Summer Training Report



Submitted towards partial fulfillment of requirements of Two Year Full Time PGDM (Equivalent to MBA)

Supervisor/ Guide’s Name: .................................................

Submitted By: Name: Roll No.: Batch: 2009-11

DPC INSTITUTE OF MANAGEMENT (An Educational Wing of Delhi Productivity Council) Approved by AICTE, Ministry of HRD, Govt. of India Sector 9, Dwarka, New Delhi-110075



I VINAY PARKASH KATARIA Roll No 978 student of PGDM(Equivalent to MBA) Batch (2009-11) at DPC Institute of Management Sector 9, Dwarka, New Delhi-110075 hereby declare that the project / report titled STUDYING OF FINANCIAL STATEMENT OF DSCL has been completed by me independently by undergoing summer training at “Company Name” and the concerned training report has not been submitted elsewhere for any purpose.

Signature of Student

Signature of Faculty Supervisor

Signature of Director



A lot of effort has gone into this project and my thanks are due to many people with whom I have been closely associated. First of all I gratefully acknowledge the continues assistances and inspiration given to me by college faculty. Finally, I would like to thanks my family and friends for providing me monetary and nonmonetary support, as and when required, without which this project would not have been completed on time. I do hope this project manages to shed some light on a new marketing approach, and it will be appreciated by students, academics and professionals.

Vinay Kataria


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Introduction and Objective Company Profile Project details Analysis and Findings Recommendations and Suggestions

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In day to day working of business concern, Working Capital plays an important role, because Working Capital is required for payment of wages, expenses, raw materials and payment to creditors. Whether a business firm is earning profit or incurring loss or facing financial crises can be seen with the help of quantum of Working Capital due to shortage of Working Capital a business firm is lame, because there is no sufficient Working Capital a business can not run its business smoothly. Due to this reason working capital management has assumed greater importance in every business firm. The Management of Working Capital is concerned with the management of the firm’s current accounts, which includes current assets and current liabilities. Working Capital plays equivalent vital role in the business as blood plays in the human body. Shortage fixed can be tolerated by a business concern for short period but shortage of working capital can create lots of serious problems within a period of few days. In this modern area of cut – throat competition, it has become essential to provide certain facilities to customers to capture the market; the credit facility is one of them. Thus working capital is required as there is a time gap between credit self and collection proceeds from the customers.


Cash is the medium of exchange on the common purchasing power and which are the most significant components of working capital. Cash is the basis input required to keep the organization running on a continuous basis. At the same time it is the ultimate output, which is expected to be realized by selling goods and services. An organization should hold sufficient cash, neither more, nor less.

Since excessive cash remain idle which in turn increases the cost without contributing anything towards the profitability of the organization and in the opposite case, trading and / or manufacturing operation will be disrupted. In other words, it can be stated that the higher the level of unused cash, the greater is the cost of holding it in the form of loss of interest which could have been earned either by investing it in securities or by reducing the burden of interest charges by paying off the loans taken previously. If the level of cash balance is more than the desired level it shows mismanagement of funds. Therefore, for smooth functioning and higher profitability, proper and effective cash management is of paramount importance. Cash is the most liquid asset that a firm owns. It includes money and instruments like cheques, money orders or bank drafts which banks normally accepts for deposit and immediately credit to the depositor’s account. Sometimes near- cash items, such as marketable securities or bank time deposits are also included cash. The basis characteristic of near- cash assets is that they can easily be converted into cash.


Cash is the basis input required to keep the organization running on a continuous basis. At the same time it is the ultimate output, which is expected to be realized by selling goods and services. An organization should hold sufficient cash, neither more, nor less.

Since excessive cash remain idle which in turn increases the cost without contributing anything towards the profitability of the organization and in the opposite case, trading and / or manufacturing operation will be disrupted. In other words, it can be stated that the higher the level of unused cash, the greater is the cost of holding it in the form of loss of interest which could have been earned either by investing it in securities or by reducing the burden of interest charges by paying off the loans taken previously. If the level of cash balance is more than the desired level it shows mismanagement of funds. Therefore, for smooth functioning and higher profitability, proper and effective cash management is of paramount importance. Cash is the most liquid asset that a firm owns. It includes money and instruments like cheques, money orders or bank drafts which banks normally accepts for deposit and immediately credit to the depositor’s account. Sometimes near- cash items, such as marketable securities or bank time deposits are also included cash. The basis characteristic of near- cash assets is that they can easily be converted into cash.


To study the importance and development of working capital in today’s scenario. To understand the various financing Strategies which DSCL has adopted to survive? To make a comparative study of the various financial years.
SWOT Analysis of the strategy adopted.


Company Profile

Sir Shri Ram
Nothing can better sum up the homage paid to great son and philanthropist of Delhi, Barey Lalaji, Sir Shri Ram who began as a humble worker and went on to set up one of India's largest business houses - the DCM Group. Not only did Lalaji achieve great height in business enterprise; he also participated in full measure in the crucial early stages of nation building. Everyone is familiar with the name of multiple facets of the industries and institutions on which he left his imprint - be it the DCM Limited, Bengal Potteries, Jay Engineering Works, many sugar mills, Sindri Fertilizers, the Lady Shri Ram College, Shriram College of Commerce, Delhi School of Economics and umpteen others. But who is this Barey Lalaji? Born into a family of Agarwal banias of modest means, Shri Ram, in the 79 years of his life, built an industrial empire manufacturing a vast variety of goods like - textiles, sugar, alcohol, heavy, chemicals, vanaspati, pottery, fans, sewing machines, electric motors and capacitors. The industrial legacy that he left behind was valued at Rs 600 million at the time of his death. Reared in milieu which graft nepotism, black marketing and tax evasion were considered a must for success in business, Shri Ram set for himself rigid standards of morality in his dealings with the public and government and made no compromises in order to earn more money or gain a favor. While himself deprived of opportunities for higher education, he nevertheless understood how, important such education was in building the future of a nation. As a result he helped to finance 9

a network of schools, colleges, industrial institutes and research laboratories. He was also the founder chairman of the Industrial Finance Corporation and Chairman of Sindri Fertilizers, the first national venture in the public sector in free India.

Little is known of Shri Ram's ancestors. Khuswant Singh writes in his "Shri Ram: A Biography" of the oldest family name on records, is the one of Kanji Mal. Nothing more is known about him. One of Kanji Mal's descendants was Rattanchand who was a confectioner. He was the grandfather of Shri Ram's grandfather. Rattanchand was a man of influential means. He was able to secure for his son Badri Das, the post of treasurer in the Karnal Commissariat of the British Army. Badri Das was very mature for his age and he fared well by saving and investing in buying real estate in Firozpur and Delhi. He died in 1874 leaving behind four sons of whom the youngest, Bishambar Das was somewhat more distinguished. Bishambar Das had three sons - Gopal Rai, Girdhari Lal and Madan Mohan Lal. Shri Ram was born to Madan Mohan Lal and his wife Chando Devi on April 27, 1884. While Shri Ram lacked formal education he read extensively. His reading included religious scriptures, Sanskrit classics, Urdu and Persian poetry and some English biographies. He assiduously cultivated men of learning and culture. But most of all he admired scientists on whom he pinned his hopes for the salvation of his country. One of his lovable eccentricities was that he carried out experiments to produce new varieties of food in his own room and then subjected his none too robust digestive system to his new recipes. The secret of Shri Ram's enlightened approach to people of different faiths lay in his basic patriotism, making money was of little consequence to him; not once did he succumb to the temptation of netting an extra buck or two in the black market or by evading tax. He was an idealist who believed in raising India into an industrial nation. His love of India did not make him dislike or distrust Pakistan. 10

Many of his friends were the members of the Muslim League. At the behest of his friend in Lyallpur Cotton Mills in Pakistan, Khan Sahib Ahmed Islam Khan, he laid the foundation of a mushaira what in the later years came to be known as the Shanker-Shad Mushaira.

Shri Ram had this uncanny ability to spot the right man for the right job a rare quality that contributed to his success. He made many mistakes in the choice of friends but seldom did he err in the selection of a business executive. Shri Ram's choice was not based on the scrutiny of a "Curriculum Vitae" but on an inborn gift, a sort of built-in Geiger-counter which ticked when he came across the man he was looking for. This helped him to pick up a humble mistry and make him a work manager, to convert an engineer into an administrator, to mould a perfume-seller into the overall head of a vast enterprises producing precision instruments and so on. So sure was Shri Ram with this instinct that once he made up his mind about the man, he gave that man every latitude, there after his sole concern was with the results. Shri Ram, described by his umpteen friends, was indeed a true friend. He refused to believe that any of his friends exploited him. And many did quite blantantly. He made friendship into an article of faith. "His house was like a dharamshala" remarks 90 years old freedom fighter Aruna Asaf Ali. He was unable to eat food unless every seat at the table was occupied. This indiscriminate hospitality at times Caused great strain to the members of his family. But his principle was, "the more, the merrier." While just in his thirties, Shri Ram got himself known in the industrial as well as the educational circles. He was nominated to the Delhi Municipal Committee. Through his business connections with Ram Bahadur Lala Sultan Singh and more to with that of his son, Raghubir Singh, who had started the Modern School in Delhi, Shri Ram began to think of problems of education in India.


He ensured that his sons Murli Dhar, Bharat Ram and Charat Ram went to the Modern School where children of more advanced Indian families were studying.

He also was instrumental in setting up several prestigious institutions of higher learning and arts such as the Lady Shri Ram College and Delhi School of Economics, Shriram Center for Performing Arts etc.

The Road Ahead

We are an integrated business conglomerate, with a group turnover of Rs. 2940 crores. Our business portfolio comprises of primarily two types of business i.e. (i) (ii) Energy Intensive products Agri products (inputs as well as outputs) and services. We have manufacturing facilities at Kota (Rajasthan), Bharuch (Gujarat), and Ajbapur, Rupapur, Hariawan and Loni(UP). Our hybrid seed operations are at Hyderabad (India), Vietnam, Philippines and Thailand. The Company also has its windows fabrication units at Bhiwadi, Bangalore, Mumbai, Hyderabad and Chennai.


Our strengths are:

Strong energy management expertise both in the area of generation as well as effective utilisation of energy. Deep understanding and knowledge of Indian rural milieu developed with over 40 years of close work with farmers to improve his economics. Well-established presence and strong brand across the entire agri-space in India. Integration through Integrated manufacturing facilities and thru utilization of competencies/resources across businesses is a major value enhancer.

• •

We are building on the above strengths to develop a business profile which enjoys strong cost competitive position and delivers superior value to our customers simultaneously. We are further integrating our business portfolio to add value added products/services and solutions to the commodity businesses. We have implemented plans resulting in significant volume growth in past 2-3 years in most of our existing commodity businesses and expect significant value/growth through value add businesses in longer term. The company has invested Rs.1300 crores in the past three years and plans to invest approximately Rs. 500 crores in the next two years, to expand its business operations.


DSCL is a Rupees 15.50 billion, public listed company, based in North India with a core sector business portfolio comprising fertilizers, chlor alkali, chemicals, plastics, cement, textiles and sugar. A leading Indian organization, DSCL aspires to become a world-class enterprise that is responsive to change, outward looking, competitive, delivers superior quality at low cost, with focused businesses and robust financials. DSCL has been built on core values of being caring, credible and fair with all stakeholders, committed to continuous improvement; and being a responsible corporate citizen. DSCL has built an enabling work culture and believes in releasing human energy within the organization through participation, teamwork, professionalism, entrepreneurship, openness and upholding human dignity. The Company is committed to enhancing the employability of individuals through competence building via continuous training and development activities. DSCL believes in a pro-active Industrial Relations policy and has an enviable track record in this field. Employee welfare is given utmost priority and is institutionalized across the organization.


DSCL has initiated several management initiatives in the recent past for upgrading the organization, the major ones being Institution Building, Quality Management. ISO 9000 Certification, and implementation of SAP R/3 ERP package

Information Technology. The Company provides aspiring professionals opportunities to grow in a

challenging and up-to-date environment. DSCL’s recruitment policy values merit, are egalitarian, do not differentiate on the basis of sex, caste or religion, and targets the best professionals. Compensation is commensurate to qualifications, experience and ability.


About DSCL
DSCL, a Rs.2770 crore+ diversified business group based in North India. Its primary businesses are: Agri-Business (Urea fertilizer, Sugar, Farm inputs marketing such as DAP, Pesticides, Seeds, Agri retailing - Haryali Kisan Bazaar) Plastics (PVC and PVC compounds) Chemicals (Chlor-Alkali) DSCL Building Products (Fenesta door and window profiles) Other business interests comprise of Cement, Textiles and Energy Services. Founded by Sir Shriram in 1889 (as DCM limited), today DSCL (which spun of as a separate company in 1990) is managed by Mr. Ajay S. Shriram, Chairman and Senior Managing Director and Mr. Vikram S. Shriram, Vice Chairman and Managing Director along with a highly professional executive team. DSCL has a strong brand equity reflective of credibility, ethical values and consistent high quality product image. With over 30 years of experience in managing large scale process industries with sustained high level of performance, DSCL meets the needs of a wide range of customers from farmers to industrial users, from house builders to business owners. Fostering enduring relationships is at the core of DSCL's business philosophy - with vendors, business partners, and customers and within the organization between employees. As a leading equal opportunity employer in India, DSCL has a motivated and dynamic management team of highly qualified professionals and dedicated workmen and staff whose work has shown the way towards creating "Team Excellence".

DSCL fertilizer operations are characterized by highly optimized production process delivering high capacity utilization & proven abilities in erection, commissioning. Operation & troubleshooting of Ammonia/Urea plant.


·Date of Commissioning of plant February 1969 ·Present production capacity(Urea)3,30,000MT/Annum

DSCL's Urea operation have consistently earned production and productivity awards for its performance. Its well-established distribution network in North and West India allows the unit to service farmer needs effectively with a consistently high quality product. It is for these reasons that SHRIRAM Urea enjoys a premium position its markets.


Sugar is a key component of our agri-business portfolio. Our sugar operations functioned as an independent company within our Group until March 2004 when they were merged in DSCL. These sugar operations commenced in 1998 in central Uttar Pradesh, where the first sugar mill was established through a green field project at Ajbapur. We later acquired an existing sugar mill in the same region, at Rupapur, in 2003 emerging as a major sugar producer in central Uttar Pradesh.Two new sugar mills at Hariawan and Loni were commissioned this year. We now have a combined installed capacity of 33,000 (tonnes crushed daily and a power generating capacity (bagasse based) of 70.5 MW . which is being further expanded to 94.5 MW,with an exportable surplus of 51.5 MW for the grid. .All our sugar plants are self-sufficient to meet their own power requirements from bagasse. We are also exporting power to the UP state grid.

Gomti sugar

Gomti Sugar Ltd., a unit of Ghaghara Sugar Ltd., an enterprise of DCM Shriram Consolidated Limited, New Delhi, is a 6000 tcd sugar mill situated at Ajbapur village, JB Ganj, Kheri district, in central UP. The plant was commissioned in November 1997 with a crushing capacity of 3125 tcd. The continued efforts in the cane development front and growth thrust of the Management have made possible to reach today’s crushing level of 6000 tcd.


Manufacturing Overview :
We have four sugar production facilities,at Ajbapur, Rupapur, Hariawan and Loni located in central UP. All of our production facilities are completely self-sufficient with access to reliable captive power, based on bagasse which is a sugar by-product, and are equipped with modern equipment and machinery. These in turn have made us one of the most efficient crushers and producers of sugar in the country. We established our Ajbapur facility as a greenfield project in 1998. It is a new and modern plant with high levels of automation and process control systems similar to a chemical plant. Resultantly, this plant's output is of premium quality, commanding the highest prices in our market region. It is also one on India's fastest growing factory in terms of cane area, crushing and recovery, and capacity. At the time of inception, this plant had a capacity of 3,125 TCD which has since been expanded to 10,500 TCD. The plant has a captive power capacity of 38 MW which is used for meeting its own requirements as well as export to the UP state grid.In addition to having in place a technologically superior factory, we also have strong business processes in place for continuous improvement of operating efficiency parameters. Our Ajbapur plant is supported by ERP resources (SAP R/3) as well as TQM and institutional bidding initiatives. It is the first sugar factory in the country to receive ISO 9000, ISO 14000, and OHSAS 18000 certifications simultaneously. Our Rupapur unit was acquired by us in 2003. This factory had been established in 1996, with its main machinery and plant supplied by Krupp which is well-regarded for superior technology. This plant's capacity was increased after acquisition from 3500 TCD to 6500 TCD.


Two new sugar mills were commissioned in February 2007 at Hariawan and Loni (8000 tcd and a 12 mw co-gen plant each),taking our total capacity to 33,000 TCD and making us the fifth largest player in UP. The expansion of Co-gen is being undertaken at these two units by additional 12 MW each to be commissioned by November 08.

Raw material
Sugar cane procured from growers around our factories is the primary input for our sugar operations. Over 2, 00,000 farmers supply us with cane. In order to facilitate the procurement of sugarcane, we have set-up over 250 cane centres at our sugar mills.This has significantly reduced the time taken in getting cane to our manufacturing facilities. The average distance covered by growers is around 5-7 kilometres and within 48 to 72 hours cane reaches our factories after harvesting. In order to ensure sustainable supply of high quality sugarcane, we invest time and resources towards training farmers and helping them in improve their yields as well as recovery. We also assist farmers with soil fertility mapping for judicious fertiliser usage. Our team of experts have also been engaged in popularising the use of bio-ferlisers, modern agricultural inputs, and other plant protection measures among cane growers, resulting in improved yields per hectare. With a view to improve post-harvest recovery, we help farmers with varietals propagation and replacement of low yield/low recovery varieties. We have also implemented an assured irrigation scheme in our cane areas, providing irrigation means to ensure irrigation to the entire cane crop that we ultimately procure and use for sugar production.


This is also helping us popularise cost-effective irrigation methods within the farming community. Our efforts towards ensuring long-term, good quality cane supply are augmented by our participation in infrastructure development for facilitating cane supplies, including construction of road networks, providing means of transportation of cane, and assisting in the computerization of the local banking operations. Recognizing farmers as our principal partners in progress, our operating philosophy is to enhance the economic status of sugarcane farmers while pursuing our own growth objectives.. We believe that our trust-based relations with farmers built on mutual respect and understanding is an intangible asset that strengthens the overall operating profile of our sugar business and allows us to also extend to them our other agri-business offerings.


Hariyali kisan bazar
On 16th July 2002, the first retail outlet was inaugurated at village Del Pandarva (Distt. Hardoi) on the Delhi-Lucknow highway near the DSCL's Gomti Sugar complex. This 10,000 sq ft store is a one-stop shop providing the farmer with a range of multi-brand agri inputs such as fertilizers, seeds pesticides, micro-nutrients, bio-fertilizers, agricultural implements, tools and farm fuels. The store is also geared to provide farmers with expert agronomic guidance and services like soil testing, water testing, pesticide application services etc. Other value added farm services are to be added in due course. After the initial pilot phase comprising of 4 stores in different parts of the country, it is proposed to roll out the concept nationally. In the future, Hariyali Kisan Bazars plans to move beyond agri into other categories like durables, furniture, electrical, fast-moving consumer goods, to cater to other needs of farmers as customers. "Hariyali Kisaan Bazaar" - a rural business centre, is a pioneering micro level effort, which is creating a far-reaching positive impact in bringing a qualitative change and revolutionizing the farming sector in India. It is also an example of how well meaning corporates can contribute to development of agriculture by building sustainable business models. 22

DCM Shriram Consolidated Ltd. (DSCL), capitalising its over 35 years of experience in the agriinput markets & first hand knowledge of Indian farmers, is setting up a chain of centres aimed at providing end-to-end ground level support to the Indian farmer & thereby improving his "profitability" & "productivity".

The key constraints of the Indian farming sector, being addressed by "Hariyali" are:
• • • • •

Lack of last mile delivery mechanism of modern agriculture know-how & practices. Lack of availability of critical good quality agri-inputs. "Middlemen" driven farmer interface. High cost credit. Lack of direct access to buyers of varied & high value crops.

The "Hariyali Kisaan Bazaar" chain, seeks to empower the farmer by setting up centres, which provide all encompassing solutions to the farmers under one roof. Each "Hariyali Kisaan Bazaar" centre operates in a catchment of about 20 kms. A typical centre caters to agricultural land of about 50000-70000 acres and impacts the life of approx. 15000 farmers. Each centre is engaged in:

Bridging the last mile: Provides handholding to improve the quality of agriculture in the area. Provides 24X7 support through a team of qualified agronomists based at the centre.

Quality Agri-Inputs: Provides a complete range of good quality, multi-brand agri inputs like fertilizers, seeds, pesticides, farm implements & tools, veterinary products, animal feed, irrigation items and other key inputs like diesel, petrol at fair prices.

Financial Services: Provides access to modern retail banking & farm credit through simplified and transparent processes as also other financial services like insurance etc. 23

Farm Output Services: Farm produce buyback opportunities, access to new markets & output related services. Other Products and Services:Fuels, FMCG, Consumer Goods and Durables,Apparels etc.

These centers provide the much needed respect/dignity and freedom to the Indian farmer. In the near future, Hariyali Kisaan Bazaars plan to move beyond agri to meet the other needs of farmers as customers.

Technology as an important enabler
IT has been a critical backbone to the chain of centres. It is being used to provide online support on latest technical advancements, weather forecasts, mandi (market) prices, fair & transparent billing to farmers as well as in maintaining extensive farmer databases with micro information about the farmers' field to provide customized service to the farmers.

Farmer Response
So far, over 185 "Hariyali" outlets have been set up in different states across India, which we plan to scale up to 300 by March 09 The ground-level agri-support is already yielding results in the farmer's fields. Whether it is adoption rate of high yielding seeds, right doses of fertilization, productivity of cattle-feed, moisture conservation measures, adoption of new crops/allied occupations or adoption of new technologies like zero tillage, the farmers in catchment of Hariyali centres are already way ahead of the national averages.

Future Plans
Hariyali Kisaan Bazaar has plans to rapidly scale up the operations & create a national footprint covering all the major agricultural markets of the country. This would mean catering to cultivable land of over 30 million acres and touching the lives of over 10 million farmers. 24

Chlor alkali
The Chemical Business derives its core strength from its Chlor-alkali operations. With an installed capacity of approx. 110,000 TPA (49,550 TPA based on mercury cells & 62,000 tpa based on membrane cells) and a market share of approx. 8% in the Indian Chlor-alkali industry DSCL is a leading producer in the country. The strategic thrust of the business is to use it existing infrastructure and market presence to build value added products and services. As a first step, DSCL has moved aggressively to enter the water treatment area by setting up a state-of-the-art plant situated at Kota, Rajasthan for a latest 3rd generation Polyaluminium Chloride (capacity 39,000 tpa). Marketed under the brand name Ecorite these products provide outstanding

coagulation/flocculation properties. DSCL’s Chemical Business provides total customer solutions with its nationally accredited Shriram Environment and Allied Services(SEAS) operations and laboratories.


Caustic soda
Caustic Soda is a basic product very widely used in diverse industrial sectors, either as a raw material or as an auxiliary chemical. As mentioned ealier, it is produced along with chlorine. It is mainly used in the manufacture of pulp and paper, newsprint, viscose yarn, staple fiber, Aluminum, cotton, textiles, toilet and laundry soaps, detergents, dyestuffs, drugs and pharmaceuticals, vanaspati, petroleum refining. Caustic soda is produced in two forms - lye and solids. Solids can be in the form of flakes or granules. Three technologies are available world over for production of caustic soda – mercury cell process, diaphragm process, and membrane cell process. All three processes are in use in India, although there is strong trend indicating a shift towards the environmentally better membrane cell process. We manufacture Caustic soda through more environmentally friendly membrane technology. Dscl have a total caustic soda capacity of approx.110,000 tons per annum at two locations in India. At Kota, Rajasthan our capacity is 50,000 tons per annum of mercury (rayon) grade caustic . This plant is a part of the integrated vinyl complex that produces PVC. With a captive power plant, this makes us one of the lowest cost manufacturers of caustic soda in India. At Bharuch, Gujarat, we have a capacity for producing 60,000 tons of caustic soda per year. The plant is based on the state of the art membrane technology in collaboration with Asahi of Japan. Bharuch offers us a strategic advantage with respect to the proximity to the markets and access to the sea port. The plant also has a flaking capacity of 33,000 tons per annum. Our caustic soda flakes are sold under the brand name "SHRIRAM". 26

DSCL’s core plastics business is based on a state-of-the-art computer process controlled PVC Resin (33,000 tpa). Based on the carbide manufacturing process this plant also generates valuable Other Products such as high purity Calcium Carbide. In a subsidiary company Shriram Polytech Limited (SPL) the business operates one of India’s largest PVC Compounds facilities (20,000 tpa). This plant supplies customizedproductstoover200industrialcustomers. SPL has also set up an Innovative Polymer Applications Centre (IPAC) which is focusing on development of further specialty and value added polymer products, innovative customer specific application solutions and moving in a calibrated manner uptheproduct-valuechain DSCL has introduced a new division, DSCL Building Products, the next step in plastics adding on to the value chain.

PVC Resin
Based on the Calcium carbide based process and closely linked with the Carbide and Chemicals operations at Kota, DSCL’s PVC resin plant enjoys unique cost advantages with a built in flexibility to quickly respond to customer needs.


Shriram PolyTech Limited
Shriram PolyTech Limited (SPL) is a wholly owned new subsidiary company of DSCL, is India’s largest integrated facility for manufacture of PVC Compounds. It is the only plant in India to be integrated back to raw materials and to an R&D facility (IPAC) for customized product development matching international standards. This allows the company to service customer specific requirements both for bulk as well as in small volumes.

Shriram PolyTech a company that is here to perform, to lead.. DSCL's core philosophy is of a caring, credible and ethical organization. We believe in building lasting relationships. The working philosophy is one of continuous improvement through learning initiatives, technology and process up gradation. This has created exciting new opportunities of growth and diversification for the group. With its pioneering efforts in the area of plastics business, DSCL is today poised on the threshold of creating a distinct position for itself in the field of providing innovative solutions to consumers of Polymers. PolyTech is focused on providing enhanced value to the customers in diverse application areas through customized solutions and quick and interactive response. Backed by a highly qualified team of capable industry / professionals and a state-of-art application development center, iPAC, PolyTech is all set to establish new standards in customers satisfaction in the plastics industry. PolyTech's world class manufacturing facility at Kota (Rajasthan), which started in 1964 as a pioneering venture today ranks amongst one of the most advanced plants in the country. PolyTech is certified by UL India for ISO 9001, IS0 14001 and OHSAS 18001 certifications and the facilities are fully equipped to meet the demanding needs of diversified customer applications.


Marching ahead with the philosophy of the parent group DSCL, PolyTech believes strongly in achieving excellence through people. The continuous training and development programme further enhances the capabilities of the highly professional workforce. PolyTech's wide portfolio of products meets the performance requirements of a broad range of industries. The company's PVC compounds, sold under the brand name market. , reach all consumption centers of the country and are now poised to reach a new focal point - the global

Other Products
The plastics business also produces and markets other value added products such as: Calcium Carbide DSCL Building Products DSCL's Building Products group is manufacturing and marketing UPVC window systems. In due course other related products will also be developed to become a premier full range supplier of building products to the industry. To bring out the best in UPVC window systems, DSCL Building Products – in technical collaboration with HW Plastics, UK – has introduced Fenesta UPVC Window Systems in India. These products have a very wide acceptance in Europe and America and have several advantages over existing products serving the same market. HW Plastics is the pioneer and market leader in UK for UPVC doors and window systems. It is also a part of £650 million Heywood Williams Group and has its presence in UK, Europe and parts of Asia. The DSCL-HW Plastics collaboration covers product development, extrusion, fabrication & supply chain management. This partnership brings together the DSCL's extensive knowledge in PVC resin and applicationspecific compounds and HW Plastics strength as one the leading window manufacturers. DSCL Building Products aims to provide high quality products and turnkey solutions to the consumer.


To do this the company has set up its first fabrication unit at Bhiwadi (Rajasthan). The company also plans to set up more fabrication units in other parts of the country. Subsequently an extrusion plant will be commissioned at Kota (Rajasthan) in early 2004. This will confer the strengths of backward integrated and help bring process controls and quality in strict adherence to international standards. Further, DSCL Building Products has created a world-class service driven organization, which endeavors to provide customized solutions and innovations to the consumer.

DSCL’s Cement Business is India’s only plant that converts waste generated at Kota intoconsistentquality,premiumgradecementproducts. Shriram Cement is produced in a computer process controlled highly automated plant. The product has created for itself a strong brand equity and is a recognized market leader in its areas of distribution.

Converting waste in to premium-grade products
Our cement business allows us to create wealth from waste generated from our calcium carbide plant. DSCL is the only manufacturer in the country that converts waste into consistent quality, premium grade cement.


We have recently expanded our capacity to 400,000 TPA to profitably utilize additional sludge that is expected to be generated from the planned expansions of our calcium carbide and PVC capacities. The use of sludge and access to economic captive power makes this business a very efficient and competitive operation. The key quality parameters that differentiate cement are its high degree of whiteness, superior strength, and quick-setting features that have translated into premium pricing. Cement manufactured by us is marketed under the “Shriram” brand. Shriram cement has created for itself strong brand equity, enjoying a premium over competitors brand, and is recognized as a market leader in its areas of distribution.

The textile group comprising of Swatantra Bharat Mills and DCM Silk Mills earlier situated in 112 acres of prime land in the heart of Delhi has relocated to Tonk, Rajasthan. Pursuant to the relocation, the modern facility at Tonk is operating successfully while opportunities for realizing value in the real estate are being explored.



We regard our agri business as a key growth driver for us. We believe that the agricultural sector is a high potential area where we, with our expertise and strengths accumulated over decades of presence in this sector, can add considerable value and capitalise on emerging opportunities. Over the years through our various agri-businesses we have developed extensive working relationship and knowledge about the farmers. Our agri business offerings comprise agricultural inputs, both manufactured and merchandised, outputs, distribution and services. Our agri-inputs include Urea, Seeds and Pesticides manufactured by us. Additionally, we are also engaged in the marketing of a range of other agri inputs SSP, and other nutrients such as Zinc Sulphate, soluble fertilisers etc. In terms of agri outputs, we manufacture and market sugar and its by-products – Molasses and Bagasse. With the objective to move towards providing total “ Solutions” to the farmers, we have initiated a “ Rural Retailing” initiative recently which we believe holds immense promise in terms of untapped opportunities, scalability and growth potential. Being implemented under our “Hariyali Kisaan Bazar” initiative, we offer multiple products and services to the rural and farming community, including agri inputs, diesel and petrol (under alliance with BPCL), consumer goods, durables, apparels, insurance, agronomy advisory, credit, and contract farming as a part of this initiative. It is proposed to extend the offerings to other products and services over a period. All of our agri business activities are supported by a strong “Shriram” brand equity that our products enjoy in the marketplace. All our agri business units are supported by a robust and extensive distribution and retail network. From about 3,000 retail outlets five years ago, we now have more than 6,000 retailers where all our manufactured and merchandised products are available to the country's farming 32

community. We also have around 900 wholesalers to distribute our agri products, a large number of these have been with us for 3-4 decades. We offer online agronomy services to farmers through 100 centres – Shriram Krishi Vikas Kendras – established by us across the country that operate with the objective to increase farmer profitability by providing them effective agronomy services. We have a team of 102 agricultural graduates, recruited from local institutions and universities, and 15 development officers who work along with farmers to assist them in their endeavours. To ensure that our agronomists provide knowledgeable and unconditional advice, we have not assigned any sales responsibilities to our agronomists. The Shriram Krishi Vikas Kendras help upgrade farming methods and also provide assistance to the farming and rural community in the educational, hygiene and sanitation needs of the community as well as health care support for animal husbandry. Such initiatives have made us one of the most reliable and trusted partners of the Indian agri community.


Overview Leveraging a wide distribution network to build major agri-based business

The agriculture sector is recognized a strategically important part of the economy and India is today the world's second largest producer of food after the United States. DSCL agri-inputs business produces Urea fertilizer, is engaged in marketing of a range of other fertilizers, pesticides and other agri-related products. The Agri-Business is leveraging modern management practices to realize significant value:
• •

A strong "Shriram" brand equity. Over 3 decades of direct relationship with the farming community with supply of agriinputs, education, training and community development programs. Operations spanning the North, West & South of India. Infrastructure of over 30 sales offices, 12 distribution warehouses, 200 wholesales and 4800 retail outlets. Shriram BioSeed Genetics India Ltd that produces high quality hybrid seeds at Hyderabad, AP, India.

• •


DSCL's strategic focus is to build on its existing activities & infrastructure in agri-inputs, while also exploring opportunities in agri-outputs, food processing and agri-based end use products. We offer online agronomy services to farmers through 107 centres – Shriram Krishi Vikas Kendras – established by us across the country that operate with the objective to increase farmer profitability by providing them effective agronomy services. We have a team of 102 agricultural graduates, recruited from local institutions and universities, and 15 development officers who work along with farmers to assist them in their endeavours. To ensure that our agronomists provide knowledgeable and unconditional advice, we have not assigned any sales responsibilities to our agronomists. The Shriram Krishi Vikas Kendras help upgrade farming methods and also provide assistance to the farming and rural community in the educational, hygiene and sanitation needs of the community as well as health care support for animal husbandry. Such initiatives have made us one of the most reliable and trusted partners of the Indian agri community.

We are amongst the first “urea” manufacturers in the country starting way back in the 1960's. Our fertiliser operations are characterized by highly optimized production process delivering high capacity utilization & proven abilities in erection, commissioning, operation & troubleshooting of Ammonia/Urea plant.


Our Urea plant, commissioned in Februrary has a Production capacity of 379,000 TPA which includes a capacity of about 700 TPD of ammonia which is an ingredient in the Urea manufacturing process. We are the lowest cost naphtha-based urea manufacturer in the country. Our urea operation has consistently earned production and productivity awards for its performance. Located within our Kota manufacturing complex, our urea plant benefits from access to efficiently generated captive power and robust technical resources that reduce our cost of manufacturing. For the past several years we have been able to manufacture urea in a profitable manner with naphtha as the feedstock. In line with our intent to continuously explore and adopt better manufacturing practices and feedstock options, we have converted the plant into dual feed. The facility can now accept dual feedstock of naphtha and gas in any proportions.The necessary infrastructure for transporting gas from the source to the plant has also been put in place. Meanwhile, the Company has started running the plant on gas from Sep ’07 onwards. This will further reduce our cost of production. Over the last 4 decades of operations, our brand ‘SHRIRAM' has developed a strong presence in the rural market and is identified with premium quality reliability and high trust. The Company has also built up an extensive distribution network over the entire northern and central India.


We have recently made a successful entry into the Southern region where our products are gaining acceptance. Encouraged by the initial feedback from the farming community there, we plan to further strengthen our presence in that market.


DSCL offers a range of hybrid seeds in the country via its 100% subsidiary Shriram BioSeed Genetics India Ltd. The Company also operates its seeds business in Vietnam, Philippines and Thailand and proposes to expand to other locations in Asia Pacific region. At present, the Company deals in Corn, Bajra ( Pearl Millet), Jowar, Paddy, BT Cotton, Vegetables and Sunflower seeds. Our seeds business is a strong R&D-led operation that develops, produces and markets high quality hybrid seeds. Currently, hybrid corn seeds account for most of our sales from this business. The other hybrid seeds in our portfolio include cotton, sunflower, bajra, jowar, SSG, and paddy. Having established ourselves as one of the country's top three players in the hybrid corn seeds market, we are now actively engaged in conducting R&D towards the development of new hybrids that possess robust disease resistance properties and offer a high and stable yield performance across varying climate conditions, while ensuring high grain quality. 37

We have invested in establishing a robust R&D infrastructure in Hyderabad and Philippines. Our team consists of qualified professionals and scientists working in the areas of genetics, plant breeding, and seed technology who leverage modern biotechnology tools and technologies to develop new and better value-added products. The Company, keeping with best practices has also created a comprehensive physical infrastructure encompassing a seed conditioning plant, a cold-storage facility besides quality assurance facilities and multiple parent seed farms. That along with an able workforce and process competencies allows DSCL to market its products more profitably. Furthermore, the company's existing marketing and distribution set up provides a ready platform to sell the hybrid seeds, thus substantially lowering the cost of operations and time-to-market for new products The overseas operations for hybrid seeds are gaining traction, with the operations at Vietnam already supplying to a fifth of the market.


DSCL's core values and beliefs are a reflection of its commitment to build a world class, learning organization, striving for excellence in all its endeavors.

Customer Focus
• •

Be sensitive to the needs of the customer; develop superior customer insight Commitment to surpass expectations and deliver superior value

Innovation and Excellence
• •

Strive to think differently and promote creativity Make continuous improvement a way of life; drive excellence

People Development
• •

Continuously improve and upgrade the skills and competencies of our people Support people to realize their potential

Team work
• •

Work closely as a cohesive, well-knit team Inculcate a spirit of openness and collaboration

Relationships and Human Dignity
• •

Value people and partnerships Nurture understanding, compassion, trust and respect in all relationships

Social Responsibility and Ethics

Be a socially responsible corporate, addressing the needs of the community and environment Conduct business ethically

Social Responsibility

A Responsible Corporate Citizen Continuing with the long history of social commitment projects started by the founder Sir Shriram, DSCL has been making meaningful contributions to the society in the different areas.

Agriculture Extension activity
DSL’s Shriram Krishi Vikas Kendra’s (SKVK's) operate with the objective to impart scientific knowledge to the farmers to enhance their profitability covering crop cycle and harvesting etc. SKVK's support the farmers in their work and life through adoption of villages. The SKVK's provide help in meeting educational, hygiene, sanitation needs for the community as well as healthcare support for animal husbandry.

Health Care
In its endeavor to serve the society around its operating locations, DSCL has equipped Maharao Bhim Singh (MBS) Hospital, Kota with a state of art intensive care unit - 'The Shriram ICU' and Private rooms- 'The Shriram Wards'. The company organizes healthcare camps in its adopted villages and centres to create awareness on diseases like AIDS and Cancer. Periodic Eye check-up camps are arranged and Family Planning programmes encouraged by incentive schemes for the villages around its areas of operation

To encourage meritorious and needy students in the fields of Engineering, Medicine, Agriculture and Management, the company has instituted Scholarships at various educational institutions in Rajasthan. DSCL runs a 'Primary Education Programme' for the girl child, which provides for support on books, school bags and uniforms. The company has also contributed for construction of school buildings both in cities & rural areas. A recent project was the reconstruction of the Primary School building at Gandhidham in Bhuj district of Gujrat - its building was reduced to rubble in the Earthquake in Jan,2001


BOARD OF DIRECTORS Shri Ajay S. Shriram Chairman & Senior Managing Director Shri Vikram S. Shriram Vice- Chairman & Managing Director Shri Rajiv Sinha Dy. Managing Director Shri Ajit S. Shriram Director (Sugar) Dr. N.J.Singh Whole Team Director (EHS) Dr. S.S. Baijal Shri Arun Bharat Ram Shri Pradeep Dinodia Shri Vimal Bhandari Shri Sunil Kant Munjai Shri D. Sengupta Shri S.C. Bhargava LIC Nominee




LISTS OF AWARDS 2008 1998 Best Assessee Award - Excise" Received by E.D & R.H " "Excise Trophy" Star Award "SAP R-3/SAP Star Customer Award 1998"

1996-97 NPC Award for "Second Best Productivity Performance in Fertilisers Industry" 1996-97 Energy Conservation Award in "Chemical Sector" 1995-96 FAI’s Runner Up Award for "Best Production Performance of Nitrogenous Fertiliser Unit"

1994-95 NPC Runner Award for "Best Productivity Performance in Cement Industry" 1993-94 NPC Award for "Best Productivity Performance in Fertilisers Industry" 1993-94 FAI Award for "Best Productivity Performance of Nitrogenous Fertilisers Unit" National Council of Cement and Building Materials Award for "Best 1992-93 Improvement in Electrical Energy Performance and 2nd Best in Energy Performance" 1991-92 1990-91 National Award for " Public Recognition of Out-standing Activity for Prevention & Control of Pollution" Indian Bureau of Mines Best Award for " Environment Conservation in Air and Noise Pollution "

1990-91 RPCB’s Award for " Excellence in Pollution Abatement Measures " 1990-91 NPC Award for " Best Productivity Performance in Fert. Inudstry " 1990-91 FAI’s Runner up Award for " Best Production Performance of Nitrogenous Fertilisers Unit "

1989-90 EAR Silver Jubilee Award for " Better Industrial Relation in the Factory " 1989-90 NPC Award for " Best Productivity Performance in Fert.Industry " 1983-84 FAI’s Runner up Award for " Best Production Performance of Nitrogenous 42

Fertilisers Unit " 1982-83 NPC Award for " Best Productivity Performance "

To handle the requirements of a huge enterprise and the responsibilities of the firm as a huge industry, DCM was restructured in 1990 into the following four companies. 1. DCM SHRIRAM CONSOLIDATED LIMITED 2. DCM SHRIRAM INDUSTRIES LIMITED 3. DCM LIMITED 4. SHRIRAM INDUSTRIES ENTERPRISES LIMITED (A) DCM SHRIRAM CONSOLIDATED LIMITED-: The following are the various divisions of DSCL. S. No. Name of the unit Location Products


1. 2. 3. 4. 5. 6. 7.

Shriram Fertilisers&Chemicals Shriram Cement Works Swatantra Bharat Mill/ DCM Silk Mill Shriram Alkali & Chemicals DSCL Energy Services Co. Shriram Polytech Fenesta Building Systems

Kota Kota Tonk Bharuch Delhi Kota Kota/Bhiwadi/

Urea Cement Textile Chlor Alkali Consulting PVC Compounding Window/Door

Mumbai/Bangalore Profiles

 Power plant fulfill 90% requirement of power at lowest cost, thus increase in profitability of different plants.  DSCL is a diversified company manufacturing a wide range of product.  The company is having its own power plant, thus reducing dependence on RSEB  Computerized plant having less dependence on work force.  Quality improvement program at kota plant improve the quality of the product


 DSCL cement business in India only plant converts waste generated at Kota into consistent quality, premium grade cement product.

 Wet process of cement production consumes high power cost.  Budgetary control is not implicated properly. Actual performance is very far from budgeted estimates.  The plant is not gas based, thus manufacturing costs are high.

 Govt. infrastructure efforts provide goods fortune for cement industry.  Good monsoon in this year have great push to disposal income of the people in rural area.  Good financial help provided by banking sector also a good opportunity for cement industry.  The low per capita cement consumption in India also opens the way for extra progress.


 Large plants are the big problem in India.  Overall growth of Indian economy is very less comparison to other developing countries.  Change in govt. policy regard to tariff, electricity, custom duty, excise duty and power production is a big threat for cement industry in determining cost structure.  Increase in diesel prices encourages the major components of cement cost i.e. freight.

The design of the research project, popularly know as the “research design”. Research design is a basis of framework, which provides guideline for the rest of research process. It is the map of blue print according to which, the research is to be conducted. The research design specifies the method of study. There are three basic types of research design via: exploratory, descriptive and environmental. A research design helps to define the problem, method of data collection and analysis, time and requirement for the project to estimate the expenses to be incurred. It is purely and simply the framework or plan for a study that guides data collection .This project based descriptive and statistical research design.


 

To study the applicability and concept of ratio analysis. To calculate various relevant financial ratio of the company and determine the To make a comparative analysis of ratio of competitive companies

relevant financial position of the company. 

Like CFCL and GSFC.

 At DSCL our vision is to build world class organization in focused business, which is profitable, with a culture of being quality driven, responsive to change and highly competitive.  The scope of the study was extended for four financial years o 2002-2003 o 2003-2004 o 2004-2005 o 2005-2006


 Secondary sources
 Annual report of DSCL for 2007-08  Credit monitoring arrangement (CMA) data files, which is prepared annually.  Quarterly information system (QIS)  Quarterly monitoring system (QMS)  Internet

Limitations of Study:

 As it is a private company, some of the information are being kept confidential and was not disclosed for the study.  All the information was collected from companies balance sheet which has its inherent limitations


 Concept of Working Capital  Needs of Working Capital  Types of Working Capital  Components of Working Capital  Uses of Working Capital


Working Capital means the funds available for day-to-day operation of an enterprise. There are two concepts of Working Capital.



Gross concept of Working Capital is quantitative in nature. It represent the total of all current assets. It is also known as circulating capital or current capital. The word current assets means, those assets, which can be converted into cash within an accounting period or trade cycle like: Inventory Trade debtors Loans and advances Investments Cash and Bank Balance Marketable securities Bills receivables

      

Net Working Capital represents the excess of current assets over current liabilities or the portion of current assets, which is financed by long-term funds. It is known as net working capital. The net concept of Working Capital is qualitative in character.


Net working capital may be negative or positive. When current assets exceed over correct liabilities there will be positive net working capital. If current liabilities exceed over current assets it will be negative working capital. Current liabilities are those usually repaid within an accounting you like. Account Payable / sundry creditors Bills Payable Trade Advances Outstanding Expenses Short Term Bonus Bank Overdraft

     

Both gross and net concepts have their own significance for management. The gross concept of Working Capital is a going concern concept, because current assets are necessary for the proper utilization of fixed assets. The net concept of Working Capital shows the financial soundness and liquidity of a firm. This concept creates the confidence to the creditors about the security of their amounts.

Funds are required for an enterprise for day to day running. These funds are generated usually through sales. However, sales don’t convert into cash instantaneously. This is always


time gap between the sales activity and receipt of cash. Working Capital is required for this period in order to sustain operating activity of an enterprise. Therefore, it is clear that Working Capital is required because of time gap between sales and actual realization of cash. This time gap is technically termed as operating or cash cycle of business.

The continuous flow from cash to suppliers to inventory, to accounts receivable and back into cash is what is called the term cash cycle refers to the length of time necessary to complete the following cycle of events: 52

1. The raw material and stores inventory stage 2. The working progress inventory stage 3. The finished goods inventory stage 4. The receivable stage CASH






Conservative Working Capital Policies:

A conservative polices suggest to carry higher level of current assets in relation to sales. Surplus current assets enable the firm to absorb sudden variation in sales, production plan and procurement time without disrupting production plans. Additionally, the higher liquidity levels reduce the risk of insolvency. But lower risk translates in to lower return. Large investment in current assets leads to higher interests, carrying cost and encouragement for sufficient. But conservative policy will enable the firm to absorb the day-to-day business risks. It assures continuous flow of operation and eliminates worry about recurring obligations. Under this policy long term financing covers more than the total requirement for working capital. The excess cash is invested in short- term marketable securities and in need; the securities are sold off in the market to meet the urgent requirement of working capital.

To run an organization well, it is necessary to maintain funds in the organization. Generally, Working capital of every business firm may be of many types: Permanent, fixed or regular Working Capital Flexible or Temporary variable Working Capital Seasonal Working Capital or Special Working Capital Negative Working Capital Cash Working Capital and Balance Sheet Working Capital

     

This working capital is the minimum quantity, which required running the organization every time; it also refers to the hard care Working Capital. 54

If this quantity of Working capital is not maintained then the business may be greatly handicapped in day to day working. It is that the minimum level of investment in the current assets that is caved by the business at all times to carry out minimum level of its activities. This part of Working Capital is as permanent as the investment in fixed assets.

It refers to that part of total Working Capital, which is required by a business over and above permanent Working Capital. It is also called as variable Working Capital. Such type of Working Capital represents such amount of additional current assets which are required at different times during an accounting period of additional inventory and cash balance to cover the pick selling period as assured by changed circumstances since the volume of temporary Working Capital keeps on fluctuating from time to time according to the business activities it may be finance from the short term services. This type of Working capital changes with the charge into operational activities.

It refers the extra Working Capital, which are required due to additional demand on some special occasions. This working Capital is also additional amount of current assets like cash, receipts and inventory, which are required during the accounting period of a business concern. Additional Working Capital may also be needed on account certain abnormal circumstances and it is termed as special Working Capital. Thus, this type of Working Capital is needed to meet extra ordinary requirements or contingencies. The classification of the seasonal Working Capital as regular and variable is also helpful in arranging finance for the business firm. 55

Negative Working Capital is when current liabilities exceed current assets. This position is not accurate theoretically and occurs when a business firm is nearing a crisis. If any business concerns to pay his liabilities, then it is called Negative Working Capital.

This Working Capital is calculated at the time shown in profit and loss account of a business. It is the real flow of money or value at accurate time and is considered to be most realistic approach to Working Capital.

It is that Working Capital which is calculated from the items appearing in the balance sheet of organization.



Construction of Working capital is being made through current assets and current liabilities. Current assets involve cash, marketable securities, inventories and receivables and current liabilities involve o/d, creditors, and bills payable and outstanding expenses.

The inventory contributes a lot to the constitution of Working Capital. Before going to the process the inventory creates the working Capital. According to American institute of Accountants. “The aggregate of those items of tangible personal property which are: (1) Are held for sale in the ordinary course of business, (2) Are in the process of production for sale and (3) Are to be currently consumed in the production of goods or be available the point of study the inventory can be divided into the following four categories: for sale.” For

Raw material is defined as the stock of materials on which manufacturing process is yet to be carried on. Means Raw Materials is the first step in the production process. A firm maintains proper stock of Raw Materials for uninterrupted production. It is not possible for a firm to purchase whenever it needed. There is a time lag between demand and supply of Raw Materials. There is a uncertainly in procuring raw material in time due to strike, flood, short supply etc. therefore a firm maintain a proper level of raw materials for uninterrupted production.



Goods in process indicate incomplete process of manufacturing. To make clearer, good in process means the stock of raw materials, which is still under manufacturing process and yet has not become a finished product. The size of good in process is determined by the length of the manufacturing cycle. Larger the time of manufacturing process, larger will be size of goods in process. On the other hand, if manufacturing process takes short time there will be low stock of goods in process.

Finished stock is the last resort of the manufacturing process. In the finished product, raw material is fully converted into the saleable product. The stock of finished goods inventory is held by a firm to serve customers continuous basis and to meet fluctuating demand.

Stores and spares consist of innumerable items. Store and spares are kept to fight to break dawn of machinery in the operation. The reasonable quantity and quality of spare parts must be kept to get away from the interruption in the production.

Receivable is the second most important component of Working Capital next to inventory. It is essential for each and every business institution to sell their product on credit basis in this though competition in order to maximum the profits. Credit sale bring out the receivables. Looking to the profits we must consider both merits and demerits of credit sale. By merits we mean the profit involved and demerits we means the risk occurred in the proceeds collection. After all receivables effects profitability, liquidity and Working Capital of business concern. Therefore a proper level of receivables should be maintained for the proper profitability. Receivable plays an important role in contributing the short-term financial position and profitability.


Cash in the business may be compared to the backbone of the human body, it gives the strength to the human body and cash gives profit and solvency to the business. In a business ultimately a transaction results either in flow or out flow of cash.

The term cash is used in two senses. In narrow sense it is used for cash, cheques, drafts and demand deposits in bank. In broad sense it also includes near cash assets like-marketable securities and fixed deposits in bank. Cash in hand, as an asset it has no any earning power in itself. But a minimum cash balance is essential to meet the requirements of the business. The question arise that what is the proper level of cash or how much cash be kept by a business.

There is no any formula to determine the proper level of cash, which should be kept by a business. The proper level of cash depends on various factors like- nature of business, period of credit sale and the position of receivables and inventory.

Now the question arise that what is the aim keeping cash. According to Keynes there are three motives for keeping cash: 1) 2) 3) Transaction motive Precautionary motive and Speculative motive

In general we can say that a business keeps cash to take day-to-day obligations, to take benefit from favorable market conditions and to allow for contingencies.


Working capital is also used to finance operational losses of companies. On the other hand if a company is in profit then fund is created. Redemption of share capital and debentures or repurchase of debentures, when cash is paid to redeem preference shares or debentures or repurchase the debentures, the result is that Working Capital is reduced.

There are two ways of dealing with proposed dividend and the subsequent payment. If the proposed dividend is treated as a current liability, actual amount will not be shown as a use of funds.

Working Capital is also used to pay the taxes. When tax is paid from Working Capital, there is reduction in Working Capital and this means use of working capital.

The purchase of fixed assets such as plant machinery either reduces current assets or increase current liabilities.

PARTICULAR A. Current Assets 1. Inventory 2. Debtors 3. Advances & Loans 4. Cash Balance A. Total Current Assets B. Current Liabilities 1. Provisions 2. other Current Liabilities B. Total Current Liabilities Net Working Capital (A-B) AMOUNT ( In Cores) 783.06 239.34 332.37 46.56 1401.33 86.26 402.95 489.21 912.12 TOTAL AMOUNT

 Introduction

Motives for Holding Cash Objective of Cash Management Control Over Cash Flows


The term cash with reference to cash management is used in two senses. In a narrow sense, it is used broadly to cover currency and generally accepted equivalents of cash, such as cheques, drafts and demand deposits in banks. The broad view of cash also includes near cash assets, such as marketable securities and timely deposits in banks. The main characteristics of these are that they can be readily sold and converted into cash. They serve as a reserve pool of liquidity that provides cash quickly when needed. There are four primary motives for maintaining cash balances: (i) Transaction motive; (ii) Precautionary motive; (iii) Speculative motive; and (iv) Compensating motive.

An important reason for maintaining cash balances is the transaction motive. This refers to the holding of cash to meet routine cash requirements to finance the transaction that a firm carries on in the ordinary course of business. A firm enters into a variety of transactions to accomplish its objectives that have to be paid for in the form of cash. Business concerns that have highly predictable inflows and outflows of funds can hold relatively less cash then firms that have irregular cash flows.

It is also related to the nature and level of business activity. Precautionary balances are those which are set aside because cash inflows and outflows are not synchronized. For example, precautionary balance may be used to meet unanticipated expenses as the result of an unanticipated decline in sales revenues.



It refers to the desire of a firm to take advantage of opportunities which present themselves at unexpected moments and which are typically outside the normal course of business. The speculative balances are sensitive to interest rate changes and are usually hold in the form of interest hearing securities.

A compensating balance is the fourth motive for holding cash. This motive is with commercial banks that require borrowers to leave a portion of their borrowed funds in deposit at the bank. Banks may require, that 10% of a loan be left in deposit. There are two reasons for requiring a compensating balance, it raises the effective interest rate for banks and it provides banks with funds to make additional loans.

The basic objectives of cash management are: (a) to meet the cash disbursement needs (payment schedule); and (b) to minimize funds committed to cash balances. These are conflicting and mutually contradictory and the task of cash management is to reconcile them.

The importance of sufficient cash to meet the payment schedule can hardly be overemphasized.

The second objective of cash management is to minimize cash balances. In minimizing the cash balances, two conflicting aspects have to be reconciled. A high level of cash balance will, ensure prompt payment together with all the advantages. But it also implies that large funds will remain idle, as cash is a non-earning assets and the firm will have to forego profits.


Drawing of cash plan is not enough; a strict compliance of plan is required through proper control of cash collections and payments. On the other hand inflow is to be accelerated, so as to cope with the growing requirements whereas outflow must be checked. There must also be a proper channel of arrangement of investment of surplus cash. For this cash periodical reports are very much helpful.


Cash can be conserved through maximized inflow and lesser permanent investment. Reducing the time gap caused by waiting time can accelerate collection; to speed up collections the followings techniques may prove useful:

In this system, a firm establishes the collection centers in accordance with the concentration of customer’s and hire a post office box and instructs its customer to remit the bills of cheques directly to this box. The firm’s authorized bank picks up the remittance collects for the gain and supply the detail of cheques collected. Although it is a costlier system but the cheques are collected immediately.

The early conversion of payments into cash, as a technique to speed up collections, is done to reduce the time lag between posting the cheque by customer and the realization of cheque from bank.

When a number of collection centers are operating instead of single collection centers at the head office, the time lag between mailing can be reduced. This is called decentralized system of collection of bill at multiply centers. This is useful technique to speed up the collection of accounts receivable. Besides, collection of payments personally is one of the important means to accelerate the inflow of funds.

A firm should make its payments using the credit terms to their fullest extent. There is no advantage in paying the amount sooner than expected or agreed to, as this source is free from interest. But a firm must not make undue delays that may endanger its credit standing.


A ratio can be defined as " the indicated quotient of two Mathematical expression", and as " the relationship between two or more things".

As a tool of financial management, ratios are of crucial significance. The importance of ratio analysis lies in the fact that it presents facts on a comparative basis and enables the drawing of inferences regarding the performance of a firm. Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects.

 Liquidity Position  Operating efficiency  Overall profitability  Trend Analysis

Liquidity Position
A firm can be said to have the ability to meet its short-term liabilities if it has sufficient liquid funds to pay interest on its short maturing debt usually within a year as well as to repay the principal. This ability is reflected in the liquidity ratios of a firm. The liquidity ratios are particularly useful in credit analysis by banks and other suppliers of short-term loans.

Operating Efficiency
Yet another dimension of the usefulness of the ratio analysis, relevant from the viewpoint of management is that it throws light on the degree of efficiency in the management and utilization of its assets. The various activity ratios measure this kind of operational efficiency. In fact, the solvency of a firm is, in the ultimate analysis, dependent upon the sales revenues generated by the use of its total assets as well as its components.


Overall Profitability
Unlike the outside parties which are interested in one aspect of the financial position of a firm, the management is constantly concerned about the over all profitability of the enterprise. That is, they are concerned about the ability of the firm to meet its short term as well as long-term obligations to its creditors, to ensure a reasonable return to its owners & secure optimum utilization of the assets of the firm.

Trend Analysis
Finally, ratio analysis enables a firm to take the time dimension into account. In other words, whether the financial position of a firm is improving or deteriorating over the years. This is made possible by the use of trend analysis. The significance of a trend analysis of ratios lies in the fact that the analysts can know the direction of movement that is, whether the movement is favorable or unfavorable.

Financial statement analysis can be a very useful tool for understanding a firm's performance & condition. However, there are certain problems & issues encountered in such analysis, which call for care, circumspection & judgment in such exercise.


Heuristic & Intuitive character
Most of the ratios we have computed & interpreted have been proposed in a somewhat heuristic or intuitive fashion. The ratio is often not related logically to a well-defined theoretical framework. Instead they have been suggested in a somewhat impressionistic manner.


Development of benchmarks
Many firms, particularly the larger ones, have operations spanning a wide range of industries. Given the diversity of their financial performance & condition. Hence, it appears that meaningful benchmarks may be available only for firm that have a welldefined industry classification.



Window dressing
Firms may resort to window dressing to project a favorable financial picture. For e.g. a firm may prepare its balance sheet at a point when its inventory level is low.


Price level changes
Financial accounting, as it is currently practiced in India & most other countries, does not take into account price level changes. As a result, balance sheet figures are distorted & profits misreported. Hence, financial statement analysis can be vitiated.


Interpretation of results
Though industry averages & other yardsticks are commonly used in financial ratios, it is somewhat difficult to judge whether a certain ratio is good or bad. A high current ratio for example, may indicate a strong liquidity position (something good) or excessive inventories (something bad).


Correlations among ratios
Several ratios have some common element (sales, for example, are used in various turnover ratios) & some items tend to move in harmony because of a certain common underlying factor.


Variations in accounting policies
Business firms have come latitude in the accounting treatment of items like depreciation, valuation of stocks, research & development expenses, foreign exchange transactions, investment, sales, preliminary & pre-operative expenses, provision of reserves & revaluation of assets.


Ratio analysis is a power full tool of financial analysis. In financial analysis a ratio is used as a benchmark for evaluating the financial position & performance of a firm. The absolute accounting figures reported in the financial statements do not provide a meaningful understanding of the performance & financial position of a firm. An accounting figure conveys meaning when it is related to some other relevant information. The relationship between two accounting figures, expressed mathematically, is known as Ratio. A ratio helps to summarize large quantity of financial data & to make qualitative judgment of the firm's financial performance.

A ratio can be defined as “the indicated quotient of two Mathematical expression", and as “the relationship between two or more things".


Liquidity ratios study the firm's short-term solvency & its ability to pay off the liabilities. These include: 1) Current Ratio 2) Liquid Ratio

Liquid Ratios as a group are intended to provide information about a firm's liquidity & the primary concern is the firm's ability to pay its current liabilities. Consequently, these ratios focus on current assets & current liabilities. CURRENT RATIO CURRENT RATIO = Total current assets/Total current liabilities The total current assets include those assets, which are in the form of cash, near cash or convertible into cash within a period of 1 year. The current liabilities include all types of liabilities, which will mature for payment within a period of 1 year. The current ratio shows the firm's ability to pay its liabilities out of its current assets. The current ratio as calculated above is to be compared with a standard ratio. Generally, a current ratio of 2:1 is considered to be satisfactory. Though this value of current ratio is industry specific.


Total Assets
(Rs. In Lakhs) Particulars Inventory Sundry debtors 2003-2004 2004-2005 205.47 304 182.51 303.61 Cash balance 41.09 25.50 Loans and advances 108.60 96.61 537.67 729.72 Total



















Total Current Liabilities
Particulars 2003-2004 2004-2005 Provisions 33.09 Other Liabilities 234.62 (Rs. In Lakhs) Total 267.71

















CURRENT RATIO OF DSCL FROM 2003-04 to 2007-2008

RATIO Current Ratio

2003-04 538.71/ 396.62 =1.35

2004-05 729.72/ 392.82 = 1.85

2005-06 1030.27/5 71.88 = 1.80

2006-07 1334.02/ 873.58 =1.52

2007-08 1401.33/ 789.21 =2.86

Current Ratio
3.5 3 2.5 2 1.5 1 0.5 0 200304
INTERPRETATION: DSCL current ratio in 2003-04 was 1.35, which was low. But later the ratio had increased to 1.85 in 2004-2005 which is almost near to the ideal ratio of 2:1.but in 2004-2005 it had fallen to 1.80 in 2005-2006 further it had fallen to 1.52 in theyear03-06 it is able to maintain its ratio near to the standard ratio. But we at these ratio of 2006-2007 it has fallen to 1.52 and in 2007-08 it rises to 2.86 so we can say that company has very sound position and sufficient assets to pay his liabilities.







SIGNFICANCE: This ratio establishes a relationship between Quick/Liquid assets & current liabilities. A current asset is considered to be liquid, if it is convertible into cash without loss of time & value. On the basis of this definition of liquid assets, as inventory in singled out of the total current assets, as inventory is considered to be potentially illiquid. The reason for keeping inventory out is that it may be obsolete, unsaleable or out of fashion & always required time for realization into cash. Moreover the inventories have tendency to fluctuate value. So the quick ratio looks for the ready availability or convertibility into cash. The quick ratio may be calculated as: Quick Ratio = Liquid assets / Total current liabilities. Generally an ideal quick ratio is said to be 1:1. If it is more, it is considered to be better. The idea is that for every rupee of current liabilities, there should at least be one rupee of liquid assets. This ratio is a better test of short-term financial position of the company than the current ratio, as it considers only those assets that can be easily and really converted in to cash. Stock is not included in liquid assets as it may take a lot of time before it is converted into cash. Quick ratio thus is a more rigorous test of liquidity than the ratio and when used together with current ratio, it gives a better picture of the short-term financial position of the firm.


Quick Ratio of DSCL FROM 2003-04 to 2007-2008 RATIO Liquidity ratio 2003-04 332.24/393.62 =. 84 2004-05 425.72/392.82 =1.08 2005-06 590.69/571.88 =1.03 2006-07 775.89/873.58 =. 88 2007-08 618.27/489.21 =1.26

Liquid Ratio

2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 200304 200405 200506 200607 200708

Liquidity Ratio

INTERPRETATION The ideal liquid ratio is 1:1 from the analysis it is found that in year 2003-2004 the liquid ratio was.84, which is near the ideal ratio but in 2005-2006, it has become1.03, which is near to the ideal ratio. Further it had fallen to .88 in 2006-2007, which is near the ideal ratio and 2007-08 it has risen to 1.26. It shows that the company is efficiently using its liquid assets. It also indicates that the company is having sufficient funds to meet its short-term liabilities.


3. LONG TERM SOLVENCY RATIOS SIGNIFICANCE The financial position of the firm can be studied & analyzed in two perspectives i.e. the short-term position which is known as the short-term liquidity position, has already been discussed with the help of liquidity ratios. In the following section the long-term financial position, its composition & implications have been considered. The long-term sources of funds for any firm comprise of the shareholder's funds & the long-term borrowings. Thus to know about the long-term financial position of a firm following ratios are calculated: 1. Debt-Equity Ratio 2. Proprietary Ratio 3. Interest Coverage Ratio 4. Fixed assets long term.

A. DEBT-EQUITY RATIO The Debt-Equity is the basic & the most measure of studying the indebt ness of the firm. The Debt-Equity ratio is based on the assumption that the extent to which a firm should employ the debt should be viewed in terms of the size of the cushion provided by the shareholders funds. The Debt-Equity ratio is based on the assumption that the extent to which a firm should employ the debt should be viewed in terms of the size of the cushion provided by the shareholders funds. The Debt-Equity ratio is calculated as follows: Debt-Equity = Debt/Net worth Or = Long-term debt/shareholder's fund's


Significance:- The ratio indicates the proportion of owner's stake in the business. Ideal ratio is 2:1. Excessive liabilities tend to cause insolvency. The ratio indicates the extent to which the firm depends upon outsiders for its existence. The ratio provides the margin of safety to the creditors. It tells the owners the extent to which they can gain benefits and maintain the control with the limited investments.

B. PROPRIETARY RATIO SIGNIFICANCE This ratio focuses the attention on general financial strength of business enterprise. This ratio is of particular importance to the creditors who can find out proportion of shareholders funds in the total assets employed in business.A low proprietary ratio will indicate greater danger to the creditors. A ratio below 50% may be alarming for the creditors since they may have to suffer heavily, in the event of company's liquidation on account of heavy losses. It is calculated as:

Proprietary Ratio = Shareholders fund/Total tangible assets x100

C. INTEREST COVERAGE RATIO SIGNIFICANCE It measures the ability of the firm to pay the fixed interest liability. This ratio is calculated as: EBIT/FIXED INTEREST CHARGES Interest coverage ratio or the times interest earned is used to test the firm's debt serving capacity. The interest coverage ratio is computed by dividing earning before interest & taxes by interest. The interest coverage ratio the number of times the interest charges are covered by funds that are ordinary available for their payment. A higher ratio is desirable but too high ratio indicates that firm is very conservative in suing debt & that it is not using credit to the best advantage of the shareholder's. A lower ratio indicates excessive use of debt or inefficient operations. 76

SIGNIFICANCE This ratio explains whether the firm has raised adequate long term funds to meet its fixed assets requirements. It is expressed as follows: Fixed assets/long-term funds The ratio should not be more than 1.if less than one; it shows that the part of working capital has been financed through long-term funds. This is desirable to some extend because a part of working capital termed as core working capital is less of fixed nature .the ideal ratio is 0.67. Fixed asset include net fixed asset (original cost- deprecation to date) and trade investments including shares in subsidiaries. Long term funds include share capital reserve and long term loans. The formula for calculating fixed assets to long term funds ratio is: FIXED ASSETS/LONG TERM FUNDS 4. PROFITABILITY RATIO OR INCOME RATIO The main object of every business concern is to earn profits. A business must be able to earn adequate profit in relation to the capital invested in it. The efficiency and the success of a business can be measured with the help of profitability ratios. We can understand more about these ratios by categories it into the following: (A) Ratios Calculated on the Bases of Sales: - {Net Sales means (sales + Income from Services)} these are as follows: -

SIGNIFICANCE It is calculated by comparing gross profit of the firm with the Net sales. The gross profit is the difference between the sales revenue & the cost of generating those sales. Therefore, the Gross profit amount the GP ratio depends upon the relationship between the selling price & the cost of production including direct expenses. The GP ratio reflects the efficiency with which the firm produces and purchases the goods.The formula for calculating gross profit ratio is : -


Gross profit Ratio


Gross profit / Net sales x 100

GROSS PROFIT RATIO OF DSCL FROM 2003-04 to 2007-2008
RATIO 2003-04 2004-05 227.10/1800. 14=12.61% 2005-06 283.74/2332. 57=12.16% 2006-07 236.21/2701. 46=8.74% 2007-08 134.78/2489. 55=5.41%

Gross profit 194.65/1381.5 ratio 1=14.08%

Gross Profit Ratio

16 14 12 10 8 6 4 2 0 2003-04 2004-05 2005-06 2006-07 2007-08
INTERPRETATION: The gross profit ratio of DSCL’S was 14.08% in 2003 – 2004, which has come down to 12.61% in 2004 – 2005. But in 2005-2006 it had fallen to 12.16.Further it had fallen to 8.74 in 20062007. The reasons for this may be raise in price of raw materials from the market. Earlier in 2003-2004 the total expenditure incurred for raw materials, power and other manufacturing expenses was 959.10 crores but as in comparing with 2005-2006 the total expenditure had gradually increased to 2666.56 crores. It is not a good sign for the company as company’s profit are not increasing as compare to its expenditures. The sales is increased which is good for the company but the decreasing ratio show that per unit margin have decreased. So fixed expenses should be controlled. Comparing with earlier years 2007-08 the total expenditure as gradually decreased to 5.41 with is not a good sign for the company as company’s profit are not 78

Gross Profit Ratio

increasing as compare to expenditure .The sales is increase which is good for the company but the decreasing ratio the per unit margin had decreased so fixed expenses should be control.

SIGNIFICANCE NP ratio establishes relationship between the net profits (after tax) of the firm & net sales. The NP ratio measures the efficiency of the firm's management in generating additional revenue over & above the total cost of operations. The NP ratio shows the overall efficiency in manufacturing, administering, selling & distributing the product. This ratio also shows the contributions made by every one rupee of the sales to the owner's funds. The NP ratio indicates the proportion of sales revenue available to the owners of the firm & the extent to which the sales revenue can decrease or the cost can increase, without inflicting a loss on the owners. So the NP ratio shows the firm's capacity to face the adverse economic conditions. An increase in the ratio over the previous ratio indicates improvement in operational efficiency of the business, provided the gross profit ratio is constant. The ratio is thus an effective measure to check the profitability of the business. One can check the adequacy of the ratio by taking into account the cost of capital, return in the industry as a whole & market condition such as boom or a depression. The formula for calculating net profit ratio is : -

Net profit ratio


Net profit/Sales ×100

NET PROFIT RATIO OF DSCL FROM 2003-04 to 2007-2008
RATIO 2003-04 2004-05 79 2005-06 2006-07 2007-08

Net profit ratio

76.68/1391.20 =5.51%

104.43/1800.14 =5.80%

115.19/2332.57 =4.97%

45.81/2701.46 =1.69%

670.99/2489.55 =26.95%

Net Profit Ratio

30 25 20 15 10 5 0 2003- 2004- 2005- 2006- 200704 05 06 07 08 Net Profit ratio

INTERPRETATION: The net profit ratio of DFCL’S was 5.51% in 2003 – 2004 it had gone up by 5.8%. in 2004-2005. But in 2005 – 2006 it had fallen down to 4.97 %. Further it had fallen to 1.69 in 2006-2007.the manufacturing and other expenses had been gradually increased it was 1339.97 crores in 20052006 and in 2006-2007 1837.34 crores. Another reason is that interest and deprecation in the year 2006-2007 had been increased. But in 2007-08 N.P. ratio is increased upto 26.95% which is very high with respected to last year due to their less expenditure and their increase in exceptional items income.


SIGNIFICANCE It is calculated to evaluate operating performance of business. Operating profit means net sales less cost of sales. OPERATING PROFIT RATIO = OPERATING PROFIT/SALES X 100

RATIO Operating profit ratio Operating Profit ratio 2003-04 145.27/1085.02 x 100=13.38 2004-05 2005-06 2006-07 2007-08 97.38/2489.55 =3.91

174.57/1381.51 227.39/1800.14 276.35/2332.74 x 100=12.63 x 100=12.63 x 100=11.84

14 12 10 8 6 4 2 0 2003- 2004- 2005- 2006- 200704 05 06 07 08
INTERPRETATION The operating profit ratio of DSCL shows that in the year 2003-2004 the ratio was 12.63%, which has fallen to 11.84% in 2005-2006. It had further fallen to 7.81% in 2006-2007 and the ratio had decreased to 7.81% only indicating that the operational proficiency had not been improved. operational expenses should be tighten. In 2007-08 it had further fallen and ratio decries to 3.91% only indication that the operational proficiency had not been improved operating should be tighten

Operating Profit Ratio


These are as follows: The profitability can also be analyzed with reference to profit earned per rupee of investments made in the firm. C. DIVIDEND PAY OUT RATIO SIGNIFICANCE The pay out ratio indicates the percentage share of net profits after taxes & preference dividend that is paid out as dividend to equity shareholders. DIVIDEND PAY OUT RATIO = DIVIDENDS/ PAT Companies follow dividend policies based on their financial requirements as well as corporate philosophy. Investors generally prefer companies declaring higher dividends & it is commonly found that high dividend distributing companies command a higher price than others who distribute less (provided they are equally profitable & similar in other respect).

RATIO 2003-04 2004-05 82 2005-06 2006-07 2007-08

Dividend payout ratio






Dividend Pay Out

3.5 3 2.5 2 1.5 1 0.5 0 2003- 2004- 2005- 2006- 200704 05 06 07 08
INTERPRETATION: In the year 2003 – 2004 the dividend payout ratio of DSCL was 1.2% . but in the year 2004 – 2005 it has gone up to 1.6% and in year 2005 – 2006 it has gone up to .9% .further in year 2006-07 it has gone up to .8% But in 2007-08 it suddenly increase to 3.3% it clearly indicates that DSCL is continuously maintaining a dividend payout ratio of average 15%. This constant payout ratio encourages investor to invest in the growing business.

Dividend Pay Out



As at

As at

31 March 08 Rs. in crores
Sources of Funds Shareholders funds Share Capital Reserves and surplus 1 2 33.34 1111.99

31 March 07 Rs. in crores
33.34 518.49

1145.33 Loan Funds Secured Unsecured Deferred Tax Liabilities (net) Total Funds employed Application of Funds Fixed Assets Gross Block Less : Depreciation Net Block Capital Work in Progress Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank balances Loans and advances Less: Current liabilities and provision - Current liabilities - Provisions Net Current Assets Total Funds utilized 3



1234.21 978.38 523.70 542.16 1757.99 1520.54 171.20 170.55 3074.44 2310.84 617.00 2242.92 2145.61 498.74


1693.84 270.36 1964.20 6 7 198.12 783.06 239.34 46.56 332.37 1401.33 402.95 86.26 489.21 912.12 3074.44

1646.87 101.62 1748.49 33.99 558.13 502.20 52.91 220.78 13340.02 812.17 61.41 873.58 460.44 2242.92




Year ended 31 March,08 Rs. in crores 2685.59 196.04 2489.55 34.79 2524.34

Year ended 31 March,07 Rs. in crores 2872.16 170.70 2701.46 33.71 2735.17 1837.34 661.62

Income Sale of product (gross) Less: Excise duty Sale of products (Net) Income from services and other income Expenditure Manufacturing and other expenses Purchases for resale Profit for the year before Depreciation, Interest, exceptional items and tax Interest - on debentures and other fixed loans - on others Profit for the year before Depreciation, Interest, exceptional items and tax Depreciation Profit for the year before tax Provision for taxation Profit after tax Transfer from debenture redemption reserve Balance b/f from the previous year Profit available for appropriation Proposed dividends Equity Shares - Interim - Final Corporate dividend tax General reserve Balance carried to Balance Sheet Earning per share - basic/diluted (Rs.)


10 1903.36 401.47 11 75.64 9.09 134.78 122.13 782.77 111.78 670.99 5.17 251.37 927.53 49.77 6.64 9.59 400 461.53 0.39 60.92 16.42 158.87 90.26 68.61 22.80 45.81 5.16 225.74 276.71 6.64 6.64 2.06 10.00 251.37 2.76



‫﷒‬ The project is based on the financial statement of the company for last four years. In this comparison between the various ratios over the period have been done.

The company is doing better year after year. The study is restricted to only financial statements. The comparative performance shows that the company is doing well. It had also done overall as in comparison with its competitors. 86

The company has managed to expand favorably at a very cost effective level. The company has been growing at a healthy rate with every ratio improving at a steadily rate except few ratios. Therefore we can say that the company is moving towards excellence to achieve its goals. Efforts should be made to improve upon the lagging areas and a strong hold is required at the places where company has managed to lead.

 It should try more to keep the proprietary ratio high to provide greater sense of security to the creditors.  Payment of interest burden had increased so to reduce it company should regularly pay interest.


 Selling price should be at certain level so that goods could be sold without corresponding decrease in cost of goods sold and vice- versa, ultimately increase in gross profit ratio.  The company has to take into consideration the inventory turnover ratio. As the control over stock has deteriorated over the years. The companies efficiency in turning its inventory into sales had declined  Capital turnover ratio, working capital turnover ratio, fixed asset turnover ratio are in decreasing trend indicating that the company has not utilized the capacity. Therefore it should try to improve its ratios and utilized capacity fully.  Financial cost is more due to which net profit ratio suffers. Company should try to reduce financial cost.



  (Intranet)  Annual report of DSCL of 2007-2008

Reference Books
 I.M pandey 9th edition  Agrawal M.R.  Prasanna Chandra, Financial Management  S.N. Maheshwari


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