FINANCE DEPARTMENT MARKETING DEPARTMENT ANALYSIS ARP MAINTENANCE FACTORY REPAIR CENTRAL BOILERUNIT 100/200 SHOP EMERGENCYKOLLAM MECHANICALGATEAN

RAW ILMENITEPLANT ADMINISTRATIVE BLOCK COALLAB BLOCK PPPPPP UNIT 300 OXYGEN COCHIN PLANT YARD ERS PERSONNEL DEPARTMENT IBP GODOWN MATERIAL DEPARTMENT FINANCIAL STATEMENTS OF

ON THE

KERALA MINERALS AND METALS LTD, CHAVARA

Submitted to Mahatma Gandhi University, Kottayam In Partial Fulfillment of the Requirement for the award of the Degree of MASTER OF BUSINESS ADMINISTRATION
Submitted By

AKHILESH.P.S
Reg.No:10492
Under the guidance of

Mr.VARGHESE.K.X
(Department of Business Administration)

JAI BHARATH SCHOOL OF MANAGEMENT STUDIES

ARACKAPADY, PERUMBAVOOR, ERNAKULAM

2009-2011

ACKNOWLEDGEMENT
I express my whole gratitude to Jai Bharath School of Management Studies for lending me the opportunity to do this study. I express my whole-hearted gratitude to Dr. K. R. Baburaj, Director, Jai Bharath School of Management Studies, for lending me the opportunity to do this study. I would like to express my deep sense of gratitude to my internal guide Mr. VARGHESE.K.X,HOD for her innovative ideas and encouragement for this work. I express my sincere thanks to KERALA MENERALS AND METALS LTD,CHAVARA for providing me this golden opportunity to do this study in the organization.

I would also take this opportunity to thank Ms.L.INDIRA (PERSONNEL OFFICER) KERALA MENERALS AND METALS LTD,CHAVARA who has given me a chance not only to do the project in the organization, but also helped me in providing sufficient data and necessary guidelines.

Last but not the least, I express my whole-hearted thanks to all the employees who have supported me with their time and effort.

AKHILESH.P.S

DECLARATION

I, hereby declare that the report entitled AN ANALYSIS ON FINANACIAL STATEMENTS OF KERALA MENERALS AND METALS LTD,CHAVARA with special reference to KERALA MENERALS AND METALS LTD,CHAVARA has been done by me under the guidance of Mr.VARGHESE.K.X, HOD MBA, Jai Bharath School or Management Studies.Perumbavur,Ernakulam. I also declare that this project has been submitted by me, as fully or partially for the award of any Degree or Diploma earlier.

DATE: -

AKHILESH.P.S

LIST OF CONTENT

Sl. No 1

Topic Chapter 1 Introduction Objective of the study Limitation of the study Scope of study Methodology Sources of Data Statement of Problem

Page No

Chapter 2 Profile of the Industry

Chapter 3 Profile of the Company Organizational Chart SWOT Analysis

Chapter 4 Theoretical Background Analysis & Interpretation

5 6

Findings Suggestions & Recommendation

Conclusion Appendices Bibliography

INTRODUCTION

1.1 About the study Working capital management is the life blood of any organization. Today, working capital had got vital importance. Most of the business concern has to give special attention on their investment than fixed capital. Working capital management usually involves the administration on current assets namely cash and marketable securities, receivables and inventories and the administration of current liability. The goal of working capital is to manage current asset and current liability in such a way that a satisfactory level of working capital is maintained. Working capital management is short term financial management which is concerned with decisions relating current assets and current liability. Funds are needed for short term purposes i.e. for the purchase of raw materials, payment of wages and other day to day expenses etc. For a fast growth and expansion, any firms needs larger amount of working capital. Therefore estimates of working capital on long term basis are also required to determine expansion. Whether or not adequate working capital will be generated to meet the firms The KMML is one of among the major public sector undertaking in the state. The working capital of the company mainly consists of stock, debtors and cash. This study is mainly focusing on analyzing the management of cash, debtors and stock. Working capital management is an important yard stick to measure a company operational and financial efficiency. This aspect must from the part of the companys strategic and operation thinking .Efforts should consistently be made to improve the working capital position. This will yield greater efficiencies and improves the working capital position. This will yield greater efficiencies and improve the overall performance of the firm.

1.2 About the Industry

1.2.1World Scenario The credit for recognizing the existence of titanium goes to Rev.Willam Gregor who found traces of black magnetic and unfamiliar to him at Menaccan parish (UK) in 1790 and he named it Menaccanite. Subsequently Kiwin recovered a new white metallic oxide and called it Menaccine. But it was in 1795 M. Klaporth who discovered titanium. He examined Rutile and identified it as an oxide of a metal and named it as Titanium after titan of Greek Mythology . It was named Titan because according to Greek mythology Titan is a God who is very hard to be pleased and since the reactivity of the pigment was feeble with almost anything. The first commercial product of titanium was an alloy additive to steel, where Ferro alloys were developed in commercial scale. The use of titanium minerals in welding electrode coating gained acceptance in the mid thirties while titanium metal has been of commercial importance since 1948. The various Titanium minerals include Rutile, Anatase, Ilmenite, and Leucoxene etc. Mining of Ilmenite is carried out in several countries like Australia, Norway, SriLanka, Malaysia, South Africa and India. The total reserved of worlds Ilmenite is estimated to be approximately 1722 million tons; range of heavy minerals in placer deposits varies from twenty to eighty percentages. Titanium dioxide is far more stable than any other pigment. Its perfect non toxicity & chemical inertness make it an ideal choice as a white pigment. The light scattering property of finely divided titanium dioxide is unmatched by any other non material. The chemical is available in two crystalline forms, viz Anatase and Rutile, which are of much commercial significance. The relatively softer anatase is the right material delustering artificial fibres. Titanium dioxide is the whitest of white pigments and has replaced other less effective pigments such as zinc oxide, lithopone etc. This is because of the unique combination of its superior properties of high refractive index, low specific gravity, high hiding power and opacity and no toxicity. It also has high tinting strength and dispersion properties as well as chemical stability. The Titanium Dioxide

market is unique in that while it is a product approaching 100 years old, there are still no functional alternatives that provide the same value in use of customers. The industry has gone through a metamorphosis in the past decade. Looking over the next 20 years, at least some new Titanium dioxide pigment will be made, though most of the industries additional capacity will come from expansion Pigment consumption rose sharply in Western Europe and Asia/Pacific (Excluding Japan) during the year 2000. East Asia is presently the most attractive region in the world for Titanium Dioxide. The event that revolutionized the titanium dioxide industry was the development of chloride technology by m/s DuPont around 1959. The chloride technology took the US industry in short span. Most of the sulphate route plants was closed or replaced by chloride route plants. Usage of TiO2 extremely widespread over 170 countries each spend over $US 10,000 per year on TiO2 pigment. International trade accounts for 55% of global consumption. The total reserve of Ilmenite in the world is estimated to be approximately 1722 million tones. The range of heavy mineral deposits is found in the eastern and western coastal of length 6000km. 1.2.2 National Scenario In 1909 a German Dr. Schomberg, discovered the presence of monazite in the black Beach sand of Manavalkurichi in the East Travancore state. The presence of mineral sand in the coir being exported later led to the discovery of certain other elements. The Geological survey conducted later on in India, established the occurrence of monazite and metals like Ilmenite, Rutile, Leucoxene, Silimenite & Zircon. India has a wealth of titanium minerals with very low ratio of resource to utilization. A sound titanium dioxide industry is essential to ensure optimum utilization of these resources as well as to develop a vibrant industry in the field of this strategic mineral. Although some technology base is available in the country for both sulphate and chloride processes of titanium dioxide pigment manufacture, additional imports of know-how and technology are considered essential to update the existing sulphate and chloride technologies in the country.

1.2.3 State Scenario At present in Kerala TTP and KMML are the only two manufacturers who produce Titanium Dioxide pigment. Indian Rare Earth Ltd (IRE) a Government of India undertaking has a mineral separation unit in Chavara which separates minerals from the beach sands. IRE also operates two mineral separation units, which are located in Manavalakurichi in Tamilnadu and Challarpur in Orrissa. Firstly Travancore products were started by His Highness Chitira Thirunal in 1946 and Titanium Dioxide using the Sulphate process technology. Later the KMML which was situated in Chavara came into existence and started producing Titanium Dioxide with the help of HCL acid process technology (Chloride technology). Chart. No.1.2.1-Demand for TiO2 in World Market

TOP PLAYERS IN WORLD DuPont Co., Wellington, USA Ishihara Ltd., Japan Rhone Poulene, France Bayer Lever Kusen, West Germany Kemira Helsinks, Finland Hoitex (USA) Millenium (Germany) Henduk (Seoul, Korea) Fletcha Titanium Products (New Zealand) Tofins (Netherlands).

1.3 About the Company

Kerala is blessed with rich and extensive mineral deposits. This deposits stretch along the sea cost between Neendakara and Kayamkulam, a track generally known as Chavara coast. This deposits stretch up to a distance of 18 km along the coastal strip and having a depth of 8m. The dark sands of Travancore coast are rich in mineral deposits as monazite illuminate Rutile Zircon etc.

Kerala minerals and metals Ltd is a pioneer industry in the titanium dioxide pigment in India. Its product has worldwide recognition and it is one of the leading revenue earning public sector enterprise under government of Kerala .It has nearly 2000 workers. It is the first state level public sector enterprise in India to achieve Export House Status from J.D.J of foreign trade in the year 2003. EMERGENCE It so happened that a German Chemist named Dr.Schlmbey found out that, the coir exported from Kerala to Germany were smeared with pasty black soil .On analyzing this clay sand, he discovered traces of Monazite. This land mark discovery led to a series of studies and surveys which relieved that this sand contains several other earths like illmenite. Zircon, Rutile, etc. Next year a man named Mr. Width setup a small unit at Neendakara for recovering monazites. In1932 a full fledged mineral Industry in Chavara area was established under the company name F.X Pereira & Sons Pvt Ltd. Soon three other companies named M/s Travancore Minerals Company Ltd, associated Minerals Limited and Hopkins & William Limited were established. Later all the three companies were amalgamated and finally Indian Rare Earth Ltd were formed under the Atomic Department under the name F.X.P Minerals. In the year 1956 the government of Kerala took over the F.X.Pereria and Sons Pvt Ltd Company and placed under control of Industries Department. This was due Courts ruling since the company was undergoing severe financial crisis .In 1972 the ownership of the company was transferred to the state government as a fully owned company by the name Kerala Minerals & Metals Ltd.

The Mineral separation unit is situated at Koviltholtam 18Kms north of Quilon and is close to National Highway 47.They have got the permission to mine in the last four bells out of the eight blocks in the Needakara-Kayamkulam belt where the huge mineral deposits of minerals exist .At present they extract about 60,000 tone of black sand from the beach. They use dry distillation process to separate minerals like illmenhe, Zerleon, Ruffle etc from the black soil. The construction work for the Ti0 2 pigment plant was started in the year 1974 for an installed capacity for about 22000 tones/year with the technical collaboration of M/s Ker Mc GEP Chemicals of USA. M/s Woodall and was commissioned In the January 1984.But initially the production capacity were about a more 4.5% and the under utilization of the production capacity continued for more than a decade. Thus the company was in heavy loss and in the year 1993 BIFR declared KMML as a sick company in its first sitting. IDBI was appointed as the operating agency to formulate rehabilitation /revival package for the company .On implementing this rehabilitation plans the company slowly improved its financial position and began to show profit in its balance sheet. With the installation of inconel tubes instead of silica tubes in the oxidation plant resulted in increasing production as well as quality improvement. With this crucial introduction the company has been able to achieve 100% and above capacity utilization. PRESENT STATUS It is India's first and only manufacturer of Rutile grade Titanium Dioxide Pigments by Chloride route. The KMML products are marketed under the brand name 'KEMOX'. KEMOX RC 822 is a pigment grade from KMML Is a multiple application pigment, which has great demand in the world market. KMML also produce six more grades at Titanium Dioxide Pigments namely RC 800. RC 800 PG, RC 802. RC 804. RC 808 and RC 813. Their product range also includes illmenite. TiCI4, Rutile, Leucoxene. Silimanite, Monazites, zircon and Iron oxide bricks. KMML enjoys the monopolist position in the titanium dioxide pigment manufacturer in India. Though It controls half the Indian Ti02 pigment market, It faces stiff competition with foreign companies like:

a. DuPont

b. Ishah IMPORTANT EVENTS 1932 KMML was established by private enterprises under the name F.X. Pereira & Sons Pvt Ltd. 1956 Pereira & Sons Ltd was took by the Government of Kerala Placed the under the control of its Industries department as F.X.P Minerals. 1972 F.X. Pereira & Sons Pvt Ltd final converted as a limited company Under the state government. 1974 The construction work of the T1O2 pigment unit In SankaraMangalam was started. 1984 The TiO2 pigment unit In Shankaramangalam was Commissioned. 1993 The Company declared as a sick unit due by BIFR and IDBI was Appointed as operating agency for formulating rehabilitation Package for the company. 1998 Company installed inconel tube Instead of Silica tube in the Oxidation plant as a measure to overcome frequent breakdowns.

1999-2000

It was the first time that the company had achieved 100 % capacity utilizations in a financial year.

1 -7-2000 2002- 03

The company got ISO 9002 certification. The Company acquired the 'Export House Status' for the excellence in exporting.

2004

Commissioned new DM plant and added two more digesters in IBP.

2005

World class quality management system like ISO 14001 and OS HAS-1800.

2006 2007 2008 2009 2010

Foundation laid for Titanium sponge plant Commissioned recovery cyclone Commissioned new ETP Sledge and oxide plant Development of Nano Titanium Dioxiede particles in laboratory scale Introduction of new production method for Titanium sponge with the help of DRDO,ISRO

2011

Integration of new premises

VISION OF KMML: Be a world class producer of mineral sand based value- added products. MISSION OF KMML: 1. To become the nodal agency for promoting and establishing mineral based industries in the state to ensure value addition and effective and controlled exploitation of the mineral reserve. 2. To develop adequate supply base for the services and utility for development of the mineral based Industry. 3. To create more awareness about corporate social responsibilities for chemical industries in the state. 4. To become the leader in controlling Green House Gas Emission so as to promote the concept of Green House. OBJECTIVES OF KMML: 1. To exploit the mineral wealth abundantly available in the coastal belt. 2. To manufacture value-added product like Titanium dioxide and Titanium metal through Chloride route technology. 3. Large scale generation of employment in the state. 4. Overall development of local area in particular and state in general.

LOCATION The company is located at Sankaramaangalam near Chavara, Kollam a coastal town 85km North of Thiruvananthapuram. KMML is situated on the side of NH-47 to about 285 acres in area. Chart.No.1.3.1-Location of the company NH 47 Kollam

CUSTOMERS Titanium dioxide pigment goes into the manufacturing of a variety of products such as dress materials, facial creams, news print, woodprint, emulsions, enamels, plastics, toothpaste, rubber products, cosmetics; packing packets, etc too have Ti02 pigment coating on them. Paint industry is the prime user of Ti02 pigment in India as well as in the foreign countries. Recently the automobile industry also extensively uses Ti02 pigment. Customers are divided into two: 1. Direct customers 2. Stockists 1. Direct Customers
Paint industry contribute large customers of Tio2, other largest customers include such industrial as paper, plastic, polyester. The bulk of the products in KMML are consumed by companies namely:1. Asian Paints 2. Berger Paints 3. Rajdhoot Paints 4. Mega Meditex 5. Camlin 6. Jenson & Nicholson 7. Hindustan Latex & Resin 8. Finolex 9. Shalimar Paints

10.Sanderson Chemicals 11. Plastic Chemix Industries 2. Stockiest Supplies to small sectors are done through stockiest appointed by the company in all major cities. Company fixes prices for its products and the stockiest are responsible to see the pellets at fixed price. KMML has an all India network of 28 stockiest to meet requirements of customers. Some of the major stockiest are: 1. Ashit Enterprises 2. Kemco Corporation 3. Hero Dye Chemical Industries 4. Bharat Solvent & Chemical Corporation 5. Balaji Export House 6. Karnataka Chemicals 7. Manorama Sales Corporation 8. Bajaj Chemicals CERTIFICATIONS KMML achieved ISO 9002 certificate by M/S Bureau virtues Quality International (BVQI) and holes certification of United Kingdom Accreditations Service, Dutch Council for certification (Holland) and Register Accreditations Board (USA). KMML has won the 1997 National award for in-house research and development effort in industry for technology absorption under the TAAS programme. The Kerala productivity Council award for high productivity standard has also been won by KMML.

ISO 9001: 2000 KMML was certified for quality management system ISO9002:9004 in June 2000 and was rectified and upgraded to ISO 9001:2000 quality management systems (QMS) in November 2003 for its TP unit. ISO 14001:2004 KMML has been certified an ISO 14001:2004 in the year 2005. As recognition of protecting and safeguarding the environment by

Strictly complying statutory and regulative requirements To control their impact on land, air and water and thus prevent pollution. To reduce health and safety risks To optimize the use of resources

OHSAS-18001-Safety Management System Workplace Safety is emerging as one of the Key risk management and regulatory compliance focus areas among many global companies. As authority result of this trend, traditionalworkplace safety compliance systems, which were designed to be point solutions at authority plant level, are giving way to enterprise wide safety management systems. GLOBAL RECOGNITIONS International Gold Medal Award for Quality & Efficiency from UK in 2003.

APCJ Award from Asia Pacific Coating Forum for the Best International Marketing Campaign - May 2003

Table.No.1.3.1-National recognitions:

Award for R&D efforts in Industry FACT MKK Nair Memorial Productivity Award Energy Conservation Award FACT MKK Nair Memorial Productivity Award FACT MKK Nair Memorial Productivity Award Energy Conservation Award CAPEXIL Award for best export performance Award for best revenue PerformanceGovt. of India

1992

1993 1994

1999

1999 2000

2000 2001

2001

2003, 2004 & 2005

2003. 004

Special Awards for Exports from Chemicals and Allied Export Promotion Council (CAPEXIL) - 3rd time consecutively

KMML bags the best public sector undertaking award 2010 !!

FUNCTIONAL DEPARTMENTS In functional form of departmentation an organization group function or activities into primary departments. The application of functional form of

departmentation means grouping activities into departments of Production, Marketing, Human Resources development and finance. Like any other PSU, KMML has separate departments and executive heads for each department. Each department specializes in its own area of operation.
The other activities of the plant like the catalytic process to the production process are also divided into many departments. 1) Production Department 2) Marketing Department 3) Finance Department 4) Materials Department 5) Personnel And Administration Department 6) Fire And Safety Department 7) Data processing department 8) Technical department 9) Project department 10) 11)

Maintenance department Project department

1) PRODUCTION DEPARTMENT
KMML always maintain high standard of perfection by achieving technical excellence in every phase of production. Catering to strict guideline, KMML offers a wide range of products for quality conscious customer. Production Department undertakes activities and decision regarding the production work. Production is carried out in lot wise with specific lot number. Each lot contain 15MT of TiO2, samples are collected from production at specific intervals and

examined thoroughly in the laboratory of the company. If any defect is identified, then the lot is considered as inferior quality.

2) MARKETING DEPARTMENT KMML has monopoly in Rutile grade TiO2 pigment industry. KMML has a large number of customers all over the world. In KMML there is no separate department for sales. So, marketing department is performing sales functions. The marketing department keeps detailed report about customers, product, product group control, dispatch and payment. FUNCTIONS OF MARKETING DEPARTMENT The marketing functions undertaking by the marketing department of the KMML can be broadly classified into three. Via 1. Functions of exchanging 2. Functions of physical supply 3. Marketing facilitating function. 3) FINANCE DEPARTMENT Finance is the lifeblood of any organization. It deals with both the acquisition of as well as allocation of funds. Hence finance department assumes a great role in the organization. A finance department in an organization is responsible for maintaining fair and just accounting, working capital management, long term funding decision making, costing etc .The mains functions of the finance department In KMML are: To maintain clear and perfect accounting system Preparation of Profit & Loss accounts, Balance statement, cash flo Statement, fund flow

statement etc. Working Capital Management.

 Carrying activities pertaining to the long term and short-term requirement like closing purchase, maintaining the accounts of the contractors, Income tax deductions, salary and disbursement etc. Dealing with the financial institutions with matters regarding to salary disbursement, credit arrangements, collecting payments from the customers etc. The finance department consists of two sections, via An internal auditing section (or carrying out auditing functions internally and also for

maintaining internal audited records. An account section for preparing P&L accounts, balance shee Fig.No.1.3.2 Finance department structure

4) MATERIALS DEPARTMENT The purchase department and store department placed under the name MATERIALS in KMML. Assistant General Manager Materials is the departmental head of these two departments. Under him there is a Deputy General Manager and below him Manager (Materials).

The functions of material department can be grouped into three 1. Purchase 2. Storage 3. Inventory control

5) STORES DEPARTMENT

Store department plays a prominent role in a company. Many a time improper store activities lead to huge losses. The store department of the KMML is one which runs efficiently and effectively. It incorporates many management techniques like inventory control system, ABC classification of items, store reviewing based on moving & non moving items and store location design. The activities carried out by a typical store department are as follows. a. Receiving materials b. Inspection of material c. Proper classification & codification of the material d.

Material handling

e. Storage & preservation of the material f.

Issue and dispatch

g. Stock record keeping stock verification report preparations h. Stock accounting

6) ELECTRONIC DATA PROCESSING DEPARTMENT The management information system is under the supervision of the data processing department. Assistant general manager (EDP) is the top authority of the department. There are around 200 personnel computers in the company and all the computers are in local area network. The company is having a 10 megabytes PC backbone copper cabling. It has 4 signals

1. Stores 2. Plant technical service 3. Illmenite beneficiation plant/ Acid regeneration plant. 4. Pigment processing unit / Laboratory

There is a direct connection from IBM service to purchase, finance, marketing & personnel department. The entire information technology activities are monitored by EDP section. KMML is using Oracle related Database Management System at backend and power builder is used among the finance, purchase, stores, marketing, personnel & production department. The database is fed into the system by each department, which is required to generate various managements. A strict security control is incorporated in the operations of various modules.
This department is in charge of developing and maintaining the software necessary for each department in the company and also the maintenance of the 200 computers throughout the organization. The server used is a main database server which uses Oracle 8. The front end used is the software called Power Builder. All the 200 computers used in the company are networked..

7) PERSONNEL & ADMINISTRATION DEPARTMENT Human Resource is the one of most valuable resource as for as a company is concerned. An organization is a human grouping in which work is done for the accomplishment of some specific goals or mission. The management of man it very important and challenging Job. Important because it is not of managing men but of administering a social system. The proper utilization of this resource will indicate whether a company is successful or not. But managing this resource is complex one especially in a state like Kerala whore unionism is strongly imparted m the minds of the workers. But the story of the KMML lies in the personnel and administrative departments ability to property the human resources. This department plays a prominent role in the day-to-day affairs of the Company.

THE FUNCTIONS OF P&A DEPARTMENT

Man power planning Recruitment and selection Grievance Handling Procedure

 Workmen Category Labor Welfare Activity Industrial Relationship Disciplinary Proceedings

8) FIRE AND SAFETY DEPARTMENT Fire and safety department, which manage the process of giving security to employees by providing training & giving license to employee& mechanist. The safety department carries out the following activities:
1. Routine plant inspection 2. Plant safety inspection 3. Issue of safety work permits 4. Coordinates & organizing safety committee meetings 5. Giving safety education and training 6. Organizing safety promotional activities 7. Liaison with statutory authorities 8. Preparing and updating safety manuals 9. Coordinates safety auditing / surveys

9) MAINTENANCE DEPARTMENT The maintenance department of KMML comprises with the various functioning and the development of the machineries and equipments. The Joint General Manager of maintenance is the top authority of the maintenance department

1. ELECTRICAL SECTION It is controlled by the AGM (electrical).The main function of this department is to ensure flow of electricity throughout the company 2. MECHANICAL SECTION The AGM (mechanical) is the head of this section. The main function is to ensure easy working of machine. The company is doing periodical shutdown to carryout necessary maintenance and servicing of the plant. 3. INSTRUMENTATION The AGM (instrumentation) is the head. This section inspects safetyness of valves, mechanics est. and the working of instruments. A statutory body occasionally visits the company to check the safety of the plant. 4. CIVIL This section undertakes the functions relating to implanting new machinery etc.These Manager (civil) is the head of this section. 9) TECHNICAL SERVICE DEPARTMENT This department acts as third agency to the production and maintenance department. The technical wing takes charge R&D, Quality control, laboratory and technical services.KMML maintain a fully equipped R&D facility in the area of pigment and plant technology with a view to establish world class products and competitiveness. This excellent facility undertakes research, development and product improvement. Scientists and

engineers continuously pursue innovative technologies in the area of titanium dioxide pigment, quality improvement and other allied products. The technical and sales service wing extends all helps to customer in the field of application and users. 10) R&D DEPARTMENT

KMMLs Research and development has achieved following tasks in recent times: 1. Developed new grade RC-802 will excellent balancing properties of glass and weather ability 2. Successfully developed an improved process of oxidation plant 3. Developed know how to convert iron oxide process of oxidation plant 4. Developed grade RC-808 special grade for automotive coating 11) PROJECT DEPARTMENT
This wing is engaged in the expansion programs of the company. They are engaged in the building up of new projects and also decide upon the future plans of the company. Some major projects on which they are currently engaged are: 1. Project for separation of Minerals at an estimate cost of Rs. 21 crores. 2. Capacity augmentation of Synthetic Rutile plant at an estimate cost of Rs.32 crores.

1.4 Product profile KMML offers rutile grade Ti02 as the main product also offers Zircon, Leucoxene, titanium tetra chloride as the secondary products. Titanium Tetra Chloride is extensively used in the manufacture of Titanium dioxide pigment, Titanium sponge or metal. The product profile of the KMML and their applications are shown in the figure below. Table.No.1.4.1- Product profile

SI No 1

PRODUCTS

APPLICATION

Titanium Dioxide pigment

Paints,

Printing

inks,

Plastics,

Paper,

Rubber,

Textiles, Ceramics.

Titanium Tetra Titanium Dioxide Pigment, Titanium sponge /metal, chloride Titanium salts, Butyl Titanate, Titanium Oxychloride

Rutile

Welding electrodes, Titanium compounds, Titanium Dioxide Pigment, Titanium sponge /metal, Titanium Tetra chloride.

Illmenite

Synthetic Rutile, Titanium Dioxide Pigment Titanium Tetra Chloride, Ferro Titanium alloys, Welding electrodes, Titanium Dioxide Pigment, Titanium salts.

Leucoxene

Welding

electrodes,

Titanium

Dioxide

Pigment.

Titanium Tetra chloride, Titanium compounds.

Zircon

Ceramics,

Foundries

Refractories,

Zirconium |

chemicals, Zirconium metals, Nuclear technology

Silimanite

High temperature refractory, Ceramics.

Iron bricks

oxide As Building Material

At present KMML produces six grades of titanium dioxide pigment under the brand name of KEMOX. The different grades of Ti02 pigments that are produce in the KMML, their main properties and their uses are:

ANALYSIS AND INTERPRETAIONS

Ratio analysis One of the most important financial tool which have come to be very frequently used for analyzing the financial strength and weakness of the enterprise is ratio analysis. Ratio analysis is the process of determine and presenting arithmetical relationship between the figures and the group of figures drawn from the statement. The ratio analysis of working capital is used by the financial analyst to check upon the efficiency of the working capital of the enterprise. It is found out by establishing the relationship between the items of Balance sheet, Trading and Profit and loss account. The ratios relating to working capital management, which have been selected for the study, are: a. LIQUIDITY RATIOS 1) Current ratio 2) Quick ratio 3) Absolute liquid ratio b. LEVERAGE RATIOS 4) Debt Equity Ratio 5) Proprietary Ratio 6) Total assets to debt ratio 7) Fixed Assets to Net worth Ratio c. PROFITABILITY RATIOS

8) Gross profit ratio 9) Net profit ratio 10) Operating ratio

d. ACTIVITY RATIOS 11) Inventory turnover ratio 12) Fixed assets turnover ratio 13) Debtors turnover ratio 14) Working capital turnover ratio ANALYSIS 1) Current Ratio Current ratio is the most common ratio for measuring liquidity. It represents the ratio of current assets to current liabilities. It is also called as working capital ratio .It is calculated by dividing the current assets by current liabilities. Current Ratio=Current assets / Current liabilities Table No.5.1-Current ratio
Years Current assets 27130.94 22531.31 23688.82 26044.46 Current liability Current ratio

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

6577.63 4.12:1 5893.47 3.82:1 10081.66 2.34:1 12037.61 2.16:1

2009-2010

25961.61

11667.93 2..22:1

Source: Annual reports of KMML Ltd.

Interpretation:The current ratio of the firm measures the short term solvency of the firm i.e. its ability to meet short term obligation. In a sound business, a ratio of 2:1 considered to be an ideal norm. The above table shows the relationship between current assets and current liabilitys. This table shows that the company having the sufficient current assets for the past 5 years and in the year 2008-2009 is the firms current ratio is 2.16:1. It shows there are sufficient current assets to pay off its current liability.

Fig.No.5.1 Current Ratio

2) Quick ratio This ratio is also known as Acid Test Ratio or Liquidity Ratio.It shows the relation between the quick assets and current liabilities. It is determined by dividing the quick assets by current liabilities. The term quick asset refers to the current assets which can be converted into cash immediately. Quick Ratio=Quick assets / Current liabilities Table .No.5.2-Quick Ratio Year Quick assets Current liability
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Quick ratio

19377.92 10557.07 11556.33 17703.26 19226.15

6577.63 2.94:1 5893.47 1.79:1 10081.66 1.14:1 12037.61 1.47:1 11667.93 1.64:1

Source: Annual reports of KMML Ltd.

Interpretation:The above table shows the relationship between Quick assets and current liabilitys. So under this table the year 2006-2010 the firms quick ratio is more than the basic ratio of 1:1.It represents the company is having sufficient quick assets for the past few years.

Fig.No.5. 2- Quick Ratio

3) Absolute liquidity ratio This ratio is obtained by dividing cash by current liabilities. Here the cash involves cash in hand, bank balance and investment in securities, treasury deposits etc. A ratio of 0.75:1 is recommended to ensure liquidity. This test is more vigorous to measure a firms liquidity position. Absolute Liquidity Ratio = (cash + marketable securities) /Current liabilities Table. No.5.3-Absolute liquidity ratio

Year

Cash+ marketable securities

Current liability

Quick ratio

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

16090.35 8950.01 8827.10 14076.20 13808.32

6577.63 2.44:1 5893.47 1.51:1 10081.66 .87:1 12037.61 1.16:1 11667.93 1.18:1

Source: Annual reports of KMML Ltd.

Interpretation:The standard absolute liquidity ratio is 0.75:1. This table shows that the absolute liquidity ratio in the five years is good for the company .At present the absolute liquidity ratio is in good position, indicating that cash form a major part of the current assets.

Fig .No.5.3- Absolute liquidity ratio

4) Debt-Equity Ratio The relationship between borrowed fund and owners capital is popular measure of the long-term financial solvency of the firm. This relationship is shown by the debt-equity ratio. This ratio is computed by dividing the total debt of the firm by its net worth. Debt equity ratio=Total debt / Net worth Table.No.5.4-Debt equity ratio Year Debt Equity Debt equity ratio
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

0 0 0 0 0

42793.73 0 43668.98 0 43919.83 0 44007.68 0 48268.39 0

Source: Annual reports of KMML Ltd.

Interpretation:The company cant makes any borrowings so this ratio is not important to the company .To improve the profitability; the company has to make the outside borrowings.

Fig No.5.4-Debt equity ratio

5) Proprietary ratio Proprietary ratio relates to the shareholder fund to total assets. This ratio shows the long term solvency of the business. The acceptable form of the ratio is 1:3.the ratio is calculated as follows: Proprietary Ratio=Shareholders fund / Total assets

Table No. 5.5-Proprietary ratio Year Shareholders fund Total assets Proprietary ratio

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

42793.73 43668.98 43919.83 44007.68 48268.39

46106.96 .92:1 41500.05 1.05:1 42959.03 1.02:1 57640.28 .76:1 63518.36 .75:1

Source: Annual reports of KMML Ltd.

Interpretation:The ratio shows strength of the company. It helps the creditors to find out the proportion of share holders fund in the total assets. Higher ratio indicates a secured position to creditors and lower ratio indicates greater risk to creditors. The above table shows that the year 2006-2007 and 2007-2008 is a decreasing trend and remain years shows increasing trend.

Fig .No.5.5 Proprietary ratio

6) Total assets to debt ratio This ratio shows a good relationship between the total assets and debt. Total assets to debt ratio=Total assets / Long term debt

Table.No.5.6-Total assets to debt ratio

Year

Total assets

Long-term debt

Debt equity ratio

0 0 0 0 0 0 0 0 0 0

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

46106.96 41500.05 42959.03 57640.28 63518.36

Source: Annual reports of KMML Ltd.

Interpretation:The firm has no long term debt. Only total assets are here for calculating the total assets to debt ratio. It is not good for the firms future life.

Fig.No.5.6-Total assets to debt ratio

7) Fixed assets to net worth ratio This ratio shows relationship between fixed assets and shareholders fund. The purpose of this ratio is to find out the percentage of the owners fund to invest in fixed assets. If the ratio is less than one it is assumed that more and more funds is used to make investments in fixed assets. If the ratio is greater than one, it means that creditors fund have been used to acquire a part of fixed assets. Fixed assets to net worth ratio=Fixed assets / Net worth or share holders fund Table No.5.7-Fixed assets to net worth ratio Year Fixed assets Shareholders fund Fixed assets to net ratio
2005-2006 2006-2007 2007-2008 2008-2009 10157.90 11746.84 12862.52 17942.43 42793.73 .23:1 43668.98 .26:1 43919.83 .29:1 44007.68 .40:1

worth

2009-2010

17803.97

48268.39 .36:1

Source: Annual reports of KMML Ltd.

Interpretation:The ratio shows the percentage of owners fund invested in fixed assets. From the analysis it is analyzed that the creditors funds are not utilized for purchasing fixed assets. So we can understand that the firms investments in fixed assets are within the standard norms.

Fig.No.5.7-Fixed assets to net worth ratio

8) Gross profit ratio The gross profit ratio plays an important role in two management areas. In the area of financial management, the ratio serves as a valuable indicator of the firms ability to utilize effectively outside source of fund. Gross profit ratio= (Gross profit / Sales) * 100 Table.No.5.8-Gross profit ratio Year Gross profit Sales Gross profit ratio
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 6881.47 5714.61 8451.49 17466.78 22908.8 28967.07 23.75:1 29574.49 19.32:1 30748.69 27.48:1 41908.91 41.67:1 48395.20 47.33:1

Source: Annual reports of KMML Ltd.

Interpretation:A high ratio is favorable to the companys financial position. The above table shoes that the relationship between the firms gross profit of the business and the net sales of the business. The highest gross profit ratio is 47.33:1 in 2010 and the lowest ratio is 19.32 in 2007.

Fig.No.5.8- Gross profit ratio

9) Net profit ratio This ratio is also called as net profit to sales or net profit margin ratio. It is determined by dividing the net income after tax to the net sales for the period and measures the profit per rupee of sales. This ratio is calculated as follows: Net profit ratio= (Net profit / Sales) *100 Table .No.5.9-Net profit ratio Year Net profit Sales Net profit

ratio
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 862.61 1237.15 612.74 449.76 6063.23 28967.07 2.97:1 29574.49 4.18:1 30748.69 1.99:1 41908.91 1.07:1 48395.20 12.52:1

Source: Annual reports of KMML Ltd.

Interpretation:The net profit ratio is decreasing up to the year 20082009.This is due to the increase in cost of production. It will affect the company survival and profitability. And in the year 2009-2010net profit shows an increasing trend.

Fig . No.5.9-Net profit ratio

10) Operating ratio Operating ratio measures the cost of operation per rupee of sales. It is generally represented as percentage. Thus two elements of the ratio are cost and net sales. Operating expenses and cost of goods sold. Its calculated as. Operating ratio= (Operating cost / Net sales) * 100 Table.No.5.10- Operating ratio Year Operating cost Sales Operating ratio
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 862.61 1237.15 612.74 449.76 6063.23 28967.07 78.43 29574.49 82.64 30748.69 74.21 41908.91 60.49 48395.20 60.58

Source: Annual reports of KMML Ltd.

Interpretation:The operating expenses of the company is increasing in the year 2005-2006 and 2006-2007 .This is because of the operating expenses of the company increases ,and in the remaining years it is decreased at increasing rate.

Fig.No.5.10-Operating ratio

11) Inventory turnover ratio This ratio indicates whether investment in inventory is sufficiently used or not .It. therefore, explains whether investment in inventories is within the proper limit or not. It also measures the effectiveness of the firms sales efforts. Inventory turnover ratio=cost of goods sold / average stock. Table. No. 5.11-Inventory turnover ratio Year Cost of goods Average stock sold Inventory turnover ratio
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 22085.60 23859.88 22297.20 24442.13 25486.13 7753.02 2.85:1 11974.24 1.99:1 12132.43 1.84:1 7855.51 3.11:1 7538.33 3.38:1

Source: Annual reports of KMML Ltd.

Interpretation:The table shows there is an increasing trend in the year 2005-2006, after this year the coming two years is a slight decrease because of over investment in inventory; in the year 2008-2009 the turnover ratio is increased.

Fig. No.5.11-Inventory turnover ratio

12) Fixed assets turnover ratio This ratio indicates the extent to which the investments in fixed assets contribute towards sales. If compared with the previous year, it indicates that whether the investment in fixed asset has been judicious or not. Fixed assets turnover ratio= Net sales / fixed assets. Table.No.5.12-Fixed assets turnover ratio Year Net sales Fixed assets Fixed assets turnover ratio
2005-2006 28967.07 10157.90 2.85:1

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

29574.49 30748.69 41908.91 48395.20

11746.84 2.51:1 12862.52 2.39:1 17942.43 2.33:1 17803.97 2.71:1

Source: Annual reports of KMML Ltd.

Interpretation:In the year 2005-2006 and 2009-2010 the fixed assets turnover ratio is a satisfactory level because the fixed assets are utilized efficiently and other years the turnover ratio is decreased.

Fig .No.5.12-fixed assets turnover ratio

13) Debtors turnover ratio The purpose of this ratio is to discuss the credit collection power and policy of the firm. For this ratio a relationship is established between account receivables and the net credit sales of the period. Debtors turnover ratio= Net credit sales / Average debtor Table .No.5.13-Debtors turnover ratio Year Net credit sales Average Debtor Debtors turnover ratio
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 28967.07 29574.49 30748.69 41908.91 48395.20 2612.57 11.09:1 1453.40 20.34:1 2606.48 11.79:1 3203.56 13.08:1 4709.92 10.27:1

Source: Annual reports of KMML Ltd.

Interpretation:In the year 2006-2007 the debtors turnover ratio is increase due to decrease the collection periods that implies prompt payment by debtors. In the remaining years debtors turnover ratio is decrease because the debtors take long period to make payments.

Fig.No.5.13-Debtors turnover ratio

14) Working capital turnover ratio

The ratio reflects the turnover of the firms net working capital in the course of the year. It is a good measure of over trading .The ratio is calculated by dividing the net sales by net working capital. Working capital turnover ratio= Net sales / Net working capital.

Table.No.5.14-Working capital turnover ratio Year Net sales Working capital Working capital turnover ratio
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 28967.07 29574.49 30748.69 41908.91 48395.20 20553.31 1.41:1 16635.84 1.77:1 13607.16 2.26:1 14006.85 2.79:1 14293.68 3.38:1

Source: Annual reports of KMML Ltd.

Interpretation:In the above table shows that sales is more than the net working capital. This shows that the improvement in the efficiency of the company in maintaining required amount of working capital.

Fig.No.5.14-Workingcapital turnover ratio

FINDINGS AND SUGGESTIONS

Findings 1) The current ratio of the company is good. The company has sufficient current assets to meet the current liability. And the quick ratio and absolute liquidity ratios are also in the satisfactory level. That is the companys liquidity position is good. 2) The companys debt equity ratio is very low. It means that company cannot borrow funds from the public.

3) Under fixed assets to net worth ratio shows that the creditors funds are not utilized for purchasing fixed assets. 4) The net profit ratio shows a decreasing and increasing trend the decreasing trend is negatively affecting the profitability of the firm. 5) The fixed assets of the firm utilized efficiently, it is good for the business. 6) Companys net working capital shows a decreasing trend. 7) The sales and fixed assets of the company show an increasing trend. 8) Debtors turnover ratio is not in good position.

Suggestions
1) To increase the profitability, the investment on fixed assets can be increased. 2) The company should try to maintain the present liquidity position. 3) Company should try to reduce the manufacturing and the selling cost. 4) Now the companys working capital position is just satisfactory, but for the smooth running

of the company, it is not enough so the company should bring more working capital.

5) To reduce credit sales on order to avoid the high risk. 6) The company should improve the activities relating to the collection of debts.

Balance Sheet as on 31st March -2010

Particulars

As per schedule A B C -

As at 31/03/2010 (Rs in lakhs)

3093.27 45175.12 1184.47

Sources of fund Share holders fund Share capital Reserves and surplus Deferred tax liability Total

49451.86

Application of funds Fixed assets Gross block -depreciation Net block Capital work in progress Investment Current assets ,loans $ advance Current assets Inventories Sundry debtors Cash and Bank balances Other current assets Loans and advance Less current liabilities and provisions Current liabilities Provisions Net current assets Total

F G H

33707.00 15903.03 17803.97 123661.25 30465.22 17.60

6735.46 4709.92 13808.32 707.91 7073.93 33035.54 11667.93 2398.57 14066.50 18969.04

D E

49451.86

Balance Sheet as on31st March -2009 Particulars Sources of fund Share holders fund Share capital As per schedule A As at 31/03/2009 (Rs in lakhs)
3093.27

Reserves and surplus Deferred tax liability Total Application of funds Fixed assets Gross block -depreciation Net block Capital work in progress Investment Current assets ,loans $ advance Current assets Inventories Sundry debtors Cash and Bank balances Other current assets Loans and advance Less current liabilities and provisions Current liabilities Provisions Net current assets Total

B C -

40914.41 768.07

44775.75

F G H

32593.71 14651.28 17942.43 6600.55 24542.98 17.60

8341.20 3203.56 14076.20 423.50 7035.24 33079.70 12037.61 826.92 12864.53 20215.17

D E

44775.75

Balance Sheet as on 31st March -2008

Particulars Sources of fund Share holders fund Share capital Reserves and surplus Deferred tax liability Total Application of funds Fixed assets Capital work in progress Investment Current assets Loans and advance Less current liabilities and provisions Current liabilities Provisions Net current assets Miscellaneous expenses Total

As per schedule
-

As at 31/03/2008 (Rs in lakhs)

3093.27 40826.56 284.73

A B C -

44144.56

R G H

12862.52 11033.42 17.60 23688.82 19270.21 42959.03 10081.66 12646.35 22728.01 20231.02 0.00

D E

44144.56

Balance Sheet as on 31st March -2007 Particulars Sources of fund Share holders fund Share capital Reserves and surplus Deferred tax liability Total Application of funds Fixed assets Capital work in progress Investment Current assets Loans and advance Less current liabilities and provisions Current liabilities Provisions Net current assets Miscellaneous expenses Total J As per schedule
-

As at 31/03/2007 (Rs in lakhs)

3093.27 40575.71 182.75

A B C R F G H I

43851.73
11746.84 9037.29 17.60 22531.31 18968.74 41500.05 5895.47 12554.58 18450.05 23050 0.00

D E

43851.73

Balance Sheet as on 31st March -2006 Particulars As per schedule

-

As at 31/03/2006 (Rs in lakhs)

3093.27 39700.46 298.83

Sources of fund Share holders fund Share capital Reserves and surplus Deferred tax liability Total Application of funds Fixed assets Capital work in progress Investment Current assets Loans and advance Less current liabilities and provisions Current liabilities Provisions Net current assets Miscellaneous expenses Total

A B C R F G H I

43092.56
10157090 5163.18 0.10 27130.94 18975.96 46106.90 6577.63 11775.42 185353.05 27753.85 17.53

D E

43092.56