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A Project Report

On
Finalisation of Balance Sheet
Submitted in partial fulfillment of the requirement for the award of the degree
or
Master of Business Administration in Finance
From
Punjab Technical University, Jalandhar


Submitted By : Guided By :

Session – 2013 -15

Department of Master of Business Administration in Finance

Sri Sukhmani Institute of Engineering & Techonology

Derabassi - 140507




DECLARATI ON

I am the student of College of Management & Technology, Department of Management, hereby
solemnly declare that the project report on "FINALISATION OF BALANCE SHEET"
conducted at "CANTECH ENGINEERS PVT. LTD." is the original work done by me and
moreover to the best of my knowledge, no similar report on this very company has been
submitted to CMT, Department of Management so far, for the fulfillment of the requirement of
the course of study under M.B.A program.

The project report is submitted in partial fulfillment of the requirements for the award of the
degree of Masters of Business Administration, being conducted at CMT, Department of
Management .


Gurpreet Singh


ACKNOWLEDGEMENT

My sincere thanks to for his valuable guidance and providing me an
opportunity to do this project without his assistance this project would not have
completed. This project was a great source oflearning and as it has made me aware
of the way in which various methods being used in the Indian companies

I express my deep sense of gratitude to Mrs. Jaspreet kaur – HOD, SSIET
I am extreamly grateful to Ms. J S Saini (CA) my project guide for the project,
who despite her busy schedule, was always there to guide me.
I am also obliged by my fellow friends who helped me and provided assistance
with all relevant information and details required for smoothen functioning without
which this project could not have been a success.

PREFACE

Management ideas without any action based on them mean nothing. That is why
practical experience is vital for any management student .Theoretical studies in the
classroom are not sufficient to understand the functioning and the real problems
coming in the way of management .
So, practical exposures are indispensable to such courses. Thus practical
experience acts as a supplement to the classroom study. It offers exposure to real
world of management in various organizations. It exposes invaluable treasures of
knowledge to a student.
This project deals with the application of theory to know the ‘‘ Finalisation of the
Balance Sheet of the Company’’. I havelearnt a lot of new things which could never
been learnt a comprehensive project concerning different aspect of Operational
Efficiency of company .And the overall knowledge gained by us will be reflected
in the report itself.











TABLE OF CONTENTS

S.No. PARTICULARS

PAGE NO.

1. FINALISATION OF BALANCE SHEET
2. COMPANY PROFILE
3. SWOT ANALYSIS
4. OBJECTIVES OF THE STUDY
5. RESEARCH METHODOLOGY
6. LIMITIONS
7. DATA INTERPERTATION
8. FINDING OF THE STUDY
9. SUGGESTIONS
10. CONCLUSION







INTRODUCTION OF THE STUDY

In our present day economy, finance is defined as the provision of
money at the time when it is required. Every enterprise, whether big, medium of
small, needs finance to carry its operations and to achieve its targets. In fact,
finance is so indispensable today that it is rightly said to be the lifeblood of an
enterprise. Without adequate finance, no enterprise can possibly accomplish its
objectives.
Financial management is applicable to every type of organization,
irrespective of its size kind of nature. It is as useful to a small concern as to a big
unit. A trading concern gets the same utility from its application as a
manufacturing unit may expect. This subject is important and useful for all types of
ownership organizations. Where there is a use of finance. Financial management is
helpful. Every management aims to utilize its funds in a best possible and
profitable way. So this subject is acquiring a universal applicability.

It is indispensable in any organization as helps in:

(i) Financial planning and successful promotion of an enterprise;
(ii) Acquisition of funds as and when required at the minimum possible
cost;
(iii) Proper use and allocation of funds;
(iv) Taking sound financial decisions ;
(v) Improving the profitability through financial controls;

OBJECTIVES OF FINANCIAL MANAGEMENT

Financial management is concerned with procurement and use of
funds. Its main aim is to use business funds in such a way that the firm’s
value/earnings are maximized. There are various alternatives available for using
business funds. Each alternative course has to be evaluated in detail.
The pros and cons of various decisions have to look into before
making a final selection. The decisions will have take into consideration the
commercial strategy of the business. Financial management provides a framework
for selecting a proper course of action and deciding a viable commercial strategy.
The main objective of a business is to maximize the owner’s economic welfare.
This objective can be achieved by:
1. Profit Maximization
2. Wealth maximization

1. Profit maximization:
Profit earning is the main aim of every economic activity. A business
being an economic institution must earn profit to cover its costs and provide funds
for growth. No business can service without earning profit. Profits are a measure of
efficiency of a business enterprise. Profits also serve as a protection against risks
which cannot be ensured. The accumulated profits enable a business to face risks
like fall in prices, competition from other units, adverse government policies etc.
Thus, profit maximization is considered as the main objective of business:
(i) When profit – earning is the aim of business then profit maximization should
be the obvious objective.
(ii) Profitability is a barometer for measuring efficiency and economic prosperity
of a business enterprise, thus, profit maximization is justified on the grounds
of rationality.
(iii) Economic and business conditions do not remain same at all the times. There
may be adverse business conditions like recession, depression, severe
competition etc. A business will be able to service under unfavorable situation
only if it has some past earnings to rely upon. Therefore a business should try
to earn more and more when situation is favorable.
(iv) Profits are the main sources of finance for the growth of a business. So, a
business should aim at maximization of profits for enabling its growth and
development.
(v) Profitability is essential for fulfilling social goals also. A firm by pursuing the
objective of profit maximization also maximizes socio- economic welfare.

2. Wealth maximization
Wealth maximization is the appropriate objective of an enterprise
financial theory asserts that wealth maximization is the single substitute for
stockholder’s utility. When the firm maximizes the stockholder’s wealth, the
individual stockholder can use this wealth to maximize his individual utility. It
means that by maximizing stockholder’s wealth firm is operating consistently
towards maximizing stockholder’s utility.





FINANCIAL STATEMENT ANALYSIS

Financial analysis is the process of determining financial strengths
and weakness of the firm by establishing strategic relationship between the items
of the items of the balance sheet, profit and loss account and other operative data.
In the words of Myers, “financial statements analysis is largely a study of
relationship among various financial factors in a business as disclosed by a single
set of statements, and a study of the trend of these factors as shown in series of
statements
The purpose of financial analysis is to diagnose the information
contained in financial statements so as to judge the profitability and financial
soundness of the firm. The analysis and interpretation of financial statements is
essential to bring out the mystery behind the figures in financial statements.
Financial statements analysis is an attempt to determine the significance and
meaning of the financial statement data so that forecast may be made of the future
earnings, ability to pay interest and debt maturities (both current and long term)
and profitability of a sound dividend policy.
The term financial statement analysis includes both ‘analyses, and
‘interpretation’. A distinction should be made between the two terms. While the
term ‘analysis’ is used to mean the simplification of financial data by methodical
classification of the data given in financial statements, ‘interpretation’ means
‘explaining the meaning and significance of the data so simplified’. However, both
‘analysis and interpretation’ are interlinked and complementary to each other.
Analysis is useless without interpretation and interpretation without analysis is
difficult or even impossible.


Methods of Financial Analysis:
The analysis and interpretation of financial statements is used to
determine the financial position and results of operations as well. A number of
methods or devices are used to study the relation ship between different statements.
An effort is made to use those devices which clearly analyze the position of the
enterprise. The following are the methods of analysis are generally used:
1. Comparative statements;
2. Common-size statements;
3. Funds flow analysis;
4. Ratio analysis;

1. Comparative Statements:
The Comparative financial statements are statements of financial
position at different periods; of time. The elements of financial position are shown
in comparative form so as to give an idea of financial position at two or more
periods. Any statement prepared in comparative form will be converted into
comparative statements. From practical point of view, generally, two financial
statements (balance sheet and income statement) are prepared in comparative form
for financial analysis purpose. Not only the comparison of the figures of two
periods but also be relationship between balance sheet and income statement
enables an in depth study of financial position and operative results.



i) Comparative Income Statement:

The income statement gives the results of the operations of business.
The comparative income statement gives an idea of the progress of a business over
a period of time. The changes in absolute data in money values and percentage can
be determined to analyse the profitability of the business.

ii) Comparative Balance Sheet:

The comparative balance sheet analysis is the study of the trend of the
same items, group of items and computed items in two or more balance sheets of
the same business enterprise on different dates. The changes in periodic balance
sheet items reflect the conduct of a business. The changes can be observed by
comparison of the balance sheet at the beginning and at the end of a period and
these changes can help in forming an opinion about the progress of an enterprise.

2. Common-size Statements:

The common-size statements, balance sheet and income statement are
shown analytical percentages. The figures are shown as percentages of total assets,
total liabilities and total sales. The total assets are taken as 100 and different assets
are expressed as percentage of the total. Similarly, various liabilities are taken as
part of total liabilities, these statements also known as component percentage
because every individual item is stated as percentage of the total 100.


The short comings in comparative statements and trend percentages
where changes in items could not be compared with the totals have been covered
up. The analyst is able to asses the figures in relation to total values.

i) Common-size Income Statement:
The items in income statement can be shown as percentages of sales
to show the relation of each item to sales. A significant relationship can be
established between items of income statement and volume of sales. The increase
in sales will certainly increase selling expenses and not administrative and
financial expenses. In case the volume of sales increases to considerable extent,
administrative and financial expenses may go up. In case total sales are declining,
the selling expenses should be reduced at once. So, a relationship is established
between sales and other items in income statement and this relationship is helpful
in evaluating operational activities of the enterprise.
ii) Common-size Balance Sheet:
A statement in which balance sheet items are expressed as the ratio of
each asset to total assets and the ratio of each liability is expressed as a ratio of
total liabilities is called common size balance sheet. The common size balance
sheet can be used to compare companies of different size. The comparison of
figures in different periods is not useful because total figures may be affected by a
number of factors. It is not possible to establish standard norms for various assets.






3. Funds flow analysis:
Funds flow statement shows the movement of funds and is a
report of the financial operations of the business undertaking. It indicates various
means by which funds were obtained during a particular period and the ways in
which these funds were employed. The flow of funds occur when a transaction
changes on the one hand and non-current account and on the other a current
account & vice- versa.

Flow of funds:








Various sources from which funds were raised and the uses to which these
funds were put. Funds flow statement is formulated on the basis of working
capital basis and on Cash basis
Steps in pre preparation of funds flow statement:
1. Increase or decrease of working capital
2. Funds from operations
3. Funds flow statement

Current Liabilities
Non-Current
Assets






Non-Current Liabilities























Current
Assets

Importance of Funds flow statement :

1. It helps in the analysis of financial operations
2. It throws light on many perplexing questions of general interest
3. It helps in formation of a realistic dividend policy.
4. It acts as future guide
5. It helps in the proper allocation of resources
6. It helps in appraising the use of working capital
7. It helps in knowing the overall credit-worthiness of a firm

Funds flow statement:
1. It should be remembered that a funds flow statement is a substitute to the
income statement or a balance sheet. It provides only some additional
information as regards changes in working capital.
2. It cannot reveal continuous changes.
3. It is not an original statement but simply arrangement of data given in the
Financial statement.

4. Ratio analysis:
Ratio analysis is a powerful tool of financial analysis. It is used
as benchmark for calculating the financial position and performance of a firm. The
absolute accounting figure reported in the financial statements does not provide
the meaningful performance of financial position in the firm, ratio helps to
summarize the large quantity of data to make qualitative judgment about the firm’s
performance.

Types of ratios:
Ratios are calculated from the accounting data are grouped into
various classes according to financial activity. In view of the requirement of
various users of ratios it is classified into four important categories:
1. Liquidity Ratio
2. Leverage Ratio
3. Activity Ratio
4. Profitability Ratio


COMPARITIVE
INCOME STATEMENT













Comparative income statement of
chittoor co-operative sugars ltd., 2003-2004
Particulars 31-3-2003 31-4-2004 change Percentage
Sales 201486573 130517437 -70969136 -35.22%
Less: Cost of goods sold 239132131 155574480 -83557651 -34.94%
Gross profit/loss -37645558 -25057043 12588515 -33.44%
Less: Operating expenses 12609835 10532587 -2077248 -16.47%
Operating profit/loss -50255393 -35589630 14665763 -29.18%
Add: Other income
Miscellaneous income 9500299 1639130 -7861169 -82.75%
Interest received 118481 129866 11385 9.61%
Profit/loss before interest -40636613 -33820634 6815979 -16.77%
Less: Interest paid 26777116 28813070 2035954 7.60%
Profit/loss after interest -67413729 -62633704 4780025 -7.09%
Less: Loss up to last year 231799275 299213004 67413729 29.08%
Net loss cumulative -299213004 -361846708 -62633704 20.93%


Source: Annual Reports of CCSL.

Interpretation:
From the above table it was analyzed that sales and cost of goods sold were
decreased so gross loss also decreased, and there was high decrease in
miscellaneous income (i.e. 82.75%) loss increased due to lack of operational
efficiency.
Comparative income statement of
chittoor co-operative sugars ltd., 2004-2005
Particulars 31-3-2004 31-4-2005 change Percentage
Sales 130517437 96920394 -33597043 -25.74%
Less: Cost of goods sold 155574480 102243876 -53330604 -34.28%
Gross profit/loss -25057043 -5323482 19733561 -78.75%
Less: Operating expenses 10532587 11133862 601275 5.71%
Operating profit/loss -35589630 -16457344 19132286 -53.76%
Add: Other income
Miscellaneous income 1639130 4383327 2744197 167.42%
Interest received 129866 143577 13711 10.56%
Profit/loss before interest -33820634 -11930440 21890194 -64.72%
Less: Interest paid 28813070 23326176 -5486894 -19.04%
Profit/loss after interest -62633704 -35256616 27377088 -43.71%
Less: Loss up to last year 299213004 361846708 62633704 20.93%
Net loss cumulative -361846708 -397103324 -35256616 9.74%


Source: Annual Reports of CCSL.

Interpretation:
From the above table it was analyzed that the percentage decrease in cost of
goods sold is more than the decrease in sales so gross loss also decreased due to
reduce in the cost of raw materials. Even though increase in operating expenses
operating loss decreased due to effective control of raw material cost.

Comparative income statement of
chittoor co-operative sugars ltd., 2005-2006
Particulars 31-3-2005 31-4-2006 change Percentage
Sales 96920394 124629657 27709263 28.59%
Less: Cost of goods sold 102243876 72877770 -29366106 -28.72%
Gross profit/loss -5323482 51751887 57075369 -1072.14%
Less: Operating expenses 11133862 35468649 24334787 218.57%
Operating profit/loss -16457344 16283238 32740582 -198.94%
Add: Other income
Miscellaneous income 4383327 4664988 281661 6.43%
Interest received 143577 172981 29404 20.48%
Profit/loss before interest -11930440 21121207 33051647 -277.04%
Less: Interest paid 23326176 29320178 5994002 25.70%
Profit/loss after interest -35256616 -8198971 27057645 -76.74%
Less: Loss up to last year 361846708 397103324 35256616 9.74%
Net loss cumulative -397103324 -405302295 -8198971 2.06%


Source: Annual Reports of CCSL.

Interpretation:
From the above table it was analyzed that sales percentage increased and
at the same time cost of goods sold decreased so the firm earned gross profit due to
high control in purchase of raw materials. Due to increase in operating expenses loss
increased (2.06%) the firm has no control over the operating activities.



Comparative income statement of
chittoor co-operative sugars ltd., 2006-2007
Particulars 31-3-2006 31-4-2007 change Percentage
Sales 124629657 368853567 244223910 195.96%
Less: Cost of goods sold 72877770 406536335 333658565 457.83%
Gross profit/loss 51751887 -37682768 -89434655 -172.81%
Less: Operating expenses 35468649 17197408 -18271241 -51.51%
Operating profit/loss 16283238 -54880176 -71163414 -437.03%
Add: Other income
Miscellaneous income 4664988 26265 -4638723 -99.44%
Interest received 172981 1056277 883296 510.63%
Profit/loss before interest 21121207 -53797634 -74918841 -354.71%
Less: Interest paid 29320178 39840441 10520263 35.88%
Profit/loss after interest -8198971 -93638075 -85439104 1042.07%
Less: Loss up to last year 397103324 405303195 8199871 2.06%
Net loss cumulative -405302295 -498941270 -93638975 23.10%


Source: Annual Reports of CCSL.
Interpretation:
Interpretation:
From the above table it was analyzed that cost of goods sold increased
by (457.83%) but sales increased only (195.96) i.e. less than increase in cost of
goods sold so the firm incurred loss. Even though operating expenses decrease it
got operating loss due to high cost of production.







COMPARITIVE
BALANCE SHEET











Comparative balance sheet for the years2003-04
Particulars 31-3-2003 31-3-2004 Change Percentage
Share capital 140,958,700 140,960,300 1,600 0.00%
Reserves 219,357,188 228,727,884 9370696 4.27%
U.D.P 64,227 64,227 0 0.00%
Reserves to be invested 24,703 24,703 0 0.00%
Audit fund 9,696 9,696 0 0.00%
Profit/loss -299,213,003 -361,846,708 -62633705 20.93%
A. Net worth 61,201,511 7,940,102 -53261409 -87.03%
Borrowings 235,616,210 223,822,462 -11793748 -5.01%
Deposits 28,836,536 28,812,457 -24079 -0.08%
B.Borrowings 264,452,746 252,634,919 -11817827 -4.47%
C. Capital employed (A+B) 325,654,257 260,575,021 -65079236 -19.98%
F.D.S with banks 250,000 2,250,000 2000000 800.00%
Shares in other co-operative institutions 228,550 228,550 0 0.00%
Loans to other co-operative factories 3,000,000 1,000,000 -2000000 -66.67%
Fixed assets 222,136,732 222,136,732 0 0.00%
Deficits 47,944 47,944 0 0.00%
D. Fixed assets 225,663,226 225,663,226 0 0.00%
Cash on hand 1,283,980 22,575 -1261405 -98.24%
Cash at bank 4,095,240 15,881,189 11785949 287.80%
Deposits with various agencies 1,254,826 1,261,226 6400 0.51%
Loans and advances to members 6,461,883 6,386,630 -75253 -1.16%
Debtors 54,412,361 54,894,708 482347 0.89%
Interest receivable 1,826,488 1,826,489 1 0.00%
Closing stock 219,662,805 96,849,740
-
122813065 -55.91%
E. Current assets 288,997,583 177,122,557
-
111875026 -38.71%
Creditors 182,912,074 115,020,074 -67892000 -37.12%
Outstanding interest 6,094,478 27,190,688 21096210 346.15%
F. Current liabilities 189,006,552 142,210,762 -46795790 -24.76%
G. Net current assets (E-F) 99,991,031 34,911,795 -65079236 -65.09%
H. Net assets (D+G) 325,654,257 260,575,021 -65079236 -19.98%
Source: Annual Reports of CCSL.
Interpretation:
From the above table it was analyzed that fixed deposits were
increased by 800% current assets and current liabilities were sufficiently decreased
due to current liabilities were paid out of current assets.
Comparative balance sheet for the years2004-05
Particulars 31-3-2004 31-3-2005 Change Percentage
Share capital 140,960,300 140,961,400 1,100 0.00%
Reserves 228,727,884 248,088,004 19360120 8.46%
U.D.P 64,227 64,227 0 0.00%
Reserves to be invested 24,703 24,703 0 0.00%
Audit fund 9,696 9,696 0 0.00%
Profit/loss
-
361,846,708 -397103323 -35256615 9.74%
A. Net worth 7,940,102 -7,955,293 -15895395 -200.19%
Borrowings 223,822,462 266,073,588 42251126 18.88%
Deposits 28,812,457 29,154,179 341722 1.19%
B.Borrowings 252,634,919 295,227,767 42592848 16.86%
C. Capital employed (A+B) 260,575,021 287,272,474 26697453 10.25%
F.D.S with banks 2,250,000 2,750,000 500000 22.22%
Shares in other co- operative institutions 228,550 228,550 0 0.00%
Loans to other co- operative factories 1,000,000 1,000,000 0 0.00%
Fixed assets 222,136,732 222,577,781 441049 0.20%
Deficits 47,944 47,944 0 0.00%
D. Fixed assets 225,663,226 226,604,275 941049 0.42%
Cash on hand 22,575 1,878,931 1856356 8223.06%
Cash at bank 15,881,189 18,140,037 2258848 14.22%
Deposits with various agencies 1,261,226 1,271,226 10000 0.79%
Loans and advances to members 6,386,630 9,085,236 2698606 42.25%
Debtors 54,894,708 67,056,512 12161804 22.15%
Interest receivable 1,826,489 1,826,489 0 0.00%
Closing stock 96,849,740 110,043,158 13193418 13.62%
E. Current assets 177,122,557 209,301,589 32179032 18.17%
Creditors 115,020,074 108,107,592 -6912482 -6.01%
Outstanding interest 27,190,688 40,525,798 13335110 49.04%
F. Current liabilities 142,210,762 148,633,390 6422628 4.52%
G. Net current assets (E-F) 34,911,795 60,668,199 25756404 73.78%
H. Net assets (D+G) 260,575,021 287,272,474 26697453 10.25%
Source: Annual Reports of CCSL.
Interpretation:
From the above table it was analyzed that the cash on hand
increased by 8223.06% current assets, current liabilities increased, net assets
increased by 10.25% and no change in fixed assets.

Comparative balance sheet for the years2005-06
Particulars 31-3-2005 31-3-2006 Change Percentage
Share capital 140,961,400 141,140,700 179,300 0.13%
Reserves 248,088,004 264,309,028 16221024 6.54%
U.D.P 64,227 64,227 0 0.00%
Reserves to be invested 24,703 24,703 0 0.00%
Audit fund 9,696 9,696 0 0.00%
Profit/loss -397103323 -405303195 -8199872 2.06%
A. Net worth -7,955,293 245,159 8200452 -103.08%
Borrowings 266,073,588 404,340,806 138267218 51.97%
Deposits 29,154,179 31,024,046 1869867 6.41%
B.Borrowings 295,227,767 435,364,852 140137085 47.47%
C. Capital employed (A+B) 287,272,474 435,610,011 148337537 51.64%
F.D.S with banks 2,750,000 250,000 -2500000 -90.91%
Shares in other co-operative
institutions 228,550 228,550 0 0.00%
Loans to other co-operative factories 1,000,000 1,000,000 0 0.00%
Fixed assets 222,577,781 225,127,858 2550077 1.15%
Deficits 47,944 47,944 0 0.00%
D. Fixed assets 226,604,275 226,654,352 50077 0.02%
Cash on hand 1,878,931 141,219 -1737712 -92.48%
Cash at bank 18,140,037 7,249,943 -10890094 -60.03%
Deposits with various agencies 1,271,226 1,267,226 -4000 -0.31%
Loans and advances to members 9,085,236 10,624,987 1539751 16.95%
Debtors 67,056,512 73,209,660 6153148 9.18%
Interest receivable 1,826,489 1,826,489 0 0.00%
Closing stock 110,043,158 304,641,448 194598290 176.84%
E. Current assets 209,301,589 398,960,972 189659383 90.62%
Creditors 108,107,592 140,980,325 32872733 30.41%
Outstanding interest 40,525,798 49,024,988 8499190 20.97%
F. Current liabilities 148,633,390 190,005,313 41371923 27.83%
G. Net current assets (E-F) 60,668,199 208,955,659 148287460 244.42%
H. Net assets (D+G) 287,272,474 435,610,011 148337537 51.64%
Source: Annual Reports of CCSL.
Interpretation:
From the above table it was analyzed that the net worth decreased by
103.08%, no change in fixed assets percentage and both current assets and current
liabilities were increased.
Comparative balance sheet for the years2006-07
Particulars 31-3-2006 31-3-2007 Change Percentage
Share capital 141,140,700 142,553,600 1,412,900 1.00%
Reserves 264,309,028 268,006,835 3697807 1.40%
U.D.P 64,227 64,227 0 0.00%
Reserves to be invested 24,703 24,703 0 0.00%
Audit fund 9,696 9,696 0 0.00%
Profit/loss -405303195 -498,941,043 -93637848 23.10%
A. Net worth 245,159 -88,281,982 -88527141 -36110.09%
Borrowings 404,340,806 405,702,422 1361616 0.34%
Deposits 31,024,046 35,201,887 4177841 13.47%
B.Borrowings 435,364,852 440,904,309 5539457 1.27%
C. Capital employed (A+B) 435,610,011 352,622,327 -82987684 -19.05%
F.D.S with banks 250,000 250,000 0 0.00%
Shares in other co-operative institutions 228,550 228,550 0 0.00%
Loans to other co-operative factories 1,000,000 1,000,000 0 0.00%
Fixed assets 225,127,858 235,857,585 10729727 4.77%
Deficits 47,944 47,944 0 0.00%
D. Fixed assets 226,654,352 237,384,079 10729727 4.73%
Cash on hand 141,219 95,083 -46136 -32.67%
Cash at bank 7,249,943 17,849,583 10599640 146.20%
Deposits with various agencies 1,267,226 1,270,226 3000 0.24%
Loans and advances to members 10,624,987 13,174,873 2549886 24.00%
Debtors 73,209,660 75,541,003 2331343 3.18%
Interest receivable 1,826,489 1,826,489 0 0.00%
Closing stock 304,641,448 281,582,197 -23059251 -7.57%
E. Current assets 398,960,972 391,339,454 -7621518 -1.91%
Creditors 140,980,325 229,172,905 88192580 62.56%
Outstanding interest 49,024,988 46,928,301 -2096687 -4.28%
F. Current liabilities 190,005,313 276,101,206 86095893 45.31%
G. Net current assets(E-F) 208,955,659 115,238,248 -93717411 -44.85%
H. Net assets (D+G) 435,610,011 352,622,327 -82987684 -19.05%
Source: Annual Reports of CCSL.
Interpretation:
From the above table it was analyzed that capital employed decreased
by 19.05% , current assets decreased and current liabilities increased due to funds
raised to short term borrowings and fixed assets increased by 4.73% due additional
assets purchased.








COMMON SIZE
INCOME
STATEMENT















common size income statement of
chittoor co-operative sugars ltd., 2003-2007
Particulars 31-3-03 31-3-04 31-3-05 31-3-06 31-3-07
Sales 100% 100% 100% 100% 100%
Less: Cost of goods sold 119% 119% 105% 58% 110%
Gross profit/loss -19% -19% -5% 42% -10%
Less: Operating expenses 6% 8% 11% 28% 5%
Operating profit/loss -25% -27% -17% 13% -15%
Add: Other income 0% 0% 0% 0% 0%
Miscellaneous income 5% 1% 5% 4% 0%
Interest received 0% 0% 0% 0% 0%
Profit/loss before interest -20% -26% -12% 17% -15%
Less: Interest paid 13% 22% 24% 24% 11%
Profit/loss after interest -33% -48% -36% -7% -25%
Less: Loss up to last year 115% 229% 373% 319% 110%
Net loss cumulative -149% -277% -410% -325% -135%


Source: Annual Reports of CCSL.

Interpretation:
From the above common size income statement it was analyzed that
cost of goods sold is more than the sales except the year 2006 due to high cost of
production due to in efficiency in controlling cost of production so, it got gross loss
in all the years except the year 2006. Operating loss had been decreasing from the
years 2003-05, in the year 2006 it got operating profit (13%) and again it got
operating loss in the year 2007 due to inefficiency in controlling expenses. Net loss
had been incasing over the years due to the firm proved that over all inefficiency in
earning profits















COMMON SIZE
BALANCE SHEET














Common size balance sheet of
chittoor co-operative sugars ltd.,2003-04
Particulars 2003 2004 Particulars 2003 2004
Share capital 27% 35% F.D.S with banks 0% 1%
Reserves to be
invested 0% 0%
Shares in other
co-operative institutions 0% 0%
U.D.P 0% 0%
Loans to other
co-operative factories 1% 0%
Reserves 0% 0% Fixed assets 43% 55%
Audit fund 43% 57% Deficits 0% 0%
Profit/loss -58% -90% Total fixed assets 44% 56%
Net worth 12% 2% Cash on hand 0% 0%
Cash at bank 1% 4%
Borrowings 46% 56%
Deposits with
various agencies 0% 0%
Deposits 6% 7%
Loans and advances
to members 1% 4%
Fixed liabilities 63% 65% Debtors 0% 0%
Outstanding interest 1% 7% Interest receivable 1% 2%
Creditors 36% 29% Closing stock 11% 14%
current liabilities 37% 35% Current Assets 56% 44%
Total 100% 100% Total 100% 100%


Source: Annual Reports of CCSL.

Interpretation:
From the above table it was analyzed that fixed assets increased from
44% to 56% and fixed liabilities also increased from 63% to65% due to
additional fixed assets were acquired through borrowings. Current assets and
current liabilities are considerably decreased it may due to current liabilities are
paid out of current assets.

Common size balance sheet of
chittoor co-operative sugars ltd.,2004-05
Particulars 2004 2005 Particulars 2004 2005
Share capital 35% 32% F.D.S with banks 1% 1%
Reserves to be
invested 0% 0%
Shares in other
co-operative institutions 0% 0%
U.D.P 0% 0%
Loans to other
co-operative factories 0% 0%
Reserves 0% 0% Fixed assets 55% 51%
Audit fund 57% 57% Deficits 0% 0%
Profit/loss -90% -91% Total fixed assets 56% 52%
Net worth 2% -2% Cash on hand 0% 0%
Cash at bank 4% 4%
Borrowings 56% 61%
Deposits with
various agencies 0% 0%
Deposits 7% 7%
Loans and advances
to members 4% 4%
Fixed liabilities 65% 66% Debtors 0% 0%
Outstanding interest 7% 9% Interest receivable 2% 2%
Creditors 29% 25% Closing stock 14% 15%
current liabilities 35% 34% Current Assets 44% 48%
Total 100% 100% Total 100% 100%


Source: Annual Reports of CCSL.

Interpretation:
From the above table it was analyzed that fixed assets were decreased
due to fixed assets were sold and hold in current assets so, current assets increased
. Fixed liabilities were increased due to additional funds borrowed. Current
liabilities were decreased due to payment made to short term creditors.

Common size balance sheet of
chittoor co-operative sugars ltd.,2005-06
Particulars 2005 2006 Particulars 2005 2006
Share capital 32% 23% F.D.S with banks 1% 0%
Reserves to be
invested 0% 0%
Shares in other
co-operative institutions 0% 0%
U.D.P 0% 0%
Loans to other
co-operative factories 0% 0%
Reserves 0% 0% Fixed assets 51% 36%
Audit fund 57% 42% Deficits 0% 0%
Profit/loss -91% -65% Total fixed assets 52% 36%
Net worth -2% 0% Cash on hand 0% 0%

Cash at bank 4% 1%
Borrowings 61% 65%
Deposits with
various agencies 0% 0%
Deposits 7% 5%
Loans and advances
to members 4% 1%
Fixed liabilities 66% 70% Debtors 0% 0%
Outstanding interest 9% 8% Interest receivable 2% 2%
Creditors 25% 23% Closing stock 15% 12%
current liabilities 34% 30% Current Assets 48% 64%
Total 100% 100% Total 100% 100%


Source: Annual Reports of CCSL.

Interpretation:
From the above table it was analyzed that fixed assets were decreased
from 52% to 36% due to most of the fixed assets were converted into cash so
current assets were increased from 48% to 64%. Fixed liabilities were increased
from 66% to 70% due to additional funds were borrowed. Current liabilities were
decreased due to payment made to short term creditors.









Common size balance sheet of
chittoor co-operative sugars ltd.,2006-07
Particulars 2006 2007 Particulars 2006 2007
Share capital 23% 23% F.D.S with banks 0% 0%
Reserves to be
invested 0% 0%
Shares in other
co-operative institutions 0% 0%
U.D.P 0% 0%
Loans to other
co-operative factories 0% 0%
Reserves 0% 0% Fixed assets 36% 38%
Audit fund 42% 43% Deficits 0% 0%
Profit/loss -65% -79% Total fixed assets 36% 38%
Net worth 0% -14% Cash on hand 0% 0%
Cash at bank 1% 3%
Borrowings 65% 65%
Deposits with
various agencies 0% 0%
Deposits 5% 6%
Loans and advances
to members 1% 3%
Fixed liabilities 70% 56% Debtors 0% 0%
Outstanding interest 8% 7% Interest receivable 2% 2%
Creditors 23% 36% Closing stock 12% 12%
current liabilities 30% 44% Current Assets 64% 62%
Total 100% 100% Total 100% 100%

Source: Annual Reports of CCSL.

Interpretation:
From the above table it was analyzed that fixed assets were fixed
assets were increased from 36% to 38% and current assets were decreased from
64% to 62% due to additional assets were purchased from current assets. Fixed
liabilities were decreased from 70% to 56% current liabilities were increased due
to repaid long term borrowings through current liabilities.






COMPANY PROFILE

CANTECH ENGINEERS PVT. LTD. was established by a professionals having
several years of experience in the sheet metal, components & assembly with a
mission to "QUALITY CARE".
The Objective was to deliver the world class quality at an affordable price with
special attention to "CUSTOMER CARE". The organisation right from its inception
paid attention to quality of its products and services. Presently we are serving
clients like Mahindra & Mahindra, Airtel, Indus, Tata, Samsung, Vodafone, ACME,
ABB, WTTIL and many more at various parts of the country.

The organisation laid stress on development of its products and acquired suitable
machinery and other infrastructures for the new developments and production.
Within a few month of its inception, the organisation become a leading supplier
of Acoustic Enclosures for DG Sets, Sheet Metal components such as UPS
cabinets, racks etc. We are also associated with Mahindra & Mahindra as Gensets
and Industrial Engine Centre for the Powerol brand of Diesel Gensets and Engines.

To run the business in a professional manner and ensure the quality of product
and services, the Organisation has acquired necessary machinery, other
infrastructure & supports and has employed qualified and experienced personnel
having requisite skill and competence in all areas of its activites. We have well
built manufacturing facilities and office complex in present location with
promotional area of 31,000 square feet and following machinery and design
supports.

We are fully equipped with the state of the art design software's and CNC based
machines. With constant and continuous imporvement in research and work
process, we are able to fulfill customer's expectations. Our products competitively
prices, thus helping customer their own bottom line. Our modular products can
make an unbeatable allowing almost any configuration and size to be designed.

Aim / Vision / Mission

Vision :
To be an Internationally recognized supplier of APIs and
Pharmaceutical Intermediates to the regulated Markets. To offer CMD and CRO Services for
the regulated markets.
Support Supply Chain Management through Trading, Sourcing, and Distribution of
Pharmaceutical and allied Industry related products in Asia and Europe.

Mission :
Our Aim: Planet, People & Profit in that order of priority.
Our Focus: Harnessing India's knowledge skills for alleviating human suffering


QUALITY
To broaden the customer's base and achieve a competitive edge in the industry, the management under
the competent stewardship of Mr. S.K.Chaturvedy who have innovative apporach to arive at business
solution; have established a Quality Management System in accordance with the international standard
ISO 9001 :2008. They have appointed head of quality assurance as the Management Representative (MR)
who has the overall responsibility to develop, implement and maintain the Quality Management System
under the guidance of Managing Director.
The Quality Managemet System includes Quality Manual as the apex document defining the company's
Quality Policy and Objectives, addressing all the clauses of the International Standards ISO 9001 : 2008 and
providing overall guidance in all aspects of Quality Managment System.

In addition to the above Quality Manual, Process Flow Charts, Record Formats and other supporting
documents for various processes have been established to ensure that the product and services provided by
the organization confirm to the specified Quality & Customer requirements. The various standards and
specifications including statutory and regulatory requirements as applicable are strictly adhered to
demonstrate that the organization complies with the specified requirements.


QUALITY POLICY

We commit ourselves to design, manufacture and supply quality products to the entire satisfaction of our
customers ensuring timely supply and prompt after sales service with continual improvement in Quality
Management System, adhering to applicable statutory & regulatory requirement.

We also commit ourselves to provide quality and cost effective service to our customer and Mahindra &
Mahindra by timely installation, commissioning and handing over of the Gensets, Engines & promptly
attending to service calls and resolution of problems to the entire satisfaction of customers.









QUALITY OBJECTIVE
 Minimize the Customer Complaints.
 Improve Customer Satisfaction Level.
 Ensure for Improvement in Suppliers Rating.
 Reduce the Service Resoluton Time.
 Minimize the Product Non-confirmity.
 Ensure for Timely Delivery.
 Reduce Time Cycle in completion of service calls.
 Ensure Availability of Valid Calibrated Monitoring and
Measuring Instruments.
" The Targets for the objectives shall be quantified during
beginning of the every financial year. "



MAHINDRA AUTHORIZED GENSET & INDUSTRIAL ENGINE
CENTRE
CANTECH ENGINEERS PVT. LTD. - MAHINDRA Authorized Genset & Industrial Engine Care (MAGIEC) dealing
with sales, services and AMC for complete range of diesel generators ranging from 5KVA to 320KVA with
and experience in the field over a decade. Cantech Engineers is asociated with MAHINDRA & MAHINDRA
LTD. for complete sales and services of their diesel generators & industrial engines.
Mahindra Powerol a perfect amalgamation of time tested values and contemporary outlook. It reflects the
philosophy of breathing of life into monotony.
 MAGIEC has organized the quality awareness workshop.
 Need based training matrix is prepared for employee skill enhancement.
 Practical training provided to technicals during assembly of Engines at MAGIEC workshop.
 Audit at regular basis by service In-charge of the workmanship of technicians by revisiting the site
where maintenance has been carried out and also take customer feedback.

PRODUCTS

1. Doors
2. Computer Racks
3. Acoustic Enclosures
4. HT & LT Panels
5. Retail Display System



OUR CLIENTS









PLANT & MACHINERY
 CNC Turret Punch Press (EM 2510 NT), Amada - Japan
 CNC Turret Punch Press (ARIES 255), Amada - Japan
 CNC Flexi Bend Folding Machine 3.0 Meter (RAS Germany)
 CNC Press Break HDS - 8025 NT (Amada - Japan)
 CNC Press Break RG - 80 (Amada - Japan)
 CNC Press Break RG - 35 (Amada - Japan)
 CNC Press Break 3.0 Meter (H.H.)
 Mechanical Shearing 6.0 mm thick
 Sheet Rolling Machine
 Power Press 50 Tones
Our Valuable Clients


PLANT STRENGTH
 Promotion area 31,000 sqft.
 EOT - 1 Ton, 5 Ton, 10 Ton
 Liquid & Power Coating
 Pre treatment line with 8 stage washing
 Jig Saw
 ARC Welding Machine
 Spot Welding Machine
 MIG & TIG Welding Machine












SWOT ANALYSIS


The SWOT analyses is a systematic identification of internal strength and weaknesses of the
business and environment opportunities and threats being faced by that business and provide
information that is helpful, in matching the firm’s resources and capabilities to the competitive
environment in which it operates. It is necessary for the organization to analyze its weakness that
can be removed by undertaking the project and what opportunities can be exploited and strengths
can be strengthen more. As such, it is instrumental in strategy formulation and selection. It is
dynamic and useful framework for choosing a staretgy.The following diagram shows how a
SWOT analysis fits into an environmental scan.


SWOT Analysis Framework

Environmental Scan













Internal
Environment
External
Environment
Strength Weakness
Opportunity


Threats

 Strength

 Extensive Experience of our Promoters
 Strong dealer network, mutual relations with them.
 Automated machines of latest technology
 Exclusive designs, good texture and fabrics.
 Laboratories for testing the quality of the product.
 Exports rising every year.
 Quality Standards.

 Weakness

 Risks relating to the price volatility in the import of wool.
 We face risk in relation to outsourcing of cotton segments of Monte Carlo.
 We are dependent upon foreign producers for greasy wool.
 Personnel and attracting talented professionals .The loss of the services of
any these persons may adversely affect our business and results of
operations
 We have high working capital requirements.


 Opportunity

 With booming retail sector and big players like WALMART, BHARTI
entering into that field, OWM is also stepping ahead with a mission of
opening up of 150 retail outlets all over India under the brand name MONTE
CARLO.
 Fabrication for various companies likes NIKE,MARKS AND SPENCER.etc
 Manufacturing of Kids garments


THREATS

 Mushrooming and upcoming of small hosieries
 Seasonal demand for their major products i.e. pullovers

OBJECTIVES OF STUDY




1. To understand, to analyze and to suggest methods of improving profitability
management.
2. To identify the key factors affecting the profitability.
3. To have an insight into the management of profit in an organization.
4. To examine the financial performance of the company for the period from 2003
to 2007.
5. To assess the working capital employed by the company.
6. To highlight the short comings in the area of finance with the aid of
comparative analysis and common size analysis funds flow analysis and to give
recommendations with a view to increase efficiency of the company.
7. To identifying the financial strength and weakness of the company.
8. Analyze the future earnings of the company , based on these give
the various suggestions.















NEED FOR THE STUDY

Financial statement analysis is used to identify the trends and
relationships between financial statement items. Both internal management and
external users (such as analysts, creditors, and investors) of the financial statements
need to evaluate a company's profitability, liquidity, and solvency. The most
common methods used for financial statement analysis are comparative statements,
common-size statements, funds flow analysis and ratio analysis. These methods
include calculations and comparisons of the results to historical company data,
competitors, or industry averages to determine the relative strength and
performance of the company being analyzed.

Financial statement analysis is to diagnose the information contained
in financial statements so as to judge profitability and financial soundness of the
firm. Just like a doctor examines his patient by recording hi body temperature,
blood pressure, etc. before making conclusion regarding the illness and before
giving his treatment, a financial analyst analysis before commenting up on the
financial health or weakness of an enterprise.






RESEARCH METHODOLOGY

The research design refers to preplanning of what a researcher does in
his study. The design adopted in the study comes under exploratory and
evaluatory research. Since the data collected from the financial statements of the
company is analyzed under various financial and tactical tools.

Data collection;
The study is based on the two types data is obtained from the chittoor
co-operative sugars ltd., chittoor.
They are:
 Primary data
 Secondary data

Primary Data;
Primary Data is obtained through the discussion with officials of the chittoor
co-operative sugars ltd., chittoor.

Secondary Data;
Secondary data is based on the past data i.e. [five years Annual Reports
2003-2007]






SCOPE OF THE STUDY

 In our present day economics, finance is defined as the provision of money at
the time when it is required. Every enterprise whether big medium or small
needs finance to carry on its operations and to achieve its target. In fact finance
is so indispensable today that it is rightly said that it is the life blood of industry
without adequate finance no enterprise can possible accomplish it objectives
 Finance is therefore viewed as the most important area in every enterprise.
Therefore the management requires giving special attention on this .The
conventional approach to finance function in business high light the
procurement of funds on the mot economic and favorable terms to concern. But
it ignores the efficiency and prepares of the same for the successful running of
the enterprise. In every organization funds are needed for various ventures and
projects.
 The basis for financial planning and analysis is financial information, financial
need to Predict compare and evaluate the forms earning ability. It is also
required to aid in economic decision making., Investment and financial
statements or accounting reports
 It contains summarized information of the firm’s financial affairs,. Organized
systematically. They are the means to present the firm’s situation to owners,
creditors and general public, preparation of the statements is the responsibility
of top management. They should be prepared very carefully and contain as
much information a possible because they are very useful to judge the financial
efficiency of the company.



LIMITATIONS

 Financial statements are prepared on the basis of certain accounting concepts
and conventions.
 Any change in the methods or procedures of accounting systems limits the
utility of financial statements.
 Ratios of the past are not true indicators of future.
 Financial analysis is based on monetary information and non monetary
information ignored.
 Liquidity ratio can mislead since current assets and current liabilities can
change quickly. Their utility become more doubtful for firms with seasonal
business.


















Balance sheet




































Balance sheet of chittoor co-operative sugars ltd chittoor.for the years 2003-2007
LIABILITIES 31-3-2003 31-3-2004 31-3-2005 31-3-2006 31-3-2007 ASSETS 31-3-2003 31-3-2004 31-3-2005 31-3-2006 31-3-2007
Share
capital 140,958,700 140,960,300 140,961,400 141,140,700 142,553,600 F.D.S with banks 250,000 2,250,000 2,750,000 250,000 250,000
Reserves 219,357,188 228,727,884 248,088,004 264,309,028 268,006,835
Shares in other
co-operative
institutions 228,550 228,550 228,550 228,550 228,550
U.D.P 64,227 64,227 64,227 64,227 64,227
Loans to other
co-operative
factories 3,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Reserves to
be invested 24,703 24,703 24,703 24,703 24,703 Fixed assets 222,136,732 222,136,732 222,577,781 225,127,858 235,857,585
Auditfund 9,696 9,696 9,696 9,696 9,696 Deficts 47,944 47,944 47,944 47,944 47,944
Borrowings 235,616,210 223,822,462 266,073,588 404,340,806 405,702,422 Cash on hand 1,283,980 22,575 1,878,931 141,219 95,083
Deposits 28,836,536 28,812,457 29,154,179 31,024,046 35,201,887 Cash at bank 4,095,240 15,881,189 18,140,037 7,249,943 17,849,583
Creditors 182,912,074 115,020,074 108,107,592 140,980,325 229,172,905
Deposits with
various agencies 1,254,826 1,261,226 1,271,226 1,267,226 1,270,226
Outstanding
interest 6,094,478 27,190,688 40,525,798 49,024,989 46,928,301
Loans and
advances to
members 6,461,883 6,386,630 9,085,236 10,624,987 13,174,873
Debtors 54,412,361 54,894,708 67,056,512 73,209,660 75,541,003

Interest
receivable 1,826,488 1,826,489 1,826,489 1,826,489 1,826,489
Closing stock 219,662,805 96,849,740 110,043,158 304,641,449 281,582,197
Loss 299,213,003 361,846,708 397,103,323 405,303,195 498,941,043

Total 813,873,812 764,632,491 833,009,187 1,030,918,520 1,127,664,576 Total 813,873,812 764,632,491 833,009,187 1,030,918,520 1,127,664,576




findings
















FINDINGS

 Cost of goods sold was more than the sales except the year 2006. So, the
chittoor co-operative sugars ltd. got gross loss in most of the years.
 Operating loss decreased up to the year 2006 and then increased in the
year 2007.
 The chittoor co-operative sugars ltd. did not earned net profit in all the
years.
 It had been maintaining high inventory levels for all the years.
 In most of the years debtor’s collection period was very high.
 Most of the funds rose through debts with high interest rates.
 Most of the funds were lost in operations.

































Suggestions





















SUGGESSIONS

 CCSL should adopt cost control measures by drawing inspiration from
prospering sugar factories.
 CCSL should reduce operating and administrative expenses, it will
increase over all efficiency of the firm.
 A high level of debt introduces inflexibility in the firms operations due
to increaseasing interference and pressures from creditors. A high debt
company is able to borrow funds on very restrictive terms and
conditions. So, it should raise owners funds.
 CCSL can adopt forward integration strategy by opening retail outlets
where its own sugar can be sold. It increases revenues one hand and
cash position on the other.



























CONCLUSION

 The present study of “FINANCIAL PERFORMANCE ANALYSIS IN
CHITTOOR CO-OPERATIVE SUGARS LTD,.” Was conducted with
the help of annual report. Various financial tools are used in the
study from the ratio analysis it has been found out that the average
collection period of the company is high and capital gearing is low.
To extent possible the study has achieved its stated objectives. It is on
the part of the company to accept the suggestions.

 CCSL Profitability position was deteriorated year by year, liquidity
position also moderate, long term solvency of the firm is also
moderate due to high debts, the firm’s efficiency in utilizing assets is
also very low.

 Finally the study helped me to acquire practical knowledge that was
only over by books and papers alone. I take up this opportunity to
thank one and all for making this study a complete one.
























BEBLIOGRAPHY













BIBILOGRAPHY

BOOKS

 Financial Management I. M. Pandey Ninth Edition Vikash Publishing house
Pvt ltd.
 Financial Management Theory and Practice Prasanna Chandra Sixth
Edition Tata Mc Graw Hill Publishing company.
 Management Accounting Principles and Practice R. K. Sharma Sahashi K.
Guptha Eigth edition kalyani publishiers.
 Dr .S.N. Maheswari-financial management G.G.S. Indraprasatha university ,
new delhi.

WEBSITES

 www.cliffsnotes.com
 www.financial-education.com