Hindustan Paper Corporation

8/11/2019 Hindustan Paper Corporation

1/48

HINDUSTAN PAPER CORPORATION LIMITED(A Govt. of India Enterprise

A Report on Financial Statement Analysis of

Hindustan Paper Corporation Ltd.

Summer Project Report

Submitted by-

!AL"IT SINGH

In partial fulfillment of the DegreeOf

Bechelor of Business AdministrationIn

Finance

Under the Guidance of

U. HA#RA

(Organiation Guide!

JUNE- JULY

"#$#

DESH !HAGAT INSTITUTE O$ MANAGEMENT AND COMPUTER % SCIENCE.(AN ISO &'')*''' Certified Instit+te

Approved ,- AICTE Ne/ De01i % Affi0iated to

Pan2a,i Universit- Patia0aA30o1 Road Mandi Go,ind4ar1 5 678' (P+n2a,


2/48

DECLARATION

I declare that the Project Report entitle% &A R'POR O) FI)A)*IA+ SA',')

A)A+-SIS OF .I)DUSA) PAP'R *ORPORAIO) +D/0 su1mitted 12 me as per

the *urriculum of the degree 3Bachelor of Business Administration4% is the record of

5or6 carried out 12 me in )AGAO) PAP'R ,I++% a unit of .I)DUSA) PAP'R

*ORPORAIO) +D% during this Summer 7une4$# and 7ul24$# under the guidance

of U/ .A8RA (Organiational guide!/ he 5or6 done 12 me is Original and the

information gi9en in the report is true/

Signature of the Guide Student : Baljit Singh

Date :


3/48

AC9NOLEDGEMENT

Summer raining is a 9er2 important part of an2 management course as it helps thestudent to ac;uire the s6ill and responsi1ilit2 of the effecti9e manager/ his report isthe result of contri1ution% guidance% and co/ Das Pur62asta% DG, (Fin!% for granting his 6indpermission and pro9iding guidance to do m2 project in Finance/

I remain inde1ted to m2 organiational guide ,r/ U/ .ara for his generous help andguidance throughout the project/

I 5ish to than6s all the officials of the Finance and Accounts Department% 5hospared their 9alua1le time 5ith me and pro9ides me all possi1le assistance andguidance to understand the financial status% 5or6ing condition and en9ironment ofthe organiation/ I e=tend m2 sincere appreciation and than6fulness to him/

+ast 1ut not the least% I ta6e this opportunit2 to than6 all m2 friends and 5ell 5ishers5ho help me in successfull2 completing m2 project report/

I o5e them all m2 deep gratitude for the encouragement gesture in respect of m2project 5or6/

!a02it Sin41

BBA ?thSemester

DBI,*S


4/48

PRE$ACE

A summer training project is re;uired to 1e underta6en for a specified period of time

in an esteemed corporate organiation to5ards partial fulfillment of Bachelor Degree

in Business Administration/ hereafter a detailed report is to 1e su1mitted to the

organiation and institute for critical assessment/ In e9er2 professional course% the

theoretical 6no5ledge gained should 1e 1ac6ed 12 some practical 6no5ledge/ hus

the summer training helps the student to understand the practical aspects of the

5or6ing of an organiation% and there12 helping the student to ha9e first hand

6no5ledge a1out real life situations faced 12 an organiation and to get accustomed

to the practical 1usiness life% there12 de9eloping 1etter a1ilit2 to anal2e pro1lems

and decisions that contri1ute significantl2 for 1etter use of resources a9aila1le to the

organiation/

In other to ma6e the data and findings easil2 understanda1le efforts ha9e 1een

made to present the information in a simplified% lucid and organied manner%

5here9er possi1le ta1les and figures ha9e 1een incorporated/ Suggestion and

recommendation ha9e 1een made on the 1asis of findings herein/

A sincere effort has 1een made in the preparation of this project report/

!a02it Sin41

BBA ?thSemester

DBI,*S


5/48

COMPAN: PRO$ILE

Paper is more than an industrial product/ It is the cultural 1arometer of a nation/ @eneed paper e9er2 da2 for 5idening the frontiers of our 6no5ledge/

.P* is an e=tended arm of the Union Go9ernment to intensif2 the mo9ement forliterac2 through the gro5th of paper industr2/ oda2 it is one of the largestmanufacturers of paper and ne5sprint in South 'ast Asia/ Simultaneousl2% .P* has1een pla2ing a dominant role in the socioerela $%##%### tones

)agaland Pulp E Paper *o/ +td/ ()PP*!% )agaland %### tones(A joint 9enture of the Go9ernment of Indiaand Go9t/ of )agaland!


6/48

.P* 5as entrusted 5ith the tas6 of producing su1stantial 9olumes of cultural9arieties of paper and ne5spaper and ne5sprints to maintain sta1ilit2 of price in a9olatile mar6et/ Besides% it 5as designed to 1e a catal2st for industrial gro5th in the)orth 'ast/ It 5as also engaged in the tas6 of de9eloping indigenous e=pertise forsetting up large ne5sprint and paper mills/

RA)G' OF PRODU*:

he )P, produce 9ariet2 of paper namel2

($! @riting and printing paper/

("! ero= paper/

(! Duplicating paper/

(H! Ballot paper/

(?! ,ap +itho paper/

(! *olour Printing paper/(C! *o9er paper/

(J! Offset printing paper/

(! )e5sprint paper/

($#!*omputer Stationar2 paper/

($$! Pac6ing paper/

($"! Base paper/

)P, also produce caustic and chlorine 1eside paper/ he caustic and chlorine areconsumed for producing paper/ he )P, also sells caustic and chlorine to theoutside parties/ he dail2 a9erage paper production 12 )P, is ## , to H## ,/he production of paper ma2 not remain same for dail2/ he monthl2 paperproduction 12 )P, is an appro= ### , and $#### ,/

SAUSK POSIIO) I) .' I)DUSR-:

he per capita consumption of paper in India is C 6g against the 5orld a9erage of ?H6g and Asian a9erage of "J 6g/ he demand for paper is estimated to gro5 1et5eenCL to JL per annum/ o meet the increasing demand% the paper industr2 is

5itnessing a major capacit2 e=pansion and a shift to5ards production of high ;ualit2paper/ he demand for paper is e=pected to gro5 12 $# la6h , 12 "#$# andanother ? la6h , 12 "#$?/ he total paper production in India during "##C


7/48

Imported pulp price is in the range of NC?# a tone (Rs/ $%?##! in the internationalmar6et% up 12 a1out N $## since April% "##C and the price are e=pected to increasefurther/ .o5e9er the Union 1udget "##J


8/48

he finance and Account Department is headed 12 the Director (Finance! 5ho isappointed 12 the President of India/ he finance Director2 is responsi1le for theFinancial management of the compan2 and for the finaliation of the Annual Reportof the compan2/ .e ad9ices the *,D on all financial matters/ In the .ead Officer theDepartment .ead of the Finance and Account Department is D/G/, (Finance!/ .ereis also an Internal Audit Department 5hich functions under a Sr/ ,anager (Finance!and 5ho reports directl2 to the Director (Finance!/ Belo5 D/G/,/ (Finance! there arethree ,anagers (Finance! 5ho loo6ed after 9arious sections assigned to them/


9/48

!OARD O$ DIRECTORS

*.AIR,A)ol6ata C## #$

SUBSIDIARI'S : .industan )e5sprint +imitedP/O/ )e5sprint )ager


10/48

Dist/ >otta2an>erala J $

: )agaland Pupl E Paper *o/ +td/P/O/ Paper )agar% uliDist/ ,o6o6chung CJ ")agaland

7agdishpur Paper ,ills +imited"$HA E "$? Ansal *it2 *entre*hina Baar Road+uc6no5 ""##$ (U/P/!

;HOLETIME DIRECTORS % CHIE$ E


11/48

HEIRARCH: O$ $INANCE % ACCOUNTDEPARTMENT

DG, (finance!

Sr/ ,anager (fin! P/A/ DG, (fin!

,A)AG'RS ("!

D'PU- ,A)AG'RS (?!

''*UI' (finance ($#!

A**OU)A)SK Sr/ A**OU)A)S ($#!

ASSISA)SK Sr/ ASSISA)S ($#!

A**OU)A)SK Sr/ A**OU)A)S ($!

7r/ ASSISA)SK 7r/ ASSISA)S (!

+D*K+D* S/G ("!

SS@KSS@ (S/G!K SS@KUS@ (S/G!K US@ ($!


12/48

PRODUCT PRO$ILE O$ NPM>

he )P, product 9ariet2 of paper namel2

he structure of final accounts as prescri1ed in Schedule I is di9ided into fourparts/ Part I deals 5ith disclosure of information relating to share capital% lia1ilitiesand a sets in a statement 6no5n as the Balance Sheet of the compan2/ here are

t5o alternati9es forms of preparing this statement/ hese are .oriontal form and9ertical form/ A compan2 has the option to adopt an2 alternati9e forms/ Part II of theSchedule deals 5ith the information to 1e disclosed in the Profit E +oss Account of acompan2/ But the Act has not prescri1ed an2 format for the presentation of Profit E+oss Account/% no form has 1een specificall2 prescri1ed for it/ Part III containsinterpretation and e=planation of certain terminologies 5hile Part I re;uiresdisclosure of certain details% 5hich are to form part of the Annual Report of the*ompan2 to 1e pu1lished for pro9iding information to 9arious interested parties orgroups/

PRO$IT AND LOSS ACCOUNT $OR THE :EAR ENDED 8STMARCH *''@


20/48

(Rs/ In +a6h!PARI*U+ARS FOR .'

-'AR')D'D

$/#/"##J

FOR .'-'AR

')D'D$/#/"##J

FOR .'-'AR

')D'D$/#/"##J

FOR .'-'AR

')D'D$/#/"##C

INCOME>Sales

Paper +ess: '=cise dut2 E *ess

*austic and *hlorine+ess: '=cise dut2 E *ess

Di9idend from a su1sidiar2 compan2Internal consumption of @riting E

Printing paper and @rapper/

AccretionK(Decretion! to stoc6Interest Income

Other Income

Pro9isionKlia1ilit2 no longer re;uired@ritten 1ac6

TOTAL> (A

ERa5 material consumed

*hemicals and other ,aterials*onsumed

Po5er E Fuel

Repairs E ,aintenance

'mplo2ees Remuneration E Benefits

Other e=penses

'=cise Dut2 E *ess on Stoc6 ofPaper

(net of AccretionK Decretion to stoc6!

J%$/? ?%"?H/J$

$%#$J/ $H/"

CC$$/CJ

JC?/C

$"J/$#

$J/#H

(H$/J?!

$$?/#"

?#/$?

"C"/J?

@6'.78

$J/$

CJ$/

$$J/??

"H$

$$?C/"

$H/C

(C"/#J!

CC%CC/HH%H/"H

$%"HC/JJ $CH/"

C"J/""

$#C/"

#C/H

$C/?

(C/H"!

"$$H/$?

#/C

J/C#

7B&@.6

$H?J$/$J

$H/

$#C"H/J

/$H

C$/#$

$"#/#C

($?C/CH!

PRO$IT AND LOSS ACCOUNT $OR THE :EAR ENDED


21/48

8STMARCH *''@(Rs/ In +a6h!

PARTICULARS $OR THE:EARENDED

8.'8.*''@

$ORTHE:EARENDED

8.'8.*''@

$OR THE:EARENDED

8.'8.*''7

$OR THE:EARENDED

8.'8.*''7Interest charges

Depreciation

+ess: Allocation to Su1sidiaries

TOTAL (!

Profit for the 2ear (A!


22/48

PRO$IT AND LOSS ACCOUNT $OR THE :EAR ENDEDMARCH 8 *''&

(Rs. Lakh)$or t1e

-ear ended8)'8)*''&

$or t1e -earended

8)'8)*''&

$or t1e-ear ended8)'8)*''@

$or t1e -earended

8)'8)*''@

INCOMESales Paper +ess: '=cise dut2 E *ess*austic and *hlorine+ess: '=cise dut2 E *essDi9idend from a su1sidiar2 compan2Internal consumption of @riting EPrinting paper and @rapper/

AccretionK(Decretion! to stoc6Interest IncomeOther IncomePro9isionKlia1ilit2 no longer re;uired@ritten 1ac6TOTAL>

ERa5 material consumed*hemicals and other ,aterials*onsumedPo5er E FuelRepairs E ,aintenance'mplo2ees Remuneration E BenefitsOther e=penss'=cise Dut2 E *ess on Stoc6 of Paper(net of AccretionK Decretion to stoc6!Interest chargesDepreciation

+ess: Allocation to Su1sidiariesRefer )ote )o/(1!Q

Profit for t1e -ear

C$%#J$/$#"%?"/$%#"?/#

$$?/$$

J%??$/$C

$#/C$%?##/##

$/(JH#/$!"%$HJ/$%"##/H#

J$/HC%"$/

$%$CJ/$H%HC/$J

$?%JC?/$J%C?/$C$%C/?"

$"%#$/$#

(J$/!H/CH

"%HH$/#HC#%CH#/J

H$/HC#%"HJ/CH

%#C/$

J%$/??%"?H/J$$%#$J/

$H/"

CC%$$/CJ

JC?/C$%"J/$#

$J/#H(H$/?J!$%$?/#"

?#/$?

"C"/J?J$%H#?/C

$%J/$%CJ$/

$$%J/??%"H$/?

$$%?C/"$%H/C

(C"/#J!$/$J

"%##/HJJ%#$$/J

"/HC%C/""

$%C"/?$


23/48


24/48

!ALANCE SHEET O$ HINDUSTAN PAPER CORPORATION LTD.$or t1e -ear ended 8stMar?1 *''7

(Rs/ In +a6h!+IABI+II'S A,OU)

RS/ASS'S A,OU)

RS/.SHAREHOLDERS $UNDS>

a! Share *apitalC#%#J/"$

1! Share Application Deposit #/##c! Reser9e and Surplus C%CHC/?

*. LOAN $UNDS>

a! Secured C/?#

1! Unsecured "%"/CJ

8.DE$ERREDTA< LIA!ILIT:>

[email protected]

*&8B7.*@

86@@.7

. $I

a! Gross Bloc6 JC%"H/$H

+ess: Depreciation #%CC/$"1! )et Bloc6 "%H??/#"

c! *apital @or6 in

Progress C%J"$/J?*. IN=ESTMENTS>

8. CURRENT ASSETSLOAN AND AD=ANCES>

a! In9entories $%H/#

1! Sundr2 De1tors%H/?

c! *ash E Ban6Balance "#%/?J

d! +oan E Ad9ances ?%"?C/

e! Interest Accrued onDeposits "CJ/#

J$%HCJ/$$

+ess: *urrent lia1ilities and

Pro9ision "H%JC"/J

6.MISCELLANEOUSE


25/48

$or t1e -ear ended 8stMar?1 *''@(Rs/ In +a6h!

+IABI+II'S A,OU)RS/

ASS'S A,OU)RS/

. SHAREHOLDERS $UNDS>

a! Share *apital C#J/"$

1! Share Application Deposit ?H#/##

c! Reser9e and Surplus $?HJ"/$

"/ +OA) FU)DS:

a! Secured $CC/?#

1! Unsecured $?CH$/##

/ D'F'RR'D A +IABI+I-

@7&@.*

&@.

86'7.8@

. $I

a! Gross Bloc6 JC%C/JH

+ess: Depreciation #%CJ/"

1!)et Bloc6 "?%"$$/?"

c! *apital @or6 inProgress J%J/"?

"/ I)'S,')S:

/ *URR') ASS'S+OA)A)D ADA)*'S:

a! In9entories $%?"/$#

1!Sundr2De1tors $H##/?H

c! *ash E Ban6Balance "H%#$H/J

d! +oan E Ad9ances "?C#/"

e! Interest Accrued onDeposits HH$/$

C??J/C#

+ess: *urrent lia1ilities andPro9ision "%C?"/C

H/,IS*'++A)'OUS'P')DIUR' O .''') )O @RI')OFFKAD7US'D

86'77.77

*8&*.8'

@8B.&6

'.''

'78'7.' '78'7.'

!ALANCE SHEET O$ HINDUSTAN PAPER CORPORATION LTD.


26/48

$or t1e -ear ended 8stMar?1 *''&

+IABI+II'S A,OU)RS/

ASS'S A,OU)RS/

SOURCES O$ $UNDS

. SHAREHOLDERS $UNDS>

a! Share *apital %JJ/"$1! Share Application Deposit ?%H#/##c! Reser9e and Surplus $J%CH/?

*. LOAN $UNDS>

a! Secured $H"/?#

1! Unsecured $?%CH$/#$

8.DE$ERREDTA< LIA!ILIT:>

#%C"/CH

$?%JJ/?$

%"#$/"H

APPLICATION O$ $UNDS

. $I

a! Gross Bloc6

+ess: Depreciation

1!)et Bloc6

c! *apital @or6 inProgress

*. IN=ESTMENTS>

8. CURRENT ASSETSLOANAND AD=ANCES>

a! In9entories

1!Sundr2 De1tors

c! *ash E Ban6

Balance

d! +oan E Ad9ances

e! Interest Accrued onDepositor

+ess: *urrent lia1ilities

and Pro9ision

)et *urrent Assets

H%$C/J

?%$H/H?

"%#HJ/"

C%"#/?#

"$%"/#

$H%H$/?"

%?$/"

"J%#J/?

"H%$H"/

$%$$/C

77668.6'

"?%$H/H

?"%"/H

''7.6& Tota0 ''7.6&


27/48

CASH $LO; STATEMENT(Rs. In LaF1

SL.NO

PARTICULARS $OR THE :R.ENDED 8ST

MARCH *''@

$OR THE :R.ENDED 8ST

MARCH *''7A. CASH $LO; $ROM OPERATING

ACTI=ITIES

)et Profit 1efore a= E '=traordinar2 items

Adjustment for:

Depreciation Pro9ision

Interest Income

Di9idend Income

Interest e=penses

ProfitK+oss on sale of fi=ed assets

Operatin4 Profit ,efore /orFin4 ?apita0 ?1an4es

Adjustment for:

rade E Other Recei9a1le

In9entories

rade E Other Pa2a1les

Cas1 Generated fro3 Operation

Income a= paid

Pa2ment of Di9idend including ta= on Di9idend

Redemption of share capital

Cas1 $0o/ ,efore Etraordinar- ite3s

'=traordinar2 Items (Deferred Re9/ '=p/!

Net Cas1 fro3 Operatin4 A?tivities

$CH/#

"##/HJ

($$?"/"?!

($"J/$#!

$/$J

(H/$$!

886.*&

(J$$"/?!

"?HH/

"?/J#

@''@.@'

(?"""/?!

($CCJ/J?!

(###/##!

(&&8.''

(C/J!

(*'8'.@&

$"##/J

"$C/H

($"?/#!

(#C/H!

$H#/C#

(J/J!

*@*B.*

(C?"$/?#!

?C/

?H/HC

8'@.

("?#C/C!

($C/!

#/##

7'B7.'7

("H/J#!

7'6*.*7


28/48

!.

C.

CASH $LO; $ROM IN=ESTING ACTI=ITIES

In9estment in .)+/

Purchase of fi=ed assetsK *apital @or6 in Progress/

Sales of Fi=ed Assets

erm Deposit 5ith Ban6s

Interest Recei9ed

Di9idend Recei9ed

emporar2 Accommodation pro9ided to )PP*

Net Cas1 $0o/ fro3 Investin4 A?tivities

CASH $LO; $ROM $INANCING ACTI=ITIES

Proceeds from Issuance of Share *apital

Proceeds from +ong erm Borro5ings


29/48

CASH $LO; STATEMENT

S+/)O

PARI*U+ARS FOR .' -R/')D'D $S

,AR*. "##

FOR .' -R/')D'D $S

,AR*. "##J

A.

!

CASH $LO; $ROM OPERATING ACTI=ITIES

)et Profit 1efore a= E '=traordinar2 itemsAdjustment for:Depreciation Pro9isionInterest IncomeDi9idend IncomeInterest '=pensesProfitK+oss on Sale of Fi=ed AssetsOperating Profit 1efore @or6ing *apital *hanges

Adjustment for:rade E Other Pa2a1lesIn9entoriesrade E Other Pa2a1les

*ash Generated from OperationsIncome a= paidPa2ment of Di9ident including ta= on the de9idendRedemption of Share *apital*ash Flo5 1efore '=traordinar2 items'=traordinar2 Items (Deferred Re9/ '=p/!)et *ash from Operating Acti9ities

CASH $LO; $ROM IN=ESTING ACTI=ITIESIn9estment in .)+Purchase of Fi=ed AssetsK*apital @or6 in ProgressSales of Fi=ed Assets

erm Deposit 5ith Ban6sInterest Recei9edDi9idend Recei9ed+oan to )PP*emporar2 Accommodation Pro9ided to )PP*)et *ash from In9esting Acti9ities

#C/$

"HH$/#H("##$/#"!($?##/##!

H/CH(#"/H"!H$$?/?

$?/$(JJC/H"!""?"/C

$$H/CJ("HJ/$#!($HHJ/$!("##/##!C?##/H

#/##C?##/H

#/##(HCJC/JH!

?J/"

(J#"$/?!$"J#/H?$?##/##

#/##("?J/#H!

($$H"J/C!

$CH/#

"##/HJ($$?"/"?!($"J/$#!

$/$J(H/$$!

$H$/"

(J$$"/?!"?HH/"?/J#

J##J/J#(?"""/?!($CCJ/J?!(###/##!($/##!

(C/J!("##/J!

($CH/##!($J/J?!

/?

$CH/HJ("/"H!$"J/$#

#/##"C"/H"H?/C"


30/48

C. CASH $LO; $ROM $INANCING ACTI=ITIES

Proceeds from Issuance of Share *apital

Proceeds from +ong erm Borro5ings

Proceeds from *ommercial Paper

@ithdra5al from *ash *redit

Interest Paid

)et *ash Used in Financing Acti9ities

)et Increase in *ash and *ash ';ui9alent AB*

*ash and *ash ';ui9alents at the 1eginning of the

2ear

*ash and *ash ';ui9alents at the end of the 2ear

DISCLOSURE AS REJUIRED !: AS)8

*ash and *ash ';ui9alents at the end of the 2ear

*ash in hand

Stamps in hand

*he;ues in hand

Remittances in transit

Balance 5ith Scheduled Ban6s:

On *ash *redit Account

On *urrent Account

Tota0

#/##

(?/##!

#/##

#/##

(H/CH!

(/CH!

(J/#$!

""/HC

?"H/H

$H/?

#/H

$HH/?$

#/##

#/##

JHH/

*&6.6B

?H#/##

$H#/##

#/##

#/##

(??/$J!

?#H/J"

?H/?

J""/?

""/HC

$/

#/"

$/?"

#/##

#/##

"HH/#

&*B*.67


31/48

RATIO ANAL:SIS

A ratio is a mathematical relationship 1et5een t5o related items e=pressed in;uantitati9e forms/ 5o num1ers are needed to calculate a ratio/ One num1er isput as the numerator and the other as the denominator/

An anal2sis of financial statement 5ith the help of ratio ma2 1e termed as ratioanal2sis/ Ratio Anal2sis implies the process of computing% determining andpresenting the relationship of items and groups of items in the statements/ Ratiosimpl2 means highlighting the arithmetic relationship 1et5een figures dra5n fromfinancial statements/ hus Accounting Ratio refers to the relationship e=pressedin mathematical terms 1et5een t5o accounting figures 5hich ha9e meaningfulrelation 5ith each other/

O!"ECT OR UTILIT: O$ ACCOUNTING RATIO>

(i! *omple= accounting data sho5 in financial statements is simplified%summaried and s2stematied 5ith the help of ratio anal2sis so as toma6e it easil2 understanda1le/ For e=ample% gross profit ratio% net profitratio etc/ gi9e a clearer picture of the profita1ilit2 of a 1usiness than thea1solute profit figures/

(ii! Ratio can assist management in its 1asic functions of forecasting%planning% co


32/48

T:PES O$ ACCOUNTING RATIOS>

Accounting ratio ma2 1e classified as follo5s:

(i LIJUIDIT: RATIOS>+i;uidit2 means the a1ilit2 of the firm to meet its current lia1ilities as the2 1ecomedue and current assets 5hich presuma1l2 pro9ide the source from 5hich theseo1ligations 5ill 1e met/ Since these ratio are used to assess the short term financialposition of the 1usiness enterprise% therefore% the2 are called short term sol9enc2ratio/ It is classified into t5o ratios namel2/

(a CURRENT RATIO>

*urrent Ratio is a li;uidit2 ratio 5hich are used to assess the short term financialposition of the 1usiness enterprise% therefore the2 are also called short

uic6 ratio is computed 12 di9iding li;uid assets 12 current lia1ilities/ his ratiosho5s 5hether the firm is a1le to meet its current lia1ilities 5ithin a month orimmediatel2% it is used to supplement the information for the current ratio/ hisratio is also called as +i;uid Ratio or Acid est Ratio/

+i;uid assetsuic6 Ratio

*urrent +ia1ilities

(ii SOL=ENC: RATIOS >

hese ratios are computed to judge the a1ilit2 of a firm to pa2 off its long termlia1ilities/ It sho5s the proportion of the fund 5hich is pro9ided 12 outside creditors incomparison to o5ners/ hese ratios are also 6no5n as long term sol9enc2 ratios/Important sol9enc2 ratios are gi9en as follo5s:

(a DE!T EJUIT: RATIO>his ratio indicates the relationship 1et5een long termde1t and the e;uit2 (or shareholders fund!/ As such% this ratio is 5or6ed out 12di9iding long term loans or de1t 12 shareholders fund or e;uit2/


33/48

De1tK+ong term +oansDe1t ';uit2 Ratio

';uit2KShareholders Fund

(, TOTAL ASSETS TO DE!T RATIO>

his ratio sho5s the relationship 1et5een total assets and the long term de1ts of theenterprise/ his ratio measured the proportion of total assets funded 12 long termde1t/ he higher the ratio % lesser role is pla2ed 12 loaned funds in financing theassets engaged in profit generating acti9ities of an organiation and 9ice

his ratio indicates the relationship 1et5een ';uit2 and otal Real Assets and iscomputed 12 di9iding the shareholders fund (';uit2! 12 total assets/ )ormall2proprietar2 ratio attempts to indicate the part of total assets funded through e;uit2/he higher the ratio% the more profita1le it is for the creditors and management 5ill

ha9e to depend less on outside funds/ If the ratio is lo5% the creditors can 1esuspicious a1out the repa2ment of their de1t/ herefore% outside funds should 1eutilied to a limited e=tent/

';uit2Kshareholders fundsProprietar2 Ratio

otal Real Assets

(iii ACTI=IT: RATIOS>

Acti9it2 ratios are used to indicate the efficienc2 5ith 5hich assets such as stoc6%de1tors% fi=ed assets etc/ of the firm are 1eing utilied/ hese ratios are also 6no5nas urno9er (or 9elocit2! ratios 1ecause the2 indicate the speed 5ith 5hich assetsare 1eing con9erted or turned o9er into sales/ hese ratios% thus% e=press therelationship 1et5een cost of goods sold or sales and 9arious assets and aree=pressed in num1er of times% i/e/% rate of turning or rotation/ he follo5ing are theimportant ratios 5hich are commonl2 included in this categor2:


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(a STOC9 OR IN=ENTOR: TURNO=ER RATIO>

his ratio sho5s the relationship 1et5een cost of goods sold during a gi9en periodand a9erage stoc6 carried during the period/ hus% stoc6 turno9er is the num1er oftimes o1tained 12 di9iding the cost of goods sold 12 a9erage stoc6/ his ratioindicates the rate at 5hich stoc6s are con9erted into sales/ he higher the ratio1etter it is for the 1usiness% its means that stoc6 is 1eing sold ;uic6l2/

*ost Goods SoldSO*> UR)O'R RAIO

A9erage Stoc6

(, DE!TOR TURNO=ER RATIO>

his ratio indicates the relationship 1et5een net credit sales and a9erage accountsrecei9a1les during the 2ear/ It sho5s the rate at 5hich case is generated 12 theturno9er of de1tors/ he ratio indicates as to ho5 man2 da24s a9erage sales are tiedup in the amount of de1tors/ he higher the ratio% the 1etter it is% since it meansspeedier collection and lesser amount 1eing 1loc6ed up in de1tor and 9ice

he de1tor turno9er ratio is usuall2 supplemented 12 a9erage collection period/ hisratio indicates the e=tent to 5hich the de1tors ha9e 1een collected in time/ he time5ithin 5hich the amount is collected from de1tors and 1ills recei9a1le is calculatedthrough this ratio/ A shorter collection period implies prompt pa2ment 12 de1tors/

A9erage Account Recei9a1le (De1tors BKR!A9erage *ollection Period

)et *redit Sales per da2/ i/e/% )et *redit SalesK?

(d ;OR9ING CAPITAL TURNO=ER RATIO>

his ratio sho5s the relationship 1et5een the cost of goods soldK sales of the firm toits 5or6ing capital/ It is calculated 12 di9iding cost of goods soldK sales 12 5or6ingcapital/ his ratio indicates the efficienc2 or inefficienc2 in the utiliation of 5or6ingcapital in ma6ing sales/ A higher 5or6ing capital turno9er ratio sho5s the efficient


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utiliation of 5or6ing capital in generating sales/ A lo5 ratio on the other hand% ma2indicate e=cess of 5or6ing capital or 5or6ing capital has not 1een utilied efficientl2/

(iv PRO$ITA!ILIT: RATIO>

Profit earning is the main o1jecti9e of each 1usiness concern/ In fact% efficienc2 of a1usiness is measured in terms of profits/ hus profita1ilit2 ratios are computed tomeasure the efficienc2 of a 1usiness/ Profit earning capacit2 ma2 1e e=pressed inthe form of sales/ Important profita1ilit2 ratios are:

(a GROSS PRO$IT RATIO>

his ratio e=presses the relationship 1et5een gross profit and sales and such isusuall2 e=pressed in percentage/ )o ideal ratio is fi=ed 1ut normall2 a higher ratio isal5a2s considered good so as to co9er not onl2 the remaining costs 1ut also to allo5proper returns to o5ners/

Gross ProfitGross Profit Ratio $##

)et Sales

(, OPERATING PRO$IT>

his ratio e=plains the relationship 1et5een cost of goods sold and operatinge=penses on the one hand and the net sales on the other/ he operating ratio is the2ardstic6 to measure the efficienc2 5ith 5hich a 1usiness is operated/ It sho5s the

percentage of net sales that is a1sor1ed 12 cost of goods sold and operatinge=penses/ A higher operating ratio is considered unfa9ora1le 1ecause it lea9es asmaller margin of profit to meet non


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*urrent Assets*urrent Ratio

*urrent +ia1ilities

For the year 2007J$HCJ/$$

*urrent Ratio /":$"HJC"/J

For the year 2008C??J/C#

*urrent Ratio /$:$"C?"/C

For the year 2009

CCHH/H#*urrent Ratio /#CL

"?$H/H

Significance:current ratio of ":$ is considered to 1e an ideal ratio/ .o5e9er% thisrule of thum1 9aries from industr2 to industr2/ As the current ratio of .P*+ in the2ear "##C greater than the standard ratio it indicates the poor in9estment policies ofthe concern/ Similarl2 of the compan2 in the 2ear "##J and "## is also greater thanthe ideal ratio/ herefore it is 1eneficial to the short term creditors/ If the ratio is less

than the standard ratio i/e/% ":$ it indicates lac6 of li;uidit2 and shortage of 5or6ingcapital/

JUIC9 RATIO

+i;uid assetsuic6 Ratio

*urrent +ia1ilities

For the year 2007

?H#$/?uic6 Ratio "/:$

"HJC"/JFor the year 2008

"#?C/#uic6 Ratio "/:$

"C?"/C

For the year 2009


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#"/JJuic6 Ratio "/?$:$

"?$H/H

Significance:According to the Accounting Principle% a ;uic6 ratio of $:$ is supposedto 1e good/ Since in all the calculated three 2ears the ratios are more than the idealratio i/e% $:$ 5hich indicates that the financial condition of the firm is sound andgood/ On the other hand if the ratio is less than the standard one% the financialposition of the concerned shall 1e deemed to 1e unsound and additional cash 5illha9e to 1e pro9ided for the pa2ment of current lia1ilities/

DE!T EJUIT: RATIO>

De1tK +ong erm +oansDe1t ';uit2 Ratio

';uit2K Shareholders4 Funds

For the year 2007"C/"J

De1t ';uit2 Ratio #/C:$CCCJ?/?

For the year 2008$?$J/?$

De1t ';uit2 Ratio #/$J:$

JCJ$/$"

For the year 2009$?JJ/?$

De1t ';uit2 Ratio #/$C:$#HC"/CH

Significance :he de1t e;uit2 ratio of ":$ is generall2 accepta1le as ideal ratio/ Itmeans de1t could 1e t5ice the e;uit2/ his ratio sho5s the relati9e amount of fund

supplied to the 1usiness 12 outsider and 12 the o5ner/ As the de1t e;uit2 ratio of allthe three 2ears are less than the ideal ratio i/e/% ":$ here it indicates that the claimsof the o5ners are greater than those of the creditors/ If it is higher than the idealratio% the creditors claim 5ill 1e higher than those of the o5ners/

TOTAL ASSETS TO DE!T RATIO>

otal Real Assets


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otal Assets to De1t Ratio De1t

For the year 2007H"C/JC

otal Assets to De1t Ratio $/$C:$"C/"J

For the year 2008H#CC/CC

otal Assets to De1t Ratio "/$:$$?$J/?$

For the year 2009

J/Cotal Assets to De1t Ratio "/"J:$

$?JJ/?$

Significance:his ratio measures the proportion of total assets funded 12 long termde1t/ he higher the ratio% lesser role is pla2ed 12 loaned funds in financing theassets engaged in profit generating acti9ities of an organiation and 9ice 9ersa/Since in the 2ear "## the total assets to de1t ratio is comparati9el2 more than thepre9ious 2ear4s total assets to de1t ratio% this indicates that there is lesser amount offunds in financing the assets than the pre9ious 2ears funds a9aila1le for thefinancing of assets/

PROPERIETOR: RATIO>

';uit2 or Shareholders4 FundsProprietor2 Ratio

otal Real Assets

For the year 2007CCCJ?/?

Proprietor2 Ratio "/:$

H"C/JC

For the year 2008JCJ$/$"

Proprietor2 Ratio "/:$H#CC/CC

For the year 2008#C"/CH


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Proprietor2 Ratio "/?:$J/C

Significance :Proprietar2 ratio indicates the part of total assets funded 12 e;uit2/he higher the ratio% the more profita1le it is for the creditors/ Since the computateproprietar2 ratio of last three 2ear are slightl2 increase it indicates that the creditorsare rela= and are in profit/ he management 5ill ha9e to depend less on outsidefunds/ If the ratio is lo5 the creditors can 1e suspicious a1out the repa2ment of theirde1t/ herefore% outside funds should 1e utilied to a limited e=tent/

STOC9 TURNO=ER RATIO>

*ost of Goods SoldStoc6 urno9er Ratio

A9erage Stoc6

For the year 2007

$"/$Stoc6 urno9er Ratio H/ times

$$/C

For the year 2008CC?/HJ

Stoc6 urno9er Ratio H/ times$#C/H

For the year 2009CJCJC/$?

Stoc6 urno9er Ratio ?/J times$?"/$#

Significance :his ratio indicates the rate at 5hich stoc6s are con9erted into sales/he higher the ratio% the 1etter it is for the 1usiness% since it means that stoc6 is1eing sold ;uic6l2/ *oncern hea9ing too high stoc6 turno9er ratio ma2 1e operating5ith lo5 margin of profit and 9ice 9ersa/ Since in the 2ear "##% the stoc6 turno9erratio is comparati9el2 higher than the 1oth pre9ious 2ear this means that the

1usiness is operating in a 1etter 5a2 and there is a ;uic6 selling of stoc6s/

)et *redit SalesDe1tor urno9er Ratio

A9erage Account Recei9a1le (De1tor BKR!

For the year 2007


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$"/$De1tor urno9er Ratio $/$ times

HCCH/#


De1tor urno9er Ratio C/J times H/?


De1tor urno9er Ratio ?/ times$H##/?H

Significance :his ratio indicates as to ho5 man2 da2s4 a9erage sales are tied upin the amount of de1tors/ he higher the ratio% the 1etter it is% since it meansspeedier collection and lesser amount 1eing 1loc6ed up in de1tors and 9ice 9ersa/From the calculation it is clear that in the 2ear "##C% the de1tor turno9er ratio ishigher than the ne=t t5o 2ear/

A=ERAGE COLLECTION PERIOD>

A9erage Account Recei9a1le (De1tor BKR!

A9erage *ollection Period )et *redit Sales per da2 i/e/ )et *redit SalesK ?

For the year 2007HCCH/#

A9erage *ollection Period "? da2s$"/$K?

For the year 2008H/?

A9erage *ollection Period HC da2sCC?/HJK?

For the year 2009$H##/?H

A9erage *ollection Period ? da2sCJCJC/$?K?


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Significance :his ratio indicates the time 5ithin 5hich the amount is collected fromthe de1tors/ A shorter collection period implies prompt pa2ment 12 de1tors/ Itreduces the chances of 1ad de1ts/ A longer collection period implies too li1eral andinefficient credit collection performance/ It indicates the inefficienc2 and negligenceon the part of management/ In the 2ear "##C% the a9erage collection period is onl2"? da2s it indicates that de1tors are ma6ing pa2ment ;uic6l2/ But in case of ne=t t5o2ears the de1tors ta6ing times to ma6e pa2ments 5hich are not good from theorganiation aspect/

;OR9ING CAPITAL TURNO=ER RATIO>

*ost of Goods Sold or Sales@or6ing *apital urno9er Ratio

@or6ing *apital

For the year 2007$"/$

@or6ing *apital urno9er Ratio $/ times?H?$/J


@or6ing *apital urno9er Ratio $/ times?#?/"?


@or6ing *apital urno9er Ratio $/? times?$J/H

Significance :his ratio indicates the efficienc2 or inefficienc2 in the utiliation of5or6ing capital in ma6ing sales/ A higher 5or6ing capital turno9er ratio sho5s theefficient utiliation of 5or6ing capital in generating sales/ A lo5 ratio on the otherhand% indicates e=cess of 5or6ing capital or 5or6ing capital has not 1een utiliedproperl2/ For the 2ear "##C and "##J the 5or6ing capital turno9er ratio is same and

for the 2ear "## the 5or6ing capital turno9er ratio is comparati9el2 higher than 1othpre9ious 2ears 5hich indicate that the 5or6ing capital is utilied more properl2 forma6ing sales than the pre9ious 2ears/

GROSS PRO$IT RATIO>

Gross ProfitGross Profit Ratio $##

)et Sales


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For the year 2007

H#H#$/$Gross Profit Ratio $## ?C/CJL

$"/$

For the year 2008

H"?/"Gross Profit Ratio $## ?JL

CC?/HJ

For the year 2008

?#$?/$?Gross Profit Ratio $## H/"HL

CJCJC/$?

Significance :his ratio e=presses the relationship 1et5een gross profit and sales/)o ideal ratio is fi=ed 1ut normall2 a higher ratio is al5a2s considered good so as toco9er not onl2 the remaining costs 1ut also to allo5 proper returns to o5ners/ Sincein the 2ear "## the gross profit ratio is more than the pre9ious 2ears/ In this 2earthe profit of the concern is higher than the last t5o 2ears/

CONCLUSION

From the Project Report one can understand the importance of Ratio Anal2sis in anorganiation/ his project 5or6 has gi9en me a deep insight of management offinancial acti9ities of the organiation/ An2one can understand that there is no


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consideration 1et5een theor2 and practical% 5hich I ha9e learnt from this project5or6/ heoretical 6no5ledge gained should 1e 1ac6ed 12 some practical 6no5ledge/I understood the importance of 1oth theor2 and actual 5or6ing during the project5or6/

During this Project% I ascertained that:$/ he o9erall financial position of the compan2 is good/ he compan2 is using

its funds in a proper manner and direction necessar2/ he management is ona practice to reduce all the e=ternal lia1ilities and sol9e the financial pro1leminternall2/

"/ he compan2 has maintained proper records sho5ing particulars% including;uantitati9e details and situation of fi=ed assets/ During the 2ear the compan2has not disposed of an2 su1stantial part of the fi=ed assets/

/ As per the 1alance sheet figure firm has moderate in9estment in fi=ed assets/

H/ he compan2 has neither granted nor ta6en an2 loan% secured or unsecured%

toKfrom companies% firms or other parties co9ered in the register maintainunder section #$ of the *ompanies Act% $?/

?/ he compan2 has no accumulated losses at the end of the financial 2ear andit has not incurred an2 case losses in the current 2ear or in the pre9ious 2ear/

/ he *ompan2 did not ha9e an2 outstanding de1enture during the 2ear/

C/ he *ompan2 has not defaulted in repa2ment of dues to an2 financialinstitution% 1an6s/ he *ompan2 does not ha9e an2 1orro5ings 12 5a2 ofde1enture/

J/ he *ompan2 has not granted loans and ad9ances on the 1asis of Securit212 5a2 of pledge of Shares% De1entures and other securities/

/ he *ompan2 has not raised an2 mone2 through pu1lic issues during the2ear/

All these elements are ascertained through the help of financial statement/ So as form2 project% I conclude m2 topic and I thin6 that m2 o1jecti9e of doing this project5or6 is completed satisfactoril2/ But there are some pro1lems faced 12 the compan2%5hat I noticed and necessar2 suggestions are gi9en in the te=t/

SUGGESTIONS


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On the 1asis of the anal2sis done% follo5ing are the some of the 6e2 areas 5here thecompan2 should loo6ed for5ard and should ta6e necessar2 steps to come out 5ithfeasi1le solution/

$! he in9entor2 has 1een ph2sicall2 9erified during the 2ear 12 themanagement/ In our opinion% the fre;uenc2 of 9erification is reasona1le/

"! he procedure of ph2sical 9erification of in9entories follo5ed 12 themanagement are reasona1le and ade;uate in relation to the sie of thecompan2 and the nature of its 1usiness/

! he internal audit s2stem of the compan2 needs to 1e strengthened to ma6eit commensurate 5ith the sie and nature of its 1usiness/

H! Operating profit of firm seems negati9e 2ear 12 2ear 5hich is not good% thus ithas 1een necessar2 for compan2 to reduce its operating e=penses and cost

of selling goods/

?! Since it is an industrial mar6eting the compan2 should emplo2 effecti9e salespersonal 5ho is ha9ing good negotiation s6ill and can 1u2 num1er of salesorders/

his project 5or6 ga9e me complete insight a1out% ho5 the anal2sis of financialstatements is done and utilied for the gro5th of the compan2/ It gi9es me6no5ledge a1out ratio anal2sis in the organiation 5hich has helped me inascertaining the true financial position of the organiation/

!I!LIOGRAPH:


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Reference Boo6s:

*oncepts of Ratio Anal2sis:

I/,/ Panda2% Financial ,anagement% heor2 and Practices i6as Pu1lishing E*o/% )e5 Delhi/

>han and 7ain% Financial ,anagement% Hth 'dition% ata ,cGra5 .illPu1licating *o/ +td/

Prasanna *handra% Financial ,anagement% ? th 'dition% ata ,cGra5 .illPu1licating *o/ +td/


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RE$ERANCES

*ompan24s Internal Sources

Boo6s

Annual Reports

@e1sites Used:

555/hindpaper/com
http://www.hindpaper.com/http://www.hindpaper.com/


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Declaration

Ac6no5ledgement

CONTENTS Page )o/

*hapter $/ PR'FA*' $

*hapter "/ *O,PA)- PROFI+' "

*hapter / BOARD OF DIR'*OR C

*hapter H/ .'IRAR*.- OF FI)A)*' A)D A**OU)S D'P/

*hapter ?/ PRODU* PROFI+' $#

*hapter / OB7'*I' OF .' SUD- $

*hapter C/ +I,IAIO) OF .' SUD- $H*hapter J/ ,'.ODO+OG- $?

*hapter / I)RODU*IO) $

*hapter $#/ FI)A)*IA+ SA',')S $J

*hapter $$/ *AS. F+O@ SA',') "?

*hapter $$/ RAIO A)A+-SIS "

*hapter $"/ FI)DI)GS A)D *A+*U+AIO)S H

*hapter $/ *O)*+USIO) H$

*hapter $H/ SUGG'SIO) H"

Bi1liograph2 H


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References H?

LL

Documents

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