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AN ORGANIZATIONAL STUDY ON

PROFITABILITY ANALYSIS OF
TRAVANCORE COCHIN CHEMICALS LTD.
Report submitted to M G University
in partial fulfillment of the requirements
for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION
Submitted By

LIGINA JALEEL
Reg. No. 32856

Under the guidance of
Mr. Burny Kunjappan
ASST.PROFESSOR
MUSALIAR INSTITUTE OF MANAGEMENT

MUSALIAR COLLEGE OF ENGINEERING AND
TECHNOLOGY
PATHANAMTHITTA – 689 653, Kerala

MUSALIAR COLLEGE OF ENGINEERING AND
TECHNOLOGY
PATHANAMTHITTA

CERTIFICATE

This is to certify that this report is based on the
organization

study

conducted

by

Ligina

Jaleel

at

Travancore Cochin Chemicals Ltd. is in partial fulfillment
of

the

requirements

BUSINESS

for

the

ADMINISTRATION,

degree

of

degree

MASTER

OF

program

of

MAHATMA GANDHI UNIVERSITY, KOTTAYAM.

Signature of the Faculty Guide
Head of Department

Signature of the Examiner

Signature of the

Pathanamthitta. Pathanamthitta Ligina Jaleel Date . ” has been prepared by me during the year 2011-13.DECLARATION I hereby declare that “Organizational Study on this project report entitled Travancore Cochin Chemicals Ltd. under the guidance of Mr. I also hereby declare that this project report has not been submitted to any other University or institute for the award of any degree or diploma. Burny Kunjappan. Department of Management Studies. Musaliar College of Engineering and Technology.

for providing the Officer) necessary guidelines to conduct the study at the organization. Last but not the least I express my sincere gratitude to my parents and friends for their constant help and encouragement and valuable prayers motivating me mentally for the successful completion of this organization study. I express my sincere thanks to my guide Mr.ACKNOWLEDGEMENT The elation and gratification of this organization study will be incomplete without mentioning all who helped me to make it possible. K.J. First and foremost I thank God Almighty for giving me the ability to do this study and make the venture a success. whose encouragement and guidance were valuable to me throughout conducting the organizational study. Sabu (Accounts Travancore Cochin Chemicals Ltd. I am also thankful to all the department heads for their valuable suggestions and constructive criticism throughout the preparation of the report. Ligina Jaleel . I am obliged to my Guide for her valuable guidance and help throughout the completion of the study. I extend my thanks to all the lecturers and staff members of the Department of Management studies for their tireless help.

CONTENTS INTRODUCTION  Introduction  Research problem (Statement of the problem)  Significance of the study  Scope of the study  Objectives of the study  Research Methodology (Methodology)  Tools of analysis  Limitations of the study INDUSTRIAL PROFILE & COMPANY PROFILE REVIEW OF LITERATURE ANALYSIS AND INTERPRETATION OF DATA FINDINGS CONCLUSION SUGGESTIONS BIBLIOGRAPHY .

5. 6. 14. 4. 11. 20. 15. Table of Current Ratios Table of Liquid Ratios Table of Debt Ratios Table of Debt-Equity Ratios Table of Proprietary Ratios Table of Debt Service Coverage Ratios Table of Inventory Turnover Ratios Table of Debtors Turnover Ratios Table of Average College period Table of Net Asset Turnover Ratios Table of Fixed Asset Turnover Ratios Table of Working Capital Turnover Ratios Table of Gross Profit Ratios Table of Operating Ratios Table of Cost of Goods sold Ratios Table of Other Operating Expense Ratios Table of Net Profit Ratios Table of Return on Investment Table of Return on Equity Capital Table of Earnings per share LIST OF FIGURES / CHARTS . 13. 18. 7. 19. 10. 9. 8. 16. 17. 12.LIST OF TABLES 1 2 3.

19 . 14 . 4. 20 .1 2 3. 9. 17 . 5. Current Ratios Analysis Liquid Ratios Analysis Debt Ratios Analysis Debt-Equity Ratios Analysis Proprietary Ratios Analysis Debt Service Coverage Ratios Analysis Inventory Turnover Ratios Analysis Debtors Turnover Ratios Analysis Average College period Analysis Net Asset Turnover Ratios Analysis Fixed Asset Turnover Ratios Analysis Working Capital Turnover Ratios Analysis Gross Profit Ratios Analysis Operating Ratios Analysis Cost of Goods sold Ratios Analysis Other Operating Expense Ratios Analysis Net Profit Ratios Analysis Return on Investment Analysis Return on Equity Capital Analysis Earnings per share Analysis . 15 . 10 . 8. 18 . 6. 12 . 16 . 13 . 11. 7.

INTRODUCTION INTRODUCTION .

Every business needs funds for two purposes for its establishment and to carry out its day-to-day operations. the rate of growth of such an economy depends to a great extent on the effective utilization of working capital. Finance being life blood of business has to be effectively managed. A new concern requires a lot of liquid funds to meet initial expenses like promotion. short term funds and working capital. larger will the requirement of working capital needed goes on increasing with the growth and expansion of business till it attains maturity. interest and taxes have been provided. greater the size of unit. A firm on the other hand needs to provide funds to finance its long term growth. Every business needs some amount of working capital. By earnings we mean a company’s reported profits after all expenses including depreciation.In today’s world there is a realization that every society has limited financial and managerial resources and those must be allocated effectively rather than wasted away. A developing country requires an increasing volume of investments not only in fixed assets but also in working capital. which make the business work. DETERMINATION OF PROFITS . formation. etc. The investors are interested in earning the maximum return on their investment and to maximum their wealth. the optimum utilization of scares financial resources especially in working capital management is closely related with the profit planning of the firm. The funds require for carrying out current operations have been variously called short term finance. Because of the scarcity of the investable resources. Working capital represents that part of business. Fixed capital is that part of resources invested in fixed or profit earning asset of the business. The profitability of every business depends on how well funds are being raised and managed for the successful performance of any business. generally.

The determination of correct profit is of Immense significance due to the following:  For correct reporting to the shareholders. shares and debentures of . the larger would be the reserves or retained earnings. the amount and trend of earnings or profits is      the starting point. For ascertaining the intensive use of capital For determining credit worthiness of the firm. II. SOURCES OF PROFITS The following are the main sources of earning profits: I. of outside investments.  For declaration of dividends. For ascertaining the operating efficiency of the company.The excess or revenues earned over expenses incurred for earning that revenue is known as profits. bonds. Income from investments Sometimes. Selffinancing or sloughing back of profits depends mainly on this source of income. Income from business Income from operations of the business is the main source of profits. For deciding about the future expansion and growth. the surplus funds of a company are invested in purchase. Income statement or profit and loss account is prepared to determine the profits. Generally higher the income from business. III. For ascertaining the importance of the industry in the national economy. such as government securities. Income from such subsidiary sources should be shown Separately while preparing the income statement because of uncertainties of such Income. Income from other sources Other sources refer to those sources which are allied to the main objects of the firm.

 The study would help the industry to create awareness about their financial condition and know the strength and weakness of their financial performance. RESEARCH PROBLEM The project study made an attempt to analyze the profitability of the company. income from such investments should also be shown separately. The study reveals the various aspects of it . The greater the volume of profit.  It focuses on three main issue come under the working capital management such as: holding cash. SCOPE OF THE STUDY  This study helps to understand the profitability and liquidity position of Travancore Cochin Chemicals Limited.  It is useful to financial position analysis in assessing the operational efficiency of the concern. the higher is the efficiency of the concern.Business is conducted primarily to earn profits. Therefore. float and managing cash. . SIGNIFICANCE OF THE STUDY  It ensures that firm is able to continue its operation and that it has sufficient ability to satisfy both manufacturing short term debt and upcoming operational expenses. The profit of a business may be measured and analyzed by studying the profitability of investments attained by the business.  The study can provide better suggestion for improving their financial performance.other companies’ etc. The amount of profit earned measures the efficiency of a business. Cochin. Profitability is the measure of efficiency of business. the present study made an attempt to analyze the profitability of the company.

test and evaluate the liquidity position of TCC Ltd To determine the profitability position of TCC Ltd and risk associated with it To analyze the operating efficiency of the company To analyze the financial soundness of the organization To ascertain overall performance of the company METHODOLOGY A comparative and analytical study is undertaken to study the impact of liquidity position and profitability of TCC Ltd. Secondary data is gathered through last 5 year annual reports from finance department of the company. The study required data to be collected from secondary sources. The term ratio refers to the numerical or quantitative relationship between two variables.OBJECTIVES OF THE STUDY Primary objective: The primary objective of the research study is to study the impact of liquidity and profitability Analysis of TCC Ltd. TOOLS OF ANAYSIS  Ratio analysis. magazines and newspapers. . Secondary objectives: To measure. Ratio analysis is a widely used tool of financial analysis. books. It is defined as the systematic use of ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial condition can be determined. business journals and internet.

financial ratios have been calculated. A measure of the strength of linear association between two variables. Comparative balance sheet not only show the absolute figures of different years but also provide columns to indicate the increase or decrease in these figures from one year to another.0. If it is negative. Correlation will always between -1. The study will show the trend or direction of movement over a long period of time and from this direction one can get a better view of future trend value or the performance.∑y)2] N = Number of values X = First score Y = Second score For the purpose of profitability analysis. In addition.0 and + 1. we have a positive relationship. Statement showing financial data for two or more than two years. Trend Projection Analysis is used to find out the trend values for the coming years based on the past years trend values. the relationship is negative n (∑xy) – (∑x) (∑y) r = [n ∑x2 – (∑x2)] [n∑y2 . . the profit and loss account and balance sheet of the company have been analyzed with the help of the data obtained in the financial statements. If the correlation is positive.  Trend analysis.  Correlation. these statements also show changes in percentage form. placed side by side to facilitate comparison is called Comparative balance sheet. Comparative balance sheet.

conclusion. limitations of the study and the chapter scheme. The study is mainly based on secondary data. The fifth chapter consists of findings. CHAPTER SCHEME The project report consist of 5 chapters The first chapter is introduction and design of the study. objective of the study. The third chapter exhibits the review of literature and theoretical frame work. The market analysis was based on the feedback collected by the company. tools of analysis. which includes introduction.LIMITATION OF THE STUDY  The study has been limited to a period of five years only and the inferences derived on period may not represent the true position of the concern. research methodology. significance of the study. The second chapter consists of profile of the study area which includes industry profile and company profile. The fourth chapter consists of analysis and interpretation of data. scope of the study. The time period provided for the study was in efficient. and suggestions . research problem.

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INDUSTRIAL PROFILE & COMPANY PROFILE INDUSTRY PROFILE & COMPANY PROFILE INDUSTRY PROFILE .

The chemical industry comprises companies engaged in the conversion of raw materials. and rubber. and Japan. The European community is the largest producer.000 different products. metals and minerals) into more than 70. The European Union and the US are home to the world’s largest chemical companies. central to the modern world economy. one of the largest in the US is an enterprise worth $674 billion. These products include petro chemicals. ceramics. manufacturing. The Chlor-alkali process is an industrial process for the electrolysis of sodium chloride solution (brine). the chemical industry is mainly concentrated in three areas of the world: Western Europe. water. fragrances. construction. The Chlor-alkali industry forms a significant part of chemical industry. and flavors. manufacturing. agro chemicals. as well as input for agriculture. The chemical industry is. metals. Globally. it converts raw materials (oil. natural gas. oil. explosives. polymers. computing and telecommunications. Depending on the method several products beside hydrogen can be produced. thus. The chemical industry. sodium hypochlorite or sodium chlorates are produced. and waxes).Chemicals are essential to millions of consumer goods. The chemical industry consists of company engaged in the processing and refinement of agricultural and industrial chemicals as well as gases. chlorine and sodium hydroxide are the products. air. air. If the products are separated. North America. followed by the US and Japan. depending on the temperature. Central to the modern world economy. enabling hi-tech advances in industries as diverse as aerospace. fats. by mixing. . construction and service industries. besides being necessary in the agriculture. and service industries. that are then used to make a wide variety of consumer goods. The chemical industry comprises the companies that produce industrial chemicals. natural gas. Chemicals are used to make a wide variety of consumer goods. water. oleo chemicals (oil.

in those early days of civilization. The global chemical industry is. Globally. But. North America and Japan. production of SULPHURIC Acid. followed by the US and Japan. The recession had hit the chemical industry hard. world chemical industries were managed to produce synthetic dyes which were being used in the textile industries. with plants idled or running at historically low rates.C. In 1890. The second one’s impact was even larger. Caustic Soda and Chlorine started at a mess level by the world chemical industries. the large scale world chemical industries with proper from and infrastructure came in to existence in 19 th century. different chemicals were produced for tanning in Massachusetts. Chemical industry is nearly a $3 trillion global enterprise. The European community is the largest producer. In 1635. It was synthetic fertilizers which led to green revolution in agriculture resulting in drastic improvement in agricultural crop yield. Then came to revolutionary chemical products.INDUSTRY-GLOBAL SCENARIO If we refer back to the world chemical industries we will be astonished by the fact that use of chemicals and chemical process is started in 7000 B. recovering from the recession-hit lows. The world chemical industry started their journey of development in real terms. the first one was Rayon which was made from wood fiber and which changed the total scenario of Textile Industry. The last half of 19 th century experienced tremendous advancement in the field of Organic Chemistry which gave the world chemical industry massive boost. After them. Shying from a lack of demand. chemical companies shelved their growth strategies. In 1850. people from China invented black powder which was nothing but Chemical Explosive. . company looked for avenues to streamlines operations and increase productivity. the chemical industry is mainly concentrated in three areas of the world: Western Europe. however. some artisans from Middle East refined Alkali and Limestone for producing glass.

As trade flows have become more dynamic. is . the global industry is again on a growth path and demand is poised to surpass the peak demand period of 2007 by the end of the year. much to the relief of major players that had watched operating rates worldwide fall to the their lowest levels in a decade after the crash of late 2008. automotive. and paper. Caustic soda prices are currently rising globally as tight inventories in the European and US markets support higher regional prices and pull price upwards in the regions. Wild the most challenging period appears to be over for now. Regional demand growth. The chemical industry was particularly affected by the weak industrial demand in the second half of 2008 and in the first half of 2009. Over the past three years. furniture. particularly in china. Global caustic soda demand plummeted in the first half of 2009 after reaching record highs in late 2008. construction. the recovering pattern varies by region and there are different drivers affecting the outlook for key markets. Currently. certain risks remain. electrical. caustic prices have become more globalized and supply or demand imbalances in one region affect other regions more quickly than ever before. The global Chlor-alkali industry saw improvements in pricing and production during the first half of 2010.Demand for chemicals tracks global industrial production and global GDP very closely. The issue of over capacity will put pressure on industry margins in some regions. the global CHLOR-alkali industry has experienced one of the most volatile periods in history. The tight inventories reflect the uneven demand recovery for chlorine and Caustic across regions. The draw in production in the chemical industry has been almost in sync with low production in the key customer industries of housing. while costadvantaged derivatives will derive expansions elsewhere. However. The swing from a record growth year in 2007 to the dramatic contraction in 2008 and 2009 demonstrates the risks and challenges the industry has been forced to navigate. adding the most capacity. China will continue to be the driver of global CHLOR-alkali capacity expansion.

The main drivers for the expert of Alkali chemicals are Flakes of Sodium hydroxide (caustic soda). This year India has exported mainly to UAE. Sodium Hydroxide in Aqueous solution (soda lye) and other Disodium Carbonate. The imports were. The key chemicals in the Chlor-alkali industry are  Caustic Soda  Chlorine (including liquid chlorine)  Soda ash Majority of soda ash is used in the glass industry which accounts for 45% of total consumption. The excess capacities in these . and EU (excluding France) are far higher than the requirement in their own country. Kenya. Indonesia. however. Further. USA. Indian caustic soda industry has been largely able to meet entire requirement of caustic soda in India. Sri Lanka. The global economy recovery will stimulate demand growth for both chlorine derivatives and caustic soda. The capacities installed by the producers in Chinese Taipei. Chemicals and soaps and detergents are other major end uses. with the imposition of antidumping duties on a number of other countries. limited because of the pricing policy of the Indian industry. The Indian industry was self-sufficient in its requirement over since 1975. and Bangladesh. the producers in the subject countries are finding it lucrative to export top India. water treatment and certain sectors in chemicals. INDUSTRY-INDIAN SCENARIO The Chlor-alkali industry forms a significant part of the Indian chemical industry.expected to consume much of this region’s production. accounting for 25% and 11% of global soda ash consumption respectively. Caustic soda has been in the list of imports permitted under OGL particularly for actual users since 1980-81. Soda ash can also replace caustic soda in certain industries like pulp and paper. Oman. Disodium Carbonate light (soda ash).

The offers being by traders. Thus. engineering. INDUSTRY-STATE SCENARIO The chemical industry touches our lives in many different ways. substantial volumes have been offered by traders in third countries for supply of caustic soda originating in these countries. The petitioners believe that the prices offered are far below the associated cost of production. There are basically four products manufactured from common salt and are caustic sodas. It would also be relevant to point out that the producers in these countries have at times not directly offered for supplies to India. and sodium hypochlorite (by-product).7% of India’s GDP and 10% of total exports. Resultantly. chlorine. Whether it is thermoplastic furniture we use or a synthetic garment we wear or a drug we consume we are inextricably linked to it. It constitutes 6. consumer durables. hydrochloric acid. Indonesia. Caustic soda is one of the basic inorganic chemicals manufactured from common salt. etc.26lakhs MT registering and increase of approximately 6%. still lower. . therefore. food processing. The industry is a vital part of the agricultural and industrial development in India and has key linkages with several others downstream industries such as automotive. and EU (excluding France) have restored to dumping of caustic soda in the Indian market. The chemical industry is a significant component of Indian economy with revenues at approximately US$ 28 billion.countries have put tremendous pressure on the producers to look for markets in these countries. Indonesia. these traders have taken can of their margins also. the exporters from Chinese Taipei. the exporters from Chinese Taipei. Kerala’s chemical industry improved its performance by increasing production and sales by 10 -25% and 15-20% respectively. and EU (excluding France) have quoted very low prices for export to India. The prices quoted by the producers in these countries are. naturally. The total production of caustic soda in the country during the year was around 23.

FACT started their ammonia plant. Susan Abraham HISTORY OF THE COMPANY In 1950. These are used in the manufacturing of soap. Chairman & Managing Director : Mr. the caustic soda industry in the state is more localized and the consuming units have come nearer to the manufacturing unit. because of the high transportation cost. they wanted to install a separate chlor alkali unit for supply of HCl gas to FACT. Fact at that time was purely a fertilizer unit and HCl gas was a chlor alkali industry product. using ammonia from their newly installed ammonia plant. TCC is a heavy chemical industry engaged in the manufacture and marketing of caustic soda and allied chemicals. under the name Travancore Mettur Chemicals (TMC). TCC is located in the banks of river Periyar. As the . situated at Udyogamandal in Cochin. The factory and registered office is located 20 km away from the Cochin international airport and 15km from Ernakulum Railway station. in the view of the high transportation cost and hazardous natural of chemicals transported. Also. They wanted to produce Ammonium Chlorate which is a fertilizer. In 1950 a joint venture was registered by fact and their technology supplies M/s. etc. Subramanian Company Secretary : Smt. the industrial belt in the state. textile.In Kerala only a few companies are engaged in the production of caustic soda. it is not possible to export caustic soda in large volume from the state. Mettur chemical and industrial corporation. COMPANY PROFILE INTRODUCTION TO THE COMPANY The TCC Ltd is a state public sector undertaking owned by the Government of Kerala. plastic. one of the finest water ways in Kerala and is recognized as an artery of costal trade and commerce. About 300 TPD caustic soda is produced by these companies. For that they required HCl gas.

Commercial production in 1954 is 20 tons per day production capacity. As the plant equipment’s ordered started arriving at Cochin airport. TCC owns 109 acres of land and around 690 people are working in TCC in three shifts. In 2002 the capacity of AGC plant was increased to 125 TDP. TCC stopped operations of its last mercury cell plant. HIL and M/S. Asahi Glass Company. M/S. The Government came to know that with the closing down of TMC. TMC could not take delivery by payment. LOCATION . The plants are functioning utilizing full capacity. By that time knowing that a chlor alkali industry is being installed at Udyogamandal two other companies. TMC could not raise sufficient fund. At present TCC has 175 TDP caustic soda production capacities employing the latest membrane cell technology. In India there are about forty chlor-alkali units as competitors. TMC represented them Travancore-Cochin state Government regarding their financial problem. The production capacity was gradually raised to 160 TDP in 1975. IRE started setting up their plants at Udyogamandal with the idea of using chlor. In 2004. The production process employed was electro sis and the technology used was Mercury Cell Technology. Germany. The plant was supplied by M/S. PRESENT SITUATION TCC is the only chlor-alkali unit in Kerala. TCC has been the pioneer producer of Rayon grade caustic soda in the country. Japan. So the Travancore-cochin Government gave massive financial assistance to TMC and with that company renamed as TCC (Travancore Cochin chemicals). The plant was supplied by M/S. In 1997 TCC started a 100 TDP caustic soda plant employing membrane cell technology which is energy efficient and environment friendly Technology. two other companies at a major plant of FACT have to be shut down.period was post war II.alkali products for their production process. UHDE. In 2005 and 2006 a 25 TDP caustic soda plant each employing membrane cell technology were installed.

Concern for Environment and Safety are our priorities”.  To continuously improve the plant operational safety and to confirm statutory pollution control standards.  To care for community around. .  Regular up gradation of technologies used in processing. CORPORATE OBJECTIVES  Produce and market chemicals and caustic soda economically and in an environmentally sound manner. The factory and registered office is located 20 KM from the Cochin International Airport and 15 KM from the Ernakulum railway station.  To maintain optimum levels of efficiency and productivity and to secure optimum returns on investment.  To continuously upgrade the quality of human resource of the company and to promote organization development.  Cost effectiveness in all the operations.  To maximize profits from projects taken up.  Compliance with laws and statutory regulation.The Travancore-Cochin Chemicals Limited (TCC) is a State Public Sector Undertaking owned by the Government of Kerala situated at Udyogamandal in Cochin industrial belt. “Customer satisfaction. We intend to achieve:  Utmost level of conservation of all resources including energy. MISSION TCC is committed to supply quality chemicals at competitive prices to customers.  To ensure corporate growth by expansion and diversification.

The company established new units for the manufacture of sodium hydro-sulphate with rated capacity 30 TDP. 1992- Research and development department was set up . 1958- A chlorine liquefaction plant was added mainly to meet demand from the new DDT plant of Hindustan Insecticides Ltd. 1970- A 60 TPD caustic soda concentration plant (CCF) was set up. 1975- Forth stage of expansion: a 100 TPD caustic soda plant was set up 1976- The company set its own water pumping and purification station.chlorination unit commissioned. 1980- Export of hydrochloric acid to gulf countries 1983- Installed an indigenously developed plant to recover mercury from effluents. 1967- The capacity of caustic soda plant was raised to 60 TPD as per third stage of expansion. 1963- The caustic soda capacity was raised to new level of 40 TDP. 1988- Replaced graphite anodes by titanium anodes. 1990- Brine De. Ernakulum 1960- Production of caustic soda was raised to 30 tons/day. 1987- Installed hydrogen firing system in continuous caustic fusion plant.The Growth Stages of TCC 1956- A continuous caustic fusion plant with a capacity to upgrade 20 tons of caustic soda/day was installed.

1997- The company commissioned the new membrane technology plant in July with 100MT capacity. each making an overall capacity of 175TPD.1994- The company planned to set up a plant employing membrane cell technology for the production of caustic soda in collaboration with ASAHI GLASS Company of Japan with a capacity of 100 TPD. productivity. 2002- Capacity of AGC plant increased from 100 TPD to125 TPD caustic soda. energy conservation and environmental protection. 1981 - Best Performance Award for Safety in the State from Directorate of Factories & Boilers. from Kerala State Pollution Control Board 1989 - Award for Best Performance in Safety in India under . Several innovative and advanced technologies were implemented to achieve higher production. 2005-06- Two 25 TDP each UDHE plant were installed which utilizes membrane cell technology. Government of Kerala. which is considered as an award for commitment rather than for efficiency. energy conservation. environmental control and economy in inputs. Best Pollution Control Award under group “Heavy Inorganic Industries" in Kerala. TCC has been bestowed with various awards for excellent performance with regard to production. 2000- The company set up a brine purification plant. The company has been dynamic to be proactive to market and thus to come out as a profitable public sector undertaking. 1987 1988-89- Award for best performance in safety in India under chemical industries. ACHIEVEMENTS OF TCC TCC is always in the forefront to adopt and incorporate the latest technology in its plants.

1994-95 - Best Performance award for the Productivity in the State of Kerala under group “Large Industries” from Kerala State Productivity Council. . 1998 - Best performance award for Energy Conservation in the State of Kerala under group "Major Industries” from Energy Management Centre. 2005 - National Energy Conservation award under “Chlor-Alkali Sector”."Chemical industrial” From National safety council 1989-90 Prize for Productivity from Kerala State Productivity Council. and Government of India. 2006 – “Kerala State Energy Conservation” Award. Government of Kerala. Ministry of Power. 1995-96 Best Performance award for Productivity in the State of Kerala under “Large Industries" from Kerala State Productivity Council. 2003 - Kerala State Energy Conservation Award (2000) in the category of large Scale Industry. 1996 - Best performance award for energy conservation in the state of Kerala under “Major industries” group from Energy Management Centre. 1993 - Best Performance award for Energy Conservation in the State of Kerala under group "Chemical & Fertilizers – above 3000 KVA" from Government of Kerala. Government of Kerala. 2008 - ‘Pollution Control’ award from Kerala State Pollution Control Board. 1998 - Performance award for Energy Conservation under group "Chloralkali Sector".

DEPARTMENTAL STRUCTURE TCC PRODUCTION MATERIAL S PURCHA SE INVENTO RY STORES MARKETING ADMINISTRATIO N PERSONNEL ACCOUNTS COSTIN G BILLS MARKETI NG ESTABLIS HMENT GENERA L CASH & FINANCE PROVIDE NT FUND INTERNA L AUDIT .

India Rare Earth Ltd. Tamil Nadu Newsprint and Paper Ltd. Travancore Rayon’s Ltd. Kerala Chemicals and Proteins. CHLORINE Customers: Hindustan Insecticides. Udyogamandal. etc. Minerals and Rutile’s Ltd. Kollam. HLL. Perumbavoor. Mysore Paper Mills Ltd. Kerala Minerals and Metals. Indian Rare Earth Ltd. Mysore Paper Mills Ltd. Hindustan Newsprint. Cochin. Cochin. Hindustan Newsprint Ltd. Kottayam. Cochin MAJOR COMPETITORS TCC is the only chlor alkali unit in the public sector in India. HYDROCHLORIC ACID Customers: Kerala Minerals and Metals. FACT Ltd. Udyogamandal. Cochin. FACT Ltd.DEPARTMENTAL STRUCTURE MAJOR CUSTOMERS OF TCC TCC has large number of customers using its products far and near. Asia Glues and Chemicals. Some of the major competitors are: . Cochin. Kottayam. Kollam. SODIUM HYPOCHLORITE India Rare Earth Ltd. CAUSTIC SODA Customers: Hindustan Newsprint Ltd.

Gujarat 16. Jayshree Chemicals. Sree Rayalaseema Alkalies and Allied Chemicals. Champlast Sanmat Ltd. The Tuticorin Alkali Chemicals and Fertilizers. Indian Petrochemicals Corporation. Pondicherry 5. Kolkata 11. Mumbai 6. Grassini Industries. Tuticorin FUNCTIONAL DEPARTMENTS/DIVISIONS There are two main divisions at TCC – Production & Administration Divisions. Madhya Pradesh 8. Saurashtra Chemicals. Hukumchand Jute and Industries. PCW Ltd. Kothari Petrochemicals. Chennai 17. Gujarat 19. New Delhi 3. Gujarat 12. Mumbai 7. Atul Ltd. Mumbai 13.1. Karnataka 18. Bilt Chemicals. Chennai 15. Gujarat Alkalies and Chemicals. Southern Petrochemical Industries Corporation. Nagda. Century Rayon. Ahmedabad 10. The Administration department is classified into 4 subsidiary departments:     Materials Marketing Personnel Accounts . Tata Chemicals. Kurnool. New Delhi 4. Ahmedabad 2. The Andhra Sugars. Andhra Pradesh 20. Chem Fab Alkalies. Gujarat 9. Orissa 14. Gujarat Heavy Chemicals. India Rayon and Industries.

Personnel Department . minimum and re-order level is prepared. etc. For controlling the inventory. price fixation. Under materials department there are three sections 1. certain levels of inventory such as maximum. Purchase Section – This section deals with:  Purchase of stock items as required by inventory control  Purchase of maintenance items required by the maintenance planning and plat     sections Purchasing of raw materials required for the process Purchase of bulk consumable for the process Purchase of demanded items Payment against delivery through bank 2. Inventory Control Inventory Control is an essential function of stores department. Codification of material is done by manager inventory control. terms of delivery and payment fixation.Store section deals with:  Maintaining a minimum stock of items required by various departments  Issuing of stock items required by various departments according to the materials requests. Its main functions include finding out customers. It helps to reduce cost and increase profit of the organization. When the stock reaches the re-order level.Materials Department Materials department deals with the procurement of all materials required for the day to day functions of the company. 3. Stores Section . Marketing Department Marketing department deals with sale of all the finished products. purchase request is made.

books of accounts. etc.Human Resource is considered as the most vital asset of an organization. sending Cheques for collection. Marketing Accounts section – This section deals with maintenance of accounts relating to the sales of all finished goods. Bills section – The bills section deals with maintaining all records. Accounts Department The accounts department is further sub-divided into eight subsidiaries: 1. of employees. short leave. budgetary control and cost analysis.. Establishment section – This section maintains all accounts in connection with the payment of wages. 6. 7. TCC has a well-defined employee power. salaries. collection of voluntary PF contribution. 3. 5. The main function is to maintain sundry creditors’ ledger. Costing Department – The costing department of the company helps the management to fix the cost of production and fix the price of finished goods. . 2. 4. increments. issue of Cheques to parties and watching the cash position all the time. The functions of the Personnel department include:  Identifying the training needs. i. Provident Fund – The PF department maintains all accounts related with the collection of PF contribution from employees and employer. general. Cash & Finance section – This section deals with the cash flow analysis. protection and medical departments. overtime wages. Its functions include budget preparation. etc. ledgers and statutory forms in connection with the purchase of all materials. The main function is to maintain sundry debtors’ ledger.e. General Accounts section – This section deals with the preparation of final accounts and all the adjustment entries in connection with the preparation of final accounts. sanctioning of such loans. It helps the organization to perform well in the market.  Implementing the required training.  Maintaining training records This department is further divided into human resource.

The company would like go for cheaper source of power and insulate itself from the future tariff hikes of the electric supply utility. FUTURE PLANS TCC is in process of setting up a power project on its own. Two projects-hidal and coal based are under consideration at present.8. The company is also planning to start a distilled water system within the company. It is now ready for commercialization and the company has proposed a plant in the district. The company is going to start a park and community centre with the corporation of the panchayat authority. but not under the control of accounts department. These products have high demand in market. A hydel power project is under consideration at present. The IT sector of the world is developing in the fast way. Due to the high demands of the projects. TCC is planning supply this hydrogen to FACT. TCC is going to become a part of it. The main products of the company are hydrogen. Internal Audit – This section is a part of accounts department. PROBLEMS AND CHALLENCES FACED BY THE COMPANY. It contributes to about 60% of the production cost. . In 1992. the company is planning to increase the production capacity 50 tons per day. Electricity is one of the raw materials for the company. In addition to the usual products TCC is planning to produce sodium chlorite and sponge iron. the R&D of the company started working on a project to manufacture synthetic rutile along with the regional laboratories setup a pilot plant to manufacture synthetic rutile. The main function of internal audit section is the verification of accounts if there is a financial commitment. It succeeded in developing the technology. The construction works are in progress.

the political condition of the state affect the management of the company. . The infrastructure of the company is obsolete compared to other.  TCC is a heavy consumer of electricity and in recent past electricity tariff increased many folds. it may require increase in the investment in pollution.  The major decision of the company has to be approved by the Government which delays the implementation of plants and thereby causing organizational inflexibility.  As the environment consciousness is very high in Kerala. TCC is a public undertaking.

REVIEW OF LITERATURE REVIEW OF LITERATURE THEORETICAL OVERVIEW Metcalf and Titard : "Analysis of financial statements a process of evaluating the relationship between component part of a financial statement to obtain a better understanding of a firm's operation and performance ". .

Chakra Borty (2008) evaluated the relationship between. Andre Luiz de Souza Guimaraes conducted a study about profitability. liquidity and solvency. and a study of the trend of these factors as shown in a series of statements '. Among the most important strategic decisions of managers are those involving the financing of the company (Barton e Gordon.is associated with higher levels of profitability. and cyclical current assets exceed cyclical current liabilities . the study reiterates the importance of efficient management of working capital to the performance and survival of health care insurance companies. This study supports the notion that effective management of working capital is important for the financial health of healthcare insurers. deserving greater attention from organizational researchers and practitioners. . working capital and profitability of Indian pharmaceutical companies. may be useful for companies of all. Sizes and should not be restricted to large corporations. The purpose of this study is to analyze the adequacy of a working capital management normative model. liquidity and solvency.Mycers: " Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a set of statements. suggesting a preference order different from the one theorized by Fleuriet / Braga. He pointed out that there were two distinct schools of thought on this issue: according to one school of thought. liquidity and solvency. the analysis of variance results (ANOVA) of a sample containing financial information from 621 healthcare insurance companies for the year 2006. organizational research has produced few works in this area (Mizruchi e Stearns. show that different working capital structures are associated with different levels of profitability. 1994). In addition. The integration of strategic planning to the capital budget process. with special attention to alternative working capital financing structures. 1987).where financial current assets exceed onerous current liabilities. The results indicate that a certain structure . Nevertheless. Through an empirical and analytical research. in terms of profitability.

Weston and Brigham (1981) rightly notes that "the financial management profit is the test of efficiency and a measure of control. to the creditors the margin of safety.in fact.working capital is not a factor of improving profitability and there may be a negative relationship between them. while profitability is amount come out of profit. Thus. but the managerial efficiency and social objectives also. national income generated and the rise in the standard of living". PROFITABILITY . but it should not be over emphasized. Lord Keynes remarked that 'profit is the engine that drives the business enterprise'. Every business should earn sufficient profits to survive and Grow over a long period of time. improved national income and rising standard of living. No doubt. PROFIT Profit is an excess of revenues over associated expenses for an activity over a period of time. output and sales cannot be maintained . It is the index to the economic progress. while according to the other school of thought. ‘income'. profit is not just the reward to owners but it is also related with the interest of other segments of the society. Terms with similar meanings include ‘earnings’. and 'Margin'. to the government a measure of taxable capacity and a basis of legislative action and to the country profit is an index of economic progress. Management should try to maximize its profit keeping in mind the welfare of the society. investment in working capital plays a vital role to improve corporate profitability. the inadequacy of working capital would keep fixed asset inoperative. profit is the legitimate object. to the owners a measure of the worth of their investment. Profit is the yardstick for judging not just the economic. and unless there is a minimum level of investment of working capital.

or an enterprise. However. firm. the terms 'Profit' and 'Profitability' are used interchangeably. Profit is an absolute term.Profitability means ability to make profit from all the business activities of an organization. and is regarded as a measure of efficiency and management guide to greater efficiency." However. profitability is a relative concept. having distinct roles in business. to the owners a measure of the . while profitability refers to the operating efficiency of the enterprise. a proper degree of efficiency can be accompanied by an absence of profit The net profit figure simply reveals a satisfactory balance between the values receive and value given. profitability is an important yardstick for measuring the efficiency. But in real sense. whereas. As Weston and Brigham rightly notes "to the financial management profit is the test of efficiency and a measure of control. there is a difference between the two. they are closely related and mutually interdependent. Moreover. It shows how efficiently the management can make profit'by using all the resources available in the market. Profitability is an index of efficiency. the extent of profitability cannot be taken as a final proof of efficiency. the. It is the ability of the enterprise to make profit on sales. there are many other factors besides efficiency. which affect the profitability. PROFIT & PROFITABILITY Sometimes. The change in operational efficiency is merely one of the factors on which profitability of an enterprise largely depends. It is the ability of enterprise to get sufficient return on the capital and employees used in the business operation. Though. "profitability is the 'the ability of a given investment to earn a return from its use. Sometimes satisfactory profits can mark inefficiency and conversely. According to Harward & Upton. the term 'Profitability' is not synonymous to the term 'Efficiency'. Profit refers to the total income earned by the enterprise during the specified period of time. company.

In other words. Isolate and remedy the causes of decreasing profit margins. and it usually happens that their profitability varies when measured in terms of size of investment".  Optimize responses to changing customer needs. PROFITABILITY RATIO . or product types. to the government a measure of taxable capacity and a basis of legislative action and to the country profit is an index of economic progress. Discover which sources of information offer the most reliable facts. many a times. Profitability analysis can help key personnel in an enterprise to:  Identify the most and least profitable clients. Profitability analysis can anticipate sales and profit potential specific to aspects of the market such as customer age groups. PROFITABILITY ANALYSIS Profitability analysis is a component of enterprise resource planning that allows administrators to forecast the profitability of a proposal or optimize the profitability of an existing project. "Profit in two separate business concern may be identical. yet. national income generated and the rise in the standard of living". That is why R.worth of their investment. no profit drives towards profitability .Firms having same amount of profit may vary in terms of profitability. S. Kulshrestha has rightly stated. to the creditors the margin of safety.  Evolve the product mix to maximize profits in the medium and long term. geographic regions.  Identify the most and least profitable products or services. while profitability is an outcome of profit.

 Different profitability ratios provide different useful insights into the financial health and performance of a company. profits and cash flows relative to relative to some metric. A higher value means that the company is doing well and it is good at generating profits. They give meaningful information only when they are analyzed in comparison to competitors or compared to the ratios in previous periods. All of these ratios indicate how well a company is performing at generating profits or revenues relative to a certain metric. a higher value is desirable.  Profitability ratios measure a company’s ability to generate earnings relative to sales. Profitability ratios are of little value in isolation. return on capital employed (ROCE). return on equity.  For most of these ratios. having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. Return on investment tells whether the company is generating enough profits for its shareholders. For most of these ratios. They highlight how effectively the profitability of a company is being managed. gross profit margin and net profit margin. These ratios assess the ability of a company to generate earnings. gross profit and net profit ratios tell how well the company is managing its expenses. cash return on capital invested (CROCI). often the amount of money invested. trend . Return on capital employed (ROCE) tells how well the company is using capital employed to generate returns. assets and equity. Definition of 'Profitability Ratios'  A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For example. return on investment. Therefore.  Common examples of profitability ratios include return on sales. revenues and cash flows.

analysis and industry analysis is required to draw meaningful conclusions about the profitability of a company. Therefore.  Some background knowledge of the nature of business of a company is necessary when analyzing profitability ratios. The revenues of retail industry are usually very high in the fourth quarter due to Christmas. it will not be useful to compare the profitability ratios of this quarter with the profitability ratios of earlier quarters. The retail industry is example of such businesses. For meaningful conclusions. the profitability ratios of this quarter should be compared to the profitability ratios of similar . For example sales of some businesses are seasonal and they experience seasonality in their operations.

ANALYSIS AND
INTERPRETATION OF
DATA

ANALYSIS AND INTERPRETATION OF DATA
 Financial Analysis is “the process of identifying the financial strengths and
weaknesses of the firm by properly establishing relationship between the
items of the balance sheet and the profit and loss account”. There are various
techniques used in analyzing financial statements, such as comparative
statements, common-size statements, trend analysis, fund flow and cash flow
analysis, cost volume-profit analysis and ratio analysis. Also known as

‘analysis and interpretation of financial statements’, refers to the process
of determining financial strengths and weaknesses of the firm by establishing
strategic relationship between the items of balance sheets, profit and loss
account and other operative data. The purpose of financial analysis is to
diagnose the information contained in financial statements so as to judge the
profitability and the financial soundness of the firm.
This chapter contains the analysis and interpretation of data.

 PROFITABILITY ANALYSIS OF THE TCC LTD
Profitability is the net result of a large number of policies and decisions. The
ratios examined thus provide some information about the way the firm
operating, but the profitability ratios shows the combined effects of liquidity,
asset management and debt management on operating results. In this
framework report the following profitability ratios are used.
Ratio Analysis
Ratio Analysis is powerful tool of financial analysis. In financial analysis, a
ratio is used as a benchmark for evaluating the financial position and performance
of a firm. The absolute accounting figures reported in the financial statements do
not provide a meaningful understanding of the performance and financial position of
a firm. The relationship between two accounting figures, expressed mathematically,
is known as a financial ratio. Ratios help to summarize large quantities of financial
data and to make qualitative judgment about the firm’s financial performance.

Solvency Ratios
1. Current Ratio
Liquidity ratio
1. Liquid/Quick/Acid-Test Ratio
Leverage Ratios
1. Debt Ratio
2. Debt Equity Ratio

3. Proprietary Ratio
4. Debt Service Coverage Ratio

Activity Ratios & Turnover ratios
1. Inventory Turnover Ratio
2. Debtor’s Turnover Ratio
3. Average Collection Period (Days)
4. Net Assets Turnover Ratio
5. Fixed Assets Turnover Ratio
6. Working Capital Turnover Ratio
Profitability Ratios
1.
2.
3.
4.

Gross Profit Ratio (%)
Operating Ratio (%)
Cost of Goods Sold Ratio (%)
Other Operating Expenses Ratio (%)

5. Net Profit Ratio (%)
6. Return on Investment (ROI - %)
7. Return on Equity Capital (REC - %)
8. Earnings per Share (EPS in Rs)

Liquidity ratios
The most common ratios, which indicate the extent of liquidity or lack of
it, are: (i) Current ratio (ii) Quick ratio.
Current ratio
Current ratio is calculated by dividing current assets by current liabilities.
Current assets
Current ratio =
Current liabilities

short-term bank loan. Current Liabilities 5474 4701 4898 5679 7859 Current Ratio 0.68 (Rs.63 0. Current liabilities include creditors. such as marketable securities. Prepaid expenses are also included in current assets as they represent the payments that will not be made by the firm in the future. debtors and inventories. As a conventional rule. accrued expenses. It indicates the availability of current assets in rupees for every one rupee of current liability. Table below shows current ratios of TCC Ltd. All obligations maturing within a year are included in current liabilities. Table of Current Ratios Period of study Current Assets 2007 – 2008 3457 2008 – 2009 3636 2009 – 2010 4007 2010 – 2011 3890 2011 – 2012 5308 Source: Annual Reports of TCC Ltd. income tax liability and long-term debt maturing in the current year. The current ratio is a measure of the firm’s short-term solvency.77 0. for the study period. a current ratio of 2 to 1 or more is considered satisfactory. A ratio of greater than one means that the firm has more current assets than current claims against them. bills payable.Current assets include cash and those assets that can be converted into cash within a year.68 0.82 0. in Lakhs) A graphical representation of fluctuation in current ratios over the study period is shown in the Figure below Current Ratio Analysis .

The highest ratio was 0. Therefore. 2009 – 10 and the lowest was in F. It establishes a relationship between quick or liquid assets and liquid liabilities.5 Current ratio 0. Inventories normally require some time .3 0.2 0. Liquid assets consist of all current assets minus inventories and prepaid expenses.e.8 0. Cash is the most liquid asset.1 0 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Period of ratio Current Ratio Analysis Interpretation Standard current ratio of a sound business is two and TCC’s current ratio is below one in the study period. it shows that the company is suffering from inadequate working capital.Y. The main reason for the decrease in current ratio is that.Y. 2007 – 08 i.0.82 in F.6 0.63.9 0. That is they cannot meet their short term obligations in time. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Inventories are considered to be less liquid.4 0. in all the five years the current liabilities of the company are more than the current assets.7 0. Liquid Ratio Liquid ratio is also known as acid-test ratio or quick ratio or near money ratio. 0.

45 0.for realizing into cash. Liquid Ratio Analysis .48 0. their value also has a tendency to fluctuate. Quick or Liquid Assets Quick / Liquid / Acid Test Ratio = Quick or Liquid liabilities Generally. for the study period. Liquid liabilities consists of all current liabilities minus bank overdraft. (Rs.53 0. Table below shows quick ratios of TCC Ltd. in Lakhs) A graphical representation of fluctuation in Liquid ratios over the study period is shown in Figure below. The quick ratio is found out by dividing liquid assets by Liquid liabilities. a quick ratio of 1 to 1 is considered to represent a satisfactory current financial condition.40 Source : Annual Reports of TCC Ltd. Prepaid expenses are not available to pay off current debts. Table of Liquid Ratios Period of study 2007 – 2008 2008 – 2009 2009 – 2010 2010 – 2011 2011 – 2012 Liquid Assets 2439 2132 2375 3024 3176 Liquid Liabilities 5474 4701 4898 5679 7859 Quick Ratio 0.45 0.

2010-11 and lowest was in F. The process of magnifying the shareholders’ return through the use of debt is called ‘financial leverage’ or ‘financial gearing’ or ‘trading on equity’.5 0.3 0. 2011-12.4 Liquid Ratio 0. . over the study period were below one and therefore.Y.0. it confirms that short term solvency of the firm is unsound in the study period. Leverage ratios are also computed from the profit and loss items by determining the extent to which operating profits are sufficient to cover the fixed charges. Higher quick ratio was in F.2 0. Leverage ratios To judge the long-term financial position of the firm.Y. or capital structure ratios are calculated. Leverage ratios may be calculated from the balance sheet items to determine the proportion of debt in total financing. financial leverage. Several debt ratios may be used to analyze the long – term solvency of a firm.1 0 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Period of study Liquid Ratio Analysis Interpretation Liquid ratios of TCC Ltd.6 0.

Capital employed 6541 6718 6331 5393 4229 Debt Ratio 0.7 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Period of study .89 (Rs.80 0.8 0. therefore compute debt ratio by dividing total debt by capital employed or net assets.95 0. It may.Debt Ratio The firm may be interested in knowing the proportion of the interest bearing debt (also called funded debt) in the capital structure.80 0.85 Debt Ratio 0.89 0. Total Debt Debt Ratio = Net Assets or Capital Employed Table of Debt Ratios Period of study Total Debt 2007 – 2008 5209 2008 – 2009 5359 2009 – 2010 5621 2010 – 2011 5010 2011 – 2012 3768 Source: Annual Reports of TCC Ltd. in Lakhs) A graphical representation of fluctuation in changes in Debt ratios over the study period is shown in the Figure below.9 0.93 0.75 0. Debt Ratio Analysis 0.

for the study period. reserve for contingencies.77 .64 2. The low ratio is viewed as favorable from the long-term creditor’s point of view.51 2. Debt-Equity Ratio Debt-equity ratio expresses the relationship between the external and the internal equities or that between the borrowed capital and the owner’s capital. capital reserve.Interpretation The debt ratios of TCC Ltd. Debt-equity ratios of TCC Ltd.44 2. revenue reserve. sinking fund for renewal of fixed assets and redemption of debentures less fictitious assets. Higher ratio is unfavorable. for the study period indicates that more than 80% of its net assets are financed by lenders or the stake of owners is quite low I the total capital employed by the company. the trend is risky and undesirable. in Lakhs) Shareholders fund 2131 2131 2131 2131 2131 Debt-Equity Ratio 2. Period of study 2007 – 2008 2008 – 2009 2009 – 2010 2010 – 2011 2011 – 2012 Outsider’s fund 5209 5359 5621 5010 3768 Source : Annual Reports of TCC Ltd. a ratio of 1:1 is considered to be satisfactory. equity share capital.35 1. Generally. Outsider’s Fund Debt Equity Ratio = Shareholder’s Fund Shareholder’s funds consist of preference share capital. (Rs. From the creditor’s point of view. Outsider’s funds include all debt/liabilities to outsiders: long-term and short-term.

From the creditor’s point of view. the trend is risky and undesirable. Shareholders fund Proprietary ratio = x 100 . Debt-Equity Ratio Analysis 3 2. available to creditors. for the study period indicate that lenders contribution is more than 2 times of owner’s contribution in most of financial years.5 2 1. This ratio indicates the long term solvency extent of trading or equity.5 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - 20 07 - 20 08 0 Period of study Interpretation The debt-equity ratios of TCC Ltd. protection.5 1 Debt Equity Ratio 0. It is the relationship between the shareholders fund and total assets. PROPRIETARY RATIO It is important in determining the long term solvency of the firm.A graphical representation of fluctuation in Debt-Equity ratios over the study period is shown in the Figure below. Higher the shareholder’s fund less is the possibility of insolvency.

2 0.19 2131.18 0.57 13127.16 0.Total assets PROPRIETARY RATIO YEAR 2007 – 2008 2008 – 2009 2009 – 2010 2010 – 2011 2011 .17 0.22 12028.19 PROPRIETARY RATIO Year INTERPRETATION 20 12 20 11 - -2 01 1 20 10 -2 01 0 20 09 -2 00 9 20 08 20 07 -2 00 8 Proprietory ratio 0.15 0.19 2131.18 0.17 0.15 .18 0.19 2131.16 0.19 0.19 TOTAL ASSETS RATIO 12516.20 11460.53 0.19 0.19 0.17 0.53 11460.19 2131.16 0.2012 SHAREHOLDERS FUND 2131.

08 (Rs. From the analysis the proprietary ratios in an increasing trend from the year 2008 – 2009 Debt Service Coverage Ratio Debt service coverage ratio (DSCR) measures how effectively a company’s operations generated income is able to cover outstanding debt payments. Net Operating Revenue Debt Service Coverage Ratio = Total payments on outstanding debt DSCR values greater than one is preferable and correlates more strongly with a company’s ability to repay its outstanding debts.82 1. The DSCR is calculated by dividing a company’s total net operating revenue during a given period by its total required payments on outstanding debt in the same period.02 1.Higher the ratio or the share of shareholders in the total capacity of the company better is the long term solvency of the company. Total payments Debt Service outstanding on debt 289 790 660 727 611 Coverage Ratio 4. Debt Service Coverage Ratios Period of study Net Operating Revenue 2007 – 2008 1392 2008 – 2009 1476 2009 – 2010 1332 2010 – 2011 1231 2011 – 2012 1881 Source : Annual Reports of TCC Ltd. in Lakhs) A graphical representation of changes in Debt Service Coverage Ratios over the study period is shown in the Figure below Debt Service Coverage Ratio Analysis .69 3.87 2.

ACTIVITY RATIOS Activity ratios are employed to evaluate the efficiency with which the firm manages and utilize its assets. It is calculated by the cost of goods sold by average inventory. Cost of Goods Sold Inventory Turnover Ratio = Average Inventory . These ratios are also called turnover ratios because they indicate the speed with which assets are being converted or turned over into sales.6 5 4 3 2 Debt Service Coverage Ratio 1 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - 20 07 - 20 08 0 Period of study Debt Service Coverage Ratio Analysis Interpretation DSCRs of TCC Ltd are at acceptable level for the study period. INVENTORY TURNOVER RATIO Inventory turnover indicates the efficiency of the firm in producing and selling its product. Several activity ratios are calculated to judge the effectiveness of asset utilization.

23 7.40 7. a high inventory turnover is indicative of good inventory management. in Lakhs) A graphical representation of changes in Debt Service Coverage Ratios over the study period is shown in the Figure below Inventory Turnover Ratio Analysis . or a slow moving or obsolete inventory.28 13.Generally.16 (Rs. 1018 1504 1632 866 1950 Inventory turnover Ratio 9.15 6. A low inventory turnover implies excessive inventory levels than warranted by production and sales activities. INVENTORY TURNOVER RATIO Period of study Cost of goods sold Average inventory 2007 – 2008 9570 2008 – 2009 10750 2009 – 2010 10244 2010 – 2011 11458 2011 – 2012 13971 Source : Annual Reports of TCC Ltd.

Debtors Turnover Ratio This ratio attempts to measure the collectability of debtors and other account receivables. its funds are unnecessarily locked up in receivables. Debtor’s turnover is found out by dividing credit sales by average debtors. A full assessment of adequacy of inventory level can be done only after studying the inventory level of similar firms or competitors of TCC Ltd and industry average.14 12 10 8 6 Inventory Turnover Ratio 4 2 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - 20 07 - 20 08 0 Period of study Interpretation Inventory turnover ratios of TCC ltd shows a highly fluctuating trend over the study period. Credit Sales Debtors Turnover Ratio = Average debtors . Debtors include the amount of bills receivables and book debts at the end of the accounting period. Financial analysis employ two ratios to judge the quality or liquidity of debtors: Debtor turnover and average collection period. There are no standard norms for inventory turnover. It shows the rate at which the trade debts are collected. If the firm has not been able to collect the debtors within a reasonable period of time.

Table of Debtors Turnover Ratios Period of study Credit Sales Average Debtors Debtor’s 1229 974 1130 1894 1806 Turnover Ratio 7.51 2007 – 2008 9390 2008 – 2009 12063 2009 – 2010 10752 2010 – 2011 12911 2011 – 2012 15374 Source: Annual Reports of TCC Ltd.64 12.39 9.82 8.52 6. (Rs. in Lakhs) A graphical representation of changes in in Debtors Turnover Ratios over the study period is shown in Figure below Debtors Turnover Ratio Analysis 14 12 10 8 6 Debtors turnover ratio 4 2 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - 20 07 - 20 08 0 Period of study The average number of days for which debtors remain outstanding is called the average collection period (ACP) and can be computed as follows 360 Average collection period(ACP) = Debtor’s turnover The Average collection period of TCC Ltd .

.51 (Rs. Average collection period (days) 47 29 38 53 42 7.52 6.Table of Average collection period Period of study Debtors turnover 2007 – 2008 2008 – 2009 2009 – 2010 2010 – 2011 2011 – 2012 Source: Annual Reports of TCC Ltd. in Lakhs) A graphical representation of changes in average collection period over the study period is shown in Figure below Average collection period Analysis 60 50 40 30 Average Collection Period 20 10 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - 20 07 - 20 08 0 Period of study Interpretation Debtor’s turnover ratios and average collection period of TCC ltd over the study period look satisfactory.64 12.82 8. But a full assessment can be done only after knowing the credit period granted by the firm and aging schedule of debtors.39 9.

32 3.43 1. Sales Net Asset Turnover = Net assets Table 10 below shows Net assets turnover of TCC Ltd for the study period . (Rs.64 2. in Lakhs) A graphical representation of changes in Net Assets Turnover Ratios over the study period is shown in Figure below Net Assets Turnover Analysis .30 Source : Annual Reports of TCC Ltd.78 1. Net Assets Turnover Ratios Period of study 2007 – 2008 2008 – 2009 2009 – 2010 2010 – 2011 2011 – 2012 Credit Sales 9390 12063 10752 12911 15374 Average Debtors Debtor’s Turnover 6554 6761 6563 5560 4657 Ratio 1.Net assets Turnover Ratio The relationship between sales and net assets is called net assets turnover ratio.

FIXED ASSETS TURNOVER RATIO This ratio indicates the extent to which the investments in fixed assets contribute towards sales.5 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - 20 07 - 20 08 0 Period of study Interpretation Net assets turnover analysis of TCC Ltd. But book value of fixed assets needs to be verified for full assessment of operating performance of the company.5 2 1. over the study period indicates an increasing trend over the years. Net Sales Fixed assets turnover ratio = x 100 Fixed Assets FIXED ASSETS TURNOVER RATIO .5 3 2.5 Net Assets Turnover ratio 1 0.3. it indicates whether the investment in fixed assets has been judicious or not. If compared with a previous year. Sales revenue is steadily increasing over years. The ratio is calculated as follows.

Working Capital Turnover Ratio Working capital Turnover ratio is computed by dividing sales by net working capital.73 12539.55 in the year 2010 – 2011 and the lowest was 1.25 10747.4 0.43 9384.2 0 Year INTERPRETATION Here all fixed assets to turnover ratio are above one.4 1. There was an increasing trend for the past years because of increase in sales and decrease in fixed assets.21 9406.2012 11035.10 in 2009 2010.33 1.2 1 0.49 FIXED ASSETS TURNOVER RATIO 20 12 20 11 - -2 01 1 20 10 -2 01 0 20 09 20 08 20 07 -2 00 8 Fixed asset turnover ratio -2 00 9 1.10 7783.YEAR NET SALES FIXED ASSETS RATIO 2007 – 2008 2008 – 2009 2009 – 2010 2010 – 2011 2011 .63 1. The highest ratio was 1.10 1.55 1. .6 1.04 7221.8 0.84 7998.8 1.43 8558. That means sales are almost equal to the fixed assets.56 12061.6 0.38 1. We can see that increase or decrease in fixed does not results to increase or decrease in the sales.

07 -7. Average Debtors -2017 -1065 -891 -1789 -2551 Debtor’s Turnover Ratio -4. for the study period Working Capital Turnover Ratios Period of study Credit Sales 2007 – 2008 9390 2008 – 2009 12063 2009 – 2010 10752 2010 – 2011 12911 2011 – 2012 15374 Source : Annual Reports of TCC Ltd.66 -11.22 -6.03 (Rs. Working Capital Turnover Ratio Analysis .33 -12. in Lakhs) A graphical representation of changes in Working Capital Turnover Ratios over the study period is shown in Figure.Sales Working Capital Turnover = Net current assets Working Capital Turnover of TCC Ltd.

because of the negative working capital. it shows an improving trend from F.20 12 20 11 - 20 11 20 10 20 10 - -4 20 09 - 20 08 - 20 07 - -2 20 09 20 08 0 -6 Working Capital Tunrover ratio -8 -10 -12 -14 Period of study Working Capital Turnover Ratio Analysis Interpretation All working capital turnover ratios of TCC Ltd. often the amount . over the study period are negative. Current liabilities exceed current assets in the entire study period. assets and equity. For most of these ratios. 2010-11 onwards.Y. PROFITABILITY RATIO Definition of 'Profitability Ratios' A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. Profitability ratios measure a company’s ability to generate earnings relative to sales. These ratios assess the ability of a company to generate earnings. profits and cash flows relative to relative to some metric. Even though it is fluctuating. having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.

Profitability ratios are calculated to measure the operating efficiency of the company. Generally. They highlight how effectively the profitability of a company is being managed.53% 12.  Profitability in relation to investment GROSS PROFIT RATIO This ratio establishes the relationship between gross profit and sales.23% Average GP ratio Sources: annual report of the company GROSS PROFIT RATIO 12.39% 2010-11 2011-12 1231 1881 12911 15374 9.82% 2008-09 1476 12063 12.26% . It is calculated by using the following formula: Gross Profit Gross Profit Ratio = x 100 Net Sales GROSS PROFIT RATIO Year Gross Profit Net Sales 2007-08 1392 9390 Gross Profit Ratio 14.  Profitability in relation to sales.of money invested. two major types of profitability ratios are calculated.33% 2009-10 1332 10752 12.

23 respectively. The average gross profit ratio is 12.6 5 4 3 2 Gross profit ratio 1 -2 01 1 20 10 -2 00 9 -2 01 0 20 09 -2 20 07 20 06 -1 20 08 -2 00 8 -2 00 7 0 -3 Year Source: Annual Reports of TCC Ltd. 12. 9.39. in Lakhs) INTERPRETATION As per the above table it is found that the percentages of gross profit ratio are 14.26.53 and 12.82. Greater gross profit is shown in the year 2007-08. 12. (Rs.33. .

06 97.Operating Ratio Operating ratio establishes relationship between the cost of goods sold. and the other operating expenses and sales. Net Sales Operating Ratio 9393 12063 10752 12911 15374 (%) 103. Operating Cost Operating Ratio = x 100 Net Sales Or Cost of goods sold + operating expenses x 100 Net Sales Operating Ratios Period of study Operating cost 2007 – 2008 9676 2008 – 2009 10864 2009 – 2010 10438 2010 – 2011 11553 2011 – 2012 14152 Source: Annual Reports of TCC Ltd. financial expenses and selling expenses.05 90. The other operating expenses include the cost of goods.08 89.48 92. in Lakhs) A graphical representation of changes in Operating Ratios over the study period is shown in Figure below Gross Profit Ratio . administrative expenses.05 (Rs.

dividend and retention of profit as reserves. In F. relationship of each item of expenses to sales is established. some of which are Cost of goods sold Cost of Goods Sold Ratio = x 100 Net Sales .Y. There are many expenses ratio. Expenses Ratio Expenses ratio is also known as supporting ratio to operating ratio. income tax payment.105 100 95 Operating Ratio 90 85 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - 20 07 - 20 08 80 Period of study Interpretation The operating ratios over the study period indicates that more than 90% of the sales have been consumed by the operating cost and only less than 10% is left to cover the interest charge. For this. 2007 – 08 operating cost crosses the total sales revenue which is a severe condition. It analyses each aspect of cost of sales and / or operating expenses in details just to find out how offer the concern is able to save or making over expenditure in respect of different items of expenses.

28 88.12 95.75 90.Table of Cost of Goods Sold Ratios Period of study Cost of Goods sold Net Sales Cost of Goods 9390 12063 10752 12911 15374 Sold Ratio (%) 101.87 2007 – 2008 9570 2008 – 2009 10750 2009 – 2010 10244 2010 – 2011 11458 2011 – 2012 13971 Source : Annual Reports of TCC Ltd. (Rs.92 89. in Lakhs) A graphical representation of changes in Cost of Goods sold Ratios over the study period is shown in Figure below Cost of Goods Sold Ratio Analysis 105 100 95 90 Cost of Goods sold ratio (%) 85 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - 20 07 - 20 08 80 Period of study Other Operating Expenses Other Operating Expense Ratio = x 100 Net Sales Selling and Administrative Expenses Ratios of TCC Ltd .

Net Profit Ratio .Table of Cost of Goods Sold Ratios Period of study Other Operating Net Sales Other Operating 9390 12063 10752 12911 15374 Expenses Ratio (%) 1.8 0.8 1.13 0.2 1 0.95 1.74 1. in Lakhs) A graphical representation of changes in Other Operating Expenses Ratios over the study period is shown in figure below Table of Cost of Goods Sold Ratios 20 07 - 20 08 20 08 -2 00 20 9 09 -2 01 20 0 10 -2 01 20 1 11 -2 01 2 Other Operating Expense Ratio (%) 2 1. But it is less than 2% of the total sales revenue.6 0. (Rs.4 1.4 0.6 1.2 0 Period of Study Interpretation The changes of cost of goods sold ratios over the study period is same like operating ratios but other operating expenses ratios shows a highly fluctuating trends over the period.80 0.18 Expenses 2007 – 2008 106 2008 – 2009 114 2009 – 2010 194 2010 – 2011 95 2011 – 2012 181 Source : Annual Reports of TCC Ltd.

in Lakhs) A graphical representation of changes in Net Profit Ratios over the study period is shown in Figure below.33 -2. interest and taxes are subtracted from the gross profit. Net profit ratio is calculated as Net Profit Net Profit Ratio = x 100 Net Sales Cost of Goods Sold Ratios Period of study Cost of Goods sold 2007 – 2008 28 2008 – 2009 -281 2009 – 2010 -249 2010 – 2011 -471 2011 – 2012 239 Source : Annual Reports of TCC Ltd.55 (Rs.Net Profit is obtained when operating expenses. Net Profit Ratio Analysis .32 -3. Net Sales Cost of Goods Sold 9390 12063 10752 12911 15374 Ratio (%) 0.30 -2.65 1.

taxes. it is very useful to proprietors. Net Profit ratios of TCC Ltd. This ratio is used to measure the overall profitability and hence. over the study period shows fluctuating trend and most of F. But EBITDA (Earnings before interest. Return on Investment (ROI) The conventional approach of calculating return on investment (ROI) is to divide PAT (Profit after taxes) by investment. without including the effects of capital structure. Investment represents pool of funds supplied by shareholders and lenders. tax rates and depreciation policies. Total Assets = Net fixed assets + Current Assets . it have negative net profit.Y.2 1 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - -1 20 07 - Net Profit Ratio (%) 20 08 0 -2 -3 -4 Period of study Interpretation Higher the ratio of net profit to sales better is the operational efficiency of the concern. ROI of TCC Ltd is calculated based on EBITDA EBITDA Return on Investment = Total Assets Where. depreciation and Amortization) represents a more general indicator of firm’s financial performance by computing earnings from core business operations.

Y.57 12.95 15. 2011-12.03 (Rs. Return on Investment 16 14 12 10 8 6 Return on Investment (%) 4 2 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - 20 07 - 20 08 0 Period of study Interpretation This ratio is one of the most important ratios for checking the overall efficiency of the firm.62 10.Return on Investment Period of study EBITDA 2007 – 2008 1392 2008 – 2009 1476 2009 – 2010 1332 2010 – 2011 1231 2011 – 2012 1881 Source: Annual Reports of TCC Ltd. Return on Equity Capital (REC) . in Lakhs) A graphical representation of changes in Return on Investment over the study period is shown in Figure below.88 11. Total Assets 12028 11462 11461 11239 12516 ROI (%) 11. Analysis of ROI of TCC Ltd for the study period reveals that it can maintain only an average of 12% return to the investment made over the years and level of return was at its maximum in F.

Shareholders are the owners of the company. . Preference shareholders have a preference over ordinary shareholders in the payment of dividend and capital. and so. Net Profit after tax – Preference Dividend Return on Equity Capital = Equity Share Capital (Paid-up) Return on Equity Capital Period of study EBITDA 2007 – 2008 28 2008 – 2009 -281 2009 – 2010 -249 2010 – 2011 -471 2011 – 2012 239 Source : Annual Reports of TCC Ltd. They get a fixed rate divided irrespective of the amount of profit of the company.31 -13. But the rate of dividend varies with the availability of profit in the case of ordinary shares. In a company there are two types of shareholders. Total Assets 2131 2131 2131 2131 2131 ROI (%) 1. in Lakhs) A graphical representation of changes in Return on Investment over the study period is shown in Figure below. they are more interested in the profitability of the company.10 11.22 (Rs.19 -11.68 -22.

15 10 5 20 12 20 11 - 20 11 20 10 - 20 10 20 09 20 09 - -10 20 08 - -5 20 07 - Return on Equity Capital (%) 20 08 0 -15 -20 -25 Period of study Return on Equity Capital Analysis Interpretation This ratio is meaningful to the equity shareholders. the better the result. Net Profit after tax – Preference Dividend Earning per share = No. Earnings per Share (EPS) Earnings per share is calculated by dividing the net profit after taxes and preferences divided by total number of equity shareholder. and the interpretation is the higher the ratio. TCC’s REC is not attractive to shareholders. Due negative net profit over most of the years in the study period. of Equity Share Earnings per Share .

Summary of Ratio Analysis Summary of Ratio Analysis for the Study Period Item Liquidity Ratios Current Ratio 20072008 20082009 2009-2010 2010-2011 2011-2012 0.21 1.Y.5 20 07 - Earning per Share (Rs. 2007 – 08 and 2011 – 12. in Lakhs) Earnings per Share Analysis 1.5 Period of study Interpretation Due negative net profit over most of the years in the study period.12 2007 – 2008 2767000 2008 – 2009 -28055000 2009 – 2010 -24917000 2010 – 2011 -47143000 2011 – 2012 23862614.Period of study Net Profit No.63 0.32 -1.5 -2 -2.77 0. (Rs.13 -1. But some clear earnings are shown in F.) 20 08 0 -1.17 -2.5 1 0.68 .82 0.28 Source : Annual Reports of TCC Ltd. of Equity EPS shares 21311900 21311900 21311900 21311900 21311900 0.5 20 12 20 11 - 20 11 20 10 - 20 10 20 09 20 09 - -1 20 08 - -0.68 0. TCC’s EPS is not attractive to shareholders.

30 1.61 1.32 -1.25 9.13 -11.52 6.33 -12.15 6.%) Earning per Share 0.87 0.72 11.80 2.53 0.80 Debt Equity Ratio 2.57 (ROI .89 1.68 -22.21 1.54 1.06 89.55 15.13 (EPS in Rs) Source: Annual Report of oTCC Ltd.02 0.35 4.51 13. in Lakhs) COMPARATIVE BALANCE SHEET .65 10.75 2.33 12.70 1.18 -2.62 -3.17 -2.51 29 38 53 42 1.05 Cost of Goods Sold 101.66 Turnover Ratio Profitability Ratios Gross Profit Ratio -1.22 -6.28 89.03 10.88 -2.82 Coverage Ratio Activity Ratios Inventory Turnover 9. 0.45 Test Ratio Leverage Ratios Debt Ratio 0.40 Ratio Debtor’s Turnover 7.89 2.05 90.32 Debt Service 4.13 90.12 (Rs.22 -1.31 Capital (REC .64 2.28 13.95 1.69 0.10 Turnover Ratio Working Capital -4.36 2.92 (%) Operating Ratio (%) 103.92 Ratio (%) Other Operating 1.10 11.88 4.40 3.03 -13.13 Expenses Ratio (%) Net Profit Ratio (%) 0.45 0.32 3.08 95.80 0.19 -11.Liquid/Quick/Acid0.40 0.32 11.75 92.64 10.95 1.07 -7.48 0.87 0.77 9.23 7016 12.48 88.39 9.64 Ratio Average Collection 47 Period (Days) Net Assets Turnover 1.%) Return on Equity 1.12 97.08 7.82 8.30 Return on Investment 11.43 Ratio Fixed Assets 1.74 1.93 2.44 Proprietary Ratio 18.44 1.78 1.

A fourth column may be added to giving percentage of increase or decrease. 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. A third column is used to show the decrease or increase in figures. A comparative balance sheet has two columns to records the figures of the current year and the previous year.The comparative balance sheet analysis is the study of the trend of the same items. while the comparative balance sheet focuses on the changes that have taken place in one accounting period. In the balance sheet the emphasis is on status in the comparative balance sheet it is on change. issue of shares profit or loss etc. The single balance sheet focus on the financial status of the firm as on a particular date. liabilities and owners’ equity of business enterprises at the beginning and at the end of the accounting period with increase and decrease in the absolute data in terms of rupees and percentage. Comparative balance sheet shows the assets. The changes can be observed by comparison of the balance sheet at the beginning and the end of the period and these changes can help in forming an option about the progress of an enterprise. The changes in the balance sheet items are the result of acquisition or sale of asset change in current asset and current liabilities.

08 2131.14%.02 -973.37 in the year 2007 at the rate of 38.21 942.02 987. . 987.14% & Advances Total Assets Share capital Reserve & Surplus Share holders fund Loans: secured Unsecured Deferred Tax Liability Current liabilities & 1228.81 5063.30 1384.99% 50.16 -523.06 1599.93 13378.53 2588.16 0.75 7998.3 13378.15 294.00 0.31 % of Increase / Decrease 24.19 2131.15 8.19 5387.81% 37.87% INTERPRETATION  The current asset of the company has increased to Rs.66 795.30 861.51 3376.7% Provisions Total liabilities 12287.49 8087% 5.76% 38.93 2131.47 5859.19 2131.29 5092.79% 15.08 1090.COMPARATIVE BALANCE SHEET AS 31st MARCH 2007 – 2008 Particulars 2007 2008 Increase/ Decrease Fixed Assets (Net) Capital work in progress Investments Profit & Loss Account Current Assets and Loans 6399 1915.42 1090. the current liability has also increased to Rs.

795.2% is utilized from the working capital of the company.17% compared to the year 2006.49 at a rate of 15.79% of fixed assets are acquired through secured loans are the remaining 19.  The reserves account of the company is not satisfactory as the company has not earned any profit in the year 2008. 1599 lakhs at rate of 24. COMPARATIVE BALANCE SHEET AS 31st MARCH 2008 – 2009 Particulars 2008 2009 Increase/ % of .  The fixed assets acquired by the company is Rs.99% only 5. The liquidity position of the company was found satisfactory.

22 562. Current liabilities has decreased to Rs.84 2 -48.27 lakhs.35 1408.19 2131.33 562.61 99.19 2131.70 5583.51 141.42 13940.51 3576.30 813 3717.09 Lakhs compared to the year 2007.30 861.20% Fixed Assets (Net) Capital work in progress Investments Profit & Loss Account Current Assets and Loans INTERPRETATION  The current asset of the company has increased to Rs.47 5859.66% 5.43 1.09 13940. 141.63% 3.19 6225. The liquidity position of the company is satisfactory.08 2131.56% 4.20% 15.06 9406.16 2.95% & Advances Total Assets Share capital Reserve & Surplus Share holders fund Loans: secured Unsecured Deferred Tax Liability Current liabilities & 13378.21 942. .Decrease Increase / 7998.14 838.00 0.14 4.22 2131. 276.22 -940.27 Decrease 17.09 4.71% Provisions Total liabilities 13378.19 5387.23 -276.88% 666.

1408.22 Lakhs and the secured loans are increased by Rs. The fixed assets acquired by the company is Rs. COMPARATIVE BALANCE SHEET AS 31st MARCH 2009 – 2010 (Rupees in Lakhs) .23 lakhs the remaining is utilized from the working capital  The financial position of the company is not satisfactory. 838.

30 785.83 -1126.22 12813.23 -848.19 6225.33 3457.1389.02% 811. 109.22 2131.35 8558.57 2.05 5473. It reveals that the fixed asset are sold and loans are paid.40% 6.08% 22.53 -1126.70 5583.46 372.20% 3.Particulars 9406.10% & Advances Total Assets Share capital Reserve & Surplus Share holders fund Loans: secured Unsecured Deferred Tax Liability Current liabilities & 13940.96% Provisions Total liabilities 13940.67 -260.10 10.08% Fixed Assets (Net) Capital work in progress Investments Profit & Loss Account Current Assets and Loans 2009 2010 Increase/ Decrease INTERPRETATION  The current asset of the company has increased to Rs.19 2131.05 -109.  The reserves account of the company is not satisfactory.41 -27. The current liability is decreased to Rs.5 Lakhs compared to the past year.24 lakhs.69 -8.31% 1. 8558 Lakhs and the secured loans are also decreased by Rs.10 % of Increase / Decrease 9.24 372.16 2.19 4836. 260 lakhs.19 2131.33 12813.33 9.30 813 3717. .50 8.43 1.53 2131.69 -1389.  The amount of fixed assets acquired by the company is Rs. The liquidity position of the company is not satisfactory.

10 10.06% 290.53 2131.54 - 2.88 3636.30 785.33 3457.30 1065.32 2.19 - 12528.99 2131.18% 12813.COMPARATIVE BALANCE SHEET AS 31st MARCH 2010 – 2011 (Rupees in Lakhs) Particulars 2010 2011 Increase/ Decrease Fixed Assets (Net) Capital work in progress Investments Profit & Loss Account Current Assets and Loans & Advances Total Assets Share capital Reserve & Surplus 8558.19 - -284.23 7783.75 280.92% 35.04 41.22% - .06 30.55 179.57 2.72% 5.22 % of Increase / Decrease 90.45 -775.

91% 15.19 4836.17 370.46 372. 772.77 57.23 429. 179.99 -284.  There is no reserve and surplus.Share holders fund Loans: secured Unsecured Deferred Tax Liability Current liabilities & Provisions Total liabilities 2131.61 249. The company have no profitability.32 1.19 2131.30 1065. The liquidity position of the company is satisfactory.7 8.58 2131.41 188.32 2.99 2131.63 229. This shows that company use loan to maintain working capital.13 420.21% 456.35% .19 5267.53 12528.93 2.7 Lakhs.39 -772.77 lakhs.22 % of Increase / Decrease 7.54 2.43% 14.06 lakhs and long term loans are increased by s.19 5248. 77.88 3636.38% 10.18% 12528.23 12775.44 4701. 430.00 lakhs and current liabilities has decreased to Rs.19 5267.46% 23.  The fixed assets of the company is decreased by Rs.99% 0.67 -561.12% 12813.59 -18.05 5473.04 41.22% INTERPRETATION  The current asset of the company has increased to Rs.91 246.30 1315.45 7221. COMPARATIVE BALANCE SHEET AS 31st MARCH 2011 – 2012 (Rupees in Lakhs) Particulars Fixed Assets (Net) Capital work in progress Investments Profit & Loss Account Current Assets and Loans & Advances Total Assets Share capital Reserve & Surplus Share holders fund Loans: secured 2011 2012 Increase/ Decrease 7783.05 4006.19 2131.83 2131.

Unsecured Deferred Tax Liability Current liabilities & Provisions Total liabilities 429. 561.9 Lakhs.03 68.45 4898. 49.19% 12528. The object of calculating trend percentages is to show the direction of the change upward or downward.41.44 4701. Each item of the base year is taken as 100 and on that basis the percentage for the other years are calculated. Under this technique.59 1.69.99% INTERPRETATION  The current asset of the company has increased to Rs.99 12775.58 246.13 497. 370.845 4.01 196.  There is no money kept as reserve and surplus.9 15. The long term loans are increased to Rs. It reveals that the working capital position of the company is satisfactory. TREND ANALYSIS Comparing the past data over a period of time with a base year is called trend analysis. information for a number of years taken up and one year (usually the first year) is taken as taken as the base year. The current liabilities are also increased to Rs.  The fixed assets acquired by the company decreased to Rs. It reveals that the loan amount is spend for maintain working capital.00 lakhs in the year 2011. 196. .

27 99.10 11617.45 106.TREND ANALYSIS OF SALES (Rs.63 100 113.30 12320.25 24. in lakhs) YEAR SALES (Rs.27 -0.81 .53 13537.45 6.75 124.67 10850.81 TREND ANALYSIS OF SALES INCREASE OR DECREASE 0 13. in lakhs) TREND 2008 2009 2010 2011 2012 10877.

in lakhs) TREND 2008 2009 2010 2011 2012 523.29 -53.71 -153.55 -249. it also shows a fluctuating trend.52 27.28 5. Now company shows are increasing trend. in lakhs) YEAR PROFIT (Rs.64 TREND ANALYSIS OF PROFIT INCREASE OR DECREASE 0 -90.64 .64 -147.64 -47.67 -280.17 100 9.01 48. later it declined.140% 120% 100% 80% 60% Trend percentage 40% 20% 20 12 20 11 - 20 11 20 10 - 20 10 20 09 - 20 09 20 08 - 20 07 - 20 08 0% Year INTERPRETATION The above table shows the trend of sales in the study period. TCC has high amount of sales in 2010 – 2011 TREND ANALYSIS PROFIT (Rs.72 -94. In 2008 – 2009 shows a increase trend.

Compared to 2007 – 2008 company was not in better position now.6 Liabilities .3 100 112.4 64.7 153.6 -889.7 43.9 119.7 96.0 95.7 100 106.3 107.8 82.7 25. Summary of TREND ANALYSIS Item Sales Gross Margin Net Profit Net worth Total Trend Analysis on Balance Sheet and P & L Account Items 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 100 128.5 114.5 112.2 60.9 115.120 100 80 60 40 Trend percentage 20 20 12 20 10 20 09 20 11 20 11 - -60 20 10 - -40 20 09 - 20 07 - -20 20 08 - 20 08 0 -80 Year INTERPRETATION Trend of profit of TCC Company shows fluctuating trend.3 expenditure Capital 100 102.5 103. last 2 years it shows loss and decreasing trend.7 Employed Current Assets Current 100 100 105.6 100 79.4 146.10 853.4 135.5 163.7 88.3 -16872.2 85.1 100 -1003.9 89.5 137.5 143.

0.0 and +1. If it is negative. The data in the input columns also can be treated as a sample obtained from a larger population.9 Loss Source : Annual Reports of TCC Ltd. the relationship is negative.3 227. we have a positive relationship. You can select more than one statistic to calculate for a given pair of input columns. and the correlation transformer can be used to test whether the attributes are correlated in the population. the null hypothesis . (Rs. In this context.6 167. The correlation transformer can calculate various measures of association between the two input columns. in lakhs) CORRELATION CO-EFFICIENT ANALYSIS A measure of the strength of linear association between two variables. The data for a correlation analysis consists of two input columns.Accumulated 100 135.2 196. If the correlation is positive. Each column contains values for one of the attributes of interest. Correlation will always between -1. Use the correlation transformer to determine the extent to which changes in the value of an attribute (such as sales) are associated with changes in another attribute (such as debtors).

01 69. FORMULA n (∑xy) – (∑x) (∑y) r = [n ∑x2 – (∑x2)] [n∑y2 .13 .26 Where X = Sales. in lakhs) YEAR 2007 – 2008 2008 – 2009 2009 – 2010 2010 – 2011 2011 – 2012 TOTAL X 10877.17 656820.∑y) 2] N = Number of values X = First score Y = Second score CORRELATION COEFFICIENT BETWEEN SALES AND PROFIT (Rs.23 Y -249. and the alternative hypothesis assets that the attributes are correlated.84 -3456563.69 48708.52 523.23) (69.13) – (59203.62 2354.48) R= [5 x 706070969) – (59203.67 10850.asserts that the two attributes are not correlated.26)-(69.09 6076126.67 866330.53 13537.20 117734001.30 151798909.30 183253076.19 2732539.80 706070969 Y2 62085.63 59203.46 417453.23)2] [5 x 417453.48)2 XY -2710296.17 -280.90 300234.55 27.30 12320.10 11617.30 765. Y = Profit.4 13496326.67 48.48 X2 11831565. N = Number of values 5 (866330.

36 -8121.06) – (59203.6)-(8121.80 -14412679.06 .03 INTERPRETATION From the above it is found that the correlation co-efficient between sales and profit is 0.22 -2188178.53 13537.23) (-8121.61 XY -24836791.68 -891.65 1469043.06 Where X = Sales.68 94476511.50 794522.4) R= [5 x 706070969) – (59203.4 1349369326.73 -22990370.3 183253076.63 -1035490.67 10850. N = Number of values (-944776511.4 706070969 Y2 5213732. Y = Profit.56 133543. in lakhs) YEAR X 10877.23)2] [14690430.23 2007 – 2008 2008 – 2009 2009 – 2010 2010 – 2011 2011 – 2012 TOTAL Y -223. CORRELATION COEFFICIENT BETWEEN SALES AND WORKING CAPITAL (Rs.30 12320.03.89 3481956 4066675.2 117734001.3 15198909.r = 0. It can therefore be inferred that there is a positive correlation between sales and profit.36 -1866 -2016.10 11617.60 -1064.4)2] r = 0.63 59203.40 X2 118315655.

INTERPRETATION From the above it is found that the correlation co-efficient between sales and working capital is -0. It can therefore be interfered that there is a negative correlation between sales and working capital. FINDINGS FINDINGS .61.

Major Findings
Under this project, the researcher can be found that the liquidity position and
profitability position of the TCC Ltd is not sufficient, because current liabilities of
this company more than current assets, Reason for that improper management of
current assets.
Other Findings
 It is clear from the above table that TCC is able to turn over its net working
capital 3.31 times in 2007-08 and the next two year it is increased to 5.57 and
9.46 times. But in the next year it is decreased to 9.28 times. But in the last
year it is further increased. This shows the efficiency of the company in
generating more quantity of sales by utilizing lesser amount of working
capital.
 The idle current ratio is 2:1. TCC’s current ratio varies between 0.43 and
0.95 during the period. The company cannot get the standard ratio in each
accounting period. So it is found that the current ratio is not satisfy, because
the current liabilities more than current assets.
 Liquid assets of the company showing a fluctuating trend, even though the
ratio of liquid assets to current liabilities of the company is not maintaining
the standard norm of 1:1 so this data gives the liquid ratio of the company is
not sufficient.
 The study reveals that the average of absolute liquid ratio of TCC Ltd is
0.35:1 during the period of analysis. We can see that every year cash position
of the company is very weak excluding last year when we compare it with
current liabilities. Moreover the trend of last year TCC’s cash position was
good to continuing trend of which shall positively affects its future
operations.

 The percentages of cash to current asset are 4.88, 3.97, 2.09, 2.32 and 7.70
respectively. Greater cash to current assets is shown in the year 2011-12. The
average of cash to current asset ratio is 4.19%.
 Inventory is the largest component of the company’s current assets. About
47.97% of its current assets constitute inventory. As far as a manufacturing
concern is concerned such level of investment in inventory is justifiable.
However conspicuous investment funds in inventory shall cause many
problems to working of an organization.
 This study reveals the inventory turnover ratio indicates less inefficient .The
reason for that the improper management of inventory and stock.
 The analysis of debtor turnover ratio supplements the information regarding
liquidity position. Five years of analysis reveals that the company is able to
collect its dues rapidly from its customers. It is indicative of credit
management. The average debtors’ turnover ratio during the period of five
years is 9.02.

CONCLUSION
CONCLUSION
The Travancore Cochin Chemicals Ltd is a state public sector undertaking
owned by government of Kerala. The last three decades have seen TCC emerging as
a leader in chemical industrial sector in the country.
This study concentrates on the impact of Profitability and liquidity position
of TCC Ltd; mainly based on the published annual reports of the company from the
period of 2007 to 2012. The analysis and findings about this topic will be indicators
of the weak points are more concentration should be made an inspiration to the
company for strengthening its position.
To conclude the report, TRAVANCORE COCHIN CHEMICALS LIMITED is
having a well vision over the future. With a strong commitment to customers and
product quality and being cost competition, TCC stands poised to meet new
challengers. It strives achieves its mission.

SUGGESTIONS SUGGESTIONS .

Author Book Title Publisher Edition No . PEERMOOHAMED S. 1. MANAGEMENT RESEARCH PASS PUBLICATIONS 2005th . BIBLIOGRAPHY BIBLIOGRAPHY Sl.M. The excess of current liabilities are the important reason for it. It leads to in efficiency of the liquidity position of the company. excluding last year. Its cash balances are too small to meet its operating expenses in time. PANDEY FINANCIAL VIKAS PUBLISHING 5th EDITION 2. At present the company is following a very stringent credit policy the liberalization of which definitely helps the company to procure more volume of sales.  Cash position of the company is very weak in almost of the year. So company should keep sufficient amount of cash with it to avoid the short term insolvency. The current ratio of the company is not sufficient for the past five years. I.  In order to overcome the problems of under trading the company should improve its sales promotion by designing attractive sales and credit policies. So the company tries to reduce the current liabilities.

AND METHODOLOGY EDITION 3. C. SHAZULI IBRAHIM S. METHODOLOGY STATISTICS FOR INTERNATIONAL PRENTICE HALL OF 7th EDITION DAVID S. PRASANNA CHANDRA FINANCIAL TATA MC GRAW HILL 4th EDITION 4. RICHARD I. KOTHARI MANAGEMENT RESEARCH PUBLISHING NEW AGE 2nd EDITION 5.K.A. RUBIN MANAGEMENT INDIAN PVT. LTD.N. LEVIN. .