A

SUMMER TRAINING PROJECT REPORT

ON

“RATIO ANALYSIS AT BIRLA CEMENT PLANT RAIPUR”

SUBMITTED TO

AWADHESH PRATAP SINGH UNIVERSITY, REWA (M.P.)

FOR THE AWARD OF
MASTER OF BUSINESS ADMINISTRATION
MBA (SEMESTER – IIIrd)
BY
SWATI SINGH

UNDER GUIDANCE OF
PROF. RUDRA PRATAP SINGH

DEPARTMENT OF VIMR
VINDHYA INSTITUTE OF MANAGEMENT & REASEARCH,
SATNA (M.P.)

2021 – 2023
 VINDHYA INSTITUTE OF MANAGEMENT & RESEARCH
SATNA (M.P.)

GUIDE’S CERTIFICATE
This is to certify that SWATI SINGH has satisfactorily completed the research
project work on “A PROJECT REPORT ON RATIO ANALYSIS OF BIRLA CEMENT
PLANT RAIPUR” Under my guidance for the partial fulfillment of MBA (Semester –
IIIrd ) submitted to Awadhesh Pratap Singh University, Rewa during the academic
year 2021 – 2023.

To best of my knowledge and belief the matter presented by Him/her is original

work and not copied from any source. Also, this report has not been submitted
earlier for the award of any Degree of Awadhesh Pratap Singh University, Rewa.

Place: Satna Prof. Rudra pratap singh

Date: ( Project Guide )
 VINDHYA INSTITUTE OF MANAGEMENT & RESEARCH
SATNA (M.P.)

DECLARATION
I undersigned, hereby declare that this research project report entitled “A
PROJECT REPORT ON RATIO ANALYSIS OF BIRLA CEMENT PLANT RAIPUR”
Prescribed by Awadhesh Pratap Singh University, Rewa during the academic year
2021 – 2023 under the guidance of Prof. Rudra pratap singh is my original work.
The matter presented in this report has not been copied from any source. I
understand that any such copying is liable to be punishable in any way the
university authorities deem to be fit. Also, this report has not been submitted
earlier for the award of any Degree or Diploma of Awadhesh Pratap Singh
University, Rewa or any other University.
This work humbly submitted to Awadhesh Pratap Singh University for partial
fulfillment of Master of Business Administration (Semester – IIIrd).

PLACE: SATNA Swati singh

DATE:
 VINDHYA INSTITUTE OF MANAGEMENT & RESEARCH
SATNA (M.P.)

ACKNOWLEDGEMENT
Whenever we are standing on most difficult step of the dream of our life, we often
remind about the great god for his blessings & kind help and he always helps us in
tracking of the problems by some means in our lifetime. I feel great pleasure to
present this project entitled “A PROJECT REPORT ON RATIO ANALYSIS OF BIRLA
CEMENT PLANT RAIPUR”
I am grateful to those who help me a lot in preparation of this project report. It is
their support and blessings, which has brought me to write this project report. I
have a deep sense of gratitude in my heart for them.

I am very thankful to my project guide Prof. Rudra pratap singh for his whole
hearted support and affectionate encourage without which my successful project
would not have been possible.
Finally, I am very grateful to Mighty God and inspiring parents whose loving and
caring support contributed a major share in completion of my task.

Swati singh
Training Certificate
 TABLE OF CONTENT
S.NO. CONTENTS PAGE NO.

1. Introduction 06-13

2. Company Profile 14-20

3. Review of Literature 21-22

4. Objectives of the study 23-24

5. Research Methodology 25-26

6. Data Analysis and Interpretation 27-49

7. Findings & Suggestions 50-52

8. Conclusions 52-54

9. References 55-56

10. Bibliography 57-58

 CHAPTER 1

INTRODUCTION OF THE PROJECT

INTRODUCTION
Ratio analysis is a technique of analyzing the financial statement of industrial concerns. Now a day this
technique is sophisticated and is commonly used in business concerns. Ratio analysis is not an end but it is
only means of better understanding of financial strength and weakness of a firm.
Ratio analysis is one of the most powerful tools of financial analysis which helps in analyzing and interpreting
the health of the firm. Ratio’s are proved as the basic instrument in the control process and act as back bone in
schemes of the business forecast.

WITH THE HELP OF RATIO WE CAN DETERMINE

 The ability of the firm to meet its current obligations.
 The limit or extent to which the firm has used its
 Borrowed funds.

The efficiency with which the firm is utilizing in generating sales revenue.
 The operating efficiency and performance of the company.

PURPOSE (OBJECTIVE) OF THE STUDY

The main objective of the study is to apply theoretical concepts to the practical situations of birla
cement plant so as to compare and correlate the actual achievements with a theoretical conclusion. The
main objectives of the study are:

 To know the extent to which birla cement plant is efficiently utilizing its sources to its operations.
 To study the efficiency of overall operations.
 To analyze the financial position of the birla cement plant.
 to understand the capital structure of the birla cement plant leverage ratios.
 to know the profitability of the birla cement plant through calculation of profitability ratios.
 To give appropriate suggestions to the best performance of the organization.
RATIO ANALYSIS OVERVIEW
 Meaning of Ratio
‘Ratio’ is an arithmetical expression of relationship between two interdependent or related items.

 Expression of ratio: Ratios can be expressed in any of the following forms:

1. Pure: it is expressed as a quotient. For example, current assets are Rs. 20000 and current liabilities are Rs.
10000, we can say that current assets to current liabilities are 2:1.
2. Percentage: it is special type of rate expressing the relationship in hundred. It is calculated by
multiplying the quotient by 100. For example, gross profit is Rs. 25000 and net sales are Rs. 100000 we can
say that gross profit is 25%.

1. Times/rate: it is the ratio between two numerical facts over a period of time. For example, stock turnover
is 4 times in a year.
2. Fraction: it is expressed in fraction. For example, ratio of fixed assets to share capital is (say) ¾ (i.e.,
0.75). Ratio, sometimes, may be expressed in terms of days also. For example, average collection period is 73
days.

 Meaning of Ratio Analysis

It is a technique of analysis, comparison and interpretation of financial statements by computing ratios.

 Steps in Ratio Analysis

Following are the steps involved in the ratio analysis:

 Selection of relevant data.

 Calculation of ratio.
 Comparison of ratio.
 Interpretation of ratio.

Objectives and Significance of Ratio Analysis

The importance of the ratio analysis can be summarized in the following points:

 Useful in simplifying accounting figures.

 Useful in financial position analysis.
 Useful in assessing the operational efficiency.
 Helpful in financial forecasting and planning.
 Useful in locating the weak spots of the business.
 Useful in comparative study.
 Helpful in communication and coordination.
 Helpful in control.

 Limitations of Ratio Analysis

These are following:

 False results
 Qualitative factors are ignored.
 Lack of standard ratio.
 May not be comparable.
 Price level changes are not considered.
 Window dressing.
 Personal bias.

RULE OF THUMB
Rule of thumb has evolved over a period of time. A ratio could be compared with rule of thumb. However
these rules of thumb should be cautiously.

RATIO RULE OF THUMB MEANING

1. CURRENT RATIO 2:1 Current assets

should be twice the

current liabilities.
2. QUICK RATIO 1:1 Quick assets should

be equal to current

liabilities.
3. DEBT-EQUITY 2:1 Long-term debts

RATIO could be twice the

shareholder’s funds.

CLASSIFICATION OR TYPES OF RATIO ANALYSIS

Ratios are classified into four categories as follows:

PROFITABILITY RATIO
Efficiency of the business is measured by profitability. Profitability ratio is divided into two groups:

1. General profitability ratio.

2. Group/Overall profitability ratio.

General profitability ratio
Gross profit ratio: It establishes the relationship of gross profit and revenue from operations, i.e.,
net sales of an enterprise.

Gross profit ratio = gross profit/net sale ×100 Gross profit= net sales –
Cost of goods sold Net sales= cash sale + credit sale – return inward
Cost of goods sold = opening stock+ net purchase+ direct expenses- closing stock

Net profit ratio: It establishes the relationship between net profit and revenue from operations, i.e., net
sales.
Net profit ratio = net profit/ net sale ×100
Net profit= gross profit- indirect expenses+ indirect income

Operating ratio: It establishes the relationship between operating costs and revenue from
operations.

Operating ratio= operating cost/ net sale ×100 Operating cost= cost of goods sold+
operating expenses.

1
Operating profit ratio: It measures the relationship between operating profit and net sales.
Operating profit ratio= operating profit/ net sales ×100 Operating profit= net sales – operating
cost.

Group/ Overall profitability ratio

Return on shareholder’s investment: This ratio determines the earning capacity related to owners
investment.
Return on shareholder’s investment= net profit after interest and tax/shareholders fund ×100.
Shareholder fund= equity share capital + preference share capital.
+ reserve and surplus – accumulated losses – fictitious asset Net profit after interest and
tax= net profit – interest – tax.

Return on equity capital: It measures how much profit a company generates with the money (capital)
shareholders have invested.
Return on equity capital= net profit after interest, tax and preference dividend/ equity shareholders fund ×100
Equity shareholders fund= equity share capital + reserve & surplus – accumulated losses – fictitious assets.
Return on capital employed: It measures how efficiently a company can generate profits from its capital
employed by comparing operating profit to capital employed.

Return on capital employed= earnings before interest and tax/ total capital employed ×100.3

Earnings per share: This helps in determining the market price of equity shares of the company &
estimating the company’s capacity to pay dividend to its equity shareholders.
EPS= net profit after interest, tax and preference dividend/ number of equity share.

TURNOVER RATIO
This ratio helps in calculating the exact efficiency of assets utilized. Higher the turnover ratio’s, outer the
utilization of the resources. Also known as performance or activity ratio. The turnover ratios are:

Stock turnover ratio: This ratio reveals the number of times finished stock is turned over during a given
accounting period. It indicates whether stock has been efficiently used or not. If stock turnover ratio is high it
means high volume of sales with lower quantity of stock. If stock turnover ratio is low it means over
investment in stock.
Stock turnover ratio= cost of goods sold/ average stock =….times
Average stock = opening stock + closing stock/ 2

Debtor’s turnover ratio: It establishes the relationship between net credit sales and average
debtors. It indicates that how much a company can take to collect money from debtors.
Debtor’s turnover ratio= net credit sale/ average debtors=…times.
Net credit sale= total credit sale – sales return.
Average debtor= opening debtor + closing debtor/ 2.

Average collection period: It provides an approximation of the average time that it takes to
collect debtors. It is calculated as follows:
Average collection period= 365/DTR or 52/DTR or 12/DTR

Creditor’s turnover ratio: It shows the relationship between net credit purchase and average
creditors. It indicates that how much time a company can take to pay off its creditors.
Creditor’s turnover ratio= net credit purchase/ average creditors =….. Times
Net credit purchase= total credit purchase – purchase return

Average creditors= opening creditor + closing creditor/ 2

Average payment period: It shows the credit period enjoyed by the enterprise in paying creditors. It is
calculated as:
 Average payment period = 365/CTR or 52/CTR or 12/CTR

Working capital turnover ratio: It shows the relationship between cost of goods sold and working
capital. It shows the number of times a unit of rupee is invested in working capital produces sales. The ratio is
computed as follows:
Working capital turnover ratio= cost of goods sold / working capital = ….. Times
Working capital= current assets- current liabilities

Fixed assets turnover ratio: It shows how efficiently the

fixed assets are being utilized.
Fixed assets turnover ratio= net sales/ fixed assets= …. Times15

LIQUIDITY RATIO
Liquidity ratios are those ratios which are computed to evaluate the capability of the entity to meet its
short- term liabilities. Commonly used liquidity ratios are:

Current ratio: This ratio is used to judge the short term financial position or solvency of a firm. The
formula for calculating the ratio is:
Current ratio= current assets/ current liabilities
The accepted standard of current ratio is 2:1 i.e. current assets should be twice the current liabilities.

Liquid ratio: It is also known as quick ratio or acid test ratio. It ratio test the short term liquidity of the firm
on immediate basis. Its ideal ratio is 1:1. The ratio is calculated as follows:
Liquid ratio = liquid assets/ current liabilities
Liquid assets= current assets – stock – prepaid expenses

SOLVENCY RATIO
Solvency ratios are the ratio’s which shows whether the enterprise is financially healthy and will be able to
meet its long- term financial obligations, i.e. long- term liabilities. Important solvency ratios are:

Debt to equity ratio: it is computed to assess long- term financial soundness of the enterprise. The
ratio expresses the relationship between long term external equities and internal equities of the
enterprise. The ratio is computed as follows:

Debt to equity ratio= debt/ equity

Solvency ratio: Solvency ratios help managers evaluate a company’s ability to pay long term debt.
 Solvency ratio = total outsider liability/ total asset
Capital gearing ratio: This ratio establish the relationship between fixed cost bearing capital and equity
capital fund. The ratio is computed as follows:
Capital gearing ratio: equity share capital + reserve & surplus/ preference
share capital + long term loans

Gearing ratio: It measures the degree that capital of the business is financed by long term loans.
The higher the ratio the greater the risk.
Gearing ratio = preference share capital + long term loans/ equity share
capital + reserve & surplus

Interest coverage ratio: The ratio establishes the

Relationship between net profit before interest and tax and interest on long term debts. The ratio indicates the
ability of a concern to pay the interest due. It is calculated as follows:
Interest coverage ratio= net profit before interest and tax/ interest
on long term debt.
 CHAPTER 2

COMPANY PROFILE

COMPANY PROFILE
OWNER OF BIRLA CEMENT
Madhav Prasad Birla (Co-founder)
He was born in Mumbai on 4 July 1918. He is the founder of M.P. Birla Group.
He was married to Smt. Priyamvada Devi . He had set up a host of companies
like Birla Corp, Universal Cables, Vindhya Telelinks, Hindustan Gum & Chemicals,
Digvijay Woollen Mills, Indian Smelting. He also established Birla Planetarium &
Belle Vue Clinic and several schools in Calcutta. He also served as vice chairman of
Bombay Hospital Trust. & he passed away on 30 July 1990 at Calcutta.

BOARD OF DIRECTORS
Mr. Harsh V. Lodha
Chairman
An eminent Chartered Accountant, Mr. Harsh V. Lodha is a member of the Managing
Committee of Assocham and Executive Committee member of the Indian Chamber of
Commerce where he has also served as Vice President. He has served as member in the
Accounting Standards Board of the Institute of Chartered Accountants of India and
Member of the Working Group on Corporate Governance, set up by the Department
of Company Affairs, Government of India.

Mr. Vikram Swarup

Mr. Vikram Swarup, Mechanical Engineer and Managing
Director of Paharpur Cooling Towers Limited, is acknowledged
as an authority on thermal designing of cooling towers in India.
he has vast experience in marketing, engineering and other management
functions. He is on the Boards of various companies also.

Mr. Anand Bordia

Mr. Bordia, a former member of the Indian Revenue Service, was First
Secretary, Trade High Commission of India, London, and worked in the
Secretariat of the World Customs Organisation, Brussels, for seven years.
he held senior positions in the Central Government He was Member
(Finance), National Highways Authority of India.

Mr. Dhruba Narayan Ghosh

Mr. Ghosh was Secretary to the Government of India and former Chairman
of State Bank of India, Larsen & Toubro Ltd., Philips (India) Ltd., Peerless
Group of Companies, the Management Development Institute, Gurgaon,
and the Indian Institute of Management, Lucknow. Presently, he is on the
boards of several reputed companies.

Dr. Deepak Nayyar

Dr. Nayyar is an eminent economist and Emeritus Professor of Economics
at Jawaharlal Nehru University. He served as Chief Economic Advisor to
the Government of India and Secretary, Ministry of Finance, and was Vice
Chancellor, University of Delhi.

Smt Shailaja Chandra

A former IAS officer, and career civil servant for 38 years, she has
distinguished herself in several positions, including Delhi's first woman
Chief Secretary. Apart from 15 years with the Government of India, where
she held positions in the Ministries of Defence, Power and Health, she worked
in different parts of the country with various State Governments. She was
Secretary to the Union Ministry of Health and Family Welfare and Chairman,
Public Grievances Commission, and Appellate Authority under the Delhi Right
to Information Act.

Mr Dilip Ganesh Karnik

Mr Dilip Ganesh Karnik, Arbitrator & Legal Consultant, retired as a Judge of
Bombay High Court in May 2012. He was elevated as Additional Judge of the
Court in October 2001. A practising advocate from 1972 to 2001, he was a Gold
Medalist in Law from the University of Pune.

Mr. Sandip Ghose

Managing Director & Chief Executive Officer
Mr. Sandip Ghose is a Business Leader and General Management professional
with multi-disciplinary skill sets. He has nearly four decades of experience and
held a variety of senior leadership positions in industries, ranging from Consumer
Goods (FMCG), Media and Cement, across India and Nepal. He qualified as a

Chartered Accountant and Professional Coach accredited by the International

Coach Federation. A prolific commentator on current affairs, he is an invited
columnist in several print and on-line publications and guest on leading TV
News and Business channels. He is a strong believer in the India growth story and passionate about mentoring
and developing leaders for the future.

INDUSTRIAL OVERVIEW
Birla Corporation Limited is the flagship company of the Mp Birla group. Incorporated as Birla Jute
Manufacturing Company Limited in 1919, it was late Mr. Madhav Prasad Birla who gave shape to it. As
chairman of the company, he transformed it from a manufacturer of jute goods to a leading multiproduct
corporation with widespread activities. Under the chairmanship of Mrs. Priyamvada Birla, the company
crossed the Rs.1300-crore turnover mark and the name was changed to Birla Corporation Limited in 1998.

After the demise of Mrs. Priyamvada Birla, the company continued to consolidate in terms of profitability,
competitiveness and growth under the leadership of Mr.Rajendra S. Lodha, late chairman of the M.P. Birla
group. Under his leadership, the company posted its best ever results in the years ended 31.3.2006, 31.3.2007
and 31.3.2008. the company continued to record impressive growth in 2008-09 and 2009-10.
Mr. Harsh V Lodha is now chairman of the company.
The company had a turnover of Rs.6915.69 crores in 2019-20 and a net profit of Rs.505.18 crores. The
company is primarily engaged in the manufacturing of cement as its core business.
activity. It has significant presence in the jute goods industry as well.
The company has acquired 100% shares of Reliance Cement Company Private Limited (Reliance
Cement), a subsidiary of Reliance Infrastructure Limited (RIL). After this acquisition, Reliance Cement
has become a wholly-owned material subsidiary of Birla Corporation Limited. The entire cement
business of RIL has been acquired for an enterprise value of Rs.4800 crores. This acquisition provides
Birla Corporation Limited with the ownership of high-quality assets, taking its total capacity from
10MTPA to 15.5MTPA.

INSTALLED CAPACITY

PRODUCT INSTALLED CAPACITY

cement 15.5 million tons
Jute goods 52631 metric tons
Iron & steel 3750 metric tons

HISTORY

Born in 1918, Madhav Prasad of Bombay, son of RD Birla, was a part of the Birla Jute Manufacturing
Company since the beginning. By the time charge of Birla Jute which had.

he finished college, he was already in suffered economic downturns and wars.

Madhav changed the company to a company from Birla Jute Manufacturing Company to a company with
activities across a wide spectrum of industries. In MP Birla’s time, Birla Corporation and the other businesses
under Birla Group gained significant power and stance in the cement, auto trims, steel, and building materials.
When he died in 1990, his wife, Priyamvada Birla took over as the chairman of Birla in 1998 and changed the
name to Birla Corporation Limited. Priyamvada was known for her active roles in the community, healthcare,
and education.

CEMENT DIVISION
The cement division of Birla Corporation Limited has seven plants, two each at Raipur M.P.)- Raipur cement
works & Birla Vikas Cement, Chanderia (Rajasthan)-Birla Cement Works & Chanderia Cement Works,
Durgapur(W.B.)-Durgapur Cement Works & Durga Hitech Cement and one at Raebareli (U.P.)-Raebareli
Cement Works.
Cement plant were set up in MP and Rajasthan and grinding units in
West Bengal and UP:
Raipur cement works - 1959
Birla cement works - 1967
Durgapur cement works - 1974
Chittor cement works - 1986
SCW conversion plant - 1989
Raebareli unit - 1998
Location of cement plants in India

RAIPUR CEMENT PLANT

PLANTS AT RAIPUR IN MADHYA PRADESH:
Plant of “Raipur Cement Works” Plant of “Birla Vikas Cement”
Raipur Cement/Birla Vikas
Cement are industries of Birla Jute & Industries Ltd, are situated in North East corners of Raipur City about
5 km from Raipur.

Raipur Cement Plant was the first cement

plant in the house of Birla’s and the plant itself was of production capacity existing in our
country at that time.

PRODUCT PROFILE:-
They manufacture varieties of cement like Ordinary Portland Cement (OPC-43 & 53 grades), Portland
Pozzolana Cement (PPC-fly ash-based), Portland Slag Cement (PSC), Sulphate Resistant Cement and
Composite Cement.

NAME OF THE PRODUCTS ARE AS FOLLOWS:-

Our Vision

To be a premium global conglomerate with a clear focus on each of the businesses.

Our Mission
To deliver superior value to our customers, shareholders, employees and society at large.

CSR ACTIVITIES
Birla Corporation Limited (BCL) plays a proactive role in the socio-economic upliftment of people
residing in and around its facilities.

 Promoting healthcare, water and sanitation.

 It has actively supported establishment of Priyamvada Birla Cancer Research Institute at Raipur (M.P.).
 Free eye treatment camps are organized to benefit villagers in Raipur.
 Education, employability and livelihoods enhancement.
 Gender, equality and women empowerment, senior citizens care.
 Environmental sustainability.
 Promoting national and rural sports, Paralympics, Olympic sport.
 Rural development.
 CHAPTER 3

REVIEW OF LITERATURE

REVIEW OF LITERATURE
Review of literature helps the researcher to understand the concept of the topic. It provides the guideline to
carry on research work in the right direction. This is the reason why the researcher made an attempt to review
the available literature on the subject in the following manner:
Financial ratios are important to analysts due to conquer the little meaning of typically numbers. Thus, ratios
are intended to provide meaningful relationship between individual values in the financial statement
(REILLY, BROWN, 2006). Because the major financial statement report numerous individual items, it is
possible to produce a vast number of potential ratios, many which will have little value.

A single number from a financial statement is of little use, an individual financial ratio has a little value except
in relation to comparable ratios for other entities. That is, only relative financial ratios are relevant. A firm’s
performance relative can be compared by the aggregate economy; or by its industries; or by its past
performance (REILLY, BROWN, 2006).
 CHAPTER 4

OBJECTIVE’S

OBJECTIVES

Analysis of financial statements is an attempt to assess the efficiency and performance of an enterprise.
For that there are some objectives which are described as under.

The main aim of the study is to know the financial performance of the
Birla Cement Plant (Raipur) by using ratios:
 To know the financial status of the company.
 To offer suggestions based on research finding.
 CHAPTER 4

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY
Research
Any efforts which are directed to study of strategy needed to identify the problems and selection of best
solutions for better results are known as research.
Methodology
Methodology is nothing but a body of methods used in a particular activity.

• Selection of data: from the financial statements of the firm for last five years; i.e. from
• Financial Statements for the year 2018- 19, 2019-20, 2020-21, 2021-22.

• Period: the study covers a period of five years data from 2018- 19, 2019-20 , 2020-21, 2021-22.
mean an accounting year of the company consisting of 365 working days.

Research Design
In view of the objects of the study listed above an exploratory research design has been adopted. Exploratory
research is one which is largely interprets and already available information and it lays particular emphasis on
analysis and interpretation of the existing and available information.

 To know the credit worthiness of the company.

 To offer suggestions based on research finding.

DATA COLLECTION METHODS

Secondary Data
 Company balance sheet and profit and loss account.
 Company’s annual reports.
 company websites

Tools and techniques

 Accounting ratios.

 Financial statements of the company.

 CHAPTER 5

DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTERPRETATION

INTRA- FIRM ANALYSIS
Here, financial ratios are analyze and compares with the past five year performance of the same firm.
Profit and loss account of Birla cement plant
(All figures are in crores)

Particulars 2022 2021 2020 2019 2018

Income
Gross sale 6724.12 6360.50 5732.17 4829.30 3711.37
- Other 0.00 0.00 208.96 633.55 493.43
services
Net sale 6724.12 6360.50 5523.22 4195.74 3217.94
Total 6915.69 6548.73 5734.16 4347.67 3268.16
operating
revenues
Other 85.13 78.47 75.49 145.87 177.39
income
Total 7000.82 6627.20 5809.65 4493.53 3445.55
revenue
Expenses

Cost of 958.12 961.25 792.36 664.55 616.99

material
consumed
Other 5361.18 5348.51 4844.97 3591.87 2596.11
expenses
Total 6319.30 6309.76 5637.33 4256.42 3213.10
Expenses
Profit before
681.52 317.44 172.32 237.12 232.45
interest & tax
Less:- Interest
176.34 61.74 18.37 17.65 64.72
& tax
Net profit 505.18 255.70 153.95 219.47 167.73
EPS 66 33 20 29 22
3
Balance Sheet of Birla Cement Plant
(All figures are in corers)
Particulars 2022 2021 2020 2019 2018
Equity &
liabilities
Shareholder’s
fund
Equity share 77.01 77.01 77.01 77.01 77.01

capital
Total share 77.01 77.01 77.01 77.01 77.01

capital
Reserve & 4729.12 4418.21 4202.81 3209.24 2848.31

surplus
Total 4806.13 4495.22 4279.82 3286.25 2925.32

shareholder’s

fund
Non-current
liabilities
Long term 3668.95 3623.21 3829.76 4049.08 789.69

borrowing

Other long 1600.27 1427.99 1376.56 1118.3 579.24

term

liabilities

Total non- 5269.22 5051.20 5206.32 5167.38 1368.93

current

liabilities

Current 2100.08 1785.15 1588.77 1244.16 935.05

liabilities

Total capital 12175.47 11331.61 11074.94 9697.82 5229.32

& liabilities

Assets
 Non- current

assets

Fixed assets 8929.42 8178.32 8130.91 7168.17 2097.19

Other non- 552.11 648.78 489.98 434.81 458.05

current assets

Total non- 9481.53 8827.10 8620.89 7602.98 2555.24

current assets

Current

assets

Current 676.17 600.32 413.70 335.30 1374.41

investment

Inventories 787.63 783.02 686.96 630.18 567.41

Other current 1230.14 1721.49 1767.09 1464.66 2106.67

assets

Total current 2693.94 2504.51 2454.05 2094.84 2674.08

assets

Total assets 12175.47 11331.61 11074.94 9697.82 5229.32

RATIOS OF THE COMPANY OVER PAST FIVE YEARS ARE:

1. LIQUIDITY RATIOS

Current ratio
year Current assets Current Current ratio
liabilities
2018 2674.08 935.05 2.86:1
2019 2094.84 1244.16 1.68:1
2020 2454.05 1588.77 1.54:1
2021 2504.51 1785.15 1.40:1

2022 2693.94 2100.08 1.28:1

Current ratio

3.5
3
2.5
2
Current ratio
1.5

2018 2019 2020 2021 2022

Interpretation: In the last five years, the current ratio of the company declines continuously &
Current ratio (2020) of Birla cement plant is 1.28:1.A current ratio lower than 2:1 shows-
 unsatisfactory liquidity/ solvency position
 Low level of current assets and,
 Over trading

Quick ratio

year Quick assets Current Quick ratio

liabilities
2018 2103.87 935.05 2.25:1
2019 1468.11 1244.16 1.18:1
2020 1763.53 1588.77 1.11:1
2021 1713.74 1785.15 0.96:1
2022 1911.07 2100.08 0.91:1

Quick ratio = quick assets/ current liabilities

 Quick Ratio
3.5
3
2.5
2
Quick Ratio
1.5

2018 2019 2020 2021 2022

Interpretation: From 2018 to 2020 acid test ratio is higher than the ideal ratio. But in 2022
Quick ratio of Birla cement plant is 0.91:1.Ideal ratio is 1:1. However the ratio is lower than the
standard norms so it means that current liabilities are more than its liquid assets. As a result, the
enterprise may not be able to meet its short-term financial obligations.

PROFITABILITY RATIO
Gross profit ratio
year Gross profit Net sales Gross profit
ratio
2018 232.45 3217.94 9.62%
2019 237.12 4195.74 11.82%
2020 172.32 5523.22 9.59%
2021 317.44 6360.50 10.50%
2022 681.52 6724.12 15.46%

Gross profit ratio = gross profit/ net sale ×100

 8000

7000

6000

5000
year
4000 Gross profit
Net sales
3000 Gross profit ratio

2000

1000

0
1 2 3 4 5

Interpretation:
From the above we can say that gross profit ratio firstly increases then decline it happens
till 2019 and after that it increases continuously. In 2022 it was 15.46% of gross profit.
The company is maintaining proper control on trade activities.

Net profit ratio

Year Net profit Net sale Net profit

ratio
2018 167.73 3217.94 5.13%
2019 219.47 4195.74 5.04%
2020 153.95 5523.22 2.68%
2021 255.70 6360.50 3.90%
2022 505.18 6724.12 7.30%

Net profit ratio = net profit/ net sale ×100

 8000

7000

6000

5000
Year
4000 Net profit
Net sale
3000 Net profit ratio

2000

1000

0
1 2 3 4 5

Interpretation:
During the year 2018 the net profit margin is 5.13% and it declines till 2020 and then it
increases, in 2022 it was 7.30% of net profit. This ratio helps in determining the operational
efficiency of the business. An increase in the ratio shows improvement in the operational
efficiency and decline means otherwise.

Operating profit ratio

Year Operating Net sales Operating

profit profit ratio
2018 33.14 3217.94 1.03%
2019 91.05 4195.74 2.17%
2020 88.37 5523.22 1.60%
2021 73.15 6360.50 1.15%
2022 65.22 6724.12 0.97%
 8000

7000

6000

5000
Year
4000 Operating profit
Net sales
3000 Operating profit ratio

2000

1000

0
1 2 3 4 5

Interpretation:
In the first two years operating profit ratio increases. After that it rapidly declines.
It shows the contribution of company’s operations towards the profitability.

Overall profitability ratio

Return on shareholder’s investment

Year Net profit Shareholder’s Return on

after interest fund shareholder’s
& tax investment
2018 167.73 2925.32 5.73%
2019 219.47 3286.25 6.68%
2020 153.95 4279.82 3.60%
2021 255.70 4495.22 5.69%
2022 505.18 4806.13 10.51%

Return on shareholder’s investment= net profit after interest & tax/

shareholder’s fund ×100
Return on shareholder's investment
6000

5000

4000

Year
3000 Net profit after interest & tax
Shareholder’s fund
Return on shareholder’s investment
2000

1000

0
1 2 3 4 5

Interpretation:
Return on shareholder’s investment increases and then declines it happens till 2021. But,
in the year 2022 it is increased to 10.51%. The higher the percentage the more money is
being returned to investors.
Return on equity capital

Year Net profit Equity Return on

shareholder’s equity capital
fund
2018 167.62 2925.32 5.73%
2019 219.19 3286.25 6.67%
2020 190.45 4279.82 4.45%
2021 255.33 4495.22 5.68%
2022 505.12 4806.13 10.51%

Return on equity capital= net profit after interest, tax & preference
dividend/equity shareholder’s fund×100
Return on equity capital
 6000

5000

4000
Year
3000 Net profit
Equity shareholder’s
Return on equity capital
2000

1000

0
1 2 3 4 5

Interpretation: Return on equity in the year 2018 is 5.73% and it increased

suddenly to 6.67% in the year 2019 and then it declines to 4.45% in the year 2019.
Return on equity of the company is at satisfactory level and then it increased to
5.68% in 2021 and again increased to 10.51% in 2022. It indicates that how well a
company’s management deploys shareholder capital.
INTER-FIRM ANALYSIS
Here, financial ratios of five different firms are analyzes and compares with each other to determine
their competitive position.

PROFIT AND LOSS ACCOUNT

(For the year ended 31 December, 2021)
(All figures are in crores)

Particulars Birla ACC Ultratech JK Ambuja

Income
Gross sale 6724.12 13486.83 41475.94 5734.73 24093.86
- Other o.oo 0.00 0.00 0.00 0.00
services
Net sale 6724.12 13486.83 41475.94 5734.73 24093.86
Total 6915.69 13785.98 42124.83 5801.64 24516.17
operating
revenues
Other 85.13 216.74 647.77 85.33 449.59
income
Total 7000.82 14002.72 42772.60 5886.96 24965.76
revenue
Expenses
Cost of 958.12 4247.86 5512.68 923.11 7360.51
material
consumed
Other 5361.18 7878.93 32016.39 4229.41 13452.09
expenses
Total 6319.30 12126.79 37529.07 5152.52 20812.60
expenses
Profit 681.52 1875.93 5243.53 734.45 4153.16
before
interest
and tax
interest 176.34 176.01 568.16 251.06 1060.76
and tax

Net profit 505.18 1699.92 4675.37 483.39 3092.40

EPS 66 76 202 63 12

BALANCE SHEET
(For the year ended 31 December, 2022)
(All figures are in crores)
Particulars Birla ACC Ultratech JK Ambuja
Equity &
liabilities
Shareholder’s
fund
Equity share 77.01 187.99 288.63 77.27 397.13
capital
Total share 77.01 187.99 288.63 77.27 397.13
capital
Reserve & 4729.12 12511.14 38791.02 2950.42 22360.47
surplus
Total 4806.13 12699.13 39115.48 3027.68 22757.60
shareholder’s
fund
Non-current
liabilities
Long term 3668.95 83.98 17367.52 2703.51 43.60

borrowing

Other long 1600.27 609.62 6215.86 1006.41 1318.21

term

liabilities

Total non- 5269.22 693.60 23583.38 3709.92 1361.81

current

liabilities

Current 2100.08 4804.26 16630.75 1824.69 9260.40

liabilities

Total capital 12175.47 18200.23 79337.13 8542.03 39720.70

& liabilities

Assets
 Non- current

assets

Fixed assets 8929.42 7232.36 51649.49 6084.02 15031.71

Other non- 552.11 2519.24 12680.27 223.44 11884.16

current assets

Total non- 9481.53 9751.60 64329.76 6307.46 26915.87

current assets

Current

assets

Current 676.17 0.00 4243.69 1.03 0.00

investment

Inventories 787.63 901.27 4148.31 690.40 1648.58

Other current 1230.14 7547.36 6615.37 1543.14 11156.25

assets

Total current 2693.94 8448.63 15007.37 2234.57 12804.83

assets

Total assets 12175.47 18200.23 79337.13 8542.03 39720.70

FOLLOWING ARE THE RATIOS OF FIVE DIFFERENT FIRMS:

LIQUIDITY RATIO

Current ratio

The current ratio of all five companies is given below. From this we can see that liquidity
position of Birla cement (1.28) is far-far good than Ultratech (0.90).
Birla ACC Ultratech JK Ambuja
Cement
name
1.28 1.76 0.90 1.21 1.38
Current
ratio
 2
1.8
1.6
1.4
1.2
name
1
Current
0.8 ratio
0.6
0.4
0.2
0
Birla ACC Ultratech JK Ambuja

Quick ratio
Quick ratio tests the short term liquidity of the firm on
immediate basis. ACC is at top and Birla’s quick ratio is 0.91:1 which is less than the
standard ratio i.e. 1:1. Higher the quick ratios better the short-term financial position of the
firm.

Birla ACC Ultratech JK Ambuja

Cement
name
0.91 1.57 0.65 0.92 1.20
Quick
ratio

1.8

1.6

1.4

1.2

1 name
Quick
0.8
ratio
0.6

0.4

0.2

0
Birla ACC Ultratech JK Ambuja
SOLVENCY RATIO
Debt-equity ratio

Debt-equity ratio is a ratio of funded debt and total equity. Normally, all company
use debt for financing money. But from this research we get that maximum cement
industry do not relay on debt financing. Birla cement is only using financing its
operations. In my selected companies JK cement is having maximum debt equity
ratio i.e. 1.50:1.

Birla ACC Ultratech JK Ambuja

Cement
name
Debt- 0.78 0.01 0.55 1.50 0.54
equity
ratio
1.6

1.4

1.2

1
name
0.8
Debt- equity
ratio
0.6

0.4

0.2

0
Birla ACC Ultratech JK Ambuja

Interest coverage ratio

Interest coverage ratio shows how many times a company can cover its interest from
their earnings. Here the interest coverage ratio of Birla cement is 25.70 while Ambuja
cement is at top of the list having 29.36.

Cement Birla Acc Ultratech Jk Ambuja

name
 Interest 25.70 18.54 23.07 23.79 29.36
coverage
ratio

interest coverage ratio

35

30

25

20 interest coverage ratio

15

10

0
birla acc lutratceh jk ambuja

TURNOVER RATIO
Stock turnover ratio

Stock turnover ratio of Birla is 8.78 times while ACC is at top. Inventory turnover
ratio indicates whether the stock of the company has been efficiently used or not.
Higher the better.
Birla ACC Ultratech JK Ambuja
Cement
name
Stock 8.78 15.30 10.51 8.71 14.87
turnover
ratio
 18

16

14

12

10 name
8 Stock turnover
ratio
6

0
Birla ACC Ultratech JK Ambuja

Fixed asset turnover ratio

Birla cement is generating 56.80 fixed assets turnover ratio while ACC cement is at
top of the list having 75.74. it shows how efficiently the fixed assets of the company
are being utilized.
Birla ACC Ultratech JK
Cement
name
Fixed asset 56.80 75.74 53.09 69.55
turnover
ratio

80

70

60

50

40 Fixed asset turnover

ratio
30

20

10

0
Birla ACC Ultratech JK
PROFITABILITY RATIO
General profitability ratio

Gross profit margin of all companies is very good. Out of which Ultratech cement
is getting 23.57% of GP while Birla cement is getting 20.54%.

Birla ACC Ultratech JK

Cement
name
Gross 20.54 18.65 23.57 23.19
profit
ratio

25

20

15
name
Gross profit
ratio
10

0
Birla ACC Ultratech JK

Net profit ratio

Here we can see that Ultratech cement is generating 13.79% of net profit margin,
Ambuja is on second position with 12.61%. Birla cement is generating 7.30% of net
profit.
 Birla ACC Ultratech JK
Cement
name
7.30 10.30 13.79 7.32
Net profit
ratio

16

14

12

10

8 Net profit
ratio
6

0
Birla ACC Ultratech JK

Operating profit ratio

Operating profit margin of Birla cement is 0.97%. This is very low as compare to
Ultratech cement (2.72%).

Birla ACC Ultratech JK

Cement
name
Gross 20.54 18.65 23.57 23.19
profit
ratio
 25

20

15
name
Gross profit
10 ratio

0
Birla ACC Ultratech JK

Return on capital employed

This ratio most widely used in measuring the overall profitability and efficiency of the
Business. JK is at top having 16.88%, ACC is on second place and Birla is generating
10.61%.

Birla ACC Ultratech JK Ambuja

Cement
name
Return on 10.61 14.42 11.52 16.88 14.09
capital
employed

Return on assets
ACC cement is generating maximum return of 7.85% on assets, while Ultratech cement
is on second position having 7.32%. Birla cement is generating 4.14% return on assets.
Birla ACC Ultratech JK Ambuj
Cement a
name
4.14 7.85 7.32 5.09 5.95
Return on
assets
 9

5
Return on
4 assets

0
Birla ACC Ultratech JK Ambuja

Earnings per share

Earnings per share of Birla Cement are (65.60). This ratio helps the company in
estimating their capacity to pay dividend to its equity shareholders.
Birla ACC Ultratech JK Ambuja
Cement
name
65.60 76.16 20.61 51.82 11.91
Earnings per
share

80

70

60

50

40 name
Earnings per share
30

20

10

0
Birla ACC Ultratech JK Ambuja
 CHAPTER 6

FINDINGS & SUGGESTIONS

FINDINGS
Short term financial position:

The short term financial position of the company is good enough. Current assets of the
company in the year 2021 is Rs. 2693.94 Cr where as the current liabilities is Rs.
2100.08 Cr.

Current ratio is 1.28:1. Company needs bit improvement in it so that to make it 2:1.

Short term liquidity position is also good as the acid test ratio is 0.91:1. Company
needs bit improvement to make it 1:1.

Turnover ratio of the company reflects their good and sound position. Stock turnover
ratio is 8.78 times. It is good that they clear their stock more than 5 times in the year.
Debtors and creditors ratio also show positive results in their efficiency.

Long term financial position:

Long term financial policy is not as good as it should be. No doubt company
adopted very nice policy of financing fixed assets from the long term fixed assets
and the long term liabilities. Rest payment is made in cash, thereby leading to
reduction of the amount of cash.

Debt-equity ratio also gives the same picture. It should be near to one as
possible. Not only but also showing the increasing trends. This is not a good
sign.

Earnings per share are the one of most important factor.

Shareholders are the main stakeholders of the company they judge the
company’s performance on the basis of earnings per share & dividend declared.

In the accounting year 2021 companies earning per share is Rs.65.60. dividend paid
for the current year is Rs. 7.5 per share.

SUGGESTIONS

Current ratio is 1.28:1. Company needs bit improvement in it so that to make it 2:1.

The current ratio of the company doesn’t reach standard ratio so company need
to concentrate on increasing the current ratio by increasing in current assets.

Debt ratio of the company has been increased to subsequent year. High debt
ratio is unfavorable of the company.
The company needs to maintain good capital employed ratio by increasing the sales.
The company needs to increases the working capital turnover ratio for efficiently
utilization of working capital.
CHAPTER 8

CONCLUSION
CONCLUSION

Ratios make the related information comparable. A single figure by itself has no
meaning, but when expressed in terms of a related figure, it yields significant
interferences. Thus, ratios are relative figures reflecting the relationship between related
variables. Their use as tools of financial analysis involves their comparison as single
ratios, like absolute figures, are not of much use.
Ratio analysis has a major significance in analyzing the financial performance of a
company over a period of time. Decisions affecting product prices, per unit costs,
volume or efficiency have an impact on the profit margin or turnover ratios of a
company.
Financial ratios are essentially concerned with the identification of significant
accounting data relationships, which give the decision- maker insights into the financial
performance of a company.
The analysis of financial statements is a process of evaluating the relationship between
component parts of financial statements to obtain a better understanding of the firm’s
position and performance.
Ratio analysis in view of its several limitations should be considered only as a tool for
analysis rather than as an end in itself. The reliability and significance attached to ratios
will largely hinge upon the quality of data on which they are based. They are as good or
as bad as the data itself. Nevertheless, they are an important tool of financial analysis.
CHAPTER 9

REFRENCES
Except the supreme power, the almighty, no one is impeccable and prowess
enough to accomplish anything without any faults and limitations. A
research is no exception. No study is devoid of certain shortcomings. Some
problems encountered in this study are under mentioned:
Some officers were too busy to give a sincere response to investigators &
hence their response may not relate to real picture.
Manager some time denied disclosing some important financial matters,
which can be helpful in this study.
The time period given to me for the completion of the project was short in
such a short span of time it is difficult to complete any project in detail.
Some information related to the study, which had been collected from the
company was rounded off because of some influence.
 CHAPTER 10

BIBLIOGRAPHY
WEBSITES:-

https://www.google.com/maps/search/official+link+of+birla+cement+plant+raipur/
@21.2566063,81.6020416,14z?hl=en

https://goo.gl/maps/VSAQdhrCRnYvtoVQ7

BOOKS USED:-
Management Accounting
Dr. SP. Gupta
Tulsian’s Accountancy
Dr. PC Tulsian