IOSR Journal of Business and Management (IOSR-JBM)

e-ISSN : 2278-487X, p-ISSN : 2319-7668, PP 39-44

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A Study On Financial Performance Using The Ratio Analysis At

Kaleeswarar Mills B Unit Of National Textile Corporation Ltd
PROF. Mr.S.SABARINATHAN, Ms.V.JENIFER
Faculty Department of Management Studies, Erode Sengunthar Engineering College, Erode 638057, Tamil
Nadu, India
II-MBA Student, Erode Sengunthar Engineering College, Thudupathi, and Erode.

ABSTRACT : The present study of the research entitled “A STUDY ON FINANCIAL PERFORMANCE
USING THE RATIO ANALYSIS AT KALEESWARAR MILLS B UNIT OF NATIONAL TEXTILE
CORPORATION LTD”. The study was based on secondary data from records, reports and profile of the
organization. The validity of any research is based on the systematic method of data collection analysis. The
Ratio analysis is the process of identifying the financial soundness and cost effectiveness of the firm by
establishing relationship between the items of balance sheet and profit and loss a/c. The present study has
thrown major concentration in ratio analysis, from the 5years balance sheet and profit and loss a/c. An
objective of the study includes the profitability, cost of goods sold and other experience company overall
financial performance of the company. Short term-long term position of the company. Based on the five years
balance sheet and profit and loss a/c suitable suggestion were given by the researcher for a better soundness
and cost effectiveness of the company.

I. INTRODUCTION
Kaleeswarar mills „B‟ unit, Kalayarkoil is a unit of national Textile corporation
(Tamilnadu&Pondichery) Ltd Coimbatore, owned by Government of India. when the condition of the textile
mill was worse the Government of India decided to take over the management of this sick textile mills.
Accordingly an act was passed which was called “The sick textile undertaken act 1974” The main intention of
this enactment was:
1) To Provide Continuous employment to the employees.
2) To fulfill the basic necessities of worker at cheaper rate.
3) To protect Government revenue (Tax/Duty)
It is one of the best leading mills among NTC mills in India. NTC that is the holding company New
Delhi selected this unit as a model mill and if deputes techniques and higher officials of various subsidiaries to
this unit for field study. “ENTYCE” yarn produced by Kaleeswarar mills “B” unit Kalaiyarkoil are 90% of
their yarn produced are sold in the Mumbai market and some them are sent to their own depot for sales. The
capacity of this unit was increased only after 1984. The mill had entered into export marketing during 1987-
1988. The mill already exported to Belgium, west Germany, U.K etc. in internal Products are sold the depot at
Madurai, Erode, Tripper, and Bunge.

II. REVIEW OF LITERATURE

Robert W. Smith and Thomas D. Lynch

Ratio is any strategic or tactical advantage, and as a verb, means to exploit such an advantage, just as
the use of a physical lever gives one an advantage in the physical sense.Ratio is a very popular business term .In
the world of finance, Ratio is the use of borrowed money to make an investment and the return on an
investment.

Ethan Coquette
Which an investor or business is utilizing borrowed money. Companies that are highly lRatio may be at
risk of bankruptcy if they are unable to make payments on their debt; they may also be unable to find
new lenders in the future. Ratio is not always bad, however; it can increase the shareholders' return on
their investment and often there is tax advantages associated with borrowing.

III. RESEARCH METHODOLOGY

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A Study On Financial Performance Using The Ratio Analysis At Kaleeswarar Mills B Unit Of

The researcher adopted the analysis of data in a manner that to combine relevance to purpose with
economy in procedure.Research design is the basis of defining the research problem. The preparation of the
design of the project is popularly known as research design. It was used in primary data was collected for the
first time. The project data has been collected through discussion with accounts manager of the company.
Secondary data that are already collected and analyzed by someone else such as annual reports, internal records,
journals, magazines and newspapers. The study depends mainly in company‟s report, books and company‟s
profile. The tools are used ratio analysis in five year period of the study2009-2013.

IV. OBJECTIVES OF THE STUDY

To analyze the ratio analysis of the KALEESWARAR MILLS „B‟ unit, Kalayarkoil is a unit of
national Textile Corporation ltd..

. RATIO ANALYSIS
CURRENT RATIO

TABLE SHOWING CURRENT RATIO

Current assets Current liabilities
Year Ratio (%)
(Rs in Crore) (Rs in crore)
2008-2009 40257368.34 25209924.40 1.60
2009-2010 167979380.52 38774695.23 4.33
2010-2011 156197744.19 60092442.95 2.60
2011-2012 228981358.82 60116161.38 3.81
2012-2013 224360290.10 68932830.58 3.25
Source: Secondary data
ABSOLUTE LIQUID/CASH RATIO

TABLE SHOWING ABSOLUTE LIQUID RATIO

Absolute liquid
Current liabilities
Year asset Ratio (%)
(Rs in crore)
(Rs in Crore)
49209.72 0.0020
2008-2009 25209924.40
101573.02 0.0026
2009-2010 38774695.23
71663.31 0.0012
2010-2011 60092442.95

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2014420.86 0.0335
2011-2012 60116161.38
16664084.91 0.2417
2012-2013 68932830.58
Source: Secondary data

ACID TEST RATIO

TABLE SHOWING ACID TEST RATIO

Liquid Assets Current liabilities
Year Ratio (%)
(Rs in Crore) (Rs in crore)
2008-2009 15047443.94 25209924.40 0.60

2009-2010 129204685.29 38774695.23 3.33

2010-2011 96105301.24 60092442.95 1.60

2011-2012 108865197.44 60116161.38 2.81

2012-2013 155427459.52 68932830.58 2.25
Source: Secondary data

INVENTORY STOCK TURNOVER RATIO

TABLE SHOWING INVENTORY TURNOVER RATIO

Sales Inventories
Year Times
(Rs in Crore) (Rs in Crore)
180901425.79 25324162.41 7.14
2008-2009
257354530.45 35987603.25 7.15
2009-2010
296527140.88 74535121.26 3.98
2010-2011
258451522.23 16182173.49 15.97
2011-2012
453326218.00 25239597.49 17.96
2012-2013

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A Study On Financial Performance Using The Ratio Analysis At Kaleeswarar Mills B Unit Of

Source: Secondary data

DEBTORS TURNOVER RATIO

1.5 TABLE SHOWING DEBTORS TURNOVER RATIO

Total Sales Debtors
Year Times
(Rs in Crore) (Rs in crore)
180901425.79 5780936.84 31.29
2008-2009
257354530.45 13600093.00 18.92
2009-2010
296527140.88 7664480.14 38.69
2010-2011
258451522.23 16182173.49 15.97
2011-2012
453326218.00 25239597.49 17.96
2012-2013
Source: Secondary data

V. INTERPRETATION
The current ratio of the company is higher (4.33%) in 2009-2010 and it is lower (1.60%) in 2008-2009
The Absolute liquid ratio of the company is higher (0.2417%) in 2012-2013 and it is lower (0.0012%)
in 2010-2011
 The Acid test ratio of the company is higher in 2009-2010 (3.33%) and it is lower in 2008-2009
(0.60%)
 The Inventory turnover ratioof the company is higher in 2012-2013 (17.96 %) and it is lower in 2008-
2009 (7.14%).
 The debtor‟s turnover ratio is higher in 2010-2011 (38.69%) and the ratio is lower in 2011-2012
(15.97%).
SUGGESTION:
 The company should concentrate the financial performance of the company.
 The company should control the ratio to earn more profit.
 I suggest the company to improve the absolute liquid asset.

VI. CONCLUSION
The study conducted on ratio analysis at “Kaleeswarar mills „B‟, unit of national textile corporation
ltd” gives a view of analysis evaluation of liquidity position of the company.Based on the tools used analysis
and interpretation have been made giving way for useful and constructive suggestions. Thus the ratio analysis of
the company is satisfactory. The company should enhance its performance for meeting challenges and
exploiting opportunities in future.The project will guide to the management to interpret its weakness and
problems this will certainly helpthe management to taking financial decision. However more efforts need to be
taken to improve the financial position for the growth of the company.

APPENDICES
Kaleeswarar mills „B‟, unit of national textile corporation ltd
Balance Sheet as on 31st March 2008-2009 &2009-2010 & 2010-2011

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A Study On Financial Performance Using The Ratio Analysis At Kaleeswarar Mills B Unit Of

PARTICULARS 2008-2009 2009-2010 2010-2011

1.SOURCE OF FUNDS
(a)shareholders fund
i)share capital 26348000.00 26348000.00 26348000.00
ii)Reserve and surplus 1975899.43 111810934.43 111810934.43

(b)loan fund
i)secured loans 509655.46 6694630.10 7769086.21
ii)unsecured loans 278130115.18 218412623.90 184723587.52
TOTAL 306963670.07 363266188.43 330651608.16
2.APPLICATIONS OF FUNDS
a)Fixed Assets
i)Gross Block 211113843.97 218851732.32 224080485.36
ii)Less: Depreciation Reserve 105211537.18 116899927.18 132615046.67
iii)Net Block 105902306.79 101951805.14 91465438.69
iv)capital WIP 6815954.23 - 2776588.23
TOTAL 112718261.02 101951805.14 94242026.92
b)Investment 100.00 100.00 100.00
c)Current Assets, Loans &Advances
i)Inventories 25324162.41 35987603.25 74535121.26
ii)sundry debtors 5780936.84 13600093.00 7664480.14
iii)cash and bank balance 49209.72 101573.02 71663.31
iv)other current assets 8442328.07 6276981.71 5946182.11
v)Loans Advances 860731.30 104175899.65 16782622.68
vi)Inter-sub unit office current a/c - - -
vii) Inter- unit office current a/c - 7837229.89 51197674.69
TOTAL (A) 40257368.34 167979380.52 156197744.19
LESS
Current liabilities Provision
i)Current liabilities 25209924.40 38774695.23 60092442.95
ii)Provision 31101247.00 35565300.00 34794861.00
iii)Inter sub office current a/c - 105066.00 -

TOTAL (B) 56311171.40 74445061.23 94887303.95

Net current assets/liabilities (A-B) 16053803.06 93534319.29 61310440.24
Miscellaneous expenses - - -
Inter unit current a/c 35366346.70 - -
d)Profit & loss a/c
(Balance as per annexed a/c) 245665458.81 167779964.00 175099041.00
TOTAL 306963670.07 363266188.43 330651608.16

Kaleeswarar mills „B‟, unit of national textile corporation ltd

Balance Sheet as on 31st March 2011-2012 & 2012-2013

PARTICULARS 2011-2012 2012-2013

I.EQUITY AND LIABILITIES
1.Shareholders funds - -
a)Share capital 26348000.00 26348000.00
b)Reserve & Surplus 245634591.74 170102543.37

SUB TOTAL(1) 219286591.74 143754543.37

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A Study On Financial Performance Using The Ratio Analysis At Kaleeswarar Mills B Unit Of

2.Non current liabilities

a)Long term Borrowings 906771806.60 667078307.52
b)Deferred tax Liabilities - -
c)Other Long term liabilities - -
d)long term provisions 34458665.00 34297550.00

SUB TOTAL(2) 941230471.60 701375857.52

3.Current liabilities
a)Short term borrowings - -
b)Trade payable 15115857.24 32177631.32
c)Other current liabilities 40148325.14 35604878.26
d)Short term provisions 4851979.00 1150321.00
e) Inter-sub unit office current a/c - -
f) Inter- unit office current a/c - -
SUB TOTAL(3) 60116161.38 68932830.58
TOTAL(1+2+3) 782060041.24 626554144.73
II.ASSETS
1.Non current asset
a)Fixed assets
i)Tangible assets 142415994.40 138675341.82
ii)Intangible assets - -
iii)Capital WIP 397117086.53 209782663.61
iv)Intangible assets under development - -

SUB TOTAL(a) 539533080.93 348458005.43

b)Non current investment 100.00 100.00
c)Deferred Tax assete(net) - -
d)Long term loans & advances 13533501.49 53480583.20
e)other non current assets 12000.00 255166.00

SUB TOTAL(1) 553078682.42 402193854.63

2.current assets
a)Current investment - -
b)Inventories 115599800.75 128068985.61
c)sundry debtors 16182173.49 25239597.49
d)cash and bank balance 2014420.86 16664084.91
e)Short term Loans Advances 5739655.98 3163115.61
f)other current assets 8326298.56 6988572.56
g)Inter-sub unit office current a/c - -
h) Inter- unit office current a/c 81119009.18 44235933.92

SUB TOTAL(2) 228981358.82 224360290.10

TOTAL(1+2) 782060041.24 626554144.73

REFERENCES
 I.M Pandey .Financial Management, 9thEdition ,Vikas Publishing House Pvt Ltd,Vol.23,pp.320-328.
WEBSITES
www.bharatbook.com
www.westpublishers.com

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