A STUDY ON FINANCIAL PERFORMANCE OF KARNATAKA

SOAPS & DETERGENTS LIMITED.

2023-24

Project work submitted in partial fulfillment of the requirements for the award of the degree
of B.COM from Bangalore University

BACHELOR OF COMMERCE

Of

BANGALORE UNIVERSITY

Submitted by
SACHIN.SHEKAR
Under the guidance of

Name of guide: Ms. Punida Arpitha.

Designation of guide: Professor.

ST PAULS COLLEGE
 A study on financial performance of KS&DL

DECLARATION BY THE STUDENT

I hereby declare that “A STUDY ON FINACIAL PERFORMANCE OF

KARNATAKA SOAPS & DETERGENTS LIMITED.BANGALORE(2023-24)” is
the result of the project work carried out by me under guidance of Prof. Punida
Arpitha in partial fulfillment for the award of bachelor degree in commerce by
Bangalore university.

I Also declare that this project is the outcome of my own efforts and that it has not
been submitted to any other university or Institute for the award of any other degree
or diploma or certificate.

PLACE: BANGALORE Name : SACHIN.SHEKAR

DATE : Register number :U03MU21C0055

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Table of Contents

Chapter No Title of the chapter Page No

1. Introduction

2. Research design

3. Company profile

4. Data analysis

5. Findings,
Suggestions and
Conclusion

6. Bibliography

7. Annexure

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Chapter-1
INTRODUCTION

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INTRODUCTION
The word finance comes from the Latin word fins. Finance is the art and science of handling
money. Finance may be defined as the provision of money at the time when it is needed. Every
enterprises needs finance to carry out on its operations and to achieve its goals. Finance is one of
the most important aspects of business management. The term finance may thus incorporate any
of following

 The study of money and other assets

 The management and control of those assets
 The science of managing money.

DEFINITION:
“Finance is that business activity which is concerned with organization and conversation of capital
funds in meeting financial needs and overall objectives of a business experience”.

 In general sense,
“Finance is the management of money and other valuables, which can be easily converted
into cash”.

 According to experts,
“Finance is a simple task of providing the necessary funds required by the business of
entities like companies , firms, individuals and others on the terms that are most favorable
to achieve their economic activities”.

 According to entrepreneurs

“Finance is concerned with cash. It is so, since, every business transaction involves cash
directly or indirectly”.

 According to academicians,
“Finance is the procurement of funds and effective and properly planned utilization of
funds. It is also deals with profits that adequately compensate for the cost and risks borne
by the business”.

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FINANCIAL MANGEMENT
Financial management is the planning of the requirement of capital investment with the
objective of earning higher return incurring the least cost and efficient management of the
financial management of the financial affairs any business enterprises.

Financial management may be defined as “financial management is the integral part of

general management engaged in rising of finance allocation and utilization of finance or
funds and other managerial function for the overall growth of the enterprise”. Financial
analysis refers to an assessment of the viability, stability, and profitability of a business,
sub businesses and project. It plays a dominate role in managerial decision making. There
are various technique used to analyse the financial statement such as ratio analysis, fund
flow ,cash flow, comparative balance sheet analysis.

The 3 broad activities of financial management are:

 Financial analysis, planning, control
 Management of firm’s assets structure, and
 Management of the firm’s financial structure.

These are mainly two approaches of financial management

 Profit maximization approach

Profit maximization in financial management represents the process or the approach by
which profits business are increased. In simple words, all the decisions whether investment,
financing or dividend etc are focused maximizing the profits at optimum levels.

Profit maximization is the traditional approach and the primary objective of financial
management. It implies that every decision relating to business is evaluated in the light of
profits.

 Wealth maximization approach

It is modern approach to financial management. Wealth maximization means to earn
maximum wealth of the shareholders
So finance manager tries to give a maximum dividend to the shareholders.

Finance manager also tries to increase the market value of the shares. The market value of
the shares is directly related to the performance of the company. Better performance higher
is the market value of shares.

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IMPORTANCE OF FINANCIAL MANAGEMENT

 Acquisition of funds – financial management involves the acquisition of required finance
to the business concern.
 Proper use of funds- Proper use and allocation of funds leads to improve the operational
efficiency of the business concern.
 Improve profitability- Profitability of the concern purely depends on the effectiveness and
proper utilization of funds by the business concern.
 Promoting savings- Savings are possible only when the business concern earns higher
profitability and maximizing wealth.

LIMITATIONS OF FINANCIAL MANAGEMENT

 Suffers from limitation of financial statements
 Ignores qualitative aspects
 Spot’s the symptoms but not misdiagnose.
 Personal judgement

INTRODUCTION
RATIO ANALYSIS

Ratio analysis is a quantitative analysis of information contained in a company’s financial

statements. Ratio analysis is used to evaluate various aspects of a company’s operating and
financial , performance such as its efficiency, liquidity, profitability, solvency.

OBJECTIVE OF RATIO ANALYSIS

 Measuring the profit earning capacity of the business using gross profit, expenses
and other similar ratios.
 Determining the operational efficiency of the business through operating ratios.
 Measuring short term or long term by calculating liquidity and solvency positions.
 Facilitating comparative analysis for both internal and external purposes.
 It indicates the overall efficiency of a certain business.
 Ratio analysis is of much help in financial forecasting and planning. Meaningful
conclusions can be drawn for future purposes from these ratios.

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ADVANTAGES
 It simplifies the financial statements.
 It helps in comparing companies belonging in the same sector with each other.
 It helps in trend analysis which involves comparing a single company’s
performance over period of time.
 It helps the firm to take short/long term investment decisions and thus helps in
formulation of policies and strategies.

LIMITATIONS

 Different companies operate in different industries each having different

environmental conditions such as regulation, market structure etc. such factors
are significant to the fact that a comparison of two companies from different
industries might be misleading.
 Financial accounting information is affected by estimates and assumptions.
Accounting standards allow different accounting policies, which impairs the
compatibility of using ratio analysis and hence it proves to be less useful in such
situations
 It basically explains the relationship between the various past year’s information
while users are more concerned about current and future information.

Steps involved calculation- Although the calculation parts of the ratios are pretty simple and
straightforward, the analysis of such values involves the trickier part. Thus , the interpreter ought
to have enough knowledge and information about the ratios as well and the company’s financial
information to do so. The process is as follows:-

1. The first task of the financial analysis at hand is to select the information relevant to the
decision under consideration from the statements and calculate appropriate ratios.
2. To compare the calculated ratios with the previous year ratios of the same firm. This in
turn facilitates the purpose of determining success or failure of the respective firm that is
being analyzed.
3. The final step is the analysis, interpretation, drawing of inferences and conclusion.

Categories of ratios:-
Most investors are familiar with a few key ratios, particularly the ones that are relatively
easy to calculate. Some of these ratios include current ratio, return on equity, debt equity
ratio, dividend payout ratio, and the price/earnings ratio.
While there are numerous financial ratios , ratio analysis can be categorized into the
following categories-

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a. Liquidity ratios: Liquidity ratios measure a company’s ability to pay off its short
term debts as they come due to using the company’s current or quick assets.
Liquidity ratios include current ratio, quick ratio and working capital ratio.
b. Solvency ratios: Also known as financial leverage ratios, it compares a company’s
debt levels with its assets, equity and earnings to evaluate whether a company can
stay afloat in the long term debt and interest on the debt. The ratios include debt
equity ratio, interest coverage ratio etc.
c. Profitability ratios: These ratios show how well a company can generate profits
from its operations. Profit margin, return on assets, return on equity, return on
capital employed etc.
d. Efficiency ratios: Also called as activity ratios, it evaluates how well a company
uses its assets and liabilities to generate sales and maximize profits. Key efficiency
ratios are the assets turnover ratio, inventory turnover ratio, debtors and creditors
turnover ratios.
e. Coverage ratio: These ratios measure a company’s ability to make the interest
payments and other obligations associated with its debts. Times interest earned
ratios and debt service ratio are examples.
f. Market prospect ratios: These ratios are the most commonly used ratios in
fundamental analysis. Investors use these ratios to determine what they may receive
in earnings from their investments and to predict what the trend of a particular stock
might be in the future. Key ratios include dividend yield, earnings per share and
dividend pay out ratio.

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INDUSTRY PROFILE

HISTORY AND SOAP MARKET ORIGIN

Soap was introduced in India by the Lever Brothers during the British reign in the country.
There after soaps were imported from England and marketed in India. However the first local soap
manufacturing unit was set up by Mr. Jamshedji Tata in Cochin, Kerala around the period 1918.

Since then soaps have become an important part of the lives of the people of the country.
Today India has one of the most developed soap markets and is dominated by numerous
multinational and also quite a few major domestic companies. Some of the most popular soap
brands in include Lux, Cinthol, Lifebuoy, Liril, Shikakai, Rexona, Nirma, Dettol etc.

The soap market in India which was once only restricted to the urban regions has now covered
practically the remotest corners of the country. The ever increasing demand for personal care
products in India is mostly due to the sizable population, greater hygiene concerns and the rising
income levels of the people of the nation. Soap is one of the commodities which have become an
indispensable part of the life of modern world. Since it is non durable consumer goods, there is a
large market for it. The soap industry in India faces a cut throat competition while multinational
companies dominate the market. They are also facing severe threat from dynamic and enterprising
new entrance especially during 1991-92.

The Global Market Outlook for Soap

Soap noodles are the sodium salt of fatty acids, formed in the reaction between sodium
hydroxide (caustic soda) and fatty acids. This semi-finished product forms the base ingredient in
the manufacture of household and toilet soap bars. There are 3 types of soap noodle – opaque,
translucent and transparent. Opaque noodles account for 90% of the market by volume.

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In this market insight, the market size for soap noodles is equated to toilet soap production,
as almost all the noodles are used in the production of toilet soaps and all toilet soaps involve the
use of soap noodles. The total consumption of soap noodles is the same as the total consumption
of toilet soap, at 3.4 million tonnes in 2004. Just under two thirds of the world soap noodle
market by volume is captive. The remaining third of the market is considered to be the merchant
market; however, it is split between toll manufacturing, long term contracts and the ‘free’ merchant
market. Approximately 45% of the merchant market is actually tied up with long term contracts
and toll manufacturing.

What is the Competitive Outlook?

Globally, there are roughly 40 noodle suppliers in the merchant market who are predominately
Asian suppliers. Malaysia and Indonesia have the largest share of the merchant soap noodle market
and their share is expected to increase.Looking ahead, competition is likely to be based around
price and reliability of supply of a quality product. Companies that have the best costs structure
and are able to operate in large volumes at low costs are likely to survive in the long run, as
competition heats up with several oleochem players increasing their capacity for soap noodles.
Back-integration into fatty acids is certainly an advantage in terms of reliability of supply.
Moreover, a further advantage will be to have a manufacturing capacity located in S.E. Asia which
is close to the growth market and the major region of vegetable oil supply, thereby reducing costs.
Increasingly, multinational companies are entering into joint ventures or long term agreements
with Southeast Asian companies in order to take advantage of these benefits. However, these
global deals are restricting the merchant market.

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Indian Soap Market growth

The Indian Soap Industry includes about 700 companies with combined annual revenue of
about $17 billion. Major companies in this industry include divisions of P&G, Unilever, and Dial.
The Indian Soap Industry is highly concentrated with the top 50 companies holding almost 90%
of the market.

The market size of global soap and detergent market size was estimated to be around 31M tonne
in 2004, which is estimated to grow to 33M tonne in the coming years. Toilet soaps account for
more than 10% of the total market of soap and detergents. In Asia, the countries like China and
India are showing rapid growth in the toilet soap section. Market share of body wash was estimated
to be around 2% in 2004 and is showing signs of healthy growth in these markets. India's soap
market is Rs 41.75 billion.

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Chapter-2
RESEARCH DESIGN

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STATEMENT OF THE PROBLEM

Ratios are very useful to draw meaningful conclusions on any company’s profits and financial
position so management wants to know what are the factors contributing for the future growth and
also wants to maintain the same in the longer run and also to improve the profitability ,solvency,
efficiency and liquidity of the organization.

OBJECTIVES OF THE STUDY

 To provide an overview of the Karnataka soaps and detergents ltd and its business of
manufacturing soaps and detergents.
 To determine the liquidity, solvency, profitability, and efficiency position of the factory
using ratio analysis as the base.
 To identify and understand the caliber of the financial management performance and
establishment
 To shed light on the history of how the 100 year old organization came into the market
with unique product.
 To determine the earnings per share and dividends per share of the company.

Scope of the study-

Ratio analysis is a fairly popular concept known and applied by most firms and accounts. Thus it
can be stated that it has wider applicability compared to other management techniques used to
measure the firm’s performance. It concentrates on intra-firm as well as inter-firm comparison of
various elements and derives meaningful relationships between them.

Limitations of the study

 This report was only restricted one of the manufacturing firms in the soaps and detergents
industry.
 It was restricted only to a period of 5 years.
 The information was limited to the annual reports of the company

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 The knowledge and skills that I had in this field was limited only to the extent that I
acquired during my course of commerce, thus the report may not reach industrial quality
standards.
 The ratios I have used, although carefully selected may not be enough to meet required
standards of an industrial report.
 There was restricted time frame within which I was asked to complete and submit my full
report and additional resources too were limited.
Keeping all these factors on mind, I have given my level best to conduct a comprehensive
if not a thorough study of the financial performance at the Karnataka soaps and detergents
limited for the period of past 5 financial years.

RESEARCH METHODOLOGY
As stated by famous researchers, a research is only good as validity of the information and
to achieve the required validity the research methodology plays an important picture. Thus
there are two types data involved in this project report to conduct the analysis:-
1. Primary data:- The primary data that was available to me was minimal as the time
of internship was unfortunately during the business parts of the financial year 2022-
2023.
So, the sources were limited to conversations and discussions with the manager and
assistant manager of the accounts department.
2. Secondary data:- The secondary sources were plenty though, thanks to the abundant
access I had to the internet as well as company records:-
 Annual reports of the Karnataka soaps and detergents ltd
 The Mysore sandal soap factory website.
 Various other financial data related sites.

Management technique tool used for analysis

The research instrument used as stated earlier is the ratio analysis, a common management
technique. It’s used by individuals and firms to conduct quantitative assessment of information on
a company’s financial statements. Ratios are calculated from current year numbers and are then
compared to previous financial year numbers.

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REVIEW OF LITERATURE
Miss. H. Rehana Praveen in her study on “performance evaluation of ponnambalam Finance,
Coimbatore” mainly suggested that for improving the performances of the finance if the firm must
recovered all its debts within time.

Miss P. Uchimahali in her study on “Performance analysis of Lakshmi engineering works,

Kovilapatti” analyzed and suggested that the company must take efforts to reduce the stock level
and utilize investments in fixed and current assets to strengthen the position of the company.

Srinivas K T has said that the Karnataka power corporation limited(KPCL) is mainly involved in
generation of power and is the sole administrator for the power generation in the state. The present
study is conducted to analyze the financial performance of KPCL with the help of various ratios.
From the present study it is found that company financial performance is seeing to be sound,
because the company trying to increase its production also net profit(T,2012)

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Chapter-3
COMPANY PROFILE

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Company profile

The Karnataka soaps and detergents limited incorporated in thousand years ago by Sir. M.
Visvesvaraya, Nalwadi Krishna raja wodeyar and sri. G. shastri. This company is one of the
premier industries in Indian soaps. It is fastest gloom over business and trading in India as well as
foreign nations among the entire worldwide markets. The maharaja of Mysore turned this as a
threat into opportunity by KS&DL budding seeds on out skirts of “Koti Forest” near Bangalore in
1918. The project turned into an shape with the engineering experts and skill and knowledge of
top-level members of board with the inspiration of Diwan of Mysore late Sir. M. Visvesvaraya and
some co-service of Scientists are late Sir. S G. Shastri, professor Watson and Dr. Sub rough.

Here the Shastri plays a main role who improved and made the process perfect of sandal wood oil
manufacturing as well as Mysore sandal soaps which is world famous one. This industry was
started in very small unit near K R Circle, Bangalore with the capacity of 100 tons per annum in
1918. Then this organization shifted to Rajajinagar area, Bangalore in July 1957. This plant or
organization occupies in around area of 42 hectares (covering soap, detergents and fatty acid
divisions) on the Bangalore-Poona highway by this the transport services and communication can
be easily accessible.

In November 1918 it was put up in the market after sincere effort and experiments which is
blending to evolve perfume soap using sandalwood oil as the main base to manufacture toilet

soaps. In the period of 1980 Oct 1st the government soap factory was renamed as “Karnataka soaps
and detergents limited”. This company registered was public limited company in this year. The
company products has built up with tradition for the quality of its products.

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Slogan

“Natural products with exotic fragrances” the products of KS&DL are highest quality standard,
right from raw-materials chosen to processing and packing of the end product. The entire
washroom cleaning as well as soaps of the company are made from the natural extracts of vegetable
origin and totally free from animal fatty products. These products are much demand in the local as
well as global markets by this company is planning to expand their business among foreign nations
so the company starts the export of goods to Kuwait, Qatar, USA, Hungary, Malaysia, China,
Taiwan, Australia, Nepal, Singapore, France and Japan. The entire detergents and washable soaps
of KS&DL are made with free from chemicals as well as fatty products.

THE FOUNDERS OF MYSORE SANDAL SOAP:

Nalwadi Krishna Raja Sir M. Visvesvaraya Sri. S.G.Shastri

Wodeyar

The Sandalwood oil produced by the Company is ranked as “THE QUEEN OF

FRAGRANCES” and popularized as “LIQUID GOLD”

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The orientation of oils and sandal products is in Karnataka state. This can be turned into making
sandal products with well-known fragrant. The ambassador of India and sandalwood oils is also
known as “liquid gold”.

Trade mark of Karnataka soaps and detergents limited

The trade mark is a mythological creation of ‘puranas, Vedas, Upanishads’ the symbol which is a
body of lion neck and face of elephant, it shows the virtues strength and wisdom. This is an official
emblem of the philosophy of the organization. This trade mark removes the impurities as well as
imperfections of the products of organization. This reflects the measuring the quality of excellence
of Karnataka soaps and detergents limited.

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VISION STATEMENTS

a) It ensures the world-wide global presence of sandal products and while leveling with a
unique strength by intelligent and selective diversification
b) It may secure all technologies alliance as well as prime status from government of India
c) It may be keeping place technology in each and every aspect either through globalization,
global trade and state policies and procedures
d) It ensures to make reasonable profits with effective decisions and managerial personnel
recruitment in the organization
e) The most prominently to earn foreign exchange values in both state as well as central
support from government
f) It is a long term desire to achieve name and fame with effective working condition
machines installation in the production place

Capacity units: here the capacity of licensed to produce products such as 10000 tons of
detergents per annual period of one year as well as 26000 tons of production of sandal soaps

MISSION STATEMENT

It is a short term desire to achieve the targets, goals as well as objectives of the company with
in a shorter duration of time.

 To serve the nation with wealth and economy

 To develop self-reliance as well as confidence
 To provide effective and efficient purity and quality goods and services
 To maintain the company brand loyalty with its customers and consumers
 To build up a goodwill position of the company of Mysore sandal based on pure
sandalwood oil with proper planning and decision making.

QUALITY POLICIES

 To interact with its environment policy effective plans and made the best practices in all
workers for implication.
 To Set basic targets and monitor progress through inter and intra audit.

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 plan to design and develop goods and services with have a friendly environmental impact
during producing, also reuse and recycle materials wherever it may possible and minimize
energy consumption and waste particles.

PROUDUCT PROFILE
A) Mysore sandal soap

This sandal soap is made from natural vegetable oils and also it may contain pure
sandalwood oil, along with its moisturizers and skin care conditioner. It emanates natural
fragrance with glowing skin, soft forever handsome young looking. It is available in 75gm,
125gm.

B) Mysore sandal millennium super premium soap

This premium millennium soap is convenient made for all type of seasons and as well as
all age level peoples without any gender discrimination. It is an well moisturizes and skin

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care soap of cooling, soft and smoothening of pure natural oils sandalwood and added with
flavor fragmented extracts.

C) Mysore sandal classic bathing bar

This classic bathing soaps are best skin care

conditioners with effective nourishment of
moisturizers and pure natural extracts of sandal
oils. The oils which emanates fragrance of
lingering and keep your skin with smooth, glowing
forever young handsome look. 75gm, 125gm.

D) Mysore sandal gold

This soap is purely made up of vegetable oils and it may contain natural sandal oil, which
is popularly known as “liquid gold”. Sandal oil recommended in ancient period of
ayurvedic with the texts of skin softer and smoother and which has been cherished of an
centuries for its effective exotic fragrance. Here the soaps are enriched with moisturizers
and nourishment and keep skin with wrinkle free and a radiant glow of blemish free extracts
which is very actively supports to removal of dead-cells in face.

E) Mysore sandal three in one gift pack

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These soaps are luxury products in soaps with fragrance of tradition in natural sandalwood
jasmine and rose which three are specifically given in an single pack for family usage and
for all customers and consumers bought for occasions purpose.
1.sandalwood soap
2.jasmine flavor
3. rose flavor
F) Sandal rose soap

These soaps are made up of with natural products rose flowers with the plucking of rose
petals from the plants. This soap shower feels to freshness with effective look with rose
extract’s and fragrance.

G) Mysore carbolic soap

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This soap is made up of pure vegetable ingredients of oil products and it may help to cure
skin infections, allergies, rashes to provide the soap users with pleasant as well as feeling
of freshness in whole day.
H) Mysore sandal herbal soap

This soap is made up of sandal oils with thulasi and neem extracts and with fresh vegetable oils,
100% bio-ingredients with skin conditioning, anti- bacterial agents and it give freshness for the till
the day end for whole family.

I) Mysore sandal baby soap

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This soaps are specifically made for the children and these soaps are made of fresh vegetable oil
products and sandalwood oil as well as pure nature extracts with the nourishment of baby body’s
and mind care, this soaps are endowed the anti-septic properties.

J).Mysore sandal talc powder

The pure Mysore talc which provides exotic fragrance with addition of pure sandalwood with
perfect natural ingredients which helps a effective smoothening of skin and which may keep the
skin in an healthy manner with cooling nourishment.

J) Mysore sandal oil

This sandal oil is a liquid gold for its uniqueness tetravalent as well as enchanting fragmented
natural and pure mixture of sandal oil which is recommended as anti-ancient Ayurvedic texts with
an effective skincare ingredient. This product can have presented as exclusive pattern of packing.

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K) Mysore sandal coconut oil

This product is a natural air-conditioner which is perfect of hair-care and its damages
prevention. these can be accepted internationally anti-oxidant storages that may ensure coconut oil
has remains fresh until its last drop in the bottle.

L) MYSORE DETERGENT CAKE

This detergent cake is an well quality soap with free from chemical extracts by adding of
natural extracts of sandal products like oil and sandalwood, with the providing of best quality
products at an affordable prices.

M) Mysore sandal incense sticks

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These products are of many flavors with exotic range of fragrances in different brands of
products provided by KS&DL with free from chemical adding’s. these three are the
premium products which will have huge demand in the market for the effective and
efficient consumption patterns.
N) Mysore sandal Dhoop

These products are the “Royal tradition for divine bliss”. These are made of De-oiled sandal
powder. The extracting fragrance from the Dhoop has a smart and smooth calming effects,
for holistic experience in an parallel manner at the time of prayer to god.

SWOT analysis of KS&DL

1. Strength: - Mysore sandal is a famous products of worldwide nations with pure sandal
oil extracts, these products are certified by international standard organization(ISO), it
is certified by the geographic indication with its Brand name and it is appointed as

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globally distributors. These products are of many types and as well as company to
maintain higher stability.
2. Weaknesses: - the promoting activities are done on par with the competitors, these
products are of high oriented cost due to excessive force from labors
3. Opportunities: -these are the products having a traditional benefits of sandal is good
for skin and health. The skincare is gaining more focus towards consumers. The
government has supports to produce a huge capacity of production. These products are
of huge demand in the market with existence of vast market creation in an worldwide
areas.
4. Threats: - due to the competitors’ products, problem of replacement of plant and
machineries in the organization and there is a entry of new multinational markets in
soap business.

AWARDS/ACHIEVEMENTS

ACHIEVEMENTS

1. Government of Karnataka Department of Industries and Commerce. State Export

Promotion Advisory Board.
2. Detergent Plants Chemical Bombay has given 1 st price for the year 1980-81
3. Geographical Indication GI-2005
4. ISO 9001-2000 in the year 1999
5. ISO 14001-2004 in the year 2000

AWARDS

1. “EXPORT PERFORMANCE”- 2006-07, 2012-13 by Chemexil, (set-up by ministry of

Commerce and Industry, Govt. of INDIA)

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2. “National Award for Excellence in Cost Management” and Good Performance for the
year 2012.

3. “Chief Minister’s Karnataka Ratna Award for the year 2009-10 for EXCELLENCE in
Progressive Growth.

FUTURE GROWTH AND PROSPECTS:

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Competition from the MNC has intensified, leading of Shrinkage of margins. Low margins and
high volumes characterize the industry. Penetration of toilet Soaps is at 98%, however per capita
consumption levels remains low and India’s per capita consumption of soaps is 460gms per annum
is lower than that of Brazil is at 1100gms per annum which shows the light opportunity for the
firms in the midst of cut throat competition. The market is highly fragmented with companies
having strong presence in select segments of a regional presence only. Brand loyalty is very low
except at the premium end and the level of disposal incomes determine the overall sector growth.

 Progress in existing product like Mysore Sandal classic improved moisturizers & skin
conditions.

 The company has plants to put-up new plant and machinery with latest technology to
improve the quality and also to reduce the cost of production.
 The company has plant to install new LPG based Boilers in place of the existing old coal
fired boilers in order to fulfill the Pollution Control Board Norms.
 The company is concentrating on the promotion of popular soaps by introducing in
different state through public distribution systems to popularize the products and also to
increase the volume of sales of popular based soaps.
 Timely introduction and implementation of market focused decisions.
YEAR OF INCORPORATION

The company was incorporated in 1918 by The Maharaja of the Mysore.

Incorporated Name Karnataka soaps and detergents limited

Address Karnataka soaps and detergents limited Bangalore Pune
highway
Post box No.5531,
Rajajinagar, Bangalore – 560055
Email: [email protected]
Website: www.mysoresandal.com

Year of establishment 1918

Constitution
Wholly owned by Govt. of Karnataka

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Management Govt. of Karnataka nominates/appoints, board of

directors. Chairman and MD
Renamed 1980

Trade mark The trademark is SHARABHA.

At Bangalore Soap plant,

Detergent plant,
Fatty acid plant

At Mysore Sandalwood oil,

Agarbathies

At Shimoga Duty paid go down

MILESTONES OF KS&DL:

1918 Government soap factory was started by Maharaja of Mysore with the capacity of
112MTs/annum near carbon park, Bangalore and the MYSORE SANDAL SOAP
was introduced into the market for the first time.
1932 Toilet soap production capacity was enhanced to 750MTs/annum.
1944 The second sandalwood oil extraction plant was started in Shimoga.
1954 Foundation stone was laid by Sri M. Visvesvaraya for established of new
manufacturing facilities at Rajajinagar, industrial Suburb, and Bangalore.
1957 Factory was shifted from Cubbon Park to the new premises…

1970 Production capacity was increased to 600MTs/annum, in a phase wise with parallel
modernization of various manufacturing equipment’s.
1974 Mysore sales international limited was appointed as the sole selling agent for
marketing its products.
1984 Expanded the production capacity with modern manufacturing facilities, which was
available at that time to produce 2600MTs/annum of toilet soaps with different
variants.
1992 Company has faced very stiff competition after liberalization in the country from
different multi-national companies. Company was registered with the board for
industries and financial reconstruction (BFR) New Delhi
1999 Company was certified with ISO 9001: 1994 certification by BSI for its effective
implementation of quality management.

2000 Company was certified with ISO 14001 certification by BSI for its effective
implementation environmental management system
2003 Company has wiped out entire carry forward losses of Rs.98 crores and come out
from BIFR. Company has made profits continuously every year and it is the only

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state public sector unit, which has come out of BIFR and making continuous profits
in the state.
2004 The ISO certification was upgraded to ISO 9001:2000.

2005 a) Launched new herbal care soaps of 100 grams contain 19 herbs and leaves
extracted perfumes.
b) Geographical indication registry Mysore sandal soap Mysore sandalwood
oil.
2007 ICWAI national award for excellence.

2008 KSDL prime products, Mysore sandalwood soap and oil are accredited with
geographical indications as the intellectual property of India as per the geographical
indication of goods act 1999.
2008 Company has introduced hand wash liquids under the trade name of herbal hand
wash and rose hand wash. Company has also introduced liquid detergent under the
trade name of KLEENOL with different variants for floor wash, dish wash and
automobile wash.
2009 Company has established in house state of the art manufacturing facilities for
manufacture and filling of Mysore sandal talcum powder and Mysore sandal baby
powder. Company has re – introduced the talcum powder variants with new outlook
of containers.
2010 The ISO certification was upgraded to ISO 9001: 2008

2010 Won Karnataka chief minister’s “RATNA AWARD” for profited government.

2011 The research and development department of the company is in the progress
development “THE MILENNIUM SOAP” new products like super specialty, body
wash, liquid soap, room fresheners, body spray perfume and pure sandalwood
powder in small pouches.
2012 India’s most expensive Mysore sandal Millennium soap launched on Jan 25 2012
priced at Rs 720 per piece of 150

2012 The company reached highest sales turnover and profit. Company is on
progressive growth for the last 10 years by increasing its production and sales
volumes. The company turnover has increased from the year 2003 to Rs 262
crores during the year 2011 – 2012.
2013 They reached highest turnover and profit (322 crores in FY 2013) on 22 nd August
“NATIONAL AWARD FOR EXCELLENCE MANUFACTURING COST”.
KSDL was the winner in public manufacturing (medium organization) category.
2014 The company reached highest sales turnover and profit during 2013 – 2014 and is
on progressive growth for the last 12 years by increasing its production and sales
volume. The turnover during the year 2013 – 2014 was Rs.353 crores with a net
profit of Rs.32.83 crores.

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2015 Up gradation of soap technology and commissioning of new lines for production
planned. The company’s sales turnover and net profit during 2014 – 2015 is Rs.
357.02 crores and Rs. 45.18 crores respectively, showing the progress of the
company in terms of production and sales year by year.

2016 The company got chemical outstanding export performance in cosmetics and
toiletries panel award on 8th February in Mumbai from Nirmala Sitharaman
ministry for commerce and industries government of India.
The company reached highest gross sales turnover of Rs.476 crores during the
financial year 2015 – 2016 with an anticipated profit of little more than Rs. 60
crores.
KS AND DL completed 100 years since its inception.

2018 KSDL achieved its highest turnover of Rs 583 crores.

2019 KSDL achieved its highest turnover of Rs 672 crores.

2020- Despite of challenging economy, the company recorded exemplary performance

2021 by achieving Revenue of Rs 786.32 crores.

BOARD OF DIRECTORS:

SL.NO NAME & ADDRESS/SRIYUTHS

01 Sri K.J. George

Hon’ble minister for large and medium scale industry, chairman

02 Sri M.R. Ravi Kumar, IAS Managing director

03 Dr. S. Chandrashekaran, Prof. & Chairman,

Dept. of organic Chemistry
Indian Institute of science, BANGALORE – 12

04 Smt. Renuka Chidambaram, IAS principal secretary to Government, Dept. of

public enterprises, Director.

05 Sri Pavan Kumar Malapati, IAS Dy. Secretary to government finance

department Bangalore – 560001

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06 Smt. N.R. Jaganmatha Addl. Secretary government commerce and industries

Dept., Vikas soudha

07 Sri G.C. Prakash , IAS Managing director, Mysore sales international ltd MSIL
House, Cunningham road Bangalore 560052

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Chapter-4

DATA ANALYSIS

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Theoretical background
As the Mysore sandal soap factory is at its core a manufacturing firm and it also being a
government sector enterprise, caution was taken to choose the ratios carefully so as to reach at
reasonable and almost accurate if not completely accurate conclusions. To achieve this following
ratio explained below were employed:-

A. Liquidity ratios:-
I. Current ratio-

The current ratio is a liquidity ratio that measures company’s ability to pay short term
and long term obligations. To gauge this ability, the current ratio considers the current
total assets of a company relative to the company’s current total liabilities. The current
ratio can give a sense of efficiency of a company’s operating cycle or its ability to turn
its product into cash.

II. Quick ratio/ acid test ratio

This ratio compares a company’s easily liquidated assets (including cash, accounts
receivables, short term investments, excluding inventories and prepaid expenses) to its
current liabilities. The quick ratio is an indicator of a company’s short term liquidity
and measures a company’s ability to meet its short term obligations with its most liquid
assets.

B. Solvency ratio
a) Proprietary ratio-
Proprietary ratio (also known as equity ratio or net worth to total assets or
shareholder equity to total equity.) it establishes relationship between proprietary’s
funds to total resources of the unit. Where proprietary’s fund refers to the equity
share capital and reserves, surpluses and total assets
C Activity/efficiency ratio
a. Stock/inventory turnover ratio-
The merchandise inventory turnover ratio measures how often the inventory
balance is sold during an accounting period. The cost of goods sold is divided by
the average inventory for a specific period.

b. Working capital turnover ratio-

It establishes the relationship between cost of sales and net working capital. As
working capital has a direct and close relationship with cost of goods sold, therefore
the ratio provides useful insight with respect to how efficiency or actively the
working capital is being used.

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C. Profitability ratio

1) Net profit ratio-

This expresses the relationship between net profit after taxes and sales. This ratio
is a measure of the overall profitability of the business. Net profit is arrived at after
taking into account both the operating and non operating items of income and
expenses. The ratio indicates what position of the net sales is left for the owners
after all expenses have been met.

A). LIQUIDITY RATIOS

1. Current ratios

Year Current Current liabilities Current

Assets Ratio
2020 6673900000 1811000000 3.68
2021 7512000000 1725200000 4.35
2022 9210300000 2292000000 4.01

Analysis-

The current ratio is an indication of a firm's market liquidity and ability to meet creditor's
demands. Acceptable current ratio varies from industry to industry and are between1.5 and 2 for
healthy Businesses. If a company's current ratio is in the range, then it indicates good short-term
financial strength. If current liabilities exceed current assets (current ratio is below

1) then the company may have problems meeting its short-term obligations. If the current ratio is
too high, then the company may not be efficiently using its current assets.

2). Quick ratio/Liquid ratio-

Year Liquid assets Liquid liabilities Quick ratio

2020 4673800000 1811000000 2.58
2021 5928200000 1725200000 3.43
2022 7953100000 2292000000 3.46

Quick ratio= Liquid assets/Current liability

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Analysis- The quick ratio may look healthy when the business is about to run out of cash.

In contrast, if the business has negotiated fast payment or cash from customers, and long term from
suppliers it may have an exceptionally low quick ratio. The Quick ratio should be 1:1 or higher,
however this varies widely by industry. In the higher the ratio, the greater the company's liquidity
(better to meet current obligations using liquid assets).

B. Solvency ratio

1). Proprietary ratio-

Year Shareholders fund Total assets Proprietary ratio

2020 1593390000 1946620000 0.81
2021 1688150000 2029600000 0.83
2022 1803240000 2021480000 0.89

Proprietary ratio= Stockholders fund/Total assets*100

Analysis-

Equity ratio with higher value indicates that a company is effectively funded its asset requirement
with the minimum amount of debt. If low equity ratio means that the company primarily used debt
to acquire assets, which is widely viewed as an indication of greater financial risk. From the above
table the equity ratio is maintained the standard of increasing from past year to current year.

C. Activity/ Inventory turnover ratio-

1. Stock/inventory turnover ratio-

Year Net sales inventory Inventory turnover

ratio
2020 6450500000 2000100000 3.22
2021 7837500000 1583800000 4.94
2022 9296200000 1257200000 7.39
Stock turnover ratio= Cost of goods sold/Average stock

Analysis- Higher value of inventory indicates how fast the goods are moved out of the inventory,
this is only possible if the sale is more, if you got high inventory ratio it would imply company
does not have a favourable way to dispatch. On other hand high ratio implies either strong sales or
insufficient inventory, it indicates a problem with the goods being offered for sale.

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2). Working capital turnover ratio

Year Cost of sales Net working capital Working capital

turnover ratio
2020 6450500000 4862000000 1.32
2021 7837500000 5786800000 1.35
2022 9296200000 6918300000 1.35

Working capital ratio= Net sales/Net working capital

Analysis-

A company uses working capital (current assets - current liabilities) to fund operations and
purchase inventory. These operations and inventory are then converted into sales revenue for the
company. The working capital turnover ratio is used to analyse the relationship between the money
used to fund operations and the sales generated from these operations.

D.. PROFITABILITY RATIOS-

1). Net profit ratio

Year Net profit after taxes Net sales Net profit ratio
2020 1131600000 6450500000 17.54%
2021 1129400000 7837500000 14.41%
2022 1382000000 9296200000 14.86%

Net profit ratio=Net profit/Net sales*100

Analysis-

Net profit indicates the efficiency of conducting Business. If the firm has less net profit, then the
company will suffer during adverse conditions. If the firm has high net profit it means the firm is
doing well in the market and can cope up during time of inflation where cost of production will
increase. But in the above table net profit of 2022 is lower than the 2020.

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Chapter-5
FINDINGS, SUGGESTIONS AND
CONCLUSION

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FINDINGS
By observing and analyzing the overall financial performance of the company and its conduct of
business with respect to past 5 years, I was able to compute the following findings:-

A) Liquidity position-
1. The current ratio of the company is more than satisfactory in terms of meeting the
industry standards available or accepted in the market in general. It surpasses the
standard at an average of 3.24 which is higher than the required 2:1.
2. In terms of liquidity too, the company has been able to maintain a favorable
position in the respective industry again, surpassing the standards of 1:1 at an
average of 1.73.
B) Solvency position-
1. The company’s capital structure consists of mainly share capital rather than debt
which only consist of 3.5 cores from the state government of Karnataka itself.
Thus, the liability position of the company is at much lesser risk compared to
various other factors that usually have higher outsider’s fund. This would prove to
be helpful if and whether the company goes under liquidation
2. The proprietors ratio has been fruitful in terms of representing the fact that the
factory has been successfully acquiring wealth for the company by increasing the
total assets of the factory. It’s also clear from the shareholder’s fund that the
company has been increasing the quantum of reserves maintained by them.
3. In terms fixed cost bearing securities, KS&DL is fortunate to enjoy the privilege
of the lender and investor of capital being the same entity itself and the fact that it
consists of only one F.C.B.S takes a huge burden from the shoulders of the
company in terms of maintaining solvency position and again, KS&DL has been
able to successfully do so.

C) Activity/efficiency position-
1. KS&DL being a manufacturing firm must try to be more cautions about the
elements related to this ratio in which the important factors include receivables and
payables department. The factory, as per my observations were not able to
maintain their accounts receivable and not implemented any countermeasures in
the past 5 years. I am presuming that this is due to their presence in the market for
over many decades, that they have confidence in receiving payments on time, but
they ought to be cautions about uncontrollable factors in the future.
2. In terms of creditors as well, they have been lagging in making prompt payment,
except for a few years where care was taken. Again, this may be due to many
factors that happened during the financial year. And like its been mentioned earlier
in the interpretations and above, the trust that the company has gained by making

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the suppliers aware of their presence in the market for almost 100 years also may
be one of the reasons for lack in payments.
3. The working capital management has to be appreciated, as enough efforts have
gone into maintaining the required measures of current assets and current liabilities
for meeting the industrial standards. A lack in maintaining any one of these
variables can overturn the position of company. Thus in terms of these elements,
the production department’s effort has to be truly appreciated.

D).Profitability position

These ratios show how well a company can generate profits from operations and how best
the operations can be carried out economically through distribution of expenses to various
elements or through cost reduction. It’s safe to say that KS&DL too has been able to make
good on their part of making sufficient profits through their various operations. The ratios used
for identifying the profitability position of KS&DL is as follows- gross profit and net profit
ratio, operating ratio, operating profit ratio.

 The gross and net profit ratio are subjective in nature in terms of industrial standards
but KS&DL have been able to meet the acceptable standards of the market.
 Operating ratio and operating profit ratio are complimentary in nature and they are
inversely proportional. That is to say that an increase in operating ratio leads to a
decrease in operating profit and vice versa. But as per my observations the values seem
to be favoring to the operating profit part of the combination of two, thereby indicating
sound profitability position of the concern.
 The operating expenses ratio seems to be minimal of all the ratios calculated and this
comes out as no surprise. As stated earlier, KS&DL has been alive and working for
ages and the management policies and control measures too have grown along with
the company making it wiser with every passing financial year in terms of cost
management.

E). Market prospect position-

 The earnings per share is one of the most important factors to consider while conducting
corporate valuation and it’s safe to say that KS&DL has been generating sufficient returns
on the investments made by the state government of Karnataka. The returns as calculated
have reached 100% returns and have been only climbing steadily in the past few years.
 The state government of Karnataka and the management at KS&DL have been very
responsible in deciding the dividend payout ratio keeping both, the interest of investors as
well as the factory too. In simple words, they decided to decrease the dividend distribution
and increase in retention ratio for the purposes of maintaining reserves. This probably done
keeping in mind the welfare and overall development of factory and to keep enough surplus

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for further growth and expansion of the business conducted by the government sector
undertaking.

SUGGESTIONS
I have had a great privilege and honor to conduct my study at this esteemed organization of the
state government of Karnataka. I have truly been taken aback after acknowledging the scale of
operations that they take up at the factory every financial year and with an efficient management
in place, any suggestions I make out of my very little experience and exposure would most
definitely fall nothing of short. But, I have still managed together my thoughts on a thing or two
that the management can keep in mind while conducting for the business in the future and I have
stated them briefly below:-

a) Keep a check on the current assets and liabilities and maintain them as stable as they have
been for the past 5 years
b) With my very little knowledge in terms of production techniques and after a visit to the
departments myself, I think the factory can incur a one time investment on new and
improved machinery, supply chain management measures which would not only boost the
productivity of the factory but would also improve employee morale as both those factors
are directly proportional.
c) Keep a close check and improve the conditions and working of the receivables as well as
the payable departments.
d) To make use of the present technological advancements in intranets and extranets. This
would only improve and increase productivity of the internal management of the company.
The extranets will eliminate the conventional middlemen involved in between the supplier
of raw materials and factory. This would also help to reduce costs considerably.
e) Try to implement an online shopping website for the various products and make use of the
exiting retail outlet stores as well as increase their numbers to cover a larger demographic
area.
f) Increase production levels of in demand products and try to reach untapped markets at both
domestic and international levels.
g) Educate the customers about the various benefits of sandalwood oil and its benefits like
mental clarity, memory booster, anti-viral, anti-septic, anti-inflammatory, expectorant(for
treating cough), hypertensive(decrease blood pressure)etc.,
h) Although the company has been able to maintain profitability, there is no harm in
increasing the future profits by efficient inventory control estimation and forecast of
working capital requirement, improved production techniques and control etc.,
i) The company may increase its selling and distribution expenses for promoting various
products. This will only increase the sales by providing a clearer picture in the minds of
the consumer about the variety of products at KS&DL has to offer in the soaps and
detergents department.

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j) The earnings per share and dividends per share is more than satisfactory can be improved
by considering all potential opportunities that are available in the field of manufacturing
and trading.

CONCLUSION
Ratio analysis in my opinion is aimed at providing an overall view of a particular industry by
evaluating their past financial performances and thereby identifying trends and behaviors in the
conduct of business to move on in the future. It is also used as one of the measures for making
portfolio investments by potential investors and as I have started earlier, although computing the
ratios may not seem as much of a herculean task; the comparison, analysis and interpretation of
the ratio must dealt very carefully, making it a very important task to take up.

I have personally selected this concept as an effort from my part, best at providing to some extent
a clear picture of the esteemed organization that has been incorporated decades before I was even
born, KS&DL in my personal opinion, I ought to truly appreciate the vision of all the souls that
went behind bringing this project to life and laud their effort whole heartedly. All the while, I
confidently believe that it has been here for a century and will definitely stay for multiple years to
come, provided they adapt according to the dynamic business environments.

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BIBLIOGRAPHY

http://www.mysoresandal.co.in

www.wikipedia.org/wiki/mysore_sandal_soap

http://202.138.105.9/mysoresandal/index.php

https://www.investopedia.com/terms/r/ratioanalysis.asp

http://www.indianmirror.com/culture/indian-specialties/mysoresandalsoap.hyml

http://www.thehindu.com/news/cities/bangalore/ksdl-rols-out-plans-to-increase-production-
capacity-in-two-years/article4957312.ece/amp/

Books-

Annual reports of Karnataka soaps and detergents limited

Management accounting- M.N.Arora

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ANNEXURES

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BALANCE SHEET AS AT MARCH 31,

2023.

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Sl Particulars Note As at 31 As at 31
No. March March
2023 2022
I. Assets
1 Non-Current Assets
Property, Plant and Equipment 2A 1,277.73 1,280.44
Capital Work-In-Progress 2B 0.27 -
Financial Assets
i. Deposits 3 0.02 0.02

1,278.01 1,280.45
Total Non-Current Assets

2 Current Assets
Inventories 4 140.71 125.72
Financial Assets
i) Trade Receivables 5 25.5 20.15
ii) Cash and Cash Equivalents 6 90.63 99.26
iii) Bank balances other than cash and cash 7 850.09 650.19
equivalents 54.08 25.72
iv) Other Financial Assets 8

Total Current Assets 1,161.45 921.03

Total Assets 2,439.46 2,201.48

II. Equity and Liabilities

A Equity
Equity Share Capital 9 31.82 31.82
Other Equity 10 1,912.54 1,771.41

Total Equity 1,944.36 1,803.24

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B Liabilities
1 Non-Current Liabilities
Deferred Tax Liabilities 11 129.73 158.77
Provisions 12 8.57 10.27

Total Non-Current Liabilities 138.30 169.04

2 Current Liabilities
Financial Liabilities
i) Trade Payables 13
a) Total outstanding dues of
Micro Enterprises & Small
Enterprises
b) Total outstanding dues of 6.84 28.29
creditors other than Micro
Enterprises & Small
Enterprises
ii) Other Current Financials 14 101.32 53.11
Liabilities
iii) Other Current Liabilities 15 131.81 96.60
iv) Provisions 16 116.3 51.20

Total Current Liabilities 356.80 229.20

Total Equity and Liabilities 2,439.46 2,201.48

The accompany Significant Accounting Policies and

Notes are an integral part of Financial Statements.
Significant Accounting Policies 1
Notes to Financial Statements 2-38

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STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2023
(All amounts are in Crores of JNR)
Particulars For the year
Note ended 31 March For the year ended 31 March
2023 2022

income

Revenue From Operations 17 1,127.19 929.62

Other Income 18 51.45 26.83
Total Income (l + Il) 1,178.64 956.45
Expenses:
Cost of Materials Consumed 19 642.31 516.30
Purchase of Stock in Trade 20 8.19 3.54
Ill Changes in Inventories of Finished Goods, Stock-in-Trade and Work-in- 21 -6.19 15.81
Progress 22 71.66 68.92
Employee Benefits Expense
2 2.74 2.49
Depreciation and Amortization Expense
23 180.73 107.93
Other Expenses 899.45 715.00
Total Expenses
Profit Before Tax 279.19 241.45

V Tax Expense:
1. Current Tax
122.07 84.50
2. Deferred Tax -29.96 -1.56
VI
3. Previous Year Tax 6.31 20.31
98.42 103.25
Net ProfitAfterTax(V.Vl)
180.77 138.20
Vil Other Comprehensive Income
1. Items that will not be reclassified to profit or loss
Vlll 2. Income tax relating to items that will not be reclassified to
profit or loss
Items that will not be reclassified to profit or loss in subsequent
periods
2.65 -0.50
3. Net (loss)/gain on Fair Market Valuation of Assets (iv)
Actuarial Gains/(Losses) on Defined Benefit Plans -0.93 0.18
Vlll Less: Income tax effect on above 1.72 -0.33
Other Comprehensive Income
IX
Total Comprehensive Income for the period (VII+VIII)
(Comprising Profit (Loss) and Other Comprehensive Income for the period) 182.49 137.88
X

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Earnings per equity share:
Basic & Diluted (in Rs.)
Face Value per Share (in Rs.) 24
5,680.75 4,342.90
Significant Accounting Policies 1 ,ooo.oo 1,000.00
Notes on Financial Statements

2-38

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