immanuel ppt.ppt

8/10/2019 immanuel ppt.ppt

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A STUDY ON FINANCIAL PERFORMANCE

AT

PANYAM CEMENTS & MINERAL

INDUSTRIES LIMITED, CEMENT NAGAR.

Under the esteemed Presented by

guidance of B. Immanuel Raj.

Dr.B.SURESH RAO garu Reg.no.1981163106


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INDUSTRY PROFILE The Indian Cement industry is the second largest cement

producer in the world, with an installed capacity of 219.17

million tones.

The Indian Cement industry is about 90 years old and its main

sources of energy are thermal and electrical energy. The

thermal energy is generally obtained from coal and theelectrical energy is obtained either from grid or captive power

plants of the individual manufacturing units.

South India Industries Limited, Chennai, produced cement for

the first time in India in 1904. This unit had an installedcapacity of 30 tons/day.

Asia contributed about 67% to world production of cement and

included 9 of the 20 leading producing countries.


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COMPANY PROFILE Panyam Cements is a Public Limited company with the

date of incorporation on 23rd June 1955. The Managing Director

is Padmashri M.Somappa who is a pioneer of Cement Industry

in the South zone of Andhra Pradesh .

The company commenced its operation in 1959 with a 200 TPD

cement plant at Cement Nagar and later on the capacities wereaugmented by addition of two more kilns with a capacity of

300 TPD and 600 TPD respectively.

The company was taken over in the year 2004 by Sri . S.P.Y.

Reddy, B.E(Mech.) Member of Parliament, and Chairman of

Nandi Group of companies and Sri. S. Sreedhar Reddy is

the Managing Director.

The company underwent an up gradation program by conversion

of the kilns to dry process .The plant is currently running with an

output of 1550 TPD.


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NEED FOR THE STUDY

Every organization is keen to

know its financial position. The financial

statement analysis helps the management of thecompany to asses its financial performance.

Financial performance evaluation has greater

influence on the development and progress of the

company. This would reveal the solvency positionof the unit. Ratio analysis is a powerful tool and

suitable tool for financial analysis.


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OBJECTIVES:

To know the financial position of PANYAMCEMENTS & MINERAL INDUSTRIES Ltd.

To study the liquidity position of PANYAM

CEMENTS & MINERAL INDUSTRIES Ltd.

To analyze the profitability of PANYAM

CEMENTS & MINERAL INDUSTRIES Ltd.

To offer suitable suggestions for betterperformance of the company.


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METHODOLOGY:

SOURCES OF DATA : The study is purely basedon the secondary data.

Secondary data : The data of Panyam cement

limited for the year 2006 to 2010 is used in this

study. The secondary data has been collected from

the profit and loss account, balance sheet of Panyam

cement limited.

Financial tool : Ratio analysis.

Period of study : 5 year annual reports are

used. i.e. 2006 to 2010.


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TYPES OF RATIOS:

Several ratios calculated from theaccounting data can be grouped into classes according

to financial activity or function to be evaluated. we

may classify them into the following four important

categories.

1. Liquidity ratios.

2. Leverage ratios.

3. Activity ratios.

4. Profitability ratios.


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LIQUIDITY RATIO:Current assets

Current ratio= -------------------------

Current liabilities

Year

Current

assets

(lakhs)

Current

liabilities

(lakhs)

Current

ratio

2005-06 805.46 7072.72 0.11

2006-07 3825.58 4824.92 0.79

2007-08 8041.81 3582.80 2.24

2008-09 13381.3 4212.28 3.17

2009-10 14858.8 5291.81 2.80

INFERENCE: The Ratio is above standard ratio (2:1) as 2.24 in 2007-08, 3.17 in

2008-09 and 2.80 in 2009-10 years respectively.


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LIQUIDITY RATIO:

Quick assets (Current assets-inventories)Quick ratio = -------------------------------------

Current liabilities

Year

Quick

assets

(lakhs)

Current

liabilities

(lakhs)

Quick

ratio

2005-06 523.11 7072.72 0.11

2006-07 3093.06 4824.92 0.79

2007-08 6869.98 3582.80 2.24

2008-09 12058.4 4212.28 3.17

2009-10 13050.4 5291.81 2.80

INFERENCE: The Ratio is above standard ratio (1:1) as 1.91 in 2007-08, 2.86 in

2008-09 and 2.46 in 2009-10 respectively


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LIQUIDITY RATIO:

Cash & bank + marketable securitiesCash ratio = ---------------------------------------------

Current liabilities

Year

Cash&

bank

(lakhs)

Current

liabilities

(lakhs)

Cash

ratio

2005-06 55.96 7072.72 0.7

2006-07 21.00 4824.92 0.4

2007-08 113.73 3582.80 0.3

2008-09 213.80 4212.28 0.5

2009-10 332.09 5291.81 0.6

INFERENCE: The cash ratios for five years i.e.2005-10 are 0.7, 0.4, 0.3, 0.5 and

0.6 respectively.


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LEVERAGE RATIO:

Debt equity ratio= Total debt / Net worth

Year

Total

debt

(lakhs)

Net

worth

(lakhs)

Debt

equity

ratio2005-06 5562.06 3989.33 1.39

2006-07 4416.56 4934.34 0.89

2007-08 4606.17 4934.34 0.93

2008-09 8207.64 4934.34 1.66

2009-10 7255.10 4934.34 1.47

INFERENCE: The debt equity ratio has been increased to 1.39 in 2005-06 and

then decreased to 0.89 in 2006-07 0.93 in 2007-08 and then increased to 1.66

and 1.47 in 2008-09 and 2009-10.This is not a good sign for the company.


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LEVERAGE RATIO:

Total debt ratio= Total debt / Capital employed

Year

Total

debt

(lakhs)

Capital

employed

(lakhs)

Debt

equity

ratio

2005-06 5562.06 9551.39 0.58

2006-07 4416.56 9350.9 0.47

2007-08 4606.17 9540.51 0.48

2008-09 8207.64 13141.98 0.62

2009-10 7255.10 15642.44 0.46

INFERENCE: The total debt ratio has been increased to 0.58 in 2005-06 and then

decreased to 0.47 in 2006-07, 0.48 in 2007-08, 0.46 in 2009-10.This is due to

decrease in debt funds. It represents the company having low debt ratio. So, the

company is flexible in the firms operation


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LEVERAGE RATIO:

Equity ratio= Capital employed / Net worth

Year

Net

worth

(lakhs)

Capital

employed

(lakhs)

Equity

ratio

2005-06 3989.33 9551.39 2.39

2006-07 4934.34 9350.9 1.89

2007-08 4934.34 9540.51 1.93

2008-09 4934.34 13141.98 2.66

2009-10 4934.34 15642.44 3.16

INFERENCE: The capital employed to net worth ratio has been increased 2.39 in

2005-06 and 3.16 in 2009-10 respectively. This is not good for the company.


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ACTIVITY RATIO:

Working capital turnover ratio = sales / working capital

w

Year

Sales

(lakhs)

Net

working

capital

(lakhs)

W.C.T

ratio

2005-06 1343.20 -6267.26 -0.21

2006-07 11758.6 -999.34 -11.76

2007-08 18733.5 4459.01 4.20

2008-09 21537.2 9169.07 2.34

2009-10 15943.9 9567.08 1.66

INFERENCE: The total working capital turn over ratios is -0.21,-11.76, 4.20, 2.34,

1.66 respectively.


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ACTIVITY RATIO:

Debtors turnover ratio = sales / average debtors

w

Year

Sales

(lakhs)

Debtors

(lakhs)

Debtors

Turnovr

ratio

2005-06 1343.20 187.20 7.17

2006-07 11758.6 925.20 12.70

2007-08 18733.5 936.15 20.01

2008-09 21537.2 1125.07 19.14

2009-10 15943.9 1649.81 9.66

INFERENCE: The ratios of debtors turnover ratio for all years are i.e.; 2005-06 to

2009-10 is 7.17, 12.70, 20.01, 19.14, 9.66 respectively.


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ACTIVITY RATIO:

Debtors collection period = no. of days in an year / debtors turnover ratio

w

Year

No. of

days in a

year

Debtors

Turnover

ratio

Debtors

collectin

period

2005-06 365 7.17 51

2006-07 365 12.70 29

2007-08 365 20.01 18

2008-09 365 19.14 19

2009-10 365 9.66 38

INFERENCE: The collection period of all years i.e. 2005-06 to 2009-10 are 51,

29, 18, 19 and 38 days respectively.


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PROFITABILITY RATIO:

Gross profit ratio = gross profit*100 / net sales

w

Year

Gross

profit

(lakhs)

Net

sales

(lakhs)

Gross

profit

ratio

2005-06 1226.49 1343.20 91.31

2006-07 9251.74 11758.6 78.68

2007-08 15323.2 18733.5 81.79

2008-09 17032.8 21357.2 79.08

2009-10 12367.2 15943.9 77.56

INFERENCE: The gross profit ratios of all years i.e.; 2005-06 to 2009-10 are

91.31, 78.68, 81.79, 79.08, and 77.56 respectively..


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Net profit margin ratio = net profit / net sales

w

Year

Net

profit

(lakhs)

Net

sales

(lakhs)

Net

profit

ratio

2005-06 -3557.91 1343.20 -264.88

2006-07 852.30 11758.6 7.24

2007-08 4190.83 18733.5 22.37

2008-09 3446.54 21357.2 16.00

2009-10 1453.99 15943.9 9.11

INFERENCE:The net profit ratio for all the years i.e.; 2005-06 to 2009-10 is

-264.88, 7.24, 22.37, 16.00, 9.11 respectively.

..


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Operating profit ratio = operating profit / net sales

w

Year

Operatg

profit

(lakhs)

Net

sales

(lakhs)

Operatg

profit

ratio

2005-06 -1118.4 1343.20 -83.26

2006-07 5710.96 11758.6 48.56

2007-08 11310.6 18733.5 60.37

2008-09 11686.3 21357.2 54.26

2009-10 7943.26 15943.9 49.82

INFERENCE: The operating profit ratio for all the years i.e.; 2005-06, 2009-10 is

-83.26, 48.56, 60.37, 54.26, 49.82 respectively.


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LIMITATIONS:

Ratios are calculated jointly on the basis of past resultwhich may not be suited to implement to the present

business polices.

Comparison between two variables, prove worth

provided their basis of valuation is identical.

The study is based on the information provided by the

organization in the form of various annual reports.

Detailed analysis could not be carried out for theproject work because of the limited time span and less

scope for gathering data.

The analysis was confined to Panyam cement ltd. only.


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FINDINGS: During the study period, the current ratio of the company in the first 2 years

was very low to 0.11, 0.79.But from the year 2007-10, it started increasingand reached to 2.24,3,17 and 2.80 respectively.

In the years 2005-07, the Quick ratio was decreased to 0.11 and 0.79 ,but

from the year 2007-10 it has been increased to 2.24,3.17 and 2.80

respectively.

The standard cash ratio is 0.5:1.The company cash ratios are 0.7, 0.4, 0.3,0.5, and 0.6.

The debt equity ratio was 1.39 in 2005-06. But in later years it decreased to

0.89 in 2006-07 and to 0.93 in 2007-08. But it was increased to 1.66 in

2008-09 and again it has been decreased to 1.47.

Total debt ratio is 0.58 in 2005-06 but from 2007-08 it has decreased to

0.47, 0.48.But in 2008-09 it has increased to 0.62 but in 2009-10 it has

decreased to 0.46.

The capital employed to net worth ratio is 2.39 in 2005-06 but from 2007 to

2008 it has decreased to 1.89,1.93.But later from 2009 to 2010 it has been

increased to 2.66 and to 3.16.


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contd.. The working capital turnover ratio was in minus in the years 2006 to 2007

with 0.21 to 11.76.But in later years it has increased to 4.20, 2.34 and1.66.

Debtors turnover ratio of the firm form the year 2006 to 2009 was

increased continuously from 7.17, 12.70, 20.01, 19.14.But in 2010 it has

decreased to 9.66.

Debtors collection period of the firm was 51, 29,18,19,37 from the years2006 to 2010.

The Gross profit ratio from the years 2006 to 2010 is 91.31, 78.68, 81.79,

79.08, and 77.56.

The Net profit margin ratio from the years 2006 to 2010 is -264.88, 7.24,

22.37, 16.00, and 9.11.

The operating profit ratio from the years 2006 to 2010 is -83.26, 48.56,

60.37, 54.26 and 49.82.


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SUGGESTIONS: The company should maintain current assets to improve the liquidity

position of the company.

The cash ratio of the company should be improved by the company

to increase the performance of the company.

The debt equity ratio is to be improved as the low debt equity

implies a greater claim of owners than creditors.

The company should reduce its selling and distribution expenses

which lead to increase the profitability of the company.

Debtors turnover ratio was too high due to increased sales, Hence

the company is suggested to take precaution to avoid bad debts.

The company needs to make constantly good performance to

increase the net profit of the company and to decrease the losses of

the company.


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