Financial analysis of eicl

Financial analysis on EICL, TVM 2007-2010

Chapter-1

INTRODUCTION

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INTRODUCTION

Financial Management is that activity is concerned with the planning and controlling

of the firm’s financial resources. Though it was a branch of economics till 1890 as a separate

or discipline it is of recent origin. Financial management is concerned with the duties of

finance manager in a business firm. He performs such as budgeting, financial forecasting,

cash management, credit administration, investment analysis and fund procurement. The

recent trend towards globalization of business activity has created new demands and

opportunities in managerial finance. Financial statements are prepared and presented for

external users of accounting information. As these statements are used by investors and

financial analysts to examine the firms performance in order to make investment decisions,

they should prepare very carefully and contain as much information as possible. The financial

statements of the Company include Trading profit and Loss A/c and Balance sheet. The

general purpose is to analyze the statement to understand the financial performance of the

company, management of various assets and liabilities and their relation.

1.1 Overview of Project1.1 Overview of Project

The topic of this project is Financial Performance Analysis at English Indian Clays

Limited (E.I.C.L). Financial Performance Analysis constitutes approach to judge the

effectiveness of the financial function of the firm. Finance is needed to promote or establish

the business, acquires fixed assets, make investigations, develop product, meeting day to day

affairs of the company, encourage manager to make progress and create value. The project

work during the period of study equips the youngsters with necessary experience and

enhances the learner with adequate to the real field. It enables the learner to meet the

challenges of a business world.

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1.2 Statement of the Problem.The financial statements reveal the true and fair view of the financial position of a

concern .A proper analysis and interpretation of these statements enables a person to judge the profitability and financial strength of the business.

The financial statement are prepared on the basis of recorded facts .The facts are recorded in monetary terms .The statement are prepared for a particular period and the transact orders .The financial statements are true and fair view of the financial position of the concern.

1.3 Significance of the Study.Finance is the life blood of every business private as well as public. Therefore proper

utilization of finance by the public sector enterprise is found necessary as it is financial by the government which is the representative of people. The financial performance of public enterprise has been a matter of wide interest and concern.

The type of relationship to the investigated depend upon the objective and purpose of evaluation .The purpose of evaluation of financial statement differ among various groups or creditors, share holders, management, labor union and so on interested in the result and relationship reported in the financial statement, so ratio analysis is an effect in tool for analyzing the financial performance of the firm.

1.4 Object of the Study. Following are the objective of the study:

i. To evaluate the liquidity position of English Indian clays.

ii. To evaluate the long term solvency of the firm.

iii. To evaluate the profitability of English Indian clays.

1.5 MethodologyThe project evaluates the financial performance of the company with the help of the

most appropriate tool of financial analysis like ratio analysis and comparative balance sheet .

The data is largely depends on primary and secondary sources. Primary data is the first hand

information that is collected during the period of research. Primary data has been collected

through discussions held with the staffs in the accounts department.

Secondary data studies whole company records and company’s balance sheet in

which the project work has been done. In addition, a number of reference books, journals

and reports were also used for the study.

1.6 Limitation of the Study.1. The study was limited up to 5 years, starting from 2004-05 to 2008-09. Hence the

results obtained can be applied for the selected period.

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2. Due to the limitation of time the study converted only financial performance of

the company in terms of solvency, liquidity and profitability.

3. The study could not extend the other important area of operational performance

analysis of the company.

4. The study was conducted within a short period, so it is not possible to study all

aspect in details.

1.7 Period of Study.The study covers the period of 2004-2005 to 2008-2009 in English Indian Clay

Limited.

1.8 Study Area.English Indian Clay Limiited,

Veli, Trivandrum-695021

1.9 Chapterisation The project report consists of five chapters. In this report the following elements are

involved.

The first chapter is introduction. Its consist of the general introduction of the topic, objective of the study in general and in particular, Statement of the Problem, Significance of study, Objectives, Methodology, Limitations, Period of Study, Study Area Second chapter includes financial statement analysis a theoretical perspective on financial statement analysis. It includes different tool for analysis and its limitation. Third chapter is profile of English Indian Clay Limited. It includes The

Company History, Vision of EICL, Mission of EICL, Quality Policy of EICL,

Company’s Philosophy, Corporate Objectives and Employee Profile.

Fifth chapter includes data analysis and interpretation. Different methods such

as ratio analysis and a comparative analysis of various years are made.

Sixth chapter deals with Findings, Suggestion, Conclusion.

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Chapter-2

Theoretical Perspective

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2.1 Financial statement

Financial statement are those statements which exhibits true financial position of the

business on a particular period and also produce the profit earning capacity at the end of a

particular period. Financial statements are prepared for the purpose of presenting periodical

review of report on the progress by the management and deal with,

a) Status of investment in the business

b) The result achieved during a period under view.

The statements disposing status of investment is known as Balance sheet and

statement showing the result is known as Profit and Loss Account. So the major financial

statement are ‘Balance sheet and Income statement’ (P/L A/c) Therefore financial statement

are affected by three things ie Recorded facts, Accounting convention and personal

Judgment. In short financial statement position, profitability or weakness of the concern.

Thus we can say that financial statement provide a summary of the accounts of a business

enterprise the balance sheet reflecting the assets and liabilities and income statement showing

the results of operation during a certain period.

2.2 Nature of Financial Statements

The following points reflects nature of financial statement of a business

Recorded Facts

Accounting conventions

Personal Judgment.

Recorded Facts

Record is made only those facts which can be expressed in monetary terms. It means

that in financial statements date are taken from the accounting records. Data which has not

been recorded in the financial books are not exhibited in the financial statement. To the

amount of cash position, debtors, cost of fixed assets, creditors etc. are recorded facts. Certain

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factors that affect financial position of a business are not shown in the accounting records.

They are purchase and sales contract claim for refund, guarantee etc appear footnote on

balance sheet.

Accounting Convention :

Management of the concern are tree to choose certain accounting concern are free to

choose certain accounting convention suited to their concern. Important accounting

conventions are valuation stock (Corprice or Market price as well) valuation of fixed asset (at

cost less depreciation) creation of provision made for expected loss etc.

Personal Judgement:

Personal judgement of the accountant plays an important role in preparing financial

un important role in taking decisions regarding method and rate of depreciation adopted for

valuation of inventories, provision for bad or doubtful debts, amortisation etc. Postulates,

various accounting concepts followed by an accountant while making accounting records are

termed as postulates. The important postulates followed by the accountant are going concern

concept, money measurement concept, business entity concept, matching concept etc.

2.3 Characteristics or Features of Financial statement

An ideal financial statement mainly exhibits a true picture about the profit earning

capacity and financial position of the concern. A postmortem of financial statement helps a

person to identify the profitability and financial position of the concern. It should have the

following characteristics,

Financial statement depicts a true and fair view of the profitability and financial position of

the concern.

It should be presented in a simple manner so as to make them understandable even to a

layman.

It should be prepared in such a way as to attract the reader. So financial statement should be

attractive.

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It should be comparable, so financial statement should be presented in such a way that it can

be compared with previous years statements.

Financial statement will be helpful in analysis and interpretation of data.

Its easy preparation enable saving much time in preparing the statement.

It should be presented in brief.

Finally financial statement should be prepared and presented promptly

2.4 Importance of Financial statements

The financial statements are very important in the modern business field. These

statements are highly useful to the following authorities.

Management.

Owners.

Creditors.

Investors.

Employees.

Government.

Consumer.

Research scholars.

Stock exchanges.

Professional Authorities.

2.5 Analysis and Interpretation of Financial Statement

Financial analysis is the process of determining the significant operating and financial

characteristics of a firm from accounting data. The analysis of financial statement is an

attempt to determine the significance and meaning of the financial statement data do that the

forecast may be made of the future prospects for earnings ability to pay interest and debt

maturities (both current and long term) and profitability.

2.6 Objective of Financial Analysis

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To estimate the earning capacity of the firm.

To judge the financial position and financial performance of the firm.

To determine the long-term liquidity of the funds.

To judge the Solvency of the firm.

To determine the debt capacity of the firm.

To decide about the future prospects of the firm.

To know the progress of the firm.

To measure the efficiency of operations.

2.7 Type of Financial Analysis

However, we can classify various types of financial analysis into different categories

depending upon (i) the material used, and (ii) the method of operation followed in the

analysis or the modus operandi of analysis (iii) objective of analysis

According to Material used:

On this basis the analysis are of two types

External Analysis:

External analysis of financial statement is made by those who do not have access to

be detailed accounting recording of the company ie, bank, creditors, general public.

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Types of Financial Analysis

According to material used

According to modus operandi

External analysis

Internal analysis

According to objectives of analysis

Horizontal analysis

Vertical analysis

Long term analysis

Short term analysis


Internal Analysis

Internal analysis is made by the finance and accounting department to help the top

management. These people have direct approach to the relevant financial records. Such

analysis emphasizes on the performance appraisal and assessing the profitability of different

activates.

According to Modus operandi:

On this basis analysis can be done as

Horizontal analysis

When the financial statements for a number of years are reviewed and

analysed the analysis is called “horzontal analysis” The preparation of common size

statement is an example of horizontal analysis. As it is based on data from year to year, rather

than on one data or period or time as a whole this is known as ‘dynamic Analysis’

Vertical analysis:

Vertical analysis is also known as “static Analysis”. When ratios are calculated from

the balance sheet of one year, it is called vertical analysis. It is not very useful for long term

planning as it does not include the trend study for future.

According to objectives of analysis:

Long term analysis:

In the long-term the company must earn a minimum amount sufficient to

maintain a suitable rate of return on the investment to provide for the necessary growth and

development of the company and meet the cost of capital. Thus in the long term analysis the

stress is no the stability and earning potentiality of the concern. In long term analysis the

fixed assets, long term debt structure and the ownership interest is analysed.

Short –term analysis:

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The short-term analysis of financial statement is mainly concerned with the working

capital analysis. In the short-term a company must have ample funds leading available to

meet its current needs and sufficient borrowing capacity to meet the contingencies. Hence in

short term analysis the current assets and the current liabilities are analysed and cash position

of the concern is determined. For short term analysis the ratio analysis to useful.

2.8 Tools or Methods of Financial Analysis

In the process of Financial Statement analysis various tools or method are used by the

financial analysis

1. Comparative Financial and Operating Statements

It is an important device of financial analysis. In these statements figures of two or more

period are placed side by side to facilitate comparison. These statements lender comparison

between two period of time and depict financial position and operating result of the firm, with

the help of comparative financial statement interfirm comparison is possible. In short

statement prepared in a form that reflects financial data for two or more periods are known as

comparative statements.

2. Common Size Statements

In balance sheet items each assets are converted into percentages to total assets and each item

of liabilities is connected into percentage of total liabilities. Thus the whole balance sheet is

converted into percentage form such converted balance sheet is known as percentage

statement. It is useful in vertical financial analysis and comparison of two business enterprise

at a certain data.

3. Trend Analysis (Detailed Analysis)

It is an important tool of horizontal financial analysis. Trend analysis involves the

arithmetical relationship with each item of several years to the same item of base year. Thus

out if many years one particular year is taken as base. Each item of base year is taken as 100

and on that base the percentages of each of the items of each of the years are calculated.

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4. Average Analysis:

It is an improvement over trend analysis method when trend ratio have been

determined for the concern these figures are compared with industry averages. Both these

trends can be presented on the graph paper. These presentations of facts in the image of

pictures make the analysis and comparison.

5. Statement of changes in Working Capital

Working capital is the excess of current assets over current liabilities. A statement

which is prepared to find out changes in working capital position of a concern is termed as

statement of changes in working capital changes in working capital may be either increase in

working capital or decrease in working capital.

6. Fund Flow analysis:

Fund Flow Analysis has become and important tool in the analytical kit of financial

analysts, credit granting institutions and financial managers. Fund flow analysis reveals the

changes in working capital position. It tells about the sources from which the working capital

was obtained and the purpose for which it was used.

7. Ratio Analysis (In Depth)

The most important tool of financial statement analysis is ratio analysis. It is

commonly used for quantitative decision making functions. Ratio is simply one number

expressed in terms of one another. So it is the arithmetical selection between two figures or

two assets. Ratio highlights the arithmetical relationship between various figures in financial

statement.

Importance

It is useful to check the efficiency of the firm.

It expresses the relationship between various items in financial statement.

It is useful for interfirm comparisons.

It is useful for measuring the performance of the firm.

It is useful for cost control.

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More over it indicates the profitability solvency liquidity and operational efficiency of the

firm.

Types of Ratios (Detailed Analysis)

1. Liquidity Ratios

a) Current Ratio

b) Quick Ratio /Liquid Ratio

c) Absolute Liquid Ratio/Cash position Ratio

2. Solvency Ratio/ Leverage Ratio

a) Debt-equity Ratio.

b) Proprietory Ratio.

c) Fixed Asset to Net worth Ratio.

Debt-assets Ratio

3. Turnover Ratios/ Activity Ratio

a) Inventory Turnover Ratio/Stock Turnover Ratio.

b) Fixed asset turnover Ratio.

c) Working capital turnover Ratio.

d) Total asset Turnover Ratio.

e) Current Asset Turnover Ratio.

f) Debtors Turnover Ratio.

g) Capital turnover Ratio.

4. Profitability Ratio

a) Operating Ratio.

b) Cost of goods sold Ratio.

c) Administrative expense Ratio

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Limitations of Ratio Analysis.

Ratio analysis gives only a good basis for quantitative analysis of financial problems. But it

suffers from qualitative aspects.

Ratios are computed from historical accounting records. So they also process those

limitations of financial accounting.

It is not possible to calculated exact and well accepted absolute standard for comparison.

In ratio analysis arithmetical window dressing is possible and firms may be successful in

concealing the real position.

Ratios are only means of financial analysis, but not an end in them. They can be affected with

the personal ability and bias of the analyst.

Liquidity Ratios:

Liquidity is the ability of a firm to meet its current liabilities. The deficiency of

performance of day to day operations is ascertained by way of liquidity ratios. The ratios

which indicate the liquidity of a firm are:

Net working capital.

Current ratios.

Acid test/quick ratios.

Super quick ratios.

Turnover ratios.

Defensive interval ratios

Solvency / Leverage / Capital Structure Ratio

Solvency ratios are used to measure long term solvency of the firm. The long-term

efficiency of the firm to set off its long term debt. The leverage or capital structure ratios may

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be defined as financial ratios which throw light on the long-term solvency of a firm as

reflected in its ability to assure the long-term creditors with regard to:

a) Periodic payment of interest during the period of the loan.

b) Repayment of principal on maturity or in pre-determined installments at due dates.

The Solvency ratios include:

a. Debt-equity ratio.

b. Debt-assets ratio.

c. Proprietary ratio etc.

Turnover ratios / Activity Ratios

Activity ratios are concerned with measuring the efficiency in asset management.

These ratios are also called efficiency ratios or asset utilization ratios. These ratios express

the operational efficiency of a concern. The operational efficiency means the speed with

which assets are being converted into sales. Turnover ratios are expressed in times. Thus

turnover ratio can be defined as the test of the relationship between sales (more appropriately

cost of sales) and ratios assets of firm.

Profitability Ratios:

The management of the firm is naturally eager to measure its operating efficiency.

The owners invert their funds in the expectation of reasonable return. The operating

efficiency of a firm and its ability to ensure adequate ratio to its shareholders depends

ultimately on the profit earned by it.

The study is to analyze the ratios for understanding the financial performance and a

comparative statement analysis

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Chapter-3

COMPANY PROFILE

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3.1 THE COMPANY HISTORY

English Indian Clays Limited (EICL) has two key business segments viz Clay

Business and Starch Business with strong R&D set-up at all its three manufacturing locations.

English Indian Clays Limited was incorporated on 18th November 1963, in technical

and financial collaboration with English China Clays Limited, UK (now known as ECC

Group plc, UK). The collaboration with ECC ceased in the year 1992. EICL has since been

actively engaged in the manufacture and processing of China Clay of different grades for use

as a coating agent and filling agent. The Company has its clay manufacturing units at Veli,

Thonnakkal and Kollam located in Thiruvananthapuram, Kerala. The installed capacity of the

plants was 36,000 MT per annum initially and it has since been increased to 2, 13,600 MT

per annum as of date.

The Starch business has two manufacturing divisions at Yamunanagar in Haryana and

Puducherry. The Starch division at Yamunanagar can trace its origins back to 1937 when

Late Lala Karam Chand Thapar promoted a Company by the name of Indian Starch &

Chemicals Limited. The name of this Company was later changed to Bharat Starch Industries

limited. The Starch Division at Puducherry was set up in 1994-95 to manufacture modified

starches for industrial uses. The Divisions have the distinction of being the only Starch

Company in India to have acquired ISO-9002 certification and DSIR recognised R & D

centre. Current starch producing capacity of the Company is 1,01,040 MT per annum.

The Company acquired the starch business of erstwhile Bharat Starch Industries

Limited (BSIL) with effect from April 1, 2001.

Clay Division:

The Company manufactures varieties of superior grade China Clay for diversified

applications such as pigments, extender, filler and as raw material in different industries.

Superior Coating Grade Kaolin is produced under the trade marks ‘Super coat’, ‘Higloss’,

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‘Hibrite’ and ‘BCK’ in the form of lumps, powder, and pre-dispersed Spray Dried Powder,

Filler and Coating Grade Clay under trade mark ‘KCG’ as lumps, powder, and pre-dispersed

Spray Dried Powder. Calcined Clay, used as a substitute for Titanium Dioxide in Paints,

Paper, Detergents, and other grades, is also manufactured by EICL to cater to niche markets.

As pigment and extender, China Clay it is used extensively in the paper and paints

industry. As filler, it is used in the manufacture of plastics, detergents, rubber goods and

paper; as raw material, it is used by glass and ceramic industries for making fiberglass and

porcelain respectively. As additive, it is used by the soap industry and it is also used by the

paper industry for specialty coating purposes as well in order to impart strength and shine and

water repellent characteristics to the paper.

3.2 VISION OF EICL

“To be a leader in processed china clay market in Asia and to be an employer of

choice, fostering a culture that values dedication, respect, and continuous improvement.”

3.3 MISSION OF EICL

“To provide consistently high quality product and materials to our customers in a

safe, timely and efficient manner, at the lowest possible cost and to grow with them and

ensure the growth and development of employees of the company in order to achieve the

objective of the organization and the career goal of the employees.”

3.4 QUALITY POLICY OF EICL

EICL is committed to processing and supply of value added hydrous and calcined clay, meet customer requirements of quality, delivery and application support through continual improvement of the effectiveness of its quality management system.

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Distribution of Equity Share holding

Category No. of shares of Rs.10/- each Percentage

Promoters 3760768 84.16

Indian Institutional Investors __ __

Other Bodies Corporate 82333 1.84

Foreign Institutional Investors 508998 11.39

NRIs/OCBs 3337 0.07

Mutual Funds __ __

General Public 84143 1.88

Directors & Relatives 29400 0.66

Total 4468979 100

3.5 COMPANY’S PHILOSOPHY

The company’s philosophy on corporate governance is to promote and raise the

standards or system and practices of corporate conduct to attain high levels of accountability,

transparency and responsibility in its operation and enhancement of overall long term value

of its share holders, customers, lenders and employees.

Chairman : Mr. Karan Thapar

Directors : Mr. S.N. Dua

Mr.S.K. toshniwal

Mr. S. Padmakumar

Mr. J.K. Jain (ICICI Nominee)

Mr. Vijay Rai

Managing Director : Mr.D. Kohli

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Vice president corporate Finance accounts & Administration : Mr S.K. JainCompany secretary &Head corporate legal : Mr. P.S. SainiAuditors : M/S Price WaterhouseBankers : Axis Bank Ltd Oriental Bank of Commerce State Bank of India State Bank of Indore

Registered office : TC-79/4, Veli TVM-695 021, Kerala.Corporate office : Global Business Park, 801-803, Tower-B, 8th floor,

Mehrauli-Gurgaon RoadGurgaon- 122 001, Haryana

Works : TVM (Kerala) Yamunanagar (Haryana) Puducherry (U.T)Shares listed at : Bombay Stock Exchange.

3.6 CORPORATE OBJECTIVES

Company’s corporate objectives are;

To procure material of required quality or quantity at most competitive prices for

uninterrupted production and maintenance of plant with least possible tie ups in

inventories.

To develop services and retain customers for the range of products manufactured by the

company and to meet customer needs in terms of new products or services.

To promote and raise the standard of system and practices of corporate conduct to attain

high levels of accountability.

To adopt transparency and responsibility in its operation and enhancement of overall long

term value of its shareholders, customers, lenders, and employees.

To ensure maximum utilisation of available human resources.

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3.7 EMPLOYEE PROFILE

EICL has 291 employees of which 61 are officers, 34 administrative staff, 179

workers and 13 mine workers.

Employee Profile.

Category Number

Officers 61

Administrative staff 34

Workers

-at SPD

179

46

Mine workers 13

Total 291

Employee Profile

1.Officers2. Administrative

staff

3. workers

4. workers at mines

0

20

40

60

80

100

120

140

160

180

200

category

No

of e

mpl

oyee

s

Working pattern of the company

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EICL is a 24 hour working company. The working time is divided into three shifts. General shift is

from 9 a.m to 5 p.m. For plant officers and staff the time is from 8 am to 5 pm.

Working Pattern of the Company

2.9 PRODUCT PROFILE

The company makes hydrous and calcined clays for application in paper, paint,

rubber, fiberglass and other industries. EICL’s products have been in use in the below

mentioned industries in India, Africa, and the Far East. Its products include hydrous and

calcined clay. The product range is as given below

Product Range & Industry

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A shift 6 a.m to 2 p.m

B shift 2 a.m to 10 p.m

C shift 10 p.m to 6 a.m


Industry-wise Market Break-up

INDUSTRY PERCENTAGE OF SALES

Paint 35

Paper 30

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Type Industry

Very Fine Coating Clays Paper

Fine Coating Clays Paper

Normal Coating/paint Grade

Clays

Paint/ Paper/Printer Inks

Coating/Filler Grades Paper/Rubber

Rubber Grades Rubber

Fiberglass Grades Fiber glass

Very Fine Calcined Clays Fiberglass/Paper

Coating/Paint/Printer Inks

Fine Calcined Clays Fiber glass/Rubber/Soap

Normal Coating/paint Grade

Calcined Clays

Paper Coating/Paint/Printer Inks

Coarse Calcined Clay Paint/ Ready Mix Concrete/PVC

Compounding

Cement grade Calcined Clay Ready Mix Concrete

Cement/Ultramarine


Rubber 20

Fibre Glass 10

Others 5

2.10 EICL EXPORTS

Over the last 10 years, EICL products have established themselves in the international

market. With hydrous and calcined clays of quality comparable with the best grades available

in the world. EICL products offer distinct techno-commercial advantage in Africa, South East

Asia, and Far East and Middle-East markets due to its geographical location.

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Chapter-4

DATA ANALYSIS

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DATA ANALYSIS AND INTERPRETATION

Ratio Analysis

Ratio Analysis is a powerful tool of Financial Analysis. The relationship between two

accounting figures, expressed mathematically is known as Financial Ratio. A ratio is used as

an index or yardstick for evaluating the financial position and performance o a firm. Ratio

Analysis highlights the liquidity, solvency, profitability, capital gearing etc. The technique

serves as a tool for assessing the current and long term financial soundness of a business. It is

also used to analyze various aspects of operating efficiency and level of profitability. Ratio

was used for the time in 1919 by a German Scholar.

Definition :-

“Ratio is simply a means of highlighting in arithmetical terms of relationship

between figures drawn from financial statements”.

4.1 RATIO ANALYSIS

A. LIQUIDITY RATIOS

1. Current ratio

Current ratio is the most common ratio for measuring liquidity. It represents the ratio of

current asset to current liabilities. The ratio measures the ability of company to discharge its

current liabilities. It is also called working capital ratio. It is calculated by dividing current

assets by current liabilities. Current ratio of the firm measures its short term solvency, i.e. the

ability to meet short term obligations. The current ratio of firm measures its short- term

solvency, i.e. ,its ability to meet short- term obligations. Ina sound business a current of 2:1

is considered an ideal one.

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Current Ratio = Current Assets / Current liabilities

Table No: 4.1

Current Ratio

Graph No: 4.1 -Current Ratio

2004-2005 2005-2006 2006-2007 2007-2008 2008-20091.50

1.70

1.90

2.10

2.30

2.50

Year

Cu

rre

nt

Ra

tio

INTERPRETATION: -

The current ratio of English Indian clays is near the standard ratio of 2:1 in

almost all the years. The highest ratio is 2.55 which were in the year 2005-06 and the lowest

ratio is 1.61 which was in the year 2008-09.

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YearCurrent Asset

(in crores)

Current

Liability(crores)Current Ratio

2004-05 55.29 29.30 1.88

2005-06 84.34 33.13 2.55

2006-07 79.55 47.80 1.66

2007-08 86.05 52.49 1.64

2008-09 79.14 48.92 1.61


2. Quick ratio

Quick ratio, is also known as acid test ratio, establish the relation between liquid assets and

current liabilities. An asset is liquid if it can be converted into cash immediately without loss

of value. Inventory normally requires some time for realizing into cash and their value may

fluctuate. An Acid Test Ratio of 1:1 is considered satisfactory

Quick ratio = Quick assets / Current liabilities

Liquid Asset =Current Asset–Stock & Prepaid Expense

Table No: 4.2

Liquid Ratio

Year Quick Asset (crores) Current Liabilit(crores) Quick Ratio

2004-05 33.20 29.30 1.13

2005-06 60.19 33.13 1.82

2006-07 44.52 47.80 0.93

2007-08 51.20 52.49 0.98

2008-09 51.39 48.92 1.05

Graph No: 4.2: - Liquid Ratio

2004-05 2005-6 2006-07 2007-08 2008-090.90

1.10

1.30

1.50

1.70

1.90

Year

Liq

uid

ra

tio

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INTERPRETATION: -

The quick ratio of English Indian clays shows satisfactory level because it is

more than the standard level (accepted level) of 1:1. The ratio had increased in the year 2005-

06 with a ratio of 1.82 and the lowest ratio was in the year 2006-07 with a ratio of 0.93.

From the above information it is concluded that the trend is increasing except

in the year 2006-07and2007-08.

3. Absolute liquidity ratio

Absolute Liquidity Ratio is obtained by dividing cash and marketable securities

by current liabilities. It is also known as position ratio. A ratio of 0.75:1 is recommended to

ensure liquidity. This test is more vigorous measure of a firm's liquidity position.

Absolute Liquidity Ratio

= (Cash + Marketable securities) / Current liabilities

Table No: 4.3

Absolute Liquid Ratio

Graph No: 4.3- Absolute Liquid Ratio

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YearAbsolute Quick Asset

(crores)

Current

Liability(crores)

Absolute Liquid

Ratio

2004-05 5.10 29.30 0.17

2005-06 14.23 33.13 0.42

2006-07 5.79 47.80 0.12

2007-08 6.93 52.49 0.13

2008-09 5.17 48.92 0.10

2008-09 5.17 48.92 0.10


2004-05 2005-06 206-07 2007-08 2008-090.00

0.10

0.20

0.30

0.40

0.50

Year

Ab

solu

te L

iqu

id R

atio

INTERPRETATION: -

Absolute Liquid Ratio was highest in the year 2005-06 having a ratio of 0.42

and lowest in the year 2008-09. The Absolute Liquid Ratio of English Indian clays are not

near to the standard ratio which is 0.75:1.

The above given graph shows a decreasing trend except in the year 2005-06 in which

the ratio has been slightly increased.

B. LEVERAGE RATIOS

1. Debt-Equity Ratio

Debt equity ratio can be computed by dividing total debt by net worth. This ratio

indicates the relative proposition of debt and equity in financing assets of a firm. This ratio is

computed by dividing the total debt of the firm by its net worth. The term debt refers to the

total outside liabilities. It includes all current liabilities and other outside liabilities like loan

and debentures. The term equity refers to net worth or shareholders fund.

Debt Equity Ratio = Debt / Equity

Table No: 4.4

MTCST, Ayur


Debt Equity Ratio

Year Debt (crores) Equity (crores) Debt Equity Ratio

2004-05 98.72 86.69 1.14

2005-06 135.40 98.12 1.38

2006-07 141.18 127.58 1.11

2007-08 168.56 90.57 1.86

2008-09 175.83 102.42 1.71

Graph No: 4.4- Debt Equity Ratio

2004-05 $2005-06 2006-07 2007-08 2008-091.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

2.00

Year

De

bt

Eq

uit

y R

ati

o

INTERPRETATION: -

The Debt Equity Ratio of the company has been fluctuating and showing a

decreasing trend over the last five year period. The ratio has declined from 0.37 in the year

2001-02 to 0.10 in the year 2004-05. This means owner’s fund are more employed than

creditor’s fund. Thus, in times of distress owners will suffer more than the creditors.

2. Proprietary ratio

MTCST, Ayur


Proprietary ratio relates to the shareholders funds to total assets. This ratio shows the

long term solvency of the business. It is calculated by dividing shareholders fund by the total

assets. The acceptable norm of this ratio 1:3. A high proprietary ratio will indicate a relatively

little danger to the creditors etc, in the event of forced reorganisation or winding up of the

company. A low proprietary ratio indicates greater risk to the creditors as shown in the above

table.

Proprietary Ratio =Shareholders Fund / Total Assets

Table No: 4.5

Proprietary Ratio

Year Shareholders Funds (croress) Total Assets (crores) Proprietary Ratio

2004-05 86.69 224.46 0.39

2005-06 98.12 286.62 0.34

2006-07 127.58 231.19 0.55

2007-08 90.57 247.19 0.37

2008-09 102.42 281.62 0.36

Graph No: 4.5- Proprietary Ratio

2004-05 2005-06 2006-07 2007-08 2008-090.30

0.35

0.40

0.45

0.50

0.55

0.60

Year

Pro

pri

eta

ry R

ati

o

INTERPRETATION: -

MTCST, Ayur


The above table shows that the Proprietary Ratio varies from 0.36 to 0.55.

During the period under study the Proprietary Ratio is found high in the year 2006-07 with

the ratio of 0.55 and lowest in the year 2005-06 with a ratio of 0.34.

The above given table shows the decreasing trend of English Indian clays except

in the case of 2006-07 in which Proprietary Ratio had come up slightly.

3. Fixed Asset to Net worth

The fixed assets ratio help in asserting the long-term solvency of a firm which depends

basically on whether the firm has adequate resources to meet its long term funds requirement.

The fixed assets ratio explains the firm has raised adequate long-tem funds to meet its fixed

assets requirements.

Fixed Asset Net worth = Fixed Asset / Long term funds or Net Worth

TABLE 4.6

Fixed Asset to Net worth Ratio

YearFixed Asset

(crores)

Net worth

(crores)Ratio

2004-05 135.97 86.69 1.57

2005-06 142.09 92.12 1.45

2006-07 151.64 127.58 1.19

2007-08 161.06 90.57 1.78

2008-09 202.47 102.42 1.97

Graph No: 4.6-Fixed Asset to Net worth Ratio

MTCST, Ayur


2004-05 2005-06 2006-07 2007-08 2008-091.101.201.301.401.501.601.701.801.902.00

Year

Fix

ed

As

se

t to

Ne

t w

ort

h

Ra

tio

INTERPRETATION: -

The standard ratio is 50%. In all the year the ratio is more than

50%. This means that the position of English Indian clays is satisfactory. The above given

table shows the mixed trend English Indian clays of due to flexibility in the ratio.

C. ACTIVITY RATIOS / TURN OVER RATIOS

1. Working Capital Turn Over Ratio

The working capital turnover ratio is calculated by comparing sales with Net working

capital. Net working capital is the excess of current assets over current liabilities. The net

working capital obtained shows a positive sign because of increase in the current asset of the

company. The ratio shows how efficiently the utilization of assets is made. The high turnover

ratio implies this efficient utilization resource. A low ratio shows the capacity is not fully

utilizing. It is true in regard to this company.

Working Capital Turnover Ratio = Sales / Net Working Capital

Table No: 4.7

MTCST, Ayur


Working Capital Turnover

Graph No: 4.7 Working Capital Turnover

2004-05 2005-06 2006-07 2007-08 2008-094.00

5.00

6.00

7.00

8.00

9.00

10.00

Year

Wo

rkin

g C

ap

ita

l T

urn

ov

er

INTERPRETATION: -

Working Capital Turnover Ratio stood at its maximum in the year 2008-09 with

a ratio of 9.43 and minimum in the year 2005-06 with a ratio of 4.05. The above given table

shows the mixed trend of English Indian clays due to flexibility in the ratio.

MTCST, Ayur

Year Sales(crores)Net Working Capital

(crores)

Working Capital

Turnover Ratio

2004-05 171.69 25.91 6.57

2005-06 206.38 51.21 4.05

2006-07 243.61 31.75 7.56

2007-08 271.08 33.56 7.99

2008-09 285.35 30.23 9.43


2. Fixed Asset Turnover Ratio

Fixed Asset Turnover Ratio indicates the extent to which the investments in fixed assets

contribute towards sales. This ratio shows the firm’s ability in generating sales from all

financial resources committed to fixed assets.

Fixed Asset Turnover Ratio = Net Sales/ Fixed Assets

Table No: 4.8

Fixed Assets Turnover Ratio

Graph No: 4.8- Fixed Assets Turnover Ratio

2004-05 2005-06 2006-07 2007-08 2008-090.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

Year

Fix

ed

As

se

ts T

urn

ov

er

Ra

-ti

o

MTCST, Ayur

Year Sales (crores) Total Asset (crores) Ratio

2004-05 171.69 237.31 0.72

2005-06 206.38 246.66 0.83

2006-07 243.61 282.21 0.86

2007-08 271.89 273.05 0.99

2008-09 285.35 293.04 0.97


INTERPRETATION: -

The turnover ratio is highest in the year 2007-08 with the ratio of 0.99 and

lowest in the year 2004-05 with the ratio of 0.72.The above given table shows the mixed

trend of English Indian clays due to flexibility in the ratio.

D. PROFITABILITY RATIOS

1. Gross Profit Ratio

The gross profit ratio plays an important role in two management areas. In the area of

financial management, the ratio serves as a valuable indicator of the firms ability to utilize the

effectively outside source of fund. Secondly, this ratio serves as important tool in shaping the

pricing policy.

Gross Profit Ratio = Gross Profit * 100 / Sales

(Gross Profit = Sales – Cost Of Goods Sold)

Table No: 4.9

Gross Profit Ratio

Year Gross Profit (crores) Net Sales (crores) Gross Profit Ratio

2004-05 25.49 171.69 15.82

2005-06 31.99 206.38 16.32

2006-07 35.92 243.61 14.97

2007-08 39.79 271.08 14.93

2008-09 39.28 285.35 13.76

MTCST, Ayur


Graph No: 4.9- Gross Profit Ratio

2004-05 2005-06 2006-07 2007-08 2008-0913.00

14.00

15.00

16.00

Year

Gro

ss

Pro

fit

Ra

tio

INTERPRETATION: -

English Indian clays has reasonable gross margin to cover all operating expenses

and building up of results. From the analysis it is clear that, Gross Profit Ratio is highest in

the year 2005-06 with a ratio of 16.32 and lowest in the year 2008-09 with a ratio of 13.76.

The above given graph shows an decreasing trend from 2006-07 to 2008-09,

but the ratio considerably decreased in the year 2008-09.

2. Net Profit Ratio

This ratio is also called as the Net Profit to Sales or Net Profit

to Margin Ratio. This ratio is used to measure the overall profitability and hence it is very

useful to firms. It is an index of efficiency and profitability of the business, higher the ratio is

better the operation efficiency of the concern.

Formula: -

Net Profit Ratio = Net Profit * 100 / Sales

MTCST, Ayur


Table No: 4.10

Net Profit Ratio

Year Net Profit (crores) Net Sales (crores) Net Profit Ratio

2004-05 15.02 171.69 8.43

2005-06 17.66 206.38 8.63

2006-07 18.12 243.61 7.58

2007-08 19.39 271.08 7.40

2008-09 19.01 285.35 6.66

Graph No: 4.10- Net Profit Ratio

2004-05 2005-06 2006-07 2007-08 2008-096.00

6.50

7.00

7.50

8.00

8.50

9.00

INTERPRETATION: -

Net Profit is calculated after deducting non-operating expenses from operating

profit and adding non-operating income to such profit. Higher the ratio, the better it is,

because it gives efficiency to the concern. Net Profit is at its highest in the year 2005-06 with

a ratio of 8.36 and lowest in the year 2008-09 with a ratio of 6.6.

MTCST, Ayur


The above figure shows an increasing trend from 2004-05 to 2005-06, but

after that there is a decreasing trend from 2006-07 to 2008-09.

3. Return on Total Assets

Profitability can be measured in terms of relationship between

Net Profit and Total Assets. This ratio is also known as Gross Capital Employed. It measures

the profitability investments.

Formula: -

Return on Total Assets = Net Profit * 100 / Total Assets

Note: - Here, Net Profit Stands For Net Profit before Interest, Tax & Dividend.

Table No: 4.11

Return on Total Assets

Year Net Profit (crores) Net assets(crores) Ratio

2004-05 15.02 237.31 6.32

2005-06 17.66 246.66 7.16

2006-07 18.12 282.21 6.42

2007-08 19.39 273.05 7.10

2008-09 19.01 293.04 6.48

MTCST, Ayur


Graph No: 4.11- Return on Total Assets

2004-05 2005-06 2006-07 2007-08 2008-095.005.506.006.507.007.508.008.509.009.50

10.00

Year

Re

turn

on

To

tal

As

se

ts

INTERPRETATION: -

The above table shows the Total Assets of the past five year. Total Assets

includes both Fixed Assets and Current Assets. From the above information it is easily

understand that the assets are properly utilized English Indian clays. The ratio is at the best in

the year 2005-06 with a ratio of 7.16 and lowest in the year 2004-05 having a ratio of 6.32

MTCST, Ayur


COMPARATIIVE INCOME STATEMENT

Table No: 4.12Comparative Income Statement 2008-2009

2008 2009 Increase / decrease

Increase / decrease IN

%Net sales 271.89 285.35 13.46 4.95

Expenditure

Manufacturing expense 176.09 185.06 8.97 5.09

Gross profit 95.08 100.29 5.21 5.47

Payment to &provision to employees

22.63 26.03 3.4 15.02

Administration &other 10.94 11.27 0.33 3.01

Selling and distribution 9.69 8.65 (1.04) 10.73

R&D 1.02 1.10 .08 7.84

TOTAL 220.40 232.13 11.73 5.32

Profit Before Interest, Depreciation And Tax

51.49 53.22 1.73 3.35

Interest 11.70 13.94 2.04 17.43

PBDT 39.79 39.27 (0.052) 0.13

Depreciation 8.95 10.25 1.3 14.52

PBT 30.83 29.02 (1.81) 5.87

TAX expense 11.44 10.00 (1.44) 12.58

PAT 19.39 19.01 (0.38) 1.95

Balance As Per Last Year

7.32 10.37 3.05 41.66

Available For Appropriation

26.71 36.38 9.67 36.20

C/F TO Balance sheet 17.37 18.32 0.95 5.46

COMPARATIVE BALANCE SHEET

MTCST, Ayur


Table No: 4.13 Comparative Balance Sheet 2008-2009Assets 31/03/2008 31/03/2009 INCREASE

/DECREASEINCREASE /DECREASE IN %

Net fixed assets 161.06 202.47 41.41 25.71

Capital W.I.P 25.94 11.45 (14.49) 55.85

Investments _ _ - -

Total 187.00 213.92 26.92 14.40

Inventories 34.85 27.75 (7.1) 20.37

Debtors 30.80 31.15 1.05 3.40

Cash&bank balances

6.93 5.17 (1.76) 25.40

Other current assets

0.10 .13 0.03 30

Loans and advances

13.36 14.93 1.57 11.75

Total 86.05 79.14 (6.91) 8.03

(-)current liabilities

(33.29) (33.58) 0.29 0.87

()provisions (19.20) (15.34) (3.86) 20.10

Total (52.49) (48.92) (3.57) 6.80

Misc expenditure

- -

TOTAL 220.56 244.14 23.58 10.69

MTCST, Ayur

Liabilities 31/03/2008 31/03/2009 Increase / decrease

Increase / decrease IN %

Share capital

34.47 33.47 (1) 2.90

Reserves&

Surplus

56.10 68.95 12.85 22.90

90.56 102.42 11.86 13.09

differed Govt grants

.04 - (.04) 100

Secured loan

105.00 101.88 (3.12) 2.97

Unsecured loan

11.06 21.83 10.7 96.74

116.0 123.72 7.72 6.66

Differed tax liability

13.87 17.99 4.12 29.70

TOTAL 220.56 244.14 23.57 10.69


COMPARATIVE INCOME STATEMENT

Table No: 4.14

Comparative Income Statement 2006-2007

2006 2007 Increase / decrease

Increase / decrease IN %

Net sales 206.39 243.62 37.23 18.03

Expenditure

Manufacturing expense 125.75 155.27 29.52 23.47

Gross profit 80.64 88.35 7.71 9.56

Payment to &provision to employees

16.34 20.14 3.8 23.26

Administration &other 10.88 10.78 (0.10) 0.9

Selling and distribution 10.81 11.00 0.19 1.75

R&D 0.79 0.84 .08 10.12

TOTAL 164.57 198.02 33.45 20.32

Profit Before Interest, Depreciation And Tax

41.82 45.60 3.78 9.03

Interest 9.83 9.68 (0.15) 1.53

PBDT 32.00 35.93 3.93 12.28

Depreciation 7.50 7.83 0.33 4.4

PBT 24.49 28.09 3.6 14.7

MTCST, Ayur


TAX expense 6.82 9.96 3.14 46.04

PAT 17.66 18.12 0.46 2.60

Balance As Per Last

Year

4.04 5.47 1.43 35.39

Available For

Appropriation

21.70 23.60 1.9 8.75

C/F TO Balance sheet 5.47 7.36 1.89 34.55

COMPARATIVE BALANCE SHEET

MTCST, Ayur


Table No: 4.15 Comparative Balance Sheet 2006-2007

3I I321991

MTCST, Ayur

Assets 31/03/2006 31/03/2007 INCREASE /DECREASE

INCREASE /DECREASE IN %

Net fixed assets 142.09 151.64 41.41 25.71

Capital W.I.P 2.38 5.62 (14.49) 55.85

Investments _ _ - -

Total 26.92 14.40

Inventories 24.15 35.02 (7.1) 20.37

Debtors 19.87 27.10 1.05 3.40

Cash & bank balances

14.23 5.79 (1.76) 25.40

Other current assets

0.47 .92 0.03 30

Loans and advances

25.60 11.38 1.57 11.75

Total 86.05 79.14 (6.91) 8.03

(-)current liabilities

(21.54) (31.40) 0.29 0.87

()provisions (11.59) (15.69) (3.86) 20.10

Total (52.49) (48.92) (3.57) 6.80

Misc expenditure

- -

TOTAL 213.60 234.56 23.58 10.69


98.11 127.58 29.47 30.03

differed Govt grants

0.81 0.06 (0.75) 92.59

Secured loan

90.22 83.32 (6.9) 7.64

Unsecured loan

12.04 10.62 (1.42) 11.79

102.27 93.94 (8.33) 8.15

Differed tax liability

13.13 13.52 0.39 2.97

TOTAL 213.59 234.56 20.97 9.82

INTERPRETATION ON COMPARITIVE INCOME STATEMENT

1) The sales volume and manufacturing expense have increased by 4.95 and 5.09

respectively during the year ending 31st march 2009 as compared to the last year ending

31st march 2008.

2) Gross profit; have increased marginally from 95.08 in 2007-08 to 100.29in 2008-09, but

net profit show a decreasing trend as compared with the previous year 2008.

From the above analysis it is evident that percentage increase in cost was more as

compared to the percentage increase in sales.net profit have decreased in spite of increase in

administrative and payment made to the employees. it is all because of the appreciable

increase in the cost of goods sold. Increase in the cost of goods sold may be because of

increase in price of materials use or goods purchased and increase in labour rates or other

manufacturing expenses. Management cannot reduce the cost if it is due to the over all

increase in the cost is as a result of in efficiency of input.

MTCST, Ayur


INTERPRETATION OF COMPARITIVE BALNCESHEET

Interpretation of comparative balance sheet shows that long that long term fund like

share capital and debentures have been raised for acquiring more fixed assets for expanding

business. Fixed assets have increased by 25.71% as compared to the last year. This has been

made possible by decrease in inventories. It is a step in right direction because expansion of

business is possible with increase in fixed assets. Debt equity ratio in lower side so there is a

scope for arranging long-term loan for further expansion.

CASH FLOW STATEMENTTable No: 4.16 Cash Flow Statement

Particulars Years

2005 2006 2007 2008 2009

Cash flow from operating activities

Net profit before tax 18.82 24.49 28.09 30.83 29.02

Operating profit 29.02 35.48 43.64 52.29 49.07

MTCST, Ayur


before working capital changes

Cash generated from operations

30.19 30.14 34.16 51.90 53.89

Net Cash from operating activities

26.46 29.36 23.8 39.98 43.72

Cash flow from investment

Net cash used in investing activities

(108.07) (37.15) (18.07) (42.69) (30.80)

Cash flow from financing activities :

Net cash used in financing activities

(17.31) (21.93) (5.51) 3.49 (15.18)

Net Increase/(Decrease) in Cash & Cash Equivalents

1.25 .83 .17 .77 (2.26)

Cash and Cash equivalents at the beginning of the year

1.88 3.13 3.95 4.12 4.90

Cash and Cash equivalents at the end.

3.12 3.95 4.12 4.90 2.63

MTCST, Ayur


WORKING CAPITAL ANALYSIS

Working Capital is the excess of current assets over current liabilities. This ratio is

calculated to study the efficiency with which the working capital is utilized in the business

Working capital= current assets- current liability

Table No: 5.18

Working Capital Analysis

Particulars 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Current assets 55.29 84.33 79.55 86.05 79.14

MTCST, Ayur


Current liability

29.38 33.13 47.80 52.50 48.92

Net working capital

25.91 51.21 31.80 33.56 30.22

Graph No: 5.12- Working Capital Analysis

2004-05 2005-2006 2006-07 2007-08 2008-0920.00

25.00

30.00

35.00

40.00

45.00

50.00

55.00

60.00

Year

Wo

rkin

g C

apit

al A

nal

ysis

INTERPRETATION

Working capital of the company showing a downward trend from the year 2005-

06. Working capital is come down from 51.21 in 2005-06 to 30.22 in 2008-09.

MTCST, Ayur


Chapter-5

MTCST, Ayur


FINDINGS,

SUGGESTIONS

&

CONCLUSION

MTCST, Ayur


FINDINGS

The current ratio of the firm though not an ideal one (2:1), because the company the

attained the satisfactory ratio only in the year 2005-2006.the current ratio shows a

satisfactory position in meeting short term obligation.

Quick ratio is highly satisfactory; English Indian Clays can attain the satisfactory level of

1:1 almost all the years. quick ratio is very high during the year 2004-05

The super quick ratio shows that the firm has not in a position to borrow from the market.

The favorable super quick ratio is 0.75:1.but the company can only attain a high ratio of

0.39 during the year 2004-05, which is not a satisfactory performance of the company.

The proprietary ratio is very low which shows relatively high risk to creditors. The

company’s financial position is very bad.

Fixed asset to net worth ratio is satisfactory to the whole period, the favorable position is

50% but the company can attain more than 50% in entire five years.

In Gross-profit ratio higher the ratio, the better it is. The company can achieve a high ratio

of 15.82 during the year 2004-05.but we can see that the ratio is come down in the entire

period after that.

Net profit ratio explains per rupee profit generating capacity of sales. The amount of net

profit and volume of sales increased by year by year but the ratio shown a downward

trend.

MTCST, Ayur


Working capital turns over ratio, the higher the ratios, the lower is the investment in

working capital and the greater are the profits. During the period of 2008-09 the company

can attain a high ratio of 9.43.

Fixed Asset turn Ratio shows a fluctuating trend sometimes nearing to the ideal one. Any

way the company is in a position to meet the long-term requirement.

MTCST, Ayur


SUGGESTIONS

The company should concentrate on the long-term solvency of the business. Company

should make effective measures to reduce the total debt.

The market condition should be properly analyzed before procurement of material.

Liquid and long term solvency is satisfactory and the company should try to keep more

liquid assets.

Low rate of gross profit is due to the increase in the operating expense.

The proprietary ratio is not in a satisfactory level. So the company should give more focus

on general financial strength.

The company should pay more attention towards the gross profit ratio and net profit ratio

because both of these are showing a downward trend.

Working capital turn over ratio is satisfactory. The company should give more attention

to attain a higher ratio that will increase the profitability.

Fixed asset turn over ratio shows a mixed trend so the company should take the necessary

steps to meet the higher ratio.

Working capital ratio should be improved because low working capital ratio indicates a

lower profit.

MTCST, Ayur


CONCLUSION

EICL is an epitome of industrial success in the customer state of Kerala. From a very

modest beginning the company has reached its present status of glory. As a clay mining,

manufacturing, and processing unit, the company’s ability to sustain a steady and time bound

supply schedule coupled with its constant striving for excellence has given it that extra edge

over all its competitors in the field. The combined effort of the management and workers has

ensured that the company never lost its course. Today the firm is well known for its

consistent performance and the quality of its products and work force. In a state that is

notorious for its militant trade unionism EICL has succeeded in maintaining a peaceful

industrial climate.

The company’s working capital position shows a positive trend which shows good or

satisfactory existences in current period. But we can see that the amount of sales is increasing

at a healthy rate, but the amount of net profit after depreciation and tax going in a decreasing

trend. This is mainly due to the increase in the cost of goods sold and increase in the

manufacturing and labour cost. We can also see that an increase in the amount of share

capital from 14.47 in 2004-07 to 33.47 in 2007-08, this will help to make more and more

fund flowing towards the fixed assts and other manufacturing facilities.

The project work entitled “Analysis of Financial Statement in English Indian Clays Ltd is the study of the proportion of financial resources in the company and how much it is effective. Such a study will give practical awareness regarding internal functioning of an organisation for this reason the study is relevant for students specialising finance.

MTCST, Ayur


BIBLIOGRAPHY

MTCST, Ayur


BIBLIOGRAPHY

Books

1. Maheshwari S.N (Dr.), Management Accounting And Financial Control,

Sultan Chand and sons, thirteenth Edition 2002

2. Jain S.P,Narang K.L, Higher Accountancy, Kalyani Publications, New Delhi,

second edition, 2000

3. K. G. C Nair (Dr.), Jayan (Dr.), Higher Accounting, Chand Publications,

Pattom, TVM

Reports

Annual Reports of English Indian clays

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

Website

www.eicl.com

MTCST, Ayur

http://www.eicl.com/

Financial analysis of eicl

Business

Transcript of Financial analysis of eicl