financial performance of public sector enterprises...

CHAPTER III

FINANCIAL PERFORMANCE OF PUBLIC SECTOR

ENTERPRISES –AN ANALYSIS

The present chapter contains three sections. Significance of financial ratios in

financial performance analysis are discussed in the first section , the theoretical base

of the selected financial ratios in the second section and the evaluation of financial

and operating performance are detailed in the third section.

Section 1: Significance of Financial Ratios in the Performance Analysis

For evaluating the financial performance, financial ratios are used. These

ratios help in evaluating whether the company is performing well or not. The pivotal

instruments for providing most of such economic information are the financial

statements prepared at regular intervals by the public enterprises.

It is worth quoting in this connection the observation made by Eaton

Marquis (1957)1 former president of AICPA (Association of the Institute of Certified

Public Accountants of America), who asserted that one thing which holds the

economy together under all the pressures and in the midst of this swift evolutionary

passage through time is our system of financial reporting. Without adequate

information about the results of business operations, no one could make intelligent

decisions, and our economy would fall apart.

Financial statements, as vehicles of communication, intend to convey

information about the workings of the unit over a period of time as well as its state

of affairs at a point of time. The Tuyeblood Committee (1973)2, in its report

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enunciating the objectives of financial statements, states that the function of external

accounting reports is to provide information for making of economic decisions by

parties who rely on such reports as a basic source of information. These financial

statements purport to communicate economic messages of the results of business

decisions and events which can be expressed in terms of quantifiable data in such a

way as to achieve the maximum understanding with the users and correspondence of

the message with economic reality.

Financial statements are multifunctional, catering to the needs of several

users, both from within and outside the economic unit, viz., managers, creditors,

investors, taxation authorities, regulatory bodies, trade unions and employees. These

varied users are concerned with the relevant information of their own areas of

interest in the firm for which they analyse and interpret these financial statements.

Some of the users are interested in the quality of operational performance whereas

others are concerned with adjudging the capability of the concern in meeting its debt

obligations. On the basis of the information gained from these financial statements,

these varied users reach the decisions pertaining to their own areas of interests.

Thus, shareholders decide about the shareholding of the concern on the basis of its

expected profitability, credit analysts including financial institutions, bankers and

other lending agencies, about the lending policy on the basis of the creditworthiness

of the concern; and the taxation authorities decide about the amount of tax to be

levied on the basis of the operating results.

Economic messages that the various users draw from these financial

statements get facilitated when the individual variables are transformed into

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financial ratios. This transformation allows direct comparison of economic units of

different sizes and provides a better picture of a firm’s financial position and the

interrelationships of the data. The denominator of financial ratios acts as size

deflator to remove the effects of scale from comparison (Geoffrey, 1980)3. The

usage of financial ratios is also justified by the fact that the selection of pertinent

material from a plethora of published information is more useful than wide and

indiscriminate reading. Financial ratios serve this purpose by reducing the size of

data disclosed in financial statements to precise information. Financial ratios, the

derivatives of financial statements, therefore, are widely applied to reach certain

judgments about the firm under study. They are expected to provide the economic

and objective justification for the decisions. In this connection Laurent (1979)4 has

opined that in principle the justification for employing financial ratio analysis to

investigate a company’s financial state is highly defensible.

The logical reason behind this type of analysis is the proposition that there

are certain normative relationships which exist between different financial

components of a company as displayed in the balance sheet and profit and loss

account. The extent to which a company does or does not conform to these norms

for the activities that it is engaged in is indicative of something favourable or

unfavourable, depending on the relationship being examined.

It is, thus, clear that financial ratios are used not only in analyzing the past

and present financial performance of an economic unit but also can be applied to

predict its future financial performance. The prediction of future events is of great

interest to the varied users of financial statements since it is a necessary pre-

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condition for decision making. The predictive capability of financial ratios has

assumed such an importance in the past few years that it is now used as a criterion

for judging the usefulness of financial statements (Beaver, 1974)5.

It is well established that the earlier the trouble is detected, the more easily

and economically it may be countered. Forewarning helps in forearming. Early

detection of state of affairs and the profitability enable the management to rectify it.

Advance information regarding the condition of an enterprise should be an important

factor in streamlining the allocation of resources by financial institutions, banks and

investors in general, to achieve efficiency.

Section 2: Theoretical Frame Work for Analysis

The ratios applied by the Bureau of Public Enterprises in Kerala for evaluation of

the financial and operating performance such as Debt Equity Ratio, Current Ratio ,

Receivables to Sales , Stock of Finished Goods to Sales , Stock of Raw Materials

to Consumption , Consumption to Sales , Net Profit to Sales and Return on

Investment ,Net worth, Capital Employed, Capital Invested and the Working capital

are taken for evaluation of the financial performances of selected Public Sector

Enterprises under study.

The net worth comprises of paid up capital plus reserves and surplus minus

preliminary expenses, accumulated loss, miscellaneous expenditure not written off

and intangible assets ( as given in balance sheet ) .Capital Employed means net fixed

assets including capital work in progress plus working capital. Capital Invested

means paid up capital plus long term borrowals and Working Capital means the

Current assets including loans and advances minus current liabilities and provision.

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Debt Equity Ratios

Long term debt-to equity ratio reveals the extent of support that the long term

debt holders are enjoying from the equity capital. It thereby provides guidelines as to

what magnitude they can take a shelter of the equity cover available with the

organisation. The basic reason attributable in this case is to avoid further risk

attached to equity capital and shareholders are unwilling to supply additional capital.

This is the ratio of long term borrowals to paid up capital . The computation is made

by using the following formula:

Debt to Equity Ratio = Long term Borrowals / Paid up Capital

An enhanced level of borrowed funds are compared to owner’s investment

which evidently results in higher service obligations in terms of interest payments

and consequently increases the possibility of the firm’s inability to meet its

obligations in time. It exhibits the relationship between loan funds and net worth. Its

main object is to increase the owners benefits ie, possibility to earn income from

such investment exceeds the interest payable to them. A high ratio of debt to equity

is appreciable in the case of capital intensive industries.

Liquidity Ratios

Liquidity ratios measure the ability of the firm to meet its current obligations.

A firm should ensure that it does not suffer from lack of liquidity and also that it

does not have excessive liquidity. The failure of a company to meet its obligations

due to lack of sufficient liquidity, will result in a poor creditworthiness, loss of

creditors’ confidence, or even in legal tangles resulting in the closure of the

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company. A very high degree of liquidity is also bad; e.g. idle assets earn nothing.

The most common ratio, which indicates the extent of liquidity, is current ratio.

Current Ratio

Current Ratio establishes the relationship between assets which are cash or

cash equivalents convertible within a period of one year (Current Assets) to

liabilities which are to be met within a period of one year (Current Liabilities).The

ratio of current assets including loans and advances to current liabilities including

provisions is current ratio.

Current Ratio = Current Assets / Current Liabilities

It measures solvency of the company in the short term. The ideal is

considered as 2:1 but banks consider the minimum acceptable level as 1.33:1 . A

very high current ratio will have an adverse impact on the profitability of the

organisation. It may be due to piling up of inventory, inefficiency in collection of

debtors , high balance in cash and banks without proper investment . It is generally

symptomised by a mismatch of the current liabilities against current assets. If the

money receipts from debtors as well as cash sales and other income are insufficient

to meet the payments which should be made to creditors, there shall be a built up of

creditors balances.

Persisting with such a situation will result in the creditors waiting for longer

periods for recovery of their money. Pressure from creditors will increase, and

illiquidity will become a problem. Part of such crisis is created by the fact that under

the accrual system of accounting, units are made liable to pay advance tax, declare

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and pay dividends to shareholders within a specified period of time in cash. An

unrealistic increase in accounts receivables which are no better than partial truths

does not help. The current ratio endeavours to provide an idea about the cushion

available with the firm to meet its short term obligations. If an enterprise cannot

meet its current obligations when they become due, its continued existence becomes

doubtful, and that renders all other measures of performance irrelevant. Therefore,

liquidity crisis generally leads to solvency crisis. Current ratio, therefore, aids in the

prediction of future operational activity and assists both internal and external users

of financial information in the decision making process.

The ratio, however, is subject to serious theoretical and practical

shortcomings. The ratio is a static concept. What is of greater relevance is the

availability of resources to meet future cash outflows whenever they arise rather than

keeping a buffer as explained by the ratio. These flows depend on elements not

included in the ratio itself, such as sales, profits and changes in economic conditions.

Moreover, the ratio is easily amendable to manipulation. Despite the shortcomings

entailed in the current ratio, more precisely its static nature, its use in predicting

corporate failure has been indicated in the empirical works of Merwin (1942)16

wherein it was suggested that current ratios of the failed firms were in general less

than those of industry as a whole and, therefore, this ratios is expected to possess the

barometric capacity to forewarn imminent problems. A deteriorating ratio is an

indicator of problems in the offing and warrants an effective management over

inventory, accounts receivables, cash and accounts payables.

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Activity Ratios

Activity ratios are employed to evaluate the efficiency with which the firm

manages and utilizes its assets. These ratios are also called as turnover ratios

because they indicate the speed with which assets are being converted or turned over

into sales. Activity ratios thus involve a relationship between sales/production and

assets. A proper balance between sales and assets generally reflects that assets are

managed well. The prominent activity ratios to judge the effectiveness of assets

utilization are capacity utilisation, finished goods turnover, raw material turnover,

debt collection period, credit payment period, asset turnover and working capital

turnover.

a. Receivables to Sales (in months)

The ratio indicates the Account Receivables (Debtors plus Bills Receivables)

to Sales in terms of months. The formula used for computation is:

Receivables to Sales (in months) = Accounts Receivables/ Sales (x) 12

b. Stock of Finished Goods to Sales (in months)

The ratio indicates the stock of finished goods (excluding semi finished

goods) to Sales in terms of months and can be computed by :

Stock of Finished Goods to Sales = Closing stock of finished goods / Sales (x) 12

Change in stock to sales ratio can be either positive or a negative fraction.

Positive change in stock ratio reveals that production was more than the sales,

whereas a negative change indicates market demand exceeded current production

levels. This ratio, if read with capacity utilization ratio, gives more insights. A low

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capacity utilization ratio coupled with negative change in stock ratio points towards

urgent improvement in production levels to avoid stock out situations. Similarly, a

low capacity utilization ratio with a positive inventory build up highlights the need

of intensifying the marketing efforts to push up the sales further.

c. Stock of Raw Materials to Consumption

Material consumed can be found out as opening balance of raw material plus

purchases minus closing balance of raw material. The firms’ operational efficiency

lies in the number of times it will be able to convert the raw material inventory into

finished goods during the period under report. A firm’s operational margin is

realised only when value is added on the raw materials procured by it. This value

addition potential of the process undertaken by the concern contributes towards its

profitability to the extent of the number of times it can transform input into intended

saleable output. A higher ratio indicates the velocity of addition on account of

operating margin is high and the operation is a value generating one.

The ratio of stock of raw materials (excluding general stores and spares ) to

Consumption in terms of months is ascertained by :

Stock of Raw Material to Consumption

= Closing Stock of Raw materials / Raw materials Consumed (x) 12

d. Consumption to Sales

The ratio indicates the raw materials consumed to Sales expressed as a

percentage on Sales and is computed by using the following formula:

Consumption to Sales (%) = Raw material Consumed / Sales (x) 100

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e. Net Profit to Sales

A company should earn profits to survive and grow over a long period of

time. Profits are essential, but it would be wrong to assume that every action

initiated by management of a company should be aimed at maximizing profits,

irrespective of concerns for customers, employees, suppliers or social consequences.

Profitability ratios are calculated to measure the operating efficiency of the

company. Besides management of the company, creditors and owners are also

interested in the profitability of the firm. The profitability ratios discussed here are

return on investment and net profit to sales.

The net profit margin ratio is measured by dividing net profit after taxes

including non- operating incomes less non-operating expenses as appearing in the

profit and loss account by sales. Net profit is obtained when operating expenses,

interest and taxes are subtracted from the gross profit.

Net profit margin ratio establishes a relationship between manufacturing,

administering and selling the products. This ratio is the overall measure of the

firm’s ability to turn each rupee sales into net profit. If the net margin is inadequate,

the firm will fail to achieve satisfactory return on shareholders’ funds.

This ratio also indicates the firm’s capacity to withstand adverse economic

conditions. A firm with a high net margin ratio would be in an advantageous

position to survive in phases of falling selling prices, rising costs of production or

declining demand for the product. It would really be difficult for a low net margin

firm to withstand these adversities. Similarly, a firm with high net profit margin can

make better use of favourable conditions, such as rising selling prices, falling costs

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of production or increasing demand for the product. Such a firm will be able to

accelerate its profits at a faster rate than a firm with a low net profit margin.

An analyst will be able to interpret the firm’s profitability more meaningfully

if one evaluates both the ratios - gross margin and net margin - jointly. For example,

if the gross profit margin has increased over years, but the net profit margin has

either remained constant or declined, or has not increased as fast as the gross margin,

this implies that the operating expenses relative to sales have been increasing. The

increasing expenses should be identified and controlled. Gross profit margin may

decline due to fall in sales price or increase in the cost of production. As a

consequence, net profit margin will decline unless operating expenses decrease

significantly. The crux of the argument is that both the ratios should be jointly

analysed and each item of expense should be thoroughly investigated to find out the

causes of decline in any or both the ratios. The ratio of net profit before tax and

dividend to sales expressed as a percentage on Sales:

Net Profit to Sales (%) = Net Profit Before Tax and Dividend / Sales (x) 100

f. Return on Investment

Return on Investment (ROI) measures the return generated by net fixed

assets plus current assets minus current liabilities excluding bank loans. The ratio of

return on investment is calculated as:

Return on Investment

=Net Profit before Tax and Dividend / Capital Employed (x) 100

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Since taxes are not controllable by management and since firm’s

opportunities for availing tax incentives differ, it is prudent to use net profit before

tax as a measure of profit. In order to survive in the long run a firm should generate

a ROI at least equal to its overall weighted average cost of capital. Any return over

and above ROI on capital employed creates an Economic Value Addition (EVA) on

the shareholder equity.

Section 3: Analysis of Financial Performance of selected Public Sector

Enterprises

For the purpose of evaluation of financial performance, 18 PSUs are selected

from various sector categories of industries in Kerala. They are: 1.Kerala Financial

Corporation ; 2.Kerala Tourism Development Corporation; 3. The Kerala Ceramics

Limited; 4. The Kerala Minerals and Metals Limited ; 5. Travancore Titanium

Products Limited; 6. Transformers and Electrical Kerala Limited ; 7. Kerala State

Electronics Development Corporation Limited; 8. Kerala Agro Machinery

Corporation Limited; 9. Kerala Automobiles Limited; 10.Kerala Agro Industries

Corporation Limited ; 11. Travancore Sugars and Chemicals Limited; 12. Sitaram

Textiles Limited; 13.Handicrafts Development Corporation Limited; 14.Kerala State

Bamboo Corporation Limited; 15.Kerala State Civil Supplies Corporation Limited;

16.Kerala State Artisans Development Corporation Limited; 17. Kerala State

Palmyrah Development and Worker’s Welfare Corporation Limited; and 18. Kerala

Shipping Inland Navigation Corporation Limited .Let us now evaluate the financial

performance one by one:

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1. KERALA FINANCIAL CORPORATION

Kerala Financial Corporation,(KFC) was incorporated in 1953 under the

State Financial Corporations Act , 1951. The forerunner of this corporation was the

Travancore - Cochin Financial Corporation established in 1953 under the SFC Act,

1951 . This was later renamed as Kerala Financial Corporation consequent to the

reorganisation of states in 1956. KFC has its headquarters at Trivandrum with

regional offices at Trivandrum, Kottayam, Palakkad and Kozhikode and district

offices in all the 14 district headquarters of the Kerala state. The KFC is the pioneer

in industrial financing in the Kerala state. Since its inception in 1953, as a

development banker, the contribution of the corporation in the industrialisation of

the state has been significant.

a. Net Worth

The net worth of KFC is analysed for knowing the trend in owners

contribution .The net worth was Rs. 3900 crores during 1990-91 which increased to

Rs. 6014 crores during 1995-96. Again this increased up to Rs. 13,189 crores in

1999-2000. It was Rs. 11332 crores in 2000-2001 which increased to Rs. 11156

crores in 2004-05 and an unprecedented growth of Rs. 26995 crores is seen in 2009-

2010. The overall position of net worth for a period of 20 years study from 1990-91

to 2009-2010 shows a fluctuating trend of increase.(Table 3.1)

b. Capital Employed

The capital employed of KFC is analysed for knowing the trend in net fixed

assets including the capital work in progress plus the working capital . The capital

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employed was Rs 1526 crores during 1990-91which increased to Rs. 2950crores

during 1994-95. Again this increased up to Rs 6187 crores in 1999-2000. It was Rs

8074 crores in 2000-2001 which decreased to Rs 2942 crores in 2004-05 and an

unprecedented growth of Rs 84952 crores is seen in 2009-2010. The overall position

of capital employed for a period of 20 years under study from 1990-91 to 2009-2010

shows a fluctuating trend of increase with exception of the year 1996-97 (Table 3.1).

c. Capital Invested

The Capital Invested by KFC is analyzed for knowing the trends in paid up

capital plus long term borrowings . The capital invested was Rs 2633 crores during

1990-91 which increased to Rs 35864 crores during 1994-95. Again this increased

up to Rs 76891 crores in 1999-2000. It was Rs 86177 crores in 2000-2001 which

decreased to Rs 71671 crores in 2004-05 and an increase to Rs 78562 crores is seen

in 2009-2010. The overall position of capital employed for a period of 20 years

study from 1990-91 to 2009-2010 shows a fluctuating trend of increase (Table3.1).

d. Working Capital

The Working Capital of KFC is analyzed for knowing the trend in current

assets over current liabilities for meeting its short term obligations. The working

capital invested was Rs 1529 crores during 1990-91 which increased to Rs 2875

crores during 1994-95. Again this increased up to Rs 5612 crores in 1999-2000. It

was Rs 7637crores in 2000-2001 which decreased to Rs 2599crores in 2004-05 and

an abnormal increase to Rs 84706 crores is seen in 2009-2010. The overall position

of working capital for a period of 20 years study from 1990-91 to 2009-2010 shows

a fluctuating trend of increase (Table3.1).

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Table 3.1 Net worth, Capital Employed , Capital Invested and Working

Capital of KFC ( Rs in Crores )

Year Net worth Capital Employed Capital Invested Working Capital

1 2 3 4 5

1990-1991 3900.14 1525.54 2632.57 1528.80

1991-1992 4001.17 1660.97 28008.35 1612.55

1992-1993 4618.89 2220.07 30821.88 2170.39

1993-1994 4871.16 2263.25 33139.44 2201.76

1994-1995 6013.8 2949.7 35864.32 2874.56

1995-1996 7282.28 2162.57 39741.57 1849.66

1996-1997 8643 546 49607 2495

1997-1998 10357 1240 61344 648

1998-1999 11645 3815 72212 3148

1999-2000 13189 6187 76891 5612

2000-2001 11332 8074 86177 7637

2001-2002 9789 9573 92376 9145

2002-2003 9635 9019 88443 8615

2003-2004 11186 3649 81502 3276

2004-2005 11156 2942 71671 2599

2005-2006 11533 7697 67211 7383

2006-2007 7220 2877 58353 2578

2007-2008 8183 51206 59118 50920

2008-2009 24353 75545 71766 75288

2009-2010 26995 84952 78562 84706

Source: Compiled from the Review of Public Enterprises , Various issues, Bureau of Public Enterprises , Government of Kerala .

The graphical representation of the trends in the growth of Net worth, Capital

Employed, Capital Invested and Working capital of KFC from 1990-91 to 2009-

2010 with the trend line and regression equation is shown in fig. 3(i)

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Fig. 3(i) Net worth, Capital Employed, Capital Invested and Working capital of KFC

Source: Table 3.1

The trend line (linear trend of first degree) of the Net worth from1990-91 to

2009-2010 is Y = 730.17x + 2628.4. The slope is 730.1x and intercept is 2628.4.

The R² is 0.4913 which shows that the equation is most suitable for prediction.

There is an increase in the net worth of KFC during the liberalization period.

The trend line (linear trend of first degree) of the Capital Employed from

1990-91 to 2009-2010 is Y = 2799.2x+ 15386. The slope is 2799.2x and intercept is

15386. The R² is 0.4458 which shows that the equation is most suitable for

prediction. There is an increase in the capital employed of KFC during the

liberalization period.

The trend line (linear trend of first degree) of the Capital Invested from 1990-

91 to 2009-2010 is Y = 2667.1x + 32457. The slope is 2667.1x and intercept is

32457. The R² is 0.4671 which shows that the equation is most suitable for

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prediction. There is an increase in the capital invested of KFC during the


The trend line (linear trend of first degree) of the Working Capital from

1990-91 to 2009-2010 is Y = 2788.1x + 15585. The slope is 2788.1x and intercept

is 15585. The R² is 0.4427 which shows that the equation is most suitable for

prediction. There is an increase in the working capital of KFC during the


Analysis of Solvency and Profitability

i. Debt to Equity Ratio

This ratio indicates the long term borrowing to paid up capital .The debt

equity ratio of KFC during 1990-91 was 7.25 : 1 which declined to 5.40 : 1 in 1994-

95 . It further declined to 4.93:1 in 1995-96 which increased to 5.28:1 in the next

year and remained almost stagnant up to 2000-2001 (5.75:1) . It again increased to

5.86:1 in 2001-02 and declined to 3.56: 1 in 2004-05 and further declined to 2.85:1

in 2009-2010. It clearly indicates that the long term borrowings to paid up capital is

declining from1990-91 to 2009-10. It shows their reduced dependence on borrowed

funds during the period under study. This is a good sign as a high ratio debt to equity

is not advisable as it is a financing concern (Table 3.2).

ii. Current Ratio

The current ratio of KFC during 1990-91 was 3.78 : 1 which increased to

5.50:1 in 1994-95 .It was 2.73 :1 in 1995-96 and in the subsequent years sharply

declined and then increased to 4.33 :1 in 1999-2000. There was a fluctuating trend

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and declined to 2.04 :1 in 2004-05. An abnormal increase is seen in 2008-09 (62.56

:1 ) and 2009-10 (29.26 : 1 ). The overall trend shows a fluctuating one with decline

in certain years and an abnormal increase in certain other years. To conclude, these

ratios are not favourable, being high. It clearly indicates that the liquidity

management of KFC is not sound and systematic (Table 3.2).

iii. Return on Investment

This is the return on the capital employed by the KFC. The return on

investment shows an increasing trend from 1990-91 (4.61per cent) to 1999-2000

with a normal increase but with exceptional increase in 1996-97 and 1997-98

periods. From 2000-01 (-30.2 per cent) onwards there was a steep decline in all other

years except during 2003-04 (4.96 per cent), 2006-07 (43.55 per cent) and in 2009-

10 (5.46 per cent ).It is clear indication from the ratios that the return on investment

of KFC during the whole period of 20 years of study from 1990-91 to 2009-10 in

not a promising one(Table 3.2).

iv. Net Profit to Sales

This is the ratio of net profit before tax and dividend to total sale of the KFC.

The net profit to sales is in an increasing trend from 1990-91 (3.22per cent) to 2001-

02, but from 2002 -03 onwards there was a decline in all other years with exception

of 2003-04 (1.54 per cent) and 2009-10 (50.43 per cent ) . This makes it clear that

the profit to sales of KFC during the whole period of 20 years of study from 1990-

91 to 2009-10 in not a promising one and the profit earned is only meager(Table

3.2).

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Table 3.2

Financial and Operating Ratios of KFC

Year Debt-equity ratio Current ratio Return on

investment (%) Net profit to sales

(%)

1 2 3 4 5 1990-1991 7.25 : 1 3.78 :1 4.61 3.22 1991-1992 7.36:1 3.89:1 5.41 3.42 1992-1993 7.00:1 4.20:1 6.36 4.15 1993-1994 6.20:1 5.06:1 6.25 3.62 1994-1995 5.40:1 5.50:1 6.45 2.75 1995-1996 4.93:1 2.73:1 45.25 4.62 1996-1997 5.28:1 1.00:1 266.3 5.58 1997-1998 5.67:1 1.36:1 92.58 7.26 1998-1999 5.88:1 2.35:1 30.09 11.46 1999-2000 5.52:1 4.33:1 11.62 6.74 2000-2001 5.75:1 4.48:1 -30.2 20.59 2001-2002 5.86:1 5.14:1 -30.12 20.59 2002-2003 5.10:1 4.81:1 -6.99 -5.5 2003-2004 4.26:1 2.37:1 4.96 1.54 2004-2005 3.56:1 2.04:1 -8.46 -2.84 2005-2006 3.23:1 2.57:1 -2.52 -2.46 2006-2007 2.67:1 1.54:1 43.55 -3.78 2007-2008 2.72:1 14.75:1 -2.01 -12.41 2008-2009 2.52:1 62.56:1 -10.28 -76.21 2009-2010 2.85:1 29.26:1 5.46 50.43


It is seen that direct correlation exists between net worth to capital employed,

capital invested and to some extent working capital and no correlation exist between

other items ( Table 3.3 )

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Table 3.3 Correlation

Item No. Item Correlation 1 Net worth 1

2 Capital Employed 0.951

3 Capital Invested 0.936

4 Working capital 0.088

5 Debt to Equity Ratio -0.907

6 Current Ratio -0.166

7 Return on Investment -0.573 Source: Computed from Table 3.1 and Table3.2

2. KERALA TOURISM DEVELOPMENT CORPORATION

Kerala Tourism Development Corporation (KTDC) Limited is under the

Tourism Department, one of the administrative departments of Government of

Kerala which was incorporated on December, 1965. KTDC is a commercial agency

which is actively participating in building up basic infrastructure needed for the

development of tourism in the State. KTDC is running hotels and wayside amenity

centres throughout Kerala. It promotes and conducts tours all over the State and

maintains a high-tech reservation system.

a. Net Worth

The net worth of KTDC was Rs. 132.89 crores during 1990-91 which

increased to Rs 680.03 crores during 1995-96. Again this increased up to Rs. 5801.7

crores in 1999-2000. It was Rs. 6008.4 crores in 2000-2001 which increased to

Rs.6919.1 crores in 2004-05 and a further growth of Rs. 6788.2 crores in 2009-2010.

The overall trend of net worth for a period of 20 years study from 1990-91 to 2009-

2010 shows an increase with exception of 2007-08 ( Table 3.4).

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b. Capital Employed

The capital employed of KTDC was Rs 690 crores during 1990-91 which

increased to Rs 1093.1 crores during 1994-95. Again this increased up to Rs

5240.7crores in 1999-2000. It was Rs 5477.1 crores in 2000-2001 which increased to

Rs 5932.6 in 2004-05.It was Rs 5122.2 crores in 2009-2010. The overall position of

Capital employed for a period of 20 years study from 1990-91 to 2009-2010 shows

a fluctuating trend of increase with exception of the year 1996-97 (Table 3.4).

c. Capital Invested

The capital invested by KTDC was Rs1530.72 crores during 1990-91 which

increased to Rs 1794.46 crores during 1994-95. Again this increased upto Rs

4540.336 crores in 1999-2000. It was Rs 5240.45 crores in 2000-2001 which

increased to Rs 7094.4 crores in 2004-05 and an increase of Rs 8324.3 crores in

2009-2010. The overall trend of capital invested during the liberalization period

under study shows a fluctuating trend but on the whole it is found increasing( Table

3.4).

d. Working Capital

The working capital invested by KTDC was Rs 150.55 crores during 1990-

91 which increased to Rs 279.31 crores during 1994-95. Again this increased up to

Rs 2408.9 crores in 1999-2000. It was Rs 2582.5 crores in 2000-2001 which

decreased to Rs 462.2 crores in 2004-05 and an abnormal fall to Rs -512.9 crores is

seen in 2009-2010 . The trend during the initial phase of liberalization was an

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increasing one but after 2005-06 the position is a declining one or even it goes to

negative growth (Table 3.4).

Table 3.4

The Net worth, Capital Employed , Capital Invested and Working

Capital of KTDC

( Rs in Crores )


1 2 3 4 5 1990-1991 132.89 690.25 1530.72 150.55 1991-1992 133.97 700.35 1527.85 157.45 1992-1993 181.52 854.47 1584.42 237.67 1993-1994 323.52 981.39 1639.34 289.59 1994-1995 680.03 1093.11 1794.46 279.31 1995-1996 1205.28 1667.81 2143.29 436.39 1996-1997 2366.63 2765.52 2899.85 1553.75 1997-1998 3676.46 3598.94 3323.44 2048.25 1998-1999 4537.73 4384.79 3709.33 2233.78 1999-2000 5801.7 5240.68 4540.36 2408.9 2000-2001 6008.36 5477.05 5240.45 2582.46 2001-2002 6042.3 5531.84 5448.8 756.1 2002-2003 6380.68 5551.31 5580.89 740.55 2003-2004 7159.61 6152.02 6802.46 763.31 2004-2005 6919.1 5932.55 7094.35 462.22 2005-2006 6965.54 5654.99 6771.35 598.18 2006-2007 7139 3907.5 6454.36 -182.34 2007-2008 5894.84 3987.53 7261.96 71.28 2008-2009 6615.52 4628.7 7857.45 482.98 2009-2010 6788.19 5122.17 8324.25 -512.93


97

The graphical representation of the trends in the growth of Net worth,

Capital Employed, Capital Invested and Working capital of KTDC from 1990-91 to

2009-10 is shown in fig. 3(ii)

Fig. 3(ii)

Net worth, Capital Employed, Capital Invested and Working capital of KTDC

Source : Table 3.4

The trend line (linear trend of first degree) of the Net worth from 1990-91 to

2009-2010 is Y = 439.85x-375.74. The slope is 439.85x and intercept is 375.74 .


Hence it is inferred that there is increase in the net worth of KTDC during the


The trend line (linear trend of first degree) of the Capital Employed during

1990-91 to 2009-2010 is Y = 271.98x +840.37. The slope is 271.98x and intercept

is 840.37. The R² is 0.6004 which shows that the equation is most suitable for

prediction. It is inferred that there is an increase in the capital employed of KTDC

during the liberalization period.

98

The trend line of the Capital Invested during 1990-91 to 2009-2010 is

Y=397.19x + 405.93. The slope is 397.19x and intercept is 405.93. The R² is 0.9672

which shows that the equation is most suitable for prediction. There is an increase in

the capital invested of KTDC during the liberalization period.

The trend line of the Working Capital during 1990-91 to 2009-2010 is

Y=21.271x +1001.2. The slope is-21.271x and the intercept is 1001.2. The R² is

0.494 which shows that the equation is most suitable for prediction. There is a

decline in the working capital during the liberalization period.



The debt to equity ratio of KTDC during 1990-91 was 0.94: 1 which declined

to 0.81: 1 in 1994-95 . It increased to 0.96:1 in 1995-96 which declined to 0.31: 1 in

1999-2000 and increased to 0.34:1 in 2000-01.It was 0.46:1 in 2004-05 which

declined to 0.39:1 in 2005-06 and further declined to 0.16: 1 in 2009-2010. It

clearly indicates that the long term borrowings to paid up capital is declining from

1990-91 to 2009-10 period. It means that they are not dependent too much on

borrowings but stick on to paid up capital as the base (Table 3.5) .

ii. Current Ratio

It is seen from Table 3.5 that the current ratio of KTDC during 1990-91 was

2.01 : 1 which decreased to 1.81 :1 in 1994-95 .It was 2.22 :1 in 1995-96 and in the

subsequent years sharply declined. It was 3.40 : 1 in 1999-2000 and declined to

1.79:1 in 2004-05. It increased to 2.66:1 in 2005-06 and declined to 0.16 :1 in 2009-

99

10 . The overall trend shows a trend of high fluctuation in all the years under study.

In the initial years the current ratio was favourable but declined sharply during 2006-

07 to 2009-10. Hence it is concluded that these ratios are not promising ones because

in most of the years the ratios are higher or lower than the ideal one (Table 3.5).


The return on investment of KTDC is negative in most of the years. It was

-2.81per cent in 1990-91 but a positive trend is seen in 1994-95 with 9.29 per cent.

This positive trend lasted up to 1999-2000 with 2.66 per cent but a negative trend

from 2001-02 (-3.21) to 2005-06 (-1.07 per cent). From 2006-07 (1.2 per cent ) on

wards a positive trend is seen up to 2009-10 (0.54 per cent) periods .It is a clear

indication from the ratios that the return on investment of KTDC during the whole

period of 20 years of study from 1990-91 to 2009-10 is varying and is not in an

acceptable level ( Table 3.5).


The ratio of net profit before tax and dividend to total sale of KTDC in 1990-

91 was -2.22 per cent but the trend is reversed during 1994-95 with a profit of 5.34

per cent. The profit declined to 3.2 per cent in 1999-2000. The loss position

continued from 2001-02 (-5.63 per cent) to -1.23 per cent in 2005-06 but the trend

reversed and some profit was earned from 2006-07 (0.83 per cent) to 2009-10 (0.41

per cent). This makes it clear that the profit to sales of KTDC during the whole

period of 20 years of study from 1990-91 to 2009-10 is not at all appreciable and

rewarding (Table 3.5).

100

v. Receivables to Sales

This ratio reveals the trends in accounts receivable to sales and it was 0.58 in

1990-91 which increased to 0.91 in 1994-95. It increased to 0.95 in 1995-96 which

declined to 0.43 in 1999-2000 and again declined to 0.21 in 2004-05 which shows a

good result .It increased to 0.51 in 2005-06 which again increased to 0.54 in 2009-

10. A fluctuating trend is noticed during 1990-91 to 2009-10 the whole 20 year

period under analysis (Table 3.5).

vi. Stock of Raw materials to Consumption

This ratio reveals the trends in stock of raw materials to consumption which

was 0.91 in 1990-91 and increased to 1.65 in 1994-95. It increased to 1.72 in 1995-

96 which again increased to 1.81 in 1999-2000 and declined to 0.72 in 2004-05 . In

2005-06 the ratio was 0.52 which again declined to 0.46 in 2009-10. A fluctuating

trend is noticed during 1990-91 to 2009-10 the whole 20 year period under analysis.

The lower the months in the raw material stock to consumption of KTDC is really an

appreciable one (Table 3.5).

vii. Consumption to Sales

It represents the ratio of raw materials consumed to sales expressed as

percentage. It was 40.2 per cent in 1990-91 which remained almost similar in

1994-95 (40.21 per cent ). It increased to 42.52 per cent in 1999-2000. It declined to

38.43 per cent in 2000-21 which again declined to 36.14 per cent in 2004-2005.

From 2005-06 onwards there was a decline from 35.13 per cent to 29.28 per cent in

2009-10. A fluctuating trend is noticed during the whole 20 year period under

101

analysis. The lower the consumption of material gives an indication that the

production is not up to the desired level which affect the sales (Table 3.5).

Table 3.5

Financial and Operating ratios of KTDC

Year Debt-equity ratio

Current ratio

Return on investment

(%)

Receivable to sales (in

months)

Stock of raw materials to consumption (in months)

Consumption to sales (%)

Net profit to sales

(%)

1 2 3 4 5 6 7 8 1990-1991 0.94 :1 2.01 : 1 -2.81 0.58 0.91 40.2 -2.22 1991-1992 0.98:1 2.05:1 -2.91 0.65 0.95 43.4 -2.84 1992-1993 0.96:1 2.10:1 6.15 0.78 1.44 41.57 5.93 1993-1994 0.93:1 2.15:1 8.86 0.89 1.82 40.6 8.2 1994-1995 0.81:1 1.81:1 9.29 0.91 1.65 40.21 5.34 1995-1996 0.96:1 2.22:1 11.26 0.95 1.72 40.10 6.58 1996-1997 0.75:1 14.62:1 10.9 0.96 1.78 41.00 8.48 1997-1998 0.42:1 7.31:1 9.73 0.85 1.79 41.50 9.52 1998-1999 0.30:1 3.93:1 15 0.61 1.80 41.60 15.02 1999-2000 .31:1 3.40:1 2.66 0.43 1.81 42.52 3.2 2000-2001 .34:1 5.13:1 0.78 0.61 1.82 38.43 1.26 2001-2002 .39:1 2.33:1 -3.21 0.42 0.92 36.33 -5.63 2002-2003 .43:1 2.4:1 -2.96 0.51 0.91 32.10 -4.9 2003-2004 .40:1 2.35:1 -3.5 0.20 0.85 30.58 -5.96 2004-2005 .46:1 1.79:1 -1.98 0.21 0.72 36.14 -2.89 2005-2006 .39:1 2.66:1 -1.07 0.51 0.52 35.13 -1.23 2006-2007 .33:1 1.85:1 1.2 0.41 0.49 30.17 0.83 2007-2008 0.22:1 1.03:1 1.66 0.52 0.62 29.84 1.12 2008-2009 0.11:1 1.25:1 1.19 0.53 0.51 28.93 0.86 2009-2010 0.16:1 1.75:1 0.53 0.54 0.46 29.28 0.41

Source : Computed from Annual Reports of Bureau of Public Enterprises, various issues It is seen that direct correlation exist between net worth to capital employed ,

capital invested and negative correlation exist between other items (Table 3.6)

102

Table 3.6

Correlation

Sl. No. Item Correlation

1 Net worth 1 2 Capital Employed 0.951 3 Capital Invested 0.936 4 Working capital 0.088 5 Debt to Equity Ratio -0.907 6 Current Ratio -0.166 7 Return on Investment (%) -0.573 8 Receivable to sales ( in Months) -0.873 9 Stock of raw materials to consumption ( in months ) -0.870 10 Consumption to Sales (%) -0.987 11 Net Profit to sales ( %) -0.512

Source: Computed from Table 3.4 and Table3.5

3. THE KERALA CERAMICS LIMITED

Kerala Ceramics Limited (KCL) was promoted jointly by Government of

Kerala and Kerala State Electronics Development Corporation (KSEDC) with the

name “Dielectro Magnetics Ltd.” in 1974 for manufacture of 25 million pieces of

Ceramic Capacitors per annum. Technical knowhow used by the company was

developed by National Physical Laboratories. The company became a subsidiary of

Kerala State Electronics Development Corporation Ltd (KELTRON) in the year

1977 and was rechristened as “Keltron Electro Ceramics Ltd.”, in January 1985.

The capacity was enhanced to 90 million ceramic capacitors per annum.

103

a. Net Worth

The net worth of Kerala Ceramics Limited is analysed and is seen negative in

all the 20 years from 1990-91 to 2009-10. It means that during the entire period

under analysis the net worth is negative (Table 3.7).

b. Capital Employed

The capital employed of Kerala Ceramics Limited was Rs 108.5 crores

during 1990-91 which declined to Rs 14.52 crores during 1994-95. From 1995-96

capital employed shows a negative growth. The trend of 20 years from 1990-91 to

2009-2010 is a declining one .It means that during the entire period under analysis

the capital employed is seen negative ( Table 3.7).

c. Capital Invested

The capital invested by Kerala Ceramics Limited was Rs 1321.2 crores

during 1990-91 which increased to Rs 1478.7 crores during 1994-95. Again this

increased to Rs 1556.4 crores in 1995-96 which increased to Rs 1736.7 crores in

1999-2000. It was Rs 1745.7 crores in 2000-2001 which increased to Rs 1760.9

crores in 2004-05 and a further increase to Rs 2090.5 crores in 2009-2010 .The

capital invested for the entire period of 20 years under study from 1990-91 to

2009-2010 shows an increasing trend (Table 3.7).

d. Working Capital

The working Capital of Kerala Ceramics Limited is analyzed and is seen it

was negative in all the years under study from 1990-91 to 2009-2010 ( Table 3.7).

104

Table 3.7

Net worth, Capital Employed , Capital Invested and Working Capital of Kerala Ceramics Limited

( Rs in Crores )


1 2 3 4 5 1990-1991 -272.34 108.52 1321.21 -15.82 1991-1992 -284.63 116.65 1433.31 -17.98 1992-1993 -257.01 77.62 1429.16 -38.73 1993-1994 -241.63 55.03 1453.69 -43.55 1994-1995 -307.24 14.52 1478.79 -74.06 1995-1996 -604.18 -238.49 1556.42 -317.07 1996-1997 -745.72 -374.72 1561.73 -444.74 1997-1998 -660.11 -282.27 1718.57 -343.71 1998-1999 -738.16 -351.14 1727.75 -403.82 1999-2000 -810.32 -414.32 1736.73 -457.58 2000-2001 -888.18 -483.25 1745.66 -510.79 2001-2002 -972.89 -570.21 1743.41 -584.62 2002-2003 -1041.39 -635.59 1746.53 -667.73 2003-2004 -1182.28 -756.4 1766.61 -781.1 2004-2005 -1269.74 -849.55 1760.92 -866.81 2005-2006 -1341.67 -868.48 1813.92 -881.69 2006-2007 -1359.68 -693.26 1907.1 -701.07 2007-2008 -1319.65 -614.37 1945.96 -617.5 2008-2009 -1300.92 -542.34 1999.26 -554.18 2009-2010 -1294.79 -445 2090.47 -456.36 Source: Compiled from the Review of Public Enterprises , Various issues, Bureau

of Public Enterprises , Government of Kerala .


Capital Employed, Capital Invested and Working capital of Kerala Ceramics

Limited from 1990-91 to 2009-2010 with the trend line and regression equation is

shown in fig. 3(iii)

105

Fig. 3(iii) Net worth, Capital Employed, Capital Invested and Working capital of Kerala

Ceramics Limited

Source : Table 3.7


2009-2010 is Y = -67.888x–131.8. The slope is -67.888xand intercept is 131.8. The

R² is 0.9373 which shows that the equation is most suitable for prediction. There is

a decrease in the net worth of Kerala Ceramics Limited during the liberalization

period.


1990-91 to 2009-2010 is Y =-46.77x + 103.73. The slope is 46.77xand intercept is

103.73. The R² is 0.7021 which shows that the equation is most suitable for

prediction. There is a decrease in the capital employed of Kerala Ceramics Limited


The trend line (linear trend of first degree) of the Capital Invested during

1990-91 to 2009-2010 is Y = 33.865x + 1341.3. The slope is33.865x and intercept

106


prediction. There is an increase in the capital invested of Kerala Ceramics Limited


The trend line (linear trend of first degree) of the Working Capital during

1990-91 to 2009-2010 is Y = -39.937x – 19.602.The slope is -39.937x and intercept


prediction. There is decrease in the Working Capital of Kerala Ceramics Limited

during the period under study.



The debt to equity ratio of Kerala Ceramics Limited during 1990-91 was

2.31:1 which declined to 0.43: 1 in 1994-95. It increased to 0.46:1 in 1995-96 which

declined to 0.43 : 1 in 1999-2000 and increased to 0.45:1 in 2004-05 and a marginal

increase in 2005-06 with 0.49:1 and it again increased to 0.72:1 in 2009-10 . It

clearly indicates that the long term borrowings to paid up capital is declining year

after year which shows that the borrowings are lesser and they depend on equity

capital (Table 3.8) .

ii. Current Ratio

The current ratio of Kerala Ceramics Limited during 1990-91 was 0.89 : 1

which declined to 0.75:1 in 1994-95. It was 0.41:1 in 1995-96 and in the subsequent

years there was a decline up to 1998-99. Then it increased to 3.31: 1 in 1999-2000

and then declined to 0.13:1 in 2004-05. It was 0.14: 1 in 2005-06 which goes to

negative in 2009-10 (-1.38:1). The overall trend shows a trend of high fluctuation in

107

all the years but ideal ratio is seen only in 1999-2000. To conclude these ratios are

not promising because in most of the years the ratios are less than the ideal one

(Table3.8).


The return on the capital employed by the Kerala Ceramics Limited is

analysed and is seen negative in all the years under study from 1990-91 to 2009-10

and not a promising one (Table 3.8).


The ratio of net profit to sales in 1990-91 was -6.12 per cent but the trend

reversed during 1992-93 with a profit of 10.59 per cent and during 1993-94 with

2.89 per cent. The profit declined to -21.05 per cent in 1994-95 and this loss position

continues up to 1997-98 ( -11.13 per cent ) . Next two years 1998-99 and 1999-2000

there was profit of 24.75 per cent and 22.53 per cent respectively. In 2000-01 the

loss is 10.5 per cent which increased to 26.01 per cent. The loss position declined in

2009-10 (0.92 per cent).The profit to sales of Kerala Ceramics Limited during the

period from 1990-91 to 2009-10 in not a promising one ( Table 3.8).


The ratio of receivable to sales was 1.28 in 1990-91 which declined to 0.58

in 1994-95. It was 0.58 in 1995-96 which increased to 3.91 in 1999-2000 and again

declined to 0.34 in 2000-01. It was 1.07 in 2004-05 but declined to 0.72 in 2009-10.

A fluctuating trend is noticed during 1990-91 to 2009-10 the whole 20 year period

under analysis (Table 3.8).

108

vi. Stock of Finished Goods to Sales

This ratio reveals the trends in stock of finished goods to sales and was 4.85

in 1990-91 which decreased to 4.27 in 1994-95. It declined to3.14 in 1995-96 which

again declined to 2.7 in1999-2000 and declined to 2.34 in 2000-01 . In 2004-05 the

ratio was 1.25 which increased to 3.69 in 2009-10 .A fluctuating trend is noticed

during 1990-91 to 2009-10 the whole 20 year period under analysis.(Table 3.8).

vii. Stock of Raw materials to Consumption

This ratio reveals the trends in stock of raw materials to raw material

consumption and it was 2.86 in 1990-91 which declined to 1.54 in 1994-95. It was

1.65 in 1995-96 which again declined to 1.22 in 1999-2000 and further declined to

0.72 in 2004-05, but with a slight increase in 2009-10. A fluctuating trend of

increase is noticed in all the 20 years from 1990-91 to 2009-10 which means

sufficient stock of raw materials is there for production operations and is appreciable

one ( Table 3.8).

viii. Consumption to Sales


percentage and it was 21.19 per cent in 1990-91 with considerable variation during

the period under study. It was 16.26 per cent in 1994-95 and declined to 6.73 per

cent in 1999-2000, but increased to 20.7 per cent in 2004-05. It was 20.2 per cent in

2005-06 which declined to 18.67 per cent in 2009-10. This fluctuating trend with

marginal increase or decrease during the period under study gives an indication that

the production is not up to the desired level ( Table 3.8).

109

Table 3.8 Financial and Operating ratios of Kerala Ceramics Limited


Current ratio


(%)

Receivable to

sales (in months)

Stock of finished goods to sales ( in months)


Consumption to

sales (%)

Net profit to sales

(%)

1 2 3 4 5 6 7 8 9

1990-1991 2.31 :1 0.89:1 -24.05 1.28 4.85 2.86 21.19 -6.12

1991-1992 3.39:1 0.94:1 -26.04 1.39 5.95 3.76 23.17 -7.18

1992-1993 0.38:1 0.89:1 72.95 0.86 4.16 3.62 19.91 10.59

1993-1994 0.41:1 0.89:1 27.95 0.43 6.07 2.56 16.11 2.89

1994-1995 0.43:1 0.75:1 -656.82 0.58 4.27 1.54 16.26 -21.05

1995-1996 0.46:1 0.41:1 -45.65 0.58 3.14 1.65 13.44 -29.78

1996-1997 0.47:1 0.20:1 -28.65 0.32 1.33 1.05 16.08 -27.4

1997-1998 0.41:1 0.22:1 -18.25 0.25 1.28 1.98 12.03 -11.13

1998-1999 0.42:1 0.34:1 -32.15 0.32 3.19 0.89 13.31 24.75

1999-2000 0. 43:1 3.31:1 28.91 3.91 2.7 1.22 6.73 22.53

2000-2001 0.44:1 0.27:1 0.18 0.34 2.34 1.85 13.1 -10.51

2001-2002 0.43:1 0.24:1 -36.3 0.64 1.95 1.43 11.56 -11.43

2002-2003 0.44:1 0.19:1 0.16 0.44 1.97 0.63 19.96 -10.28

2003-2004 0.45:1 .14:1 -18 0.96 1.06 0.75 21.52 -11.74

2004-2005 0.45:1 .13:1 -12 1.07 1.25 0.72 20.7 -26.01

2005-2006 0.49:1 .14:1 -0.50 1.73 3.02 2.26 14.2 -24.57

2006-2007 0.57:1 .13:1 -0.10 0.42 0.43 0.74 19.09 -1.86

2007-2008 0.60:1 .15:1 -6.52 0.24 0.74 0.31 18.65 3.75

2008-2009 0.64:1 0.27:1 -3.45 0.42 1.78 0.23 25.59 1.88

2009-2010 0.72:1 0.37:1 -1.38 0.72 3.69 0.76 18.67 0.92 Source: Compiled from the Review of Public Enterprises , Various issues, Bureau of Public Enterprises , Government of Kerala .

It is seen that there is direct correlation exist between net worth to working

capital , stock of finished goods to sales and stock of raw materials to consumption

and a negative correlation exists between other items (Table 3.9)

110

Table 3.9

Correlation

Sl. No. Item Correlation

1 Net worth 1

2 Capital Employed 0.933

3 Capital Invested -0.910

4 Working capital 0.918

5 Debt to Equity Ratio 0.269

6 Current Ratio 0.319

7 Return on Investment (%) -0.274

8 Receivable to sales ( in Months) 0.006

9 Stock of finished goods to sales( in months ) 0.730

10 Stock of raw materials to consumption 0.738

11 Consumption to Sales (%) -0.243

12 Net Profit to sales ( %) 0.082


4. THE KERALA MINERALS AND METALS LIMITED

Kerala Minerals and Metals Limited (KMML) was incorporated in 1972 to

take over M/s FXP Minerals, Chavara. The entire equity capital is held by

Government of Kerala. The Company set up a Titanium Dioxide Pigment

manufacturing unit in Chavara, with a capacity of 22000 Tonnes Per Annum (TPA)

at an estimated cost of Rs. 6500 lakh. Industrial Development Bank of India (IDBI),

Industrial Finance Corporation of India (IFCI), Life Insurance Corporation of India

(LIC), State Bank of India (SBI) and State Bank of Travancore (SBT) jointly

111

sanctioned term loans for commencing the project. The Company has two

distinguishable sets of plants viz., Titanium Pigmentation Plant and Mineral

Separation Plant to support the processing of mineral sand and other need based

sections.

a. Net Worth

The net worth of KMML was Rs -6535.8 crores during 1990-91 which

further increased to Rs -1391.44 crores during 1994-95. During 1995-96 onwards

the position of net worth changed into positive which amounted to Rs 4813.37 crores

and increased to Rs 18571.7 crores in 1999-2000. It increased to Rs. 26254.27

crores in 2000-01 and to Rs 41913.59 crores in 2004-05. There was an increase to

Rs. 42776.2 crores in 2005-06 and again it increased to Rs 48267.49 crores in 2009-

10. Thus during the initial years under study there was negative net worth but shows

an increasing trend during the entire period under liberalization (Table 3.10).

b. Capital Employed

The capital employed of KMML was Rs340.3crores during 1990-91 which

increased to Rs 4915.4 crores during 1994-95. During 1995-96 capital employed was

Rs 5029.97 crores which increased to Rs 18571.6 crores in 1999-2000. It was Rs

26254.7 crores in 2000-1 which again increased to Rs 42212.14 crores in 2004-05.It

was Rs 43074.93 crores in 2005-06 which increased to Rs49434.3 crores in 2009-10.

It means that the capital employed is found favourable during the liberalization

period (Table 3.10).

112

c. Capital Invested

The capital invested by KMML was Rs 17095.5 crores during 1990-91

which declined to Rs 9400.22 crores during 1994-95. During 1995-96 it was Rs

3309.97 crores which again declined to Rs 3093.27 crores in 1999-2000. In 2000-01

it was Rs 3093.3 crores which increased to Rs 3391.92 crores in 2004-05. It was Rs

3392.1 crores in 2005-06 which increased to Rs 4277.74 crores in 2009-10. It shows

that during the entire period under analysis the capital invested is found

unfavourable (Table 3.10).

d. Working Capital

The working Capital of KMML was Rs 3756.2 crores during 1990-91 which

declined to Rs 3041.5 crores during 1994-95. It was Rs 3187.47 crores in 1995-96

which increased to Rs 16694.31 in 1999-00. It was Rs 23567.25 crores in 2000-01

which increased to 32606.29 crores in 2004-05. It was Rs 27753.85 crores in 2005-

06 which declined to 18969.04 crores in 2009-2010.The overall position of working

capital during the period under review shows an increasing trend(Table 3.10).

113

Table 3.10

Net worth, Capital Employed, Capital Invested and Working Capital of KMML (Rs in Crores )

Year Net worth Capital Employed

Capital Invested Working Capital

1 2 3 4 5 1990-1991 -6535.82 340.3 17095.52 3756.2 1991-1992 -6726.95 376.4 17196.72 3886.32 1992-1993 -7604.13 7703.98 18404.48 5154.42 1993-1994 -5607.39 4884.78 13585.54 2844.94 1994-1995 -1391.44 4915.41 9400.22 3041.53 1995-1996 4813.37 5029.97 3309.97 3187.47 1996-1997 4833.51 4964.08 3233.94 3221.51 1997-1998 6079.14 7649.98 4664.21 5997.81 1998-1999 11376.74 11476.64 3193.27 9655.37 1999-2000 18571.7 18571.6 3093.27 16694.31 2000-2001 26254.17 26254.07 3093.27 23567.25 2001-2002 32680.79 32680.69 3093.27 29526.89 2002-2003 37948.76 38613.35 3757.96 34600.97 2003-2004 40197.73 40364.11 3259.75 33403.06 2004-2005 41913.59 42212.14 3391.92 32606.29 2005-2006 42776.2 43074.93 3392.1 27753.85 2006-2007 43668.98 43834.13 3276.02 23050 2007-2008 43919.82 44126.96 3318.27 20231.02 2008-2009 44007.68 44758.15 3861.34 19565.23 2009-2010 48267.39 49434.26 4277.74 18969.04

Source: Compiled from the Review of Public Enterprises, Various issues, of

the Bureau of Public Enterprises , Government of Kerala . The graphical representation of the trends in the growth of Net worth, Capital

Employed, Capital Invested and Working capital of KMML during 1990-91 to 2009-

2010 with the trend line and regression equation is shown in fig. 3(iv)

114

Fig. 3(iv) Net worth, Capital Employed, Capital Invested and Working capital of KMML

Source : Table 3.10


2009-2010 is Y =3470.3x – 15465.The slope is 3470.3x and intercept is 15465. The

R² is 0.9480 which shows that the equation is most suitable for prediction. There is a

decrease in net worth of KMML during the initial period of liberalization but

afterwards there is an increase.


1990-91 to 2009-2010 is Y = 2983.7x – 7765.1. The slope is 2983.7x and intercept

is 7765.1.The R² is 0.9203 which shows that the equation is most suitable for

prediction. There is an increase in the capital employed of KMML during the


The trend line (linear trend of first degree) of the Capital Invested from

1990-91 to 2009-2010 is Y = -677.11x + 13505.The slope is -677.11xand intercept

115

is 13505. The R² is 0.4635 which shows that the equation is most suitable for

prediction. There is a decrease in the capital invested of KMML during the



1990-91 to 2009-2010 is Y = 1505.1x + 232.16. The slope is 1505.1x and intercept


prediction. There is an increase in the working capital of KMML during the



i. Debt equity ratio

The debt equity ratio of KMML was 4.46:1 in 1990-91 which declined to

0.07:1 in 1995-96. It increased to 11.53:1 in 1999-2000. Then a declining trend was

seen and it was 0.38:1 in 2009-2010 (Table 3.11).

ii. Current Ratio

The current ratio of KMML during 1990-91 was 3.18:1which declined to

2.15:1 in 1994-95 period. It was 1.64 : 1 in 1995-96 which increased to 2.7 : 1 in

1998-99 and declined sharply to 2.66:1 in 1999-2000. Again there was a steep

increase to 2.69:1 in 2000-01 and almost similar picture is noticed in 2004-05 (2.57 :

1 ) and declined to 2.35 : 1 in 2009-10 . The overall trend shows that the ratios are

ideal in most of the years but a declining trend is noticed in certain other years

(Table 3.11).

116


The return on the capital employed by the KMML shows that the ratio is

negative in the first three years from 1990-91 to 1992-93. It was 85.77 per cent in

1994-95 and declined to 72.75 per cent in 1998-99 periods. It further declined to

48.98 per cent in 2000-01 and declined further to 9.1 per cent in 2004-05 and

increased to 16.93 per cent in 2009-10. Thus it is inferred that the return on

investment of KMML during the whole period of 20 years of study from 1990-91 to

2009-10 in not a promising one.( Table 3.11).


KMML shows a loss in the first three years under study. The net profit to

sales in 1993-94 was 14.39 per cent which increased to 27.27 per cent in 1994-95. It

could make a profit of 40.2 per cent in 2000-01 which declined to 12.07 per cent in

2004-05. There was an increase of 16.84 per cent in 2009-10. It is clear from the

analysis of profit to sales of KMML that it failed to maintain a steady profitability

ratio during the whole period of 20 years under study from 1990-91 to 2009-10

(Table 3.11).


This ratio reveals the trends in accounts receivable to sales. It was 0.03 in

1990-91 which slightly increased to 0.06 in 1994-95 and again increased to 2.45 in

1999-2000. It declined to 0.11 in 2000-01 which increased to 0.35 in 2004-05 and

again increased to 1.14 in 2009-10. A fluctuating trend is noticed during 1990-91 to

2009-10 the whole 20 year period under analysis (Table 3.11).

117

vi. Stock of Finished Goods to sales

This ratio reveals that the stock of finished goods to sales was 3 in 1990-91

which decreased to 1.02 in 1994-95. It declined to 0.85 in 1999-2000 which again

declined to 0.29 in 2004-05. It was 0.06 in 2009-10. A fluctuating trend is noticed

during 1990-91 to 2009-10, the whole 20 year period under analysis (Table 3.11).


This ratio reveals the trends in stock of raw materials to consumption. The

ratio was 1.45 in 1990-91which increased to 1.54 in 1994-95. It was 2.64 in 1995-

96 which declined to 1in 1999-2000 and it further declined to 0.69 in 2000-01. It

was 1.14 in 2001-02 which declined to 0.51 in 2004-05 and declined further to 0.44

in 2005-06 and increased to 0.82 in 2009-10. A fluctuating trend of increase is

noticed in all the 20 years from 1990-91 to 2009-10 ( Table 3.11).



percentage and it was 9.10 per cent in 1990-91 which increased to 9.4 per cent in

1994-95.It was 7.45 per cent in 1995-96 but a very high percentage of 67.56per cent

was seen in 1999-2000. It declined to 23.58per cent in 2000-01 which increased to

28.06per cent in 2004-05. It was 35.96percentin 2005-06 which increased to 50.8per

cent in 2009-10. A fluctuating trend of increase is noticed during 1990-91 to 2009-

10, the whole 20 year period under analysis. The trend is somewhat high and

indicates that consumption depends on sales (Table 3.11).

118

Table 3.11 Financial and Operating ratios of KMML


Current ratio


(%)


months)

Stock of finished goods to sales (in months)



Net profit

to sales (%)

1 2 3 4 5 6 7 8 9 1990-1991 4.46:1 3.18:1 -16.2 0.03 3.00 1.45 9.10 -14.22

1991-1992 4.56:1 3.08:1 -17.3 0.04 3.07 1.55 10.07 -15.33

1992-1993 4.95:1 4.82:1 -11.39 0.69 2.49 1.74 9.18 -9.11

1993-1994 3.39:1 3.17:1 41.23 0.06 0.46 1.77 7.6 14.39

1994-1995 2.04:1 2.15:1 85.77 0.06 1.02 1.54 9.4 27.27

1995-1996 0.07:1 1.64:1 149.43 0.01 0.15 2.64 7.45 39.21

1996-1997 0.04:1 1.54:1 1.39 0.23 6.4 1.23 19.5 1.2

1997-1998 0.51:1 3.14: 23.57 0.32 2.43 0.81 11.84 13.03

1998-1999 .03:1 2.66:1 72.75 0.25 0.57 0.48 18.71 -27.67

1999-2000 11.53:1 0.44:1 -52.10 2.45 0.85 1 67.56 -50.85

2000-2001 5:1 2.69:1 48.98 0.11 1.13 0.69 23.58 40.02

2001-2002 3:1 3.29:1 30.68 0.17 0.96 1.14 21.63 33.21

2002-2003 0.21:1 3.10:1 24.35 1 1.48 0.7 24.35 31.76

2003-2004 .05:1 2.53:1 11.52 0.84 0.98 0.75 24.96 15.43

2004-2005 .10:1 2.57:1 9.1 0.35 0.29 0.51 28.06 12.07

2005-2006 .10:1 2.51:1 4.12 0.97 0.67 0.44 35.96 5.49

2006-2007 .06:1 2.25:1 4.74 0.53 1.88 0.55 38.86 6.32

2007-2008 .07:1 2.87:1 2.3 1 1.78 0.32 69.2 3.23

2008-2009 0.25:1 2.52:1 6.8 0.89 0.42 0.27 55.49 7.07

2009-2010 0.38:1 2.35:1 16.93 1.14 0.06 0.82 50.08 16.84

Source : Computed from Annual Reports of Bureau of Public Enterprises, various issues. It is seen that direct correlation exists between net worth and capital

employed, working capital and consumption to sales and a negative correlation

exists between other items ( Table 3.12).

119

Table 3.12

Correlation

Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.984 3 Capital Invested -0.686 4 Working capital 0.867 5 Debt to Equity Ratio -0.409 6 Current Ratio -0.153 7 Return on Investment (%) -0.288 8 Receivable to sales ( in Months) 0.425 9 Stock of finished goods to sales( in months ) -0.375 10 Stock of raw materials to consumption -0.748 11 Consumption to Sales (%) 0.691 12 Net Profit to sales ( %) 0.193


5. TRAVANCORE TITANIUM PRODUCTS LIMITED

Travancore Titanium Products Limited was incorporated in 1946 under the

Department of Industries, Government of Kerala. Manufacture and sale of Titanium

Dioxide and Sulphuric Acid are the main activities.

a. Net Worth

The net worth of Travancore Titanium Products Limited was Rs 3065.3

crores during 1990-91 which further increased to Rs 3517.97 crores. During1995-

96 the position of net worth was Rs 3687.5 crores which increased to Rs. 5395.2

crores in 1999-2000. It increased to Rs 5669.13 crores in 2000-01 which slightly

declined to Rs. 5658.72 crores in 2004-05. Again it declined to Rs 4854.32 crores in

2009-10. Overall position of net worth during the liberalization period shows an

increasing trend (Table 3.13).

120

b. Capital Employed

The capital employed of Travancore Titanium Products Limited was Rs

2734.3 crores during 1990-91 which increased to Rs 3155.1crores during 1994-95.

During 1995-96, capital employed was Rs 3225.4 crores which increased to Rs

4959.2 crores in 1999-2000. It was Rs 5296.13 crores in 2000-01 which again

increased to Rs 5568.94 crores in 2004-05. It was Rs 3949.8 crores in 2005-06

which increased to Rs 11268.21 crores in 2009-10. The capital employed during the

entire period under analysis shows an increasing trend with fluctuations(Table 3.13).

c. Capital Invested

The capital invested by Travancore Titanium Limited was Rs 175.35 crores

during 1990-91 which increased to Rs 176.8 crores during 1994-95. During 1995-96

it was Rs 218.09 crores which declined to Rs 176.75 in 1999-2000. In 2000-01 it

was Rs 176.75 crores which increased to Rs 330.07 crores in 2004-05. It was Rs

267.65 crores in 2005-06 which increased to Rs 6030.18 crores in 2009-10 showing

an abnormal increase compared to other years . It indicates a fluctuating trend of

increase during the entire period under analysis from 1990-91 to 2009-10 (Table

3.13).

d. Working Capital

The working capital of Travancore Titanium Products Limited was Rs

2318.82 crores during 1990-91 which declined to Rs 1159.72 crores during 1994-

95. It was negative in the next two years and increased up to Rs 2728.1 crores in

1999-2000 and Rs 3836.7 crores in 2004-05. It was Rs 2160.8 crores in 2005-06

which declined to Rs -49.20 crores in 2009-10. Thus the ratio shows a fluctuating

121

trend with negative working capital in certain years during the liberalization periods

(Table 3.13).

Table 3.13

Net worth, Capital Employed, Capital Invested and Working Capital of Travancore Titanium Products Limited

(Rs. in crores).


Capital Invested Working Capital

1 2 3 4 5 1990-1991 3065.28 2734.26 175.35 2318.82 1991-1992 3177.36 2862.36 176.75 2416.92 1992-1993 3478.33 3162.33 176.75 2710.29 1993-1994 3504.87 3188.87 176.75 2037.18 1994-1995 3517.97 3155.1 176.75 1159.72 1995-1996 3687.53 3225.37 218.09 -310.93 1996-1997 3572.31 3068.81 176.75 -29.07 1997-1998 3886.52 3399.02 176.75 672.06 1998-1999 4592.29 4151.29 176.75 1758.95 1999-2000 5395.17 4959.17 176.75 2728.06 2000-2001 5669.13 5296.13 176.75 3231.87 2001-2002 5996.34 5685.34 176.75 3836.32 2002-2003 5718.24 5475.14 176.75 3855.05 2003-2004 5657.88 5414.78 176.75 3947.35 2004-2005 5658.72 5568.94 330.07 3836.66 2005-2006 4101.97 3949.77 267.65 2160.79 2006-2007 3778.48 4591.5 1232.87 -97.02 2007-2008 4519.72 10172.61 5841.89 -47.56 2008-2009 4225.76 10186.41 5848.64 -47.57 2009-2010 4854.32 11268.21 6030.18 -49.20

Source: Compiled from the Review of Public Enterprises, Various issues, Bureau of Public Enterprises , Government of Kerala .


Employed, Capital Invested and Working capital of Titanium Products Limited

122

during 1990-91 to 2009-2010 with the trend line and regression equation is shown in

fig. 3(v)

Fig. 3(v)

Net worth, Capital Employed, Capital Invested and Working capital of Travancore Titanium Products Limited

Source : Table 3.13

The trend line (linear trend of first degree) of the Net worth 1990-91 to 2009-

2010 is Y = 92.783x + 3428.7. The slope is 92.783x and intercept is 3428.7. The R²

is 0.3371 which shows that the equation is most suitable for prediction. There is a

decrease in net worth of Travancore Titanium Products Limited in certain years, but

on the whole it shows an increasing trend during the period of liberalization.


1990-91 to 2009-2010 is Y = 354.6x + 1352.5. The slope is 354.6x and intercept is


123

prediction. In certain years the capital employed of Travancore Titanium Products

Limited remains constant but on the whole it shows an increasing trend during the

liberalization period .


1990-91 to 2009-2010 is Y = 231.86x – 1331.3 The slope is 231.86x and intercept


prediction. There is an increase and in some years the capital invested of Travancore

Titanium Products Limited remains constant.


1990-91 to 2009-2010 is Y = -42.989x + 2255.8. The slope is -42.989x and intercept


prediction. There is a decrease in the working capital of Travancore Titanium

Products Limited during the liberalization period.


(i) Current Ratio

The current ratio of Travancore Titanium Products Limited during 1990-91

was 1.78 :1 which declined to 1.47 : 1 in 1994-95 periods . It was 0.89 : 1 in 1995-

96 which increased to 1.36 : 1 in 1998-99 and again increased to 1.42 : 1 in 1999-

2000. It again increased to 1.44: 1 in 2000-01. It further increased to 1.74 :1 in

2004-05 and declined further to 0.95 : 1 in 2009-10 . The overall trend shows a

fluctuating one (Table 3.14).

124

(ii) Return on Investment

The return on the capital employed by the Travancore Titanium Products

Limited was 26.40 per cent in 1990-91 which declined to 2.82 per cent in 1994-95.

It was 24.07 per cent in 1998-99 and declined to 4.29per cent in 2004-05 periods and

again it declined to 5.22 per cent in 2009-10 . It is a clear indication from the ratios

that the return on investment of Travancore Titanium Products limited during the

whole period of 20 years of study from 1990-91 to 2009-10 in not a promising one

(Table 3.14).

(iii) Net Profit to Sales

The ratio of net profit before tax and dividend to total sale of the Travancore

Titanium Products Limited was 14.21 per cent in 1990-91 which declined to 1.64

per cent in 1994-95 periods. The net profit to sales in 1998-99 was 11.22 per cent

and declined to 2 per cent in 2004-05 and there was loss during 2005-06 and 2006-

07 periods but profit was noticed at 6.57 per cent during 2009-10 periods .It is clear

from the analysis of profit to sales of Travancore Titanium Products Limited that

they are earning profit but the profit is not up to the mark during the whole period

of 20 years under study from 1990-91 to 2009-10 ( Table 3.14).

iv. Receivables to Sales

The receivables to sales of Travancore Titanium Products Limited was 0.75

in 1990-91 which slightly increased to 0.84 in 1994-95 and again increased to 1.08

in 1999-2000. It declined to 0.88 in 2000-01 which increased to 1 in 2004-05 and

again declined to 0.42 months in 2009-10. A fluctuating trend is noticed during

125

1990-91 to 2009-10 the whole 20 year period under analysis. The lower the months

in the receivable to sales is really good for increasing the amount of cash by way of

sales ( Table 3.14).

v. Stock of Finished Goods to Sales

The ratio of stock of finished goods to sales was 0.35 in 1990-91 which

declined to 0.24 in 1994-95. It further declined to 0.74 in 1999-2000 which

increased to 2.49 in 2004-05. It was 0.50 in 2005-06 and increased to 1.32 in 2009-

10 periods. A fluctuating trend is noticed during 1990-91 to 2009-10 the whole 20

year period under analysis. The lower the months in the stock of finished goods to

sales is an indication of increased sales ( Table 3.14).

vi. Stock of Raw materials to Consumption

The ratio of stock of raw materials to consumption was 2 in 1990-91 which

declined to 1.00 in 1994-95 . It was 1.74 in 1995-96 which again declined to 1.39

in 1999-2000.It increased to 2.28 in 2000-01 and declined to 0.87 in 2004-05which

again declined to 0.41 in 2009-10 . A fluctuating trend of increase is noticed in all

the 20 years from 1990-91 to 2009-10. The lesser the number of months in raw

materials to consumption is appreciable but in this case it must be remembered that

stock of raw materials was more than the consumption which means there is less

production ( Table 3.14).

vii. Consumption to Sales

It represents the ratio of consumption to sales expressed as percentage. It was

9.10 per cent in 1990-91 which increased to 32.55 per cent in 1994-95. It was 31.96

126

per cent in 1995-96 but it declined to 20.7 percent in 1999-2000. It was 20.09per

cent in 2000-01 which increased to 31.67per cent in 2004-05. It was 35.34per cent in

2007-08 which declined to 30.02 per cent in 2009-10. A fluctuating trend is noticed

during 1990-91 to 2009-10 the period under analysis. The trend is somewhat high

which indicates that consumption depends on sales ( Table 3.14).

Table 3.14 Financial and Operating Ratios of Travancore Titanium Products Ltd.

Year Current ratio


(%)


months)




Net profit to sales

(%)

1 2 3 4 5 6 7 8

1990-1991 1.78:1 26.40 0.75 0.35 2.0 28.5 14.21 1991-1992 1.89:1 27.35 0.84 0.43 2.1 30.9 14.46 1992-1993 1.84:1 22.32 1.11 0.34 2.69 28.94 13.04 1993-1994 1.81:1 4.1 1.36 0.69 2.04 26.87 3.31 1994-1995 1.47:1 2.82 0.84 0.24 1 32.55 1.64 1995-1996 0.89:1 4.53 0.26 0.1 1.74 31.96 2.23 1996-1997 0.99:1 -0.41 0.7 1.32 1.81 32 -0.23 1997-1998 1.16:1 12.38 0.92 1.26 2.6 26.67 6.44 1998-1999 1.36:1 24.07 1.02 0.6 0.61 15.02 11.22 1999-2000 1.42:1 27.57 1.08 0.74 1.39 20.7 12.55 2000-2001 1.44:1 9.98 0.88 0.75 2.28 20.09 4.77 2001-2002 1.45:1 10.39 0.99 1.6 2.7 19.35 6.39 2002-2003 1.69:1 0.16 1.07 4.1 2.57 26.77 0.13 2003-2004 1.61:1 2.18 0.82 0.89 0.95 22.66 0.92 2004-2005 1.74:1 4.29 1 2.49 0.87 31.67 2 2005-2006 1.44:1 -39.32 0.64 0.5 0.79 28.41 -11.6 2006-2007 .98:1 -9 0.52 0.94 0.89 28.73 -3.54 2007-2008 0.99 5.92 0.56 1.68 0.45 35.34 6.57 2008-2009 0.97 5.82 0.46 1.45 0.43 33.51 5.50 2009-2010 0.95 5.22 0.42 1.32 0.41 30.02 4.60

Source: Compiled from the Review of Public Enterprises, Various issues, Bureau of Public Enterprises , Government of Kerala .

It is seen that direct correlation exists between net worth and capital

employed, working capital and stock of finished goods to sales (Table 3.15).

127

Table 3.15

Correlation

Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.566 3 Capital Invested -0.013 4 Working capital 0.696 5 Current Ratio 0.152 6 Return on Investment (%) 0.044 7 Receivable to sales ( in Months) 0.242 8 Stock of finished goods to sales( in months ) 0.560 9 Stock of raw materials to consumption 0.001 10 Consumption to Sales (%) -0.544 11 Net Profit to sales ( %) -0.021


6. TRANSFORMERS AND ELECTRICAL KERALA LIMITED

Transformers and Electrical Kerala Limited was incorporated in 1963 under

the Department of Industries, Government of Kerala. Its activities include

manufacturing and supply of transformers and switch gears.

a. Net Worth

The net worth of Transformers and Electrical Kerala Limited was Rs -

2155.21 crores during 1990-91 which declined to Rs -647 .11 crores during 2005-

06 . During 2006-07 onwards there was positive net worth. It was Rs 2338 crores in

2006-07 which increased to Rs 9810 crores in 2009-10. The overall position of net

worth for a period of 16 years is negative and positive net worth is seen only 4 years

under study and the overall trend is not a favourable one (Table 3.16).

128

b. Capital Employed

The capital employed of Transformers and Electrical Kerala Limited was Rs

876.23 crores during 1990-91 which increased to Rs 1403.31 crores during 1994-95.

During 1995-96 capital employed was Rs 1124.38 crores which declined to Rs

495.48 crores in 1999-2000. It was Rs -279.79 crores in 2000-01 which again

increased to Rs 1913.88 crores with a very high increase compared to the past. It was

Rs 2440.93 crores in 2005-06 which increased to Rs 9809 crores in 2009-10. The

overall position of capital employed for a period of 20 years study from 1990-91 to

2009-2010 shows a fluctuating trend during the liberalization period(Table 3.16).

c. Capital Invested

The capital invested by Transformers and Electrical Kerala Limited was Rs


During 1995-96 it was Rs 4178.7 crores which again increased to Rs 6175.2 crores

in 1999-2000. In 2000-01 it was Rs 7107.5 crores which decreased to Rs 7063.4

crores in 2004-05. It was Rs 7385.7 crores in 2005-06 which declined to Rs 4297

crores in 2009-10. The trend in capital invested for a period of 20 years under study

from 1990-91 to 2009-2010 shows a fluctuating trend of increase (Table 3.16).

d. Working Capital

The working Capital of the Transformers and Electrical Kerala was Rs


It was Rs 786.5 crores in 1995-96 which declined to Rs 201.66 in 1999-00. It was

negative for further three years and positive figure is shown in 2003-04 with Rs

701.1 crores and again increased to Rs 1635.39 crores in 2004-05. It was Rs 2152.44

129

crores in 2005-06 which increased to Rs. 9303 crores in 2009-2010. The trend in

working capital for a period of 20 years study from 1990-91 to 2009-2010 shows a

fluctuating trend of increase with negative growth in some years (Table 3.16).

Table 3.16

Net worth, Capital Employed, Capital Invested and Working Capital of

Transformers and Electrical Kerala Limited

( Rs in Crores )

Year Net worth Capital

Employed Capital

Invested Working Capital

1 2 3 4 5 1990-1991 -2155.21 876.23 5288.2 507.34 1991-1992 -3164.18 978.43 5490.4 518.44 1992-1993 -2900.83 1319.39 5568.01 918.35 1993-1994 -2727.89 1188.99 5264.92 869.93 1994-1995 -1946.04 1403.31 4707.39 1029.71 1995-1996 -1696.23 1124.38 4178.65 786.47 1996-1997 -1517.66 1267.58 4143.48 908.42 1997-1998 -1348.82 1740.1 4447.16 1393.01 1998-1999 -2438.97 1184.03 4981.24 847.44 1999-2000 -4321.48 495.48 6175.2 201.66 2000-2001 -6205.02 -455.81 7107.45 -710.9 2001-2002 -2187.19 -279.79 6205.06 -521.53 2002-2003 -2081.57 64.93 6444.16 -155.84 2003-2004 -1461.23 936.76 6695.65 701.11 2004-2005 -851.8 1913.88 7063.36 1635.39 2005-2006 -647.11 2440.93 7385.7 2152.44 2006-2007 2338 2337 4297 2039 2007-2008 4798 4797 4297 4427 2008-2009 7802 7801 4297 7421 2009-2010 9810 9809 4297 9303

Source: Compiled from the Review of Public Enterprises , Various issues, of

the Bureau of Public Enterprises , Government of Kerala .


Employed, Capital Invested and Working capital of Transformers and Electricals

130

Kerala Limited during 1990-91 to 2009-2010 with the trend line and regression

equation is shown in fig. 3(vi)

Fig. 3(vi) Net worth, Capital Employed, Capital Invested and Working capital of Transformers

and Electricals Kerala Limited

Source : Table 3.16


2010 is Y =460.6x-5481.4. The slope is 460.6x and intercept is 5481.4. The R² is


decrease in net worth of Transformers and Electrical Kerala Limited during the first

16 years under study and then an increasing trend is noticed.




131

prediction. There is an increase in certain years but with decline in most of the years

as far as the capital employed of Transformers and Electrical Kerala Limited during

the liberalization period.




prediction. There is an increase in the capital invested Transformers and Electrical

Kerala Limited during the liberalization period.




prediction. There is an increase in the working capital of Transformers and

Electrical Kerala Limited during certain years and decline in certain other years

under liberalization period.

Analysis of solvency and Profitability


The debt to equity ratio of Transformers and Electrical Kerala Limited

during 1990-91 was 3.06 :1 which declined to 2.47 : 1 in 1994-95 periods . It was

2.06 : 1 in 1995-96 which increased to 2.67 : 1 in 1998-99 and increased to 3.55 : 1

in 1999-2000. Again there was a steep increase to 4.24 : 1 in 2000-01 but noticed a

decline in 2004-05 ( 0.64 : 1 ) and ultimately increased to 0.65 : 1 in 2009-10 .

The overall trend shows a trend of high fluctuations. In the initial years the ratio of

debt to equity was high but in the latter years it declined (Table 3.17).

132

ii. Current Ratio

The Current ratio of Transformers and Electrical Kerala Limited during

1990-91 was 1.25 : 1 which declined to 1.15 : 1 in 1994-95 periods . It was 1.13 : 1

in 1995-96 which declined to 1.12 : 1 in 1998-99 and a slow down to 1.03: 1 in

1999-2000. Again there was a decline and it came to 0.87 : 1 in 2000-01 and noticed

an increase to 1.25 :1 in 2004-05. It increased to 2.95 : 1 in 2009-10 . The overall

trend shows high fluctuations and in the initial years the ratio was not equal to ideal

but it reached to ideal position during 2008-09 and 2009-10 periods ( Table 3.17).


The return on the capital employed of the Transformers and Electrical Kerala

Limited is negative in certain years. It was 3.76 per cent in 1990-91 and increased to

47.66 per cent in 1998-99 periods .It declined to -325.64 per cent in 2000-01 and

increased to 3.34 per cent in 2004-05 and increased to 46.47per cent in 2009-10 . It

is a clear indication from the ratios that the return on investment of Transformers

and Electrical Kerala Limited during certain years is not at all promising except in

certain years (Table 3.17).


The net profit position is very worse and a negative profit or loss is seen in

certain years under study. The net profit to sales in 1990-91 was 0.64 per cent and

increased to 7.43 per cent in 1994-95 and leads to loss in 1999-2000 . There was

meager profit of 0.68 per cent in 2004-05 which increased to 21.38 per cent in 2009-

10. It is clear from the analysis of profit to sales of Transformers and Electrical

133

Kerala Limited that the profit earned is not up to the mark during the whole period

of 20 years under study from 1990-91 to 2009-10 ( Table 3.17).


The ratio of accounts receivable to sales was 4.89 in 1990-91 which slightly

increased to 5.77 in 1994-95 and again increased to 8.63 in 1999-2000. It declined to

4.77 in 2000-01 which increased to 5.58 in 2004-05anddeclined to 3.1in 2009-10. In

this case a fluctuating trend is noticed during 1990-91 to 2009-10. The lower the

months in the receivable to sales is really good for increasing the amount of cash by

way of sales (Table 3.17).



declined to 1.84 in 1994-95. It declined to 1.26 in 1998-99 which again declined to

0.64 in 2004-05. It was 0.49 in 2009-10. A fluctuating trend is noticed during 1990-

91 to 2009-10 the whole 20 year period under analysis. The lower the months in the

stock of finished goods to sales is an indication of increased sales and is appreciable

(Table 3.17).


The stock of raw materials to consumption was 1.25 in 1990-91 which

increased to 1.82 in 1994-95. It was 2.92 in 1995-96 which again declined to 1.71 in

1999-2000 and it further declined to 1.64 in 2000-01. It was 1.68 in 2001-02 which

increased to 2.03 in 2004-05 and again increased to 2.58 in 2009-10. Here a

fluctuating trend of increase is noticed in all the 20 years from 1990-91 to 2009-10.

134

The lesser the number of months in raw materials to consumption is appreciable one

(Table 3.17).


The ratio of raw materials consumed to sales expressed was 65.48 per cent in

1990-91 which increased to 71.6 per cent in 1994-95. It was 63.38 per cent in 1995-

96 which increased to 68.77 per cent in 1999-2000. It declined to 62.36 per cent in

2000-01 which declined to 53.36 per cent in 2001-02. It was 60.72 per cent in 2005-

06 which declined to 50.68 per cent in 2009-10. A fluctuating trend of increase is

noticed during 1990-91 to 2009-10. The trend is somewhat high which indicates that

consumption depends on sales (Table 3.17).

135

Table 3.17 Financial and Operating Ratios of Transformers and Electricals Kerala Limited


Current ratio


(%)


months)




Net profit to

sales (%)

1 2 3 4 5 6 7 8 9

1990-1991 3.06:1 1.25:1 3.76 4.89 2.82 1.25 65.48 0.64

1991-1992 3.07:1 1.35:1 3.85 5.84 2.93 1.35 68.23 0.65

1992-1993 3.13:1 1.40:1 19.96 6.81 1.94 1.4 68.58 3.56

1993-1994 2.91:1 1.84:1 22.18 5.64 1.7 1.84 76.87 2.34

1994-1995 2.47:1 1.15:1 47.66 5.77 1.84 1.82 71.6 7.43

1995-1996 2.06:1 1.13:1 22.22 5.73 0.66 2.92 63.38 2.86

1996-1997 2.05:1 1.16:1 29.82 6.89 0.36 1.96 57.36 4.34

1997-1998 2.28:1 1.20:1 14.4 8.34 0.14 1.51 62.23 2.8

1998-1999 2.67:1 1.12:1 -69.84 10.09 1.26 0.74 90.37 -15.13

1999-2000 3.55:1 1.03:1 -369.39 8.63 1.49 1.71 68.77 -31.7

2000-2001 4.24:1 0.87:1 -325.64 4.77 1.95 1.64 62.36 -27.73

2001-2002 0.44:1 0.88:1 -564.12 3.37 1.25 1.68 53.36 -24.19

2002-2003 0.50:1 0.98:1 200.92 6.05 0.44 1.55 48.64 1.57

2003-2004 0.56:1 1.12:1 69.59 4.57 0.3 1.85 52.32 6.98

2004-2005 0.64:1 1.25:1 3.34 5.58 0.64 2.03 63.91 0.68

2005-2006 0.72:1 1.40:1 8.39 5.31 0.4 1.63 60.72 1.88

2006-2007 0.75 1.24:1 -18.27 4.93 0.28 2.02 57.52 -2.58

2007-2008 0.71 1.59:1 51.53 3.65 0.32 1.5 59.5 12.57

2008-2009 0.73 2.03:1 65.13 3.53 0.64 1.8 57.26 22.98

2009-2010 0.65 2.95:1 46.47 3.1 0.49 2.58 50.68 21.38 Source : Computed from Annual Reports of Bureau of Public Enterprises, various issues

The correlation values depict that there is direct correlation between net

worth and capital employed, current ratio, working capital and net profit to sales

(Table 3.18).

136


Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.955 3 Capital Invested -0.514 4 Working capital 0.958 5 Debt to Equity Ratio -0.777 6 Current Ratio 0.814 7 Return on Investment (%) 0.279 8 Receivable to sales ( in Months) -0.553 9 Stock of finished goods to sales( in months ) 0.507 10 Stock of raw materials to consumption 0.350 11 Consumption to Sales (%) -0.410 12 Net Profit to sales ( %) 0.725


7. KERALASTATE ELECTRONICS DEVELOPMENT CORPORATION LIMITED

Kerala State Electronics Development Corporation Limited was incorporated

in 1972 under the Department of Industries, Government of Kerala. The main

activities include designing, manufacturing and marketing of various IT / Electronic

products / systems.

a. Net Worth

The net worth of the Kerala State Electronics Development Corporation

Limited was Rs 1125.08 crores during 1990-91 which declined to Rs 238.31 crores

during 1994-95. During 1995-96 there was negative net worth and it continues

throughout the entire period under study (Table 3.19).

137

b. Capital Employed

The capital employed of the Kerala State Electronics Development

Corporation Limited was Rs 3886.79 crores during 1990-91 which increased to Rs

5455.84 crores during 1994-95. During 1995-96 capital employed was Rs 4450.23

crores which declined to Rs -1155.28 crores in 1999-2000. It was Rs -935.08 crores

in 2000-01 which again increased to Rs -13379.54 crores in 2004-05 and a positive

capital employed is seen from 2006-07 onwards (Rs. 12241.25 crores) . It was Rs

14923.76 crores in 2009-10.It is seen from the analysis that capital employed for a

period from 1990-91 to 2009-2010 shows an increasing trend except for 7 years

during which it was negative ( Table 3.19).

c. Capital Invested

The capital invested by the Kerala State Electronics Development


13707.9 crores during 1994-95. During 1995-96 it was Rs 14012.09 crores which

again increased to Rs 18369.95 crores in 1999-2000. In 2000-01 it was Rs 25040.96

crores which increased to Rs 30998.6 crores in 2004-05. It was Rs 33210.14 crores

in 2005-06 which increased to Rs 37826.28 crores in 2009-10. The trends in capital

invested for a period of 20 years under study from 1990-91 to 2009-2010 shows an

increasing one (Table 3.19).

d. Working Capital

The working capital of the Kerala State Electronics Development


3721.21 crores during 1994-95. It was Rs 2951.98 crores in 1995-96 which declined

138

to Rs -2555.8 crores in 1999-00. It was negative for further six years and positive

figure is shown from 2006-07 onwards to Rs 13528.33 crores in 2009-2010. The

analysis on working capital during the period from 1990-91 to 2009-2010 shows a

trend of increase except in seven years (Table 3.19).

Table 3.19

Net worth, Capital Employed , Capital Invested and Working Capital of Kerala State Electronics Development Corporation Limited

( Rs in Crores )


1 2 3 4 5 1990-1991 1125.08 3886.79 12635.82 2027.38 1991-1992 1178.18 3995.89 12740.92 2037.67 1992-1993 1502.58 5470.67 14144.63 3574.33 1993-1994 1714.66 7329.62 15931.14 5513.06 1994-1995 238.31 5455.84 13707.9 3721.35 1995-1996 -966.47. 4450.23 14012.09 2951.98 1996-1997 -2473.4 4180.59 15836.43 2650.59 1997-1998 -4862.01 2937.89 16982.27 1446.69 1998-1999 -6026.65 553.96 16916.97 168.84 1999-2000 -9188.87 -1155.28 18369.95 -2555.78 2000-2001 -14011.23 -935.08 23412.51 -2323.26 2001-2002 -18660.97 -3956.37 25040.96 -5335.21 2002-2003 -24366.77 -7648.84 27425.35 -7532.41 2003-2004 -29551.01 -10861.12 29025.85 -12064.91 2004-2005 -34042.19 -13379.54 30998.61 -14489.89 2005-2006 -38155.38 -15281.2 33210.14 -16285.74 2006-2007 -8561.32 12241.25 33750.55 11310.36 2007-2008 -8072.27 14463.29 35483.54 13444.48 2008-2009 -8559.22 15266.95 36459.53 14094.36 2009-2010 -8210.66 14923.76 37826.28 13528.33

Source: Compiled from the Review of Public Enterprises , Various issues, of



Employed, Capital Invested and Working capital of Kerala State Electronics

Development Corporation Limited during 1990-91 to 2009-2010 with the trend line

and regression equation is shown in fig. 3(vii)

139

Fig. 3(vii) Net worth, Capital Employed, Capital Invested and Working capital of Kerala State

Electronics Development Corporation Limited

Source : Table 3.19


2010 is Y =-1262.1x + 2803.2. The slope is -1262.1x and intercept is 2803.2. The


a decrease in net worth of Kerala State Electronics Development Corporation

Limited during the 15 years under study.




prediction. There is an increase in most of the years but the increase is not a

promising one as far as the capital employed of Kerala State Electronics

Development Corporation Limited during the liberalization period is considered .

140

The trend line (linear trend of first degree) of the Capital Invested from 1990-

91 to 2009-2010 is Y = 1484.9x + 7604. The slope is 1484.9x and intercept is 7604.

The R² is 0.9493 which shows that the equation is most suitable for prediction. The

position of capital invested by Kerala State Electronics Development Corporation

Limited shows an increase during the liberalization period.


1990-91 to 2009-2010 is Y = 79.444x – 40.051. The slope is 79.444xand intercept is


prediction. There is an increase in the working capital of Kerala State Electronics

Development Corporation Limited during certain years and decline in certain other

years under liberalization period.



The debt to equity ratio of Kerala State Electronics Development

Corporation Limited during 1990-91 was 0.58 : 1 which declined to 0.85 : 1 in

1994-95 periods . It was 0.86: 1 in 1995-96 which declined to 0.83 : 1 in 1998-99

and increased to 0.98 : 1 in 1999-2000. Again there was an increase to 0.99 : 1 in

2000-01 and noticed an increase to the extent of 2.14 :1 in 2004-05. It again

increased to 2.35: 1 in 2005-06 which slightly declined to 2.28 : 1 in 2009-10 . The

overall trend shows fluctuations. In the initial years the ratio shows that debt to

equity was lower and slightly increased gradually in the liberalization periods (Table

3.20).

141

ii. Current Ratio

The Current ratio of Kerala State Electronics Development Corporation

Limited during 1990-91 was 1.13 : 1 which increased to 1.25 : 1 in 1994-95 periods.

It was 1.20 : 1 in 1995-96 which declined to 0.96 : 1 in 1998-99 and to 0.89 : 1 in

1999-2000. Again there was a decline and it came down to 0.61 : 1 in 2004-05 and

noticed an increase to 1.70 :1 in 2009-10 . The overall position shows a trend of

fluctuations and the ratio was not ideal in any year under study ( Table 3.20).


The return on the capital employed by the Kerala State Electronics

Development Corporation Limited shows a negative figure in certain years. It was

-92 per cent in 1990-91 and shows a negative growth up to 2005-06 and positive

figures are shown in 2006-07, 2007-08 and 2009-10.It is clear from the computed

ratios that the return on investment of Kerala State Electronics Development

corporation is not a promising one during the entire period of 20 years from 1990-91

to 2009-10 (Table 3.20).


The ratio of net profit to total sales position of Kerala State Electronics

Development Corporation Limited is very worse and a negative profit or loss is seen

in certain years under study. The net profit to sales in 1990-91 was 82.18per cent

and it declined to -22.9 per cent in 1994-95 . It was 52.62 per cent in 1998-99 which

increased to 62.07 per cent in 2003-04. In 2005-06 it was 37.22 per cent which

declined to 1.58 per cent in 2009-10 .It is clear from the analysis of profit to sales

142

of Kerala State Electronics Development corporation that the profit earned is not up

to the mark during the whole period of 20 years under study from 1990-91 to

2009-10 ( Table 3.20).


This ratio reveals the trends in accounts receivable to sales and it was 10.31

in 1990-91 and which increased to 13.52 in 1994-95 and again increased to 15.78

in 1998-99 . It was 14.58 in 1999-2000 which declined to 12.11 in 2004-05 and

declined again to 8.22 in 2009-10. A fluctuating trend is noticed during 1990-91 to

2009-10, the whole 20 year period under analysis. The lower the months in the

receivable to sales is really good for increasing the amount of cash by way of sales

but the ratio is unfavourable (Table 3.20).



declined to 0.46 in 1994-95. It further declined to 0.40 in 1998-99 which again

declined to 0.28 in 1999-00.It was 0.11in 2004-05 which slightly increased to 0.12 in

2009-10. A fluctuating trend is noticed during 1990-91 to 2009-10, the whole 20

year period under analysis. The lower the months in the stock of finished goods to

sales is an indication of increased sales ( Table 3.20).


The ratio of stock of raw materials to raw materials consumption was 6.18 in

1990-91 which declined to 3.73 in 1994-95. It was 6 in 1995-96 which declined to

5.31 in 1999-2000 and it further declined to 5.23 in 2000-01. It was 3.57 in 2004-05

143

which declined to 1.55 in 2009-10. A fluctuating trend of increase is noticed in all

the 20 years from 1990-91 to 2009-10. The lesser the ratio of raw materials to

consumption is appreciable (Table 3.20).



percentage. It was 75.21 per cent in 1990-91 which declined to 69.09 per cent in

1994-95. It was 53.44 per cent in 1995-96 which increased to 56.27 per cent in

1999-2000. It declined to 55.32 per cent in 2000-01 which slightly increased to

55.91 per cent in 2004-05. It was 50.35 per cent in 2005-06 which increased to 62.4

per cent in 2009-10. A fluctuating trend of increase is noticed during 1990-91 to

2009-10, the whole 20 year period under analysis. The trend is somewhat high

which indicates that consumption depends on sales ( Table 3.20).

144

Table 3.20 Financial and Operating ratios of KSEDC


Current ratio


(%)


months)

Stock of finished goods

to sales (in

months)


Consumption to sale (%)

Net profit

to sales (%)

1 2 3 4 5 6 7 8 9

1990-1991 0.58:1 1.13:1 -92 10.31 1.3 6.18 75.21 82.18

1991-1992 0.59:1 1.14:1 -94 11.24 1.4 6.27 76.11 84.19

1992-1993 0.72:1 1.23:1 2.15 8.65 0.26 2.92 54.53 0.91

1993-1994 0.94:1 1.37:1 2.27 10.81 0.25 2.71 58.78 1.23

1994-1995 0.85:1 1.25:1 -31.38 13.52 0.46 3.73 69.09 -22.9

1995-1996 0.86:1 1.20:1 -30.49 17.72 1.14 6 53.44 25.47

1996-1997 0.94:1 1.16:1 -62.95 19.3 0.66 11.24 40.65 52.64

1997-1998 1.07:1 1.08:1 -81.36 15.82 0.48 6.34 50.05 36.01

1998-1999 .83:1 .96:1 -567.09 15.78 0.4 1.74 50.02 52.62

1999-2000 .98:1 .89:1 3.21 14.58 0.28 5.31 56.27 58.14

2000-2001 0.99:1 0.78:1 -4.22 14.96 0.22 5.23 55.32 57.59

2001-2002 1.63:1 0.82:1 --5.32 15.05 0.2 3.75 40.49 -74.9

2002-2003 1.76:1 .71:1 -6.54 14.4 0.18 3.68 51.3 76.55

2003-2004 1.95:1 .65:1 --7.58 13.04 0.13 3.2 55.51 62.07

2004-2005 2.14:1 .61:1 --8.33 12.11 0.11 3.57 55.91 -61.4

2005-2006 2.35:1 .60:1 --10.2 11.21 0.04 3.24 50.35 37.22

2006-2007 1.93:1 1.79:1 16.5 10.7 0.07 2.62 53.66 15.87

2007-2008 2.08:1 1.90:1 3.57 11.95 0.05 2.37 58.09 3.87

2008-2009 2.17:1 1.95:1 -3.06 10 0.22 1.93 54.87 -3.04

2009-2010 2.28:1 1.70:1 2.31 8.22 0.12 1.55 62.4 1.58

Source: Computed from Annual Reports of Bureau of Public Enterprises, various issues

145


employed, current ratio ,working capital , Return on capital employed and stock of

finished goods to sales (Table 3.21).

Table 3.21

Correlation Sl. No. Item Correlation

1 Net worth 1 2 Capital Employed -0.567 3 Capital Invested -0.514 4 Working capital 0.754 5 Debt to Equity Ratio -0.707 6 Current Ratio 0.594 7 Return on Investment (%) 0.079 8 Receivable to sales ( in Months) -0.013 9 Stock of finished goods to sales( in months ) 0.504 10 Stock of raw materials to consumption 0.192 11 Consumption to Sales (%) 0.316 12 Net Profit to sales ( %) 0.385


8. KERALA AGRO MACHINERY CORPORATION LIMITED

Kerala Agro Machinery Corporation Limited was incorporated in 1973 under

the Department of Agriculture, one of the administrative Departments of

Government of Kerala. Kerala Agro Machinery Corporation Limited is involved in

the manufacture and sale of power tillers, diesel engines and power reapers.

a. Net Worth

The net worth of Kerala Agro Machinery Corporation Limited was Rs 522.1

crores during 1990-91 which declined to Rs 100 crores during 1994-95. During

146

1995-96 there was negative net worth of Rs 3931.5 crores which increased to Rs

5994.1 crores in 2004-05. It was Rs 6466.7 crores in 2005-06 which again increased

to Rs 9097.89 crores in 2009-10. It is noticed from the data that the net worth

position shows a steep increase except in 1993-95 to 1995-96 periods (Table 3.22).

b. Capital Employed

The capital employed of Kerala Agro Machinery Corporation Limited was

Rs 544.11 crores during 1990-91 which increased to Rs 969.87 crores during 1994-

95. During 1995-96 capital employed was Rs 1146.22 crores which increased to Rs

3162.21 crores in 1999-2000. It was Rs 3756.5 crores in 2000-01 which again

increased to Rs 581.1 crores in 2004-05. It was Rs. 6291.7 crores in 2005-06 which

again increased to Rs 8933.31 crores. The position of capital employed for a period

of 20 years under study from 1990-91 to 2009-2010 shows a trend of increase

(Table 3.22).

c. Capital Invested

The capital invested by Kerala Agro Machinery Corporation Limited was Rs

161.46 crores during 1990-91 which remained stagnant up to 2006-07 and changed

to Rs 201.88 crores in 2009-10. The capital invested remains stagnant from 1990-91

to 2006-07 and then shows an increase in trend during the remaining years under

study (Table 3.22).

d. Working Capital

The Working Capital of Kerala Agro Machinery Corporation Limited was Rs


147

It was Rs 615.93 crores in 1995-96 which increased to Rs 2207.15 crores in 1999-00

. It was Rs 5104.21 crores in 2004-05 which increased to Rs. 8193 .5 crores in 2009-

10. The analysis on working capital for a period of 20 years from 1990-91 to 2009-

2010 clearly shows an increasing trend( Table 3.22).

Table 3.22

Net worth, Capital Employed, Capital Invested and Working Capital of Kerala Agro Machinery Corporation Limited

( Rs in Crores )


1 2 3 4 5

1990-1991 522.10 544.1 161.46 401.23

1991-1992 544.11 544.11 161.46 402.49

1992-1993 681.68 681.66 161.46 534.33

1993-1994 100 811.27 161.46 578.7

1994-1995 100 969.87 161.46 582.03

1995-1996 100 1146.22 161.46 615.93

1996-1997 1372.69 1222.69 161.46 766.56

1997-1998 1903.5 1753.5 161.46 1205.49

1998-1999 2545.78 2395.78 161.46 1751.36

1999-2000 3337.21 3162.21 161.46 2207.15

2000-2001 3931.49 3756.49 161.46 2817.27

2001-2002 4554.92 4379.92 161.46 3490.53

2002-2003 5144.19 4969.19 161.46 4141.38

2003-2004 5601.66 5426.66 161.46 4654.18

2004-2005 5994.1 5819.1 161.46 5104.21

2005-2006 6466.7 6291.7 161.46 5627.03

2006-2007 6987.66 6782.66 161.46 6163.32

2007-2008 7561.54 7398.04 202.96 6792.21

2008-2009 8274.39 8111.42 203.49 7495.23

2009-2010 9097.89 8933.31 201.88 8193.5 Source: Compiled from the Review of Public Enterprises, Various issues, of the Bureau of Public Enterprises , Government of Kerala .

148


Employed, Capital Invested and Working capital of Kerala Agro Machinery

Corporation Limited during 1990-91 to 2009-2010 with the trend line and regression

equation is shown in fig. 3(viii)

Fig. 3(viii)

Net worth, Capital Employed, Capital Invested and Working Capital of Kerala Agro Machinery Corporation Limited

Source : Table 3.22


2010 is Y = 498.2x – 1490. The slope is 498.2x and intercept is 1490. The R² is

0.9665 which shows that the equation is most suitable for prediction. There is an

increase in net worth of Kerala Agro Machinery Corporation Limited during the 20

years under study.

149




prediction. There is an increase but at a reduced rate in most of the years and the

increase is not high and steep as far as the capital employed of Kerala Agro

Machinery Corporation Limited during the liberalization period is considered.




prediction. There is an increase in the capital invested by Kerala Agro Machinery

Corporation Limited during the liberalization period.


1990-91 to 2009-2010 is Y = 435.12x – 1392.5 The slope is 435.12x and intercept


prediction. There is an increase in the working capital of Kerala Agro Machinery

Corporation Limited during certain years and decline in certain other years during




The debt to equity ratio of Kerala Agro Machinery Corporation Limited

during 1990-91 was 1.25 : 1 which increased to 2.5 : 1 in 1994-95 periods . It was

2.01: 1 in 1995-96 which increased to 3.11: 1 in 1998-99 and increased to 3.52 : 1 in

150

1999-2000. Again there was an increase to 3.89 : 1 in 2000-01 which declined to

0.26:1 in 2004-05 and again declined to 0.25 : 1 in 2009-10. The overall trend

shows fluctuating one. The ratio gives an indication that the debt in their capital

structure is low (Table 3.23).

ii. Current Ratio

The Current ratio of Kerala Agro Machinery Corporation Limited during

1990-91 was 1.75 : 1 which increased to 2.03 : 1 in 1994-95 periods . It was 1.62 : 1

in 1995-96 which increased to 2.76 : 1 in 1998-99 and marginally declined to

2.70 : 1 in 1999-2000. Again there was an increase to 3.78: 1 in 2000-01 which

increased to 5.63:1 in 2004-05. Again in 2005-06 it increased to 6.54 :1 and declined

to 4.69 :1 in 2009-10 periods . The overall trend shows a trend of increase and all

time higher than ideal one in most of the years under study ( Table 3.23) .


The return on the capital employed by Kerala Agro Machinery Corporation

Limited shows negative one in certain years under study. It was 47.20 per cent in

1990-91 which declined to 16.35 per cent in 1994-95. It was 16.65 per cent in 1995-

96 which increased to 40.49 per cent in 1999-2000. It is very low in 2000-01 (0.74

per cent ) . In 2001-02 it was 22.5 per cent which declined to 12.56 per cent in 2004-

05 and again declined to 14.93 per cent in 2009-10 periods. The return on

investment of Kerala Agro Machinery Corporation shows a fluctuating trend

throughout the period under study (Table 3.23).

151


The analysis on the net profit before tax and dividend to total sale of Kerala

Agro Machinery Corporation Limited shows that net profit to sales in 1990-91 was

12.54 per cent and it declined to 6.41 per cent in 1994-95. It was 5.19 per cent in

1995-96 which increased to 18.04 per cent in 1999-2000. It was 26.34 per cent in

2000- 01 which declined to 9.21 per cent and again it increased to 10.03 per cent in

2005-06 which declined to 9.55 per cent in 2009-10. It is clear from the analysis of

net profit to sales of Kerala Agro Machinery Corporation Limited that even though

they are earning profit in all years under study but the profit earned is not up to the

mark during the whole period of 20 years under study (Table 3.23).


The ratio of receivables to sales was 0.30 in 1990-91 which decreased to 0.17

in 1994-95 and increased to 0.25 in 1998-99 . It was 0.33 in 1999-2000 which

increased to 1.35 in 2004-05 which increased to 2.67 in 2009-10 periods .A

fluctuating trend is noticed during 1990-91 to 2009-10 the whole 20 year period

under analysis. The lower the months in the receivable to sales is really good for

increasing the amount of cash by way of sales. It was not so good in certain years

under study ( Table 3.23).



increased to 0.13 in 1994-95 . It was 0.26 in 1998-99 which declined to 0.12 in

1999-2000. This ratio increased to 0.89 in 2004-05 and it further declined to 0.35 in

152

2009-10 .A fluctuating trend is noticed during 1990-91 to 2009-10 the whole 20 year

period under analysis. The lower the months in the stock of finished goods to sales is

an indication of increased sales (Table 3.23).


The ratio of stock of raw materials to consumption was 2.17 in 1990-91

which increased to 3.62 in 1994-95. It was 2.91in 1995-96 which again decreased to

2.04 in 1999-2000. It was all time high in 2000-01 ( 61.8) but declined to 1.99 in

2004-05 and to 1.84 in 2009-10. A fluctuating trend of increase is noticed in all the

20 years from 1990-91 to 2009-10. The lesser number of months in raw materials to

consumption is appreciable ( Table 3.23).


The ratio of raw materials consumed to sales expressed as percentage shows

62.38 per cent in 1990-91 which declined to 58.42 percent in 1994-95. It was 62.87

per cent in 1995-96 which declined to 58.74 per cent in 1999-2000. It declined to

14.53 per cent in 2000-01 which slightly increased to 63.83 per cent in 2004-05. It

was 72.66 per cent in 2005-06 which decreased to 72.38 per cent in 2009-10. A

fluctuating trend of increase is noticed during 1990-91 to 2009-10 the whole 20 year

period under analysis. The trend is somewhat high which indicates that consumption

depends on sales ( Table 3.23).

153

Table 3.23 Financial and Operating Ratios of Kerala Agro Machinery Corporation


Current ratio


(%)


months)




Net profit

to sales (%)

1 2 3 4 5 6 7 8 9

1990-1991 1.25:1 1.75:1 47.20 0.30 0.04 2.17 62.38 12.54

1991-1992 1.25:1 1.86:1 47.19 0.40 0.04 2.18 63.37 12.99

1992-1993 1.25:1 2.01:1 50.6 0.19 0.03 2.51 64.58 15.21

1993-1994 1.15:1 2.01:1 15.96 0.19 0.21 2.31 64.71 5.16

1994-1995 2.5:1 2.03:1 16.35 0.17 0.13 3.62 58.42 6.41

1995-1996 2.01:1 1.62:1 16.65 0.28 0.02 2.91 62.87 5.19

1996-1997 2.31:1 1.83:1 36.63 0.11 0.39 2.91 67.85 11.16

1997-1998 2.41:1 2.12:1 46.2 0.33 0.19 2.29 60.98 14.36

1998-1999 3.11:1 2.76:1 41.51 0.25 0.26 0.33 61.17 15.57

1999-2000 3.52:1 2.70:1 40.49 0.33 0.12 2.04 58.74 18.04

2000-2001 3.89:1 3.78:1 0.74 0.29 2.15 61.83 14.53 26.34

2001-2002 NA 3.93:1 22.48 1.05 0.92 1.58 65.01 14.6

2002-2003 NA 4.15:1 20.19 1.09 0.85 1.71 58.63 13.67

2003-2004 0.26:1 5.53:1 14.23 1.6 1.26 1.9 61.32 11.33

2004-2005 0.26:1 5.63:1 12.56 1.35 0.89 1.99 63.83 9.21

2005-2006 0.26:1 6.54:1 12.74 1.54 1.42 1.77 72.66 10.03

2006-2007 0.26:1 5.45:1 12.91 1.61 0.73 1.97 65.96 9.61

2007-2008 0.26:1 7.05:1 12.61 2.3 0.34 2.17 67.97 8.98

2008-2009 0.26:1 6.64:1 14.42 2.55 0.11 2.07 71.98 9.5

2009-2010 0.25:1 4.69:1 14.93 2.67 0.35 1.84 72.38 9.55 Source: Computed from Annual Reports of Bureau of Public Enterprises, various issues


employed, capital invested, current ratio, working capital and Receivable to sales

(Table 3.24)

154


Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.993 3 Capital Invested 0.650 4 Working capital 0.989 5 Debt to Equity Ratio -0.886 6 Current Ratio 0.897 7 Return on Investment (%) -0.529 8 Receivable to sales ( in Months) 0.936 9 Stock of finished goods to sales( in months ) 0.374 10 Stock of raw materials to consumption -0.018 11 Consumption to Sales (%) 0.203 12 Net Profit to sales ( %) -0.004


9. KERALA AUTOMOBILES LIMITED

Kerala Automobiles Limited (KAL), incorporated in March 1978, is a wholly

owned Company promoted by Government of Kerala. It has an installed capacity to

manufacture 5400 numbers of three wheelers per annum at Thiruvananthapuram,

with technical collaboration from Automobile Products of India Ltd. (APL). The

commercial production was started in the year 1985-86. The operations of the

company had been unsatisfactory since inception due to weak management, lopsided

organizational set up, teething troubles and stiff competition in the market. The

collaborators turned up to be the main competitor as most of the dealers were

common to both KAL and APL. Despite of the reliefs and concessions extended by

the institutions and banks during the period from 1989 to 1991, KAL continued to

incur losses and by the end of March 1993, the accumulated losses stood at Rs. 1403

155

lakh against net worth of Rs. 373 lakh. At the hearing held on 11th February 1993,

KAL was declared as a sick industrial company under section 3(1)(o) of the Sick

Industrial Companies Act (SICA) 1985 and Industrial Development Bank of India

(IDBI) was appointed as the Operating Agency (OA).

a. Net Worth

The net worth of the Kerala Automobiles Limited was Rs -872 .27 crores

during 1990-91and this negative trend repeated upto 2000-01 periods. It was Rs

468.89 crores in 2001- 02 which increased to Rs 975.11 crores in 2004-05. It was Rs

765.34 crores in 2005-06 which declined to Rs 85.56 crores in 2007-08 and turned to

negative net worth afterwards. It means that during the entire period under analysis

the net worth does not give a good picture ( Table 3.25).

b. Capital Employed

The capital employed of the Kerala Automobiles Limited was Rs 432.18

crores during 1990-91 which increased to Rs 439.77 crores during 1994-95. During

1995-96 capital employed was Rs 494.18 crores which increased to Rs 883.16

crores in 1999-2000. It was Rs 883.16 crores in 2000-01 which again increased to

Rs 1355.12 crores in 2004-05. It was Rs 1432.81 crores in 2005-06 which declined

to Rs 515.4 crores in 2009-10. The position of capital employed for a period of 20

years study from 1990-91 to 2009-2010 shows a fluctuating trend (Table 3.25) .

156

c. Capital Invested

The capital invested by the Kerala Automobiles Limited was Rs 1628.45

crores during 1990-91 which increased to Rs 2010.01 crores during 1994-95.

During 1995-96 it was Rs 2034.01 crores which declined to Rs 1537.66 crores in

1999-2000. In 2000-01 it was Rs 1537.44 crores which declined to Rs 1402.83

crores in 2004-05. It was Rs 1690.19 crores in 2005-06 which increased to Rs

1767.03 crores in 2009-10. The position of capital invested shows an increasing

trend in the liberalization period( Table 3.25) .

d. Working Capital

The working capital of Kerala Automobiles Limited was Rs 73.75 crores

during 1990-91 which increased to Rs 195.36 crores during 1994-95. It was Rs

225.38 crores in 1995-96 which declined to Rs 630.02 crores in 1999-00. It was Rs

630.02 crores in 2000-01 which increased to Rs 1151.63 crores in 2004-05 and it

declined to Rs 306.72 crores in 2009-2010. The working capital from 1990-91 to

2009-2010 shows an increasing trend (Table 3.25).

157

Table 3.25 Net worth, Capital Employed, Capital Invested and Working Capital of Kerala

Automobiles Limited ( Rs in Crores )


1 2 3 4 5

1990-1991 -872.27 432.18 1628.45 73.75

1991-1992 -873.27 432.18 1628.45 73.75

1992-1993 -1269.77 200.04 1792.81 -67.33

1993-1994 -1258.1 397.91 1979.01 144.15

1994-1995 -839.25 439.77 2010.01 195.36

1995-1996 -808.84 494.18 2034.01 225.38

1996-1997 -815.51 416.62 1963.13 130.18

1997-1998 -741.72 332.2 1804.92 47.8

1998-1999 -793.94 457.79 1787.66 191.64

1999-2000 -118.57 883.16 1537.66 630.02

2000-2001 -118.57 883.16 1537.66 630.02

2001-2002 468.89 1160.74 1567.34 925.96

2002-2003 775.66 1178.02 1318.21 962.79

2003-2004 852.48 1203.01 1266.38 988.66

2004-2005 975.11 1355.12 1402.83 1151.63

2005-2006 765.34 1432.81 1690.19 1246.8

2006-2007 577.42 900.71 1346.11 721.01

2007-2008 85.56 290.51 1227.77 130.78

2008-2009 -230.99 356.58 1610.39 191.22

2009-2010 -228.81 515.4 1767.03 306.72

Source: Compiled from the Review of Public Enterprises, Various issues, of


158


Employed, Capital Invested and Working capital of Kerala Automobiles Limited

during 1990-91 to 2009-2010 with the trend line and regression equation is shown in

fig. 3(ix)

Fig. 3(ix) Net worth, Capital Employed, Capital Invested and Working capital of Kerala

Automobiles Limited

Source : Table 3.25


2009-2010 is Y = 93.393x – 1203.1. The slope is 93.393xand intercept is 1203.1.



1990-91 to 2009-2010 is Y =29.101x + 382.55 . The slope is 29.101x and intercept


prediction. There is a decrease in most of the years and the increase noticed in some

159

years is not high and steep as far as the capital employed of Kerala Automobiles

Limited during the liberalization period is considered.


1990-91 to 2009-2010 is Y = -23.72x+1894.1 . The slope is -23.72xand intercept is


prediction. There is a decrease in the capital invested by Kerala Automobiles

Limited during the liberalization period.


1990-91 to 2009-2010 is Y = 37.281x + 53.565 . The slope is 37.281x and intercept


prediction. There is an increase in the working capital of Kerala Automobiles

Limited during all the years under liberalization period.



The debt to equity ratio of Kerala Automobiles Limited during 1990-91 was

4.04: 1 which declined to 1.75 : 1 in 1994-95 periods . It was 1.78: 1 in 1995-96

which increased to 1.87: 1 in 1999-2000. It was 1.87: 1 in 2000-01 which declined to

0.37:1 in 2004-05. It again declined to 0.32 :1 in 2006-07 which slightly increased to

0.73:1 in 2009-10 . The overall trend is a fluctuating one. In the initial years the ratio

shows that debt to equity was lower and increased gradually during the liberalization

periods (Table 3.26).

160

ii. Current Ratio

The Current ratio of Kerala Automobiles Limited during 1990-91 was 1.17:

1 which increased to 1.30:1 in 1994-95 periods. It was 1.29 : 1 in 1995-96 which

decreased to 1.18 : 1 in 1998-99 and further increased to 1.94: in 1999-2000. Again

it increased to 2.46 : 1 in 2004-05 but declined to 1.27 :1 in 2009-10 . The overall

trend shows fluctuations and the ratio is not ideal in most of the years under study

(Table 3.26).


The return on the capital employed by the Kerala Automobiles Limited in

certain years is negative. It was -67.65 per cent in 1990-91 and shows a negative

growth in 1992 -93 and increased to 6.31 in 1995-96. It decreased to 0.73 in 2000-01

and then increased to 1.6 in 2004-05 . From 2005 -06 on wards there was negative

trend and in the year 2009-10 it was positive (0.42 per cent) . It is a clear indication

from the ratios that the return on investment of Kerala Automobiles Limited is not a

promising one during the entire period of 20 years from 1990-91 to 2009-10.(Table

3.26).


The ratio of net profit before tax and dividend to total sale of Kerala

Automobiles Limited is not a promising one. The net profit to sales in 1990-91 was

52.63 per cent and it declined to 0.6 per cent in 1994-95. It was 3.2 per cent in 1998-

99 which declined to 0.45 per cent in 2004-05. In 2005-06 and 2006-07 there was

loss and again in 2007-08 onwards there was a profit of 19.33 per cent and came

161

down to 0.11 in 2009-10. It is clear from the analysis of profit to sales of Kerala

Automobiles Limited that even though they are earning profit in certain years the

profit earned is not up to the mark during the whole period of 20 years under study

from 1990-91 to 2009-10 ( Table 3.26).


This ratio of accounts receivable to sales was 0.95 in 1990-91 which declined

to 0.6 in 1994-95 and again increased to 1.19 in 1999-2000 . It was 1.19 in 2000-01

which declined to 0.54 months in 2004-05 and then increased to 1.75 in 2009-10. A

fluctuating trend is noticed during 1990-91 to 2009-10, the whole 20 year period


increasing the amount of cash by way of sales (Table 3.26).


This ratio reveals the trends in stock of finished goods to sales . It was 1.06

in 1990-91 which declined to 0.55 in 1994-95 . It increased to 0.610 in 1998-99

which again declined to 0.16 in 1999-00. It was 1.15 in 2004-05 which increased to

2.51 in 2005-06 and slightly declined to 2.21 in 2009-10 periods . A fluctuating

trend of increase is noticed during 1990-91 to 2009-10, the whole 20 year period

under analysis. The lower the months in the stock of finished goods to sales is an

indication of increased sales but the trend is not favourable (Table 3.26).

162



which declined to 2.46 in 1994-95 . It was 2.22 in 1995-96 which increased to 60.47

in 1999-2000 and it further declined to 1.56 in 2004-05. It was 1.83 in 2005-06

which again declined to 0.25 in 2009-10. In this case a fluctuating trend is noticed

in all the 20 years from 1990-91 to 2009-10 . The lesser is the number of months in

raw materials to consumption is appreciable one but more time is taken for

consumption of raw materials in this case ( Table 3.26).


The ratio of raw materials consumed to sales expressed as percentage

was57.64 per cent in 1990-91 which increased to 66.44 per cent in 1994-95 . It was

68.09 per cent in 1995-96 which decreased to 7.18 per cent in 1999-2000. It was

58.42 per cent in 2001-02 which slightly increased to 61.17 per cent in 2004-05 . It

was 70.33 per cent in 2005-06 which decreased to 68.8 per cent in 2009-10. A


period under analysis (Table 3.26).

163

Table 3.26 Financial and Operating ratios of Kerala Automobiles Ltd


Current ratio


(%)


months)




Net profit

to sales (%)

1 2 3 4 5 6 7 8 9

1991-1992 4.04:1 1.17:1 -67.65 0.95 1.06 4.48 57.64 52.63

1992-1993 4.55:1 0.85:1 -196.55 1.34 0.83 2.09 62.72 49.63

1993-1994 5.13:1 1.30:1 2.54 1.03 0.23 2.49 57.54 -0.75

1994-1995 1.75:1 1.30:1 2.54 0.43 0.55 2./46 66.44 0.6

1995-1996 1.78:1 1.29:1 6.31 0.6 0.51 2.22 68.09 1.32

1996-1997 1.69:1 1.13:1 1.79 0.9 0.48 0.36 64.38 0.24

1997-1998 1.47:1 1.05:1 22.02 0.76 0.55 0.2 63.65 2.16

1998-1999 2.34:1 1.18:1 30.65 0.79 0.61 0.25 60.76 3.2

1999-2000 1.87:1 1.94:1 0.73 1.19 0.16 60.47 7.18 30.01

2000-2001 1.87:1 1.94:1 0.73 1.19 0.16 60.47 7.18 30.01

2001-2002 0.79:1 2.63:1 21.36 0.37 1.05 0.13 58.42 5.64

2002-2003 0.44:1 2.02:1 22.92 0.46 1.58 0.14 61.29 5.91

2003-2004 0.38:1 2.46:1 17.01 0.58 1.38 1.59 60.3 4.63

2004-2005 0.37:1 2.02:1 1.6 0.54 1.15 1.56 61.17 0.45

2005-2006 0.65:1 2.40:1 -14.69 0.65 2.51 1.83 70.33 -5.56

2006-2007 0.32:1 2.45:1 -14.69 2.36 2.49 0.81 66.81 -3.33

2007-2008 0.20:1 2.09:1 -134.57 3.48 2.41 0.17 54.73 -19.33

2008-2009 0.57:1 2.16:1 -115.22 3.32 2.68 0.59 59.05 -35.51

2009-2010 0.73:1 2.26:1 0.42 1.75 2.21 0.25 68.8 0.11


It is seen that there is direct correlation between net worth and capital

employed, current ratio, working capital and Stock of finished goods to sales (Table

3.27)

164

Table 3.27

Correlation

Sl. No. Item Correlation 1 Net worth 1 2 Capital Employed 0.875 3 Capital Invested -0.788 4 Working capital 0.908 5 Debt to Equity Ratio -0.795 6 Current Ratio 0.800 7 Return on Investment (%) 0.261 8 Receivable to sales ( in Months) -0.003 9 Stock of finished goods to sales( in months ) 0.534 10 Stock of raw materials to consumption 0.012 11 Consumption to Sales (%) -0.022 12 Net Profit to sales ( %) 0.319


10. KERALA AGRO INDUSTRIES CORPORATION LIMITED

The Kerala Agro Industries Corporation Limited was incorporated in 1968

under the Agriculture Department, one of the Administrative Departments of the

Government of Kerala, involved in the process of trading of agricultural machineries

and implements, fabrication of farm equipment, implementation of Government

sponsored schemes and projects .

a. Net Worth

The net worth of Kerala Agro Industries Corporation Limited was Rs 18

crores during 1990-91 which increased to Rs 21 crores during 1993-94 and shows

negative figures for further two years. It was Rs 538.7 crores in 1999-2000. During

2000-01 it was Rs 542.55 crores which declined to Rs. 490.6 crores in 2002-03.

165

There is negative net worth in most of the period under analysis during the

liberalization period ( Table 3.28).

b. Capital Employed

The capital employed of Kerala Agro Industries Corporation Limited was Rs

110. 58 crores during 1990-91 which declined to Rs 46.23 crores during 1994-95.

During 1995-96 capital employed was Rs 2.69 crores which increased to Rs 658.4

crores in 1999-2000. It was Rs 689.24 crores in 2000-01 which declined to Rs 5.72

crores in 2004-05. It was Rs 238. 62 crores in 2005-06 which increased to Rs 373.85

crores in 2009-10. The overall position of capital employed for a period of 20 years

under study from 1990-91 to 2009-2010 shows a trend of increase with fluctuations

and negative growth in certain years(Table 3.28) .

c. Capital Invested

The capital invested by Kerala Agro Industries Corporation Limited was Rs

575.64 crores during 1990-91 which declined to Rs 541.9 crores during 1994-95.

During 1995-96 it was Rs 541.9 crores which declined to Rs 620.9 crores in 1999-

2000. It was Rs 911.89 crores in 2005-06 which increased to Rs 1081.89 crores in

2009-10. The position of capital invested for a period of 20 years under study from

1990-91 to 2009-2010 shows an increasing trend (Table 3.28).

d. Working Capital

The Working Capital of Kerala Agro Industries Corporation Limited was Rs

75.82 crores during 1990-91 which declined to Rs 18.67 crores during 1994-95. It

was negative working capital from 1995-96 to 2009-10 with exception on 2002-03.

166

The overall position of working capital for a period of 20 years study from 1990-

91 to 2009-2010 shows declining a trend. (Table 3.28).

Table 3.28 Net worth, Capital Employed, Capital Invested and Working Capital of Kerala Agro

Industries Corporation Limited ( Rs in Crores )


1 2 3 4 5 1990-1991 18 110.58 575.64 75.82 1991-1992 7 111.65 578.76 79.87 1992-1993 19.3 135.28 590.09 105.48 1993-1994 21.03 147.78 600.86 120.23. 1994-1995 -21.56 46.23 541.9 18.67 1995-1996 -65.1 2.69 541.9 -25.36 1996-1997 538.27 605.96 541.9 -87.27 1997-1998 449.6 542.29 566.9 -152.5 1998-1999 437.07 583.76 620.9 -108.59 1999-2000 538.71 658.4 620.9 -5.46 2000-2001 542.55 689.24 620.9 -0.01 2001-2002 512.66 659.35 620.9 -30.2 2002-2003 490.6 688.29 671.9 2.14 2003-2004 -258.64 -60.95 671.9 -750.37 2004-2005 -191.97 5.72 671.9 -686.08 2005-2006 -199.06 238.62 911.89 -450.93 2006-2007 -185.57 332.11 991.89 -355.94 2007-2008 -433.07 84.61 991.89 -601.44 2008-2009 -349.2 168.48 991.89 -517.82 2009-2010 -233.83 373.85 1081.89 -309.95

Source: Compiled from the Review of Public Enterprises, Various issues, of the Bureau of Public Enterprises , Government of Kerala .


Employed, Capital Invested and Working capital of the Kerala Agro Industries


equation is shown in fig. 3 (x )

167

Fig. 3(x) Net worth, Capital Employed, Capital Invested and Working capital of the Kerala

Agro Industries Corporation Limited

Source : Table 3.28


2009-2010 is Y =-21.593x + 309.07. The slope is -21.593x and intercept 309.7.


There is a decrease in net worth of the Kerala Agro Industries Corporation Limited

during the 20 years under study.


1990-91 to 2009-2010 is Y = 4.5619x + 258.3 The slope is 4.5619x and intercept is


prediction. There is an increase in most of the years but the increase is not high and

168

steep as far as the capital employed of the Kerala Agro Industries Corporation

Limited during the liberalization period.


1990-91 to 2009-2010 is Y = 25.885x + 428.54 The slope is 25.885x and intercept


prediction. There is an increase in the capital invested the Kerala Agro Industries



1990-91 to 2009-2010 is Y = -35.685x + 184.7. The slope is -35.685x and intercept

is 184.7. The R² is 0.0.5561 which shows that the equation is most suitable for

prediction. A decrease and sometimes even negative working capital was noticed in

the analysis of the working capital of Kerala Agro Industries Corporation Limited

during all the years under study .


(i) Debt to Equity Ratio

The debt to equity ratio of Kerala Agro Industries Corporation Limited

during 1990-91 was 0.22 : 1 which declined to 0.14 : 1 in 1994-95 periods . It was

1.14 : 1 in 1995-96 which declined to 0.31 : 1 in 1999-2000. It was 0.31 : 1 in 2000-

01 which increased to 0.42:1 in 2004-05 and again increased to 0.92 :1 in 2005-06.

It increased to 1.09 : 1 in 2006-07 and again increased to 1.28 :1 in 2009-10. The

trend shows an increase but with fluctuations. In the initial years the ratio shows that

169

debt to equity was lower and slightly increased gradually in the liberalization periods

(Table 3.29).

ii. Current Ratio

The Current ratio of Kerala Agro Industries Corporation Limited during

1990-91 was 1.18 : 1 which declined to 1.02 : 1 in 1994-95 periods . It was 0.96 : 1

in 1995-96 and increased to 1.00:1 in 1999-2000. It was 0.87:1 in 2009-10 .The

trend shows a fluctuating one and the ratio is not ideal in majority of the cases

(Table 3.29).


The return on the capital employed by the Kerala Agro Industries

Corporation Limited was negative in 1990-91 (-56.24per cent) and continues till

1997 -98. It increased to 14.8 per cent in 1999-2000. From 2001-02 on wards there

was negative return and a very high figure is noticed in 2004-05 and it was increased

to 30.9 in 2009-10.The ratios on return on investment of Kerala Agro Industries

Corporation Limited is not a promising one during the entire period of 20 years

from 1990-91 to 2009-10 (Table 3.29 ).


The ratio of net profit before tax and dividend to total sale of Kerala Agro

Industries Corporation Limited during 1990-91 was 10.80 per cent and it declined to

0.16 per cent in 1993-94 .From 1994-95 onwards there was a loss up to 1998-99

periods. In the next two years there was profit and another two years loss .A slow

growth in profit is seen from 2006-07 ( 0.62 per cent ) to 2.62 per cent in 2009-10

170

periods. The analysis of profit to sales of Kerala Agro Industries Corporation

Limited shows that even though they are earning profit in certain years, the profit

earned is not up to the mark during the whole period of 20 years under study from

1990-91 to 2009-10 (Table 3.29 ).


The ratio of accounts receivable to sales was 3.12in 1990-91 and which

increased to 6.16 in 1994-95 and declined 0.72 in 2000-01 periods. It was 6.12 in

2001-02 which declined to 1.97 in 2004-05 and again increased to 3.32 in 2009-

10.A fluctuating trend of increase is noticed during 1990-91 to 2009-10 the whole

20 year period under analysis. The lower the months in the receivable to sales is

really good for increasing the amount of cash by way of sales ( Table 3.29).



increased to 2.16 and declined to 0.34 in 2000-01. It was 1.61 in 2001-02 which

declined to 0.42 in 2005-06 and it declined further to 0.37 in 2009-10 periods . A


period under analysis. The lower the months in the stock of finished goods to sales is

an indication of increased sales and is favourable (Table 3.29).



1990-91 which increased to 0.18 in 1995-96 . It was 0.15 in 1997-98 which

increased to 0.45 in 2002-03 and increased to 0.76 in 2005-06 and declined to 0.65

171

in 2009-10 periods . In this case a fluctuating trend of increase is noticed in all the

20 years from 1990-91 to 2009-10 (Table 3.29).


The ratio of raw materials consumed to sales expressed as percentage was

2.01 per cent in 1990-91 which declined to 1.11 per cent in 1994-95 . It was 1.11per

cent in 1995-96 which declined to 0.19 per cent in 2000-01. It was 2.63 per cent in

2001-02 which declined to 0.50per cent in 2005-06 .A high level of consumption

was attained from 2006-07 (55.27 per cent) to 2009-10 (87.9 per cent). A fluctuating

trend of increase is noticed in the initial years and a very high consumption was seen

from 2006-07 on wards during the 20 years period under analysis. The trend is

somewhat high and it indicates that consumption depends on sales (Table 3.29).

172

Table 3.29 Financial and Operating ratios of Kerala Agro Industries Corporation


Current ratio

Return investment

(%)


months)




Net profit to

sales (%)

1 2 3 4 5 6 7 8 9

1990-1991 0.22 1.18: -56.24 3.12 1.59 0.03 2.01 10.80

1991-1992 0.22:1 1.18:1 -56.24 3.12 1.59 0.03 2.05 11.09

1992-1993 0.24:1 1.06:1 7.98 5.22 1.79 0.03 1.78 1.94

1993-1994 0.27:1 1.26:1 1.04 1.78 1.17 0.29 1.02 0.16

1994-1995 0.14:1 1.02:1 -98.79 6.16 2.16 0.35 1.11 -5.63

1995-1996 0.14:1 0.96:1 -1618.59 4.19 1.39 0.18 1.11 -4.61

1996-1997 0.14:1 0.91:1 -11.07 5.36 1.54 0.15 1.07 -5.75

1997-1998 0.20:1 0.84:1 -16.36 3.95 0.97 0.15 0.79 -5.85

1998-1999 .31:1 .90:1 2.16 2.97 0.58 0.62 1.34 -0.66

1999-2000 .31:1 1.00:1 14.81 538.71 5.38 0.62 1.11 3.54

2000-2001 .31:1 1.00:1 3.3 0.72 0.34 0.9 0.19 0.56

2001-2002 .31:1 .97:1 -15.19 6.12 1.61 0.41 2.63 -8.97

2002-2003 .42:1 1.00:1 -3.17 4.63 1.11 0.45 1.73 -1.4

2003-2004 .42:1 .54:1 -35.91 3.33 0.71 0.46 1.47 1.23

2004-2005 .42:1 .58:1 1161.36 1.97 0.5 0.78 0.51 2.2

2005-2006 .92:1 .74:1 -3.04 2.54 0.42 0.76 0.50 -0.2

2006-2007 1.09:1 .79:1 14.33 1.18 0.41 0.77 0.55 0.62

2007-2008 1.09:1 0.84:1 95.78 0.68 0.09 0.72 0.97 0.6

2008-2009 1.09:1 0.78:1 49.78 2.6 0.29 0.69 0.91 1.71

2009-2010 1.28:1 0.87:1 30.86 3.32 0.37 0.65 0.87 2.62 Source: Computed from Annual Reports of Bureau of Public Enterprises, various issues A direct correlation exists between net worth and capital employed ,current

ratio , working capital ,stock of finished goods to sales, stock of raw material to

consumption (Table 3.30).

173

Table 3.30

Correlation

Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.852 3 Capital Invested - 0.631 4 Working capital 0.686 5 Debt to Equity Ratio -0.630 6 Current Ratio 0.398 7 Return on Investment (%) -0.0494 8 Receivable to sales ( in Months) 0.320 9 Stock of finished goods to sales( in months ) 0.404 10 Stock of raw materials to consumption 0.315 11 Consumption to Sales (%) -0.618 12 Net Profit to sales ( %) -0.324


11. TRAVANCORE SUGARS AND CHEMICALS LIMITED

Travancore Sugars and Chemicals Ltd (TSCL), originally owned by M/s

Parry and Company was taken over by Government of Kerala in the year 1974 by

acquiring the shares held by them. The company’s product profile included sugar,

spirit, Indian Made Foreign Liquor (IMFL) and arrack. In all the years under study,

the company’s operations were not upto the mark. The plant in the Sugar Unit is

quite old with a cane crushing capacity of 900 Tonnes per day (tpd), whereas the

economically viable capacity is 2500 tpd. Even for 900tpd, the availability of

sugarcane was uncertain. The company has only seven per cent sugar recovery from

crushed cane and as such, is capable of producing only about 60 tpd of sugar at 100

per cent capacity utilization which is not a viable scale of operation.

174

The Distillery Unit was commissioned in 1951 with an installed capacity of

46.53 lakh litres. This unit has also not been functioning efficiently which is evident

from the low and diminishing capacity utilization ranging from 25 per cent to 35 per

cent. The main raw material for the Distillery Unit is molasses. Only ten per cent of

the molasses requirement was being met from the Sugar Unit and the Company was

depending on imported molasses from other States for the balance 90 per cent

requirements. This has resulted in the steep increase in raw material cost. Being an

old plant, the efficiency and output were very poor.

a. Net Worth

The net worth of the Travancore Sugars and Chemicals was Rs 8 crores

during 1990-91 and Rs 9 crores in 1991-92. In all other years except during 2009-10

there is negative net worth . In 2009-10 it was Rs 55.05 crores. There is negative net

worth in all period under analysis except two years (Table-3.31)

b. Capital Employed

The capital employed of Travancore Sugars and Chemicals Limited was Rs 8

crores during 1990-91 and a negative capital employed is seen except during 2009-

10 ( Rs 57. 88 crores) . The overall position of capital employed for a period of 20

years study from 1990-91 to 2009-2010 shows a negative growth. During the entire

period under analysis the capital employed is found declining (Table 3.31).

c. Capital Invested

The capital invested by Travancore Sugars and Chemicals Limited was Rs 50

crores during 1990-91 which increased to Rs 111 crores during 1994-95. During

1995-96 it was Rs 148 crores which declined to Rs -210.4 crores in 1999-2000. In

2000-01 it was Rs 184.5 crores which increased to Rs 291.5 crores in 2004-05. It

175

was Rs 173.97 crores in 2005-06 which declined to Rs 146.07 crores in 2009-10.

During the entire period under analysis the capital invested is seen increasing but

with a fluctuating trend (Table 3.31).

d. Working Capital

The working Capital of Travancore Sugars and Chemicals Limited was Rs -

29.3 crores during 1990-91 which continues up to 2008-09 the whole 19 years with

exception of the year 2009-10 . During this year there was Rs 22.88 crores as

working capital. During the entire period under analysis there is negative working

capital with the exception of 2009-10 (Table 3.31).

Table 3.31

Net worth, Capital Employed, Capital Invested and Working Capital of Travancore Sugars and Chemicals Limited

( Rs in Crores )


1 2 3 4 5 1990-1991 8 8 50 -29.31 1991-1992 9 9 51 -38.22 1992-1993 -18.22 -18.6 51 -61.3 1993-1994 -51.45 -51.45 51 -88.46 1994-1995 -156.95 -96.95 111 -134.45 1995-1996 -295.47 -200.47 148 -233.55 1996-1997 -417.22 -292.22 176 -321.58 1997-1998 -711.59 -334.76 438.06 -360.57 1998-1999 -285.87 -214.95 -238.96 -238.9 1999-2000 -250.88 188.98 -210.35 -210.35 2000-2001 -297.11 -244.2 184.48 -263.5 2001-2002 -215.62 -172.18 175 -186.93 2002-2003 -297.09 -253.66 175 -266.79 2003-2004 -264.77 -95.86 300.48 -107.31 2004-2005 -250.65 -90.74 291.48 -113.57 2005-2006 -183.88 -141.48 173.97 -164.05 2006-2007 -113.13 -78.58 166.12 -100.37 2007-2008 -58.5 -24.43 165.64 -47.57 2008-2009 -35.17 -11.1 155.64 -43.03 2009-2010 55.05 57.88 146.07 22.88

Source: Compiled from the Review of Public Enterprises, Various issues of the Bureau of Public Enterprises , Government of Kerala .

176


Employed, Capital Invested and Working capital of Travancore Sugars and

Chemicals Limited during 1990-91 to 2009-2010 with the trend line and regression

equation is shown in fig. 3(xi)

Fig. 3(xi) Net worth, Capital Employed, Capital Invested and Working capital of Travancore

Sugars and Chemicals Limited

Source : Table 3.31


2010 is Y = 1.6153x –208.4. The slope is 1.6153x and intercept is 208.4. The R² is


negative net worth of the Travancore Sugars and Chemicals Limited during the 20

years under study.


1990-91 to 2009-2010 is Y = 1.6081x –119.7. The slope is 1.6081x and intercept is

177


prediction. There is negative capital employed in Travancore Sugars and Chemicals

Limited during the liberalization period .




prediction. The capital invested in the Travancore Sugars and Chemicals Limited

during the liberalization period shows an increase.


1990-91 to 2009-2010 is Y = 2.8472x –179.24. The slope is 2.8472x and intercept

is179.24. The R² is 0.1915 which shows that the equation is most suitable for

prediction. There is a decrease or negative working capital in Travancore Sugars

and Chemicals Limited during all the years under liberalization period .



The debt to equity ratio of Travancore Sugars and Chemicals Limited during

1990-91 was 1.15 : 1 which increased to 1.18 :1 in 1994-95 periods . It was 1.86 : 1

in 1995-96 which declined to 0.49 : 1 in 1999-2000 . It was 0.40 : 1 in 2000-01

which increased to 1.22 :1 in 2004-05 and declined to 0.11 :1 in 2009-10. The trend

shows an increase but at a slow rate with fluctuations which depicts that the debt

content in the capital is declining ( Table 3.32).

178

ii. Current Ratio

The Current ratio of Travancore Sugars and Chemicals Limited during 1990-

91 was 0.87 : 1 which declined to 0.74 : 1 in 1994-95 periods. It was 0.52 : 1 in

1995-96 which declined to 0.46 :1 in 1999-2000. It was 0.44 :1 in 2000-01 which

increased to 0.76 : 1 in 2004-05 and again there was increase up to 1.06 :1 in 2009-

10. The trend shows an increase with fluctuations but it is not ideal ( Table 3.32).


The return on the capital employed by the Travancore Sugars and Chemicals

Limited was -534.32 per cent in 1990-91 and increased to 69.66 in 1995-96. From

1998-99 to 1999-2000 and many of the years there was negative return on

investment but a high return was seen in (218.4 per cent) during 2009-10. The ratios

give an indication that the return on investment of the Travancore Sugars and

Chemicals Limited is not a promising one during the entire period of 20 years from

1990-91 to 2009-10. (Table 3.32).


The ratio of net profit to total sales of the Travancore Sugars and Chemicals

Limited in 1990-91 was -7.25per cent and it continues till 1995-96. A good profit

was shown in 1998-99 (111.43 per cent) to 1997-98 (110 per cent). During 2003-04

profit was 34.13 per cent which decreased to 8.45 per cent in 2009-10. The analysis

of profit to sales of the Travancore Sugars and Chemicals Limited shows that even

though there was profit in certain years, heavy loss was incurred in the other years

(Table 3.32).

179


The ratio of accounts receivable to sales was 0.15 in 1990-91 which

increased to 0.16 in 1994-95 and declined to 0.09 in 1998-99. It was 6.39 in 2000-01

periods but declined to 0.01 in 2005-06 and again increased to 2.85 in 2009-10. A

fluctuating trend of increase is noticed during 1990-91 to 2009-10, the whole 20 year

period under analysis. The lower the months in the receivable to sales is really good

for increasing the amount of cash by way of sales but in this case the ratio is not

suitable in all cases (Table 3.32).



increased to 5.4 in 1994-95. It was 0.97 in 1995-96 which increased to 2.24 in 1999-

2000. It was 0.01 in 2004-05 and increased to 0.13 in 2009-10. A fluctuating trend of

increase is noticed during 1990-91 to 2009-10 the whole 20 year period under

analysis. The lower the months in the stock of finished goods to sales is an

indication of increased sales. It is seen appreciable from 2004-05 onwards (Table

3.32).



which increased to 6.25 in 1994-95. It was 26.27in 1997-98 which declined to 1.91

in 2001-02 and increased to 5.29 in 2005-06. It declined to 0.46 in 2009-10 period.

A fluctuating trend of increase is noticed in all the 20 years from 1990-91 to 2009-

10 .The lesser the number of months in raw materials to consumption is appreciable

and avoids unnecessary blocking of funds in raw materials (Table 3.32).

180


The ratio of raw materials to sales expressed as percentage was 52.48 per

cent in 1990-91 which increased to 82.05 per cent in 1994-95. It was 38.87 per cent

in 1995-96 which increased to 24.02 per cent in 1999-2000. It was 22.84 per cent in

2001-02 which increased to 46.57 per cent in 2005-06. It was 46.22 per cent during

2009-10. A fluctuating trend of increase is noticed in the initial years and a very high

consumption level is noticed from 2002-03 onwards .The trend is somewhat high

which indicates that consumption depends on sales (Table 3.32).

Table 3.32

Financial and Operating ratios of Travancore Sugars and Chemicals Ltd


Current ratio


(%)


months)




Net profit

to sales (%)

1 2 3 4 5 6 7 8 9

1990-1991 1.15:1 0.87:1 -534.32 0.15 1.10 0.42 52.48 -7.25 1991-1992 1.15:1 0.88:1 -574.78 0.14 1.23 0.58 53.58 -8.35 1992-1993 1.16:1 0.82:1 -68.26 0.18 0.71 1.66 46.32 -4.57 1993-1994 1.17:1 0.79:1 74.31 0.87 1.29 3.05 50.62 -19.01 1994-1995 1.18:1 0.74:1 88.65 0.16 5.4 6.25 82.05 -35.3 1995-1996 1.86:1 0.52:1 69.66 0.1 0.97 4.06 38.87 -61.85 1996-1997 2.45:1 0.40:1 -67.25 0.42 9.2 8.64 28.31 -124.92 1997-1998 6.15:1 0.35:1 -0.18 0.12 1.28 26.27 -15.27 -111.43 1998-1999 .56:1 .36:1 -118.45 0.09 0.32 2.36 27.52 110.02 1999-2000 .49:1 .46:1 -18.49 0.08 2.24 4.62 24.02 13 2000-2001 .40:1 .44:1 -0.19 6.39 11.44 16.71 -45.4 -2 2001-2002 .33:1 .62:1 -0.18 0.01 0.13 1.91 22.84 -14.84 2002-2003 .33:1 .53:1 -0.17 0.03 0.28 1.3 37.13 -50.47 2003-2004 1.28:1 .78:1 -61.99 0.03 0.14 3.54 35.23 34.13 2004-2005 1.22:1 .76:1 -15.54 0.01 0.01 1.26 48.9 2.08 2005-2006 .32:1 .66:1 -47.7 0.01 0.01 5.29 46.57 10.3 2006-2007 .26:1 .73:1 -90.81 1.73 0.03 3.26 44.42 9.95 2007-2008 .26:1 .85:1 -225.01 1.26 0.05 1.71 45.42 5.83 2008-2009 0.18:1 0.89:1 -212.07 1.49 0.17 3.43 45.14 2.52 2009-2010 0.11:1 1.06:1 218.35 2.85 0.13 0.46 46.22 8.45


181


employed, working capital current ratio, receivable to sales, consumption to sales,

and net profit to sales the result of which is shown in Table 3.33.


Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.729 3 Capital Invested - 0.351 4 Working capital 0.914 5 Debt to Equity Ratio -0.849 6 Current Ratio 0.845 7 Return on Investment (%) -0.250 8 Receivable to sales ( in Months) 0.146 9 Stock of finished goods to sales( in months ) - 0.282 10 Stock of raw materials to consumption -0.764 11 Consumption to Sales (%) 0.465 12 Net Profit to sales ( %) 0.497


12. SITARAM TEXTILES LIMITED

Sitaram Textiles Limited was incorporated in 1975 under Industries

Department, one of the administrative Department of the Government of Kerala. The

main activity of it is to carry out the manufacturing of cotton yarn.

a. Net Worth

The net worth of the Sitaram Textiles was Rs -1062.82 crores during 1990-91

and a negative net worth is seen in all the years under study (Table 3.34).

182

b. Capital Employed

The capital employed of the Sitaram Textiles was Rs -165.21 crores during

1990-91 and the negative capital employed is seen in all the years under study. The

overall position of capital employed for a period of 20 years study from 1990-91 to

2009-2010 shows a negative growth ( Table 3.34).

c. Capital Invested

The capital invested by the Sitaram Textiles Limited was Rs 1142.42crores

during 1990-91 which increased to Rs 1666.25 crores during 1994-95. During 1995-

96 it was Rs 1771.79crores which increased to Rs 2242.1 crores in 1999-2000. In

2000-01 it was Rs 2516.02 crores which increased to Rs 3406.55 in 2004-05. It was

Rs 3540.98 crores in 2005-06 which increased to Rs 4419.83 crores in 2009-10. The

overall position of capital invested for a period of 20 years under study from 1990-

91 to 2009-2010 shows a fluctuating trend of increase (Table 3.34).

d. Working Capital

The working Capital of the Sitaram Textiles Limited is analysed for

knowing the trend in current assets over current liabilities for meeting its short term

obligations. The working capital invested was Rs -280.1crores during 1990-91 and

this negative trend continued during the entire period under analysis (Table 3.34).

183

Table 3.34 Net worth, Capital Employed, Capital Invested and Working Capital of the Sitaram

Textiles Limited ( Rs in Crores )


1 2 3 4 5 1990-1991 -1062.82 -165.21 1142.42 -280.10 1991-1992 -1074.96 -179.33 1162.63 -300.5 1992-1993 -1111.19 -57.71 1448.48 -166.1 1993-1994 -958.1 164.28 1542.38 40.27 1994-1995 -1176.91 69.34 1666.25 -74.25 1995-1996 -1325.26 26.53 1771.79 -134.08 1996-1997 -1558.88 -60.64 1918.24 -202.89 1997-1998 -1760.21 -137.8 2042.41 -254.83 1998-1999 -2001.61 -274.57 2147.04 -360.25 1999-2000 -2045.98 -223.88 2242.1 -301.59 2000-2001 -2128.41 206.39 2516.02 -279.64 2001-2002 -2398.36 -372.09 2620.27 -440.15 2002-2003 -2654.06 -413.54 2834.52 -476.25 2003-2004 -2981.32 -503.22 3072.1 -560.62 2004-2005 -3254.13 -441.58 3406.55 -497.4 2005-2006 -3426.06 -479.08 3540.98 -531.15 2006-2007 -3519.1 -391.51 3721.59 -512.52 2007-2008 -3754.55 -258.63 4089.92 -379.02 2008-2009 -3909.99 -236.06 4267.93 -332.38 2009-2010 -3874.53 -48.7 4419.83 -126.33

Source: Compiled from the Review of Public Enterprises , Various issues of



Capital Employed, Capital Invested and Working capital of the Sitaram Textiles

Limited from 1990-91 to 2009-2010 with the trend line and regression equation is

shown in fig. 3(xii)

184

Fig. 3(xii)

Net worth, Capital Employed, Capital Invested and Working capital of the Sitaram

Textiles Limited

Source : Table 3.34


2010 is Y = -174.71x – 464.39 . The slope is -174.71x and intercept is 464.39. The


a negative net worth of the Sitaram Textiles Limited during the 20 years under study.


1990-91 to 2009-2010 is Y = -17.725x – 2.7364 . The slope is -17.725x and

intercept is 2.7364. The R² is 0.2794 which shows that the equation is most suitable

for prediction. A negative capital trend is seen during the liberalization period.


1990-91 to 2009-2010 is Y = 174.49x+746.48. The slope is 174.49x and intercept is

746.48.The R² is 0.9796 which shows that the equation is most suitable for

185

prediction. There is an increase in the capital invested the Sitaram Textiles Limited



1990-91 to 2009-2010 is Y = -15.132x -149.61. The slope is -15.132x and intercept


prediction. A declining trend is noticed in the working capital during all the years

under liberalization period.


(i) Debt to Equity Ratio

The debt to equity ratio of the Sitaram Textiles Limited during 1990-91 was

3.25 : 1. It was 3.22:1 in 1995-96 period. It was 3.57 : 1 in 1996-97 which increased

to 3.41 : 1 in 2001-02. It was 4.96 : 1 in 2005-06 which increased to 6.44 :1 in 2009-

10. The trend shows an increase but with fluctuations in certain years in the

liberalization era ( Table 3.35).

ii. Current Ratio

The Current ratio of the Sitaram Textiles Limited during 1990-91 was 0.52 :

1 which increased to 0.81 : 1 in 1995-96 periods . It was 0.49 : 1 in 1999-2000 which

declined to 0.26 :1 in 2005-06 and increased to 0.69 : 1 in 2009-10. The trend

shows an increase with fluctuations and is not favourable because it is not ideal

(Table 3.35).

186


The return on the capital employed by the Sitaram Textiles Limited in all the

years from 1990-91 to 2009-10 is negative (Table 3.35).


The ratio of net profit before tax and dividend to total sales of the Sitaram

Textiles Limited in 1990-91 was 10.25 per cent which increased to 11.14 per cent in


2004-05 and it declined to 3.6 per cent during 2009-10. It is clear from the analysis

of profit to sales of the Sitaram textiles Limited that even though they are earning

profit in certain years but the profit earned is not up to the mark. (Table 3.35).


The ratio of accounts receivable to sales was 0.70 in 1990-91 and which

increased to 1.35 in 1995-96. It was 1.19 in 1999-2000 which declined to 0.04

months in 2005-06 and shows a slight increase during 2009-10 (0.07). A fluctuating

trend of increase is noticed during 1990-91 to 2009-10, the whole 20 year period


increasing the amount of cash by way of sales and is favourable towards the end of

the period under study ( Table 3.35).


The trend in stock of finished goods to sales was 1.52 in 1990-91 which

increased to 1.72 in 1995-96. It was 0.41 in 2000-01 which increased to 0.59 in

2005-06 and again declined to 0.24 in 2009-10. A fluctuating trend of increase is

187

noticed during 1990-91 to 2009-10, the whole 20 year period under analysis. The

lower the months in the stock of finished goods to sales is an indication of increased

sales. It also reveals that it was not so favourable in the initial years under

study(Table 3.35).



1990-91 which declined to 0.67 in 1995-96. It was .60 in 2000-01 which increased to

2.66 in 2005-06 and declined to 0.38 in 2009-10.A fluctuating trend of increase is

noticed in all the 20 years from 1990-91 to 2009-10 . The lesser the number of

months in raw materials to consumption is appreciable and is favourable (Table

3.35).



percentage. It was 70.01 per cent in 1990-91 which decreased to 67.42 per cent in


2001-02. It was 58.19 per cent in 2005-06 which declined to 56.61 per cent in

2009-10. A fluctuating trend of increased is noticed in all the 20 years period under

analysis (Table 3.35).

188

Table 3.35 Financial and Operating ratios of Sitaram Textiles Limited


Current ratio


(%)


months)

Stock of finished goods to sales (

in months)



Net profit

to sales (%)

1 2 3 4 5 6 7 8 9

1990-1991 3.25 0.52:1 -45.10 0.70 1.52 0.75 70.01 10.25

1991-1992 3.35:1 0.58:1 -ve 0.72 1.61 0.81 70.04 11.99

1992-1993 2.67:1 0.78:1 -ve 1.76 0.75 0.45 63.99 10.63

1993-1994 2.67:1 0.90:1 -50.18 1.92 0.86 0.61 53.27 -7.05

1994-1995 2.97:1 0.82:1 -235.23 1.4 0.98 2.16 68.64 14.06

1995-1996 3.22:1 0.81:1 -558.73 1.35 1.72 0.67 67.42 11.14

1996-1997 3.57:1 0.73:1 -ve 1.42 1.28 0.47 59.63 13.52

1997-1998 3.86:1 0.65:1 -ve 1.67 0.73 0.68 59.23 16.57

1998-1999 4.11:1 0.50:1 -ve 1.22 0.79 0.53 69.75 24.18

1999-2000 4.34:1 0.49:1 -ve 1.19 0.66 0.12 65.99 23.93

2000-2001 3.24:1 0.51:1 1.03 0.74 0.41 0.60 60.08 27.58

2001-2002 3.41:1 0.35:1 -ve 1.27 0.77 0.16 60.98 33.97

2002-2003 3.77:1 0.33:1 -ve 2.29 1.34 0.26 62.77 64.86

2003-2004 4.17:1 0.27:1 -ve 1.71 0.61 0.11 60.94 43.78

2004-2005 4.73:1 0.21:1 -ve 0.5 0.27 0.48 64.02 40.47

2005-2006 4.96:1 0.26:1 -ve 0.04 0.59 2.66 58.19 -27

2006-2007 4.26:1 0.24:1 -ve 0.04 1.24 0.41 56.63 13.78

2007-2008 5.89:1 0.26:1 -ve 0.14 0.57 0.23 61.79 29.36

2008-2009 6.19:1 0.28:1 -ve 0.26 0.39 0.15 62.49 20.21

2009-2010 6.44:1 0.69:1 -72.83 0.07 0.24 0.38 56.61 3.6 Source: Computed from Annual Reports of Bureau of Public Enterprises, various issues


employed, current ratio, working capital, receivables to sales, stock of finished

goods to sales, stock of raw materials to consumption ( Table 3.36).

189


Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.591 3 Capital Invested - 0.989 4 Working capital 0.617 5 Debt to Equity Ratio -0.912 6 Current Ratio 0.765 7 Return on Investment (%) -0.357 8 Receivable to sales ( in Months) 0.684 9 Stock of finished goods to sales( in months ) 0.548 10 Stock of raw materials to consumption 0.622 11 Consumption to Sales (%) 0.035 12 Net Profit to sales ( %) 0.293


13. HANDICRAFTS DEVELOPMENT CORPORATION LIMITED

Handicrafts Development Corporation was incorporated in 1968 and is under

Industries Department, one of the Administrative Departments of Government of

Kerala. It is engaged in procuring and marketing handicraft products by giving fair

returns to the artisans through its Kairali emporia spread all over India .

a. Net Worth

The net worth of the Handicrafts Development Corporation Limited was Rs

31.52 crores during 1990-91 which increased to Rs 155.09 crores in 1995-96. It was

Rs 148.83 crores in 1996-97 which decreased to Rs 138.81 crores in 1999-00. But a

negative net worth was noticed from 2000-01 to 2007-08. It turned into positive net

worth of Rs 344.39 crores in 2009-10. The overall picture of net worth shows a

positive one but in some years negative trend is noticed (Table 3.37).

190

b. Capital Employed

The capital employed of the Handicrafts Development Corporation Limited

was Rs 84.72 crores during 1990-91 which increased to Rs 204.42 crores in 1994-

95. It was Rs 223.86 crores in 1995-96 which increased to Rs 389.49 crores in 1999-

2000. It was Rs 262.76 crores in 2000-2001 which declined to Rs 255.68 crores in

2004-05. It was Rs 181.87 crores in 2005-06 which increased to Rs 1098.11 crores

in 2009-10. The overall position of capital employed for 20 years of study from

1990-91 to 2009-2010 shows an increasing trend with fluctuations. It means that

during the period under analysis the capital employed is seen increasing (Table

3.37).

c. Capital Invested

The capital invested by the Handicrafts Development Corporation was Rs


During 1995-96 it was Rs 293.03 crores which increased to Rs 507.22 crores in

1999-2000. In 2000-01 it was Rs 579.63 crores which increased to Rs 743.36 crores

in 2004-05. It was Rs 768.42 crores in 2005-06 which increased to Rs 1030.51

crores in 2009-10. The overall position of capital invested for a period of 20 years

under study from 1990-91 to 2009-2010 shows an increasing trend (Table 3.37).

d. Working Capital

The working Capital of the Handicrafts Development Corporation Limited

is analysed for knowing the trend in current assets over current liabilities for meeting

its short term obligations. It is seen from Table 3.37 that the working capital invested


191

95. It was Rs 219.75 crores in 1996-97 which increased to Rs 341.59 crores in 1999-

2000. It was Rs 227.84 crores in 2000-01 and decreased to Rs 213.98 crores in 2004-

05. It was Rs 143.71 in 2005-06 which increased to Rs 963.84 crores in 2009-10. It

means that during the entire period under analysis that the working capital is

increasing but with a trend of fluctuations (Table 3.37).

Table 3.37

Net worth, Capital Employed, Capital Invested and Working Capital of Handicrafts Development Corporation Limited

( Rs in Crores )


1 2 3 4 5 1990-1991 31.52 84.72 212.11 46.58 1991-1992 32.87 85.73 223.12 47.59 1992-1993 80.98 137 238.78 102.92 1993-1994 109.54 168.31 258.03 134.16 1994-1995 140.65 204.42 278.03 163.6 1995-1996 155.09 223.86 293.03 186.11 1996-1997 148.83 259.32 357.03 219.75 1997-1998 174 294.49 377.03 253.24 1998-1999 161.63 390.26 485.17 347.24 1999-2000 138.81 389.49 507.22 341.59 2000-2001 -17.15 262.76 546.45 227.84 2001-2002 -98.29 207.8 579.63 169.85 2002-2003 -195.92 132.19 604.9 89.12 2003-2004 -218.28 169.93 665 126.61 2004-2005 -210.89 255.68 743.36 213.98 2005-2006 -309.76 181.87 768.42 143.71 2006-2007 -196.93 462.17 935.89 422.93 2007-2008 -143.01 520.94 940.74 471.86 2008-2009 76.43 760.41 960.77 708.74 2009-2010 344.39 1098.11 1030.51 963.84

Source: Compiled from the Review of Public Enterprises, Various issues of the Bureau of Public Enterprises, Government of Kerala


Employed, Capital Invested and Working capital of the Handicrafts Development

192


equation is shown in fig. 3(xiii)

Fig. 3(xiii)

Net worth, Capital Employed, Capital Invested and Working capital of the

Handicrafts Development Corporation of Kerala Limited

Source : Table 3.37


2009-2010 is Y = -10.724x + 122.83. The slope is -10.724x and intercept is 122.83.

The R² is 0.1448 which shows that the equation is most suitable for prediction. The

net worth of the Handicrafts Development Corporation Limited during the 20 years

under study was found to be negative.

193




prediction. There is increase in the capital employed by the Handicrafts

Development Corporation Limited during the liberalization period.




prediction. There is an increase in the capital invested by the Handicrafts

Development Corporation Limited during the liberalization period .


1990-91 to 2009-2010 is Y =26.969x – 14.114. The slope is 26.969x and intercept is


prediction. There is an increase in the working capital of the Handicrafts

Development Corporation Limited for most of the years under liberalization period.



The debt to equity ratio of the Handicrafts Development Corporation Limited

during 1990-91 was 0.21 : 1 which increased to 0.31 : 1 in 1995-96. It was 0.45 : 1

in 1996-97 which increased to 1.05 : 1 in 2000-01. It was 1.78 : 1 in 2005-06 which

increased to 2.72 :1 in 2009-10. The overall trend shows an increase but with

fluctuations in the liberalized era ( Table 3.38).

194

ii. Current Ratio

The Current ratio of the Handicrafts Development Corporation Limited

during 1990-91 was 1.21 : 1 which increased to1.65 : 1 in 1995-96 periods . It was

1.80 : 1 in 1999-2000 which declined to 1.20 :1 in 2005-06 and increased to 3.48 : 1

in 2009-10. The overall trend shows an increase with fluctuations in the liberalized

era but the ratio for most of the years is less than the ideal one 2:1 ( Table 3.38).


The return on the capital employed by the Handicrafts Development

Corporation Limited was 3.11 per cent during 1990-91 which declined to 0.07 in

1995-96. From 2001-02 onwards till 2005-06 the return on investment is negative. It

was 6.11 per cent in 2006-07 which increased to 8.38 per cent in 2009-10. It clearly

indicates that the return on investment during the period under analysis shows an

increase in certain years and negative return in certain other years (Table 3.38).


The ratio of net profit before tax and dividend to total sale of Handicrafts

Development Corporation Limited in 1990-91 was 0.70 per cent which declined to

0.03 per cent in 1995-96. It was 23.93 per cent in 2001-02 which increased to 21.56

per cent in 2005-06 and it increased to 14.12 per cent in 2009-10. It is clear from the

analysis of profit to sales that it is not up to the mark during the whole period of 20

years under study from 1990-91 to 2009-10 ( Table 3.38).

195


The trends in accounts receivable to sales was 0.42 in 1990-91 and which

increased to 0.46 in 1995-96. It was 0.68 in 1999-2000 which increased to 0.71in

2001-02. It increased to 1.03 which declined to 0.63 during 2009-10. In this case a

trend of increase with fluctuations is seen. The lower the months in the receivable to

sales is really good for increasing the amount of cash by way of sales and is

appreciable ( Table 3.38).


The trend in stock of finished goods to sales was 4.39 in 1990-91 which


2005-06 and then declined to 6.12 in 2009-10. A fluctuating trend of increase is

noticed during 1990-91 to 2009-10, the whole 20 year period under analysis. The

lower the months in the stock of finished goods to sales is an indication of increased

sales but greater value is seen in certain years and is unfavourable (Table 3.38).



1990-91 which declined to 0.20 in 1995-96. It was 53.64 in 2000-01 which declined

to 0.01in 2005-06 and increased to 2.37 in 2009-10. A fluctuating trend of increase

is noticed in all the 20 years from 1990-91 to 2009-10. The lesser the number of

months in raw materials to consumption is appreciable one but in this case the

number of months is more and hence it is unfavourable, the materials are procured

not based on production ( Table 3.38).

196



5.28 per cent in 1990-91 which increased to 5.71 per cent in 1995-96 . It was 5.61

per cent in 1996-97 which increased to 53.82 per cent in 2001-02. It was 56.38 per

cent in 2005-06 which declined to 33.2 per cent in 2009-10 . A fluctuating trend of

increase is noticed in all the 20 years, the period under analysis but the percentage of

consumption is not seen high in all the years, hence it is not favourable ( Table 3.38).

Table 3.38

Financial and Operating Ratios of Handicrafts Development Corporation Ltd

Year

Debt-equity ratio

Current ratio


(%)


months)




Net profit to

sales (%)

1 2 3 4 5 6 7 8 9

1990-1991 0.21:1 1.21:1 3.11 0.42 4.39 0.21 5.28 0.70 1991-1992 0.31:1 1.23:1 3.22 0.45 5.29 0.31 5.08 0.72 1992-1993 0.31:1 1.45:1 26.5 0.48 5.87 0.28 6.01 7.91 1993-1994 0.30:1 1.54:1 6.17 0.52 6.11 0.29 6.02 2.09 1994-1995 0.30:1 1.67:1 0.85 0.57 6.78 0.30 6.82 0.35 1995-1996 0.31:1 1.65:1 0.07 0.46 5.81 0.20 5.71 0.03 1996-1997 0.45:1 1.69:1 -1.13 0.81 5.82 0.31 5.61 -0.46 1997-1998 0.47:1 1.62:1 0.06 0.75 6.49 0.42 5.62 0.03 1998-1999 .89:1 1.95:1 0.93 0.61 6.87 0.45 56.23 0.58 1999-2000 .98:1 1.80:1 -9.17 0.68 7.12 0.03 55.38 -5.59 2000-2001 1.05:1 1.49:1 0.55 0.58 0.06 0.53 -4.03 -7.12 2001-2002 1.12:1 1.31:1 -56.85 0.71 8.45 0.09 53.82 -23.93 2002-2003 1.19:1 1.15:1 -94.41 0.68 8.22 0.3 57.88 -24.68 2003-2004 1.40:1 1.19:1 -78.25 0.97 8.46 0.4 53.85 -28.83 2004-2005 1.69:1 1.30:1 -4.17 0.63 8.63 0.11 54.5 -2.45 2005-2006 1.78:1 1.20:1 -54.36 1.03 8.11 0.01 56.38 -21.56 2006-2007 2.38:1 2.10:1 6.11 0.68 4.26 0.01 30.21 3.95 2007-2008 2.40:1 2.26:1 7.47 0.7 4.47 0.10 33.19 6.31 2008-2009 2.47:1 3.05:1 7.83 0.67 4.7 0.20 33.5 9.97 2009-2010 2.72:1 3.48:1 8.38 0.63 6.12 2.37 33.2 14.12

Source : Computed from Annual Reports of Bureau of Public Enterprises, various issues

197

The correlation value shows that direct correlation exists between net worth

and capital employed, working capital, current ratio, return on investment, stock of

raw materials to consumption and net profit to sales.(Table 3.39).

Table 3.39

Correlation Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.398 3 Capital Invested - 0.353 4 Working capital 0.388 5 Debt to Equity Ratio -0.324 6 Current Ratio 0.526 7 Return on Investment (%) 0.601 8 Receivable to sales ( in Months) - 0.087 9 Stock of finished goods to sales( in months ) - 0.179 10 Stock of raw materials to consumption 0.076 11 Consumption to Sales (%) -0.421 12 Net Profit to sales ( %) 0.641


14. KERALA STATE BAMBOO CORPORATION LIMITED

Kerala State Bamboo Corporation was set up in 1971 with the objective to

develop and promote industries based on bamboo, reed, cane and rattan, provide

financial and technical assistance and guidance to the bamboo workers/artisans. The

major activities of the corporation is to collect good quality reeds from Government

forest, distribute the reeds to the registered bamboo mat weavers of the corporation

on credit basis and to procure woven mats, thus providing employment and means of

livelihood to the weaker sections of the society.

198

Bamboo Species in Kerala is a major biodiversity source which accounts for

19 per cent of the total bamboo distributed in India. Bamboo industry in Kerala is

providing livelihood to a majority of tribes and other weaker sections of the society,

majority of which are women.

a. Net Worth

The net worth of the Kerala State Bamboo Corporation Limited was Rs

215.22 crores during 1990-91 which increased to Rs 378.04 crores in 1994-95. It

was Rs 388.04 crores in 1995-96 which increased to Rs 725.51 crores in 1999-2000.

It was Rs 677.26 crores in 2000-2001 which declined to Rs 229 crores in 2003-04.

After that there was negative net worth up to 2009-10. The net worth shows an

increasing trend till 2003-04 but turns negative after that ( Table 3.40).

b. Capital Employed

The capital employed of the Kerala State Bamboo Corporation Limited was

Rs 274.29 crores during 1990-91 which increased to Rs 471.98 crores in 1994-95. It


It was Rs 818.03 crores in 2000-01 which declined to Rs 492.36 crores in 2004-05.

It was Rs 318.51 crores in 2005-06 which increased to Rs 896.71 crores in 2009-

10.The trends in capital employed for a period of 20 years study from 1990-91 to

2009-2010 shows an increasing trend with fluctuations (Table 3.40).

c. Capital Invested

The capital invested by the Kerala State Bamboo Corporation Limited was

Rs 334.78 crores during 1990-91 which increased to Rs 434.86 crores during 1994-

95. During 1995-96 it was Rs 444.86 crores which increased to Rs 749.74 crores in

1999-2000. In 2001-02 it was Rs 933.82 crores which declined to Rs 118.14 crores

199


crores in 2009-10. The trends in capital invested for a period of 20 years under study

from 1990-91 to 2009-2010 is an increasing one but with fluctuations (Table 3.40).

d. Working Capital

The working Capital of the Kerala State Bamboo Corporation was Rs 215.1

crores during 1990-91 which increased to Rs 412.6 crores in 1994-95. It was Rs

406.1 crores in 1996-97 which increased to Rs 616.55 crores in 1999-2000. It was

Rs 719.5 crores in 2001-02 which declined to Rs 364.25 crores in 2004-05. It was Rs

209.7 crores in 2005-06 which increased to Rs 590.96 crores in 2009-10. It means

that during the entire period under analysis that the working capital is increasing but

with a trend of fluctuations (Table 3.40 ).

200

Table 3.40

Net worth, Capital Employed, Capital Invested and Working Capital of Kerala State Bamboo Corporation Limited

( Rs in Crores )


1 2 3 4 5 1990-1991 215.22 274.29 334.78 215.10 1991-1992 217.35 274.29 336.88 217.2 1992-1993 281.64 350.58 365.88 295.22 1993-1994 352.91 441.85 424.86 391.38 1994-1995 378.04 471.98 434.86 412.6 1995-1996 388.04 486.98 444.86 406.1 1996-1997 628.54 639.98 570.38 519.6 1997-1998 695.4 749.54 658.08 601.09 1998-1999 701.25 763.82 666.51 575.05 1999-2000 725.51 851.28 749.74 616.55 2000-2001 677.26 818.03 774.74 591.5 2001-2002 609.89 902.24 933.82 719.5 2002-2003 491.14 918.58 1069.91 755.33 2003-2004 229 747.01 1 163.48 615.52 2004-2005 -36.31 492.36 118.14 364.25 2005-2006 -220.99 318.51 1198.97 209.7 2006-2007 -313.71 236.43 1209.61 132.03 2007-2008 -359.91 415.39 1444.42 191.97 2008-2009 -309.28 529.78 1578.18 316 2009-2010 -187.25 896.71 1873.1 590.96



Capital Employed, Capital Invested and Working capital of Kerala State Bamboo

Corporation Limited from 1990-91 to 2009-2010 with the trend line and regression

equation is shown in fig. 3(xiv)

201

Fig. 3(xiv) Net worth, Capital Employed, Capital Invested and Working capital of the Kerala

State Bamboo Corporation Limited

Source : Table 3.40

The trend line (linear trend of first degree) of the Net worth 1990-91 to

2009-2010 is Y = -37.171x + 648.49. The slope is -37.171x and intercept is648.49.


There is a negative net worth of the Kerala State Bamboo Corporation Limited

during the last part of the years under study.




prediction. There is increase in capital employed of the Kerala State Bamboo




202


prediction. There is an increase in the capital invested in Kerala State Bamboo





prediction. There is an increase in working capital of the Kerala State Bamboo

Corporation Limited during all the years under liberalization period .



The debt to equity ratio of the Kerala State Bamboo Corporation Limited

during 1990-91 was 0.20 : 1 which increased to 0.29 : 1 in 1995-96 periods . It was

0.02 : 1 in 1996-97 which increased to 0.22 : 1 in 2000-01. It was 0.82: 1 in 2005-06

which increased to 1.37 :1 in 2009-10 . The overall trend is a fluctuating one during

the period under study. The ratio is lower means that they are not depending on the

debt capital (Table 3.41).

ii. Current Ratio

The current ratio of the Kerala State Bamboo Corporation Limited during

1990-91 was 2.5 : 1 which declined slightly to2.35 : 1 in 1995-96 periods . It was

3.98: 1 in 1999-2000 which declined to 1.68 :1 in 2005-06, but increased to 2.97: 1

in 2009-10. The overall trend shows a trend of increase with fluctuations .The ratios

are favourable only in certain years (Table 3.41).

203


The return on the capital employed by the Kerala State Bamboo

Corporation Limited was 18.32 per cent during 1990-91 which declined to 2.22 per

cent in 1995-96. It was 3.2 per cent in 1996-97 which declined to 0.83 per cent in

1999-2000. It was 1.07 per cent in 2000-01. After that it turned negative till 2006-07

periods and increased to 9.48 per cent in 2009-10. It clearly indicates that the return

on investment during the period under analysis shows an increasing trend in certain

years but turns negative in certain other years. In most of the years the values are not

appreciable (Table 3.41).


The ratio of net profit before tax and dividend to total sale of Kerala State

Bamboo Corporation Limited in 1990-91 was 8.2 per cent which declined to 4.92

per cent in 1995-96. It was 21.26 per cent in 2005-06 which declined to 5.66 per cent

in 2009-10. The percentage of profit to sales is lower and it is not adequate during

the 20 years under study ( Table 3.41).



increased to 1.88 in 1995-96. It was 3.47 in 1999-2000 which declined to 0.32 in

2005-06 which increased to 0.36 during 2009-10. A trend of increase with

fluctuations is seen and lower the months in the receivable to sales is really good for

increasing the amount of cash by way of sales (Table 3.41).

204




2005-06 and then again increased to 2.66 in 2009-10. A fluctuating trend of increase

is noticed during 1990-91 to 2009-10 the whole 20 year period under analysis. The

increased ratio is an indication of lower amount of sales(Table 3.41).


The trends in stock of raw materials to consumption was 1.20 in 1990-91

which increased to 1.27 in 1995-96 . It was 8.24 in 2000-01 which declined to 0.9

months in 2005-06 and increased to 1.35 in 2009-10. In this case a fluctuating trend

of increase is noticed in all the 20 years from 1990-91 to 2009-10 . The lesser the

number of months in raw materials to consumption is appreciable one but it is very

high in certain years (Table 3.41).



65.78 per cent in 1990-91 which increased to 72.37 per cent in 1995-96 . It was

84.03 per cent in 1996-97 which decreased to 71.47 per cent in 1999-2000. It was

64.26 per cent in 2005-06 which declined to 49.29 per cent in 2009-10 . A

fluctuating trend is noticed in all the 20 years under analysis (Table 3.41).

205

Table 3.41 Financial and Operating ratios of Kerala State Bamboo Corporation


Current ratio


(%)


months)




Net profit

to sales (%)

1 2 3 4 5 6 7 8 9

1990-1991 0.20:1 2.53:1 18.32 1.34 0.32 1.20 65.78 8.2 1991-1992 0.20:1 2.53:1 19.44 1.44 0.35 1.26 67.85 8.9 1992-1993 0.23:1 2.78:1 11.65 0.88 0.82 0.98 73.95 7.68 1993-1994 0.26:1 2.27:1 20.29 0.94 1.78 1.24 70.62 12.02 1994-1995 0.28:1 2.36:1 8.7 1.62 1.43 1.25 73.35 4.92 1995-1996 0.29:1 2.35:1 2.22 1.88 1.15 1.27 72.37 1.21 1996-1997 0.02:1 3.21:1 3.2 1.33 2.47 1.27 84.03 2.31 1997-1998 0.09:1 4.46:1 0.27 1.31 1.84 1.2 73.32 0.19 1998-1999 .10:1 3.71:1 4.67 3.29 2.88 0.1 77.17 3.01 1999-2000 .20:1 3.98:1 0.83 3.47 3.01 0.32 71.47 0.61 2000-2001 .22:1 3.77:1 1.07 2 1.63 8.24 -2.61 -3.11 2001-2002 .46:1 4.66:1 -8.3 0.78 4.30 2.25 87.33 -6.45 2002-2003 .67:1 4.97:1 -12.26 0.91 4.80 3.08 71.47 -11.3 2003-2004 .80:1 3.39:1 -35.4 0.78 5.7 2.75 65.06 29.47 2004-2005 .80:1 2.70:1 -57.62 0.66 2.26 1.65 54.8 29.35 2005-2006 .82:1 1.68:1 -61.51 0.32 1.88 0.9 64.26 21.26 2006-2007 .83:1 1.38:1 -83.24 0.24 1.12 1.07 62.56 21.57 2007-2008 1.16:1 1.51:1 5.55 0.5 0.9 0.92 55.51 1.71 2008-2009 1.14:1 1.65:1 3.06 0.05 2.5 1.06 59.8 1.32 2009-2010 1.37:1 2.97:1 9.48 0.36 2.66 1.35 49.29 5.66

Source: Computed from Annual Reports of Bureau of Public Enterprises, various

issues It is seen that direct correlation exists between net worth and capital

employed, working capital , current ratio and receivables to sales(Table 3.42).

206

Table 3.42

Correlation

Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.562 3 Capital Invested - 0.550 4 Working capital 0.709 5 Debt to Equity Ratio -0.850 6 Current Ratio 0.814 7 Return on Investment (%) 0.431 8 Receivable to sales ( in Months) 0.747 9 Stock of finished goods to sales( in months ) 0.227 10 Stock of raw materials to consumption 0.262 11 Consumption to Sales (%) 0.176 12 Net Profit to sales ( %) 0.293


15. KERALA STATE CIVIL SUPPLIES CORPORATION LIMITED

The Kerala State Civil Supplies Corporation better known as Supplyco was

set up in the state in 1974 with the mission of “food security for Kerala” and acts as

a second line of Public Distribution System in the State by distributing essential

commodities like rice, sugar, pulses and spices at reduced prices through a network

of 2975 outlets spread all over the State. Prices of essential items distributed by

Supplyco is on an average 30 per cent to 60 per cent less than open market prices.

The intervention of Supplyco in the market in respect of essential commodities has

given immense relief to the people of the State.

207

a. Net Worth

The net worth of the Kerala State Civil Supplies Corporation during 1990-91

was Rs- 3068.22 crores which increased to Rs -623.31 crores in 2009-10.The overall

picture of net worth shows negative trend in all the years under study (Table 3.43).

b. Capital Employed

The capital employed of the Kerala State Civil Supplies Corporation shows a

negative one from 1990- 91 to 1994-95. In the remaining years under study it shows

a positive one. It was Rs 517.4 crores in 1995-96 which increased to Rs.11847.7

crores in 1999-2000 with an abnormal increase. It was Rs 13,024.58 crores in 2000-

01 which increased to Rs 14696.4 crores. It was Rs 15,216.06 crores in 2005-06

which declined to Rs 12722.2 crores in 2009-10. The trends in capital employed for

a period of 20 years study from 1990-91 to 2009-2010 shows an increasing trend

with fluctuations in certain years(Table 3.43).

c. Capital Invested

The capital invested by the Kerala State Civil Supplies Limited was Rs


During 1995-96 it was Rs 12284.48 crores which increased to Rs 35839.2 crores in

1999-2000. In 2000-01 it was Rs 41345.3 crores which increased to Rs 68627.98

crores in 2004-05. It was Rs 68685.08 crores in 2005-06 which declined sharply to

Rs 14201.5 crores in 2009-10. The trends in capital invested for a period of 20 years

under study from 1990-91 to 2009-2010 shows mostly an increasing trend (Table

3.43).

208

d. Working Capital

The working Capital of the Kerala State Civil Supplies Corporation during

1990-91 was Rs -588.81 crores which increased to Rs. 1696.54 crores during

1996-97. It increased to Rs 10976.93 crores in 1999-2000. It was Rs 12090.94 crores

in 2000-01 which declined to Rs 6225.74 crores in 2006-07.It was Rs. 10729.44

crores in 2009-10. It means that during most of the years under analysis, the working

capital shows an increasing trend with wide fluctuations(Table 3.43) .

Table 3.43

Net worth, Capital Employed, Capital Invested and Working Capital of Kerala State Civil Supplies Corporation Limited

( Rs in Crores )


Capital Invested

Working Capital

1 2 3 4 5 1990-1991 -3068.22 -2.10 3821.09 -588.81 1991-1992 -3068.22 -2.15 3922.07 -588.81 1992-1993 -5498.78 -764.62 5590.16 -1380.73 1993-1994 -7489.19 -1144.81 7200.38 -1755.31 1994-1995 -8847.91 -411.24 9292.67 -1019.77 1995-1996 -10911.08 517.4 12284.48 -114.54 1996-1997 -14637.93 2336.47 17830.41 1696.54 1997-1998 -14815.46 4931.32 20602.78 4250.17 1998-1999 -21111.97 8870.92 30838.89 8183.02 1999-2000 -23136.12 11847.69 35839.21 10976.93 2000-2001 -27464.74 13024.58 41345.32 12090.94 2001-2002 -32732.12 13689.9 47278.02 12806.81 2002-2003 -37127.33 15505.13 53488.46 14644.13 2003-2004 -45431.78 14120.07 60407.85 13199.66 2004-2005 -53075.62 14696.36 68627.98 13639.78 2005-2006 -52613.02 15216.06 68685.08 14255.74 2006-2007 -59026 7603.79 67485.75 6225.74 2007-2008 -57274.66 9355.09 67485.75 7829.86 2008-2009 -55570.78 11058.97 67485.75 9419.53 2009-2010 -623.31 12722.2 14201.51 10729.44

Source: Compiled from the Review of Public Enterprises, Various issues of the

Bureau of Public Enterprises, Government of Kerala

209


Employed, Capital Invested and Working capital of the Kerala State Civil Supplies


equation is shown in fig. 3(xv)

Fig. 3(xv)

Net worth, Capital Employed, Capital Invested and Working capital of the Kerala State Civil Supplies Corporation Limited

Source : Table 3.43

The trend line (linear trend of first degree) of the Net worth 1990-91 to

2009-2010 is Y =-2646.5x + 1112. The slope is -2646.5x and intercept is 1112.5.

The R² is 0.4131 which shows that the equation is most suitable for prediction. On

the whole a negative net worth was noticed during the 20 year period under study .


1990-91 to 2009-2010 is Y = 861.5`2x – 1387.5. The slope is 861.52x and intercept


prediction. The capital employed of the Kerala State Civil Supplies Corporation

Limited during the period under study shows an increasing trend.

210


1990-91 to 2009-2010 is Y = 3509.5x – 1664.2 The slope is 3509.5x and intercept is


prediction. There is an increase in the capital invested by Kerala State Civil Supplies

Corporation Limited during the period under study.


1990-91 to 2009-2010 is Y = 801.8x – 1693.9. The slope is 808.8x and intercept is


prediction. There is an increase in working capital of the Kerala State Civil Supplies

Corporation Limited during all the years under study.



The debt to equity ratio of the Kerala State Civil Supplies Corporation

Limited during 1990-91 was 3.57: 1 which increased to 13.35 : 1 in 1995-96 periods.

It was 19.83: 1 in 1996-97 which increased to 47.30: 1 in 2000-01. It was 79.24: 1 in

2005-06 which decreased to 15.59:1 in 2009-10. The overall trend shows an

increasing one but with fluctuations and is favourable in the sense that there is

reduced risk in capital ( Table 3.44).

ii. Current Ratio

The Current ratio of the Kerala State Civil Supplies Corporation Limited

during 1990-91 was 0.90 : 1 which increased to1.43 : 1 in 1995-96 periods . It was

211

2.76: 1 in 1999-2000 which increased to 3.53:1 in 2005-06 and declined to 1.52: 1

in 2009-10 . The overall trend shows increase but with fluctuations (Table 3.44)


The return on the capital employed by the Kerala State Civil Supplies

Corporation Limited remained negative from 1990-91 to 1994-1995. In 1996-97 it

was -159.51 per cent which increased to -17.09 per cent in 1999-2000. It was 2.26

per cent in 2000-01 but turned to negative till 2006-07 periods and increased to

13.11 per cent in 2009-10. It clearly indicates that the return on investment during

the period under analysis shows an increase but it is too low and is not adequate

(Table 3.44).


The ratio of net profit before tax and dividend to total sale of Kerala State

Civil Supplies Corporation Limited in 1990-91 was 8.64 per cent which declined to -

8.79 per cent in 1995-96. It was negative in 2001-02. It was 0.66 per cent in 2005-06

which increased to 0.72 per cent in 2009-10. It is clear from the analysis of profit to

sales that it is not up to the mark during the whole period of 20 years under study

from 1990-91 to 2009-10 ( Table 3.44).



decreased to 0.16 in 1995-96. It was 1.12 in 1999-2000 which increased to 1.76 in

2005-06. It decreased to 0.24 during 2009-10. In this case a trend of increase with

212

fluctuations is seen. The lower the months in the receivable to sales is really good

for increasing the amount of cash by way of sales and is favourable (Table 3.44).


The trends in stock of finished goods to sales ratio was 2.10 in 1990-91

which decreased to 0.95 in 1995-96. It was 0.62 in 2000-01 which increased to 1.31

in 2005-06 and then again decreased to 1.29 in 2009-10. A fluctuating trend of

increase is noticed during 1990-91 to 2009-10 the whole 20 years. The lower ratio of

stock of finished goods to sales is an indication of increased sales ( Table 3.44).


The trend in stock of raw materials to consumption was 0.21 months in 1990-

91 which increased to 0.23in 1995-96. It was 0.48 in 2000-01 which declined to 0.9

in 2005-06 and increased to 1.35 in 2009-10. In this case a fluctuating trend of

increase is noticed in all the 20 years from 1990-91 to 2009-10. The lower ratio of

raw materials to consumption is appreciable ( Table 3.44).


It was 96.01 in 1990-91 and decreased to 94.35 in 1995-96. The consumption

to sales was 99.94 in 1989 – 99. It decreased to 90.89 in 2009-2010 (Table 3.44).

213

Table 3.44 Financial and Operating ratios of Kerala State Civil Supplies Corporation


Current ratio


(%)


months)



Consumption to sales

(%)

Net profit

to sales (%)

1 2 3 4 5 6 7 8 9

1990-1991 3.57:1 0.90:1 -ve 0.45 2.10 0.21 96.01 8.64

1991-1992 3.58:1 0.91:1 -ve 0.51 2.18 0.13 98.01 10.93

1992-1993 5.53:1 0.76:1 -ve 0.25 1.33 0.30 94.89 -6.45

1993-1994 7.41:1 0.79:1 -ve 0.19 1.11 0.21 98.15 -8.61

1994-1995 9.86:1 0.97:1 -ve 0.19 1.01 0.10 97.20 6.03

1995-1996 13.35:1 1.43:1 -398.76 0.16 0.95 0.23 94.35 -8.79

1996-1997 19.83:1 1.48:1 -159.51 0.12 1.09 0.22 96.28 11.56

1997-1998 23.07:1 2.53:1 -3.6 0.09 0.82 0.18 98.86 -0.38

1998-1999 35.03:1 2.44:1 -18.71 0.53 4.46 0.04 99.94 -2.75

1999-2000 40.87:1 2.76:1 -17.09 1.12 0.82 0.04 94.02 -3.21

2000-2001 47.30:1 3.04:1 2.26 1.26 0.62 0.48 -7.89 33.23

2001-2002 54.23:1 0.13:1 -38.48 3.61 0.95 0.43 3.01 12.87

2002-2003 61.49:1 4.25:1 -28.35 3 0.94 0.02 3.25 11.37

2003-2004 69.57:1 3.78:1 -55.56 2.51 0.95 0.03 97.03 -17.1

2004-2005 79.17:1 3.37:1 -52.01 1.78 1 0.01 97.96 -13.3

2005-2006 79.24:1 3.53:1 3.04 1.76 1.31 0.01 97.81 0.66

2006-2007 77.84:1 1.52:1 -26.56 0.56 0.77 0.53 92.7 -2.04

2007-2008 77.84:1 1.51:1 14.97 0.51 1.34 0.52 89.41 1.12

2008-2009 77.84:1 1.44:1 15.41 0.38 1.13 0.51 88.96 0.93

2009-2010 15.59:1 1.52:1 13.11 0.24 1.29 0.42 90.89 0.72 Source: Computed from Annual Reports of Bureau of Public Enterprises, various

issues

214


employed, working capital, current ratio and receivables to sales (Table 3.45).

Table 3.45

Correlation

Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.543 3 Capital Invested - 0.551 4 Working capital 0.794 5 Debt to Equity Ratio -0.853 6 Current Ratio 0.840 7 Return on Investment (%) 0.435 8 Receivable to sales ( in Months) 0.791 9 Stock of finished goods to sales( in months ) 0.227 10 Stock of raw materials to consumption 0.262 11 Consumption to Sales (%) 0.189 12 Net Profit to sales ( %) 0.235


16. KERALA STATE ARTISANS DEVELOPMENT CORPORATION

LIMITED

The Kerala Artisans Development Corporation ( KADCO) was established in

1981. It is one of the State agencies which provide assistance to artisans for

establishing production units, promoting marketing of products and providing

employment opportunities through the activities of trade fairs and marketing centres.

KADCO has also been nominated as one of the State channelizing agencies for the

implementation of schemes announced by the National Backward Classes Finance

and Development Corporation (NBCFDC).

215

a. Net Worth

The net worth of the Kerala Artisans Development Corporation shows

negative growth during 1990-91 to 1996-97 periods. It was Rs 40.54 crores during

1997-98 which declined to 19.04 in 1999-2000. It was 21.51 crores in 2000-01 and

nearly to the same level of Rs 21.51 crores in 2004-05 periods. It increased to Rs

47.95 crores during 2005-06 which increased to Rs 132.07 crores in 2009-10.The

trends in net worth was negative in the initial years but later turns positive and shows

an increasing trend (Table 3.46) .

b. Capital Employed

The capital employed of the Kerala Artisans Development Corporation was

Rs 1.82 crores during 1990-91 which increased to Rs 18.89 crores in 1994-95. It was

Rs 15.1crores in 1995-96 which increased to Rs 205.5 crores in 1999-2000 with an

abnormal increase. It was Rs 208.72 crores in 2000-01 which increased to Rs 228.41

crores in 2004-05. It was Rs 248.42 crores in 2005-06 which increased to Rs 383.97

crores in 2009-10. The trends in capital employed for a period of 20 years from

1990-91 to 2009-2010 is an increasing one with fluctuations ( Table 3.46).

c. Capital Invested

The capital invested by the Kerala Artisans Development Corporation was

Rs 68.41crores during 1990-91 which increased to Rs106.69 crores during 1994-95.

During 1995-96 it was Rs 122.5 crores which increased to Rs 381.8 crores in 1999-

2000. In 2000-01 it was Rs 400.02 crores which increased to Rs 441.8 crores in

2004-05. It was Rs 467.58 crores in 2005-06 which increased to Rs 687.93 crores in

216

2009-10. The trends in capital invested for a period of 20 years under study from

1990-91 to 2009-2010 is an increasing one. During the entire period under analysis

capital invested shows an increasing trend with minor fluctuations (Table 3.46).

d. Working Capital

The working capital of the Kerala Artisans Development Corporation was

Rs 0.82 crores during 1990-91 which increased to Rs.17.51 crores in 1994-95. It was

Rs 13.7 crores in 1995-96 which increased to Rs 191.02 crores in 1999-2000. It was

Rs 145.52 crores in 2000-01 which increased to Rs 227.27 crores in 2004-05. It was

Rs 247.75 crores in 2005-06 which increased to Rs 381.24 crores in 2009-10.It

means that during the entire period under analysis the working capital is increasing

with a trend of fluctuations (Table 3.46).

217


Artisans Development Corporation ( Rs in Crores )


Capital Invested

Working Capital

1 2 3 4 5 1990-1991 -24.04 1.82 68.41 0.82 1991-1992 -26.04 1.93 69.51 0.92 1992-1993 -32.12 2.07 80.63 -1.06 1993-1994 -27.07 16.41 91.79 15.68 1994-1995 -31.49 18.89 106.69 17.51 1995-1996 -43.12 15.09 122.52 13.7 1996-1997 -68.07 11.94 150.32 11.07 1997-1998 40.54 135.31 290.08 134.33 1998-1999 22.01 228.82 402.12 227 1999-2000 19.04 205.53 381.8 191.02 2000-2001 21.51 208.72 400.02 145.52 2001-2002 25.51 205.25 402.55 194.49 2002-2003 34.39 263.24 466.66 255.4 2003-2004 14.73 216.55 428.63 213.56 2004-2005 21.81 228.41 441.81 227.27 2005-2006 47.95 248.42 467.58 247.75 2006-2007 40.51 259.93 494.63 259.33 2007-2008 37.43 268.5 510.78 268.33 2008-2009 136.33 417.4 660.78 413.31 2009-2010 132.07 383.97 687.93 381.24



Capital Employed, Capital Invested and Working capital of the Kerala Artisans

Development Corporation from 1990-91 to 2009-2010 with the trend line and

regression equation is shown in fig. 3(xvi)

218

Fig. 3(xvi) Net worth, Capital Employed, Capital Invested and Working capital of the Kerala

Artisans Development Corporation

Source : Table 3.46


2009-2010 is Y = 7.2693x – 59.234. The slope is 7.2693x and intercept is 59.234.


There is a negative net worth in the initial years but turns positive during latter part

of the 20 years under study.


during 1990-91 to 2009-2010 is Y = 21.004x – 53.631 . The slope is 21.004x and

intercept is 53.631. The R² is 0.8722 which shows that the equation is most suitable

for prediction. An increase is noticed in capital employed of the Kerala Artisans

Development Corporation during the liberalization period.

219


1990-91 to 2009-2010 is Y = 32.485x – 4.835. The slope is 32.485x and intercept is


prediction. There is an increase in the capital invested by Kerala Artisans

Development Corporation during the period under study.




prediction. An increasing trend is noticed in the working capital of the Kerala

Artisans Development Corporation during all the years under study.



The debt to equity ratio of the Kerala Artisans Development Corporation

during 1990-91 was 0.80 : 1 which increased to 0.91 : 1 in 1995-96 periods. It was

1.14 : 1 in 1996-97 which declined to 0.88 : 1 in 2000-01. It was 0.75: 1 in 2005-06

which declined to 0.58 :1 in 2009-10 . The overall position shows a trend of increase

but with fluctuations in the liberalized era and is favourable since the months

involved in it is low (Table 3.47).

ii. Current Ratio

The Current ratio of the Kerala Artisans Development Corporation during

1990-91 was 1.25 : 1 which increased to 4.99: 1 in 1995-96 periods . It was 59.78 : 1

in 1999-2000 which declined to 3.68 :1 in 2005-06 which further declined to 1.92 :

220

1 in 2009-10 . The trend shows an increasing one with fluctuations during the

period under study (Table 3.47).


The return on the capital employed by the Kerala Artisans Development

Corporation shows a negative growth in all most all the years from 1990-91 to 2009-

10. It clearly indicates that the return on investment during the period under analysis

shows an unsatisfactory position ( Table 3.47).


The ratio of net profit before tax and dividend to total sale of Kerala Artisans

Development Corporation was 85.20 per cent in 1990-91 which declined to 68.30

per cent in 1995-96. It was negative in all other years. It is clear from the analysis of

profit to sales of the Kerala Artisans Development Corporation for the whole period

of 20 years under study from that it is not satisfactory (Table 3.47).


The accounts receivable to sales ratio was 2.08 in 1990-91 which declined to

0.88 in 1995-96. It was 2.83 in 1999-2000 and increased to 84.66 in 2005-06. It

declined to 5.89 during 2009-10. The lesser the months in the receivable to sales is

really good for increasing the amount of cash by way of sales and more the number

of months it is unfavourable. The ratio shows an increasing trend with fluctuations in

certain years ( Table 3.47).

221


The stock of finished goods to sales ratio was 1.50in 1990-91 which declined

to 1.20 in 1995-96. It was 7.73 in 2000-01 which declined to1.45 in 2005-06 and

then again declined to 0.02 in 2009-10 . A fluctuating trend is noticed during 1990-

91 to 2009-10, the whole 20 year period under analysis. The lower the months in the

stock of finished goods to sales is an indication of increased sales but abnormal trend

is seen in certain years (Table 3.47).


A very low ratio is seen from 1990-91 to 2009-10 .It means production needs

are met at each time and there is no unnecessary blocking (Table 3.47).





cent in 2005-06 which increased to 90.59 per cent in 2009-10. In this case a

fluctuating trend of increase is noticed in almost all the years under analysis except

negative trend in certain years (Table 3.47).

222

Table 3.47

Financial and Operating Ratios of Kerala State Artisans Development Corporation Ltd


Current ratio

Return on

investment (%)

Receivable to

sales (in months)


Stock of raw materials to consumptio

n (in months)

Consumption to sales

(%)

Net profit to sales

(%)

1 2 3 4 5 6 7 8 9 1990-1991 0.80:1 1.25:1 -685.05 2.08 1.50 -ve 40.20 85.20 1991-1992 0.81:1 1.35:1 -687.05 3.10 0.80 -ve 35.10 92.60 1992-1993 0.86:1 1.38:1 -495.17 1.80 0.50 -ve 42.60 32.40 1993-1994 0.90:1 7.62:1 -44.36 2.10 1.50 -ve 48.40 40.20 1994-1995 0.89:1 6.61:1 -65.75 3.60 1.40 -ve 52.58 48.20 1995-1996 0.91:1 4.99:1 -130.02 0.88 1.20 -ve 74.27 68.30 1996-1997 1.14:1 1.63:1 -214.32 0.92 1.08 -ve 63.24 -78.2 1997-1998 0.49:1 13.17:1 -12.11 0.90 1.02 -ve 54.20 -84.4 1998-1999 1.06:1 28.22:1 -8.1 0.9 1.01 -ve 72.47 -47.76 1999-2000 0.95:1 59.78:1 -1.44 2.83 0.48 -ve 63.41 -4.19 2000-2001 0.88:1 58.2:1 4.36 0.48 7.73 -ve -19.2 -7.2 2001-2002 0.81:1 26.83:1 -0.5 7.04 0.82 -ve 95 -2.25 2002-2003 0.96:1 31.05:1 -2.32 8.99 0.72 -ve 90.02 -15.99 2003-2004 0.89:1 10.85:1 -3.72 54.69 0.69 -ve 82.20 -63.77 2004-2005 0.88:1 3.68:1 -0.58 84.66 1.42 -ve 85.30 -10.63 2005-2006 0.75:1 3.01:1 -2.36 72.94 1.45 -ve 88.20 -33.41 2006-2007 0.80:1 2.62:1 -6.13 45.72 1.47 -ve 90.10 -61.84 2007-2008 0.83:1 5.63:1 -2.82 3.62 0.14 -ve 92.18 -3.9 2008-2009 0.74:1 6.15:1 -0.26 0.83 0.04 -ve 88.4 -0.2 2009-2010 0.58:1 1.92:1 -0.1 5.89 0.02 -ve 90.59 -0.05


The correlation values indicate that direct correlation exists between net

worth and capital employed ,capital invested and net profit to sales the result of

which is shown in Table 3.48.

223

Table 3.48

Correlation

Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.930 3 Capital Invested 0.900 4 Working capital 0.932 5 Debt to Equity Ratio -0.612 6 Current Ratio -0.623 7 Return on Investment (%) 0.494 8 Receivable to sales ( in Months) - 0.067 9 Stock of finished goods to sales( in months ) -0.277 10 Stock of raw materials to consumption 0.349 11 Consumption to Sales (%) 0.349 12 Net Profit to sales ( %) 0.644


17. KERALA STATE PALMYRAH DEVELOPMENT AND WORKER’S

WELFARE CORPORATION LIMITED

Kerala State Palmyrah Development and Workers Welfare Corporation

Limited which comes under welfare agency was incorporated in 1985. It comes

under the Industries Department being the Administrative department of the

Government of Kerala. The financial performance evaluation is made as follows:

a. Net Worth

The net worth of the Kerala State Palmyrah Development and Worker’s

Welfare Corporation Limited was negative during 1990-91 to 1991-92 periods. It

was Rs 0.17 crores during 1992-93 which increased to Rs 26.01 crores in 1994-95.

It was Rs 43.49 crores in 1995-96 which increased to Rs 98.15 crores in 1999-00.

224

It declined to Rs 40.27 crores in 2009-10 .The overall picture of net worth shows a

trend of increase in all the years but with fluctuations (Table 3.49).

b. Capital Employed

The capital employed of the Kerala State Palmyrah Development and

Worker’s Welfare Corporation Limited was Rs 6.95 crores during 1990-91 which

increased to Rs 34.17 crores in 1994-95.It was Rs 47.57 crores in 1995-96 which

increased to Rs 98.15 crores in 1999-2000. It was Rs 98.15 crores in 2000-01 which

declined to Rs 54.15 crores in 2004-05. It was Rs 58.34 crores in 2005-06 which

increased to Rs 131.69 crores in 2009-10. The capital employed for a period of 20

years study shows an increasing trend but with fluctuations in certain years (Table

3.49).

c. Capital Invested

The capital invested by the Kerala State Palmyrah Development and

Worker’s Welfare Corporation was Rs 16.35 crores during 1990-91 which increased

to Rs 50.16 crores during 1994-95. During 1995-96 it was Rs 62.08 crores which

increased to Rs 116.08 crores in 1999-2000. In 2000-01 it was Rs 87 crores which


increased to Rs 177.99 crores in 2009-10. The capital invested for a period of 20

years under study from 1990-91 to 2009-2010 shows an increasing trend but with

fluctuations (Table 3.49).

d. Working Capital

The working Capital of the Kerala State Palmyrah Development and

Worker’s Welfare Corporation Limited was Rs 6.61 crores during 1990-91 which

225



decreased to Rs 11.36 crores in 2004-2005. It was Rs 20.32 crores in 2005-06 which

increased to Rs 87.81 crores in 2009-10. It means that during the entire period under

analysis that the working capital is increasing but with a trend of fluctuations during

the period under study (Table 3.49).

Table 3.49

Net worth, Capital Employed , Capital Invested and Working Capital of Kerala State Palmyrah Development and Worker’s Welfare Corporation Limited ( Rs in Crores )


1 2 3 4 5 1990-1991 -4.21 6.95 18.35 6.61 1991-1992 -5.27 6.98 19.25 6.66 1992-1993 0.17 15.42 29.25 14.25 1993-1994 8.8 22.58 39.75 17.8 1994-1995 26.01 34.17 50.16 26.03 1995-1996 43.49 47.57 62.08 21.11 1996-1997 65.74 65.74 75 42 1997-1998 77.78 77.78 87 49.4 1998-1999 98.15 98.15 103.58 26.43 1999-2000 98.15 98.15 116.08 21.68 2000-2001 98.15 98.15 87 43.28 2001-2002 92.23 92.23 87 35.77 2002-2003 69.49 69.49 87 16.97 2003-2004 67.87 71.82 90.95 23.44 2004-2005 41.75 54.15 701.38 11.36 2005-2006 47.45 58.34 99.87 20.32 2006-2007 39.2 65.64 113.44 29.42 2007-2008 39.66 65.04 112.38 32.03 2008-2009 36.86 61.86 112 21.4 2009-2010 40.27 131.69 177.99 87.81

Source: Compiled from the Review of Public Enterprises, Various issues of the

Bureau of Public Enterprises , Government of Kerala .


Employed, Capital Invested and Working capital of the Kerala State Palmyrah

226

Development and Worker’s Welfare Corporation Limited during 1990-91 to 2009-

2010 with the trend line and regression equation is shown in fig. 3(xvii)

Fig. 3(xvii)

Net worth, Capital Employed, Capital Invested and Working capital of the Kerala

State Palmyrah Development and Worker’s Welfare Corporation Limited

Source : Table 3.49


2010 is Y = 2.0487x + 27.576 .The slope is 2.0487x and intercept is 27.576. The R²

is 0.0642 which shows that the equation is most suitable for prediction.




prediction. There is an increase in capital employed by the Kerala State Palmyrah

Development and Worker’s Welfare Corporation Limited during the period under

study.

227




prediction. There is an increase in the capital invested by Kerala State Palmyrah

Development and Worker’s Welfare Corporation Limited during the period under

study.


1990-91 to 2009-2010 is Y = 1.367x + 13.335. The slope is 1.367x and intercept is


prediction. There is an increase in working capital of the Kerala State Palmyrah

Development and Worker’s Welfare Corporation Limited during all the years under




The debt to equity ratio of the Kerala State Palmyrah Development and

Worker’s Welfare Corporation Limited during 1990-91 was 1.70: 1 which declined

to 0.07 : 1 in 1995-96 periods .It was 0.05 : 1 in 1996-97 which increased to 1.55 : 1

in 2000-01. It was an 0.15: 1 in 2005-06 which increased to 1.05 :1 in 2009-10 .

The overall trend shows an increasing one but with fluctuations certain years under

study. The ratio indicates their reduced dependence on debt capital (Table 3.50).

228

ii. Current Ratio

The Current ratio of the Kerala State Palmyrah Development and Worker’s

Welfare Corporation Limited during 1990-91 was 8.2 : 1 which increased to 8.79 : 1

in 1995-96 periods. It was 2.73 : 1 in 1999-2000 which declined to 1.61 :1 in 2005-

06 and then increased to 2.74 : 1 in 2009-10. The overall trend shows an increasing

one with some fluctuations in the period under study. The current ratio indicates that

it was abnormal in certain years and reaches towards ideal in certain other years

(Table 3.50).


The return on the capital employed by the Kerala State Palmyrah

Development and Worker’s Welfare Corporation Limited shows a negative one in

all most all the years from 1990-91 to 2008-09. It means that the return on

investment during the period under analysis shows an unfavourable one ( Table

3.50).


The net profit before tax and dividend to total was 32.2 per cent in 1990-91

which declined to -3 per cent in 1995-96. It was negative in all most all the years. In

2009-10 it was 33.93 per cent. It is clear from the analysis of profit to sales that it is

not up to the mark during the whole period of 20 years under study from 1990-91

to 2009-10 ( Table 3.50).

229


The accounts receivable to sales was 1.27 in 1990-91 and which increased to

3.92 in 1995-96. It was 3.84 in 1999-2000 which increased to 17.95 in 2005-06

which declined to 10.96 during 2009-10. In this case a trend of increase with

fluctuations is seen. The lower the months in the receivable to sales is really good

for increasing the amount of cash by way of sales but the trend seen here is an

unfavourable one ( Table 3.50).


The stock of finished goods to sales was 4.78 in 1990-91 which increased to

8.58 in 1995-96. It was 0.14 in 2000-01 which increased to 1.76 months in 2005-06

and then again declined to 1.00 in 2009-10. A fluctuating trend of increase is noticed

during 1990-91 to 2009-10, the whole 20 year period under analysis. The lower the

months in the stock of finished goods to sales is an indication of increased sales but

it is abnormal in the initial periods under study and are favourable in the remaining

years Table 3.50).


The stock of raw materials to raw materials consumption was 30.22 in 1990-

91 which increased to 40.85 in 1995-96. It was 62.99 in 2000-01 which declined to

25 in 2005-06 which again declined to 4.43 in 2009-10. A fluctuating trend of

increase is noticed during 1990-91 to 2009-10 the whole 20 year period under

analysis. The lower the months in the stock of finished goods to consumption is an

indication of increased production and is appreciable ( Table 3.50).

230





cent in 2005-06 which increased to 35.82 per cent in 2009-10. A fluctuating trend of

increase is noticed in all the 20 years under analysis and is favourable in the initial

periods under study ( Table 3.50).

Table 3.50 Financial and Operating Ratios of Kerala State Palmyrah Development and

Workers’ Welfare Corporation Ltd


Current ratio


(%)


months)




Net profit to

sales (%)

1 2 3 4 5 6 7 8 9

1990-1991 1.70:1 8.2:1 -38.5 1.27 4.78 30.22 64.81 32.02 1991-1992 1.75:1 10.12:1 -46.7 1.36 5.21 32.40 65.91 -74.09 1992-1993 1.08:1 4.18:1 -16.6 0.27 6.43 38.40 227.76 -30.37 1993-1994 0.53:1 11.79:1 -14.9 0.34 3.30 36.33 71.22 -14.9 1994-1995 0.19:1 25.10:1 -3.39 2.05 8.25 35.25 38.63 -9.13 1995-1996 0.07:1 8.79:1 -0.82 3.92 8.58 40.85 78.37 -3 1996-1997 0.05:1 16.67:1 -1.02 1.38 11.19 45.35 79.31 -6.38 1997-1998 0.12:1 24.86:1 -1.77 5.31 4.09 50.40 30.87 -6.48 1998-1999 0.19:1 3.58:1 1.09 3.43 0.82 60.62 40.93 4.08 1999-2000 0.33:1 2.73:1 0.6 3.84 2.12 61.72 31.01 1.83 2000-2001 1.55:1 4.30:1 9.65 0.44 0.14 62.99 -9.63 -2.65 2001-2002 2.78:1 29.04 -27.39 29.04 0.65 61.89 90.35 -223.54 2002-2003 1.83:1 13.04 -69.03 28.01 0.51 60.78 86.23 -641.31 2003-2004 0.05:1 2.23:1 -26.64 31.81 2.42 40.30 63.36 -655.14 2004-2005 0.17:1 1.31:1 -83.56 14.89 1.58 38.20 62.22 -677.4 2005-2006 0.15:1 1.61:1 -68.17 17.95 1.76 25.10 29.98 -727.06 2006-2007 0.30:1 1.71:1 -72.82 13.18 2.78 18.30 30.51 -612.82 2007-2008 0.29:1 1.63:1 1.25 12.51 0.43 11.66 26.99 8.81 2008-2009 0.29:1 1.40:1 -4.53 17.23 1.78 8.23 43.74 -49.38 2009-2010 1.05:1 2.74:1 2.6 10.96 1 4.43 35.82 33.93


231

It is seen that direct correlation exists between net worth and all items except

stock of finished goods to sales and consumption to sale (Table 3.51)


Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.781 3 Capital Invested 0.044 4 Working capital 0.299 5 Debt to Equity Ratio 0.047 6 Current Ratio 0.125 7 Return on Investment (%) 0.231 8 Receivable to sales ( in Months) 0.225 9 Stock of finished goods to sales( in months ) -0.039 10 Stock of raw materials to consumption 0.992 11 Consumption to Sales (%) -0.424 12 Net Profit to sales ( %) 0.174


18. KERALA SHIPPING INLAND NAVIGATION CORPORATION

LIMITED

The Corporation was formed in 1989 by the statutory amalgamation of

Kerala Inland Navigation Corporation Limited (KINCO) and Kerala Shipping

Corporation Limited ( KSC), two Government of Kerala Companies. The main

objective of the company is to develop passenger and cargo transportation through

Inland Waterways of Kerala, docking and repair of marine vessels, construction of

boats, conducting navigation training programmes, conducting tourist cruises,

providing navigational aids and maintenance in National Waterway-III. The

Corporation at present has 12 barges, 11 boats and 2 Jhankars. With the

commissioning of Goshree bridges the ferry services of the Corporation slumped and

have since diversified into tourism sector.

232

Construction and repair of boats, barges and other marine vessels of the

Corporation and of the customers in the public and private sector are carried out by

the corporation leasing a slipway complex from Cochin Port Trust since 1991. The

Corporation had also started a Marine Training Institute for giving training for

operating Inland Vessels and Crafts.

a. Net Worth

The net worth of the Kerala Shipping Inland Navigation Corporation Limited

was Rs 470.10 crores in 1990-91 which increased to Rs 761.6 crores in 1994-95. It


It was Rs 1470.47 crores in 2000-01 which declined to Rs 204.91 crores in 2004-05.

It was Rs 1115.32 crores in 2005-06 which increased to Rs 2154.55 crores in 2009-

10. The overall picture of net worth shows an increasing one with some fluctuations

(Table 3.52).

a. Capital Employed

The capital employed of the Kerala Shipping Inland Navigation Corporation


95. It was Rs 947.81 crores in 1995-96 which increased to Rs.1323.08 crores in

1999-2000. It was Rs 1473.47 crores in 2000-01 which declined to Rs 204.91 crores


crores in 2009-10. The capital employed for a period of 20 years study from 1990-

91 to 2009-2010 shows an increasing trend fluctuations ( Table 3.52).

233

c. Capital Invested

The capital invested by the Kerala Shipping Inland Navigation Corporation

Limited was Rs 556.30 crores during 1990-91 which increased to Rs 783.87 crores

during 1994-95. During 1995-96 it was Rs 855.57 crores which increased to Rs

1166.96 crores in 1999-2000. In 2000-01 it was Rs 1266.96 crores which declined

to Rs 915.99 crores in 2004-05. It was Rs 915.99 crores in 2005-06 which increased

to Rs 2726.89 crores in 2009-10. The trends in capital invested for a period of 20

years under study from 1990-91 to 2009-2010 shows an increasing one ( Table

3.52).

b. Working Capital

The working Capital of the Kerala Shipping Inland Navigation Corporation

Limited was Rs 322.21 crores during 1990-91 which increased to Rs 562.1 crores in

1994-95. It was Rs 664.46 crores in 1995-96 which increased to Rs 1011.18 crores

in 1999-2000. It was Rs 1149.87 crores in 2000-01 which declined to –Rs 35.62

crores in 2004-05 and increased to Rs 1119.18 crores in 2006-07. It again increased

to Rs 1514.1 crores in 2009-10.It shows that during most of the years under analysis

the working capital shows an increasing trend with some fluctuations (Table 3.52).

234


Shipping Inland Navigation Corporation Limited ( Rs in Crores )


1 2 3 4 5 1990-1991 470.10 530.32 556.30 322.21 1991-1992 472.26 565.48 557.28 344.28 1992-1993 543.7 606.76 597.02 381.77 1993-1994 687.64 771.7 691.02 551.97 1994-1995 761.6 866.51 783.87 562.1 1995-1996 851.2 947.81 855.57 664.46 1996-1997 950.87 1032.97 946.06 715.18 1997-1998 1013.04 1026.04 976.96 722.78 1998-1999 1155.02 1158.02 1066.96 871.59 1999-2000 1320.08 1323.08 1166.96 1011.18 2000-2001 1470.47 1473.47 1266.96 1149.87 2001-2002 291.74 291.74 828.99 -60.28 2002-2003 1582.15 1585.15 1336.96 1254.29 2003-2004 312.27 312.27 915.99 34.12 2004-2005 204.91 204.91 915.99 -35.62 2005-2006 115.32 115.32 915.99 -87.66 2006-2007 1572.48 1575.41 1526.89 1119.18 2007-2008 1115.72 1118.65 1576.89 628.24 2008-2009 1672.1 1675.03 2126.89 1125.19 2009-2010 2154.55 2157.48 2726.89 1514.1



Capital Employed, Capital Invested and Working capital of the Kerala Shipping

Inland Navigation Corporation Limited from 1990-91 to 2009-2010 with the trend

line and regression equation is shown in fig. 3(xviii)

235

Fig. 3(xviii) Net worth, Capital Employed, Capital Invested and Working capital of the Kerala

Shipping Inland Navigation Corporation Limited

Source : Table 3.52


2010 is Y = 41.726x + 497.74. The slope is 41.726x and intercept is 497.74. The R²

is 0.1602which shows that the equation is most suitable for prediction. There is a

positive net worth and it shows an increasing trend during the whole 20 years under

study .




prediction. There is increase in capital employed of the Kerala Shipping Inland

Navigation Corporation Limited during the period under analysis .

236




prediction. There is an increase in the capital invested by the Kerala Shipping Inland

Navigation Corporation Limited during the period under study.




prediction. There is an increase in working capital of the Kerala Shipping Inland

Navigation Corporation Limited during all the years under liberalization period.



The debt to equity ratio of the Kerala Shipping Inland Navigation

Corporation Limited during 1990-91 was 0.20 : 1 which declined to 0.13 : 1 in 1995-

96 periods . It was 0.10 : 1 in 1996-97 which decreased to 0.02: 1 in 2000-01. It

was an 0.41 : 1 in 2005-06 which declined to 0.10:1 in 2009-10 . The trend shows

an increasing one but with fluctuations and is a clear indication that they are not

depending on debt capital ( Table 3.53).

ii. Current Ratio

The Current ratio of the Kerala Shipping Inland Navigation Corporation

Limited during 1990-91 was 4.75 : 1 which increased to 5.23 : 1 in 1995-96 periods .

It was 5.48 : 1 in 1999-2000 which declined to 0.81 :1 in 2004-05 which increased to

237

1.53 : 1 in 2009-10 . The overall trend shows an increase but with high fluctuations

in the initial period under study but it has not reached to an ideal one (Table 3.53).


The return on the capital employed by the Kerala Shipping Inland Navigation

Corporation Limited was 1.75 per cent in 1990-91 which declined to 0.98 per cent in

1995-96. It was 4.94 per cent in 2000-01 and shows a negative one in all other years

under study. It clearly indicates that the return on investment during the period under

analysis shows a very low per cent which is not favourable( Table 3.53).


The ratio of net profit to total sales of Kerala Shipping Inland Navigation

Corporation Limited in 1990-91 was 4.89 per cent which declined to 2.89 per cent

in 1995-96. It was 5.22 per cent in 2000-01 which increased to 89.02 per cent in

2005-06 and declined to -8.48 per cent in 2009-10. It is clear from the analysis of

profit to sales that it is not up to the mark during the whole period of 20 years under

study from 1990-91 to 2009-10. ( Table 3.53).



increased to 2.64 in 1995-96. It was 4.8 in 1999-2000 which declined to 4.1 in 2005-

06 which again declined to 3.11 during 2009-10. In this case a trend of increase with

fluctuations is seen .The lower the months in the receivable to sales is really good

for increasing the amount of cash by way of sales (Table 3.53).

238

vi. Consumption to Sales


28.25 per cent in 1990-91 which declined to 16.12 per cent in 1995-96 . It was 18.13


cent in 2005-06 which declined to 16.69 per cent in 2009-10. A very high fluctuation

is noticed in all the 20 years period under analysis and thus it is concluded that is

not so favourable (Table 3.53).

Table 3.53

Financial and Operating Ratios of Kerala Shipping Inland Navigation Corporation Ltd


Current ratio


(%)


months)


Net profit to sales (%)

1 2 3 4 5 8 9

1990-1991 0.20:1 4.75:1 1.75 2.10 28.25 4.89 1991-1992 0.20:1 4.78:1 1.77 2.39 30.54 5.87 1992-1993 0.12: 4.57:1 1.67 2.91 28.22 5.17 1993-1994 0.14:1 8.46:1 7.06 1.75 10.81 26.79 1994-1995 0.15:1 4.71:1 3.28 1.47 14.28 10.15 1995-1996 0.13:1 5.23:1 0.98 2.64 16.12 2.89 1996-1997 0.10:1 5.54:1 1.74 2.61 18.13 5.26 1997-1998 0.01:1 3.53:1 2.48 2.73 18.8 6.86 1998-1999 0.01:1 4.74:1 7.42 1.52 12.31 15.27 1999-2000 0.08:1 5.48:1 6.05 4.8 15.46 2.64 2000-2001 0.02:1 9.15:1 4.94 1.82 13.62 5.22 2001-2002 0.02:1 .16:1 -24 1.77 40.62 -625.55 2002-2003 0.03:1 3.62 3.13 3.62 50.59 10.1 2003-2004 0.04:1 1.81:1 1.48 2.16 38.45 2.72 2004-2005 0.32:1 .81:1 -52.78 46.46 22.53 2.72 2005-2006 0.41:1 .42:1 -73.74 4.1 18.54 89.02 2006-2007 0.10:1 3.78:1 -5.73 14.41 12.85 -16.49 2007-2008 0.19:1 1.92:1 -17.33 5.16 31.19 -21.83 2008-2009 0.13:1 2.92:1 -5.17 5.1 30 -13.01 2009-2010 0.10:1 1.53:1 -2.93 3.11 16.69 -8.48


It is seen that direct correlation exists between net worth and all items except

debt equity ratio, receivable to sales, consumption to sale (Table 3.54)

239


Sl. No.

Item Correlation

1 Net worth 1 2 Capital Employed 0.997 3 Capital Invested 0.817 4 Working capital 0.979 5 Debt to Equity Ratio -0.833 6 Current Ratio 0.244 7 Return on Investment (%) 0.488 8 Receivable to sales ( in Months) - 0.197 9 Consumption to Sales (%) -0.238 10 Net Profit to sales ( %) 0.202

Source: Computed from Table 3.52 and Table3.53 Hypotheses Testing

Based on the analysis, the researcher here attempts to test the hypotheses

already formulated. For that a summary table showing the overall financial

performance of Public Sector Enterprises is prepared and depicted in Table 3.55.

Table 3.55 Overall Financial Performance of PSEs

Item Increase Decrease Fluctuating Total

Net Worth 10 (55.6) 8 (44.4) - 18 (100)

Capital Employed 15 (83.3) 3 (16.7) - 18 (100)

Capital Invested 16 (88.9) 1 (5.55) 1 (5.55) 18 (100)

Working Capital 12 (66.67) 6 (33.33) - 18 (100)

Debt to Equity - 3 (17.6) 14 (82.4) 17 (100) Current Ratio 2 (11.1) 1 (5.6) 15 (83.3) 18 (100)

Return on Investment 1 (5.6) 6 (33.3) 11 (61.1) 18 (100) Net Profit to Sales - 8 (44.4) 1 0(55.6) 18 (100) Recievables to Sales - 1 (5.88) 16 (94.12) 17 (100)

Figures in bracket shows the percentage to total

Source : Computed values

240

From Table 3.55 it is found that the average net worth of selected public

sector enterprises in Kerala shows an increase in 10 out of 18 cases under study.

Hence the null hypothesis that public sector enterprises failed to attract ownership

funds during the liberalization period stands rejected.

It is clear from the trend line analysis done in this chapter that there is

increase in both the capital employed and the capital invested, but in certain years

they are not in the same proportion. Further the correlation analysis of capital

employed and capital invested with respect to net worth shows that positive

correlation exists in majority of the cases for capital employed and negative

correlation exists for capital invested. Hence the hypothesis that there exists

disparity in fund invested and the capital employed in public sector enterprises in

Kerala during the liberalization period stands accepted.

It is seen from the analysis that the debt equity ratio of 14 out of 17 PSEs

under study shows a fluctuating trend and in 3 cases there is a declining trend (Table

3.55).It means that they are not able to collect debt funds for its investment

compared to equity funds. So the hypothesis that during the liberalization era, the

public sector enterprises failed to attract debt funds into the business stands

accepted.

Table 3.55 clearly indicates that the current ratio, which is the indicator of

short term solvency showed a fluctuating trend in 15 out of 18 cases. Hence the

hypothesis that public sector enterprises in Kerala failed to manage short term funds

during the liberalization period stands accepted.

241

It is seen from Table 3.55 that the return on investment of majority of PSEs

under study showed a fluctuating trend in 11 out of 17 cases. In 6 cases there is a

declining trend. It is an indication that investments are not properly allocated in the

form of fixed assets. So the hypothesis that lack of adequate return on investment

hinders the development of public sector enterprises in Kerala stands accepted.

It is seen from the analysis that PSEs earn less profit and sometimes even

incurs loss on account of inadequate sales. From Table 3.55 it is seen that net profit

to sales ratio shows a fluctuating trend in 10 out of 18 cases and in 8 cases there is a

declining trend. In none of the 18 selected cases, it showed an increasing trend.

Hence the hypothesis that profit earned by majority of public sector enterprises is

meager stands accepted.

The trends in the financial management of Public Sector Enterprises are

analysed during the period of liberalization and it is seen that there is an increasing

trend in some cases but remains static in certain other cases. The debt to equity ratio,

current ratio, return on investment and net profit to sales shows a fluctuating trend

during the period under study.

From the analysis it is clear that a distinct trend set is visible for different

categories of Public Sector Enterprises which is a function of behavioural pattern of

decisions makers involved in the context of liberalization. Hence, the study

proceeded by analyzing the opinion from the selected respondents and is dealt in

Chapter IV.

242

REFERENCES

1 Eaton, Marquis. 1957. “Financial Reporting in a Changing Society,” The

Journal of Accountancy, August. p 25

2 Report of the Study Group on the Objectives of Financial Statements,

October, 1973 P.37 (Tuyeblood Committee Report).

3 Wittington, Geoffrey. 1980. “Some Basic properties of Financial Ratios,”

Journal of Business Finance and Accounting, Vol. 7, No.2. p 226

4 Laurent, L.R. 1979. “Improving the Efficiency and Effectiveness of Financial

Ratios Analysis” Journal of Business Finance and Accounting, pp 401-405.

5 Beaver, W .H., J.W. Kennely, and W.M.Voss. 1974. “Predictive Ability

Criterion for the Evaluation of Accounting Data ,” The Accounting Review,

October. p 678.

6. Merwin, C.L. 1942. Financing of Small Corporations in Give Manufacturing

industries, 1926-36, New York: National Bureau of Economic Research.

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