financial operation

AN ANALYSIS OF FINANCIAL OPERATIONS OF UNIROYAL

MARINE EXPORTS LTD, VENGALAM, CALICUT

PROJECT REPORT

Submitted In Partial Fulfillment of the Requirements for the Award of the Degree

of

MASTER OF BUSINESS ADMINISTRATION (MBA)

Submitted by

Under the Guidance of

DEPARTMENT OF MBA, JAWAHARLAL COLLEGE OF

ENGINEERING AND TECHNOLOGY, LAKKIDI, OTTAPPALAM

September - 2011

OBJECTIVES OF THE STUDY

To study the profitability and liquidity of the firm

To analyze the changes in working capital during the period

To compare financial performance of different periods

SCOPE OF THE STUDY

The scope of the study includes an analytical study of financial operations

with regards to UME LTD.

It is necessary to analyze financial performance to understand more about

profitability and financial position of the business. This study will give an exact

picture of the company and will help the management to take managerial

decisions. It can also be used for the purpose of comparative study of the similar

industries.

RESEARCH METHODOLOGY

Research simply means searching for knowledge.

“Research Comprises Defining And Redefining Problems, Formulating

Hypothesis Or Suggested Solutions; Collecting, Organizing & Evaluating Data;

Making Deductions And Reaching Conclusions; And At Last Carefully Testing

The Conclusions To Determine Whether They Fit The Formulating Hypothesis” -

CLIFFORD WOODY

Methodology can be the analysis of the principles of methods, rules, and

postulates employed by a discipline, the systematic study of methods that are, can

be, or have been applied within a discipline. It depends on the objectives of the

study.

RESEARCH PROBLEM

The research problem in this study is “to analyze the financial operations of

UNIROYAL MARINE EXPORTS LIMITED.”

RESEARCH DESIGN

The research use facts or information area by available to analysis and evaluate material, so it is descriptive and is more of the analytical in nature. The study is primarily based on the internal records and the annual reports of the company.

PERIOD OF STUDY

The study period consist of 5 years. ie, the financial statements of the year ending

March 2007 to March 2011.

DATA COLLECTION

PRIMARY DATA

Data directly collected by the researcher, with respect to problem under study, is known

as primary data. Primary data is also the first hand data collected by the researcher for

the immediate purpose of the study. It is collected through unstructured

interviews with officers of the company

SECONDARY DATA

Secondary data are statistics that already exists. It collects from the following

Company Reports and Records

Journals and Books

Internet

TOOLS AND TECHNIQUE USED

Ratio Analysis

Comparative Statement Analysis

Statement of Changes in Working Capital

LIMITATIONS OF THE STUDY

Lack of adequate time for study

3.1 INDUSTRY PROFILE

India with a large wart line of 8129 km of exclusive economic zone and 1.2

million hectors of brackish water bodies, offers vast potential for development of

fisheries. Against an estimated potential of 3.9 million tons are tapped.

MARINE FISHERIES IN INDIA

The fisheries sector occupies a unique status in the national economy and

provides employment opportunities and food and nutritional security in the last

50 years. The growth in marine fisheries sector has been rather slow during the

nineties when compared to the previous decades.

The geographic base of Indian marine fisheries has 8118 km. coastline,

2.02 million sq. km of Executive Economic Zone (EEZ) including 0.5 million sq.

km of continental shelf and 3937 fishing villages. There are 1896 traditional fish

landing centres, 33 minor fishing harbours and 6 major fishing harbours which

serve as bases for about 2,08,000 traditional non-motorized craft 55,000 small

scale beach- landing craft fitted with outboard motors, 51250 mechanized craft

(mainly bottom trawlers and purse-seiners) and 180 deep sea fishing vessels and

out of which 80 are in operation. The post-harvest infrastructure consists of

freezing plans, canning plants, ice making plants, fish meal plants, cold storage

and peeling sheds which together cater to a sizable, labour force of one million

people engaged in fishing and another 0.8 million in post – harvest operations. A

large number of scientists, technocrats and other organized categories of

personnel are involved in research, education, technology development and

administration in marine fisheries. The estimated first value of the marine fish

landings in the year 2000 was Rs. 10,200 core. There is a lucrative and organized

sea food export trade with the value of the export exceeding Rs. 6300 core.

A large number of fin fish and shell fish stock principally consisting of

sardines, Bombay- duck, ribbonfish Indian mackerel, coastal tunas, ser fishes,

pealed and non-pealed shrimps, stompatopoda, croakers, threadfin breams, silver

bellies and carangids trevallies, leather jackets, scads and horse mackerel are

exploited using different craft and gear combinations.

Marine fisheries within the territorial waters are the subject of maritime

states whereas fisheries beyond this limit within the EEZ fall in the jurisdiction of

central government besides playing an advisory role also provides funding

support to the state/ union territories for implementation of central sector and

Centrally Supported Schemes. The policy initiates are required not only for

making marine fisheries sustainable and responsible, but also globally

competitive so that Indian producers stand to gain in international markets. The

global scenario with respect to marine fisheries is rapidly changing with major

developments in harvesting and processing technology and consequent expansion

of global markets for fish and fishery products.

The ministry of agriculture has been paying due attention in the past

decade to the development of deep sea fishery in the country. The declaration of

EEZ in 1976 facilitated exploration, exploration and utilisation of marine living

resources in the sea around India extending to 200 nautical miles, thereby giving

the nation immense opportunities and challenges to harvest the resources and to

manage them on sound scientific basis. The past three decades have witnessed

rapid initiatives by the govt and private agencies in the marine fisheries sector of

the country. On realisation that most of the deep sea fishery resources beyond the

conventional fishing limit and fishing capability of the indigenous craft can be

gainfully exploited only if the upgraded and sophisticated vessels of adequate

size and capabilities are inducted into the fishery and mobilization of capital and

expertise indigenously to achieve this was found difficult in short span of time,

the Govt addressed this issue in 1981 Charter Policy.

After the expiry of five years of operation of this policy, the govt revised

the policy to rectify the deficiencies noticed during its operation and to make it

more beneficial to the country. Accordingly a revised 1986 Charter Policy

envisaged acquisition of vessels by the Indian Companies either through import /

construction in India or through joint venture etc. As a result of the above Charter

Policy, 97 companies were permitted to operate 311 foreign fishing vessels.

Besides augmenting the marine fish production in the country, the policy also

facilitated greater inflow of foreign exchange through export of fish caught by

these vessels. All these vessels were operating on 100 % EOU basis. The Govt of

India subsequently constituted a few Committees to gather inputs on availability

of the fishing craft, status of marine fishing resources, issues relating to the

various stakeholder groups etc.

The marine fishing policy announced by Govt. of India in the past focussed

only on the developmental needs o the deep sea sector, leaving aside similar

issues pertaining to the coastal sector to the respective marine states/ UT’s. Even

though substantial assistance was channelized through Central and Centrally

Sponsored Schemes in to the state/ UT’s for the development of coastal fisheries,

non existence of an integrated policy for this sector was found to hamper

fulfilment of the national objectives. Therefore in the present policy the Govt

seeks to bring the traditional and coastal fisherman also in to the focus together

with stakeholders in the deep sea sector so as to achieve harmonized development

of marine fishery both in the territorial and extra territorial waters of our

Country. The theme of comprehensive marine fishing policy is enshrined in the

National Agriculture policy promulgated by the govt. it is significant that the new

policy is being pronounced during the initial years of the X five.

A large proportion of coastal fish stocks are exploited, leaving under

exploited resources in the deeper seas. Out of about 54000 Mechanized Fishing

Vessels (MFVs) below 20m overall (OAL) length, a majority is engaged in

trawling and a sizable percentage operates in the near shore water resulting in

pressure on the coastal stocks. However, opportunities exist for pelagic stocks,

out of a 1.2 million tonnes about 871000 tonnes are estimated to be in the non

oceanic zone.

The govt has allowed entry of resource- specific fishing vessels such as

tuna long liners, mid- water trawlers, hood and lie, and the like (procured mainly

on deferred payment basis) and about 80-85 such vessels are presently operating

in deeper water of the Executive Economic Zone (EEZ) to tap the available

potential.

EXPORT OF MARINE PRODUCTS

Export of fish and fishery products India commenced in 1953 with one

export of small consignment of frozen shrimp from Cochin, India is the major

producing country among the world nation. Out of the total fish production of

about 2.5 million tonnes less than 5 % is exported, while the rests sold in

domestic market for direct human consumption. The fish freezing in the country

is almost entirely export oriented and frozen fishery products contributed 95 % of

foreign exchange. Prawn squid and cattle fish constitute important items of the

fishery resources of our country. From the economic point of view prawn and

cephalopods occupy the top rank as the backbone of sea food export industry of

the country.

1.2 COMPANY PROFILE

INTRODUCTION

Uniroyal Marine Exports is an export oriented public limited company. It was

incorporated in August 1992 for setting up a modern sea food factory for the

processing and export of value added marine products to USA, the European

Union and the Far East. The sea food industry was at the time, considered to be

one of the 'Sunrise’ industries with a golden future and an assured export market.

The company has build up a good market for its various products in Europe. It is

one of the few factors in the country enjoying ‘Green Channel’ status for export

of cooked products in to US and also approved for export of frozen fishery

products in to the European Union.

UME LTD is one of the well known companies in the field of marine

exports. It was formulated as public limited company. The company is located at

Vengalam village, near kozhikode. It is very close to the largest fishing harbors in

Beypore and Puthiyappa. The Company started as 100 percent export oriented

unit and late in 2003 onwards. The company gains the UME status and has been

enjoying the Export Promotion Capital Scheme. Their products are well known in

the foreign market in the brand name "ROYAL GOLD". They produce and

export items according to the order received from abroad.

THE MAIN OBJECTIVES OF COMPANY

As per company's memorandum of association, the main objective of the

company is “to carry on the business of purchasing, caring, canning, freezing,

selling, exporting, and dealing in marine products.”

BANKERS : THE FEDERAL BANK LTD, KOZHIKODE-673011

UCO BANK, KOZHIKODE-673001

WEBSITE : WWW.UNIROYALMARINE.COM

EMAIL : [email protected]

FAX NUMBER : 91-0496-2633783

BOARD OF DIRECTORS

CHAIRMAN : IYPE MATHEW

MANAGING DIRECTOR : ANUSH.K.THOMAS

DIRECTORS : K.C.THOMAS

: V.MOHANLAL

: VARGHESE THOMAS

: V.T.JOHN

: NATH RAM

: P.SHRINIVAS

CHIEF EXECUTIVE : THOMAS.P.KOSHY

COMPANY SECRETARY : V.BALACHANDRAN

THE MAIN MARKETS

USA,

TAIWAN,

JAPAN,

ITALY,

BELGIUM,

GERMANY,

FRANCE,

KUWAIT,

QATAR

CAPITL STRUCTURE

The company issued only equity shares at a nominal value of Rs.10/-each.

The company went for public issue in august 1993. The company shares are

issued at Cochin Stock Exchange, Delhi Stock Exchange and Bombay Stock

Exchange.

Their authorised share capital was 80, 00, 000 equity shares @ Rs. 10 each Rs.

800, 000, 000

ISSUED / SUBSCRIBED / PAID UP CAPITAL

65, 00, 000 Equity shares @ Rs. 10/- each subscribed and paid up as follows:

a. 33, 00, 000 Equity shares issued to public – Rs. 3, 30, 00,

000

b. 32, 00, 000 Equity shares held by promoters and associates-Rs. 3, 20, 00,

000

Total - Rs. 6, 50, 00, 000

ORGANISATIONAL STRUCTURE

Fig. 3.2.1

MANAGING DIRECTOR

GENERAL MANAGER

COMPANY SECRETARY

ACCOUNTS MANAGER

PRODUCTION MANAGER

CHIF

ENGINEER

SHIFT-IN-CHARGE

QUALITY CONTROL

DEPARTMENTASSISTANT

SANITATION-IN-CHARGE ASSISTANT

TECHNOLOGISTS

SUPERVISORS

ASSISTANTS

WORKERS

TIME OFFICE-IN-CHARGE

PURCHASE EXECUTIVE

SHIPMENT EXICUTIVE

3.3 PRODUCT PROFILE

SHRIMPS PRODUCTSSQUID PRODUCTS

Head-on-shrimpsSquid whole

Head-less-shrimpsSquid whole cleaned

Head-less-shrimps blanchedSquid tentacles

Peeled and undeveined shrimpsSquid tube

Peeled and undeveined shrimps

Blanched

Squid rings

Peeled and cooked shrimpsSquid ring blanched

Peeled and deveined shrimpsSquid tentacles blanched

Peeled and deveined shrimps blanched

Squid ring tentacles

Table No. 3.3.1

Table No.3.3.2

CUTTILE FISH PRODUCTSOCTOPUS PRODUCTS

Cuttle fish wholeOctopus while gutted

Cuttle fish whole cleanedOctopus ring blanched

Cuttle fish tentaclesOctopus tentacles v-cut blanched

Cuttle fish strips blanched

Table No. 3.3.3

FUNCTIONAL DEPARTMENTS

1. PURCHASE DEPARTMENT

The company has a department headed by the purchase manager. The main

duty of the purchase manager is the procurement by raw materials which are

required for processing. In addition to this the functioning of the peeling sheds,

where the pre-processing of materials is taken place are also comes under the

direct control of the purchase manager.

Purchase agents make direct purchase from direct fisherman. They get

commission on the basis of purchase made by them. There are 5 purchase

assistants to help the purchase manager in performing his duties. There are shed

supervisors to look after the affairs of the peeling sheds.

The raw materials required for processing are shrimps and fish. The

production manager who gives details of raw material required such variety,

quantity; grade.etc. Purchase is made according to the demand of purchase

department.

FROZEN FISH PRODUCTSFROZEN LOBSTER PRODUCTS

Ribbon fishDeep sea lobster whole

MackerelDeep sea lobster tails

Sea fish whole

Sea fish whole gutted

Reef cod whole

Reef cod gutted

2. PRODUCTION DEPARTMENT

UME LTD has a separate department for production under the guidance of

production manager. It converts input in to output. The company works 24 hours

a day. The processing is done in 3 shifts. Each shift is headed by a shift-in-

charge.1 shift consist of 70 processing girls, 10 male workers and 7 production

supervisors.

The function of production department includes the following.

1. Grading of materials

2. Processing of materials

3. Packing of processed materials

4. Storage of processed materials

The processing of materials is done according to the specification of buyer.

Company's previous year's production was 1524 Million Ton.

3. ENGINEERING DEPARTMENT

The company has machines and equipments for their functioning. It must

be properly maintained and repaired. Otherwise the entire production will be

stopped. For this purpose, there is an engineering department headed by a chief

engineer. He manages the maintenance function. The main function of this

department is to keep the plant and equipment in good working condition. The

department works 24 hours a day as per the production shift. It ensures continues

supply of power, water, etc.

4. TIME KEEPING DEPARTMENT

The office-in-charge is the head of the department. The time officers,

drivers, and cleaners, are working under him. The person who enters to the

production plant and back from there should report first at the time office.

Vehicles are used for transportation of goods are under the supervision of time

officer. So it also records the arrival and departure of vehicles which are used for

carrying goods.

5. ELECTRONIC DATA PROCESSING DEPARTMENT

Electronic data processing-in-charge is the head of this department. The

Uniroyal Marine Export 3imited is not fully computerised. But its 80% of

functions are computerised. Finance and share department are fully computerised.

Only quality and quantity aspects are entered in the computer in the production

department.

6. QUALITY CONTROL DEPARTMENT

The quality control manager is the head of this department. The main

function of this department is to check the quality after every process. The

department conducts various inspection testing. Better quality means reduced

cost of repairs, instructions and rework and product warrantees. Increased

productivity results in better profits and builds customer loyalty.

Quality control is done mainly with intention to prevent the defect in

manufacturing so that items may be made right at the first time and not to be

rejected later. In order to achieve this end several activities need to be performed.

There must be inspection and control of incoming raw material to ensure that

they meet specification; there must be planning and control of manufacturing

process to ensure that suitable methods are being used and that equipments are

performing satisfactory; there must be in process inspection to ensure that items

being fabricated meet specification.

7. STORES DEPARTMENT

After the inspection of purchased materials they have to be taken in to

store.

FUNCTIONS AND RESPONSIBILITIES OF THE DEPARTMENT

Receiving the raw materials.

Providing adequate storage preservation of various items.

Issuing material against authorized requisition.

Carry stock out verification.

Entering receipts in various documents.

Stores department is headed by store-in-charge officer. Stores department

works 24 hours. The department is divided into 3 sections.

8. FINANCE DEPARTMENT

Finance department deals with the costing and accounting activities of

enterprise. Financial records reveal the actual profit of business and real financial

position. It provides details of fund flow of the organization. In UME LTD, there

is one account manager and in each unit they have assistant account managers.

Two basic financial statements are prepared for the purpose of external

reporting.

a. Balance sheet

b. Profit and loss account.

These statements are recorded in the company's annual report. For internal

management purpose planning and controlling much more information than

contained in the public financial statement is to assist in decision making. Export

cost includes freight also. The company's technical know-how and preliminary

expenses are written off over a period of 10 years.

Capital structure

share capital loans fund reserve surplus

equity share capital

promoter secured loan unsecured loan

banker

employer

public

9. SHARE DEPARTMENT

Share department deals with the further issue of shares, issue of share

certificate, call of shares, forfeiture of share, conduct general meeting and

declaring dividend as well as keeping necessary books and documents.

10. MARKETING DEPARTMENT

Marketing occupies very important role in the company. Because it

identifies, anticipates, and satisfies the customer's requirements profitably.

Marketing procedure

The company receives order from buyers. Orders may be collected either

by company or trade agents. These agents collect orders from importers and place

the same with exporters. These agents are known as Indent houses; charge a

commission on the orders placed by them. In UME, the direct sale is rare. Direct

sales can be made through the presentation of products in trade fares, etc.

11. PUBLIC RELATION DEPARTMENT

Public relation officer is the head of this department. PRO coordinates the

activities of the internal department of marketing, production, quality control,

accounting, government or private departments like customs & excise, export

inspection agencies, JDGET(Joint Director General of Foreign Trade), shipping

lines, SGS, Lloyd's, J.B.Boda, etc for the smooth function of the Export/Import.

ANALYSIS AND INTERPRETATION

LIQUIDITY RATIOS

A. CURRENT RATIO

Current Ratio= Current Assets ÷ Current Liabilities

Rs in lakhs

Year 2008 2009 2010 2011 2012 MeanCurrent Assets

639.87

703.49

880.15

928.44

1033.87 837.164

Current Liabilities

239.06

253.19

256.54

242.14 312.94 260.774

Current Ratio 2.67 2.78 3.43 3.83 3.3 3.202

2007 2008 2009 2010 20110

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2.67 2.78

3.43

3.83

3.3

Current Ratio

Current ratio

Ratio

Year

Inference

The current ratio shows an increasing trend from 2008 to 2011. But in 2012 it

reduced. The mean current ratio 3.2:1 which is favorable compared to the ideal

current ratio 2:1. This shows that the firm is able to meet its short term obligation.

LIQUID / QUICK RATIO

Liquid/ Quick Ratio = Quick/Liquid Assets ÷ Current liabilities

Quick/ liquid Assets = Current Assets- Inventories

Rs in lakhs

Year 2008 2009 2010 2011 2012 Mean

Quick Assets142.7

2 150.6 138.4 152262.4

6Current Liabilities

239.06

253.18

256.54

242.14

312.94

Quick Ratio 0.597 0.595 0.54 0.628 0.84 0.64

2007 2008 2009 2010 20110

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

0.597 0.5950.54

0.628000000000004

0.840000000000001

Quick Ratio

Quick Ratio

Year

Ratio

Inference

From the above table and chart the liquid ratio of the company is decreasing

from 0.59 in 2008 to 0.54 in 2010 and it shows an increase trend from 0.63 in

2011 to 0.84 in 2012. The ideal quick ratio is 1:1. Therefore the firm will not

be able to pay off its current liabilities when they become due.

ABSOLUTE LIQUID RATIO

Absolute Liquid or Cash Ratio = Absolute Liquid Assets ÷ Current

Liabilities

Absolute Liquid Assets = Quick assets – (Debtors + Receivables)

Rs in lakhs

Year 2008 2009 2010 2011 2012 MeanAbsolute Liquid Assets 118.2 87.46 36.54 45.27 79.86

Current liabilities239.0

6253.1

8256.5

4242.1

4312.9

4Absolute Liquid Ratio 0.5 0.35 0.14 0.2 0.25 0.288

2007 2008 2009 2010 20110

0.1

0.2

0.3

0.4

0.5

0.6

0.5

0.35

0.140.2

0.25

Absolute Liquid Ratio

Absolute Liquid Ratio

Ratio

year

Inference

The Absolute Liquid Ratio is decreasing from 0.5 in 2008 to 0.14 in 2010.

Then it increases to 0.25 in 2012. This shows the absolute liquid ratio of the

firm is harmfully low than the ideal ratio 1:2.

B. PROFITABILITY RATIO

GROSS PROFIT RATIO

Gross Profit Ratio = (Gross Profit ÷ Net Sales)*100

Gross Profit= Net Sales - (cost of goods sold+ Freight)

Rs in lakhs

Year 2008 2009 2010 2011 2012Mean

Gross Profit 294.87 306.4 506.9 275.71 321.36

Net Sales2912.1

82432.

12709.6

91993.7

62543.2

3 Gross Profit Ratio (in %) 10.13 12.6 18.71 13.83 12.64

13.582

2007 2008 2009 2010 201102468

101214161820

10.13

12.6

18.71

13.8312.64

Gross Profit Ratio

Gross Profit Ratio (in %)

Year

Ratio

Inference

The Gross Profit Ratio has a fluctuating trend. It increases from 10.13% in

2008 to 18.71% in 2010. In 2010 it reaches at highest level and then starts to

decrease up to 12.64% in 2011. The mean GP Ratio is 13.58% which is not

favorable compared to ideal ratio which is 20%- 25%.

NET PROFIT RATIO

Net Profit Ratio = (Net Profit After Tax ÷ Net Sales) * 100

Inference

Rs in lakhs

Year 2008 2009 2010 2011 2012Mean

Net Sales2912.1

82432.

12709.6

91993.7

62543.2

3

Net Profit -8.05 11.33 11.52 22.07 31.48Net Profit Ratio (in %) -0.27 0.46 0.43 1.12 1.24 0.596

The Net Profit Ratio is negative in 2008. Then it became positive in 2009. It

comes to 1.24 % in 2011. The ratios show a fluctuating trend. The company

should increase its sales and reduce cost for increasing the net profit. This is not

at a satisfactory level while compared to the ideal N/P Ratio 5 %-10 %.

OPERATING RATIO

Operating Ratio = (Operating Cost ÷ Net Sales) * 100

Operating Cost = Cost of goods sold + Administration, Selling & financial Expenses

Rs in lakhs

Year 2008 2009 2010 2011 2012 Mean

Net Sales2912.1

82432.

12709.6

91993.7

62543.2

3 Operating Cost 2626.6

2191.4 2258.8 1777.9 2272.1

Operating Ratio (in %) 90.19 90.1 83.36 89.2 89.34

88.438

2007 2008 2009 2010 201178

80

82

84

86

88

90

9290.19 90.1

83.36

89.2 89.34

Operating Ratio

Operating Ratio (in %)

Year

Ratio

Inference

The ratio decreased to 83.36 % in 2010 and then increased up to 89.34%

in 2012. Operating of firm has decreased. Average operating ratio is 88.44 %.

The ideal rate is 75%.- 85 %. Therefore it is in good position.

OPERATING PROFIT RATIO

Operating Profit Ratio = (Operating Profit÷ Net Sales) * 100

Operating Profit = Net Sales- Operating Cost

Rs in lakhs

Year 2008 2009 2010 2011 2012 Mean

Net Sales2912.1

82432.

12709.6

91993.7

62543.2

3

Operating Profit 285.58 240.7 450.89 215.86 271.13Operating Profit Ratio (in %) 9.8 9.9 16.64 10.83 10.66

11.566

2007 2008 2009 2010 20110

2

4

6

8

10

12

14

16

18

9.8 9.9

16.64

10.83 10.66

Operating Profit Ratio

Operating Profit Ratio (in %)

Year

Ratio

Inference

Operating Profit Ratio is increased up to 16.64% in 2010 and then started

decreasing. The mean rate 11.56 is satisfactory.

COMPARATIVE BALANCE SHEET OF UME LTD

AS ON MARCH 31, 2007 AND 2008

Particulars 2007 2008

Increase/DecreaseRs)

Increase/Decrease (%)

CAPITAL AND LIABILITIES Share holders’ Funds Share Capital 64888500 64888500 0 0 Reserves and Surpluses 2427842 2427842 0 0

Total 67316342 67316342 0 0 Long Term Funds

Secured Loan 30590345.6 28066449.62

-2523895.9

5 -8.25 Unsecured Loan 18071543.3 17875391.3 -196152 -1.08

Total 48661888.9 45941840.92

-2720047.9

5 -5.59 Current Liabilities 20995220.4 21581116.05 585895.7 2.79 Provisions 2911108 3736634 825526 28.36

Total 23906328.4 25317750.05 1411421.7 5.9

Total 139884559 138575933

-1308626.2

5 -0.94ASSETS Fixed Assets Gross Block 119657047 120069322.4 412274.96 0.35

Less: Depreciation 82329671.1 89134314.946804643.8

6 8.26 Net block 37327376.4 30935007.47 -6392368.9 -17.13 Add: Capital 145000 NILL 0

Work In Progress Total 37472376.4 NILL 0

Investments 15000 NILL 0 Current Assets Loans and Advances

Inventory 49714541.6 55305052.285590510.6

5 11.25 Sundry Debtors 2454942 6313596.5 3858654.5 157.18 Cash and Bank Balances 4429751.96 5009445.16 579693.2 13.1

Loans and Advances 7387934.87 3736284.96

-3651649.9

1 -49.43

Total 63987170.5 70364378.96377208.4

4 9.96 Deferred Tax Asset 11032784.4 11032784.36 0 0

Profit and loss A/C 27377228 26243762.24

-1133465.7

6 -4.14

Total 139884559 138575933

-1308626.2

2 -0.94

Inference

Fixed assets have been reduced by 17.13% during 2008. The current assets

have been added by 9.96%. It implies better asset management.

Current liabilities increased by 2.79%

The general financial structure of company in not good




Increase/Decrease(Rs)



Total 67316342 67316342 0 0 Long Term Funds

Secured Loan28066449.6

2 29988802 1922352.38 6.85 Unsecured Loan 17875391.3 8345586.3 -9529805 -53.31

Total45941840.9

2 38334388.3-

7607452.62 -16.56

Current Liabilities21581116.0

521992775.3

7 411659.32 1.91

Provisions 3736634 3661437 -75197 -2.01

Total25317750.0

525654212.3

7 336462.32 1.33

Total 138575933131304942.

7 -7270990.3 -5.25

ASSETS Fixed Assets

Gross Block120069322.

4120774746.

4 705424 0.59

Less: Depreciation89134314.9

495756842.9

4 6622528 7.43

Net block30935007.4

725017903.4

7 -5917104 -19.13 Current Assets Loans and Advances

Inventory55305052.2

874176969.1

318871916.8

5 34.12 Sundry Debtors 6313596.5 10183955.5 3870359 61.31 Cash and Bank Balances 5009445.16 151372.56 -4858072.6 -96.98 Loans and Advances 3736284.96 3503004.95 -233280.01 -6.24

Total 70364378.988015302.1

417650923.2

4 25.1

Deferred Tax Asset11032784.3

6 3547450.61-

7485333.75 -67.85

Profit and loss A/C26243762.2

414724286.4

5

-11519475.7

9 -43.89

Total 138575933131304942.

7 -7270990.3 -5.25

Inference

During the period there has been a decrease in fixed assets by Rs

5917104 i.e, 19.13 % while the long term liabilities to outsiders have

decreased by Rs. 7607452.62 ie, 16.56 %. This indicates the fixed assets

have been financed from long term sources.

Current assets loans and advances have gone up by Rs 17650923.24 ie,

25%. There has been a decrease in cash and bank balances by Rs

4858076, ie, 96.9 %.

Current liabilities and provisions have increased Rs 336462, ie, 1.33 %.

This shows that the current assets of the company having improvement

and there by the liquidity position of the company will increase.






CAPITAL AND

LIABILITIES Share holders’ Funds Share Capital 64888500 64888500 0 0 Reserves and Surpluses 2427842 2427842 0 0

Total 67316342 67316342 0 0 Long Term Funds Secured Loan 29988802 29697846 -290956 -0.97 Unsecured Loan 8345586.3 8940281.3 594695 7.13

Total 38334388.3 38638127.3 303739 0.79

Current Liabilities21992775.3

720494257.2

2

-1498518.1

5 -6.81 Provisions 3661437 3719265 57828 1.58

Total25654212.3

724213522.2

2

-1440690.1

5 -5.61

Total131304942.

7130167991.

5

-1136951.1

5 -0.86ASSETS Fixed Assets


4122885554.

4 2110808 1.75

Less: Depreciation95756842.9

4101149995.

95393152.9

9 5.63

Net block25017903.4

721735558.4

8

-3282344.9

9 -13.12 Current Assets Loans and Advances

Inventory74176969.1

377643577.8

83466608.7

5 4.67 Sundry Debtors 10183955.5 10673307 489351.5 4.81 Cash and Bank Balances 151372.56 1407078.72

1255706.16 829.5

Loans and Advances 3503004.95 3119844.17 -383160.78 -10.9

Total88015302.1

492843807.7

74828505.6

3 5.5 Deferred Tax Asset 3547450.61 3071979.61 -475471 -13.4

Profit and loss A/C14724286.4

512516645.6

6

-2207640.7

9 -14.99

Total131304942.

7130167991.

5

-1136951.1

5 -0.86

Inference

The comparative balance sheet of company reveals that during the

year 2010 there has been a decrease in fixed assets by Rs 3282344.99,

ie, 13.12 % and the long term funds have increased by Rs. 303739, ie,

79 %. This means the fixed assets have not been financed from long

term sources. A part of working capital has been financed from long

term sources.

The current assets loans and advances have increased by Rs 4828505

ie, 5.5 %. In that cash and bank balance shows huge increases of Rs

1255706 ie, 829.5 %. Stock and sundry debtors have also increased.

Current liabilities and provisions have decreased by Rs.140690 ie, 5.6

%. This indicates improvement in liquidity position of the firm.







Total 67316342 67316342 0 0 Long Term Funds Secured Loan 29697846 27266651 -2431195 -8.18 Unsecured Loan 8940281.3 8477332.3 -462949 -5.18

Total 38638127.3 35743983.3 -2894144 -7.5 Current Liabilities

20494257.22

27088098.94 6593841.72 32.17

Provisions 3719265 4206217 486952 13.09

Total24213522.2

231294315.9

4 7080793.72 29.24

Total130167991.

5134354641.

2 4186649.72 3.23

ASSETS Fixed Assets


4126363920.

4 3478366 2.83 Less: Depreciation

101149995.9

105233668.9 4083673 4.04

Net block21735558.4

821130251.4

8 -605307 -2.78 Current Assets

Loans and Advances

Inventory77643577.8

8 77141539.7 -502038.18 -0.65 Sundry Debtors 10673307 18259994.9 7586687.9 71.1 Cash and Bank Balances 1407078.72 340605.16

-1066473.56 -75.8

Loans and Advances 3119844.17 7645038.27 4525194.1 145.05

Total92843807.7

7 10338717810543370.2

6 11.36 Deferred Tax Asset 3071979.61 469127.87

-2602851.74 -84.73

Profit and loss A/C

12516645.66 9368083.86 -3148561.8 -25.15

Total130167991.

5134354641.

2 4186649.72 3.23

Inference

Long term fund reduced by Rs 2894144 ie, 7.5 %. And total current

liabilities increased to Rs 7080793.72 ie, 29.24 %.

Fixed assets decreased by Rs 605307 ie, 2.78 %. This is mainly due to

4.04 % increase in depreciation during the year.

Current assets increased by Rs 10543370.26 ie, 11.36 %.

Profit and loss account shows a loss of Rs 3148561.8 or 25.15 %.

COMPARATIVE INCOME STATEMENT OF UME LTD

FOR THE YEAR ENDED 31ST DECEMBER 2007 AND 2008




Net Sales 291217816 243209750 -48008066 -16.48

Less: Cost of Goods Sold

239043284.2

196380159.4

-42663124.8

3 -17.85 Shipping Freight and Expenses

22687798.52

16291692.17

-6396106.35 -28.2

Gross Profit29486733.2

530537898.4

3 1051165.18 3.56Add: Miscellaneous Receipts 682398.9 694445.21 12046.31 1.8

Gross Profit and MR30169132.1

531232343.6

4 1063211.49 3.5Less: Admn and Selling Expenses

16365082.21 16020186.9 -344895.31 -2.11

PBIDT13804049.9

415212156.7

4 1408106.8 10.2

Less: Depreciation 6985787 7023105 37318 0.53

PBIT 6818262.94 8189051.74 1370788.8 20.1Less: Interest and Financial Charges 7254191.2 6741157.95 -513033.25 -7.07

Profit for the year -435928.26 1447893.79 1883822.05 -432.1Less: Prior Period Adjustment 281961 259428 -22533 -7.99

PBT -717889.26 1188465.79 1906355.05 -265.5

Less: Tax 87450 55000 -32450 -37.1

PAT -805339.26 1133465.79 1938805.05 -240.7

Profit Brought Forward26571888.7

727377228.0

3 805339.26 3.03

Profit Transferred to balance Sheet

-27377228.0

3

-26243762.2

4 1133465.79 -4.14

Inference

Net sales decreased by Rs 48008066 or 16.48 %. Cost of goods sold

and shipping freight expenses also decreased by Rs 42663124.83 or

17.85 % and Rs 6396106.35 or 28.2 % respectively. The gross profit

increased by Rs 1051165.18 or 3.56 %

PBIDT have increased by Rs 1408106.8 or 10.2 %. And PBIT

increased by Rs 1370788.8 or 20.1 %.Profit for the year have

increased by Rs 1883822.05. PAT also increased by Rs 1938805.05.






Net Sales 243209750 270969364 27759614 11.41Less: Cost of Goods Sold

196380159.4

202097565.5 5717406.09 2.91

Shipping Freight and Expenses

16291692.17

18359854.01 2068161.84 12.69


3 50511944.519974046.0

7 65.4Add: Miscellaneous Receipts 694445.21 303927.45 -390517.76 -56.23


450815871.9

519583528.3

1 62.7Less: Admn and Selling Expenses 16020186.9

15269131.44 -751055.46 -4.68

PBIDT15212156.7

435546740.5

120334583.7

7 133.67Less: Depreciation 7023105 7015097 -8008 -0.11

PBIT 8189051.7428531643.5

120342591.7

7 248.4Less: Interest and Financial Charges 6741157.95 8522148.51 1780990.56 26.42

Profit for the year 1447893.79 2000949518561601.2

1 1281.9Less: Prior Period Adjustment 259428 694685.46 435257.46 167.7

PBT 1188465.7919314809.5

418126343.7

5 1525.2

Less: Tax 55000 7795333.75 7740333.75 14073

PAT 1133465.7911519475.2

510386009.4

6 916.3 Profit(loss) Brought Forward

27377228.03

26243762.24

-1133465.79 -4.14


-26243762.2

4

-14724286.9

911519475.2

5 -43.89

Inference

There has been an increase in sales by Rs 27759614 or 11.41 %. There is a

huge decrease in miscellaneous expenses by Rs 390517.76 or 56.23 %.the

cost of goods sold and shipping and freight expenses have increased by

2.91 % and 12.69% respectively. As there is a high increase in sales and

miscellaneous receipts there is an increase in gross profit by Rs

19583528.31 or 62.7 5.

The operating profit or profit before depreciation interest and tax (PBDIT)

has increased by Rs. 20334583.77 or 133.67 %. This is due to increase in

sales and control of operating expenses.

The profit for the year has shown a high increase of 1282 %. Profit before

tax has increased 1536%.

There has been a significant increase in tax by Rs. 7740333.75 or 14073

%.hence the profit after tax has increased by 916 %

The overall profitability of the company is not satisfactory






Net Sales 270969364199375916.

1

-71593447.8

9 -26.42

Less: Cost of Goods Sold

202097565.5

158301147.7

-43796417.8

3 -21.67 Shipping Freight and Expenses

18359854.01

13625545.24

-4734308.77 -25.78

Gross Profit 50511944.527449223.2

1

-23062721.2

9 -45.66Add: Miscellaneous Receipts 303927.45 681402.68 377475.23 124.2

Gross Profit and MR

50815871.95

28130625.89

-22685246.0

6 -44.6Less: Admn and Selling Expenses

15269131.44

16043522.07 774390.63 5.07

PBIDT35546740.5

112087103.8

2

-23459636.6

9 -65.9

Less: Depreciation 7015097 5393152.99-

1621944.01 -23.12

PBIT28531643.5

1 6693950.83

-21837692.6

8 -76.5Less: Interest and Financial Charges 8522148.51 3444349.04

-5077799.47 -59.6

Profit for the year 20009495 3249601.79 - -83.7

16759893.21

Less: Prior Period Adjustment 694685.46 46490 -648195.46 -93.3

PBT19314809.5

4 3203111.79

-16111697.7

5 -83.4

Less: Tax 7795333.75 995471-

6799862.75 -87.2

PAT11519475.2

5 2207640.79-

9311834.46 -80.8

Profit(loss) Brought Forward

26243762.24

14724286.45

-11519475.7

9 -43.8


-14724286.9

9

-12516645.6

6 2207641.33 -14.99

Inference

The sales have shown a decrease in 2010 by Rs 71593447.89 or 26.42 %.

Miscellaneous receipts have increased by Rs 377475.23 or 124.2 %. Cost

of goods sold and shipping and freight charges shows a decrease by Rs

43796417.83 or 21.67 % and Rs 4734308.77 or 25.78 % respectively. The

gross profit shows a decrease of 45.66 %.

PBDIT or operating profit has decreased by 65.9 %. PBIT also shows a

decrease of 76.5 %. Hence the profit for the year has decreased by 83.7 %.

The profit after tax or (PAT) of the company has decreased during the

year 2010 by Rs 9311834.46 or 80.8 %.

The general profitability of company is not favorable during the period






Net Sales199375916.

1 25432322354947306.8

8 27.55Less: Cost of Goods Sold

158301147.7

204524036.5

46222888.79 29.2

Shipping Freight and Expenses

13625545.24

17806060.36 4180515.12 30.68


131993126.1

8 4543902.97 16.55Add: Miscellaneous Receipts 681402.68 286340.52 -395062.16 -57.97


9 32279466.7 4148840.81 14.75Less: Admn and Selling Expenses

16043522.07

15982671.29 -60850.78 -0.38

PBIDT12087103.8

216296795.4

1 4209691.59 34.8

Less: Depreciation 5393152.99 4083673-

1309479.99 -24.3

PBIT 6693950.8312213122.4

1 5519171.58 82.45Less: Interest and Financial Charges 3444349.04 6704763.05 3260414.01 94.65

Profit for the year 3249601.79 5508359.36 2258757.57 69.5Less: Prior Period Adjustment 46490 438179.82 391689.82 842.5

PBT 3203111.79 5070179.54 1867067.75 58.3Less: Tax 995471 1921617.74 926146.74 93.03

PAT 2207640.79 3148561.8 940921.01 42.6 Profit(loss) Brought Forward

14724286.45

12516645.66

-2207640.79 -14.99


-12516645.6

6-

9368083.86 3148561.8 -25.15

Inference

Net sales of the company during the year have increased By Rs

54947306.88 or 25.55 %. Gross Profit also has shown an increasing trend.

There is an increase of Rs 4543902.97 or 16.55 % in gross profit.

The PBIDT have risen by Rs 4209691.59 or 34.8 %. This is due to the

decrease in administration and selling expenses by Rs 60850.78 or .38 5.

PBIT have increased to 32.45 %.

It shows improved profit for the year say Rs 2258757.57.ie, 69.5 %.

PAT is Rs 940921.01 or 42.6 %

SCHEDULE OF CHANGES IN WORKING CAPITAL

(FOR THE YEAR ENDED MARCH 31, 2008)

Particulars 2007 2008 Increase Decrease

Current Assets

Cash and bank 4429751.96 5009445.16 579693.2

Sundry Debtors 2454942 6313596.5 3858654.5

Inventory49714541.6

355305052.2

8 5590510.65

Loans and advances 7387934.87 3736284.96 3651649.91

Total63987170.4

6 70364378.9 Current Liabilities and provision

Current Liabilities 20995220.3

521581116.0

5 585895.7

Provision 2911108 3736634 825526

Total23906328.3

525317750.0

5

Working Capital40080842.1

145046628.8

5 Net increase in working capital 4965786.74 4965786.74

10028858.3

510028858.3

5




Current Assets

Cash and bank 5009445.16 151372.56 4858072.6

Sundry Debtors 6313596.5 10183955.5 3870359

Inventory55305052.2

874176969.1

318871916.8

5

Loans and advances 3736284.96 3503004.95 233280.01

Total 70364378.988015302.1

4 Current Liabilities and provision


521992775.3

7 411659.32

Provision 3736634 3661437 75197

Total25317750.0

525654212.3

7


562361089.7

7 Net increase in working capital

17314460.92

17314460.92

22817472.8

522817472.8

5




Current Assets

Cash and bank 151372.56 1407078.721255706.1

6

Sundry Debtors 10183955.5 10673307 489351.5

Inventory74176969.1

377643577.8

83466608.7

5 Loans and advances 3503004.95 3119844.17 383160.78

Total88015302.1

492843807.7

7 Current Liabilities and provision


720494257.2

21498518.1

5

Provision 3661437 3719265 57828

Total25654212.3

724213522.2

2


768630285.5

5 Net increase in working capital 6269195.78

6269195.78

6710184.5

66710184.5

6




Current Assets

Cash and bank 1407078.72 340605.16 1066473.5

6

Sundry Debtors 10673307 18259994.97586687.

9

Inventory77643577.8

8 77141539.7 502038.18

Loans and advances 3119844.17 7645038.274525194.

1

Total92843807.7

7 103387178 Current Liabilities and provision


227088098.9

4 6593841.7

2Provision 3719265 4206217 486952

Total24213522.2

231294315.9

4


572092862.0

9 Net increase in working capital 3462576.54

3462576.54

1211188

2 12111882

financial operation

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