Chapter – I INTRODUCTION The signification of financial performance analysis of any business undertaking in general or in particular hardly needs any

emphasis. Notably as a potent instrument. Proper financial analysis not only helps largely in finding goal deviation of available both physical and financial. Its scope is for expansive because the techniques of financial analysis that are employed for diagnosing the economic health of an enterprise eventually helps both the internal and external parties concerned with the interest in the profitability of that enterprise in evaluating its over all performance. Financial Performance Analysis : the Concept Simply financial analysis by scientific evaluation of the profitability and financial strength of any business concern infect, financial analysis in the process of making a study on the financial and operational data contained in the profit and loss account and the balance sheet of a give concern and there by satisfying the information needs of the internal and external users of such data. On the other hand, financial analysis of the process of scientifically making a proper and comparative evaluation of the profitability and financial health of the given concern on the basis of summarized and analyzed data in the output of financial analysis. Thus it follows the above that the analysis of financial statements as financial analysis of the results dawn by the analysis (or) management accounts obviously the analysis of such results is made by the management by decision making process. Thus, it is evident that the financial analysis being so, starts where the summarization of financial data in the form of usual profit and loss account and balance sheet ends. In other words financial analysis is the end of that

continuous flow of accounting cycle which starts from classification, recording, summarizing, presentation and analysis of data and ends with interpretation of he results obtained from such an analysis. Notably in practice the entire exercise up to the point of analysis of the financial and accounting data is performed by the accounts division of a business enterprise where as analysis (or) evaluation part is the major concern of management. Placing the analysis and interpretation of financial statements are an attempt to determine the meaning and signification of these financial statements so that a forecast could be made of the prospects for the future earning ability, to pay interest and debt machines (both current and long term) and profitability of a sound dividend policy. Financial statement of a business enterprise are valuble in the sense that they relate how the financial data of the concerned enterprise fit into the facbric of its accounting system. The analysis and interpretation of the financial statements results in the presentation of the information that will aid in decision making by business managers, investors and creditors as well as other groups who are interested in the financial status and operating results of a business. According to more, financial is process, syntheses and summarization of financial and operative data embodied in the financial statements with a view of getting an insight with the operative activities of a business enterprise weasels, views it as technique X – raying the financial position as well as the progress of the company by establishing strategic relationships between the components of balance sheet and profit and loss account and other operative data, financial analysis eventually unveils the meaning and significance of the various items embodied in the financial statements, also known as the financial blue prints of a business concern.

As mentioned earlier, the major and the most significant financial statements of a business concern are the profit and loss account and the balance sheet. The profit and loss account is a dynamic statement that records income(s) and expense(s) between the two balance sheet dates, the balance sheet is a static statement which shows the financial position on a certain date. Thus, the latter is an intentions photograph of the assets, liabilities and the net worth of an enterprise at a particular unit of time. The analysis of both the statements gives a comprehensive understanding of business operations of the related concern as also of their impact on the financial health. A careful perusal of profit and loss account throws ample light on the operating efficiency, inventory management, control over indirect overheands and other policies pursued by the concern. Moreover, a study of the major individual items of other statements will measure the activity and the profitability of the enterprise. Since both the major financial statements are interrelated the exclusive analysis of either of them would not lead to purposive exercise. The main purpose of financial is to make available to creditors, shareholders and general public adequate information about and evaluation of corporation’s financial conditions. Special interest to banks and other lenders of funds to corporations, are the various ratios that enable creditors and investors to analyze the progress of company. These ratios help in comparing current accomplishments and financial prospects of a business corporation with those of its past as well as those of similar corporations. The general public and particularly and particularly the investors in corporate securities are concerned about the soundness of a business in which they have purchased or contemplating to purchase a share of ownership. The

production and quantitative methods. . find capital etc. Definition There are many definitions of finance of all the best was Harvard and UPTON’s definition. It I viewed different by different people depending upon their interest.. provide with money. Meaning and Significance of Ratio Analysis Finance has many meanings such as management of money. which have to do with the management of the flow of the cash so that the organization will have the means to carry out its objectives as satisfactory as possible and at the same time meet its obligations as they become due”. It requires over all knowledge of the environment in which it is read. Financial management is not a totally independent area. Finance now – a – day became a special function. accounting. It is an integral part of the overall management. like management promoters. They defined finance as “ That administrative area of set of administration functions in an organization. marketing. finance places an important role in any organization. Finance includes money banking and credit of different types and classes. which is concerned with planning and controlling of the financial resources. It draws heavily all related disciplines and fields of study namely economics. Meaning of Financial Management Financial management is the managerial activity.analysis of a company’s securities requires valuation of its art performance as reflected in the previous financial statements and of its probable future performance considering the overall business environment and futuristic trends. shareholders organization or business enterprise.

It is one of the very significant aspect in the task of measuring the prospective profitability of new investments. do not require a great managerial ability to carry them out. Investment or long – term assets – mix decision. 1.Although these disciplines are interrelated there are key differences among them. 4. on the other hand. where and how to acquire funds to meet the firms investment needs. Investment Decision Investment decision or capital budgeting is the oldest area of the recent thinking in finance. Then the financial manager must strive to obtain the best financing mix on optimum capital structure for . 2. There are 4 important managerial finance functions. 3. Investment proposals should therefore. Liquidity or short – term asset – mix decision. The mix of debt and equity is known as the firm’s principle capital structure. Dividend or profit allocation decision. Broadly. Financing or capital – mix decision. Control and execution of financial activities. It relates to allocation of capital and involves decisions to commit funds to long – term assets which would yield benefits in future. Because the capital budgeting decision involves risk. Functions Managerial finance functions are those functions which require skilful planning. he must decide when. They are chiefly clerical in nature and is incidental to the effective handling of managerial financial functions. Finance Decision Financing decision is the second important function to be performed by the financial manager. be evaluated in terms of both expected return and risk. The central issue before him is to determine the proportion of equity and debt. Routine finance functions.

Investment in current assets effects firm’s profitability. So the financial manager should develop sound techniques of managing the assets. the financing manager must determine the optimum dividend pay out ratio. in addition guarding the firm against the dangers of illiquidity and insolvency. the dividend policy should be determined in terms of its impact on shareholder’s value. Like the debt policy. Once the financial manager is able to determine the debt combination of debt and equity. if shareholders are not indifferent to the firm’s dividend policy. A conflict exists between profitability and liquidity while managing the current assets. Thus. which maximizes the market value of the firm’s shares. Liquidity Decision Current assets management which effects a firm’s liquidity is yet another important finance function. The financial manager must decide whether the firm should distribute all the profits. or return them. If the firm does not invest sufficient funds in current assets it will become illiquid and it would lose profitability as idle current assets would not earn anything. among the best available sources. The firm’s capital structure is optimum then the marker value of the shares is maximized. concerned with decision – making in regard to the size to . The use of debt it always increase risk. The optimum dividend policy is one. Dividend Decision Dividend decision is he third major financial decision.his firm. or distribute a portion and retain the balance. he must raise the appropriate best combination of debt and equity. liquidity and risk. Financial decision thus directly concern the firm’s decision to acquire or dispose of assets and require commitment or recommitment of funds on a continuous basis. Objectives of the Financial Management The objectives shows that financial management as an academic discipline.

In the earlier stages financial management was knows as “corporate finance”. It has now been described as it suffers from serious limitations. Traditional approach 2. the field of study dealing with finance was tracked as encompassing three interrelated aspects of raising an administering resources from outside. Scope of the Financial Management The scope of financial management is divided into two categories. As the name suggests the concern of the corporate finance functions was treated by the traditional approach in the narrow sense of procurement of funds by corporate enterprises to meet their financing needs. Modern Approach Traditional Approach The traditional approach to the scope of financial management refers to its subject. 2. He objectives provide a frame work for optimum financial decision making. 1. The traditional approach to the scope of the finance function evolved during the 1920s and 1930s dominated the academic thinking during early fifties. The term “procurement” was used in a broad sense so as to include the work of raising funds externally. Those relating to the treatrnent of various topics and the emphasis attached to them.composition of assets and level of structure of financing. 1. The weakness of the traditional approach fall into two broad categories. Those relating to the basic concept and analytical framework of the definitions and scope of the finance. This defined. mathematics in the academic literature in the initial stages of its evolution as a separate branch of academic study. Modern Approach .

the main concern of financial management is the efficient and wise allocation of funds to various use defined in a broad sense. financial management according to the new approach is concerned with the solution of three major problems relating to the financial operations of a firm. In other words. it is viewed as an integral part over-all management. 1. The financial statements contain summarized information the firms financial affairs. in the modern sense of the firm. They are the means of foreseen the firms financial situation to users. organized systernatically. The financing decision 3. The main contents of this approach are what is the total volume of funds an enterprise should commit? The principal contents approach to the financial management can said to be i) ii) iii) How large should an enterprise be. According to it. the issues involved in acquiring external funds. The dividend policy decision. Thus. can be broken down into three major decisions as functions of finance they are . Preparation of financial . Corresponding the three questions namely investment. The investment decision 2. financial management. The new approach is an analytical way viewing the financial problems of a firm. Financial Statements A firm communicates financial information to the users through financial statements and reports. financing and dividend decisions.The modern approach views the term financial management in a broad sense and provides a conceptual and analytical framework for financial decision making. and how fast should it grow? In what form should it hold assets? What should be the composition liabilities ? of modern The three questions posed above the major financial problems of the firm.

The . Profit and loss Account or Income statement. They should be prepared very carefully and contain as mush information as possible. In proportion : In this from the amounts of the two items are being expressed in a common denominator. investors and creditors are 1.statements is the responsibility of top management. In rate or times or Co – efficient : In this form a quotient obtained by divide one item by another item is taken as unit of expression.. B. This quantitative relationship (i. maintained by the firm. As these statements ate used by the investors and financial analysts to examine the firm’s performance in order to make investment decisions. Meaning of the Ratio A ratio is a mathematical relationship between two related items in expressed in quantitative from. Financial statements ate prepared form the accounting records. Balance sheet 2. then it is called “accounting ratio”. When the definition of ratio is explained with reference to the items shown in financial statements.e. Two basic financial statements ate prepared for the purpose of external reporting to the owners. The example of this form of expression is the relationship between current assets and current liabilities “2 :1”. Hence an accounting ratio is defined as quantitative relationship between two or more items of the financial statements connected with each other. ratio) may be expressed in either of the following ways : A. The generally accepted accounting principles and pricedured are followed to prepare these statements.

for example the relationship between profit and sales may be expressed as 25 percent. This importance lies in the fact that they are interrelated. Ratio analysis may high light upon the few phases of the business operations in which the outsiders are most interested by ascertaining the rate and direction of change . It is important to note that when ratio is expressed in this form. outsiders. On account of the above facts plus the utility discussed earlier. ii) Ratio analysis is a tool for the interpretation of financial statements. Like doctor’s prescription ratios represent the figures containing the condensed report of the position. C. Hence there is need for established relationship between various but related items. progress and problems of the concern. It signifies whether the financial health of the concern is vital. if any correct and accurate conclusion is to be drawn by their uses. In fact. may also use ratio analysis as a tool for financial analysis and interpretation. strong. In percentage : In this form a quotient obtained by dividing one item by another is multiplied by one hundred and it becomes “percentage” form of expression. good or poor and weak. It is now being used as a device to diagnose the financial health of business concern. Like the management. they are basically dumb ratio provide power to speak. creditors. It is also significant because ratio help the analyst to have a deep knowledge into the data given in statement.. Need and Significance of Ratio Analysis The need significance of ratio analysis is due to the following facts : i) Business facts shown in financial statements do not carry any importance individually. the use of ratio analysis has increased considerably.example of this form is sales divide by stock (say it comes 6). it is called as “turnover” and is written in “times”. thus 6 time is the ratio between sales and stock. bankers and shareholders etc.

It can be easily conveyed through the ratios as what has happened during the two intervening periods. control. sales profits and other related facts are revealed by the past ratios and future event can be forecasted on the basis of such trends. Ratios may be used as instrument of management control particularly in the areas of sales and costs. communication and forecasting etc. although each ratio is to some specific utility for a particular used the general utility or ratio analysis may be summarized as under. vi) Procedure of Ratio Analysis The following is generally followed. Primarily. Thus ratio analysis is a powerful tool for better internal and external analysis. Ratios also facilitate the functional communication.and future potentialities. Objectives of Ratio Analysis Ratio analysis serves the purpose of various parties interested in financial statements. co-ordination.. a) Arrangement of data b) Classification . iii) iv) v) Ratios may also be used as a measure of efficiency since ratios being possible. i) Trends in costs. ii) Ideal ratio may be constructed and the relationship found between strategic ratios can be used for achieving the desired co – ordination. while analyzing the financial statements through ratio analysis. To helps in investment decisions to make profitability investments. the object of ratio analysis is to help management in analyzing and interpreting the financial statements to get adequate information useful for the performance of various functions like planning.

c) Interpretation of calculated ratios d) Projections through ratios Classification of Ratios Ratios may be classified from various stand points. the following are included in this classification. Net sales to tangible assets . Return on shareholders fund iii. i. Balance sheet : These are also sometimes called financial ratios and include.e.. Fixed assets x. Return on capital ii. Current ratio iii. Capital – generating ratio 2. ii. Creditors turnover vi. i. Some of the possible classifications are being mentioned below. Debtors turnover v. Therefore. Stock ratio iv. Liquidity ratio. Working capital turnover vii.Current assets turnover viii. a) Classification by Statements : This classification is based on those statements from which information’s are obtained for calculating the ratios. 1. balance sheet and profit and loss account. Balance sheet and profit and Loss account ratios : These are also called inter statements ratios or combined ratios or mixed ratios and include. Stock turnover iv. since accounting information are obtained mostly from two statements i. Total turnover ix.

The standard may be industrial standards. Secondary credit Ratios d. A single ratio itself is not important or has limited value because trend is more significant in the analysis. 2. firm’s past Ratios and the ratios of the leaders of the industry. The process of identification of strengths and weakness is by comparison with standards. a . Primary Ratios b. Secondary performance Ratios c. Ratios are not an end in themselves but they are means to achieve a particular end. Limitations of Ratios The following are the limitations of ratios 1. the extent to with the firm has used its long term solvency by borrowing funds. This classification includes i) Ratios management ii) Ratios for creditors iii) Ratios for shareholders c) Classification by relative importance : This classification includes a. The efficiency with which the firm is utilizing its various assets in generating sales revenue and the overall operating efficiency and performance of the firm is net with out limitations. Growth Ratios d) Classification by relative importance e) Classification by nature f) Classification by purpose Thought this ratio analysis identifies the ability of the firm meet its current obligations.b) Classification by Users : This classification is based on the parties who are interested in making the case of these ratios. Even with these limitations ratio analysis helps in identifying the strengths and weaknesses of the firm to certain extent. At the same time.

accepted accounting principles and personal judgments”. the financial ratio derived from these could not be considered as “exact measures”. The accuracy and correctness of ratios are totally dependent upon the reliability of the data contained in financial statements on the basis of which ratios are calculared. accounting conventions. 3.change in a particular ratio is meaningful. The balance sheet and profit and loss account of a company being a “combination of recorded facts. Because over emphasis in a past ratio without considering other ratios could lead wrong inferences. Inherent limitations of financial ratios : Expert’s View Various financial ratios like current assets to current liabilities. Ratios become meaningless if details from which they are derived in this is more true when there is some sort of window dressing in the financial statements. Ratios may the comparative study complicated and misleading an account of changes in price level. only when it is studied with reference to other ratios. Each ratio makes its own contribution to the interpretation of financial . This aspect is highlighted in a background paper circulated to bankers to merchant bankers participating in a tow-day programme on “project appraisal” which is opened and organized by the Industrial and Technical Consultancy Organisation of Tamil Nadu (ITCOT) Any single financial ratio by itself could not give a complete picture. 4. which help to determine and interpret the strengths and weaknesses of any company are subject to “ inherent limitations”. Therefore all relevant ratios should be taken together and their effects should be assessed before arriving at a correct conclusion.

. So.condition. it must be considered in connection with other ratios to obtain a clear picture of soundness or weakness of a concern.

After three weeks blossoms appear after blossoming the petals fall offend the offspring or the boll develops. . natural vegetable fiber of great economic importance as a raw material for cloch. built the first American Cotton mill these mills converted cotton fibers into yarn and cloth. an Englishmen. One or two week after showing shoots appear and 50 to 80 days later flowering begins. which mechanically separates the seed from the lint fiber. natural and versatile History: The oldest cotton fibers and boil fragments. Cotton it’s fashionable. First buds are formed. “short for the word “engine technology has improved over the past centuries making cotton growth and production much more efficient Cotton Plant Cotton is produced by small trees and shrubs which bear botanical mane “GOSSIPIER”. but processing was difficult.. and North and South Americans. Cotton’s strength. It was ten that Slater. In 1793 Eli whitney developed the cotton gin. Egyptians. the greek historian Herodotus reported of a pant that “bore fleece” cotton has been in India and Egypt forever 5000 years. and capacity to be washed and dyed also make it adoptable to a considerable variety of textile products. It was not until the 1700s that the cotton industry flourished in the United states. The plant has certainly been grown and used in India for at least 5000 years and probably for much longer. Whitney named his machine a “gin. it was against the law import or manufacture fabric made of cotton since it was a threat to the sheep and wool industry. In 5000 B. Cotton was used also by the ancient Chinese.. Its wide speed use is largely due to the case with which its fiber are spun in to yarn. The bolls divided by partition into 3-5 sections contain seeds.C. in England in the 1700s. Fiber grows on the seeds.C. dated from around 5000 B. American colonists were able to grow lots of cotton. Cotton was grown by Native Americans as early as 1500.COTTON INDUSTRY PROFILE Cotton: Cotton is a white gold. absorbency. were discovered in Mexico.

Asiatic and upland. by mechanical planters. and barb dense the first hybrid in the cotton crop was developed in India. producing the fibers and seeds that are harvested. A mechanical cotton harvester moves though the field picking the cotton. in surat. which then packed into truck load sized “modules” and taken to the gin. The white blossoms become pollinated. during the 25 week growing cycle. Some whole cotton seed is fed to cattle. This helps the leaves dry and fall off and any remaining closed bolls to open. He cotton is carded roomed. The most prominent types of cotton grown in California are upland. by dry C T patel (H4 intra hirsute in 1970) more than 200 . sea island. The first true leaves appear after two to four weeks with the bud. is packed into 500 pound bales and then transported to textile mills. turn light pink and then wither at about nine weeks letting the cotton boll develop. and American pima. The gin separated the cotton fibers from the seeds. whose fiber lengths are 13/16” to 11/4” in length. also known as a “square” appearing about five seven weeks after planting. Some seed is further processed. The fiber. Plants are irrigated fertilized and weeded. G hirsute. TYPES OF COTTON: India grows all the four major types of cotton G arbor turn. producing cotton seed oil ad meal. American pima. The cotton bolls open naturally over time and defoliant chemical is applied grounder air to ensure top quality. seed beds. now called lint. and then spun in to thread. whose fiber lengths are 15/16” to 11/2” seventeen states in the nation produce cotton with over 14 million acres of cotton planted annually. making all of the fibers run parallel. The fine “linter” fibers are removed and the seed is pressed and cooked.I nearly spring seeds are planted one to three in seed. Variets: There are five main varieties grown throughout the world Egyptian. as needed. Cleaning equipment removes twigs and other debris. G herbaceous.

anjali and Rajat. Hybrids occupy around 45% of cotton crop in India. DDH 2 and drought tolerant straights varieties like SRT 1.varieties and hybrids were evolved in the subsequent five decades. . G got 9. as in 1998. important landmarks in the Indian cotton history include the development and release of native hybrids like G got DH37. LRA 5166. renuka.

Army worm. Chief among these is the boll weevil. In different parts of the country a number of methods. Panjab. The kappa’s with seeds so generated is called . Pakistan. Where seed is separated from kappas. It cultivated in countries with hot climate as India. Andhra Pradesh.CULTIVATION: Successful cultivation of cotton requires alone growing season. To separate the seed from raw cotton it is taken to machine called gins. COTTON INSECTS AND DISEASE: In addition to the flowers. These deposits and the succulent stem make the plant attractive to a variety of insert pests. Thailand and Karnataka are the major cotton producing states. chemical and mechanical. The under side of each leaf of the cotton plant contains a small cuplike structure holding nectar. PROCESSING: Raw cotton kappa’s which is picked from fileds contains seed. fumigation of seed. Cotton is shown around May & Jane and harvested around September. maharastra. Hariyana. The use of early maturing strains of cotton plus the application of several comical and control methods have greately reduce loses from boll-weevil infestation the boll worm the pink larva of a small month is beloved to have been a native of India but is now parasitic on cotton all over the world. and dry weather for harvest. including intensive spraying of herbicide before and after planting. to December. plenty of sunshine and water during the period growth. Cotton producing areas in India are spread thought out the country. Quarantine. lygus. have been used to control weeds and grass. and destruction of trash removed from the cotton in ginning arecontrol measures boll-worm tobacco budworm also is one of the most damaging cotton pests in terms of loses and control costs. USA. trips. and red spider are among other scientific pests. China.

.lint. It is in loose from the cotton above lint is pressed and packed in bal from in hydraulic/pneumatic press and taken to mills.

cotton seed is a valuable byproduct. most of which begin with a thread. Linters are used for padding in furniture and automobiles. maturity. Clothing and bedding items are common products. PRODUCTS: . long staple. The hulls. Staple refers to fiber length. or meats. brightness. 2. Fiber length can be classified into three grades i. Color groping indicates the degree of whiteness. are used as feed for cattle. The brae seed is then cracked and the kernel removed. each suitable fro different purposes. lacquers and smokeless power for munitions. Character refers to the diameter. uniformity. for absorbent cotton swabs. Grader refers to color. or husks. 1. an for miniature of many celloulose products such as rayon. provides fatty acids for industrial products also in India cotton seed is directly expelled and cotton seed cake containing oil up to 6% is directly used as a cattle feed. short staple. yarn or cotton fabric. plastics. The seed goes to oil mills. body. 3. COTTON SEED: Once a waste-disposal problem for gains. MARKETING: In determining the value of cotton samples are drawn from random bale and evaluated according to staple. plastics and inulation. cotton comes in many varieties and qualities. Kernels. and smoothness of the fiber. medium staple. are removed from the seed and are used as stuffing for furniture and components of linoleum. where it is deleted of its linters in an operation similar to ginning. strength.e. and character. grade. provide cotton seed oil refining. As linters.USES: Like lumber. and amount of foreign matter. The longlint fibres are used for many thins. The meal that remains after the oil has been extracted is high in protein. The smaller cotton fibers..

Tilled into soil. TOP PRODUCTING COUNTRIES: The majority of the cotton is produced in the cotton belt of the.300. Rope. Increased global production. • COTTONSEED • LINTERS linoleum. Major production areas Fresno.000. Paper. and some groups lobbied for increased price supports. World demand for cotton continued to be erotic. emergence of synthetic as an alternative to cotton textile and improved productivity are mainly contributing for world supply. kings and Merced countries.9 million metric tns annually. World production of cotton in the early 1990s stood at 18. Cotton alone constitute around 60% of the raw material. India. cosmetics. : : : : Blouses. . • • LINT DEBRIS soaapsalad dressing. Towels. Rugs. margarine. bandages and gauze. The leading producers include USA China. Cotton textiles commend a significant share in exports from India it accounts for nearly 22% of the total exports. cotton was produced in 13 California countries from as for north as glen country ands far south as imperial country. Yarn. United States.Cotton is still a principal raw material for the world’s textile industry. But an up word trend began in the 1980s. but its dominant position has been seriously eroded by synthetic fiber. Pakistan and Turkey. its share is around 70%. In the 2004. Cottons shares in world textiles manufacturing is around 45% where as in India. cellophane. Money. compost. ranging along the southern part of the nation from California to Florida and Virginia. shirts. One third of contemporary Indies exports earnings the textile sector. India exported to England alone goods worth $1. COTTON EXPORTS FROM INDIA: As late as 1815. Pants. Planting seed. Sheets.

• 31% of the incastrial production • 7% of GDP.033 (mill sector) Installed capacity .65 Mn spindle 37.702 rotors 1875 36 Mn spindles 3.of mills Ring spinning OE spinning 861 1.of mills Ring spinning OE spinning Looms SSI SECTON No. • 10% of excise revenue.INDIAN TEXTAILE INDUSTRY: • Largest gross and net foreign exchange earner • 31% of the exports earnings with practically no import content.79.579 rotors 1. • Direct employment to nearly 3 crows of people.19. PROFILE OF THE INDIAN TEXTILE INDUSTRY Organization sector No.

60 296.00 165.80 53.50 78.60 Year 1950-51 1960-61 1970-71 1980-81 1990-91 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 .16 159.00 177.80 56.83 173.80 115.00 Consumption (in lakh bales) 42.50 170.00 201.00 177.90 158.76 168.00 275.00 117.00 158.96 194.00 136.00 243.PRODUCTION AND CONSUMPTION DETAILS OF COTTON Production (in lakh bales) 32.00 171.00 206.70 84.36 173.00 140.10 61.01 165.10 67.36 173.00 156.

50 01.00 242.00 230.40 28.00 14.12.25 16.20 68.50 08.95 1.40 02.COTTON CROP FOR 2006-2007 Lakh bales of 170 kg Crop as per CAB Arrivals up to SUPPLY Punjab Haryana Rajasthan Gujarat Maharashtra Madhya Pradesh Andhra Pradesh Karnataka Tamil Nadu Others TOTAL Plus Loose lint All India Dt.00 195.00 7.00 30.50 12.00 33.00 15.07.25 206.25 04.80 .04.00 80.00 11.2006 (1) 21.55 11.00 5.00 46.2007 (2) 19.70 12.40 09.

The international cotton advisory committee estimates that 27 percent of world cotton areas or will be planted to officially approved biotech varieties in 2005-06.Stock • Slow down in U.EXPERTS VIEW ON MARKET (INTERNATIONAL) • Chinese buying • Chinese market strong versus world prices • Oil prices • Polyester prices up • Unfilled nearby international demand • Lower qualities in cert. up from 2 percent in 1996-97. This upsurge in production was due to a combination of great whether and of BT technology’s ability to reduce risks and costs and save Indian cotton producers from the worn invasions that used to frequently destroy their crops. Indian cotton production from 10. a 33 percent increase.6 million bales in 2002-03 to 19 million bales in 2004-05.mill consumption • Higher oil prices could dampen consumer demand • Certificated stocks building • Commodity funds liquidations INDIA COMING ON STRONG IN COTTTON PRODUCTION Cotton producers in India have made huge strides in cotton production. As a result. increasing their average yields from 294 pounds per acre nationally to 391 pounds per acre over the last three seasons. the huge 2004 crop produced 4 million bales of excess supply.S. The great whether was shared across almost the entire planet in 2004 and the yields produced will likely go down in history as a once in a lifetime happening technology’s impact on cotton production in India and around the world is still evolving. . that 27 percent contributes to 36 percent of world production exports.

to around 800. While BT cotton is only produced in hybrid varieties in India. Indian farmers have found that BT cotton has provided consistent yield and fiber quality. The consequence of increasing efficiency in world production could be run of lower prices over the next decade compared with the 70-cent average of the last 30 years. world average yield has climbed from 534 pounds per acre in the 1990s before BT technology to a surprising 652 pounds per acre in 200405. as it could start to export more cotton as their yields increase. Meanwhile india’s imports of raw cotton have decreased from 1. ICAC statistician. the world’s most efficient cotton producers are producing cotton at below 55 cents per pound in several countries. for individual growers. Indian farmers took to the new technology quickly because of increased financial returns. According to a report from the ICAC. Indian farmers have found that BT cotton has provided consistent yield and fiber quality. according to Gerald Estur. . While BT cotton is only produced in hybrid varieties in India.000 bales in 2004-05. and the percentage of BT cotton acres is rising. there is a movement to place the technology in congenital varieties. higher yields can have the effect of lowering breakeven costs. India is a country to keep an eye on. the illegal use of BT cotton seed is decreasing.Mean while. Currently. According to the ICAC. the country could become a big player in world trade very quickly. speaking at the ICAC’s 64th plenary meeting in Liverpool. If their yields keep moving toward the world average. sept 2002.95 millions bales in 200102. It’s sort of a double-edged sword. India is responsible for roughly one fourth of the planted cotton area in the world with about 22 million acres planted to cotton. which makes these farmers competitive at lower prices.

• The Cotton Corporation of India Limited.81 crores during the previous year (i.000 bales in 2004-05.00 lakh bales valuing Rs.e.82 crores in the year 2006-07 as compared to around 1.1218. Maharashtra. followed by co-operatives and the CCI. Of these three groups. Exports of Cotton . for the year 2005-06). Madhya Pradesh. Beside these the Corporation had also carried out commercial operations and purchased 2. Orissa and Karnataka. The government of India announces a minimum support price for each variety of seed cotton (kapas) based on recommendations from the Commission for Agricultural Costs and Prices.95 millions bales in 200102.there is a movement to place the technology in congenital varieties. The Cotton Corporation of India Ltd.108.285.77 lakh bales valuing Rs.71 lakh bales valuing Rs. For the year 2006-07 had purchased 60. etc.. to around 800.30 lakh quintals of kapas equivalent to 11. power. Meanwhile india’s imports of raw cotton have decreased from1..70 crores in Andhra Pradesh. POLICY OF GOVERNMENT OF INDIA TOWARDS COTTON INDUSTRY The cotton production policies in India historically have been oriented toward promoting and supporting the textile industry. Markets for Indian Cotton The three major groups in the cotton market area • Private traders • State-level co-operatives. The Government of India is also providing subsidies to the production inputs of the cotton in the areas of fertilizer. private traders handle more than 70 percent of cottonseed and lint.

Thailand and Turkey.00 lakh bales.700. which were in short supply at around 6 lakh bales inclusive of import of around 2 lkah bales of long staple varieties contracted by mills during April-May 2007. which had resulted in sustained cotton exports. Imports of Cotton Despite good domestic crops. the union Government removed all curbs on cotton exports. In July 2001. like as previous year.000 lakh bales. allocation. . now the exporters are not required to obtain any certificate from the Textile Commissioner on the registration.000 lakh bales in 200506 and the anticipated imports for the year 2006-07 are 550. During the year 2006-07 the prices of Indian cotton early part of the season being lower than the international prices. quality and quantity of export. As a result of these. especially S-6.The main market for Indian cotton export in China. H-4 and Bunny. India imported just 721.Sep 2008. The Cotton Advisory Board estimated an 18-20 percent increase in cotton exports to 65 lakh bales for Oct 2007. For the year 2006-07 the cotton imports into the country had once again remaind limited mainly to Extra Long staple cottons. India exported around 25 per cent cotton during 2006-07 and it is estimated nearly 62 per cent exported to China. 4. The other markets also include Taiwan. had been attractive to foreign buyers and there was good demand for Indian cotton. which are estimated at 55. The imports rose to 1. India is importing cotton because of quality problems or low world prices particularly for processing into exportable products like yarns and fabrics.000 lakh bales in 2004-05.217. as against in Aug 2007 estimate of 58 lakh bales.000 lakh bales of cotton in 2003-04.

Currently.. the oil recovery from cottonseed is around 11%. the country does not import cottonseed oil. China. In addition. United States (60000 tons) is the major exporter of cottonseed oil. However. the demand for other oil meals like soymeal.5 million tons. Pakistan are the major producers of oil. . Gujarat is the major consumer of cotton seed oil in the country.Role of Cotton seed oil in Indian Economy The global production of cottonseed oil in the recent years has been at around 4-4. more particularly groundnut oil. It is also used for the manufacture of vanaspati. Around 2 lakh tons are traded are traded globally every year. has lowered the cottonseed demand globally. The price of cotton seed oil is generally dependent on the price behaviour of other domestically produced oils. It is estimated that. before palm and soyoil became the only imports of the country. United States. Severe associations are promoting the production of decorticated cake in India and the production of this is expected to increase in the country. The major seed producers. Role of cottonseed meal in Indian Economy India produces around 2 million tons of cottonseed meal a year. when Canada is the major importer. In India and average production of cotton oil is around 4 lakh tons a year. viz. India used to import around 30000 tons of crude cottonseed oil. India used to be a major exporter of cottonseed extraction around two decades ago. India. However. In India. the low availability of decorticated meal in India also been a major reason for the fail exports. Cottonseed is a traditional oilseed of India. in India mainly undercorticated meal is largely produced. if scientific processing is carried out the oil production can be increased by another 4 lakh tons.

1. 3. The Cotton Corporation of India Limited The Cotton Corporation of India Ltd. India does not import cottonseed meal.The major importers of Indian cottonseed meal (undecorticated) used to the Thailand. the Corporation is nominated as the Nodal Agency of Governement of India. too three have been no significant exports. . The Organizations dealing with the promotion of Cotton Industry in India The organizations that try to promote the quantity and quality of Cotton in India are. Haryana and Rajasthan in Northern Zone. as an agency in Public Sector. Cotton Advisory Board. for undertaking Price Support Operations. The Cotton corporation of India Ltd. India in 2002-03 exported only 50 tons of decorticated cottonseed meal. Central Institute of Cotton Research. the role and functions of the Corporation were also reviewed and revised from time to time. Corporation was charged with the responsibility of equitable distribution of cotton among the different constituents of the industry and to serve as a vechicle of the canalization of imports of cotton. As per the Policy directives from the Ministry of Textiles. Cotton Association of India. 4. in the initial period of setting up. Operations covers all the cotton growing states in the country comprising of: • Punjab. Was established on 31st July 1970 as a Government Company registered under the Companies Act 1956. The Cotton Corporation of India Ltd. 1. Governement of India in 1985. 2. With the changing cotton scenario. In 2003-04. whenever the prices of kapas (seed cotton) touch the support level.

Karnataka & Tamilnadu in Southern Zone. • Andhra Pradesh. The Cotton Association of India The Cotton Association of India also called as the East India Cotton Association (EICA) was declared as the statutory body by the Bombay Cotton Contract Act on 28th December. 2. Central Institute of Cotton Research With a view of develop a centre of excellence for carrying out long term research on fundamental problems limiting cotton production the Indian Council of Agricultural Research has established the Central Institute for . the cotton trade and the Government. Maharashtra and Madhya Pradesh in Central Zone. of the contracts. and also provides a forum for liaison among the cotton textile mill industry. Cotton Advisory Board The Cotton Advisory Board is a representative body of Government/Growers/Industries/Traders. etc. preserve or disseminate useful information connected with the cotton interests. 4. Its purpose is to • Provide and maintain suitable buildings or rooms. 3. It functions under the Chairmanship of Textile Commissioner with Deputy Textile Commissioner as a Member Secretary. • Acquire. consumption and marketing of cotton. the cotton growers. It advises the Government generally on matters pertaining to production. 1922. • Fix and adopt standards or classification of cotton. • Exchange in the city of Bombay or elsewhere in India. • Provide forms of contracts and regulate the marketing. • Adjust by arbitration or otherwise controversies between persons engaged in the cotton trade.• Gujarat.

Cotton Research at Nagpur in April, 1976, CICR was simultaneously established at Coimbatore to cater to the needs of southern cotton zone. CICR was established at Sirsa in the year 1985, to cater to the needs of northern irrigated cotton zone. All the three research farms are well equipped with tractors and other farm implements and efforts are underway to initiate further developmental work in all the farms. The vision of the CICR is to improve production and quality of Indian Cotton with reduced cost to make cotton production cost effective and competitive in the national and global market. The Mission of CICR is to develop economically viable and ecofriendly production and protection technologies for enhancing quality cotton production by 2-3% every year on a sustainable basis for the next twelve year (till 2020). Future of Cotton Industry in India The Cotton Advisory Board (CAB) has estimated the cotton crop at 3.10 lakh bales for the current season 2007-08. this is a historic high and represents a 11% jump over last year’s crop estimate of 280 lakh bales. The increase in cotton production areas is also expected to increase to 95.30 lakh hectares for the season 2007-08 against 91.42 lakh hectares for the season 2006-07. Cotton Advisory Board expects exports to be higher at 65 lakh bales as against 55 lakh bales in 2006-07. imports in 2007-08 are projected at 6.50 lakh bales as compared to 5.50 lakh bales in 2006-07, because mills have to rely on foreign growths to spin some finer counts of yarn.

It is also estimated that the cotton industry is going to provide 12 million new jobs mainly for the semi-skilled and unskilled labour. Currently, India is responsible for roughly one-fourth of the planted cotton area in the world with about 22 million acres planted to cotton. If their yields keep moving toward the world average, the country could become a big player in world trade very quickly.

COMPANY PROFILE SRI DHANALAKSHMI COTTON & RICE MILLS (P) Ltd established in 1977 in ganapavaram(v). nadendla mandalam Guntur (dt). The company main activity when established was rice milling. Since 1981-82 the company diversified its operation by established cotton, ginning & pressing unit and cotton seed processing plant. In 1984 the company added solvent extraction plant during the year 1990-91. The company constructed power plant near arre palli muppala beside nagarjuna sagar canal. SRI DHANALAKSHMI Group with its diverse interests in core areas is surging ahead with drive and determination with all the companies superbly integrated in one single campus, the group harnesses an entrepreneurial spirit, state-of-art technology and financial strengths to emerge as an industrial force to reckon with. SRI DHANALAKSHMI GROUP is driven by a passion on the best in all the areas it operates. Backed by a high density of advanced technology and sophisticated manufacturing facilities, it’s only natural that the group is leaf fogging for an outstanding future. The total group turnover is around 300 crores per annum. ABOUT THE COMPANY The founder of SRI DHANALAKSHMI GROUP Sadineni Chowdaraiah has drawn its future planned growth. A man whose spirit of Dynamism has helped the group to achieve manifold growth thanks to his pioneering vision, the group’s operation grew and market extended. Today SRI DHANALAKSHMI is a multi-activity group with a Rs.300 crores turnover, comprising 6 divisions with diverse interest in • COTTON • RICE

Relentless pursuit of perfection is the hallmark of this young and dynamic B. His enterprising zeal and cautious planning have been the pivotal points in driving the group toward trailblazing progress. Sri Sadineni Chowdaraiah left in pursuit of a dream. His value oriented strategy and adventurous spirt before fruit consistently. His farmland grew and from a model farmer he evolved into a dynamitic entrepreneur. he ventured to cultivate 100 acres of land. The managing director of SRI DHANALAKSHMI COTTON & RICE MILLS (P) LTD. A future where the best of minds and men will work and will have the most resources to draw upon. the future is rich in possibilities. His rich and professionals experience in the spinning line enabled SRI DHANALAKSHMI’s Spinning Division to scale new heights. and with the tell tale spirte gleaming in his eyes. He proved that success starts with a proactive attitude.Tech Textiles Graduate. Mr. A vigorous confidence that one can effectively integrate ideas with enterprise.• OIL • SPINNING • POWER • TEXTILE A TRADITION OF ENTERPRISE As per back as 1956. THE BIRTH OF A DREAM SRI SADINENI CHOWDARAIAH set up a cotton ginning mill in 1973. With just two bags of grain. the operations grew rapidly to lay solid foundations for giant surging ahead in diverse environments.RAGHAVA RAO is committed to labour welfare and his visionary . This man had set the ball of a 120 crore congolomerate rolling. To the group. It’s vision of the future where change will be embraced as the very basis of opportunity and endeavor. Sadineni’s first trip to RUSSIA gave him the power of conviction to stride boldly into the industrial environment and valiantly into the future.

he is committed to a vision that encompasses everybody’s upliftment. This Division also processes India’s best long staple cotton DCH-32 at Dharwad Branch. COTTON DIVISION The COTTON GINNING & PRESSING UINT was started in 1973. Karnataka.1951 12000 MTs of cotton seed Cotton kapas INSTALLED CAPACITY:392 Mts of seed per day of 24 hours working RAW MATERIAL : FINISHED PRODUCTS: Cotton lint. He is widely acknowledged as the man who has fostered a ‘can do’ culture which starts at top and filters down to every employee at SRI DHANALAKSHMI. The Division maintain 54 Gins and I Hydraulic press with an annualized turnover of Rs. The company firmly believes that unmatched capabilities plus an in-depth knowledge of various cotton growing areas along can put it on the path to speedy growth. Manufacture of cotton i. Cotton Seed Cotton Lint will be supplied to Spinning Mills and Cotton Seed to Oil Mills. he is forever aiming higher. This Division has stayed big thinking and keeping an eye on the details that sustain quality. by Ginning & Pressing Activities. Social service has always been a matter of prime concern to him. OIL DIVISION . The division is poised to excel and is confidently geared to post an impressive growth rate.e.40 crores. While nurturing a corporate culture that encourages individual growth. LICENCE PROCESSING : : Licenced under Industries (D&R) Act. Which is why he perennially strives to provide the best education and undertake multi-pronged schemes towards the betterment of the community. An astute professionals by habit.leadership has earned him a wealth of respect among the employees of SRI DHANALAKSHMI.

A totally Integrated Agro Industry extensively engaged in extracting both Crude Oil and Edible Oil from high quality Cotton Seed Oil is a popular cooking medium thanks to its low tat and nutritional content. up gradation and a shared of commitment. On the other hand. At this division. Expeller (Oil Mill). Poultry and Fish feed which is immensely popular. Sunflower seed. Soyabean SeedRice . Hulls Cottonseed. Oil Division consist of cotton seed processing Plant. the Division was set up in 1981. Indeed. Crude oil finds an immediate industrial application. Refinery and solvent Extraction Plan. Capability on its competence and knowledge of agro industry. The De-oiled Cake is then utilized as cattle. Besides these two core oil extractions. RAW MATERIAL : Branc and Other Seeds FINISHED PRODUCTS: Cotton Extractions. SPINNING DIVISION inters. this outstanding recognition sets an example to all the other oil and extracting industries in the country. Edible Refined Oil. The division has consistently bagged excellence awards for highest Cotton Seed processing and crushing. the Division has also extensively diversified into high quality extractions from a variety of other seeds and beans. The Mill’s capacity of processing Cotton Seed and Cotton Seed Cake has jumped to 80 tones. These awards recognize SRI DHANALAKSHMI’s pursuit of excellence which is achieved through enhanced productivity. quality. Success comes with a fierce will to perform. This philosophy to excel has placed the division on the summit. the De-oiled Cake is further processed in the solvent extraction plant which gives about 3-4% oil.

The unit is enviably well-entrenched as a leading player for the highly competitive export markets ever since 1996. Astute focus on niche markets. By exporting world class cotton yarn globally. Established in 1991. the plant started commercial production or World class yarn to the requirement of global markets as well as indigenous markets. We are running compact yarn with 12000 spindles (suessen). We will achieve 25000 spindles compact yarn shortly. In fact. . The division through a concerted Endeavour assures exemplary quality by undertaking rigid quality control measures which start right at the stage of procuring raw material ingredients down to the last level. uncompromising productivity standards. SRI DHANALAKSHMI’s magnificent obsession with exports has won for it important international markets. prompt delivery schedules combined with competitive pricing have resulted in higher sales and profits. Conceived in a sprawling area in the midst of rich cotton fields of GUNTUR District. It is the dedicated quality consciousness that as paved the way for a phenomenal demand for SRI DHANALAKSHMI products. the mill is leap fogging for the further growth. the division is on its way to dizzy heights on the cotton horizon. We are having a capacity of 63. COUNT RANGE: We are running from 50 to 100 counts in single as well as double (TFO) yarms. The thrust on higher capacity utilization. the products of SRI DHANALAKSHMI have won widespread appreciation and repat orders. over 70% of the produce was exported major European countries.600 spindles. The impressive performance reflects SRI DHANALAKSHMI’s commitment to continue machine modernization. All this translates into utmost customer satisfaction.The SRI DHANAKSHMI SPINNING MILLS DIVISION has been a trend setter ever since its commissioning. In recognition of its excellent quality conforming to the highest international standards. quality management.

Total plant planned for 98 Looms. A nere 40 kms away from the company’s factories at Ganapavaram.RAW METERIAL : Cotton lint FINSHED PRODUCT: Cotton Yarn RICE DIVISION The division conduct Rice Milling Activities PARA BOILED RICE MILL: Milling of 480 Qtls of paddy per day of 24 hrs working. RICE MILL : Milling of 480 Qtls of paddy per day of 24 hrs working. Reason why SRI DHANALAKSHMI is fully geared to meet any emerging . Only those with all the answers will emergency victorious. Presently we are running with 60 Brand New Looms. RAW MATERIAL : Paddy FINISHED PRODUCTS : Rice. POWER DIVISION The future is a limitless expanse of challenges waiting for the strongest to step in and conquer. In phased manner we are expanding the Looms capacity. The power project will not only serve as a major boost to the company but will meet the ever growing captive consumption needs. dynamic and growth oriented Group has naturally moved into the core sector-power. We have sucker Wrapping and sizing. In the wake of fast resources and an increasing drive for selfreliance SRI DHANALAKSHMI GROUP realizes the alarming global concern. Bran TEXTILE DIVISION The Division was started in 2005. To SRI DHANALAKSHMI. To reach the goal of self reliance. The Units equipped with modern imported machinery. the progressive. reliability is an acronym missionary self-confidence.

FIXED ASSETS: Fixed assets are stated at cost less accumulated depreciation.W. we have to give back an environment that is conductive to healthy living. The group is an eco-friendly entity whose concern is preservation of life and environment. Mini Hydel Power Station (3 Stations of 2 M. SRI DHANALAKSHMI is standing shoulder to shoulder with all those corporate bigwigs who lead the industry in self-reliance. moisture and temperature are constantly monitored to ensure top most safety. humidity.each) ENVIRONMENTAL PRIORITY We believe that environmental protection requires attitude. STATEMENT OF ACCOUTING POLICIES GENERAL: The accounting are prepared on historical cost convention and in accordance with normally accepted accounting principles. Cost of acquisition of fixed assets is inclusive of directly attributable cost of bringing the assets to their working condition for the intended use and interest on borrowings till the date of commissioning of the assets. And. The division does not release any toxic wastes and pollutants.power need. SRI DHANALAKSHMI is harnessing its technology resources and inherent strengths to gain the competitive edge. across every unit of the group. CENVAT/VAT credit PROTECTION AND SAFETY – A TOP .W. The very fact that we have made wearing of masks mandatory for the personnel bears amp witness to our commitment to industrial safety. The environmental protection commitment of the company firmly believes that when we use the bounties of mother earth. action and right application of technology. PRODUCING 6M.

• Electronic power at net releasable valve EXCISE DUTY: Liability on finished goods is accounted for as and when goods are cleared from factory and there is no liability on closing stock of finished goods at the year end. SALES: Sales are exclusive of sales tax collections due to implementation of AO VAT Act 2005. • Raw-Material and Finished goods at cost or net realizable valve whichever is lower. • Stores and spares at cost. Power and Textile Divisions. • Under written down valve method on the assets of all other divisions of the company. INVENTORIES: Valuation of inventories is made as follows. on fixed assets is not included in the cost of such fixed assets capitalized. • Work-in-Progress at cost inclusive of direct production overheads. INVESTMENTS: Long-Term investments are valued at cost price less provision for diminution on account other than temporary decline in the valve of investment. . if any.availed. DEPRECIATION: Depreciation is a written off in accordance with the provisions of schedule XIV of the companies Act 1956 as follows: • Under straights-Line Method in respect of the assets of Spinning.

Inter-segment Revenue has been accounted for based on the market related prices. being the difference between the taxable income and accounting income the orginate in one period and are capable of revesal in one or more subsequent periods. Revenue and Expenses other than interest have been identified to segments on the basis of their relationship to the operating activities of the segment Revenue and expense which related to the enterprise as a whole and are not allocable to segments on a reasonable basis have been included under “Unallocated” head. The company has taken Group Gradually (Cash Accumulation) scheme with Life Insurance Corporation of India. In case of power division which eligible for tax Holiday. subject to the consideration of timing differences. SEGMENT REPORTING: The accounting policies adopted for segment reporting are in line with the accounting policies of the company with the following additional policies for segment reporting.TAXES ON INCOME: Current taxes is determined as per the provisions of Income Tax Act 1961 in respect of taxable income for the year ended 31st march.I. and are charged against the revenue. The premium on policy and the difference between the amount of gratutity paid retirement and recovered from the Life Insurance .C. 2007. Deferred Tax Asset/liabilities for timing differences which reverse after the Tax Holiday period are recognized. RETIREMENT BENEFITS: The Company makes regular monthly contribution to provident fund which are deposited with the Government and Group term Insurance is routed through L. Deffered tax liability is recognized.

IMPAIRMENT OF ASSETS: At the date of each balance sheet the company evaluate internally.16 lacs by export through merchant / trade house of its finished goods the company has pent Rs.58. Pending approval of the shareholders at the annual General Meeting. FOREIGN EXCHANGE EARNINGS AND OUTGO: The company has earned foreign exchange of Rs.725. FOREIGN CURRENCY TRANSACTIONS: • Import of material / capital Equipment are accounted at the rates at which actual payments are effected. Leave encashment is accounted as and when the employees claimed and paid. No impairment loss has been recognized. indications of the impairment if any. PROPOSED DIVIDEDND: Provision is made in the account for the dividend payable (including of all tax thereon) by the company as recommended by the Board of Directors.72 lacs of its finished goods and Rs.Corporation of India debited to profit and Loss Account. but are disclosed after a careful evaluation of the concerned facts and legal issues involved.95 lacs of foreign exchange . • Foreign Currency loans covered by forward contracts are stated at the forward contracts rates while those not covered are calculated at year end rate. 1493. To carrying amount of its fixed and other assets. • The profit / Loss arising out of foreign Exchange transactions are sale of goods are accounted on actual realization basis. CONTIGENT LIABILITIES: Contingent Liabilities are not recognized in the accounts.

commission & traveling.90 lacs towards freight. Rs. .11.18 lacs towards import of components & spare parts. 5. Rs.02 lacs towards interest on foreign currency loan and Rs.towards import of raw-material.1166.37 lacs towards import of capital goods including advance paid.4. Rs.

Cotton Linters 2.48 17548.25 2260.63 15772. Cotton Seed 2.74 Domestic Sales 11562. Other seeds 1.02 17406. Cotton Lint Finished Goods 1.46 19625. Cotton Seed 1. Sunflower Seed 3. Rice Bran Rice Division Spinning Division 5.85 Exports 4650.77 15604.82 13391. Bran 1. Soyabean seed 4.73 10502. Paddy 1.71 1944.88 .44 2218.4: Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Sales Turnover 16213. Cotton Kappas 1.42 3852. Rice 2. Cotton Lint 2. Hulls 4.58 17644.38 13511. Edible Oil 3.76 4252. Extractions 1.3: Raw Material 1. Cotton Yarn Refined Cotton Division Oil Division Commercial Performance Table 3.Raw Material & Finished goods: Table 3.15 14354.

P. 1991-92-Stood first in India in domestic sales of cotton seed Extraction. 1989-90: 1989-90-Stood first in India in scientific processing of cotton seed. 1990-91: 1990-91-Stood first in India in scientific processing of cotton seed. 1990-91-Stood first in India in domestic sales of cotton seed Extraction. 1992-93-Stood first in India in domestic sales of cotton seed Extraction. 1988-99-Stood first in Indian in Scientific processing of cotton seed. 1989-90-Stood first in India in domestic sales of cotton seed Extraction. 1991-92: 1991-92-Stood first in India in scientific processing of cotton seed. . 1989-90-Stood first in India in Export sales of cotton seed Extraction. 1993-94-Stood first in India in domestic sales of cotton seed Extraction. 1993-94: 1993-94-Stood first in India in scientific processing of cotton seed.ACHIEVEMENTS & AWARDS 1987-89: 1988-Best Exporter Award from Govt of A. 1988-99-Stood first in India in domestic sales of cotton seed Extraction. 1990-91-Stood first in India in Export sales of cotton seed Extraction. 1992-93: 1992-93-Stood first in India in scientific processing of cotton seed. 1992-93-Stood first in India in Export sales of cotton seed Extraction.

1997-98: 1997-98-Stood first in India in scientific processing of cotton seed. 2001-02: 2001-02-Stood first in India in scientific processing of cotton seed. 1995-96: 1995-96-Stood first in India in scientific processing of cotton seed. 1995-96-Stood first in India in domestic sales of cotton seed Extraction. 1996-97-Stood first in India in domestic sales of cotton seed Extraction. 1998-99-Stood first in India in domestic sales of cotton seed Extraction.1994-95: 1994-95-Stood first in India in scientific processing of cotton seed. 1999-00-Stood first in India in domestic sales of cotton seed Extraction. . 1997-98-Stood first in India in domestic sales of cotton seed Extraction. 1999-00: 1999-00-Stood first in India in scientific processing of cotton seed. 2000-01-Stood first in India in domestic sales of cotton seed Extraction. 1998-99: 1998-99-Stood first in India in scientific processing of cotton seed. 2000-01: 2000-01-Stood first in India in scientific processing of cotton seed. 1994-95-Stood first in India in domestic sales of cotton seed Extraction. 2001-02-Stood first in India in domestic sales of cotton seed Extraction. 1996-97: 1996-97-Stood first in India in scientific processing of cotton seed.

2005-06: 2005-06-Stood first in India in scientific processing of cotton seed.DIRECTOR& SECRETARY. 2002-03-Stood first in India in domestic sales of cotton seed Extraction. B.B.P.N.S.PV.NARAYANAACA.M. BOARD OF DIRECTORS  SRI. 2006-07-Stood first in India in domestic sales of cotton seed Extraction.LINGAIAH.E.Com-DIRECTOR  SRI. B.ACS.M. 2006-07: 2006-07-Stood first in India in scientific processing of cotton seed. 2005-06-Stood first in India in domestic sales of cotton seed Extraction. 2004-05-Stood first in India in domestic sales of cotton seed Extraction. 2003-04-Stood first in India in domestic sales of cotton seed Extraction. 2003-04: 2003-04-Stood first in India in scientific processing of cotton seed.A.RAGHAVA REDDY. MAN POWER IN DHANALAKSHMI GROUP: Oil Division Cotton Division 300 54 .M.HANUMANTHA RAO.RAGHAVA RAO.B.B.Electronics-DIRECTOR  SRI. 2004-05: 2004-05-Stood first in India in scientific processing of cotton seed.A CHAIRMAN&MD  SRI.-M.Sc-DIRECTOR  SRI.E.2002-03: 2002-03-Stood first in India in scientific processing of cotton seed.

we are hopeful of improved performance in 2007-08 despite the difficulties posed. • Thus. • In view of this. • Power division shall perform well in the current year also. . company has to grapple with an industrial scenario that calls for alert and caution. Company has acquired 48 looms under first phase of project implementation for textile division.Spinning Division Textile Division Rice Division Power Division FUTURE OUTLOOK: 250 100 30 46 Operations on consolidated basis continue to pose healthy trends. changes in the industrial trends are bound to influence spinning operations. • Oil division is showing immense potential to reach higher levels in all spheres of operations. Textile operations have come out of teething problem but have to reach estimated levels in operations and profits. This shall take some more time in view of dip in dollar valuation and decline in exports. However.

He has helped translate many dreams into glorious realities. . affiliated to CBSE. • SRI SADINENI CHOWDARAIAH Residential Public School. • The Navodaya Vidyalaya in Maddirala Village. He has launched diverse community development programmers in educational. He started the professionally oriented “SRI SADINENI CHOWDARAIAH SCIENCE&ARTS COLLEGE”. has so far accomplished 12 outstanding batches of student who have secured 100% 1st class. has been constructed on 30 acres of prime land donated by him. • This college is special in the sense that it offers a range of vocational and specialized courses which are aimed at self-employment for youth. Chilakaluripet. The founder. A philanthropist by virtue he is blessed with a helping hand. healthcare and communication areas. Government of India.W. He has setup many schools and colleges in and around Chilakaluripet. Guntur. SRI DHANALAKSHMI is standing shoulder to shoulder with all those corporate bigwigs who lead the industry in self-reliance. is a man of core value and a deep rooted willingness to reach out to the deprived and less fortune. The site is adjacent to his Degree College which is run by Ministry of Human Resources. Affiliated to Acharya Nagarjuna University at Maddirala Village to import high quality education.SRI DHANALAKSHMI is harnessing its technology resources and inherent strengths to gain the competitive edge.W each) Other Services SRI SADINENI CHOWDARAIAH. He has commitment lies SRI SADINENI CHOWDARAIAH EDUCATIONAL TRUST.Mini Hydel Power Stations (3Stations of 2M. Production 6M.

Bankers • UNION BANK OF INDIA.Sc-DIRECTOR • SRI.m. BOARD OF DIRECTORS • SRI.E.N.E. EPURU MANDAL.RAGHAVA REDDY. ACS-DIRECTOR & SECRETARY.P.-CHAIRMAN & MD • SRI.MASTANAIAH CHARTED ACCOUNTANT GUNTUR. B. GUNTUR DISTRICT. LAKSHMIPURAM. Registered Office & Factory  GANAPAVARAM VIA. B.B.CHILAKURIPETA.• He has donated 2 acre of land at Chilakaluripet towards the construction of a Health & Recreation Club • A new: Junior College is being built near the power project at Muppalla.. .RAGAVA RAO.Com-DIRECTOR • SRI.LINGAIAH. PIN-522 619.M. GUNTUR. Auditors  M/S.S.VA PV. Hydel Power Plant  A. Electronics – DIRECTOR • SRI. ANDHRA PRADESH. GUNTUR • STATE BANK OF INDIA. COMMERCIAL.HANUMANTHA RAO.NARAYANA ACA.MUPPALLA.

GUNTUR DISTRICT. CHILAKALURIPETA MANDAL. Fixed Assets Fixed assets are stated at cost less accumulated depreciation. Textile Division  BOPPUDI VILLAGE. PIN-522 661. ANDHRA PRADESH. CENVAT/VAT credit availed. If any. Power and Textile Divisions. Cost of acquisition of fixed assets is inclusive of directly attributable cost of bringing the assets to their working condition for the intended use and interest on borrowings till the date of commissioning of the assets. Statement of Accounting Policies General The accountings are prepared on historical cost convention and in accordance with normally accepted Accounting Principles. of fixed assets is not included in the cost of such fixed assets capitalized. GUNTUR DISTRICT. . Investments Long-Term investments are valued at cost price less provision for diminution on account other than temporary decline in the value of investment Depreciation Depreciation is a written off in accordance with the provisions of schedule XIV of the companies Act 1956 as follows: • Under Straight Line Method in respect of the assets of Spinning. PIN-522 616.

differed tax liability is recognized.• Under Written down value method on the assets of all other divisions of the company. Sales Sales are exclusive of sales tax collections due to implementation of AP VAT Act 2005. • Stores and spares at cost. • Work-in-Progress at cost inclusive of direct production overheads. Segment Reporting . subject to the consideration of timing differences. Taxes on Income Current taxes is determined as per the provisions of income Tax Act 1961 in respect of taxable income for the year ended 31st march. • Electronic power at net releasable value Excise Duty Liability on finished goods is accounted for as and when goods are cleared from factory and there is no liability on closing stock of finshed goods at the year end. being the difference between the taxable income and accounting income the originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Asset/Liabilities for timing differences which reverse after the Tax Holiday period are recognized. Inventories Valuation of inventories is made as follows: • Raw-Material and Finished goods at cost or net realizable value whichever is lower. In case of power division which eligible for tax Holiday. 2007.

Retirement Benefits The Company makes regular monthly contribution to provident fund which are deposited with the Government and Group term insurance is routed through L. Revenue and expense which related to the enterprise and a whole and are not allocable to segments on a reasonable basis have been included under “Unallocated” head. The premium on policy and the difference between the amount of gratuity pain on retirement and recovered from the Life Insurance Corporation of India debited to profit and Loss Account.I.C of India. Inter-segment Revenue has been accounted for based on the market related prices. Leave encashment is accounted as and when the employees claimed and paid.C. The company has taken Group Gradually (Cash Accumulation) scheme with L. . Foreign Currency Transactions • Import of material / capital Equipment is accounted at the rates at which actual payments are effected. • The profit / loss arising out of foreign Exchange transactions on sale of goods are accounted on actual realization basis. Pending approval of the shareholders at the annual General Meeting.The accounting policies adopted for segment reporting are in line with the accounting policies of the company with the following additional policies for segment reporting.I. Proposed Dividend Provision is made in the account for the dividend payable (including of all tax thereon) by the company as recommended by the Board of Directors. and are charged against the revenue. Revenue and Expenses other than interest have been identified to segments on the basis of their relationship to the operating activities of the segment.

• Foreign Currency loans covered by forward contracts are stated at the forward contracts rates while those not covered are calculated at year end rate.72 lacs of its finished goods and Rs.90 lacs towards freight.16 lacs by export through merchant / trade house of its finished goods. Rs. Impairment of Assets At the date of each balance sheet the company evaluates internally. .5.1493.725.4. No impairment loss has been recognized.11. commission & traveling. indications of the impairment if any.95 lacs of foreign exchange towards import of raw-material. Contingent liabilities Contingent Liabilities are not recognized in the accounts.18 lacs towards import of component spare parts. Rs. to carrying amount of its fixed and other assets. Foreign Exchange Earnings and Outgo The company has earned foreign exchange of Rs.02 lacs towards interest on foreign currency loan and Rs.58.1166. company has spent Rs. Rs. but are disclosed after a careful evaluation of the concerned facts and legal issues involved.37 lacs towards import of capital goods including advances paid.

Other seeds 2.76 4252. Cotton Seed 5. Cotton Seed 7.25 2260.48 17548. Rice Bran Rice Division Spinning Division 10. Paddy 2.42 3852.82 13391.02 17406.73 10502.1: Raw Material 2. Cotton Lint 4.88 .77 15604. Cotton Yarn Refined Cotton Division Oil Division Commercial Performance Table 2.63 15772. Cotton Lint Finished Goods 3.2: Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Sales Turnover 16213.71 1944.38 13511.74 Domestic Sales 11562.Raw Material & Finished goods: Table 2. Soyabean seed 9.15 14354.44 2218. Cotton Kappas 6.46 19625.85 Exports 4650. Cotton Linters 6.58 17644. Rice 4. Sunflower Seed 8. Extractions 3. Hulls 8. Bran 2. Edible Oil 7.

What the ratio do is that they reveal the relationship in a more meaningful way so as to enable us to draw conclusions from them. It is defined as the systematic use of ratio to interpret the financial statements so that the strengths and weaknesses of a firm as well as its historical performance and current financial condition can be determined. ratio developed using the projected or preformed. . i. i. enables analysis to draw quantitative answers to questions such as : Are the assets being used efficiently? Is the firm solvent? Are the next profit adequate? Can the firm meet its current obligations and so on? Ratio’s help summarize large quantities of financial data and to make qualitative Judgment about the firm’s financial performance. financial statements of the same firm. It should be compared with some standard. at the same point of time..RATIO ANALYSIS Ratio analysis is a widely used tool of financial analysis. as a quantitative tool. Standard of comparison may consist of:  Past Ratios.  Industry Ratios. ratios calculated from past financial statements of the same firm. ratio of the industry to which the firm belongs.e. Liquidity ratio measure the firm’s ability to meet current obligations.e.e. and  Project Rations.e. thus. ratios of some selected firms. Ratio analysis. A single ratio in it self does not indicate favourable or unfavorable condition. especially the most progressive and successful competitor.  Competitor’s ratios. i. i. Standards of comparison: The ratio analysis involves comparison for a useful interpretation of the financial statements.

A ratio is calculated by dividing one item of the relationship with the other. ratios. Fraction and 3. as tool of financial management. The use of ratios. are: I. Activity Ratios reflected the firm’s efficiency in utilizing its assets. unlike the absolute figures. Quick ratio. which indicate the extent of liquidity or lack of it. . In other words. involves their comparison as single ratio. Current ratio and II. can be expressed as 1. Liquidity ratios: The most common ratios. Meaning of Ratio Analysis: The term ratio refers to the numerical or quantitative relationship between two items variable. other ratios include cash ratio.Leverage Ratios show the proportion of debt and equity in financing the firm’s assets. Proportion of numbers The ratio reveal the relationship in a more meaningful way so as to enable us to draw conclusions from them. Percentage 2. Interval measures and networking capital ratio. as a tool of financial management. which fails to reveal the position. and Profitability Ratios measure over all performance and effectiveness of the firm.

. Trend ratios. Ratio helps to summaries large quantities of financial data and to make quantitative judgment about the firm’s financial performances. Comparison with related facts is. comparison of the ratios of the same firm over time. i. Inter-firm comparison 3. . Comparison with standards or plans. 2. Creditors who are concerned primarily with liquidity and ability to pay interest a redeem loan with a specified period. present ratio are compared with past ratio for the same firm. The persons interested in the analysis if financial statements can be grouped under three heads owners. Investor who are desire primarily a basis for estimating earning capacity. therefore. 4. The relationship between two accounting figures. Trend ratios indicated the direction of change in the performance – improvement or deterioration or constancy over the year. ie. A ratio is used as benchmark for evaluating the financial position and performance of the firm. Four types of comparison are involved. 2.Ratio analysis The ratio analysis converts figures into meaningful comparison forms and removes the difficulty of drawing inferences on the basis of absolute figures. Expressed mathematically are known as financial ratio. NATURE OF RATIO ANALYSIS Ratio analysis is a powerful tool of financial analysis. Trend ratios involve a comparison of ratios of an over time. the basis of ratio analysis. 1.e. A ratio is defined as “the indicated quotient of mathematical expression” and as “the relationship between two or more things”. Comparison of items with in a single years financial statement of a firm. 1.

The ability of the firm to meet its current and future obligations. The overall operating efficiency and performance of the firm. liquidity and profitability with a view to make intelligent decisions. The extent to which the firm has used its long-term solvency by borrowing funds. 4. It helps to analysis the probable casual relation among different items after analysis and scrutinizing the past result. 4. 2. 4. one can determine: 1.3. As stated in the beginning. 3. It helps to take time dimension into account by trend analysis 9 times analysis. ADVANTAGE OF RATIO ANALYSIS 1. Then helps the management to prepare budgets. To measures taxes paid in terms of revenues or profits earned by the companies. and growth of the firm. many diverse groups of people are interested in analysis the financial information to indicate the operating and financial efficiency. It throws light on the degree of efficiency of management and utilization of the assets (and called survey or of efficiency) 5. to formulate policy and to prepare the future plan of action and thus helps as a guide to org among different items for preparing budgets. UTILITY OF RATIO ANALYSIS The ratio analysis is the most powerful tool of the financial analysis. With the help of ratio’s. These people use ratios to determine those financial characteristic of the firm in which they are interested. 2. Management is interested in evolving analytical tools that will measure costs. The efficiency with which firm is utilizing its assets in generating revenue. 3. efficiency. It helps to make inter firm comparison (cross-sectional analysis) .

b. 7. Ratio are calculated join the basis of past result which may not be suited to implement to the present business policies. c. The figures are window dressed. A firm should ensure that it odes not suffer from lack of liquidity and that it does not have excess liquidity. Quick Ratio . Ratio analysis become more meaningful and significant if trend analsysi (i.e. or charging different methods of depreciation of fixed assets etc. Comparison of current or past ratio with future ratio shows the firm’s relative strengths & weaknesses in the past and the future. TYPES OF RATIO ANALYSIS A) LIQUIDITY RATIOS: Liquidity ratios measure the ability of the firm to meet us obligations. Ratio depends on the figure of the financial statements. Ideal assets earn nothing. LIMITATIONS OF RATIO ANALYSIS a. Ratio analysis can serve.e. But in most cases.6. 1. Comparison between two variables prove worth provided their basis of valuation is identical. Liquidity ratios help in establishing a relationship between cash and other current assets. as a better tool for measurement of the financial health of an enterprise than is possible by the analysis of absolute figures. A very high degree of liquidity is also bad.) the analysis over a number of year) is possible. It is difficult all the time. Current Ratio 2. also be measured by the application of leverage and profitability ratios. d. But in reality it is not possible such as methods of valuation of stock-in-trade. to current obligations to provide a quick measure of liquidity. Therefore it is necessary to strike a proper balance between high liquidity. Short-term liquidity position can be measured i. The firms funds will be unnecessarily tied up in current assets. But in practice.

Activity ratios help to judge the effectiveness of assets utilization. The process of magnifying the shareholders return through the use of debt is called “financial leverage” or “financial gearing” or “trading on equity”. 1. Financial leverage or capital structure. and ratios are calculated. Debt Ratio 2. . Equity Ratio 3. These should be an appropriate mix of debt and owners equity in financing the firm’s assets. financial institutions are more concerned with the firms long-terms financial strength. A proper balance between sales and assets generally reflects that assets are managed well. Cash or super Quick Ratio 4. Leverage ratios are calculated to measures the financial risk and the firm’s ability of using debt to share holders advantage. Activity ratios thus involves a relationship between sales and assets. Debt – Equity Ratio 4. To judge the long-term financial position of the firm. These ratios are also called turnover ratios. Because they indicate the speed with which assets are being converted or turned over into sales. Total Liabilities Ratio ACTIVITY RATIOS: Activity ratios are employed to evaluate the efficiency with which the firms managers and utilizes its assets. Net working Capital Ratio B) LEVERAGE RATIOS: The short-term creditors like bankers and suppliers of raw material are more concerned with the firm’s current debt paying ability. On the other hand long-term creditors like.3. debenture holders.

Return on equity . Return on investment 2. creditors wants to get interest and repayment of principal regularly. Besides management of the company creditors and owners are also interested in the profitability of the firm. Inventory Turnover Ratio 2. Profits are the different between revenues and expenses over a period of time. Profitability ratios are calculated to measure the operating efficiency of the company. Profits are essential but it would be wrong to assume that every action initiated by the management of accompany should be aimed at maximizing profits.1. Debt Turnover Ratio 5. Profitability in relation sales 1. Raw material Inventory Turnover Ratio 3. Operating expenses ratio Profitability in relation to investment 1. Fixed assets Turnover Ratio 8. Working capital Ratio C)PROFITABILITY RATIOS: A company should earn profits to survive and grow over along period of time. Generally two major types of profitability ratios are calculated. Gross profit margin 2. Worn-in-progress inventory Turnover Ratio 4. Total assets turnover Ratio 6. Net profit margin 3. Net assets Turnover Ratio 7.

3. Earnings per share LIQUIDITY RATIOS: Current Ratio The current ratios is an acceptable measure of the firm’s short-term solvency. Current assets include cash within a year such as marketable securities, debtors and inventories. Pre-paid expenses are also included in current assets as they represent the payments that will not be made by the firm in the future. All obligation maturing within year are included in current liabilities. Current liabilities include creditors. Bills payable. Accrued expenses, short term bank loan, income tax liability and long term debt maturing in the current year. The current ratio is measure of the firm’s short-term solvency. It indicates the availability of current assets in rupees for every one rupee of current liability. A current ratio of 2:1 is considered satisfactory. The higher the current ratios. The great the margin of the safety the larger the amount of current assets in relation to current liabilities, the more the form’s ability to meet its obligations. It is a crude-and-quick measure of the firm’s liquidity. Current ratio is calculated by dividing current assets and current liabilities.
Currentass erts CurrentLia bilities

Current Asserts =

2 QUICK RATIO: Quick ratio establishes a relationship between quick, or liquid, assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon with out a loss of value. Cash is mot liquid assets, other assets that are considered to be relatively liquid assets, other assets that are considered to be relatively liquid and included in quick asserts are

debtors and bills receivables and marketable securities. Inventors are considered to be less liquid. Inventories normally require sometime for realizing into cash their value also has a tendency to fluctuate. The quick ratios in found out by diving quick asserts by current liabilities.
Current − inventorsi es CurrentLia bilities

Quick Ratios =

Generally quick ratio. A company with high value of quick ratio can suffer from the shortage of funds if it has slow-paying doubtful and long duration outstanding debtors. Low quick ratios may really be prospering and paying its current obligation in time. 3 CASH RATIO: Since cash is the most liquid assets. A financial analyst may examine cash ratio and its equivalent current liabilities. Trade investment or marketable securities are equivalent of cash. Therefore they may be included in the computation of cash ratio. If the company carries a small amount of cash there is nothing to be worried about the lack of cash if the company has reserves borrowing power. In India, firms have credit limits sanctioned from banks and easily draw cash. Cash ratio is calculated as cash and marketable securities divided by current liabilities.
Cas + marketable Securities CurrentLia bilities

Cash Ratio =

Cash + Marketable Securities

4 NETWORKING CAPITAL RATIO: The difference between the current assets and current liabilities excluding short-term bank borrowings is called net working capital or net current asserts.
NetWorking Capital NetAssets

Net Working Capital Ratio =

Some times it is used to measure firm liquidty if the firm is having NWC has the greater ability to meet its current obligations. B) LEVERAGE RATIOS DEBT RATIO: Several debt ratios many be used to analyze the long-term solvency of a firm. The firm may be interested in knowing the proportion of the interestbearing debt in the capital structure. It may therefore, computer debt ratio by dividing total debt by capital employed or nets assets. Total debt will include short and long-term borrowing from financial institutions, debentures bonds, referred payment arrangement for buying capital equipment. Bank borrowing public deposits and any other interest-bearing loan. Capital employed will include total debt and net worth.
Tataldebt Totaldebt + NetWorth

Debt Ratio =

A high ratio means that claims of creditors are greater than those of owner. A higher level of debt introduces inflexibility in the firms operations due to the increasing interference and pressure from creditors. DEBT EQUITY RATIO: Debt equity ratio indicates the relationship describing the lenders contribution for each rupee of the owner’s contribution is called debt equity

1. Material consumed can be found out as operating balance of raw material plus purchase minus closing balance of raw material. Activity ratios help to judge the effectiveness of assets utilization. Lower the debt equity higher the degree of protection. These ratios are also called turnover ratios because they indicate the speed with which assets are being converted or turnover over into sales.ratio. A debt equity ratio of 1:2 is considered ideal. Raw material inventory is related to materials consumed. . It is calculated by dividing the cost of goods sold by the average inventory. A proper balance between sales and assets generally reflects that assets are managed well. Inventory Turnover Ratio = cos t of goods sold A verage inventory Average Inventory = Openinginv enty − clo sin ginventory 2 2 RAW MATERIAL INVENTORY TURNOVER RATIO Ratio material inventory turnover ratio indicates the efficiency with which the firm converts raw material into work-in-process and work-in-process into finished goods. INVENTORY TURNOVER RATIO Inventory turnover ratio indicates the efficiency of the firm in producing and selling its product. Debt equity ratio is directly computed by dividing total debt by net worth. Activity ratios thus involve a relationship between sales and assets. TotalDebt NewWorth Debt Equity Ratio = C) ACTIVITY RATIOS: Activity ratio are employed to evaluate the efficiency with which the firm manages and utilize its assets.

The work-inprocess should be related to cost of production. When the firm extends credits to its customer. Sales NetAssets Net Assets Turnover Ratio = . The higher the value of debtor’s turnover. CreditSale s AverageDeb tors Debtors Turnover Ratio = 5. Costof Pr oduction AverageWor k − in − process Work-In-Process Inventory Turnover Ratio : 4. the more efficient is the management credit.Raw Material Inventory Turnover Ratio = MaterialCo nsumed AverageRaw Material 3 WORK-IN-PROCESS INVENTORY TURNOVER RATIO Work-in-process inventory turnover ratio indicates the efficiency with which the firm converts work-in-process into finished goods. DEBTORS TURNOVER RATIO A firm sells goods for cash and credit. A firm’s ability to produce a large volume of sales for a given amount of net assets is the most important aspects of its operating performance. Debtor’s turnover is found out by dividing credit sales by average debtors. NET ASSETS TURNOVER RATIO Assets are used to generate sales therefore a firm should manage its assts is called assets turnover. Cost of production is determined as material consume plus other manufacturing expenses plus opening balance minus closing balance of work-in-process. Credit is used as marketing tool by a number of companies. debtors are created in the firm’s account debtor’s turnover indicates the number of times debtor’s turnover each year.

Creditors want to get interest and repayment of principle regularly. . Profitability ratios are calculated to measures the operating efficiency of the company. Besides management of the company. Profits are essential but it would be wrong to assume that every action initiated by management of a company should be aimed at maximizing profits. TOTAL ASSETS TURNOVER RATIO Some analyses like to compute the total assets turnover in addition to or instead of the net assets turnover.6. Profit is the difference between revenues and expenses over a period of time. This ratio shows the firm’s ability in generating sales from all financial resources committed to total assets. Working capital turnover indicates for one rupee of sales the company needs how many net current assets. Generally.WORKING CAPITAL TURNOVER RATIO A firm may also like to relate net current assets or net working capital to sales. two major types of profitability ratios are calculated. creditors and owners are also interested in the profitability of the firm.PROFITABILITY RATIO A Company should earn profits to survive and grow over long period of time. Total Assets Turnover Ratio = Sales TotalAsset s 7. • Profitability in relation to investment. • Profitability in relation to sales. Sales NetCurrent Assets Working Capital Turnover Ratio = D. This ratio indicates whether or not working capital has been effectively utilized in market sales.

Higher sales prices cost of goods sold remaining constant. interest and taxes are subtracted from the gross profit. resulting in higher cost of production or due to fall in prices in the market. or over investment in plant and machinery. obtain the ratio of cost of goods sold to sales. A low gross profit margin may reflect higher cost of good sold due to firm’s inability to purchase raw materials at favorable term’s inefficient utilization of plant and machinery. This ratio indicates the average spared between the cost of goods sold and the sales revenue. Net profit margin ratio established a relationship between net profit and sales and indicates management’s efficiency in manufacturing administrating and selling the products. we. A high gross profit margin ratio is a sign of good management. Net Profit Margin = Pr ofitafterT ax Sales . sold. Sales − cos tofgoodsso ld Sales Gross Profit Margin = 2. A gross margin ratio may increase due to any of the following factors. This ratio is the overall measures of the firm’s ability to turn each rupee sales into net profit.NET PROFIT MARGIN Net profit is obtained when operating expenses.GROSS PROFIT MARGIN The first profitability ratio in relation to sales is the gross profit margin the gross profit margin reflects the efficiency with which management produces each unit of product. lower cost of goods. sales price remaining constant.1. This ratio also indicates the firm’s capacity to withstand adverse economic condition. A firm with a high net ratio would be in an advantageous position to survive in the face of falling prices. When we subtract the gross profit margin form 10 percent. rising.

3. capital employed us equal to net worth plus total debt. dividends. A higher operating expenses ratio is unfavorable since it will leave a small amount of operating income meet interest. The fund employed in net assets is known as capital employed investment represent pool of funds supplied by shareholders and lenders. Where ROTA and RONA are respectively return on total assets and return on assets. This ratio is computed by dividing operating expenses by sales.OPERATING EXPENSES RATIO The operating expenses ratio explains the changes in the profit margin ratio. Operating expenses ratio is a yardstick of operating efficiency. RETURN ON INVESTMENT The return on investment may refer to total assets or net assets.RETURN ON EQUITY (ROE) A return on shareholder’s equity is calculated to see the profitability of owner’s investment. such as external uncontrollable factors. Alternatively. internal factors. but it should be used cautiously. Operating expenses = cost of goods sold plus selling expenses and general administrative expenses by sales. It is affected by a number of factors. The conventional approach of calculating return on investment (RIO) is to divide profit after tax by investment. Net assets equal net fixed assets plus current minus current liabilities excluding bank loans. EBIT ( I −T ) TotalAsset s Return on Investment = 5. ROE indicates how well the firm has used the resources of . PoeratingE xpenses Sales Operating Expenses Ratio = 4. RONA is equivalent of return on capital employed.

The ratio of net profit to owner’s. rather than EPS. profitafte rTax Earning per Share = NumberofSh ares 7.EARNING PER SHARE: (EPS) The profitability of the common shareholders investment can also be measure in many other ways. Dividends Dividend per share = NumberofSh ares . which has the responsibility of maximizing the owner’s welfare. Earning per share indicates whether or not the firm’s earnings power on per share has increased or not. Large number of present and potential investors may be interested in DPS.owner’s this ratio is one of the most important relationships is financial analysis. It does not reflect how much is paid as dividend and how much is retained in the business. But. Pr ofitafterT ax NetWorth Return on Equity = 6. equity reflects the extent to which this objective has been accomplished. But the income. It also helps in estimating the company’s capacity to pay dividend to its equity shareholders. is the amount of earning distributed as cash dividends. The earning of satisfactory return is the most desirable objective of a business.DIVIDENDS PER SHARE: (DPS) The net profit after taxes belong to shareholders. One measure is to calculate the EPS. It is valuable and widely used ratio. as profitability index. This ratio is of interest to the present as well as prospective shareholders and also of great concern to management. EPS simply shows the profitability of the firm on a per share basis. which they really receive.

It should be compared with some standard. A single ratio in itself does not indicate favorable or unfavorable condition. It is the most significant source of financing a firm’s investment. retained earnings and dividends.DIVIDEND PAY OUT RATIO: A firm’s dividend policy has the effect of dividing its earning into two parts. Standards of comparison may consist of: Past Ratio: Ratio calculated from the past financial statements of the same firm. Industries differ in their growth prospects. Competitors Ratio: Ratios of some selected firms. MarketValu eperShare Earningper Share Price Earning Ratio = STANDARDS OF COMPARISION: The ratio analysis involves comparison for a useful interpretation of the financial statement. . especially the most progressive and successful competitor. Management is also interested in this market appraisal of the firm’s performance and will take to find the causes if the price-earning ratio declines. Price earnings ratio reflects investor’s expectations about the growth in the firm’s earnings. The retained earnings provide funds to finance the firm’s long-term growth.PRICE EARNING RATIO This ratio is widely used by the security analysts to value the firm’s performance as expected by investor’s judgement or expectations about the firm’s performance.8. Dividendpe rShare Dividend payout Ratio = Earningper Share 9. at the same point of time.

Industry Ratios: Ratios of the industry to which the firm belongs. it is known as the time series analysis or tend analysis. This type of analysis is known as industry analysis. financial statement. its ratio may be compared with average ratios of the industry of which the firm is a member. Liquidity analysis: The determine the financial condition and performance of a firm. Projected Ratios: Ratios developed using the projected. Profitability ratios are calculated to measures the operating efficiency of the company. PROFORMA ANALYSIS: Sometimes future ratios are sued as the standards of comparison. corrective actions should be initiated. Besides management of the company creditors and owners are . If the future ratios indicate weak financial position. When financial ratios over a period are compared. The comparison of current or past ratios with future ratios shows the firm’s relative strengths and weakness in the past and future. Profitability Ratios: A company should earn profits to survive and grow over long period of time. or performa. This kind of comparison is known as the cross-sectional analysis. Profits are essential but it would be wrong to assume that every action initiated buy management of a company should be aimed at maximizing profits. financial statements of the same firm. Time series analysis: The easiest way to evaluate the performance of the firm is to compare its present ratios with past ratios. Communicational analysis: another way to comparison is to compare ratios of one firm with selected firms in the industry at the same point in time. Profit is the difference between revenues and expenses over a period of time. Future ratios can be developed from the projected or Performa.

• Profitability in relation in investment. Generally. • Profitability in relation to sales. .also interested in the profitability of the firm. Creditors want to get interest and repayment of principal regularly. low major types of profitability ratios are calculated.

153 10.985 12.82.86.64.935 55.42 6.15.76.06 5.60.66.80.68.33.262 13.01.56.74.35.433 10.69.915 Ratio 3.55.12.70.33.50.861 85.42.43.023 Current Liabilities 16.641 69.846 57.05 7.58.81.97.28.02 5.016 46.Liquidity Ratios Current ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 CA CL Current Assets 50.23.081 9.861 13.08.521 92.17 4.77 7.09 .

8 7 6 5 4 Ratio 3 2 1 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .

915 Ratio 1.07.19 1.15.50 2.426 21.081 9.153 10.62.68.06.16 .861 13.228 15.2 (2.08.97.002 26.453 20.64.696 28.79.433 10.74.43.77 1.80.55.985 12.96.09.07.92.727 Current Liabilities 16.33.85.49.262 13.58.03 2.14 2.01.197) 2.23.35.66.783 21.• Quick Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 QuickAsset s CurrentLib ilities Quick Assets 19.90.70.93.

5 2 1.5 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .2.5 Ratio 1 0.

161 1.08 0.01.12 0.433 10.08.5360.526 1.• Cash Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Cash + BankBalanc e CurrentLia bilities Cash + Bank 1.23.861 13.708 1.772 Current Liabilities 16.73.15.16 0.24.06.57.262 13.35.915 Ratio 0.16 0.70.637 1.153 10.58.20.11 0.67.081 9.43.97.680 2.83.17 0.64.18.985 12.33.80.01.70.55.979 1.68.76.09.14 .

02 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .18 0.08 0.1 Ratio 0.12 0.06 0.0.04 0.14 0.16 0.

67.67.41.122 62.186 Ratio 088 0.36.20.97.146 79.46.21.33.305 43.28.74 0.132 68.88.14.469 34.50.77.247 Current Liabilities 40.75.724 84.61.13.431 97.587 42.13.79 0.36.37.86.714 47.80 0.023 104.87.48.88.69 0.• Leverage Ratios: Cash Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Longtermde bt Shareholde r ' sequity Cash + Bank 35.865 52.75 0.67.08.05.305 72.36.76 .

90 80 70 60 50 Ratio 40 30 20 10 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .

63.32.86.76.54.753 Sales 176.061 0.032 .12.558 246.021 0.619 157.02.83.24.971 Ratio 0.63.092 0.44.183 238.472 175.47.00.312 13.544 143.297 13.218 3.560 9.13.24.19.756 16.655 7.79.86.07.07.26.• Net Profit Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Earningsaf tr int erst + taxes Sales Earning interest + Taxes 3.32.75.84.058 0.14.15.00.083 0.018 0.60.942 196.

04 0.1 0.07 0.02 0.0.06 0.03 0.09 0.01 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Ratio .05 0.08 0.

61.183 238.54.53.36.24.8 3.19.66.16.472 175.619 157.07.544 143.18.96.52.21.02.47.61 2.85.555 95.86.15 2.187 123.971 Sales Capitalemp loyed Capital Employed 46.83.12.24.15.18.64.56.99 .33 2.200 75.39 1.900 60.60.558 246.05 2.44.355 99.43.63.942 196.047 45.669 Ratio 3.• Sales to Capital Employed Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Sales 176.

5 1 0.5 3 2.5 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .4 3.5 2 Ratio 1.

54.97. A Sales 176.83.36 2.33.24.24.91.94.942 196.12.714 59.249 97.60.008 (2.17 2.676 122.791 86.757 Ratio 3.81 3.27 2.619 157.44.558 246.74.28.259 74.63 2.56.472 175.02.63.75.544 143.91.971 Net Fixed Assets 46.70.22.07.01) .15.86.047 45.15.34.183 238.19.47.67.44 2.• Sales to Fixed Assets Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Sales NetF .

5 2 Ratio 1.4 3.5 3 2.5 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .5 1 0.

63.544 143.07.048 197.13.12.19 1.15.58.36 1.86.44.24.835 115.18.24.10.25.• Total Assets Turnover Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Sales NetSales TotalAsset s Total Assets 96.971 .54.35.02.32 1.45.063 92.558 246.83.53.47.15.619 157.65.472 175.777 1.98.942 196.183 238.24 1.82 1.94.31.19.196 165.60.90.046 132.56 1.25 Ratio 176.876 192.

6 0.2 1 0.6 1.4 1.4 0.8 0.2 1.2 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Ratio .8 1.

60.183 238.38 Ratio .652 2.93 1.58 1.43.558 246.198 128.44.942 196.56.25.971 Fixed Assets 71.15.02.43.544 143.19.54.32.97.63.630 92.717 178.45 1.472 175.07.86.76.52.71 1.85.043 74.650 145.• Fixed Asset Turnover Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 NetSales FixedAsset Net Sales 176.83.75.21.86.619 157.51.24.53 1.24.47.83.64 1.382 111.12.

5 Ratio 1 0.5 2 1.2.5 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .

641 69.095 1.53.187 123.355 99.521 92.52.28.669 Ratio 1.56.70.42.81.• Current Assets to Fixed Assets Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Current Assets 50.861 85.03.61.846 57.36.16.56.200 75.86.723 0.82.924 0.935 55.555 95.66.932 0.76.023 CurrentAss ets Fixedasset s Fixed Assets 46.49.33.74.12.21.03.016 46.28.60.81.51.900 60.693 .024 0.047 45.50.69.771 0.

6 Ratio 0.2 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .1.8 0.4 0.2 1 0.

472 175.17 3.99 3.44.69.02.58.83.942 196.24.60.35 .61.63.82 3.79.183 238.19.• Working Capital Turnover Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Sales 176.58.77 3.47.10.54.693 47.12.660 79.92.23.544 143.619 157.77.42.10.935 37.32 2.208 59.15.673 41.86.558 246.18.72 3.37.108 Ratio 5.971 Sales Networking capital Net Working Capital 34.24.07.23.876 73.

6 5 4 3 Ratio 2 1 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .

544 143.95 Sales .63.86.39.06.08.20.64.56 17.643 15.96.02.689 13.09 13.15.380 Ratio 11.• Receivable Turnover Ratio Debtor’s Turnover Ratio : Debtors (+Bils Re ceivable ) Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Sales 176.558 246.12.848 13.71 12.73.619 157.942 196.54.971 Debtors 15.89.183 238.472 175.07.47.24.24.33 10.83.44.75.34 13.73.96.59.16.34.19.851 11.417 20.417 14.31 11.60.

18 16 14 12 10 Ratio 8 6 4 2 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .

56 17.34 13.95 Collection period 31 30 35 28 27 32 21 .33 10.09 13.31 11.• Average Collection Period : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 365 365 365 365 365 365 365 Noofday sin ayear Debtorstur noverratio Days Debtors turnovers Ratio 11.71 12.

35

Collection period

30

25

20

15

10

5

0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Inventory Turnover Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Sales Inventory

Sales 176,44,15,544 143,54,63,619 157,24,07,472 175,47,60,942 196,24,83,183 238,19,02,558 246,86,12,971

Inventory 31,03,48,788 30,63,84,482 34,75,33,063 36,20,50,215 47,48,32,825 63,84,19,859 59,62,73,296 5.69 4.69 4.52 4.85 4.13 3.73 4.14

Ratio

6

5

4

3

Ratio

2

1

0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

13 3.69 4.day sin ayear InventoryR atio Days 365 365 365 365 365 365 365 Inventory Ratio 5.14 Period 64.38 97.of .16 .26 88.69 4.86 88.85 4.15 77.52 4.73 4.83 80.• Inventory Period : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 No .75 75.

100 90 80 70 60 50 40 30 20 10 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Period .

26.15.47.183 238.86.54.558 246.24.07.63.09 0.24.753 Sales 176.32.06 0.083 ≈ 0.12.32.09 0.06 0.14.02 0.79.19.058 ≈ 0.218 3.619 157.032 ≈ 0.60.092 ≈ 0.544 143.021 ≈ 0.756 16.13.312 16.02 0.83.00.• Net Profit Margin : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Pr ofitaftert ax sales Profit after tax 3.76.07.63.061 ≈ 0.971 Ratio 0.560 9.655 7.00.0178≈0.297 13.75.472 175.02.942 196.03 .84.44.86.

05 0.06 0.01 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Ratio .08 0.04 0.07 0.0.09 0.1 0.02 0.03 0.

07.41. Net worth = share Capital + Reserve Networth PAT 3.36.32.46.312 16.13.21.00.84.297 13.183 0.87.305 43.37.75.48.235 0.186 Ratio 0.67.218 3.14.00.86.724 84.63.32.142 0.76.023 104.13.28.753 Net Worth 40.075 .078 0.560 9.865 52.132 68.194 0.• Return on equity : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 PAT .75.756 16.26.77.069 0.14.79.431 97.655 7.61.

15 0.25 0.05 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .1 0.0.2 Ratio 0.

4 52 94.08.58 7 42.21. 736 169.• Debt Ratio : Totaldebt Totaldebt + Networth Year 2002 -03 2003 -04 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 Total Debt 35.4 31 97.77.3 05 43.67.444 0.88.97.1 32 68.50.8 46 115. 169 184.14 6 79.87.442 0.13.85.88.67.37.67.88.426 0.46.66.61. 469 34.05. 186 TD + NW 75.427 0.75.35.12 2 62. 433 Ratio 0.24 7 Net worth 40.34.24.468 0.46.17.33.0 23 104.36.36.36.43.71 4 47.14.13.49.41.7 24 84.30 5 72. 846 147.86.91.7 74 77.25.8 65 52.24.28.408 0.20.48.431 .24.

43 0.41 0.47 0.0.46 0.38 0.4 0.42 0.44 0.45 0.37 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Ratio .39 0.

000 31.95.000 9.297 13.41 EPS 30.14.76.95.655 7.95.00. of Shares 31.79.54 .of .000 31.Shares o PAT 3.63.95.07.16 50.312 16.95.31 51.13.95.26.41 24.218 3.• EPS (Earnings per Share) : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 PT A N .32.000 31.756 16.84.75.32.753 No.95.000 31.560 9.000 31.81 9.00.08 43.86.000 31.

60 50 40 30 EPS 20 10 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .

46.958 12.49 11.67.405 19.35.80.11.50.368 6.48.946 11.28.58 21.490 NW 40.19.21.36.75.305 43.12.17.45 28.132 68.431 97.71.94.95 24.186 Ratio 12.90.865 52.49.73 14.77.724 84.38.41.13.023 104.87.917 20.14.37.17 .727 19.• Return on net worth Ratio : Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Netprofits beforetaxe s Networth PBT 5.87.05 23.61.45.

30 25 20 15 Ratio 10 5 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 .

12.63.18.RAGHAVA REDDY.58.10.58.223 74. Current Assets.33.deferred Tax Liability Application of Funds: 1.50.37.850 31.16.643 1.000 36.047 46.86.88.66.SAMBASIVA RAO & CO.865 32.16.223 As At 31-03-2003 Rs.482 11.935 9. 5 6 7 8 9 10 11 12 13 Total (1+2+3) Note : The Schedules.673 83.226 46.48.11.16.V.SRI DHANALAKSHMI COTTON & RICE MILLS PRIVATE LIMITED BALANCE SHEET AS AT 31ST MARCH.08.64.851 1. Director & Secretary Partner Hyderabad GUNTUR 19-05-2004.058 80.28.33.24. Director Ch.03.771 83.935 80.NARAYANA.83.832 Schedule I.28.42.46.353 5.924 1.MASTANAIAH P.89.900 25.07.11.77.17. Sources of Funds: 1.08.06.64.08.83.01.60.56. Investments 3.87.55..97.043 25. 20-05-2004.047 25.33.06.97.33.262 37.46.17.62.84.49.50.234 2.39.98.186 45.000 39.081 34. Managing Director Chartered Accountants P. 2004 As At 31-03-2004 Rs.161 14.97.94. 3.458 50.526 19.70.RAGHAVA RAO.305 33.94.758 3.650 30.36.22.69.79. Notes and Statement on Accounting policies from an integral part of the Balance Sheet As per our report of even date: For and on behalf of the Board: For N.76.19.996 46. N.50. 3. .49.545 5.Loan Funds: a) Secured Loans b) Unsecured Loans 3.Share holder’s Funds: a) Capital b) Reserves & Surplus 2.016 16.916 45.058 3. Loans & Advances: a) Inventories b) Sundry Debtors c) Cash & Bank Balance d) Other Current Assets e) Loans & Advances Less: Current Liabilities & Provisions 1 2 3 4 II.832 71.714 15.33.Fixed Assets: a) Gross Block b) Less: Depreciation c) Net Block d) Capital Work-in-progress 2.64.26.50.64.84.788 15.56.11.19.630 29.56.

673 83.51.12. 2005 As At 31-03-2005 Rs.058 3.97..46.630 29.RAGHAVA REDDY.353 5.33.11.848 1.941 60. Director & Secretary Partner Ganapavaram GUNTUR 28-05-2005.526 19.92.223 Schedule I.V.21.80. Notes and Statement on Accounting policies from an integral part of the Balance Sheet As per our report of even date: For and on behalf of the Board: For N.01.74.771 83.SAMBASIVA RAO & CO. Investments 3.06.259 35.916 45. N.52.132 40.96.03.60.98. 28-05-2005.62.54 3 92.11. Current Assets.97.20.693 101. .50.88.186 45.79.88.650 30.382 32.01.56.42.08.650 34.987 55.94.63. Director Ch.846 13.33.MASTANAIAH P.84.33.16.70.16.86.76.75.223 Note : The Schedules.585 1. Sources of Funds: 1. 3.153 41.000 39.NARAYANA.643 1.60.33.969 3.46.935 9.697 101.12.49.19.53.900 25.50.37.063 15.Share holder’s Funds: a) Capital b) Reserves & Surplus 2.19.11.64.08.22.69.87.200 15.88.deferred Tax Liability Application of Funds: 1.77.226 46.33.000 49.129 6.979 8. Managing Director Chartered Accountants P.714 15.36.07. 3.75.33.08.SRI DHANALAKSHMI COTTON & RICE MILLS PRIVATE LIMITED BALANCE SHEET AS AT 31ST MARCH.49.96.67.18.39.123 59.17. Loans & Advances: a) Inventories b) Sundry Debtors c) Cash & Bank Balance d) Other Current Assets e) Loans & Advances Less: Current Liabilities & Provisions Total (1+2+3) 1 2 3 4 II.58.482 11.73.234 2.16.865 32.262 37.16.17.Loan Funds: a) Secured Loans b) Unsecured Loans 3.Fixed Assets: a) Gross Block b) Less: Depreciation c) Net Block d) Capital Work-in-progress 2.54 3 As At 31-03-2004 Rs. 5 6 7 8 9 10 11 12 13 74.54.58.RAGHAVA RAO.50.

29.213 Schedule I.82.78.56. 5 111.000 65.58.82.764 75.34..03.16.05.44.20.452 7.48.213 6 7 8 9 10 11 12 13 Note : The Schedules.000 81.27.407 74.521 10.05.243 6.36.18320) Ganapavaram GUNTUR 09-08-2007.433 47.417 1.56.33.32.183 5.53.46 5 As At 31-03-2006 Rs.555 14.88.62. Managing Director Chartered Accountants.Fixed Assets: a) Gross Block b) Less: Depreciation c) Net Block d) Capital Work-in-progress 2.401 86.21.50.39.724 45.70.058 57. Director CA G.43.19.RAGHAVA RAO.680 3.370 69.22. 3.367 122.249 9.32.215 13.42.deferred Tax Liability Application of Funds: 1.Loan Funds: a) Secured Loans b) Unsecured Loans 3. Current Assets.86.208 122.76.791 81.81.09.Share holder’s Funds: a) Capital b) Reserves & Surplus 2.52.36.853 1.60. P.04.40.198 37.73.21.861 59.V.77.RAGHAVA REDDY.65 0 42.431 61.52. .85.106 95.50.450 36.61. Sources of Funds: 1.46.73.463 1.96.44.660 155.18.86. 2007 As At 31-03-2007 Rs.71.23.96.50.86.85.22. 09-08-2007. Loans & Advances: a) Inventories b) Sundry Debtors c) Cash & Bank Balance d) Other Current Assets e) Loans & Advances Less: Current Liabilities & Provisions Total (1+2+3) 1 2 3 4 II.33.15.42.No.SRI DHANALAKSHMI COTTON & RICE MILLS PRIVATE LIMITED BALANCE SHEET AS AT 31ST MARCH.91.76.23. Investments 3.SAIBABU CA P.45. Notes and Statement on Accounting policies from an integral part of the Balance Sheet As per our report of even date: For and on behalf of the Board: For MASTANAIAH & CO. 3.729 155.708 7.910 6.08.53.23.825 14.68.212 1.44.67. Director & Secretary Partner (M.57.10.450 47.17. N.79.46 5 128.355 13.NARAYANA.29.641 10.19.

859 20.25.45.296 13.97. 2009 As At 31-03-2009 Rs.75 7 78.912 123.RAGHAVA REDDY.74.676 1. Investments 3.45.27.19.895 122.513 Schedule I.34.10.96. 3.61.75.72 7 As At 31-03-2008 Rs.431 16.54.62.380 1.65.85.65 2 55.68.43.25.023 12.68. P. N.62.50.985 79.876 179.000 94.73.28.19.91.99.978 10. .70.43.92.13.V.51.023 61.50.52.Share holder’s Funds: a) Capital b) Reserves & Surplus 2.92. Director & Secretary Partner (M.717 47.No.84.10.682 92. Application of Funds: 1. Director CA G.18 6 62.53.450 63. Current Assets.84.59.15.51.75.35.16.66 9 13.597 85.041 97.38.861 13.915 73.28.294 197.511 99.SAIBABU CA P.Loan Funds: a) Secured Loans b) Unsecured Loans 3.94. Notes and Statement on Accounting policies from an integral part of the Balance Sheet As per our report of even date: For and on behalf of the Board: For MASTANAIAH & CO.21.deferred Tax Liability II.344 179.23.43.582 11.RAGHAVA RAO.70.18320) Ganapavaram GUNTUR 13-08-2009. 3.108 197.05.08. Loans & Advances: a) Inventories b) Sundry Debtors c) Cash & Bank Balance d) Other Current Assets e) Loans & Advances Less: Current Liabilities & Provisions Total (1+2+3) 6 7 8 9 10 11 12 13 1 2 3 4 5 145.73.47.513 Note : The Schedules.60.23.000 101.56.564 9.57.950 59.20.08.51.24.69.85.72 7 178.SRI DHANALAKSHMI COTTON & RICE MILLS PRIVATE LIMITED BALANCE SHEET AS AT 31ST MARCH.59. Sources of Funds: 1.637 4.689 2.90.20.58.772 1.816 13.Fixed Assets: a) Gross Block b) Less: Depreciation c) Net Block d) Capital Work-in-progress 2.37.01..81.80. Managing Director Chartered Accountants.40.NARAYANA.26.187 13.994 6.08.19. 13-08-2009.70.

FINDINGS The following are the findings after a detailed study about working capital management in “Sri Dhana Lakshmi Cotton & Rice Mills (p) Ltd”.  It is observed that the current Ratio is more than the standard norm i.  The quick ratio Sri Dhana Lakshmi Cotton & Rice Mills (P) Ltd shows increasing trend under the period of study 2002-03 to 2006-07.  From the debtors turnover ratio It is observed that the debtors are collecting rapidly.  The Inventory turnover ratio had been fluctuated through out the study period of 2002-03 to 2006-07.  The Debt Equity Ratio of Sri Dhana Lakshmi Cotton & Rice Mills (P) Ltd had been fluctuated through out the study period of 2002-03 ot 2006-07.  The net working capital position of Sri Dhana Laksmi Cotton & Rice Mills (P) Ltd is gradually increasing thought out the study period of 2002-2003 to 2006-07. 2:1 under the period of study.e. .  It is found that the Creditors Turnover Ratio of Sri Dhana Lakshmi Cotton & Rice Mills (P)Ltd is under fluctuating trend from the period of Study 2002 -03 to 2006-07.  It is found that the company cash & bank balances gradually increased from the study period of 2002-03 to 2006-07.  It is observed that the working capital turnover ratio had been fluctuated under the period of study.

It should be maintain in future also for meet the liquidity operations. it is good to the organization. that company must try to improve it and make more sales by utilization of working capital.  The company should maintain same collection period in case of debtors for better trade credit management in future. So.  The Debtors turnover ratio is under satisfactory position.SUGGESTIONS  The net Working capital of Sri Dhana Lakshmi Cotton & Rice Mills (P) Ltd had been increasing year to year. the company must try to maintain optimum inventory levels to meet the stock requirements.  The inventory turnover ratio of Sri Dhana Lakshmi Cotton & Rice Mills (P) Ltd is in fluctuated during the study period of 2003-07 it is not factorable to the company. It is advised to maintain the same proportion in future to make better financial soundness of company. So.  It is suggested to maintain same levels of quick ratio for the up coming years to meet the current requirements of Sri Dhana Lakshmi Cotton & Rice Mills (P) Ltd .  The Current Ratio is more than the standard norm. It is suggested that the company should continue the same level of net working capital in future to make the profits. .  The working capital turnover ratio of Sri Dhana Lakshmi Cotton & Rice Mills (P) Ltd is decreasing year by year. It is advised to maintain in future also…. It indicates less efficiency of firm.  The company cash and bank balances increased gradually year by year.  The Debt equity ratio of Sri Dhana Lakshmi Cotton & Rice Mills (P) Ltd show that the total debt is less that the total share holder funds.. It is suggested to maintain the same levels in future for better liquidity of debtors.

It is suggest that to maintain optimum ratio for better trade credit management. . The company payable management is not favorable.

the company is in a position which can satisfy the current obligations. .CONCLUSION By observing the study we may conclude that. The recommendations and given. Thus. the long –term solvency of the firm is under satisfactory position. The performance of company is observed through the Liquidity. if adopted will improve position of the company substantial and optimal profitability coupled with better service and satisfactions for the investors may be achieved. the present study has been conducted to analyzed and evaluated the working capital position of Sri Dhana Lakshmi Cotton & Rice Mills (P) Ltd through ratios. Turnover Ratios. leverage. With reference of the study we can observe that…… The liquidity position of the company is under satisfactory condition. The profitability of the firm increasing significantly through out the study period of 2002-03 to 2006-07. There is some fluctuations in Turnover Ratios and Leverage Ratio.

JAIN TITLE OF THE BOOK FINANCIAL MANAGEMENT TEXT AND PROBLEMS FINANCIAL MANAGEMENT THEORY AND PRACTICE FINANCIAL MANAGEMENT PUBLICATIONS TATA McGRAWHILI PUBLISHING COMPANY LIMITED.PANDEY  ANNUL REPORTS OF SRI DHANA LAKSHMI COTTON & RICE MILLS PVT.Y. WEBSITES : www. NEW DELHI TATA McGRAWHILI PUBLISHING COMPANY LIMITED.cottonindia.M. NEW DELHI VIKAS PUBLISHING HOUSE PVT.sridhanalakshmi.com www.K.LTD.LTD. NEW DELHI PRASANNA CHANDRA I.com . KHAN & P..BIBLIOGRAPHY AUTHOR NAME M.

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