A STUDY ON

RATIO ANALYSIS with reference to

M/S HINDUSTAN SHIPYARD LIMITED (HSL)

VISAKHAPATNAM

A Project report submitted for partial fulfilment for the award of the degree of

BACHELOR OF COMMERCE

SUBMITTED BY

ANKITA KUMARI CHOUDHRY

Regd. No : 19AG424

Under The Esteemed Guidance Of

D R . JADA JAYENDRA, MBA, M.Com, M.Phil., PhD, (PDF)

ASSOCIATE PROFESSOR

DEPARTMENT OF COMMERCE AND MANAGEMENT

ST.JOSEPH’S COLLEGE FOR WOMEN(A)
Gnanapuram,Visakhapatnam
 (2019-2022)

DECLARATION

I, ANKITA KUMARI CHOUDHRY here by declared that the project work

Titled “ A STUDY ON RATIO ANALYSIS ” with regard to the

HINDUSTAN SHIPYARD LIMITED, VISAKHAPATNAM the original

work done by me and submitted to ST.JOSEPH’S COLLEGE FOR WOMEN

(A), in the partial fulfillment of requirement for the award of BACHELOR OF

COMMERCE is a original record work done by me under the supervision of 

DR. JADA JAYENDRA.

Date: Name: Ankita Kumari Choudhry

Place: Visakhapatnam. Regd.No: 19AG424

 CERTIFICATE

This is to certify that project entitled “A STUDY ON RATIO ANALYSIS” with

reference to HINDUSTAN SHIPYARD LIMITED, Visakhapatnam submitted by

ANKITA KUMARI CHOUDHRY (19AG424) in partial fulfilment for the award

of the degree of BACHELOR OF COMMERCE, ST.JOSEPH’S COLLEGE

FOR WOMEN(A), Visakhapatnam is a record of bonafide work carried out by

her under my guidance and supervision.

Date : DR . JADA JAYENDRA

Place: Visakhapatnam Project Guide

Associate Professor
 ACKNOWLEDGEMENT

The completion of this undertaking could not have been possible without the
participation and assistance of so many people. Their contributions are sincerely
appreciated and gratefully acknowledged.

I would like to express my sincere gratitude to Prof. SISTER SHYJI Principal,

Director (Academic & Planning), and M. JYOTHI, Associate Professor and Head
of the Department, Bachelor of Commerce, St. Joseph women’s college (A),
Visakhapatnam, for having given me an opportunity to do this project.

I would like to express my deep sense of gratitude to DR. JADA JAYENDRA,

Associate Professor, Bachelor of management studies, St. Joseph women’s college
(A), Visakhapatnam.

I profusely thank my company guide Gayathri Devi Malladi, (DEPUTY

MANAGER), Hindustan Shipyard Ltd, helping and assisting me through his
valued guidance, co-operation and unstinted support during the course of my
project.

Name: Ankita Kumari Choudhry

 INDEX
CHAPTER 1
 Introduction of the study.
 Need for the study.
 Scope of the study.
 Objectives of the study.
 Methodology & sampling.
 Limitations of the study.

CHAPTER 2
 Industry Profile

CHAPTER 3
 Company Profile

CHAPTER 4
 Theoretical frame work of the ratio analysis

CHAPTER 5
 Data Analysis and interpretation

CHAPTER 6
 Summary report
 Findings & suggestions
 Bibliography
 CHAPTER I

 Introduction

 Need for the study

 Scope of the study

 Objectives of the study

 Methodology of the study

 Limitations of the study

 Introduction

Ratio Analysis is a technique of analysis of financial statements to conduct a

quantitative analysis of information in a company’s financial statements.

Financial statements are the collection of summary-level reports about an

organization's financial results, financial position, and cash flows. They include the
income statement, balance sheet, and statement of cash flows. Financial
statements record all the financial data of the business when evaluated and
critically analyzed becomes more useful to various stakeholders. Financial
statement analysis is the procedure of analyzing an enterprise’s financial
statements for making decisions for the purposes and to understand the
comprehensive health of an organization. The most frequently used tools of
financial analysis are as follows :

Comparative Statements

Common Size Statements

Cash Flow Analysis

Ratio Analysis

Ratio analysis is the process of determining and interpreting the numerical

relationship between figures of the financial statements. Ratio analysis is not only
useful to internal parties of business concern but also useful to external parties.
Ratio analysis highlights the liquidity, solvency, profitability and capital gearing. It
is a study of relationship among various financial factors in a business.
Accounting ratio is an arithmetical relationship between two accounting variables. 
It is the comparison of two or more financial data which are used for analyzing the
financial statements of companies. It is an effective tool used by shareholders,
creditors and all kinds of stakeholders to understand the profitability, strength and
financial status of companies.  This is also widely known as financial ratio based
on which business performance can be monitored and important business decisions
are made.

Need of the Study

 The project study is undertaken to know the financial position of a firm

for different purposes.

 To know standardized financial information for comparison.

 To evaluate current operation of Hindustan shipyard limited.

 To compare current performance with past performance.

 The study helps to know a liquidity, profitability, turnover and solvency

position of the company.

 To analyse the long term solvency position.

  It signifies whether the financial position the concern is vital, strong, and
poor or weak. Ratio facilities the work of ganging the profitability,
solvency and activity of the concern.

Scope of the Study

 The scope of the study is limited to collecting financial data published in

the annual reports of the company every year. The analysis is done to
suggest the possible solutions. The study is carried out for 5 years (2017-
21).
 The study include the ability of the firm to meet its current obligations.
 The extent to which the firm has used its long-term solvency by borrowing
funds.
 The efficiency with which the firm is utilizing its assets in generating the
sales revenue.
 The overall operating efficiency and performance of firm.

Ratio analysis is a powerful tool of financial analysis. It is a process of identifying

the financial strengths and weakness of the firm by properly establishing the
relationship between the different items of balance sheet and profit and loss
account for a meaningful understanding of the financial position and performance
of the firm.
 Objective of the study

 To study and analyze the financial position of the Company through ratio
analysis.

 To analyze the profitability position of the “Hindustan shipyard limited”.

 To determine the long term solvency position of “Hindustan shipyard

limited”.

 To suggest the feasible solution to improve the overall efficiency of the”

Hindustan shipyard limited”.

 To know about the nature and scope of the Financial Management in a

public sector like “Hindustan Shipyard Limited”

 To study about ship building industry in India and profile of HSL.

  To indicate the direction of change and identify whether the firm’s financial
performance has improved or deteriorated and remained constant over time.

This study is to determine the efficiency and effectiveness of the management in

each segment of the financial activities.

Methodology of the study

Methodology is an intensive and purposeful search for knowledge and for the
understanding of social and physical phenomena. It is the method for the discovery
of true values in a scientific way. There are two sources of data,

1.       Primary sources and

2.       Secondary sources

Primary Data

Primary data is the data that is collected for the first time through personal
experiences or evidence, particularly for research. It is also described as raw data
or first-hand information. The data is mostly collected through observations,
physical testing, mailed questionnaires, surveys, personal interviews, case studies,
and focus groups, etc.

The data collection includes:

Conducting personnel interviews with the concerned officer of finance department

of  Hindustan Shipyard Limited.

Secondary Data
Secondary data is a second-hand data that is already collected and recorded
by some researchers for their purpose, and not for the current research problem. It
is accessible in the form of data collected from different sources such as
government publications, censuses, internal records of the organisation, books,
journal articles, website and reports, etc.

The data collection includes:

  Collection of required data from annual reports of Hindustan Shipyard limited.

References from text books and journals relating to financial management.

The information so collected from both sources will be subjected to statistical

treatment to make the study a useful one. Application of statistical techniques helps
to draw useful conclusions

Limitations of the study 

1. Lack of time is another limiting factor, i.e., the schedule period of 4 weeks are
not sufficient to make the study independently regarding capital budgeting in
HINDUSTAN SHIPYARD LIMITED.

2. The busy schedule of the officials in HINDUSTAN SHIPYARD LIMITED is

another limiting factor. Due to the busy schedule officials restricted me to collect
the complete information about the organization.

3. Non-availability of confidential financial data.

4. The study is conducted in a short period, which was not detailed in all aspects.

5. During the period of analysis the company’s current financial informaion is not
available.

6. Reliability on usage of secondary data.

7. The calculated data can be compared with other shipping companies but it was
not available.

 
 CHAPTER – II
INDUSTRY PROFILE
The shipbuilding industry deals with the production of larger (mainly seagoing)
vessels intended for the merchant fleet (cargo or passenger transport), the off-shore
energy industry or military purposes. It also includes products and services
supplied for the building, conversion, and maintenance of these ships. 

The shipbuilding industry is a dynamic and competitive sector. It is important from

both an economic and social perspective. It is also linked to other sectors including
transport, security, energy, research, and the environment.Shipbuilding is an
important and strategic industry. Shipyards contribute significantly to regional
industrial infrastructure and national security interests (military shipbuilding).

India has 28 Shipyards, six are public sector undertakings (PSUs), two are owned
by state government and remaining 20 are in private sector. The Indian shipping
industry plays an important role in the Indian economy as almost 90% of the
country’s international trade is conducted by the sea. Today, India has around 1071
ships with 722 coastal and 349 overseas ships; Indian coastal shipping is highly
fragmented.

The first ship building factory of India was established at Vishakhapatnam in 1941.

It was later, adopted by the Indian Government in 1952 and was named as
‘Hindustan Shipyard Limited’.

Kolkata, Goa, Mumbai and Kochi are the major ship building centres.
The Kochi Dockyard, developed in collaboration with Japan, which is the largest
and most recent Dockyard of the country, whereas the Mazagaon Dockyard
(Mumbai) builds the naval ships for the Indian Navy.

India is one of the main maritime nations of the world with 6.8 million Gross
Registered Tonnages (GRT), with rating 17th in the world.

The Shipping Corporation of India Ltd. (SCI) was formed in 1961 and in 1992;

it was changed from a Private Limited Company to Public Limited Company. On
August, 2009, it conferred as ‘Navratna’ status.

Indian Maritime University (IMU) was set up in 2008 in Chennai with campuses

at Chennai, Kolkata and Vishakhapatnam as a Central University.

INDIA’S SHIP-REPAIRING INDUSTRY

Indian ship repairing industry comprises of about 7 ship repair units (SRU's),
specifically Alcock Ashdown & Co. Limited, Chennai Port Trust, Mumbai Port
Trust, Hindustan Shipyard Limited (HSL), Cochin Shipyards Limited (CSL),
Garden Reach Shipbuilders (GRSE) and Mazagon Dock Limited(MDL) who have
been approved as the permanent SRU’s

MAJOR SHIPBUILDERS IN INDIA

Key Government Entities in the Indian Shipbuilding Industry :

Company Name Activities Location Revenue in

India(crore)
Cochin Shipyard Shipbuilding and South India, Kerala 3669.99
Ship repair
Hindustan Shipbuilding and South India, Andhra 546.48
Shipyard Ship repair Pradesh

Mazagon Docks Shipbuilding West India, 5289.53

Maharashtra
 Goa Shipyard Shipbuilding and West India, 978.76
Ship repair and Maharashtra
engineering
Garden Reach Shipbuilding and East India, West 1658.79
Shipyard Ship repair Bengal

Hooghly Dock Shipbuilding and East India, 10

Ship repair West Bengal

MAIN SEGMENTS IN THE INDAIN SHIPBUILDING INDUSTRY

Shipbuilding Industry is divided into the following :-
1) New shipbuilding yards.
2) New shipbuilding yards are mainly active in building commercial and
defence vessels.
3) Commercial vessels are primarily built for European owners, and defence
vessels are for the Indian Navy.
4) Shipyard mainly build vessels for European owners
5) Major yards are AGB Shipyard , Bharati shipyard, L&T Shipyard , Cochin
Shipyard etc.

Key Private Entities in Indian Shipbuilding Industry

 Company Name Activities Location Revenue in India

ABG Shipyard Shipbuilding and West India,  $2.42 million

Repair Maharashtra
Bharati Shipyard Shipbuilding and West India, $180 million
Repair Maharashtra
Pipavav Shipyard Ship Repair West India, $190 million
Maharashtra
Chowgule Shipyard Shipbuilding and West India, $110 million
Repair Maharashtra
L&T Shipyard Shipbuilding and South India, Tamil $20 billion
Repair Nadu

MAIN CENTRES OF SHIP BUILDING INDUSTRY IN INDIA

The four major ship centres in India are located at
I . Visakhapatnam
II. Kolkata
III. Kochi and
IV. Mumbai

India ranks second among the Asian Countries next only to Japan in terms of
shipping tonnage. However, her shipping fleet is much too small for her
dimensions.

MAJOR SHIPYARDS IN INDIA

COCHIN SHIPYARD

Cochin Shipyard was incorporated in 1972 as a Government of India company,

with the first phase of facilities coming online in 1982. The company
has Miniratna status. The yard has facilities to build vessels up to 1.1 lakh tons and
repair vessels up to 1.25 lakh tons, the largest such facilities India. In August 2012,
Government of India announced plans of divestment to raise capital of Rs.
15 billion for further expansion through an Initial public offering (IPO) towards the
end of the fiscal year. However, this did not materialise until August 2017, when
the company conducted its IPO and listed its shares on BSE and NSE. Cochin is
one of the largest shipyards in India , and is the only yard capable of building ships
up to about 1,25,000 dwt. It was established in 1972 under technical collaboration
with Mitsubishi heavy industries of Japan. The yards have the distinction of having
the international standers organization (ISO) 9001 Certification for ship building,
ship repair and marine engineering training.

HINDUSTAN SHIPYARD
Founded as the Scindia Shipyard, it was built by Walchand Hirachand as a part
The Scindia Steam Navigation Company Ltd. Walchand selected Visakhapatnamas
a suitable location for the construction of the yard and took possession of the land
in November 1940. The foundation stone for the shipyard was laid by Dr. Rajendra
Prasad on 21 June 1941, who was at that time the Congress President.
The first ship to be constructed fully in India after independence was built at the
Scindia Shipyard and named Jal Usha. It was launched in 1948 by Jawaharlal
Nehru a ceremony.
The main features of the yard are :-
a. Three slip ways of 30,000 DWT capacity, each building dock of 80,000
DWT capacity.
b. Outfit jetty and ship Quay of 457 meters length.
c. A two –berth wet basin.

CENTRAL ISLAND (RAJA BEGAN) DOCK YARD

The central island (Raja Began) Dock yard is the Calcutta dock system. The
facility has three dry docks for construction and repair of small and medium-size
vessels. The operation has integrated facilities for hull fabrications, casting
operations, machine repair and outfitting of machinery and equipment. The yard
was established in 1972. In 2000 the net income, which was largely from ship
repair , was Rs 39 cores (us 8.3 Million) It has been recommended that the
operation be privatized as quickly as possible there being no strategic or
commercial rational for public ownership.
MAZAGON DOCKS LIMITED

Mazagon Dock Shipbuilders Limited (MDL) , formerly called Mazagon Dock ,is a

Shipyard in Mazagaon, Mumbai. It manufactures warships and submarines for the
Indian Navy and offshore platform associated support vessels for offshore oil
drilling. It also builds tankers, cargo bulk carriers, passenger ships and ferries. The
shipyards of MDL were established in the 18th century. Ownership of the yards
passed through entities including the Peninsular and Oriental Steam Navigation
Company and the British-India Steam Navigation Company. Eventually, 'Mazagon
Dock Limited' was registered as a public company in 1934. The shipyard was
nationalised in 1960 and is now a Public Sector Undertaking of the Government of
India.

ABG SHIPYARD GROUP

ABG Shipyard Ltd is a part of the ABG Group of companies with diversified
business interests. Established in 1985, it is headquartered in Mumbai. It has
shipbuilding operations in Surat and Dahej in Gujarat. Following its acquisition
of Western India Shipyard Limited in October 2010, it operates a ship repair unit
in Goa which is the largest ship maintenance facility in India.
ABG became one of the largest private ship building companies in India with a
capacity to manufacture vessels up to 20 tonnes in weight.

BHARATHI SHIPYARD LIMITED

Bharati Shipyard Limited (BSL) was founded in 1973 in Ratnagiri, Maharashtra by
Prakash C. Kapoor and Vijay Kumar, graduates of the Ocean Engineering & Naval
Architecture program at Indian Institute of Technology, Kharagpur, as well as
colleagues at Mazagon Dock Limited. The company went public in December
2004, with listings on the Bombay Stock Exchange and the National Stock
Exchange.
In 2005, BSL subsequently acquired a 51% stake in privately held Pinky Shipyard
Private Limited based in Goa. In 2009, BSL won majority control of Great
Offshore Limited in a bidding war with ABG Shipyard Limited. In November
2010, BSL acquired a majority stake in South India based Tebma Shipyards for
INR 757.5 Million. Bharati Shipyard is one of the two leading shipyards in the
private sector. It is engaged in the design and construction of sea and coastal craft
up to a maximum of approximately 25 meters in length.
HOOGHLY DOCK AND PORT ENGINEERS
Hooghly Dock & Port Engineers Limited (HDPEL) is a shipyard at Howrah, India.
Originally Hooghly Docking & Engineering Company Limited, it was created in
1819. The company has two units located at Salkia and Nazirganj on the bank
of River Hooghly in the city of Howrah (in the State of West Bengal, India). It
manufactures various types of vessels, dredgers, floating dry dock, oil pollution
control vessels, passenger vessels, etc.

GOA SHIPYARD LIMITED

The Goa Shipyard (GSC) was established in 1957 as a small barge – building yard.
Today it is a completed integrated facility and participates in the design ,
development construction and commissioning of a complete range of commercial
and military ships. It is also engaged in repair and modernization. Its workforce is
about 2150 persons, the yard is publicly owned under the administrated control of
Ministry of Defence.

GARDEN REACH SHIPBUILDING AND ENGINEERS

Garden Reach Shipbuilders & Engineers Ltd, abbreviated as GRSE, is one of
India's leading shipyards, located in Kolkata, West Bengal. It builds and
repairs commercial and naval vessels. Presently GRSE has also started building
export ships in a mission to expand its business. Founded in 1884 as a small
privately owned company on the eastern bank of the Hooghly River, it was
renamed as Garden Reach Workshop in 1916. The company was nationalised by
the Government of India in 1960. It was awarded the Miniratna status, with
accompanying financial and operational autonomy in September 2006. It is first
Indian shipyard to build 100 warships.

WORLD SHIPBUILDING INDUSTRY IN THE 21ST CENTURY

South Korea is the World’s largest shipbuilding nation with a global market share
of 37.45% in 2011.South Korea is the global leader in the production of advanced
high-tech vessels such as cruise liners, super tankers . LNG carriers, drill ships, and
large –sized container ships. In the 3rd quarter of 2011, south, South Korea won all
18 orders for LNG carriers, 3 out of 5 drill ships and 5 out of 7 large –sized
container ships.

GLOBAL LEADRERS IN SHIPBUILDING INDUSTRIES

 Hyundai Heavy Industries – South Korea
 Heavy Industry – South Korea
 Bohai Shipbuilding Heavy Industries Co. Ltd- China
 Bolunbao Shipyard –China
 Aclock Ashdown , Bhavnagar –India
 Cochin Shipyard Ltd- India
 Hakodate Dock (Hokodate )- Japan
 Imabari S.B (Saijo) – Japan

WORLD SHIP BUILDING MARKET SHARE BY COUNTRIES

 CHAPTER – III
COMPANY PROFILE
 Hindustan Shipyard Limited

BASIC INFORMATION

Type Public Sector Undertaking

Industry Shipbuilding

Founded 21 June 1941

Headquarters Visakhapatnam, Andhra Pradesh

Key People Commodore Hemant Khatri

 Service Ship Building, Ship repair,
Submarine Construction and Refits

Hindustan Shipyard Ltd., strategically located on the East Coast of the Indian
peninsula, at Visakhapatnam, Andhra Pradesh, is the nation’s premier shipbuilding
organization catering to the needs of shipbuilding, ship repairs, submarine
construction and refits as well as design and construction of sophisticated state-of-
the-art offshore and onshore structures. Considering the strategic requirements, the
yard was brought under the administrative control of the Ministry of Defence on 22
Feb 2010. The Registered Office of the company is located in Visakhapatnam and
has regional office at New Delhi.

MISSION
To continuously innovate and improve upon performance for construction and
repair of ships and submarines within contractual time, cost and quality standard
meeting customer satisfaction.

VISION
To be an internationally competitive shipyard for construction, repair and refitting
of ships & submarines and achieve mini – ratna status.

OBJECTIVE

 To incorporate “best practices” in all key activities of   the yard such as
proud, efficiency, customers, satisfactory, marketing, H.R, purchase and
planning.

 To develop and improve the technological capabilities in the area of the ship
building design and construction and render ship building more viable.

 To undertake retrofitting, refitting of the normal refit, short refit and medium
refit and modernization of special submarines .

 To make collaboration/joint venture arrangement with reputed foreign yards

for securing new orders to achieve ship repairs and retro fitting business.
  To strive to secure off shore platform construction orders and maintenance
activities from ONGC.

HISTORY 
The long journey towards making ships in India started during the pre-independent
years with the founding of the first green-field shipyard in the year 1941 in the
name Scindia Steam Navigation Co. Ltd by the great industrialist and visionary
Seth Walchand Hirachand which is today known as the Hindustan Shipyard Ltd.
 Walchand selected Visakhapatnam as a strategic and ideal location and took
possession of land in November 1940. The World War II was going on and in
April 1941, the Japanese bombed the town. However, Walchand was unfettered
and decided to go ahead with his plan of building a shipbuilding industry in India.
In the days when it was unthinkable of foundation ceremony to be done by anyone
other than British officials, the truly patriotic Walchand decided to break the
tradition and the foundation stone for the shipyard was laid by Dr.Rajendra Prasad
on 21 June 1941, who was acting Congress President at that time. The first ship to
be constructed fully in India after independence was built at the Scindia Shipyard
and named Jal Usha. It was launched in 1948 by Jawaharlal Nehru by the first
Prime Minister of India, at a ceremony where the families of Seth Walchand
Hirachand, late Narottam Morarjee and Tulsidas , the partners of Scindia Shipyard,
were present along with other dignitaries and industrialists. 
Walchand died in 1953, and the Scindia Shipyard continued to flourish
under next of kinds of founders. However, later on the government of India
decided to nationalise the Scindia Shipyard, as it was a sensitive and strategic
related to defence sector of the country. After Independence, two thirds of its
holdings were acquired by Govt. of India in 1952 and Hindustan Shipyard Ltd was
incorporated on 21 Jan 1952. Balance one third share was acquired by GOI in Jul
1961 and the Shipyard became a fully owned Govt. of India undertaking under the
administrative control of Ministry of Shipping.
Considering the strategic requirements of the nation, the yard was brought under
the administrative control of the Ministry of Defence on 22 Feb 2010. The
Registered Office of the company is located in Visakhapatnam and has regional
offices at New Delhi.        
EXISTING INFRASTRUCTURE AND FACILITIES 
Sprawling in an area of 117 acres, the shipyard has an ergonomic layout that
ensures unidirectional material flow. 2000 T / month of steel can be processed in
the yard with a stockyard that can hold 30,000 tonnes of steel, modern plate and
section treatment plant, NC Cutting Machines, heavy duty presses, self-elevating
trucks capable of handling blocks up to 250 tonnes and large prefabrication shops
with EOT cranes of adequate capacity.
The hull construction facilities include a fully-covered Building Dock (240 x 53
M) equipped with cranes of maximum capacity of 300 T and three Slip Ways
capable of launching up to 33000 DWT. Indeed, the first ever 30000 DWT launch
in India was done in 2007 in HSL. The Yard has a long outfitting quay (460 m) of
10M clear depth equipped with self-contained services and facilities.
In addition to the existing facilities, the yard has about 21 Acres of land (OPF
Yard) and 20 Acres of land in the Colony which can be effectively utilised for
augmenting the existing facilities for new construction projects.

SHIP REPAIRS 
 The Dry dock, constructed in the year 1971, is an important adjunct to the
Shipyard for undertaking repairs of ships and oil rigs. With a size of  244 x 38 M,
it is capable of handling vessels up to 70,000 DWT. The Dry Dock, the biggest and
modern dock in the East Coast, with 544 meters of berths with a depth of 10 M,
has accomplished intricate repair jobs on a variety of Naval Ships including
Submarines, Merchant Ships and Oil Rigs. 

SUBMARINE REFIT 
 HSL happens to be the only yard in India to have carried out the refits of three
classes of submarines (refit of two Egyptian submarines in 1971, refit of F-class
(INS Vagli) and EKM class (INS Sindhukirti) submarine. The Medium Repair-
cum-Modernisation of Russian made INS Sindhukirti, was successfully completed
and handed over to the Navy on 26 Jun 2015. This has earned many accolades for
the shipyard. 
 During the refit, nearly 100 Km of cabling and 30 Km of high pressure piping was
renewed, thereby making this the most advanced platform ever to be undertaken in
an Indian yard proving the Yard’s capability to take up orders to construct
generation next Greenfield submarines. Incidentally, this was the only instance
where retrofitting of missile system in an existing submarine was undertaken in the
country. The submarine achieved RPM of 350 during its very first sea sortie for
Full Power Trials, thus certifying the quality of work by the yard.
 Considering the expertise gained in MR of INS Sindhukirti, HSL has been
awarded for Normal Refit of INS Sindhuvir, a Kilo class submarine of the Indian
Navy at a cost of Rs 500 Cr. For this project, HSL has signed a contract with SC
Zvyozdochka shipyard, Russia on 28 Mar 17 for technical support during NR of
INS Sindhuvir at HSL. The yard has successfully undertaken the refit of an IN
Submarine with extensive work package. Post completion of entire work package,
and the mandatory trials the submarine was delivered to Indian Navy nine days
ahead of contractual delivery time.
DESIGN RESOURCES
 HSL has a well-equipped Design & Drawing Office, which in the past has
developed in-house design for a number of vessels. HSL’s design department has
been recognized as in-house R&D unit by Department of Scientific & Industrial
Research (DSIR), Ministry of Science & Technology. 
 HSL's design capability embraces wide spectrum of general and special purpose
vessels. In anticipation of the requirement of state-of-the-art resources for taking
on the complex design support for the assured orders for SOVs and FSS, design
office has been upgraded in the recent past with sufficient number of licenses for
Aveva Marine as well as for Auto CAD Mechanical under modernisation program.
With these tools, the design office has mastered the art of producing composite
drawings which would enable adoption of integrated modular construction
methodology with a high level of pre-outfitting of blocks-modules.

TECHNOLOGY UP-GRADATION 
HSL is also venturing into the latest technological upgradations available in the
market, aiming for a seamless process flow of information and to bring in best
practices adopted in other Indian and foreign shipyards. HSL has partnered with
M/s Tech Mahindra Ltd as System Integrator (SI) to implement SAP ERP and
integrate with PLM design software products. This would be first time in any
Indian Shipyard that PLM Design software would be integrated with any ERP
software. In fact not many shipyards in the world have this feature included in the
ERP. The system is now implemented.

SOLAR POWER SYSTEM

 Achieving 100 GW solar power is part of India’s commitment before the United
Nations Framework Convention on Climate Change (UNFCCC). Accordingly, the
Government has set a target for installation of 40 GW power grid connected solar
rooftop systems in the country by 2022. To fulfil the commitment of Government
of India, Hindustan Shipyard Ltd has taken a step by installing 2 MWp rooftop
solar plant. The solar power plant was inaugurated by Shri Pravin Kumar, IAS,
Collector & District Magistrate, Shri Mahesh Chandra Laddha, IPS, Commissioner
of Police, Shri M Hari Narayanan, IAS, Commissioner, GVMC in the presence of
Shri S K Mishra, Director, SECI, Shri UmaKantShende, COO, CleanMax Solar
and Media personnel.

 The entire project including design, supply, erection, testing, commissioning

including warranty, operation & maintenance is being undertaken by M/s Clean
Max without any operation and capital expenditure from the yard side. HSL is
required to buy the generated power from M/s Clean Max at a cost of Rs
3.939/kWh as against Rs 5.60/kWh grid power of APEPDCL. The solar plant, now
the largest rooftop solar plant in Andhra Pradesh, will help the shipyard to save Rs
48 lakh per annum in energy costs, while also reducing its environmental footprint.
This rooftop solar plant will meet about 35% of Shipyard’s total power
consumption, with 28 lakh units of clean solar energy being generated annually by
the plant. Hindustan Shipyard Ltd, built in 1941 as India’s first Greenfield defence
shipyard, is an early adopter of rooftop solar, moving towards a sustainable future.

Seven buildings in the Hindustan Shipyard Limited premises have been equipped
with solar panels, including the iconic blue sheds where naval ships & submarines
are built and repaired. Overall the panels will result in the abatement of 2300 tons
of C02 per annum, for the next 25 years. This abatement is equivalent to planting
58,000 full grown trees. While there is no investment on the part of HSL, as per the
agreement arrived at with Clean Max, the yard has to buy power from it for 25
years. The project was executed under the Solar Energy Corporation of India
(SECI) Rooftop Solar Scheme. 

MORALE, MOTIVATION & TEAM WORK 

There is no discrimination in HSL with regard to caste, creed, minority status,
gender, religion etc., and the efforts are synergized with unanimity and team work
towards improvement of productivity and operational efficiency. This has resulted
in improving Rank, Revenue and Reputation of the Shipyard.  HSL prioritizes its
efforts and, endeavours to comply with all Govt. stipulations, with regard to
reservation of posts for SC/ST/OBC and as on now the compliance is more than
the Govt. norms. 

PRODUCT PROFILE 
The product profile include cargo liners, bulk carriers, passenger vessels, offshore
platform vessels, inshore platform vessels, survey vessel, mooring Vessel, HSD
oiler, landing ship tanks, training Ship, tugs, supply vessels, drill ship, dredgers, oil
recovery and pollution control vessel, research vessel, floating cranes, barges etc.
for varied number of customers like Indian Navy, Indian Coast Guard, ONGC,
GML, Port trusts, DCI, SCI, Andaman & Nicobar administration etc. 
 

QUALITY AND CERTIFICATION 

HSL is the first yard in the country to obtain ISO 9001-2000 accreditation. The
yard is ISO 9001 - 2015 certified from IRQS for undertaking “Design and
Construction of all categories of Defence Ships/ Crafts/Boats, Commercial Vessels
up to 80,000 DWT and Repairs of all categories of Ships/ Crafts/ Boats/ Rigs and
allied services”. 
The Quality Division of HSL has developed comprehensive ‘Quality Management
System’ which ensured successful completion of the MR of INS Sindhuvir
conforming to stringent quality norms stipulated in Russian Repair Documents.
SKILL DEVELOPMENT 
The yard’s initiatives in the field of skill development include training of Trade,
diploma & degree apprentices as well as vocational trainees. 23 engineering
graduates and 14 Diploma qualified were trained in their respective streams during
the year 2019-20. ‘On job training’ and project work was also extended to 699
students of various engineering colleges, management institutions and marine
institutes. The company also provided training to its workmen such as fitters,
welders, painters, electricians by using in-house faculties.
 
SUPPORT TO ANCILLARY INDUSTRIES  
In many respects, HSL has been the Mother Yard by providing the lead in
shipbuilding, Ship Repairs including off-Shore/ on-Shore platforms and rigs and in
Submarine Repairs. HSL has also been a Mother yard for training large number of
young engineers and workers. HSL has thus achieved many significant milestones
earning a name for itself as a ship builder of repute in India and abroad.  
Apart from providing a good many jobs to locals, the Shipyard has been
instrumental in the rise of a large number of ancillary industries and steel
fabrication yards in and around the city and reaching as far as Vizianagaram and
Kakinada.
 
CORPORATE SOCIAL RESPONSIBILITY
The yard is committed to CSR activities. The Yard has identified some of the need-
based CSR initiatives for the betterment of the local people with limited financial
commitment. Activities like Swachh Bharat Campaign, blood donation Camp, free
medical camp and participation in International coastal clean-up day have been
undertaken. HSL also supports seven educational institutions set up in the colony.
As a part of Community based project, the yard has provided a spacious area with
amenities, which gives a platform to small farmers, fishermen, traders to market
their products besides making available fresh market produce and essentials at
economical price for employees and resident of neighbouring colonies/ townships

HSL’s CONTRIBUTION IN FIGHT AGAINST COVID-19 PANDEMIC

The second wave of the COVID-19 has hit the country and the entire country is
battling against this deadly virus. In view of the surge in COVID Cases, the entire
country is united to strengthen its health infrastructure on a war footing to battle
against this pandemic. Hindustan Shipyard Ltd (HSL), located in Visakhapatnam,
has also been actively doing its bit towards India’s anti-COVID-19 efforts. In this
regard, HSL has contributed Rs10 Lakhs from its CSR funds to DRDO (the apex
defence research organization of the country) for setting up a dedicated 500 bed
COVID hospital at Lucknow, Uttar Pradesh. Under its CSR initiatives, HSL is also
supplying oxygen filled cylinders to the designated COVID hospitals referred by
District Administration. The first lot of 50 cylinders has been supplied to
Siddhartha Hospital which is declared as a Covid-19 Hospital by Visakhapatnam
District Administration.
 
SWATCH BHARAT CAMPAIGN
The Company fully adheres to the Hon’ble Prime Minister’s Nationwide Swachh
Bharat Campaign with the awareness and participation by all employees and
residents of nearby area with an aim to make it a mass awareness movement and
bring about a lasting change in the mindset. A voluntary program was initiated
which invites every employee to spend at least 02 hours a week towards
cleanliness of their surroundings.
Under “Swathta hi seva” program, various cleanliness drives were organised to
sensitise employees, residents of township and people residing in surrounding
areas. Swatchata Pakhwada was conducted thrice during the year. Various rallies,
march past and mini marathons were also conducted to spread the message for a
clean and green life.

SWOT ANALYSIS OF HSL

In the changing environment your company has identified following strengths ,
weakness, opportunities and threats:-
Strengths
a) Largest shipyard on East coast of India.
b) Only shipyard on East coast with Submarine repair capability .
c) Large covered building dock for un-interrupted work.
d) Strategically located with water depth of about 10 meters.
e) Capable to build all kinds of vessels up to 80,000 DWT.
f) 850m of wharf age with more than adequate carnage.
g) Large Dry dock and wet basin with exclusive workshops for ships repairs.
h) Carnage to handle blocks/loads up to 300 tons.
i) Three low bed transport up to 200 tons capacity.
j) Good quality assurance system of test facility.
Weakness
a) Aged work force with low productivity.
b) Old plant machinery with frequent breakdowns.
c) Acute cash/ working capital constraints.
d) Difficulty to retain good contractors & vendors view irregular payments.
e) Weak supply chain management
f) Lack of high value orders.

Opportunities
a) Increased requirements of ships to meet coastal security/defence needs.
b) Large scope for repairs due to increased maritime / offshore fleet and
platform.
c) National need to create second line submarine Construction.
d) Navy’s requirements for Strategic Vessels to meet Defence needs.
e) Need for large special ships to collect Intelligence Information.
f) Medium Repair/Mid Life update of Submarines.

Threats
a) Loss of expertise due superannuation.
b) Poaching by sister PSUs & upcoming yards..
c) Loss of business due new yards on East Coast.
d) Uneven playing filed compared to private yards.
e) Volatile Exchange Rate Variation.
f) Unfavourable judgments for legal cases.
g) Non- payment of statutory dues to employees leading to legal tangles.
h) Changing International Maritime Laws.

DEPARTMENTS IN HSL

The departments can be mainly categorized as follows:

I. Production Department.
II. Administration Department.
III. Service department.

I. PRODUCTION DEPARTMENT

The production department mainly consists of the following sections:

1. Hull shop

It deals with material preparation like plates used for the construction
of ship.
2. Pre-fabrication shop

It deals with ship parts like the funnel, wheel house & engine roots.

1. Erection department

Assembling the ship parts to bring the complete shape.

1. Welding department

It deals with attaching the parts to make complete ship work.

1. Black smith department

It deals with railing, leader & flooring works.

1. Steel metal department

It deals with air conditioned works.

1. Rigging department

Holding the ship with repairs.

1. Painting department
 Painting the ship with required colors. 
 

1. Plumbing department

Plumbing works to trappers.

2. Engineering department

Facilitating and assembling the main machine. 

I. ADMINSTRATION DEPARTMENT

The administrative department consists of the following sections:

o Accounts Department.
o Personal Department.
o Internal Audit Department.
o General Department

A. Accounts Department

The following are the sections in accounts:

a. Cost Accounts
b. Bills and Insurance
c. Provident Fund
d. Salaries section

Cost accounts deals with compilation of the final accounts, budgets, and cost report
to ministry direct & indirect taxation that is central excise, income tax and sales
tax.
Bills & Insurance deals with payment of bills that is passing of bills & insurance of
materials etc. pay account section deals with the payment of wages, salaries,
provident fund & gratuity & V.R & up to 5000 only the provident fund is allowed
and the remaining goes to Hindustan Shipyard Ltd Provident Fund Trust. 
 
 

 B. Personal Department

The following are the sections in personal department:

a. Staff Cell.
b. Workmen Cell.
c. Executive Cell.

Staff cell deals with the staff of 958 members and workmen 2694 and officers on
executive of 386 totally strength of HSL comes to 3589.

Acts which are present in HSL are:

Promotion, leave management, medical re-imbursements, canteen management

facilities, general administration shifts, time keeping etc…..

A. Internal Audit Department

The department checks the values of inventories and bills. Different branches of
accounts are awaited annually.

A. General Department

This is responsible for procurement of the stationary and functional goods other
identical items. 
 

III SERVICE DEPARTMENT

 The Service Department consists of the following sections:

 Design office.
 Production, Planning Departments.
 Quality Control Department.
 Purchase Department.
 General Stores.
 Bond Stores.
 Clearance Department.
 Maintenance Department.
 Civil Engineering Department.
 Medical & Health Department.
 Transport Department.
 Security Department.

 “Design Office” deals with ship design and off-fit design etc. Design office is also
called Drawing Office.

“Production, Planning Department” deals with the way how to execute the work
and they design the flow charts of the works.

“Quality Control Department” deals with the certification of IRS, LRS works
relating to the ISD certification and stores is also done by this section.

“Purchase Department” deals with purchase of all types or materials.

“General Stores” are those stores which will be coming to this store after the
inspection of material and this maintain like material receipts reports material
requisition and bin cards etc.,

“Clearance Department” deals with receipts to imported goods for clearance.

“Maintenance Department” deals with maintenance of machinery.

“Civil Engineering Department” deals with the construction of civil works and
maintenance of colony housing estate.

“Medical and Health Department” deals with aspects like giving medicines to
the sick employees and family etc.,
“Security Department” deals only the Hindustan Shipyard Ltd security with
supervisory to safeguard the organization. 

BOARD OF DIRECTOR

 Cmde. Hemant Khatri, Chairman & Managing Director.

 Cdr. Jagdish Pratap Gupta, Director ( Corporate planning & Personnel)
 S V Rambabu, Director ( Finance & Commercial)
 Cmde. Kunjumon E Mathew, Director (Shipbuilding)
 Shri V P Shreepadmanabhan, Director
 Dr. N Rajalakshmi, Director
 Shri. Devi Prasad Shetty, Director
 Shri Shrish Kumar
 CHAPTER 4
THEORETICAL FRAME WORK OF THE RATIO
ANALYSIS
A THEORY ON FINANCIAL ANALYSIS

 
 Diverse group of people are interested in information found in financial
statements. These groups study the statements carefully analyse and interpret the
information that related to their particular interest. Investor to assess what the
future holds for the company creditors analyse the financial statements with an eye
to risk and returns estimation.
Management analyses the information to determine how efficiency firms use its
assets and how it finances its assets. Thus, the type of analysis varies according to
specific needs of the analyst.
Ratio analysis is one of the very effective tool financial Analysis the use of
accounting ratios enable conclusion to be drawn relating to the information that
concern the analyst. To evaluate the financial condition and performance of a firm,
the financial analyst needs certain yardstick. According to the ratio are frequently
used yardstick for this purpose.
Ratio is an expression of the quantitative relationship that exists between the two
numbers. The ratio should be determined between related accounting variable to be
meaningful and effectives.

Ratio can be in any of the following forms

Ratios are expressed in following four ways:
 Pure Ratio Like 2:1. All liquidity and solvency ratios are expressed in pure
form.
 Percentage e.g. 15%. All profitability ratios are presented in percentage
form.
  Times Like 4 times. All turnover ratios and Interest Coverage Ratio are
presented in this form.

Comparison can be with

 Past ratio of same enterprise. This shows a trend.
 Ratio of the other companies in the same industry. This comparison
gives insight into the relative financial health and performance of the
firm.
 Comparison with three determined standards ratio which may be
company standard or industry or accepted general standard.

RATIO ANALYSIS

Ratio Analysis is a process of determining and interpreting relationships between

the items of financial statements. Its purpose is to provide a meaningful
understanding of the performance and financial position of an enterprise. Thus, it is
a technique for analyzing the financial statements by computing ratios.

Ratio can be defined as “Ratio analysis is a study of relationship among various

financial factors in a business.”

OBJECTIVES OF RATIO ANALYSIS

Ratio analysis serves the purpose of various users who are interested in the
financial statements. It simplifies summaries and systematizes the figures in the
financial statements.

Objectives of Ratio Analysis are:

1. Simplify accounting information.
2. Determine liquidity or Short-term solvency and Long-term solvency.
Short-term solvency is the ability of the enterprise to meet its short-term
 financial obligations. Whereas, Long-term solvency is the ability of the
enterprise to pay its long-term liabilities of the business.
3. Assess the operating efficiency of the business.
4. Analyse the profitability of the business.
5. Help in comparative analysis, i.e. inter-firm and intra-firm comparisons.

ADVANTAGES OF RATIO ANALYSIS

Ratio analysis plays an important role in analyzing a company’s financial

performance. Therefore, the advantages of ratio analysis are:

1 USEFUL TOOL FOR ANALYSIS OF FINANCIAL STATEMENTS

Accounting ratios are useful for understanding the financial position of an

enterprise. Bankers, investors, creditors, etc. all can analyze the Balance Sheet and
Statement of Profit and Loss using ratios.

2 SIMPLIFIES ACCOUNTING DATA

Accounting ratios simplify summaries and systematize accounting data to make
it understandable. Its main contribution lies in communicating precisely the
interrelationships which exists between various elements of financial statements. In
other words, these ratios are useful because they summarize briefly the results of a
complicated computation.

3 HELPFUL IN ASSESSING THE OPERATING EFFICIENCY OF

BUSINESS
Accounting ratios are useful for assessing the financial health and performance of
the company. It is assessed by evaluating liquidity, solvency, profitability, etc.

4 USEFUL FOR FORECASTING

Ratios are helpful in business planning and future forecasting. The trend of ratios
can be analyzed and use as a guide for the future. We can decide about what should
be the course of action in the immediate future. Also, many times on the basis of the
trend of ratios, we can calculate ratios for the number of years.

5 USEFUL IN INTER-FIRM AND INTRA-FIRM COMPARISON

A firm may compare its performance with the other firms or with the industry
standards in general. The comparison is called inter-firm comparison .If we
compare the performance of different units which belongs to the same firms then it
is known as “intra-firm comparison”. Accounting ratios help in making the
comparison simple.

LIMITATIONS OF RATIO ANALYSIS

The ratio analysis is a powerful tool of financial management if suffers from

serious limitations as follows.

1. It communicates only a relative picture every organization in one way or the

other in unique and comparison may not be valid.

2. Ratio are only a tool. Their ultimate use depends on the craftsman who use it.
The back group and understanding. For this reason, it is said that they are not
an end in themselves. Rather they are means to an end. They only pass gilding
signal.

3. Inflation distorts financial ratio: analysis, changes in the reported

performance of a company may be entirely the due to management. For this
reason company may have to use replacement cost method or other suitable
device used to differentiate the impact of inflation.

4. Limited use of a single ratio: Single ratio fails to convey the desired results
in most cases, to make better interpretation a number of ratio have to be
calculated within likely to confuse the analyst that help him in making
meaningful conclusion.
5. Lake of adequate standards: There are no clear cut standards for all ratios
which can be accepted as norms.

6. Limitation of accounting: Like the financial statements, ratio also suffer

from the inherent weakness of accounting records such as their historical
nature. Ratio of the past are not necessarily true indicators of the future.

7. Changing in accounting procedures: Change in accounting procedure often

makes ratio analysis misleading.

8. Personal bias: Ratio are only means of financial analysis and is not an end in
itself. Different persons may interpret the same ratio in different ways.

9. Window dressing: Financial statement can be easily window dressed to

prevent a better picture of its financial and profitability position to outsiders.
So, there should be very careful in making a decision from ratio calculated
from financial statement.

10. Incomparable: the firms differ in their nature, size and procedure it makes
comparison of ratio difficult and misleading moreover, a comparison is very
difficult due.

11. Differences in definition of various financial terms used in the ratio analysis.

12. Absolute figure distortive: Ratio of absolute figures may prove distortive as
ratio analysis is primarily a quantitative analysis and not a qualitative
analysis.

13 Change in price level: as no consideration is given to change in price level,

the interpretation of ratio because invalid in most cases.

IMPORTANCE OF RATIO ANALYSIS

Ratio analysis is a widely used tool of financial analysis. The significance of ratio
analysis lies in the fact that it represents facts on a comparative basis & enables the
drawing of the firm. Ratio analysis is relevant in assessing the performance to the
firm in respect of the following aspects.

Liquidity position
With the help of ratio analysis conclusion can be drawn regarding the liquidity
position of a firm. The liquidity position of a firm would be satisfactory if it is able
to meet its short term liabilities if it has sufficient liquidity funds to pay the interest
on its short term measuring debt usually within a as well as the principle. The
ability is reflected in the liquidity ratios of a firm.

Long Term Solvency

Ratio Analysis is equally useful for assessing the long term financial viability of
the firm. This aspect of the financial position of the borrower is of the long term
creditor, security analysis and present and potential owners of a business. The long
term solvency is measured by the leverage or capital structure and profitability
ratios which forces on earning power and operating efficiency forces on earning
power and operating efficiency.

Operating Efficiency

Yet another demission of the usefulness the ratio analysis, relevant from the view
point of management that it throws light on the degree of efficiency in the mgmt
and utilization on its assets.

Overall Profitability

Unlike, the outside parties which are interested in one aspect, of the financial
position of a firm, the management are constantly concerned above the overall
profitability of the enterprises.

That is possible it an integrated view is taker and the ratio are considered together.

Inter firm Comparison:-

A single figure of particular ratio is unless it is related to some standard or norm.
One of the popular techniques is to compares the ratio with the industry average an
inter firm comparison would demonstrate the relative position to its competitors;
the firm can seek to identify the probable reason and in that light, take remedial
measures.

Ratio can be successful employed to analysis and compare the working result of an
enterprise for a year with that of another popular term as inter firm comparison. It
can be done simultaneously also it may lead the concern to determination of the
following

 Suitable production policy

 Suitable method of trading
 Appropriate method of trading
 Suitable attitude towards social obligations.

Tools of Analysis of Financial Statements :

The most frequently used tools of financial analysis are as follows :

 Comparative Statements: 

These are the statements depicting the financial position and profitability of
an enterprise for the distinct timeframe in a comparative form to give a
notion about the position of 2 or more periods. It usually applies to the 2
important financial statements, namely, statement of profit and loss and
balance sheet outlined in a comparative form. Comparative figures signify
the direction and trend of financial position and operating outcomes. This
type of analysis is also referred to as ‘horizontal analysis’.

 Common Size Statements: 

Common size statements are the statements which signify the association of
distinct items of a financial statement with a generally known item by
depicting each item as a % of that common item. Such statements allow an
 analyst to compare the financing and operating attributes of 2 enterprises of
distinct sizes in a similar industry. This analysis is also referred to as
‘Vertical analysis’.

 Cash Flow Analysis: 

It refers to the analysis of the actual movement of cash into and out of an
establishment. The flow of cash into the trading concern is called cash
inflow or positive cash flow and the flow of cash out of the enterprise is
known as negative cash flow or cash outflow. The difference between the
outflow and inflow of cash is the net cash flow. Hence, it compiles the
reasons for the changes in the cash position of a trading concern between
dates of 2 balance sheets.

 Ratio Analysis: 

It characterizes the vital association which exists between several items of a

B/S (balance sheet) and a statement of P&L of an enterprise. As a method of
financial analysis, accounting ratios compute the comparative importance of
the single items of the position and income statements. It is feasible to
evaluate the solvency, efficiency, and profitability of an enterprise via the
method of ratio analysis

TYPES OF RATIO

Ratios can be classified into following 4 categories:

1. Liquidity Ratios

2. Solvency Ratios

3. Activity Ratios also known as turnover Ratios or Performance Ratios.

4. Profitability Ratios

Liquidity Ratios:

These measure short term solvency, i.e. the firm’s ability to pay its current dues. In
Liquidity Rations the following two ratios are included.
1. Current Ratio also called Working Capital Ratio.

2. Liquid Ratio also called Quick Ratio or Acid Test Ratio.

1. Current Ratio : It shows the relationship of current assets with current

liabilities

Current Ratio =   

2. Quick Ratio : It shows the relationship of quick assets with current liabilities.

Current Ratio = 

Solvency Ratio :

Solvency ratios convey an enterprise’s ability to meet its long term obligations as
and when they becomes due.

1. Debt Equity Ratio

2. Total Assets to Debt Ratio

3. Proprietary Ratio

4. Interest Coverage Ratio

1. Debt Equity Ratio: It show relationship between Debts (Long term Liabilities
or Non Current Liabilities) and Equity (Shareholders’ Funds).

Debt Equity Ratio = 

2. Total Assets to Debt Ratio : It shows the relationship between Total Assets and
Debts.

Total Assets To Debt Ratio = 

3. Proprietary Ratio: It shows the relationship between Proprietors’
Funds/shareholders’ Funds and Total Assets of the business.

Proprietary Ratio =  

4.Interest Coverage Ratio : This ratio establishes relationship between the Net
Profit before Interest & Tax and interest payable on long term debts (Fixed Interest
Charges)

Interest Coverage Ratio = 

Activity Ratios/Turnover Ration/Performance Ratios

These ratios measure the efficiency of asset management and measure the
effectiveness with which an enterprise uses resources at its disposal. These show
rotation of concerned item within an accounting period. Important Turnover ratios
are :

1. Stock Turnover Ratio/Inventory Turnover Ratio

2. Debtor Turnover Ratio/Trade Receivables Turnover Ratio

3. Creditors Turnover Ratio/Trade Payables Turnover Ratio

4. Working Capital Turnover Ratio

1. Inventory Turnover Ratio : It is also called as Stock turnover ratio. This ratio
is a relationship between the Cost of goods sold i.e, Cost of Revenue form
Operations during a particular period of time and the Cost of average inventory
during a particular period.

It is expressed in number of times.

Interest/Stock turnover Ratio

= 

2. Debtors Turnover Ratio/Trade Receivables Turnover Ratio: It shows the

relationship between Net Credit Sales i.e., Net Credit Revenues from Operations
and Average Debtors/Average Trade Receivables (Debtors + Bills Receivables).

This ratio is expressed in TIMES.

Trade Receivable/Debtors turnover Ratio

= 

3. Creditors Turnover Ratio/Trade Payable Turnover Ratio:

It shown the relationship between Net Credit Purchases and Average

Creditors/Average Trade Payables (Creditors + Bills Payable).

This ratio is expressed in TIMES.

Trade Payable/Creditors turnover Ratio = 

4. Working Capital Turnover Ratio : It establishes the relationship between

Net Working Capital and Revenue from Operations i.e., Net Sales.

Working Capital Turnover Ratio =

Profitability Ratio:
These ratios are used to assess the profitability or earning capacity of the business.

These ratios are very important as profitability is the measurement of the overall
performance and efficiency of the management.

The important Profitability ratios are:

1. Gross Profit Ratio

2. Operating Ratio

3. Operating Profit Ratio

4. Net Profit Ratio

5. Return on Investment or Return on Capital Employed.

1. Gross Profit Ratio : It shows the relationship between Gross Profits and Net
Sales i.e., Net Revenue from Operation.

Gross Profit Ratio = 

2.Operating Ratio: It shows the relationship between Operating Cost and Net
Sales i.e., Net Revenue from Operations.

Operating Ratio =

3. Operating Profit Ratio : It shows the relationship between Operating Profit and
Net Sales i.e., Net Revenue form Operations.

Operating profit Ratio = 

4. Net Profit Ratio : It shows the relationship between Net Profits and Net Sales
i.e., Net Revenue from Operations.

Net profit Ratio = 

5. Return on Investment or Return on Capital Employed:

It shows the relationship between Net profit before interest, Tax and Divided and
Capital Employed of the business.

Return on Investment (ROI)

= 
 CHAPTER 5
DATA ANALYSIS AND INTERPRETATION

RATIO ANALYSIS IN HINDUSTAN SHIPYARD LIMITED

Diverse groups of peoples are interested in formation found in financial statement.

These groups study the statement carefully and analyze and interpret the
information that relates to their particular interest. Inventories try to assess what
the future holds for the company creditors analyze the financial statements with an
eye to risk and return estimation. Management analyzes the information to
determine how efficiency firm uses it asserts and how it finances it asserts. Thus
the type of financial analysis varies according to specific needs of the analyst.
Ratio analysis is one of the very effective tool of financial analysis the use of
accounting ratio enables conclusion to be drawn relating to the information, that
concerns the analyst.

To evaluate the financial condition and analysis need certain yards stick.
According ratios are frequent entry. Used yards stick for his purpose ratio is an
expression of the quantitative relationship that exists between the two numbers.
The ratio should be determined between related accounting variables to be
meaningful and effective.

As observed a basis limitation of traditional financial statement comprising the

balance sheet and the profit and loss accounts is that they do not give all the
information related to the financial operation of the firm.

They provide some extremely useful information to the extent that the balance
sheet mirrors the financial position on a particular date in terms of the structure of
assets, liabilities and owners equity and so on. The profit and loss accounts shows
the result of operation the year during a certain period of the revenue obtain and
the cost incurred during the year. There for much can be learnt about a firm from a
careful examination of its financial statement.

Ratio analysis is a widely used tool of financial analysis. It is defined as the

systematic use of ratios to interpret the financial statement so that the strength and
weakness of the firm as well as its historical performance and current financial
condition can be determined ratio analysis is a powerful tool of financial analysis.

A ratio is defined as “the indicated quotient of two mathematical expressions” or as

the relation between the two or more things finally ratio analysis enables a firm to
take the time dimension in to accounts. In other words whether the financial
position of a firm is improving or deteriorating significance of a trend analysis of
ratio lies in the fact that the analyst can known the direction of movements, i.e.,
whether the movements is favorable or unfavorable. Thus, trend analysis is of great
significant.

RATIO ANALYSIS OF HSL:-

LIQUIDITY RATIOS:

The terms liquidity and short term solvency are used synonymously. Liquidity or
short term solvency means ability of the business to pay its short term liabilities.
Inability to pay off short term liabilities affects its credibility as well as its credit
rating. Continuous default on the part of the business leads to commercial
bankruptcy. The Liquidity Ratio is to measure the ability of the firm to meet the
short term obligations and reflect the short term financial strength / solvency of the
firm.

Traditionally two ratio are used to highlight the business liquidity, these are current
ratio and  quick ratio.  

CURRENT RATIO:

The current ratio expresses the relation between current assets and current
liabilities. Current assets may be defined as “those assets which are easily turned
into cash with in an accounting period, say one year”. The rules of thumb
prescriber that at2:1 the position comfortable but the conditions or circumstances
of each business should be fact to judge this. This ratio is an acceptable measure of
short term solvency as it indicates the ability of the business to meet current
obligation (liabilities) from the available resources.

Calculation:

Current Ratio = Current Assets /Current Liabilities 

Current Assets = Inventories + Sundry Debtors + Cash & Bank Balance + other +
Current Assets + Loans & Advance

Current Liabilities = Liabilities other than Current ratio of Hindustan Shipyard Ltd.

CURRENT RATIO OF HINDUSTAN SHIPYARD LIMITED DURING THE

PERIOD FOR 2016-21

(Rupees in Lakhs)

Particular 2016-17 2017-18 2018-19 2019-20 2020-21

Inventories 5432.80 7745.47 5432.80 11387.54 5490.95
Sundry 27644.00 17617.01 27644.00 39351.33 32912.65
Debtors
Cash & 26573.70 18619.06 26573.70 13068.21 22075.98
 Bank
Other 40833.20 29921.34 40833.20 35144.05 31571.67
Current
assets
Loans & 7615.80 5818.84 7615.80 12641.65 13175.28
Advances
Total 74941.71 79721.73 108099.50 111592.78 105226.53
Current 70138.78 73592.44 100372.04 103563.92 102410.70
Liabilities
Ratio in 1.06 1.08 1.07 1.07 1.02
time
Percentage 106 108 107 107 102

Current Ratio
109
108
107
106
105
104
103
102
101
100
99
1 2 3 4 5

Percentage

INTERPRETATION:

From the above table it is clear that the Current Ratio of HSL is Increased to 108%
in 2017-18 due to increase in current assets and decrease in Liquid Liabilities,
whereas during 2018-19 the current ratio decreased to 1% respectively due to
decrease in current assets and increase in current liabilities. During the year 2019-
20 the Current Ratio is same as the previous year. In the year 2020-21 the current
ratio was decreased to 5% due to decrease in current assets and increase in current
liabilities.

By analyzing the overall performance of the company short term solvency is

good and it is in a position to meet the short term obligations.

QUICK RATIO:

This ratio is calculated by dividing the total quick assets by total current liabilities.
In this quick assets or liquid assets i.e., cash marketable securities and sundry
debtor are expressed as a proportion of the business to meet the current liabilities
without having to wait for the manufacturing cycle to be completed and sale to
take place for inflow of cash.

Calculation:

Quick Ratio = Quick assets/Current liabilities 

QUICK RATIO OF HINDUSTAN SHIPYARD LIMITED DURING THE

PERIOD FROM 2016-21

(Rupees in Lakhs)

Particular 2016-17 2017-18 2018-19 2019-20 2020-21

Sundry 27644.00 17617.01 27644.00 39351.33 32912.65
Debtors
Cash & Bank 26573.70 18619.06 26573.70 13068.21 22075.98
Other Current 40833.20 29921.34 40833.20 35144.05 31571.67
assets
Loans & 7615.80 5818.84 7615.80 12641.65 13175.28
Advances
Total 66543.86 71976.26 102666.7
100205.2 99735.58
3
Current 70138.78 73592.44 100372.04 103563.9 102410.70
 Liabilities 2
Ratio in time 0.94 0.97 1.02 0.96 0.97
Percentage 94 97 102 96 97

Quick Ratio
104

102

100

98

96

94

92

90
1 2 3 4 5

Percentage

A Quick Ratio of 1:1 is usually considered adequate 

INTERPRETATION:
From the above table it is clear that the liquid ratio of HSL is increased to 3% in
2017-18 due to increase in current assets and increase in current liabilities, where
during 2018-19 the liquid ratio increases to 5% due to increase in current assets
and increase in current liabilities respectively like in increased loans and advances.
In the year2019-20 the liquidity ratio decreased to 6% due to decrease current
assets and decrease in current liabilities.
In the year 2020-21 the liquidity ratio has increased to 1% due to decrease in
current assets and increase in current liabilities.

INVENTORY TO WORKING CAPITAL RATIO:

Inventory to Working Capital Ratio shows the relationship between inventories to

working capital. It is an indication of the amount of working capital invested.
Inventory consists of raw material work in progress and finished goods.

Working Capital means current assets less current liabilities. Inventories are
important to the management of an enterprise because it affects the profits of the
company directly.

Calculations:

Inventory to Working Capital    = Inventories / Working Capital

Inventories = Raw materials + Work in progress + Finished Goods

Working Capital = Current Assets – Current Liabilities 

 
 
 INVENTORY TO WORKING CAPITAL RATIO IN HINDUSTAN SHIPYARD
LIMITED DURING THE PERIOD FROM 2016-21

(Rupees in Lakhs)

Particulars 2016-17 2017-18 2018-19 2019-20 2020-21

Inventories 8397.85 7745.47 5432.80 39351.33 5490.95
Current 74941.71 79721.73 108099.50 111592.78 105226.53
assets
Current 70138.78 73592.44 100372.04 103563.92 102410.70
liabilities
Working 4802.93 6129.29 7727.46 8028.86 2815.83
 capital
Ratio in 1.74 1.26 0.70 4.90 1.95
times

INTERPRETATION:

The above table reveals the inventories to working capital ratio for 5 years that is from
2016-17 to 2020-21. According to that ratio there is a comparison between inventories
and working capital. The working capital is in negative figures as the Current

Inventory to Working Capital

6

0
1 2 3 4 5

Ratio in times

liabilities are more than the current assets. So it can be concluded that the liquidity
position of the organization is decreased to 295% during the year 2020-2021. The
liquidity position and working capital has to be maintained properly and this can be
possible if the current assets are increased. This step can be helped for bringing up the
organization to a satisfactory

DEBT-EQUITY RATIO:
The debt equity ratio is important tool of financial analysis to appraise the financial
structure of a firm. Debt equity ratio reflects the relative contribution of creditors
and owners of business in its financial usually the higher the debt equity ratio.

Higher the amount of other people money being used and the fore more financial
leverage due to fixed amount of interest on long term debt. The relation between
outside funds (equity) can be show in different ways and therefore there are many
variants of this ratio.

Debt-equity ratio = Long term debt /Share holder funds

This ratio indicates the proportion of debt fund in relation to equity. 

LONG TERM TO EQUITY SHARE HOLDER IN HINDUSTAN SHIPYARD

LIMITED DURING THE PERIOD FROM 2016-21

(Rupees in Lakhs)

Particular 2016-17 2017-18 2018-19 2019-20 2020-21

Long term 37221.25 37221.26 54121.25 54121.25 54121.25

borrowing

Other long 50819.22 60002.86 31071.04 30302.71 30247.29

term
liabilities
Long term 8744.56 8466.89 7181.38 8489.86 6808.47
provision
Total long 96785.03 95680.00 92373.67 92913.82 91177.01
term debt
Shareholder -75051.01 -61943.41 -57707 -56761.91 -59516.21
fund
Ratio in -0.08 -1.54 -1.60 -0.40 -1.53
Times
 Debt Equity Ratio
0
1 2 3 4 5
-0.2
-0.4
-0.6
-0.8
-1
-1.2
-1.4
-1.6
-1.8

Ratio in Times

INTERPRETATION:

The above table reveals the long term debt to equity share holders ratio of
HINDUSTHAN SHIPYARD LIMITED for five years 2016-17 to 2020-21. According
to that ratio is compared between long term debts & equity share holder’s funds or net
worth. The net worth is negative figure as capital & reserves and surpluses less than
the past accumulated losses. So it can be concluded that the organization debt equity
is not good.

PROPRIETORY RATIO:

Proprietary ratio establisher’s relationship between share holders funds to total

assets of the firm. The ratio of proprietor’s funds to total is important ratio for
determining long term solvency of a firm. A higher proprietary ratio or shares of
the share holders in the total capital of the company, better in the long term
solvency position of the company proprietary funds include share capital, reserve
and surplus. This is also being calculated as fixed assets + current assets - current
liabilities.
Proprietary ratio = Share holders fund / total assets.

Proprietary fund includes equity-share capital=preference share capital= reserves

& surplus- fictitious assets. Total assets exclude fictitious assets and losses.  

NET WORTH TO TOTAL ASSETS RATIO IN HINDUSTAN SHIPYARD

LIMITED DURING THE PERIOD FROM 2016-21

(Rupees in Lakhs)

Particulars 2016-17 2017-18 2018-19 2019-20 2020-21

Shareholders fund -75051.01 -61943.41 -57707.78 -56761.91 -59516.21

Non current assets 16931.09 27607.30 26938.43 28123.05 28844.97

Current assets 74941.71 79721.73 108099.50 111592.78 105226.53

Total Assets 91872.80 107329.03 135037.93 139715.83 134071.50

Ratio in time -0.08 -0.57 -0.42 -0.40 -0.44

Proprietary Ratio
0
1 2 3 4 5

-0.1

-0.2

-0.3

-0.4

-0.5

-0.6

Ratio in time
INTERPRETATION
A high proprietary ratio, therefore, indicates a strong financial position of the
company and greater security for creditors. A low ratio indicates that the company
is already heavily depending on debts for its operations. The proprietary ratio of
HSL is negative since last five years because of past losses and deficit. Overall
comparison is not satisfactory.

ACTIVITY TURNOVER RATIO:

The activity ratios are also called the turn over ratios or performance ratios. These
ratios are employed to evaluate the efficiency with which the firm manages and
utilizes its assets. These ratios usually indicate the frequency of sales to its assets.
These assets may be capital assets or working capital or average inventory. These
ratios are usually calculated with the references to sales/cost of goods sold and are
expressed in terms of rate or times. Several activity ratios are as follows:

 Fixed asset turnover ratio

 Working capital turnover ratio

 Inventory turnover ratio

 Debtor’s turnover ratio

FIXED ASSETS TURN OVER RATIO:

This ratio is called the investment turnover ratio and is calculated by dividing the
cost so sales of the business unit by the net fixed assets to measure the efficiency
of using its fixed or earning assets to generate the sales. In the absence of
information regarding the cost of sales, the figure of sales can be used generally the
higher the ratio the better is the efficiency, when comparison is made with the
previous period. It indicates whether the investment in fixed assets turnover ratio.

Fixed assets turnover ratio = sales / capital assets

A high fixed assets turnover ratio indicates efficient utilization of fixed assets in
generating sales. A firm whose plant and machinery are old may show a higher
fixed assets turnover ratio than the firm which has purchased them recently. 

FIXED ASSETS TURNOVER RATIO IN HINDUSTAN SHIPYARD DURING

THE PERIOD FROM 2016-21

(Rupees in Lakhs)

Particular 2016-17 2017-18 2018-19 2019-20 2020-21

s
sales 39326.87 49497.5 53584.6 58353.74 61808.21
0 4
Fixed 12380.63 12705.5 12716.8 13079.59 5412.92
assets 1 7
Ratio in 3.17 3.89 4.21 4.46 11.4
times

Fixed Asset Turnover Ratio

12

10

0
1 2 3 4 5

Ratio in times
 INTERPRETATION:

The above table and the diagram represent the fixed assets turnover ratio of HSL. In
the year 2017-18 the ratio is increased by 0.72 times from 2016-17 because more
funds are invested in the fixed assets. In the period of 2018-19 the ratio is increased
by 0.32 times,0.25 times & 6.94 times respectively from previous years this will
shows the firm is able to generate more sales by using less assets. By overall
comparison the ratio is satisfactory.

WORKING CAPITAL TURNOVER RATIO:

Working capital turnover is further segregated into inventory turnover, debtor’s

turnover, creditor’s turnover.

Inventory turnover ratio is also known as stock turnover ratio establishes the
relationship between the cost of goods sold during the year and average inventory
held during the year.

Working capital= sales/ working capital 

WORKING CAPITAL TURNOVER RATIO IN HINDUSTAN SHIPYARD

LIMITED DURING THE PERIOD FROM 2016-21

(Rupees in Lakhs)

Particular 2016-17 2017-18 2018-19 2019-20 2020-21

s
sales 61808.2 58353.7 53584.64 49497.50 39326.87
1 4
Current 74941.7 79721.7 108099.5 111592.7 105226.5
assets 1 3 0 8 3
 Current 70138.7 73592.4 100372.0 103563.9 102410.7
liabilities 8 4 4 2 0
W.C.= 4802.93 6129.24 7727.46 8028.86 2815.83
(C.A-C.L)
Ratio in 12.8 9.52 6.93 6.16 13.9
time

Working Capital Turnover Ratio

16
14
12
10
8
6
4
2
0
1 2 3 4 5

Ratio in time

INTERPRETATION:

The working capital turnover ratio of HSL decreased by 3.28 from 2016-17 to
2017-18. The ratio is increased by 7.44 during the year 2020-21 due to the firm is
able to generate more sales by using less working capital by overall comparison the
ratio is satisfactory 

INVENTORY TURN OVER RATIO: 

 This ratio also known as stock turnover ratio establishes the relationship between the
cost of goods sold during the year end average inventory held during the year. It is
calculated as follows:
Inventory turnover ratio = Cost of goods sold / average inventory.

INVENTORY TURNOVER RATIO IN HINDUSTAN SHIPYARD LIMITED

DURING THE PERIOD FROM 2016-21 (Rupees in Lakhs)

Particular 2016-17 2017-18 2018-19 2019-20 2020-21

Revenue 61808.21 58353.74 53584.64 49497.50 39326.87
from
operation
Gross Profit 5853.51 7668.75 7871.06 3000.84 -6310.33
COGS 55954.7 50684.99 45713.58 46496.66 45637.2
Average 19168.31 8071.66 6589.13 8410 8439.24
Inventory
Ratio in 2.9 6.2 6.9 5.5 5.4
times

Inventory Turnover Ratio

8
7
6
5
4
3
2
1
0
1 2 3 4 5

Ratio in times

INTERPRETATION:
The above table indicates the inventory turnover ratio of HSL in the year 2017-18 the
ratio is increased by 113.7% from 16-17 due to accurate movement of stock. In 18-19
the ratio is increased . In the year 2019-20 the ratio is decreased by 20% from 2018-
19 due to slow movement of stock. In 2020-21 the ratio is decreased by 1.8% from
19-20 due to slow movement of stock. By overall comparison the ratio is fluctuating.

PROFITABILITY RATIOS:

The profitability ratios measure the profitability or the operational efficiency of the
firm. These ratios reflects the final results of business operations. The results of the
firm can be evaluated in terms of its earnings with reference to a given level of
assets or sales or owners interest etc. some of the profitability ratio are as follows:

GROSS PROFIT RATIO:

Gross profit ratio measure the relationship between the gross profit to net sales and is
usually represent as a percentage. Thus it is calculated dividing the gross profit by
sales. The gross profit indicates the extent to which selling price of goods per unit
may decline without responding no loss on operating of a firm.

As the gross profit is found by deducting cost of goods sold from net sales higher the
gross ratio better the result a low gross profit ratio generally indicates high cost of
goods sold due to unfavorable poor changing policies, losses, sales, lower selling
price excessive competition over investment in plant and machinery.

Gross profit ratio = gross profit/ sales * 100

GROSS PROFIT LOSS RATIO IN HINDUSTAN SHIPYARD LIMITED DURING THE

PERIOD FROM 2016-21

(Rupees in Lakhs)

Particulars 2016-17 2017-18 2018-19 2019-20 2020-21

Net sales 61808.21 58363.74 53584.64 49497.50 39326.87

Gross Profit 5853.51 7668.75 7871.06 3000.84 -6310.33

 Ratio in 9.47 13.13 14.68 6.06 -16.04
time

Gross Profit Ratio

20
15
10
5
0
1 2 3 4 5
-5
-10
-15
-20
-25

Ratio in time

INTERPRETATION:

The above table indicate gross profit ratio of HSL. The ratio has been increased from
38.64% from 2016-17 to 17-18 due to increase in gross profit in sales in the year. In
2019-20 the ratio is decreased by 58.71% from 2018-19 due to decrease of GP. In the
year 2020-21 Ratio is negative due to losses. By overall comparison the ratio is not
satisfactory. 

NET PROFIT RATIO:

This ratio show the earning left for share holders (both equity and preference) as a
percentage of net sales. It measures the overall efficiency of production,
administration, selling, financing, pricing and tax management, jointly considered,
the gross and not profit margin ratio provide a valuable understanding of the cost
and profit structure of the firm and enable the analyst to identify the sources of
business efficiency/inefficiency.
Net profit ratio = net profit / sales * 100

It measures overall profitability of the business.

NET PROFIT/LOSS NET SALES RATIO IN HINDUSTAN SHIPYARD

LIMITED DURING THE PERIOD FROM 2016-21

(Rupees in Lakhs)

Particular 2016-17 2017-18 2018-19 2019-20 2020-21

s
Net sales 61808.21 58353.7 53584.64 49497.50 39326.87
4
Net 5377.16 2099.26 3623.53 1303.18 -1400.57
profit/loss
Ratio in 8.69 3.59 6.76 2.63 -3.56
time

Net Profit Ratio

10

0
1 2 3 4 5
-2

-4

-6

Ratio in time

Interpretation:
The net profit ratio, indicates how much net income a company makes with total
sales achieved. A higher net profit margin means that a company is more efficient
at converting sales into actual profit. During the year 2017-18 ratio has been
decreased to 5.1 time due to less sale. In 2018-19 ratio is increased due to increase
in net profit. In 2020-21 the ratio is negative. By overall comparison the ratio is not
satisfactory.

RETURN ON ASSETS: 

Return on assets is an odd measure because it numerator measures the return to

share holder where as its denominator represents the contribution of all investors.

The profitability ratio is measured in terms of relationship between net profits and
assets employed to earn that profit. This ratio measures the profitability of the firm
in terms of assets employed in firm. The return on assets may be measured as
follows:

Return on Assets = net profit after taxes / average total assets *100

RETURN ON ASSETS RATIO IN HINDUSTAN SHIPYARD LIMITED

DURING THE PERIOD FROM 2016-21

(Rupees in Lakhs)

Particular 2016-17 2017-18 2018-19 2019- 2020-21

s 2020
Net Profit/ 5377.16 2009.25 3623.53 1303.18 1400.57
Loss
Average 99852.2 99600.9 121183.4 137376.8 136893.6
Total 3 1 8 8 6
Assets
Ratio in 5.3 2.01 2.99 0.94 1.02
times
Interpretation:

The above table indicates the return on assets ratio of HSL. The ratio is decreased by
62% in the year 2017-18 due to decrease in total assets. In the year 2018-19 the ratio
is increased by 48.7% due to increased in net profit. In 2020-2021 ratio is increased
by 8.5. Overall comparison the ratio is not satisfactory.

Return on Asset
6

0
1 2 3 4 5

Ratio in times

RETURN ON INVESTMENT:

A measure of great interest to equity share holders, the return on equity is defined as

Return on investment = net profit / capital employed * 100 

The numerator of the ratio is equal to profit after tax less preference dividends. The
denominators includes all contribution made by equity share holders. This ratio is
called the return on net worth. The return on equity measures the profitability of
equity funds invested in the firm. It is regarded as very important measure because it
reflects the productivity of the ownership capital employed in the firm. It is influence
by several factors earning power, debt-equity ratio, average cost of debt funds, and tax
rate.
Return = net profit + non-trading adjustments + interest on long term debts +
provision for tax – interest/dividend from non-trade investments.

Capital employed = shareholders fund + long term liabilities

GROSS PROFIT/NET SALES IN HINDUSTAN SHIPYARD LIMITED

DURING THE PERIOD FROM 2016-21

(Rupees in Lakhs)

Particulars 2016-17 2017-18 2018-19 2019-20 2020-21

Net -1400.57 1303.18 3623.53 2099.75 5377.16
Profit/loss
Shareholde -75051.01 -61943.41 -57707.78 -57761.91 -59516.21
r fund
Long term 96785.03 95680.00 92913.82 92913.82 91177.01
liabilities
Capital 31660.8 36151.91 34665.89 33736.59 21732.02
employed
Ratio -4.42 3.60 10.45 6.22 24.74
 Return on Investment Ratio
30

25

20

15

10

0
1 2 3 4 5
-5

-10

Ratio

Interpretation:

When ROI calculations returns a positive figure, it means that net returns are total
returns exceed total costs. Alternatively, when ROI calculations yield a negative
figure, it means that total costs exceed total returns. In other words, this
investment produces a loss. In the year 2016-17 ROI ratio is negative because
company faces loss from investment. Afterwards company has a positive returns.
 CHAPTER 6
 Summary report
 Findings & suggestions
 Bibliography
 SUMMARY:
One of the most important tools which have come to be very frequently for analyzing
the financial strength and weakness of enterprises is ratio analysis. Ratio analysis is a
technique of analysis and interpretation of financial statements. It is the process of
establishing and interpreting various ratios for helping in making certain decision.

Ratio may be expressed in either of 3 ways it may be quotient obtained by dividing

one value by other. This unit of expressions is called as ‘times’. If the quotient is
multiplied by one hundred, the unit of expressions becomes “percentage”. It may also
be stated in terms of ‘proportion’ between the figures. Thus time, percentage, and
proportion are the ‘3’ forms of expressing ratio.

The project is divided into 6 chapters. In the 1 st chapter, is containing introduction of

the study, need for the study, and objective of the study, scope of the study,
methodology and sampling and limitation. In the 2 nd chapter, it contains profile of the
ship building industry, and 3 rd chapter contain profile of Hindustan shipyard limited.
In the 4th chapter, it contains theoretical framework of the study, process of the study,
in the 5th chapter, content analysis and interpretation.

India has 28 Shipyards, six are public sector undertakings (PSUs), two are owned
by state government and remaining 20 are in private sector. The Indian shipping
industry plays an important role in the Indian economy as almost 90% of the
country’s international trade is conducted by the sea. Today, India has around 1071
ships with 722 coastal and 349 overseas ships; Indian coastal shipping is highly
fragmented.

The first ship building factory of India was established at Vishakhapatnam in 1941.

It was later, adopted by the Indian Government in 1952 and was named as
‘Hindustan Shipyard Limited’.

The Scindias Steam Company limited was registered in Bombay (presently Mumbai)
in March 1919. Sir Norotan Mararjee was the chairman of the founders of the country.
Sir Nar tan Mararjee and Sir Walchand Hirachand invited Mr.Knusen as well known
ship building expect from United Kingdom in 1920 to visit India. He was to formulate
a plan for establishing a shipyard project, but he died suddenly. Scindias were unable
to make concern progress till 1990. In 1940 m/s. Alexander Gibb, pertness, and
London recommendation on this shipyard project, after examining various sites at
Visakhapatnam for establishing the shipyard and submitted their report in March
1941, to draw inference keeping in view the above objective a period of five year i.e.,
from 1993-94 to 1997-98 is considered. The annual performance reports and other
printed report date of m/s. Hindustan Shipyard Limited, Visakhapatnam is considered
as secondary data.

Findings:

 By analyzing the overall performance of the company short term solvency is

good and it is in a position to meet the short term obligations.

 Investment in inventory can be reduced to improve the liquidity position of the

firm.

 The company should try to enquire more contact from a broad to earn more
amount of foreign exchange.

 HSL incurred a loss on account of excess of cost of production.

 The capital is negative because of the past accumulated loss and current losses.
Suggestions:

 The delivery dates are delayed to, which must be checked.

 Generally, in public sector under taking things will be pending especially

related to financial matter.

 To bring more financial strength. Government should offer some stake in HSL
to private people for issue of bonds or debentures.

 Maximum utilization of capacity is achieved like losses should reduce.

 In Hindustan shipyard limited the average of the employees is `48years who are
very reluctant to change the organization order to speed up the work and
improve should allow young food to work.

 HSL has to take measures to reduce (or) decrease the overhead expenditure.
Bibliography:

 Annual Report – HSL in 5 years.

 Other Printed Leaf vectors HSL.

 General Articles about the ship building industry.

 Internet – HSL web :- www.hsl.nic.in

www.wikipedia.com

 Management Accounting By R.S.N. PILLAI, BAGAVATHI

 Conclusion:
The project report is prepared by me concludes that the company’s performance is not
up to mark which can be known by observing the chapter 4 where I have analyzed and
interpreted from the collected data. The companies are running in loss since from
several years. The fixed asset ratios are not satisfactory because of the negative net
worth.

The leverage ratio is also not perfect because there is no balance in debt equity ratio.
Likewise, almost all the ratios computed. So far for the last 5 year turn out to be
negative.

As the company is not getting profit and the company is not able to pay the loans and
interests. There the company should resort to some drastic measures to improve the
ratios.