8/14/2019 FM Report -Nirma

1/47

Company Profile

1

8/14/2019 FM Report -Nirma

2/47

Nirma - An Overview

Nirma is one of the few names - which is instantly recognized as a true

Indian brand, which took on mighty multinationals and rewrote the Marketing

rules to win the heart of the consumer.

Nirma, the proverbial Rags to Riches saga of Dr. Karsanbhai Patel, is a

classic example of the success of Indian entrepreneurship in the face of stiff

competition. Starting as a one-man operation in 1969, today, it has about 14,

000 employee-base and annual turnover is above Rs. 25, 00 Crores.

India is a one of the largest consumer economy, with burgeoning middle

class pie. In such a widespread, diverse Marketplace, Nirma

aptly concentrated all its efforts towards creating and building a strong

consumer preference towards its value-for-money products.

It was way back in 60s and 70s, where the domestic detergent Market

had only premium segment, with very few players and was dominated by

MNCs.

It was 1969, when Karsanbhai Patel started door-to-door selling his

(Nirma) detergent powder, priced at an astonishing Rs. 3 per kg, when the

available cheapest brand in the Market was Rs. 13/- per kg. It was really an

innovative, quality product with indigenous process, packaging and low-

profiled Marketing, which changed the habit of Indian housewives for

2

8/14/2019 FM Report -Nirma

3/47

washing their clothes.

In a short span, Nirma created an entirely new Market segment in

domestic Marketplace, which is, eventually the largest consumer pocket and

quickly emerged as dominating Market player a position it has never since

relinquished. Rewriting the Marketing rules, Nirma became a one of the

widely discussed success stories between the four-walls of the B-school

classrooms across the world.

3

8/14/2019 FM Report -Nirma

4/47

BOARD OF DIRECTORS

Dr. K. K. Patel, Chairman

Shri Rakesh K. Patel, Vice Chairman

Shri Shrenikbhai K. Lalbhai

Shri Pankaj R. Patel

Shri Rajendra D. Shah

Shri A. P. Sarwan

Shri Chinubhai R. Shah

Shri Kaushikbhai N. Patel Shri Kalpesh A. Patel, Executive Director

Shri Hiren K. Patel, Managing Director

AUDITORS COMPANY SECRETARY

Hemanshu Shah & Co., Shri Paresh Sheth

Chartered Accountants,

Ahmedabad

4

8/14/2019 FM Report -Nirma

5/47

REGISTERED OFFICE

Nirma House,

Ashram Road,

Ahmedabad 380 009

SUBSIDIARY COMPANY

Nirma ConsumerCare Limited,

Nirma House,

Ashram Road,

Ahmedabad 380 009

5

8/14/2019 FM Report -Nirma

6/47

Corporate Social Responsibility

Nirma's vision visualises itself as a vibrant, pro-active and widely

admired, ethical corporate citizen. Nirma believes that exemplaryachievements on the Business points are not enough in the making of a good

corporate citizen. In fulfilment of this role as a responsible part of the society

and environment in which one operates, Nirma has undertaken a host of

activities in the educational and social development areas.

Realising the significant role of education - especially technical andmanagerial in socio-economic development of the nation, Nirma played a vital

role by establishing the Nirma Education & Research Foundation (NERF)

in 1994.Recently, this Foundation has been awarded University status. This

status gives way to shape up and expand into a body providing education in

other courses like medicine, nursing, biotechnology, etc.

Along with the existing courses under a single roof of Nirma University.

Today, this state-of-the art academic infrastructure runs various institution

bodies such as Institute of Technology, Institute of Management, Institute

of Pharmaceutical Sciences and Institute of Deploma Engineering. These

6

8/14/2019 FM Report -Nirma

7/47

all institutions are located in a disciplined, serene and pleasant environment.

The campus blends beautifully with the green landscaping, aesthetic elegance

of arches and the vibrant pursuit of knowledge by the young aspirants. The

environment gives full scope for group activities, which are plenty, as also to

individual pursuits for development on preferred tracks.

Awards

The man behind the success of Nirma phenomenon Dr. Karsanbhai Patel

is a recipient of various awards and accolades. He has been bestowed with

various awards like

Udyog Ratna by Federation of Association of Small-Scale Industries of

Gujarat, New Delhi.

Outstanding Industrialist of Eighties by Gujarat Chamber of

Commerce and Industry, Ahmedabad (in 1990).

Gujarat Businessman Award in 1998 by Gujarat Chamber of

Commerce and Industry, Ahmedabad.

Excellence in Corporate Governance Award by Rotary International

District 2000.

A&M Hall of Fame

Shri Karsanbhai has been awarded an Honorary Doctorate by Florida

Atlantic University, Florida, USA in the year 2001 in recognition of his

exceptional accomplishments as a philanthropist and Businessman.

7

8/14/2019 FM Report -Nirma

8/47

Dividends

2005-2006

During the year for the Company announced dividend at 6 % on

Preference shares i.e. Rs.6/- per share on 2,79,285 Redeemable Non-

Cumulative Non-Convertible Preference shares of Rs.100/- each absorbing

Rs.0.19 crore including tax on dividend.

ForEquity shares the Company announced dividend at 75 % i.e. Rs.7.50/-per share on the 7,93,84,684 equity shares of Rs.10/- each absorbing Rs.67.89

Crores including tax on dividend.

During the year under review, your Company achieved Gross Sales of

Rs.2244.11 crore against Rs.2149.21 crore for the previous year, registering

growth of about 4.46 %.

2006-2007

In this year Company recommend the dividend on Preference shares at 6

% i.e. Rs.6/- per share on 279285 Redeemable Non Cumulative Non

8

8/14/2019 FM Report -Nirma

9/47

Convertible Preference shares of Rs.100/- each absorbing Rs.0.19 Crores

including tax on dividend. The Board has not recommended any further

dividend on equity shares for the year ended 31st March, 2007 keeping in

view the Companys need to reserve the internal accruals, to finance the

future objectives and considered the interim dividend paid, as final dividend

on equity shares for the financial year 2006-07.

The Company paid interim dividend at 80 % on subdivided Equity shares

of Rs.5/- each during the year i.e. Rs.4/- per equity share.

2007-2008

On Preference shares the Company announced dividend at 6 % i.e. Rs.6/-

per share on 279285 Redeemable Non cumulative Non convertible Preference

shares of Rs.100/- each absorbing Rs.0.20 Crores including tax

On Equity shares the Company announced dividend at 80 % i.e. Rs.4/- pershare of Rs.5/- each absorbing Rs.74.48 Crores including tax, for the financial

year 2007-08.

The Turnover during the year on standalone basis has marginally increased

from Rs.2541.05 Crores to Rs.2650.78 Crores showing increase by Rs.109.73

Crores.

On consolidated basis, the turnover is Rs.3003.03 Crores during the year.

The operating profit before interest, depreciation and tax is Rs.390.26 Crores

9

8/14/2019 FM Report -Nirma

10/47

during the year compared to Rs.379.38 Crores of the previous year. The net

profit has gone up to Rs.229.73 Crores during the year under review.

Cash flow Statements

10

8/14/2019 FM Report -Nirma

11/47

Cash flow statement for the year ended 31st

March, 2008

11

8/14/2019 FM Report -Nirma

12/47

Cash flow statement for the year ended 31st March, 2007

12

8/14/2019 FM Report -Nirma

13/47

Cash flow statement for the year ended 31st March, 2006

13

8/14/2019 FM Report -Nirma

14/47

Notes:

14

8/14/2019 FM Report -Nirma

15/47

Profit Before Tax of the Company for the Financial year 2007-08 is

226.58 Crores & has Flow of Cash 386.96 Crores, which is Operating

Profit before Working Capital changes. It is increase as compare to Net

Profit Before Tax. Because of the Company provides depreciation or writes

off the Debt.

The Company has Net Cash Flow from Operating Activity of Rs. 219.93

Crores. Here the Trade Receivables are increasing and because ofPayment

of Interest & Direct Taxes, The Company has Net Cash Flow from

Operating Activities is decreasing.

The Company purchases Fixed Assets worth Rs. 311.44 Crores for the

Financial year 2007-08 and also purchases Investments of Rs.40.76 Crores.

The Company receives Interest of Rs.15.39 Crores.

Because of all the above Transactions, the Company has decreasing Net

Cash used in Investing Activities of Rs.113.55 Crores.

The Company has Borrowings of Rs.382.88 Crores and it also Repays the

Borrowings of Rs.2.61 Crores. Due to the Payment and Borrowings, the

Company has Net Cash used in Financial Activities is of Rs.123.42 Crores.

15

8/14/2019 FM Report -Nirma

16/47

8/14/2019 FM Report -Nirma

17/47

Comparative Profit & Loss A/c

Particulars

Schedule

2005-06 2006-07 2007-08

Income:

Sales

Less:Excise Duty

2244.11

325.31

2541.05

295.01

2650.78

318.57

Net Sales

Other Income (13)

Increase In Stock (14)

1918.80

24.01

6.98

2246.04

26.23

67.52

2332.21

19.65

25.96

(1) Total Income 1949.80 2339.79 2371.82

Expenditure:

Consumption of Raw Material (15)

Purchase Of Finished Goods

Payment to & Pro. for Employee (16)

Mfg, Admin & Sales Exps. (17)

Interest & Charges (18)

906.18

--

43.8

506.13

(6.73)

1091.62

0.07

65.10

803.62

(6.52)

1084.06

1.15

81.65

814.70

7.92

(2) Total Expenditure 1449.36 1953.89 1989.42

Profit Before Dep. & Tax (1-2)

Less:Pro. For Depreciation

Add:Pro. For Expenditure

500.44

158.42

--

385.90

207.51

--

382.34

226.65

70.89

Profit Before Tax

Less:Pro. For Tax - Current Tax

- Fringe Benefit Tax

- Deferred Tax

344.02

106.5

0.44

(4.30)

178.39

20

0.50

(48.77)

226.58

26

0.40

(29.55)

Net Profit 241.30.44 109.12 229.73

From the above Statement, we can conclude that

17

8/14/2019 FM Report -Nirma

18/47

1. The Sales of the company is continuously increasing, which is Rs.

2244.11 Crores in the Financial Year 2005-06 and Rs.2650.78 Crores in

the Financial Year 2007-08 rise by Rs.406.67 Crores.2. There is no provision for the Expenditure in the Previous Years, but

company Introduce a Provision for Expenditure in the Year 2007-08

worth Rs. 70.89 Crores.

3. As compare to the Previous Year, The Net Profit of the Company also

increased by Rs. 120.60 Crores.

Comparative Balance Sheet

18

8/14/2019 FM Report -Nirma

19/47

Particulars

Schedules2006 2007 2008

SOURCES OF FUNDS

Shareholders FundsShare capital (1)

Reserves and surplus (2)82.16

1965.81

82.36

2347.42

82.36

2502.62

2047.99 2429.78 2584.98

Loan Funds

Secured loans (3)

Unsecured loans (4)

344.30

3.79

239.15

85.70

182.54

261.40

348.09 324.85 443.94

2396.08 2754.63 3028.92APPLICATION OF FUNDS

Fixed Assets (5)

Gross block

Less : Depreciation

2733.48

983.35

3649.80

1404.99

3738.92

1826.96

Net block

Add : Capital work-in-progress

1750.13

40.78

2044.81

113.23

1911.96

259.61

1790.91 21588.04 2171.57

Investments (6) 7.49 6.70 45.85

Current Assets, Loans & Advances

Inventories (7)

Sundry debtors (8)

Cash and bank balances (9)

Loans and advances (10)

308.14

221.52

271.17

319.98

486.01

233.39

62.77

550.50

635.16

216.37

72.65

500.86

1120.81 1332.67 1425.04

Less : Current Liabilities and Provisions (11)

Current liabilities

Provisions91.77

77.18

214.60

125.23

195.46

129.68

168.95 339.83 325.14

Net Current Assets 951.86 992.84 1099.90

19

8/14/2019 FM Report -Nirma

20/47

Deferred tax liabilities (12) 354.18 402.95 288.40

597.68 589.89 811.50

2396.08 2754.63 3028.92

From the above Balance sheet of the Company for three Years, we can

conclude below given matters:

1. The Reserves & Surpluses of the company are continuously increasing

from Rs. 1965.80 Crores in the Year 2005-06 to Rs. 2502.62 in 2007-08.

2. In addition, the Investments are going on rising from only Rs.7.49

Crores on The Year 2005-06 to Rs.45.85 Crores in the Year 2007-08

Difference of Rs.38.36.

3. Simultaneously the Current Assets of the Company are increase by Rs.

148.04 Crores as Compare to the Year 2005-06.

20

8/14/2019 FM Report -Nirma

21/47

Ratio Analysis

Ratio:

A Ratio is only comparison of numerator with denominator. The term

Ratio refers to the numerical or quantitative relationship between two figures

21

8/14/2019 FM Report -Nirma

22/47

and obtained by the letter Ratios are designed to show, How one number is

related to another?

Advantages of Ratio Analysis

The use of Ratio was started by banks for ascertaining the liquidity and

profitability of companies Business for the purpose of advancing loans to

them profitably. The Ratio analysis provides useful data to the Management,

which would keep them in taking important policy decisions. Diverse group of

people make use of Ratio to determining a particular aspect of the financialposition of the Company in which they are interested.

Profitability:-

Useful information about the trend of profitability is available from

profitability Ratios. The Gross Profit Ratio, the Net Profit Ratio & Ratio of

Return on Investment, give good ideas of the Profitability of Business. On the

basis of these Ratios, investors get ideas about the overall efficiency of

Business. The Management gets an idea about the efficiency of managers &

banks as well as other creditors draw useful conclusion about repaying

capacity of borrowers.

Liquidity:-

In fact, the use of Ratios made initially Business. The current Ratio,

liquid Ratio & acid test Ratio will be able to meet its current liability as &

22

8/14/2019 FM Report -Nirma

23/47

when the nature bank & others leaders will be able to conclude from these

Ratios whether the firm will be able to pay regularly the interest & loan

interest.

Efficiency:-

The turnover Ratios are excellent guides to measures the efficiency of

managers, i.e. the stock turnover will indicate how efficiently the sale is being

made the debtors turnover will indicate the efficiency of collection

department and assets turnover shows the efficiency with which the assets are

used in Business. All such Ratios related to sales present a good picture on the

success or otherwise of the Business.

Inter-Firm Comparison:-

The absolute Ratios of firm are not much use, unless they are compared

with similar Ratio of the other firm belonging to same industry. This is inter-

firm comparisons, which shows the strength and weakness of the firm as

compare to other firm and will indicate corrective measures.

Use for budgetary Control:-

23

8/14/2019 FM Report -Nirma

24/47

Regular budgetary reports are prepaid in a Business where the system of

budgetary control is in use. If various Ratios are presented in these reports it

will give a fairly good idea about various aspects of financial position.

Useful for Decision Making:-

Ratios guide the Management in making some of the important decision.

Suppose, the liquidity Ratio shows an unsatisfactory position, the

Management may decide to get addition liquid funds. Even for capital

expenditure decision, the Ratio of return on investment will guide the

Management. The efficiency of various departments can be judged on the

Business of their profitability Ratio and efficiency of each department can

thus be determined.

Disadvantages of Ratio Analysis

24

8/14/2019 FM Report -Nirma

25/47

Single Years Ratio has Limited Liquidity:-

The utility of Ratios computed from the financial statement of one year

only is obviously limited. They must be compared with the past results of the

Company as above with the result of other Business firms in the same

industry.

Other factors must be Considered:-

While computed Ratios of different firms, it must be remembered that

different accountancy plans & policies. For example, some may use a straight-

line method of depreciation, while others may make use of diminishing

balance method. Hence, great care has to be exercised before any conclusions

are drawn from such comparison.

Limiting Utility of Historical Ratios:-

While comparing Ratios of past several years it should be remember that

charges in price level might render such comparison useless. An assets

purchase some ten years before may be sales are expressed in current Market

value.

Importance of Ratio

25

8/14/2019 FM Report -Nirma

26/47

The inter relationship that exists among the different items appeared in

the financial statements are related by A/C Ratio. Ratio analysis of affirm is

financial statement of it interest to a number of parties mainly, share holder,creditors, financial executives etc. shareholders are interested with earning

capacity of the firm.

Liquidity Position:-

With the help of Ratio analysis conclusion can be drawn regarding the

liquidity position of affirm. The liquidity position of a firm would be

satisfactory if it is able to meet its current obligations when they become due.

A firm can be say to have the ability to meet its short-term liabilities if it has

sufficient liquid fund to pay the interest on its short maturing debt usually

within a year as to repay the principles.

Long Term Solvency:-

Ratio analysis is equally useful for assessing the long-term finance

liability of a firm. This aspect of the financial position of a bollowel is of

concern to long-term creditors Security analysis of the present & position

owners of Business. The long term, solvency is measured by the leverage,

capital & profitability Ratio that focus on earning power & operating

efficiency Ratio analysis the strengths and weakness of firm in this aspect.

Operating Efficiency:-

26

8/14/2019 FM Report -Nirma

27/47

Yet another dimension of the usefulness if the Ratio analysis, relevant

from the viewpoint of Management is that it throws light on the degree of

efficiency in the Management & utilization of its assets. The various activitiesRatios measure this kind of operational efficiency.

Overall Profitability:-

On like the outside parties which are interested in one aspect of the

financial position of a firm, the Management is constantly concerned about the

ability of the firm to meet its short term as well as long term obligation to its

creditors to ensure a reasonable return to its owners and secured optimum

utilization of the assets of the firm.

Inter- Firm Comparison:-

Ratio analysis not only throws light on the financial position of a firm

but also serves as a stepping-stone to remedial measures. This is made

possible due to inter firm comparison & comparison with industry averages. A

single figure of a particular Ratio is meaningless unless it is related to some

standards, more Ratios as a firm with the industry average. It should be

reasonably accepted that the performance of the firm should be broad

uniformity with that of the industry to which it belongs.

27

8/14/2019 FM Report -Nirma

28/47

Spread Sheet

28

8/14/2019 FM Report -Nirma

29/47

PARTICULARS AS ON 31-03-08 AS ON 31-03-07 AS ON 31-03-06

Equity Share Capital (Paid Up) 79.57 79.39 79.39

Reserves & Surpluses 2502.62 2347.42 1965.81Preference Share Capital 5.00 5.00 10.00

Secured Loans

Long Term Loans -- - 295.82

Short Term Loans 182.54 239.15 48.48

Fixed Assets(Excluding Depreciation) 1911.96 2044.81 1750.13

+ Capital ( Work In Progress) 259.61 113.32 40.78

Total Fixed Assets 2171.57 2158.04 1790.91

Current Assets

Inventory 635.16 486.01 308.14Sundry Creditors 216.37 233.39 221.52

Loans & Advances 500.86 550.50 319.98

Cash & Bank 72.65 62.77 277.14

Total Current assets 1425.04 1332.67 1120.81

Current liabilities & Provisions 325.14 339.83 168.95

Income

Sales 2650.78 2541.05 2244.11

- Excise Duty 318.57 295.0 325.31

Net sales 2332.21 2244.28 1918.80

Other Income 13.65 26.23 24.02

Increase In stock 25.96 67.52 6.98

Expenditure

Sales 2650.78 2541.05 2244.11

- Gross Profit 876.34 766.6 710.13

Cost Of Goods Sold 1774.44 1772.69 1533.98

Cost of Material Consumed 1084.06 1091.62 906.16

+ Salary, Wages & Bonus 7211 57.6 3.06

+ Current Manufacturing Exps. 814.70 803.62 506.13

Profit Before Tax(PBT) 226.58 178.39 344.02Provision For Tax 55.95 69.27 111.24

Profit After Tax (PAT) Or Net Profit 229.73 109.12 241.38

29

8/14/2019 FM Report -Nirma

30/47

Calculation & Interpretation of Ratio

1. Gross Profit Ratio:-

30

8/14/2019 FM Report -Nirma

31/47

It is Ratio expresses the relationship between gross profits earned to net

sale. It is also known as Gross Margin. It is basic measurement of

profitability of Business.

Gross Profit Ratio= Gross Profit * 100

Sales

37.01%

34.16%

37.57%

32.00%

33.00%

34.00%

35.00%36.00%

37.00%

38.00%

Ratio

2005-06 2006-07 2007-08

Year

Gross Profit Ratio

Interpretation:-

Particular 2005-06 2006-07 2007-08

GROSS PROFIT 710.13 766.6 876.34

NET SALES 1918.8 2244.28 2332.28

GROSS PROFIT RATIO 37.01% 34.16% 37.57%

31

8/14/2019 FM Report -Nirma

32/47

We can observe from the above Ratio that the profitability of the

industry is fluctuating. In the year 2005-06 the Ratio is 37.01%. In the year

2006-07 it decreased by 34.16% and in the year 2007-08 it increased by37.57%.

2. Stock Turnover Ratio:-

32

8/14/2019 FM Report -Nirma

33/47

This Ratio shows the number of times the average stock is turn over during

the year. This Ratio signifies the efficiency of sales. It is computed by

dividing the cost of goods sold by the average stock of the year.Stock Turnover Ratio= Cost of Goods Sold

Average Stock

Particular 2005-06 2006-07 2007-08Sales 2244.11 2539.29 2650.78

Gross Profit 710.13 766.6 876.34

Cost of Goods Sold 1533.98 1772.69 1774.44

OP. Stock 73.86 80.94 148.46

CL. Stock 80.94 148.46 174.42Average Stock 77.45 114.7 161.44

STOCK TURN OVER RATIO 19.81 18.30 10.99

19.8118.3

10.99

0

5

10

15

20

Ratio

2005-06 2006-07 2007-08

Year

Stock Turnover Ratio

Interpretation:- We can see that in the year 2005-06 No. of times the average

stock is turned over to 19.81 times, in the year 2006-07 it decreased by 18.30

times and in the year 2007-08 it increased by 10.99 tomes.

3. Current Ratio:-

33

8/14/2019 FM Report -Nirma

34/47

8/14/2019 FM Report -Nirma

35/47

It is on index on profitability of Business and it is obtained by comparing

net profit with capital employed. The term capital employed includes share

capital.Return on Capital Employed = Net Profit before Interest & Tax * 100

Capital Employed

Particular 2005-06 2006- 07 2007- 08

Profit before Tax 344.02 178.39 226.58

Interest 6.73 6.52 7.92

Net Profit before Interest & Tax 350.75 184.91 234.5Share Capital 82.18 82.36 82.36

Reserve& Surplus 1965.81 2347.42 2502.62

Secured loan 344.30 239.15 182.54Capital Employed 2392.29 2668.93 2767.52

RETURN ON CAPITAL EMPLOYED RATIO 14.66% 6.93% 8.47%

14.66%

6.93% 8.47%

0.00%

5.00%

10.00%

15.00%

Ratio

2005-06 2006-07 2007-08

Year

Return on Capital Em ployed

Interpretation:-

We can observe from above chart that return on capital employed is

14.66% in the year 2005-06 and it went up to 6.93% in the year 2006-07.

Again, it reaches at the level of 8.47% in the year 2007-08.

5. Return on Share Holders Fund:-

35

8/14/2019 FM Report -Nirma

36/47

In order to judge the efficiency with which the proprietors funds are

employed in Business. This Ratio is ascertained proprietors equity funds

included Share Capital & Reserves. This Ratio shows what amount ofdividend is likely to be received on shares.

Return on Share Holders Fund = Net Profit before Interest & Tax * 100

Share Holders fund

Particular 2005-06 2006- 07 2007- 08

Profit After Tax 241.38 109.12 229.73(-)Interest 6.73 6.52 7.92

Net Profit After Interest & Tax 234.69 102.6Share Capital 82.18 82.36 82.36

(+)Reserve& Surplus 1965.81 2347.42 2502.62

(-) Differed Tax Assets Share Holder's Fund 2.66 49.46 126.97

Share Holders Fund 2045.33 2380.32 2458.01

RETURN ON SHARE HOLDER'S FUND RATIO 11.47% 4.31% 9.02%

11.47%

4.31%

9.02%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Ratio

2005-06 2006-07 2007-08

Year

Return on Share Holders Fun

Interpretation:-

36

8/14/2019 FM Report -Nirma

37/47

We can observe from above chart that Return on Share Holders fund is

11.47% in the year 2005-06 and it went up to 4.31% in the year 2006-07.

Again it reaches at the level of 9.02% in the year 2007-08.

6. Return on Equity Share Capital:-

37

8/14/2019 FM Report -Nirma

38/47

Return on Equity Share Capital Ratio shows the relationship between net

profit and shareholders Funds.

Return on Equity Share Capital = Net Profit Preference Dividend * 100Equity Share Capital

Particular 2005-06 2006- 07 2007- 08

Profit After Tax 241.38 109.12 229.73

(-) Interest 6.73 6.52 7.92

Net Profit After Interest & Tax 234.69 102.6 221.81

Preference Share Dividend 0.17 0.17 0.17

NPAIT - Preference Dividend 234.48 102.43 221.64

()Equity Share Capital 79.40 79.40 79.59

RETURN ON EQUITY SHARE CAPITAL RATIO 2.95% 1.29% 2.78%

2.95%

1.29%

2.78%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

Ratio

2005-06 2006-07 2007-08

Year

Return on Equity Share Capital

Interpretation:-

Return on Equity Share Capital Ratio indicates fluctuation in this the

Ratio was 2.95% in 2005-06 then it decreased to 1.29% in 2006-07 and it

further increased to 2.78% in 2007-08.

7. Debtor Ratio:-

38

8/14/2019 FM Report -Nirma

39/47

This Ratio shows the number of days taken to collect the dues of credit

sales. It shows the efficiency and policy for collection of debt.

Debtor Ratio= Debtors + Bills Receivables *365

Credit Sales

Particular 2005-06 2006- 07 2007- 08

Debtors 221.52 233.39 216.37

Bills Receivable 0 0 0

Total 221.52 233.39 216.37

Credit Sales 1918.8 2244.38 2332.21

DEBTOR'S RATIO 42days 38days 34days

4238 34

0

10

20

30

40

50

Ratio

2005-06 2006-07 2007-08

Year

Debtors Ratio (In Days)

Interpretation:-

Debtors Ratio show average collection period of the industry. In 2005-

06 the Ratio was 42 days which decreased to 38 days in 2006-07 and further

more decreased to 34 days in 2007-08 which showing good efficiency.

8. Debtors Turnover Ratio:-

39

8/14/2019 FM Report -Nirma

40/47

The debtors turnover Ratio suggests the number of times the amount credit

sale collected during the year.

Debtors Turnover Ratio = Credit Sales

Average Debtors

Particular 2005-06 2006- 07 2007- 08

Average Debtors 221.52 233.39 216.37

Credit Sales 1918.8 2244.38 2332.21

DEBTOR'S TURNOVER RATIO 9 times 10 times 11 times

9 Times 10 Times 11 Times

0

2

4

6

8

10

12

Ratio

2005-06 2006-07 2007-08

Year

Debtor's Turnover Ratio

Interpretation:

Debtors turnover Ratio was 9 times in 2005-06. In 2006-07, it was

increased to 10 times and in 2007-08, it increases to 11 times.

9. Fixed Assets Ratio:-

40

8/14/2019 FM Report -Nirma

41/47

The Ratio shows the relationship between fixed assets and turnover means

sales. Fixed assets compute the Ratio dividing the amount of sale.

Fixed Assets Ratio = Total Sales

Fixed Assets

Particular 2005-06 2006- 07 2007- 08

Sales 1918.8 2244.38 2332.21

Fixed Assets 1750.13 2044.81 1911.96

FIXED ASSETS RATIO 1.1 1.1 1.22

1.1 1.1

1.22

1

1.05

1.1

1.15

1.2

1.25

Ratio

2005-06 2006-07 2007-08

Year

Fixed Assets Ratio

Interpretation:

This Ratio compared fixed capital with fixed assets. How much times

fixed assets is more than capital. Here it is constantly increase but it is

balanced. Therefore, it is good for Company.

10. Total Assets Turnover Ratio:-

41

8/14/2019 FM Report -Nirma

42/47

8/14/2019 FM Report -Nirma

43/47

A variant of current Ratio or quick Ratio which is design to show the

amount at cash available, to meet immediate payments. Liquid assets obtain

by liquid liability.Liquid Ratio = Liquid Assets

Liquid Liability

Particular 2005-06 2006-07 2007-08

Sundry Debtors 221.52 233.39 216.37

Cash & Bank 271.17 62.77 72.65

Loans & Advances 319.98 550.5 500.86

TOTAL LIQUID ASSETS 812.67 846.66 789.88

Current Liabilities 91.77 214.6 195.46

Provisions 71.18 125.23 129.68

TOTAL LQUID LIABILITY 168.95 339.83 325.14

LIQUIDTY RATIO 4.81:1 2.49:1 2.43:1

4.81:1

2.49:1 2.43:1

0

1

2

3

4

5

Ratio

2005-06 2006-07 2007-08

Year

Liquidity Ratio

Interpretation: Standard liquid Ratio is 1: 1. Liquid Ratio shows the

amount of cash available to meet immediate payment. If liquid assets are

equal to or more than liquid liabilities, it is considered as satisfactory. Here, in

2005-06, Company has more liquid assets compared with liabilities but its

constant decreased in last two years.

12. Proprietary Ratio:-

43

8/14/2019 FM Report -Nirma

44/47

The Ratio shows the proportion of proprietors funds to the total assets

employed in the Business.

Proprietary Ratio = Proprietors Fund *100Total Assets

Particular 2005-06 2006-07 2007-08

Proprietor's Fund 2047.99 2429.78 2584.98

Fixed Assets 1750.13 2044.81 1911.96

Current Assets 1120.81 1332.67 1425.04

Total Assets 2870.98 3377.48 3337

PROPRIETORY RATIO 71.33% 71.94% 77.46%

71.33% 71.94%

77.46%

68.00%

70.00%

72.00%

74.00%

76.00%

78.00%

Ratio

2005-06 2006-07 2007-08

Year

Proprietory Ratio

Interpretation:

Higher the Ratio better will be the financial position of the Company.

The Ratio 40% to 60% is considering balance Ratio. Company has got good

proprietor Ratio in last three years. Therefore, Companys financial position is

very good.

13. Debt Equity Ratio:-

44

8/14/2019 FM Report -Nirma

45/47

This Ratio shows the proportion of long-term external equities and internal

equities. In this proportion of funds provided by long-term creditors and that

provided by shareholders.Debt Equity Ratio = Long Term Liability *100

Share Holders Fund

Particular 2005-06 2006-07 2007-08

Long-term Liability 324.85 324.85 443.94

Share Holder's Fund 2047.99 2429.78 2584.98

DEBT EQUITY RATIO 15.86% 13.37% 17.17%

15.86% 13.37%17.17%

0.00%

5.00%

10.00%

15.00%

20.00%

Ratio

2005-06 2006-07 2007-08

Year

Debt Equity Ratio

Interpretation:

Higher the Ratio, it is good for Company. The last three years Ratio

shows that in the year 2006-07 the Ratio is high. Therefore, it is good for

Companys growth.

14. Operating Ratio:-

45

8/14/2019 FM Report -Nirma

46/47

It is the Ratio shows relationship between cost of goods sold and operating

expenses to net sales. It shows the efficiency of the Management, the higher

the Ratio the less will be the margin available to the proprietors.

Operating Ratio = Cost of Goods Sold + Operating Expenses *100

Net Profit

Particular 2005-06 2006-07 2007-08Sales 2244.11 2539.29 2332.21

Gross Profit 710.13 766.66 876.27

Cost of Goods Sold 1533.98 1772.63 1455.94

Payment to Provision for Employees. 43.8 0.07 1.15Interest & Charges 6.73 6.52 7.92

Consumption Of Stores and Spars 45.74 47.9 51.04

Power And Fuel Expenses 225.86 256.27 278.53

Processing Charges 23.93 14.83 16.35

Total Expenses 346.06 325.59 354.99

Net Sales 1918.8 2244.28 2332.21

OPERATING RATIO 0.98 0.9349 0.78

0.98 0.930.78

0

0.2

0.4

0.6

0.8

1

Ratio

2005-06 2006-07 2007-08

Yaer

Operating Ratio

Interpretation: In the year 2005-06 the Ratio was 0.98% and it was decreased

by 0.93% in the year 2006-07, again it is decreased to 0.78% in 2007-08.

15. Net Profit Ratio:-

46

8/14/2019 FM Report -Nirma

47/47

This Ratio valuable for the purpose of ascertaining overall profitability of

Business and shows the efficiency. It is the reserve of the operating Ratio.

Net Profit Ratio =Net Profit after Interest & Tax *100Net Sales

Particular 2005-06 2006-07 2007-08Profit After Tax 241.38 109.12 229.73

(-) Interest 6.73 6.52 7.92

Net Profit After Interest & Tax 234.69 102.6 221.81

Net Sales 1918.8 2244.28 2332.28

NET PROFIT 12.23% 4.28% 9.51%

12.23%

4.28%

9.51%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Ratio

2005-06 2006-07 2007-08Year

Net Profit

Interpretation:

This Ratio Indicates Proportion of sales revenue left to the Company

after all operating expenses are meeting. Higher the Ratio better will be theprofitability. In the year 2005-06, the Ratio is highest, but in 2006-07, it has

decreased & in 2007-08, it has increased.