Nalco Report 6w5c71

SUMMER INTERNSHIP PROJECT REPORT AT

National Aluminiums Company Limited A Project Report Submitted In Partial Fulfillment of the Requirements For The Award of the

Master of Business istration University of Mysore TO

M.S.RAMAIAHA ACADEMY OF MANAGEMENT BY Sk Md Parwej Quadry REG.NO. 15MB4585 BATCH 2015-17

Under the guidance of Prof Meghna Verma

M.S.RAMAIAHA ACADEMY OF MANAGEMENT NEW BEL ROAD, BANGALORE-560054 September 2016

pg. 1

CERTIFICATE

This is to certify that the Project Report undertaken by Sk Md Parwej Quadry Reg. No. 15MB4585 conducted at National Aluminium Company Limited Submitted in partial fulfillment of the requirements for the award of the

Master of Business istration University of Mysore TO

M.S.RAMAIAHA ACADEMY OF MANAGEMENT Is a record of bonafide internship carried out under my supervision and guidance. He has attended the required guidance sessions held. This report has not been submitted for the award of any other degree/diploma/fellowship or similar titles or prizes.

Guide’s Signature: Name: Prof.Meghna Verma Qualification: MBA (Marketing & HR), M.Sc (Applied Mathematics)

pg. 2

STUDENT’S DECLARATION

I hereby declare that the Project Report conducted at National Aluminium Company Limited Under the guidance of Prof Meghna Verma Submitted in Partial fulfillment of the requirements for the

Master of Business istration University of Mysore TO

M.S.RAMAIAHA ACADEMY OF MANAGEMENT

is my original work and the same has not been submitted for the award of any other Degree/Diploma/Fellowship or other similar titles or prizes

Signature of the Student Place: Bangalore Date:

pg. 3

SK MD PARWEJ QUADRY Reg. No.: 15MB4585

ACKNOWLEDGEMENT

I extend my special gratitude to our Dean Dr.H.Muralidharan, Academic Head Prof. V. Narayanan & Programme Head Dr. T.N.Anuradha for inspiring me to take up this project and also for their able guidance and in completing this internship. I wish to acknowledge my sincere gratitude and indebtedness to my project guide Prof. Meghna Verma M.S. Ramaiah Academy of Management, Bangalore for her valuable guidance and constructive suggestions in the preparation of project report.

STUDENT NAME - Sk Md Parwej Quadry Number-15MB4585

pg. 4

LIST OF CONTENTS S. No.

Content

1

CHAPTER 1 Industry Analysis  Brief history of growth and developments  Future growth prospects  Major players  Michael E. Porter’s Five Forces Model

2

CHAPTER 2 Company Analysis  About the company  Marketing  Customers  Competitors  Operations  Finance  Organizational Hierarchy  SWOT Analysis of NALCO  Products

3

4

5

CHAPTER 3 Tasks Accomplished During Internship  Roles and Responsibilities  Description of tasks handled  Contribution to the Organization CHAPTER 4 Analysis Of The Research Undertaken  Introduction  Research Design  Analysis of Data  Findings, Conclusions and Recommendations ANNEXURE 1(Balance Sheet, Profit and Loss A/C , Cash Flow

Page No. 8 – 18

19 - 39

40-41

42 – 72

73 – 81

ANNEXURE 2 (Weekly report and Attendance sheet) 6

82 BIBLIOGRAPHY

pg. 5

LIST OF TABLES

S NO.

TABLES

PG.

TABLE 4.1

TABLE SHOWING EARNINGS PER SHARE OF THE FIRM

56

TABLE 4.2

TABLE SHOWING NET PROFIT RATIO OF THE FIRM

57

TABLE 4.3

TABLE SHOWING GROSS PROFIT RATIO OF THE FIRM

58

TABLE 4.4

TABLE SHOWING CASH PROFIT RATIO OF THE FIRM

59

TABLE 4.5

TABLE SHOWING DEBTORS TURNOVER RATIO OF THE FIRM

60

TABLE 4.

TABLE SHOWING STOCK TURNOVER RATIO OF 61 THE FIRM

TABLE 4.7

TABLE SHOWING CURRENT RATIO OF THE FIRM

62

TABLE 4.8

TABLE SHOWING LIQUID RATIO OF THE FIRM

64

pg. 6

NO

LIST OF GRAPHS

S. NO

GRAPHS

PG. NO

GRAPH 4.1a

GRAPHICAL REPRESENTATION OF EARNINGS PER SHARE

56

GRAPH 4.2b

GRAPHICAL REPRESENTATION OF NET PROFIT RATIO

57

GRAPH 4.3c

GRAPHICAL REPRESENTATION OF GROSS PROPIT RATIO

58

GRAPH 4.4d

GRAPHICAL REPRESENTATION OF CASH PROFIT RATIO

59

GRAPH 4.5e

GRAPHICAL REPRESENTATION OF DEBTORS TURNOVER RATIO

60

GRAPH 4.6f

GRAPHICAL REPRESENTATION OF STOCK TURNOVER RATIO

61

GRAPH 4.7g

GRAPHICAL REPRESENTATION OF CURRENT RATIO

63

GRAPH 4.8h

GRAPHICAL REPRESENTATION OF LIQUID RATIO

64

pg. 7

CHAPTER-1

Industry Analysis

pg. 8

INTRODUCTION . Aluminium is the youngest metal in use by humans. Unlike copper, gold and iron, aluminium cannot be extracted from the ground and purified by simple technologies, such as strong fire or remelting processes. Aluminium production became possible only when the production of electricity became possible, only when chemistry advanced enough. Here alu NET International pays tribute to those who worked to create the next age. Humanity moved beyond the age of stone to the age of copper, then to the age of iron and steel, now is the turn of ages once again. The discovery of Aluminium - Birth and initial growth The ancient Greeks and Romans used aluminium in medicine as an astringent, and in dyeing processes. It is doubtful whether you entered a museum with ancient Greek, Roman or Chinese pottery and you did not see aluminium in use. Aluminium-bearing clays to make pottery, and aluminium salts to make dyes can be found on such ancient pottery of all ancient cultures contains aluminium. Those cultures of course did not know, or so we suppose, that an element called aluminium gave those special properties to their creations. In the Middle Ages aluminium was one of the elements which acquired anal chemical symbol, as alchemist thought that they can use a metal they had not seen in their ancient pursuit concerned with, for instance, the transformation of other metals into gold. It was not, however until much later that aluminium began to be thought as a metal separate and self-contained for use such as other ferrous and nonferrous metals. In 1761 de Morveau proposed the name "alumine" for the base in alum. Later yet, in 1807, Davy proposed the name alumiuim for the metal, undiscovered at that time, and later agreed to change it to aluminum. Shortly thereafter, the name aluminium was adopted by IUPAC to conform with the "ium" ending of most elements. Aluminum is the IUPAC spelling and therefore the international standard.

Aluminium was also the accepted spelling in the U.S.A. until 1925, at which time the American Chemical Society decided to revert back to aluminium, and to this day Americans still refer to aluminium as"aluminum".But let’s revert back to history. Aluminium was first isolated by Hans Christian Oersted in 1825 who reacted aluminium chloride (AlCl3) with potassium amalgam, an alloy of potassium and mercury. Heating the resulting alumin pressure caused the mercury to boil away leaving aluminium metal. The metal was born for uses, which at that time

pg. 9

no one could have thought of. Pressure caused the mercury to boil away leaving aluminium metal. The metal was born for uses, which at that time no one could have thought of. The conquest of space, safe packaging and other frontiers, we know consider everyday life convinces could have not been possible without the use of this metal. But let’s take a detailed look at the history of aluminium, which is celebrating only 190 years since its birth, making it the most recently discovered metal in common use. Aluminium only exists naturally in combination with other materials –silicates and oxides. These are very stable and it took many years of painstaking research to "unlock" the metal, from nature’s protective arms. The Early History of Aluminum During ancient times, aluminum oxide clays were used in hide tanning, first aid, fabric dying and fireproofing. These major milestones occurred during the aluminum’s “discovery period”: 1865: Science fiction writer Jules Verne describes an aluminum space rocket in his novel, Journey to the Moon. 1886: Oberlin College student Charles Hall and French engineer Paul Heroult separately and simultaneously develop an inexpensive electrolysis process by which aluminum can be extracted from aluminum oxide. The large amount of electricity required to power the electrolytic process limited the production of aluminum. Hall received U.S. patent #400,666 in 1889. 1887: Austrian engineer Karl Josef Bayer developed a chemical process by which alumina can be extracted from bauxite, a widespread and naturally occurring aluminum ore. Both the Bayer and Hall-Herout processes are still used today to produce nearly all the world’s aluminum.

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1900s to Present In the early 1900s, U.S. business leaders and industrialists quickly recognized aluminum’s superior properties. Power transmission lines and elevated train electrical wiring were among the first to benefit from the electrical advantages of aluminum. Aluminum found early industrial uses in engines, such as the one built in 1903 by the Wright brothers to power their first biplane. Aluminum foil entered the market in 1910. Alloy development, begun in 1911, improved physical properties and opened new industrial fields. The Great Depression resulted in Works Progress istration (WPA) projects that expanded hydroelectric generation capacity, which in turn increased production capacity of primary aluminum. During this time, the Aluminum Association was formed. The Association’s first meeting was held in New York City in 1935.

GROWTH OF ALUMINIUM INDUSTRY: The Aluminium Industry has developed to the point where scores of companies in some 35 countries are smelting aluminium and thousands more are manufacturing the many end products to which aluminium is so well suited. For its first half century the aluminium industry pursued the dual role of improving and enlarging production processes to reduce the price of the metal and, at the same time, proving the worth and feasibility of aluminium in a wide range of markets. Such was the dynamic approach of the the production of primary aluminium is a young industry - just over 100 years old. Industry to this problem that the consumption of aluminium gained the remarkable record of doubling every ten years. The strong demand for aluminium stimulated the rapid expansion of productive capacity to meet it. The First World War had a dramatic effect on aluminium production and consumption. In the six years between 1914 and 1919 world out putsoared from 70,800 tonnes to 132,500 tonnes a year and it is a striking testimony to the adaptability of the metal that after the very large expansion occasioned by war the ground was held. Once the changeover to civilian production had been carried through the increased capacity was occupied before very long in supplying the normal demands of industry. And this happened again, on a much larger scale, as a result of the Second World War World production of primary aluminium increased from 704,000 tonnes in1939 to a peak of 1,950,000 tonnes in 1943, after which it declined considerably. At the end of World War II, the western world industry had completed an unprecedented threefold

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expansion in capacity in the space of four to five years. Civilian markets had to be developed for this new capacity. The demand for aluminium proved to be elastic and the expanded facilities were working at near capacity in a matter of a few years. Constant research and product development throughout the 1950's, 60'sand 70's led to an almost endless range of consumer goods incorporating aluminium. Its basic benefits of lightness, strength, durability, formability, conductivity and finish ability made it a much sought after product. The necessity for the industry itself to pioneer the use of aluminium led to an integrated structure in the major companies from the mining of bauxite to, in some cases, the finished consumer product. As the total world production soared, countries with raw materials and especially those with cheap energy resources, began to enter the market with primary metal for others to further the process. Today a significant proportion of metal is marketed in this way.

MAJOR PLAYERS Hindalco Industries Ltd National Aluminium Company Ltd (NALCO) Vedanta Resources plc Bharat Aluminium Company Co Ltd (BALCO) Jindal Aluminium Ltd Apar Industries Ltd

pg. 12

ALUMINIUM INDUSTRY IN INDIA: 1- Hindalco Industries Ltd Largest integrated aluminium manufacturers in the country; part of the Aditya Birla Group; products: alumina chemicals, primary aluminium, extrusions, rolled products, wire rods, aluminium foil, aluminium wheels, copper cathodes; based in Mumbai (Aluminium NonFerrous Metals) 2 -National Aluminium Company Ltd (NALCO) Public sector Company which is Asia's largest integrated aluminium manufacturer, with activities that include bauxite mining, alumina refining, aluminium smelting & casting, power generation, rail & port operations; based in Bhubaneswar (Orissa) 3- Vedanta Resources plc Leading integrated metals & mining group located in London, UK, but whose operations are mainly in India; has interests in aluminium (BALCO,MALCO), copper (Sterlite, Konkola, CMT) & zinc (Hindustan Zinc Ltd)(Minerals and Mining Non-Ferrous Metals Aluminium) 4- Bharat Aluminium Company Co Ltd (BALCO) Integrated aluminium producers whose activities include mining, smelting, refining & fabrication; based in New Delhi; part of Vedanta Resources; has an alumina production capacity of 200,000 tpa & smelting capacity of 100,000 tpa(Aluminium ) 5- Jindal Aluminium Ltd Largest manufacturer of aluminium extruded profiles in India having 6extrusion presses under one roof; manufactures bars, rods & tubes, structure, architectural, moulding, transport, industrial & general products; located in Bangalore(Aluminium) 6- Apar Industries Ltd Manufacturers of transformer oil & specialty oils, overhead power transmission & distribution aluminium conductors & specialty polymer; corporate office is in Mumbai; products include industrial & automotive oils, nitrile rubber, latices etc.(Lubricants Aluminium Miscellaneous Supplies)

pg. 13

7 -Century Extrusions Ltd (CEL) Manufacturers of aluminium extrusions based in Kolkata; has an installed capacity of 7,500 MT; product categories: architectural applications, transport, electricals, electronics & communications, industrial applications(Aluminium ) 8 -Alufluoride Ltd Manufacturers of aluminium fluoride based in Visakhapatnam, Andhra Pradesh; has an installed capacity of 5,000 tonnes (Aluminium) 9- Bhoruka Aluminium Ltd ISO certified manufacturer of aluminium extrusions; part of the Bhoruka group; supplies its products to the industrial, transportation, building & construction, electricals & electronics, solar, and interiors sectors (Aluminium) 10- Karshni Aluminium Co Pvt Ltd ISO certified manufacturer of industrial and domestic aluminium ladders, aluminium doors and windows, curtain walls and structural glazings;based in Ghaziabad, Uttar Pradesh; has in-house powder coating & anodising facilities(Building Materials Aluminium) 11 -Madras Aluminium Company Ltd (MALCO) Primary aluminium producers whose activities include mining, refining, smelting & power generation; based in Salem, Tamil Nadu; part of the Vedanta Group; produces ingots, wire rods & busbars; has a 40,000 tpa smelter & a 80,000 tpa refinery(Aluminium ) 12- Manaksia Ltd Multi-division and multi-location conglomerate in Kolkata; formerly known as Hindustan Seals Ltd; specialises in the manufacture of packaging products (crowns, closures and metal containers), metal products and fast moving consumer goods etc.(Packaging Personal Care Products Aluminium) 13- SP Fabricators Pvt Ltd Company belonging to the Shapoorji Pallonji group; provides architectural aluminium products including curtain wall, structural glazing, cladding, windows & doors system, skylights etc.; has fabrication & glazing facilities at Navi Mumbai(Aluminium)

pg. 14

14 -Sudal Industries Ltd Manufacturers of aluminium extrusions based in Nashik, Maharashtra; offers products for automotive, building & construction, electrical, marine& transport needs, including channels, bars, round tubes etc.; ISO 9001certified(Aluminium)

CONSUMPTION OF ALUMINIUM IN INDIA: India the second most populous country in the world, with almost one billion citizens has an annual aluminium consumption of 0.5kg per year whereas the global average is 20 times that figure, Indian aluminium industrial analysts forecast 7-8 per cent annual growth .India’s transport sector is expected to be the driving force behind the move, since it consumed 20 per cent of 540,000 tons produced in the subcontinent during the 1997-98 fiscal year. According to industry statistics road transport uses about 95 per cent of the total consumption of aluminium in the transportation sector with the rest going into rail, shipping and aviation. For example India’s scooter manufacturing sector, which produces about five million scooters annually, consuming about 47,250 tons of aluminium over the past fiscal year

Top 10 Aluminum Producing Countries in the World Rank Country Name Thousand Tonnes 1 China 23,475 2 Russia 3,634 3 Canada 3,145 4 UAE 2,474 5 India 2,135 6 US 1,785 7 Australia 1,763 8 Norway 1,284 9 Brazil 971 10 Bahrain 942 Total World 50,000 China has the first rank in the list of aluminum producing countries in the world. They have much reserves to take out the bauxites and process them into plants to get necessary things for human use. Aluminium is one of the highest used metal.

pg. 15

pg. 16

Michael E. Porter’s Five Forces Model

Competition in the industry Competition is primarily on quality and price, as being a commodity, differentiation is difficult. However, the recent spate of consolidation has reduced the competitive pressure in the industry. Further, increasing value addition to aluminium products has helped some companies protect themselves from the high volatilities witnessed in the industry.

Example NAME LAST PRICE MARKET CAP SALES NET PROFIT TOTAL ASSETS HINDALCO 158.95 32,823.30 34,317.66 607.25 65,604.92 Manaksia Alumin 4.9 32.36 265.52 -5.04 200.6 Century Extr 2.25 18 167.97 0.91 71.44 Maan Aluminium 41.05 13.88 190.33 0.6 82.37

Potential of new entrants into industryThere are high barriers to entry in his industry as

Large economies of scale



High capital costs



Extended time to set up



Scarcity of power



Government factors



Land problems



Labour law issues

pg. 17

Power of suppliers Most domestic players operate integrated plants. Bargaining power is limited in case of power purchase, as government is the only supplier. However, increasing usage of captive power plants will help to rationalise power costs to a certain extent in the longterm.

Power of customer Being a commodity, customers enjoy relatively high bargaining power, as prices are determined on demand and supply.

Threat of substitute products Rise in the input cost of materials is a major threat for aluminium producers like NALCO. Power is one of the major inputs for aluminium production, constituting roughly 40% of the production cost. Substantial increase in the cost of coal in recent past has put additional cost pressure on the Company. The Company faces a major challenge of procuring required quantity of coal at reasonable price. The recent deallocation of captive coal blocks allocated earlier to aluminium players like NALCO, HINDALCO and Sesa Sterlite has further increases operational challenges for these companies.

pg. 18

CHAPTER 2

Company Analysis

pg. 19

ABOUT THE COMPANY Is corporate in 1981 as a public sector enterprise of the Govt. of India. National Aluminum Company Ltd., (NALCO) is one of the biggest and Asia’s largest integrated Aluminum Complex. Encoming Bauxite mining, alumina Refining, Aluminum smelting and casting power generation Rail and port operations. Commissioned during 1985 to 1987 under extremely difficult logistics of project management that too without time or cost over runs, the major source came from external sources i.e. 680 million euro dollar loan which NALCO has signed an agreement with 48 International Banks in Feb 1987 and further US$ 300 million dollar due to inflation and deflation rate. The growth part is so high that it becomes the top within a span of time clearing all its Foreign Debts. NALCO has emerged to be a star performer in production and export of Alumina and Aluminum and more significantly, in propelling self-sustained growth. M/s Engineers India Ltd., a wholly owned by the Govt. of India a leading engineering company in the prime India consultant for Mine, Alumina, Aluminum Complex. M/s Development Consultants Pvt. Ltd., Calcutta have been retained by the Co. for detailed engineering procurement service assistance in supervision of construction & commissioning of power plant M/s Hara India Pvt. Ltd., is the consultant of Port facilities being developed at Visakhapatnam (A.P) by Rail India Technical & Economic Services (RITES) and National Industrial Development Corporation (NIDC). The whole company owned by Department of Mines, Govt. of India having it’s ed & Corporate Office at P/1, Nayapalli, Bhubaneswar (Orissa).

Leveraging the Technical Collaboration with Aluminum Pechiney of , ISO 9002 certification of Quality Management, LME registration of Products, Environment care confirming to ISO 9002 – ISO 14001, low cost operations, International Customer base, Nalco has continued to add value and is poised to grow further. Nalco gives 99.9% purification on its aluminum material which is best in the world. Transparent & successful operations of NALCO as well as its contributions, have brought about remarkable socio-economic progress in the two under developed districts, (Angul & Koraput) of Orissa where the company’s plant are located. Nalco faced a major setback in the year 2000-01 due to ash pond problem. So naturally its production dressed in the same year & it had to give 22 crore of rupees in aggregate as compensation amount.

pg. 20

NALCO has earned a number of awards for his excellent performance like:1. EEPC Gold Trophy, as ‘Top Exporter’ 2006-2007. 2. All

India

Export

Award

of

EEPC

as

the

‘Star

Performer’

in

large

enterprise category, for the year 2007-08. 3. ‘Best ecological Care’ & ‘Best Workplace Practices’ at Think Odisha Leadership Awards function, organized by The Times of India & Tefla’s. 4. Status of ‘Premier Trading House’ as per Foreign Trade Policy 2009-10by the Ministry of Commerce, Govt. of India for the period 09-14. 5. ‘Organization with innovation HR Practices’ Award at World HRD

Congress at

Mumbai. 6. Alumina Refinery bagged the first Runner-up award from CII, Orissa State Center for the best Safety, Health & Environment practices and also the Pollution Control Excellence Award 2009 from Orissa state Pollution Control Board. 7. Bauxite Mines bagged 1st prize in Reclamation &Rehabilitation from Indian Bureau of Mines Conservation Week. 8. Nalco received EEPC (Engineering Export Promotion Council)’s Star Performer Award, for its outstanding export performance during the year 2013-14. Bauxite Mines bagged the Pollution Control Excellence Award -2015, instituted by the State Pollution Control Board, Odisha (OSPCB). Our Alumina Refinery received the Kalinga Safety Award – 2014, in the ‘Gold’ category, at the Odisha State Safety Conclave – 2015. 9. The Performance Excellence Award, instituted by the Indian Institution of Industrial Engineering (IIIE). Again, our Alumina Refinery bagged the prestigious Business Excellence Star Recognition Award. The Institute of Quality, CII adjudged Nalco the “Leader in Process Industries, for Excellence in Operations Management”. Our Captive Power Plant was awarded for ‘proactive climate change’, during a seminar on ‘Microalgae in developing a Sustainable Society’. Nalco has also been selected for CAPEXIL’s Highest Export Award for the year 2012-13, to be received this month.

pg. 21

LANDMARK EVENTS OF THE COMPANY 1981-

Formulation of the company.

1982

-

Start of commissioning.

1987

-

Commencement of sale of metal.

1988

-

Commencement of Alumina Export.

1988

-

Commencement of Metal Export

1989

-

London Metal Exchange (LME) Registration

Brief history of growth and developments of NALCO National Aluminium Company Limited (NALCO) is a Navratna SE under Ministry of Mines, Govt. of India. It was established on 7th January, 1981, with its ed office at Bhubaneswar. The Company is a group ‘A’ SE having integrated and diversified operations in mining, metal and power with sales turnover of Rs 7024 crore in financial year 2013-14. Presently, Government of India holds 80.93% equity of NALCO. The company has a 68.25 lakh TPA Bauxite Mine & 22.75 lakh TPA Alumina Refinery located at Damanjodi in Koraput dist. of Odisha, and 4.60 lakh TPA Aluminium Smelter & 1200 MW Captive Power Plant located at Angul, Odisha. As per diversification plan, NALCO has ventured into renewable energy sectors. The Company has successfully commissioned two wind power plants. A 50.4 MW wind power plant at Gandikota, Andhra Pradesh and another of 47.6 MW wind power plant at Jaisalmer, Rajasthan are operational since December, 2012 and January, 2014 respectively. 260 KWp Rooftop Solar Power System has been made operational at Office and Township, Bhubaneswar during FY 2014-15. NALCO has bulk shipment facilities at Vizag port for export of Alumina/Aluminium and import of caustic soda and also utilises facilities of Kolkata and Paradeep ports. The company has its regional marketing offices in Delhi, Kolkata, Mumbai & Chennai its branch offices at Bangalore, Paradeep, Ahmedabad and its 11 stockyards at various locations in the Country. NALCO is the first Company in Aluminium sector in the Country to venture into International market in a big way with London Metal Exchange (LME) registration since May, 1989. The Company is listed at Bombay Stock Exchange (BSE) since 1992. All the manufacturing units and the port facility of the Company, are certified to ISO 9001, ISO 14001, and OHSAS 18001

pg. 22

Management Systems and Integrated Management System operates at these units. The energy intensive manufacturing units i.e. Smelter, P & Alumina Refinery are also certified to ISO 50001 Standard for energy management system. SA 8000 certification is also obtained for all the manufacturing units and corporate office In its efforts for capacity addition and expansion, NALCO has extensive plans for brown field and green field expansion projects, which include 1 MTPA Alumina Refinery in Gujarat in JV with Gujarat Mineral Development Corporation (GMDC) (Greenfield), 5th Stream of 1 MTPA capacity in existing Alumina Refinery at Damanjodi (Brownfield), 0.5 MTPA Aluminium Smelter and 1050 MW Power Complex in Odisha (Greenfield), 0.5 MTPA Aluminium Smelter abroad and development of bauxite mines at Gudem and KR Konda in Andhra Pradesh and Pottangi in Odisha etc. The Company has plans to set up a 2 lakh TPA caustic soda plant in JV with Gujarat Alkalies & Chemicals Limited (GACL) and 55,000 TPA Aluminium Conductor plant in JV with Power Grid Corporation of India Limited (PGCIL). The Company has plans to set up a 14MW wind power plant at mined out area of Damanjodi and another 100MW wind power plant at any suitable location in the Country. The company has formed a JV Company with Nuclear Power Corporation of India Limited (NPCIL) for establishing 2X700 MW Nuclear Power Plants at an estimated investment of Rs. 11,459 crore at Kakrapara in Gujarat. For development of downstream ancillary industries, a JV Company has been formed with IDCO, Odisha for Angul Aluminium Park. The company is involved in playing a significant role in the socio-economic development of the areas where it operates. Rehabilitation of displaced families, employment, income generation & health care for local people, development of infrastructure, care for environment and various humanitarian goodwill missions have earned NALCO a place of pride in the corporate world. With the setting up of NALCO Foundation and doubling of CSR budget to 2% of the net profit, the company is well-poised to augment its activities on social responsibilities significantly. In order to promote education amongst tribal children, NALCO has sponsored more than 655 students in reputed educational institutes in Odisha by way of bearing all their expenses on studies including lodging and boarding etc.

pg. 23

Future growth prospects of NALCO Future growth of the Company is likely to come from transport, building and construction sectors which are the primary consumers of aluminium. Additionally, with Government’s emphasis on infrastructure development and the power sector is likely to grow which in turn will reduce the cost component for NALCO thereby increasing its profit margins.

SEGMENTS OF NALCO Segment / Capacity

Special technological features

Bauxite and mines, On Panchpatmali hills of Koraput district in Orissa, a fully panchapatmali,

mechanized opencast mine of 4.8 million tpa capacity is in

Koraput

operation since November, 1985, serving feedstock to Alumina Refinery at Damanjodi located on the foothills. Presently, the capacity is being expanded to 6.3 million tpa. The salient features: 

Area of deposit - 16 sq. km.



Resource - 310 million tones



Ore quality - Alumina 45%, Silica 2%



Mineralogy - Over 90% gibbsitic



Over burden - 3 meters (average)



Ore thickness - 14 meters (average)



Transport - 14.6 km long single flight multicurve cable belt conveyor of 1800 tph

pg. 24

Plant, The 15, 75,000 tpa Alumina Refinery, having three parallel

Aluminium

Damanjodi Orissa. streams of equal capacity, is located in the picturesque valley tpa of Damanjodi in Koraput district. In operation since

21,00,000

September, 1986, the Refinery is designed to:

Chemical Plant



Provide Alumina to the Company's Smelter at Angul



Export the balance Alumina to overseas markets through Visakhapatnam Port

The salient features: 

Atmospheric pressure digestion process



Pre-desilication and inter-stage cooling for higher productivity



Energy efficient fluidised bed calciners



Co-generation of 3x18.5 MW power by use of back pressure turbine in steam generation plant



Advanced red mud disposal system

Captive Power Plant Close to the Aluminium Smelter at Angul, a Captive Power 960

MW

Expanded MW)

Coal

Thermal

(being Plant of 960 MW capacity, comprising 8 x 120 MW clusters, 960 has been established for firm supply of power to the Smelter.

to

Fired

Presently, the capacity is being expanded to 1200 MW.

power

plant Turbines.

The salient features: 

Micro-processor based burner management system for optimum thermal efficiency



Computer controlled data acquisition system for online monitoring

pg. 25



Automatic turbine run-up system



Specially designed barrel type high pressure turbine



Electrostatic precipitators with advanced intelligent controllers



Wet disposal of ash

The water for the Plant is drawn from River Brahmani through a 7 km long double circuit pipeline. The coal demand is met from a mine of 3.5 million tpa capacity opened up for Nalco at Bharatpur in Talcher by Mahanadi Coalfields Limited. The Power Plant is inter-connected with the State Grid. Port Facilities

The salient features: 

Maximum ship size - 35000 DWT



Alumina reception - 48 x 53 tonne pay-load wagons



Alumina storage - 3 x 25000 ton RCC Silos



Ship loading rate - 2200 tph

These facilities are being upgraded to handle higher volumes of exports, following expansion of production capacities.

pg. 26

LOCATIONS OF NALCO

Nalco projects mostly located in backward districts of Orissa were expeditiously completed on schedule on the very difficult logistics of project management. The Mines and Alumina Refinery Complex has located at Damanjodi in Koraput District. This is a picture sque valley of this beautiful district at the foot of Panchpatmali Hills. A 16 km long uphill road connects the plateau of Panchapatmali, where the bauxite Mines of Nalco is located. Damanjodi is 12 Km. from Semiliguda, a small town located on the NH-43 that connects Vizianagarm of Andhra Pradesh with Jagdalpur of Chatisgarh. The Vizianagaram is a distance of 135 Km..There is of course a enger rail service from Koraput to Visakhapatnam through the most enchanting hilly terrains of Aruku Valley and Anantagiri. Damanjodi is also connected by Rail Transport from Bhubaneswar, Rayagada, Visakhapatnam, and Sambalpur & Kolkata. It is also connected by bus service from Berhampur, Cuttack, Bhubaneswar, and Angul & Samabalpur. Its Smelter Plant and P are located at Angul, while the corporate head quarter is located at Bhubaneswar, the capital city of Orissa.

pg. 27

PLANT LOCATION SITES

pg. 28

ORGANISATIONAL STRUCTURE: NALCO is a govt. of INDIA Enterprise under the istration control of the ministry of mines. The company is managed by Board of Directors appointed by the president of INDIA. The Board consists of 10 Directors including the Chairman cum Managing Director of the company. There are 4 functional full-time directors heading production, finance, project and technical personal and istrative disciplines. There are four senior Govt. officials nominated to the Board as Directors on ex-officio basis. Besides there are three non-official directors in the appointed to represent the interests of financial institutions, allied Industries and R&D objectives of the company. Thus the Board of company is a full of highly experienced and outstanding potentials drawn from various fields of specialization. The company enjoys maximum possible operational autonomy consistent with the overall corporate objectives, basic policies and programmes two with a view to achieve optimum utilization of its resources subject to the provision of Indian companies act. The memorandum of understanding signed with the govt and also subject to policies formulated by the Board of Directors from time to time the Chairman cum MD has full power to sanction expenditures or to deal with other matters for effective functioning of the company. The management Control System is based on delegation of authority and individual ability for results. The responsibility and authority ability for result. The responsibility and authority to take decisions on various matters are delegated by the Chairmancum MD to different levels in the management.

pg. 29

VISION To be a reputed global company in the metals and energy sectors

MISSION To achieve sustainable growth in business through diversification Innovation and global competitive edge. To continuously develop human resources, create safe working Conditions, improve productivity and quality and reduce cost and waste. To satisfy the customers and shareholders, employees and all Other stakeholders. To be a good corporate citizen, protecting and enhancing the Environment as well as discharging social responsibility in order to Ensure sustainable growth.

OBJECTIVES National aluminium company limited through efficiently operated aluminium complex, Bauxite mining, alumina refining, aluminium smelting & casting, powder generation, rail & port operation. Besides fulfilling needs of the customer in of quantity, focus on quality, value addition and beneficiation to the satisfaction of the customers. Marketing of aluminium as a main product.

pg. 30

MARKETING

Marketing strategy A marketing strategy is a procs that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should be centered around the key concept that customer satisfaction is the main goal. A marketing strategy is most effective when it is an integral components of firm strategy, defining how the organization will successfully engage customers, prospects and competitors in the market arena. Corporate missions and corporate goals. As the customer constitutes the source of a company’s revenue. Marketing strategy is closely linked with sales. A key component of marketing strategy is often to keep marketing in line with a company’s overarching mission statement. Distribution network Bauxite mined from Panchamali hill at Koraput. Transportation through 14.6 km long cable belt.

Alumina refinery at Damanjodi Here bauxite ore converts to alumina Transportation Through train Aluminium smelting at angul Here alumina converts into aluminium & Alumina converted into ingot, rod and billet Transport through truck & Railway.

pg. 31

Stockyards Jaipur, Visakhapatnam, Bangalore, Silvasa Bhiwandi, Kolkata Transport through train, truck & ship Sell the products both in domestic & export

Pricing The pricing strategy of Nalco is based on. 1. LME (London metal exchange) so, the price changes according to the changes in the LME. 2. Demand of the (A1) Market or demand of the customers. 3. Pressure from competitors. As Nalco also has some strong competitors, pricing is done by keeping a keen view on the competitors. Overall, the pricing strategy of Nalco generally updated at a monthly basis but it changes according to the situation.

Promotion As the company’s present market is a buyer market. So it’s not required to spend money. But somewhere as global company it need some promotion. Nalco use to do some small promotional activities which we can see in form of CSR like organizing cricket matches, funding journal etc.

Competitors     

pg. 32

Jindal Aluminium ltd. National small industries corporation. Hindustan seals ltd. Bajaj auto ltd. Tata motors ltd etc

Operations NALCO headquartered at Bhubaneswar, Odisha. NALCO operates from two major Units 

Mining and Refinery (M&R) complex

* Bauxite Mines located at Panchpatmali hills, Koraput with capacity of 68.25 lakh TPA * Alumina Refinery located at Damanjodi, Odisha with capacity of 22.75 lakh TPA 

Smelter and Power (S&P) complex

* Aluminium Smelter located at Angul, Odisha with capacity of 4.60 lakh TPA * Captive Power Plant located at Angul, Odisha with capacity of 1200 MW Other operations are:    

pg. 33

Port Facilities at Visakhapatnam and Paradip. Solar Power at Bhubaneswar. Wind Power Plants at Gandikota, Jaisalmer. Regional offices at Kolkata, Mumbai, Delhi, Chennai

Organizational Hierarchy

Shri T K Chand (chairman-Cum-Managing Director)

Shri N.R Mohanty Director (P&T)

Shri S.C.Padhy director (HR)

pg. 34

Shri K. C. Samal is the Director (Finance)

Ms. Soma Mondal is the Director (Commercial)

Shri V. Balasubramanyam Director (Production)

pg. 35

Shri R. Sridharan is the Part-time Official Director

Dr. N K Singh was inducted to the Board as a Part-time Official Director

CMD

:– Chairman cum Managing Director

GM

:– General Manager

P&T

:– Project and Technical

M&R

:– Mining and Refinery

H&A

:– HRD and istration

P&A

:– Personal and istration

P

:– Captive Power plant

pg. 36

TOP MANAGEMENT

pg. 37

Swot analysis of Nalco Strengths

It has a very rich bauxite mine.



Nalco is one of the lowest cost procedure in its segment.



It is one of the pioneer in the field of aluminium.



It has a strong technical man power.



Strong cash reserves with no debt.

Weakness

Being a public sector company, it has a slow decision making process compare to any private sector.



Shortage in coal linkages has to higher share of imported coal at relatively much higher price.

Opportunities

Automobile, consumer durables and engineering sectors are at very nascent stage compare to global scale.



Low per capita housing and booming retail industry would drive construction demand.



Low per capita aluminium consumption compare with other countries offers a higher growth.

Threats

Instability in LME aluminium price (currently at five year low) will affect margin badly.



Significant distribution in demand in developed countries from key consumer segment.



Competition from scrap imports and very high threat from substitute materials particular plastics.

pg. 38

PRODUCTS Aluminium Metal Ingots Alloy Ingots T-Ingots Sows Billets Wire Rods Cast strips

Alumina & Hydrate Calcined Alumina Alumina Hydrate Zeolite-A

Special Products Specialty Hydrate/Alumina (Alumina Chemicals)

Rolled Product Aluminium Rolled Products Aluminium Chequered Sheets Power Thermal Power Co-generation Power Wind Power Solar Power

pg. 39

CHAPTER -3

TASKS ACCOMPLISHED DURING INTERNSHIP

pg. 40

Roles and Responsibilities I have undergone an internship in National Aluminium Company Limited limited in finance department from 4th July 2016 to 03rd August 2016 on “THE FINANCIAL PERFORMANCE IN NATIONAL ALUMINIUM COMPANY LIMITD THROUGHT RATIO ANALYSIS” where I was reporting to Mr. B.C BARIK who is the Deputy Manager of finance department of Nalco Angul. 

When I was collect the data of past 3 years.



To Prepare a Ratio for 3 years to know what was the performance of the company.



Calculation and analysis of various ratios.



Comparative study and interpretation of various ratios.

Description of tasks handled I was prepared report on the financial performance in national aluminium company limited through ratio analysis when I have to prepared current ratio, stock turnover ratio, debtor turnover ratio, cash profit ratio, gross profit ratio etc . An intern worked in the field of finance helps me to understand company work how I have to prepared ratio by working under Dy manager of finance, I am able to understand and follow financial trends. I have practically apply his theoretical knowledge of financial laws, government policies in his day to day work at a finance company.

pg. 41

CHAPTER - 4

ANALYSIS OF THE RESEARCH UNDERTAKEN

pg. 42

INTRODUCTION About the subject: Finance Finance is the science of funds management. The general areas of finance are business finance, personal finance and public finance. Finance includes lending money. The field of finance deals with the concepts of time, money and how they are interrelated. It also deals with how money is spent and budgeted. Finance works most basically through individuals and business organizations depositing money in bank. The bank then lends the money out to other individuals or corporations for consumption or investment, and charges interest on the loans.

Financial Statements Financial statements are formal records of the financial activities of a business, person, or other entity. Financial statements are often referred to as s, although the term financial statements are also used particularly by s. Financial statement provides an overview of a business or person’s financial condition in both short and long term. All the relevant financial information of a business enterprise presented in a structured manner and in a form easy to understand, is called the financial statements.

Types of financial statements 1. Balance sheet: also referred to as statement of financial position or condition, reports on a firm’s assets, liabilities, and Ownership equity at a given point in time. 2. Income statement: also referred to as Profit and Loss statement (or a “P&L”), reports on a firm’s income, expenses and profits over a period of time. Profit & Loss provides information on the enterprise. These include sales and the various expenses during the processing state. 3. Statement of retained earnings: explains the changes in a firm’s retained earnings over the reporting period. 4. Statement of cash flow: reports on a firm’s cash flow activities, particularly its operating, investing and financing activities.

pg. 43

For large corporations, these statements are often complex and many include an extensive set of notes to the financial statements and management discussion and analysis. The notes typically describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements.

Importance of financial statements  The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of s in making economic decisions. Financial statements should be understandable, relevant, reliable and comparable. Reported assets, liabilities and equity are directly related to an organization’s financial position. Reported income and expenses are directly related to an organization’s financial performance.

 Financial statements are intended to be understandable by readers who have “a reasonable knowledge of business and economic activities and ing and who are willing to study the information diligently. Financial statements may be used by s for different purposes.  Owners and managers require financial statements to make important business decisions that affect its continued operations. Financial analysis is then performed on these statements to provide management with a more detailed understanding of the figures. These statements are also used as part of figures. These statements are also used as a part of management’s annual report to the stockholders.  Employees also need these reports in making collective bargaining agreements (CBA) with the management, in the case of labour unions or for individuals in discussing their compensation promotion and rankings.  Prospective investors make use of financial statements to assess the viability of investing in a business. Financial analyses are often used by investors and are prepared by professionals (financial analysts), thus providing them with the basis for making investment decisions.

pg. 44

 Financial institutions (banks and other lending companies) use them to decide whether to grant a firm with fresh working capital or extend debt securities (such as a long-term bank loan or debentures) to financial expansion and other significant expenditures.  Government entities (tax authorities) need financial statements to ascertain the propriety and accuracy of taxes and other duties declared and paid by a firm.  Vendors who extend credit to a business require financial statements to assess the creditworthiness of the business.  Media and the general public are also interested in financial statements for a variety of reasons.

Nature of financial statements  Allow the manager or analyst to track the financial condition and operating results of the business.  Assist in understanding the cash flow patterns in more specific . Since financial statements are the source for a good portion of analytical effort, we must first understand their nature, coverage and limitations before we can use the data and observations derived from these statements for our analytical judgments. Financial statements reflect the cumulative effects of all of management’s past decision.  Financial statements are governed by rules that attempt to consistently.  And fairly for every business transaction using the following conservative principles: 

Transactions are recorded at values prevailing at the time.



Adjustments to recorded values are made only if values decline.



Revenues and costs are recognized when committed to, not when cash actually changes hands.



Periodic matching of revenues and costs is achieved via accruals, deferrals, and ing allocations.



Allowances for negative contingencies are required in the form of estimates that reduce both profits and recorded value, usually affecting shareholders’ equity or special set-asides.

pg. 45

 These rules leave reported financial ing results open to considerable interpretation, especially if the analyst seeks to understand a firm’s economic performance and to establish the basis for shareholder value results. It’s common practice among professional analysts to adjust the data reflected on financial statements for known ing transactions which do not affect cash flows and to make assumptions about the economic values underlying recorded asset values.

Financial Analysis: Financial analysis (also referred to as financial statement analysis or ing analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to the top management as one of their bases in making business decisions. Based on these reports, management may: 

Continue or discontinue its main operation or part of its business.



Make or purchase certain materials in manufacture of its product.



Acquire or rent/lease certain machineries and equipment in the production of its goods.



Issue stocks or negotiate for a bank loan to increase its working capital.



Make decisions regarding investing or lending capital.

Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.

Methods of financial statement analysis: 1. Comparative financial statements 2. Common size statements 3. Trend analysis 4. Funds flow analysis 5. Cash flow analysis 6. Cost volume profit analysis 7. Ratio analysis

pg. 46

Comparative Financial Statement In comparative statement analysis two or more Balance sheets and the Income statement of a firm are presented simultaneously in columnar form. The financial data for two or more years are placed in adjacent columns and thereby the financial data is provided a times perspective in order to facilitate periodic comparison.

Common Size Statement The common size statement represents the relationship of different items of a financial statement with some common item by expressing such item as a percentage of the common items. The common size statements, Balance Sheet and Income statement are shown in analyzed percentage.

Trend Analysis The financial statements may be analyzed by computing trend of series of information. This method evaluate the direction upwards or downwards and involves the computation of the percentage relationship that each statement item bears to the same item in the base year.

RATIOS A ratio is a simple arithmetical expression of the relationship of one number to another. According to Kell and Bedford, a ratio “is an expression of the qualitative relationship between two numbers. Ratios provide clues to the financial position of a concern. These are the pointers or indicators of financial strength, soundness, position or weakness of an enterprise. One can draw conclusions about the exact financial positions of a concern with the help of ratios.

 NET PROFIT RATIO Net profit ratio establishes a relationship between net profit after taxes and sales and indicates the efficiency of the management in manufacturing, selling, istrative and other activities of the firm. This ratio is the overall measure of the firm’s profitability. Net profit ratio = Gross Profit/Net Sales*100

pg. 47

 GROSS PROFIT RATIO It measures the relationship of gross profit to net sales and is usually represented as a percentage. Gross profit ratio = Gross profit/ Net sales*100 The Gross Profit ratio reflects the efficiency with which a firm produces its products. It indicates the extent to which selling prices of goods per unit may decline without resulting in losses on operations of a firm.

 CASH PROFIT RATIO This ratio measures the relationship between cash generated from operations and the net sales. Cash profit ratio = cash profit/ net sales*100 The net profits of a firm are affected by depreciation charged. Depreciation being a non cash expense it is better to calculate cash profit ratio.

 OPERATING RATIO It establishes the relationship between cost of goods sold and other operating expenses on the one hand and the sales on the other. Operating ratio = Operating Cost/Net Sales*100 (Operating Cost = Cost of goods sold + operating expenses) Higher the Operating ratio, less favorable it is because; it would have a small margin (operating profit) to cover interest, dividend and reserves.

pg. 48

TURNOVER RATIOS  INVENTORY TURNOVER RATIO: Inventory turnover ratio = Cost of goods sold / average inventory. (Cost of goods sold = sales – gross profit) The inventory turnover ratio measures the number of times a firm sells its inventory during the year. A high inventory turnover ratio indicated that the product is selling well. The inventory turnover ratio should be done by inventory categories or by individual product.

 DEBTORS TURNOVER RATIO: Debtors turnover ratio = Net Credit annual sale/ Average trade debtors Higher the value of Debtor’s turnover ratio the more efficient is the management of debtors/sales or more liquid are the debtors.

FINANCIAL RATIOS  CURRENT RATIO: This ratio is obtained by dividing the ‘Total Current Assets’ of a firm by its ‘Total Current Liabilities’. The ratio is regarded as a test of liquidity for a firm. It expresses the ‘working capital’ relation of current assets available to meet the firm’s current obligations. Current ratio = Total Current Assets/ Total Current Liabilities

 QUICK RATIO/LIQUID RATIO: This ratio is obtained by dividing the ‘Total Quick Assets’ of a firm by its ‘Total Current Liabilities’. Sometimes a firm could be carrying heavy inventory as a part of its current assets, which might be obsolete or slow moving. Thus eliminating inventory from current assets and then doing the liquidity test is measured by this ratio. The ratio is regarded as an acid test of liquidity for a firm.

pg. 49

It expresses the true ‘working capital’ relationship of its cash, s receivables, prepaid and notes receivables available to meet the firm’s current obligations. Quick Ratio = Total Quick Assets/Total Current Liabilities (Quick Assets = Total Current Assets - Inventory)

SOLVENCY RATIOS  DEBT EQUITY RATIO: This ratio is obtained by dividing the ‘Total Liability or Debt’ of a firm by Shareholder’s funds’. Debt Equity Ratio = Long-term debts / Shareholder’s Funds This ratio indicates relationship between external equities and internal equities.

Limitations of Financial Statement Analysis Financial statement is a powerful mechanism of determining financial strength and weakness of a firm. Therefore the financial statement analysis suffers from some limitations:  Shareholders, Investors etc. are more interested in knowing the likely prospects in the future. The financial statements are not of much help as information gives in these statement does not reflect the future.  Financial statements display the position in monetary . The statements do not include a very important asset, namely human resources.  The financial statement can be drawn up on the basis of different ing policies.  Financial statements are the outcomes of ing concepts and conventions. However, some valuations like stock, treatment of deferred revenue expenditure, provision for depreciation etc. are based on personal judgment and therefore are not free from bias.  It does not consider changes in price levels  Analysis is only a means and not an end in itself. The analysts have to make interpretations and draw their own conclusions. Different people may interpret the same analysis differently.

pg. 50

RESEARCH DESIGN

Title of Study  A STUDY ON THE NATIONAL ALUMINIUM COMPANY LIMITED (NALCO) THROUGH RATIO ANALYSIS

Statement of problem: This study has been undertaken to study the Financial Performance of National Aluminum Company Limited through Ratio Analysis with the help of financial statements of the firm to as to know more about the profitability of the concern.

Objectives of Study:  This project has been undertaken to study the financial performance of National Aluminium Company Limited for the financial years from 2013-14 to 2014-15.  The study was conducted as a part of requirement of the course and Ratio analysis formed the basis of the study.

 The study also helped to analyze the profitability of the firm during the above financial years.

pg. 51

Scope of Study  The project was undertaken in National Aluminium Company Limited and done within the firm with the help of financial statements.  The profitability and financial performance of the firm was analyzed with the help of Ratio Analysis.



The study also helped in taking necessary steps in improving performance of the firm the future.

Methodology of study: It includes 

Collection of data : Secondary data



Data Analysis

 Collection of Data Data constitute of foundation of the Research Process. To make a decision in any business situation data is more important. Success of any statistical investigation depends on the availability of accurate and reliable data. The research processes adopted in this study are based on sources and methods of collecting data. There are two types of data. They are as under: 

Primary Data



Secondary Data

Data collected from primary methods or which is the first hand information is known as primary data. Data collected from secondary methods or which is already available, second hand data is known as secondary data.

pg. 52

 SECONDARY DATA The Sources of secondary data may be divided into two categories, published and unpublished. The Balance Sheet and Profit & Loss can be obtained from the annual reports of the Company. Unpublished data from the internal records. It includes: 

Schedule of s



Balance Sheet Abstract



Cash Flow Statement

Secondary source of data 

Annual report



Study of files and other documents.



Web sites of Nalco India Ltd.



Web sites of money control.



Review of previous reports related to the topic.



Study about the topic ‘Ration Analysis’ from various sources.

Secondary Data’s were collected by using company website, Annual report and books. In this I have used secondary data most of which was obtained from internal records of the company. Usage of secondary data enjoys some advantages but it suffers some limitations.

pg. 53

Limitations of study: 

The biggest limitation with respect to the topic was that the data was only the secondary data and no primary data was provided because of the company rules and regulations.



The ratios cannot be taken as final while deciding the financial condition of the company is good or bad ratios are simply indicators to the fact.



Due to confidentially aspects some data has to be collected from an identical plant of another major Aluminum Company, buts depicts the same trends as is persistent to the Nalco.



The Analyst work with the figures already taken place, so damage, which has been taken, cannot be stopped but rectified so that it does not occur in future.



pg. 54

The study is limitation to the scope of data provided publically

INTERPRETATION AND DATA ANALYSIS

pg. 55

TABLE NO 4.1 EARNING PER SHARE OF THE FIRM year NET PROFIT(IN CRORE) NO OF EQUITY SHARES EARNING PER SHARE(RS)

2014-15 1322 600 2.2

2013-14 642 600 1.07

2012-13 593 600 0.98

EARNINGS PER SHARE = NET PRROFIT/ NO. OF EQUITY SHARES Earnings per share gives a view of the comparative earnings or earning power of a firm. EPS calculated for a number of years indicates whether or not earning power of the firm has increased. It is seen that in the above table the earnings per share of the firm is increasing every year.

INFERNCE: Due to share buyback program the total number of outstanding shares decreases. As a result earning per share increase. (Buyback program is to buy a company's own shares by its promoters itself)

EARNING PER SHARE 2500 2000 1500 1000 500 0 2014-15

2013-14

NET PROFIT(IN CRORE)

NO OF EQUITY SHARES

FIG 4.1a Earning per share

pg. 56

2012-13 EARNING PER SHARE(RS)

TABLE N0-4.2 THE NET PROFIT RATIO OF THE FIRM YEARS NET PROFIT NET SALES NET PROFIT RATIO

2014-15 1322 7262 18.2

2013-14 642 6649 9.65

2012-13 593 6809 8.7

Net Profit ratio = (Net Profit/ Net Sales)*100

Net Profit ratio indicates the efficiency of the management in manufacturing, selling, istrative and other activities of the firm. Higher the ratio the better is the profitability INFERENCE:

The Firm’s net profit ratio has increased over the years showing that

profitability also has increased.

NET PROFIT 2014-15

2013-14

2012-13

6809 6649 7262 593

8.7

642 18.2 NET PROFIT

NET SALES

FIG 4.2B

pg. 57

2012-13

9.65

1322

2013-14 2014-15

NET PROFIT RATIO

NET PROFIT RATIO

TABLE NO 4.3 THE GROSS PROFIT RATIO OF THE FIRM years

2014-15

2013-14

201213

GROSS PROFIT

3171.07

2454.69

2162.45

NET SALES

7262

6649

6809

GROSS PROFIT RATIO

43.66

36.91

31.75

gross profit ratio = gross profit/ net sales*100 The Gross Profit ratio reflects the efficiency with which a firm produces its product. It indicates that a company is a good financial health. As seen from the above table the gross profit ratio has increased over the years. INFERENCE: A high gross profit margin indicates your company is efficient in the manufacturing and distribution processes.

GROSS PROFIT RATIO 8000 7000 6000 5000 4000 3000 2000 1000 0 GROSS PROFIT

NET SALES 2014-15

2013-14

Fig 4.3c Gross profit ratio

pg. 58

GROSS PROFIT RATIO 2012-13

TABLE NO- THE CASH PROFIT RATIO OF THE FIRM YEARS NET PROFIT DEPRECIATION CASH PROFIT

2014-15 1322 414 1736

2013-14 642 525 1167

2012-13 593 505 1098

YEARS CASH PROFIT NET SALES CASH PROFIT RATIO

2014-15 1736 7262 0.23

2013-14 1167 6649 0.17

2012-13 1098 6809 0.16

CASH PROFIT RATIO= CASH PROFIT/ NET SALES Cash profit ratio= cash profit/ net sales (Cash profit= Net Profit +Depreciation) Cash profit ratio measures the relationship between cash generated from operation and net sales. The cash profit ratio has increased over the year.

INFERENCE: In this table we saw in 2012-13 to 2014-15 the cash profit ratio of the firm has increased over the year indicating lower rate of depreciation.

cash profit ratio 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0

0.23 0.17

0.16

6649

6809

1736

1167

1098

2014-15

2013-14

2012-13

7262

CASH PROFIT

NET SALES

CASH PROFIT RATIO

Fig number-4.4d

pg. 59

TABLE NO-4.5 DEBTORS TURNOVER RATIO OF THE FIRM YEARS

2015

2014

2013

DEBTOR TURNOVER RATIO

40.52

35.08

49.21

Debtors Turnover ratio= Net Credit annual sale / Average trade debtors [Average trade debtors= (opening debtors=closing debtors)/2]

Higher the value of Debtors turnover ratio the more efficient is the management of debtors/sales or more liquid are the debtors. Here the Debtor’s turnover ratio has decreased from the year 2013 to 2015. INFERENCE: Here debtor turnover ratio is decreasing, this means that your average collections are taking longer. The reverse is true if you turnover in days is decreasing; this means that your average collection period is decreasing also.

DEBTOR TURNOVER RATIO 60 50 49.21 40 40.52 35.08

30 20 10 0 2015

2014

2013

FIG 4.5E DEBTOR TURNOVER RATIO

pg. 60

TABLE NO-4.6 THE STOCK TURNOVER RATIO OF THE FIRM YEARS STOCK

2015 TURNOVER 0

2014

2013

0

5.33

RATIO

STOCK TURNOVER RATIO= COST OF GOODS SOLD/ AVERAGE STOCK Inventory turnover is a measure of how quickly a company can convert its inventory into cash and profits. The goal of a company is to hold enough inventory to meet its client’s orders continuously, but not so much that the cost of holding it outweighs the profits. A decreasing inventory indicates that the company is not converting its inventory into cash as quickly as before. When this occurs, the company ends up having increased storage, insurance and maintenance costs. INFERENCE; When a company’s inventory turnover is decreasing, it means that it is holding its inventory longer than previously measured time periods. The measure of how long a company holds its inventory before selling it is referred to as the inventory turnover ratio.

STOCK TURNOVER RATIO 6 5 4 3 2 1 0 2015

2014

FIG 4.6F- STOCK TURNOVER RATIO

pg. 61

2013

Table no-4.7 SHOWING CURRENT RATIO OF THE FIRM It measures the ability of the firm to meet its current obligations. It also reflects the firm’s shortterm solvency. Current Ratio of 2:1 is considered to be satisfactory for a manufacturing company. Current Assets Current Ratio

=

----------------------Current Liabilities

The higher the Current Ratio the greater is the Margin of Safety and the larger amount of current asset and more is the firm’s ability to meet its obligation YEARS

2015

2014

2013

CURRENT ASSETS

7712.18

7425.54 7030.59

CURRENT

1967.04

3242.75 3217.59

3.92

2.28

LIABILITIES CURRENT RATIO

2.18

During the review of Current Ratio of Nalco for the last three years i.e. from 2013 to 2015, it appears that the current ratio has increased from 2.18:1 to 3.92:1. INFERENCE: According to thumb rule the ideal current ratio is 2:1. With comparison to this NALCO’s last 3yrs Current Ratio signifies firm have current assets which are averagely 2.79times the current liabilities. This signifies the healthy conditions of the Firm.

pg. 62

current ratio 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2015 CURRENT ASSETS

2014 CURRENT LIABILITIES

Fig no-4.7G current ratio

pg. 63

2013 CURRENT RATIO

TABLE NO-4.8 SHOWING LIQUID RATIO OF THE FIRM YEARS

2015

2014

2013

CURRENT ASSETS

7712.18

7425.54

7030.23

STOCK

1165.56

1173.66

1380.64

LIQUID ASSETS(CA-STOCK) 6546.62

6251.88

5649.59

YEARS

2015

2014

2013

LIQUID ASSETS

6546.62

6251.88

5649.59

CURRENT LIABILITIES

1967.04

3242.75

3217.59

LIQUID RATIO

3.32

1.92

1.75

Liquid ratio measures the liquidity of the firm. An ideal quick ratio of 1:1 is considered satisfactory. As seen from above table the liquid ratio of the firm has crossed up the satisfactory ratio.

INFERENCE: The liquid ratio of the firm has increased as compared to 2013 and 2014 showing that the company’s liquidity position of the firm is very good.

Liquid ratio 7000 6000 5000 4000 3000 2000 1000 0 2015 LIQUID ASSETS

2014 CURRENT LIABILITIES

2013 LIQUID RATIO

Fig no-4.8H Liquid ratio

pg. 64

Findings, Conclusions and Recommendations

pg. 65

SUMMARY OF FINDINGS Financial ratios quantify many aspects of a business and are an integral part of financial statement analysis. Financial ratios are categorized according to the financial aspect of the business which the ratio measures. Liquidity ratios measure the availability of cash to pay debt. Activity ratios measure how quickly a firm converts non- cash assets to cash assets. Debt ratio measures the firm’s ability to repay long term debt. Profitability ratios measure the firm’s use of its assets and control of its expenses to generate an acceptable rate of return. Market ratios measure investor response to owning a firm’s stock and also the cost of issuing stock. Financial ratios allow for comparisons between companies between industries between different time periods for one firm between a single firm and its industry average. Ratios generally hold no meaning unless they are benchmarked against something else, like past performance or another firm. Thus the ratios of firms in different industries, which face different risks, capital requirements, and competition, are usually hard to compare.

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FINDINGS

 Earnings per share gives a view of the comparative earnings or earnings power of a firm. EPS calculated for a number of years indicates whether or not earnings power of the firm has increased. The earning power of the firm has increased over the years.  Net profit ratio indicates the efficiency of the management in manufacturing, selling, istrative and other activities of the firm. The firm’s net profit has increased over the years showing that profitability also has increased.  The gross profit ratio reflects the efficiency with which a firm Produces its products. It indicates that a company is a good financial health. As seen from the above table the gross profit ratio has increased over the years.  Cash profit ratio measures the relationship between cash generated from operations and the net sales. The cash profit ratio has increased over the years. The cash profit ratio of the firm has increased over the years indicating lower rate of depreciation.  Higher the value of Debtors turnover ratio the more efficient is the management of debtors/sales or more liquid are the debtors. Here the Debtor’s turnover ratio has decreased from the year 2013 to 2015.The debtor turnover ratio is decreasing, this means that your average collections are taking longer. The reverse is true if you turnover in days is decreasing; this means that your average collection period is decreasing also.  A decreasing inventory indicates that the company is not converting its inventory into cash as quickly as before. When this occurs, the company ends up having increased storage, insurance and maintenance costs. When a company’s stock turnover ratio is decreasing, it means that it is holding its inventory longer than previously measured time periods. The measure of how long a company holds its inventory before selling it is referred to as the stock turnover ratio.

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 Current Ratio of Nalco for the last three years i.e. from 2013 to 2015, it appears that the current ratio has increased from 2.18:1 to 3.92:1.According to thumb rule the ideal current ratio is 2:1. With comparison to this NALCO’s last 3yrs Current Ratio signifies firm have current assets which are averagely 2.79 times the current liabilities. This signifies the healthy conditions of the Firm.  The liquid ratio of the firm has increased as compared to 2013 and 2014 showing that the company’s liquidity position of the firm is very good.

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RECOMMENEDATIONS, SUGGESTIONS & CONCLUSION Financial ratios quantify many aspects of a business and are an integral part of financial statement analysis. Financial ratios are categorized according to the financial aspect of the business which the ratio measures. Liquidity ratio measure the availability of cash to pay debt. Debt ratios measure the firm’s ability to repay long- term debt. Market ratios measure investor response to owning a firm’s stock and the cost of issuing stock. Profitability ratios measure the firm’s use of its assets and control of its expenses to generate an acceptable rate of return.  Earnings per share = Net profit (after tax) – Preference Dividend/ Number of equity shares. Earnings per share gives a view of the comparative earnings or earnings power of a firm. EPS calculated for a number of years indicates whether or not earnings power of the firm has increased. The earning power of the firm has increased over the years.  Net Profit ratio = Net Profit/ Net Sales*100

Net Profit ratio indicates the efficiency of the management in manufacturing, selling, istrative and other activities of the firm. Higher the ratio the better is the profitability. The Firm’s net profit ratio has increased over the years showing that profitability also has increased.  The Gross Profit ratio reflects the efficiency with which a firm produces its product. It indicates that a company is a good financial health. A high gross profit margin is one of the best indicators that a company is in good financial health. It is the ratio of gross profit in a given period to revenue, and it is used as a measure of profitability. A high gross profit margin indicates your company is efficient in the manufacturing and distribution processes.

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 Cash profit ratio measures the relationship between cash generated from operation and net sales. The cash profit ratio has increased over the year indicating lower rate of depreciation.  Debtor turnover ratio is decreasing, this means that your average collections are taking longer. The reverse is true if you turnover in days is decreasing; this means that your average collection period is decreasing also.  STOCK TURNOVER RATIO= COST OF GOODS SOLD/ AVERAGE STOCK Inventory turnover is a measure of how quickly a company can convert its inventory into cash and profits. Low inventory turnover ratio is a signal of inefficiency, since inventory usually has a rate of return of zero. It also implies either poor sales or excess inventory. A low turnover rate can indicate poor liquidity, possible overstocking, and obsolescence, but it may also reflect a planned inventory build-up in the case of material shortages or in anticipation of rapidly rising prices.

 Current Ratio =

Current Assets / Current Liabilities

A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time as and when they become due. The increase in current ratio represents increase in liquidity position of the firm.  Liquid ratio measures the liquidity of the firm. An ideal quick ratio of 1:1 is considered satisfactory. As seen from above table the liquid ratio of the firm has crossed up the satisfactory ratio. The liquid ratio of the firm has increased the company’s liquidity position of the firm is very good.

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RECOMMENDATIONS AND SUGGESTIONS 

The financial analysis done on National Aluminum Company Limited showed that the firm is doing well due to expansion.



The firm deals with aluminum whose price fluctuates according to LME. Necessary precautions should be taken to handle this situation.



Customer’s satisfaction is the key to success of every business enterprise. Delivery schedules should be on time and every step must be taken into to see that the customers are satisfied with the service provided.

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CONCLUSION The “financial statement Analysis’’ plays a vital role in helping the financial manager and top management of company to plan and control their financial structural operations. An efficient analysis would therefore highlight the pitfalls in management in of financial matters such as income, expenditure, export and domestic sales ,profitability, fund availability, liquidity etc. This gives an idea about controllable and uncontrollable variables. These can be re-examined and integrated to evolve idea, which can give efficient financial decision. A sound financial decision gives the way for higher profitability and performance. It is nothing but a fine-tuning of control system in financial structure. The suggestions should be emphasize the control system that should be adopted by NALCO. This may prove to be corrective measures for improving the financial structure of NALCO. But the fact remains that the suggestions, which will be accepted an d fully implemented in NALCO, will only be decided by relevant financial system that followed by Nalco and its adaptability in the aluminum complex of NALCO.

I would like to conclude that NALCO has travelled long distance in pursuit of excellence in all the areas of its performance, for which it has become a world-class company.

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APPENDICES & ANNEXURE

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FUND FLOW ANALYSIS & CASH FLOW ANALYSIS It shows the sources and uses if funds of a company. This helps to analyze changes in Working Capital components between two dates, which helps to accomplish the goals of the organization effectively and efficiently.  Increase in Working Capital -

Application of Funds

 Decrease in Working Capital -

Source of Funds

CASH FLOW ANALYSIS  Opening Balance + Receipts – Payments = Closing Cash Balance  Increase in Current Asset reduces cash from operations  Decrease in Current Asset increases cash from operations  Increase in Current Liabilities increases cash from operations  Decrease in Current Liabilities decreases cash from operations

The Cash flow statement of NALCO for the last three years from 2012-13 to 2014-15 has been prepared to find out the net effect of changes in the cash balance. Changes in the net cash flows (inflows and outflows) from different activities like operating, investing and financing with the operating cash balance. The Cash Flow Statement shows:  The cause of changes in the company’s Working Capital or Cash Flow position.  The liquidity position of the firm.  How much the firm’s Working Capital needs were met by the funds generated from current operations.  Estimation of Working Capital requirement for long period.  In this study only cash flow statement is projected for analysis as extracted Plant’s report. This forms a part of the Company’s Cash Flow.

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Cash flow statement PARTICULARS A. Cash flow from operating activity Net profit Adjustment for : Depreciation Interest &financing charges & dividend Provision net Stores & spares written off Dividend income Intrest income Loss/(profit)on sales of assets Operating profit before working capital changes Adjustment for : Inventories Trade & other receivables Trade payables

Year ended march 31st 2015

Year ended march 31st 2014

2113.42

917.81

413.66

524.73

61.01 13.17 -119.39 -477.2 -0.24

32.34 19.45 -122.48 -368.88 0.06 -108.99 2004.43

-1.26 199.33 -1190.54

Year ended march 31st 2013 905.04 505.43 7.45 24.99 13.85 -73.1 -395.03 0.17

85.22 1003.03 191.3 -122.37 268.97

83.76 988.8 -205.25 -120.66 213.68

Cash generated from operations Direct taxes paid

-992.47 1011.96 -491.49

337.9 1340.93 -359.59

-112 876.57 -435.11

Net cash from operating activities

520.47

981.34

441.46

B. Cash Flow from Investing Activities: Purchase of Fixed Assets (purchase)/sale of invetment Dividend income from mutual funds intrest income from deposits,loan and advances Net cash used in investing activities C. Cash Flow from Financing Activities: intrest financing charges Dividends including dividend tax paid Net cash used in financing activities D. Net changes in cash & cash equivalents (A+B+C) E.Cash & cash equivilant-opening balance F.Cash & cash equivalents-closing balance(D+E)

-303.14 294 119.39 455.47

-618.68 245.02 122.48 329.23 565.67

-506.5

78.05

-506.5 579.69 4048.29 4627.98

*Figures in brackets are cash out flow/income, as the case may be.

-876.92 -7.45 -221.06

-515.48

NOTE:

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-648.93 -735.8 73.1 434.71

-515.48 543.91 3504.38 4048.29

-228.51 -663.97 4168.35 3504.38

MANUFACTURING, TRADING & PROFIT N LOSS FOR THE YEAR ENDED 31ST MARCH 2015

PARTICULARS Revenue from operations Other income Total revenue Expenses: cost of material consumed Power and Fuel Changes in inventories of finished goods Intermediaries and W I P Employee benefits expenses Finance costs Depreciation and amortization expenses other expenses Total expenses Profit before exceptional items and tax Exceptional items profit before tax

FIGURES FOR THE 2015 7382.81 672.64 8055.45 1031.59 1802.24 2.9 1377.91 413.66 1462.15 6090.45 1965 -148.42 2113.42

Tax expenses: (1)Current tax (2)Deferred tax (3)Earlier years profit/(loss) for the period Earning per share (a)profit after tax (b)Average number of equity shares(face value 5/- each) Earning per share-Basic(a/b) Earning per share-Diluted(a/b)

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520.63 249.68 21.26 1321.85 1321.85 2,57,72,38,512 5.13 5.13

Balance Sheet As at March 31, 2015 Figures as at the 2015 Particulars EQUITY AND LIABILITIES Shareholders’ funds Share capital 1288.62 Reserves and surplus 11508.68 Non-current liabilities Deferred tax liabilities (Net) 1105.27 Other Long term liabilities 65.3 Long-term provisions 242.76 Current liabilities Trade payables 455.46 Other current liabilities 1325.37 Short-term provisions 186.21 Total 16,177.67 ASSETS Non-current assets Fixed assets Tangible assets 6509.21 Intangible assets 136.21 Capital work-in-progress 549.73 Non-current investments 1.04 Long-term loans and advances 1221.85 Other non-current assets 47.45 Current assets Current investments 950 Inventories 1165.56 Trade receivables 120.82 Cash and Bank Balances 4627.98 Short-term loans and advances 607.54 Other current assets 240.28 Total 16,177.67

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MANUFACTURING, TRADING & PROFIT N LOSS FOR THE YEAR ENDED 31ST MARCH 2014 PARTICULARS Revenue from operations Other income Total revenue Expenses: cost of material consumed Power and Fuel Changes in inventories of finished goods Intermediaries and W I P Employee benefits expenses Finance costs Depreciation and amortization expenses other expenses Total expenses Profit before exceptional items and tax Exceptional items profit before tax

FIGURES FOR THE 2014 6780.85 557.71 7338.56 1063.16 2017.67 58.55 1245.33 524.73 1461.94 6371.38 967.18 49.37 917.81

Tax expenses: (1)Current tax (2)Deferred tax (3)Earlier years profit/(loss) for the period Earning per share (a)profit after tax (b)Average number of equity shares(face value 5/- each) Earning per share-Basic(a/b) Earning per share-Diluted(a/b)

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264.65 7.15 3.66 642.35 642.35 2,57,72,38,512 2.49 2.49

Balance Sheet As at March 31, 2014

Particulars Figures as at the 2014 EQUITY AND LIABILITIES Shareholders’ funds Share capital 1288.62 Reserves and surplus 10833.38 Non-current liabilities Deferred tax liabilities (Net) 910.13 Other Long term liabilities 54.96 Long-term provisions 218.22 Current liabilities Trade payables 531.12 Other current liabilities 2564.38 Short-term provisions 147.25 Total 16,548.51 ASSETS Non-current assets Fixed assets Tangible assets 6688.8 Intangible assets 103.14 Capital work-in-progress 768.74 Non-current investments 1.04 Long-term loans and advances 1517.27 Other non-current assets 43.32 Current assets Current investments 1244 Inventories 1173.66 Trade receivables 243.57 Cash and Bank Balances 4048.29 Short-term loans and advances 481.38 Other current assets 235.3 Total 16,548.51

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MANUFACTURING, TRADING & PROFIT N LOSS FOR THE YEAR ENDED 31ST MARCH 2013 PARTICULARS Revenue from operations Other income Total revenue Expenses: cost of material consumed Power and Fuel Changes in inventories of finished goods Intermediaries and W I P Employee benefits expenses Finance costs Depreciation and amortization expenses other expenses Total expenses Profit before exceptional items and tax Exceptional items profit before tax

FIGURES FOR THE 2013 6916.48 511.05 7427.53 1167.83 2432.27 -64.25 1153.93 7.45 505.43 1319.83 6522.49 905.04 − 905.04

Tax expenses: (1)Current tax (2)Deferred tax (3)Earlier years profit/(loss) for the period Earning per share (a)profit after tax (b)Average number of equity shares(face value 5/- each) Earning per share-Basic(a/b) Earning per share-Diluted(a/b)

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263.3 54.02 -5.11 592.83 592.83 2,57,72,38,512 2.3 2.3

Balance Sheet As at March 31, 2013 Particulars Figures as at the 2013 EQUITY AND LIABILITIES Shareholders’ funds Share capital 1288.62 Reserves and surplus 10,643.83 Non-current liabilities Deferred tax liabilities (Net) 903.13 Other Long term liabilities 70.82 Long-term provisions 208.62 Current liabilities Trade payables 509.17 Other current liabilities 2545.75 Short-term provisions 162.67 Total 16,332.61 ASSETS Non-current assets Fixed assets Tangible assets 6523.8 Intangible assets 105.09 Capital work-in-progress 1001.92 Non-current investments 161.04 Long-term loans and advances 1474.04 Other non-current assets 36.39 Current assets Current investments 1329.02 Inventories 1380.64 Trade receivables 148.65 Cash and Bank Balances 3504.38 Short-term loans and advances 473.76 Other current assets 193.78 Total 16,332.61

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BIBLIOGRAPHY The Success which I have been used for the completion of this project on “RATIO ANALYSIS’ BOOKS 1.

Management ing

- By Shashi K Gupta & R K Sharma

2.

Cost & Financial Analysis -

3.

Fundamentals of ing – by Appanaiah Reddy

4.

34 Annual Reports of NALCO.

by Neethi Gupta

WEBSITES 1. WWW. NALCO INDIA.COM 2. WWW. GOOGLE.COM

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