I hereby declare that the summer project titled ³FINANCIAL ANALYSIS´ is original to the best of my knowledge and has not been publised elsewhere. This is for the purpose of partial fulfillment of STEVENS BUSINESS SCHOOL.



ACKNOWLEDGEMENT At the time of completion and submission of summer training project at IFFCO KANDLA. First of all I am grateful to Chief Manager- Mr.H. H. Chauhan (Training center) who gave us opportunity to undertake this project at IFFCO-Kandla, and also for their help and tips whenever needed. I would like to thank Mr. V.J.Mankodi Joint General Manager- (F&A) & Mr. V.H.Ambwani Senior Manager (Accounts), for allowing me to carry out my project study and his guidance and support during training period and also Mr. D D Pandya Senior Manager (Accounts),Mr.H.J.Davariya(Accounts), Mr. D.N.Joshi, Manager (F&A) for sharing their ideas with us. I would also thank Mr. K. M. Patel & Mr H.T.Bhambhani for their guidance throughout my training period and F&A staff for their cooperation and supportive attitude. I also appreciate the supportive attitude of the entire HOD s and the staff of was fruitful learning experience which will be helpful to me further. At last my sincerer regards to my faculty guide and friends , who have directly or indirectly help me in project.

EXECUTIVE SUMMARY Indian Farmers fertilizers co-operative Limited(IFFCO), Today is a leading player in India s fertilizar industry and is making substantial contribution to the efforts of INDIAN GOVERNMENT to increase food grain production in the country. Indian Farmers fertilizers co-operative Limited, popularly known as IFFCO emerged as a pioneer venture on the horizone of the fertilizer production and marketing with objective of attaining self sufficiency in food gain production. The following report is based on FINANCIAL ANALYSIS of IFFCO, done with the help of various RATIOS. The report includes analysis and interpretation of comparative income statements followed by comparative study of BALANCE SHEETS and CASHFLOW STATMNETS of the last two years.

The Indian fertilizer industry has been meeting a substantial portion of the growing demand of fertilizer now. As on today the demand-supply gap in the fertilizer industry is very marginal. The industry had a very humble beginning in 1906, when the first manufacturing unit of Single Super Phosphate (SSP) was set up in Ranipet near Chennai with an annual production capacity of 6000 M.T. The Fertilizer and Chemicals Travancore ltd. (FACT) at Cochin in Kerala and the Fertilizer Corporation of India Ltd, Sindhri in Jharkhand were the first large sized fertilizer plant set up in forties and fifties with a view to establish a base for industrialization and achieving selfsufficiency in food grains. The seventies and eighties witnessed a significant addition to the fertilizer industry. Presently there are 66 large sized fertilizer plants in the country manufacturing a wide range of nitrogenous, phosphatic and other complex fertilizer. Besides there are about 80 medium and small-scale single super phosphate plants. As of now the country is almost self-sufficient in case of nitrogen but in case of phosphates the scarcity of domestic raw material constraints the attainment of self-sufficiency in the country. Indigenous rock phosphates supplies meet only a small percentage (5%-10%) of total requirement of P2O5. also there are no known commercially exploitable reserves of potash in the country and hence the entire requirement are met through imports.

What is Cooperative Society?

Co - operation refers to an organization of individuals for achieving a common economic objective by mutual help and collective efforts.

The word ³Co - operation´ has been derived from the Latin word Co-operate which, means to work together, to labor together, to endeavor for some common purpose.

Features or Characteristics of Co -operative Society The following are the characteristics and/or features of the co ± operative societies: 1. Voluntary Association 2. Equal Voting Rights 3. Democratic Management 4. Service Motive 5. Limited Interest on Capital 6. Distribution of Profits or Surpluses 7. Cash Trading 8. State Control 9. Serving all at Market Price without discrimination between members and nonmembers. 10. Member render Honorary Services 11. Political and Religious Neutrality 12. Honest Trading 13. Principle of Thrift

Difference Between Co-operative society & Company.

S. No Item 1 Object

Cooperative Society Interest of members and community

Company Self interest either of management or the share holders In a public limited company, minimum number of members should be 7 and in a private limited company minimum number of members should be 2


Number of members

Minimum number of members should be 50 for a multi state cooperative society from each state in case of individual membership In case societies are members of a Multi State Cooperative Society, two societies from different states should sign the application of registration of the society If a Multi State Cooperative Society is a member then the multi state cooperative and a society should sign the application of registration



Chairperson is elected by the Board of Usually, Chairperson / Managing Directors from among themselves. The Director are persons with maximum Managing Director / Chief executive is number of shares in the company appointed by the Board of Directors Shares are issued to general public or by invitation. In a company shares cannot be withdrawn by a share holder.


Share Capital The shares of cooperative society are not issued to general public by advertisement and can be issued any time. Shares can be withdrawn member / society as prescribed by rules in their byelaws. Types of shares Only equity shares are available


Equity and preferential shares may be issued Voting rights depend directly on the holding of shares


Voting Power Member of a cooperative society have right of only one vote, irrespective of the number of shares held of any denomination


Distribution of Minimum 25% of net profits should be No restrictions on a company Profits transferred to the General reserve and the maximum dividend cannot exceed 20% Taxes Cooperatives are exempt from few taxes in some states like stamp duty. Tax rates also vary Provision for workers participation in the management through a representative exists Not applicable to Multi State Societies The Central registrar of Cooperatives advises in the affairs of a multi state society No exemptions provided



Workers participation

No such provision for workers

10 11

MRTP Act Control

Applicable Companies are governed by the Company Registrar of the states where its registered office is located

COMPANY DETAILS Indian Farmers Fertilizer Co-operative Limited (IFFCO) today is a leading player in India s fertilizer industry and is making substantial contribution to the efforts Indian Government to increase food grain production in the country. Indian Farmers Fertilizer Co-operative Limited, popularly known as IFFCO emerged as a pioneer venture on the horizon of fertilizer production and marketing with the objective of attaining self-sufficiency in food grain production. Now a days , there are 40,500 co-operative societies associated with IFFCO. They have diversified their business in the field of insurance, power plant and raw material production.

This report is a study of RATIO ANALYSIS OF IFFCO KANDLA . It contains detailed information regarding various types of Ratios pertaining to IFFCO KANDLA. In this report we have mentioned how Ratio Analysis is useful for the company. I have also studied the procedures and steps to find various Ratios and its interpretation. Various Ratios are Current Ratio, Quick Ratio, Fixed Assets Ratio, Absolute Liquid Ratio, Debt Equity Ratio, etc. I had also studied Comparative Statement and Income Statement, its Analysis and Interpretation.

There are five units of IFFCO:
1. 2. 3. 4. 5. IFFCO Kandla (GUJARAT) IFFCO Kalol (GUJARAT) IFFCO Phulpur (Uttar Pradesh) IFFCO Anola (Uttar Pradesh) IFFCO Paradeep (Orissa)







IFFCO¶s Kandla plant is located on the western bank of Kandla creek adjacent to Kandla Port Trust oil Jetties. The plant produces NPK/DAP complex phosphatic fertilizers of various grades, namely NPK grades 10:26:26, 12:32:16 & DAP 18:46:00 in terms of N:P2O5:K2O. The plant, originally consisting of only 2 streams A&B and related facilities was designed & erected by M/s Dorr Oliver Inc. USA at a cost of Rs. 30 crores with an annual licensed capacity of 1,27,000 MT P2O5. The plant was commissioned on 26th Nov. 1974 and commercial production declared on 1st Jan, 1975. With increased demand for complex fertilizers, the capacity was doubled by addition of two more streams C & D designed & erected by HDO at a cost of Rs. 28.80 crores. Licensed capacity was increased from 1.27.000 MT P2O5 per annum to 2,60,000 MT P2O5 per annum. The expanded unit was commissioned on 4th June 1981 and the commercial production was started from 6th Sept. 1981. Subsequently due to introduction of production of DAP grade, the total capacity increase to 3.09,000 MT per annum of P2O5.

IFFCO went in for expansion of their unit at Kandla in 1996-97. Kandla phase-II NPK/DAP project conceptualized the setting up of two additional E & F streams for manufacture of the same grades of NPK/DAP fertilizers with an annual production capacity of 2,10,700 MTPA thus increasing the total capacity from 3,09,000 MTPA of P2O5 to 5,19,700 MTPA of P2O5. The actual cost of the project was Rs. 205.30 crores against a budgeted cost of Rs. 212.20 crores. The main consultant for the NPK/DAP plant was M/s Hindustan Dorr Oliver, Mumbai with the pipe reactor technology obtained from process licensor M/s Grande paroisse, France. The construction of E&F streams was completed 77 days ahead of schedule. The E & F streams were commissioned on 10th June 1999 & 9th July 1999 respectively and the commercial production started from 5th August µ 1999.


Kandla Unit Location

State State Capital District Distance from New Delhi Distance from Mumbai Nearest Airport

Gujarat, India Gandhinagar Kutch Approx. 1100 kilometers by rail Approx. 800 kilometers by rail Kandla Airport, Near Gandhidham,and Bhuj Airport 65 KM from Gandhidham.

Railway Station

Gandhidham (12 Km from plant and 3 Km from IFFCO's township at Gandhidham) and Kandla (3 Km from the plant)


Adjacent to Kandla Port Trust on National Highway 8-A, 365 Km. from Ahmedabad

Area under Plant Area under Township Temperature ( o C ) Rainfall (mm) Longitude Latitude Address

70.61 Hectares 79.65 Hectares 47 (Max.) in summer to 7 (Min.) in winter. Scarcity 70o 13'26" E 23o 00'00" N IFFCO, Kandla Unit, Post BoxNo.12, Gandhidham - 370201, Kandla (Kutch), Gujarat, INDIA


:91-2836-270381,-270382,-270539 ,-270639, -270641.

FAX Website E-Mail

: 91-2836-270642, -270658, -270685. : www. Iffco. nic. In :

History of IFFCO.

During mid- sixties the Co-operative sector in India was responsible for distribution of 70 per cent of fertilizers consumed in the country. This Sector had adequate infrastructure to distribute fertilizers but had no production facilities of its own and hence dependent on public/private Sectors for supplies. To overcome this lacuna and to bridge the demand supply gap in the country, a new cooperative society was conceived to specifically cater to the requirements of farmers. It was a unique venture in which the farmers of the country through their own Co-operative Societies created this new institution to

safeguard their interests. The number of co-operative societies associated with IFFCO has risen from 57 in 1967 to more than 36,000 now. Indian Farmers Fertilizer Co-operative Limited (IFFCO) was registered on November 3, 1967 as a Multiunit Co-operative Society. On the enactment of the Multistate Cooperative Societies act 1984 & 2002, the Society is deemed to be registered as a Multistate Cooperative Society. The Society is primarily engaged in production and distribution of fertilizers. The byelaws of the Society provide a broad frame work for the activities of IFFCO as a Cooperative Society. IFFCO commissioned an ammonia - urea complex at Kalol and the NPK/DAP plant at Kandla both in the state of Gujarat in 1975. Ammonia - urea complex was set up at Phulpur in the state of Uttar Pradesh in 1981. The ammonia - urea unit at Aonla was commissioned in 1988. The annual installed capacity of all the plants was 1.62 million tonne of Urea and NPK/DAP equivalent to 309 thousand tonne of phosphates.

In 1993, IFFCO had drawn up a major expansion programs of all the four plants under overall aegis of IFFCO VISION 2000 . The expansion projects at Aonla, Kalol and Phulpur have been completed on schedule. The latest feather in the cap of IFFCO was completion of Kandla Phase-II on 5th August 1999 which has heralded realizations of all the objectives set forth under VISION - 2000. As per the tradition of IFFCO the project was completed more than two months ahead of schedule. As a result of these expansion projects IFFCO's annual capacity has been increased to 3.69 million tonne of Urea and NPK/DAP equivalent to 825 thousand tonne of phosphates. With the successful realisation of all the objectives of Vision 2000, IFFCO has emerged as a pioneer in international cooperative movement. A new path has been chalked out to realise newer dreams and greater heights through Vision 2010 which is presently under implementation. The distribution of IFFCO's fertilizers is undertaken through over 36,000 co-operative societies. The entire activities of Distribution, Sales and Promotion are coordinated by Marketing Central Office (MKCO) at New Delhi assisted by the Marketing offices in the field. In addition, essential agro-inputs for crop production are made available to the farmers through a chain of 167 Farmers Service Centre (FSC). IFFCO obsessively nurtures its relations with farmers and undertakes a large number of agricultural extension activities for their benefit every year.

At IFFCO, the thirst for ever improving the services to farmers and member co-operatives is insatiable, commitment to quality is insurmountable and harnessing of mother earths' bounty to drive hunger away from India in an ecologically sustainable manner is the prime mission. All that IFFCO cherishes in exchange is an everlasting smile on the face of Indian Farmer who forms the moving spirit behind this mission.

IFFCO, to day, is a leading player in India's fertilizers industry and is making substantial contribution to the efforts of Indian Government to increase food grain production in the country.

Investment of IFFCO in other Firms. IFFCO has started the joint venture in all below mention firms in India as well as in other country and all the detail regard all the joint venture of IFFCO: International Industries Chimiques du Senegal (ICS). Industries Chimiques du Senegal (ICS) is producing Phosphoric Acid at Darou (Senegal) which IFFCO needs in producing the NPK/DAP. Its production capacity is 1.5 million TPA of Phosphoric acid. Its paid up capital as on 31st March, 2000 was Rs 6.5 billion out of which IFFCO's share was Rs 927.4 million i.e.14.32% of paid up capital. Indian consortium, consisting of Government of India, IFFCO & SPIC, entered into a long term agreement with Industries Chimiques du Senegal (ICS) in March 1980. The agreement was for purchase of Phosphoric Acid by setting up a plant at Darou, Senegal. The plant with a capacity of 313000 TPA phosphoric acid started commercial production in February 1984. ICS had been consistently supplying phosphoric acid to Kandla unit since commencement of production.

Doubling of the capacity of the existing plant for production of an additional 313000 TPA was taken up at a total investment of US$ 250 million. IFFCO has committed to purchase the entire quantity of the acid that would be produced by the ICS expansion project.

Oman India Fertilizer Project IFFCO and KRIBHCO have entered into a Joint Venture Agreement with Oman Oil Company (OOC), Oman for setting up of a Urea - Ammonia Fertilizer Plant at a Capital Cost of US$ 969 million, with a Debt : Equity Ratio of 2:1. The Fertilizer Plant would be located on the east coast of Oman, and have a capacity of producing 16.52 lakh MT of urea per annum and surplus Ammonia of 2.5 lakh MT per annum. Raw Material (Natural Gas) will be supplied by Omani Government under a long Term Gas Supply Agreement. Entire Urea will be purchased by Government of India for 15 years under a Urea Off take Agreement. Surplus Ammonia will be purchased by IFFCO for 10 years under Ammonia Off take Agreement. The main project Agreements, Urea Off take (UOTA), Ammonia Off take (AOTA) and Gas supply (GSA) were signed on 29th May 2002. Other Project Agreements have been finalized amongst the Sponsors and the Arranging Banks. The Arranging Banks, a consortium of International Banks, appointed for arranging Debt finalized the financing arrangements for the Project. All the contracts leading to the Financial Closure for the Project have been executed. The zero date for the project was 15 August, 2002. The construction of the Project will be completed in 35 months. IFFCO and National Commodity & Derivatives Exchange Limited IFFCO has picked up 12% stake in Commodity Exchange NCDEX recently. IFFCO's endeavor had always been to ensure that the farmers receive best quality fertilizer input at economical price. The present association facilitates enhancement in the scope of services for farmers wherein the farmers can realize higher prices, minimize risk and strive for reliable market conditions. With this new relationship, farmers & cooperatives will have a new platform floated by reputed national institutions to herald a new era in Indian agriculture. The on-line multi commodity exchange promoted by ICICI Bank Limited (ICICI Bank), Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE). Punjab National Bank (PNB) and CRISIL Limited (formerly the Credit Rating Information Services of India Limited) by subscribing to the equity shares have joined the initial promoters as shareholders of the Exchange. NCDEX is a public limited company incorporated on April 23, 2003 under the Companies Act, 1956. It obtained its Certificate for Commencement of Business on May 9, 2003. It has commenced its operations on December 15, 2003.NCDEX has an independent Board of Directors and professionals not having any vested interest in commodity markets. It is committed to provide a world-class commodity

exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, professionalism and transparency.NCDEX currently facilitates trading of fifteen commodities - Gold, Silver, Soy Bean, Refined Soy Bean Oil, Rapeseed-Mustard Seed, Expeller RapeseedMustard Seed Oil, RBD Palmolein, Crude Palm Oil, and Cotton - medium and long staple varieties, Pepper, Rubber, Jute Sacking, Chana and Guar Seeds. At subsequent phases trading in more commodities would be facilitated. IFFCO - Tokio General Insurance Company Limited (ITGI) IFFCO had done the amalgamation with the Tokio General Insurance Company Limited and started serving the insurance sector in India as well as in other countries. It involve in General Insurance Activity, its Corporate Office is situated at New Delhi. The total paid up capital of Tokio General Insurance Company Limited was Rs 1 billion as on 31st March, 2001. Out of which IFFCO's share was Rs 510 million i.e. 51% of its paid up capital. Godavari Fertilisers & Chemicals Limited (GFCL) Godavari Fertilisers & Chemicals Limited (GFCL) is situated at Kakinada in Andhra Pradesh. It is producing NPK/DAP fertilisers, its production capacity in P2O5 terms is 1.5 million TPA. The paid up capital of Godavari Fertilisers & Chemicals Limited (GFCL) was Rs 320 million as on 31st March, 2000. Out of which IFFCO's share was Rs 79.7 million i.e.24.9% of its paid up capital. Indian Potash Limited (IPL) Indian Potash Limited (IPL) mainly involve in activities like supply of imported potash as well as supply of imported fertilizers. The paid up capital of Indian Potash Limited (IPL) was Rs 95 million as on 31st March, 2000. Out of which IFFCO's share was Rs 32.4 million i.e. 34% of its paid up capital.

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