Ratio Analysis

A STUDY ON RATIO ANALYSIS
AT
RASTRIYA ISPAT NIGAM LIMITED
VISAKHAPATNAM
A Project report submitted in partial fulfillment of the requirements for
the award of
BACHELOR OF BUSINESS
ADMINISTRATION
By
D.VENKATESH
Regd.No-15987/2010
Ro !o-CB "#11
Under the esteemed guidance of
P.A.SURYANARAYANA
SENIOR MANAGER (F&A)
Visakhapatnam Steel Plant
Visakhapatnam
Project Guide
U.G. DEPARTMET !" #U$%E$$
ADM%%$TRAT%!
&!''EGE !" #U$%E$$ ADM%%$TRAT%!
1

CERTIFICATE OF PRO1ECT GUIDE
IN

This is to certif( that the project report entitled a stud( on RATIO
ANALYSIS in RASTRIYA ISPAT NIGAM LIMITED,
VISAKHAPATNAM STEEL PLANT is a bonafide wor) done and
submitted in partial fulfillment of the requirement for the award of
#achelor of #usiness Administration b( Re*d. o.15987/2010 under m(
*uidance + super,ision durin* the period 04-06-2012 to 30-06-2012.
Station:
Visakhapatnam P.A.SURYANARAYANA
Date- ./0/102/32 SENIOR MANAGER(F&A)
Visakhapatnam Steel Plant
2

DECLARATION
%4 D.VENKATESH here b( solemnl( declare that the project report
entitled a stud( on the Ratio Analysis in RASTRIYA ISPAT NIGAM
LIMITED, VISAKHAPATNAM STEEL PLANT, submitted b( me is
a bonafide wor) done and it is not submitted to an( other uni,ersit( or
published an(time before. This project wor) is in partial fulfillment of
the requirements for the award of the Bachelor of Business
Administration from PRE$%DE&5 &!''EGE.
Place: BERHAMPUR (D.VENKATESH)
Date: 30-06-2012

3

ACKNOWLEDGEMENT
The satisfaction that accompanies the successful completion of an(
tas) would be incomplete with out mentionin* people who made it
possible and whose encoura*ement and constant *uidance crowned m(
effort with success. % wish to e6press m( deep sense of *ratitude to Dr.
Srinivas mahapatra, Head of the Department4 Presidenc( &olle*e4
#erhampur for permittin* me to do the project.
% am *rateful to e6ternal project *uide SRI P.A.
SURYANARAYANA, SENIOR MANAGER (F&A) and % am also
than)ful to SRI O.R.M RAO, AGM, HRD, VISHAKAPATNAM
STEEL PLANT for his co0operation and in pro,idin* the information of
the compan( needed b( me.
% especiall( than) all those who ha,e helped me directl( or
indirectl(. % e6press m( profound than)s to m( affectionate parents for
their constant encoura*ement throu*hout m( educational career.

(D.VENKATESH)

4

CONTENTS
CHAPTER I 6 -10
%ntroduction
!bjecti,es of the stud(
eed for the stud(
$cope of the stud(
Methodolo*( of the stud(
'imitations of the stud(
CHAPTER II 11- 25
%ndustr( profile
CHAPTER III 26 - 40
&ompan( profile
CHAPTER IV 41 - 63
&onceptual frame wor)
CHAPTER V 64 - 86

Data Anal(sis +%nterpretation
CHAPTER VI 87 - 91
$ummar(
$u**estions
&onclusion
#iblio*raph(
5

CHAPTER-I
6

GENERAL INTRODUCTION
The end products of the business transactions are the financial statements
comprisin* the position statement or #alance $heet and the %ncome $tatement or
Profit and 'oss Account. "inancial statements are the basics for the decision ma)in*
b( the mana*ement and as well as all other sta)eholder who are interested in the
affairs of the firm such as in,estors4 creditors 4 customers 4suppliers 4 financial
institutions 4 emplo(ees 4potential in,estors 4 *o,t.4 and the *eneral public.
%n this project an attempt is made to )now the financial performance of
RASHTRIYA ISPAT NIGAM LIMITED, VISAKHAPATNAM STEEL PLANT
throu*h Ratio Anal(sis.
7

OB1ECTIVES OF THE STUDY:
The main objecti,e of the stud( is to appl( theoretical concepts to the practical
situations of R%' so as to compare and correlate the actual achie,ements with a
theoretical conclusion.
The main objecti,es of the stud( are-
To )now the e6tent to which R%'78$P is efficientl( utili9in* its sources to its
operations.
To stud( the efficienc( of o,erall operations.
To anal(9e the financial position of the R%'78$P.
To understand the capital structure of the R%'78$P throu*h calculatin* of
le,era*e ratios.
To )now the profitabilit( of the R%'78$P throu*h calculation of profitabilit(
ratios.
To *i,e appropriate su**estions to the best performance of the or*ani9ation.
8

METHODOLOGY OF THE STUDY:
Methodolo*( is a s(stematic procedure of collectin* information in order to
anal(9e and ,erif( a phenomenon. The collection of information is from two
principle sources. The( are-
1. Primary Data
2. Secondary Data
1. Primary Data:
%t is the information collected directl( with out an( references. %n this stud( it
is *athered throu*h inter,iews with concerned officers and staff4 either indi,iduall( or
collecti,el(4 sum of the information has been ,erified or supplemented with personal
obser,ation conductin* personal inter,iews with the concerned officers of "inance
Department of 8isa)hapatnam $teel Plant.
2. Secondary Data:
The $econdar( Data was collected from alread( published sources such as4
Pamphlets of Annual Reports4 Returns and %nternal Records4 reference from Te6t
#oo)s and :ournals relatin* to "inancial Mana*ement. The data collection includes-
;a< &ollection of required data from Annual Reports of 8isa)hapatnam
$teel Plant.
;b< Reference from Te6t #oo)s and :ournals relatin* to "inancial
Mana*ement.
9

LIMITATIONS OF THE STUDY:
Thou*h the project is completed successfull( a few limitations ma( be there.
$ince the procedure and polices of the compan( will not allow to
disclose some confidential financial information4 the project has to
be completed with the a,ailable data *i,en to us.
The stud( is carried basin* on the information and documents
pro,ided b( the or*ani9ation and based on the interaction with the
,arious emplo(ees of the respecti,e departments.
Anal(sis is limited to the results of R%'78$P and not compared to
industr( standards 7 results.
Data in some of the ratios has been directl( ta)en from the
prepared reports of R%' due to non0disclosure of input data due to
confidentialit(.
10

CHAPTER-II
11

INDUSTRY PROFILE
DEVELOPMENT OF STEEL INDUSTRY IN INDIA:
:apan remained the lar*est e6porter of semi0finished and finished steel
products in 2//2 followed b( Russia and U)raine.
!ther si*nificant recent de,elopments in The De,elopment of $teel %ndustr(
in %ndia should be ,iewed in conjunction with the t(pe and s(stem of Go,ernment that
has been rulin* the countr(. =owe,er4 its production in si*nificant quantit( started
onl( after 3>//. The *rowth of steel industr( can be studied b( di,idin* the period
into pre and post independence era. #( 3>?/4 the total installed capacit( of in*ot steel
production was 3.? million tons per (ear. %n a short span of about . decades or so the
capacit( was increased 33 folds to about 31 MT b( the >/@s.
3.3 Growth of Steel Industry:
The *rowth in a chronolo*ical order is depicted below-
$ o 5ear Growth
3. 3A./ !sier Marshall heather constructed the first manufacturin*
plant at port0motor in Madras Presidenc(.
2. 3ABC :ames Ers)ine founded the #en*al "rame Dor)s.
.. 3A>> :amshedji TATA initiated the scheme for an inte*rated
$teel Plant
C. 3>/1 "ormation of T%$&!
?. 3>33 T%$&! started production
1. 3>3A T%$&! was founded
B. 3>C/03>?/ "ormation of M( sore %ron and $teel initiated at
#hadra,athi in Earnata)a.
A. 3>?303>?1 "irst "i,e05ear Plan 0 The =industan $teel 'imited ;=$'<
was born in the (ear 3>?C with decision of settin* up three
plants each with 3 million tones in*ot steel per (ear at
12

Rour)ela4 #hilai4 and Dur*apur. T%$&! started its
e6pansion pro*rammed.
>. 3>?103>13 $econd "i,e05ear Plan 0 A bold decision was ta)en up to
increase the in*ot steel output in %ndia to 1 million tones
per (ear and its production at Rou)ema4 #hilai and
Dur*apur $teel Plant started.
3/. 3>1303>11 Third "i,e05ear Plan F Durin* the plan the three $teel
Plants under =$' + T%$&! were e6panded.
33. 3>1C #o)aro $teel Plant came into e6istence
32. 3>1103>1> Recession Period F Till the e6pansion pro*rams were
acti,el( e6isted durin* this period
3.. 3>1>03>BC "ourth "i,e05ear Plan F $alem $teel Plant started.
'icenses were *i,en for settin* up of man( Mini $teel
Plants and re0rollin* mills Go,ernment of %ndia. Plants in
south are each in 8isa)hapatnam and Earnata)a. $A%'
was formed durin* this period on 2C
th
:anuar( 3>B..
3C. 3>BC03>B> "ifth "i,e05ear Plan F The idea of settin* up the fifth
inte*rated $teel Plant4 the first re0based plant at
8isa)hapatnam too) a definite shape. At the end of the
"ifth "i,e05ear Plan the total installed capacit( from si6
inte*rated plants was up to 3/.1 million tons.
3?. 3>B>03>A/ Annual Plan 0 The Erstwhile $o,iet Union a*reed to help
in settin* up the 8isa)hapatnam $teel Plant.
31. 3>A/03>A? $i6th "i,e05ear Plan F Dor) on 8isa)hapatnam $teel Plant
started with a bi* ban* and top priorit( was accorded to
start the plant. $chemes for moderni9ation of #hilai $teel
Plant4 Rour)ela $teel Plant4 Dur*apur steel plant and
T%$&! were initiated. &apacit( at the end of $i6th "i,e0
5ear Plan from si6 inte*rated plants stood 33.?/ million
tons.
3B. 3>A?03>>3 $e,enth "i,e05ear Plan F E6pansion wor)s at #hilai and
#o)aro $teel Plant completed. Pro*ress of 8isa)hapatnam
$teel Plant pic)ed up and the nationali9ed concept has been
introduced to commission the plant with ./ MT liquid steel
capacities b( 3>>/.
3A. 3>>203>>B Ei*ht "i,e05ear Plans F The 8isa)hapatnam $teel Plant
was commissioned in 3>>2. The cost of plant has become
13

around AB?? cores. 8isa)hapatnam $teel Plant started the
production and moderni9ation of other steel plants is also
dul( en*a*ed.
3>. 3>>B02//2 inth "i,e05ear Plant F Restructurin* of 8isa)hapatnam
$teel Plant and other public sector underta)in*s.
2/ 2//202//B Tenth "i,e05ear Plan F$teel industr( re*isters a *rowth of
>.>G.8isa)hapatnam steel plant has hi*h re*ime tar*ets
and achie,ed the best of them.
First Five-Year Plan (1951 to 1956):
o new steel plant came up4 as the first plan was mainl( a*riculture oriented.
=owe,er4 %%$&! was allowed to e6pand form 3MT7(ear to 2 MT7(ear of in*ots4 and
from /.? MT7(ear to 3./ MT7(ear of steel. And4 the "irst "i,e05ear Plan
contemplated a new $teel Plant to be erected in Public $ector.
Thus the =industan $teel 'imited ;=$'< was born on 3>
th
:an 3>?C with the
decision of settin* up three steel plants each with one million tons in*ot steel per (ear
at Rour)ela4 #hilai and Dur*apur. Thou*h T%$&! and %%$&! were scheduled to
e6pand4 T%$&! started its e6pansion pro*ram.
Second five-year plan (1956 to 1961):
Durin* this period4 additional steel producin* capacit( was added and a
decision was ta)en to increase the in*ot steel output in %ndia to 1 million tons per
(ear. The three one million ton steel plant one each at Rour)ela4 #hilai and Dur*apur
were completed durin* this period. The( started production durin* the end of this
plan.
14

The salient features are *i,en below-
Plant &apacit( 'ocation &ollaboration
Production ;Tons<
R$P $undar*arh4 !rissa German( B2/4///
#$P Dur*apur4 M.P. U.$.$.R BB/4///
D$P #urdwan4 D.#. UE A//4///
%n addition to the abo,e #$P and D$P each were ha,in* the capacit( to
produce .//4/// tons of pi* iron for sale.
Third five-year plan (1961 to 1966):
Durin* this period4 the three steel plants under =$'4 T%$&!4 and %%$&! were
e6panded as shown below. =owe,er4 these could be completed onl( b( 3>1A F 3>1>.
Recession Period ;3>11 F 3>1><-
The amblin* e6pansion pro*ram ta)en up durin* the Third "i,e05ear Plan
could not be completed durin* that period. All the e6pansion pro*rams were acti,el(
e6ecuted durin* this period
Fourth Five-Year Plan (1969 - 1974):
#alancin* facilities were incorporated in all the steel plants. $alem $teel Plant
wor) was ta)en up durin* this period. 'icenses were *i,en for settin* up of man(
Mini $teel Plants and Rollin* Mills. Go,ernment accepted the idea of settin* up two
more $teel Plants in the $outh one at 8isa)hapatnam and other at =ospet in
Earnata)a. #oth of them were en,isa*ed to produce plain low &arbon $teel Products
initiall( with a capacit( of 2 MT7(ear of in*ots. $teel authorit( of %ndia 'td.4 was also
formed durin* this period on 2
nd
:an 3>B.. &entral Research and De,elopment
15

!r*ani9ation was set up in :une4 3>B. to tac)le the research and de,elopment
problems of %ron and $teel %ndustr(.
Fifth Five-Year Plan (1974 to 1979):
Dor) on $alem project pro*ressed well. #o)aro with 3.B MT capacities started
in "eb 3>BA. The e6pansions of #hilai $teel Plant form 2.? MT to C MT and #o)aro
from 3.B MT to C./ MT pic)ed up momentum. The idea of settin* up the ?
th
inte*rated steel plant at 8i9a* too) a definite shape. #( the end of fifth fi,e0(ear plan
the total installed capacit( from si6 inte*rated plants was 3/.1 MT7(ear.
Annual plans 3>B> to 3>A/- ,arious plans named abo,e were re,iewed and the
pro*ress on different plants consolidated. $o,iet F Union has a*reed to help in settin*
up the 8i9a* steel plant.
Sixth Five-Year Plan (1980 - 1985):
Dor) in e6pansion of #hilai and #o)aro Plant was pro*ressed. #o)aroHs
intermediate sta*e of 2.? MT completed. Man( of the units were commissioned e.*. a<
$alem steel plant was commissioned b< on .3.>.A3 wor) on 8i9a* $teel Plant started
with a ban* and c< top priorit( was accorded to moderni9e the plant at T%$&!.
$chemes for moderni9ation of #$P4 R$P4 D$P4 and %%$&! were initiated at the end of
si6th fi,e0(ear plan. The capacit( from si6 inte*rated steel plants stood at 33.?1 MT.
Seventh Five-Year Plan (1985 to 1991):
Almost all the units in the e6pansion wor) of #hilai and #o)aro to C MT
completed. Pro*ress of 8i9a* $teel Plant pic)ed up and the rationali9ed concept has
been introduced to commission the plant with . MT liquid steel capacities b( 3>>/.
Eighth Five-Year Plan (1992 to 1997):
16

All units of 8i9a* $teel Plant were commissioned b( :ul(4 3>>2. Go,ernment
of %ndia has *i,en permission to set up Mini $teel Plants in Pri,ate $ectors.
Ninth Five-Year Plan (1998 to 2002):
ational De,elopment &ouncil under &entral Go,ernment has deposited Rs.
A?>.2// corers in ninth fi,e (ear plan that tar*ets an o,erall 1.?G *rowth *ross
domestic production and will necessitate a BG *rowth in the remainin* (ears of plan.
Global Scenario:
As per %%$%
%n March 2//? Dorld &rude $teel output was >2.AMT when compared to
March 2//C ;AB.2 MT<4 the chan*e in percenta*e was 1.?G.
&hina remained the world@s lar*est &rude $teel producer in 2//? also
;2B.?MT< followed b( :apan ;>.1MT< and U$A ;A.3MT<. %ndia occupied the
A
th
position ;A.AMT<
U$A remained the lar*est importer of semi0finished and finished steel
products in 2//2 followed b( &hina and German(.
the *lobal steel scenario ha,e been-
Under the auspices of the !E&D ;!r*ani9ation for Economic &o0operation +
De,elopment< the ne*otiations amon* the major steel producin* countries for a $teel
$ubsid( A*reement ;$$A< held in 2//. with the objecti,e to a*ree on a complete
ne*otiatin* te6t for the $$A b( the middle of 2//C. %t also set subsidies for the $teel
%ndustr( of a ceilin* of /.?G of the ,alue of production to be used e6clusi,el( for
Research + De,elopment.
The *lobal econom( witnessed a *radual reco,er( from late 2//. onwards.
&hina has become one of the major factors currentl( dri,in* the world
econom(.
17

As a result of these economic de,elopments %%$% has projected an increase b(
1.2G or ?. million metric tones in 2//C in the *lobal consumption of finished
steel products. %%$% has split the *rowth into two separate areas4 &hina and the
Rest of the Dorld ;R!D<. $teel consumption in &hina has been estimated to
increase b( 3..3G or .3 met in 2//C.
U$A has repealed the safe*uard measures on import of steel as a result of a
rulin*4 b( a DT! Dispute Resolution Panel4 which held these measures to be
ille*al under the DT! re*ime.
Present Scenario of Indian Steel Industry:
%ndia is uniquel( placed to become a ,er( lar*e producer and consumer of
finished steel products in the world. $ubstantial reser,es of hi*h *rade iron ore4 low
wa*e rates4 technical and mana*erial s)ills of a hi*h order ha,e all enabled %ndia to
*ain this stature4 b( becomin* 3/
th
lar*est producer of steel in the world.
Unfortunatel( for the %ndian steel industr(4 the price and distribution controls to which
it was subjected till about economic liberali9ation process be*an in the earl( 3>>/@s
did not permit the lar*e inte*rated steel plants to moderni9e their steel manufacturin*
facilities or to up*rade their technolo*ies to the state of art le,els from time to time.
Dith the economic liberali9ation that was initiated in 3>>24 %ndian $teel
%ndustr( has to accept the ine,itable i.e. to appreciate the implications of low import
dut( rated4 face forei*n competition and some how impro,e its stren*ths and
competiti,e ed*e to produce *ood qualit( products at lower prices and learn to
sur,i,e in the mar)et place. "ollowin* liberali9ation4 the steel %ndustr( is well set on
the path of *lobali9ation. The d(namics of the Dorld $teel %ndustr( has a close
relation with %ndian steel %ndustr(. Presentl( in %ndia4 $teel products are bein*
produced from four different sources ,i9.4
%nte*rated $teel Plants
Mini $teel Plants
18

Re0rollin* Mills
Allo( + $pecial $teel Plants
%nte*rated $teel Plants ha,e lar*er capacit( and produce $teel from basic raw
materials and the other three cate*ories mentioned are characteri9ed b( low
in,estment and low brea)0e,en point.
Characteristics of Integrated Steel Plants:
The( ha,e lar*e capacities.
=i*hl( capital intensi,e.
The( ha,e lon* *estation period.
'abour intensi,e.
The( would ha,e all facilities includin* raw materials resources4 water suppl(4
power suppl(4 testin* and inspection facilities4 township facilities4 medical4
educational and recreational etc.
%nter dependenc( of all the processin* units on the proceedin* and succeedin*
units in the path of materials flow.
A potential source for earnin* forei*n e6chan*e throu*h e6ports.
The( ser,e as centers for the de,elopment of ancillar( industries.
The( are major consumer of refractor( materials.
The integrated Steel Plants in India are:
Rour)ela $teel Plant
#hilai $teel Plant
#o)aro $teel Plant
19

Dur*apur $teel Plant
%ndian %ron and $teel &ompan( ;%%$&!<
Tata %ron and $teel &ompan( ;T%$&!<
8isa)hapatnam $teel Plant ;8$P<
Exim Policy (2002-2007):
To facilitate sustained *rowth in e6ports to attain a share of 3G of *lobal
merchandise trade.
To stimulate sustained economic *rowth b( pro,idin* access to essential raw
materials4 intermediates4 components4 consumables and capital *oods required
for au*mentin* production and pro,idin* ser,ices.
To enhance the technolo*ical stren*th and efficienc( of %ndian a*riculture4
industr( and ser,ices4 thereb( impro,in* their competiti,e stren*th while
*eneratin* new emplo(ment opportunities4 and to encoura*e the attainment of
internationall( accepted standards of qualit(.
To pro,ide consumers with *ood qualit( *oods and ser,ices at internationall(
competiti,e prices while at the same creatin* a le,el pla(in* field for the
domestic producers
The New Industrial Policy Regime:
The ew %ndustrial polic( has opened up the iron and steel sector for pri,ate
in,estment b(
;a< Remo,in* it from the list of industries reser,ed for public sector and
;b< E6emptin* it from compulsor( licensin*.
20

%mports of forei*n technolo*( as well as forei*n direct in,estment are freel(
permitted up to certain limits under an automatic route. Ministr( of $teel pla(s the
role of facilitator4 pro,idin* broad directions and assistance to new and e6istin* steel
plants4 in the liberali9ed scenario.
The Growth Profile:
STEEL:
The liberali9ation of industrial polic( and other initiati,es ta)en b( the
Go,ernment ha,e *i,en a definite impetus for entr(4 participation and *rowth of the
pri,ate sector in the steel industr(. Dhile the e6istin* units are bein*
moderni9ed7e6panded4 a lar*e number of new7*reen field steel plants ha,e also come
up in different parts of the countr( based on modern4 cost effecti,e4 state of0the0art
technolo*ies.
At present4 total ;crude< steel ma)in* capacit( is o,er .C million tons and
%ndia4 the A
th
lar*est producer of steel in the world4 has to its credit4 the capabilit( to
produce a ,ariet( of *rades and that too4 of international qualit( standards. As per the
ratin*s of the presti*ious IDorld $teel D(namicsJ4 %ndian =R products are classified
in the Tier %% cate*or( qualit( products0 a major reason behind their acceptance in the
world mar)et. EU4 :apan has qualified for the top slot4 while countries li)e $outh
Eorea4 U$A share the same class as %ndia.

%n pi* iron also4 the *rowth has been substantial. Prior to 3>>34 there was onl(
one unit in the secondar( sector. Post liberali9ation4 the A%"%s has sanctioned 23 new
projects with a total capacit( of appro6 ..> million tones. !f these4 31 units ha,e
alread( been commissioned. The production of million tones in 2//20/.. Durin* the
(ear 2//.0/C4 the production of Pi* %ron was ?.223 million tones.
Market Scenario:
21

After liberali9ation4 with hu*e scale addition to steel ma)in* capacit(.
Apparent consumption of steel increased from 3C.AC million tons in
3>>30>2 to ./.21? million tons in 2//.0/C.
The production of steel in 2//.0/C is .1.3>. million tons as a*ainst
...1B million tons in 2//20/. thereb( re*isterin* B.?G *rowth.
The demand of steel has been firmed up both at home as well as
internationall(.
Efforts are bein* made to boost demand particularl( in rural areas and
also to increase e6ports.
Production:
$teel industr( was de0licensed and decontrolled in 3>>3 and 3>>2
respecti,el(.
%ndia is the A
th
lar*est producer of steel in the world.
%n 2//.0/C4 finished steel production was .1.3>. million tones.
Pi* iron production in 2//.0/C was ?.223 million tons.
$pon*e iron production was A./A? million tons durin* 2//.02//C.
The annual *rowth rate of crude steel production in 2//202//. was AG
and in 2//.02//C was 1G. 'ast C (ears production performance is as
under-0
Demand - Availability Projection:
Demand0 A,ailabilit( of iron and steel in the countr( is projected b( Ministr(
of $teel annuall(.
22

Gaps in A,ailabilit( are met mostl( throu*h imports.
%nterface with consumers b( wa( of $teel &onsumer &ouncil e6ists4 which is
conducted on re*ular basis.
%nterface helps in redressin* a,ailabilit( problems4 complaints related to
qualit(.
Pricing & Distribution
Price re*ulation of iron + steel was abolished on 31.3.3>>2.
Distribution controls on iron + steel remo,ed e6cept ? priorit( sectors4 ,i9.
Defence4 Railwa(s4 $mall $cale %ndustries &orporations4 E6porters of
En*ineerin* Goods and orth Eastern re*ion.
Allocation to priorit( sectors is made b( Ministr( of $teel.
Go,ernment has no control o,er prices of %ron + $teel.
!pen mar)et prices are *enerall( on rise.
Price increases of late ha,e ta)en place mostl( in lon* products than flat
products.
Imports of Iron & Steel:
%ron + $teel are freel( importable as per the e6tant polic(.
%ndia has been annuall( importin* around 2./? Million Tones of $teel.
%mport dut( on se,eral raw materials used b( the steel sector li)e non0co)in*
coal4 met co)e and nic)el has been reduced to ?G. %mport dut( on co)in* coal
has been reduced to Kil@.
23

Exports of Iron & Steel:
%ron + $teel are freel( e6portable and %ndia is a net e6porter of steel.
Ad,ance 'icensin* $cheme allows dut( free import of raw materials for
E6ports.
Dut( Entitlement Pass #oo) $cheme ;DEP#< also facilitates e6ports. The
Go,ernment has temporaril( suspended the DEP# on iron + $teel +
ferroallo(s w.e.f 2B
th
March 2//C as a measure to increase %ron + $teel
a,ailabilit( in the domestic mar)et.
$teel E6porter@s "orum has been set up to boost steel e6ports.
An Anti Dumpin* Directorate has been set up under the Ministr( of
&ommerce with adequate power to fi*ht trade actions while remainin* within
the DT! framewor).
Customs Duty:
The pea) rate of &ustom Dut( has been reducin* sharpl( durin* the
last ? (ears. %n the interim bud*et for 2//C0/?4 announced in
:anuar(@2//C the pea) rate was reduced from 2?G to 2/G. %n 2//C the
&ustoms Dut( on carbon steel items and pi* iron was further reduced
to ?G.
The custom dut( on scrap was nil.
%mport dut( on co)in* coal has been reduced to Knil@4 and on
metallur*ical co)e reduced to ?G.
Excise Duty:
The Go,ernment has ta)en a number of steps to ensure the a,ailabilit( of iron
and steel items which inter0alias includes reduction in E6cise Dut( b( 31G with
addition to Educational &ess 2G on 31G.
24

Levies on Iron & Steel:
DF LEVY:
This was a le,( started for fundin* moderni9ation4 e6pansion and
de,elopment of steel sector. The fund4 inter0alias4 supports-
3< &apital e6penditure for moderni9ation4 rehabilitation4 di,ersification4
renewal + replacement of %nte*rated $teel plants.
2< Research + De,elopment
.< Rebates to $$% &orporations
C< E6penditure on ERU of :P&
$D" le,( was abolished on 23.C.>C
&abinet decided that corpus could be rec(cled for loans to Main
producers
%nterest on loans to Main Producers is set aside for promotion of R+D
on steel etc.
An Empowered &ommittee has been set up to *uide the R+D effort in
this sector.
25

CHAPTER-III
COMPANY PROFILE
The Go,ernment of %ndia has decided to set up an inte*rated $teel Plant at
8isa)hapatnam to meet the *rowin* domestic needs of steel. 8isa)hapatnam $teel
Plant was the effect of the persistent demands and mass mo,ements. %t is another step
towards increasin* the countr(@s steel production.
26

The decision of the Go,ernment to set up an inte*rated steel plant was laid
down b( the then Prime Minister $mt. %ndia Gandhi. The Prime Minister laid the
foundation stone on 2/
th
:anuar( 3>B3.
The consultant4 M7s M Dastur + &o ;P,t< 'td. submitted a techno0economic
feasibilit( report in "ebruar( 3>B24 and detailed project report for the plant4 with an
annual capacit( of ..C million tones of liquid steel.
The Go,ernment of %ndia and U$$R si*ned an a*reement on 32
th
:une 3>B>
for the co0operation in settin* up ..C million tones inte*rated $teel Plant. The project
was estimated to cost to Rs..4 A>B.2A crores based on prices as on C
th
Luarter of
3>A3.=owe,er4 on completion of the construction and commissionin* of the whole
Plant in 3>>24 the cost escalated to Rs.A4 B?? crores based on prices as on 2
nd
Luarter
of 3>>C.
Unli)e other inte*rated $teel Plants in %ndia4 8isa)hapatnam $teel Plant is one
of the most modern steel plants in the countr(. The plant was dedicated to the nation
on 3
st
Au*ust 3>>2 b( the then Prime Minister4 $ri.P.8.arasimha Rao.
ew technolo*(4 lar*e0scale computeri9ation and automation etc4 are
incorporated in the Plant at the international le,els and attain such labor producti,it(4
the or*ani9ational manpower has been rationali9ed. The manpower in the 8$P has
been limited to3B4 ?// emplo(ees. The plant has the capacit( of producin* ../ million
tones of liquid steel and 2.1?1 million tones of saleable steel.
%t has set up two major #last "urnaces4 the Goda,ari and the Erishna4 which
are the en,( of an( modern steel ma)in* comple6.
The econom( of a nation depends on core sector industries li)e iron and steel.
$teel is the basic input for construction4 machines buildin* and transport industries.
Eeepin* in ,iew the importance of steel the followin* inte*rated steel plant with
forei*n collaborations was constructed in the public sector in the post independence
era.
27

ORGANIZATION CHART
VISION:
To be a continuousl( *rowin* world0class compan(.
De shall-
=arness our *rowth potential and sustain profitable *rowth.
Deli,er hi*h qualit( and cost competiti,e products and be the first choice of
customers.
28
CHAIRMAN CUM MANAGING DIRECTOR
Director
;"inance<
Director
;&ommercial<
Director
;Personnel<
Director
;!perations<
Director
;8i*ilance<
ED
;"inance<
&ompan(
$ecretar(
AGM
;%nt. Audit<
ED ;MM<
Addl. GM
;M)t*<
Addl. GM
;M)t*<
0 $er,ices
+ E6ports
DGM
;M+=$< %7&
GM ;P+A<
Addl. GM
;P+%R<
DGM ;Tr*<
DGM ;=RD<
DGM ;'e*al
Affairs<
GM
;Dor)s<
Addl. GM
;LATD<
Addl. GM
;Audio +
Telco<
Addl. GM
;$er,ices<
Addl. GM
;$teel<
Addl. GM
;&4 $ + &<
ED
;Maint.<
GM
;Maint.<
Addl. GM
;&R+RM<
DGM
;$(stem<
GM
;D+E<+
%7& PE&$
Addl. GM
;8i*.<
A&M
;&ordon<

&reate an inspirin* wor) en,ironment to unleash the creati,e ener*( of people.
Achie,e e6cellence in enterprise mana*ement.
#e a respected corporate citi9en4 ensure clean and *reen en,ironment and de,elop
,ibrant communities around.
Mission:
To attain 31 million tone liquid steel capacit( throu*h technolo*ical up
0*radation4 operational efficienc( and e6pansion4 to produce steel at international
standards of cost and qualit(4 and to meet the aspirations of the sta)eholders.
Core Values:
&ommitment
&ustomer satisfaction
&ontinuous impro,ement
&oncern of en,ironment
&reati,it( and inno,ation
BRIEF IDEA ABOUT STEEL MAKING PROCESS
The modern era in steel ma)in* be*an with the introduction of =enr(
#essemerHs + #essemer process in the late 3A?/@s. This enabled steel to be produced
in lar*e quantities cheapl(4 so that Mild $teel is now used for most purposes for which
wrou*ht iron was formerl( used. This was onl( the first of a number of methods of
steel production. The Gilchrist0Thomas process ;or basic #essemer process< was an
29

impro,ement to the #essemer process4 linin* the con,erter with a basic material to
remo,e phosphorus. Another was the $iemens0Martin process of open hearth
steelma)in* which li)e the Gilchrist0Thomas process complemented4 rather than
replaced4 the ori*inal #essemer process.

These were rendered obsolete b( the 'in90Donawit9 process of basic o6(*en
steel ma)in*4 de,eloped in the 3>?/@s4 and other o6(*en steelma)in* processes. !ne
third of worldHs steel is currentl( produced in &hina. Arcelor0Mittal is howe,er the
production. Dhite0hot steel pourin* out of an electric arc furnace.
#last furnaces ha,e been used for two millennia to produce pi* iron4 a crucial
step in the steel production process4 from iron ore b( combinin* fuel4 charcoal4 and
air. Modern methods use co)e instead of charcoal4 which has pro,en to be a *reat deal
more efficient and is creditin* with contributin* to the #ritish %ndustrial Re,olution.
!nce the iron is refined4 con,erters are used to create steel from the iron. Durin* the
late 3>th and earl( 2/th centur( there were man( widel( used methods such as the
#essemer process and the $iemens0Martin process. =owe,er4 basic o6(*en
steelma)in*4 in which pure o6(*en is fed to the furnace to limit impurities4 has
*enerall( replaced these older s(stems. Electric arc furnaces are a common method of
reprocessin* scrap metal to create new steel. The( can also be used for con,ertin* pi*
iron to steel4 but the( use a *reat deal of electricit( ;about CC/ )Dh per metric ton<4
and are thus *enerall( onl( economical when there is a plentiful suppl( of cheap
electricit(.
30
HRD POLICY
focu
s
%dentif(in* competence needs
Pro,idin* trainin* inputs
Monitorin* trainin* effecti,eness
&reatin* learnin* en,ironment
"acilitatin* $elf De,elopment4
inno,ati,eness + self e6pression
Enablin* emplo(ees to assume
hi*her responsibilit(

31

HUMAN RESOURCES
HRD PHILOSOPHY IN VISAKHAPATNAM STEEL PLANT
Emplo(ees of the or*ani9ation are *reatest and most ,aluable resources.
Dhole on the one hand4 =RD should appropriatel( harness the emplo(ee
potential for the attainment of the compan( objecti,es4 the compan( on the
other4 as its corporate responsibilit(4 should create an enablin* climate where
in human talent *ets the best opportunit( for self e6pression4 all round
de,elopment and fulfillment.
People are more than mere resources and therefore it will be the compan(@s
sincere endea,or to treat people with all the respect and that is warranted when
emplo(ees are seen as more mere instrumentalities.
=RD as a mana*ement function will be *i,en a place of strate*ic priorit(4
alon* with function li)e production4 maintenance4 materials on finance in the
o,erall scheme of mana*ement action in the compan(.
=RD does not refer to trainin* alone4 nor it is just a new name for trainin*. %n
R%'78$P =RD refers to creati,e and inno,ati,e initiati,es in se,eral
mana*ement functions for the de,elopment and *rowth of emplo(ees
=RD should e,entuall( be a core philosoph( of all mana*ement actions and
should not remain merel( a departmental 7 sectional acti,it(.
All functional and di,isional heads responsible for ,arious acti,ities of the
compan( will imbibe the =RD spirit and suitabilit( inte*rate =RD into their
plans4 decisions and actions
32

HRD Objectives of Visakhapatnam Steel Plant:
To pro,ide initiall( a suitable match between emplo(ee competence le,el and
compan(@s wor) requirements
To foster an appropriate climate and culture which nurtures emplo(ee
competence and adequate moti,ational le,els for the application of their
abilities to assi*ned jobs7roles with required commitment.
To enable emplo(ees see) *reater identification with the compan( b( fusin*
mana*ement decisions and actions with the requisite care4 concern and
de,elopmental approach.
To initiall( enable the emplo(ees and the or*ani9ation achie,e its mission and
objecti,es and business *oals throu*h =RD.
OHSAS- 18001 Certification:
%t is widel( reco*ni9ed that the wor) itself and the wor) en,ironment are
factors are paramount importance for health and well0bein* of the wor)in* and
*eneral population. Most industrial jobs are inherentl( associate with certain wor)in*
conditions which are inimical to health and wor)ers e6posed to them sooner or later
succumb to their ad,erse influence unless adequatel( protected. The principles of
occupational ris) mana*ement ma( be the same in de,eloped and de,elopin*
countries. =owe,er4 there can be a wide di,ersit( in practice. A major trend in the
re*ulation of industrial ris)s to human health and the en,ironment is the pro,ision of
rele,ant information to all sta)eholders and ris) bearers. The #ritish $tandard
%nstitute ;#$%<- !ccupational =ealth and $afet( Assessment $eries ;!=$A$<
specification pro,ide theoretical insi*hts to enable an or*ani9ation to control its
occupational health and safet( ;!=+$< ris)s and impro,e its performance.
33

8isa)hapatnam $teel Plant ;8i9a* $teel< is an %$! >//34 %$! 3C//34 and
!=$A$ 3A//34 certified public sector or*ani9ation in %ndia. %t is the onl( steel plant
in %ndia4 had all the three certificates. This paper re,iews )e( aspects li)e ha9ard
identification and ris) assessment;=%RA< carried out in ?/ departments for ph(sical4
chemical and #iolo*ical ha9ards4 ris) control measures ta)en4 dissemination of
occupational ris) mana*ement information to 3B4/// wor)force as a part of !=$A$
3A//3 certification process. De summari9e the role of occupational health ser,ices
department in ha9ard identification4 ris) assessment and ris) control at ,arious
wor)in* en,ironments with an emphasis on continual impro,ement and occupational
ris) mana*ement.
Objectives:
E6pand plant capacit( to 1..mT b( 2//A0/> with the mission to e6pand
further in subsequent phases as per the corporate plan
$ustain *ross mar*in to turno,er ration M 2?G
#e amon*st top fi,e lowest steel producers in the world b( 2//>03/
Achie,e hi*her le,els of customer satisfaction than competitors
#e reco*ni9ed as an e6cellent business or*ani9ation b( 2//A0/>
%nstill ri*ht attitude amon*st emplo(ees and facilitate them to e6cel in their
professional4 personal and social life.
Quality Policy:
Emplo(ees of 8isa)hapatnam $teel Plant are committed to suppl( their customers@
qualit( products and ser,ices. To accomplish this 8isa)hapatnam $teel Plant will-
Manufacture products as per specification and standards a*reed with the
customer.
34

"ollow clearl( documented procedures for achie,in* e6pected qualit( standard
of products and ser,ices.
&ontinuousl( stri,e to impro,e qualit( of all material4 processes and products.
Maintain an enablin* en,ironment4 which encoura*es acti,es in,ol,ement of
all emplo(ees to pursue continuous impro,ement of qualit(.
Technological Highlights of VSP:
"irst shore based inte*rated steel plant.
$electi,e crushin* with pneumatic separation of coal blend.
B Meter tall &o)e !,ens.
Dr( Luenchin* of hot co)e and production of steam and power from hot inert
*ases.
#ase0mi6 (ard for the $inter Plant.
.2// cu. m #last "urnace ha,in* belled0less top equipment with con,e(or
char*in*.
Granulation of 3//G molten sla* at the &ast =ouse.
#.". top pressure reco,er( turbine for power *eneration.
Desulphuri9ation facilities for pre0treatment of hot metal.
$ub lance measurement of d(namic blowin* control with computer.
3//G continuous castin* of liquid steel.
=i*h capacit(4 hi*h speed4 computer controlled multi0line mills.
Use of on0line heat treatment ITemp coreJ processes for reinforcement bars.
Use of o twist rollin* and controlled coolin* I$telmoreJ of wire rods.
%ncorporation of peripheral (ard for incomin* and out*oin* materials.
35

"irst inte*rated steel plant to recei,e %$! >//2 certification for all its products.
Major sources of Raw Materials:
%ron !re lumps + fines #ailadilla4 M.P
#" 'ime $tone :a**a((apeta4 A.P
$M$ 'ime $tone UAE
#" Dolomite Dubai
$M$ Dolomite Madharam4 A.P
Man*anese !re &hipuripalli4 A.P
#oiler &oal Talcher4 !rissa
&o)in* &oal Australia
Dater suppl( 5eluru canal4 Andhra Pradesh
Power suppl( &apti,e power plant
Medium coo)in* coal Gidi7$wan*7Rajarappa7Ear*il
Major Units:
DEPARTMET$
AUA' &AP.
;K///T<
U%T$ ;../ MT $TAGE<
&!EE !8ER$ 24213
. #atteries each of 1B o,ens + B Mts
=ei*ht
$%TER P'AT ?42?1
2 $inter machines of .32 $qm *rate
area each
#'A$T "URA&E .4C// 2 "urnaces of .2// cu m ,olume each
$TEE' ME'T $=!P .4///
. 'D &on,erters each of 3?/ &um.
8olume and si9e C strand bloom
casters
'MMM B3/ C $tand finishin* Mill
DRM A?/ 2 6 3/ $tand finishin* Mill
MM$M A?/ 1 $tand finishin* Mill
Statistical Information:
MANPOWER PROFILE - GROWTH PATTERNS
36

5EAR ENE&UT%8E$ !0ENE&UT%8E$
.30.03>>B 213B 3C?B/
.30.03>>A 213B 3C?B2
.30.03>>> 213B 3C/AB
.30.02/// 21A. 3.?>.
.30.02//3 C/2B 3.3/C
.30.02//2 C2/. 32A2.
.30.02//. C./A 32?A1
.30.02//C C?.. 32222
.30.02//? C?32 323/3
.30.02//1 C12> 33>.2
.30.02//B C1BC 33B2B
.30.02//A C>1B 33CC>
.30.02//> ?23A 32//B
.30.02/3/ ?21. 32?1B

MAN POWER PROFILE
37

Error: Reference source not foundQualification Profile as on
31.03.2010:
En*ineerin* 03C..CG
Diploma 03/...G
Grad7PG 033.1?G
'iterates 02C...G
%T% 0.>..?G
38

DIVISION-WISE MAN POWER:
Dor)s 0A2./.G
Projects 02.3/G
Mines 02.3CG
!thers 03..B2G
AWARDS:
3. %$! >//2 for $M$ and all the down stream units F a unique distinction in
the steel industr(.
2. %ndira Pri(a Darshini 8ri)sha Mitra award 3>>20>.4 ehru memorial
national award for pollution control 3>>20>. + 3>>.0>C.
.. EEP& e6port e6cellence award F 3>>C0>?.
C. &%% ;$outhern Re*ion< ener*( conser,ation award F 3>>?03>>1.
?. &ontinuousl( *rowin* peacoc) ;3
st
pri9e< national qualit( award F 3>>1.
1. $teel ministries troph( I#est safet( performance F 3>>1.J
B. %%M national qualit( commitment award F 3>>B.
A. Gold star award for e6cellent performance in producti,it(.
>. Ud(o* e6cellence *old medal for e6cellence in steel plant.
3/. E6cellence award for out standin* performance in producti,it( mana*ement4
qualit( and inno,ation.
33. %$PAT $ura)sha Puras)ar ;3
st
pri9e< for lar*est accident free period 3>>30>C.
32. PM Troph( for the (ear 2//20/. as the #est %nte*rated $teel Plant
3.. Dorld qualit( commitment international star award in 2//C
3C. &ll0G#& ational Award in 2//?
39

3?. $afet( inno,ation award in 2//1
31. !r*ani9ational e6cellence award in 2//1
3B. ational Ener*( &onser,ation Award in 2//1
3A. Enterprise E6cellence Award F 2//B
3>. 8iswa)arma Rashtri(a Puras)ar F 2//B
2/. #est Lualit( &ircles implementin* !r*ani9ation Award 02//B
Employee involvement & Process improvements:
The ima*ination and creati,it( of emplo(ees ha,e alwa(s been )e( success
factors for the compan(. Emplo(ees of R%' ha,e alwa(s been at the forefront in
contributin* ideas for process impro,ements. 8oluntar( in,ol,ement of
emplo(ees in C2?3 qualit( circles projects is a testimon( of the interest e6hibited
b( emplo(ees in process impro,ements.
Safety & Health:
$afet( and health of emplo(ees has alwa(s been the prime concern in the plant
and all efforts ha,e been made to le,era*e upon the safet( initiati,es to ma6imi9e
emplo(ee morale and satisfaction. These initiati,es ha,e (ielded positi,e results
with a 3....G reduction in reportable accidents when compared to (ear 2//B0/A.
Corporate Social Responsibility:
R%' continues to contribute in the area of &orporate $ocial Responsibilit(
;&$R<. &$R acti,ities in R%' focus mainl( on En,ironmental care4 education4
communit( health care4 people care4 peripheral de,elopment4 cultural
efflorescence4 acti,ities as a responsible corporate citi9en and help durin* natural
calamities.
40

CHAPTER-IV
Conceptual Frame Work
41

Financial Ratio Analysis
Introduction:
The traditional financial statements comprisin* the balance sheet and the profit
and loss account are pro,in* the information related to the financial operation of the
firm. The( pro,ide some e6tremel( useful information that mirrors the financial
position on a particular date in terms of the structure of assets4 liabilities and owner@s
equit( and so on. The profit and loss account shows the results of operations durin* a
certain period of time in terms of the re,enues obtained and the cost incurred durin*
the (ear. Therefore4 much can be learnt about a firm from a careful e6amination of its
financial statements. Users of financial statements can *et further insi*ht about
financial stren*ths and wea)nesses of the firm if the( properl( anal(9e information
reported in these statements. Mana*ement should be particularl( interested in
)nowin* financial wea)ness of the firm to ta)e suitable correcti,e actions. The future
plans of the firm should be laid down in ,iew of the firm@s financial stren*ths and
wea)nesses. Thus4 financial anal(sis is the startin* point for ma)in* plans4 before
usin* an( sophisticated forecastin* and plannin* procedures. Understandin* the past
is a pre0requisite for anticipatin* the future.
Ratio Analysis - Introduction:
Ration anal(sis is a widel( F used tool of financial anal(sis. %t is used to
interpret the financial statements so that the stren*ths and wea)nesses of the firm as
well as its historical performance and current financial condition can be determined. A
ratio is defined as Ithe indicated quotient of two mathematical e6pressionsJ and as the
Ithe relationship between two or more thin*sJ.
%t is a benchmar) for e,aluatin* the financial position and performance of a
firm.
42

The term ratio refers to the numerical or quantitati,e relationship between two
items7,ariables. This relationship can be e6pressed as-
3. Percenta*es4 sa(4 et Profits are 2?G of $ales ;assumin* et Profit of
Rs.2?4/// and $ales of Rs.34//4///<4
2. "raction ;et profit is 37C
th
of $ales< and
.. Proportion of numbers ;the relationship between et profits and $ales is 3-C<.
These alternati,e methods of e6pressin* items4 which are related to each other4
are4 for purpose of financial anal(sis4 referred to as ratio anal(sis. %t should be noted
that computin* the ratios does not add an( information alread( inherent in the abo,e
fi*ures of profits and sales. Dhat the ratios do is that the( re,eal the relationship in a
more meanin*ful wa( so as to enable us to draw conclusions from them. The
rationale of ratio anal(sis lies in the fact that it ma)es related information comparable.
A sin*le fi*ure b( itself has no meanin* but when e6pressed in terms of a related
fi*ure4 it (ields si*nificant inferences. "or instance4 the fact that the et profits of a
firm amount to4 sa( Rs. Ten 'a)hs throws no li*ht on its adequac( or otherwise. The
fi*ure of et profit has to be considered in relation to other ,ariables. =ow does it
stand in relation to salesO %f4 therefore4 et profits are shown in terms of their
relationship with items such as $ales4 Assets4 &apital emplo(ed4 Equit( capital and so
on4 meanin*ful conclusions can be drawn re*ardin* their adequac(.
To carr( the abo,e e6ample further4 assumin* the capital emplo(ed to be Rs.?/
la)h and Rs.3// la)h4 the et profit are 2/G and 3/G each respecti,el(. Ratio
anal(sis4 thus4 as a quantitati,e tool4 enables anal(sts to draw quantitati,e answers to
questions such asP are the et profits adequateO Are the assets bein* used efficientl(O
%s the firm sol,entO &an the firm meet its current obli*ations and so onO
Ratio Analysis - Importance:
43

As a tool of financial mana*ement4 ratios are of crucial si*nificance. The
importance of ratio anal(sis lies in the fact that presents facts on a comparati,e basis
and enables the drawin* inference re*ardin* the performance of a firm. Ratio
anal(sis is rele,ant in assessin* the performance of a firm in respect to the followin*
aspects.
3. 'iquidit( position
2. 'on*0term sol,enc(
.. !perational efficienc(
C. !,erall profitabilit(
?. %nter0firm comparison4 and
1. Trend anal(sis
1. Liquidity position:-
Dith the help of ratio anal(sis conclusions can be drawn re*ardin* the
liquidit( position of a firm. The liquidit( position of a firm would be
satisfactor( if it is able to meet its current obli*ations when the( become due.
A firm can be said to ha,e the abilit( to meet its short0term liabilities if it has
sufficient liquid funds to pa( the interest on its short0maturin* debt usuall(
within a (ear as well as to repa( the principal. This abilit( is reflected in the
liquidit( ratio of a firm. The liquidit( ratios are particularl( useful in credit
anal(sis b( ban)s and other suppliers of short0term loans. &ommon liquidit(
ratios include The &urrent ratio4 Luic) ratio and The operatin* &ash flow
ratio.
2. Long-term solvency:-
Ratio anal(sis is equall( useful for assessin* the lon*0term financial ,iabilit(
of a firm. This aspect of the financial position of a borrower is of concern to
the lon*0term creditors4 securit( anal(sts and the present and potential owners
of a business. The lon*0term sol,enc( is measured b( the le,era*e7capital
structure and profitabilit( ratios4 which focus on earnin* power and operatin*
efficienc(. Ratio anal(sis re,eals the stren*th and wea)nesses of a firm in this
respect. The le,era*e ratios4 for instance4 will indicate whether a firm has a
reasonable proportion of ,arious sources of finance or if it is hea,il( loaded
44

proportion of ,arious sources of finance or if it is hea,il( loaded with debt in
which case its sol,enc( is e6posed to serious strain. $imilarl( the ,arious
profitabilit( ratios would re,eal whether or not the firm is able to offer
adequate return to its consistent with the ris) in,ol,ed. %t includes Debt0equit(
ratio4 &ash co,era*e ratio4 The times interest earned ratio etc.
3. Operating Efficiency:-
Another dimension of the usefulness of the ratio anal(sis4 rele,ant from the
,iew point of mana*ement4 is that it throws li*ht on the de*ree of efficienc( in
the mana*ement and utili9ation of its assets. The ,arious acti,it( ratios
measure this )ind of operational efficienc(.
4. Overall Profitability:-
Unli)e the outside parties4 which are interested in one aspect of financial
position of a firm4 the mana*ement is constantl( concerned about the o,er0all
profitabilit( of the enterprise. That is4 the( are concerned about the abilit( of
the firm to meet its short0term as well as lon*0term obli*ations to its creditors4
to ensure a reasonable return to its owners and secure optimum utili9ation of
the assets of the firm. This is possible if an inte*rated ,iew is ta)en and all the
ratios are considered to*ether.
5. Inter-firm Comparison:-
Ratio anal(sis not onl( throws li*ht on the financial position of a firm but also
ser,es as a steppin* stone to remedial measures. This is made possible due to
inter0firm comparison and comparison with industr( a,era*es. A sin*le fi*ure
of a particular ratio is meanin*less unless it is related to some standard or
norm. !ne of the popular techniques is to compare the ratios of a firm with
the industr( a,era*e. An inter0firm comparison would demonstrate the firm@s
position ,is0Q0,is its competitors.
6. Trend Analysis:-
45

Ratio anal(sis enables a firm to ta)e the time dimension into account. %n other
words4 whether the financial position of a firm is impro,in* or deterioratin*
o,er the (ears. This is made possible b( the use of trend anal(sis. The
si*nificance of a trend anal(sis of ratios lies in the fact that the anal(sis can
)now the direction of mo,ement4 i.e.4 whether the mo,ement is fa,orable or
unfa,orable. "or e6ample4 the ratio ma( be low as compared to the norm but
the trend ma( be upward. !n the other hand4 thou*h the present le,el ma( be
satisfactor( but the trend ma( be a declinin* one.
Ratio Analysis-Limitations:
Ratio Anal(sis is a widel( used tool of financial anal(sis. 5et4 it suffers from
,arious limitations. The operational implication of this is that while usin* ratios4 the
conclusions should not be ta)en on their face ,alue. $ome of the limitations4 which
characteri9e ratio anal(sis4 are
i. Difficult( in comparison.
ii. %mpact of %nflation4 and
iii. &onceptual Di,ersit(
i. Difficulty in comparison:-
!ne serious limitation of ratio anal(sis arises out of the difficult( associated
with there comparabilit(. !ne technique that is emplo(ed is inter0firm
comparison. #ut such comparison is ,itiated b( different procedures adopted
b( ,arious firms.
Differences in basis of in,entor( ,aluation ;e.*.-0 last in first out4
a,era*e cost and cost<P
Different depreciation methods ;i.e. strai*ht line 8s. written down
basis<P
Estimated wor)in* life of assets4 particularl( of plant and equipmentP
Amorti9ation of deferred re,enue e6penditure such as preliminar(
e6penditure and discount on issue of sharesP
46

&apitali9ation of leaseP
Treatment of e6traordinar( items of income and e6penditureP and so
on.
$econdl(4 apart from different accountin* procedures4 companies ma( ha,e
different accountin* procedures4 impl(in* differences in the composition of assets4
particularl( current assets. "or these reasons4 the ratios of two firms ma( not be
strictl( comparable.
ii. Impact of Inflation:-
The second major limitation of the ratio anal(sis is associated with price le,el
chan*es. This is a wea)ness of the traditional financial statements4 which are
based on historical cost. An implication of this feature of the financial
statements as re*ards ratio anal(sis is that assets acquired at different periods
are4 in effect4 shown at different prices in the balance sheet4 as the( are not
adjusted for chan*es in the price le,el. As a result4 ratio anal(sis will not be
strictl( comparable.
iii. Conceptual Diversity: -
The factor that influences the usefulness of ratios is that there is difference of
opinion re*ardin* the ,arious concepts used to compute the ratios. There is
alwa(s room for di,ersit( of opinion as to what constitutes shareholderRs
equit(4 debt4 assets4 profit and so on.
"inall(4 ratios are onl( a post0mortem anal(sis of what has happened
between two balance sheet dates. "or one thin* the position in the interim
period is not re,ealed b( ratio anal(sis. Moreo,er4 the( *i,e no clue about the
future.
%n brief4 ratio anal(sis suffers from some serious limitations. The
anal(sis should not be carried awa( b( it@s o,er simplified nature4 eas(
computation with hi*h de*ree of precision. The reliabilit( and si*nificance
attached to ratios will lar*el( depend upon the qualit( of data on which the(
47

are based. The( are as *ood as the data itselfP ne,ertheless4 the( are an
important tool of financial anal(sis.
Ratio Analysis-Guidelines to use:
The calculation of ratios ma( not be a difficult tas) but their use is not eas(.
The information on which these are based4 the constraints of financial statements4
objecti,es for usin* them4 the caliber of the anal(st4 etc4 are important factors4 which
influence the use of ratios.
"ollowin* *uidelines7factors ma( be )ept in mind in interpretin* ,arious ratios.
The reliabilit( of ratio is lin)ed to the accurac( of information in financial
statements. #efore calculatin* ratios one should see whether proper concepts
and con,entions are used for preparin* financial statements of not.
The purpose of the user is also important for the anal(sis of ratios. A creditor4
a ban)er4 an in,estor4 a shareholder4 all has different objects for stud(in*
ratios. The purpose ;or< object for which ratios are required to be studied
should alwa(s be )ept in mind for stud(in* ,arious ratios. Different objects
ma( require the stud( of different ratios.
Another precaution in ratio anal(sis is the proper selection of appropriate
ratios. The ratios should match the purpose for which these are required.
Ratio Analysis-Conclusion:
&alculatin* a lar*e number of ratios without determinin* their need in the present
conte6t ma( confuse the thin*s instead of sol,in* them. !nl( those ratios should be
selected which can throw proper li*ht on the matter to be discussed.
Unless otherwise the ratios calculated are compared with certain standards one
will not be reach at conclusions. These standards ma( be a rule of thumb as in
current ratio ;2-3<4 ma( be industr( standards4 ma( be projected ratios etc.
48

The comparison of calculated ratios with the standards will help the anal(st in
formin* his opinion about financial situation of the concern.
The ratios are onl( the tools of anal(sis but their interpretation will depend
upon the caliber and competence of the anal(st. =e should be familiar with
,arious financial statements and the si*nificance of chan*es etc.
A wron* interpretation ma( create ha,oc for the concern since wron*
conclusions ma( lead to wron* decisions. The utilit( of ratios is lin)ed with
e6pertise of the anal(st.
The ratios are onl( *uidelines for the anal(stP he should not base his decisions
entirel( on them. =e should stud( an( other rele,ant information4 situation in
the concern4 *eneral economic en,ironment etc.4 before reachin* final
conclusions.
The stud( of ratios in isolation ma( not alwa(s pro,e useful. The
interpretation should use the ratios as *uide and ma( tr( to solicit an( other rele,ant
information which helps is reachin* a correct decision.
Ratio Analysis-Types:
$e,eral ratios4 calculated from the accountin* data4 can be *rouped into
,arious classes accordin* to financial acti,it( or function to be e,aluated. As stated
earlier4 the parties interested in financial anal(sis are short0term and lon*0term
creditors4 owners and mana*ement. $hort0term creditorsR main interest is in the
liquidit( position or the short0term sol,enc( of the firm. 'on*0term creditorsR4 on the
other hand4 are more interested in the lon*0term sol,enc( and profitabilit( of the firm.
$imilarl(4 owners concentrate on the firm@s profitabilit( and financial condition.
Mana*ement is interested in e,aluatin* e,er( aspect of the firm@s performance. The(
ha,e to protect the interests of all parties and see that the firm *rows profitabl(. %n
,iew of the requirements of the ,arious users of ratios4 we ma( classif( them into the
followin* four important cate*ories-
49

'%LU%D%T5 RAT%!$
'E8ERAGE RAT%!$
A&T%8%T5 RAT%!$
PR!"%TA#%'%T5 RAT%!$
LIQUIDITY RATIOS:
%t is e6tremel( essential for a firm to be able to meet its obli*ations as the(
become due. 'iquidit( ratios measure the firm@s abilit( to meet current obli*ations.
%n fact4 anal(sis of liquidit( needs the preparation of cash bud*ets and cash
and "und "low statementsP but liquidit( ratios4 b( establishin* a relationship between
cash and other current assets to current obli*ations pro,ided a quic) measure of
liquidit(. A firm should ensure that it does not suffer from lac) of liquidit(4 and also
that it does not ha,e e6cess liquidit(. The failure of a compan( to meet its obli*ations
due to lac) of sufficient liquidit(4 will result in a poor creditworthiness4 loss of
creditorsR confidence4 or e,en in le*al tan*les resultin* in the closure of the compan(.
A ,er( hi*h de*ree of liquidit( is also badP idle assets earn nothin*. The firm@s funds
will be unnecessaril( tied up in current assets. Therefore4 it is necessar( to stri)e a
proper balance between hi*h liquidit( and lac) of liquidit(. The most common ratios4
which indicate the e6tent of liquidit( or lac) of it4 are-
3. &URRET RAT%!
2. LU%&E RAT%!
.. &A$= RAT%!
1. CURRENT RATIO:
The current ratio is calculated b( di,idin* current assets b( current liabilities.
50

&urrent assets
&urrent Ratio S
&urrent liabilities
&urrent assets include cash and those assets4 which can be con,erted into cash
within a (ear4 such as Mar)etable $ecurities4 Debtors and %n,entories. Prepaid
e6penses are also include in current assets as the( represent the pa(ments that will not
be made b( the firm in future. &urrent 'iabilities include &reditors4 #ill pa(able4
Accrued e6penses4 $hort0term ban) loan4 and %ncome Ta6 'iabilit( and 'on*0term
debt maturin* in the current (ear.
The current ratio is a measure of the firmsR short0term sol,enc(. The hi*her
the current ratio4 the lar*er is the amount of rupees a,ailable per Rupee of current
liabilit(4 the more is the firmsR abilit( to meet current obli*ations and the *reater is the
safet( of funds of short0term creditors.
2. QUICK RATIO:
The Luic) ratio is calculated b( di,idin* quic) assets b( quic) liabilities.
Luic) assets
Luic) Ratio S
Luic) liabilities
Luic) assets or 'iquid assets mean those assets which are immediatel(
con,ertible into cash without much loss. All current assets e6cept prepaid e6penses
and in,entories are cate*ori9ed in liquid assets. Luic) liabilities means those
liabilities4 which are pa(able within a short period. ormall(4 #an) o,erdraft and
&ash credit facilit(4 if the( become permanent mode of financin* are in quic)
liabilities.
As this ratio concentrates on cash4 mar)etable securities and recei,ables in
relation to current obli*ation4 it pro,ides a more penetratin* measure of liquidit( than
current ratio.
51

3. CASH RATIO:
The cash ratio is calculated b( di,idin* cash T mar)etable securities b( current
liabilities
&ash Ratio S &ash T Mar)etable $ecurities
&urrent liabilities
$ince cash is most liquid asset4 a financial anal(st ma( e6amine cash ratio and
its equi,alent to current liabilities. Trade in,estment or mar)etable securities are
equi,alent of cashP therefore4 the( ma( be included in the computation of cash ratio.
LEVERAGE RATIOS:
The short0term creditors li)e ban)ers and suppliers of raw material are more
concerned with the firmsR current debt0pa(in* abilit(. !n the other hand4 lon*0term
creditors li)e debenture holders4 financial institutions etc.4 are more concerned with
the firmsR lon*0term financial stren*th. %n fact4 a firm should ha,e stron* short0as
well as lon*0term financial position. To jud*e the lon*0term financial position of the
firm4 financial le,era*e4 or &apital structure4 ratios are calculated. These ratios
indicate mi6 of funds pro,ided b( owners and lenders. As a *eneral rule4 there should
be an appro6imate mi6 of debt and owner@s equit( in financin* the firmsR assets.
The manner in which assets are financed has a number of implications. "irst4
between debt and equit(4 debt is more ris)( from the firmsR point of ,iew. The firm
has a le*al obli*ation to pa( interest on debt holders4 irrespecti,e of the profits made
or losses incurred b( the firm. %f the firm fails to debt holders in time4 the( can ta)e
le*al action a*ainst it to *et pa(ment and in e6treme cases4 can force the firm into
liquidation.
$econdl(4 use of debt is ad,anta*eous for shareholders in two wa(s-
a. The( can retain control of the firm with a limited sta)e and
52

b. Their earnin*s will be ma*nified4 when the firm earns a rate of return on the
total capital emplo(ed hi*her than the interest rate on the borrowin* funds.
The process of ma*nif(in* the shareholders return throu*h the use of debt is
called Ifinancial le,era*eJ or Ifinancial *earin*J or Itradin* on equit(J.
'e,era*e ratios ma( be calculated from the balance sheet to determine the
proportion of debt in total financin*. Man( ,ariations of these ratios e6istP but all
these ratios indicate the same thin*0the e6tent to which the firm has relied on debt in
financin* assets. 'e,era*e ratios are also computed from the profit and loss items b(
determinin* the e6tent to which operatin* profits are sufficient to co,er the fi6ed
char*es.
DEBT - EQUITY RATIO:
The relationship describin* the lender contribution for each rupee of the
owner@s contribution is called DE#T0ELU%T5 RAT%!. DE#T F ELU%T5
RAT%! is directl( computed b( the followin* formula.
DE#T
Debt0Equit( Ratio S
ELU%T5
PROPRIETARY RATIO:
This ratio states relationship between share capital and total assets.
Proprietors equit( represents equit( share capital4 preference share capital and
reser,es and surplus. The latter ratio is also called capital emplo(ed to total assets.
ELU%T5 $=ARE &AP%TA'
Proprietar( Ratio S
T!TA' TAG%#'E A$$ET$
53

PR!PR%ET!R$ ELU%T5
;!R<
T!TA' TAG%#'E A$$ET$
INTEREST COVERAGE RATIO:
This ratio indicates the e6tent to which earnin*s can decline without resultant
financial hardship to the firm because of its inabilit( to meet annual interest cost. "or
e6ample4 co,era*e of ? times means that a fall in earnin*s unto ;37?
th
< le,el would be
tolerable4 as earnin*s to ser,ice interest on debt capital would be sufficientl(
a,ailable. This ratio is measured ad follows-
E#%T
%nterest &o,era*e Ratio S 000000000000000000000000000000000
%TERE$T &=ARGE$
FIXED ASSETS TO NET WORTH:
This ratio indicates the e6tent to which Equit( capital is in,ested in the net
fi6ed assets. %t is e6pressed as follows-
"%NED A$$ET$
"i6ed Assets To et Dorth S
ET D!RT=
et Dorth is represented b( Equit( $hare &apital plus Reser,es and $urpluses. %f the
fi6ed assets are more than the et Dorth4 difficulties ma( arise4 as the depreciation
will reduce profit. This also means that creditors ha,e contributed to fi6ed assets.
The hi*her this ratio4 the less will be the protection to creditors. %f this ratio is too
hi*h4 the firm ma( find itself handicapped4 as too much capital is tied up in fi6ed
assets but not circulatin*.
ACTIVITY RATIOS:
54

"unds creditors and owners are in,ested in ,arious assets to *enerate sales and
profits. The better the mana*ement of assets4 the lar*er the amount of sales. Acti,it(
ratios are emplo(ed to e,aluate the efficienc( with which the firm mana*ers and
utili9es its assets. These ratios are also called Turno,er Ratios because the( indicate
the speed with which assets are bein* con,erted or turned o,er into sales. Acti,it(
ratios4 thus4 in,ol,e a relationship between sales and assets. A proper balance
between sales and assets *enerall( reflects that assets are mana*ed well. $e,eral
acti,it( ratios can be calculated to jud*e the effecti,eness of asset utili9ation.
INVENTORY TURNOVER RATIO:
%n,entor( turno,er ratio indicates the efficienc( of the firm in producin* and
sellin* its products. %t is calculated b( di,idin* the cost of *oods sold b( the a,era*e
in,entor(.
The a,era*e in,entor( is the a,era*e of openin* and closin* balance of
in,entor(.
%n a manufacturin* compan( in,entor( of finished *oods is used to calculate
in,entor( turno,er.
&ost of *oods sold
%n,entor( Turno,er Ratio S
A,era*e in,entor(
DEBTORS TURNOVER RATIO:
A firm sells *oods for cash and credit. &redit is used mar)etin* tool b( a
number of companies. Dhen the firm e6tends credits to its customers4 debtors
;accounts recei,ables< are created in the firmsR accounts. The debtors are e6pected to
55

be con,erted into cash o,er a short period and4 therefore4 are included in current
assets. The liquidit( position of the firm depends on the qualit( of debtors to a *reater
e6tent. Debtor@s turno,er ratio indicates the ,elocit( of debt collection of a firm. U
simple wards it indicates the number of times a,era*e debtors are turned o,er durin* a
(ear.
&redit $ales
Debtors Turno,er Ratio S 00000000000000000000000000000000
A,*. Accounts Recei,able
FIXED ASSETS TURNOVER RATIO:
The fi6ed assets turno,er ratio measures the efficienc( with which the firm is
utili9in* its in,estments in fi6ed assets4 such as land4 buildin*4 plant and machiner(4
furniture4 etc. %t also indicates the adequac( of sales in relation to the in,estment in
fi6ed assets. The fi6ed assets turno,er ratio is sales di,ided b( net fi6ed assets. The
firm assets turno,er ratio should be compared with past and future ratios and also with
ratio of similar firms and the industr( a,era*e. The hi*h fi6ed assets turno,er ratio
indicates efficient utili9ation of fi6ed assets in *eneratin* sales4 while low ratio
indicates inefficient mana*ement and utili9ation of fi6ed assets.
This ratio indicates the e6tent to which the debts ha,e been collected in time.
The debt collection period indicates the a,era*e debt collection period. This ratio is a
*ood indicator to the lenders of the firm4 because it e6plains to them whether their
borrower is collectin* from its debt in time. An increase in this period indicates
bloc)a*e of funds in debtors.
$ales
"i6ed Assets Turno,er Ratio S
et fi6ed assets
56

WORKING CAPITAL TURNOVER RATIO:
Dor)in* capital turno,er ratio indicates the ,elocit( of the utili9ation of net
wor)in* capital. This ratio indicates the number of times the wor)in* capital is
turned o,er in the course of a (ear. This ratio measures the efficienc( with which the
wor)in* capital is bein* used b( a firm. A hi*her ratio indicates efficient utili9ation
of wor)in* capital and low ratio indicates otherwise. #ut a ,er( hi*h wor)in* capital
turno,er ratio is not a *ood situation for an( firm and hence care must be ta)en while
interpretin* the ratio. Ma)in* of comparati,e and Trend Anal(sis can at best use this
ratio for different firms in the same industr( and for ,arious periods. This can be
calculated as follows-
$ales
Dor)in* &apital Turno,er Ratio S
et Dor)in* &apital
et Dor)in* &apital S &urrent Assets 0 &urrent 'iabilities
;E6cludin* short0term ban)
#orrowin*s<
PROFITABILITY RATIOS:
A compan( should earn profits to $ur,i,e and Grow o,er a lon* period of
time. Profits are essential4 but it would be wron* to assume that e,er( action initiated
b( mana*ement of a compan( should be aimed at ma6imi9in* profits4 irrespecti,e of
social consequences.
Profit is the difference between re,enues and e6penses o,er a period of time ;usuall(
a (ear<. Profit is the ultimate I!utputJ of a compan(4 and it will ha,e no future if it
fails to ma)e sufficient profits. Therefore4 the financial mana*er should continuousl(
e,aluate to the efficienc( of the compan( in term of profits. The profitabilit( ratios
are calculated to measure the operatin* efficienc( of the compan(. #esides
mana*ement of the compan(4 creditors and owners are also interested in the
profitabilit( of the firm. &reditors want to *et interest and repa(ment of principle
re*ularl(. !wners want to *et a required rate of return on their in,estment. This is
possible onl( when the compan( earns enou*h profits.
57

Generall( two major t(pes of profitabilit( ratios are calculated.
PROFITABILITY IN RELATION TO SALES
PROFITABILITY IN RELATION TO INVESTMENT
PROFITABILITY RATIOS IN RELATION TO SALES
3. GR!$$ PR!"%T MARG%
2. &A$= MARG%
.. !PERAT%G MARG%
C. ET PR!"%T RAT%!
1. GROSS PROFIT MARGIN:
Gross profit mar*in reflects the efficienc( with which the mana*ement
produces each unit of product. This ratio indicates the a,era*e spread between
the cost of *oods sold and the sales re,enue.
This shows profits relati,e to sales after the deduction of production
costs4 and indicates the relation between Production costs and sellin* price. A
hi*h *ross profit mar*in relati,e to the industr( a,era*e implies that the firm
is able to produce at relati,el( lower cost.
A hi*h *ross profit mar*in ratio is a si*n of *ood mana*ement. A *ross
mar*in ratio ma( increase due to an( of the followin* factors.
i. =i*her sales prices4 cost of *oods sold remainin* constant4
ii. 'ower cost of *oods sold4 sales prices remainin* constant4
iii. A combination of ,ariations in sales prices and costs4 the mar*in widenin*4
and
58

i,. %ncreases in the proportionate ,olume of hi*her mar*in items.
The anal(sis of these factors will re,eal to the mana*ement that how a
depressed *ross profit mar*in can be impro,ed.
A low *ross profit mar*in ma( reflect hi*her cost of *oods sold due to the
firmsR inabilit( to purchase raw materials at fa,orable terms4 inefficient utili9ation of
plant and machiner(4 resultin* in hi*her cost of production. The ratio will also be low
due to fall in prices in the mar)et4 or mar)et reduction in sellin* price b( the firm in
an attempt to obtain lar*e sales ,olume4 the cost of *oods sold remainin* unchan*ed.
The financial mana*er must be able to detect the causes of a fallin* *ross mar*in and
initiate action to impro,e the situation.
$ales F &ost of *oods sold
;or<
Gross profit
Gross Profit Mar*in Ratio S
$ales
Net Profit Margin Ratio:
et profit is obtained when operation e6penses4 interest and ta6es are
subtracted from the *ross profit.
%f the non0operatin* income fi*ure is substantial4 it ma( be e6cluded from PAT
to see profitabilit( arisin* directl( from sales. et profit mar*in ratio establishes a
relationship between net profit and sales and indicated mana*ement@s efficienc( in
manufacturin*4 administerin* and sellin* the products. This ratio is the o,erall
measure of the firmsR abilit( to turn each rupee sales into net profit. %f the net mar*in
is inadequate4 the firm will fail to achie,e satisfactor( return on shareholderRs funds.
This ratio also indicates the firmsR capacit( to withstand in ad,erse economic
conditions. A firm with a hi*h net mar*in ratio would be in an ad,anta*eous position
to sur,i,e in the case of fallin* sellin* prices4 risin* costs of production or declinin*
demand for the product. %t would reall( be difficult for a low net mar*in firm to
withstand these ad,ersities. $imilarl(4 a firm hi*her net profit mar*in can ma)e better
59

use of fa,orable condition4 such as risin* sellin* pricesP fall in costs of production or
increasin* demand for the product. $uch a firm will be able to accelerate its profits at
a faster rate than a firm with a low net profit mar*in will.
An anal(st will be able to interpret the firm@s profitabilit( more meanin*full(
if he7she e,aluates both the ratios0*ross mar*in and net mar*in0jointl(. To illustrate4 if
the *ross profit mar*in has increased o,er (ears4 but the net profit mar*in has either
remained constant or declined4 or has not increased as fast as the *ross mar*in4 this
implies that the operatin* e6penses relati,e to sales ha,e been increasin*. The
increasin* e6penses should be identified and controlled. Gross profit mar*in ma(
decline due to fall in sales price or increase in the cost of production.
Profit after Ta6
et Profit Mar*in Ratio S
$ales
CASH MARGIN RATIO:
&ash profit e6cludes depreciation. %t means et profit after interests and ta6es
but before depreciation. This ratio indicates the relationship between the profit4 which
accrues in cash and sales. Greater percenta*e indicates better position and 8ice08ersa
as it shows the correct profit earned b( the firm.
This ratio is e6pressed as cash profit to sales.
&ash profit
&ash Mar*in Ratio S N 3//
$ales
OPERATING MARGIN RATIO:
!peratin* mar*in ratio is also )nown as !peratin* et profit ratio. %t is the
ratio of operatin* profit to sales. This ratio establishes the relationship between the
total cost incurred and sales. !peratin* profit is the et profit after depreciation but
60

#efore %nterests and Ta6es. The purpose of computin* this ratio is to find out the
o,erall operational efficienc( of the business concern. %t measures the const of
operations per rupee of sales.
This ratio is e6pressed as operatin* profit to sales.
!PERAT%G MARG% RAT%! S !peratin* profit N3//
$ales
PROFITABILITY RATIOS IN RELATION TO INVESTMENT:
3. RETUR ! %8E$TMET
2. RETUR ! ET D!RT=
.. RETUR ! &AP%TA'
C. RETUR ! GR!$$ #'!&E
RETURN ON INVESTMENT:
The term in,estment refers to Total Assets. The funds emplo(ed in et assets
are )nown as &apital Emplo(ed. et assets equal net fi6ed assets plus current assets
minus &urrent liabilities e6cludin* #an) loans. Alternati,el(4 &apital emplo(ed in
equal to et worth plus total debt.
The con,entional approach of calculatin* return on in,estment ;R!%< is to
di,ide PAT b( %n,estment. %n,estment represents pool of funds supplied b(
shareholders and lenders4 while PAT represents residual income of shareholdersP
therefore4 it is conceptuall( unsound to use PAT in the calculation of R!%. Also4 as
discussed earlier4 PAT is affected b( capital structure. %t is4 therefore more appropriate
to use one of the followin* measures of R!% for comparin* the operatin* efficienc( of
firms.
E#%T ;30T<
61

R!% ;or< R!TA S
Total Assets
E#%T ;30T<
R!% ;or< R!A S
ET Assets
Dhere R!TA and R!A respecti,el( Return on Total assets and Return on
et assets.
R!A is equi,alent of Return on &apital Emplo(ed.
RETURN ON NET WORTH:
ET Dorth is also )nown proprietors et &apital Emplo(ed. The Return
should be calculated with reference to profits belon*in* to shareholders4 and
therefore4 profit shall be et profit after interest and ta6. The profit for this purpose
will include e,en non0tradin* profit. This is *i,en as follows-
et profit after interest + ta6
RETUR ! ET D!RT= S 000000000000000000000000000000000000000U3//
$hareholders funds

RETURN ON CAPITAL:
The R!&E is the second t(pe of R!%. The term capital emplo(ed refers to
lon*0term funds supplied b( the creditors and owners of the fund. %t can be computed
62

in two wa(s. "irst4 it is equal to non0current liabilities ;lon*0term liabilities< plus
owner@s equit(. Alternati,el(4 it is equi,alent to et Dor)in* &apital plus "i6ed
Assets. Thus4 the &apital Emplo(ed pro,ides a basis to test the profitabilit( related to
the sources of lon*0term funds. A comparison of this ratio with similar firms4 with the
industr( a,era*e and o,ertime would pro,ide sufficient insi*ht into how efficienc(
the lon*0term funds of owners and creditors are bein* used. The hi*her the ratio4 the
more efficient is the use of &apital Emplo(ed.
ET PR!"%T A"TER TAN7E#%T
R!&E S N 3//
A,era*e Total &apital Emplo(ed
RETURN ON GROSS BLOCK:
This ratio establishes a relationship between net profit and *ross fi6ed assets.
This ratio emphasi9es the profit on in,estment in "i6ed Assets. This ratio is
e6pressed as follows-
et profit
RETUR ! GR!$$ #'!&E S N 3//
Gross #loc)
ET PR!"%T is profit before Ta6. Gross #loc) means Gross fi6ed assets i.e.4 "i6ed
assets before deductin* depreciation.
63

CHAPTER-V
DATA ANALYSIA & INTERPRETATION
Ratio analysis in VSP/RINL
64

Liquidity ratios:
&urrent assets
&urrent ratioS 0000000000000000000000000000000000000000000
&urrent liabilities
TABLE SHOWS YEAR WISE CURRENT RATIO
;Rs. %n &rores<
Particulars 2//?0/1 2//10/B 2//B0/A 2//A0/> 2//>0
3/
%n,entor( 3231.C? 32/..2C 3B13.3? .23?.2A 2C?3.?2
$undr( debtors 31?.1? 231.A/ >..C3 3>3.2B 3A3.3A
&ash + ban) ?123.B/ B3>C.1A B1>>.33 112C.3B ?C3?.?C
!ther Assets 3AC..1 .3C.CA 2>2.C. 2?A.>3 3.B.C/
'oans + ad,ances 3/1..AC 3?3A.>/ 3>?A.C> 3?1>.1> 3.1?./2
&urrent assets A2?2.// 3/CCA.3/ 33A/C.1/ 33A?>..2 >??/.11
&urrent liabilities 3?AB.A1 23/C../ .3>3.12 C3A3..2 C./B.AC
&urrent ratios ?.2/ C.>B ..B/ 2.AC 2.23

INTEPRETATION:

The current ratio durin* the stud( period that is from 2//?0 2//1 to 2//>0
2/3/4 it has been obser,e that 4in the (ear 2//? to 2//1 it is ,er( hi*h that
is ?.2/.
The current ratio has been decreasin*4 but the compan( is able to maintain
hi*her current ratio than that of ideal ratio.
65

As the current ratio is hi*her than the ideal current ratio4 the liquidit(
position is said to be *ood.
LIQUID/QUICK RATIO:
'iquid assets
'iquid ratio S 000000000000000000000000000
&urrent liabilities
TABLE SHOWING YEAR WISE LIQUID RATIOS
;Rs in &rores<
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10
$undr( debtors 31?.1? 231.A/ >..C3 3>3.2B 3A3.3A
!ther assets 3AC..1 .3C.CA 2>2.C. 2?A.>3 3.B.C/
'oans + ad,ances 3/1..AC 3?3A.>/ 3>?A.C> 3?1>.1> 3.1?./2
Liquid assets B/.?.?? >2CC.A1 3//C..CC A1CC./C B/>>.3C
Current liabilities 3?AB.A1 23/C../ .3>3.12 C3A3..2 C./B.AC
Liquid ratio 4.43 4.39 3.14 2.06 1.65
INTERPRETATION:
%t has been obser,ed that the quic) ratio of 8$P is hi*h compared with
ideal ratio.

66

As the quic) ratio durin* the period of stud( is hi*her than that of then
ideal ratio4 the liquidit( position is ,er( *ood.
ABSOLUTE LIQUID/ CASH RATIO:
A#$!'UTE A$$ET$
Absolute liquid7 cash ratio- 00000000000000000000000000000000000000
&URRET '%A#%'%T%E$
TABLE SHOWING YEAR WISE ABSOLUTE LIQUID RATIO
(Rs. in crores)
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10
Absolute Assets ?123.B/ B3>C.1A B1>>.33 112C.3B ?C3?.?C
&urrent liabilities 3?AB.A1 23/C../ .3>3.12 C3A3..2 C./B.AC
ABSOLUTE
LIQUID RATIO
3.5 3.42 2.41 1.58 1.26

INTERPRETATION: %deal Ratio /-?-3
67

The absolute liquid7 cash ratio of 8$P is more than the ideal ratio. %t means
the compan( is enjo(in* hi*h liquidit( and secured position.
LEVERAGE RATIO:
!utsider@s funds
Debt Equit( Ratio S0000000000000000000000000000000000000000
$hareholders@ funds
TABLE SHOWING YEAR WISE DEBT EQUITY RATIO
(Rs. in crores)
particulars 2005-06 2006-07 2007-08 2008-09 2009-10
$ecured loans 3B..AB 1/C.C? ..2.BA >/B.B2 C/B.2A
Unsecured loans .1>.CC .32.?3 3/B.>? 3//./C A2?.2B
!utsiders funds ?C...3 >31.>1 CC/.B. 3//B.B1 32...??
$hareholders
funds
A3B..B >?.A.2 33CA3./C 32C3>.>3 32AA?.//
Debt equit(
ratio
/.3. /.3> /./A /.31 /.3>

INTERPRETATION:
&ompan( is less dependent on outsider@s funds.
%ts capital base is hi*h and stron*.
68

%t can be concluded that the compan( is maintainin* less percent of debt in its
capital structure.
INTEREST COVERAGE RATIO:
E#%T
%nterest co,era*e ratioS000000000000000000000000000000000000000
"%NED %TERE$T
TABLE SHOWING YEAR WISE INTEREST COVERAGE RATIO
(Rs. in crores)
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
E#%T 3>2/.?B 22B/.B1 ./21.>. 233C./1 3.2?.2/
"i6ed interest .3./1 CA.C2 .3.?B AA.3C 3>.B1
Interest Coverage Ratio 61.83 46.90 95.88 23.99 67.06
69

INTERPRETATION:
&ompan(@s %nterest &o,era*e Ratio is ,er( hi*h and e6traordinaril(
satisfactor(.
%t indicates that *reater abilit( of the firm to handle fi6ed char*es.
=i*h interest co,era*e ratio does not indicate unutili9ed debt capacit( in case
of
R%'4 since the compan( is ha,in* its own funds.
PROPRIETARY RATIO:
$hare holders funds
Proprietar( ratioS00000000000000000000000000000000000000000
Total assets
TABLE SHOWING THAT YEAR WISE PROPRIETARY RATIO
;Rs.in &rores<
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
$hare holders funds BA2B..3 BA2B..3 BA2B..2 BA2B..2 BA2B..3
Total assets 3/?3.>> 32A.?.A 3?2B1.?3 3BB...C. 3A?2..23
Proprietary Ratio BAG BCG B?G B>G C2G
70

INTERPRETATION:
Proprietar( ratio is a test of lon* term financial position.
E6cept for the (ear 2//>03/4 all other (ears showin* hi*her ratio4 this
indicates sound lon* term financial position.
%t is also indicatin* the sufficient use is bein* made of equit( to finance the
business.
SOLVENCY RATIO:
Total 'iabilities of outsiders
$ol,enc( ratio S0000000000000000000000000000000000000000000
Total assets
TABLE SHOWING YEAR WISE SOLVENCY RATIO:
71

;Rs. %n &rores<
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
$ecured loans 3B..AB 1/C.C? ..2./A >/B.B2 C/B.2A
Total liabilities to
outsiders
?C...3 >31.>1 CC/.B. 3//B.B1 1?/.?A
Total assets 3/?33.// 32A.?.A 3?2B1.?3 3BB...C. 3A?22.>1
Solvency ratio 5.1 7.1 2.8 5.68 3.51
INTERPRETATION:
$ol,enc( ratio of 8$P ltd durin* the (ear 2//10/B is hi*h as compared to other (ears.
%t sol,enc( ratio is stable for last three (ears. %t indicates the the sol,enc( position of
8$P ltd is more satisfactor(.
FUNDED DEBT TO TOTAL CAPITALIZATION:
"UDED DE#T
"unded Debt To Total &apitali9ation S00000000000000000000000000000000000000
T!TA' &AP%TA'%VAT%!
72

TABLE SHOWING YEAR-WISE FUNDED DEBT TO TOTAL
CAPITALIZATION RATIO ;Rs. in crores<
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10
$ecured loans 3B..AB 1/C.C? ..2.BA >/B.B2 C/B.2A
"unded debt;A< ?C...3 >31.>1 CC/.B. 3//B.B1 32.2.??
Total "unds ;#< A3B..B/ >?.A.2/ 33CA3./C 32C3>.>3 32AA?
Total capitali9ation
;A7#<
1.1/G >.1/G ..A/G AG >.?/G
INTERPRETATION:
73

Durin* the (ear 2//>03/4 the funded debt to total capitali9ation is
>G.%t is hi*h as compared to other periods but in the real sense it is
quite low.
There is enou*h scope for the compan( to raise lon* term loans from
outsiders.
ACTIVITY RATIO:
INVENTORY TURNOVER RATIO:
ET $A'E$
%n,entor( Turno,er Ratio S00000000000000000000000000000
A8G %8ET!R5
TABLE SHOWING YEAR WISE INVENTORY TURNOVER RATIO
;Rs. in crores<
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-
10
et sales B./?.B3 B>.2.11 >/AA..B >32A..A >A/>.3?
A,* in,entor( 32.1.>> 323/.A/ 3CA2.2/ 3122.3C 2A...C/
%n,entor( Turno,er
Ratio
?.>3
Times
1.??
Times
1.3.
Times
?.12
Times
..C1
Times

74

INTERPRETATION:
The %n,entor( Turn !,er Ratio durin* the (ear 2//>03/ was ..C1
ormall( hi*her the ratio indicates the better in,entor( mana*ement.
=i*her ratio also indicates that the compan( is not able to met the customers
demand properl(.
INVENTORY CONVERSION PERIOD:
o of wor)in* da(s
%n,entor( &on,ersion Period S000000000000000000000000000000000000000000000
%n,entor( turno,er ratio
TABLE SHOWING YEAR WISE INVENTORY CONVERSION PERIOD
(Rs. in crores)
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10
75

o. of wor)in*
da(s .1? .1? .1? .1? .1?
%n,entor(
turno,er ratio ?.>3 1.?? 1.3. 1.A? B.2C
%n,entor(
con,ersion
period
12 da(s ?1 da(s 1/ da(s ?. da(s ?/ da(s

INTERPRETATION:
The in,entor( con,ersion period durin* 2//>02/3/ is ?/ da(s. %t means that
the in,entor( has been disposed off or sold on an a,era*e of once in e,er( ?/
da(s.
DEBTORS TURN OVER RATIO
et credit annual sales
Debtors Turn !,er Ratio S 000000000000000000000000000000000000
A,era*e trade debtors
TABLE SHOWING YEAR WISE DEBTORS TURN OVER RATIO
(Rs. in crores)
Particular 2005-06 2006-07 2007-08 2008-09 2009-10
A. net sales B./?.B3 B>.2.11 >/AA..B >32A..A >A/>.3?
b. a,era*e
trade debtors 3/B.CA 3>3.?C 3??.3/? 3C2..C 3A1.2.
76

debtor turn
o,er ratio 1A times C3 times ?> times 1C times ?. times
INTERPRETATION:
The debtor turno,er ratio for the (ear 2//>03/ is ?C
%t can be concluded that the mana*ement is efficient in con,ertin* the
debtors into cash
AVERAGE COLLECTION PERIOD:
o of Dor)in* Da(s

A,era*e &ollection Period S 00000000000000000000000000000000000000000000
Debtor@s turno,er ratio
TABLE SHOWING YEAR WISE AVERAGE COLLECTION PERIOD
(Rs. in crores)
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
o of wor)in* da(s .1? .1? .1? .1? .1?
77

Debtors turno,er
ratio
1/.>B C3.CA ?A.?> ??.1A 1B.32
A,*.collection
period
? da(s > da(s 1 da(s 1 da(s ? da(s

INTERPRETATION:
The a,* collection period durin* the (ear 2//>03/4 is ? da(s- it represents the
a,*. no of da(s for which the firm has to wait before its recei,ables are
con,erted into cash.
Durin* the period of stud( it has been obser,ed that debt collection period
,aries from ? to > da(s
=owe,er4 the a,*. collection period durin* different periods is quite low. %t
indicates the better qualit( of debtors and the efficienc( of the debt collection
department.
WORKING CAPITAL TURNOVER RATIO:
et sales
Dor)in* capital turno,er ratio S 0000000000000000000000000000000000000000000000000
Dor)in* capital
78

TABLE SHOWING YEAR WISE WORKING CAPITAL TURNOVER RATIO
(Rs. in crores)
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
a.net sales B./?.B3 B>.2.11 >/AA..B >32A..A >A/>.3?
b. net wor)in*
capital
111C.3C A.C..A A132.>B B1BA.// ?2C2.A2
Dor)in* capital
turno,er ratio;a7b<
3.3/
times
/.>?
times
3./?
times
3.3A
times
3.AB
times

INTERPRETATION:
The wor)in* capital turno,er ratio durin* the (ear 2//>03/ i 3.AB times. %t
shows that onl( 3./? of net current assets are used to *enerate 3 rupee of sales.
The hi*her wor)in* capital ratio indicates that the efficient utili9ation of
wor)in* capital.
79

PROFITABILITY RATIOS:
GROSS PROFIT RATIO:
Gross profit
Gross profit ratio S 000000000000000000000000000000000U3//
et sales
TABLE SHOWING YEAR WISE GROSS PROFIT RATIO
(Rs. in crores)

PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
a. *ross profit 3>23.// 22B3.// ./2B.// 233?.// 3.21.//
b. net sales B.3C.// B>...// >/AA.// >32A.// >A/>.//
Gross profit
ratio;a7b<
21../G 2A.B/G ..../G 2..2/G
3..1/G

INTERPRETATION:
%t has been obser,ed that the *ross profit ratio is in increasin* tread upto 2//B0
/A and it is decreasin* from 2//A0/>
80

$ales are in increasin* trend but the profit ratio is decreasin*. %t is due to
increased cost of production.
OPERATING PROFIT RATIO:
!peratin* profit
!peratin* profit ratio S 0000000000000000000000000000000000000000U3//
$ales
TABLE SHOWING YEAR WISE OPERATING PROFIT RATIO
(Rs. in crores)

PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
!peratin* profit 2/33.23 2..>.23 ..2?.3> C>AA.32 2C?/.?/
et $ales B.3C.// B>...// >/AA.// >32A.// >A/>.//
Operating profit
ratio 27.50 29.50 36.60 54.70 25.00

INTERPRETATION:
&ompan( recorded hi*her operatin* profit durin* 2//A0/> and in other (ears4
it is more or less recorded same trends.
%t is indicates4 the compan(@s operational efficienc(.
81

NET PROFIT RATIO:
et profit
et profit ratio S 0000000000000000000000000000000000000000U3//
$ales
TABLE SHOWING YEAR WISE NET PROFIT RATIO
;Rs. in crores<
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
A.net profit 32?2..B 3.1..C. 3>C2.BC 3..?.?B B>1.1B
#. net sales B./?.B3 B>.2.11 >/AA..B >32A..A >A/>.3?
et profit ratio;A7#< 3B.3CG 3B.3AG 23G 3C.1.G A.32G

INTERPRETATION:
et profit is in decline position from 2//A0/> in comparati,e with 2//B0/A.
Main attributable reason for the declinin* the profit is o,erall *lobal meltdown
E,en in ad,erse mar)et conditions4 the compan( is able to earn net profits.
82

PROFITABILITY RATIOS BASED ON INVESTMENT:
RETURN ON SHAREHOLDERS INVESTMENT:

et Profit ;After %nterest + Ta6<
R! %S 00000000000000000000000000000000000000000000000000006 3//
$hare =olders "unds
TABLE SHOWING YEAR WISE RATIOS BASED ON INVESTMENT
;Rs. in crores<
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
A.net profit 32?2..B 3.1..C. 3>C2.BC 3..?.?B B>1.3/
#.share holders
funds
A3B..B >?.A.2 33CA3./C 32C3>.>3 32AA?
Return on
investment(A/B) 15.32 14.29 16.92 10.75 6.18

INTERPRETATION:
=i*hest return on in,estment was recorded in 2//B0/A.
83

%t has been obser,ed that the R!% is fluctuatin* from (ear to (ear.
More reser,es and surplus funds ha,e been di,erted to e6pansion acti,ities
RETURN ON EQUITY CAPITAL:
et profit ;after interest + ta6<
Return on equit( capital S 00000000000000000000000000000000000000000000
Equit( capital
TABLE SHOWING YEAR WISE RETURN ON EQUITY CAPITAL
;Rs. in crores<
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
#.equit( share
capital
CA>/.// CA>/.// CA>/.// CA>/.// CA>/.//
Return on equit(
capital
2?.13 2B.AA .>.B. 2B..3 31.2>

INTERPRETATION:
Equit( share capital is constant in in all the (ear whereas net profit is
fluctuatin*.
84

E,en thou*h the return on equit( capital is in decreasin* position4 the rate of
return in comparison with the mar)etin* conditions is ,er( satisfactor(.
Global mar)et conditions4 increasin* in operatin* costs4 decrease in net profits
are the main reasons for the recordin* of low ratio.
EARNING PER SHARE:
Earnin* a,ailable to equit( share holders
Earnin* Per $hare S 000000000000000000000000000000000000000000000000
o. of equit( shares
TABLE SHOWING YEAR WISE EARNING PER SHARE
;Rs. in crores<
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
Earnin* a,ailable to
equit( shareholders
32?2..B 3.1..C. 3>C2.BC 3/>?.// ??1.A>
o. of equit( shares
;in crs<
C.A> C.A> C.A> C.A> C.A>
Earning per share 256.12 278.83 397.30 223.93 113.89
INTERPRETATION:
The earnin*s per share is declinin* (ear b( (ear.
The least rate of return is 33.C/G
85

$ince the compan( is in e6pansion acti,it(4 the future earnin*s per share will
increase.
RETURN ON CAPITAL EMPLOYED:
et profit
Return on capital emplo(ed S 00000000000000000000000000000000000000000
&apital emplo(ed
TABLE SHOWING YEAR WISE RETURN ON CAPITAL EMPLOYED
;Rs. in crores<
PARTICULARS 2005-06 2006-07 2007-08 2008-09 2009-10
#.capital emplo(ed
;incl. term deposits<
AC>..// >C2B.// >>.?.// BA>2.// ?CB1.//
Return on capital
employed 14.80 14.50 19.55 17.00 14.60

INTERPRETATION:
E,en thou*h the return on capital emplo(ed is declinin*4 but it is satisfactor(4
considerin* the present mar)et conditions and from the securit( point of ,iew.
86

CHAPTER-VI
87

SUMMARY:
8isa)hapatnam $teel Plant was founded on 2/
th
:an @B3 but became full(
operational on 3
st
Au* @>2. 8$P is the first shore based inte*rated steel plant with
new technolo*(4 lar*e scale computeri9ation and automation. The or*ani9ational
manpower has been rationali9ed to operate it at international le,els of efficienc( and
to attain international labor producti,it(.
The production4 commercial and financial performance has been impro,in*
with the passa*e of (ears. The financial anal(sis of 8$P b( the use of ,arious
techniques i.e. Ratio4 &ash flow anal(sis shows that-
3< The liquidit( position of the compan( is e6cellent.
2< The compan( is 9ero debt7low debit compan(.
.< The net worth of 8$P is satisfactor(
C< %t is noted that the in,entor( le,el is increasin*.
?< The profitabilit( ratio is in decline state
1< 'iquidit( position of 8$P is ,er( *ood.
B< The compan( has accumulated funds which are a,ailable for
e6pandin* business operations and e6pansion wor)s.
A< $ecurit( to share holders is e,isa*ed
88

SUGGESTIONS
The followin* su**estions will impro,e the financial position of the 8$P.
PRODUCTION
3< eed for continuous up *radation of technolo*( for impro,in* the
processes.
2< Effort should be made at cost sa,in*s particularl( in spares and ener*(
consumption.
.< Usin* the natural *as reser,es of EG basin4 =ot metal production
capacit( can be enhanced with the present #" facilit( with ne*li*ible
in,estment.
FINANCE
3< %mpro,in* financial le,era*e ratio for better returns.
PERSONNEL:
3< Rationali9ation of e6istin* man0power with effecti,e trainin* for future
e6pansion of the plant.
2< %mpro,in* efficienc( throu*h better =RD pro*rams.
.< Pro,idin* better moti,ation.
89

C< $tri,in* towards becomin* the most chosen emplo(er.
MARKETING
3< &ontinuousl( monitorin* the indi*enous sale4 e6port sale ratio to
capture the best of mar)ets.
2< %ncreasin* the net reali9ation b( sellin* in the most profitable re*ion.
.< %dentif(in* new mar)ets and new application of the compan(@s
product.
C< %mpro,in* reali9ation b( identif(in* ,alue added products and
pro,idin* feedbac) to production department.
?< 8alue added products ;hi*h ,alue items< are to be produced instead of
sellin* semi0finished products in order to increase profit mar*in.

90

BIBLIOGRAPHY
BOOKS:
1. Financial Management: Theory & Practice (4
th
Edition)
Eugene F. Brigham and Michael C. Gerhardt
2. Elements of Management Accounting
Leslie Chadwick
3. Principles of Corporate Finance (7
th
Edition)
Richard Berkley Stewart Myers
4. Accounting & Finance for Managers
Barry 1. Cooper
WEBSITES
http://vizagsteel.com
http://www.indiansteel.com
http://www.bee-india.nic.in.com
http://www.answer.com
91

Ratio Analysis

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ratio Analysis

Uploaded by

Copyright:

Available Formats

A STUDY ON RATIO ANALYSIS

You might also like