Executive Summery

This summer training report is prepared at KRISHAK BHARATI CO-OPERATIVE LIMITED. at Surat on Ratio Analysis as a part of curriculum of the MBA program. KRIBHCO is one of the biggest co-operative sectors of Asia which manufactures fertilizer. KRIBHCO has setup a Fertilizer Complex to manufacture Urea, Ammonia & Biofertilizers at Hazira in the State of Gujarat, on the bank of river Tapti, near Kawas village, 15 Kms from Surat city and 20 Kms from Surat Railway Station on Surat Hazira State Highway. During the training period from March to 9th may to 9th july,2010. i have studied different departments at KRIBHCO. I observed different activities of them. I have studied Finance & Accounting and various section in finance and account department. Main activities of F & A Department are financial planning, Capital & Revenue budgeting, Ratio analysis, SWOT analysis etc. In short, KRIBHCO handles its all functions efficiently. It operates at its effective level by performing the sequence of operations, and acquires the maximum profits among leading manufacturers of fertilizers- urea.

The Objectives are:

To know the financial condition of the company. To study cash management. To study inventory management. To analyze the liquidity position of the company. To study receivable management and companys credit policy.

To achieve these objectives, I have studied analysis which are as in the project.

Ratio analysis

methods for

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Industrial profile
Introduction of fertilizer Company:
We all know that India lives in village. There are many as five lacks and seventy five thousand village in her fold. 75% of the population of our country lives in village. Out of 70% of the people earn their living from agrobased industries. So that the prosperity of our country depends on village and advancement of agriculture. The cooperative movement is contributing since long towards the advancement on the field of agriculture. So that we are on the path of progress. Therefore the progress of our country basically due to development of village and agriculture. The co-operative societies are giving their full support since last many years for the development of villages and its agriculture activities which resulted in continuous progress of the country. In general when we discuss about the development of villages we will have to give priority for the development of agriculture of the villages. In consideration of the development of agriculture and the activities of cooperative society. It is presumed that India has made a stupendous progress in the field of agriculture with entire and fruitful support of cooperative society. The cooperative societies have played key role for the development of villages and its agriculture. The cooperative society has further made a giant step in both the sectors i.e. world of agriculture and agro-life. The agriculture has played glorious part of the reconstruction of our country which covers such as countys income growth, creation of employment, increase in export, providing required raw materials to the industries, food arrangements for the periodically increasing population, initiated basic required of human life, controlling the price rise, successful in planning, development and protection of dairy business and ushering in socialism etc. To increase the agriculture products as well as progress of farmers the credit goes to cooperative activities for providing sufficient loan, fertilizers, seeds and related instruments, arrangement of buying-selling of agro products goods at reasonable rates. It has been noted very carefully by Late Pandit Jawaharlal Nehru that cooperative society and their societies and their activities shares full support as key role for the development of agriculture and reconstructions of villages keeping main intention of better cooperative economic development of village.
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The Gujarat state stands on top with progress in the field of cooperative and around 35000 cooperative societies are active in development of villages. The poet had said, The farmer is the father of mankind. The poet can express only his emotional feelings but hard reality is that to become the father if mankind, the farmers have to undergo pangs which bruise his spirit often and on. He has to fight against vagaries of monsoon, exploitation of the vested interest, hunger and malnutrition and very poor and painful life.

WHAT DO YOU MEAN BY CO-OPERATIVE ?

A cooperative is an autonomous association of persons united voluntarily to meet their common social and cultural needs and aspirations through jointly owned and democratically controlled enterprises. Cooperatives are based on the values of selfhelp, self-responsibility, democracy, equality and solidarity.

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Fertilizer Industry Scenario in India

In India, First of all in 1906,A Single Super Phosphate (SSP) manufacturing unit was set up at Ranipat near Chennai (Madras) with annual capacity of 6000 tones per annum.

1. Public Sectors The Fertilizer And Chemicals Travancore Ltd. (FACT) Hindustan Fertilizer Corporation Ltd. (HFC) Madras Fertilizer Ltd. (MFL) Hindustan Copper Ltd. (HCL) Naively Lignite Corporation Ltd. (NLC) Pyrites, Phosphates And Chemicals Ltd. (PPCL) Pradeep Phosphates Ltd. (PPL) Rashtriya Chemicals And Fertilizers Ltd. (RCFL) National Fertilizer Ltd. (NFL)

2. Co-operative Sectors
There are only two fertilizer manufacturing societies in Co-operative sector. Indian Farmers Fertilizers Cooperative Ltd. (IFFCO) Krishak Bharati Cooperative Ltd. (KRIBHCO)

3. Private Sectors
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There are 17 companies in private sector, which are producing fertilizer. Gujarat Narmada Valley Fertilizer Co. Ltd. (GNFC) Hindustan Lever Ltd. (HLL) Hari Fertilizer ICI India Ltd. Indo Gulf Fertilizers & Chemicals Corporation Ltd. Mangalore Chemicals & Fertilizers Ltd. (MCFL) Southern Petro Chemicals Industries Corporations Ltd. Nagarjuna Fertilizer & Chemical Ltd. (NFCL) Shri Ram Fertilizer & Chemicals Ltd. Tuticorian Alkali Chemicals & Fertilizer Ltd. Zuari Agro Chemicals Ltd. Bindali Agro Chemicals Ltd. Chambal Fertilizer & Petrochemical Corporations Ltd. (DEPCL) E.D.I. PASSY (I) LTD. Gujarat State Fertilizer Company (GSFC)

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The Role Of The FERTILIZER In The National Economy

AGRICULTURE

INDUSTRY

SERVICES

ENVIRONMENT

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As critical input in crop production Fertilizer use promotes. It promoters agriculture growth food security & rural

Fertilizer industry promotes Use of gas, sulfur etc. Foreign Exchange saving

Distribution network promotes domestic world trade; credit Banking, services, and research, transport and storage services.

The proper use of Fertilizers can help in 1-maintainance of soil structure 2-prevention of soil erosion and degradation. 3-control of deforestation

Growth of Fertilizer Industry

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One of the most significant achievement of the post Independence period of our Country has been the ability to achieve self-sufficiency in food grain production. This achievement is due to the rapid growth and improvement of Fertilizer industry. The Fertilizer industry is growing at the rate of 4% for the last 10 years and has been contributing a significant part of G.D.P. The growth and importance of Fertilizer industry in India can be divided in to three distinct phases, these are given below: 1. Pro Green Revolution Period 2. Green Revolution Period 3. The Post Green Revolution Period

1. Pro Green Revolution Period:

This period is described in 1952-1953 era where increased growth of food grains took place however this increased production in food grains took place due to increased irrigation methods. In this phase the land under agriculture was made more, during this period about 80% of the country's population was involved in Agriculture either directly or indirectly. During this period the fertilizer's which were manufactured were Super Phosphate & Ammonium Sulphate. Irrigation was thought to be heart of Agriculture.

2. Green Revolution Period:

During this phase Government stated the programmed aimed at making our country self sufficient in Food Products. This was the period between the years 1959-1960. This plan laid the emphasis on production of High Yielding Varieties. To make this plan a success there was a high need to make soil fertile by providing it with nutrients like Phosphorus, Nitrogen and Potassium.

3. The Post Green Revolution Period

The world's population along with Indian population has kept on growing at an alarming rate; the fertilizer companies all over India are trying to expand their scale of operations in order to increase the production rate. The demand for fertilizers per year is increasing. The current demand of fertilizers in India is 18 million tones. - According to Fertilizer Association of India.

Company profile
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 INTRODUCTION OF KRIBHCO:
Krishak Bharti Co-operative Limited

Krishak Bharati co-operative limited popularly known as KRIBHCO has been registered as national level co-operative society under the provision of the multi-state cooperative societies act, 1984. KRIBHCO the worlds premier fertilizer producing co-operative has an outstanding track record to its credit in all spheres of its activities. Since 17th April 1980 as a national level co-operative society promoted by Government of India authorized to manufacturing and distribution of fertilizers. Late Smt. Indira Gandhi, former Prime Minister of India laid the Foundation Stone on February 5, 1982. Chemical fertilizer and allied farm imputes KRIBHCO imbibed the co-operative philosophy fulfilling its commitment to strengthening and promoting the cause of agriculture development and co-operative movements in the country. KRIBHCO plant is one of the largest and most modern fertilizer compels in the co-operative sector in the world. It has two phases on UREA plants consisting of two streams of 1520 MTPP with an annual capacity to produce 14.52lakh.MT of urea equipment to 6.68 lakhs MT interns of nutrient nitrogen.

Location:
The KRIBHCO Hazira unit is located around 15 kms. West of Surat and lies on the north of river Tapti. An all weather road from Surat to Hazira connects the plant site with the city. The cannel belonging to irrigation department is running on the plant site and is feeding

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water from ukai. A railway feeder line apporx. 55 kms. Long has connected the site with BombayAhmadabad main line. KRIBHCO multiunit co-operative societies were promoted jointly by IFFCO and the agricultural co-operative all over the country. HISTORY AND DEVELOPMENT A fertilizer is any material, organic, inorganic, natural or systematic, that is placed on or incorporated into the soil to supply plants with one or more of the chemicals elements necessary for normal growth. Fertilizer is the material, which supplies the chemicals elements required for plant growth. Primary nutrients like nitrogen, phosphates and potassium are supplied through chemical fertilizer. Fertilizer response studies have proved that 1 kg. Of fertilizer can increase the food grain production by 8-10 kg. Fertilizer production is of permanent importance for this country because Fertilizer increases agriculture productivity. The trial production of Urea commenced from November 26, 1985 and within a very short time of 3 months, the commercial production commenced from March 01, 1986. Since then, it has excelled in performance in all areas of its operations. The total Project cost was Rs. 890 crore as against the estimated cost of Rs. 957 crore. This shows a saving of Rs. 67 crore (approximately 7%) in Capital Cost of the Project, which is a rare feature in the history of a Public Sector Unit. PROJECT ZERO DATE FOUNDATION LAID BY STONE 31st MARCH, 1981 Late Smt. Indira Gandhi then the Prime Minister Of India on 5th February 1982 31st MAY 1985

PROJECT COMPLETION

ISO certificate:

(I) (II)

KRIBHCO plant ISO 9001-2000 KRIBHCO plant ISO 14001

(III) KRIBHCO Marketing office ISO 9001-2000

GLOBAL COMPACT PRINCIPLES ADOPTED BY KRIBHCO

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Globalization has resulted in providing free flow of goods and services throughout the world. This has brought significant advantages and benefits to several countries. However, the benefits have been shared unequally amongst the more and the less advanced organizations and countries. In these circumstances it has become all the more necessary to provide broad framework and direction to promote equally social objectives in the field of human rights Labour standards environment protection etc. The UN Secretary General Mr. Kofi Anann first proposed the Global Compact in his address to the World Economic Forum on 31st January 1999.Today a large number of companies from all regions of world, international labour and civil society organizations are engaged in the Global Compact. KRIBHCO has embraced the universal principles of global compact in the key areas of human rights, labour standards, environment and anti-corruption. These principles are

Human Rights
Business should support and respect the protection of internationally proclaimed human rights and Make sure they are not complicit in human rights abuses

Labor Standards
i. ii. iii. iv. Business should uphold the freedom of association and the effective recognition of the right to collective bargaining. The elimination of all forms of forces and compulsory labor. The effective abolition of child labor. Eliminate discrimination.

Environment
Business should support a precautionary approach to environmental challenges; Undertake initiatives to promote greater environmental responsibility; and Encourage the development and diffusion of environmentally friendly technologies.

Anti corruption
Business should work against all forms of corruption, including extortion and bribery.

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 PRODUCTS
KRIBHCO is manufacturing Nitrogenous Fertilizers and Allied Products viz.: Urea, Ammonia Liquid, and Bio-fertilizer. Besides, its also has a 30 Mega Watt Power Plant of its own for generation of Power to meet its requirement. KRIBHCO has also been assigned the job of Operation & Maintenance of Heavy Water Plant of Department Of Atomic Energy.

MISSION

1. To contribute to agriculture & rural development in the regions. 2. Services to members of cooperatives society by selecting financing.

3. Managing society desirable and commercial profitable investment opportunity preferable at multiple locations.

VISION
KRIBHCO will become one of the leading fertilizer producers in the world funding growth through: Efficient Production Efficient Distribution Efficient diversification Efficient Utilization of Resources
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We want to be a world class organization that represents the farmer community and maximizes returns to them through specialization in agricultural inputs and products and other diversified businesses that m aximize stakeholder value.

OBJECTIVES OF KRIBHCO MAIN:

1. To increase the urea installed capacity, maintaining its market share. 2. To ensure optimum utilization of existing plant and machinery, through proper maintenance. 3. To diversify into other core sector like power, LNG terminal/port, chemicals etc.

OTHERS:
1. To enlarge product mix through product development 2. To continue and intensify efforts towards rural development and Co movements. operative

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AWARDS

Industrial Relations:
All India Organization of Employees (AIOE) Awards 1990 in the field of Industrial Relations. Winner of Gujarat state Award for the year 1996 under Group-A Industry category-1.

Productivity:
FAI- Best Production Performance (Runners up) Award: 1988-89. Golden Jubilee memorial trust Award 1997-98 for Outstanding Achievement in Productivity by Southern Gujarat Chambers of commerce and Industry. FAI Award on Production, Promotion and marketing of Bio-Fertilizer: FAI Best performance Award for performance of Bio-Fertilizer plant from fertilizer Association of India for the year 2002 for the third time. KRIBHCO has received the certificate of excellence for the year 2001-02 in process Industry from the Indian institute of industrial engineering, Mumbai. KRIBHCO has received National productivity Award for three consecutive years 1999-00, 2000-01 & 2001-02. KRIBHCO has received Excellence in Improving Productivity conferred by South Gujarat Chamber of commerce and Industry for the year 2007-08.

Energy Conservation:
National Energy Conservation Award (second prize) by Ministry of power 1994-95 and 2000-01.

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 Safety:
The Royal Society for the Prevention of Accidents (ROPSA), U.K. Award for Safety to KRIBHCOs Hazira complex for the year 1989-90. National Safetys council, U.S.A, awarded Award for Honour in the year 1989-90, 1990-91, 1993-94 and 1996-97 for nitrogenous fertilizer sector for operating more than 22 million man hours without occupation injury or illness for the period from 20-09-1992 to 31-12-1995. National safety (Runners up) Award 1994 by Govt. of India Ministry of Labour. Gujarat State Safety Award 1995 for lowest disabling injury index by Gujarat Safety Council.

Environment Protection:
FAI- Environmental Protection Award 1989, 1991 & 1993. KRIBHCO has bagged the Gopalkrishna Singhania Memorial Environment Award given by Indian merchants chamber for outstanding contribution toward control of Air & Water pollution in fertilizer industries for the year 1990-91. Nehru memorial national award 1996 for control of pollution and energy. Award by Council for Ecological Futurology and Environment for Dedication to Environment-2001

Other Awards:
KRIBHCO receives Samarpit Rajbhasha Seva Saman by town official Language Implementation Committee, Noida for the year 2006-07. KRIBHCO receives Star Industry of Surat 2008 conferred jointly by leading news-paper Gujarati Mitra and Consumer Forum. KRIBHCO won Sarvottam Stall Prize in Pusha Krishi Vigyan Mela at New Delhi. KRIBHCO receives AMITY HR Excellence Award for the year 2008 by Amity International Business School. KRIBHCO receives Gold Star award of Excellence from Institute of Economic studies for its overall excellence performance. KRIBHCO receives the Rajbhasha Award from Honble Minister of Chemical and Fertilizer for 2002-03, 2003-04, and 2004-05. KRIBHCO was awarded First Prize for production, promotion and Marketing of Biofertilizer for the year 2004-05 on 1st of December o5 by FAI.
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 IIIE ENTERPRISE EXCELLENCE Award for the year 2003-04. KRIBHCO has won Indira Gandhi Rajbhasha Purashkar (2nd) for 2003-04. KRIBHCO Hazira pot plants exhibition received the 2nd prize in the first National Horticulture exhibition and flower show for the year 2002. FAI- Best video Film Award 1987, 1990,1991,1992,1993,1994,1995,1996 and 1998. FAI Technical Innovation Award: 2001-02 to two KRIBHCO officers. SHIELD & CERTIFICATE awarded by Rajbhasha Vibhag, Home Ministry, GOI for PROMOTION OF HINDI AS AN OFFICIAL LANGUAGE for the year 1993-94. Best House keeping Award to KRIBHCOs Hazira complex from Baroda Productivity Council- Awarded 5 times from 1988-89 to 1991-92.

Environment Management
KRIBHCO has long been at the forefront of Environmental protection. The society recognizes its responsibility to protect the environment and is committed to regulated all its activity using best available technology to mitigate adverse environmental impact, if any that may arise out of its operations. The comprehensive environmental protection plant based on a principal of Reduce, Recycle and Re-use KRIBHCO has created a green belt by planting more than one lakh trees and developing lush green lawns in an area of about 100 Acers. Beside this, a demonstration farm has been developed in an area of above 41 Acers. Environmental Management System (EMS) of KRIBHCO has been certified as in-line with international standard ISO 14001-2004.

QUALITY POLICY
Management of KRIBHCO, Hazira Plant is committed to operate and maintain its Fertilizer manufacturing complex through quality assurance, environmental, protection and go to the satisfaction of customers. KRIBHCO Hazira Plant shall achieve this Quality Policy through following Objectives:1. Continually upgrading technology to improve plant efficiency and reliability. 2. Maintaining and improving the safety and environmental performance. 3. Improving the skills and knowledge of personnel. 4. Continuously improving the Quality management system.
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 MEMBERSHIP
A cooperative thrives on the trust of its members. Membership of KRIBHCO is open to government of India, national state and district and village level cooperative society. At the initial stage, way back in June, 1981 the total membership in KRIBHCO was only 221 cooperative societies which rose significantly to 6523 cooperative societies as on march 31,2008 as against 6044 as on march 31 2008. Phenomenal progress made by the society becomes a testimony to the ever-increasing membership over the years. The total paid up share capital as on March 31, 2009 was Rs.390.68 crore.

6600 6523 6400 6200 6000 5800 5600 5400 5200 5000 2004-05 2005-06 2006-07 5624 5732 5790 6044

2007-08

2008-09

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 ORGANIZATION CHART OF KRIBHCO:-

GOVERNMENT OF IINDIIA GOVERNMENT OF ND A || MIINIISTRY OF AGRIICULTURE M N STRY OF AGR CULTURE || DEPT.. OF FERTIILIIZER & CHEMIICAL DEPT OF FERT L ZER & CHEM CAL || CHAIIRMAN CHA RMAN || BOARD OF DIIRECTOR BOARD OF D RECTOR || MANAGIING DIIRECTOR MANAG NG D RECTOR || OPERATIIONAL DIIRECTOR OPERAT ONAL D RECTOR

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 BOARD OF DIRECTORS
(As on March 31, 2009) CHAIRMAN VICE- CHAIRMAN DIRECTORS Shri Chandra Pal Singh Shri R.K. Dhami Shri V.R Patel Shri V. Sudhakar Chowdary Shri Mathew C. Kunnumkal Shri Deepak Singhal Shri Shiv Narayan Prasad Mishra Shri S.S Jagmod Shri Ponnam Prabhakar Shri B.D. Sinha Dr. V.P.Singh Shri R. Karma Shri I.N. Bansal

MANAGING DIRECTOR MARKETING DIRECTOR FINANCE DIRECTOR OPERATIONS DIRECTOR

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 INVESTMENTS
JOINT VENTURES: 1. Oman India Fertilizer Company SAOC (OMIFCO)

KRIBHCO Society is one of the lead sponsors of Oman India Fertilizer Company (OMIFCO) with equity investment of US$ 69.5 MM (Equivalent to INR 328.53 crore) representing 25% of paid up equity capital of OMIFCO. OMIFCO produced over 19.52 lakh MT urea for the year ended 31st December 2008, which is 121% of the annual rated capacity. This is the highest production achieved by OMIFCO in any financial year since inception. OMIFCO has produced 7 million MT Urea since inception. KRIBHCO is handling and marketing 50% of the urea produced by OMIFCO. For the calendar year 2008, OMIFCO paid a dividend of 73.5% on paid-up capital.

2. Gujarat State Energy Generation Limited (GSEG) Gujarat State Energy Generation Limited (GSEG) is a joint venture company with Gujarat State Petroleum Corporation Limited (GSPCL), other Government of Gujarat companies, KRIBHCO and GAIL India Ltd. KRIBHCO has invested 30.2% equity (Rs. 48.75 crore) in GSEG. GSEG had declared a dividend of 5% for the third consecutive year 2007-08. GSEG has achieved a provisional pre-tax profit of Rs. 9.34 crore during the Financial Year 2008-09.

3. Urvarak Videsh Limited (UVL) Urvarak Videsh Limited (UVL) is a joint venture company prompted by KRIBHCO, National Fertilizers Limited (NFL) and Rashtriya Chemicals and Fertilizer Limited (RCF)

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To set up Joint-ventures in India and abroad for manufacturing, mining, long term tie ups for nitrogenous, phosphatic and pottasic fertilizers and fertilizer raw materials including exploring the possibility of making investments and rendering consultancy service in India and abroad. The has made an initial contribution of equity of Rs.5.00 lakh in the above company.

4. KRIBHCO Shyam Fertilizer Limited (KSFL) KRIBHCO Shyam Fertilizer Limited (KSFL) is a joint venture company of KRIBHCO and M/S STL Fertilizer Pvt. Ltd. Which operates the Shahjahanpur Fertilizer complex. On March 30, 2009 KRIBHCO bought 25% of equity of KSFL from its JV Partner pursuant to the JVagreement. Consequently the shareholding of Society in KSFL has increased from 60% to 85%.

OTHERS: Nagarjuna Fertilizers and Chemicals Ltd (NFCL) The Society has an equity participation of Rs.10.00 crore in NFCL, which is 2.15% of NFCLs paid up share capital of Rs.465.16 crore. Actual Production during the year was 13.78 lakh MT which is equivalent to 115.40% capacity utilization.

SALES Sales are accounted for on the basis of Released orders issued to customers. Sales in the state of Gujarat are accounted for on dispatch basis and sales through Krishak Bharti Sewa Kendras are accounted for on cash and carry basis.

TURNOVER The turnover of the KRIBHCO is round about 2300 crores.

MARKET SHARE The market share of the KRIBHCO is decided by the Co-operative Society. So the 20% share is their own and the 80% share is decided by the Government of India
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Accounting & finance department

Introduction:Finance is the blood of the business. Finance Management is that managerial activity which is concerned with the planning and controlling of the firms financial resources. Finance management is the most important activity of the firm and it means that the firm secures capital, if needs and employees it. Finance management is mainly concerned with raising fund in the suitable manner using the funds as profitably as possible, planning future operations and controlling current performances and future developments through financial accounting, cost accounting, budgeting and other functions. Before the proposal is concurred, financial department has to scrutinize all the steps which are involved in formulation of proposal according to certain rule, regulation, etc. This are know as principle guiding activities relating to concurrence such as delegation of power, purchase procedures and govt. Notifications issued from time to time. The Finance and Accounts Department of KRIBHCO plant is located in the Administration Building, which is situated outside the Plant factory gate. The Finance & Accounts (F&A) Department is a service department and its main function is to co-ordinate the financial activities at Plant Site. The F&A department maintain the records as required under various statute and get the same audited by Statutory Auditors under the functional supervision and guidance of KRIBHCO CO-OPERATE OFFICE at NOIDA.

The Object of the Finance Department : To pre-audit and examine each proposal as per procedures lay down by the society. Whether procurements are being made or work orders are being executed on the economical rate. Selections of parties are as per approved vendor list. Deviation, if any, of Norms In Terms (NIT) have been granted on proper justification and after approval of the competent Authority.
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 It also includes assessing the accounting principle used and significant estimates made by the management as well as evaluating the overall financial statement presentation

FUNCTIONS OF FINANCE DEPARTMENT:

This department has strength of 54 people and is being headed by two managers. Under them 11 senior managers are there. chief

The main activities of this department are as under: Budgeting (capital and revenue) Inventory Management Work Order Concurrence Purchase Order Concurrence Lodging and settlement of insurance claims Payment of salaries Maintaining records in cash book, bank book and general ledger. Internal Audit Payment to Foreign Vendor

Various Sections at finance department Excise Section/ Service Tax

J.G.BHAVSAR

Excise duty is on commodities that are manufactured. It is central base.

Service duty is on the services provided.

Excise duty is on the removal base, when company moves good out from the factory, it
raise excisable invoice - passing of excise on the buyer if any disparity then file the claim.

Single coding for all the transaction in India. Uses PAN bases for registration
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 Registration in 30 days in XM Excise duty Before/ in-advance XT Service tax Excise duty in 5 days raise invoice and do deposit. Service in 14 days raise invoice and then deposit on receipt base i.e. whenever get
amount.

File excise return < 50 lakh monthly E - payment. Contains Litigation process. KRIBHCO producing fertilizer Exempted product so no excise duty so no CENVAT. On NEPHTA specific exemption as use to produce fertilizer natural gas. 90% - no excise duty no CENVAT. If urea not used for fertilizer, excise duty has to be paid. Sales Tax Types of sales tax
State level 1964 Central level 1956

J.G.BHAVSAR

From 1-april-2006- VAT in Gujarat, before VAT it was GSCT Reasons for collection of TAX: To remove inequality, To feed local body Panchayat,
Sources of income/ fund

In KRIBHCO, 90 % Raw material so no credit full tax payment only 10% process so
get credit or can claim input tax cannot get double benefit tax.

Monthly filing of return for KRIBHCO as paying tax for more than 60,000 per month. Turnover of more than 1 crore CA or statutory account to be appointed. Rules of VAT : Opportunity to genuine traders, to collect tax and make payment to government Procurement tax input tax Manufacture and sales collected tax from customer and paid so trader tax is compensated. Credit invoice is required Cycle of purchase and sales
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 So at the last kribhco has to bare whole tax. Schedules of taxes: Schedule 1 Agriculture products NIL tax for 57 items included all exemptions. Schedule 2 86 item Vast items raw materials, needs etc Schedule 3 Single line item Items excluding schedule 1 & 2 All items 12.5% Additional tax 2.5% Credit can be given on tax invoice Tax invoice raised by person registered He can collect tax and then can avail tax Registered person has to get TIN i.e. Tax Identification Number
In KRIBHCO fertilizer ministry has decided that for essential product low tax has to be paid, subsidies are given, if high production then different cost of goods sold is calculated and then selling price is to be determined. 4 % to 5 %

Different items gems, jewellery, oil, petrol, liquor, naphtha 1% to 16%, 20%, 60%

Budgeting Estimation of funds Optimum utilization April to March Types of budget

Revenue budget short term Capital budget long term Revenue budget
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A.L.AGARWAL

Last year is considered as base year Estimation on last year expenses

 Capital budget

Revenue budget reviewed by all departmental head Then comes to account departments For abnormal expenditure requires justification Sittings and readings and then final budget is prepared

Capital like machines not working information passed to head of the department for replacement. Departmental head prepares estimation Then comes to accounts department Reading, reviewing and then final budget is prepared Capital expenditure can be postponed From accounts department budget is send to Board Of Director Board of director does proper review of the budget Revised budget Last 2 to 3 months of year end To re-check budget Every year revised budget is prepared and scrutinize Annual budget/ plan Annual plan is made for next 5 years It is 5 year planning of finance of the company It is made on the basis of past and current experiences, facts and figures It is also inclusive of hypothetical figure

Sale of scrap 95% Ammonia used to make urea Unutilized machine & catalyst scarp Wood platelet used for packaging transport Selling scrap to MSTC Brokerage to MSTC
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P.G.SONI

 Meeting to public commission Decide scrap value Within /outside State tax GVAT
c form Gujarat sales tax 2% 4% +1%

Advance payment of sale of scrap Invoices given as per payment Surplus Material Moving , slow moving and non moving items are inclusive Slow and non moving becomes surplus MSTC Meeting Reserve Coding price Sale P.G.SONI

Sale of Industrial Urea

Production of Ammonia 95% is used to make urea 5% is sold outside as raw material and for various purposes Sale order has to be made Monthly quantity or annual sales of ammonia and urea is fixed Ammonia price is fixed globally Penalty cost is around Rs 200 to maximum of security deposit amount Sales are made only to Farmers co-operative society Only 0.01% are sold to industrial companies

P.G.SONI

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Price of urea is kept around 40000 per metric ton to farmers For industries it is kept at 42000 metric tones ARGON It is the Gas used by wielder to cut the sheets Plant is started from last 3 years Steel company are the major consumers It is calculated as per NM3 - Normal meter cube 1 normal meter cube is Rs 26

Finance concur
General outline Procurement is to be determined Procurement is scrutinize Draft are purchased Contract proposals are made Proposal for procurement/award of contract

A.D.GANDHI

Procedure of finance concurrence Procurement / contract proposals are sub divided into 2 categories:o Capital procurement o Revenue procurement Procurement is done on the basis of Material Purchase Requisition (MPR) Material department is responsible for developing a list of approved vendors On receipt of proposal, it is entered in inward register

Stages of finance concurrence Pre - award level Post- award level

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Pre award level:i. ii. Duly approved MPR in Principle Approval Enquiry has been issued by Purchase/User departments to societys Vendors/ Contractors iii. iv. 2 stages bidding procedure has been followed whenever required Terms and conditions are as per the societys standard terms and in case of deviations, same are duly approved before the issue of NIT v. Parties have been given time for submission of bids as per purchase procedure and emergent procurements have been approved Post award level i. ii. iii. Bids received and stored Bids opened by Tender Opening Committee on the specified date /time/venue Bids consists of 2 parts a. Technical b. Commercial iv. v. vi. Conducting negotiations with the LEVEL-1 bidders Evaluation of bids will loading criteria Proposal for techno-commercial terms are crystallized, proposal accepted and rejected vii. viii. ix. x. xi. Proposal sent to finance department Price bids will be opened Quotation comparison statement Bids are invited on single stage Basis of loading considered in QCS a. Price basis b. Terms of payment c. Delivery period d. Performance bank guarantee

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xii.

Based on QCS status proposal for placement of PO/WO will be made by Purchase/User department

xiii. xiv.

In case negotiation in rates are required, the same will be done L-1 party only Proposal by purchase department for procurement of required material will be sent to User department

xv.

Proposal of purchase dept after recommendations from User dept will be forwarded to the finance dept by Purchase dept

xvi. xvii. xviii. xix.

Finance dept will review It is reviewed with reference to rate of justification as the viability of the proposal Approval of competent authority Reasonable expenses incurred and availability of provision the budget as approved by the board

xx.

Impact of variation in estimated quantity and that of actual and lowest acceptable bidder declined

xxi.

Letter of Intent, Fax of Intent, Work Order will then be prepared by Purchase/User dept

xxii.

For repeat orders, no downward trend in prices to be taken and repeat orders will be placed within one year

xxiii.

After vetting of PO/WO, same will be recorded on the face as draft order

Payment will be made in finance against PO/WO copy, duly vetted and signed by Competent Authority and Acceptance of Party

Establishment Section
General Outline Appointment for vacancies by recruitment

R.G.SHAH

Promotions, transfers, suspension, reduction in pay, stoppage of increments etc Each employee allotted a personal number by personnel department It is also used for the purposes like o Salary o Provident fund

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o Welfare schemes o Medical benefits o Identity card Personnel dept examine the eligibility of each applicant as per rules and issue sanctions As per service rules of society, employee to have earned leave at the rate of one day for every 11 days subject to maximum 33 days Authority for dealing with cases relating to termination of services, resignation, retirements, rest with P&A dept. no dues certificate from P&A dept Salary payments & emoluments components o Basic pay o Project non practicing allowance o Over time o Shift allowance o HRA o City compensatory allowance o Canteen subsidy o Washing allowance o Cash handling allowance o Family planning incentive o Education allowance o Transport allowance o Personal pay o Dearness allowance o Magazine allowance o Medical allowance For preparation of salary details requirements are:o Absentee statement o OT details o Late attendance statement o Leave regularization statement o Overtime statement
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o Personal details Processed by 27th 28th of each month Overtime , shift allowance, leave details punched in prior 20th- 25th date of each month Deduction for leave without pay will be made from salary

Annual Increment Awarded twice a year 1st Jan to 30th June On reaching maximum limit no more increment is allowed Adhoc increment given to employees in their pay

Dearness allowance Variable dearness allowance Salary & establishment section enter. Fixed dearness allowance & variable dearness allowance Productivity linked scheme Provision for bonus, productivity

Advances to offices/ employee Tour advance Conveyance loan House building loan Salary advance Leave travel concession advance Medical advance

Deduction of income tax at source Section 192 IT act 1961 for deduction TDS will be required to be deposited within 7 days of deduction

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Type of statutory & statistical return & data will be required to be furnished by establishment

Provident fund Attendance Biometric systemfinger print in KRIBHCO Provident fund within 15 days HBL HBL 1 2 6% 8%

Types of Leave Casual leave 14 days Sick leave 20 days half / full Earn leave 1 day from 11 day

Encash maximum 300 leave at a time of retirement upto 3 lakh- no tax Recruitment A to T grade, 3% increment in a year, 3 to 4 years gap Promotion based on qualification For e.g. ACA/AICWA 3 years, 3 % on basic salary increased

Overtime - authorized by head Total hour of month is divided by basic salary

Shift Morning basic salary Evening - basic salary + 75 Night basic salary + 150

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Basic salary fixed by HR department and is based on last month For verification increment, abseentism, promotion

Raw material Payment

Raw materials are like: - gas, power, water, naphtha 80% of the total expenditure of raw material are covered Main fuel is gas Purchased from BPCL, GAIL, RELIANCE Consumption of 70 crore per month Main purchased from Reliance and GAIL

B.C.MISTRY

10 11 crore square cubic meter per month payment of Rs 70 crore GAIL have own pipeline to transport Water is obtained from Kakrapal dam and total usage for industrial purpose and township is Rs 1 crore

Power Own generation Extra is obtained from GEB Extra power generated is sold out to GEB To generate power GEB have to take license from government Duty paid is 40 paisa per 1 kilowatt + tax to the government In plant 7 lakh kilowatt per month is produced

Product Handling Section

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M.V.PATHAK

For a month requirement is approximately 1.8 lakh bags Labours are employed and facilities like Provident fund, Gratuity, Incentives, Bonus etc are paid by the employer to the employee On extra work done extra incentives are given Procedure is:-

o Statement is filed o Number of units and price is determined o Scrutinization is done o Send to the product handling department o Goes to Finance and accounting department o Finally payment is done by HR

Empty Bags/ Urea Handling Payment Section

Purchased from : Balaji polyrex MMT Dalmia GDIPO PVNS

M.V.PATHAK

Foreign vendor payment /L.C. payment

Purchase from foreign company Monopoly Bind by their rule Terms and condition to be followed Clearing agent Remove from dock in 5 & 6 days Customs have to be paid Formality of custom Details of purchase order Document sends to 5 parties o Clearing party o Supplier party o Supplier bank
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J.B.SANGHAVI

o Purchaser bank o Purchaser party o All the documents send to all Terms and condition fully followed no relaxation in value, quality & price Full quality control Create monopoly Company is bound by sellers rules Condition have to be accepted by both the party Condition should not be such that if dominate other Payment done to banker Money given to bank Bank bank transaction For new purchase order, new letter of credit is issued For any change in condition also new L.C. No penalty for delay product For extension new L.C & purchase send after that only When goods send & documents send, have to negotiate ,no delay is accepted For delay, demurrage It create bad impression of the company to auditions Custom duty has to be paid Custom duty sends to clearing agent & then it pays & release goods KRIBHCO done all transaction through Indian overseas bank

HAEP Section

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R.T.VORA
HAEP Hazira Ammonia extension plant Row Material of nuclear atom is heavy water Ammonia gas DE Department of energy DE given % production expenses salaries to workers There are 230 employee working in HAEP DE Provide 10% service charge to KRIBHCO

KRIBHCO purchase department handles DE row material purchase & get 7.5% service charge Slabs are prepared on annual base KRIBHCO earn on average 20 crore annually Recruitment procedure done by KRIBHCO From heavy water nuclear energy release used to make atomic bomb RM gas comes from GAIL Synthetic gas, DN water, raw water is supplied by KRIBHCO Project started from 1991 Separate software is developed GSFT-Baroda RCF Thal Total exp for a year around 100 crore reimburse by DE Different housing colony for this department & all charges & maintenance by DE Treated water o De-mineral water o Synthetic gas / Ammonia gas o Raw water o Nitrogen

Supplied by KRIBHCO It is on contract base 10 years 2001-2010 Started from 1991 & construction from 1989. It is secret project, so total production is not known

Codes allotted for each. Amount /tones to be produced Work Order Concurrence Section

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Z.A. JARULLA

Contract for a period of 1 or 2 year for RA(Running account) bill payment final bill payment Running bills are prepared

Types of contract Natural gas contract Maintenance work Mechanical , technical, electrical work Civil maintenance Personalized services Hiring of vehicles Canteen contract Miscellaneous contract- man power

Registration of vendors registration various vendors for purchase Documents pre qualified VAT PAN number Certificate of registration Partnership Audited annual returns ITRS

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Documents sent forward to technical department Raising of indent user department For procurement MPR material Process requisition is required Value more than 1 crore EMD Earnest money deposit by EMD For tender min 3 bids & twice in a week 1st EMD is checked & then send to technical department & user department. then bids are opened Comparative statement are prepared Budget are prepared checked if bids & proposal comes under budget estimated & then final decision all taken by finance department Delegation of authority

Up to 5 lakh DGM 5 to 50 More 50 - GM - operation

Weighted in finance regarding work order.

Books Section

M.V.PATHAK

All session prepares bill and submit to books session Here bills made permanent then no amendment is possible Work of compilation is done. JV is send to GL Every month balance-sheet, Profit & loss and various schedules are prepared Monthly balance-sheet prepared in 5 codes and then converted into 6 digit code and send to HO and then decoding is done there Sight balance-sheet, marketing balance-sheet and HR balance-sheet is send to HO and then HO checks fluctuation All capitalization is done in this section Sources of capitalizations are:o Indigenous bills o Foreign vendor payment o Contract payment o Miscellaneous

Residential office in-house. Miscellaneous employees in charge like Purchase Order officer and others suggest what to purchase, from where, how much quantity, what type of quality etc

Payment procedure is followed as:o Working Capital In Progress a/c To all deductions a/c To sundry creditors a/c Sundry creditors a/c To bank a/c Dr Dr

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From each department fixed asset to general voucher

In books section fixed asset register entry is made In fixed asset register different groups made for different assets Depreciation reserve for each asset is made and registered After posting and permanent all GVS are generated through LAN Trial balance is prepared in excel sheet and then preparation of balance-sheet, Profit & Loss a/c, schedules is done through LAN

Argon Gas Recovery Plant

Its a Tri-party contract o Lindage India o Lindage Germany o KRIBHCO Plant made by Lindage Germany Argon is used as by-product Excise bills comes to KRIBHCO Lindage India Make purchase in the name of KRIBHCO

Ms. MINAL

KRIBHCO makes payment of service tax, VAT, Excise duty, Custom Tax Due to this gets credit from customs Supply is done by Lindage Germany Purchase by Lindage India

Contract payment Plant

If payment not on time per day Rs 500 fine

G.A BAMANIA

If company of other city or state, format of undertaking is signed 5% security deposit kept of Work order Security deposit given after ending date of contract and after thorough checking Terms and conditions general Terms and conditions technical Schedule of rate If security deposit not given then bank guarantee is asked
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 Have to keep a look on labor laws For safety at work contractor is responsible for employees, KRIBHCO is not responsible only service charge is given Insurance taken by contractor Process of terms of payments o Bills comes to a/c department o Schedule of rate is checked o Quantity value is checked o Bills has to be certified o Payment done in 15 days Liquidate damage is not disclosed in work order Payment by electronic i.e. e-payment Documents required are:o IFSC o Bank a/c number o MICR Code Procedure for final bill payment o Payment within 2 months o No due certificate o Taking no certificate o Statement of material o No claim certificate o Final takeover certificate

Contract payment- administration & others

If payment not on time per day Rs 500 fine If company of other city or state, format of undertaking is signed 5% security deposit kept of Work order

D.K.JAIN

Security deposit given after ending date of contract and after thorough checking Terms and conditions general Terms and conditions technical
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 Schedule of rate If security deposit not given then bank guarantee is asked Have to keep a look on labor laws For safety at work contractor is responsible for employees, KRIBHCO is not responsible only service charge is given Insurance taken by contractor Process of terms of payments o Bills comes to a/c department o Schedule of rate is checked o Quantity value is checked o Bills has to be certified o Payment done in 15 days Liquidate damage is not disclosed in work order Payment by electronic i.e. e-payment Documents required are:o IFSC o Bank a/c number o MICR Code Procedure for final bill payment o Payment within 2 months o No due certificate o Taking no certificate o Statement of material o No claim certificate o Final takeover certificate Labour law certificate IR Gross value + service tax value of work + re-imbursement issued

Contract payment:- Transportation

Transportation of urea to various distributions through railway Various logistics channel is approached

VIKRAM

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Destinations decided by government of India Contract on tender basis Rate fixed by Government of India Procedure same as contract payment of plant, administration Carrying, loading of 1 truck is 10 metric tones Generally, 10 such trucks are used In nearby areas like Gujarat, Maharashtra, Madhya Pradesh, Rajasthan through trucks and rest of railways

Bills Payment
Proprietor items - single order

A.M.S BELIM

Foreign order - foreign vendor and if have Indian agent he is appointed and order is placed to Indian agent Procedure is done in 21 days Technical and commercial prospects have to be considered Technical bills rejected if o Non providing of guarantee o Terms are not fulfilled o Bids not proper

Lowest bill is accepted They are considered for placement of order Before placement of order, an activity is done known as Pre-Audit order 1 copy sent to the party After placement, activity starts, it is registered in codes, registrations done up to 33000 orders Purchase of raw materials, head office comes into picture Annual rate contract is made Purchase of spares, tools etc done by purchase department After placement of order, vendors evaluates the things

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Sometimes packaging, forwarding, transportation, insurance, tax etc is paid by KRIBHCO Quantification of packaging and forwarding charges for which special packaging requires E.g:- Tubes, Glass Cassel etc Excise duty is 8.24% to 10.3% charged on basic by KRIBHCO As per C form, 2% consistent for manufacturing Placement of order in Gujarat Input Tax Credit Delivery intake on time as on committed date For uncertain situation of nonpayment KRIBHCO has right for penalty by using reserve as Liquidate Damage 5% Warranty & Guarantee Installation and commission supervision staff are sent, technicians, engineers etc are sent KRIBHCO release payment in 21 days only after checking and inspecting all the materials If vendors ask for advances payment, it is done on bank guarantee Annual rate contract:- petrol, diesel, gas etc for 1 year contract and for the same value is predetermined. Recovery and refund of penalty:- Accounting less than 5000 .If above 5000 all cases are reviewed and transferred to LD Payment of security deposit:- KRIBHCO to suppliers. Here for this no expenditure account is prepared. All entries are directly debited to inventory a/c

Note:- for purchase of heavy water, material etc C form and local tax is to be paid even if purchased from another state. For heavy water plant normal payment is done and for other materials E-payment. For Credit purchase 30 days are allotted For discount allowed 3% payment in 7 days

Inventory management
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J.R.YADAV

ABC analysis is done Centralized store department SRV is prepared Challan is prepared in which quantity is defined After materials dispatch from store SIV is prepared Average method or monthly weighted average price method is used to determine price SRV, SIV, ISR documents are made ISRV Internal Store Return Voucher In ISRV, SIV number is written SAV Store adjustment voucher FAV Finance adjustment voucher If mistakes are done, to correct the mistakes SAV is prepared and adjustment is done Whole inventory divided into 0 to 49 general store items 50 to 99 general inventory items 42 Furniture 11 Loose tools 13 Steel 37 Cement Material code is of 10 digit Procedure for loose tools If value of loose tools less than written off in the same year Value greater than 1000 then it is written off in 3 years If material has to be repaired, has to sent out, voucher is prepared, this comes in rotable In concept of rotable even if value is 1 crore only 1 item is considered Total inventory is 103.37 crore and types of items are 73,239 Store and inventory of HAEP is differently managed. Here 25000 items is included and it costs around Rs 33 crore In SRV, documents are entered In ISRV value is entered which is taken from SRV

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Non- Moving item:- no transaction of any item for 5 years Surplus:- if value is not consumable then declare and sold out Due to LAN system which is Oracle base, whole calculation is done by it.

Performance Highlights:
Highest Total Fertilizer Sales (Urea 38.47 Lac MT, DAP 1.14 Lac MT, MOP 0.90 Lac MT) [Previous 37.76 Lakh MT of Urea during 2008-09] Highest Imported Fertilizers Handled [Previous Best was 10.45 Lac MT during 2006-07]

40.51 Lakh MT

12.12 Lac MT

Highest Seed Sales

2.22 Lac Qtls

Highest KBKs Turnover

Rs. 74.97 Cr.

Highest Operational Profit of Traded Products

Rs. 43.31 Cr.

Highest Daily Urea Production (13.11.2009)

5638 MT

Highest Monthly Urea Production (December 2009)

167901 MT

Highest Daily Ammonia Production (28.12.2009)

3452 MT

Highest Monthly Ammonia Production (December 2009)

104740 MT

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Sources of Income for the Year 2009-10: Sources of Income Sales (Net) Concession/Remuneration from Govt. of India Other Revenue Rs. (In Crore) 1637.38 959.69 286.59

Sources of Income for the year ended on 31.03.2010

10%

Sales (Net)

33%

57%

Concession/Remuner ation feom Govt. of India Other Revenue

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Sales for 5 years:

Year 2005-06 2006-07 2007-08 2008-09 2009-10 Sales (Rs. In Cr.) 1257.3 1343.97 1385.62 1512.4 1637.39

Sales (Rs. In Cr.)

1385.62 1512.4 1637.39

1257.3

1343.97

2005-06

2006-07

2007-08

2008-09

2009-10

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Profit before Tax (PBT) andProfit after Tax (PAT)for Last 5 Years:
Year 2005-06 2006-07 2007-08 2008-09 2009-10 PBT (Rs. In Cr.) 280.2 231.53 272.14 269.34 252.77 PAT (Rs. In Cr.) 192.45 193.24 209.2 250.13 228.17

PBT & PAT For Last 5 Years

300 250
280.2 231.53 192.45 193.24 272.14 209.2 269.34 250.13 252.77 228.17

200
150 100 50

2005-06

2006-07

2007-08

2008-09

2009-10

PBT (Rs. In Cr.)

PAT (Rs. In Cr.)

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Net Worth of the company for last 5 years:

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Net Worth (Rs. In Crore) 2173.69 2287.52 2378.51 2549.42 2697.13

Net Worth (Rs. In Crore)

2173.69 2287.52 2378.51 2549.42 2697.13

2005-06

2006-07

2007-08

2008-09

2009-10

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Net Working Capital of the Company for last 5 Years:

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Net Working Capital (Rs. In Crore) 1123.76 1234.65 1353.2 1060.21 809.09

Net Working Capital (Rs. In Crore)

1123.76 1234.65 1353.2 1060.21 809.09

2005-06

2006-07

2007-08

2008-09

2009-10

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Concept of ratio analysis

Introduction:Ratio analysis is the process of determining and interpreting numerical relationship based on financial statements. It is the technique of the interpretation of financial statements with the help of accounting ratio derived from the balance sheet and profit and loss A\c. it involves the comparison of existing ratios against standards established. The standards may be set by management as goals expressed in the budgets or may be historical figures showing performance of the same concern in the past or may be figure reflecting the performance of the other companies.

Meaning of Ratio:A ratio is simply one number expressed in terms of another. It is an expression of relationship spelt out by dividing one figure by another. It is the quotient of two arithmetic numbers obtain from financial statement. An expression of the quantitative relationship between two numbers. - Wixon, kell and Bedford in their book Accountant hand book According to J.batty the term accounting ratio is used to describe the significant relationship which exists between figures show in a balance sheet and profit and loss account in budgetary control system or any other part of accounting organization.

Nature of Ratio:Ratio are indicators, sometimes they serve as pointer but not in themselves powerful tools of management. The ratio help to summarized the large quantities of financial data and to make qualitative judgment about the firms financial performance

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They cannot be taken as the final result regarding good or bad financial position of the business. They are at best symptoms and there is the always need to investigate the facts reveled by them further. Hence ratios are not adequate for taking financial decision. It may indication that affirm is weak or strong in a particular area but it must never be taken as a powerful tool of the management. Ratio as a matter of fact are tools of quantitative analysis and it is quite possible that quantitative factors may override numerical aspects with the consequence that the conclusion from the ratio analysis may get distorted .in a way ratios are an attempt to delve in the past as financial statement.

THE VARIOUS WAY OF INTERPRETING ACCOUNTING RATIO

1] Single Absolute Ratio 2] Group Ratios 3] Historical Comparison 4] Inter-firm Comparison 5] Projected Ratios The following are the various ways of interpreting accounting ratio:1] Single absolute ratio:A ratio taken in isolation may not convey much meaning .lf it is expressed in relation to another aspect it may prove to be more useful. For example, if current ratio is less than one, it may reveal the insolvency position of the business. Ex:- current assets are not

sufficient to pay current liabilities. Sometimes a single ration may fail to show the exact financial position of business. 2] Group ratios:When group of ratio are calculated and interpreted they convey better idea about the business operation and efficiency. For example, in addition to calculating current ratio, Ex.
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Current assets to current liabilities if liquid ratio Ex. Liquid asset to liquid liabilities, is also used, it throw better light on the business. 3] Historical comparison:Under this method of interpretation, the ratio of current period is compared with ratios of past year or years. Comparison of ratios over a period of time gives better indication and sets a trend which again reflects the performance and position of the business. However, care must be taken to ensure that there is no change in accounting policy and procedure during the period of comparison. 4] Inter firm comparison:Under this method, the ratio of the firm is compared with ratio of other firm belonging to the same industry. But this method may prove to be in effective when different firm use different accounting policies and procedure. 5] Projected Ratio:Sometimes ratio can be calculated based on estimated financial statement, in which case they constitute standard ratios. The actual ratios are compared with standard ratios. The variance in ratio indicates the success or failure of the business.

Limitation:1] Usefulness of ratios depends upon the abilities and the intention of the persons

who handle them. It will be affected considerably by the prejudice of such persons. 2] Ratios are worked out on the basis of money value only. They dont take into account the

real values of various items involved. 3] Historical values are considered in working out the ratios. However, the effects of changes in the price levels of various items are ignore and to that extent the comparison and evaluation of proposals through ratio become unrealistic.

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4] One particular ratio in isolation is not sufficient to analyze investment proposals or liquidity analysis. A group of ratios are to be considered simultaneously to arrive at the conclusion. 5] 6] Ratio analysis is only a technique for making judgment and not a substitute for a judgment. Ratio are only symptoms, they may indicate what is to be investigated, only a careful

investigation. 7] Liquidity ratio can mislead since current assets and liabilities can change quickly. Their

utility becomes more doubtful for firms with seasonal business. 8] If there is window dressing in financial statement, ratios derived there from will not serve

the purpose. Outsiders can not make out the window dressing of the business. 9] Financial statement suffers from inherent limitations which make ratios inaccurate. Ratio

calculate on the basis of past statements need not necessarily constitute true indicator of future.

TYPES OF RATIOS:Traditional basis of classification of ratio:1] Classification on the basis of statement 2] Classification on the basis of time 3] Classification on the basis of nature 4] Classification according to function Ratios may be classified according to the following bases: 1] Classification on the basis of statement: a) Balance sheet or position ratios: They deal with relationship between two items or group of items with are taken form the balance sheet such as current ratio, debt equity ratio, etc. b) Profit and loss account or revenue ratios:
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These are the ratios which are calculated out of the figures appearing in the profit and loss account, are gross profit ratio operating profit ratio, etc. c) Position-cum-revenue ratio: These ratios are also known as consolidated or combined or complex ratios or inter statement ratios. They portray the relation ship between items one of which is a part of the balance sheet and the other of the revenue statement. Examples of such ratios are return on total resources return on capital employed, turnover of debtors etc. 2] Classification on the basis of time: a) Structural ratios: Ratio computed from data referring to the same point of time; e.g. ratios of a particular months or year b) Trend ratios: Ratio compared between the items referred to different period of time. 3] Classification on the basis of nature: a) Primary ratios: It measures the size of profit in the relation to capital employed e.g., Operating profit to capital employed. b) Secondary ratios: Also referred to as supporting ratios brings to light strategic facts in the profit earning structure e.g., stock velocity, debtors velocity, expense ratios etc. 4] Classification according to function: a) Financial ratios:

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Financial ratios include liquidity and solvency ratio. Ratio indicating the liquidity position of the firm are current ratio, quick-ratio, absolute liquidity ratio. Solvency ratios include proprietary ratio, debt equity-ratio, capital gearing ratio.

b) Profitability ratios: Profitability ratios would cover gross profit ratio, net profit ratio, return on capital employed. c) Market test ratio: Market test ratios comprise of dividend yield, fixed dividend cover, price earning ratio, etc. -:For the more understanding we classify ratio into the following types:-

Types of Financial Ratios:

Following 5 types of financial ratios have been covered in this report: 1 1. Current Ratio 2. quick Ratio 1. Debt Equity Ratio Solvency Ratio 2. Capital Gearing Ratio 3. Interest Coverage Ratio 4. Debt Service Coverage Ratio 3 1. Gross Profit Ratio 2. Operating Profit Ratio Profitability Ratio 3. Net Profit Ratio 4. Return on Investment- ROI 5. Return on Equity- ROE 4 Activity Ratio 1. Inventory Turnover Ratio 2. Debtors Turnover Ratio 3. Working Capital Turnover Ratio 4. Fixed Assets Turnover Ratio
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Liquidity Ratios

5. Capital Turnover Ratio 5 Invisibility Ratio 1. Earnings Per Share- EPS 2. Dividend Payout- DP 3. Price Earning- PE

Research methodology
I have been permitted the project report on Ratio Analysis of the KRIBHCO. The basic methodology that I have undergone for this project is as follows.

Problem statement:
Financial performance of kribhco ltd based on ratio analysis.

Research Objectives:
Main objective :
1. To analyze the financial performance of the company for last 3 years. 2. To know the current financial trend in the company for last 3 years. 3. To know the position of the company in the Indian fertilizer industry.

Sub-Objective of Study:
To analyze the profitability condition of the company To analyze the liquidity position of the company To study receivable management and company credit policy

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Scope:
The scope of the study is to describe the current financial trend and financial performance of the company.

Literature review:
The Indian fertilizer industry has come a long way since the setting up of the manufacturing unit of Single Super phosphate (SSP) near Chennai in 1906 A new impetus to the growth of Indian Fertilizer industry was provided by the set up the two fertilizer plants- Fertilizer & Chemicals Travancore of India Ltd. (FACT) in Kerala and the Fertilizers Corporation of India (FCI) in Bihar. This was during the forties and the fifties. The aim was to create an industrial base that would provide India with self-reliability in food grains. India witnessed significant growth of the fertilizer industry during the sixties and the seventies. By 2003, India had an installed capacity of 12.11 million MT of nitrogen and 5.36 million MT of phosphate. Today, with 57 large sized fertilizer plants manufacturing a wide variety of the nitrogenous, complex and phosphatic fertilizers, the Indian fertilizer industry is the 3rd largest producer in the world. One of the major factors that have led to the rapid increase in the production capacity of fertilizers in India is the policy environment. With the formulation and implementation of investor friendly policies, large investments poured into the private, public and co-operative sectors and this propelled the growth of the Indian fertilizer industry. Some of the major fertilizer companies in India (in the public sector) are as follows: National Fertilizers Limited (NFL)

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Hindustan Fertilizer Corporation Limited (HFC) Paradeep Phosphates Limited (PPL) Fertilizers & Chemicals Travancore LTD. (FACT) Rashtriya Chemicals & Fertilizers Limited (RCF) The Fertilizer Corporation of India Limited (FCI) Steel Authority of India Limited (SAIL) Madras Fertilizers Limited (MFL)

Reports showed the total installed capacity of fertilizer production in 2004 to be 119.60 LMT of nitrogen and 53.60 LMT of phosphate. These figures went up to 120.61 LMT of nitrogen and 56.59 LMT of phosphate in 2007. The production of fertilizers was 113.54 LMT of nitrogen and 42.21 LMT of phosphate during 2005-06. The target of production for 2006-07 was set at 114.48 LMT of nitrogen and 48.20 LMT of phosphate. Though the target production was not met, there was a growth in production during 2006-07 as compared to the production during 2005-06. Indian fertilizer industry has reached international levels of capacity utilization by adopting various strategies for increasing the productions of fertilizers. These include the following: Expansion and increase in efficiency through modernization and revamping of existing fertilizer units. Reviving some of the closed fertilizer plants. Using alternative sources, such as coal or liquefied natural gas for the production of fertilizers, especially urea. Establishing joint venture projects with companies in countries that abound in cheaper resources of raw materials. In order to meet the demand for gas, which is one of the prime requirements for the production of nitrogenous fertilizers, India has entered into joint ventures with foreign companies in a number of countries. Joint ventures have also been established for the supply of phosphoric acid. Indian fertilizer manufacturing companies has joined hands with companies in Senegal, Oman, Jordan, Morocco, Egypt, Tunisia and other countries.

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It is, therefore, evident that the Indian fertilizer industry has witnessed extensive growth and development in a short span of time. With such extensive growth, it is not surprising that the India ranks among the leading fertilizer manufacturing countries of the world.

Research Design:
Data collection :
Descriptive Study : Descriptive Study is also used to study the situation. This study helps to describe the situation. A detail description about present situation can be found out by the descriptive study. Descriptive study involves the analysis of situation using secondary data. Secondary data : Secondary data means the data which are already collected and used by some body else. Annual report of the company having been analyzed the data it was arranged in the form of ratios.
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In this project work the secondary data i.e. annual report of the company is used to find out the ratios and financial position of the company

Sources of Data:
As described above that this project will require Secondary Data, sources of data will be 1. www.kribhco.in 2. Annual report of the company

Time Frame:
Data are collected for 3 financial years 2007-08, 2008-09 and 2009-2010 which will be sufficient for describing the current trend of the company.

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 Data tabulation/validation:After the data collection, the data was tabulated in a Microsoft Excel Sheet .

Analysis of data :

Liquidity Ratio

Current Ratio Quick ratio

Leverage Ratio

Capital structure ratio

-equity ratio -debt ratio -debt to equity ratio

Coverage ratio
-interest coverage ratio -Debt service coverage ratio 3 Activity ratio

Capital turnover ratio Fixed assets turnover ratio Working capital turnover ratio
-inventory turnover ratio -Debtor turnover ratio -creditors turnover ratio

Probability ratio

Owners point of view

-return on equity -earning per share

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Based on investment/assets
-return on capital employed

Based on sales of firm

-gross profit ratio -Operating profit ratio -Net profit ratio

Based on capital market information

-Dividend payout ratio

Limitation :
1. As obtaining information from secondary data, it is easy to get it. But it is very difficult

to understand. 2 It is very hard job to convince employees of the company to give few minutes from their

tight working schedule. 3 Some of the calculation, shown in the report, has been obtained trough personal

discussion. 4 Some of the information which is treated as company secret was no disclosed.

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Data analysis and interpretation

1 Liquidity Ratios 1. Current Ratio 2. Liquid/quick Ratio

1. Liquid Ratios:
It is extremely essential for a firm to be able to meet its obligations as they become due. Liquidity Ratios measure the firms ability to meet current obligations and are calculated by establishing relationship between current assets and current liabilities. In fact, analysis of liquidity needs the preparation of cash budget and cash and fund flow statement; but liquidity ratios, by establishing a relationship between cash and other current assets to current obligations, provide a quick measure of liquidity, and also that it does not have excess liquidity. The failure of a company to meet its obligations due to lack of sufficient liquidity, will result in a poor credit worthiness, loss of creditors, or even in legal tangles resulting in the closure of the company. A very high degree of liquidity is also bad; idle assets earn nothing. The firms fund will be unnecessarily tied up in current assets. Therefore, it is necessary to strike a proper balance between high liquidity and lack of liquidity. A. Current Ratio: Current ratio is one of the best known measures of financial strength of the company. Current Ratio is calculated by dividing current assets by current liabilities: Formula:

Current Ratio= Current assets include cash and those assets that can be converted into cash within a year, such as marketable securities, debtors and inventories. Prepaid expenses are also included in current assets as they represent the payments that will not be made by the firm in the future. All obligations maturing within a year are included in current liabilities. Current liabilities include
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creditors, bills payables, accrued expenses, short term bank loan, income tax liabilities and long term debt maturing in the current year. The current ratio is a measure of the firms short term solvency. It indicates the availability of current assets in rupees for every one rupee of current liability. A ratio of greater than one means that the firm has more current assets than current claims against them. Years Particular 2007-08 Current Assets Current Liabilities 173195.07 Cr. 27506.06 Cr. 2008-09 142759.77 Cr. 29808.48 Cr. 2009-10 120501.89 Cr. 30685.19 Cr.

2007-08 Current Ratio 6.297

2008-09 4.787

2009-10 3.927

current ratio
7 6 5 4 3 2 1 0 2007-08 2008-09 2009-10 4.787 3.927 current ratio 6.297

Interpretation: A generally acceptable current ratio is 2 : 1.

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Higher the current ratio, the larger is the amount of rupees available per rupees of current liabilities, the more is the firms ability to meet current obligation and greater is safety of fund of short term creditors. From the above calculation we can say that current Ratio of 2010 is 3.927:1 which is comparatively lesser then the previous years. It indicates the company dealing not nicely with their current affairs compare to previous years. Which show that companys current assets decrease and current liabilities increase so that we can say that companys current ratio is decrease.

B. Quick Ratio: Quick ratio, also called acid teat ratio or liquid ratio, establishes a relationship between quick or liquid assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is the most liquid asset. Other assets that are considered to be relatively liquid and included on quick assets are debtors and bills receivables and marketable securities (temporary quoted investments). Inventories are considered to be less liquid. Inventories normally require some time for realizing into cash; their value also has a tendency to fluctuate. The quick ratio is found out by dividing quick assets by current liabilities. Formula:

Quick Ratio=

Years Particular 2007-08 2008-09 2009-10

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Quick Assets Current Liabilities

162236.31 27506.06 Cr.

137663.83 29808.48 Cr.

119249.13 30685.19 Cr.

2007-08 Quick Ratio 5.898

2008-09 4.618

2009-10 3.886

quick ratio
7 6 5 4 3 2 1 0 2007-08 2008-09 2009-10 5.898 4.618 3.886 quick ratio

Interpretation: A generally acceptable quick ratio is 1 : 1. Higher the ratio higher the company liquidity position.

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We can see that Quick ratio of the year 2010 is 3.886:1 which is lesser then all previous years indicate companys decresing liquidity position.

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2. Leverage/capital structure /Solvency Ratios:

2 1. Capital structure ratio -equity ratio -debt ratio Leverage/capital structure ratio - Debt to Equity Ratio 2. Coverage ratio -Interest Coverage Ratio -Debt Service Coverage Ratio Solvency ratios measure the firm's ability to repay long-term debt. (A) Equity ratio : Equity ratio indicates proportion of owners fund invested in company. Traditionally we believed that higher the proportion of owners fund lower the degree of risk. Formula : Equity ratio = shareholders Equity / total capital employed Years Particular 2007-08 Share holders equity Capital Employed 39607.93 2378.51 2008-09 39073.33 2549.41 2009-10 39068.58 2697.13

2007-08 Equity Ratio 16.65

2008-09 15.33

2009-10 14.48

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Equity ratio
17 16.5 16 15.5 15 14.5 14 13.5 13 2007-08 2008-09 2009-10 Equity ratio

Interpretation : As we can see higher the proportion of owners fund lower the degree of risk. In the above diagram in 2009-10 equity ratio is 14.48 , it is very low than previous year, so companies equity position decrese.

(B) Debt ratio : This ratio is use for the long term solvency of the firm Formula : Debt ratio = total debt / capital employed Years Particular 2007-08 Total debt Capital Employed Debt Ratio
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2008-09 50776.12 2549.41 2008-09

2009-10 54605.03 2697.13 2009-10

49858.31 2378.51 2007-08

20.962

19.917

20.245

debt ratio
21.2 21 20.8 20.6 20.4 20.2 20 19.8 19.6 19.4 19.2 20.962

20.245 19.917

debt ratio

2007-08

2008-09

2009-10

Interprtion : total debt include the money borrowing from financial institute ,debenture and etc. here we see that during the current year 2010 debt ratio is 20.245 that is increase in compare to previous year. (C) Debt to Equity Ratio: The relationship describing the lenders contribution for each rupee of owners contribution is called Debt-Equity ratio. Debt-Equity ratio is directly calculated by dividing total debt by net worth. Formula:

Debt to Equity Ratio= Years Particular 2007-08 2008-09 2009-10

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Long-term Debt Shareholders Equity

224.72 396.08

92.14 390.73

0.23 390.67

2007-08 Debt to Equity Ratio 0.567:1

2008-09 0.236:1

2009-10 0.0006:1

debt to equty ratio

0.6 0.5 0.4 0.3 0.2 0.1 0 2007-08 2008-09 2009-10 0.0006 0.236 debt to equty ratio 0.567

INTERPRETATION:-

The standard debt-equity ratio is 2:1.

It means for every 2 share there is 1 debt. If the debt is less than 2 times the equity, it means that creditors are relatively less and the financial structure of the business is sound. If the debt is more than 2 times the equity, the states of long-term creditors are more and indicate week financial structure.

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From the above chart we can understand that there is no debt because KRIBHCO is total handling by government, so they are not using out sides debt. Through this we can say that companys financial structure is very sound. Because every year they maintain debtequity ratio 0:1. (D) Interest Coverage Ratio: Debt ratios fail to indicate the firms ability to meet interest obligations. The interest coverage ratio or the times interest-earned is used to test the firms debt-serving capacity. The interest coverage ratio is computed by dividing earnings before interest and taxes (EBIT) by interest charges. The interest coverage ratio shows the number of tomes the interest charges are covered by funds that are ordinarily available for their payment. Since taxes are computed after interest, interest coverage is calculated in relation to before tax earnings. Depreciation is non-cash item. Therefore, funds equal to depreciation are also available to pay interest charges. We can thus calculate the interest average ratio as earnings before interest taxes, depreciation and amortization (EBITDA) divided by interest:

Formula:

Interest Coverage Ratio=

Years Particular 2007-08 2008-09 2009-10

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EBIT Annual Interest Payment

299.54 5.32

307.30 10.37

288.36 5.18

Interest Coverage Ratio

2007-08 56.304:1

2008-09 29.633:1

2009-10 62.852:1

interest coverage ratio

70 60 50 40 30 20 10 0 2007-08 2008-09 2009-10 29.633 interest coverage ratio 62.852 56.304

Interpretation : Earnings before interest and tax are used in the numerator of the ratio because the ability to pay interest is not affected by tax burden , a high interest coverage ratio means that the company can easily meet its interest obligation and lower ratio indicates excessive use of debt . Here we see that in current year 2010 , the interest coverage ratio is 62.85, that is very higher than the previous year. This indicates the good position of kribhco for the meet interest obligation.

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Debt Service Coverage Ratio: Formula:

Debt Service Coverage Ratio=

Years Particular 2007-08 EBIT Total Debt 299.54 224.72 2008-09 307.30 92.14 2009-10 288.36 211.70

Debt Service Coverage Ratio

2007-08 1.333:1

2008-09 3.335:1

2009-10 1.253:1

debt service coverage ratio

3.5 3 2.5 2 1.5 1 0.5 0 2007-08 2008-09 2009-10 debt service coverage ratio

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Interpretation : Lenders are interested in debt service coverage ratio to judge the companies current ability to pay of current interest and installment. Here we see in the diagram during the current year 2010, debt coverage ratio is 1.253 : 1 , that is low then the previous year.

3. Activity Ratio:
It is also known as a turn-over / performance ratio , this ratio are to evaluate the efficiency with which the firm manages and utilizes its assets. These ratios are calculated with reference to sale/cost of goods sold and are expressed in term of rate or times.

(A) Capital Turnover Ratio (B) Fixed Assets Turnover Ratio Activity Ratio (C) Working Capital Turnover Ratio a. Inventory Turnover Ratio b. Debtors Turnover Ratio c. creditor Turnover Ratio

A. Capital Turnover Ratio: This ratio indicates the firms ability of generating sales per rupee of long term investment. The higher the ratio , the more the utilization of owners and long terms creditors funds. Formula: Capital Turnover Ratio= Total Sales

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Capital Employed

Years Particular 2007-08 Total Sales Capital Employed 1385.62 2378.51 2008-09 1512.40 2549.41 2009-10 1637.39 2697.13

Capital Turnover Ratio

2007-08 0.583

2008-09 0.593

2009-10 0.607

capital turnover ratio

0.61 0.605 0.6 0.595 0.59 0.585 0.58 0.575 0.57 2007-08 2008-09 2009-10 0.583 0.593 capital turnover ratio 0.607

Interpretation :
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This ratio indicates the companies ability of generating sales per rupee of long term investment. The higher the ratio , the more efficient the utilization of owners and long terms creditors fund. Here we see in the diagram that during the current year 2010, the capital turnover ratio is 0.607, that is continuous incresing in compare to previous year , that denotes the good utilization of the owners fund. (B) Fixed Assets Turnover Ratio: A high fixed assets turnover ratio indicates efficient utilization of fixed assets in generating sales. Formula: Fixed Assets Turnover Ratio= Net Sales Total Fixed Assets

Years Particular 2007-08 Net Sales Total Fixed Assets 1385.62 368.02 2008-09 1512.40 359.44 2009-10 1637.39 393.87

Fixed Assets Turnover Ratio

2007-08 3.765

2008-09 4.208

2009-10 4.157

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fixed assets turnover ratio

4.3 4.2 4.1 4 3.9 3.8 3.7 3.6 3.5 2007-08 2008-09 2009-10 fixed assets turnover ratio

Interpretation :The standard fixed turnover ratio is 5 times. A high ratio indicates better utilization of fixed assets. A low ratio indicates under- utilization of fixed assets. From the above given chart we can find out that KRIBHCO companys fixed assets turnover ratio every year increase. In the year 2008 companys fixed turnover ratio was 3.765 and in the year 2009-10 companys fixed assets turnover ratio 4.157 so that we can say that KRIBHCO companys fixed assets are more utilized and efficiently use their assets.

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(c) Working Capital Turnover Ratio: Formula: Working Capital Turnover Ratio= Net Working Capital Net Assets

Years Particular 2007-08 Net Working Capital Net Asset 1353.20 1721.22 2008-09 1060.20 1419.64 2009-10 809.09 1202.96

Working Capital Turnover Ratio

2007-08 0.786:1

2008-09 0.747:1

2009-10 0.673:1

working capital turnover ratio

0.8 0.78 0.76 0.74 0.72 0.7 0.68 0.66 0.64 0.62 0.6 0.786 0.747

0.673

working capital turnover ratio

2007-08

2008-09

2009-10

Interpretation :This ratio enables to know efficient utilization of working capital of an organization.
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As seen in the data this Ratio has shown a decreasing. Through this chart we can say that companys net working capital increase so that we can say that companys financial position is going into the good situation. Working capital turnover is further segregated into inventory, debtor, and creditor turnover.

1. Inventory Turnover Ratio: This ratio also known as stock turnover ratio establishes the relationship between the cogs during the year and average inventory held during the year, Formula:

Inventory Turnover Ratio= Or Inventory turnover ratio = sales / average inventory

Average inventory = opening stock- closing stock / 2

Years Particular 2007-08 COGS Inventory 1111.16 109.76 2008-09 1501.74 50.96 2009-10 966.46 12.53

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Inventory Turnover Ratio

2007-08 10.12 Times

2008-09 29.27 Times

2009-10 77.13Imes

inventory turnover ratio

80 70 60 50 40 30 20 10 0 2007-08 2008-09 2009-10 10.12 29.27 77.13 inventory turnover ratio

Interpretation: This ratio indicates that how fast inventory is used/sold. A high ratio is good from the view point of liquidity and vice versa. To judge whether the ratio of a firm is satisfactory or not, higher ratio shows efficient use of inventory. As we can see from the graph that in the year 2009-10 ratio is 77.13 times which higher then all the previous years, so we can say that inventory is converted into finished goods highest in this year which indicate the highest efficient use of the inventory. (B) Debtors Turnover Ratio: This ratio throws lights on the collection and credit policy of the firm. Formula: Debtors turnover ratio = total sales or credit sales / debtors 360 Particular Years

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2007-08 Credit Sales or Total Sales Debtors 830.93 612.86

2008-09 907.44 407.53

2009-10 855.45 264.83

Debtors Turnover Ratio

2007-08 269 Days

2008-09 164 Days

2009-10 113 days

debtor turn over ratio

300 250 200 150 100 50 0 2007-08 2008-09 2009-10 debtor turn over ratio

Interpretation:

The analysis of the debtors turnover ratio supplements the information regarding the liquidity of one item of current asset of the firm. The ratio measure how rapidly debts are collected. A higher ratio is indicator of shorter time lag between credit sales and cash sales.

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As we can see in the year 2007-08 debtors turnover ratio is highest 269 days. But for the year 2009-10 this ratio is 113 days. that denotes that companies position is well.to collect the money, ( C ) Creditors Turnover Ratio: This ratio shows the velocity of debt payment by the firm. Creditors turnover ratio indicates the average collection period. Formula: Creditors turn over ratio =total purchase or credit purchase creditors 365 Years Particular 2007-08 Credit Purchase or Total Purchase Creditors 916.29 151.22 2008-09 527.07 109.15 2009-10 454.50 107.27

Creditors Turnover Ratio

2007-08 60 Days

2008-09 76 Days

2009-10 86 Days

creditor turnover ratio

100 90 80 70 60 50 40 30 20 10 0 86 76 60 creditor turnover ratio

2007-08

2008-09

2009-10

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Interpretation : A low creditors turnover ratio reflect liberal credit terms Granted by suppliers , while a high ratio shows that accounts are settled rapidly. In kribhco creditors turnover ratio in 2007-08 is 60 days and in 2010 is 86 days, so it is increasing compare to the previous year.

4. Profitability Ratios:
Profitability ratios measure the company's use of its assets and control of its expenses to generate an acceptable rate of return. These ratio reflects the final results of business operations. The profibility ratios are broadly classified in four categories :

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1. Owners point of view return on equity earning per share 2. Based on assets/investment Return on capital employed/investment/assets Profitability Ratio 3. Based on sales of firm Gross profit ratio Operating profit ratio Net profit ratio 4. Based on capital market information Dividend payout ratio

Return on Equity (ROE): Return on equity measures the probability of equity funds invested in the company. This ratio revels how profibility of the owners fund have been utilized by the firm Formula:

Return on Equity=

Years Particular 2007-08 Net Income (PAT) Equity + Reserves And Surplus 209.20 2378.51 2008-09 250.13 2549.41 2009-10 228.17 2697.13

Return on Equity

2007-08

2008-09

2009-10

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0.088

0.098

0.085

return on equity
0.1 0.095 0.09 return on equity 0.085 0.08 0.075 2007-08 2008-09 2009-10

Interpretation: Roe measures the profitability of equity funds invested in the firm. Roe is one of the most indicators of a firms profitability and poteintional growth. In kribhco we see in diagram that in compare to previous year , in current year 2010 ,the return on equity ratio is 0.085, that is low to previous is , but utilization of equity fund is quit well. A. Earnings Per Share (EPS): The profibility of a firm from the point of view of ordinary shareholder can be measured in terms of number of equity shares. This is known as earning per share. Formula: Earnings Per Share= Profit after Tax No. of Shares

Particular

Years

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2007-08 PAT No. of Shares 209.20 0.0063882

2008-09 250.13 0.0063882

2009-10 228.17 0.0063882

2007-08 Earnings per Share 32747.88

2008-09 39155.00

2009-10 35717.42

earning per share

40000 38000 36000 34000 32000 30000 28000 2007-08 2008-09 2009-10 32747.88 earning per share 39155

35717.42

Interpretation : The profitability of the firms on the point of ordinary shareholders can be measures in the number of share, in the above diagram during the currnt year 2010 eps is 35717.42, which is lower than 2009, that is 39155, but more than the 2008 that is 32747.88, so comparatively performance of kribhco is well. A. Return on Investment: ROI is the most importance ratio of all. It is the percentage of return on funds invested in the business by its owners,

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Formula:

Return on Investment=

Years Particular 2007-08 Net Income (PAT) Equity + Reserves And Surplus 209.20 2378.51 2008-09 250.13 2549.41 2009-10 228.17 2697.13

2007-08 Return on investment 0.0879

2008-09 0.0981

2009-10 0.0846

return on investment
100% 80% 60% 40% 20% 0% 2007-08 2008-09 2009-10 0.0879 0.0981 0.0846

return on investment

Interpretation :

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Return on investment tells the owner whether or not all the efforts put in to the business has been worthwhile. In kribhco normally roi is more above same during the year 200708,2008-09,2009-10. Gross profit ratio: It expresses the relationship of gross profit to net sales and is expressed in terms of percentage. Sales for this purpose means net sales i.e., sales after deducting the value of goods returned by the customers. Gross profit results from the difference between net sales and cost of goods sold without taking into account expenses generally charged to profit and loss account. Cost of goods sold in the case of a trading concern in the purchase of goods and all expenses directly connected with the purchases of goods, while in the case of manufacturing concern, it consist of the purchases price of the raw materials and all manufacturing expenses. A low gross profit may indicate unfavorable purchasing, the instability of the management to develop sales volume thereby making it impossible to by goods in the large volume, excessive competition etc. On the other hand an increase in the gross profit ratio may reflect an increase in the sales price of goods sold without any corresponding increase in costs; a decrease in cost without its the impacts on the sale price of goods, opening stock valued at a figure lower than it should have been, over valuation of the closing stock at the end of accounting period etc. There is no rigid standard to this ratio. Normally 25% to 30% margin is anticipated.

This ratio is used to compare departmental probability . Gross profit ratio = gross profit sales 100 Years Particular 2007-08 Gross Profit
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2008-09 2840.63

2009-10 2610.89

2188.06

Net Sales

1385.62

1512.4

1637.39

2007-08 Gross Profit Ratio 15.79 %

2008-09 18.78 %

2009-10 15.94 %

gross profit ratio

19.00% 18.50% 18.00% 17.50% 17.00% 16.50% 16.00% 15.50% 15.00% 14.50% 14.00% 18.78%

15.79%

15.94%

gross profit ratio

2007-08

2008-09

2009-10

INTERPRETATION:From the above given chart we can understand that in the year 2007-08 gross profit ratio was 15.79 %. so that in that year gross profit ratio was lowest. And than after companys gross profit ratio around 18.79 % and in the year 2009-10 gross profit ratio 15.94 %

B. Operating Profit Ratio: Formula:

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Operating Profitability Ratio=

Years Particular 2007-08 Operating Profit (PBIT) Net Sales 299.54 1385.62 2008-09 307.30 1512.4 2009-10 288.36 1637.39

2007-08 Operating Profit Ratio 21.618%

2008-09 20.319%

2009-10 17.611%

operating profit ratio

25.00% 20.00% 15.00% operating profit ratio 10.00% 5.00% 0.00% 2007-08 2008-09 2009-10 21.62% 20.32% 17.61%

Interpretation :-

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This ratio is calculated mainly to ascertain the operational efficiency of the management in their business operations, as it shows the percentage of net sales that is absorbed by the cost of goods sold. Higher the operating ratio. Ratio during the year we see in the diagram.

C. Net Profit Ratio: This ratio is widely used as a measure of over-all profitability and is very useful proprietors, as it gives an idea of the efficiency as well as profitability of the business to a limited extent. It is the different from the operating ratio in the sense it is calculated after adding nonoperating income like interest or dividend on investment etc., to generating profit and deducting non-operating expenses such as loss on sale of old assets, provision for legal damages, etc from such profit.

Formula:

Net Profit Ratio=

Years Particular 2007-08 Operating Profit (PBIT) Net Sales 209.20 1385.62 2008-09 250.13 1512.4 2009-10 228.17 1637.39

2007-08 Net Profit Ratio 15.098%

2008-09 16.538%

2009-10 13.935%

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net profit ratio

17.00% 16.50% 16.00% 15.50% 15.00% 14.50% 14.00% 13.50% 13.00% 12.50% 16.54%

15.10% 13.94%

2007-08

2008-09

2009-10

Interpretation:From the given data we can say that the profitability ratio in year 2007-08 is 15.10 % and in the year 2009-10 companys profitability ratio is 13.94%, that company is not able to maintain his sales and overall profit decrease in compare to previous year.

A. Dividend Payout Ratio/ dividend yield (DP Ratio): It provides the guide as a the ability of a business to maintain a dividend payment . it also measures the proportion of earnings that are being retain by the business rather than distributed as a dividend. Formula : Dividend yield = dividend earnings 100

Years Particular 2007-08 2008-09 2009-10

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Dividends Earnings

79.21 209.20

71.27 250.13

77.67 228.17

Dividend Payout Ratio

2007-08 37.86%

2008-09 28.49%

2009-10 34.04%

dividend payout ratio

40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 37.86% 34.04% 28.49%

dividend payout ratio

2007-08

2008-09

2009-10

Interpretation : as see in the diagram dividend pay out ratio of kribhco during the year 2007-08 ; 2008-09 .,and in 2009-10 are 37.86 %, 24.49 % and 34.04 % respectively. It denotes that kribhco is able to pay dividend regularly.

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Recommendation and conclusion

Findings and Conclusion
As a tool of financial management, analyzing the performance of a business concern is that of financial ratio analysis. The importance of ratio analysis lies in facts that it present facts on a comparative basis and enables drawing on the basis of the performance of the company.

( a ) liquidity position :
With the help of ratio analysis we on conclusion regarding liquidity position of the kribhco. From analysis we can say that current Ratio of 2010 is 3.927:1 which is comparatively lesser then the previous years. It indicates the company dealing not nicely with their current affairs compare to previous years. Which show that companys current assets decrease and current liabilities increase so that we can say that companys current ratio is decrease. We can see that Quick ratio of the year 2010 is 3.886:1 which is lesser then all previous years indicate companys decreasing liquidity position.

( b ) long-term solvency :
As we can see higher the proportion of owners fund lower the degree of risk. In the above diagram in 2009-10 equity ratio is 14.48 , it is very low than previous year, so companies equity position decrese. Here we see that in current year 2010 , the interest coverage ratio is 62.85, that is very higher than the previous year. This indicates the good position of kribhco for the meet interest obligation. total debt include the money borrowing from financial institute ,debenture and etc. here we see that during the current year 2010 debt ratio is 20.245 that is increase in compare to previous year. Through this we can say that companys financial structure is very sound. Because every year they maintain debt-equity ratio 0:1.

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( C ) operating efficiency :
Here we see in the diagram that during the current year 2010, the capital turnover ratio is 0.607, that is continuous incresing in compare to previous year , that denotes the good utilization of the owners fund. in the year 2009-10 companys fixed assets turnover ratio 4.157 so that we can say that KRIBHCO companys fixed assets are more utilized and efficiently use their assets. Through this chart we can say that companys net working capital increase so that we can say that companys financial position is going into the good situation.

( d ) overall profitability :
in current year 2010 ,the return on equity ratio is 0.085, that is low to previous is , but utilization of equity fund is quit well. From the given data we can say that the profitability ratio in year 2007-08 is 15.10 % and in the year 2009-10 companys profitability ratio is 13.94%, that company is not able to maintain his sales and overall profit decrease in compare to previous year. kribhco during the year 2007-08 ; 2008-09 .,and in 2009-10 are 37.86 %, 24.49 % and 34.04 % respectively. It denotes that kribhco is able to pay dividend regularly.

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Suggestion
After having completed my summer training project in Krishak Bharti Cooperative Limited, Hazira, I have come to know its working and understand various departments therein. The Project makes us able to understand the various aspects of management. After having a detailed study of the various departments of KRIBHCO, I am giving our conclusion.

In liquidity ratio, Standard Ratio for Current Ratio, Quick Ratio and Debt-Equity Ratio are 2:1. Current Ratio and Quick Ratio asset ratio are nearer to the standard, but DebtEquity ratio is 0:1 for all the three year, because KRIBHCO is subsidized from by the government. So there no need to debt. KRIBHCO should reduce its liability to reach standard position. KRIBHCO should increase it sales to maintain activity ratios. As we know that requirement of Urea and other Fertilizer is higher than its production, So KRIBHCO should use proper sales channel for sales increment. A profitability ratio of KRIBHCO is doing well, so there no need to change it profit policies. As far as cash management is concerned, cash inflow is efficiently undertaken, but improvement in cash out flow is payment & disbursement of cash required condrable attention. Company have to reduce differ tax liabilities which is continuously increase in last two years for the better result of the company. The KRIBHCO is achieving more production capacity than installed. On an average, the KRIBHCO is running on 108 % capacity utilization. It is having a skilled staff to running

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the plant. The KRIBHCO is also implementing the good Inventory Control Techniques to control the stocks of materials with a good purchasing policy. Finally, KRIBHCO is having a professional management to control all the activities carried out therein. So, we would like to conclude that KRIBHCO is having a bright future to expand and diversify.

Limitation
This research is based on the secondary data and during the study of working capital there are so many data required from various department which was not disclosed by the respective department, for example budget of the current financial year. As obtaining information from secondary data, it is easy to get it. But it is very difficult to understand. It is very hard job to convince employees of the company to give few minutes from their tight working schedule. Some of the calculation, shown in the report, has been obtained trough personal discussion. Some of the information which is treated as company secret was no disclosed. Available information for the study of ratio analysis is limited.

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Appendix and bibliography

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BIBLIOGRAPHY
Books
FINANCIAL MANAGEMENT, I.M.PANDEY, EIGHT EDITIONS - 2000, VIKASH PUBLISING HOUSE PRIVATE LTD. FINANCIAL ACCOUNTING FOR MANAGER AMNRISH GUPTA FINANCIAL MANAGEMENT BOARD OF STUDY, ICAI BUSINESS RESEARCH METHODS , DONALD R. COOPER & PAMELA S. SCHINDLER , EIGHT EDITION , TATA Mc. GRAW-HILL EDITION.

Reports
Company Annual Report from 2006-07 to 2009-10.

Websites
www.kribhco.net www.kribhcoindia.com www.kribhco.org.

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