2132531t483700 Ratio Analysis Project Report
2132531t483700 Ratio Analysis Project Report
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PROJECT REPORT
1
A STUDY ON RATIO ANALYSIS
WITH REFERENCE TO
GENTING LANCO POWER INDIA PRIVATE LIMITED.
2
CERTIFICATE
work titled “RATIO ANALYSIS” in partial fulfillment of requirement for the award of
This project is the record of authentic work carried out during the
3
DECLARATION
the record of authentic work carried out by me during the academic year 2006 –
2008 and has not been submitted to any other University or Institute towards the
4
Chapter – 1
INTRODUCTION
5
Introduction
6
Role of Financial Managers:
1. Nature of work
2. Working conditions
3. Employment
5. Job outlook
6. Earnings
7. Related occupations
1. Nature of work
7
The duties of financial managers vary with their specific titles,
which include controller, treasurer or finance officer, credit manager, cash
manager, and risk and insurance manager. Controllers direct the preparation
of financial reports that summarize and forecast the organization’s financial
position, such as income statements, balance sheets, and analyses of future
earnings or expenses. Regulatory authorities also in charge of preparing
special reports require controllers. Often, controllers oversee the accounting,
audit, and budget departments. Treasurers and finance officers direct the
organization’s financial goals, objectives, and budgets. They oversee the
investment of funds and manage associated risks, supervise cash
management activities, execute capital-raising strategies to support a firm’s
expansion, and deal with mergers and acquisitions. Credit managers oversee
the firm’s issuance of credit. They establish credit-rating criteria, determine
credit ceilings, and monitor the collections of past-due accounts. Managers
specializing in international finance develop financial and accounting
systems for the banking transactions of multinational organizations.
8
employ additional financial managers who oversee various functions, such
as lending, trusts, mortgages, and investments, or programs, including sales,
operations, or electronic financial services. These managers may be required
to solicit business, authorize loans, and direct the investment of funds,
always adhering to State laws and regulations.
9
The role of the financial manager, particularly in business, is
changing in response to technological advances that have significantly
reduced the amount of time it takes to produce financial reports. Financial
managers now perform more data analysis and use it to offer senior
managers ideas on how to maximize profits. They often work on teams,
acting as business advisors to top management. Financial managers need to
keep abreast of the latest computer technology in order to increase the
efficiency of their firm’s financial operations.
2. Working conditions
3. Employment
10
4. Training, Other qualifications and Advancement
11
who successfully complete courses. Although experience, ability, and
leadership are emphasized for promotion, this type of special study may
accelerate advancement.
12
Financial managers should be creative thinkers and problem-
solvers, applying their analytical skills to business. They must be
comfortable with the latest computer technology. As financial operations
increasingly are affected by the global economy, financial managers must
have knowledge of international finance. Proficiency in a foreign language
also may be important.
5. Job outlook
13
Financial managers who are familiar with computer software that can assist
them in this role will be needed.
6. Earnings
US$
Treasurer 301,200
Controller/comptroller 268,600
Director 227,200
Manager 167,000
Large organizations often pay more than small ones, and salary
levels also can depend on the type of industry and location. Many financial
14
managers in both public and private industry receive additional
compensation in the form of bonuses, which also vary substantially by size
of firm. Deferred compensation in the form of stock options is becoming
more common, especially for senior level executives.
7. Related occupations
15
NEED FOR THE STUDY
16
OBJECTIVES
OBJECTIVES
17
4. To offer appropriate suggestions for the better
performance of the organization
METHODOLOGY
18
LIMITATIONS
2. The below mentioned are the constraints under which the study
is carried out.
19
Chapter – 2
20
Andhra Pradesh Electricity Regulatory Commission was
constituted on 31.03.1999 under the A.P. Electricity Reform Act, 1998.
Since its inception, the APERC has taken several initiatives to improve the
functionality of the Power Sector in the state of AP to make it viable and
more importantly to protect the interests of the consumers. The commission
issued Licenses to the APTRANSCO, the four Distribution Companies and
the nine Rural Electric Cooperatives in the state. Six Tariff Orders have
been issued. Several path breaking documents have been formulated and
released relating to the performance of the Licensees and protection of the
interests of the consumer’s viz., Customer’s right to information, Licensee's
complaint handling procedure, the grid code, Guidelines for Investment
proposals, Load Forecasting and Power Procurement procedure, Merit Order
Dispatch and Long Term tariff Principles (LTTP) etc.
21
The Commission is also set to introduce Multiyear tariff regime
from 2006-07 onwards so as to ensure Regulatory Certainty and to improve
the financial and operational efficiency of the Distribution Licensees.
1.4 This Regulation shall come into force on the date of its publication in the
official Gazette of Andhra Pradesh.
22
2. DEFINITIONS
(a) “Act” means the Electricity Act, 2003 (Central Act No. 36 of
2003);
(g) “Grid Code” means the set of principles and guidelines prepared in
accordance with the terms of Section 86 (1) (h) of the Electricity Act 2003;
23
Grid Code specified by Central Commission under clause (h) of sub-section
(1) of section 79 of the Act;
(j) “Rules” means the Indian Electricity Rules, 1956 and/or any other
rules made under Act;
2.2 Words and expressions used but not defined herein shall have the
meaning assigned to them in Electricity Act 2003, Indian Electricity Grid
Code, Andhra Pradesh Electricity Grid Code and Indian Electricity Rules,
1956.
24
3. OBJECTIVE
(b). To enable the Users to design their systems and equipment to suit
the electrical environment that they operate in; and
25
(a) Mandatory Standards - Those performance standards, the failure to
maintain which attracts the provisions of sub-section (2) of the section 57.
(a) Voltage Variation
(b) Safety Standards
4.3 Desirable standards too have been specified herein under section 86 (1)
(i) of the Act, with the main objective of providing quality, continuity and
reliability of services to the consumers. The Commission shall fix the time-
bound schedule for implementation/compliance of/with each parameter of
these standards. The following standards are specified herein as desirable of
achievement:
26
(a) Feeder Availability
27
(c) Final Stage (Level-3): Two years after expiry of the Transition
Stage when substantial improvements should have been carried out and the
system considered to be in satisfactory condition with necessary capability
improvement. Standards marked as Level 3 shall be achieved during this
Final Stage.
5.2 In all cases, where standards are specified by appropriate authorities, for
example Electricity Rules 1956, such standards shall be required to be
complied with as specified by that authority, may be from the preliminary
stage itself.
28
(iii) State Transmission Utility /Transmission Licensee shall make all
possible efforts to ensure that the grid voltages remain within the following
voltage levels at all points of its Transmission System:
33 35 30
11* 11.67 10
29
taking into consideration the safety requirements for the construction,
operation and maintenance of electrical plants and electric lines as may be
specified by the Central Electricity Authority under Clause (c) of section 73
read with Section 53 of the Act.
30
(ii) The Transmission Licensee shall achieve 97% Substation
availability from the preliminary stage itself.
% Voltage Unbalance = Max Deviation from Mean of {VRY, VYB, VBR} X 100
Mean of {VRY, VYB, VBR}
Where, VRY is Voltage between R & Y phases, V YB is Voltage
between Y & B phases and VBR is voltage between B & R phases.
31
32
(iii) The State Transmission Utility /Transmission Licensee shall
ensure that the neutral point voltage of the transformers with respect to earth
will not have potential greater than 2% of the no load phase to phase voltage
of the transformer.
N
VVI = Square Root of {å (Vi – Vs) 2 / N} X (100 / Vs) %
I=1
Where,
Vi = RMS value of measured voltage (in kV) at i th hour in the period for
which VVI is computed
Vs = RMS value of the nominal system voltage i.e. 400kV, 220kV and
132kV etc. as may be applicable at the interconnection point
33
Preliminary Stage – Level 1 <= 10 To be achieved for more than
90% of buses
34
Implementation Stage Nos. of hours in year when Loss Of
system demand Load
Expectation
ca can (LOLE) in
n be fully met not fully met % of hours
subject to even with
generation generation (C=B
availability availability X100/8760)
(A)
(B = 8760 - A)
35
security level of "n-1" (single contingency) plus spinning reserve margin for
Steady State Operation.
36
station level shall be subject to its scrutiny as considered necessary by the
Commission.
6.4 The Commission may, from time to time, modify the contents of the
regulation/formats or add new regulation/formats for additional information.
37
Provided that the STU/Transmission Licensee shall be given an
opportunity of being heard before such compensation is determined by the
Commission:
7. MISCELLANEOUS
38
Use of the Information
7.2 The Commission shall have the right to use the information submitted by
State Transmission Utility /Transmission Licensee as it deems fit including
publishing it or placing it on the Commission's website and/ or directing the
State Transmission Utility /Transmission Licensee to display the information
in the licensee’s website.
Power to Amend
7.3 The Commission may, at any time add, vary, alter, modify or amend any
provisions of this Regulations.
Savings
7.5 Nothing in this Regulation shall bar the Commission from adopting in
conformity with the provisions of the Act, a procedure, which is at variance
with any of the provisions of this Regulation, if the Commission, in view of
the special circumstances of a matter or class of matters and for reasons to
be recorded in writing, deems it necessary or expedient for dealing with such
a matter or class of matters.
7.6 Nothing stated in this Regulation shall, expressly or implicitly, bar the
Commission from dealing with any matter or exercising any power under
39
the Act for which no Regulation has been framed, and the Commission may
deal with such matters, powers and functions in a manner it thinks fit.
Exemption
40
Chapter – 3
POWER INDUSTRY
41
INDUSTRY PROFILE
42
The share of the thermal element in the installed generating
capacity, which is also predominantly coal-based, shows a steady increase.
Thus, the relatively cheaper and a more desirable change in terms of a higher
share of hydel source, which is renewable, have not materialized.
POWER SCENARIO
HYDEL POWER
43
the Chinese pattern of micro and mini hydel projects wherever the terrain is
suitable.
44
They are
45
MINI-HYDEL SCHEMES HAVE SEVERAL ADVANTAGES.
1. They do not require larger capital investment and their gestation period is
only 12 to 18 months.
THERMAL POWER:
46
HIGHLIGHTS:
1. Two part system for thermal tariffs and single tariff for hydel projects.
47
ROLE OF NATIONAL THERMAL POWER CORPORATION
(NTPC)
48
GEO POWER SYSTEM
49
During Summer
Ventilation
Ground Air is pumped into the house after being cooled by the
GEO PIPE. The hot air is being ventilated out of the house through the attic
ventilation
Circulation
Ground Air is pumped into the house after being cooled by the
GEO PIPE
During Winter
Ventilation
Circulation
50
The effect of Geo Power System
In this age where child care and better health services for all
especially of the old have taken primary significance, the power of this
system which minimizes temperature differences between interior rooms
helps better health keeping for the young and the old.
4. Natural Purification
51
The system includes natural purification of minute impurities in
the air which are cleaned before being pumped into the house. This is done
with the help of condensed moisture which accumulates at the surface of the
cobblestones and the pipes.
1. Energy Saving
[Building Structure]
52
1. Increased Durability
NUCLEAR ENERGY:
53
1. Tarapur Atomic Power Station (TAPS)-It provides electricity to
Maharashtra and Gujarat.
ADVANTAGES:
2. Nuclear is economical.
OCEAN ENERGY:
54
Indian Institute of Technology, Madras commending the offer of the U.S.
based firm sea solar power (SSP) to set up 6 Ocean Thermal Energy
Conversion (OTEC) plants of 100 MW capacities each along the Tamilnadu
Coast for serious consideration and recommending the setting up of one
plant to begin with at Kulasekarpatnam area.
WIND ENERGY:
55
sources (DNES) in association with state agencies has been responsible for
creating and sustaining interest in the field.
SOLAR ENERGY:
It is believed that with just 0.1 per cent of the 75,000 trillion
kHz of solar energy that reaches the earth, planet’s energy requirement can
be satisfied. Electricity can be generated with the help of solar energy
through the solar thermal route, as well as directly from sunlight with the
help of Solar PhotoVoltaic (SPV) technology. SPV Systems are being used
for lighting, water pumping, and telecommunications and also for village
size power plants in rural areas. SPV systems are being used to provide
lighting under the National Literacy mission, refrigeration for vaccine
storage and transport under the National immunization programme, drinking
water and power for telecommunications. Indian railways have been using
this technology for signaling.
PRICING:
56
PROBLEMS:
57
2. Permitting the use of gas and oil fuels at selected power plants either to
supplement or to substitute coal with a view to increase power
production.
58
3. Coal benefaction by adopting more sophisticated techniques to ensure
better and consistent quality of coal to the power plants.
2. 80% of the capital investment to be raised through loans and only 50% of
this amount could be raised from public Fls.
4. Increase in the prescribed rate of return for the license has been approved
from the existing 12% to 15%.
59
5. Capitalization of interest during construction has been permitted at the
actual cost (instead of the present 1% above the Reserve Bank rate) for
the initial project as well as for the subsequent expansions.
7. Private licenses have been exempted from obtaining clearance under the
MRPT act.
THE FUTURE:
60
Chapter – 4
OVERVIEW OF
LANCO GROUP
61
PROFILE OF GENTING LANCO POWER (INDIA) PRIVATE
LIMITED
(OPERATIONS & MAINTENANCE COMPANY FOR LANCO
KONDAPALLI POWER PRIVATE LIMITED)
Genting Lanco Power (India) Private Limited is a subsidiary of
Genting group of companies based at Kuala Lumpur, Malaysia. Genting
group has its presence in diversified fields like Power, Plantations, Paper &
Packaging, Entertainment, Resorts & Hotels, Property development, Cruise
liners, e Commerce, Oil and Gas.
62
LANCO GROUP PROFILE
63
HISTORY AND EVOLUTION
MEMBER OF PARLIAMENT
64
OBJECTIVES
This was established in the year 1993 and has executed most
demanding and difficult projects in the field of civil and construction
engineering. Lanco constructions ltd. today stand tall and proud as one the
leading civil engineering companies by building competencies, developing
65
modern construction management methods and by adopting the highest
standards of guilty.
66
LANCO KONDAPALLI POWER PRIVATE LTD
Vision:
Mission
67
4. To constantly evolve and seek synergies between the interests of
employers and those of employees and to work intelligently towards
empowerment of associates.
Philosophy
68
2. Business heads are entrepreneurs
3. Mistakes are facts of life. Its is response to the error that counts.
Success
Work culture
69
LOCATION
70
Lanco Kondapalli Power Private Limited (LKPPL) is an
Independent Power Project (IPP) located at Kondapalli Industrial
Developmental Area near Vijayawada in India, set up at a cost of around
Rs.11,000 million (US $275 million), the Plant is a 368.144 MW Combined
Cycle Power Project operating on Natural Gas as Primary fuel.
The plant operates on natural gas as the main fuel and Naphtha;
HSD as the alternative fuels Natural gas fuel is being received at site from
Tatipaka near Rajahmundry through a pipeline laid down by GAIL
Fuel Received
71
4. Environmental Excellence Award 2004 by Green-tech Foundation,
New Delhi.
ENVIRONMENT POLICY
72
QUALITY POLICY
4. Treating all staff & families fairly and with respect while encouraging
personnel growth.
73
3. Provide appropriate and on going Information,
Instruction and Training of our direct and indirect employees.
NOISE MANAGEMENT
74
2. Silencers have been provided.
3. Community participation.
75
4. Eco – friendly, adhering to highest standards of safety and conversion of
natural resources.
5. The first project cleared by Central Electricity Authority (CEA) under the
international competitive Bidding (ICB) route for power projects in India.
6. The first of the ICB power projects in India to achieve financial closure
and complete construction in shortest possible time.
76
Chapter – 5
RATIO ANALYSIS
77
RATIO ANALYSIS
FINANCIAL ANALYSIS
Trade creditors, to identify the firm’s ability to meet their claims i.e.
liquidity position of the company.
78
RATIO ANALYSIS
Percentages
Fractions
Proportion of numbers
To compare the calculated ratios with the ratios of the same firm
relating to the pas6t or with the industry ratios. It facilitates in
assessing success or failure of the firm.
79
Third step is to interpretation, drawing of inferences and report
writing conclusions are drawn after comparison in the shape of report
or recommended courses of action.
80
understanding of financial strengths and weaknesses of a firm. There are a
number of ratios which can be calculated from the information given in the
financial statements, but the analyst has to select the appropriate data and
calculate only a few appropriate ratios. The following are the four steps
involved in the ratio analysis.
Comparison of the calculated ratios with the ratios of the same firm in
the past, or the ratios developed from projected financial statements or
the ratios of some other firms or the comparison with ratios of the
industry to which the firm belongs.
Group of ratios
81
Historical comparison
Projected ratios
Inter-firm comparison
The calculation of ratios may not be a difficult task but their use
is not easy. Following guidelines or factors may be kept in mind while
interpreting various ratios are
Selection of ratios
Use of standards
82
Facilitate decision making
Evaluation of efficiency
Effective tool
Differences in definitions
Limited use
83
Personal bias
CLASSIFICATIONS OF RATIOS
1. Traditional Classification
2. Functional Classification
3. Significance ratios
1. Traditional Classification
Balance sheet (or) position statement ratio: They deal with the
relationship between two balance sheet items, e.g. the ratio of current
assets to current liabilities etc., both the items must, however, pertain
to the same balance sheet.
Profit & loss account (or) revenue statement ratios: These ratios deal
with the relationship between two profit & loss account items, e.g. the
ratio of gross profit to sales etc.,
Composite (or) inter statement ratios: These ratios exhibit the relation
between a profit & loss account or income statement item and a
84
balance sheet items, e.g. stock turnover ratio, or the ratio of total
assets to sales.
2. Functional Classification
3. Significance ratios
Some ratios are important than others and the firm may classify
them as primary and secondary ratios. The primary ratio is one, which is of
the prime importance to a concern. The other ratios that support the primary
ratio are called secondary ratios.
1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio
1. LIQUIDITY RATIOS
85
Liquidity refers to the ability of a concern to meet its current
obligations as & when there becomes due. The short term obligations of a
firm can be met only when there are sufficient liquid assets. The short term
obligations are met by realizing amounts from current, floating (or)
circulating assets The current assets should either be calculated liquid (or)
near liquidity. They should be convertible into cash for paying obligations of
short term nature. The sufficiency (or) insufficiency of current assets should
be assessed by comparing them with short-term current liabilities. If current
assets can pay off current liabilities, then liquidity position will be
satisfactory.
Current ratio
Current assets
86
Current ratio =
Current liabilities
Quick ratio is a test of liquidity than the current ratio. The term
liquidity refers to the ability of a firm to pay its short-term obligations as &
when they become due. Quick ratio may be defined as the relationship
between quick or liquid assets and current liabilities. An asset is said to be
liquid if it is converted into cash with in a short period without loss of value.
87
Components of quick or liquid ratio
88
creditors are nor accepted to demand cash at the same time and then cash
may also be realized from debtors and inventories.
89
2. LEVERAGE RATIOS
The leverage or solvency ratio refers to the ability of a concern
to meet its long term obligations. Accordingly, long term solvency ratios
indicate firm’s ability to meet the fixed interest and costs and repayment
schedules associated with its long term borrowings.
The following ratio serves the purpose of determining the
solvency of the concern.
Proprietory ratio
Shareholders funds
Proprietory ratio =
Total assets
90
3. ACTIVITY RATIOS
91
Components of Working Capital
Cost of Sales
Fixed assets turnover ratio =
Net fixed assets
92
(c) CAPITAL TURNOVER RATIOS
93
(d) CURRENT ASSETS TO FIXED ASSETS RATIO
Current Assets
Current Assets to Fixed Assets Ratio =
Fixed Assets
94
4. PROFITABILITY RATIOS
Return on investments
95
Net Profit after Tax = Net Profit (–) Depreciation (–) Interest (–) Income Tax
Net profit
Return on assets =
Total assets
96
(c) RESERVES AND SURPLUS TO CAPITAL RATIO
Reserves& surplus
Reserves & surplus to capital =
Capital
97
(e) OPERATING PROFIT RATIO
Operating cost
Operation ratio =
Net sales
Operating profit
Operating profit ratio =
Sales
98
(f) PRICE - EARNING RATIO
Price earning ratio is the ratio between market price per equity
share and earnings per share. The ratio is calculated to make an estimate of
appreciation in the value of a share of a company and is widely used by
investors to decide whether (or) not to buy shares in a particular company.
99
(g) RETURN ON INVESTMENTS
100
Chapter – 6
DATA ANALYSIS
101
LIQUIDITY RATIO
1. CURRENT RATIO
(Amount in Rs.)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58,574,151 7,903,952 7.41
2004 69,765,346 31,884,616 2.19
2005 72,021,081 16,065,621 4.48
2006 91,328,208 47,117,199 1.94
2007 115,642,068 30,266,661 3.82
Interpretation
In the year 2006, the cash and bank balance is reduced because
that is used for payment of dividends. In the year 2007, the loans and
advances include majorly the advances to employees and deposits to
102
government. The loans and advances reduced because the employees set off
their claims. The other current assets include the interest attained from the
deposits. The deposits reduced due to the declaration of dividends. So the
other current assets decreased.
GRAPHICAL REPRESENTATION
CURRENT RATIO
8.00 7.41
7.00
6.00
4.48
5.00 3.82
Ratio 4.00
2.19 1.94
3.00 Ratio
2.00
1.00
0.00
2003 2004 2005 2006 2007
Years
103
2. QUICK RATIO
(Amount in Rs.)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58,574,151 7,903,952 7.41
2004 52,470,336 31,884,616 1.65
2005 69,883,268 16,065,620 4.35
2006 89,433,596 47,117,199 1.9
2007 115,431,868 30,266,661 3.81
Interpretation
Quick assets are those assets which can be converted into cash
with in a short period of time, say to six months. So, here the sundry debtors
which are with the long period does not include in the quick assets.
104
GRAPHICAL REPRESENTATION
QUICK RATIO
8.00 7.41
7.00
6.00
5.00 4.35 3.81
Ratio 4.00
3.00 Ratios
1.90
1.65
2.00
1.00
0.00
2003 2004 2005 2006 2007
Years
105
3. ABOSULTE LIQUIDITY RATIO
(Amount in Rs.)
Interpretation
The current assets which are ready in the form of cash are
considered as absolute liquid assets. Here, the cash and bank balance and the
interest on fixed assts are absolute liquid assets.
In the year 2006, the cash and bank balance is decreased due to
decrease in the deposits and the current liabilities are also reduced because
of the payment of dividend. That causes a slight increase in the current
year’s ratio.
106
GRAPHICAL REPRESENTATION
107
LEVERAGE RATIOS
4. PROPRIETORY RATIO
(Amount in Rs.)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67,679,219 78,572,171 0.86
2004 53,301,834 88,438,107 0.6
2005 70,231,061 89,158,391 0.79
2006 56,473,652 106,385,201 0.53
2007 97,060,013 129,805,102 0.75
Interpretation
Total assets, includes fixed and current assets. The fixed assets
are reduced because of the depreciation and there are no major increments in
the fixed assets. The current assets are increased compared with the year
108
2006. Total assets are also increased than precious year, which resulted an
increase in the ratio than older.
GRAPHICAL REPRESENTATION
PROPRIETORY RATIO
0.90 0.86
0.79 0.75
0.80
0.70 0.60
0.53
0.60
0.50
Ratios
0.40
Ratios
0.30
0.20
0.10
0.00
2003 2004 2005 2006 2007
Years
109
ACTIVITY RATIOS
(Amount in Rs.)
Interpretation
The income from services is raised and the current assets are
also raised together resulted in the decrease of the ratio of 2007 compared
with 2006.
110
GRAPHICAL REPRESENTATION
111
6. FIXED ASSETS TURNOVER RATIO
(Amount in Rs.)
Interpretation
Fixed assets are used in the business for producing the goods to
be sold. This ratio shows the firm’s ability in generating sales from all
financial resources committed to total assets. The ratio indicates the account
of one rupee investment in fixed assets.
112
GRAPHICAL REPRSENTATION
1.00
0.00
2003 2004 2005 2006 2007
Years
113
7. CAPITAL TURNOVER RATIO
(Amount in Rs.)
Interpretation
114
GRAPHICAL REPRESENTATION
1.04
1.04
1.03
1.02 1.01
1.01 1.00
1.00
0.98
Ratios 0.99 0.98
0.98 Ratios
0.97
0.96
0.95
0.94
2003 2004 2005 2006 2007
Years
115
8. CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount in Rs.)
Interpretation
116
GRAPHICAL REPRESENTATION
9.00 8.17
8.00
7.00 6.07
6.00
5.00 4.20
Ratios 3.74
4.00 2.93
Ratios
3.00
2.00
1.00
0.00
2003 2004 2005 2006 2007
Years
117
PROFITABILITY RATIOS
(Amount in Rs.)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21,123,474 36,039,834 0.59
2004 16,125,942 53,899,084 0.30
2005 16,929,227 72,728,759 0.23
2006 18,259,580 55,550,649 0.33
2007 40,586,359 96,654,902 0.42
Interpretation
The net profit ratio is the overall measure of the firm’s ability to
turn each rupee of income from services in net profit. If the net margin is
inadequate the firm will fail to achieve return on shareholder’s funds. High
net profit ratio will help the firm service in the fall of income from services,
rise in cost of production or declining demand.
118
GRAPHICAL REPRESENTATION
0.50 0.42
0.40 0.33
0.30
Ratios 0.30 0.23
Ratios
0.20
0.10
0.00
2003 2004 2005 2006 2007
Years
119
10. OPERATING PROFIT
(Amount in Rs.)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36,094,877 36,309,834 0.99
2004 27,576,814 53,899,084 0.51
2005 29,540,599 72,728,759 0.41
2006 31,586,718 55,550,649 0.57
2007 67,192,677 96,654,902 0.70
Interpretation
120
GRAPHICAL REPRESENTATION
121
11. RETURN ON TOTAL ASSETS RATIO
(Amount in Rs.)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21,123,474 78,572,171 0.27
2004 16,125,942 88,438,107 0.18
2005 16,929,227 89,158,391 0.19
2006 18,259,580 106,385,201 0.17
2007 40,586,359 129,805,102 0.31
Interpretation
This is the ratio between net profit and total assets. The ratio
indicates the return on total assets in the form of profits.
122
GRAPHICAL REPRESENTATION
0.35
0.31
0.30 0.27
0.25
0.18 0.19
0.20 0.17
Ratios
0.15 Ratios
0.10
0.05
0.00
2003 2004 2005 2006 2007
Years
123
12. RESERVES & SURPLUS TO CAPITAL RATIO
(Amount in Rs.)
Reserves & Surplus To Capital Ratio
Year Reserves & Surplus Capital Ratio
2003 65,599,299 2,079,920 31.54
2004 34,582,554 18,719,280 1.85
2005 51,511,781 18,719,280 2.75
2006 37,754,372 18,719,280 2.02
2007 78,340,733 18,719,280 4.19
Interpretation
The reserves & surplus is decreased in the year 2006, due to the
payment of dividends and in the year 2007 the profit is increased. But the
capital is remaining constant from the year 2004. So the increase in the
reserves & surplus caused a greater increase in the current year’s ratio
compared with the older.
124
GRAPHICAL REPRESENTATION
35.00 31.54
30.00
25.00
20.00
Ratios
15.00
Ratios
10.00
2.75 4.19
1.85 2.02
5.00
-
2003 2004 2005 2006 2007
Years
125
OVERALL PROFITABILITY RATIOS
(Amount in Rs.)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21,123,474 207,992 101.56
2004 16,125,942 1,871,928 8.61
2005 16,929,227 1,871,928 9.04
2006 18,259,580 1,871,928 9.75
2007 40,586,359 1,871,928 21.68
Interpretation
Earnings per share ratio are used to find out the return that the
shareholder’s earn from their shares. After charging depreciation and after
payment of tax, the remaining amount will be distributed by all the
shareholders.
Net profit after tax is increased due to the huge increase in the
income from services. That is the amount which is available to the
shareholders to take. There are 1,871,928 shares of Rs.10/- each. The share
capital is constant from the year 2004. Due to the huge increase in net profit
the earnings per share is greaterly increased in 2007.
126
GRAPHICAL REPRESENTATION
120.00
101.56
100.00
80.00
Ratios 60.00
Ratios
40.00 21.68
8.61
9.04 9.75
20.00
0.00
2003 2004 2005 2006 2007
Years
127
14. PRICE EARNINGS (P/E) RATIO
(Amount in Rs.)
Price Earning (P/E) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 32.54 101.56 0.32
2004 28.47 8.61 3.30
2005 37.52 9.04 4.15
2006 30.17 9.75 3.09
2007 51.85 21.68 2.39
Interpretation
128
GRAPHICAL REPRESENTATION
P/E RATIO
4.50 4.15
4.00
3.30
3.50 3.09
3.00 2.39
2.50
Ratios
2.00
Ratios
1.50
1.00
0.32
0.50
0.00
2003 2004 2005 2006 2007
Years
129
15. RETURN ON INVESTMENT
(Amount in Rs.)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21,123,474 67,679,219 0.31
2004 16,125,942 53,301,834 0.3
2005 16,929,227 70,231,061 0.24
2006 18,259,580 56,473,652 0.32
2007 40,586,359 97,060,013 0.42
Interpretation
This is the ratio between net profits and shareholders funds. The
ratio is generally calculated as percentage multiplying with 100.
130
GRAPHICAL REPRESENTATION
0.45 0.42
0.40
0.31 0.32
0.35 0.30
0.30 0.24
0.25
Ratios
0.20
RatioS
0.15
0.10
0.05
0.00
2003 2004 2005 2006 2007
Years
131
Chapter – 7
132
FINDINGS OF THE STUDY
133
8. The current assets to fixed
assets ratio is increasing gradually from 2003 – 07 as 2.93, 3.74, 4.20,
6.07 and 8.17. It shows that the current assets are increased than fixed
assets.
134
14. Price Earnings ratio is reduced
when compared with the last year. It is reduced from 3.09 to 2.39,
because the earnings per share is increased.
135
SUMMARY
2) The company profits are huge in the current year; it is better to declare
the dividend to shareholders.
3) The company is utilising the fixed assets, which majorly help to the
growth of the organisation. The company should maintain that
perfectly.
4) The company fixed deposits are raised from the inception, it gives the
other income i.e., Interest on fixed deposits.
CONCLUSION
136
BIBLIOGRAPHY
REFFERED BOOKS
INTERNET SITE
www.ercap.org
www.wikipedia.com
www.nwda.gov.in
137
APPENDIX
(Amount in Rs.)
138
Profit and Loss Account for the period ended on 31st March 2007
(Amount in Rs.)
Particulars 2006 - 07 2005 – 06
I.INCOME
Income from Services 96,654,902 55,550,649
Other Income 2,398,220 2,285,896
TOTAL 99,053,122 57,836,545
II.EXPENDITURE
Administrative and Other Expenses 81,334,750 75,599,719
81,334,750 75,599,719
Less: Expenditure Reimbursable under Operations
and Maintenance Agreement 49,474,305 49,349,892
TOTAL 31,860,445 26,249,827
III. PROFIT BEFORE DEPRECIATION AND TAXATION 67,192,677 31,586,718
Provision for Depreciation 2,183,576 2,279,917
IV. PROFIT BEFORE TAXATION 65,009,101 29,306,801
Provision for Taxation
- Current 24,292,000 10,680,440
- Deferred (315,922) (67,359)
- Fringe Benefits 446,663 434,140
V. PROFIT AFTER TAXATION 40,586,359 18,259,580
Surplus brought forward from Previous Year 26,699,257 44,951,851
VI. PROFIT AVAIALABLE FOR APPROPRIATIONS 67,285,617 63,211,431
Transfer to General Reserve - 4,495,185
Interim Dividend Rs.15 per equity Share (2005- NIL) - 28,078,920
Provision for Dividend Distribution Tax - 3,938,069
VII. BALANCE CARRIED TO BALANCE SHEET 67,285,617 26,699,257
139