Kiran Sir Financial Performance Sagar Cements
Transcript of Kiran Sir Financial Performance Sagar Cements
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CHAPTER-1
INTRODUCTION
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INTRODUCTION
Financial analysis is the process of identifyin the
!nancial strenths and "ea#ness of the !r$ %y properly
esta%lishin relationships %et"een the ite$s of !nancial
state$ents &i'( %alance sheet tradin acco)nt* and pro!t
+loss acco)nt,
Financial analysis assess the co$panys
operational e.ciency and also learn a%o)t !nancial
position at the end of the acco)ntin year,
Financial state$ent analysis larely a st)dy of
relationship a$on the &ario)s !nancial factors in a
%)siness as disclosed %y a sinle set of state$ents assho"n in a series of state$ents,
Importance of nancial analysis:
In&estors in co$pany e/ects are concern
principally "ith present and e0pected f)t)re earnins and
sta%ility of this earnins a%o)t a trend* as "ell as they
co&ariance "ith the earnins of other co$panies, As a
res)lt in&estors $iht concentrate their analysis on the
pro!ta%ility of !r$, They "o)ld %e concerned "ith
!nancial condition,
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In so far its e/ects the a%ility of the co$pany
to pay the di&idends and to a&oid %an#r)pt, in order to
%arain $ore e/ecti&ely for o)tside f)nds * the
$anae$ent of the !r$ sho)ld %e interested in all
aspects of !nancial analysis that o)tside s)ppliers of
capital )se in e&al)atin the !r$, 2anae$ent also
e$ploys !nancial analysis for the p)rpose of internal
control,
In partic)lar it is concerned "ith the
pro!ta%ility on in&est$ent in the &ario)s assets of the
co$pany and in the !r$ iss)es of the co$pany and in the
!r$ iss)es &ario)s o&ern$ent re)lators $y )se
!nancial analysis in partic)lar re)latory aencies
concerned "ith the rate of ret)rn of a co$pany earns on
its assets* as "ell as "ith the proportion of non-e3)ity
f)nds e$ployed in the %)siness Th)s* this type of!nancial )nder ta#in &aries accordin to the speci!c
interest of a !nancial state$ents analysis is the part of
larer infor$ation processin syste$ of "hich infor$ed
decisions can %e %ased,
Co$parati&e analysis are relationship e0pressed in a
$athe$atical for$s %et"een !)res "hich are connected
"ith each other in sa$e $anner o%&io)sly4 no p)rpose "ill
%e ser&ed %y co$parin t"o steps of !)res* "hich are
not at all connected "ith each other* $ore e&er ade3)ate
!)res are also )nits for co$parison,
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Co$$on si'e analysis is a si$ple arith$etic
e0pression of the relationship of one n)$%er to another ,it
$ay %e de!ned as the indicated re3)ire$ents of t"o
$athe$atical e0pression ,in si$ple lan)ae ratio
e0pressed in ter$s of another and can %e "or#ed o)t %y
di&idin one n)$%er to another,
NEED FOR THE STUDY
Financial 6t$ants HE7P6A66E66THEOPRETION7E
and learn a%o)t the !nancial position of the %)siness at
the end of the acco)ntin period ,
The acco)ntant prepares a pac#ae of a !nancialstate$ents thats is tradin* pro!t + loss acco)nt*
%alance sheet
6o the !nancial analyst depends pri$arly on
these state$ents to dionise !nancial perfor$ance the 5
$ain reasons of the !nancial analyst depends on the
state$ents
As lon as acco)ntin %iases re$ain $ore or less the
sa$e o&er ti$e* $eanin f)ll inferences can %edra"n %y e0a$ine trends in ra" data and in !nancialRatios
6ince si$ilar %iases characteri'e &ario)s !r$s in the
sa$e ind)stry* inter-!r$ co$parisons are )sef)l,
E0perience see$s to s)est that !nancial analysis
"or#s if one is a"are of acco)ntin %iases and $a#esad8)st$ents for the sa$eIf properly analy'ed and interpreted !nancial
state$ents is of interest to
o 7enders9short ter$ and lon ter$ lenders:
o In&estors
o 6ec)rity analystso 2anaers and also it helps for assessin
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o Corporate e0cellence
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To pro&ide relia%le infor$ation a%o)t chanes in
net reso)rces of the acti&ity,
Researc! met!o#olo$y:
2ethodoloy is a syste$atic proced)re of
collectin infor$ation in order to analysis and =arity
a pheno$enon* the collection is done thro)h
principles so)rces &i'4
i:Pri$ary data,
ii:6econdary data,
i%&rimary #ata:
It is infor$ation collected directly "ith o)t any
reference , in this st)dy it "as $ainly inter&ie"s* "ith
concerned o.cers and sta/* either indi&id)ally or
collected so$e of the infor$ation had %een &eri!ed
or s)pple$ented cond)ctin personal "itho%ser&ations,
T!e #ata incl"#es
Inter&ie"s "ith 6pone Iron Indian 7i$ited
e$ployees Oranition charts has %een dra"n thro)h
o%ser&ation
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ii% secon#ary #ata:
The secondary data "as collectin for$
so)rce s)ch as pa$phlets* ann)l reports * ret)rn and
internal records,
The data incl)des,
Collection of re3)ired data fro$ the ann)al
reports of 6A@AR CE2ENT67I2ITED INDIA
7I2ITED in ho)se $aa'ines* p)%lication and"e%sites,
Reference fro$ te0t %oo#s and 8o)rnals relatin!nancial $anae$ent
'I(IT)TIONS OF THE STUDY:
As the researcher as the pro8ect and period of
ti$e consideration for analy'in the !nancialperfor$ance is less* it is not possi%le to ha&e
enerali'ation the chance of errors in $ore,
As it is not the researcher direct o%ser&ation %)t
a secondary so)rces of infor$ation pro&ided %ythe co$pany,
It is dealin "ith &ery li$ited pro$oters for
e&al)atin desired o%8ecti&es
It is $a8orly %ased on the secondary datan)$%ers,
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CHAPTER-
INDU6TR PROFI7E
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*E(ENT INDUSTRY
India* %ein the second larest ce$ent prod)cer in the"orld after China "ith a total capacity of 1>1, 2illion
Tones 92T:* has ot a h)e ce$ent ind)stry, ith theo&ern$ent of India i&in %oost to &ario)s infrastr)ct)repro8ects* ho)sin facilities and road net"or#s* the ce$entind)stry in India is c)rrently ro"in at an en&ia%le pace,2ore ro"th in the Indian ce$ent ind)stry is e0pected inthe co$in years, It is also predicted that the ce$entprod)ction in India "o)ld rise to 5?,1? 2T in F11, Itsalso e0pected to rise to ?,?1 2T in F1,
The ce$ent ind)stry in India is do$inated %y aro)nd Gco$panies* "hich acco)nt for al$ost BG of the total
ce$ent prod)ction in India, In the present year* the Indiance$ent co$panies ha&e prod)ced 11 2T ce$ent d)rinApril-6epte$%er GG, It too# the total ce$ent prod)ctionin FG to 51 2T,
Ce$ent ind)stry* in any co)ntry* plays a $a8or role in thero"th of the nation, Ce$ent ind)stry in India "as )nderf)ll control and s)per&ision of the o&ern$ent, Ho"e&er* it
ot relief at a lare e0tent after the econo$ic refor$, J)t
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o&ern$ent interference* especially in the pricin* is stille&ident in India, In spite of %ein the second larestce$ent prod)cer inthe "orld* India falls in the list oflo"est per capita cons)$ption of ce$ent "ith 1> #, The
reason %ehind this is the poor r)ral people "ho $ostly li&ein $)d h)ts and cannot a/ord to ha&e the co$$odity,Despite the fact* the de$and and s)pply of ce$ent inIndia has ro"n )p, In a fast de&elopin econo$y li#eIndia* there is al"ays lare possi%ility of e0pansion ofce$ent ind)stry,
+lobal Scenario:
7ocal* national* reional and lo%al entities*
in&ol&ed in the $an)fact)re and $o&e$ent of ce$ent and
clic#er* are the constit)ents of the lo%al ce$ent ind)stry,
The ind)stry is a dyna$ic one* respondin to chanes in
$)ltit)de of &aria%les- incl)din $acro- econo$ic ro"th*
ho)sin sector %oo$s* p)%lic spendin le&els* trade
protectionis$* and transportation costs-pre&ailin in the
respecti&e co)ntries, The ce$ent capacity is do$inated at
lo%al le&el %y a handf)l of $)ltinational co$panies*
"hose presence is increasinly felt in ro"in Indian*
Chines* 2iddle East and 7atin A$erica $ar#ets* as a res)lt
of "hich the ce$ent sector has %eco$e e&en $ore
lo%alisied in recent years, D)e to this*
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National Scenario:
India "itnessed the %einnin of $an)fact)re of
ce$ent in an orani'ed $anner in the year 11; "hen the
Indian ce$ent co$pany li$ited co$$enced its
$an)fact)re of ce$ent at its plant Por%)ndhar in @)8arat,
6ince then the ind)stry has co$e a lon "ay to reach the
c)rrent position of %einnin the second larest prod)cer
of ce$ent in the "orld* ne0t in china,
There are nearly 1> lare ce$ents plants
and $ore than 5GG s$all ce$ent plants c)rrently
operatin in the co)ntry, This ind)stry has also $ade
tre$endo)s strides in technoloical )p rad)ation and
assi$ilation of latest technoloy to prod)ce di/erent types
of ce$ent li#e
Ordinary Portland ce$ent
Portland po''olana ce$ent
Portland %last fyrnace sla ce$ent
Oil "ell ce$ent
Rapid hardenin Portland ce$ent
6)lphate resistin Portland ce$ent
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hite ce$ent,
Presently* $ore than G percent of the total
capacity in the ind)stry is %ased on $odern anden&iron$ent-friendly dry process technoloy,
The positi&e de&elop$ents ha&e pa&ed the "ay
for entry of $)ltinational co$panies li#e holci$* ci$por
9of por)ese:* crh plc* &icat 6,A of France into the Indian
ce$ent ind)stry* "hich has also attracted the attention
of lo%al in&estors and f)nd $anaers li#e Jlac#stone*Fidelity* AJNA$ro *H6JC* No$)ra Asset 2anae$ent
F)nd and E$erin 2ar#et F)nd, This trend "ill ain
f)rther strenths as the ind)stry is set to "itness a
fastest ro"th "ith h)e in&est$ents planned in the
Indian infrastr)ct)re %oth %y o&ern$ent and pri&ate
sector* %oo$in ho)sin constr)ction and e0pansion in
corporate prod)ction facilities
*ompany Scenario:
The year GG-G "as a$o$ento)s one for )s at saar ce$ents for $ore then
one reason, It "as d)rin this year that the co$pany
e0pand its capacity to ,5> $illion tones* transfor$in
it self fro$ %ein a $ini ce$ent plant to a $a8or
ce$ent plant, The e0pansion "as co$pleted "ith in a
recorded ti$e* $a#in opti$)$ )se of infrastr)ct)re
and other facilities a&aila%le at the plant and at the
$ini$)$ cost,
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The e0pand plant e$ployees &ertical roller
$ill technoloy and IKNP end)l)$ cooler, F76 $idth
a)to$ations LCM Ro%ola% syste$ has %een installed inthe plant and 6C7 is one of the !rst fe" Indian
copaniess to i$ple$ent s)ch as a syste$,
This "o)ld ens)re the %est 3)ality in la%
operations to facilitate hih prod)ct 3)ality "hich "o)ld
opti$i'e o&erall plant operation
In the year GG-G saar ce$ents entered
into 8oint &ent)re "ith =ICAT 6,A, CE2ENT $a8or and
the o ship co$pany of the lo%ally #no"n =ICAT
ro)p of France* to set )p a reen !eld ce$ent plant of
>,> $illon tones capacity at CHATRA6HA7A &illae of
Chincholi Tal)# in @)l%ar Dirstic of KARNATAKA
A separate entity )nder the na$e of =ICAT
6A@AR CE2ENT PRI=ATE 7I2ITED has %een for$ed for
the p)rpose* in rhe e3)ity capital of "hich saar and
&icat ro)p "ill %eholdin ; and >1 respecti&ely
the ac3)isition of land for the pro8ect is nearin
co$pletion,
HISTORY:
6aar Ce$ents 7i$ited 96C7: is a Co$pany of >ears standin* enaed in $an)fact)re of Ce$ent at itsPlant in 2atta$pally* Nalonda District* Andhra Pradesh,
The Co$pany is $anaed %y a Joard* "hose$e$%ers are hihly co$petent and "ell #no"n, The
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6enior 2anae$ent tea$ consists of hihly 3)ali!edProfessionals "ith rich e0perience in the area of their6peciali'ation,
The Co$pany e$ploys $odern technoloyin each of its process of $an)fact)re at its Plant and hasadopted proressi&e $an)fact)rin practices* "hether itrelates to $aintainin hih standards of 3)ality of itsprod)cts or de&elop$ent of its hihly &al)ed h)$anreso)rces or the need to #eep the poll)tion to the %arest$ini$)$,
6aar Ce$ents has a consistent Pro!ttrac# record and* e0cept for a fe" years "hen it "as eithere0ec)tin its e0pansion plans or the ind)stry as a "hole"as )nderoin a di.c)lt period* it has %een declarindi&idend at reasona%le percentaes,
The co$panys 6hares are listed on Hydera%ad
and Jo$%ay 6toc# E0chanes* "here they are acti&elytraded,
The Co$pany "hich started its operation "ith aCe$ent capacity of ??GGG TPA* has rad)ally increased itto the le&el of ,5> 2TPA* "hile its Clin#er capacity hasalso "itnessed a sini!cant increase fro$ ??GGG TPA in1 to present le&el of ,1G 2TPA,
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*!apter,-
*O(&)NY &ROFI'E
&ERSON)':
.ISION(
To pro&ide fo)ndation for society s f)t)re
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(ISSION:
To %e the Indian $ost respected and attracti&e
co$pany in o)r ind)stry creatin &al)e for all o)rstoc#holders,
The &ision and $ission state$ents of 6C7 ltd is
to $aintain leadership in ce$ent ind)stry and de&elop
co$ple$entary prod)cts and ser&ices to strenths core
%)siness of %)ldin prod)cts %y
f)l!ll$ent of $ar#et needs "ith cost e/ecti&e
sol)tion for endin and enhance c)sto$ersatisfaction
stri&in for e0cellence in all that "e do
inno&ati&e sol)tion to create "orld class prod)cts
and ser&ices
$aintain e3)ita%le %alance %et"een
de&eloped and en&iron$ental needs of the society,
/)*0+ROUD OF THE *O(&)NY:
Chief Pro$oter ( 6ri, 6,=eera Reddy
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Other Pro$oters ( 6ri, 6,Annand Reddy
( 6ri, 6,6ree#anth Reddy
( 6ri, O,6"a$inatha Reddy
The corporate head o.ce is located at
--;B% Road No-
Jan8ara hills
Hydera%ad->GGG5;
Tel-G;G-55>1>B1,
The $an)fact)rin plant of ce$ent is located at
2atta$ pally 9&:
2atta$ pally 9$:
Nalonda 9Dt:
Andhra Pradesh,
)RE)S IN 1HI*H R2D *)RRIED OUT /Y
S)+)R *E(ENTS 'TD
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The follo"in areas 6C7 is )nderta#in R+D
de&elop$ent of ne" prod)cts
I$pro&e$ents in process e.ciency
Usae of cost e/ecti&e ra" $aterials
Conser&ation of enery and "ater
Technoloy a%sorption
Red)ctin and recyclin "astes
6C7 $atts$ pally )nits is ha&in $ilestone
deposits 'ones for ce$ent co&erin area 5,1G acres
&i'
2atta$ pally Nalonda dt (1?,G>
2atta pally Nalonda dt (BG,G>
@)ndla pally Nalonda dt (1GG,GG
Peda&eed) Nalonda dt (>G,GG
HU()N RESOUR*ESS:
the plant has "ell 3)ali!ed hihly $oti&ated
$anpo"er of 5> e$ployss on its rolls
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The Directors and 6enior 2anae$ent Tea$ shall act in
accordance "ith the hihest standards of personal and
professional interity* honesty and ethical cond)ct, They
shall act and cond)ct free fro$ fra)d and deception, Their
cond)ct shall confor$ to the professional standards of
cond)ct
HE)'TH3 S)FETY3 EN.IRON(ENT )ND SO*I)'
RES&ONSI/I'ITY
6aarsoft shall stri&e to pro&ide a safe and healthy
"or#in en&iron$ent and co$ply "ith all re)lations
reardin the preser&ation of the en&iron$ent in and
aro)nd its $an)fact)rin facilities and other points of
operations, The co$panies is co$$itted to e.cient )se of
nat)ral reso)rces and $ini$i'e any ha'ardo)s i$pact of
the de&elop$ent* prod)ction* )se and disposal of any of
its prod)cts and ser&ices on the ecoloical en&iron$ent,
FIN)N*I)' RE&ORTIN+ )ND RE*ORDS
As the professional and ethical cond)ct in the $atter of
!nancial a/airs is essential for the proper f)nctionin of
the co$pany* the o.cers and e$ployees enaed in the
!nance f)nctions sho)ld act "ith honesty and interity,
The persons in-chare of !nance and acco)ntin f)nction
sho)ld prepare and $aintain co$panys acco)nts fairly
and acc)rately in accordance "ith enerally accepted
)idelines* principles* standards* la"s and re)lations
applica%le to the co$pany, Internal acco)ntin and a)dit
proced)res shall fairly and acc)rately reect all of the
co$panys %)siness transactions and disposition of assets,
There shall %e no "illf)l o$issions of the co$pany
transactions fro$ the %oo#s and records, Any "illf)l
$aterial $isrepresentation or $isinfor$ation on the
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!nancial acco)nts and reports shall %e rearded as a
&iolation of this code,
&ROTE*TIN+ *O(&)NY )SSETS
The assets of the co$pany sho)ld not %e $is)sed %)t
e$ployed only for the p)rpose of cond)ctin the %)siness
for "hich they are a)thorised, All Directors and $e$%ersof the 6enior 2anae$ent Tea$ sho)ld stri&e to protect
co$panys assets and property and ens)re e.cient )se of
the$,
&ro#"cts
Ce$ent is the %asic and the $ost "idely )sed %)ildin$aterial, T"ice as $)ch Ce$entConcrete is )sed"orld"ide than all other J)ildin 2aterials,
A 2i0t)re of 7i$estone and Clay is ro)nd and %)rnt at a&ery hih te$perat)re to for$ Clin#er, The Clin#er isro)nd to a !ne po"der "ith addition of @yps)$ 9 )p to >: to for$ Ce$ent, The essential co$ponents of Ce$entare 7i$e* 6ilica* Al)$ina and Iron O0ide,
4- +ra#e O&*
>5 @rade OPC is a hiher strenth ce$ent to $eet theneeds of the cons)$er for hiher strenth concrete,
4- +ra#e O&* can be "se# for t!e follo5in$
applications6
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Q RCC "or#s9Prefera%ly "here rade of concrete is 2->
and a%o&e:
Q Precast concrete ite$s s)ch as pa&in %loc#s* tiles
%)ildin %loc#s etc,
Q Pre-stressed concrete co$ponents
Q R)n"ays* concrete Roads* Jrides et
7- +ra#e O&*
The ;5 rade OPC is the $ost pop)lar eneral-p)rposece$ent in the co)ntry today, The prod)ction of ;5 radeOPC is nearly >G of the total prod)ction of ce$ent in theco)ntry,
7- +ra#e O&* can be "se# for t!e follo5in$applications6
Q @eneral Ci&il Enineerin constr)ction "or#,
Q RCC "or#s9prefera%ly "here rade of concrete is )p to2-5G:,
Q Precast ite$s s)ch as %loc#s* tiles* pipes etc,
Q As%estos prod)cts s)ch as sheets and pipes,
Q Non-str)ct)ral "or#s s)ch as plasterin* oorin etc,
-- +ra#e O&*
This ce$ent is )sed for eneral ci&il constr)ction "or#
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)nder nor$al en&iron$ental conditions,
This ce$ent is )sed for eneral ci&il constr)ction "or#)nder nor$al en&iron$ental conditions, The co$pressi&e
strenth of ce$ent after days test as per JI6speci!cation is 55 2Pa, D)e to lo" co$pressi&e strenth*this ce$ent is nor$ally not )sed "here hih rade ofconcrete &i'* 2-G and a%o&e is re3)ired, The a&aila%ilityof hiher rades of OPC in the $ar#et i$pacts the )saeof 55 rade OPC as these days ;5 rade OPC is nor$ally)sed for eneral constr)ction "or#, This rade of ce$entis $ore )sef)l for $ass concretin and plain ce$entconcretin and can also %e )sed for plasterin and sinle
storied indi&id)al ho)ses,
&ortlan# &o88olana *ement 9&&*%
Portland Po''olana Ce$ent is a #ind of Jlended Ce$ent
"hich is prod)ced %y either interrindin of OPC clin#er
alon "ith yps)$ and po''olanic $aterials in certain
proportions or rindin the OPC clin#er* yps)$ and
Po''olanic $aterials separately and thoro)hly %lendin
the$ in certain proportions,
&ortlan# &o88olana *ement is i#eally s"ite#for t!e follo5in$ constr"ction:
Q Hydra)lic str)ct)res,Q 2ass concretin "or#s,Q 2arine str)ct)res,Q 2asonry $ortars and plasterin,
Q Under aressi&e conditions,Q All other applications "here OPC is )sed,
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Q The co$pressi&e strenth of PPC as per JI6code at present is e3)i&alent to that of 55 rade OPC,
*ONTRI/UTION TO THE E*HE;UER:
6C7 2atta$ pally has %een contri%)tion aro)nd of Rs
>>,1G 7a#hs to the e0che3)er in the for$ of Ta0es*Royalties etc
TO1NSHI&:
6C7 2atta$ pally has a "ell-planned to"nship
consistin of ;GG 3)arters ha&in facilities li#e
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O'D )+E &ENSION
RO)DS
Jy allocatin a %)det a$o)nt of a%o)t % Rs
746* Coal -G* Clin#er
-B* @ypsa$ -5,
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BOARD OF DIRECTORS OF SAGAR CEMENTS LIMITED
SI.N
O NAME OF THE DIRECTOR
CATEGORY OF THE
DIRECTOR
1 SHRi O.Swaminatha Reddy
Independent N!n "
E#e$%ti&e
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' SHRi S.(ee)a Reddy Mana*in* Di)e$t!)
N!n+ Independent
E#e$%ti&e
,
SHRi S.Annand Reddy- !int mana*in*
Di)e$t!)
N!n+ Independent
E#e$%ti&e
/
SHRi S S)ee0anth Reddy. E#e$%te
Di)e$t!)
N!n+ Independent
E#e$%ti&e
SHRi 2.Than% pi33ai
Independent N!n "
E#e$%ti&e
4 SHRi 5e)ne) C.R.6OOT
N!n+ Independent N!n
"E#e$%ti&e
7 SHRi (.(.S Ra&ind)a8IDBI9
Independent N!n "
E#e$%ti&e
: SHRi 6.Rae;wa)a Ra!8A6IDC Naminee9
N!n "E#e$%ti&e N!n+
Independent
Financial perfor$ance "ith respect to the operational
perfor$ance
6a)ti$%3a); '
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E6S8R;9 11./: ',.7
The end prod)cts of the %)siness
transactions are !nancial state$ents co$parin the
position state$ents or %alance sheet and inco$e
state$ent or pro!t and loss acco)nt, Financial
state$ents are the %asis for decision $a#in %y the
$anae$ent and as "ell as all other o)t siders "ho are
interested in the a!re of !r$ s)ch as in&estors*
creditors *c)sto$ers* s)ppliers* !nancial instit)tions*
e$ployee* potential in&estors *o&ern$ent and eneral
p)%lic
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(eanin$ of nancial statements
analysis(
A !nancial state$ent is a collection of data
orani'ed accordin to loical and consist ant acco)ntin
proced)res, Its p)rpose is to con&ey on on )nderstandin
of so$e !nancial aspects of %)siness !r$s ,these the
!nancial state$ents enerally refer to the t"ostate$ents,,
The position state$ents or %alance sheet
The inco$e stat $et or the pro!t and loss acco)nt
In the "ords of
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Use an# importance of nancial staments:
The !nancial state$ents are
$irror "hich reect the !nancial position and operatin
and strenths or "ea#ness of the concern these
state$ents are )sef)l to the $anae$ent in&estors
creditors %an#ers *"or#ers* o&ern$ent *and p)%lic at
lare
@eore o$ey points o)t the fallo"in $a8or )ses of
!nancial state$ents,
As a report of ste"ard ship
As a %asic for !scal policy
As a deter$ine the leality of di&idends
As a )ide to ad&ice di&idend action
As a %asic for the rantin of credit
As infor$ation for prospecti&e in&estor in an
enterprise
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As a )ide to the &al)e of in&estor s in an
enterprise,
As a )ide to the &al)e of in&est$ent already$ade,,
As an aid to o&t s)per&ision
As a %asis for ta0ation
'imitations of nancial statements
Thro)h !nancial state$ents are rele&ant and )sef)l
for the cocern* still they do not present a !nal pict)re of
the concern
The analysis and interpretation of these state$ents
sho)ld %e done &ery caref)lly, Other"ise $isleadin
concl)sion $ay %e dra"n,
The !nancial state$ents s).cient and !nal
reports
Only in ter$ reports and !nal reports
7ac# of precision and de!niteness
7ac# of o%8ecti&e 8)d$ent,
Record only $onetary facts,
Historical in nat)re,
6cope of $anip)lation* inade3)ateinfor$ation
)nalysis an# interpretation:
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The analysis and interpretation of !r$
state$ent is essential to %rin o)t the $y state$ents
%ehind the !)res in !nancial state$ents , the ter$
!nancial state$ents analysis incl)des other analysis and
interpretation, A distinction sho)ld %e $ade %et"een the
t"o ter$s,
The ter$ analysis is )sed to $ean the
si$pli!cation !nancial data %y $ethodalic classi!cation of
the data i&en in the !nancial state$ents the ter$
interpretation $eans E e$ployin the $eanin and
sini!cance of the si$pli!ed
Ho"e&er the %oth analysis and interpretation are
inter lin#ed and co$pli$entary to each other
In the "ords of KENDE and 2E2U77AR The
analysis and interpretation of !nancial state$ents are an
atte$pt to deter$ine the sini!cance nd $eanin of the
!nancial state$ents data ,so the at forecast $ay %e $adeof the prospect for f)t)re earnins a%ility to pay interest
and de%t $at)rities and pro!ta%ility of so)nd di&idend
policy
Tec!ni?"es@Tools@Deices@(et!o#s of
ananlysis:
To analy'e and interpret the !nancial state$ents
n)$%ers of techni3)es can %e )sed those are
Co$parati&e state$ents,
Co$$on si'e state$ents
Trend pro8ection $ethod
F)nds o" analysis,,
Cash oe analysis,,
Ratio analysis
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The a%o&e $ethods are )sed to analy'e the
co$pany li3)idity position or cash position , in these
$odel "e ta#en the co$parati&e state$ents and
#no" the li3)idity position of the saar ce$ents
li$ited,
*omparatie statements:
The co$parati&e state$ents are state$ents of
the !nancial position at di/erent periods of ti$e, The
ele$ents are sho"n in co$parati&e for$ so as to i&e and
idea of !nancial position at t"o or $ore periods any
state$ents prepared in a co$parati&e state$ents for$partial point of &ie" enerally t"o !nancial p)rpose not
only the co$parison of the !)res of t"o periods %)t also
%e relationship %et"een %alance sheet and inco$e
state$ent ena%les in depth st)dy of !nancial position
and operati&e res)lts the co$parati&e state$ents $ay
sho"
A%sol)te !)res9r)pees a$o)nts:,
Chanes in a%sol)te !ers i,e, increase decrease in
a%sol)te !)res ,,
A%sol)te data in ter$s of percentaes
The analysis is a%le to dra" )sef)l concl)sion "hen!)res are i&en in co$parati&e position, The !)res of
sales for a 3)arter * half yearly or one year $ay tell only
the present position of the sales e/orts, hen sales
!)res of analysis "ill %e a%le to st)dy the trends of sale
o&er di/erent periods of ti$e, 6i$ilarly co$parati&e
!)res "ill indicated the trend and direction of !nancial
position and operatin res)lts,,
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The !nancial data "ill co$pared only "hen sa$e
acco)ntin principals are )sed in preparin the
state$ents in case of any de&iation in )se of )sin
acco)ntin principal this fact $)st %e $aintained at the
analyst sho)ld %e caref)l in )sin these state$ents are,,
1:Jalance sheet
:Inco$e state$ent
*O(&)R)TI.E /)')N*E SHEET:
THE CO2PARATI=E JA7ANCE 6HEET ANA76I6 is
the st)dy of the trend of the sa$e ite$s* ro)p of ite$sand co$pared ite$s in t"o or $ore %alance sheets of the
sa$e %)siness enterprise on di/erent dates, the chanes
in periodic %alance sheet ite$s reected the cond)ct of
the %)siness, The chanes can %e o%ser&ed %y
co$parison of the %alance sheet of the %einnin and at
the end of a period and these chanes can help in for$in
and opinions a%o)t the proress of an enterprise, A third
col)$n )sed to sho" increase in !)res,
The forth col)$n $ay %e added for i&in percentae
of increase or decrease,
2ain pae(
The assets are i&en )nder the fallo"in %alance sheet
ite$s,,
)SSETS SIDE
A%FiBe# assets(
The !0ed assets are those "hich are p)rchased for
the p)rpose of )se o&er a lon period, These assets $eet
to increase prod)ction capacity of the %)siness* they are
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not ac3)ired for sale %)t are )sed for a considera%le
period of the ti$e,, the %alance sheet is prepared to
sho"n !nancial position of the concern, This assets sho)ld
%e sho"n in s)ch a"ay that %alance sheet depicts tr)e
!nancial position of the %)siness , !0ed assets are sho"n
distinctly fro$ each other ,e,, @ood "ill land and
%)ildins* lease holdsetc these assets are sho"n at their
oriinal cost any additions and ded)ction d)rin the
year are sho"n separately, The a$o)nt of depreciation )p
to the pre&io)s year and the d)rin the c)rrent year is
separately ded)cted fro$ the assets
C%Inestments:
In&est$ents are sho"n %y i&in their nat)re and
$ode of &al)ation in&est$ents )nder &ario)s s)% heads
s)ch as in&est$ents in o&t or tr)sty sec)ritys in shares*
de%ent)res and %onds and i$$o&a%le properties arei&en separately in the separate col)$n of the %alance
sheet,,
-%*"rrent assets:
Accordin to al0ander "all c)rrent assets are
s)ch assets as in the ordinary and nat)ral co)rse of
%)siness $ore on "ord thro)h &ario)s the &ario)s
process of prod)ction* distri%)tion and pay$ent ofoods* )ntil they %eco$e cash or its e3)i&alent %y "hich
de%ts $ay %e readily and i$$ediately paid c)rrent
assets are either cash in hand and cash at %an#s or
shortly con&erti%le into cash, The assets li#e de%tors and
%ills recei&a%les are non step "ay fro$ cash, The stoc#
in trade is considera%le to %e t"o steps "ay fro$ cash
%eca)se !rst sales "ill %e $ade and then collection "ill
%e )nderta#en , the co$$only )sed $ethod of
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&al)ation,, i,e, cost or $ar#et price "hiche&er is lo" ,this
is done to a&oid anticipatin pro!ts d)rin inationary
conditions and on the other hand ta#in into acco)nt
losses, If there is a fall in prices of stoc#, The de%tors if
$ore than si0 $onths old are separately i&en,, the
a$o)nt o"ed %y directors etc,, if incl)de in de%tors* are
also separately $entioned
7:(iscellaneo"s EBpen#it"res:
e sho" defer e0pendit)re )nder this headin,
These are the e0penses "hich are not de%ited f)lly to the
pro!t and loss acco)nt of the year in "hich they ha&e%een inc)rred, These e0penses are spred o&er a n)$%er of
the years and the )n"ritten %alance is sho"n in the
%alance sheet,, the ite$s on iss)e of shares or de%ent)res
interest paid o)t of capital d)rin constr)ction etc,,
')I/I'TIES SIDE ITE(S:
A%S!are capital:
The share capital is sho"n as a !rst ite$ an
the lia%ilities side of the %alance sheet,A)thori'ed and
iss)ed capital is sho"n i&in the n)$%ers of shares and
their a$o)nt, The n)$%er of shares and their a$o)nt, The
n)$%er of shares for "hich p)%lic has applied are
$entioned alon "ith the type of capital, i,e, preference
*share capital* e3)ity share capital,, if the capital is iss)ed
for the other than cash, The a$o)nt of s)ch capital is
$entioned, The fact of iss)ed %ones shares is also
$entioned any )npaid calls are ded)cted fro$ the called
)p capital,, if forfeited shares are re iss)ed then this
a$o)nt is added to the paid )p capital,,
C% Resere# an# s"rpl"s:
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Under this headin all those reser&es "hich ha&e
%een created )ndistri%)ted pro!ts are sho"n, Capital
reser&es are those reser&es* "hich are not free for
distri%)tion as pro!ts "here as re&en)es reser&es are
created o)t of apportion of pro!ts &ario)s ite$s incl)ded
here as ,,
a: Capital reser&e
%: Capital rede$ption
c: 6hare pre$i)$ acco)nt
d: Other reser&es
e: 6)rpl)s ,i,e, pro!t and loss acco)nt
f: Proposed addition to reser&es
: 6in#in f)nd
The additional and ded)ction since last %alance
sheet %e sho"n )nder each head, The "ord f)nd in
relation to any reser&e sho)ld %e )sed only "here s)chreser&es is speci!cally represented %y earn $ore
in&est$ents,,
-%Sec"re# loans:
All those loans aainst "hich sec)rities are i&en are
sho"n )nder this cateory, De%ent)re are sho"n )nder
this headin loans and ad&ances fro$ %an#s *s)%sidiary
co$panies etc,, sho)ld %e sho"n separately and thenat)re of sec)rities sho)ld also %e $entioned,,
7%Unsec"re# loans:
These are the loans and ad&ances sec)rity *the
ite$s incl)ded here are deposits* loans fro$ %an#s and
others are also sho"n in they cateory, 6hort ter$ loans
incl)de those are year on the date of the %alance sheet,
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,as reard loans fro$ directors* $anaers etc,, these
sho)ld %e sho"n separately )nder di/erent s)%-headins,
4%*"rrent liabilities an# proisions:
These are di&ided into
a: c)rrent lia%ilities
%: pro&isions
a%c"rrent liabilities:
Acceptance
6)ndry creditor
6)%sidiary co$panies
Ad&ance pay$ent and e0pired disco)nts
Unclai$ed di&idends
Other lia%ilities if any
Interest acc)rd %)t not paid on loans
b%proisions>
follo"in ite$s are incl)ded )nder pro&isions
Pro&isions for ta0ation
Proposed di&idends
Pro&isions for pro&ident f)nd sche$e
Pro&ision for ins)rance* pension and sta/ %ene!ts
sche$es
Other pro&isions
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CO2PARATI=E JA7ANCE 6HEET PROFOR2A
6ARTIC>LARS
YEAR ENDING INCRESE?DECRES
E
8AMO>NT9
INCRESE?DECRESE
86ERCENTAGE9
ASSETS 8RS9 8RS9
I)Current Assets +++ +++ +++ +++
a9In&ent!)ie; +++ +++ +++ +++
@9;%nd)y De@t!); +++ +++ +++ +++
$9Ca;h and Ban0 @a3an$e +++ +++ +++ +++
d9 Othe) C%))ent A;;et; +++ +++ +++ +++
e9L!an; and Ad&an$e;; +++ +++ +++ +++
Total current Assets (A) +++ +++ +++ +++
II) Fixed Assets +++ +++ +++ +++
a9Net @3!$0 ! a;;et; +++ +++ +++ +++
@9In&e;tment; +++ +++ +++ +++
$9w!)0 in p)!*)e;; +++ +++ +++ +++
Total Fixed Asset(B) +++ +++ +++ +++
Total Misc Expenditure (C) +++ +++ +++ +++
Total Fixed Assets (A+B+C) +++ +++ +++ +++
IABIITIES +++ +++ +++ +++
I)S!are !olders "und +++ +++ +++ +++
a9Capita3 +++ +++ +++ +++
@9Re;e)&e; S%)p3%; +++ +++ +++ +++Total S!are !olders Fund (A) +++ +++ +++ +++
II)on# Ter$ ia%ilities +++ +++ +++ +++
a9;e$%)ed 3!an; +++ +++ +++ +++
@9>n ;e$%)ed 3!an; +++ +++ +++ +++
$9Dee)d Ta# +++ +++ +++ +++
d9 $)edit!); !) 3!n* te)m +++ +++ +++ +++
Total on# Ter$ ia%ilites (B) +++ +++ +++ +++
Current ai%ilites& 'roisions +++ +++ +++ +++
a9Lia@i3itie; +++ +++ +++ +++
;B
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@96)!&i;i!n; +++ +++ +++ +++
Total Current ia%ilities (C) +++ +++ +++
TOTA IABIITES (A+B+C) +++ +++ +++ +++
CO22ON 6IE JA7ANCE 6HEET PROFOR2A
6ARTIC>LARS YEAR 6ERCENTAG
E
YEAR 6ERCENTAGE
ASSETS
I)Current Assets
a9In&ent!)ie;@9;%nd)y De@t!);
$9Ca;h and Ban0 @a3an$e
d9 Othe) C%))ent A;;et;
e9L!an; and Ad&an$e;;
Total current Assets (A)
II) Fixed Assets
a9Net @3!$0 ! a;;et;
@9In&e;tment;
$9w!)0 in p)!*)e;;
Total Fixed Asset(B)
Total Misc Expenditure (C)
Total Fixed Assets (A+B+C)
IABIITIES
I)S!are !olders "und
a9Capita3
@9Re;e)&e; S%)p3%;
Total S!are !olders Fund (A)
II)on# Ter$ ia%ilities
a9;e$%)ed 3!an;
@9>n ;e$%)ed 3!an;
$9Dee)d Ta#
d9 $)edit!); !) 3!n* te)m
Total on# Ter$ ia%ilites (B)
Current ai%ilites& 'roisions
a9Lia@i3itie;
@96)!&i;i!n;
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Total Current ia%ilities (C)
TOTA IABIITES (A+B+C)
+UIDE'INES FOR INTER&RET)TION OF *O(&)R)TI.E
/)')N*E SHEET:
hile interpretin co$parati&e %alance sheet the
interpreter is e0pected to st)dy
the
fallo"in aspects
1: C)rrent !nancial position and li3)idity position
: 7on-ter$ !nancial position
5: Pro!ta%ility of the concern
*ommon si8e statement:
The co$$on si'e state$ents* %alance sheet and
inco$e state$ents are sho"n in analytical percentaes, The!)res are sho"n as a percentaes of total assets* total
lia%ilities and total sales, The total assets are ta#en as 1GG and
di/erent assets are e0pressed as a percentae of the total,
6i$ilarly *&ario)s lia%ilities are ta#en as apart of the total
lia%ilities, these state$ents are also #no"n as a co$ponent
percentae of 1GG percentae state$ents %eca)se e&ery
indi&id)al ite$s co)ld not %e co$pared "ith the total has %een
co&er )p, The analy'e is a%le to assess the !)res in relationto total &al)es, The co$$on si'e state$ents $ay %e prepared
in the follo"in "ay,
1: The total of assets or lia%ilities are ta#en as 1GG
: The indi&id)al assets are e0pressed as a percentaeof total assets i,e, 1GG and di/erent are calc)lated inrelation to total lia%ilities ,for e0a$ple* if total assetsare Rs, >7a#es and in&entory &al)es is Rs,>GGGG thenit "ill %e 1G of total assets,
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*H)&TER,4
D)T) )N)'YSIS)ND
INTER&RET)TION6
>G
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CO2PARATI=E JA7ANCE 6HEET OF 6A@AR CE2ENT6 7I2ITED
FOR THE A66E662ENT EAR GG-G AND GG-1G
9R)pees in 7a#hs:
6ARTIC>LARS '1
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Total Current ia%ilities (C) 2,.,-*4 /,/4-1* 03**-*1 /0-31
TOTA IABIITES (A+B+C) 2,1,0-.2 /1222-3 0/*1-, 4-40
INTERPRETATION(
The Net Fi0ed Assets in GG-G is B;,;> and
GG-1G is 5B1;?,;B i,e ,there is increase of B,?in Fi0ed Assets,
There has %een arisin in C)rrent Assets G,5 of
the co$pany, The rise $ainly on a$o)nt increasein In&entorys , The co$pany $iht ha&e chaned itcredit policy and list f)t)re li3)idity position "ill %edependent on credit $anae$ent,
7on ter$ lia%ility are in GG-G are >1,B1 and
in GG-1G is B55B,;1 there is increase 1,1G
The pro!ta%ility of the co$pany appears to %e ood
i$pressi&e as 8)ded %y 5, increase inReser&es and s)rpl)s,
The o&erall !nancial position of the co$pany
appears to %e satisfactory,
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CO2PARATI=E JA7ANCE 6HEET OF 6A@AR CE2ENT6 7I2ITED
FOR THE A66E662ENT EAR GGB-G AND GG-G
9R)pees in 7a#hs:
6ARTIC>LARS '
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Current ai%ilites& 'roisions
a9Lia@i3itie; 1711.7 '1.77 ///.
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CO2PARATI=E JA7ANCE 6HEET OF 6A@AR CE2ENT6 7I2ITED
FOR THE A66E662ENT EAR GG?-GB AND GGB-G
9R)pees in 7a#hs:
6ARTIC>LARS '
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Total on# Ter$ ia%ilites (B) 1.,-*4 22*-./ 433-10 0,-,.
Current ai%ilites& 'roisions
a9Lia@i3itie; 1,
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CO2PARATI=E JA7ANCE 6HEET OF 6A@ARCE2ENT6 7I2ITED
FOR THE A66E662ENT EAR GG>-G? AND GG?-GB
9R)pees in 7a#hs:
6ARTIC>LARS '
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Total on# Ter$ ia%ilites (B) 1*32-20 1.,-*4 00/,-4, 41-3,
Current ai%ilites& 'roisions
a9Lia@i3itie; 1' inFi0ed Assets,
There has %een arisin in C)rrent Assets 5,G? of
the co$pany, The rise $ainly on a$o)nt increasein Cash and Jan# %alances, The co$pany $ihtha&e chaned it credit policy and list f)t)re li3)idityposition "ill %e dependent on credit $anae$ent
The pro!ta%ility of the co$pany appears to %e ood
i$pressi&e as 8)ded %y 1,1 increase in 6ec)redloans,
The o&erall !nancial position of the co$pany
appears to %e satisfactory,
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a9Capita3 1,:'.'4 ,.7' 1
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year GG-1G c)rrent assets are ;,G andc)rrent lia%ilities are 1?,1, the "or#incapital of the co$pany in the year GG-G is$)ch %etter than year GG-1G
The analysis of &ario)s !)res sho"n that the
7on- ter$ and 6hort ter$ !nancial position issatisfactory,
CO22ON 6IE JA7ANCE 6HEET OF 6A@AR CE2ENT6 7I2ITED
FOR THE A66E662ENT EAR ANGGB-G and GG-G
9R)pees in 7a#hs:
6ARTIC>LARS '
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IABIITIES
I)S!are !olders "und
a9Capita3 1,74.:, 1,1 these fro$ 7on ter$ so)rces,
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The "or#in capital of the co$pany is ood in
%oth years, The c)rrent assets co$pares of;G,?1 and c)rrent lia%ilities are G,>5, in theyear GG-G c)rrent assets are 1B,B and
c)rrent lia%ilities are 1G,1?, the "or#incapital of the co$pany in the year GG-G is$)ch %etter than year GGB-G
The analysis of &ario)s !)res sho"n that the
7on- ter$ and 6hort ter$ !nancial position issatisfactory,
CO22ON 6IE JA7ANCE 6HEET OF 6A@AR CE2ENT6 7I2ITED
FOR THE A66E662ENT EARGG?-GB AND GGB-G
9R)pees in 7a#hs:
6ARTIC>LARS '
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Total Fixed Asset(B) 411/-* *1-4, .44-,* /3-21
Total Misc Expenditure (C) < 1,the !)re in GGB-G"ere 5,G and5 these fro$ 7on ter$ so)rces,
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The "or#in capital of the co$pany is ood in
%oth years, The c)rrent assets co$pares of5B,> and c)rrent lia%ilities are 1,B5, in theyear GGB-G c)rrent assets are ;G,?1 andc)rrent lia%ilities are G,>5, the "or#incapital of the co$pany in the year GGB-G is$)ch %etter than year GG?-GB
The analysis of &ario)s !)res sho"n that the7on- ter$ and 6hort ter$ !nancial position issatisfactory,
CO22ON 6IE JA7ANCE 6HEET OF 6A@AR CE2ENT6 7I2ITED
FOR THE A66E662ENT EAR GG>-G? AND GG?-GB
9R)pees in 7a#hs:
6ARTIC>LARS '
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II) Fixed Assets
a9Net @3!$0 ! a;;et; ':7-G? share capitalconsists of C67of total in&est$ent, "hile thepercentae is 5?,B> in GGB-G the co$panyshare holder f)nds are increased %y co$parethen pre&io)s year,
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In the %oth the year the co$pany has follo"ed
the policy of !nancin !0ed assets fro$ 7onter$ f)nds, In the year GG>-G? in&est$ents in!0ed assets are >B,1B,"hich lon ter$ f)nds
B,1,the !)re in GG?-GB"ere ;1,51 and5 these fro$ 7on ter$ so)rces,
The "or#in capital of the co$pany is ood in
%oth years, The c)rrent assets co$pares of;,5 and c)rrent lia%ilities are >,GG, in theyear GG?-GB is 5B,> c)rrent assets are 1,B5and c)rrent lia%ilities are G,>5, the "or#incapital of the co$pany in the year GG?-GB is$)ch %etter than year GG>-G?
The analysis of &ario)s !)res sho"n that the
7on- ter$ and 6hort ter$ !nancial position issatisfactory,
?B
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*H)&TER,4
*ON*'USION )NDSU++ESTIONS
*ON*'USION )ND SU++ESTIONS6
The orani'ation C)rrent Assets is &ery hih in the
Assess$ent year GG-1G*the a$o)nt Rs-
?
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1?1G,5>7a#hs*and the C)rrent Assets is lo" in theassess$ent tear GG?-GB,the a$o)nt is Rsis>5,157a#hs these is increasinly ood proportion*"here or#in capital is hih* this is )sef)l for
orani'ation ,so $aintain this position in f)t)re also,
The orani'ation share holders f)nd is hih in GG-
1G the a$o)nt is -1,5 7a#hs and this is lo" inthe assess$ent year* the a$o)nt is Rs-;>,57a#hs*the 6hare holder f)nd is rad)allyincreased , so the Co$pany $aintain for the f)t)reyears also,
The co$pany 7on-ter$ f)nds are hih in the
assess$ent year GG-1G*the a$o)nt Rs-B55B,;17a#hs and it is lo" in the assess$ent year GG?-GBthe a$o)nt Rs -GB,?;the co$pany has a $aintainood lon-ter$ f)nds it is &ery )sef)l in the %adposition,
The 6aar ce$ents li$ited Assets &ery hih in the
assess$ent year GG-1G( the a$o)nt is Rs-5B5,>>7a8hs, this is &ery hih %y co$parepre&io)s year ,so totally a$o)nt in&ested for !0edAssets* also C)rrent assets ,so the proportion of"or#in capital is also ood,
The c)rrent lia%ilities is slo"ly increasin the
pre&io)s year GG?-GBtoGG-1G the orani'ationha&e a ood position in the c)rrent lia%ilities *so$ain tan this res)lts in f)t)re,
The or#in capital $anae$ent of the co$pany
indicates lo" )ct)ations its not e/ect on theco$pany perfor$ance,
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The lon ter$ !nancial position of concern al"ays
!0ed assets $ore than increase in lon-ter$sec)rities* as also the co$pany ha&e ood "or#incapital %)t the in&est$ent in !0ed assets is less
co$pare to c)rrent assets, 6o its not ood sin forthe co$pany,
In order to $aintain the or#in capital
$anae$ent cycle in $ore e/ecti&e and e.cientthey sho)ld i$pro&e and )se the latest technoloy to$eet the re3)ire$ent,
The cash and %an# %alance is not $ore %alances
co$pare to other c)rrent assets, 6o co$pany$aintain ood cash and %an# %alances for the f)t)re)se,,
BG
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/I/I'IO+R)&HY
/I/I'IO+R)&HY
B1
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()N)+E(ENT )**OUNTIN+ SH)R() )ND
SH)SHI 06+U&T)
FIN)N*I)' ()N)+E(ENT I6(6&)DEY
FIN)N*I)' ()N)+E(ENT &R)S)N) *H)NDR)
FIN)N*I)' ()N)+E(ENT
9principles an# practices%
S6N6()HES1)RI
)nn"al reports of S)+)R *E(ENTS 'I(ITED6
)ND S)+)R *E(ENTS 'TD 1E/SITE