LOVELY PROFESSIONAL UNIVERSITY

School of Business Faculty of

Name of the faculty member

Course Code: ACC205 Course Title: Cost Accounting

Academic Task No: 2 Academic Task Title: CA2
Date of Allotment: Date of Submission: 30/10/2022
Student Roll No: 19 Student Reg. No: 12111498
Term: 3 Section: Q2113
Max. Marks 30` Marks. Obtained:
Evaluation Parameters

Learning Outcomes: (Student to write briefly about learnings obtained from the
academic tasks)

Declaration:

I declare that this Assignment is my individual work. I have not copied it from any other
students’ work or from any other source except where due acknowledgement is made
explicitly in the text, nor has any part been written for me by any other person.

Evaluation Criterion: Rubrics on different parameters

Student’ Signature:

Evaluator’s Comments (For Instructor’s use only)

General Observations Suggestions for Improvement Best part of assignment

Evaluator’s Signature and Date:

Mangalore Chemicals Fertilizers Limited (MCF)
Mangalore Chemicals and Fertilizers Limited (MCF) is a subsidiary of Zuari Agro Chemicals
Limited, an Adventz group company, which holds 53.03% equity shares. The 'Adventz'
Group, is an Indian conglomerate with global ambitions that participates in and contributes
to India's economic growth and prosperity through transformational change.
MCF is the largest manufacturer of chemical fertilizers in the state of Karnataka. The factory
is strategically located at Panambur, 9 km north of Mangalore City, on the banks of the
Gurpur River, along the National Highway 66, opposite to the New Mangalore Port Trust.
The main products are Urea, Di-Ammonium Phosphate (DAP), NP 20:20:00:13, Ammonium
Bi-Carbonate (ABC) - Food grade, Sulphuric Acid, Speciality fertilizers and Nutrient products
consisting of Water-Soluble Fertilizers, Micronutrients & Soil Conditioners and Sulphonated
Naphthalene Formaldehyde (SNF), an industrial product.
While fertilizers and Plant Nutrient products are marketed in Karnataka, Kerala, Tamil Nadu,
Andhra Pradesh, Telangana and Maharashtra, the food grade ABC used mainly in
Confectionery Industry and SNF used in the construction industry are marketed Pan India as
well as in the international market. The requirement of power for the production facility
(process plants) is met by a Captive Power Plant. Ammonia & Phosphoric Acid, the raw
VISION AND MISSION

For the Farmers, By the Farmers, To the Farmers

To augment the incremental incomes of farmers by helping them to increase their crop
productivity through balanced use of energy efficient fertilisers; maintain the environmental
health; and to make cooperative societies economically and democratically strong for
professionalised services to the farming community to ensure an empowered rural India.
Corporate Growth Plans
In pursuit of its growth and development, MCF had embarked upon and successfully
implemented its Corporate Plans, 'Mission 2005', 'Vision 2010' and 'Vision 2015'. These
plans have resulted in MCF becoming the largest manufacturer and distributor of Chemical
Fertilisers in India and a significant global player by setting up Projects and Joint Venture
Companies overseas.

Our Mission
• MCF mission is "to enable Indian farmers to prosper through timely supply of reliable,
high quality agricultural inputs and services in an environmentally sustainable manner
and to undertake other activities to improve their welfare".
• To provide to farmers high-quality fertilisers in the right time and in adequate quantities
to increase crop productivity.
• Commitment to health, safety, environment and forestry development to enrich the
quality of community life.
• To institutionalise core values and create a culture of team building, empowerment and
innovation which would help in the incremental growth of employees and enable
achievement of strategic objectives.
• Foster a culture of trust, openness and mutual concern to make working, a stimulating
and challenging experience for stakeholders.
• To acquire, assimilate and adopt reliable, efficient and cost-effective technologies.
• A true cooperative society committed for fostering cooperative movement in the
country. Emerging as a dynamic organisation, focussing on strategic strengths, seizing
opportunities for generating and building upon past success, enhancing earnings to
maximise the shareholders’ value.
• To make plants energy efficient and continually review various schemes to conserve
energy.
• Sourcing raw materials for the production of phosphatic fertilisers at economical cost by
entering into Joint Ventures outside India.
• Building a value driven organisation with an improved and responsive customer focus. A
true commitment to transparency, accountability and integrity in principle and practice.
• Commitment to social responsibilities for a strong social fabric.
Business of the company (PRODUCTS)

Product Description
• Urea is a Synthetic organic compound containing 46% Nitrogen in Amide form.
• Available in the form of white solid pills free flowing for easy application.
• Being Hygroscopic, urea is packed in moisture proof High Density Poly Ethylene bags.
Details
Features & Benefits
Less acidifying than many other nitrogenous fertilizers. Hence most suited for high pH soils.
High concentration of nutrients makes packing, storage and transport cost cheaper.
Application
• Can be applied to soil. Also suitable in solution form as spray.
• Application is recommended in split doses for better use efficiency.
Technical Details
• Moisture per cent by weight (Maximum) - 1%
• Total Nitrogen per cent by weight (Minimum)- 46%
• Biuret percent by weight (Maximum) - 1.5%
Packing
• Packing - 50 kg HDPE Bag

In the changing agriculture scenario, where the fertile and productive land area is shrinking
due to unscientific and surfeit use of chemicals and fertilizers, there is an urgency to correct
the soil condition to suit for modern agriculture.
Soil conditioners are termed as materials which when added to the soil help in improving or
maintaining its physical conditions with improved physical and chemical health of soil that
resultantly improve biological health. In the Integrated Nutrient Management approach, soil
conditioners are integral part of the agronomic package.
For precise application, soil conditioners are formulated specifically to tackle different
problematic soils
3 Plant Protection Chemicals
4

COMPETITORS
ANALYSIS OF FINANCIAL STATEMENTS
1 Comparative Balance Sheet

• Reserves and surplus are increasing at a decent rate around 15% a year due to which
shareholder funds increasing at 12% a year
• Company repaid a lot of debt in the year 2021 which is visible in the decrease in long
term borrowings and in short term borrowings but the company again raised a lot of
money in the year 2022 as we can see the long-term borrowings increased by 47% and
short-term borrowings increased by 70%.
• The raised money was invested in work in progress which indicates that the company
started increasing up its production in the year 2022. Also fixed assets were increased by
31% which tells us that the company is expanding at a fast rate.
• The same can be concluded by looking at the inventories which increased by 136% in the
year 2022 whereas it was decreasing by 26% in the year 2021.
SUMMARIZING
The company decreased its production in the year 2021, repaid debt and again started
raising capital for the expansion and increasing its production in the year 2022. For
further analysis we will look at the income statements that how much profits is the
company earning while expanding at a drastic rate.
2 Common size Balance sheet

• Current Liabilities are very high which is a worrisome sign. Short term borrowings and
trade payables make almost 70% of total liabilities in all three years.
• Trade Receivables has decreased a lot which a little positive but it still does not make up
for the large short-term borrowings
• Chemicals and fertilizers are a capital-intensive industry so current ratio will be a little
on lower side but still it is close to around 1 which can be troublesome if the company
comes into a cashflow problem
• Debt to equity it was around 4 in the financial year 2020 and it came to 2.25 in the year
2022 which is a positive.
SUMMARIZING
The industry itself is capital intensive so the debt could be understood but the current
ratio is very low. Company should lower its short-term borrowing. Right now, the
business is very risky. For more details we will have a look at both kinds of income
statements as it will show the profitability and give us a broader view of the company.
3 Comparative Income statement

• The balance sheet also showed that the company decreased its production in the year
2021 which is also visible in the income statement where you can see the decrease sales
by 21% and then the company increased sales by 35% which is aligned with the balance
sheet analysis.
• The decrease in raw material by 21% and then an increase of 68% again tells us the
previous point.
• One alarming factor is that the company’s operating profit was decreasing in 2021 but it
bounced back in 2022 which should have happened.
• The company paid large amounts of tax in 2021 which is shown by the 553% increase in
tax due to which its profits decreased in 2021 but they were back to normal in 2022.
SUMMARIZING
Paid a tax of 38 crores in 2021 whereas it was 6 crores in 2020 due to which the net
profit of the company was in decline but it came back to normal in 2022. Companies
closing stock has decreased by 1100% which is also a positive sign.

4 Common size Income statement

• Not only net profits but percentages of net profits are also increasing which is a positive
sign.
• Profit before interest tax is also increasing but the percentage decreasing which means
that they are ramping up the productions but are not so efficient while doing so.
• The company announced a higher dividend after the profit after tax was increased.
SUGGESTIONS
• The company has 20% of its assets as cash and cash equivalents, instead
of giving dividends for a few quarters, it can lower its current liabilities.
• The net profits right now stand at 2% only, the company can look out
ways to manufacture its products more efficiently.
• Pandemic was very important factor due to which the company suffered
in some aspects but it is increasing its production to bounce back stronger
which with a little more current ratio will be a good sign for the company
• Lower current ratio is necessarily not a bad sign as he ability of a company
to pay its bills might be lower, but a Current Ratio below 1 could also be a
sign that a company is very good at managing its working capital: keeping
its receivables and inventory low, and its payables high. It’s the story
behind the ratio and the numbers that is important.