Introduction

Meghmani Organics Limited is a leading manufacturer

of pigment in the country. It is one of the largest producers of pigment
blue and pigment green other than this is a one of the largest
producers of pesticides in India. Meghmani Organics Limited is one of
the largest producers of agrochemical in the world.

Sound Fundamental outstanding export performance,

strong presence in the domestic market and a focused management
Meghmani Organics Limited grow at a compounded annual growth rate
of 17% and profits 10% over the past 3 years. It was founded in 1986
as a partnership firm under M/s Gujarat Industries. On 2nd January
1995, Meghmani Organics Limited was incorporated as a company with
liability under Indian Companies Act.

This Project is aimed financial analysis and

manufacturing process at Meghmani Organics Limited. In this report I
analyzed various component of finance like cash flow, ratio analysis
and manufacturing process.
Primary data is collected from the interview and observation method
while secondary data is collected through annual report, web site,
books, and other project reports. In this report I analyze current
situation of the company through past and present data and at the end
I find some important points and give suggestions to the company.
 Research Methodology

Scope of the Study

♦ To get information from the personal interview of manager and
employee and get primary data.
♦ To receive more information through secondary data like
annual report, news papers, web site etc.

Objective of the study

♦ To study and analysis the liquidity position of the Meghmani

Organice ltd.
♦ To analyze the cash flow statement, ratio and find important
that impact on the company
♦ To analyze the company’s manufacturing process

Methods of Data Collection

♦ Personal Interviewing
♦ Observing Method

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 2

 i. Sources of Data :
Primary Data:
Here the data is to be collected through
personal interaction with the people of an organization.

Secondary Data:
Past fact sheet maintained by the
organization. (Annual Reports of 2010-09, 2009-08, 2008-
07, 2007-06)

Limitation of the Study

♦ When got majority of information from secondary sources like
annual reports and web- sites but some information are
confidential so they are not ready to give us.
♦ Second limitation is related to the time factor. Because it is
very difficult to cover all the information in a short time
duration.

Company Profile

• Name of The Company

MEGHMANI ORGANICS LIMITED

PIGMENTS # AGROCHEMICALS # ADDITIVES

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 3

 • Corporate Office Address

“MEGHMANI HOUSE”
Street: Shree Nivas Society,
Area: Paldi,
City: Ahmedabad-380 007.
State: Gujarat
Country: INDIA.
Agro Domestic Helpline No. : +91-9909030545
Phone No. : +91-79-26640668/669
Fax No. : +91-79-26640 670

Vision
“To become a global leader in the chemicals and allied
industries.”

Mission
Company will lead by:

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 4

  Empowered work environment
 Speed of decision making
 Honoring commitments
 Focusing on results
 Innovation and commitments

Values
Company values in being:

 A caring member of society

 An equal opportunity provider
 Fair to our stack holder
 A preferred source for our invaluable customer

Company Overview

Sound Fundamental outstanding export performance,

strong presence in the domestic market and a focused management
Meghmani Organics Limited grow at a compounded annual growth rate
of 17% and profits 10% over the past 3 years.
The Rs. 6000 million Rupees Meghmani Organics Limited
 One of the largest producers of pigment blue in the world
 One of the largest producers of pigment green
 One of the largest producers of pesticides in India.

More than 80% of our pigment products and over 50%

of our pesticides product are exported the world over. Company has
four multifunctional production facilities in Gujarat (India) of which
three are ISO 9001-2000. Company’s production facilities are

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 5

 strategically located with high accessibility and close proximity to
source of raw-material.

Related Companies
• Meghmani Dyes & Intermediates & Meghmani Industries
LTD.

• Ashish Chemical

• Meghmani Pigments

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 6

 • Matangi Industries

• Meghmani Industries LTD

History
Company were founded in 1986 as a partnership, under the
name M/s Gujarat Industries, to manufacture Pigments by our
Executive Chairman Mr. Jayanti Patel, together with our Managing
Directors, Mr. Ashish Soparkar and Mr. Natwarlal Patel, as well as two
of our Executive Directors Mr. Ramesh Patel and Mr. Anand I Patel
On 2 January 1995, our Company, Meghmani Organics
Limited, was incorporated as a joint stock company with limited liability
pursuant to Part IX of the Indian Companies Act.

The Vatva Plant

In 1986, we commenced operations to manufacture Phthalocynine
Green 7 more popularly known as Pigment Green 7 (PG-7) at our first
manufacturing plant situated at the GIDC Industrial Estate, Vatva,
which is approximately 14 km from Ahmedabad City. This industrial
estate is developed by the state government's nodal agency, GIDC.

The Vatva Plant was originally set up for the manufacture of Pigment
Green 7. Our present production capacity of 1200 tpa at the Vatva
Plant is the result of the construction of additional facilities over the
years, which increased the manufacturing capacity of Pigment Green 7
from 240 tpa in 1986 to its present production capacity.

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 7

As at 30 November 2003, we have invested Rs 128.49 million in plant
and machinery and building at the Vatva Plant. Our manufacturing
facilities at the Vatva Plant are ISO 9001-2000 certified.

The Chharodi Plant

In 1995, the Founders decided to diversify our business through the
manufacture of Agrochemicals. The plant for the manufacture of
Agrochemicals is located in Chharodi Village, which is approximately
40 km from Ahmedabad City. The cost of commissioning the Chharodi
Plant was approximately Rs 300.7 million.

At the plant, we manufacture Technical Grade Pesticides which include

synthetic pyrethroids such as Cypermethrin, Permethrin and Alpha
Cypermethrin and organic phosphorous compounds such as Acephate
as well as new Technical Grade Pesticides such as Imidacloprid and
Triazophos, Formulations and Pesticides Intermediates such as MPB
and CMAC. As at 30 November 2003, we have invested Rs 440.7
million in plant and machinery and building at the Chharodi Plant. Our
manufacturing facilities at the Chharodi Plant are ISO 9001-2000
certified.

The Panoli Plant

In 1996, our Company proceeded to expand our Pigments business and
to move upstream into the manufacture of CPC Blue, a raw material
used in the manufacture of green Pigments and the manufacture of the
blue Pigments namely, Alpha Blue and Beta Blue.

We acquired two plots of GIDC land at the GIDC Industrial Estate,

Panoli, to set up the manufacturing facilities. The plant is located on
the western side of India near Ankleshwar, which is approximately 200

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 8

km south from Ahmedabad and 250 km north from Bombay. This area
is one of India's chemical manufacturing centers and is accessible by
railway and roads, and has adequate infrastructure facilities for the
industries and is in close proximity to sources of raw materials and
other inputs.

The cost of commissioning the Panoli Plant was approximately Rs

437.0 million. The project was partially funded by way of an equity
injection by JF Electra (Mauritius) Limited (now known as Electra
Partners Mauritius Limited), a Mauritius based private equity
investment company which injected Rs 205.0 million and Pisces Re Ltd,
a Mauritius based company which injected Rs 175.0 million. The
construction of the plant was completed in the second half of 1997 and
we commenced manufacturing CPC Blue, Alpha Blue and Beta Blue in
February 1998. At present, the Panoli Plant has a production capacity
of 7200 tpa, 600 tpa and 3,000 tpa for CPC Blue, Alpha Blue and Beta
Blue respectively. Our manufacturing facilities at the Panoli Plant are
ISO 9001-2000 certified.

As at 30 November 2003, we have invested Rs 550.8 million in plant

and machinery and building at the Panoli Plant. In February 2004, we
acquired an adjoining plot of land of 34,000 sq m for Rs 12.0 million

Ankleshwar Plant
In FY2003, we acquired another plant in Ankleshwar at a purchase
price of Rs 31.5 million. The Ankleshwar Plant commenced production
on 1 August 2003 to manufacture Chlorpyrifos, a class of Agrochemical
products, and has a current installed production capacity of 480 tpa.

As at 30 November 2003, we have invested a further Rs 53.4 million in

plant and machinery and building at the Ankleshwar Plant. Mumbai
Office

In 1996, we purchased office premises in Mumbai, which is presently

headed by Mr. Ashvin Raythatha, our Executive Director, who oversees
our imports and exports activities.

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 9

 Production
Process

PRODUCTS
S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 10
A) HERBICIDES
1. Atrazine Technical
2. Ametryne Technical (PSF)
3. Terbutryne Technical (PSF)
4. Pretilachlor Technical
5. Pendimethalin Technical

B) FUNGICIDES

1. Hexaconazole Technical
2. Propiconazole Technical
3. Thiophanate methyl Technical (PSF)
4. Tricyclazole Technical

Usage

• Atrazine: Atrazine as a selective systemic herbicide used in

maize, sorghum, sugar cane, bananas, pineapples, guavas,
forestry.

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 11

 • Ametryne: Ametryne is a selective herbicide used in pineapple,
sugarcane, bananas and plantains.

• Terbutryne: Used pre-emergence in winter cereals, other pre-

emergence uses are on sugar cane and sunflowers; beans, peas
and potatoes. It is used to control algae and submerged vascular
plants in waterways, reservoirs and fish ponds.

Manufacturing Process
1. Atrazine Technical
In Toluene Cyanuric Chloride is dissolved and reacted with isopropyl
amine. Sodium Hydroxide is added to neutralize the liberated
hydrochloride acid. Intermediate compound (2-isopropylamino-4, 6-
dichloro-1, 3, 5-triazine) is then reacted with monoethyl amine. Solvent
is recovered by steam distillation. Atrazine is filtered off, centrifuged,
dried and pulverized. Atrazine Technical is then packed according to
the requirement or formulated

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 12

 Flow Diagram

2. Ametryne Technical
• Atrazine is reacted with dilute sodium methyl merchantman
(SMM) solution. Ametryne thus formed is filtered off, centrifuged,
dried and pulverized. Ametryne Technical is then packed
according to the requirement or formulated.

Flow Diagram

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 13

 3. Terbutryne Technical
Ter-buthylazine is reacted with dilute sodium methyl mercaptan.
Terbutryne thus formed is filtered off, centrifuged, dried and
pulverized. Terbutryne Technical is then packed according to the
requirement or formulated

Flow Diagram

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 14

 List of Raw Materials

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 15

 1 1,2,4 TRIAZOLE
2 2 ISO PROPYLAMINO 4-6 DICHLORO 1,3,5
TRIZAINE
3 2,4 DICHLORO VALERO PHENONE
4 3,4 XYLIDINE
5 ACETONE
6 ALKAMULS - OR/40-R
7 ALUMINIUM CHLORIDE
8 AMMONIUM CARBONATE
9 AMMONIUM THIOCYANATE
10 BENZYL TRIETHYL AMMONIUN CHLORIDE
11 CAUSTIC POTASH FLAKES
12 CAUSTIC SODA FLAKES
13 CAUSTIC SODA LYE
14 CHINA CLAY
15 CHLORO ACETYL CHLORIDE
16 CYANURIC CHLORIDE
17 CYCLOHEXANONE
18 DI METHYL FORMAMIDE
19 DI METHYL PHOSPHITE
20 DI METHYL SULFOXIDE

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 16

 Flow Diagram of Effluent Treatment
and Disposal System

Collection tank for Collection tank Collection tank

Effluent from for Effluent from for Effluent from
Unit-1 Unit-2 + 6 + 7 Unit-3

Collection
Collection Collection Tank- 5 & 6
Tank-1 & 2 Tank- 3 & 4

Incinerator - I & II

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 17

 THEORITICAL
ASPECTS OF
STUDY

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 18

 Organization Structure

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 19

 Ratio Analysis

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 20

 The Financial statement as prepared & annually are little use for
guidance of prospective creditors & even management. If relationships
between various related items in these financial statements are
established, they can provide useful clues to gauge accurately the
financial health & ability of business to make profit.

This relation between two related items of financial statements is

known as ratio. A ratio is thus one number which expressed in terms of
another ,e.g. in order to obtain the rate of return on paid up capital,
the net profit of the business is divided by the paid up share capital.
The figure so obtained is the ratio. If the same is multiplied by 100, a
percentage rate of return on paid up capital is obtained.

Cash Flow Statement

The cash flow statement shows a company's money flow in and out
over a fixed period of time. Most companies report their cash flow
statement on a quarterly or monthly basis. The cash flow is broken out
into three reporting areas: (1) Operating, (2) Investing, and (3)
Finance. The cash flow statement was originally known as the flow
funds statement or statement of changes in financial position

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 21

Operating Activities
Operating activities represents the incoming and outgoing cash
activities to run the day-to-day operation of a business. The net cash
flow from operating activities represents the monies made from the
sales of products and services. These are items include receipts from
goods sold, tax payments, and interest received from loans. The
operating activities is the most critical component of the cash flow
statement, because it shows if a company is able to turn a profit based
on its current business model at this exact moment in time. If a
company is unable to turn a profit from their business activities, odds
are the company will be experiencing finance issues and or making
investments in hardware or software without any proof of success.

Investing Activities
Investment activities represent the cash flow from the purchase of long
term assets required to make or sell goods and services. Investment
activities also include purchases of stocks or other securities. A major
issue that potential investors have with the investing activities section
is that the money listed here represents activities paid for in cash. So,
if a company were to purchase $5 million dollars worth of equipment
with only $1 million cash and $4 million in financing, only the $1 million
will show up under investing activities.

Financing Activities
Financing cash flow is related to money in and out to investors and
shareholders. When a company raises funds from bonds or stock, this
is considered cash in. While dividends paid out to investors and
interest paid to bond holders is considered cash out.

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 22

 Operating Cycle

In operating cycle theory it shows one year temporal

standard to determine current ness. What is current or non-current is
depending on the nature of the core business activity marked by
technological requirement and trading practices. Operating cycle is a
theory of working capital. ”Current ness” on the basis of Operating
cycle state that any item liquidating it self or getting or converted in to
cash within the operating period is a current item, the rest are non
current asset.
In operating cycle for current assets are raw-material in
store, work in progress, finished goods in store and receivables and
only one item of current liability is trade creditors.

DATA ANALYSIS
AND
S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 23
INTERPRETATION

1) Current Ratio
This ratio is obtained by dividing the 'Total Current
Assets' of a company by its 'Total Current Liabilities'. The ratio is
regarded as a test of liquidity for a company. It expresses the
'working capital' relationship of current assets available to meet the
company's current obligations.

CURRENT RATIO= CURRENT ASSESTS / CURRENT

LIABILITIES
2009-‘10 5,846,715,080 / 1,458,964,626
= 4.01
2008-09 5,342,887,659 / 1,437,138,227
=3.72
2007-08 4,488,447,170 / 905,672,071
=4.96
2006-07 3,469,699,991 / 573,876,708
=6.05
Current Ratio

7
6.05
6
4.96
5
4.01
3.72
4
3
2
1
0
2009- 2008- 2007- 2006-
S.K PATEL INSTITUTE
‘10 OF MANAGEMENT
09 08AND COMPUTER
07 STUDIES (2010) 24
Interpretation:
The current ratio is an index of the concern’s financial
stability. Current ratio of the company is good as compare to ideal ratio
of current ratio 2:1. The current ratio of company is reduced year by
year since 2008-09 but in 2009-10, it was recovered by the company.

2) Quick Ratio
This ratio is obtained by dividing the 'Total Quick
Assets' of a company by its 'Total Current Liabilities'. The ratio is
regarded as an acid test of liquidity for a company. It expresses the
true 'working capital' relationship of its cash, accounts receivables,
prepaid and notes receivables available to meet the company's current
obligations.

QUICK RATIO= QUICK ASSETS/ QUICK LIABILITY

2009-‘10 4,637,558,959 / 1,458,964,626
= 3.17
2008-09 4,288,438,707 / 1,437,138,227
=2.98
2007-08 3,634,001,744 / 905,672,071
=4.01
2006-07 2,526,685,063 / 573,876,708
=4.40

LiquidRatio

5
4.4
4.5 4.01
4
3.5 3.17
2.98
3
2.5
2
1.5
1
0.5
0
2009-10 2008-09 2007-08 2006-07

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 25

Interpretation:
The company has good Quick ratio as compare to ideal
ratio
1:1. The company is more capable to convert its current assets in cash
in short period. Again the ratio was decreased year by year but
company was recovered it in 2009-10.
3) Net Profit Ratio
Net Profit Ratio indicates the overall cost
effectiveness of the firm. If company is able to control its non-
manufacturing costs and other things remaining the same, its net
profit well increases.

NET PROFIT RATIO= NET PROFIT/ SALES *100

2009-‘10 615,801,905 / 7,292,646,659 *
100
=8.44 %
2008-09 505,306,936 / 7,683,688,371 *
100
= 6.58 %
2007-08 375,971,197 / 5,869,717,005 *
100
= 6.41 %
2006-07 408,808,133 / 4,690,593,469 *
100
= 8.71 %

Net Profit Ratio

10
8.44 8.71
9
8
6.58 6.41
7
6
5
4
3
2
1
0
2009- 2008- 2007- 2006-
‘10 09 08 07

Interpretation:

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 26

 The ratio of net profit of the companies is good. The
cost- effectiveness is good in 2009-10 as compare to previous years
2008-09 and 2007-08.

4) Stock Turnover Ratio:

This ratio is obtained by dividing the
'Total Sales' of a company by its 'Total Inventory'. The ratio is
regarded as a test of Efficiency and indicates the rapidity with which
the company is able to move its merchandise.

STOCK TURNOVER RATIO=AVERAG INVENTORY / SALES *

365
2009-‘10 7,292,184,531/1,131,802,536
= 6 times
2008-09 7,683,688,371 / 954,447,189
= 8 times
2007-08 5,932,390,188 / 898,730,177
=6 times

Stock Turnover Ratio

9 8
8
7 6 6
6
5
4
3
2
1
0
2009-10 2008-09 2007-08

Interpretation:
Stock turnover ratio in 2007-08 was 6 times and in
2008-09, the ratio was 8 times. It’s good for company because it

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 27

reduced the cost. But again in 2009-10, the ratio was reduced and
reached at 6 times.

5) Return on Shareholder’s Funds:

It measures a firm's
efficiency at generating profits from every unit of shareholders'
equity. ROE shows how well a company uses investment funds to
generate earnings growth

RETURN ON SHAREHOLDER’S FUND=

NET PROFIT AFTER TAX & INTEREST/ SHAREHOLDER’S
FUND *100
2009-‘10 615,801,905 / 4,978,912,259 *
100
=12.37 %
2008-09 505,306,936 /4,481,731,403 *
100
= 11.27 %
2007-08 375,971,197 /4,074,610,988 *
100
=9.23 %
2006-07 408,808,133 /2,830,682,795*
100
=14.44 %

ReturnonShareholder's Fund

16 14.44
14 12.37
11.27
12
9.23
10
8
6
4
2
0
2009- 2008- 2007- 2006-
‘10 09 08 07

Interpretation:

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 28

 The return on shareholder’s fund ratio was not good
for company because the considerable desirable ratio is between 15
to 20 % .So Company have to try to reach upto desirable ratio.

6) Earning Per Share:

Earnings per share (EPS) is the amount of
earnings per each outstanding share of a company's stock.

EARNING PER SHARE= NET PROFIT / NO. OF SHARES

2009-‘10 615,801,905 / 254,314,211
= 2.42 Rs.
2008-09 505,306,936 / 254,314,211
= 1.99 Rs.
2007-08 375,971,197 / 254,314,211
= 1.48 Rs.
2006-07 408,808,133 / 254,314,211
= 1.61 Rs.

EarningPerShare

3
2.42
2.5
1.99
2
1.61
1.48
1.5

0.5

0
2009-10 2008-09 2007-08 2006-07

Interpretation:
The ratio of earning per share was increased year by
year. It is good for company because the higher EPS will make the
good image of company.

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 29

 Cash Flow Statement
For the year ended on 31st March 2010 &
2009
Particular 31.03.2010 31.03.2009
Cash flow from Operating Activities Rs. Rs.
Net Profit Before Tax and Prior Period 837,283,552 621,233,925
Adjustment
Adjustment for :
Depreciation 170,157,188 153,625,886
Deferred Revenue Expenses Written Off -
Unrealized Foreign Exchange Gain (21,402,992 7,788,823
)
Interest and Finance Charges 136,011,467 240,055,596
Dividend Received (330,927) (37,000)
Interest Received (20,656,299 (27,627,425)
)
Diminution in Investment - -
Loss on Discarded assets - 680,458
Loss on Sale of Investment (376,000) -
Loss on Sale of Fixed Assets (Net) (347,962) 1,945,868
Operating Profit before exceptional 1,100,338, 998,026,13
item 027 1
Exceptional item (54,083,279 427,109,193
)
Operating Profit before Working Capital 1,046,254, 1,425,135,3
changes 748 24
Adjustment for:
Inventories (154,707,16 (200,003,526
9) )
Debtors (268,029,23 (185,072,231
8) )
Loans and Advances (68,447,699 (420,992,617
) )
Current Liabilities (10,690,220 497,899,972
)
Provision for Employee Benefit 3,568,508 18,645,692

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 30

 Sub Total (498,305,8 (289,522,71
18) 0)
Cash Generated from Operation 547,948,93 1,135,612,6
0, 14
Direct Taxes Paid (174,099,52 (147,563,850
1) )
Net Cash from operating activities 373,849,40 988,048,76
9 4
B.)Cash flow from Investment Activities
Purchase of Fixed Assets (569,006,23 (288,040,537
3) )
Dividend Received 330,927 37,000
Interest Received 19,480,585 26,547,869
Purchase of Mutual Fund (716,015,40 -
0)
Sales of Mutual Fund 528,934,869 -
Investment in Subsidiaries (13,413,400 (12,630,000)
)
Investment in Others 9,727,880 5,664,498
Sale of Fixed Assets - (5,000)
Net Cash Used in Investing Activities (739,960,7 (268,426,17
72) 0)
C.)Cash flow from Financing Activities
Dividend Paid (83,923,690 (76,018,077)
)
Tax on Dividend (14,262,831 (12,966,210)
)
Interest and Finance Charges Paid (131,944,72 (227,215,147
6) )
Bank-Borrowing (Term Loan) (476,440,00 -
0)
Bank-Borrowing (Working Capital) 290,890,029 (651,815,775
)
Proceeds from other Borrowing 1,636,500,0 2,091,668,00
00 0
Other Borrowing repaid (1,815,123,0 (1,388,120,0
00) 00)
Increase In Share Capital - -
Increase In Share Premium - -
Net Cash from Financing Activities 358,575,78 (264,467,20
2 9)

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 31

 Net (Decrease)/ Increase in Cash and (7,535,581 455,155,38
Cash Equivalent ) 5
Cash on Hand -Opening Balance 85,879,942 65,622,573
Cash on Hand -Closing Balance 78,344,361 520,077,95
8

For the year ended on 31st March 2008 &

2007
Particular 31.03.2008 31.03.2007
Cash flow from Operating Activities Rs. Rs.
Net Profit Before Tax and Prior Period 474,203,629 455,165,626
Adjustment
Adjustment for :
Depreciation 143,701,631 135,013,251
Deferred Revenue Expenses Written Off - 1,970,339
Unrealized Foreign Exchange Gain (73,838,724 20,354,746
)
Interest and Finance Charges 91,127,384 120,764,106
Dividend Received (21,738,524 (30,000)
)
Interest Received (172,566) (390,791)
Diminution in Investment 190,000 -
Loss on Discarded assets (565,717) -
Loss on Sale of Investment - -
Loss on Sale of Fixed Assets (Net) 2,812,584 1,188,512
Operating Profit before exceptional 91,410,114 278,870,16
item 3
Exceptional item - -
Operating Profit before Working Capital 565,613,74 734,035,78
changes 3 9
Adjustment for:
Inventories 88,569,502 (169,561,604
)
Debtors (710,993,99 (219,192,103
9) )
Loans and Advances (287,841,76 (140,171,758
0) )
Current Liabilities 323,157,533 51,298,174

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 32

 Provision for Employee Benefit 1,225,120
Sub Total (585,883,6 (477,627,29
04) 1)
Cash Generated from Operation (20,269,86 256,408,49
1) 8
Direct Taxes Paid (81,146,619 (56,452,692)
)
Net Cash from operating activities (101,416,4 199,955,80
80) 6
B.)Cash flow from Investment Activities
Purchase of Fixed Assets (39,234,176 (383,006,568
) )
Dividend Received 21,738,524 30,000
Interest Received 172,566 390,791
Purchase of Mutual Fund (1,305,000,0 (278,552,750
00) )
Sales of Mutual Fund 1,555,565,7 -
17
Investment in Subsidiaries (1,055,560,4 -
18)
Investment in Others - -
Sale of Fixed Assets 2,027,412 1,797,180
Net Cash Used in Investing Activities (820,290,3 (659,347,34
75) 7)
C.)Cash flow from Financing Activities
Dividend Paid (72,226,800 (70,220,500)
)
Tax on Dividend (12,274,945 (9,848,425)
)
Interest and Finance Charges Paid (86,520,940 (120,764,106
) )
Bank-Borrowing (Term Loan) - -
Bank-Borrowing (Working Capital) 697,438,392 (140,353,789
)
Proceeds from other Borrowing (573,675,43 829,359,231
4)
Other Borrowing repaid - -
Increase In Share Capital 53,684,211 -
Increase In Share Premium 901,789,344 -
Net Cash from Financing Activities 908,213,82 488,172,41
8 1

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 33

 Net (Decrease)/ Increase in Cash and (13,493,02 28,780,870
Cash Equivalent 7)
Cash on Hand -Opening Balance 79,115,600 50,334,730
Cash on Hand -Closing Balance 65,622,573 79,115,600

Interpretation

The picture clearly shows that the net cash flow from
operating activities has drastically decreased in 2010 compared to
year 2009 and In 2009, the net cash flow from operating activities has
drastically increased compared to that years of 2008 and 2007. In the
year 2007, the net cash from operating activities was Rs. 199,955,806
and it was good for company but in 2008 it has suddenly declined and
reached up to negative viz. (101,416,480).It happened due to increase
in debtors and it directly affected to the net cash flow from operating
activities.

In 2008, company started new plant in Dahej for

manufacturing of caustic soda and caustic chlorine. So there was need
for huge investment and at that time company take huge amount from
the others i.e. debtors. So in that year debtors rose up to Rs.
710,993,999.

But in year 2009, the net cash flow from operating

activities was Rs. 988,048,764 which is higher than the year 2008. In
this year debtors were decreased and other incomes increased.
Company paid almost 80% of their debt and becoming free form
interest. In this year, the net profit before tax was Rs. 621,233,925 and
net cash from operating activities was Rs. 988,048,764. So cash from
operating activities are higher than net profit before tax.
Again it deceased in 2010. It happened due to decrease
in current liability, decreased in loan and advances and some increase
in debtors. Company was paid its almost 98 % current liabilities and 45
% increased in debtors.

Depreciation is increased year by year because

company fixed assets every year for expanding their business.

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 34

Company is also making new products in existing location so new
machinery their parts are purchased.

The net cash used in investment activities in the year

2007 was more than 2009 and less than the year 2010 and in the year
2008, investment was more than 2010.In 2007, company purchased
fixed assets of Rs. 383,006,568 and also purchased mutual funds of Rs.
278,552,750.While in the year 2008 company purchased less fixed
assets but mutual funds. In this year company also invest in subsidies
which are good for the company in future. Dividend and interest
received in the year 2008 were very high compared to other years.

But compare to 2008, company did not make good use

of cash in investment activities in the year 2009 and 2010. But
company started to invest in other activities in this year. Company
believes in more reserves and surplus and gets more from outsiders.

Company paid dividend regularly and always paid

higher than previous year. This happened due to increase in net profit
s year by year.

In the year 2008, there was increased in share capital

up to Rs. 53,684,311. Because company started their new plant in
Dahej and also expand their business internationally. So company
issued their shares in the market and get funds for expansion purpose.

• Raw-Material in Store

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 35

 2007-08
Raw Material 25
Avg. stock
of RM Company stored their raw-
Openin 148,013,00 material 25 days in the year
g 3 2007-08 while it stored 20 days in
Closing 279,856,22 2008-09. It was good for company
1 2008-09
427,869,22
Raw Material 20
4
Avg. stock
Averag 213,934,61
of RM
e 2
Openin 279,856,22
g 1
Annual Consumption 3,093,798,
Closing 213,865,31
of RM 291
1
493,721,53
2
Averag 246,860,76
e 6

Annual Consumption 4,549,198,

of RM 641
because company stored 5 days less from the previous year.

• Work in process

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 36

 2007-08
Work in 21
Progress
Avg.
stock of
WIP
Openin 246,888,70
g 5
Closing 232,650,51
6
479,539,22
1
Averag 239,769,61
e 1
Cost of
Finished
goods
produced
Op. WIP 246,888,70
5
RM 3,093,798,
Cons 291
MFG 573,161,30
Exp. 7
Cl. WIP 232,650,51
6
4,146,498,
819

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 37

 2008-09
Work in 11
Progress
Avg.
stock of
WIP
Openin 232,650,51
g 6
Company stored their work in Closing 106,544,56
process material 21 days in 2007- 8
08 while it stored only 11 days in
339,195,08
2008-09. It was good for the
4
company because company stored
Averag 169,597,54
10 days less from the previous
e 2
year.
Cost of
finished
goods
produced
Op. WIP 232,650,51
6
RM 4,549,198,6
Cons 41
MFG 772,006,18
• Finished Goods in Exp. 2
store Cl. WIP 106,544,56
8
5,660,399,9
07

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 38

 2007-08 2008-09
Finished Goods 32 Finished Goods 28
Avg. Avg.
stock of stock of
FG FG
Openin 500,740,24 Openin 299,571,63
g 3 g 8
Closing 299,571,63 Closing 613,473,60
8 0
800,311,88 913,045,23
1 8
Average 400,155,94 Average 456,522,61
1 9
Cost of Cost of
goods goods
sold sold
Op. FG 500,740,24 Op. FG 299,571,63
3 8
COP 3,793,665,3 COP 5,483,334,
53 656
Adm. 130,943,58 Adm. 243,455,38
Exp. 4 Exp. 8
Sell 470,387,30 Sell 505,834,83
Exp. 5 Exp. 6
Cl. FG 299,571,63 Cl. FG 613,473,60
8 0

Company stored their finished goods 32 days in 2007-08 while it

stored 28 days in 2008-09. It was good for the company because
company stored 4 days less from the previous year.

• Debtors

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 39

 2007-08
Debtors 143
Avg.
Deb.
Openin 1,950,756,
g 709
Closing 2,661,750,
708
4,612,507,
417
Averag 2,306,253,
e 708
2008-09
Sales 5,869,717,
Debtors 134
005
Avg.
Deb.
Openin 2,661,750,
g 708
Closing 2,968,939,
317
5,630,690,
025
Averag 2,815,345,
e 012
In year 2007-08, time period for
Sales 7,683,688,
receiving payment is 143 days. In 371
year 2008-09 it reduced and reached
at 134 days .Its good for company because company received 13 days
less from the previous year.

• Creditors
2007-08
Creditors 60
Avg.
Cre.
Openin 406,901,14
g 6
Closing 731,883,81

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 40

 5
1,138,784,9
61
Averag 569,392,48
e 1
2008-09
Purchase 3,225,641,5
Creditors 64
09
Avg.
Cre.
Openin 731,883,81
g 5
Closing 740,873,32
8
1,472,757,1
43
Averag 736,378,57
e 2

Purchase 4,480,207,7
Company paid their cash to the 31
creditors in 64 days in the year
2007-08 while 60 days in 2008-09. It was bad for the company because
company has to be paid their debt early from the previous year.

• Operating Cycle of Meghmani Organic

Limited

2007-08 2008-09
Operating Cycle Operating Cycle
RM 25 RM 20
WIP 21 WIP 11
FG 32 FG 28
DEBTORS 143 DEBTORS 130
221 189
CREDITOR 64 CREDITOR 60
S S
157 129

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 41

 Company’s operating cycle for the year 2008-09 is good as
compare to the 2007-08. Because in the year 2008-09 operating cycle
is completed in 129 days while in the year 2007-08 it was completed in
157 days . So company stored their material in 2008-09 less than
previous year. So it reduced the cost of the company.

Company reduced their operating cycle period i.e. 28 days which

was beneficial for the company. Company received their cash 13 days
early from the debtors in the year 2008-09 .So, company could invest
these cash for manufacturing as well as expanding their business. But
on the other side company paid their debts 4 days early from the
previous year. The difference between debtor’s payment and creditor’s
payment is big. So, it is not good for company’s liquidity position.

Research Findings
• Company has a formal and positive culture and also uses informal
communication. Sometime company use grapevine
communication also.
• Company brought FPO and increased their capital of Rs.
53,684,211 in the year 2008. It issued for starting new plant in
Dahej of Manufacturing caustic soda and chlorine. That means
company issued shares for the purpose of expansion of business
and utilized these funds in that project.
• Company believes in more retain earning and less dividend s
declared. Because company transfer their profits into general
reserves and surplus more and declaring dividends to their share
holders.
• Company’s capacity for borrowing is good because company’s
reputation in the market is high as well as it regularly paid their

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 42

 dividends. So, very bank is ready to give large amount of loans to
them.

Suggestions

• As I observed that MEGHMANI ORGANICS LIMITED is not give

more important to focus on working capital like consumption
period of raw-material, WIP & finished goods.
• Company can not fully utilize their borrowed fund, If they utilize
then it can make more growing and expanding their business
• Company’s reputation is good in the market and also get ting
more earnings year by year but it ca declare low dividend. So for
increasing their market share value, give more dividends to the
shareholders.

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 43

 Conclusion
MEGHMANI ORGANICS LIMITED has emerged as
leading name in the field of Agrochemical and pigment in India,
which is among the promising company in the field of
Agrochemical. The prospects of Meghmani organics Ltd, appears
to be bright in a coming future. To meet the challenges and
opportunities and become the global player in the core business,
Meghmani has come with an FPO in the past which was
overwhelmingly by the investors – which reflects the trust of
public in the management.

I have learnt good management lessons while doing

this project and also learnt financing activities are the backbone
of the company. Meghmani is doing constantly growing as well
as expanding their business. It manages their incomes and
investments in new plant or producing new products. I have
received good co-operation and guidance from Meghmani
Organics Limited I wishing them for a bright future.

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 44

 Bibliography
 Web- sites:

• www.scribd.com
• www.meghmani.com
• www.sebi.gov.in

S.K PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES (2010) 45