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A STUDY ON FINANCIAL PERFORMANCE ANANLYSIS


(WITH REFERENCE TO KESORAM CEMENT)
A Project report submitted to Jawaharlal Nehru Technological University, Hyderabad, for the
award of degree
MASTER OF BUSINESS ADMINISTRATION


By
M.VIKRAM SINGH
Reg. No. 10241E0028

Under the Guidance of
Prof. KVS RAJU


Department of Management Studies
Gokaraju Rangaraju Institute of Engineering & Technology
(Affiliated to Jawaharlal Technological University, Hyderabad)
Hyderabad
2010-2012




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DECLARATION



I hereby declare that the project entitled A study on financial performance
analysis a at t K Ke es so or ra am m C Ce em me en nt t submitted in partial fulfillment of the requirements for
award of the degree of MBA at Gokaraju Rangaraju Institute of Engineering and
Technology, affiliated to Jawaharlal Nehru Technological University, Hyderabad, is
an authentic work and has not been submitted to any other University/Institute for
award of any degree/diploma.







M.VIKRAM SINGH
(10241e0028)
MBA, GRIET
HYDERABAD








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ACKNOWLEDGEMENT



Firstly I would like to express our immense gratitude towards our institution
Gokaraju Rangaraju Institute of Engineering & Technology, which created a great
platform to attain profound technical skills in the field of MBA, thereby fulfilling our most
cherished goal.
I would thank all the finance department of Kesoram specially Mr. MURTHY ASST
Manager Finance for guiding me and helping me in successful completion of the project

I am very much thankful to our Prof. KVS RAJU (Internal Guide) sir for extending
his cooperation in doing this project.

I am also thankful to our project coordinator Prof. S. RAVINDRA CHARY for
extending his cooperation in completion of Project..

I convey my thanks to my beloved parents and my faculty who helped me directly or
indirectly in bringing this project successfully.


M. VIKRAM SINGH
(10241E0028)






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INDEX
S.No: Contents Page No.
Chapter-1 1-8
Introduction
Need of the Study
Objectives of the Study
Methodology of the Study
Limitations of the Study
Chapter-2 9-28
Industry Profile
Company Profile
Chapter-3 29-38
Review of Literature
Chapter-4 39-68
Data Analysis And Interpretation
Chapter-5 69-71
Findings
Suggestions
Chapter-6 72-75
Annexure
Bibliography






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CHAPTER-I
INTRODUCTION



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Introduction:-

The term financial performance analysis also known as analysis and interpretation
of financial statements , refers to the process of determining financial strength and
weaknesses of the firm by establishing strategic relationship between the items of the
balance sheet , profit and loss account and other operative data.

Financial performance analysis is a process of evaluating the relationship between
component parts of a financial statement to obtain a better understanding of a firms
position and performance.

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. Just
like a doctor examines his patient by recording his body temperature, blood pressure etc.
Before making his conclusion regarding the illness and before giving his treatment. A
financial analyst analyses the financial statements with various tools of analysis before
commenting upon the financial health or weaknesses of an enterprise.

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 divided policy.

Financial performance refers to the act of performing financial activity. In broader sense,
financial performance refers to the degree to which financial objectives being or has been
accomplished. It is the process of measuring the results of a firm's policies and operations in
monetary terms. It is used to measure firm's overall financial health over a given period of
time and can also be used to compare similar firms across the same industry or to compare
industries or sectors in aggregation.
In short, the firm itself as well as various interested groups such as managers,
shareholders, creditors, tax authorities, and others seeks answers to the
Following important questions:



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1. What is the financial position of the firm at a given point of time?
2. How is the financial performance of the firm over a given period?
Of time?
These questions can be answered with the help of financial analysis of a firm. Financial
analysis involves the use of financial statements. A financial statement is an organized
collection of data according to logical and conceptual framework 50 consistent accounting
procedures. Its purpose is to convey an understanding of some financial aspects of a
business firm. It may show a position at a moment of time as in the case of a balance sheet,
or may reveal a series of activities over a given period of time, as in the case of an income
statement.
Thus, the term financial statements generally refers to two basic statements:
The balance sheet and the income statement.

The balance sheet shows the financial position (condition) of the firm at a given point of
time. It provides a snapshot and may be regarded as a static picture.
Balance sheet is a summary of a firms financial position on a given date that
Shows total assets = total liabilities + owners equity.

The income statement (referred to in India as the profit and loss statement) reflects the
performance of the firm over a period of time.
Income statement is a summary of a firms revenues and expenses over a specified period,
ending with net income or loss for the period.
However, financial statements do not reveal all the information related to the financial
operations of a firm, but they furnish some extremely useful information, which highlights
two important factors profitability and financial soundness. Thus analysis of financial
statements is an important aid to financial performance analysis. Financial performance
analysis includes analysis and interpretation of financial statements in such a way that it
Undertakes full diagnosis of the profitability and financial soundness of the business.

The analysis of financial statements is a process of evaluating the relationship between
component parts of financial statements to obtain a better understanding of the firms
position and performance.




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Need for Study

Need Of Financial Management Study To Diagnose The Information Contain In
Financial Statement. So as To Judge the Profitability and Financial Position of the
Firm.
Financial Analyst Analyses The Financial Statements With Various Tools Of
Analysis Before Commanding Upon The Financial Health Of The Firm.
Essential to Bring Out the History.
Significance and Meaning of the Financial Statements.




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Objectives:
1. To understand the financial statements of Kesoram cement.
2. To study the change in assets and liabilities of the company.
3. To study the liquidity position of the firm.
4. To study the financial health of the company using ratio analysis.
5. To study the profitability of the company.
6. To offer suggestions to the company.





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Significance of Financial Performance Analysis
Interest of various related groups is affected by the financial performance of a firm.
Therefore, these groups analyze the financial performance of the firm. The type of analysis
varies according to the specific interest of the party involved.

Trade creditors: interested in the liquidity of the firm (appraisal of firms liquidity)
Bond holders: interested in the cash-flow ability of the firm (appraisal of firms capital
structure, the major sources and uses of funds, profitability over time, and projection of
future profitability).
Investors: interested in present and expected future earnings as well as stability of these
earnings (appraisal of firms profitability and financial condition).
Management: interested in internal control, better financial condition and better
performance (appraisal of firms present financial condition, evaluation of opportunities in
relation to this current position, return on investment provided by various assets of the
company, etc)

Research Methodology
Research Design

This is a systematic way to solve the research problem and it is important
component for the study without which researches may not be able to obtain the format. A
research design is the arrangement of conditions for collection and analysis of data in a
manager that aims to combine for collection and analysis of data relevance to the research
purpose with economy in procedure.
Meaning of Research Design
The formidable problem that follows the task of defining the research problem is the
preparation of design of the research project, popularly known as the research design,
decision regarding what, where, when, how much, by what means concerning an inquiry of
a research study constitute a research design. A research design is the arrangement of
conditions for collection and analysis of data in a manager that aims to combine for
collection and analysis of data relevance to the research purpose with economy in
procedure.



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Sources of Data

Data we collected based on two sources.
Primary Data.
Secondary Data.

Primary Data

The Primary Data Are Those Informations, which are Collected afresh and for the
First Time, And Thus Happen to Be Original in Character.

Secondary Data:
The secondary data are those which have already been collected by some other agency and
which have already been processed. The sources of secondary data are annual reports,
browsing internet, through magazines.

1. It includes data gathered from the annual reports of Kesoram.
2. Articles are collected from official website of Kesoram.

Methodology Used:

Types Of Financial Statements Adopted:
Following Two Types of Financial Statements Are Commonly Used in
Analyzing the Firms Financial Position
a. Balance Sheet.
b. Income Statements.







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Limitations of Financial Statement:
Each Project Gives Rise to Its Own Unique Risks And Hence Possess Its Own Unique
Challenges.
1. Only Interim Reports:
Only interim statements dont give a final picture of the concern. The data given in
these statements is only approximate. The actual position can only be determined when the
business is sold or liquidated.
2. Dont Give Extra Position:
The Financial Statements Are Expressed In Monetary Values, So They Appear To
Give Final And Accurate Position. The Values Of Fixed Assets In The Balance Sheet
Neither Represent The Value For Which Fixed Assets Can Be Sold Nor The Amount Which
Will Be Required To Replace These Assets.
3. Historical Costs:
The Financial Statements Are Prepared On The Basis Of Historical Costs Or
Original Costs. The Value of Assets Decreases with the Passage of Time Current Price
Changes Are Not Taken Into Account. The Statements Are Not Prepared Keeping In View
The Present Economic Conditions. The Balance Sheet Loses The Significance Of Being An
Index Of Current Economic Realities.
4. Act of non monitory factors Ignored:
There are certain factors which have a bearing on the financial position and
operating results of the business but they dont become a part of these statements because
they cant be measured in monetary terms. Such factors may include in the reputation of the
management.
No Precision:
The precision of financial statement data is not possible because the statements deal with
matters which cant be precisely stated. The data are recorded by conventional procedures
followed over the years. Various conventions, postulates, personal judgments etc.



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CHAPTER-II
INDUSTRY PROFILE
&
COMPANY PROFILE




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Industry Profile:
In the most general sense of the word, cement is a binder, a substance which
sets and hardens independently, and can bind other materials together. The word "cement"
traces to the Romans, who used the term "opus caementicium" to describe masonry which
resembled concrete and was made from crushed rock with burnt lime as binder. The
volcanic ash and pulverized brick additives which were added to the burnt lime to obtain a
hydraulic binder were later referred to as cementum and cement. Cements used in
construction are characterized as hydraulic or non-hydraulic.
The most important use of cement is the production of mortar and concretethe bonding of
natural or artificial aggregates to form a strong building material which is durable in the
face of normal environmental effects.
Concrete should not be confused with cement because the term cement refers only to the dry
powder substance used to bind the aggregate materials of concrete. Upon the addition of
water and/or additives the cement mixture is referred to as concrete, especially if aggregates
have been added.
It is uncertain where it was first discovered that a combination of hydrated non-hydraulic
lime and a pozzolan produces a hydraulic mixture (see also: Pozzolanic reaction), but
concrete made from such mixtures was first used on a large scale by engineers. They used
both natural pozzolans (trass or pumice) and artificial pozzolans (ground brick or pottery) in
these concretes. Many excellent examples of structures made from these concretes are still
standing, notably the huge monolithic dome of the Pantheon in Rome and the massive Baths
of Caracalla. The vast system of Roman aqueducts also made extensive use of hydraulic
cement. The use of structural concrete disappeared in medieval Europe, although weak
pozzolanic concretes continued to be used as a core fill in stone walls and columns.

Modern cement
Modern hydraulic cements began to be developed from the start of the Industrial Revolution
(around 1800), driven by three main needs:
Hydraulic renders for finishing brick buildings in wet climates
Hydraulic mortars for masonry construction of harbor works etc, in contact with sea water.
Development of strong concretes.
In Britain particularly, good quality building stone became ever more expensive during a
period of rapid growth, and it became a common practice to construct prestige buildings



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from the new industrial bricks, and to finish them with a stucco to imitate stone. Hydraulic
limes were favored for this, but the need for a fast set time encouraged the development of
new cements. Most famous was Parker's "Roman cement." This was developed by James
Parker in the 1780s, and finally patented in 1796. It was, in fact, nothing like any material
used by the Romans, but was Natural cement" made by burning septaria - nodules that are
found in certain clay deposits, and that contain both clay minerals and calcium carbonate.
The burnt nodules were ground to a fine powder. This product, made into a mortar with
sand, set in 515 minutes. The success of "Roman Cement" led other manufacturers to
develop rival products by burning artificial mixtures of clay and chalk.
John Smeaton made an important contribution to the development of cements when he was
planning the construction of the third Eddystone Lighthouse (1755-9) in the English
Channel. He needed a hydraulic mortar that would set and develop some strength in the
twelve hour period between successive high tides. He performed an exhaustive market
research on the available hydraulic limes, visiting their production sites, and noted that the
"hydraulicity" of the lime was directly related to the clay content of the limestone from
which it was made. Smeaton was a civil engineer by profession, and took the idea no
further. Apparently unaware of Smeaton's work, the same principle was identified by Louis
Vicat in the first decade of the nineteenth century. Vicat went on to devise a method of
combining chalk and clay into an intimate mixture, and, burning this, produced an "artificial
cement" in 1817. James Frost, working in Britain, produced what he called "British cement"
in a similar manner around the same time, but did not obtain a patent until 1822. In 1824,
Joseph Aspdin patented a similar material, which he called Portland cement, because the
render made from it was in color similar to the prestigious Portland stone.
All the above products could not compete with lime/pozzolan concretes because of fast-
setting (giving insufficient time for placement) and low early strengths (requiring a delay of
many weeks before formwork could be removed). Hydraulic limes, "natural" cements and
"artificial" cements all rely upon their belite content for strength development. Belite
develops strength slowly. Because they were burned at temperatures below 1250 C, they
contained no alite, which is responsible for early strength in modern cements. The first
cement to consistently contain alite was made by Joseph Aspdin's son William in the early
1840s. This was what we call today "modern" Portland cement. Because of the air of
mystery with which William Aspdin surrounded his product, others (e.g. Vicat and I C
Johnson) have claimed precedence in this invention, but recent analysis of both his concrete



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and raw cement have shown that William Aspdin's product made at North fleet, Kent was a
true alite-based cement. However, Aspdin's methods were "rule-of-thumb": Vicat is
responsible for establishing the chemical basis of these cements, and Johnson established
the importance of sintering the mix in the kiln.
William Aspdin's innovation was counter-intuitive for manufacturers of "artificial cements",
because they required more lime in the mix (a problem for his father), because they required
a much higher kiln temperature (and therefore more fuel) and because the resulting clinker
was very hard and rapidly wore down the millstones which were the only available grinding
technology of the time. Manufacturing costs were therefore considerably higher, but the
product set reasonably slowly and developed strength quickly, thus opening up a market for
use in concrete. The use of concrete in construction grew rapidly from 1850 onwards, and
was soon the dominant use for cements. Thus Portland cement began its predominant role.
It is made from water and sand.

Types of modern cement:
Portland cement:
Cement is made by heating limestone (calcium carbonate), with small quantities of other
materials (such as clay) to 1450C in a kiln, in a process known as calcination, whereby a
molecule of carbon dioxide is liberated from the calcium carbonate to form calcium oxide,
or lime, which is then blended with the other materials that have been included in the mix .
The resulting hard substance, called 'clinker', is then ground with a small amount of gypsum
into a powder to make 'Ordinary Portland Cement', the most commonly used type of cement
(often referred to as OPC).
Portland cement is a basic ingredient of concrete, mortar and most non-speciality grout. The
most common use for Portland cement is in the production of concrete. Concrete is a
composite material consisting of aggregate (gravel and sand), cement, and water. As a
construction material, concrete can be cast in almost any shape desired, and once hardened,
can become a structural (load bearing) element. Portland cement may be gray or white.
Portland cement blends
These are often available as inter-ground mixtures from cement manufacturers, but similar
formulations are often also mixed from the ground components at the concrete mixing plant.
Portland blast furnace cement contains up to 70% ground granulated blast furnace slag,
with the rest Portland clinker and a little gypsum. All compositions produce high ultimate



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strength, but as slag content is increased, early strength is reduced, while sulfate resistance
increases and heat evolution diminishes. Used as an economic alternative to Portland
sulfate-resisting and low-heat cements.
Portland fly ash cement contains up to 30% fly ash. The fly ash is pozzolanic, so that
ultimate strength is maintained. Because fly ash addition allows lower concrete water
content, early strength can also be maintained. Where good quality cheap fly ash is
available, this can be an economic alternative to ordinary Portland cement.
Portland pozzolan cement includes fly ash cement, since fly ash is a pozzolan, but also
includes cements made from other natural or artificial pozzolans. In countries where
volcanic ashes are available (e.g. Italy, Chile, Mexico, and the Philippines) these cements
are often the most common form in use.
Portland silica fume cement. Addition of silica fume can yield exceptionally high
strengths, and cements containing 5-20% silica fume are occasionally produced. However,
silica fume is more usually added to Portland cement at the concrete mixer.
Masonry cements are used for preparing bricklaying mortars and stuccos, and must not be
used in concrete. They are usually complex proprietary formulations containing Portland
clinker and a number of other ingredients that may include limestone, hydrated lime, air
entrainers, retarders, water proofers and coloring agents. They are formulated to yield
workable mortars that allow rapid and consistent masonry work. Subtle variations of
Masonry cement in the US are Plastic Cements and Stucco Cements. These are designed to
produce controlled bond with masonry blocks.
Expansive cements contain, in addition to Portland clinker, expansive clinkers (usually
sulfoaluminate clinkers), and are designed to offset the effects of drying shrinkage that is
normally encountered with hydraulic cements. This allows large floor slabs (up to 60 m
square) to be prepared without contraction joints.
White blended cements may be made using white clinker and white supplementary
materials such as high-purity metakaolin.
Colored cements are used for decorative purposes. In some standards, the addition of
pigments to produce "colored Portland cement" is allowed. In other standards (e.g. ASTM),
pigments are not allowed constituents of Portland cement, and colored cements are sold as
"blended hydraulic cements".
Very finely ground cements are made from mixtures of cement with sand or with slag or
other pozzolan type minerals which are extremely finely ground together. Such cements can



have the same physical characteristics as normal cement but with 50% less cement
particularly due to their increased surface area for the chemical reaction. Even with
intensive grinding they can use up to 50% less energy to fabricate than ordinary Portland
cements.
Non-Portland hydraulic cements
Pozzolan-lime cements. Mixtures of ground Pozzolan and lime are the cements used by the
Romans, and are to be found in Roman structures still standing (e.g. the Pantheon in Rome).
They develop strength slowly, but their ultimate strength can be very high. The hydration
products that produce strength are essentially the same as those produced by Portland
cement.
Slag-lime cements. Ground granulated blast furnace slag is not hydraulic on its own, but is
"activated" by addition of alkalis, most economically using lime. They are similar to
pozzolan lime cements in their properties. Only granulated slag (i.e. water-quenched, glassy
slag) is effective as a cement component.
Super sulfated cements. These contain about 80% ground granulated blast furnace slag,
15% gypsum or anhydrite and a little Portland clinker or lime as an activator. They produce
strength by formation of ettringite, with strength growth similar to a slow Portland cement.
They exhibit good resistance to aggressive agents, including sulfate.
Calcium aluminate cements are hydraulic cements made primarily from limestone and
bauxite. The active ingredients are monocalcium aluminate CaAl
2
O
4
(CaO Al
2
O
3
or CA in
Cement chemist notation, CCN) and mayenite Ca
12
Al
14
O
33
(12 CaO 7 Al
2
O
3
, or C
12
A
7
in
CCN). Strength forms by hydration to calcium aluminate hydrates. They are well-adapted
for use in refractory (high-temperature resistant) concretes, e.g. for furnace linings.
Calcium sulfoaluminate cements are made from clinkers that include ye'elimite (Ca
4

(AlO
2
)
6
SO
4
or C
4
A
3
in Cement chemist's notation) as a primary phase. They are used in
expansive cements, in ultra-high early strength cements, and in "low-energy" cements.
Hydration produces ettringite, and specialized physical properties (such as expansion or
rapid reaction) are obtained by adjustment of the availability of calcium and sulfate ions.
Their use as a low-energy alternative to Portland cement has been pioneered in China,
where several million tonnes per year are produced. Energy requirements are lower because
of the lower kiln temperatures required for reaction and the lower amount of limestone
(which must be endothermically decarbonated) in the mix. In addition, the lower limestone



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content and lower fuel consumption leads to a CO
2
emission around half that associated
with Portland clinker. However, SO
2
emissions are usually significantly higher.
"Natural" Cements correspond to certain cements of the pre-Portland era, produced by
burning argillaceous limestones at moderate temperatures. The level of clay components in
the limestone (around 30-35%) is such that large amounts of belite (the low-early strength,
high-late strength mineral in Portland cement) are formed without the formation of
excessive amounts of free lime. As with any natural material, such cements have highly
variable properties.
Geopolymer cements are made from mixtures of water-soluble alkali metal silicates and
aluminosilicate mineral powders such as fly ash and metakaolin.




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COMPANY PROFILE



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Kesoram Cement Industry is one of the leading manufacturers of cement in India. It is a day
process cement Plant. The plant capacity is 8.26 lakh tones per annum It is located at
Basanthnagar in Karimnagar district of Andhra Pradesh. Basanthnagar is 8 km away from
the Ramagundam Railway station, linking Madras to New Delhi. The Chairman of the
Company is B.K.Birla,
History:
The first unit at Basanthnagar with a capacity of 2.1 lakh tones per annum
incorporating humble suspension preheated system was commissioner during the year 1969.
The second unit was setup in year 1971 with a capacity of 2.1 lakh tones per annum went on
stream in the year 1978. The coal for this company is being supplied from Singgareni
Collieries and the power is obtained from APSEB. The power demand for the factory is
about 21 MW. Kesoram has got 2 DG sets of 4 MW each installed in the year 1987.
Kesoram Cement has setup a 15 KW captor power plant to facilitate for
uninterrupted power supply for manufacturing of cement at 24
th
august 1997 per hour 12
mw, actual power is 15 mw.
The Company was incorporated on 18th October, 1919 under the Indian Companies Act,
1913, in the name and style of Kesoram Cotton Mills Ltd. It had a Textile Mill at 42,
Garden Reach Road, Calcutta 700 024. The name of the Company was changed to Kesoram
Industries & Cotton Mills Ltd. on 30th
August, 1961 and the same was further changed to Kesoram Industries Limited on 9th July,
1986. The said Textile Mill at Garden Reach Road was eventually demerged into a separate
company.

The First Plant for manufacturing of rayon yarn was established at Tribeni, District
Hooghly, West Bengal and the same was commissioned in December, 1959 and the second
plant was commissioned in the year 1962 enabling it to manufacture 4,635 metric tons per
annum (mtpa) of rayon yarn. This Unit has 6,500 metric tons per annum (mtpa) capacity as
on 31.3.2009.
The plant for manufacturing of transparent paper was also set up at the same location at
Tribeni, District Hooghly, West Bengal, in June, 1961. It has the annual capacity to
manufacture 3,600 metric tons per annum (mtpa) of transparent Paper.



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The Company diversified into manufacturing of cast iron spun pipes and pipe fittings at
Bansberia, District Hooghly, West Bengal, with a production capacity of 45,000 metric tons
per annum (mtpa) of cast iron spun pipes and pipe fittings in December, 1964.
The Company subsequently diversified into the manufacturing of Cement and in 1969
established its first cement plant under the name 'Kesoram Cement' at Basantnagar, Dist.
Karimnagar (Andhra Pradesh) and to take advantage of favorable market conditions, in
1986 another cement plant, known as 'Vasavadatta Cement', was commissioned by it at
Sedam, Dist.

Gulbarga (Karnataka). The cement manufacturing capacities at both the plants were
augmented from time to time according to the market conditions and as on 31.3.2009
Kesoram Cement and Vasavadatta Cement have annual cement manufacturing capacities of
1.5 million metric tons and 4.1 million metric tons respectively.
The Company in March 1992, commissioned a plant at Balasore known as Birla Tyres in
Orissa, for manufacturing of 10 lakh mtp.a. automotive tyres and tubes in the first phase in
collaboration with Pirelli Ltd., U.K., a subsidiary company of the world famous Pirelli
Group of Italy - a pioneer in production and development of automotive tyres in the world.

The capacity at the said plant was further augmented during the year by 19 MT per day
aggregating to 271 MT per day production facility. The Greenfield Project of 257 MT per
day capacity in the State of Uttarakhand with a capex of about Rs.760 crores commenced
the commercial production in phases during the financial year 2008-09.The Company as on
31.3.2009 had the manufacturing capacities of 3.71 million tyres, 2.95 million tubes and
1.53 million flaps per annum in the Plants including at Uttarakhand Plant. It has small
manufacturing capacities of various Chemicals at Kharda in the State of West Bengal also.
It has the annual manufacturing capacities of 12,410 mtpa of Caustic Soda Lye, 5,045 mtpa
of Liquid Chlorine, 6,205 mtpa of Sodium Hypochlorite, 8,200 mtpa of Hydrochloric Acid,
3,200 mtpa of Ferric Alum, 18,700 mtpa of Sulphuric Acid and 1,620,000 m3pa of purified
Hydrogen Gas.
The Company is a well-diversified entity in the fields of Cement, Tyre, Rayon Yarn,
Transparent Paper, Spun Pipes and Heavy Chemicals with two core business segments i.e.
Cement and Tyres.



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In Spun Pipes & Foundries, a unit of the Company, work suspended from 2nd May, 2008
still commences till further notice.
The Company as of now is listed on three major Stock Exchanges in India i.e. Bombay
Stock Exchange Ltd., Mumbai, Calcutta Stock Exchange Association Ltd., Kolkata and
National Stock Exchange of India Ltd., Mumbai and at the Societe de la Bourse de
Luxembourg, Luxembourg.
A further expansion upto 1.65 million tons of cement per annum in Vasavadatta Cement at
Sedam in Karnataka as unit IV at the same site is in progress, with a 17.5 MW Captive
Power Plant, involving a capital expenditure of about Rs. 783.50 crores (including the cost
of Captive Power Plant).

The commercial production of cement in the aforesaid unit IV has commenced in June
2009. The work for the further expansion in the Tyres Section at Uttarakhand for radial
tyres with 100 MT per day capacity and bias tyres with 125 MT per day capacity involving
an estimated aggregate capital outlay of about Rs. 840 crores is under progress. The Board
has further approved a Motor Cycle Tyre Project of 70 MT per day capacity at the same site
involving a capital outlay of Rs.190 crore. The civil construction of both the Projects is in
full swing. The commercial production in both the Projects is likely to start by December
2009/ January 2010.
Birla Supreme in popular brand of Kesoram cement from its prestigious plant of
Basantnagar in AP which has outstanding track record. In performance and productivity
serving the nation for the last two and half decades. It has proved its distinction by bagging
several national awards. It also has the distinction of achieving optimum capacity
utilization.
Kesoram offers a choice of top quality portioned cement for light, heavy
constructions and allied applications. Quality is built every fact of the operations.
The plant lay out is rational to begin with. The limestone is rich in calcium
carbonate a key factor that influences the quality of final product. The day process
technology uses in the latest computerized monitoring overseas the manufacturing process.
Samples are sent regularly to the bureau of Indian standards. National council of
construction and building material for certification of derived quality norms.



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The company has vigorously undertaking different promotional measures for
promoting their product through different media, which includes the use of news papers
magazine, hoarding etc.
Kesoram cement industry distinguished itself among all the cement factories in
Indian by bagging the National Productivity Award consecutively for two years i.e. for the
year 1985-1987. The federation of Andhra Pradesh Chamber & Commerce and Industries
(FAPCCI) also conferred on Kesoram Cement. An award for the best industrial promotion
expansion efforts in the state for the year 1984. Kesoram also bagged FAPCCI awarded for
Best Family Planning Effort in the state for the year 1987-1988.

One among the industrial giants in the country today, serving the nation on the
industrial front. Kesoram industry ltd. has a checked and eventful history dating back to the
twenties when the Industrial House of Birlas acquired it. With only a textile mill under its
banner 1924, it grew from strength to strength and spread its activities to newer fields like
Rayon, Transparent paper, pipes, Refractors, tyres and other products.
Looking to the wide gap between the demand and supply of vital commodity
cement, which play in important role in National building activity the Government of India,
had de-licensed the cement industry in the year 1966 with a review to attract private
entrepreneur to augment the cement production. Kesoram rose to the occasions and divided
to set up a few cement plants in the country.
Kesoram cement undertaking marketing activities extensively in the state of Andhra
Pradesh, Karnataka, Tamilnadu, Kerala, Maharashtra and Gujarat. In A.P. sales Depts., are
located in different areas like Karimnagar, Warangal, Nizamabad, Vijayawada and Nellore.
In other states it has opened around 10 depots.
The market share of Kesoram Cement in AP is 7.05%. The market share of the
company in various states is shown as under.
STATES MARKET SHARE
Karnataka 4.09%
Tamilnadu 0.94%
Kerala 0.29%
Maharashtra 2.81%





27
Process and Quality Control:
It has been the endeavor of Kesoram to incorporate the Worlds latest technology in
the plant and today the plant has the most sophisticated.

X-ray analysis:
Fully computerized XRF and XRD X-RAY Analyzers keep a constant round the
clock vigil on quality.
Supreme performance:
One of the largest Cement Plants in Andhra Pradesh, the plant incorporate the latest
technology in Cement - making.
It is professionally managed and well established Cement Manufacturing Company
enjoying the confidence of the consumers. Kesoram has outstanding track record in
performance and productivity with quite a few national and state awards to its credit.
BIRLA SUPREME, the 43 Grade Cement, is a widely accepted and popular brand
in the market, commanding a premium.
However to meet the specific demands of the consumer, Kesoram bought out the 53
grade BIRLA SUPREME GOLD, which has special qualities like higher fineness, quick-
setting, high compressive strength and durability.
Supreme Strength:
Kesoram Cement has huge captive Limestone Deposits, which make it possible to
feed high- grade limestone consistently, its natural Grey colour is anion- born ingredient
and gives good shade.
Both the products offered by Kesoram, i.e. BIRLA SUPREME-43 Grade and
BIRLA SUPREME-GOLD-53 Grade cement are outstanding with much higher
compressive strength and durability.
The following characteristics show their distinctive qualities.

Comprehensive
Strength
Opc 43
grls 8112
1989
Birla
Supreme 43
grade
Opc 43 gr
Is 1226987
Birla
Supreme
Gold 53 gr
3 days mpa Min. 23 31 + Min. 27 38+
7 days mpa Min. 23 42+ Min. 37 48+
28 days mpa Min. 43 50+ Min. 53 60+



28
D.C. SYSTEM:
Clinker making process is a key step in the overall cement making process. In the case of
BIRLA SUPREME/GOLD, the clinker-making process is totally computer. control. The
Distributed Control System (DCS) constantly monitors the process and ensures operating
efficiency. This eliminates variation and ensures consistency in the quality of Clinker.

Physical Characteristics:


Ope 43
Is 8 112-89

Birla
Supreme
43 grade
Ope 53 gr
Is 12269-87

Birla Supreme
Gold 53 gr

Setting time

Min30

120-180

Min 30

130-170

a. Initial (mats)

Max 600

180-240

Max 600

170-220

b. final (mats)

Min 225

270-280

. Min 225

300-320

Fincncssm 2/Kg

Max 10

1.0-2.0

Max 10

0.5-1.0

Soundness

Max 0.8

0.04-0.08

Max 0.080.

0.04-0.2

a. le-chart (mm)









b. autoclave (%)









Supreme Expertise:

The Best Technical Team, exclusive to Kesoram, mans the Plant and monitors the process,
to blend the cement in just the required proportions, to make BIRLA SUPREME/GOLD OF
Rock Strength.
18 Million Tones of Solid Foundation:
Staying at the top for over a Quarter Century, Quarter Century is no less an achievement.
Infact. Kesoram is synonymous with for over 28 years.
Over the years, Kesoram has dispatched 18 million tones of cement to the nook and corners
of the country and joined hands in strengthening the Nation. No one else in Andhra Pradesh
has this distinction. The prestigious World Bank aided Ramagundam Super Thermal Power
Project of NTPC and Mannair Dam of Pochampad project in AP arc a couple of projects for
which Kesoram Cement was exclusively uses: to cite an example.



29
Chemical Characteristics:


Opc 43 gr
Is 81 132-989

Birla
Supreme
43 grade
Ope 53 gr
Is 12269-
87
Birla
Supreme
Gold 53 gr.
Loss on inflection % Max 5 <1.6 Max 4.0 <1.5
Insoluble residue %

Max 2.0

<0.8

Max 2.0

< 0.6

Magnesium oxide % Max 6.0 < 1.3 Max 6.0 < 1.3
Lime saturation factor 0.66-1.02 0.8-0.9 0.8-1.02 0.88-0.9
Alumna: iron ratio

MinO.66

1.5-1.7

MinO.66

1.5-1.7

Sulfuric anhydride % Max 2.5/3 1.6-2.0 Max 2. 5/3 1.6-2.0
Alkalis Chlorides

Max 0.05

Max 0.01

Max 0.05

Max 0.4


Kesoram Cement - advantages:
Helps in designing sleeker and more elegant.
Structures, giving greater flexibility in design concept.
Due to its fine quality, super fine construction can be achieved.. Its gives maximum
strength at Minimum use of cement with water in the water cement ratio, especially the 53
grade Birlas supreme-gold.
Feathers in Kesoram's cap:
Kesoram has outstanding track record, achieving over 100% capacity utilization I
productivity and energy conservation. It has proved its distinction by bagging several
national and state awards, noteworthy being.
NATIONAL:
1. National productivity award for 1985-86
2. National productivity award for 1986-87
3. National award for mines safety for 1985-86
4. National award for mines safety for 1986-87
5. National award for energy conservation 1989-90



30
STATE
1. A.P. State productivity award for 1988
2. State award for best industrial management 1988-89.
3. Best industrial productivity award of FAPCCI (federation of A.P. chamber of
commerce and industry), 1991
4. Best management award of the state Govt. 1993
5. FAPCCI award for the workers welfare, 1995-96.
I.S.O. 9002
All quality systems of Kesoram have been certified under I.S.O. 9002/1.S. 4002, which
proves the worldwide acceptance of the products.
All quality systems in production and marketing of the product have been certified by B.I.S.
under ISO 9002/1S 14002.
The first unit was installed at basanthnagar with a capacity of 2.5 lakhs TPA (tones per
annum) incorporating humble supervision, preheated system, during the year 1969.
The second unit followed suit with added a capacity of 2 lakhs TPA in 1971.
The plant was further expanded to 9 lakhs by adding 2.5 lakhs tones in august 1978, 1.13
lakhs tones in January 1981 and 0.87 lakhs tones in September 1981.
Power:
Singareni collieries make the supply of coal for this industry and the power was
obtained from AP TRANSCO. The power demand for the factory is about 21MW. Kesoram
has got 2-diesel generator seats of 4 MW each installed in the year 1987.
Kesoram cement now has a 15MWcaptive power plant to facilities for uninterrupted
power supply for manufacturing of cement.
Performance:
The performance of kersoram cement industry has been outstanding achieving over
cent percent capacity utilization all through despite many odds like power cuts and which
most 40% was wasted due to wagon shortage etc.
The company being a continuous process industry works round the clock and has
excellent records of performance achieving over 1005 capacity utilization.
Kesoram has always combined technical progress with industrial performance. The
company had glorious track record for the last 27 years in the industry.
Technology:



31
Kesoram cement uses most modern technology and the computerized control in the
plant. A team of dedicated and well- experienced experts manages the plant.
The quality is maintained much above the bureau of Indian standards.
The raw materials used for manufacturing cement are:
Lime stone
Bauxite
Hematite
Gypsum
Environmental and Social Obligations:
For environmental promotion and to keep up the ecological balance, this section
has planted over two lakhs trees .on social obligation front ,this section has undertaken
various social welfare programs by adopting ten nearly villages, organizing family welfare
campus, surgical camps, animal health camps blood donation camps, children immunization
camps, seeds, training for farmers etc were arranged.
Welfare and Recreation Facilities:
For the purpose of recreation facilities 2 auditoriums were provided for playing
indoor games, cultural function and activities like drama, music and dance etc.
The industry has provided libraries and reading rooms. About 1000 books are available in
the library. All kinds of newspaper, magazines are made available.
Canteen is provided to cater to the needs of the employees for supply of snacks, tea,
coffee and meals etc.
One English medium and one Telugu medium school are provided to meet the
educational requirements.
The company has provided a dispenser with a qualified medical office and
paramedical staff for the benefit of the employees. The employees covered under ESI
scheme have to avail the medical facilities from the ESI hospital.
Competitions in sports and games are conducted every year for august 15
th

Independence Day and January 26
th
, republic day among the employees.
Electricity:
The power consumption per ton of cement has come down to 108 units against 113
units last year, due to implementation of various energy saving measures. The performance
of captive power plant of this section continues to be satisfactory. Total power generation



32
during the year was 84 million units last year. This captive power plant is a major role in
keeping power costs with in economic levels.
The management has introduced various HRD programs for training and
development and has taken various other measures for the betterment of employees
efficiency.
The section has installed adequate air pollution control system and equipment and is
ISO14001 such as Environment management system is under implementation.

Awards:
Kesoram cement bagged many prestigious awards including national awards for
productivity, technology, conservation and several state awards since 1984. The following
are the some of important awards.

AWARDS OF KESORAM CEMENT:

No

Year

Awards
National/
State
1 1989-90 Management award community
Development
State

2

1991 Energy conservation may day award of the
Govt.
State
3 1991 Pundit Jawaharlal Nehru rolling trophy for
best
State
4 1993 National productivity effort Indira Gandhi
national award
State
5 1994 Best management award State
6 1994-
1995
Best industrial rebellion award State
7 1995 Rural development by chief minister
Environment and mineral conservation
award
State
8 1995 Best industrial rebellion award State



33
9 1995-
1996
Best effort of an industrial unit to
development rural economy shri.S.R.Rungta
award for social
National
10 1996 Awareness for best rural development
efforts
State
11 1999 Best workers welfare best family welfare
award
State
12 2001 First prize for mine environment &pollution
control for the 3
rd
year in succession
State
13 2002 Vana mithra award from AP Govt State
14 2003 Company has got OHSAS-18001 State
15 2005 Certification from DNV, New Delhi. State
16 2006 Award for pollution control and
environmental protection FAPCCI award
for best rural development in the state
State




34
Products of the organization:










35





CHAPTER-III
LITERATURE REVIEW




36
Introduction:
Financial Performance Analysis:
The term financial performance analysis also known as analysis and interpretation of
financial statements , refers to the process of determining financial strength and
weaknesses of the firm by establishing strategic relationship between the items of the
balance sheet , profit and loss account and other operative data.
Analyzing financial statements by Metcalf and Titard
Financial analysis is a process of evaluating the relationship between component
parts of a financial statement to obtain a better understanding of a firms position and
performance by Myers

Financial Performance:
The word Performance is derived from the word parfourmen, which means to do, to
carry out or to render. It refers the act of performing, execution, accomplishment,
fulfillment etc. In border sense, performance refers to the accomplishment of a given task
measured against preset standards of accuracy, completeness, cost, and speed. In other
words, it refers to the degree to which an achievement is being or has been accomplished. In
the Words of Frich Kohlar The performance is a general term applied to a part or to all the
conducts of activities of an organization over a period of time often with reference to past or
projected cost efficiency, management responsibility or accountability or the like. Thus, not
just the presentation, but the quality of results achieved refers to the performance.
Performance is used to indicate firms success, conditions, and compliance.

Financial performance refers to the act of performing financial activity. In broader
sense, financial performance refers to the degree to which financial objectives being or has
been accomplished. It is the process of measuring the results of a firm's policies and
operations in monetary terms. It is used to measure firm's overall financial health over a
given period of time and can also be used to compare similar firms across the same industry
or to compare industries or sectors in aggregation.
The purpose of financial analysis is to diagnose the information contained in financial
statements so as to Jude the profitability and financial soundness of the firm. Just like a
doctor examines his patient by recording his body temperature, blood pressure, etc. Before



37
making his conclusion regarding the illness and before giving his treatment, a financial
analyst analysis the financial statements with various tools of analysis before commenting
upon the financial health or weaknesses of an enterprise.
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 divided policy.

Types of financial analysis:-
Financial analysis into different categories depending upon
(1) The material used and
(2) The method of operation followed in the analysis or the modus operandi of
analysis
Types of financial analysis
On the basis of material used on the basis of modus operandi
External Internal Horizontal Vertical
Analysis Analysis Analysis Analysis

1. On the basis of material used: - According to material used, financial analysis can
be of two types
External analysis
Internal analysis

External analysis:-
This analysis is done by outsiders who do not have access to the detailed internal
outsiders include investors, potential investors, Creditors, Potential Creditors, Government
Agencies, Credit Agencies and General Public. For financial analysis, these external parties
to the firm depend almost entirely on the published financial statements.

Internal analysis:-
This analysis is undertaken by the persons namely executives and employees of the
organization or by the officers appointed by government or court who have access to the



38
books of account ( internal accounting records) and other information related to the
business.
2. On the basis of modus operandi:-
According to the modus operandi financial analysis can also be of two types
a. Horizontal analysis
b.Vertical analysis
Horizontal analysis:-
Horizontal analysis refers to the comparison of financial data of a company for several
years. The figures for this type of analysis are presented horizontally over a number of
columns. The figures of the various years are compared with standard or base year. a base
year is year chosen as beginning point. This type of analysis is also called dynamic
analysis as it is based on the data from year to year rather than on data of any one year. The
horizontal analysis makes it possible to focus attention on items that have changed
significantly during the period under view.

b. Vertical analysis:-
Vertical analysis refers to the study of relationship of the various items in the financial
statements of one accounting period. In this types of analysis the figures from financial
statement of a year are compared with a base selected from the same years statement

Methods of financial analysis:-
The following methods of analysis are generally used:-
1. Comparative Statements.
2. Trend Analysis.
3. Common-Size Statements.
4. Funds flow Analysis.
5. Cash Analysis
6. Ratio Analysis
7. Cost-volume-Profit Analysis






39
Comparative statements:-
The comparative financial statements are statements of the financial position at
different periods of time .the elements of financial position are show in a
Comparative Statement provides an idea of financial position at two or more
periods. Generally two financial statements (balance sheet and income statement) are
prepared in comparative form for financial analysis.
The Comparative Statement May Show:-
1. Absolute figures (rupee amounts)
2. Changes in absolute figures i.e. increase or decrease in absolute figures.
3. Absolute data in terms of percentages.
4. Increase or decrease in terms of percentages.

The Two Comparative Statements Are:-
1. Comparative balance sheet, and
2. Income statement.

1. 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 change in periodic balance sheet items reflect the conduct of a business
the change 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.

Guide Lines for Interpretation of Comparative Balance Sheet:-

While interpreting comparative balance sheet the interpreter is expected to study the
following aspects:-
1. Current financial position and liquidity position
2. Long-term financial position
3. Profitability of the concern.




40
Common Size Statement:-
The common-size statements, balance sheet and income statement are show in
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 a
percentage of the total similarly, various liabilities are taken as a part of total liabilities.
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. The common size balance sheet can be used to compare companies
of differing 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. The trends of figures from year to year may not be studied and even they
may not give proper results.

Trend Analysis of Balance Sheet:-
Trend analysis is Very important tool of horizontal financial analysis.
This analysis enables to known the change in the financial function and operating efficiency
in between the time period chosen.
By studding the trend analysis of each item we can known the direction of changes and
based upon the direction of changes, the options can be changed.
Trend =Absolute Value of item in the statement understudy *100
Absolute Value of same item in the base statement
Ratio Analysis:
Ratio analysis is used as a technique of analyzing the financial information, contained in the
balance sheet and profit and loss accounts, for a more meaningful understanding of the
financial position and performance of a firm.
The relationship between two accounting figures, expressed mathematically, is known as a
financial ratio. A ratio helps the analyst to make qualitative judgment about the firms
financial position and performance.
Several ratios can be calculated from the accounting data contained in the financial
statements. The parties which generally undertake financial analysis is short term
creditors, long-term creditors, owner and management. In view of the requirements of the
various ratios, ratios are classified into the following four important categories.



41
Liquidity ratios
Leverage ratios
Activity ratios
Profitability ratios
Liquidity Ratios:
It is extremely essential for a firm to be able to meet its obligations as they become due.
Liquidity ratios measure the ability of the firm to meet its current obligations. A firm should
ensure that it does not suffer from lack of liquidity, and also that it does not have excess
liquidity. The failure of a company to meet its obligations due to lack of sufficient liquidity,
will result in a poor creditworthiness, loss of creditors confidence, or even in legal tangles
resulting in the closure of the company. A very high degree of liquidity is also bad; idle
assets earn nothing. The firms funds will be unnecessarily tied up in current assets.
Therefore it is necessary to strike a proper balance high liquidity and lack of liquidity.

The most common ratios which indicate the extent of liquidity or lack of it are
Current ratio
Quick ratio
Other ratios include Cash ratio, Interval Measure and Net working capital ratio.

Current Ratio:
The current ratio is calculated by dividing current assets by current liabilities.
Current assets
Current ratio = --------------------------
Current liabilities
Current ratio is a measure of the firms short term solvency. It indicates the availability of
current assets in rupees for every one rupee of current liability. A ratio of greater than one
means that the firm has more current assets than current claims against the, Current ratio of
2 to 1 or more is considered satisfactory. Current ratio represents a margin of safety for
creditors.
Quick Ratio:
Quick ratio also known as acid-test ratio establishes a relationship between quick assets and
the current liabilities. Cash is the most liquid asset. It is calculated by dividing quick assets
by current liabilities.
Quick ratio = Quick Assets / Current Liabilities



42
(Quick Assets = Current assets Inventory)
One defect of the current ratio is that it fails to convey any information on the composition
of the current assets of the firm. A rupee of cash is considered equivalent to a rupee of
inventory of receivables. But it is not so. A rupee of cash is more readily available to meet
current liabilities than a rupee of say inventory. This implies the usefulness of the current
ratio.
The Acid test ratio measures the firms ability to convert its current assets quickly into
cash in order to meet its current liabilities.
A quick ratio of 1 to 1 is considered to represent a satisfactory current financial condition. It
is an important index of the firms liquidity.

Leverage Ratios:
Leverage ratios identify the source of a firms capital owners or outside creditors.
Financial leverage refers to the use of debt in financing non-current assets. If the return on
assets exceeds the cost of debt, the leverage is successful i.e., it improves return on equity.
Debt Equity Ratio:
The Debt Equity is determined to analyze the soundness of the long term financial
policies of the organization. It is also known as Internal External Equity Ratio.
It is calculated as follows:
Debt Equity Ratio = Total long term debt / Share holders funds.
Equity Ratio:
This ratio is also called as proprietary ratio establishes a relationship between share holders
funds to total assets of company. Equity Ratio is calculated by dividing share holders fund
by total assets.
Fixed Asset Ratio:
This ratio indicates the extent to which the assets of the companys can be lost without
affecting the interest of the creditors of the company. Higher the ratios better the long-term
position of the company.
Activity Ratios:
They are primarily used for studying a firms working capital situation. A well managed
firm should have good activity ratios.




43
Working Capital Turnover Ratio:
The working capital turnover ratio indicates whether or not working capital has been
effectively used in making sales.
Working capital turnover = Sales / Net current assets

Inventory Turnover Ratio:
This ratio also known as Stock Turnover Ratio establishes the relationship between costs of
goods sold or net sales during the given period and the average amt of stock held during the
period. This ratio reveals the number of times finished stock in turnover during a given
accounting period.
Higher the ratio the better is it because it shows the finished stock is rapidly turned
in to sales. On the other hand, a low stock turnover ratio is not desirable, because it reveals
the accumulation of stock.

Debtors Turnover Ratio:
This ratio indicates the velocity of debt collection of a company. In other words it shows
the number of times average turnover during a year.
A Higher Debtor Turnover Ratio indicates a more efficient is the management towards
debtors and low ratio ratio implies inefficient management of debtors.

Total Assets Turnover Ratio:
The asset turnover ratio indicates how efficiently management is employing Assets.
Total Assets Turnover Ratio = Sales / Total Assets

Profitability Ratios:
Profitability ratios are the ratios which measure a firms overall effectiveness as revealed by
the returns generated on sales and investment.
General Profitability Ratios:
1. Gross Profit Ratio
2. Net profit Ratio
3. Operating or Expenses Ratio.




44
Gross Profit Ratio:
Gross profit Ratio measures the relationships to net sales and is usually represented as a
percentage. It is a good measure of profitability.
The gross profit ratio indicates the extent to which selling price of goods per unit may
decline without resulting in losses on operation. Higher the gross profit betters the result.
Net Profit Ratio:
Net Profit Ratio indicates net margin on sales. It is given by the following equation.
Net Profit Ratio = (Net Profit / Sales) * 100

Operating or Expenses Ratio:
This ratio is complimentary of Net Profit Ratio. The more the net profit, the less the
Operating Ratio. Operating costs include the cost of direct materials, direct labors and other
overheads, viz., are generally excluded from operating costs. A comparison of the Operating
Ratio will indicate whether the cost efficiency is high or low in the figure of sales. This less
the ratio it depicts the efficiency of the management.




45









CHAPTER IV
DATA ANALYSIS & INTERPRETATION
















46
Comparative Balance Sheet of Kesoram in the Year between 2008-2009
(Rupee in crores)
Years Changes
Particulars 2008 2009 In Rupees In Percentage
Liabilities
\Share Capital 45.74 45.74 0.00 0.00
Reserves & Surplus 930.85 1280.24 349.39
Revaluation Reserves 5.33 4.12 -1.21 -22.70
Loans
Secured Loans 971.06 1536.27 565.21 58.21
Un Secured Loans 121.29 434.16 312.87 257.95
Deferred Tax Liabilities 0.00 0.00 0.00 0.00
Current Liabilities
Provisions 330.39 345.29 14.90 4.51
Current Liabilities 570.67 665.87 95.20 16.68

Total 2975.33 4311.69 1336.36 44.91
Assets
Net Block 1084.24 1804.35 720.11 66.42
Capital Wip 634.59 864.85 230.26 36.28
Investments 47.83 61.78 13.95 29.17
Current Assets
Inventories 442.17 589.06 146.89 33.22
Sundry Debtors 273.07 380.17 107.10 39.22
Cash & Bank Balances 40.36 56.57 16.21 40.16
Total Current Assets 755.60 1025.80 270.20 35.76
Loans & Advances 452.89 554.62 101.73 22.46
Fixed Deposits 0.18 0.28 0.10 55.56
Total 2975.33 4311.69 1336.36 44.91




47
Interpretation of comparative balance sheet of 2008-2009:
Reserves & Surplus were increased to 37.53 % (percent) i.e., in Rupees 349.39
crores.
Revaluation Reserves decreased to 1.21 % i.e., in Rupees 22.70 crores.
Secured Loans are increased to 58.21 % i.e., in Rupees 565.21 crores. And UN
secured loans highly Increased to 257.95 %.
Current liabilities and Provisions are increased to 16.68 and 4.51 respectively i.e., in
Rupees 95.20 & 14.90 crores.
Fixed assets were highly increased to 66.42 % i.e., in Rupees 720.11 crores.
Investments were increased to 29.17 % i.e., in Rupees 13.95 crores.
Sundry debtors increased to 39.22 % i.e., in Rupees 107.10 crores.
Current assets increased 35.76 % i.e., in Rupees 270.20 crores. And Loans &
Advances increased to 22.46 % respectively.
The overall financial position was satisfactory.

















48
Comparative Balance Sheet of Kesoram in the Year between 2009-2010

(Rupees in crores)
Years Changes
Particulars 2009 2010 In Rupees In Percentage
Liabilities
Share Capital 45.74 45.74 0.00 0.00
Reserves & Surplus 1280.24 1491.11 210.87 16.47
Revaluation Reserves 4.12 3.39 -0.73 -17.72
Loans
Secured Loans 1536.27 1863.72 327.45 21.31
Un Secured Loans 434.16 1262.50 828.34 190.79
Deferred Tax Liabilities 0.00 0.00 0.00
Current Liabilities
Provisions 345.29 357.34 12.05 3.49
Current Liabilities 665.87 1076.88 411.01 61.73

Total 4311.69 6100.68 1788.99 41.49
Assets
Net Block 1804.35 3431.82 1627.47 90.20
Capital WIP 864.85 412.83 -452.02 -52.27
Investments 61.78 51.43 -10.35 -16.75
Current Assets
Inventories 589.06 916.19 327.13 55.53
Sundry Debtors 380.17 542.89 162.72 42.80
Cash & Bank Balances 56.57 80.14 23.57 41.67
Total Current Assets 1025.80 1539.22 513.42 50.05
Loans & Advances 554.62 665.06 110.44 19.91
Fixed Deposits 0.28 0.31 0.03 10.71
Total 4311.69 6100.68 1788.99 41.49




49
Interpretation of comparative balance sheet of 2009-2010:

Reserves & surplus increased to 16.47 % i.e., in Rupees 210.87 crores.
Revaluation Reserves decreased to 17.72 % i.e., in Rupees 0.73 crores.
Secured loans increased to 21.31% i.e., in Rupees 327.45 crores.
Current Liabilities were increased to 61.73 % i.e., in Rupees 411.01 crores, and
Provisions 3.49 % i.e., in Rupees 12.05 crores.
Fixed Assets were increased to 90.20 % i.e., in Rupees 1627.47 crores.
Investments were decreased to 16.75 % i.e., in Rupees 10.35 crores.
Sundry debtors were increased to 42.80 % i.e., in Rupees 162.72 crores.
Current assets increased to 50.05 % i.e., in Rupees 513.42 crores. And loans and
Advances increased 19.19 % i.e., in Rupees 110.44 crores.
The overall financial position was satisfactory.




















50
Comparative Balance Sheet of Kesoram in the Year between 2010-2011

(Rupees in crores)
Years Changes
Particulars 2010 2011 In Rupees In Percentage
Liabilities
Share Capital 45.74 45.74 0.00 0.00
Reserves & Surplus 1491.11 1251.62 -239.49 -16.06
Revaluation Reserves 3.39 2.89 -0.50 -14.75
Loans
Secured Loans 1863.72 2371.83 508.11 27.26
Un Secured Loans 1262.50 1627.44 364.94 28.91
Deferred Tax Liabilities 0.00 0.00 0.00
Current Liabilities
Provisions 357.34 14.94 -342.40 -95.82
Current Liabilities 1076.88 1139.02 62.14 5.77

Total 6100.68 6453.48 352.80 5.78
Assets
Net Block 3431.82 3691.72 259.90 7.57
Capital WIP 412.83 437.81 24.98 6.05
Investments 51.43 65.82 14.39 27.98
Current Assets
Inventories 916.19 1118.55 202.36 22.09
Sundry Debtors 542.89 631.34 88.45 16.29
Cash & Bank Balances 80.14 71.88 -8.26 -10.31
Total Current Assets 1539.22 1821.77 282.55 18.36
Loans & Advances 665.06 434.60 -230.46 -34.65
Fixed Deposits 0.31 1.76 1.45 467.74
Total 6100.68 6453.48 352.80 5.78








51
Interpretation of comparative balance sheet of 2010-2011:

Reserves & surplus decreased to 16.06 % i.e., in Rupees 239.49 crores.
Revaluation Reserves decreased to 14.75 % i.e., in Rupees 0.50 crores.
Secured loans increased to 27.26 % i.e., in Rupees 508.11 crores.
Current Liabilities were increased to 5.77 % i.e., in Rupees 62.14 crores
Provisions decreased to 95.82 % i.e., in Rupees 342.40 crores.
Fixed Assets were increased to 7.57 % i.e., in Rupees 259.90 crores.
Investments were decreased to 27.98 % i.e., in Rupees 14.39 crores.
Sundry debtors were increased to 16.29 % i.e., in Rupees88.45 crores.
Current assets increased to 18.36 % i.e., in Rupees 282.55 crores. And loans and
Advances increased 34.65 % i.e., in Rupees 230.46 crores.
The overall financial position was UN satisfactory.




























52
Comparative Balance Sheet of Kesoram In The Year Between 2011-2012
(Rupees in crores)
Years Changes
Particulars 2011 2012 In Rupees In Percentage
Liabilities
Share Capital 45.74 45.74 0.00 0.00
Reserves & Surplus 1251.62 866.57 -385.05 -30.76
Revaluation Reserves 2.89 2.70 -0.19 -6.57
Loans
Secured Loans 2371.83 3177.92 806.09 33.99
Un Secured Loans 1627.44 927.42 -700.02 -43.01
Deferred Tax Liabilities 0.00 0.00 0.00
Current Liabilities
Provisions 14.94 407.26 392.32 2625.97
Current Liabilities 1139.02 1800.10 661.08 58.04

Total 6453.48 7227.71 774.23 12.00
Assets 0.00
Net Block 3691.72 3587.21 -104.51 -2.83
Capital WIP 437.81 680.65 242.84 55.47
Investments 65.82 66.36 0.54 0.82
Current Assets
Inventories 1118.55 995.16 -123.39 -11.03
Sundry Debtors 631.34 673.58 42.24 6.69
Cash & Bank Balances 71.88 69.59 -2.29 -3.19
Total Current Assets 1821.77 1738.33 -83.44 -4.58
Loans & Advances 434.60 1154.09 719.49 165.55
Fixed Deposits 1.76 1.07 -0.69 -39.20
Total 6453.48 7227.71 774.23 12.00







53
Interpretation of comparative balance sheet of 2011-2012:

Reserves & surplus decreased to 30.76 % i.e., in Rupee 385.05 crores.
Revaluation Reserves decreased to 6.57 % i.e., in Rupees 0.19 crores.
Secured loans increased to 33.99 % i.e., in Rupees 806.99 crores.
Current Liabilities were increased to 58.04 % i.e., in Rupees 661.08 crores
Provisions increased to 2625.97 % i.e., in Rupees 392.32 crores.
Fixed Assets were decreased to 2.83 % i.e., in Rupee 104.51 crores.
Investments were increased to 0.82 % i.e., in Rupees 0.54 crores.
Sundry debtors were increased to 6.69 % i.e., in Rupees 42.24 crores.
Current assets decreased to 4.58 % i.e., in Rupees 83.44 crores. And loans and
Advances increased 165.55 % i.e., in Rupees 719.49 crores.
The overall financial position was UN satisfactory.




























54
Common Size Balance Sheet of Kesoram For The Year 2008-2009

(Rupees in crores)
Particulars 2008 Change Percentage 2009 Change Percentage
Liabilities
Share Capital 45.74 1.54 45.74 1.06
Reserves & Surplus 930.85 31.29 1280.24 29.69
Revaluation Reserves 5.33 0.18 4.12 0.10
Loans
Secured Loans 971.06 32.64 1536.27 35.63
Un Secured Loans 121.29 4.08 434.16 10.07
Deferred Tax Liabilities 0.00 0.00 0.00 0.00
Current Liabilities
Provisions 330.39 11.10 345.29 8.01
Current Liabilities 570.67 19.18 665.87 15.44

Total 2975.33 100.00 4311.69 100.00
Assets
Net Block 1084.24 36.44 1804.35 41.85
Capital WIP 634.59 21.33 864.85 20.06
Investments 47.83 1.61 61.78 1.43
Current Assets
Inventories 442.17 14.86 589.06 13.66
Sundry Debtors 273.07 9.18 380.17 8.82
Cash & Bank Balances 40.36 1.36 56.57 1.31
Loans & Advances 452.89 15.22 554.62 12.86
Fixed Deposits 0.18 0.01 0.28 0.01
Total 2975.33 100.00 4311.69 100.00











55
Interpretation of Common Size Balance Sheet of 2008-2009:

Share capital was recorded 1.54 percent in the total liabilities in the year 2008 it is
decreased to 1.06 % in the year 2009.
Reserves & surplus contributed to 31.29 % in the total liabilities in the year 2008 it is
decreased to 29.69 % in the year 2009.
Secured loans were 32.64 % in the total liabilities in the year 2008 it is increased to
35.63 % in the year 2009.
Current Liabilities shown to 19.18 % in the total liabilities in the year 2008 it is
decreased to 15.44 % in the year 2009.
Provisions 11.10 in the total liabilities in the year 2008 it is decreased to 8.01 % in the
year 2009.
Fixed Assets were 36.44 in the total liabilities in the year 2008 i.e., decreased to 41.85
% in the year 2009.
Investments were 1.61 in the total liabilities in the year 2008 it is decreased to 1.43 %
in the year 2009.
Sundry debtors were 9.18 in the total liabilities in the year 2008 it is decreased to 8.82
% in the year 2009.

















56
Common Size Balance Sheet of Kesoram For The Year 2009-2010

(Rs in crores)

Particulars 2009 Change Percentage 2010
Change
Percentage
Liabilities
Share Capital 45.74 1.06 45.74 0.75
Reserves & Surplus 1280.24 29.69 1491.11 24.44
Revaluation Reserves 4.12 0.10 3.39 0.06
Loans
Secured Loans 1536.27 35.63 1863.72 30.55
Un Secured Loans 434.16 10.07 1262.50 20.69
Deferred Tax Liabilities 0.00 0.00 0.00 0.00
Current Liabilities
Provisions 345.29 8.01 357.34 5.86
Current Liabilities 665.87 15.44 1076.88 17.65

Total 4311.69 100.00 6100.68 100.00
Assets
Net Block 1804.35 41.85 3431.82 56.25
Capital WIP 864.85 20.06 412.83 6.77
Investments 61.78 1.43 51.43 0.84
Current Assets
Inventories 589.06 13.66 916.19 15.02
Sundry Debtors 380.17 8.82 542.89 8.90
Cash & Bank Balances 56.57 1.31 80.14 1.31
Loans & Advances 554.62 12.86 665.06 10.90
Fixed Deposits 0.28 0.01 0.31 0.01
Total 4311.69 100.00 6100.68 100.00











57

Interpretation of common size balance sheet of 2009-2010

Share capital was recorded 1.06 percent in the total liabilities in the
year 2009 it is decreased to 0.75 % in the year 2010.
Reserves & surplus contributed to 29.69 % in the total liabilities in the
year 2009 it is decreased to24.44 % in the year 2010.
Secured loans were 35.63 % in the total liabilities in the year 2009 it is
increased to 30.55 % in the year 2010.
Current Liabilities shown to 15.44 % in the total liabilities in the year
2009 it is decreased to 17.65 % in the year 2010.
Provisions 8.01 in the total liabilities in the year 2009 it is decreased
to 5.86 %in the year 2010.
Fixed Assets were 41.85 in the total liabilities in the year 2009 i.e.,
increased to 56.25 % in the year 2010.
Investments were 1.43 in the total liabilities in the year 2009 it is
decreased to 0.84 % in the year 2010.
Sundry debtors were 8.82 in the total liabilities in the year 2009 it is
increased to 8.90 % in the year 2010.
















58
Common Size Balance sheet of Kesoram for the year 2010-2011

(Rupees in crores)
Particulars 2010 Change Percentage 2011
Change
Percentage
Liabilities
Share Capital 45.74 0.75 45.74 0.71
Reserves & Surplus 1491.11 24.44 1251.62 19.39
Revaluation Reserves 3.39 0.06 2.89 0.04
Loans
Secured Loans 1863.72 30.55 2371.83 36.75
Un Secured Loans 1262.50 20.69 1627.44 25.22
Deferred Tax Liabilities 0.00 0.00 0.00 0.00
Current Liabilities
Provisions 357.34 5.86 14.94 0.23
Current Liabilities 1076.88 17.65 1139.02 17.65

Total 6100.68 100.00 6453.48 100.00
Assets
Net Block 3431.82 56.25 3691.72 57.21
Capital WIP 412.83 6.77 437.81 6.78
Investments 51.43 0.84 65.82 1.02
Current Assets
Inventories 916.19 15.02 1118.55 17.33
Sundry Debtors 542.89 8.90 631.34 9.78
Cash & Bank Balances 80.14 1.31 71.88 1.11
Loans & Advances 665.06 10.90 434.60 6.73
Fixed Deposits 0.31 0.01 1.76 0.03
Total 6100.68 100.00 6453.48 100.00










59
Interpretation of Common Size Balance Sheet Of 2010-2011:


Share capital was recorded 0.75 percent in the total liabilities in the year 2010 it is
decreased to 0.71 % in the year 2011.
Reserves & surplus contributed to 24.44 % in the total liabilities in the year 2010 it is
decreased to19.39 % in the year 2011.
Secured loans were 30.55 % in the total liabilities in the year 2010 it is increased to
36.75 % in the year 2011.
Current Liabilities shown to 17.65 % in the total liabilities in the year 2010 it is
also17.65 % in the year 2011.
Provisions 5.86 in the total liabilities in the year 2010 it is decreased to 0.23 %in the
year 2011.
Fixed Assets were 56.25 in the total liabilities in the year 2010 i.e., increased to 57.21
% in the year 2011.
Investments were 0.84 in the total liabilities in the year 2010 it increased to 1.02 % in
the year 2011.
Sundry debtors were 8.90 in the total liabilities in the year 2010 it is increased to 9.78
% in the year 2011.


















60
Common Size Balance Sheet of Kesoram for the Year 2011-2012:

(Rupees in crores)
Particulars 2011 Change Percentage 2012
Change
Percentage
Liabilities
Share Capital 45.74 0.71 45.74 0.63
Reserves & Surplus 1251.62 19.39 866.57 11.99
Revaluation Reserves 2.89 0.04 2.70 0.04
Loans
Secured Loans 2371.83 36.75 3177.92 43.97
Un Secured Loans 1627.44 25.22 927.42 12.83
Deferred Tax Liabilities 0.00 0.00 0.00 0.00
Current Liabilities
Provisions 14.94 0.23 407.26 5.63
Current Liabilities 1139.02 17.65 1800.10 24.91

Total 6453.48 100.00 7227.71 100.00
Assets
Net Block 3691.72 57.21 3587.21 49.63
Capital WIP 437.81 6.78 680.65 9.42
Investments 65.82 1.02 66.36 0.92
Current Assets
Inventories 1118.55 17.33 995.16 13.77
Sundry Debtors 631.34 9.78 673.58 9.32
Cash & Bank Balances 71.88 1.11 69.59 0.96
Loans & Advances 434.60 6.73 1154.09 15.97
Fixed Deposits 1.76 0.03 1.07 0.01
Total 6453.48 100.00 7227.71 100.00







61

Interpretation of common size balance sheet of 2011-2012:


Share capital was recorded 0.71 percent in the total liabilities in the year 2011 it is
decreased to 0.63% in the year 2012.
Reserves & surplus contributed to 19.39 % in the total liabilities in the year 2011 it
is decreased to 11.99 % in the year 2012.
Secured loans were 36.75 % in the total liabilities in the year 2011 it is increased to
43.97 % in the year 2012.
Current Liabilities shown to 17.65 % in the total liabilities in the year 2011 it is
increased to 24.91 % in the year 2012.
Provisions 0.23 in the total liabilities in the year 2011 it is increased to 5.63 %in the
year 2012.
Fixed Assets were 57.21 in the total liabilities in the year 2011 i.e., decreased to
49.63 % in the year 2012.
Investments were 1.02 in the total liabilities in the year 2011 it increased to 0.92 %
in the year 2012.
Sundry debtors were 9.78 in the total liabilities in the year 2011 it is decreased to
9.32 % in the year 2012.


















Trend Analysis
Share Capital:-
Year
Amount
(In Crores) Trend %
Increase/Decrease
Base Year Previous Year
2008 45.74 100.00 0.00 0.00
2009 45.74 100.00 0.00 0.00
2010 45.74 100.00 0.00 0.00
2011 45.74 100.00 0.00 0.00
2012 45.74 100.00 0.00 0.00

Trend Percentages in Share Capital:
Share capital shown a constant trend in the period 2008 and 2012.
Share capital is 45.74 crores all the years from 2008-2012.









Reserves & Surplus:-

Year
Amount
(In Crores) Trend %
Increase/Decrease
Base Year Previous Year
2008 930.85 100.00 0.00 0.00
2009 1280.24 137.53 37.53 37.53
2010 1491.11 160.19 60.19 22.66
2011 1251.62 134.46 34.46 -25.73
2012 866.57 93.09 -6.91 -41.37

Trend Percentages in Reserves & Surplus:
Reserves & surplus shown an increasing trend in the period between 2008 and 2010.
The average trend was 132.77 % till 2010.
The Reserves & surplus was showing decreasing trend in the period 2011-2012 (i.e.
from 160.19 % in 2010 to 93.09 % in 2012).
The decreasing trend in Reserves & surplus indicates the decrease in profits of the
firm.






Investments:-
Year
Amount
(In Crores) Trend %
Increase/Decrease
Base Year Previous Year
2008 47.83 100.00 0.00 0.00
2009 61.78 129.17 29.17 29.17
2010 51.43 107.53 7.53 -21.64
2011 65.82 137.61 37.61 30.09
2012 66.36 138.74 38.74 1.13

Trend Percentages in Investments:-
The investments are shown an increasing trend in the period between 2008 2009
and it is decreasing in the year 2010.
The average trend was 114.58. % till 2009.
The investments increased in the periods 2011-2012 (i.e. from 107.53 % in 2010 to
138.74 % in 2012).
The overall trend in investments shown is satisfactory.







Net Current Assets:-
Year
Amount
(In Crores) Trend %
Increase/Decrease
Base Year Previous Year
2008 307.61 100.00 0.00 0.00
2009 569.54 185.15 85.15 85.15
2010 770.37 250.44 150.44 65.29
2011 1104.17 358.95 258.95 108.51
2012 686.13 223.05 123.05 -135.90

Trends in Net Current Assets:-
The NCA shown positive (increasing) trend.
The NCA are increased to 358.95 % (the year 2011) compared with base year and
decreased in the year 2012 to 223.05 %.
The NCA shown increased trend from year and crossed 100 %.
The overall trend was good.









66
Ratio Analysis:-
Current Ratio:-

Current Ratio = Current Assets/ Current Liabilities

Current assets are cash in hand, Cash at bank, Marketable Securities(short term) short term
Investment, Bills receivables, sundry debtors, Inventories, (stock) Work in progress, prepaid
expenses. Current Liabilities are outstanding expenses, Bills payable, sundry Creditors,
short-term advances, income tax payable and Dividend payable.
Current Ratio of Kesoram:-
(Rupees in crores)
Year Current Assets Current Liabilities Current Ratio
2007-08 755.60 570.67 1.32
2008-09 1025.80 665.87 1.54
2009-10 1539.22 1076.88 1.43
2010-11 1821.77 1139.02 1.60
2011-12 1738.33 1800.10 0.97

Interpretation:-
As per the standard rule of current ratio i.e., 2:1 where current assets double the current
liabilities is considered satisfactory.
In the present analysis the current ratio of the Kesoram is not satisfactory
from the above table. It was assessed that the current ratio for all the five year is lower (less)
than the standard rule i.e., 2:1. And it is 0.97 in the year 2011-2012 (current year). This is
highly UN satisfactory.






Quick Ratio:-
Quick ratio also known as acid-test ratio establishes a relationship between quick
assets and the current liabilities. Cash is the most liquid asset. It is calculated by dividing
quick assets by current liabilities
.
Quick ratio = Quick Assets / Current Liabilities
(Quick Assets = Current assets Inventory)

Quick Ratio of Kesoram:-
Rupees in crores)
Year Total Quick
Assets
Current Liabilities Quick Ratio
2007-08 333.43 570.67 0.58
2008-09 436.74 665.87 0.66
2009-10 623.03 1076.88 0.58
2010-11 703.22 1139.02 0.62
2011-12 743.33 1800.10 0.41

Interpretation:-
Usually a high Quick ratio is an indication that the company is liquid and has the ability to
meet its current or liquid liabilities in time on the other hand a low Quick Ratio represents



that the companys liquidity position is not good. The above table showing the quick ratios
of Kesoram are cant be considered satisfactory.













Leverage Ratios:-
Debt-Equity Ratio:-
Debt-Equity Ratio = Total Long Term Debt/ Equity Share Holders Fund
Total Long term Debt= Debenture Capital + Long term loans from banks and financial
institutions + Public deposits.
Equity Share Holders fund = Equity + Reserves and Surplus.
Debt Equity Ratio of Kesoram:
(Rupees in crores)
Year Total Debt Share Holders Fund Debt Equity Ratio
2007-08 1092.35 981.92 1.11
2008-09 1970.43 1330.10 1.48
2009-10 3126.22 1540.24 2.03
2010-11 3999.27 1300.25 3.08
2011-12 4105.34 915.01 4.49



Interpretation:-
The Debt-Equity Ratio accepted standard is 0.5. This ratio reflects the relative contribution
of creditors and owners of business in its financing. From the above it is clear that the long
term debt is more than that of the share holders fund. So we can interpret that the firms
assets are financed more by the external funds rather than by the internal funds.







Fixed Asset Ratio:-
Net Sales
Fixed Asset Ratio = ..
Net Assets
Fixed Asset Ratio of Kesoram;-
(Rupees in crores)
Year Net Sales Net Assets Fixed Assets Ratio
2007-08 3002.71 3587.21 0.84
2008-09 3897.97 3691.72 1.06
2009-10 4750.62 3431.82 1.38
2010-11 5397.88 1804.35 2.99
2011-12 5918.2 1084.24 5.46

Interpretation:
This ratio indicates the extent to which the assets of the companys can be lost without
affecting the interest of the creditors of the company. Higher the ratios better the long-term
position of the company.
The above table shows fixed assets ratio in increasing trend. Which is good for the
company?




Overall Profitability Ratios:-
Net Profit Ratio:
Net Profit Ratio indicates net margin on sales. It is given by the following equation.
Net Profit Ratio = (Net Profit / Sales) * 100
Net Profit Ratio of Kesoram:
(Rupees in crores)
Year Net Profit Sales Net Profit Ratio
2007-08 379.17 3002.71 12.63
2008-09 414.32 3897.97 10.63
2009-10 202.98 4750.62 4.27
2010-11 -281.76 5397.88 -5.22
2011-12 -381.08 5918.2 -6.44

Interpretation:
It establishes a relationship between net profits after tax and net sales, and
indicates the efficiency of the management in manufacturing, selling, administrative and
other activities of the company.
The higher the ratio the better is the profitability or performance of the business.
The above table depicts the net profit Ratio of Kesoram has decreased every year from
2007-2008 to 2011-2012.It further decreased to negative in the year 2010-11 to -5.22 and -
6.44 in the year 2011-2012. This shows constant decrease in the profits of the company.




72
Return on Investment:-
Net Profit
Return on Investment = . X 100
Share Holders Fund

Return on Investment Ratio of Kesoram:-
(Rupees in crores)
Year Net Profit Share Holders Fund Return On Investment
2007-08 379.17 981.92 38.62
2008-09 414.32 1330.10 31.15
2009-10 202.98 1540.24 13.18
2010-11 -281.76 1300.25 -21.67
2011-12 -381.08 915.01 -41.65

Interpretation:-
The above table reveals how well the resources of the firm are being used. Higher
the ratio, better the result. The above ratio implies how well the firm is growing in
terms of profitability and efficiency. From the above table we can concern that the return on
investment is in decreasing trend. ROI is highest in the year 2007-2008 as 38.62 %. But
there after its decreased every year.
The ROI is negative in the years 2010-2011 & 2011-2012 as -21.67 & -41.65 respectively.
Which is not a good sign for the firm?






Return on Capital Employed Ratio:-
Year PBIT Capital Employed
Return On Capital Employed
Ratio
2007-08 602.61 981.92 61.37
2008-09 565.57 1330.10 42.52
2009-10 550.35 1540.24 35.73
2010-11 16.05 1300.25 1.23
2011-12 -300.14 915.01 -32.80

Interpretation:-
The above table depicts return on Equity Capital Employed Ratio of Kesoram has decreased
every year from 2007-2008 to 2010-2011.It further decreased to negative in the year 2011-
12 to -32.80.which shows constant decrease in the returns of the company.










75











CHAPTER V
FINDINGS & SUGGESTIONS:



76
Findings:
The Share capital remains constant. Share capital is unchanged all the years from
2008-2012.
Reserves & surplus were recorded an increasing trend in the period between 2008
and 2010.It is showing decreasing trend in the period 2011-2012 (i.e. from 160.19 %
in 2010 to 93.09 % in 2012).
Current Liabilities were increased compared to base year i.e. 2008.
Provisions increased to 2625.97 % i.e., in Rupees 392.32 crores in the current year.
The current ratio for all the five year is lower (less) than the standard rule i.e., 2:1.
And it is 0.97 in the year 2011-2012 (current year).
The Debt-Equity Ratio was shown under the standard ratio. It is clear that the long
term debt is more than that of the share holders fund. It indicates that the firm
heavily relying on external funds rather than the internal funds.
The operating and net profit of Kesoram is in decreasing trend due to heavy
increase of manufacturing & administrative expenses.
ROI is highest in the year 2007-2008 as 38.62 %. The ROI is negative in the years
2010-2011 & 2011-2012 as -21.67 & -41.65 respectively.
Return on Equity Capital Employed Ratio of Kesoram has decreased every year
from 2007-2008 to 2010-2011.It further decreased to negative in the year 2011-12 to
-32.80.
EPS of Kesoram has decreased every year from 2008-12.It is negative in the year
2011 & 12.





77
Suggestion:
The organization should adopt an appropriate capital structure.
The companys debt-equity ratio is recorded more or less as 1.11 in the year 2008
and it is increased to 4.49 in the year 2012 (current year).The company should
adopt a better debt equity mix in the future to control the fluctuations in returns.
The company should control fluctuations in cash and bank balances as it impacts the
current ratio of the company.
The provisions are showing increasing trend which indicates risk of debtors. The
firm should implement an effective credit management policy. It should utilize its
idle funds by decreasing provisions.
The company should control heavy increase of manufacturing & administration
expenses as it is impacting the operating and net profit of company.

















78
ANNEXURE

Profit And Loss Account of Kesoram Cement:
Mar'12 Mar'11 Mar'10 Mar'09 Mar'08
12 Months 12 Months 12 Months 12 Months 12 Months
INCOME:
Sales Turnover 6282.60 5750.72 5051.51 4316.13 3457.00
Excise Duty 364.40 352.84 300.89 418.15 454.29
NET SALES 5918.20 5397.88 4750.62 3897.97 3002.71
Other Income 0.00 0.00 0.00 0.00 0.00
TOTAL
INCOME
5961.29 5487.33 4810.19 3939.69 3020.20
EXPENDITURE:
Manufacturing
Expenses
819.03 748.03 139.74 131.53 441.13
Material
Consumed
3708.97 3101.50 2955.50 2293.59 1184.48
Personal
Expenses
334.68 273.55 232.94 186.90 153.44
Selling Expenses 819.10 782.53 586.67 488.46 450.19
Administrative
Expenses
282.25 293.08 172.19 161.79 99.07
Expenses
Capitalized
0.00 0.00 0.00 0.00 0.00
Provisions Made 0.00 0.00 0.00 0.00 0.00
TOTAL
EXPENDITURE
5964.03 5198.70 4087.04 3262.27 2328.32
Operating Profit -45.83 199.18 663.58 635.70 674.39
EBITDA -2.74 288.64 723.16 677.42 691.88
Depreciation 297.40 272.59 172.80 111.86 89.27
Other Write-offs 0.00 0.00 0.00 0.00 0.00
EBIT -300.14 16.05 550.35 565.57 602.61
Interest 410.15 239.83 109.21 120.87 54.26
EBT -710.29 -223.77 441.14 444.70 548.35
Taxes -329.21 57.98 238.16 30.37 169.18
Profit and Loss
for the Year
-381.08 -281.76 202.98 414.32 379.17
Non Recurring
Items
-11.42 70.63 32.28 -40.23 4.02
Other Non Cash
Adjustments
12.76 0.91 2.07 4.65 0.17
Other
Adjustments
0.00 0.00 0.00 0.00 0.00
REPORTED
PAT
-379.74 -210.21 237.34 378.74 383.35



79
Balance Sheet Of Kesoram:









Years
Particulars 2008 2009 2010 2011 2012
Liabilities
Share Capital 45.74 45.74 45.74 45.74 45.74
Reserves & Surplus 930.85 1280.24 1491.11 1251.62 866.57
Revaluation Reserves 5.33 4.12 3.39 2.89 2.7
Loans
Secured Loans 971.06 1536.27 1863.72 2371.83 3177.92
Un Secured Loans 121.29 434.16 1262.5 1627.44 927.42
Deferred Tax Liabilities 0 0 0 0 0
Current Liabilities
Provisions 330.39 345.29 357.34 14.94 407.26
Current Liabilities 570.67 665.87 1076.88 1139.02 1800.1

Total 2975.33 4311.69 6100.68 6453.48 7227.71
Assets
Net Block 1084.24 1804.35 3431.82 3691.72 3587.21
Capital WIP 634.59 864.85 412.83 437.81 680.65
Investments 47.83 61.78 51.43 65.82 66.36
Current Assets
Inventories 442.17 589.06 916.19 1118.55 995.16
Sundry Debtors 273.07 380.17 542.89 631.34 673.58
Cash & Bank Balances 40.36 56.57 80.14 71.88 69.59
Total Current Assets 755.6 1025.8 1539.22 1821.77 1738.33
Loans & Advances 452.89 554.62 665.06 434.6 1154.09
Fixed Deposits 0.18 0.28 0.31 1.76 1.07
Total 2975.33 4311.69 6100.68 6453.48 7227.71



80
KEY ITEMS 2012 2011 2010 2009 2008
Preference
Dividend 0 0 0 0 0
Equity Dividend 4.57 25.16 25.16 25.16 25.16
Equity Dividend
(%) 9.99 55 55 55 55
Shares in Issue
(Lakhs) 457.43 457.43 457.43 457.43 457.43
EPS - Annualised
(Rs) -83.02 -45.95 51.88 82.8 83.8






















81
BIBLIOGRAPHY

Sl.
No.
Books: Author Name
1. Financial Management Khan & JAIN
2. Financial Management I.M.Pandey
3. Management Accounting R.P.Trivedi



Websites & Search Engines
1. www.kesoram.com.
2. www.moneycontrol.com.
3. www.googlefinance.com.

Annual reports of Kesoram cement limited 2008-2012.