Ratio Nandi

A Study on RATIO ANALYSIS
INTRODUCTION
Ratio Analysis of financial statements stands for the process of determining and
presenting relationship of items and group of items in the statements.
There are different ratios which an analyst can employ depending on the purpose
for which the analysis is made. A creditor, who likes to know the ability to meet its
current obligations, may think of current and liquid ratios, similarly, managers and
investors who want to know operationally efficiency may think of return on investments,
turnover and fixed assets, earnings per share, book value per share and dividend per
share.
Ratio analysis is a powerful tool of financial analysis.
It is
a process of
identifying the financial strength and weakness of the firm by properly establishing
relationship between the items of Balance sheet and Profit and Loss a more meaningful
understanding of the financial position and performance of a firm.
A ratio is a mathematical relationship between the two related items expressed in
quantitative form. A ratio is used as an index yard stick for evaluating the financial
position and performance of a firm.
Viswam Degree and PG College, Angallu, Madanapalle
REQUISITE FOR RATIO ANALYSIS:

The requisition of Ratio Analysis to come in to being caused by the following
facts.
Business facts displayed in Balance sheet and Profit and Loss account do not
convey any pompous individually. Their significance lies in the fact that they are interrelated. From this time on word, there is need for fixing relationship between various but
related items.
Ratio Analysis as a tool for the interpretation of financial statements is also
important because ratios help the analyst to have a profound cautiously in to the data
given statements figure in their peremptory forms shown in financial statements are
neither significant nor to enable to the compared.
Uses of ratio Analysis
The nature of ratio Analysis will differ depending on the purpose of the analyst.
Ratio Analysis the starting point for making plans before using any sophisticated fore
casting and budgeting procedures . The Ratio analysis is useful for the following
reasons.
SHARE HOLDERS / INVESTORS:

Investors or Shareholders, who have invested their money in the firm's shares, are
most concerned about the. firm's earnings. They restore more confidence in those firms
that show steady growth in earnings .As such, they concentrate on the analysis of the
firm's present and future profitability. They are also interested in the firm's financial
position to the extent it influences the firm's earnings ability. Owners or Investors desire
primarily a basis for estimating capacity.
Creditors:
Creditors are concerned primarily with liquidity and ability and to pay interest on
redeems loan with a specified period.

Long-Term Creditors:
The Long term creditors are interested in the long term solvency and survival.
They analyses about firm's solvency and profitability overtime, its ability to generate
cash, to be able to pay interest and repay principal and relationship between various
sources of funds.
Employees:
The employees are also interested in the financial position of the concern
especially profitability. Their wages increase, the amount of fringe benefits are related to
the volume of profits earned by the concern. The employees make use o( information
available in financial statements.
Government:
Government is also interested to know the strength and weakness of the firm.
Government makes the future policies, plans on the basis of financial information
available from various units of the company.
Management:
Finally management of the firm or Executives would be interested in every
aspect of the financial analysis. It is their overall responsibilities to see at the resources
of the firm are used most effectively, and the firm's financial conditi~n is sound.
Through financial analysis they try to seek answers to the following questions:
Is the firm in a position to meets it current obligations.
What sources of Long-term finance are employed by the firm and what is the
relationship between them? Is there any danger to the solvency of the firm due to the
employment of excessive debt how efficiently does the firm uses its assets are the
earnings of the adequate?
Do Investors consider the firm prof1table and safe for the purpose of investing
their money in the shares of the firm? Financial analysis may not provide exact answers
to these questions, but it does indicate what can be expected in the future.

Standards of comparison
A single ratio in itself does not indicate favorable or unfavorable condition. It
should be compared with some standards of comparison may consist of ratios calculated
from the past financial statements of the same firm.
Ratios developed using the projected or Performa financial statements of the
same firm.
Ratios of some selected firms, especially the most progressive and successful at
the same point of time.
Ratios of the industry to which the firm belongs.
The easiest way to evaluate the performance of a firm is to compare its present
ratios with the past ratios. When financial ratios over a period of time are compared, it
gives an indication oJ the direction of change and reflects whether the firm's financial
position and performance has improved, deteriorated constant over time. This kind of
comparison is valid only when the firm's accounting policies and procedures have not
changed over time.
Sometimes, Future ratios are used as the standard comparison. Future ratios can
be developed projected or Performa financial statements. The comparison of the past
ratios with future ratios shows the firm's relative strengths and weakness in the past and
the future. If the future ratios indicate weak financial position, corrective actions.
Another way of comparison is to compare the ratios of one firm with some
related firms in the same industry at the same point of time. In most of the cases, it is
more useful to compare firm's ratios with the ratio of a few carefully selected
competitors who have similar operations. This kind of comparison indicates the relative
financial position and performance of the firm. A firm can easily resort to such a
comparison, as it is not difficult to get the published financial statements of the similar
firms.
To determine the financial condition and performance of a firm, its ratios may be
compared with average ratios of the industry of which the firm is a member. Industry
ratios are important standards in view of the fact that each industry as its characteristics
which influence the financial operating relationships.
But there are certain practical difficulties in using industrial ratios.

It is difficult to get average ratios in the industry.
Even if industry ratios are available, they are averages -averages of the ratios of
strong and weak firms. Sometimes the spread may be so wide that the average may not
be little utility.
The averages will be meaningless and the comparison futile, if the firm with in
the same industry widely differ in their accounting policies and parties.
If it is possible to standardize the accounting data for the companies in the
industry and eliminate extremely strong and extremely weak firms, the industry ratios
will prove to useful in evaluating the financial condition and performance of a firm.
It is difficult to get average ratios in the industry.
Even if industry ratios are available, they are averages -averages of the ratios of
strong and weak firms. Sometimes the spread may be so wide that the average may not
be little utility.
The averages will be meaningless and the comparison futile, if the firm with in
the same industry widely differ in their accounting policies and parties.
If it is possible to standardize the accounting data for the companies in the
industry and eliminate extremely strong and extremely weak firms, the industry ratios
will prove to useful in evaluating the financial condition and performance of a firm.
Types of Ratios
Several ratios can be calculated from the accounting data contained in the
financial statements. These ratios can be grouped in to various classes according to the
financial activity or function to be evaluated. As stated earlier, the parties that generally
undertake financial analysis are shortterm creditors, Long-term creditors, owners and
Management. Shortterm creditor's main interest is in the liquidity position of the short
-term solvency of the firm. Long-term creditors .on the other hand, are more interested
in the long -term solvency and profitability of the firm. Similarly, owners concentrate on

the firm's profitability analysis and analysis of the firm's financial conditions.
Management is interested in evaluating every activity of the firm. They have to protect
the interest of all parties and see that the firm grows profitability.
In view of the requirements of the user of ratios we may classify them as follows:
Traditional classification
Balance sheet Ratios:
Balance sheet Ratios aeal with the relation between two balance sheet items .
Both the items must however pertain to same Balance sheet. Ex. Current Ratio
Profit and Loss Account
These ratios deal with the relationship between two profit and loss account items,
both the items must belong to the same Profit and Loss Account. Ex. Gross Profit Ratio
Composite or Mixed Ratios:
These ratios exhibit statement item and a Balance sheet item.
Ex. Stock Turnover Ratio
CLASSIFICATION OF RATIOS:
RA TIOS may be classified in a number of was keeping in VIew of the particular
purpose. Rations indicating profitability are calculated on the basis of the profit and loss
account, those indicating financial position are computed on the basis of the balance
sheet and those which show operating efficiency or productivity or effective use or
resources are calculated on the basis of figures in the profit and loss account and the
balance sheet. This classification is rather crude and unsuitable to determine the
profitability and financial position of the business. To achieve this effectively, ratios may
be classified as:
1. LIQUIDITY RATIOS
2. LEVERAGE RATIOS
3. ACTIVITY RATIO
4. PROFITABILITY RATIOS
Liquidity Ratios:
It is extremely essential for a firm to be able to meet its obligations as they
become due. Liquidity Ratios measure the ability of the firm to meets its current
obligations. In fact, analysis of liquidity needs the preparation of Cash Budgets and Cash
flow statements .But liquidity ratios, by establishing in a relationship between Cash and
other Current obligations provide a quick measure of liquidity.
Also that it is not too much meets its obligations, due to lack of sufficient
liquidity, will result in bad credit rating, loss of creditors' confidence, or even in lawsuits
resulting in the closure of the Company. A very high degree of liquidity is also bad.
Therefore, it is necessary to strike a proper balance between Liquidity.
The ratios, which measured and indicate the extent of firm's liquidity, are known
was liquidity ratios or short-term solvency ratios commonly used liquidity ratios
included.
Current Ratio (Or) Working Capital Ratio
Quick Ratio (Or) Acid Test Radio
Cash Position Ratio (Or) Super Quick Ratio
Leverage Ratios:
The long term creditors like Debentures holders, financial Institutions, etc. , are
more concerned with the firm's long -term financial strength. To judge the long-term
financial position of the firm, Leverage or capital structure ratios are calculated. These
ratios indicate the funds provided by the owners and creditors. As a general, there should
be an appropriate mix of the debt and owner's equity in financing the firm's assets.
Firm with low leverage have less risk of loss, but they also have lower expected
returns. Conversely firms high leverage ratios have risk of large losses.
But also have a chance of earning huge profits. Therefore, before deciding
whether a firm should have debt, must balance with higher expected returns against
increased risks. The most commonly examined leverage ratios are:

i)
Debt Equity Ratio
ii)
Fixed Assets Ratio
iii)
Current Assets to Fixed Assets Ratio
Activity Ratios
The funds of creditors and owners are interested in various kinds of Assets to
generate sales and profit. The better the management of Assets, the larger will be the
amount of sales. Activity ratios are employed to evaluate the efficiency with which the
firm manages and utilizes its assets. These ratios are also called Turn over ratios because
they indicate the speed with which assets are being converted or turn over in to sales.
Activity ratios thus involve a relationship between sales and the various assets .A proper
balance between Sales and Assets generally reflects that assets are managed well.
Following are some of the important activity ratios.
i)
Total assets turnover ratio
ii)
Fixed assets turnover ratio
iii)
Current assets turnover ratio
iv)
Stock turnover ratio
v)
Debtors turnover ratio
vi)
Creditors turnover ratio
Profitability Ratios:
A company should earn profits to survive and grow over a long period of time.
Profits are essential, but it would be wrong to assume that every action initiated by
management of the company should be aimed at maximizing profits, irrespective of
social consequences.
Profit is the difference' between total Revenues and total Expenses over a period
of time. Profits are the ultimate output of a company and it will have no future if it fails

to make sufficient profits. There fore, the Financial Manager should continuously
evaluate the efficiency of the company. Besides management of the company, creditors
and owners are also interested in the profitability of the firm.
Generally, two major types of profitability ratios are calculated.

1. Profitability in relation to sales.
2. Profitability in relation to Investment.
A company should be able to produce adequate profit on each rupee of sales .If
sales do not generate sufficient profits, it would be very difficult for the firm to cover the
operating expenses and interest charges and as a result will fall to earn any profits for
owners. Some of the profitability ratios are:
i)
Gross Profit Ratio
ii)
Operating Ratio
iii)
Operating Profit Ratio
iv)
Net Profit Ratio
Significance of Ratio Analysis

The ratio Analysis is the most powerful tool of the financial analysis. The many
diverse groups of people are interested in analyzing the financial information to indicate
the operating efficiency and the various aspects of the firm's financial position. These
people use ratios to determine a particular financial characteristic of the firm in which
they are interested. With the help of ratios one can determine.
1. The ability of the firm to meet its current obligations.
2. The extent to which the firm is utilizing its long-term solvency by borrowing
funds.
3. The efficiency with which the firm is utilizing its various assets in generating
sales Revenue.

4. The overall operating efficiency and performance of the firm.
A short-term creditor will be interested in current financial position of the firm,
while a long-term creditor will pay more attention to the solvency of the firm and also be
interested in profitability of the firm. The equity share holders are generally concerned
with their return and many bother about the .firm's financial condition only when their
earnings are depressed. In fact, it has to be realized that the short-term and the long term
financial position and the profitability of the firm are based on every kind of financial
analysis, the emphasis would differ.
In credit Analysis, the analyst will usually select a few important ratios. He may
use the Current Ratio or Quick- Asset Ratio to judge the firm's liquidity or Debt-paying
ability.
The ratio Analysis is also useful in security analysis. The major focus on security
analysis is on the long-term profitability. From time to time, Management uses ratio
Analysis to determine the firm's financial strength and weakness and accordingly takes
action to improve the firm's position.
The ratio of a firm in itself does not reveal anything. For meaningful
interpretation, the ratios of the firm should be compared with the ratios of similar firms
and industry. This comparison will reveal whether the firm is significantly out have like.
The firm should undertake a detailed analysis to spot out the trouble areas.
The Ratio Analysis will reveal the financial condition of the firm more reliably
when trends in ratios over time are analyzed. The significance of trend analysis of ratios
lies in the fact the analyst can know the direction of movement, i.e., whether the
movement is favorable or unfavorable.
Limitations of Ratio Analysis:

The Ratio Analysis is a widely used technique to evaluate the financial position
and performance of a business. But there are certain problems in using ratios. The
following are the limitations of the Ratio Analysis.
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It is difficult to decide on proper basis for comparison:
The comparison is rendered difficult because of differences in situations of two
companies or one company over years.
The price level changes make the interpretations of ratios invalid.
The differences in definitions of items of Balance sheet and income
statements make the interpretation of ratios difficult.
The ratios calculated at a point of time are less informative and defective as
they suffer from short-term changes.
The ratios are generally calculated from past financial statements and thus are
no indications of the future.
A single ratio usually does not convey much sense. To make a better
interpretation a number of ratios have to be calculated which are likely to confuse
the analyst than helping him in making any meaningful conclusion.
Like financial statements, ratios also suffer from the inherent weakness of
accounting records such as their historical nature. Ratios of the past are not
necessarily .true indicators of the future. ~ Ratio Analysis is merely a tool of
financial statements. Hence, ratios become useless if separated from the
statements from which they are computed.
Ratios are only means of financial analysis and not an end in it self. Ratios have
to be interpreted and different people may interpret the same ratio in different
ways.
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INDUSTRY PROFILE
ORIGIN:
Rayalaseema is economically backward area in Andhra Pradesh was rarefied
region for industries. A dynamic entrepreneur Sri S.P.Y.REDDY who is basically a
Mechanical Engineer started unit at Nandyal, which manufactures black pipes in 1977.
The determination and hard work of Sri S.P.Y.REDDY helped him to over come the
problems faced by the company in the initial years, and with financial assistance from
local commercial banks. The company could over come the problems of the merger and
is running smoothly.
Late the company started manufacturing PVC pipes, which terminated the
manufacturing of black pipes. This resulted in the formation of a PVT Ltd., Company
called SUJALA PIPES PVT LTD., with Sri S.P.Y.REDDY as the managing director.
The only major competitors to the company are Sudhakar Pipes, Maharaja Pipes.
The only backdrop to it is the competition from local brands. As the majority of
customers belong to farmers, they consider than quality. The company has to make
aware of the companys quality standards to them.
Nandi has its origins in the year 1979, when Mr.S.P.Y.REDDY, a technocrat left
his job at Bhaba Atomic Research Centre, Mumbai to start a plastic containers unit in
Anantapur. The company has grown at a fast pace and Mr.REDDY who sensed an
opportunity in making pipes for irrigation started manufacture of PVC Pipes in year
1984 and has fast become leading manufacturer in Andhra Pradesh and later in India.
With annual consumption of 50,000 tones of resin, Nandi group is one of the biggest
plastic processors in Asia. The group has either setup or acquired plants in different
geographical locations of South India to improve operational efficiency and to enhance
customer satisfaction. Nandi group sells PVC pipes under 4 brands of which Nandi
brand is the most Prominent.
Plastic have become synonymous with modern living. It is undoubtedly a
product, which has penetrated extensively into the common mans life. No wonder the
industry has achieved in terms of supply of raw material expansion and diversification of
processing capabilities and manufacturing of processing machinery and equipment.
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This versatile material with its superior qualities such as light weight, easy
process ability corrosion resistance, energy conservation, no toxicity etc., many
substitute to a large extent many conventional and costly industrial materials like wood,
metal, glass, jute lather etc., in the future. The manifold applications of plastics in the
field of automobiles, electronics, electrical, packaging and agriculture give enough
evidence of the immense utility of plastics.
At 80 percent of total requirement for raw material and almost all types of
plastic machines required
for the industry are indigenously available. The present
investment in all the three segments of the industry namely production of raw materials,
expansion and diversification of processing capacities, manufacturing of processing
machinery and ancillary equipment is Rs. 1,250 crores and it provides employment to
more than eight lakh people.
On account of their inherent advantage in properties and versatility in adoption
and use, plastics have come to play a vital role in a variety of applications, the world
over. In our country, plastics are used in making essential consumer goods of daily use
for common man such as baskets, shopping bags, water bags, water bottles, school bags,
Tiffin boxes, hair combs, tooth brushes, spectacle frames and fountain pens, they also
find applications in field like packaging, automobiles, and transportation, engineering,
electronics, telecommunications, defense, medicine, and building and construction.
Plastics are growing in importance in agriculture and water management.
The Govt of India recognizing the importance of plastics in agriculture appointed
on March 7th, 1981 a National Committee on the use of plastics in agriculture under the
chairmanship of Dr.G.V.K.Rao. This committee has forecast a tremendous growth of
drip irrigation through a net work of plastic pipes and tubes. In its opinion large scale
adoption of irrigation would lead to sports in demand for PVC pipes, L.D.P.E tubes and
polypropylene emitters.
The committee made a number of
recommendations for
promoting the use of plastics. The implementation of recommendations would go along

away in increasing the consumption of plastics, which at present is very low. The rigid
pipes, flexible pipes and sheeting, which are being used for agricultural operations to
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carry out water place to place and also lining of ponds and reservoirs to reduce seepage
and most important in drip irrigation system.
Export of Plastics Goods:
Plastics have excellent potentialities. Our country is equipped with all kind of
processing machinery
and skilled labor and undoable, and extra to boost export,
finished plastics products will yield rich divided.

Today India exports plastic products to as many as 80 countries all over the
world. The exports, which were stagnant at around rest 60-70 cores per annum double
to 129 craters. The Plastic Industry has taken up the challenge of achieving an export
target of Rs.17 crores.
Major export markets for plastic
products and linoleum
are Australia,
Bangladesh, Canada, Egypt, Hong Kong, Italy, Kuwait, Federal Republic of Germany,
Sri Lanka, Sweden, Taiwan, U.K., U.S.A., and Russia.
With view to boosting the export, the plastics and linoleums export promotion
council has urged the government to reduce import duty of plastic raw material, supply
indigenous raw materials at international prices, fix duty, draw backs on weighted
average basis and charge freight rate on plastic products on weights basis instead of
volume basis.
Prospects:
The Production of various plastics a raw materials in the country is expected to
double by the end of seventh plan, the consumption of commodity plastics including
LDPE, HDPE, PP, PS AND PVC is immense scope for the use of plastics in agriculture,
electronics, automobile, telecommunications and irrigation and thus, the plastic industry
is on the threshold of an explosive growth.
Role of Plastics in the National Economy:
Plastics are got perceived as just simple colorful household products in the mind
so common person. A dominant part of the plastics of the percent and future find their
utilization in the areas.
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Agriculture, forestry and water management.
Electronics and Telecommunications, buildings, construction and.
Food processing and packaging.
Power and Gas Distributor.
Importance of Pipes Industry:
We shall look at the basic data about plastics and particularly those properties,
which are so, fuse in practical working with plastics. Plastics are man-made materials.
The oldest raw material for producing plastics is carbonaceous material obtained from
coal tar (Benzene, Phenol).
Today the majority of raw materials are obtained from petrol chemical source and
they can be economically produced in large quantities.
Plastics have changed our world and day-by-day they are becoming important.
They own their success to whole series of advantage, which they have over conventional
materials such as:
Lightweight
Excellent Mould Ability
Attractive Colors
Low Energy Requirements for Convention
Low Labor and Cost of Manufacture
Low maintenance & High strength weight ratio
Economic Role:
Agriculture is the chief occupation in India. For the developing countries like
India modernization of the agriculture practices assumes pivotal places in improving the
economic status and the process of modernization. Includes usage of higher productive
plastics supplement to greater extent manufacturing of tools required for new agricultural
practices.
15

The usage of poly vinyl chloride pipes in agricultural
fields, lesser water
seepage, which was predominant in earlier practices, with services of P.V.C pipes, water
can be transported efficiently with lesser from the place of higher potential to the place
of lower water potential.
Presently the revolutionary tried in water management speaks much about drip
irrigation, which is developed in Israel and is practiced by all agricultural based nations
in the world. Drip irrigation greatly P.V.C pipes as core tools of implementation with
the services of this sort, P.V.C pipes one way or the other strengthening the hands of
countrys economy.
A part with the referred P.V.C pipes supplemented with fitting is used in houses
for electrical connection and other domestic purposes.
A part from these two
applications it has got wide applications even in industrial sectors. P.V.C pipes with
much unique heart, chemical and physical characteristics serve
many industrial
purposes.
Even characteristics of weight and low price attract many more applications.
Ragid PVC pipes have been manufactured in India from the 60s on imported extrusion
lines and there after indigenous plan were few pipes manufactures upto 1979-83. When
many extrusion lines were imported from batten field. Cincinnati, Kraaus maffi etc,
the Govt allowed the imports of sophisticated and high output plants, which were not
available indigenously.
PVC Pipes in India:
Pipes products have found wide acceptance in India and abroad. PVC is one of
the more versatile plastics. It can be extruded, molded, calendared and thermoformed
into a multitude of furnished products. The PVC resin can be formulated to give a wide
range of properties ranging from hand, tough materials for load bearing application lime
pipes, windows and doors to flexible materials for products a due as wire and cable
insulation and shooting and flooring.
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PVC products cater to both interiors and exteriors. In interiors it can be used for
flooring, profile and cable tray, wall covering modular office systems, houses and
furniture.
For
exteriors it is used for doors and windows, fencing partitions and
paneling, roofing and rain systems.

The other external applications are in the field of irrigation, portable water
supplies. In the field of irrigation there are several methods to irrigate the fields. There
are minor irrigation projects and major irrigation projects apart from individual sources
like wells, tube wells, bore wells. Major irrigation sector small projects will have
canals and lift irrigation schemes etc., will have pipelines. Cement and GI pipes were
the pipes used in conventional methods of irrigation. Now-a-days PVC pipes replaced
the conventional pipes and they constituted almost 90% in this respect.
Drip irrigation popular in the agricultural sector especially
in the field of
horticulture commercial cropping and greenply houses. The drip irrigation concept is
becoming more popular with its advantages like highly yield, water conversion, less
labour cost, less fertilizer, less past management costs, less power costs and many more
advantages. The demand for this concept is increasing at a place of 30% - 40% per
annum.
Agriculture a sunrise industry in the Indian economy is mainly dependent on the
PVC pipes for the seawater sector and pumping to their aqua ponds. They are using
pipelines of four to five kilometers of 10-16 diameters pipes.
The state Govt of A.P is using rigid PVC pipes for the irrigation water supplies
for the past few years.
17
COMPANY PROFILE
MONARCH PIPES:
Monarch Pipes Ltd., was incorporated in the year 1986. The factory is situated
at Nh 7, Hampapuram Village, Rathadu Mandalam, Nandipur District. It was taken
over by Nandi Pipes.
In annual production capacity is 16000 Mts, and
it is one of the leading
manufactures of PVC pipes in the South India. The company is equipped with technical
collaboration from Batten field of West Germany. It has made possible few other small
ventures.
Pipes are sold under brand names of MONARCH, KOHINOOR
and
KRISHNA.
Monarch pipes with their good quality trouble free services durability and
economical use or a better choice than mild steel, Galvanized steel, cast iron and plastic
pipes. The company is managed by a term of professionals under the guidance of a
young, experienced and well qualified dynamic managing director Mrs.Sreedhar Reddy.
Nandi PVC Pipes Ltd., Nandyala a premier enterprise of Nandi Group is the will
known manufacturer of the largest and most comprehensive range of UPVC Pipes in
India. Nandi Gold Pipes, with a diameter up to 400 are suitable for water Transportation,
Irrigation, Plumbing, Drainage, Cable Ducting, Bore Wells, Transfer
of Industrial
effluents an Electrical Conduits.

The gamut of products cover all applications in Which PVC pipes can be used.
Nandi UPVC systems are more cost effective than conventional GI, CI or AC systems
besides being light in weight, durable and no corrosive. They are also easy to handle,
offer excellent flow characteristics and can be transported and installed anywhere. With
world class quality and customized product development
support, they enjoy the
satisfaction of millions of customers.
18
Mission Statement:
The mission statement of Nandi PVC Pipes Pvt Ltd., is as follows:
To be preferred supply chain partner to out customer.
To be recognized as the best in the world at we do.
To create new values in the quality for our customers and employees.
Vision Statement:
The vision statement of Nandi PVC Pipes Pvt Ltd is as follows:
Creating new values in quality by working together for you
BOARD OF DIRECTORS
S.P.Y.REDDY
Sri S.P.Y.REDDY locally well known industrialist with the base at Nandyal,
Kurnool District who has been successfully entrepreneur and management.
Is
technically qualified person with B.E. MECHANICAL from R.E.C (Warangal) and with
work experience at BAARC (Bombay). He has daringly ventured and established
industries.
NANDI MILK
MAHANANDI MINERALS WATER
NANDI INFOSYS
NANDIONLINE SERVICES
MONARCH PIPES LTD
INTEGRATED THERMOS PLASTICS LTD
NANDI PVC PRODUCTS
PROMOTER:
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Sri Sridhar Reddy, a Computer Engineer and a student of IIM, Ahmadabad as
been entrusted the management
of Monarch Pipes Ltd., Hampapuram and great
assistance and a young up coming engineer and industrialist.
BRANCHES
PONDICHERY
SALEM
BELLARY
MADURAI
GOA
SIZES:
Various sizes ranging to 10 inches pipes are offered to the customers. Even
pipes with different gauges and sizes are manufactured to suit specific conditions.
DETAILS OF NANDI PVC PIPES
PIPE DIAMETER CLASS
MM
20
25
32
40
50
63
75
90
110
140
160
180
200
225
250
INCHES
0.5
0.75
1
1.25
1.5
2
2.5
3
4
5
6
7
8
9
10
CLASS
5
5
5
3
3
2
2
2
2
2
2
2
2
2
2
FLOW RANGE
PRESSURE
10
10
10
6
4
4
4
4
4
4
4
4
4
4
4
LITRE / SEC
0.07 -0.13
0.13-0.25
0.25-0.50
0.50-1.00
1.00-1.80
1.980-3.00
3.00-5.00
5.00-15.00
8.00-15.00
15.00-20.00
20.00-30.00
30.00-40.00
40.00-50.00
50.00-60.00
60.00-70.00
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PACKNG:
Packing plays less important role into the products like PVC Pipes because the
hallow space inside can be utilized. For the purpose of cubic space utilization in trucks,
while transport. Organization is adopting the technique like pipes in pipes.
PAYMENT PERIOD:
For monarch brand and company adopts zero credit policy and goods are not
delivered unless cash remittances are made. For monarch and sagar brands credit is
entitled up to a week. The difference between these brands is due to brand image.
COVERAGE:
At present Andhra Pradesh, parts of southern states of Karnataka, Tamilnadu and
Kerala are ambit of Sujala Pipes Pvt Ltd. The extended the sales in the below regions as
shown below.
1979
Nandyal Region (Poly Phone Pipes)
1984 - 1985
Rayalaseema Regions (PVC Pipes)
1985 1986
Telangana Regions
1986-1987
Karnataka and Andhra Pradesh
1988-1991
Tamilnadu and Karnataka
1991-1994
Kerala
TRANSPORTATION:
The transportation department of Sujala Pipes Pvt Ltd. Is very admirable. This
unique strength of the organization enables the dealers to reduce inventory levels to the
minimum. Thus dealers are also supplemented with dealers to reduce inventory levels
to the minimum. Thus dealers are also supplemented with the benefit of the lower tied
up capital in the form of inventory.
Ingredients:
PVC Resin
D.B.L.S
T.B.L.S
21

L.S
C.S
Stearic Acid
Hydro Carbon
Calcium Carbonate
GENERAL INFORMATION ABOUT THE COMPANY

The company is equipped with sophisticated laboratory to carry all tests to
ascertain out going quality level of pipes. A Nandi pipe has got I.S.I Trade mark, this
speaks for itself for the quality of the pipes. Numbers of statistical quality control
techniques are applied to sustain the quality level of the product. Managers at the
company are dynamic and are well
educated supervisory staff or intermediate
managerial staff are able in talking their area not highly educated.
Most of the
employees are skilled is uniqueness of workers in Sujala Pipes Pvt., Ltd. There is nonindulgence in trade union activities.
As the company is located in Industrial Estate of Nandyal. It is facilitated with
good communication networks. Which includes telecom; fax machine and Internet
Company has also got the support of electronic date processing. Companys major
settings.
The Companys major strength is considered to be transportation vehicles.
A unique cash out flow justifies it self by providing good reputation of the
company through improved customer service.
`The unit also has
world class quality assurance systems ensuring products of
uncompromising excellence, meeting all relevant ISI, BS,DIN, and ASTM standards. In
addition to these features, extensive R&D facilities provide reliable and committed
support for new product development, implying the even if a Nandi Customer is unable
to acquire his precise requirement from our elaborate ranges, Nandi also could supply
customized products as per his own exclusive specifications. Such relentless pursuit of
quality and readiness to adopt and innovate, the propelled the Nandi to the forefront of
this product category in India.
22
FUNCTIONAL DEPARTMENTS OF THE COMPANY

FINANCIAL DEPARTMNET:
Through initially the company approached the external sources for financial
status of the company is the very sound and is being run only with self financial
excepting for loans taken for hypothecation of machinery and stock from SBI Nandyal.
The
company follows cash and carry policy for Nandi Brand. The product is
not delivered until the cash is paid and financial department with the help of marketing
department look after this transaction.
MARKETING DEPARTMENT:
Marketing manager who reports to executive director and assistant marketing
manager who reports and 20 salesmen headed by 30 sales representatives who are
headed by assistant marketing heads the marketing department. Marketing mix and
advertising particulars of Sujala Pipes Pvt Ltd.
Shows the departments effective
management of the marketing department in the organization.

PERSONAL DEPARTMENT:
The personal department consists the details of the executives and workers of
the organization. The organization is formed with Sri S.P.YREDDY as the Managing
Director and executive director who reports managing director.
Two marketing
managers, financial manager, public relations officer and quality control officer who all
reports to executive director, other than executives there are thousand works in
organization panel consisting of managing director, executive director and managers of
concerned departments makes the recruitment and selection of persons A part from the
attractive salaries company provides health card facilities.
PURCHASING DEPARTMENT:
The perplexing situation i.e., conformed by manufactures of the PVC pipes is
scarcity of resin. Though the govt of India has taken various steps to improve supply
conditions of PVC resin. The Indian manufacturers could meet only 50 percent of
demand of demand of remaining 50 percent is met from imports.
23

The lead time for the acquisition of raw materials is 4 days.
The following lines highlight the human resources policies and practices.
Effective utilization of manpower.
To provide good working condition.
To promote industrial development.
Channels of Distributing:
Nandi PVC Pipes Pvt.,Ltd has got
zero level and single level channel of
distribution.
MANUFACTURER
MANUFACTURER
MANUFACTURER
CONSUMER
DEALER
CONSUMER
Nandi PVC Pipes Pvt.,Ltd. Has an extensive network of 350 dealers in Andhra
Pradesh and who are directly serviced by company sales force and 620 dealers in South
India.
THE MAJOR PETROCHEMICAL COMPANIES ARE:

Sri ram vinyl Ltd.
Chem Past Ltd.
Reliance Petrochemical Ltd.
National Organic Chemical Industries Ltd.
Indian Petrochemical Industries Ltd.
PROCESS:
The main raw materials are HDPE granules, PP granules. The manufacturing for
pipes consist of mixing various resins along with coloring material in a mixture and the
prepared material is fed to the extruder. In the extruder, the material is heated to the
required politicizing temperature (1900 Centigrade to 2300 Centrigrade) the extruded
through the die hard to from the pipe. The hot pipe coming out of the extruder is cooled
24

in a water bath to retain the final shape. The pipe coming out of the extruder is guided
through the water bath to retain the final shape. The pipe coming out of the extruder is
guided through the water bathe suitable traction system.
ORGANIZATION STRUCTURE
MANAGING
DIRECTOR
FINANCIAL
MANAGER
ACCOUNTS
MANAGER
Accounts
Officer
PRODUCTION
MANAGER
PRODUCTION
INCHARGE
Operator
PERSONAL
RELATION
OFFICER
MARKETING
MANAGER
QUALITY
CONTROLLER
Lab
Technician
REGIONAL
MANAGER
PERSONAL
OFFICER
Sales
Officer
25
REVIEW OF LITERATURE
Review of Literature refers to the collection of the results of the various
researches relating to the present study. It takes into consideration the research of the
previous researchers which are related to the present research in any way. Here are the
reviews of the previous researches related with the present study:
Bollen (1999) conducted a study on Ratio Variables on which he found three
different uses of ratio variables in aggregate data analysis: (1) as measures of
theoretical concepts, (2) as a means to control an extraneous factor, and (3) as a
correction for heteroscedasticity. In the use of ratios as indices of concepts, a problem
can arise if it is regressed on other indices or variables that contain a common
component. For example, the relationship between two per capita measures may be
confounded with the common population component in each variable. Regarding the
second use of ratios, only under exceptional conditions will ratio variables be a suitable
means of controlling an extraneous factor. Finally, the use of ratios to correct for
heteroscedasticity is also often misused. Only under special conditions will the
common form forgers soon with ratio variables correct for heteroscedasticity.
Alternatives to ratios for each of these cases are discussed and evaluated.
Cooper (2000) conducted a study on Financial Intermediation on which he
observed that the quantitative behavior of business-cycle models in which the
intermediation process acts either as a source of fluctuations or as a propagator of real
shocks. In neither case do we find convincing evidence that the intermediation process
is an important element of aggregate fluctuations. For an economy driven by
intermediation shocks, consumption is not smoother than output, investment is
negatively correlated with output, variations in the capital stock are quite large, and
interest rates are procyclical. The model economy thus fails to match unconditional
moments for the U.S. economy. We also structurally estimate parameters of a model
economy in which intermediation and productivity shocks are present, allowing for the
intermediation process to propagate the real shock. The unconditional correlations are
closer to those observed only when the intermediation shock is relatively unimportant.
26

Gerrard (2001) conducted a study on The Financial Performance on which he
found that Using ratio analysis the financial performance of a sample of independent
single-plant engineering firms in Leeds is examined with regard to structural and
locational differences in establishments. A number of determinants of performance are
derived and tested against the constructed data base. Inner-city engineering firms
perform relatively less well on all indicators of performance compared with outer-city
firms. The study illustrates the importance
of using different measures of performance since this affects the magnitude and
significance of the results. Financial supports necessary to sustain engineering in the
inner city in the long run.
Schmidgall (2003) conducted a study on Financial Analysis Using the
Statement of Cash Flow son which he observed that Managers use many financial
ratios to judge the health of their businesses. With the recent requirement of a
statement of cash flow (SCF) by the Financial Accounting Standards Board, managers
now have a new set of ratios that will give a realistic picture of the business. The ratios
include cash flow-interest coverage, cash flow-dividend coverage, and cash flow from
operations to cash flow in investments. These ratios are particularly useful because
they show changes in a hotel or restaurant's cash position over time, rather than at a
given moment, as is the case with many other ratios.
Marinade (2003) conducted study on Corporate Financial Structures on which
he observed that the financial structure of a sample of Indian non-financial companies
using a new and unique dataset consisting of a panel containing the published accounts
of almost 900 companies that published a full set of accounts every year during 198999.
In a new departure in the literature, the dataset includes quoted and unquoted
companies. We compare the sources-uses approach to analyzing company financial
structures with the asset-liability approach. We use both approaches to characterize and
to compare the financial structures of Indian companies over time; between quoted and
unquoted companies; and between companies which belong to a business group and
those that do not. Finally, we compare our results to those obtained previously for India
and for the industrial countries.
27

McMahon (2005) conducted a study on Financial Information on which he
found that financial statements mean little to the uninitiated. This paper, explains, in
layman's terms, how to understand financial information. It covers measures of
profitability. The second article will cover measures of company liquidity and the use
of financial ratios. This paper continues to explain how to interpret and understand
financial information. It deals with measures of liquidity, solvency and fund flows and
describes how to establish standards against which a companys financial ratios can be
compared.
Lee (2008) conducted a study on Financial Risk on which he observed that
Financial researchers, including those concentrating on the lodging industry, use
various financial risk measures for their studies. Examples of those risk measures are
beta, earnings variability, bankruptcy probability, debt-to-equity ratio and book-tomarket ratio. The purpose of this study is, first, to descriptively investigate various
financial risk measures used in the lodging financial literature by performing factor
analysis and identifying four distinct risk groups. Second, this study examines the
predictive ability of the four risk groups for lodging firm performance. The findings of
this study suggest that strategic and stock performance risk factors better represent a
lodging firm's financial risk than do bankruptcy and firm performance risk factors, and
also, ROA than ROE better estimates lodging firm performance in terms of their
relationships with financial risk factors.
Johnson (2009) conducted a study on Financial Ratio patterns on which he
found that the properties and characteristics of financial ratios have received
considerable attention in recent years with interest primarily focused on determining
the predictive ability of financial ratios and related financial data. Principal areas of
investigation have included the prediction of corporate bond ratings, and the
anticipation of financial impairment]. Related studies have examined the characteristics
of merged firms the differences in financial ratio averages among industries whether
firms
seek to adjust
their
financial ratios
toward industry averages
the
relationship between accounting-determined and market-determined risk measures, and

the influence of financial ratios on analysts' judgments about impending bankruptcy
28

The general conclusion to emerge from these various research efforts is that a number
of financial ratios have predictive and descriptive utility when properly employed.
To summarize the literature, Ratio analysis is a key dimension of financial
management, suggesting a relationship between profit and loss as mentioned in the
balance sheet of an organization. Its appropriate use will go toward giving a true
picture of the financial health of the unit. Its benefits can be seen in areas of
management, production, marketing, personnel management etc
RESEARH METHODOLOGY
Research in common parlance refers to a search for knowledge. Research as a
scientific and systematic search for pertinent in formulation on a specific topic. In fact,
research is an art of scientific investigation. It is a careful investigation or inquiry.
Data Sources
Primary Data:
The data has been gathered through interactions and discussion with the finance
department and executive.
Secondary Data:
Referred standard texts and reference books for collecting the information
regarding the theoretical aspects, of the topic.
Annual reports and other magazines published by the company are used for
collecting the required information.
29
NEED FOR THE STUDY

The present study on the ratios of NANDI PVC PIPES is to get the appropriate
information of the organization. It help to know the historical position as well as the
current financial possibility through search for new facts in any branch of knowledge.
30
SCOPE OF THE STUDY

The present study is confined to only Nandi PVC pipes pvt limited. The time
period considered for performing the study is five years. On operating cycle calculation
has been analyzed taking into consideration the information both past and present with
respect to performance of the company.
31
OBJECTIVES OF THE STUDY
The main objective of the present study is to find out the financial position of the
company.
To know the liquidity position of the firm.
To evaluate the profitability of the firm.
To evaluate the firm efficiency in utilizing of assets.
32
LIMITATIONS OF THE STUDY

The present study is subjected to the following limitations:
Confidential matters like financial position soundness etc. are naturally not
disclosed fully. This is set back while drawing the conclusion.
The information from annual reports is insufficient to calculate few ratios.
Since the study covers only SRI NANDI PVC PVT LTD, It does not represent the
over all scenario of the Nandi industry.
33
DATA ANALYSIS AND INTERPRETATION

LIQUIDITY RATIOS
1. Current Ratio
Current ratio expresses relationship between current assets and current liabilities.
It is computed by dividing current assets and current liabilities. A higher current ratio
indicates sign 2:1 is considered an ideal current ratio in ideal situation. For only one of
worth of current liabilities, company should be maintained two of worth of current
assets.
Current Ratio =
Current Assets
Current Liabilities
Table: 4.1
Years
Current Assets Current

(Rs. in Lakhs)
Liability
Current Ratio
2009-10
16137.54
(Rs. in Lakhs)
8106.45
2010-11
18321.76
9202.11
1.99
2011-12
26196.83
10188.34
2.57
2012-13
26616.98
9319.38
2.86
2013-14
35973.84
10109.38
3.56
1.99
34
Graph: 4.1
Interpretation
The current ratio of Nandi Industries Pvt Ltd varied from 1.99 to with an
average of 3.56 during the study period. In the above table and chart, the ratio of
current assets and current liabilities should be 2:1 according to the financial report of
the company that the firm is liquid and has ability to pay its current obligations in
time.
Viswam Degree and PG College Angallu, Madanapalle
35
2. Quick Ratio
Quick ratio express relationship between quick assets and current liabilities. It
is obtained by measures quick assets by current liabilities. A quick ratio of 1:1 is
considered adequate. For every one rupee current liabilities there should be
maintained one rupee of worth of quick assets.
Quick Ratio =
Quick Assets
Current Liabilities
Table: 4.2
Years
Current Assets Inventory

(Rs. in Lakhs)
(Rs. in Lakhs)
Current Liabilities
Quick Ratio
2009-10
16137.54
7085.18
8106.45
1.99
2010-11
18321.76
9194.09
2011-12
26196.83
10736.86
2012-13
26616.98
12102.91
2013-14
35973.84
14436.48
9202.11
10188.34
9319.38
10109.38
1.99
2.57
2.86
2.56
36
Graph: 4.2
Interpretation
The quick ratio of Nandi Industries Pvt Ltd varied from 1.99 to 2.86 with an
average of 1.11. It was above standard norm of 1:1 for the entire period. It conforms
that the liquidity position of this Nandi Industries Pvt Ltd in terms quick ratio was
more than the standard except in the 2010-11 financial year. The firms capacity of
pays of currant obligations immediately and is a test of liquidity. The high quick ratio
is an indicate of the firm is liquid and has the ability to meet is current liabilities.
37
3. Cash Ratio
This ratio is also called "Absolute Liquidity Ratio" or "Super Quick Ratio".
Since cash is the most liquid asset, a financial analysis may examine cash ratio and its
equivalent to liabilities. Trade investment or marketable securities are equivalent of
cash, the reform, they may be included in the computation of cash ratio is,
Cash Ratio =
Cash+Marketable Securities
Current Liabilities
Table: 4.3
Years
Cash+MS
(Rs. in Lakhs)
Current Liabilities Cash Ratio

(Rs. in Lakhs)
2009-10
247.72
8681.59
0.03
2010-11
350.67
9556.53
0.04
2011-12
2650.37
10826.59
0.25
2012-13
420.1
10030.68
0.04
2013-14
3463.66
10109.38
0.34
38
Graph: 4.3
Interpretation
The cash ratio of Nandi Industries Pvt Ltd was started low at first by 0.03in
the year 2009-10 andThen it was increased by 0.25 in the year 2011-12, it was fatly
decreased by 2012-13 by 0.04 and it increased in 2013-14. So, it will increase in
future also.
39
4.Net Working Capital Ratio:

Working capital turn over ratio indicates velocity of the utilization of net
working capital. This ratio indicates number of times the working capital is turned
over in the course of year. This ratio measures the efficiency with which the working
capital is being used by a firm.
NWC Ratio =
Net Working Capital

Net Assets
Table: 4.4
Years
Net working Capital

(Rs. in Lakhs)
Net Assets
(Rs. in Lakhs)
NWC Ratio
2009-10
7455.95
28680.37
0.26
2010-11
8765.23
32901.4
0.27
2011-12
15470.24
40386.36
0.38
2012-13
16586.3
43836.66
0.38
2013-14
25865.46
54106.44
0.48
40
Graph: 4.4
Interpretation
The NWC ratio of Nandi Industries Pvt Ltd was started with 0.26 in the first
year 2009-10 and it was increased same like another two years respectively. The
NWC ratio was increased to 0.38 by the year 2011-12 and it was constant to next
2012-13 and it increased in 2013-14 year. The average NWC ratio of Nandi Industries
Pvt Ltd is 0.45 for during period.
41
LEVERAGE RATIO
1. Debt Ratio
Several debt ratios may be used to analyze the long term solvency of a firm.
The firm may be interested in knowing the proportion of the interest bearing debt in a
capital structure. It may therefore, compute debt ratio by dividing total debt by capital
employed. Capital employed will include total debt and net worth.
Debt Ratio =
Total Debt
Captial Employed
Table: 4.5
Years
Total Debt
Capital Employed
Debt Ratio
2009-10
20999.21
28680.31
0.73
2010-11
24931.96
32901.40
0.76
2011-12
31301.36
40386.36
0.78
2012-13
32679.87
43836.66
0.75
2013-14
41229.73
53755.86
0.76
42
Graph: 4.5
Interpretation
The debt ratio of Nandi Industries Pvt Ltd was started with 0.73 at first year
2009-10. It was increased to 0.76, 0.78, 0.75 and 0.76 by remaining year's i.e.2010-11,
2011-12, 2012-13 and 2013-14 respectively. The last year it was increased with 0.76.
The average debt ratio of Nandi Industries Pvt Ltd is 0.75 for the above study period.
43
2. Debt Equity Ratio:

The relationship describing the leader's contribution for each rupee of owner's
contribution is called Debt Equity Ratio. The debt equity measures the long term
financial solvency of a business concern. The ratio is also popularly known as
External or Internal equity ratio. This ratio can also be viewed as including the
relative proportion of debt amends equity in financing the assets of the business unit.
Debt Equity Ratio =
Total Debt
Net Worth
Table: 4.6
Years
Total Debt
Net worth
Debt Equity Ratio
2009-10
20999.21
7781.10
2.69
2010-11
24931.96
7969.42
3.13
2011-12
31301.36
9095.07
3.45
2012-13
32679.87
11156.07
2.93
2013-14
41229.73
12526.13
3.29
44
Graph: 4.6
Interpretation
The debt equity ratio of Nandi Industries Pvt Ltd was started with 2.69 at first
time in the year 2009-10 and then it was increased up to 3.45 in the year 2011-12. It
was decreased by 2.93 in the year 2012-13 and it increased by 3.29. The average debt
equity ratio of Nandi Industries Pvt Ltd is 3.09 during the Study period.
45
3. Capital Employed To Net Worth Ratio

This ratio is also known as equity ratio. This is yet another way of expressing
relationship between debt and equity. This to know how much funds ate being
contributed together by lenders and owners for each rupee of owner's contribution.
Capital Employed To Networth Ratio =
Capital Employed
Net Worth
Table: 4.7
Years
Capital Employed
Net worth
Capital Employed to Net

Worth Ratio
2009-10
22264.36
6136.54
3.63
2010-11
28256.36
7781.10
3.63
2011-12
32283.34
7969.42
4.06
2012-13
40386.36
9095.07
4.45
2013-14
53755.86
12526.13
4.29
46
Graph: 4.7
Interpretation
This ratio of Nandi Industries Pvt Ltd was started with 3.63 at first year 200910 and it was increased up to 4.45 in the year 2012-13 it decreased by 4.29 in the year
2013-14. The average of this ratio of Nandi Industries Pvt Ltd is 4.09 during the study
period.
47
ACTIVITY RATIOS
1. Inventory Turnover Ratio
It indicates whether inventory is efficiently used or not the purpose is to see
whether only the required minimum funds have been locked up to inventory. This
ratio implies number of times stock has been turned over during a period and
evaluates efficiency with which a firm is able to manage its inventory.
Usually a high inventory turn over ratio indicated efficient management of
inventory. A low inefficient management of inventory indicating over investment in
inventories, debt business, poor quality of goods, stock accumulation and low profit
as compared to total investment.
Inventory Turn over Ratio =
Sales
Inventory
Table: 4.8
Years
Sales
(Rs. in Lakhs)
Inventory
(Rs. in Lakhs)
InventoryTurnover
Ratio
2009-10
28608.02
7085.18
4.04
2010-11
30295.60
9194.09
3.30
2011-12
36936.10
10736.86
3.47
2012-13
46365.12
12102.91
3.83
2013-14
64471.61
14436.48
4.46
48
Graph: 4.8
Interpretation
The inventory turn over ratio of Nandi Industries Pvt Ltdwas started with 4.04
at 2009-10. It was decreased by 3.30 at 2010-11 and slowly fluctuation by next 2
years. It was increased by 3.83 i.e., 2012-13 and it increased by 4.46. The average
ratio of Nandi Industries Pvt Ltd is 3.82 for the above study period.
49
2. Debtors Turnover Ratio

Debtors turn over ratio indicate this ratio the relationship between sales and
average debtors. It is showing by dividing credit sales. Higher turn over ratio
indicated better performance and lower turn over ratio indicated inefficiency. It
includes debtors as well as the bills receivables.
Debtors Turn over Ratio =
Sales
Debtors
Table: 4.9
Years
Sales
(Rs. in Lakhs)
Debtors
(Rs. in Lakhs)
Debtors Turnover Ratio
2009-10
28608.00
7197.89
3.97
2010-11
30295.60
6707.59
4.52
2011-12
36936.00
7667.92
4.82
2012-13
46365.00
8814.31
5.26
2013-14
64471.61
11966.16
5.38
50
Graph: 4.9
Interpretation
The debtors turn over ratio of Nandi Industries Pvt Ltd was started with 3.97
by the year 2009-10. It was going up to, increased by 4.52 to 4.82 and it stands at last
by 5.38 in the years 2010-11, 2011-12 and 2013-14 respectively. The debtors turn
over ratio average of Nandi Industries Pvt Ltd is 4.79 for the above study period.
51
3. Net Assets Turnover Ratio

Assets are used to generate sales. Therefore, a firm should manage its assets
efficiently to maximize sales. The relationship between sales and assets is called
assets turn over ratio.
Net Assets Turn over Ratio =
Sales
Net Assets
Table: 4.10
Years
Sales
(Rs. in Lakhs)
Net assets
(Rs. in Lakhs)
Net Assets Turnover Ratio
2009-10
28608.00
28680.37
1.00
2010-11
30295.60
32901.40
0.92
2011-12
36936.00
40386.36
0.91
2012-13
46365.00
43836.66
1.07
2013-14
64471.61
61074.35
1.07
52
Graph: 4.10
Interpretation
The net assets turn over ratio of Nandi Industries Pvt Ltd was 1.00 in the year
2009-10. It was increased and decreased by 0.92 and 0.91 in the years2010-11 to
2011-12 respectively. Then it was increased in the year 2013-14 by 1.07. The average
of net assets turn over ratio of Nandi Industries Pvt Ltd is 0.99 during the above study
period.
53
4.Fixed Assets Turnover Ratio

This ratio is calculated by dividing Sales into Net Fixed Assets. This ratio
expressed the number of times fixed assets are being turn over in a stated period. This
ratio shows how well the fixed assets are being used in business. The higher ratio is
shows that better utilization of the plants and equipment another a low ratio indicated
that fixed assets are not being efficiently utilized.
Fixed Assets Turn over Ratio =
Sales
Net Fixed Assets
Table: 4.11
Years
Sales
(Rs. in Lakhs)
Net Fixed Assets

(Rs. in Lakhs)
Fixed Assets Turnover

Ratio
2009-10
28608.00
20719.42
1.39
2010-11
30295.60
24129.72
1.26
2011-12
24912.53
1.48
2012-13
36936.00
.
46365.00
27242.36
1.70
2013-14
64471.61
28665.35
2.25
54
Graph: 4.11
Interpretation
The Fixed Assets Turn over Ratio of Nandi Industries Pvt Ltd was started with
1.39 in the year 2009-10. Then it was increased and decreased by 1.26 by the years
2010-11 respectively. At last it was increased by 1.48 to 1.70 in the years 2011-12 and
2012-13 respectively and it increased by 2.25 in the year2013-14. Then the average of
this ratio of Nandi Industries Pvt Ltd is 1.61 during the above study period.
55
5. Current Assets Turnover Ratio

This ratio is calculated by dividing sales into current assets. This ratio
expressed the number of times current assets are being turn over in a started period.
This ratio shows how well the current assets are being used in business. The higher
ratio is showing that better utilization of the current assets another a low ratio
indicated that current assets are not being efficiently utilized.
Current Assets Turn over Ratio =
Sales
Current Assets
Table: 4.12
Years
Sales
(Rs. in Lakhs)
Current assets
(Rs. in Lakhs)
Current Assets
Turnover ratio
2009-10
28608.00
16137.54
1.77
2010-11
30295.60
18321.76
1.65
2011-12
36936.00
26196.83
1.41
2012-13
46365.00
26616.98
1.74
2013-14
64471.61
35973.84
1.79
56
Graph: 4.12
Interpretation
The current assets turn over ratio of Nandi Industries Pvt Ltd was started with
1.77 in the year 2009-10 and it was decreased by 1.65 and 1.41 i.e. 2010-11 and 201112 respectively. Then it may increased by 1.79 in the year 2013-14. The average
current assets turn over ratio of Nandi Industries Pvt Ltd 1.67 during the above study
period.
57
6. Working Capital Turnover Ratio

The ratio expressed the relationship between sales and working capital. A
higher working capital turn over ratio indicated more efficiency, the lesser
investments in working capital and greater the profit.
Working Capital Turn over Ratio =
Sales
Net Current Assets
Table: 4.13
Years
Sales
(Rs. in Lakhs)
Net Current Assets

(Rs. in Lakhs)
Working Capital
Turnover Ratio
2009-10
28608.00
7455.95
3.84
2010-11
30295.60
8765.23
3.46
2011-12
36936.00
15470.24
2.39
2012-13
46365.00
16586.3
2.80
2013-14
64471.61
25100.51
2.57
58
Graph: 4.13
Interpretation
The Working Capital Turn over of Nandi Industries Pvt Ltd was started with
3.84 in the year 2009-10. Then it was decreased by 3.46 in the year 2010-11. At the
last three years i.e.2011-12, 2012-13 and 2013-14 it was decreased by2.39, 2.80 and
2.57 respectively. The average of Working Capital Turn over Ratio of Nandi
Industries Pvt Ltd is 3.01 during the study period.
59
PROFITABILITY RATIOS
1. Gross Profit Ratio
This ratio established a relationship between gross profit into sales. It is
calculated by gross profit by sales. It indicates the position of trading result. The
higher gross profit ratio is indicated better performance and lower gross profit ratio is
shown unfavorable.
Gross Ratio =
Gross Profit
x100
Sales
Table: 4.14
Years
Gross profit
(Rs. in Lakhs)
Net Sales
Gross Profit Ratio
2009-10
34742.20
31587.00
1.00
2010-11
60991.00
33589.00
1.81
2011-12
216164.00
41045.00
5.27
2012-13
400144.00
49472.00
8.10
2013-14
480022.00
64471.61
7.44
60
Graph: 4.14
Interpretation
The Gross Profit Ratio in the year 2008-09 is 1.00, and it is increased in the
next year 2010-11 by 1.81 respectively. Later it is increased in the year2011-12 and
2012-13 by the values of 5.27 and 8.10 respectively later it decreased by 7.44 it has to
increased in future.
61
2. Net Profit Ratio

Net profit ratio is established a relationship between net profit after tax in to
sales. This ratio is very useful to the proprietors invests because it reveals over all
profitability concern. This ratio indicated the efficiency of the management in
manufacturing, selling and distribution, administration and other expensive actives.
The higher net profit ratio indicated the better performance because it uses idea of
improves efficiency of the concern.
Net Profit Ratio =
Net Profit after tax

x100
Net Sales
Table: 4.15
Years
Net Profit After tax
Net Sales
Net Profit Ratio
2009-10
2552.80
21024.15
0.12
2010-11
2698.38
28608.29
0.10
2011-12
1163.79
30295.60
0.04
2012-13
2591.74
46365.63
0.06
2013-14
1835.29
64471.61
0.02
Graph: 4.15
62
INTERPRETATION
The above graph shows the Net Profit Ratio of five years from 2010-14. This
shows the relation between Profit after Tax and Net Sales. The Net Profit Ratio in the
year 2009-10 is 0.12 and it decreased in the years 2012-13 and 2013-14 by 0.06, 0.02
respectively, the profit must be increase in future.
FINDINGS
Current ratio is 2.65 in 2012-13 and 3.56 in 2013-14, because of increase in
current assets and current liabilities.
63

The Quick ratio is fluctuating year by year.
Networking capital ratio shows an increasing trend.
Debt ratio is increased by 0.73, 0.76, 0.77 i.e., 2010-2011 and suddenly
decreased in 2014 is 0.76.
The inventory turnover ratio was started with 4.04 at 2010-11 it was decreased
by 3.30 i.e., 2011-12 and slowly fluctuating by next two years. It was
increased by 4.46 i.e., 2013-14.
Net assets turnover ratio is also fluctuating year by year i.e., 1.00, 0.92, 0.91,
1.07, and 1.07 it is constant trend.
The current assets turnover ratio is decreased by 1.86, 1.77, 1.65, 1.41, later it
increased to1.74 and 1.79 in the year 2013-14 and 2014-15.
The working capital turn over ratio is fluctuating year by year i.e., 3.83, 3.46,
2.79 and 2.57.
The gross profit ratio is increasing from 2010-2011, 2013-2014 decrease year
by year.
Net profit ratio shows an average of decreasing trend.
SUGGESTIONS
The company should maintain adequate cash to meet daily business
obligations.
64

The company is suggested to improve the net profit by increasing the volume
of sales as it is found that sales percentage is fluctuating over the years.
The earning per share is fluctuating year by year the management should
concentrate to build optimum capital structure to maximize the earning per
share.
The management should relay more on internal funds than external funds
which make the company strong in financial solvency.
The firm is investing most of the debt funds in improving the fixed assets it
will be suggestible to continue the same to have a financial soundness.
CONCLUSION
It is concluded that, the firms overall financial performance is very good. If
the credit collection period could be reduced. The company has to increase the
65

current ratio. Then only the liquidity position of a company is good. The company
can perform still better in current ratio. The ratios are fluctuating year by year in
order to maintain good position of the ratios in feature.
BIBLIOGRAPHY
. FINANCIAL MANAGEMENT
66

I.M. Pandey
. FINANCIAL ACCOUNTING & ANALYSIS

S.P. Jain & K.L. Narang
S.P. Khan & P.K. Jain
Prasanna Chandra
Web sites
www.google.com
www.money controwork
www.nandipipes.com
NANDI PVC PIPES PVT LTD BALANCE SHEET FOR THE 2009-14
ANNEXURE - I
PARTICULARS
S.NO 2009-10
Rs.
2010-11
Rs.
(Rs. In lakes)
2011-12 2012-13 2013-14
Rs.
Rs.
Rs.
67
Source of funds
1 . Share holders funds
3976.30
3976.30 3976.36 3976.36 3976.36
a) Share capital
3804.70
3993.00 5109.64 7179.70 8549.77
a) Secured loans
10986.30
9244.80 16382.92 17832.23 22645.54
b) Unsecured loans
b) Reserve & Surplus

2. Loan funds
3. Deferred tax liability
9588.74 15079.10 13733.65 12271.32 15460.46

424.17
Total
618.07 1184.79 2576.32 3123.73
28680.37 32901.40 40386.36 43836.66 53755.86
Application of funds
1 .Fixed assets
a) Gross block
b) Less: Depreciation
20021.36 25035.99 31824.32 35516.23 38974.86

5417.03
c) Net block
6510.29 7666.24 9127.98 10834.88
14604.33 18525.70 24158.09 26380.35 28239.98
d) Capital work in
progress
6015.10
5604.02
754.45
862.01
425.37
589.83
a) Inventories
7085.18
9194.09 10736.86 12102.91 14436.48
b) Sundry debtors
7197.89
6707.59 7667.92 8814.31 11966.16
c) Cash & bank balances
247.72
10
1616.75
2. Investments
3. Current assets, loans
and
Advances
d) Loans and advances
350.67 2650.37
420.10 3463.66
2080.42 5241.68 5289.66 6108.54
16137.54 18321.76 26196.83 26616.98 35973.84

68
Less: Current liabilities

a) Current liabilities
11
b) Provisions
586.14
Net current assets

4.
Miscellaneous
expenditure
(Adjustment)
Total
8106.45 9202.11 10188.34 9319.38 10109.38
12
354.42
538.25
711.30
774.95
8681.59
9556.53 10826.59 10030.68 10983.33
7455.95
8765.23 15470.24 16586.30 25100.51
10.17
6.45
3.59
28680.37 32901.40 40386.36 43836.66 53755.86
69
PROFIT & LOSS ACCOUNT

PARTICULARS
S.NO
Income
Sales
2009-10
Rs.
2010-11
Rs.
2011-12
Rs.
(Rs. In Lakhs)
2012-13
2013-14
Rs.
Rs.
31587.0 33589.00 41045.00 49472.00 68046.95
Less: Exercise duty
2979.50 3294.08
Sales(net)
4109.00
3107.00
3575.34
28608.7 30295.60 36936.00 46365.00 64471.61
Other income
13
Increase(decrease) in
stocks
14
Total
Expenditure
62.34
77.70
33.59
93.21
210.18
879.63 741.46
471.20
14.16
246.82
29550.67 31114.76 37441.00 46473.00 64434.97
Raw material
consumed
15
15484.0
Manufacturing
expenses
16
6479.97
8629.00
8874.00
10101.71
4403.50
276.10
644.00
659.16
608.33
Cost of material sold
18264.94 19232.00 24779.00 39775.51
Salaries, wages
and other
Allowances
17
954.90
1254.33
1449.00
1862.53
2142.75
Other expenses
18
1612.60
1879.07
2331.00
2479.56
2745.53
Interest and financial

charges
19
989.50
1257.86
1832.00
2302.59
4608.48
852.50
1103.6
1156.00
1512.99
1641.84
Depreciation
Total
24298.00 30606.85 35276.00 42471.50 61612.15
Profit before tax
3474.20
609.91
2164.00
4001.44
2822.82
Provision for current

tax
272.42
52.78
242.00
453.41
318.20
Less: MAT credit

entitlement
-52.78
242.00
453.41
109.14
70
Provision for fringe

benefit tax
Provision
deferred tax
for
Profit after tax
Balance
brought
forward from
17.21
1392.16
546.78
1108.60
193.89
566.00
17.54
14.41
2104.10
415.02
1580.00
2591.74
1835.29
604.21
748.77
837.00
858.92
1242.48
2698.30 1163.79
2417.00
3395.20
3087.77
previous year
Profit available for
appropriation
Appropriations
Transfer to Debenture
Redemption Reserve
Transfer to general
reserve
Proposed dividend
Tax on dividend
Balance carried
balance sheet
to
Basic diluted earning

per share
No. of shares used in
computing
93.75
187.50
468.75
1500.00
100.00
1000.00
1500.00
1000.00
397.64
198.82
397.00
397.64
397.64
51.97
27.88
67.09
67.58
67.58
748.77
837.10
858.00
1242.48
1143.80
2698.30 1163.79
2417.00
3395.20
3087.77
5.27
1.04
3.98
6.52
4.62
397.63
397.63
397.63
397.63
397.63
basic.
EPS.
71

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A Study on RATIO ANALYSIS

Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

REQUISITE FOR RATIO ANALYSIS:

SHARE HOLDERS / INVESTORS:

Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

A Study on RATIO ANALYSIS

But there are certain practical difficulties in using industrial ratios.

A Study on RATIO ANALYSIS

Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

Current Ratio (Or) Working Capital Ratio

Quick Ratio (Or) Acid Test Radio

Cash Position Ratio (Or) Super Quick Ratio

A Study on RATIO ANALYSIS

Debt Equity Ratio

Fixed Assets Ratio

Current Assets to Fixed Assets Ratio

Total assets turnover ratio

Fixed assets turnover ratio

Current assets turnover ratio

Stock turnover ratio

Debtors turnover ratio

Creditors turnover ratio

A Study on RATIO ANALYSIS

Generally, two major types of profitability ratios are calculated.

Gross Profit Ratio

Operating Profit Ratio

Net Profit Ratio

Significance of Ratio Analysis

Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

Limitations of Ratio Analysis:

Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

A Study on RATIO ANALYSIS

for the industry are indigenously available. The present

The committee made a number of

promoting the use of plastics. The implementation of recommendations would go along

Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

and skilled labor and undoable, and extra to boost export,

finished plastics products will yield rich divided.

products and linoleum

Viswam Degree and PG College, Angallu, Madanapalle

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Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

fields, lesser water

A part from these two

Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

exteriors it is used for doors and windows, fencing partitions and

paneling, roofing and rain systems.

Viswam Degree and PG College, Angallu, Madanapalle

A Study on RATIO ANALYSIS

it is one of the leading

Pipes are sold under brand names of MONARCH, KOHINOOR