Printable

Published on February 2017 | Categories: Documents | Downloads: 123 | Comments: 0 | Views: 865
of 111
Download PDF   Embed   Report

Comments

Content

KARNATAKA SOAPS AND DETERGENTS LIMITED

A STUDY ON “FINANCIAL STATEMENTS THROUGH RATIO ANALYSIS”
Done for

KARNATAKA SOAPS AND DETERGENTS LIMITED BANGALORE
Project report submitted in partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION
BY

D.VENKATA NAIDU
(Reg. No: 1981163018) Under the guidance of

Dr. SARDAR GUGLOTH

DEPARTMENT OF MANAGEMENT STUDIES
1 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

SVU COLLEGE OF COMMERCE MANAGEMENT AND COMPUTER SCIENCE SRI VENKATESWARA UNIVERSITY TIRUPATI-517502 (2010-2012)

A STUDY ON “FINANCIAL STATEMENTS THROUGH RATIO ANALYSIS”
Done for

KARNATAKA SOAPS AND DETERGENTS LIMITED BANGALORE
Project report submitted in partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION
BY

D.VENKATA NAIDU
(Reg. No: 1981163018) Under the guidance of

Dr. SARDAR GUGLOTH

2 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

DEPARTMENT OF MANAGEMENT STUDIES SVU COLLEGE OF COMMERCE MANAGEMENT AND COMPUTER SCIENCE SRI VENKATESWARA UNIVERSITY TIRUPATI-517502 (2010-2012)

SRI VENKATESWARA UNIVERSITY,TIRUPATI.

CERTIFICATE
This is to certify that the project entitled “A STUDY ON FINANCIAL STATEMENTS THROUGH RATIO ANALYSIS” done for KARNATAKA SOAPS AND DETERGENTS LIMITED, BANGALORE” is a
3 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

bonafide work done and submitted by D.VENKATA NAIDU (1981163018) in partial fulfillment of the requirements for the award of the degree of “MASTER OF BUSINESS ADMINISTRATION” during academic year (2010-2012) in the “Department of management studies” Sri Venkateswara University, Tirupati.

(Dr. SARDAR GUGLOTH)
Project Guide Department

(Prof.D.V.Ramana)
Head of the

DECLARATION

4 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

I hereby declare that this project report entitled “A STUDY ON FINANCIAL STATEMENTS USING RATIO ANALYSIS AT KARNATAKA SOAPS AND DETERGENTS LIMITED”. Submitted by me under the valuable guidance of Prof. SARDAR GUGLOTH, faculty in “College of commerce Management and information sciences, Sri Venkateswara University, Titupati.

I confirm that is my original work and that I have not submitted this report to any other University for the award of any other degree (or) diploma.

Date: Signature Place: (D.VENKATA NAIDU)

5 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

ACKNOWLEDGEMENT
I hereby take the opportunity to express my sincere gratitude to the following eminent personalities without whose aid and advise the successful completion of my project work would have remained a dream. I express my sincere thanks to Professor D.V.Ramana, (Head of the Department) Department of Management Studies Sri Venkateswara University Tirupati (A P) for have provided me with an opportunity to carry out the project. I am grateful to the KARNATAKA SOAPS AND DETERGENTS LIMITED, Sri. P.Ravi, Dy.Gen.Manager[Finance], Sri N.R.Gave Gowda, Asst. Gen.Manager [Accounts]. I feel very indebted to him for his instilled support encouragement and advices all through my project work. I extremely grateful to my project guide Prof. Sardar Gugloth, Department of Management studies for his guidance and support to me for his valuable input (or) time while carrying out the project work. Finally I wish to thank my parents and my cousin for their generosity and support shown during my work and further. I would like to thank all my support to the successful completion of the project.

6 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Place: Signature of the student Date: (D.VENKATA NAIDU)

CONTENTS

CHAPTER NO 1

DESCRIPTION

2

3

Introduction Executive Summary Introduction of Financial Management Introduction to Ratio Analysis Design for the study 15-18 Need for the study Scope of the study Objectives of the study Research Methodology Limitations of the study Profiles 19-35 Industry profile Company profile
7

PAGE NO 8-14

S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

4 5 6 7 8

Product profile Data Analysis and Interpretation Findings Suggestions Bibliography Annexure

36-87 88-89 89 90 91-92

LIST OF TABLES AND CHARTS
Sl.N o 1 Current Ratio 2 3 4 5 6 Quick Ratio Cash Ratio Net working capital Ratio Debt Ratio Debt Equity Ratio Title Page No 3739 4041 42-43 44-45 46-47 48-49
8 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Capital Employed to Net Worth Ratio Inventory Turnover Ratio Debtors Turnover Ratio Average Collection period(Days) Net Assets Turnover Ratio Total Assets Turnover Ratio Fixed Assets Turnover Ratio Current Assets Turnover Ratio Working Capital Turnover Ratio Gross profit Ratio Net profit Ratio Earnings per share Overall profitability Ratio Cash profit Margin Operating profit Margin Operation expenses to sales Ratio Return on Total Assets Return on Net worth Operating expenses to Total cost

50-51 52-53 54-55 56-57 58-59 60-61 62-63 64-65 66-67 68-69 70-71 72-73 74-75 76-77 78-79 80-81 82-83 84-85 86-87

CHAPTER -1
9 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INTRODUCTION

EXECUTIVE SUMMARY
10 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

In the year 1918 the company came into the existence under the name Government Soap Factory. Shri S.G. Shastri a Science Student went to UK for higher studies in Oil Technology. After returning to India, he conducted several experiments. He evolved with a soap perfume blend using sandalwood oil as the main base to manufacture the toilet soap and thus the famous “ MYSORE SANDAL SOAP” that took birth in the year 1918. The factory started functioning in its new premises from 1st July 1957. From this year onwards till the date the factory has never looked back and it has achieved growth and development in production, sales and profits. The initially named Government Soap Factory was renamed as Karnataka soaps and Detergents Limited in 1st October 1980. Its trademark is “SHARABHA”, The Company is a leading Sandalwood soap manufacture in the country, and they have demand for their products in both domestic as well as international market. Ratio Analysis is the process of determining and interpreting numerical relationships based on financial statements. It is a statistical yardstick that provides a measure of relationship between two variables or figures. Financial statements are prepared for the purpose of presenting a periodical review of report by the management in business and result achieved during the period under review. Financial analysis helps in assessing the financial position and profitability of the concern. The study is done using Research tool “RATIO ANALYSIS” with the help of secondary data. The liquidity ratios like current ratio, quick ratio shows the efficient management of current assets and current liabilities and also reflects that company is liquid and has the ability to pay its current obligations in time. Objective: This project is under taken with intension to know liquidity, solvency, profitability and operating and financial risk of the KS&DL by analyzing the financial statements in the light of accounting ratios. Scope: Study is designed to assess the financial health of the corporation and operating and financial risk of the corporation through ratio analysis, Trend analysis. Methodology: The relevant data has been systematically analyzed and interpreted by using above mentioned tools i.e. ratio analysis and trend analysis.
11 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Findings: The following are some of the facts that are found of from analysis of financial statements. • •


Profitability of the corporation is fluctuating in trend. Long –term solvency of the company is quite satisfactory. The liquidity position of the firm is falling .Though it is falling, KS&DL has the ability to pay the firms current obligations . The fixed asset turnover ratio is high which indicates the better utilization of the fixed assets. Conclusion: It is here to note that the ratio analysis undertaken in this project gives only bird’s eye view of overall financial & operating performance of the company as indicated by financial statements of the company for last 5 years. Ratio analysis is not the final solution but only a tool to comprehend the financial position of a company. Here it’s hope that the effort researcher would benefit to the company in assessing the future prospectus & impact on the financial status in the near future. Suggestions: The liquidity ratios like current ratio, quick ratio shows the efficient management of current assets and current liabilities and also reflects that company is liquid and has the ability to pay its current obligations in time. All ratios are indicting only near to the standard norms. The fluctuating profitability ratios reflect that the profitability position of the company is not fair. It is suggested to the corporation to request their short-term, long-term creditors either to remit or waive off some amount of creditors. The company should enhance the facilities get the consultancy services from the global consultant and see that the financial performance is improve in the years to come.



12 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

The training has exposed me to many facts of an organization and also helps me to gain practical knowledge and know about cooperation and relationship of each department in KS&DL.

CHAPTER-1
INTRODUCTION
Financial management is that managerial activity which is concerned with the planning and controlling of the firm’s financial resources. It was a branch of economics till 1890, and as a separate discipline, it is of recent origin. Still, it has no unique body of knowledge of its own, and draws heavily on its theoretical concepts economics for even today. The subject of financial management is of immense interest to both academicians and practicing managers. It is of great interest to academicians because the subjects is still developing , and there are still certain areas where controversies exist for which no unanimous solutions have been reached as yet. Practicing managers are interested in this subject because among the most crucial decisions of the firm are those which relate to finance, and an understanding of the theory of financial management provides them with conceptual and analytical insights to make those decisions skillfully.
13 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Financial management is a financial aspect, which deals with all the financial transactions done in organization. As per the management definition we can say that financial management means planning and controlling of funds in an organization. Just as circulation of blood cells necessary in the human body to maintain life, finance is very essential to the business organization for smooth running of the business. DEFINITION


“Financial management may be considered to be the management of the finance function.” _Raymo

nd chambers
⇒ “Business finance can broadly be defined as the activity concerned

with planning, raising, controlling and administrating of funds used in the business.” _ Guttmann

and Doug Hal ⇒ “Financing consists with the rising, providing and managing of all the money, capital funds of any kind to be used in connection with the business.” _ Bonneville and Dewey “Financial management is concerned with the efficient use of any important economic resource namely capital funds.” _Prof. Ezra soloman

NATURE OF FINANCIAL MANAGEMENT Financial management is that managerial activity which is concerned with the planning and controlling of the firm’s financial
14 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

resources. As a separate activity of discipline, it is recent origin. It was a branch of economics till 1980. Still today, it has no unique body of knowledge of its own, and it draws heavily on economics for its theoretical concepts. OBJECTIVES OF FINANCIAL MANAGEMENT The firm investment and financing decisions are unavoidable and continuous. In order to make them rationally, the firm must have a goal. It is generally agreed in theory that the financial goal of the firm should be the maximization of owner’s economic welfare could be maximized be maximizing the shareholder’s wealth maximization is theoretically logical and operationally feasible normative goal for guiding the financial decision making. A. Profit maximization B. Wealth maximization IMPORTANCE OF FINANCIAL MANAGEMENT The important of financial management cannot be over emphasized. In every organizational fund are involved, sound financial management is necessary. Sound financial management is essential in both profit and nonprofit organization. The financial management helps in monitoring the effective deployment of funds in fixed assets and in working capital. The financial manager estimates the total requirement of funds, both in the short period and long period. Financial management also helps in Ascertaining how the company would perform in future. It helps in indicating whether the firm will generate enough funds to meets its loans, redemption of other liabilities etc. Sound financial management is indispensable for any organization. It helps in profit planning, capital spending, measuring costs, controlling.

15 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Introduction to Ratio analysis
RATIO ANALYSIS
Ratio Analysis is a very important and potent tool for financial statement analysis. Ratios aid financial statement analysis because they conveniently summarize data in a form easy to understand, interpret and compare. Ratio Analysis is the process of determining and interpreting numerical relationships based on financial statements. It is a statistical yardstick that provides a measure of relationship between two variables or figures. Financial ratios are classified in various ways a) Solvency ratios b) Profitability ratios c) Activity ratios Classification of Ratios The use of ratio analysis is not confined to the financial management only. There are different parties interested in the ratio analysis for different purposes. In view of several of ratios, there are many types of ratios, which can be calculated from the information given in the financial statements. The particular purpose of the user determines the particular ratios that might be used the financial analysis.

16 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

17 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED LONG TERMRATIOS SOLVENCY PROFITABILI SHORT GP RATIO INVENTORY CURRET DEBTRATIOS ACTIVITY RATIO NP RATIO TERM TURNOVER TY RATIOS RATIO RATIOS RATIOS (MARKETING) RAIOS DEBT EQUITY (FINANCE) EPS RATIO QUICK DEBTORS RATIO TURNOVER RATIO CAPITAL RATIO EMPLOYED TO AVERAGE CASH COLLECTION NET WORTH RATIO PERIOD RATIO TOTAL ASSETS TUROVER RATIO CURRENT ASSETS TURNOVER RATIO WORKING CAPITAL TURNOVER RATIO

18 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

CHAPTER-2

DESIGN FOR THE STUDY

19 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

CHAPTER-2
DESIGN OF THE STUDY NEED AND IMPORTANCE OF STUDY
Financial statements are prepared for the purpose of presenting a periodical review of report by the management in business and result achieved during the period under review. It reflects a combination of recorded facts accounting conventions and personal judgments. The main need of the study is to study the financial performance of the company and methods to evaluate the financial performance of the company. Finance is the life blood of any organization. The future of any

organization depends on the ability of the organization to make use of its resources in the best way. The information relating to the financial position of the company is of great interest to management, creditors, investors and other to have a judgment about the operating performance and financial position of the stakeholders.

SCOPE OF THE STUDY
The scope of the study covers the previous five years financial reports of the company.
20 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

An extensive study is done on the financial performance of KARNATAKA SOAPS AND DETERDENTS Ltd. The study concentrates on the profitability position of the firm and the brief study. The study covers all the financial information of the firm.

The scope of the study is defined below in terms of concepts adopted and period under focus. First the study of the Ratio analysis is confined to the KARNATAKA SOAPS AND DETERGENTS Ltd. Second the study is based onthe annual reports of the company for a period of 5 years from 2005-2006 to 2009-2010 the reason for restricting the study to this period is due to time constraints.

OBJECTIVES OF THE STUDY
• • To study the financial performance of the company. To assess the profitability position of the firm.  To assess the operating efficiency by finding the operating profit and operating ratio.  To know the collection efficiency.
 To evaluate how effectively short terms sources like creditors are used

for working capital requirements.

LIMITATIONS OF STUDY

 Confidentiality was a constraint for data collection.  Time is a major constraint as the project was done only for a period of two month  Window dressing (false results may be possible on incorrect account of data).
21 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

 Ratios are only a post mortem of what has happened between two balance sheet data. They may not exactly reflect the nature.

RESEARCH METHODOLOGY
In view of the objective of the study listed above, an exploratory research design has been adopted. Exploratory research is one which is already interpreted and already available information and it lays particular emphasis on analysis and interpretation of the existing and available information. It makes use of secondary data.

DATA COLLECTION
The study depends up on primary and secondary data from various sources.

SOURCES OF DATA
The data collected related to the study was divided into two parts.
22 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

1. Primary data 2. Secondary data

PRIMARY DATA
First hand information was collected from experts of finance department, on the basis of which actual position of the company is identified.

SECONDARY DATA

The secondary data is collected from the annual reports, schedules, budgets and other statements of the company, company websites etc. , Which is provided by the finance department of “ KARNATAKA SOAPS AND DETERGENTS Ltd”.

CHAPTER - 3
23 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INDUSTRY AND COMPANY PROFILES

INDUSTRY PROFILE:
24 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Soap is one of the commodities, which have become an indispensable part of the life of modern world. Since it is non-durable consumer goods, there is a large market for it. The whole soap industry is experiencing changes due to innumerable reasons such as government relations, environment and energy problems increase in cost of raw material etc. Following swadeshi movement in 1905, few factories were set up and they were: 1. Mysore Government Soap factory at Bangalore. 2. Godrej Soaps at Bombay. The changing technology and even existing desire by the individuals and the organizations to produce a better product at a mere economical rate has also acted as catalyst for the dynamic process of change. More and more Soap manufactures are trying to capture a commanding market share by introducing and maintaining acceptable products. The soap industry in India faces a cutthroat competition while multinational companies dominate the market.

THE INDIAN SOAP INDUSTRY SCENARIO:The Indian soap industry has been dominated by handful of companies such as 1. 2. 3. 4. Hindustan Lever Limited. Tata Oil Mills (Taken over by HLL) Godrej Soaps Private Limited. Recent entrants include – Colgate Palmolive Ltd., _ Proctor & Gamble Ltd., _ Nirma Soap Works, _ Wipro Ltd., The Indian soaps industry continued to flourish very well until 1967-68, but began to stagnate. Soon it started to recover and experienced a short upswing in1974. This increase in demand can be attributed to:-

1. Growth of population. 2. Income and consumption increase.
25 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

3. Increase in urbanization. 4. Growth in degree of personal hygiene. Soap manufactures are classified as, Organized and unorganized sector. KSDL is under organized sector.

HISTORY OF THE SOAP:
Traditionally, soap has been manufactured from alkali (lye) and animal fats (tallow), although vegetable products such as palm oil and coconut oil can be substituted for tallow. American colonists had both major ingredients of soap in abundance, and so soap making began in America durin2g the earliest colonial days. Tallow came as a by-product of slaughtering animals for meat, or from whaling. Farmers produced alkali as a by-product of clearing their land; until the nineteenth century wood ashes served as the major source of lye. The soap manufacturing process was simple, and most farmers could thus make their own soap at home. The major uses for soap were in the household, for washing clothes and for toilet soap, and in textile manufacturing, particularly for filling, cleansing, and scouring woolen stuffs. Because colonial America was rural, soap making remained widely dispersed, and no large producers emerged. By the eve of the American Revolution, however, the colonies had developed a minor export market; in 1770 they sent more than 86,000 pounds of soap worth £2,165 to the West Indies. The Revolution interrupted this trade, and it never recovered. The growth of cities and the textile industry in the early nineteenth century increased soap usage and stimulated the rise of soap-making firms. By 1840, Cincinnati, then the largest meatpacking center in the United States, had become the leading soap-making city as well. The city boasted at least seventeen soap factories, including Procter and Gamble (established 1837), which was destined to become the nation's dominant firm. A major change in soap making occurred in the 1840s when manufacturers began to replace lye made from wood ashes with soda ash, lye made through a chemical process. Almost all soap makers also produced tallow candles, which for many was their major business. The firms made soap in enormous slabs, and these were sold to grocers, who sliced the product like cheese for individual consumers. There were no brands, no advertising was directed at consumers, and most soap factories remained small before the Civil War

GROWTH OF INDIAN SOAP INDUSTRY:
The period between the end of the Civil War and 1900 brought major changes to the soap industry. The market for candles diminished sharply,
26 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

and soap makers discontinued that business. At the same time, competition rose. Many soap makers began to brand their products and to introduce new varieties of toilet soap made with such exotic ingredients as palm oil and coconut oil. Advertising, at first modest but constantly increasing, became the major innovation. In 1893 Procter and Gamble spent $125,000 to promote Ivory soap, and by 1905 the sales budget for that product alone exceeded $400,000. Advertising proved amazingly effective. In 1900 soap makers concentrated their advertising in newspapers but also advertised in streetcars and trains. Quick to recognize the communications revolution, the soap industry pioneered in radio advertising, particularly by developing daytime serial dramas. Procter and Gamble originated Ma Perkins, one of the earliest, most successful, and most long-lived of the genre that came to be known as Soap Operas, to advertise its Oxydol soap in 1933. By 1962 major soap firms spent approximately $250 million per year for advertising, of which 90 percent was television advertising. In 1966, three out of the top five television advertisers were soap makers, and Procter and Gamble was television's biggest sponsor, spending $161 million. Advertising put large soap makers at a competitive advantage, and by the late 1920s three firms had come to dominate the industry: (1) ColgatePalmolive-Peet, incorporated as such in 1928 in. New York State, although originally founded by William Colgate in 1807; (2) Lever Brothers, an English company that developed a full line of heavily advertised soaps in the nineteenth century and in 1897 and 1899 purchased factories in Boston and Philadelphia; and (3) Procter and Gamble. A soap maker at the Procter and Gamble Company had no idea a new innovation was about to surface when he went to lunch one day in 1879. He forgot to turn off the soap mixer, and more than the usual amount of air was shipped into the batch of pure white soap that the company sold under the name The White Soap. Fearing he would get in trouble, the soap maker kept the mistake a secret and packaged and shipped the air-filled soap to customers around the country. Soon customers were asking for more "soap that floats." When company officials found out what happened, they turned it into one of the company’s most successful products, Ivory Soap.

PROBLEMS AND PROSPECTS OF SOAP INDUSTRY:
27 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

The changing technology and even existing desire by the individuals and the organization to produce a better product at a mere economical rate has also acted as Catalyst for the dynamic process of change. More and more Soap manufactures are trying to capture a commanding market share by introducing and maintaining acceptable products. Soap industry faces some problems in case of raw materials. The major ingredients are soap ash, linear alkyl, benzene& sodium. Tripoli phosphate poses number of serious problems in terms of availability. The demand supply gap for vegetable oil is 1.5 to 2 lakhs tons & is met through imports. In recent times, caustic soda and soap ashes in the cheaper varieties of soaps are quite high. The soap industry in India faces a cut throat Competition, while multinational companies dominate the market.

PRESENT STATUS:MARKET SCENARIO
India is the ideal market for cleansing products. The countries per capita consumption of detergent powders and bars stands at 1.6kg and soaps at 543gms. Hindustan Lever, which heralds over the cleaning business, sells in all over the cleaning business. The 7.4lakhs tons per annum soap market in India in crawling along at 4%. The hope lies in raising Rupee worth, the potential for which is high because the Indian soap market is pseudo in nature & it is amazingly complex being segmented not only on the basis of price benefits, but even a range of emotions within that outlining framework.

COMPANY PROFILE
India is a rich land of forest; ivory, silk, sandal; precious gems are magical charms of centuries. The most enchanting perfumes of the world got their exotic spell with a twist of sandal. The world’s richest sandalwood resource is form one isolated stretch of forests land in South India that is Karnataka. The origin of sandalwood and its oil in Karnataka, which is used in making of Mysore sandal soaps is well known as Fragrant Ambassador of India & Sandalwood oil is infact known as “Liquid Gold”.
28 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

By the inspiration of his Highness Maharaja of Mysore late Jayachamarajendra Wodeyar, the trading of sandalwood logs started which was exported to Europe and New destinations, but with commencement of First world war India faced severe crisis on the business of sandalwood. This situation gave rise to start of an industry, which produces value added products i.e., of sandalwood oil. His highness Maharaja of Mysore created this situation as an opportunity by sowing the seed of the Government Sandalwood Oil Factory, which is the present KS&DL. The project was shaped with the engineering skills and expertise of the top level. Late Sir M.Visvesvaraya, the great Engineer who was the man behind the project. Today’s famous Mysore sandal soaps credit goes to late Sri Sosale Garalapuri Shastri who incorporated the process of soap making using sandalwood oil. He was an eminent scientist in the field working at the Tata Institute, Bangalore. He was sent to England to master the fine aspects of soap manufacturing. The Maharaja of Mysore & Diwan Sir, M.Visvesvaraya established the Government Soap factory during the year 1918. The factory was started as a very small unit near K.R.Circle, Bangalore with the capacity of 100 tons P.A. in November 1918 the Mysore sandal soap was put into the market after sincere effort and experiments were undertaken to evolve a soap perfume blend using sandalwood oil as the main base to manufacture toilet soap. The factory shifted its operation to Rajajinagar industrial area, Bangalore in july 1957, where the present plant is located. The plant occupies an area of 39 acres (covering Soaps, detergents and fatty acid division), on the Bangalore-Pune Highway, easily accessible by transport service and communication. Another sandalwood oil division was established during the year 1944 at Shimoga, which stopped its operations in the year 2000 for want of Natural Sandalwood. This factory started at moderate scale in year 1916. The first product was washing soap in addition to the toilet soap in addition to the toilet soap in the year 1918. The toilet soap of the company was made up of sandalwood oil. In 1950 Government decided to expand the factory in two stages. The first stage of expansion was done to increase the output to700 tons per year and was completed in the year 1952 in the old premises.The next stage of
29 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

expansion was implemented in 1954 to meet growing demand for Mysore sandal soap and for this purpose Government of India sanctioned license to manufacture 1500 tons of soaps and 75 tons of glycerine per year. The expansion project worth of Rs.21 lakhs includes the shifting of the factory to a newly laid industrial suburban of Bangalore.The factory started functioning in this new premise [i.e., present one] 1st July 1957. From this year onwards till date the factory had never looked back, it has achieved growth and development in production scales and profits. The industry has 2 more divisions one at Shimoga and another at Mysore where sandalwood oil is extracted. The Mysore division started functioning from 1917 and only during 1984 manufacturing of perfumed and premiere quality Agarbathis at was started. Right from the first log of sandalwood that rolled into the boiler room 1916, the company has been single- minded pursuit of excellence. The project took shape with the engineering skills and expertise of top-level team under the leader ship of Sir. M. Visvesvaraya, Prof. Watson and Dr. Sudbrough. Like this soap factory was started as a small unit and now it has grown up to a giant size.

RENAMING:
On 1st October 1980, the Government Soap Factory was renamed as “Karnataka Soaps and Detergent Limited” The Company was registered as a public limited company. Today Company produces varieties of products in the toilet soaps, detergent, Agarbathies and Cosmetics.

VISION STATEMENT:
Keeping pace with globalization, global trends and the state’s policy for using technology in every aspect of governance. Secure all assistance and prime status from Government of India, all technology alliances. Making available technology product and services at the most affordable price to the people at large, in keeping with the policy of a welfare state.

attain self-relianceTo promote purity & quality products and to maintain the brand loyalty of its customers.

MISSION STATEMENT:- To serve the National economy and to

OBJECTIVES OF KSDL:
• To serve the national economy
30 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

• • • • •

To attain self – reliance To promote and uphold its image as symbol of traditional products To promote purity and quality products and thus enhance age old – charm of Sandalwood Oil To build upon the reputation of Mysore Sandal soap based on pure sandal oil To maintain the brand loyalty of its customer and to supply the products mentioned above at most reasonable and competitive. Seek purchase of goods and services from environment responsible suppliers. Communicate its environment policy and best practices to all its employees’ implications. • Set targets and monitor progress through internal and external audits.

POLICY OF KS&DL: • •

• •

Strive to design and develop products, which have friendly environmental impact during manufacturing. Reuse and recycle materials wherever possible and minimize energy consumption & waste.

SWOT ANALYSIS OF KS&DL STRENGTHS:
1. Only soap in India that contains pure sandal and almond

2. 3. 4. 5. 6. WEAKNESS:

oil. certified by ISO World’s largest production of sandalwood oil. Brand name from decades from soap market. It has very good dealership network in south which ensures that the products reach every customer. Diversified product range helps the company to maintain stability.

1. Distribution network weak in north and east.
31 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

2. Absence of television advertisement. 3. Neglecting freshness aspect. 4. High oriented cost due to excessive labor force. 5. Low turnover resulting in low profits. OPPORTUNITIES: 1. Traditional benefits that sandal is good for skin. 2. 3. 4. 5. THREATS:
1. Other competitors products such as Rexona, Moti,Santoor

Skin care is just gaining importance among consumers. Government supports and large production capacity. Advantages of being in the industry for a long time. Existence of vast market and huge demand.

etc. 2. There is a need for renovation of plant and machinery. 3. Government policy may reduce growth potential. 4. Other sandal soaps in the market. 5. Entry of new multinationals in soap business. CLASSIFICATION OF EMPLOYEE AT KS&DL
• •

• • •

MAN POWER DETAILS: GROUP Bangalore

Permanent Employee: One who has been engaged for work on a permanent basis. Temporary Employee: One who has been engaged for work which is essentially of temporary nature and likely to be finished within a limited period. Probationary Employee: One who is provisionally employed to fill a permanent vacancy. Casual Workmen: One who is engaged on day-to-day basis for casual or non-recurring work. Trainee: Trainee is a learner who may or may not be paid stipend during the period of training.
SOD Mysore Marketi ng Branche s Duty paid Godown Shimog a Total

Executives Supervisors Workers

32 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED
Total

ORGANIZATION STRUCTURE:
Organization structure is a basic framework within which the managers decision making behavior takes place. The structure gives an established pattern of relationship among the various components or parts of an organization. It is a vital tool for providing information about organization relationships.

ORGANISATION CHART:

33 S.V.U. TIRUPATI.

CS

KARNATAKA SOAPS AND DETERGENTS LIMITED MGR AGM GEN DY. MGR GEN. EXECUTIVE MANAGING (R(MD’s (HRD) (MIS) MANAGER & DIRECTOR MGR D) DIRECTOR (R&D/P&M) (FINANCE) Office) & (MTLS (MARKETING) (FTD) Strs)

34 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

1 2 3 4 5 6 7 8 9 10

M.D Managing Director E.D Executive Director GEN. MGR (R&D/P&M) General Manager (R & D / Prodn.,& Maintenance) GEN. MGR (F) General Manager (Finance) DY. GEN MGR (FTD) Deputy General Manager (Foreign Trade) DY. GEN MGR (MTLS & Strs) Deputy General Manager (Materials & Stores) AGM (R & D) Assistant General Manager (R & D) AGM (HRD) Assistant General Manager (HRD) MGR (MD's Office) Manager (MD's Office) MGR (MIS) Manager (Management Information System)

Functional Heads Shivanad Naik, Ex-Minister & chairman, M.K.Baladevakrishna, IAS H.M.Nataraj S.G.Kulkarni P.Ravi D.N.Vasanth Kumar C.M.Suvarna Kumar N.S.Prakash Rao HRD & SOD Mysore) V.S.Venkatesha Gowda B.S.Lokeshaiah T.S.Diwakar Chairman Managing Director General Manager (Finance) D.G.M (P&M) D.G.M (Finance) D.G.M (Marketing & MID) D.G.M (Marketing & Export) D.G.M (PROJECTS, COMPUTERS, D.G.M (R&D) D.G.M (Materials) A.G.M (E&S)/Stores

COMPETITORS OF KS&DL PRODUCTS AND SERVICES:KS&DL is facing cutthroat competition in national and international market. Some of its main competitors are: 1. M/S. Hindustan Uni Lever Ltd., • • • •


M/S. Godrej Soaps Private Ltd., M/S. Proctor& Gamble M/S. Wipro M/S. Nirma Soaps Private Ltd., M/S. Jyothi Laboratories
35

S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

TRADEMARK OF KS & DL
The “SHARABHA” The carving on the cover is the sharabha, the trademark of KS & DL

The sharabha is a mythological creation from the “puranas” which has a body of a lion and head of elephant, which embodies the combined virtues of wisdom and strength. It is adopted as an official emblem of KS& DL to symbolize the philosophy of the company. The sharabha thus symbolized a power that removes imperfections and impurities. The maharaja of Mysore as his official emblem adopted it. And soon took its pride of place as the symbol of the Government Soap Factory of quality that reflects a standard of excellence of Karnataka Soaps and Detergent Limited.

SLOGAN: -

“Natural products with exotic fragrances”

KS & DL has a long tradition of maintaining the highest quality standard, right from the selection of raw materials to processing and packing of the end product. The reasons why its products are much in demand globally and are exported regularly to UAE, Bahrain, Saudi-Arabia, Kuwait, Qatar, South America. The entire toilet soaps of KS & DL are made from raw materials of vegetable origin and are totally free from animal fats.

BACKGROUND OF KS&DL:1918 – Government Soap Factory was started by Maharaja of Mysore and the Mysore Sandal Soap was introduced into the market for the first time. 1950 - The factory output rose to 500 Metric Tons with the following modifications.
36 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

1. Renovating the whole premises. 2. Installing new boiler soap building plant and drying chamber. 1954 – Received license from Government to manufacture 1500 tons of soap and 75 tons of glycerin per year. 1957 – Factory shifted its operation to Rajajinagar industrial area. 1974 – Mysore sales international limited was appointed as the sole selling agent, for marketing its products. 1975 – Rs.4 Crores synthetic detergent plant was installed based on Italian technology by Ballestra SPA. 1980 - On 1st October 1980 the Government Soap Factory was converted into a public sector enterprise and renamed as “Karnataka Soaps & Detergents Limited”. 1981 – a) Production capacity increased to 6000 tons, b) Rs.5 Crores Fatty Acid Plant was installed. 1984 – Manufacturing of premium quality of Agarbathies at Mysore division. 1985 – Production capacity was raised to 26,000 M.Tons Per Annum. A large variety of toilet soaps at attractive shapes, colors and fragrances introduced to meet the varieties & tastes of consumers. 1992 – The company was registered with the Board for Industries and Financial Reconstruction (BIFR), New Delhi in December for rehabilitation, as the company suffered losses continuously since 1980 at its net worth fully eroded. 1996 – The BIFR approved the rehabilitation scheme in September & the Company stated making Profits. 1999 – ISO-9002 Certificate for quality assurance in production, installation and Servicing. 2000 – ISO-14001 certificate pertaining to environmental management system. 2003 – The entire carried forward loss of Rs.98 Crores wiped out and in May BIFR, declared the company to be out of its Purview. The Company is
37 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

making profit continuously; it is only State Public Sector unit that has come out of BIFR

PRESENT STATUS OF THE COMPANY
The company is mainly dependent on southern market. The product availability in retail outlets particularly for Mysore sandal soap is almost comparable to any other similar industries products in the premium segment in the south. Whereas in other parts like Eastern & Northern markets penetration of KSDL product is relatively poor, which depends on the company’s distribution structure, stockiest and field personnel strength. With increased trust on distribution, the company does not foresee any problems to achieve the projected sales through the redistribution package. Further, the policy of Indian Government also sees the public sector enterprise enter the industry in a large way there by making the products available to the consumers at reasonable prices. Being located in the center in the southern part of Indian the Government Soap Factory claims preferential treatment for expansion programme in view of availability of exotic natural Sandalwood oil.

AN ISO-9002 COMPANY: KS & DL with a tradition of excellence of over eight decades is committed to customer delight, through total quality management and continuous improvement through the involvement of all employees. KS&DL has got ISO 9002 certificate. To improve the quality management system and to facilitate TQM in the process of soap and detergent, the management took decision to obtain ISO9002 by end of March 1999. Accordingly action plan was drawn and a committee was set up for the purpose during October 1998 with a mission statement. The company gives initial training including conducting employee’s awareness programme, document quality manual and quality system procurement. In this direction company obtained the guidance from Consultancies, Bangalore and Bureau of Indian Standards, Bangalore. Accordingly, company standards registered for ISO 9002 by the end of March to the
38 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Bureau of Indian Standards. Obtained the certificate by the end of March 1999 itself. This id to project in the national and international market and also to improve the quality of products offered to the consumers with the assurance of quality in the message. The company got itself upgraded to ISO-90012004, Quality systems in the year 2004-05.

ISO-14001:The company is located in the heart of the Bangalore city. The management of the company took a decision to get the ISO-14001 and become model to other public sector for the techniques used and also to other Government units to spread the message of maintenance of environment. ISO-14001 and ISO-9001 will facilitate to improve the corporate brands in the global market and it will help the company to improve the profits, year after year on long-term basis. The environment management system adopted in the company through this motive as follows: • • • Conservation of energy Conservation of Surrounding Conservation of resources

Equipped with latest technology and backed by full-fledged quality control and R&D support, KS&DL is marching confidentially ahead in the new millennium. The Company is developing new products to meet the changing preferences of its customers

PRODUCT PROFILE
TOILET SOAPS : NAME OF THE PRODUCT Mysore Sandal Soap Mysore Sandal Classic Soap Mysore Sandal Gold Soap Mysore Sandal Baby Soap UNITS OF GRAMS 75, 125 75 75, 125 75
39 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Mysore Special Sandal Soap Mysore Rose Soap Mysore Sandal Herbal Care Soap Mysore Jasmine Soap Wave Soap Mysore lavender Soap Mysore Sandal bath tablet Mysore tablet Sandal classic

75 100 100, 125 100 100 150 150 bath 150 150 150 150 17

Mysore Jasmine bath tablet Mysore Special Sandal tablet Mysore Sandal rose tablet Mysore Sandal Guest tablet

GIFT RANGE SBT SJR 06 IN 01 GOLD SIXER
40 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

OTHERS Washing Half Bar Washing Sandal Baby Wash

DETERGENTS
NAME OF THE PRODUCT Mysore detergent powder Mysore detergent powder Mysore detergent Cake Mysore detergent cake UNITS IN GRAMS 1000 500 125 250

TALCUM POWDERS
NAME OF PRODUCT Mysore Sandal Talc Mysore Sandal Baby Talc THE

UNITS IN GRAMS 20, 50, 100, 300 100, 200, 400

AGARBATHIES
NAME OF THE PRODUCTS Mysore Sandal Premium Mysore Sandal Regular Mysore Rose
41 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Nagachampa Suprabhatha Mysore Jasmine Parijatha Sir M.V.100 Bodhisathva Venkateshwara Durga Ayyappa Alif Laila Meditation

SANDALWOOD OIL:
In 5ml, 10ml, 20ml, 100ml, 500ml, 2kg, 5kg, 20kg and 25kg packing

POWDERS:
Mysore Sandal Talk: Cooling & Healing, Fragrant freshness, Net. Wt 20gm, 60gm, 300gm and 1kg. Mysore Sandal Baby Powder: Tender loving care for baby…& Mummy. Net wt 100-400gms.

REVIEW OF LITERATURE:
42 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

To understand the financial performance and condition of a firm, its stockholders look at three financial statements viz. the balance sheet, the profit and loss statement and the sources and uses of funds statements. The balance sheet shows the financial position of the firm at a given point of time. The profit and loss statement reflects the financial performance of the firm over a period of time typically it is drawn up for a period of one year. The sources and uses of fund statement portray the flow of funds through the business during a given accounting period. Financial statement analysis may be done for a variety of purposes, which may range from a simple analysis of the short-term liquidity position of the firm to a comprehensive assessment of the strengths and weakness of the firm in various areas. It is helpful in assessing the corporate excellence judging credit worthiness, forecasting bond ratings, predicting bankruptcy and assessing market risk. Ratio analysis is a powerful tool to financial analysis. The ratio analysis involves comparison for a useful interpretation of the financial statements. A single ratio in itself does not indicate favorable or unfavorable condition. It should be compared with some standard. Standards of comparison may consist of part ratios, projected ratios, competition ratios and industry ratios. Several ratios calculated from the accounting data can be grouped into various classes according to financial activity or function to be evaluated as the short and long-term creditors owners and management are interested in financial analysis. In the finance literature a lot of importance has been attached to financial ratios for assessing the financial health of a firm. The financial institutions and commercial banks are interested to know whether a particular company will be in a position to repay its debt.

43 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

CHAPTER- 4

DATA ANALYSIS AND INTERPRETATION
44 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

DATA ANALYSIS AND INTERPRETATION
LIQUIDITY RATIOS CURRENT RATIO: Current ratio may be defined as the relationship between current assets and current liabilities. This ratio, also known as working capital ratio, is a measure of general liquidity and is also most widely used to make the analysis of a short-term financial position (or) liquidity of a firm

Current Ratio = Current Assets/Current Liabilities
A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time as and when they become due. On the other hand a relatively low current ratio represents that the liquidity position of
45 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

a firm is not good and the firm shall not able to pay its current liabilities in time. “Two to one ratio” is referred to as a banker’s rule of thumb (or) arbitrary standard of liquidity for a firm. Current assets include cash and those cab be easily converted into cash within a short period of time generally, one year such as marketable securities, debtors, inventories, work-inprogress etc. Current liabilities are those obligations which are payable within a short period of time generally one year and include outstanding expenses, bills payable, sundry creditors, accrued expenses short term advances, income tax etc.

TABLE-1 YEAR CURRENT ASSETS(
n Rs ) I

Current Liabilities(
in Rs

Current Rations
2.60 1.99 1.85 2.41
46

2005-2006 2006-2007 2007-2008 2008-2009

70,02,25,559 81,66,21,470 88,16,89,555 1,09,13,72,58

26,89,45,929 40,85,67,751 47,55,23,005 45,16,07,354

S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

7 2009-2010 1,23,95,60,59 56,15,27,841 3 2.20

47 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENC: A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time as and when they become due. On the other hand, relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not able to pay its current liabilities in time without facing difficulties. The Standard current ratio is 2:1. The current ratios are 2.60, 1.99, 1.85, 2.41, & 2.20 for the study period. The standard ratio of 2:1 was observed during all the study period. So, it shows the efficient management of current assets and current liabilities. Compare to among five years of study period 2005-06 years ratio is good at 2.60.

48 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

2. QUICK RATIO
Quick ratio is known as acid test or liquid ratio is a more rigorous test of liquidity then the current ratio. Then term liquidity raffs to the ability of a firm to pay its short-term obligations as and when they become due. The two determinants of current ratio is as a measure of liabilities. Quick ratio may be current or liquid liabilities. Inventories cannot be termed to be liquid assets because they cannot be converted into cash immediately without a sufficient loss of value. The quick ratio can be calculated by dividing the total of the quick assets by total current liabilities. As a rule of thumb (or) as a convention quick ratio of 1 is considered satisfactory.

Quick Ratio = Quick Assets/ Current
Liabilities TABLE 2 Years Current Assets ( in Rs) Inventori es ( in RS ) Quick Assets ( in Rs) 35,90,11,33 5 46,57,65,74 7 Current Liabilities ( in Rs) Quic k Ratio

2005-06 2006-07

70,02,25,559 34,12,14,2 24 81,66,21,470 35,08,55,7 23

26,89,45,92 1.33 9 40,85,67,75 1.13 1
49

S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

2007-08 2008-09 20092010

88,16,89,555 29,60,12,8 22 1,09,13,72,5 40,74,52,4 87 87 1,23,95,60,5 51,76,05,8 93 39

58,56,76,73 3 68,39,20,10 0 72,19,54,75 4

47,55,23,00 1.23 5 45,16,07,35 1.51 4 56,15,27,84 1.28 1

50 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE

The Quick ratio showed a fluctuating trend during the study period. The values are 1.33, 1.13, 1.23, 1.51, & 1.28 respectively. It was observed that the standard ratio of 1:1 was maintained in the study period. The high quick ratio is an indication that the firm is liquid and has the ability to meet its current liabilities.

3. CASH RATIO
Cash is the most liquid asset a financial analyst may examine cash ratio and its equivalent to current liabilities. Trade investments or marketable securities are equivalent of cash therefore they may be included in the computation of cash ratio. Absolutely liquid assets include cash in hand and at bank and marketable securities; or temporary investment. The acceptable norm for this ratio is 50% (or) 0.5. It can be calculated as follows
51 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Cash Ratio = (cash securities)/Current Liabilities

+marketable

This ratio is also called Absolute Liquidity Ratio or Super Quick ratio.

TABLE 3 showing Cash Ratio Years Cash
Rs)

(

in

Current liabilities ( in Rs )
26,89,45,929 40,85,67,751 47,55,23,005 45,16,07,354 56,15,27,841

Cash Ratio

2005-06 2006-07 2007-08 2008-09 2009-10

19,57,15,651 31,23,45,581 33,43,85,423 25,51,32,910 28,53,59,727

0.72 0.76 0.70 0.56 0.50

52 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE: This Ratio indicates the proportion of Cash and Bank balance. i.e. it shows the ability of a firm to pay its current liabilities by using most liquid assets, Cash and Bank balance. The Cash Ratios of KARNATAKA SOAPS & DETERGENTS LTD for the period study from 2005-06 to 2009-10 are 0.72, 0.76, 0.70, 0.56, and 0.50 respectively. It is high in 2005-06 to 2007-08. Finally in 2008-09 and 2009-10 the cash ratio was very near to acceptable norm 0.50. It showed good condition.
53 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

4. NET WORKING CAPITAL RATIO
The difference between the current assets and the current liabilities excluding short-term bank borrowings is called net working capital. It is sometimes used as a measure of a firm’s liquidity. It is considered that between two firms, the one having the larger networking capital has greater ability to meet its current obligations. NWC, however, measures the firm’s potential reservoir of funds. It can be related to net assets (or capital employed). This is not necessary so, the measure of liquidity is a relationship, rather than the difference between Current Assets and Current Liabilities.

Net

working

capital

Ratio

=

Net

working

capital/ Net assets Net working capital= current assets- current liabilities NWC Ratio = Net working capital/Net assets TABLE 4
Years Net working Net Assets capital ( In Rs) ( in Rs ) Net working capital Ratio
54 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

2005-06 2006-07 2007-08 2008-09 2009-10

43,12,79,630 40,80,53,719 40,61,66,550 63,97,65,233 67,80,32,752

49,16,39,785 46,69,84,688 46,52,21,875 70,95,40,993 76,38,63,709

0.88 0.87 0.87 0.90 0.89

55 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE:
The NWC ratio of KARNATAKA SOAPS & DETERGENTS LIMITED was started with 0.88 in the year 20052006 and it was decreased same like to another two years to 0.87 in the years 2006-07 and 2007-2008 respectively. The NWC ratio was increased to 0.90 in the year 2008-2009. In the year 20092010 decreased to 0.89. The average NWC ratio of KARNATAKA SOAPS & DETERGENTS LIMITED is 0.88 for the five years of study period.

LEVERAGE RATIOS 5. TOTAL DEBT RATIO
Several debt ratios may be used to analyze the long term solvency of a firm. The firm may be interested in knowing the proportion of the interest bearing debt in a capital structure. It may therefore, compute debt ratio by dividing total debt by capital employed. Capital employed will include total debt and net worth. Capital employed = ( total debt + net worth) Debt Ratio = Total Debt/Capital employed

TABLE 5 showing total debt ratio
56 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Years

Total Debt

Capital Employed ( in Rs) 51,81,32,435 47,99,15,849 55,54,08,013 77,84,20,599 82,52,99,050

Total Debt Ratio 0.38 0.30 0.18 0.24 0.19

(
2005-06 2006-07 2007-08 2008-09 2009-10

in Rs)

19,99,11,435 14,66,24,556 10,03,60,972 19,07,11,112 16,35,98,904

57 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE
The Debt Ratio of KARNATAKA SOAPS & DETERGENTS LIMITED was started with 0.38 at first year 2005-2006. It was decreased to 0.30, 0.18 in the years 2006-2007, 2007-2008 respectively. It was again increased to 0.24 in the year 20082009. And it was again decreased to 0.19 in the year 2009-2010. It was efficient management in the study period.

6. DEBT EQUITY RATIO
Debt equity ratio is the ratio, which expresses the

relationship between debt and equity or relationship between borrowed capital and owners. The ratio is determined to ascertain in the proportion between the outsiders funds and share holder’s funds in the capital structure of
58 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

a enterprise.

The terms outsiders funds is generally used to

represent total long –term debt.

Debt Equity Ratio = Total Debt/Net worth

TABLE 6 showing Debt Equity Ratio
Years Total Debt ( 2005-06 2006-07 2007-08 2008-09 2009-2010 in Rs) Net Worth ( in Rs) Debt Equity Ratio 0.62 0.43 0.22 0.32 0.24

19,99,11,435 14,66,24,556 10,03,60,972 19,07,11,112 16,35,98,904

31,82,21,000 33,32,91,293 45,50,47,041 58,77,09,487 66,17,00,146

59 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE: The Debt equity ratio is calculated to measure
the extent to which debt financing has been used in a business. The ratio indicates the proportions claims of owners and the outsiders against the firm’s assets. The Debt Equity ratio of KARNATAKA SOAPS &DETERGENTS LIMITED was started with 0.62 in the year 20052006 and then it was gradually decreasing to 0.43, 0.22, 0.32 and 0.24 in the years 2006-07, 2007-08, 2008-09 and 2009-10 respectively. The average Debt Equity Ratio of KARNATAKA SOAPS AND DETERGENS LIMITED is o.36 during the study period. It is indicating that the, KS&DL is maintaining sound Debt Equity Ratio.

7. CAPITAL EMPLOYED TO NET WORTH RATIO

60 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

This ratio is also known as equity ratio. This is yet another way of expressing relationship between Debt and Equity. This is to know how much funds are being contributed together by lenders and owners for each rupee of owner’s contribution.

Capital Employed to Net Worth Ratio = Capital Employed/ Net Worth

TABLE 7
Years Capital Employed 2005-06 2006-07 2007-08 2008-09 2009-10 ( in Rs) 51,81,32,435 47,99,15,849 55,54,08,013 77,84,20,599 82,52,99,050 Net Worth ( in Rs) CENW RATIO 1.62 1.43 1.22 1.32 1.24

31,82,21,000 33,32,91,293 45,50,47,041 58,77,09,487 66,17,00,146

61 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE:
The Capital Employed to Net Worth ratio of KARNATAKA SOAPS & DETERGENTS LIMITED was started with 1.62 in the year 2005-2006 and it was decreased gradually 1.43, 1.22, 1.32, and 1.24, in the years 2006-2007, 2007-2008, 2008-2009 and
62 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

2009-2010 respectively. The average ratio, however good that is 1.36 in the five year of study.

ACTIVITY RATIOS
8. INVENTORY TURN OVER RATIO It indicates whether inventory is efficiently used or not the purpose is to be whether only the required minimum funds have been locked up to the inventory. This ratio implies number of times stock has been turned over during a period and evaluates efficiency with which a firm is able to manage its inventory. Usually a high inventory turnover ratio indicates efficient management of inventory. inventory indicating over A low efficient management of investment in inventories, debt

business, poor quality of goods, stock accumulation and low profit as compared to total investment.

Inventory Turnover Ratio = Sales/Inventory
TABLE 8

63 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Years

Sales (
in Rs )

Inventory ( in Rs)

Inventory Turn over Ratio
3.25 3.40 4.91 4.15 3.45

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

1,10,92,10,60 34,12,14,224 0 1,19,58,03,29 35,08,55,723 4 1,45,52,84,54 29,60,12,822 4 1,69,39,19,36 40,74,52,487 8 1,78,90,59,79 51,76,05,839 6

64 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE:
The Inventory turnover ratios were 3.25, 3.40, 4.91, 4.15 and 3.45 respectively during the study period. The average ratio for the period of study is 2005-2006 to 2009-2010is 3.83. sales to contribute the profit in the short period. It shows that company was unable to convert its inventory into

9. DEBTORS TURN OVER RATIO

Debtors’ turnover ratio indicates the relationship between sales and average debtors. It is showing by dividing
65 S.V.U. TIRUPATI.

credit sales. Higher turnover ratio indicated better performance

KARNATAKA SOAPS AND DETERGENTS LIMITED

and lower turnover ratio indicates inefficiency. It includes debtors as well as the bills receivable.

Debtors Turn Over Ratio = Sales

/ Debtors

TABLE 9 Years Sales ( 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 in Rs) Debtors ( in Rs) Debtors Turn Over Ratio 1,10,92,10,60 6,88,37,157 0 1,19,58,03,29 8,08,73,641 4 1,45,52,84,54 14,63,46,670 4 1,69,39,19,36 16,35,29,618 8 1,78,90,59,79 17,26,41,760 6 16.11 14.78 9.94 10.35 10.36

66 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE: The debtor’s turnover ratio of KARNATAKA SOPS & AND DETERGENTS LIMITED was 16.11 in the year 2005-06.
67 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

The ratio had been decreasing from 16.11 to 10.36 in the study period. The average debtor’s turnover ratio of KARNATAKA SOAPS AND DETERGENTS LIMITED is 12.30.

10. AVERAGE COLLECTION PERIOD (DAYS) The average number of days for which debtors remain outstanding is called the average collection period and can be computed as follows. The average collection period measures the quality of debtors since it indicates the speed of their collection. The shorter the average collection period, because short collection period of the debtors. Average collection period (days) = 365/ Debtors
turnover ratio

TABLE 10
68 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Years

Debtors

Average PERIOD(DAYS) 22.65 24.69 36.72 35.26 35.23

Turnover Ratio COLLECTION 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
16.11 14.78 9.94 10.35 10.36

69 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE:
The average collection period showed increasing trend during the period 2005-2010. It shows that the company was able to convert its debtors into cash in short period. The average collection period of Karnataka soaps and detergents

limited was 30.91 days for the study period.

11. NET ASSETS TURN OVER RATIO
Assets are used to generate sales. Therefore a firm should manage its assets efficiently to maximize sales. The relationship between sales and assets is called Net Assets turnover ratio. Net Assets turnover Ratio = Sales

/ Net Assets
70

S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

TABLE 11 Years Sales ( in Rs) Net Assets ( in Rs) Net Turn Ratio 2.25 2.56 3.12 2.38 2.34 Assets Over

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

1,10,92,10,60 49,16,39,785 0 1,19,58,03,29 46,69,84,688 4 1,45,52,84,54 46,52,21,875 4 1,69,39,19,36 70,95,40,993 8 1,78,90,59,79 76,38,63,709 6

71 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE:
The Net Assets turn Over Ratios of KARNATAKA SOAPS AND DETERGENTS LIMITED were 2.25, 2.56, 3.12, 2.38, & 2.34 in the years 2005-06, 2006-07, 2007-08,2008-2009, and 2009-10 respectively. The average of Net Assets Turnover Ratio of KARNATAKA SOAPS AND DETERGENTS LIMITED was 2.53 during the study period.

72 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

12. TOTAL ASSETS TURN OVER RATIO

The total assets turnover ratio indicates the firm’s ability in generating sales from all financial resources committed to total assets. Total Assets Turn Over = Sales / Total Assets
TABLE 12 Years Sales ( in Rs) Net Fixed Assets ( in Rs) Current Assets ( in Rs) Total Assets ( in Rs) Total Assets turn over 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 1,10,92,10,60 0 1,19,58,03,29 4 1,45,52,84,54 4 1,69,39,19,36 8 1,78,90,59,79 6 6,03,60,155 70,02,25,559 5,89,30,969 81,66,21,470 5,90,55,325 88,16,89,555 6,97,75,760 1,09,13,72,587 8,58,30,957 1,23,95,60,593 76,05,85,714 87,55,52,439 94,07,44,880 1,16,11,48,34 7 1,32,53,91,55 0 Ratio 1.45 1.36 1.54 1.45 1.34

73 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

74 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE: Total Turnover Ratios of the years 2005-06, 2006-07,
2008-09, and 2009-10 are 1.45, 1.36, 1.54, 1.45, and 1.34 respectively. The average total assets turnover ratio of KARNATAKA SOAPS AND DETERGENTS LIMITED was 1.42 during the study period. The fluctuating trend was due to the reason that the trend of sales is proportion to the trend of total assets.

13. FIXED ASSETS TURN OVER RATIO
This ratio is calculated by dividing Net Sales into Net fixed assets. This ratio expressed the number of times fixed assets are being turnover in a stated period. This ratio shows how well the fixed assets are being used in business. Fixed assets turnover ratio is the ratio between net sales and fixed assets. It indicates as to what extent the fixed assets have been utilized. The higher ratio is shows that better utilization of the plants and equipment. Low ratio indicates that fixed assets are not being efficiently utilized. The ideal fixed assets turnover ratio is 5
75 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

times. When fixed assets turnover is 5 times or more, indicates better utilization of fixed assets. Fixed Assets Turn Over Ratio = Net Sales / Net Fixed Assets TABLE 13 showing fixed assets turnover Ratio Years Net Sales ( in Rs) Net Fixed Assets ( 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 98,81,11,423 1,04,43,74,470 1,28,64,62,008 1,53,37,03,531 1,64,77,74,737 in Rs) 16.37 17.72 21.78 21.98 19.19 Fixed Assets Turn Over Ratio

6,03,60,155 5,89,30,969 5,90,55,325 6,97,75,760 8,58,30,957

76 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE
The Fixed Assets Turnover Ratios of KARNATAKA SOAPS AND DETERGENTS LIMITED were 16.37, 17.72, 21.78, 21.98 and 19.19 in the years of study period. The average of this ratio was 19.40 during the study period from 2005-06 to 2009-10. The above analysis is indicating that the fixed assets turnover ratio is more than 5 times for the period 2005-6 to 2009-10. It indicates that the company fixed assets has been utilizing effectively in the concern, and has put fixed assets into good use.

14. CURRENT ASSETS TURN OVER RATIO
77 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

The ratio is calculated by dividing sales into current assets. This ratio expressed the number of times current assets are being turnover in a stated period. This ratio shows how well the current assets are being used in business. The higher ratio is showing that better utilization of the current assets or else a low share indicates that current assets are not being efficiently utilized. Current Assets Turn Over Ratio = Sales / Current Assets

TABLE 14 Years Sales ( in Rs) Current Assets ( in Rs) Current Turnover Ratio 1.58 1.46 1.65

2005-2006 2006-2007 2007-2008 2008-2009

1,10,92,10,60 70,02,25,559 0 1,19,58,03,29 81,66,21,470 4 1,45,52,84,54 88,16,89,555

4 1,69,39,19,36 1,09,13,72,58 1.55 7 8
78

S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

2009-2010

1,78,90,59,79 1,23,95,60,59 1.44 3 6

INFERENCE:
79 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

The current Assets Turn Over Ratio of KARNATAKA SOAPS AND DETERGENTS LIMITED were 1.58, 1.46, 1.65, 1.55, and 1.44 respectively in the study period from 2005-06 to 2009-10. There were fluctuations in the Current Assets Turnover ratio during the study period. The average current assets turnover ratio of KARNATAKA SOAPS AND DETERGENTS LIMITED is 1.53 during the study period.

15. WORKING CAPITAL TURN OVER RATIO This is also known as working capital leverage ratio or sales to capital employed ratio. The ratio indicates that whether working capital has been effectively utilized or not in making sales. If the firm can achieve higher volume of sales with relatively small amount of working capital, then it is an indication of the operating efficiency of the company. The ratio is calculated as follows

Working capital turnover ratio = Net Sales / Net Current assets

80 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

TABLE 15 Years Net Sales ( in Rs) Net Current Assets ( in Rs) Working Capital Turn over Ration

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

98,81,11,423 1,04,43,74,47 0 1,28,64,62,00 8 1,53,37,03,53 1 1,64,77,74,73 7

43,12,79,630 40,80,53,719 40,61,66,550 63,97,65,233 67,80,32,752

2.29 2.55 3.16 2.39 2.43

81 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE:
The Working Turn Over Ratios of KARNATAKA SOAPS AND DETERGENTS LIMITED are 2.29, 2.55, 3.16,2.39, and 2.43 in the years 2005-06, 2006-07, 2007-08, 2008-09, and 200910 respectively. It was increased from 2.29 to 3.16 in the years from 2005-2006 to 2007-2008, then decreased to 2.43 in the year 2009-10. The average of working capital turnover ratio is 2.56 during the study period. The working capital turnover ratio shows an increasing tendency. So it shows the working capital turnover ratio of the company is satisfactory. Which means the firm generates through sales is satisfactory.

PROFITABILITY RATIOS
82 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

16. GROSS PROFIT RATIO The gross profit margin reflects the affiance with the management produces each unit of profit. The ratio indicates the average spread between cost of goods sold and the revenue. A high gross profit margin is a sign of good management. Also, a high profit margin relative to industry average implies that the firm is able to produce at relatively low cost. Thus Profit Ratio = Gross profit / Sales * 100Gross TABLE 16 Years Gross Profit ( in Rs) 2,36,78,619 4,33,57,146 11,79,35,440 11,70,84,989 13,48,85,857 Sales ( in Rs) 1,10,92,10,600 1,19,58,03,294 1,45,52,84,544 1,69,39,19,368 1,78,90,59,796 Gross Profit Ratio (%) 2.13 3.62 8.10 6.91 7.53

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

83 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE: The Gross profit ratios were 2.13, 3.62, 8.10, 6.91, and 7.53 in the years 2005-06, 2006-07, 2007-08, 2008-09, and 200910 of study period. It was very low in 2005-06 at 2.13. The average gross profit ratio is 5.65 in the study period. The increasing trend in the gross profit ratio during the study period might be due to decrease in the cost of goods sold.

84 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

17. NET PROFIT RATIO
It establishes a relationship between net profit and sales and, it indicates management efficiency in manufacturing, administrating and selling products and is expressed as a percentage. The higher the net profit ratio, higher the greater will be the profitability and higher return to the share holders as well as enable the firm to withstand adverse economic conditions. On the other hand, a lower net profit ratio is an indication of poor profitability of an enterprise. Net profit margin is obtained when operating expenses, interest, taxes are subtracted from the gross profit. The net profit margin is calculated as follows Net Profit Ratio = Net profit after tax / Net sales * 100 TABLE 17 showing Net Profit Ratio Years Profit Tax ( in Rs) 98,81,11,423 1.80 1,04,43,74,470 3.43
85 S.V.U. TIRUPATI.

After Net Sales ( in Rs)

Net (%)

Profit

2005-2006 2006-2007

1,78,78,814 3,58,55,694

KARNATAKA SOAPS AND DETERGENTS LIMITED

2007-2008 2008-2009 2009-2010

8,82,39,809 11,68,14,479 9,31,12,149

1,28,64,62,008 6.85 1,53,37,03,531 7.61 1,64,77,74,737 5.65

INFERENCE: The Net profit ratio in the year 2005-06 was 1.80%, it was increased gradually to 7.61 in the year 2008-09. The ratios
86 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

in the years 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 were 1.80, 3.43, 6.85, 7.61, and 5.56 respectively. From the above analysis, the percentage of net profit ratio is increasing year after year. This shows that the company is in a good economic position. But in the year 2009-10 the net profit ratio is decreased by 2.05

18. EARNING PER SHARE
Earnings per share show the profitability of the firm on a per share basis. It does not reflect how much is paid as dividend how much is retained in the business.

Earnings per share = Profit after tax / Number of shares * 100

TABLE 18

87 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Years

Profit Tax (

After No of Shares

Earnings Per Share yet t b*100

in Rs) 3,18,221 3,18,221 3,18,221 3,18,221 3,18,221

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

1,78,78,814 3,58,55,694 8,82,39,809 11,68,14,479 9,31,12,149

(%) 56.18 112.67 277.29 367.08 292.60

INFERENCE:
The earnings per share for the years 2005-06, 2006-07, 2007-08, 2008-09, and 2009-10 are 56.18, 112.67, 277.29,
88 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

367.08 and 292.60 respectively. sales.

Comparatively the ratio

gradually increasing, this might be due to increase in PAT and

The average earning per Share in the study period is 211.16.

19. OVERA ALL PROFITABILITY RATIO The overall profitability ratio indicates the speed at which the capital employed in the business rotates. Higher the rate of return greater will be the profitability. The ratio is calculated as follows

Overall profitability ratio = Operating profit / operating Assets * 100

Operating profit is obtained when operating expenses are deducted from gross profit. Operating assets is obtained when surplus carried to balance sheet is added to the assets.

89 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

TABLE 19 Years Operating Profit ( in Rs ) 2,90,67,487 4,80,05,540 12,24,44,174 12,43,61,250 14,31,83,402 Operating Assets ( in Rs) Overall Profitability Ratio (%) 76,05,85,714 3.82 87,55,52,439 5.48 94,07,44,880 13.01 1,16,11,48,347 10.71 1,32,53,91,550 10.80

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

90 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE: The overall profitability ratio in the year 2005-06 was 3.82%. 2008-09, The ratios followed a increasing trend with 5.48%, and 2009-10 respectively. The average overall 13.01%, 10.71%, and 10.80% in the years 2006-07, 2007-08, profitability ratio of KARNATAKA SOAPS AND DETERGENTS

LIMITED is 8.76 during the study period.

20. CASH PROFIT MARGIN

The cash profit margin is calculated as, cash profit is the profit before interest, depreciation and tax.

91 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Cash Profit Ratio = Cash profit / Net sales * 100
TABLE 20 Years Cash Profit ( in Rs) Net Sales ( in Rs) Cash Profit Ratio ( % ) 3.29 4.94 9.79 8.36 8.99

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

3,25,50,419 5,16,10,556 12,60,21,604 12,83,30,288 14,81,65,877

98,81,11,423 1,04,43,74,470 1,28,64,62,008 1,53,37,03,531 1,64,77,74,737

92 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE: It is inferred from the above table that the cash profit margin shows a gradually increasing trend during the study period. There was a very low margin in the year 2005-06 with a ratio of 3.29% when compared to 9.79% ratio in the year 2007=08. The ratios of 2005-06, 2006-07, 2007-08, 2008-09, and 2009-10 are 3.29%, 4.94%, 9.79%, 8.36% and 8.99 respectively. The average cash profit margin is 7.07% during the study period.

93 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

21. OPERATING PROFIT MARGIN Operating profit is obtained when operating expenses are subtracted from gross profit.

Operating profit margin = Operating profit / Sales *

10TABLE 21

Operating Years Profit ( in Rs )

Net Sales ( in Rs)

Operating Profit margin Ratio (%) 2.94 4.59 9.51 8.10 8.68

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

2,90,67,487 4,80,05,540 12,24,44,174 12,43,61,250 14,31,83,402

98,81,11,423 1,04,43,74,470 1,28,64,62,008 1,53,37,03,531 1,64,77,74,737

94 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE: The operating profit margin ratios for the study period are 2.94%, 4.59%, 9.51%, 8.10% and 8.68 for the years 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 respectively. The
95 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

average operating profit ratio is 6.76%. The trend represents that the performance was not better.

22. OPERATING EXPENSES TO SALES RATIO

The ratio explains the changes in the profit margin (EBIT TO Sales) ratio.

Operating expenses include all expenses such as depreciation, salary and benefits, selling distribution and other administrative expenses.

Operating expenses = Operating expenses / Sales * 100

TABLE 22
96 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Operating Years expenses ( in Rs )

Net Sales ( in Rs)

Operating Expenses Sales Ratio( % ) 86.97 101.75 90.05 100.43 95.89 to

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

85,94,56,599 1,06,26,82,573 1,15,85,36,413 1,54,03,40,291 1,58,01,65,818

98,81,11,423 1,04,43,74,470 1,28,64,62,008 1,53,37,03,531 1,64,77,74,737

97 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE: The operating expenses to sales ratios are 86.97%, 101.75%, 90.05%, 100.43% and 95.89% in the years 2005-06, 2006-07, 2007-08, 2008-09, and 2009-10 of the study period. The average operating expenses to sales ratio is 95.01% during the study period.

23. RETURN ON TOTAL ASSETS

Return on Total Assets = PATAI / Total Assets * 100

This ratio indicates the operating efficiency of the firm.

TABLE 23
98 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

Years

PATAI ( in Rs )

Total Assets ( in Rs)

Return Total

on Assets

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

1,78,78,814 3,58,55,694 8,82,39,809 11,68,14,479 9,31,12,149

Ratio (%) 76,05,85,714 2.35 87,55,52,439 4.09 94,07,44,880 9.37 1,16,11,48,347 10.06 1,32,53,91,550 7.02

99 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE:
Returns on total Assets are 2.35%, 4.09%, 9.37%, 10.06% and 7.02 in the years 2005-06, 2006-07, 2007-08, 200809 and 2009-10 of study period. This trend shows that very less return on assets. The average of return on total assets is 6.57 during the study period of KARNATAKA SOAPS AND DETERGENTS LIMITED.

24. RETURN ON NET WORTH

10 0 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

This ratio indicates how well the firm has used the resources of owners, and hence there is one of the most important relationships in financial analysis. The ratio is calculated as Return on Net worth = PATAI / Net worth * 100.

Net worth includes share capital and reserve surplus.

TABLE 24 Years PATAI ( in Rs) Net Worth ( in Rs) Return Net Ratio (%) 5.61 10.75 19.39 19.87 14.07 on worth

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

1,78,78,814 3,58,55,694 8,82,39,809 11,68,14,479 9,31,12,149

31,82,21,000 33,32,91,293 45,50,47,041 58,77,09,487 66,17,00,146

10 1 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

INFERENCE: The return on Net worth ratio for the study period ranged from 5.61% to 19.87% for the years 2005-06 to 2008-09. The average return on net worth ratio for the above study period is 13.93%.

10 2 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

25. OPERATING EXPENSES TO TOTAL COST

Operating

expenses

include

direct

labour

and

overheads. The operating expenses form a part of total cost. So this gives the ratio operating expenses in total cost. It is found as

Operating Expenses to total cost = Operating expenses / Total cost*100

TABLE 25 Years Operating Expenses ( in Rs) Total cost ( in Rs) Operating Expenses Total to cost

2005-2006 2006-2007 2007-2008

Ratio (%) 85,59,73,667 87,06,45,272 98.31 1,05,90,77,557 1,07,48,32,419 98.53 1,15,49,58,983 1,19,27,40,778 96.83
10 3

S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

2008-2009 2009-2010

1,53,63,71,253 1,58,86,03,698 96.71 1,57,51,83,344 1,64,80,97,822 95.57

INFERENCE:

10 4 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

The Operating expenses to total cost ratios for the years 2005-06, 2006-07, 2007-08, 2008-09, and 2009-10 are 98.31%, 98.53%, 96.83%, 96.71% and 95.57 respectively. increase in total cost of KARNATAKA The ratios AND followed a decreasing trend in operating expenses because of SOAPS DETERGENTS LIMITED. The average of the ratio for the above study period is 97.19. CHAPTER – 5 FINDINGS
1. The current ratios are 2.60, 1.99, 1.85, 2.41 and 2.20 for the study

2.

3. 4. 5.
6.

7.

period. The standard ratio of 2:1 was observed mostly during the study period. So, it shows the efficient management of current assets and current liabilities. The quick ratio of Karnataka soaps and detergents limited showed fluctuations with an average of 1.29. It was above standard ratio of 1:1 for the entire period. It confirms that the liquidity position of the Karnataka soaps and detergents limited in terms of quick ratio was more than the standard ratio. The high quick ratio is an indication that the firm is liquid and has the ability to meet its current liabilities. For the years 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 the cash ratios are 0.72, 0.76, 0.70, 0.56, and 0.50 respectively. The Net working capital ratio showed a fluctuating trend. Debt ratio showed decreasing trend for the study period, as 0.62, 0.43, 0.22, 0.32 and 0.24 showing a positive sign. The Debt equity ratio showed decreasing, because of increase in growth, as 0.38, 0.30, 0.18, 0.24 and 0.19 respectively in the study period. The Total assets turnover ratio was fluctuating year by year i.e.. 1.45, 1.36, 1.54, 1.45 and 1.34. This is due to the reason that the trend of sales is not proportionate to the trend of total assets.
10 5

S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED 8. The Inventory turnover ratios were 3.25, 3.40, 4.91, 4.15 and 3.45

during the study period. It shows that the company was unable to convert its inventory into sales to contribute the profit in the short period. 9. Debtors turnover ratios were 16.11, 14.78, 9.94, 10.35 and 10.36 for the study period. 10.Net Assets turnover ratio was also fluctuating year by year i.e., 2.25, 2.56, 3.12, 2.38, and 2.34 for the study period. 11.The fixed assets occupied less percentage when compared to current assets in the capital employed. 12. The current assets turnover ratios were fluctuating for the study period as 1.58, 1.46, 1.65, 1.55 and 1.44. 13.The average collection period showed increasing trend during the period 2005-2010. It shows that the company was unable to convert its debtors into cash in short period. 14.The working capital turnover ratio was 2.29, 2.55, 3.16, 2.39 and 2.43 during the period 2006-10. It shows low working capital turnover. It represents that the current assets are not converted into sales effectively. 15.The Net profit margin ratio was increasing in the study period, when compared with previous years due to decreasing in administrative expenses. 16.The Gross profit ratio was increasing in the study period when compared with previous year due to the decrease in the cost of goods sold. 17.The Earnings per share (EPS) showed increasing trend in the period2006-2010. 18.The Overall profitability ratio in the period showed increasing trend. 19.The cash profit margin followed a fluctuating trend during the study period. 20. Operating expenses were decreased in the period, because they have some control over the operating expenses.

SUGGESTIONS:


The company is suggested to improve the net profit by increasing the volume of sales as it is found that sales percentage is fluctuating over the years.
10 6

S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

• The company performance is largely dependent on the performance of the industry. • Manufacturing expenses are to be controlled to increase the gross profit. • The company has to reduce the long-term debt to improve the profitability. • The management should relay on internal funds than external funds which make the company strong in financial solvency. • The firm is investing most of the debt funds in improving the fixed assets it will be suggestible to continue the same to have a financial soundness.

BIBLIOGRAPHY
10 7 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

BOOK NAME FINANCIAL MANAGEMEN T Financial Management Elements of Financial Management M.Y.Khan & P.K.Jain Kedarnath Ramnath & Co Meerut Tata Mc Graw Hill Co. Ltd Pradeep Kumar 6th Edition I.M.PANDEY Tata Mc Graw Hill Co.Ltd 10th Edition

Web site: www.mysoresandal.co.in

10 8 S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED

ANNEXURE

PROFIT & LOSS ACCOUNT PARTICULARS INCOME Sales Other income Increase(Dec.) in stocks TOTAL EXPENDITURE Materials consumed(including trading items) Other expenditure Depreciation SC D L L M 2005-06 98,81,11,423 1,72,20,084 1,00,53,31,5 07 (-)11,68,07,4 21 88,85,24,086 2006-07 1,04,43,74, 470 1,90,04,300 1,06,33,78, 770 4,73,09,343 1,11,06,88, 113 50,70,94,58 3 55,19,82,57 3 36,05,016 1,06,26,82, 573 4,80,05,540 46,48,394 4,33,57,146 75,01,452 3,58,55,694 66,40,866 2,20,99,794 53,86,504
10 9 S.V.U. TIRUPATI.

200708

200809

200910

N 36,72,38,387 O D 48,87,35,280 34,82,932 85,94,56,599 2,90,67,487 53,88,868 2,36,78,619 57,99,805 1,78,78,814 23,67,245 …………. 2,55,72,563

Operating profit/loss Interest and P financial Charges Profit before tax Provision for taxation Profit after tax Prior period income/ Q (-expenditure) Income tax provision written back Profit /loss brought

KARNATAKA SOAPS AND DETERGENTS LIMITED

forward from previous year Profit/Loss carried forward to balance sheet

(-)2,55,72,56 3

1,50,70,293

BALANCE SHEETS

PARTICULARS SOURCES FO FUND 1.Shareholders funds a)Share capital b)Reserve & Surplus 2.Loan funds a)Secured loans b)Unsecured loans TOTAL APPLICATION OF FUNDS 1.Fixed assets a)Gross block b)Less:

SCD

2005-06

2006-07

2007-08

2008-09

2009-10

A

31,82,21,0 00

31,82,21,0 00

B C 19,99,11,4 35 51,81,32,4 35

1,66,29,12 0 12,99,95,4 56 47,99,15,8 49

D 30,28,08,0 02 24,24,47,8 29,24,06,4 86 23,34,75,5 11 0

S.V.U. TIRUPATI.

KARNATAKA SOAPS AND DETERGENTS LIMITED Depreciation c)Net block 2.Investments 3.CURRENTASSE TS, LOANS ANDADVANCES a)Inventories b)Sundry debtors c)Cash &bank balance d)Loans & advances CURRENT LIABILITIES a)Current liabilities b)Provisions NET CURRENT ASSETS 4.a)Miscellaneous exp.(or adjusted) b)Profit and loss a/c TOTAL E 47 6,03,60,15 5 100 17 5,89,3096 9 100

F G H I

34,12,14,2 24 6,88,37,15 7 19,57,15,6 51 9,44,58,22 7 70,02,25,5 59 17,07,06,3 57 9,82,39,57 2 43,12,79,6 30 2,11,66,04 6 53,26,504 51,8132,4 35

35,08,55,7 23 8,08,73,64 1 31,23,45,5 81 7,25,46,52 5 81,66,21,4 70 29,26,24,2 43 11,59,43,5 08 40,80,53,7 19 1,29,31,06 1 47,99,15,8 49

K

11 1 S.V.U. TIRUPATI.

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close