. for !++', !++7, !++5, !++6, !++,.
!@. J 0adegouda NAccounting for managersO
%@. .han 0 and :... Jain N(inancial managementO

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