CHAPTER I

INTRODUCTION AND DESIGN OF THE STUDY

1.1. INTRODUCTION

Today economy, finance is defined as the provision of money at the time when it is
required. Every enterprise whether big, medium or small needs finance to carry on its
operations and to achieve its targets. In fact, Finance is so in dispensable today thatis said to
be the life hood of an enterprise.

Financial statements are prepared primarily for decision making they play a dominant
role in setting the frame work of managerial decisions. Financial analysis is the processes of
identifying the financial strengths of the firm by properly establishing relationship between
items of the balance sheet and profit and loss account.

In the study of various ratios are used in ratio analyzing from the following liquidity
ratio, profitability ratio and financial ratio.

Finance is the study of how investors allocate their assets over time under conditions
of certainty and uncertainty. A key point in finance, which affects decisions, is the time value
of money, which states that a unit of currency today is worth more than same unit of currency
tomorrow. Finance aims to price assets based on their risk level, and expected rate of return.
Finance can be broken into three different categories: public finance and personal finance.

Studying finance will lead you in wiser decisions making on financial funds. It can
help you identify risks and benefits if are planning to put up own business. Finance discipline
requires you certain abilities and training which can be developed over a period of time.

1
1.2 .REVIEW OF LITERATURE

Ratio analysis is one of the techniques of financial analysis to evaluate the financial
condition and performance of a business concern. Simply, Ratio means the comparison of one
figure to other relevant figure or figures.

Myers(2008)Ratio analysis of financial statement is a study of relationship among

various financial factors in a business as disclosed by a single set of statement and a study of
trend of these factors as shown in a serious of statements.

Wild, Subramanian and Halsey (2008)financial statements are the major source of
information used by its user to have an understanding about a company. There are five
components of financial statement that are available to the users, Which are balance sheet,
income statement, owner’s equity of financial statement is required to provide information to
its user regarding the financial condition, performance and future prospects of a company

Alfred Sonnet (2009) identify that each financial statement has its own objectives.
Balance sheet is prepared to provide information about a company’s financial condition, while
income statement is used to provide information about a company’s financial performances.
The owner’s equity statement is used to assess the full performance of a company, it includes
revenues, expenses, gains or losses that are reported in income statement and also
transactions related to equity holders (such as, owners investments and withdrawal) Moreover
the statement of owner’s equity acts as a connection between the balance sheet and income
statement.

Cooper(2010)projected a target 75 million telephone lines by the year 2005 and 175
million telephone lines by 2010 has been set. Indian telecom sector has already achieved 100
million lines. With over 100 million telephone connections and an annual turnover of Rs.61,
000 corers, our present tele density is around 9.1%. The growth of Indian telecom network
has been over 30% consistently during last 5 years According to Wellenius and Stern
(2001)3information is regarded today as a fundamental factor of production, alongside capital
and labour.

2
 Videsh Sanchar Nigam Limited (VSNL) (2011)India like many other countries has
adopted gradual approach to telecom sector reform through selective privatization and
managed competition in different segments of the telecom sector. India introduced private
competition in value-added services in 1992 followed by opening up of cellular and basic
services for local area to competition. Competition was also introduced in National Long
Distance (NLD) and International Long Distance (ILD) at the start of the current decade.

World Telecommunication Development Report (2011) explains that network

expression in India was accompanied by an increase in productivity of telecom staff measured
in terms of ratio of number of main lines in operation to total number of staff. Indian
Telecommunication Statistics in its study showed the long run trend in supply and demand of
Direct Exchange Lines. Potential demand for telecom services is much more than its supply.
In eventful decade of sect oral reforms, there has been significant growth in supply of DEL.

Adam Braff Passmore and Simpson (2012) focus that telecom service providers
evening United States face a sea of troubles. The outlook for US wireless carriers is
challenging. They can no longer grow by acquiring new customers; in fact, their new
customers are likely to be migrated from other carriers. Indeed, churning will account for as
much as 80% of new customers in 2005. At the same time, the carrier’s Average Revenue per
User (ARPU) is falling because customers have and Sundram studied that in order to boost
communication for business, new modes of communication are now being introduced in
various cities of the country. E-fallen by an average of three percent per year between 1999
and 2003.

T.K Johnson (2013) analysed performance of Indian Telecom Industry which is

based on volumes rather than margins. The Indian consumer is extremely price sensitive.
Various socio-demographic factors-high GDP growths, rising income levels, booming
knowledge sector and growing urbanization have contributed towards tremendous growth of
this sector.

3
1.3. OBJECTIVES OF THE STUDY

 To study liquidity position of the company by using ratio analysis.

 To study the profitability position of the company by using ratio analysis.
 To measure financial growth of the company.
 To offer findings and suggestions to the company.

1.4 .SCOPE OF THE STUDY

This study is about the ratio analysis of ACC Limited which is a part of
financial analysis. Ratio analysis is perhaps the first financial tool developed to analyze and
interpret the financial statement and is still used widely for this purpose. Financial
performance analysis is a well-researched area innumerable studies have proved the utility
and usefulness of the analytical technique. This research seeks to investigate and
constructively contribute to help:

 It investigates the information needs and use behaviour of the working women.
 The company to understand its own position over time.
 The managers to understand their contribution to the performance of the company.

4
1.5.RESEARCH METHODOLOGY
DATA COLLECTIONMETHOD

Data used for this is secondary in nature. Data have been collected from the annual
reports published by ACC Limited. This is also based on the information by balance sheet
method.

DATA TO BE USE

Data to be used for analysis purpose for five year financial data like

 Balance Sheet
 Profit and Loss Account

METHOD OF ANALYSIS

 Ratio analysis

5
1.6.LIMITATIONS OF THE STUDY
 The study consists only period of 5 years.
 Financial analysis is based on monetary information hence non monetary is ignored.
 The ratios are generally calculated from part financial statement and thus are no
indicates of future.
 Any change in this methods (or) procedure of accounting system limits the utility of
financial statement.

1.7.PERIOD OF STUDY
This study covers 5 years from 2009 to 2013.

1.8. CHAPTER SCHEME

The representation contains 4 chapters it is a systematic order.

CHAPTER-I Introduction and Design of the Study

Introduction and Design of the Study, it includes Introduction, Reviews of Literature and
Objectives of the Study, Scope of the Study, Research Methodology, and Limitations of the
Study.

CHAPTER-II Company Profile

It includes History of the Company and Vision and Mission, Organization Chart.

CHAPTER-III Analysis and Interpretation

Analysis and Interpretation of data-I it includes Ratio Analysis and Interpretation.

CHAPTER-IV Findings, Suggestions and Conclusion

This is the final chapter of the project which contains, Findings, Suggestions Conclusion of
the Study.

6
 CHAPTER-II

COMPANY PROFILE

2.1. HISTORY OF ACC LTDCOMPANY

In 1936 ten cement company belonging to Tatas, Khataus, Kellick Nixon and FE
Dinshaw groups merged to form a single entity, The associated cement companies sir Nowroji
B Saklatvala was the first chairman of ACC.

ACC Limited is India’s foremost cement manufacturer with a country wide network of
factories and marketing offices, Established in 1936,ACC as been a pioneer and trendsetter in
cement and concrete technology among the first companies.

Include commitment to environment protection as a corporate objective, ACC has won

accolades for environment friendly measures taken at its plants and mines, And has also
been felicitated for its acts of good corporate citizenship.

MILESTONES

1936: Incorporation of the Associated Cement Companies Limited on August 1, 1936

1936: First Board Meeting of the Associated Cement Companies Limited held at Esplanade
House, Mumbai on November 10, 1936

1937: With the transfer of the 10th company to ACC, viz. Dewar hand Cement Company
the formation of ACC is complete on October23, 1937

1944: ACC’s first community development venture near Bombay.

2008: CNBCTV18 India Business Leader awarding the category India Corporate Citizen of
the year 2008.

2008: Project Orchid launched to transformer Corporate Office, Cement House into a green
building.

2009:Jamanalal Bajaj “Uchit Vyavahar Puraskar” of Council for Fair Business Practices

7
2009:ACC is allotted coal blocks in Madhya Pradesh and West Bengal
2009:New Grinding plant of capacity1.60 MTPA inaugurated at Thondebhavi in
Karnataka
2010:Kudithini Grinding Plantin augurated in Karnataka with capacity of 1.1 MTPA of
Portland Slag Cement.

2.2. VISION

 To be one of the most respected companies in India.

 Recognised for challenging conventions and delivering on our promises.

MISSION

To benefit society at large through innovation, quality, productivity, human

development and growth, and to generate sustained surpluses, always striving for excellence,
within the framework of law, and with pride in ethical values. We are committed to being a
highly profitable and Socially Responsible, leading manufacturer of high value of money,
environmentally friendly.

8
 2.4. ORGANISATION CHART

Board of Directors

Mr .N.S.sekhsaria Mr. Bernard Terver

Managing
DirectorMr Harish

Business Head Business Head Business Head Business Head

south North RegionMr West Region Mr East Region Mr
RegionMrjoydeep Jagdish shailesh rajiv kumar

Chief Financial Commercial Technical support Operations Support

Office-Mr smith services Centre-Mumbai

Raw materials & Alternate Fuels & Secretarial &

Mines planning Raw materials Compliance

Overseas Projects & Communication Business Internal Audit

Consultancy &CSR Development&
planning

9
 CHAPTER-III

ANALYSIS AND INTERPRETATION

MEANING OF RATIO ANALYSIS

Ratio’s can be defined as relationships expressed in quantitative terms between

figures which have cause and effect relationship or which are connected with each other in
some manner or the other.

Ratio analysis widely used tool of financial analysis. It is defined as the systematic use
of ratio to interpret the financial statements so that the strength and weaknesses of a firm as
well as its historical performance and current financial condition can be determined.

Financial statement ratio analysis focuses on three key aspects of business; liquidity
Profitability and Solvency.

Financial ratio’s can be classified in the some type of ratios:-

 Liquidity Ratio
 Profitability Ratio
 Financial Leverage Ratio

Ratio analysis helps in inter-firm comparison by providing necessary data. A inter firm
comparison indicates relative position. It provides the department. The ratio analysis is one of
the tools in the hands of those who to know something more from the financial statement in
the simplified manner. Financial statements are prepared primarily for decision making. They
play a dominant role in setting the frame work of managerial decisions. Financial analysis is
the process of identifying the financial strengths and weakness of the firm by properly
establishing relationship between the items of the balance sheet and profit and Liquidity ratio
of ratio analysis facilitates to identify whether the company has enough capability to meet
short term obligation requirements.

10
LIQUIDITY RATIO:

The liquidity ratio is computation that is used to measure a company’s ability to pay
its short-term debts. There are three common calculations that fall under the category of
liquidity ratios. The current ratio is the most liberal of the three. It is followed by the acid
ratio, and the cash ratio. These three ratios are often grouped together by financial analysts
when attempting to accurately measure the liquidity of company.

11
CURRENTRATIO:

The current ratio is also called the working capital ratio, as working capital is the
difference between current assets and current liabilities. This ratio measures the ability of
accompanies to pay its current obligation using current assets. The ratio is calculated by
dividing current assets by current liabilities.

CURRENT ASSETS

CURRENT ASSETS

CURRENT RATIO = ______________________

CURRENT LIABILITIES

12
 TABLE NO 3.1

TABLE SHOWING CURRENT RATIO

CURRENT
YEAR CURRENTASSET LIABILITIES RATIO
(Rs in Cr) (Rs in Cr)

2009 3385.63 3113.91 1.08

2010 4973.70 4659.21 0.06

2011 4467.01 3277.26 1.36

2012 4826.35 3468.03 1.39

2013 4418.14 3265.64 1.35

Source: Compiled from annual reports

INTERPRETATION

The current ratio is high in 2012 and low in 2010. The company position is not in a
satisfaction level company to the standard ratio 2:1. The company has to improve its current
assets to improve its current ratio position.

CHART NO 3.1

13
 CHART SHOWING CURRENT RATIO

CURRENT RATIO
1.6

1.36 1.39
1.4 1.35

1.2
1.08
1
RATIO

0.8

0.6

0.4

0.2
0.06
0
2009 2010 2011 2012 2013

YEAR

PROFITABILITY RATIOS

14
Profitability ratio measured well a company is performing by analyzing how profit was earned
relative total sales and total assets and network. It necessary to know how much profit has
been earned with help of the amount in the business. The important of profitability ratios:

 Gross profit ratio

 Net profit ratio
 Operating ratio
 Expenses ratio

GROSS PROFIT RATIO

15
Gross profit ratio indicates the difference between sales and direct cost. Gross profit ratio is
the relationship between gross profit and net sales. This ratio is also known margin or trading
margin ratio and it is calculated as

GROSS PROFIT
GROSS PROFIT
GROSS PROFIT RATIO = __________________ X 100
SALES

TABLE NO 3.2

16
 TABLE SHOWING GROSS PROFIT RATIO

YEAR GROSS PROFIT SALES

RATIO
(Rs in Cr) (Rs in Cr)

2009
2,636.48 8,027.20 32.84

2010
1,854.13 7,717.33 24.02

2011
2,015.75 9,660.29 20.86

2012
2,345.75 11,357.96 20.65

2013
1,800.91 11,168.94 16.12
Source: Compiled from annual reports

INTERPRETATION

The gross profit ratio is high in 2009 and low in 2013. The company’s sales are
heading increase but equally gross profit is also increasing which indicates that there is a high
in the expenses of the business. So efforts are to be taken to reduce the expenses.

CHART NO 3.2

17
 CHART SHOWING GROSS PROFIT RATIO

Gross Profit Ratio

35 32.84

30

25 24.02
20.86 20.65
20
RATIO

16.12
15

10

0
2009 2010 2011 2012 2013

YEAR

NET PROFIT RATIO

18
Net profit ratio establishes the relationship between netprofit as sale indicates the efficiency of
the management in manufacturing, selling, administration and other activities of the firm. This
ratio is the overall measure of company’s profitability and is calculated as,

NET PROFIT
NET PROFIT RATIO = __________________X 100
SALES

TABLE NO 3.3

19
 TABLE SHOWING NET PROFIT RATIO

YEAR NET PROFIT SALES

RATIO
(Rs in Cr) (Rs in Cr)

2009
1,606.73 8,027.20 20.01

2010
1,120.01 7,717.33 14.51

2011
1,325.26 9,660.29 13.71

2012
1,061.19 11,357.96 9.34

2013
1,095.76 11,168.94 9.81
Source: Compiled from annual reports

INTERPRETATION

The net profit ratio is high in 2009 and low in 2012. This indicates that the company
is wasting its money a lot in other expenses which has to be reduced to increase the
profitability.

TABLE NO 3.3

20
 CHART SHOWING NET PROFIT RATIO

Net Profit Ratio

25

20.1
20

15 14.51
13.71
RATIO

9.34 9.81
10

0
2009 2010 2011 2012 2013

YEARS

21
OPERATINGRATIO

It is the ratio of net profit to net sales expressed percentage. It expresses the relationship
between operating net profit. Operating profit ratio is the variation of net profit ratio. It
measures the relationship between operating profits and sales. Operating profit ratio is a better
indicator of operational efficiency than the net profit ratio. It is calculated as

OPERATING PROFIT
OPERATING RATIO = _______________________ X 100
SALES

22
 TABLE-3.4

TABLE SHOWING OPERATING PROFITRATIO

YEAR OPERATINGPROFIT SALES

RATIO
(Rs in Cr) (Rs in Cr)

2009
2,741.11 8,027.20 34.14

1,955.58 7,717.33 25.34

2010

2011
2,112.63 9,660.29 21.86

2012 22.31
2,535.01 11,357.96

2013
1,852.58 11,168.94 16.58

Source: Compiled from annual reports

INTERPRETATION

The operating profit ratio is high in 2009 and low in 2013. This indicates the operating
cost of the company is getting decreased which shows a favourable position of the company.

23
 CHART-3.4

CHARTSHOWING OPERATING PROFIT RATIO

Operating Profit Ratio

40

35

30

25
RATIO

20

15

10

0
2009 2010 2011 2012 2013

YEARS

24
EXPENSES RATIO

Expenses ratio indicates the relationship of various expenses to net sales lower the ratio
greater is the profitability and higher ratio, lower is the profitability.

ADMINISTRATIVE EXPENSES

ADMINISTRATIVE EXPENSE=_____________________________ X 100

SALES

25
 TABLE-3.5

TABLE SHOWING ADMINISTRATION EXPENSES

YEAR ADMIN EXP SALES RATIO

( Rs in Cr) ( Rs in Cr)

2009 144.67 8,027.20 1.80

2010 143.44 7,717.33 1.85

2011 150.07 9,660.29 1.55

2012 175.24 11,357.96 1.54

2013 172.53 11,168.94 1.54

Source: Compiled from annual reports

INTERPRETATION

The administration expenses ratio is high in 2010 and low in 2012 & 2013. The
expenses are increasing with increase the profit of the organization. The organisation has to
take necessary steps to reduce the expenses.

26
CHART-3.5

ADMINISTRATION EXPENSES

ADMINISTRATION EXPENSES

2
1.8 1.85
1.8
1.6 1.55 1.54 1.5
1.4
1.2
RATIO

1
0.8
0.6
0.4
0.2
0
2009 2010 2011 2012 2013

YEAR

27
SELLING EXPENSES

Selling expenses are part of the operating expenses, under the accrual basis of
accounting. Selling expenses appear on the income statement in the period in which they
occurred.

SELLING EXPENSES

SELLING EXPENSES = __________________________ X 100

SALES

28
 TABLE-3.6

SELLING EXPENSES RATIO

YEAR SELLING EXP SALES RATIO

( Rs in Cr) ( Rs in Cr)

2009
1,224.18 8,027.20 15.25

2010
1,251.02 7717.33 16.21

2011
2,085.34 9,660.29 21.58

2012
2,406.91 11,357.96 21.19

2013
2,513.91 11,168.94 22.50
Source: Compiled from annual reports

INTERPRETATION
It is inferred from the above chart that the selling expenses is high in 2013 i.e.22.50 and
low in 2009 i.e. 15.25. The ratio is fluctuating and the company has to take required steps to
reduce the sales expenses.

29
 CHART-3.6

SELLING EXPENSES RATIO

SELLING EXPENSES

25
22.5
21.58 21.19
20

16.21
15.25
15
RATIO

10

0
2009 2010 2011 2012 2013

YEAR

30
MANUFACTURING EXPENSES RATIO

Manufacturing expense the sum costs of all resources consumed in the process of making a
product. The manufacturing cost is classified into three categories direct materials cost; direct
labour cost and manufacturing overhead.

MANUFACTURING EXPENSES

MANUFACTURING = ____________________________ x100

EXPENSES RATIO SALES

31
 TABLE NO 3.7

TABLE SHOWING MANUFACTURING EXPENSES

YEAR MANUFACTURING SALES

EXPENSES RATIO
( Rs in Cr)
( Rs in Cr)

2009
887.89 8,027.20 11.06

2010 7,717.33
1,056.68 13.60

2011 9,660.29
974.62 10.08

2012 11,357.96
1,061.15 9.34

2013 11,168.94
1,201.38 10.75
Source: Compiled from annual reports

INTERPRETATION

It is inferred from the above chart that the manufacturing expenses is high in 2010
i.e.13.60 and low in 2012 i.e. 9.34. The ratio is fluctuating and it shows that manufacturing
expenses is increasing and decreasing due to some reasons. Steps have to be taken to reduce
the manufacturing expenses.

32
 CHART NO 3.7

CHART SHOWING MANUFACTURING EXPENSES

Manufacturing Expenses
16

14 13.6

12 11.06 10.75
10.08
10 9.34
RATIO

0
2009 2010 2011 2012 2013

YEAR

33
FINANCIAL LEVERAGE RATIO

DEBT EQUITY RATIO

This ratio is ascertained to determine long-term solvency position of a company. Debt equity
ratio is also called external-internal equity ratio.

OUT SIDERS FUND

DEBT EQUITY RATIO = _________________________

SHARE HOLDERS FUND

34
 TABLE NO 3.8

TABLE SHOWING DEBT-EQUITY RATIO

YEAR OUTSIDERS SHARE HOLDERS RATIO

FUND FUND
( Rs in Cr) ( Rs in Cr)

2009 566.92 6,016.22 0.09

2010 523.82 6,469.49 0.08

2011 1001.4 7,192.27 0.13

2012 558.48 7,382.80 0.07

2013 495.84 7,824.84 0.06

Source: Compiled from annual reports

INTERPRETATION

The debt-equity ratio is high in 2011 and low in 2013, the ratio indicates that the company
is completely depending on the shareholders fund which is a healthier one.

35
 CHART NO 3.8

CHART SHOWING DEBT-EQUITY RATIO

Debt - Equity Ratio

0.14
0.13

0.12

0.1
0.09
0.08
0.08
RATIO

0.07
0.06
0.06

0.04

0.02

0
2009 2010 2011 2012 2013

YEAR

36
LIQUID RATIO
Quick (or) liquid assets refer to assets which are quickly convertible into cash.

Current assets other than stock and expenses.

LIQUID ASSETS

LIQUID RATIO =_________________________

CURRENT LIABILITIES

37
 TABLE NO 3.9

TABLE SHOWING LIQUID RATIO

CURRENT
YEAR QUICK ASSET
LIABILITIES RATIO
( Rs in Cr)
( Rs in Cr)

2009
778.98 3,113.91 0.25

2010
914.98 4,659.21 0.19

2011
1,099.54 3,277.26 0.33

2012
1,133.55 3,468.03 0.32

2013
1,121.47 3,265.64 0.34
Source: Compiled from annual reports

INTERPRETATION

The current ratio is high in 2013 and low in 2010. The ratio reveals that the company’s
current asset position is bad and is to be improved.

38
 CHART NO 3.9

CHART SHOWING LIQUID RATIO

LIQUID RATIO
0.4

0.35 0.33 0.34

0.32
0.3
0.25
0.25
RATIO

0.2 0.19

0.15

0.1

0.05

0
2009 2010 2011 2012 2013

YEAR

39
CURRENT ASSET TO PROPRIETOR RATIO

This ratio compares the shareholders funds or owners fund and total tangible assets. In other
words this ratio expresses the relationship between the proprietor’s funds and the total
tangible assets.

SHARE HOLDERS FUND

PROPRIETORY RATIO = ____________________________
TOTAL TANGIBLE ASSET

40
 TABLE-3.10

TABLE SHOWING CURRENT ASSET TO PROPRIETOR RATIO

SHARE TOTAL
YEAR HOLDERS TANGIBLE
RATIO
FUND ASSET
( Rs in Cr) ( Rs in Cr)

2009
6,016.22 4,158.29 1.44

2010
6,469.49 5,082.44 1.27

2011
7,192.27 6,207.53 1.15

2012
7,382.80 5,863.87 1.25

2013
7,824.84 5,503.96 1.42
Source: Compiled from annual reports

INTERPRETATION

It is inferred from the above table the proprietor ratio is high in 2009 i.e. 1.44 and low in
2011 i.e. 1.15. This shows that the company is depending entirely its shareholders funds to
buy assets.

41
 CHART NO 3.10

CHART SHOWING PROPRIETORY RATIO

PROPRIETORY RATIO
1.6
1.44 1.42
1.4
1.27 1.25
1.2 1.15

1
RATIO

0.8

0.6

0.4

0.2

0
2009 2010 2011 2012 2013

YEAR

42
CASH POSITION RATIO

This ratio is also called Absolute Liquidity ratio or super quick ratio. This is a variation of
quick ratio. This ratio is calculated when liquidity is highly restricted in terms of cash and
cash equivalents. This ratio measures liquidity in terms of cash and near cash items and short-
term current liabilities.

CASH AND BANK BALANCE

CASH POSITION RATIO = ______________________________

CURRENT LIABILITES

43
 TABLE NO 3.11

TABLE SHOWING CASH POSITION RATIO

CASH AND BANK CURRENT

YEAR RATIO
BALANCE LIABILITIES
( Rs in Cr) ( Rs in Cr)

2009
746.38 3,113.91 0.23

2010
980.03 4,659.21 0.21

2011 3,277.26
1,652.56 0.50

2012
678.38 3,468.03 0.19

2013 3,265.64
503.38 0.15
Source: Compiled from annual reports

INTERPRETATION

The cash position ratio is high in 2011 and low in 2013. The ratio is getting decreased and
it indicates an unfavourable position of the company. Efforts are to be made to increase the
cash and bank balance.

44
 CHART-3.11

CHART SHOWING CASH POSITION RATIO

Cash Position Ratio

0.6

0.5
0.5

0.4
RATIO

0.3
0.23
0.21
0.2 0.19
0.15

0.1

0
2009 2010 2011 2012 2013

YEAR

45
 CHAPTER IV
FINDINGS, SUGGESTIONS AND CONCLUSION

4.1 FINDINGS
 CURRENT RATIO
The current ratio is high in 2012 and low in 2010. The company position is not in a
satisfactions level company to the standard ratio 2:1. The company has to make assets to
improve its current asset position.

 GROSS PROFIT RATIO

The gross profit ratio is high in 2009 and low in 2013. The company’s sales are
heading increase but equally gross profit is also increasing which indicates that there is a high
in the expenses of the business. So efforts are to be taken to reduce the expenses.

 NET PROFIT RATIO

The net profit ratio is high in 2009 and low in 2012. This indicates that the company is
wasting its money a lot in other expenses which has to be reduced to increase the profitability.

 OPERATING PROFIT RATIO

The operating profit ratio is high in 2009 and low in 2013. This indicates the
operating cost of the company is getting decreased which shows a favourable position of the
company.

 ADMINISTRATION EXPENSES
The administration expenses ratio is high in 2010 and low in 2012 & 2013. The expenses are
increasing with increase the profit of the organization. The organisation has to take necessary
steps to reduce the expenses.

 SELLING EXPENSES

It is inferred from the above chart that the selling expenses is high in 2013 i.e.22.50 and low
in 2009 i.e. 15.25. The ratio is fluctuating and the company has to take required steps to
reduce the sales expenses.

46
  MANUFACTURING EXPENSES
It is inferred from the above chart that the manufacturing expenses is high in
2010 i.e.13.60 and low in 2012 i.e. 9.34. The ratio is fluctuating and it shows that
manufacturing expenses is increasing and decreasing due to some reasons. Steps have to be
taken to reduce the manufacturing expenses.

 DEPT-EQUITY RATIO
The debt-equity ratio is high in 2011 and low in 2013, the ratio indicates that the company is
completely depending on the shareholders fund which is a healthier one.

 LIQUID RATIO
The current ratio is high in 2013 and low in 2010. The ratio reveals that the
company’s current asset position is bad and is to be improved.

 PROPRIETORY RATIO
It is inferred from the above table the proprietor ratio is high in 2009 i.e. 1.44 and low in 2011
i.e. 1.15. This shows that the company is depending entirely its shareholders funds to buy
assets.

 CASH POSITION RATIO

The cash position ratio is high in 2011 and low in 2013. The ratio is getting decreased and it
indicates an unfavourable position of the company. Efforts are to be made to increase the cash
and bank balance.

47
4.2 SUGGESTIONS
 The suggestion is pointed out by the research for the future development of the
organization.
 Liquidity position of the company should try to reduce their current liabilities or
outstanding liabilities.

48
4.3 CONCLUSION
In this study has been undertaken with objectives of evaluating the financial
performance of ACC LIMITED for the period of 2009-2013.The research found that the
company had some down ward trend during the period of the study. If the company has
strengthen the collection policy and maintain of assets properly it can shows the upward trend
in future in all aspects.

49
 BIBLIOGRAPHY
Books:

1. Advanced Accountancy, Gupta R.L & Radhaswamy, M. Sultan Chand & Sons, New
Delhi, year 1991
2. Management Accounting Sharma R.K, Shashi K Gupta, Kalyani Publishers, New
Delhi, year 1997
3. Principles of Management Accounting, S.N. Maheswari, Sultan Chand & Sons, New
Delhi, year 1987
4. Financial Management Khan M.Y & Jain P.K, Tata Mc-Graw Hill Publishing
Company Ltd., year 1994
5. Financial Management Kuchhal, S.C. Chaitanya Publishing House, Allahabad, year
1993
6. Research Methodology Kothari C.R. Wishwa Prakashan, New Delhi, year 1990.
7. Statistical Methods S.P Gupta.

Websites :

 www.google.com
 www.wikipedia.in
 www.acc.co.in
 www.reviewliterature.com

50
 BALANCE SHEET OF ACC LTD.

DEC'10
DEC'13 DEC'12 DEC'11 DEC'09
PARAMETERS (Rs in
(Rs in Cr) (Rs in Cr) (Rs in Cr) (Rs in Cr)
Cr)

EQUITYAND
LIABILTIES
Share Capital 187.95 187.95 187.95 187.95 187.94
Shareholder's Funds 7,824.84 7,382.80 7,192.27 6,469.49 6,016.22
Secured Loans 0.00 82.00 500.00 509.93 550.00
Unsecured Loans 0.00 3.03 6.08 13.89 16.92
Deferred Tax Assets
507.27 516.92 518.36 361.53 349.25
Liabilities
Other Long Term
406.75 381.09 372.26 0.00 0.00
Liabilities
Long Term
89.09 92.36 123.06 0.00 0.00
Provisions
Total Non-Current
1,003.11 1,075.40 1,519.76 885.35 916.17
Liabilities
Trade Payables 639.20 660.49 710.26 1,616.38 1,408.71
Current Liabilities
Other Current
1,545.69 1,515.81 1,517.06 634.17 555.20
Liabilities
Short Term
Provisions 1,080.75 1,291.73 1,049.94 2,408.66 1,150.00
Total Current
3,265.64 3,468.03 3,277.26 4,659.21 3,113.91
Liabilities
Total Liabilities 12,093.59 11,926.23 11,989.29 12,014.05 10,046.30
ASSETS
Gross Block 10,399.55 10,218.78 9,645.37 8,076.95 6,826.27
Less: Accumulated
4,883.66 4,354.91 3,437.84 2,994.51 2,667.98
Depreciation
Less: Impairment of
11.93 0.00 0.00 0.00 0.00
Assets
Net Block 5,503.96 5,863.87 6,207.53 5,082.44 4,158.29
Lease Adjustment
0.00 0.00 0.00 0.00 0.00
A/c
Capital Work in
819.61 311.30 365.63 1,562.80 2,156.21
Progress

51
Non Current
176.81 194.67 445.10 395.11 346.17
Investments
Long Term Loans &
866.83 564.20 447.88 0.00 0.00
Advances
Other Non Current
308.24 165.84 56.14 0.00 0.00
Assets
Total Non-Current
7,675.45 7,099.88 7,522.28 7,040.35 6,660.67
Assets
Total Reserves 7,636.89 7,194.85 7,004.32 6,281.54 5,828.18
Current Assets
Loans & Advances
Currents Investments 2,017.21 2,358.88 1,179.85 1,307.56 1,129.47
Inventories 1,121.47 1,133.55 1,099.54 914.98 778.98
Cash and Bank 503.38 678.38 1,652.56 980.03 746.38
Other Current Assets 19.47 28.80 15.00 56.12 10.99
Short Term Loans
359.39 323.29 332.32 1,536.73 516.11
and Advances
Total Current
4,418.14 4,826.35 4,467.01 4,973.70 3,385.63
Assets
Net Current Assets
(Including Current 1,152.50 1,358.32 1,189.75 314.49 271.72
Investments)
Total Current Assets
Excluding Current 2,400.93 2,467.47 3,287.16 3,666.14 2,256.16
Investments
Total Assets 12,093.59 11,926.23 11,989.29 12,014.05 10,046.30
Contingent Liabilities 1,764.15 1,681.22 448.77 408.90 359.10
Total Debt 35.03 163.06 510.73 523.82 566.92
Book Value 416.76 0.00 383.07 344.57 320.44
Adjusted Book Value 416.76 0.00 383.07 344.57 320.44

PROFIT AND LOSS ACCOUNT OFACC LIMITED FOR 5 YEARS

52
 DEC'13 DEC'12 DEC'11 DEC'10 DEC'09
PARAMETERS (Rs in Cr) (Rs in Cr) (Rs in Cr) (Rs in (Rs in Cr)
Cr)

53
Gross Sales 12,491.07 12,639.44 10,700.02 8,563.71 8,724.24

Less :Inter divisional 0.00 0.00 0.00 0.00 0.00

transfers
Less: Sales Returns 0.00 0.00 0.00 0.00 0.00

Less: Excise 1,322.13 1,281.48 1,039.73 846.38 697.04

Net Sales 11,168.94 11,357.96 9,660.29 7,717.33 8,027.20

EXPENDITURE:

Increase/Decrease in 13.00 108.49 9.55 58.56 55.78

Stock
Raw Materials 1,854.34 1,710.22 1,310.08 1,224.21 984.67
Consumed
Power & Fuel Cost 2,382.34 2,382.26 2,183.30 1,598.67 1,539.65

Employee Cost 661.68 616.65 533.01 456.66 363.75

Other manufacturing 1,201.38 1,061.15 974.62 1,056.68 887.89

Expenses
General and 172.53 175.24 150.07 143.44 144.67
administration expenses
Selling and Distribution 2,513.91 2,406.91 2,085.34 1,251.02 1,224.18
Expenses
Miscellaneous 740.97 701.46 493.60 374.11 346.25
Expenses
Expenses Capitalised 0.00 0.00 0.00 0.00 0.00

Total Expenditure 9,540.15 9,162.38 7,739.57 6,163.35 5,546.84

PBIDT (Excl OI) 1,628.79 2,195.58 1,920.72 1,553.98 2,480.36

Other Income 223.79 339.43 191.91 401.60 260.75

Operating Profit 1,852.58 2,535.01 2,112.63 1,955.58 2,741.11

Interest 51.67 189.26 96.91 101.45 104.63

54
PBDT 1,800.91 2,345.75 2,015.72 1,854.13 2,636.48

Depreciation 573.95 558.88 475.30 392.68 342.09

Profit Before Taxation 1,226.96 1,786.87 1,540.42 1,461.45 2,294.39

& Exceptional Items

Exceptional Income 0.00 -335.38 0.00 0.00 0.00

Expenses
Profit Before Tax 1,226.96 1,451.49 1,540.42 1,461.45 2,294.39

Provision for Tax 131.20 390.30 215.16 341.44 687.66

PAT 1,095.76 1,061.19 1,325.26 1,120.01 1,606.73

Extraordinary Items 0.00 0.00 0.00 0.00 0.00

Adj to Profit After Tax 0.00 -216.29 0.00 0.00 0.00

Profit Balance B/F 3,861.83 3,821.54 3,381.41 3,203.85 2,477.91

Appropriations 4,957.59 4,666.44 4,706.67 4,323.86 4,084.64

Equity Dividend 300.00 300.00 280.00 305.00 230.00

Earnings Per Share 58.36 56.52 70.59 59.65 85.58

Book Value 416.76 393.21 383.07 344.57 320.44

55