A STUDY ON

RATIO ANALYSIS

with reference to
VISAKHAPATNAM PORT
TRUST

A project report submitted to the partial fulfillment of the

requirements for the Award of degree of

BACHELOR OF BUSINESS ADMINISTRATION (BBA) by

PEESAPATI RIDDHI APOORVAA Redg no : 122014201009

UNDER THE ESTEEMED GUIDANCE OF Dr.V. GOWRI

LAKSHMI

GITAM SCHOOL OF BUSINESS

GIATM UNIVERSITY, VISAKHAPATNAM (2020-2023)

1
 DECLARATION
I PEESAPATI RIDDHI APOORVAA, student of
GITAM UNIVERSITY, Visakhapatnam declare that this project work entitled

“A STUDY ON RATIO ANALYSIS” with reference to

“VISAKHAPATNAM PORT TRUST” Visakhapatnam is a genuine work

submitted by me, under the esteem guidance of Dr.V. GOWRI LAKSHMI

in partial fulfillment for the requirement of the degree of BBA in FINANCIAL
MARKETS . I confirm this has not been published or submitted elsewhere for the
award of any degree in part or in full.

PEESAPATI RIDDHI APOORVAA

Regd No : 122014201009

Place: Visakhapatnam

Date:

2
 CERTIFICATE

This is to certify that the project entitled “A STUDY ON RATIO

ANALYSIS” is a bonafide work done by PEESAPATI RIDDHI
APOORVAA
on Reg No.122014201009 pursuing Bachelor of Business
Administration who has completed 2 nd year from Gitam University has
undergone internship program at VISAKHAPATNAM PORT
TRUST under my supervision during the academic year 2020-2023.

Shri P.Sridhar
Sr. Accounts Officer,
Finance Department
Visakhapatnam Port Trust
Visakhapatnam

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 ACKNOWLEDGEMENT

I am thankful to the entire VISAKHAPATNAM PORT TRUST for

considering my internship request and facilitating in all means and thus having
made this organization study a fruitful one.

I Am Extremely Thankful to Dr.V.GOWRI LAKSHMI Internal

Guide, for his esteemed guidance, support and valuable time for completion of
the project work without which this report would not have materialized.

I am extremely grateful to the company project guide Shri P.SRIDHAR ,

Sr. Accounts Officer, Finance Department, “Visakhapatnam Port Trust” for
providing me with his valuable guidance and extending his kind cooperation
during this project.

Name: PEESAPATI RIDDHI APOORVAA

Regd:122014201009

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CONTENTS

CHAPTER-1
INTRODUCTION
 NEED FOR THE STUDY  OBJECTIVES OF THE
STUDY  METHODOLOGY OF THE STUDY 
LIMITATIONS OF STUDY
CHAPTER-2
 INDUSTRIAL PROFILE
CHAPTER-3
 ORGANIZATION PROFILE

CHAPTER-4

 THEORITICAL
FRAMEWORK OF STUDY

CHAPTER-5
 DATA ANALYSIS & INTERPRETATION

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CHAPTER-1

 Introduction
 Need for the study
 Objectives of the study
 Methodology of the study
 Limitations of the study

6
INTRODUCTION TO THE STUDY

Chennai, Calcutta, Mumbai were the older ports. These cities became metro cities because of
the port trade. The port of Visakhapatnam and cochin came up 1993 and 1936. After partition
of India, in lieu of Karachi port was newly constructed and commissioned in 1959. There are
no proposals in 10th plan to create any new major port. The effort is to expand and consolidate
the existing major ports. About 90% of international trade is transported through sea and port.
Handling in major ports have increased from 20 million tones in 1950 (5 ports) to 679.35
million tones by 2020 in 12 ports. These are about 200 minor ports, many of them are not
operational. About 271.74 million tones have been handled in the minor ports. Major ports
are under control of central government and minor ports are under control of maritime state
government for development and administration. The ports are costly to construct, maintain,
requiring enough draft of international ship movement, need faster handling, and the assured
cargo. Indian ports are considered to be inefficient compared to foreign ports.

Visakhapatnam is an ancient port city, which had trade relations with middle east and Rome.
Ships were anchored at open road and loaded with cargo from Visakhapatnam shore by all
means. Visakhapatnam port is one of the best, natural port in India and its location provided
protection from cyclones, which strikes the east coast regularly during may and November.
The „Dolphin Nose‟ hill which is to the south of the entrance cannel, rises and Dora hill
which is to north of the entrance channel are land form which provided tranquil water. This
low range of minimum of 1.82 mts this section of the sea is advantages for the location of the
port central provinces. There are also plans to relocate the fishing harbor at the port to allow
for the expansion of berths and stalking areas and dredging of the outer harbor is also being
undertaken to increase the draft of the main channel to 21 meters. Visakhapatnam port was
minor port, ships were anchored in the shore areas and the cargo transported in small
muscular boats. They gained the status of a major port in 1963 and it was in February 1963
that the Visakhapatnam port was constituted.

The project report is about the Ratio analysis in the organization. The study of Ratio analysis
is prepared for the purpose of presenting a periodical review or report to the management and
to deal with the state of investment in business and result achieved during the period under

7
review. They reflect the financial position and operating strengths and weakness of the
concerns by properly establishing relationship between the items of ratio analysis estimates
and review estimates. Ratio analysis is the powerful tool of financial analysis. Several ratios
calculated from the accounting data can be grouped into various classes according to financial
activity or function to be evaluated. Ratio analysis is “The indicate quotient of two
mathematical expressions and as the relationship between two or more things”. It evaluates
the financial position and performance of the firm. As started in the beginning many diverse
groups of people are interested in analyzing financial efficiency and growth of firm. Ratio
analysis is important one for all management accounting for decision making. Ratio analysis
of financial statements stands for the process of determining and presenting the relationship
of items and groups of items in the statements.

The port started in 1933 transformed itself into a mega major port. With a capacity to handle
more than 125 million tones per annum, it is capable of handling all types of cargoes
including iron ore, coal, crude oil, petroleum products, LPG, fertilizers, dry cargoes, liquid
cargoes and containers. Port of Visakhapatnam has super cape handling capability and the
deepest container terminal among major ports. The port has fully merchandised facilities for
handling coal, iron ore and alumina besides liquid and containers cargoes. Efficient cargo
evacuation infrastructure is developed by the port for transportation of cargo by rail and road.
The port owns and operates a railway and east coast railway of the Indian railways.

NEED FOR THE STUDY

The main reason why we need ports is to facilitate trade, so to make exports and imports as
easy as possible. Bad ports create barriers, good ports make sure firms do not lose time,
money or cargo and here the irony of measuring port economic value kicks in. The
transportation sector is strong factor in terms of economic and regional balanced
development, as well as also having a great influence on national integration to the world
economic market. India has a rich history of trade across sea. Ports constitute an important
economic activity in coastal areas. These will bring varying degrees of benefits to the
economy and to the country. Ports are also important for the support of economic activities in
the hinterland since they act as a crucial connection between sea and land transport. In terms
of load carried, seaway transportation is the cheapest and most effective transportation system

8
compared to other systems. Industries require a safe and cheap means of exporting finished
goods and importing raw materials. Hence the majority of industries in the world are located
in the coastal belts, in the vicinity of major ports. These industries in turn, influence the lives
of the employees and indirect benefactors. This report seeks to study the role played by ports

in the development of a nation.

Visakhapatnam port mainly derive their revenue from cargo handling in their port areas,
charges on the ships visiting their areas and other related charges. Visakhapatnam port is the
natural port. The port has the specific feature of quick turn round of ships, better labour
productivity, cost affective cargo handling, fast clearance of easiest better industrial relations,
exemptions of levy on export cargoes. Visakhapatnam port ships were anchored in the open
of shore areas and the cargo transported in small muscular boats. The port of Visakhapatnam
handled 58.05 million tones of cargo throughout during the year 2014 – 2015 and is
consistently making relentless efforts in enhancing its capacity and productivity in
consonance with changing requirements of the trade. The dry bulk of trade at port of
Visakhapatnam is increasing year by year. Projection of dry bulk cargo as per the maritime
agenda – 2014 – 2015 is 58.05 million tones and 71.75 million tones by 2019 – 2020. To
cater to handling needs of cargos such as coking coal, thermal coal, steam coal, iron ore,
fertilizers, and LAM coke through bigger size vessels, and to provide a long lasting solution
to the environment concerns, the port is developing new berths and merchandising existing
berths. The present proposal is envisaged in order to cater to handling needs to dry bulk
cargoes and may other cargoes.

An absolute figure does not give any meaning unless it is related with the other relevant
figure. Amount of current liabilities of a company does not tell anything about solvency
position of the company. When it is related with current assets amount of the same company,
an opinion about the solvency position of the company can be had. Ratios are important both
in vertically and horizontal analysis. In vertical analysis, ratios help the analysts to form a
judgment whether the performance of the corporation at a point of time is good, average or
poor. Ratios can be useful to judge financial condition and profitability performance of the
corporation when they are compared. An analysis of ratio gives two types of comparison.
First, a comparison is made between present ratios with past expected future ratios of the
same firm.

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Ratio analysis is very important in fundamental analysis, which investigates the financial
health of the companies. An example of ratio analysis is the comparison of price earning ratio
of different companies share prices properly reflect their performances and therefore basing
on ratio analysis one can decide, what investments are most likely to be most profitable.
Ratio analysis is a way expressing relationship between a firm‟s accounting numbers and
trends overtime that analysis use to establish values and evaluate risks. Ratios of one firm are
often compared with the same ratios on a similarfirms or of all firms in a single industry. This
comparison indicates of a particular firm‟s financial statistics are support. Ratio analysis is a
name given to the financial statements analysis using the ratio of two financial statements that
are related to each other. Ratio analysis is a scientificattempt devices by intelligent to
reasonably predict the future outcomes of investment. As true as this may be, investors still
need to use ratio analysis with caution. Venture capitalist and banker use the ratio analysis
featured here and others when they consider investing in or loaning to businesses.

OBJECTIVES OF THE STUDY

The major objective of the present study is to know about financial strengths and weakness of
Visakhapatnam port trust through Ratio analysis. An attempt was made to:

• To evaluate the performance of the Visakhapatnam port trust by using ratios as a

yardstick to measure the efficiency of the company.
• To understand the liquidity and profitability of the Visakhapatnam port trust during the
study period.
• To study the existing capital structure and allocation of funds.
• To make comparisons between the ratios during different periods.
• To evaluate and analyze various ratios of Visakhapatnam port trust.
• To offer suggestions to improve financial position of Visakhapatnam port trust.

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METHODOLOGY OF THE STUDY

Methodology is a systematic procedure of collecting information in order to analyze and

verify a phenomenon.
The collection of information has done through two principle sources:

• Primary Data
• Secondary Data

PRIMARY DATA:
Primary data are those which are collected afresh and for the first time, and thus happen to be
original in character.
Only one fourth of the information has obtained from primary data and the rest from
secondary data. The major techniques that are used for the purpose of the primary data are
personal interview method and observation method.
It is the information collected directly from accounts, accounting officers and finance
departments.

SECONDARY DATA:
The secondary data is the data which have been collected by someone else and which have
already passed through the statistical process. Secondary data comprises of information
obtained from ratio analysis estimates of other financial statements, files and some other
important documents maintained by the organization are also helpful. Most of the used for the
study is secondary and has been collected from the

• Balance sheet,
• Profit and loss account,
• Annual reports of VPT,
• Financial statements of organization,  Business magazines and websites.

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LIMITATIONS OF THE STUDY

The major limitations of the study:-

• Some aspects of financial information were not available because of the confidentiality
of Visakhapatnam port trust.
• Scope of discussions with employees of the organization not having an extensive
experience in primary data collection.

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 CHAPTER-2

INDUSTRIAL PROFILE

INTRODUCTION:
About 90% of international trade is transported through sea and cargo handling in major ports
have increased from 20 million tons in 1950(5 ports) to 520 million tons by 2017 in ports.
There are about 200 minor ports. About 485 million tones had been handled in the ports.

Major ports are under control of Central Government and minor ports and maritime with state
government for development and administration. The ports are expensive to construct,
maintain, requiring enough draft of international ship movement, quick handling and the
assured cargo Indian ports are considered to be inefficient compared to foreign ports.

MEANING OF PORT:
A port is a trans-shipment point between sea and surface transport and entry and exit for
imports
and exports trade which plays a unique role in the country‟s transport system. A port is a
place on shore where ships may run into shelters to load and unload. According to
encyclopedia, a port is a place equipped to facilitate the trans-shipment of freight between
water and land carriers.

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PORT AS INFRASTRUCTURE:

A port is an important infrastructure, affording the transit facilities import/export of

trade/cargo. Thus, port is an important infrastructure for socioeconomic development. More
than 90% of import/export, trade passes through the port. Advent of steam power, steel hut,
opening up of SEZ canal all have boosted and caused the ever increasing maritime trade.
India has 6000km of coastal line and more than 200 ports including major and minor.

Chennai, Calcutta, Mumbai were the oldest ports. They became metro cities because of the
port trade. The port of Visakhapatnam and Cochin came up 1993 and 1936. After partition of
India, in lieu of Karachi, kandla port was newly constructed and commissioned in 1959. The
effort is to expand and consolidate the existing major ports.

TYPES OF PORTS:
The term “Port” and “Sea Port” are used for different types of port facilities that handle ocean
going vessels, and river port is used for river traffic, such as barges and other shallow draft
vessels, some ports on a lake, river (fluvial port) or canal have access to a sea or ocean and
are sometimes called “Inland ports”.

A fishing port is a port or harbour for landing and distributing fish. It may be a recreational
facility, but it is usually commercial. A fishing port is the only port that depends on an ocean
products and depletion of fish may cause a fishing port to be is a term sometimes used to
describe a yard used to place containers or conventional bulk cargo, usually connected to a
seaport by rail or road.

A warm water port is one where the water does not freeze in winter time. Because they are
available year round, warm water ports can be of great geopolitical or economic interest.
Such settlements as Murmansk and Petropavlovsk-Kamchatski in Russia, Odessa in Ukraine,
Kushiro in Japan and Valdez at the terminus of the Alaska pipelines owe their very existence
to being ice-free ports.

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A seaport is further categorized as a “Cruise port” or a “Cargo port.” Additionally, “Cruise
port” are also known as a “Home port” or a “Port of Call.” The “Cargo port” is also further
categorized into a “Bulk” or “Break Bulk Port” or as a “Container Port.”

A Cruise home port is the port where cruise-ship passengers board (or embark) to start their
cruise and disembark the cruise ship at the end of their cruise. It is also where the cruise
ship‟s supplies are loaded for the cruise, which includes everything from fresh water and fuel
to fruits, vegetables, champagne and any other supplies needed for the cruise. “Cruise home
ports” are a very busy place during the day the cruise ship is in port, because off-going
passengers debark their baggage and on-going passengers broad the ship in addition to all the
supplies being loaded. Currently, the cruise capital of the world is the port of Miami, Florida,
closely followed behind by port everglades, Florida and the port of San Juan, Puerto Rico.

A port of call is an intermediate stop or a ship on its sailing itinerary, which may include up
to a half a dozen ports. At these ports, a cargo ships may take on supplies or fuel, as well as
unloading and loading cargo. But for a cruise ship, it is their premier stop where the cruise
lines take on passengers to enjoy their vacation.

Cargo ports, on the other hand, are quite different from cruise ports, because each handle‟s
different cargo, which has to be loaded and unloaded by very different mechanical means.
The port may handle one particular type of cargo or it may handle numerous cargoes. Such as
grains, liquid fuels, liquid chemicals, wood, automobiles etc. such ports are known as “Bulk
ports” or “Break bulk port”. Those ports that handle containerized cargo are known as
container ports. Most cargo ports handle all sorts of cargo, but some ports are very specific as
to what cargo they handle. Additionally, the individual cargo ports are divided into different
operating terminals which handle the different cargoes, and are operated by different
companies, also known as terminal operators or stevedore.

CLASSIFICATION OF PORTS:
Ports in India are classified into three categories:

• Major ports

• Intermediate ports

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 • Minor ports

MAJOR PORTS:
Technically speaking a major port is the one which handles not less than half a million of
cargo annually and which possess labour and other facilities to receive ships of 4000 foot and
more.

INTERMEDIATE PORTS:
This type of port is the one, which handles not less than 1500toners of cargo annually and is

independent from the point of view of passengers of traffic defence and customs.

MINOR PORTS:
Minor port is the one which handles not handles less than 500 toners of cargo annually and
which is not considered from any other point of view is termed as minor port.

Major ports are governed by the “Major ports Act 1963” and the “Indian ports Act 1908”.
The Chairman of each major port trust is appointed by the Central Government besides
Chairman, the Port Trust Board comprises of Deputy Chairman. Board of trustees from
customs, railways, defence, state government, ship owners, shippers etc. all members of the
board other than chairman and deputy chairman are part time members. Our country is having
a coastal line of about 6000kms. And the major ports and the minor ports are situated along
the coastal line and at sea, islands. There are 12 major ports and 163 minor ports and
intermediate ports.

MAJOR AND MINOR PORT TRUST:

The following are the major and minor ports listed in ministry of shipping are compelled and
given below:

1. MUMBAI PORT TRUST:

The port is established in1875 in Maharashtra state. It is leading Indian port. This is
commercial gate way and premier port India. Bombay port is a tally ink great multipurpose
port capable of handling dry null, co-author food grains state.

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 2. KOLKATTA PORT TRUST:
This port is established in 1983 in west Bengal. Calcutta port significantly contributed to
India‟s economic development. Traditionally Calcutta port has been a terminal port vessels
bring imports to Calcutta and after necessary repairs if any are undertaken takes first leads of
cargo export.

3. COCHIN PORT TRUST:

This port was established in 1930 at Willington Island. This is a leading port on the west
coast of India. The port has the berthing facilities in the placed backwater throughout the
year.

4. KANDLA PORT TRUST:

It is established in 1955 and geographically situated in Gujarat state. It is a “sea of North
West
India.”

This port has the special feature of highest productivity rates among India‟s ports. Work
bustle on every port. Documentation procedures facilitate formalities smoothed and
accelerated.

5. VISAKHAPATNAM PORT TRUST:

This is a natural port. The port has the specific feature of quick turn round of ships, better
labor productivity, cost effective cargo handling fast clearance, better industrial relations,
exemptions of levy on export cargos, local point Goa‟s rich maritime treaties etc.

6. JAWAHARLAL NEHRU PORT TRUST:

There is another port trust new Bombay it is international trade partner the most modern port
of India with fully automated and computer controlled facilities for handlingin port of day
bulk cargo and in port and export of container cargo and machines.

7. MORMUGAO PORT – GOA:

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The main port of Goa, Mormugao port is a best natural harbour of India located in South Goa.
Mormugao port is one of the leading iron ores exporter port in India and raw materials too.
The port of Mormugao is one of the major attraction of Goa along with the beautiful city of
Vasco da Gama and international airport Dabolim. The natural harbour of Goa is one of
India‟s earliest modern ports.

8. PANAMBUR PORT – KARNATAKA:

Panambur Port known as the New Mangalore Port is a seaport located near to Surathkal
railway station in Dakshina Kannada district of Karnataka. New Mangalore Port is a deep
water all weather port and the only major port of Karnataka and one of the largest port in
India. Port of Mangalore export major commodities like manganese, granite stones, coffee
and cashew and main imports includes timber logs, LPG, petroleum products and cargo
containers. There is a beautiful beach at south of sea port of Panambur along with the shore
of the Arabian Sea.

9. TUTICORIN PORT – TAMIL NADU:

Tuticorin Port is an artificial deep-sea harbor and one of the 12 major ports of India. It is also
the second largest port in Tamil Nadu first is Chennai Port and one of the largest container

terminal in India. The artificial port of Tuticorin is a weather port and who receive a large

volume of international traffic.

Port of Tuticorin is used to be best port for maritime trade and pearl fishery on the Bay of
Bengal. The port city is also known as Pearl City and is one of the beautiful sea gateways of

India from Tamil Nadu state.

10. CHENNAI PORT:

Madras Port is the one of the oldest port of India and the second largest port in the country.
Chennai Port is also the largest port in the Bay of Bengal and a hub port for cars, big
containers and cargo traffic in the east coast of India. Port of the Coromandel Coast handles a
variety of Cargo Container, Automobiles, Coal, Fertilizers and Petroleum Products.Chennai
Port terminals have lighthouses around, Intra port connectivity, Pipelines and Railway
terminus.

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 11. PARADIP PORT – ORISSA:

The artificial, deep-water port of East Coast of India is located in the Jagatsinghpur district of
Orissa state. Port of Paradip is the major port in the East Cost shore and situated at the
confluence of Great River Mahanadi and the Bay of Bengal. Paradip Port has its own Railway
System, Coal handling plant and a national highway connects the port with rest of Indian road

networks.

12. HALDIA PORT – WEST BENGAL:

Haldia port or Calcutta Port is a major seaport situated near the Hooghly River in the state of
West Bengal. Port of Haldia is one of the major Trade centerfor Calcutta and receive bulk
cargoes of Chemicals, Petrochemicals and oils. Port of Kolkata is also a base of Indian Coast
Guard.

DEVELOPMENT OF PORT DURING THE PLANNING ERA:

Planned development of the port began with the commencement of our Five Year Plans.
Huge investments were made during different five year plan period for providing more
facilities, such as construction of additional berths, modernization of cargo handling facilities,
development of transit sheds, ware house, open stacking spaces, development of road and rail
network to meet the increased requirement of the trade. Thus, with humble beginning,
Visakhapatnam has craved the place of prestige, in the realm of ports by giving a number of
developments.

FIRST FIVE YEAR PLAN:

The V.P.T allotted a sum of Rs.136lakh at a time during five year plan i.e. 1951-1956 for the
functioning of the said port. The port has undertaken the essential works of construction of
transit shed lying of broad gauge and narrow gauge lines, construction of jetty berths and
construction of query berths.

SECOND FIVE YEAR PLAN:

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For the second Five Year Plan i.e.1956-61, a sum of Rs.403lakhs was allotted for expenditure
initially and it was increased by Rs.267lakh subsequently. During the period, the VPT has
extended the broad gauge, narrow gauge, Dock as development activities.

Construction of oil wharf consisting of 2berths, OR-1 OR -2 and the procurement of electrical
cranes, mobile crane Barge Launches and so on were taken up by the VPT during the period.

THIRD FIVE YEAR PLAN:

An amount or Rs. 907lakhs during this period was taken as the plan expenditure. The
following were some development programs undertaken by VPT under this period.

For the procurement and for better placement, the VPT had undertaken the work of
construction of two deep drafted mechanized ore berths, handling plant for ore mechanically,
construction of the lighter rage wharf [reclamation & reclamation-2 area], construction of
warehouses and storage sheds were undertaken by Visakhapatnam Port Trust.

FOURTH FIVE YEAR PLAN:

An amount of Rs. 663lakh was the allotment to plan expenditure during the fourth five year
(1965-74). The major development program was the construction of outer harbor.

FIFTH FIVE YEAR PLAN:

During the plan, various development programs were undertaken with the amount of
Rs.558lakh for giving the better privileges/ benefits to the employees by undertaking of port
& railways system, construction of second storage to transit shed No.2, balance
miscellaneous works of the outer harbor projects, initiation of work in installation of
supervision equipment for ore handling complex, were too, undertaken at this time.

SIXTH FIVE YEAR PLAN:

The total expenditure of this plan was Rs.574lakh. The various activities for the development
of the V.P.T are installation of third wage Tripler, construction of additional mooring breath,
procurement of shipping tug of bollard pull 28 tones in replacement of tug procurement of
two member of 10 tones electric wharf cranes, construction of two ware house having the vast

20
capacity construction of oil berth in the outer harbor having the capacity accommodation of
150000 tones tanker too, was undertaken by the VPT during this plan.

SEVENTH FIVE YEAR PLAN:

During 1985-90 under this plan, the lump-sum expenditure stood at Rs.534lakh. The VPT
converted the west 1, 2&3 berths into regular quary berths having the price escalation of
Rs.13.46crore. Upgrading iron carries procurement of 30T B.P tugs Nagarjuna and dolphin,
procurement of high power locomotives as replacement.

EIGHTH FIVE YEAR PLAN:

Under the process of this plan, the VPT has undertaken a number of development activities. It
is proposed to take necessary steps for the procurement of number of electric wharf cranes of
10/15 tones capacity, one dredger for stand by pass. Procurement of two shipping tugs 30
tones each. Ballord pull, handling equipment together with UST top lift carriers two numbers
B.E.M.L. loader, one of four thousand T.P.H bucked wheel reclaimed and the other of
1000Ton capacity each twin wagon Tripler.

NINETH FIVE YEAR PLAN:

The development schemes include in this plan are construction of 4 multipurpose berths in
north‟s northern arm inner harbor at a coat of Rs.120crore and development of railway
system etc. the total outlay projected for this plan for VPT is about Rs.1178crore. To have
further development, port has drawn up a perspective plan for capacity augmentation and
organizational efficiency enhancement in pursuance of the above it has been taken up for
development of container of port infrastructure etc. with such as growth handles 47 million
tons of cargo.

PORT VISION:

Predicting the traffic for future and development of the port are riddles with many
imponderable, the same is dependent on so factor which are not in the control of trade or
ports. The factors are:
• Economic development.
• Technological & sociological changes.
• Government politics on import/export.
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 • Industrial development.
• Drought or good rain.
• Lacking infrastructure facilities such as road/ rail.

FACILITIES:
• Handling containers in a port regardless the following facilities
• Shore cranes at berths for unloading/loading containers  Tippers for bringing in/out
of containers.

FUTURE IMPROVEMENTS:

• In 1997-98 Mumbai handled a peak 6.01lakh TEUS which was now reduced to
3.07lakh in 2001-02. This down trend may continue in view of lack of facilities at
Mumbai.

• JNTP, not surprisingly, in view of limited berth space and bulk dividing have
proposed conversion of their 3 berths into container berths under BOT, concept for
Rs.700crores. They proposed to double the railway line from port is also activity
being pursued. This is bound to materialize and become operational in another 2-3
years.

• In Chennai the container berths are privatized a year after legal battles with the
employers, worker Chennai has potential to become a hub port.

• Visakhapatnam and Tuticorin have also leased their berths under privatization and
hence there is a scope for increased handling of containers.

• Cochin has developed container terminal with ADB funding and developed
Vadlapandam terminal as a transshipping port under privatization.

• Kandla port lost their chance of container handling improvements by P&O under
privatization concept, due to negative attitude shown by their employees. The

22
 privatization schemes hence feel through loss of this is a gain for Mumbai port where
again P&O is involved, in equipping and operating the container terminal with 2
berths.

DEFICIENCIES:
The deficiencies in the Indian port generally are:

• Ship has to wait for long in the channel for berthing.

• The productivity of loading/unloading is so low that ships waiting at berths increases

quite considerable compared to international standards.

• Ports handling is labor intensive are susceptible for not only low productivity but also
to the whims of labor. Lack of mechanized handling for bulk cargo.

• Desire to change the outmoded system lacking.

• Available equipment is outdated and hence has low efficiency.

• Capital maintenance dredging is not adequate.

• Berthing of ship navigation wait for high tides.

• Night navigation is not available hence the ships have to wait for daylight.

• Adequate and proper cranes are not available for handling containers.

• Insufficient yard for stacking/handling containers.

• Where cranes are available, the productivity is low, operating lack.

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 • Experience of the maintenance is lacking.

• The railways do not provide adequate tracks for easy movement of trains.

• The maintenance is lacking.

• Lack of ICD‟s facilities, where exists are insufficient.

• Due to resource crunch the development needed are lacking.

PRIVATISATION:
The resources crushes for port development have caused the port to go in privatization.
Privatization gives the following advantage to the port, to mention a few:

• Port development.
• Increased productivity.
• Better management.
• Flexibility in operation.
• Use of latest equipment.

Privatization concept was mainly successful at the hi-tech port-JNPT, where initially
container handling equipment was taken on lease which was essential for handling. But no
money was available. The new container terminal with a quality length of 600m yards,
equipment with Rs.900crore through P&O Australia who are pioneers in operation of
containers terminal. This gave competition to port caused fillip to other ports to convert the
bulk terminal VS private. The success caused fillip to other port to convert the bulk terminal
into container terminal under privatization concept. Cochin&Tuticorin, Chennai have
privatized concept. Cochin is planning to construct a new terminal at Vallarpadam under this
concept. Even they also exploring in for privatization. Still privatization is given negative
impact to the port employees. Fearing they job security. No wonder privatization of container
berths in Kandla had to be shelved by P&O.
Got delayed by years with a legal problem by a union. Hence, a chance in mindset is required
to yield the full results.

24
 CHAPTER-3

COMPANY PROFILE

COMPANY PROFILE

INTRODUCTION:
Visakhapatnam port trust, one of the leading ports of India, has been playing a vital role in
fostering country‟s foreign trade and economic development. Originally conceived as one
outlet for manganese, export in 1935, the port has gained strength, adapting itself to the needs
of fast changing sea transport systems strategically located on the east coast, the ports is not
only serving the commercial requirement of the country but also promoting industrialization

25
of the hinter land by acting as a catalyst for location of various types of port based industries,
VPT was opened for traffic. Now VPT is one of the 12thworking major ports in India.

LOCATION:
Visakhapatnam port trust, located strategically on the east coast of India, is one of the
preindependence ports of the country. The port is the natural port enclosed with deep water
basins and has been serving a vast & rich hinterland comprising of A.P, Orissa, M.P,
Maharashtra, and U.P.

The location of the port is very ideal in the cause that it affords protection from cyclones
which strikes the east coast regularly, by a high promontory into the sea known as Dolphin
nose and Ross hills which is to the south of the entrance channel & rose hill to the north of
the entrance channel, the low tidal range of a maximum of 1.82 MTs, is also advantageous to
the location of the port.

The port was opened to sea-going vessels in October.1933 at IH when the first ship S.S.
JALA DURGA landed the port. This port when commissioned in 1933-34 handled 1.3lakh
tons of cargo with 3 berths. It is a natural harbor with low tidal range of 1.52 meters of
maximum and offers safe anchorage of ships even during severe cyclones, which are common
phenomenon on each coast.

HISTORY OF VPT:

In 1858, the need for development of a port was emphasized in a report of British survey
team. Later, in the year 1877, the first detailed report was made on Visakhapatnam. The port
of the central provinces was established and started the construction of the port at
Visakhapatnam. However, the proposal was temporarily freezed due to the outbreak of First
World War. It was only in 1914 the proposal for construction harbor Visakhapatnam was
indicated. During 1922 Bengal Nagpur railways received the proposals for handling coal. The
Wright Reid of British admiral was appointed for the construction of inner harbor at
Meghadrigedda. The construction was started in 1929 and continued up to 1933. It was

26
opened to ocean traffic on 7th oct.1933 with the arrival of passenger ship SS JALA DURGA.
This port was formally inaugurated by Excellency Lord Wellington and the Viceroy and
Governor General of India formally inaugurated the port on 19 th December 1933. The port
was constructed at a cost of Rs.378lakhs.

Visakhapatnam port is one of the 12 major ports of India, is ideally located almost midway to
Kolkata and Chennai altitude of 17th degree 14 N and longitude 83 degree 18 E is a natural
port with the deep water basins and has been serving a vast and rich hinter land comprising
Andhra Pradesh, Orissa, Maharashtra and Uttar Pradesh.

The major ports are governed by the major ports Act 1963 and the Indian port trust Act 1908
and rules and regulations formed. Each major port has board of trustees representing various
interests connected with port operation and shipping industry. The Chairman of each Port
Trust is appointed by the Central Government.

SALIENT FEATURES OF VISAKHAPATNAM PORT:

• Tranquil deep water benefits to handle cape size vessels Suez Max and VLCC‟S.
• The only port on East Coast to accommodate post panama mainline container ships.
• Economical stevedoring costs.
• Highest output rated fast turnaround of ships.
• Responsive and transparent administration.
• Self sufficient port with sound financial position.
• Dedicated facilities for bulk handling.
• Programmatic and constructive approach of trade unions.
• Excellent communication facilities.
• Easy availability of open/covered storage.
• Ambitious expansion plans with emphasis on modernization.
• Natural positional advantage for trading with countries like Bangladesh, Myanmar,
South East Asia and Far East and West coast of USA and Canada.
• Can full fill the role of nodal port on East Coast by acting as a distribution center to
other ports on East Coast /ports of neighboring countries.

NOTABLE EVENTS OF VPT:

27
 • Received “BEST OF THE NATION” award in 1988-89 for highest scale of
efficiency.
• Emerged as premier port of the country in 2000-01.
• Secured grade in “Efficiency Parameters” compared to the targets set by the Ministry
of shipping, Government of Indi, New Delhi.

OBJECTIVES OF VPT:
The following are the main objectives of Visakhapatnam port trust:
• The quick turn-around time of ships.
• The fast clearance of cargo.
• Cost effective service by exemption of levy on all export cargos.
• For regular container feeder services.
• To be the fast growing port in the country.
• To adopt a participative style of management resulting in a safe and healthy working
environment increased production and productivity and goodwill amongst all the
employees.
• To strive towards improving quality of life of employees and their families.
• To secure adequate return on the capital invested and generated internal resources to
finance further development.

NATURAL HARBOUR:

Visakhapatnam port is a natural harbor in the sense that is surrounded by chains of hill,
providing a safe anchorage to ships. Notable among the chains of the hills, Dolphin‟s Nose is
the main hill with regard to provide protection during cyclones which strikes the east coast
during November normally.

HARBOUR FACILITIES AT VISAKHAPATNAM PORT TRUST:

28
The Visakhapatnam Port harbor is divided into three harbors. They are Inner harbor, Outer
harbor and Fishing harbor. It also has a Railway system and shipping facilities including 27
berths, 3 jetties and 2 moorings and several marine services. Visakhapatnam port trust plays
an important role in exports and imports also.

INNER HARBOUR:
The Inner harbor has an entrance channel which consists of 3 navigable arms. It has been
functioning since 1933. The Inner harbor has 12 quay berths i.e. multi commodity berths
(EQ-1 TO EQ-10), (WQ-1 TO WQ-5) 2 oil berths (OR-1, OR-2) and one fertilizer berth.

Apart from the above there are three more berths have been recently constructed at the Inner
harbor. They are east quay -10 berth, West quay-6 berth and west quary-7&8 berths. Inner
harbor water spread area 100 hectares and land area -3.881 hectares.

OUTER HARBOUR:
The port has outer harbor functioning since 1976. It has a projected basin of 200 hectares
encompassed by a part of breaking water of length 3.025 lanes on the eastern, southern, and
northern sides and two berths on the two sides. The depth of the outer harbor is 16 METERS
to 270 METERS. The vessel size up to 130 D.W.T. can be berthed in outer harbor. In outer
harbor there are Container Berth, General Cargo Berth and Ore Berths, OSTT and SPM
facility. Inner harbor water spread area is 200 hectares.

FISHING HARBOUR:
The First stage of fishing harbor at Visakhapatnam Outer harbor was commenced in April
1978 with land area of 28 acres, water spread of 40 acres, which includes a draft of 7.5 acres.
The quay length is 1624 meters.

MAIN ACTIVITIES OF PORT:

The main activities of port are:

29
 • Maintenance of port approaches, navigable channels and dredging, conservancy,
hydro graphic surveys.
• Pilotage towards berthing and unberthing of visiting ships.
• Handling, warehousing and transportation of goods in port area.
• Civil, mechanical and electrical engineering and maintenance and navigation.
• Fire fighting.
• Stores.
• Medical, welfare, housing etc.
• Management of port properties and estates.

To carry out various activities each port engages different types of labor. The workers
employed by the port authorities are generally known as “Port Workers” and they work on
shore. For working on board the workers register with Dock Labor Board known as “Dock
Labor” are engaged. There will be large number of work force besides equipment etc.
Organization requires high degree of skill, coordination, cordial relations etc. for the
successful operation of port. So training takes place a very important role in human resources
development of VPT.

VARIOUS DEPARTMENTS OF VPT:

In VPT various departments are set up to carry out their regular activities in a sequential order
with any disturbance. These departments are 8 in number. These departments are categorized
under two types.
They are
1. Non-operational department.
2. Operational department.

GENERAL ADMINISTRATION DEPARTMENT:

The department is under the control of the Secretary. The Secretary and its attorney are
independent charge of administration. It is an important department through which matters
are placed before the Board of the Government.

ACCOUNTS DEPARTMENT:
The Accounts department is under the control of the Financial Advisor and Chief Accounts
Officer. This department deals with receipts and expenditure of the port and deals with the

30
day to day financial functions of the port. The Financial Advisor acts as the cheque drawing
authority of the port trust and is responsible for the drawing and disbursement of money.

MEDICAL DEPARTMENT:
Medical department is under the control of Chief Medical Officer. He is in charge of the
Golden Jubilee Hospital equipped with complete range of medical instruments and
equipment‟s for diagnosis to keep good health of port employees. 15 medical officers and 6
lady doctors assist him. CMO is in charge of various dispensaries and looks after for the
medical facilities of the port employees and their families. These are dispensaries located at
Kancharapalem, Malkapuram and Chinna - Mushudiwada housing colonies and also at the
port operational area.

MARINE DEPARTMENT:
This is another department which is under the control of Deputy Conservator. He is in charge
of navigable depth of port, dredging, shipping movements in ports.

CIVIL ENGINEERING DEPARTMENT:

Civil engineering department is under the control of Chief Engineer who is assisted by
Deputy Chief Engineer, to look after the works maintenance and management of port
buildings. The department attends to all capital and revenue works. It is also attends to water
supply, maintenance and up keep of port, building and department structures and also the
railway.

MECHANICAL AND ELECTRICAL ENGINEERING DEPARTMENT:

The department is under the control of Chief Mechanical Engineer. He is in charge of port
work shop, M.V section, M.C section, ORS, BG LOCOS and electrical maintenance section.
He is also the in charge of the Ore Handling Plant and is assisted by plant superintendent.

TRAFFIC DEPARTMENT:
Traffic Manager is the head of this department. He looks after cargo handling.

31
Activities of vessels by sea or land within the port.
It deals with import and export cargo and supply of cranes and collection of shipping and
other dues as per the port schedule of charges.

VIGILANCE DEPARTMENT:
It is headed by Chief Vigilance Officer and looks after the vigilance matter.

ORGANIZATIONAL STRUCTURE

Organizational setup of VPT

Board of trustees

Chairman

Deputy Chairman

Head of the department

Deputy Head of the department

Section Officer

Sections

DEPARTMENTS IN THE ORGANIZATION

Chairman

Deputy Chairman

32
 Non - Operational Operational
Administration Department Traffic department
Vigilance Department Marine Department
Medical Department Mechanical
Department
Accounts department Civil engineering
Dept

ORGANIZATIONAL STRUCTURE OF VPT:

VPT is managed by board of trustees constructed under the Major Port Trust Act 1963. The
Port Trust Board constitutes chairman, a Deputy Chairman and the following MEMBERS.
Trustees appointed by the government in India are shown below:

• Chairman.
• Deputy Chairman.
• Trustee representing the ministry of shipping.
• Trustees representing the Indian railways.
• Trustees representing the Deputy of customs.
• Trustees representing the mercantile marine department.
• Trustees representing other interests.
• Trustees representing the Visakhapatnam Management Association (shippers).
• Trustees representing the labor unions.
• Trustees representing the defense services.
• Trustees representing the Hindustan Petroleum Corporation LTD, Visakhapatnam.
• Trustees representing the National Mineral Development Corporation LTD.

• Trustees representing the Federation of Madhya Pradesh Chamber of Commerce &

Industry (shippers).

RECENT AWARDS & ACHIEVEMENTS:

• The only Indian port to have three international certifications.

• ISO 9001 –quality Management three international System.

33
• ISD 149091 – Environmental Management System.

• OHSAS 18001- Occupational Health and Safety Management System.

• Ranked FIRST among the Indian major port in.

• Terms of annual cargo throughput, for six consecutive financial years throughout
handled in 2005-06 was 55.80 million tones.

• Complimented by the ministry of shipping, government of India as JEWEL among all

the major ports of India.

• INTERNATIONAL SAFETY AWARD for outstanding performance in industrial for

five consecutive years.

• Winners for the year 2002.

• Runners for the year 2003, 2001, 2000, 1999.

• GREENTECH SILVER AWARD for safety for the year 2007.

• GREENTECH GOLD AWARD for environment management for the year 2007.

• The port has also been received GREENTECH SAFETY AWARD gold for the year
2009 in the service for the outstanding achievement in environment management for
the performance year 2008-09.

• GREENTECH GOLD AWARG for the environment excellence for the year 2011.

• GATEWAT AWARD of excellence for achieving high levels of productivity and

customer satisfaction during the year 2010-11.

34
DETAILS OF PORT AREA:
• Total water spread -300 hectares
• Inner harbour -100 hectares
• Total reclaimed -3537 hectares

EVOLUTION OF VISAKHAPATNAM PORT:

ADMINISTRATION:

The administration of Visakhapatnam port which was under the Bengal, Nagpur Railways in
1933 passed through different departments & ministries of the Govt. as under.

Railway board - 1933-35

Commerce department - 1935-37

Communication department - 1937-42

War transport - 1942-44 Defense

department - 1944-46

Bengal board - 1946-56

Ministry of transport - 1956-64

Trust under MMPT Act - 1964

CHRONOLOGY OF MAJOR DEVELOPMENTS:

1951-61:

• Construction of three jetty berths (Wj-1,2 &3)

• Construction of one quay berth (EQ-4)
• Construction of oil wharf consisting two oil berths (OR-1&2) 1961-71:
• Commissioning of two captive iron ore berths WOB-1 (now WQ-4)
• Commissioning of captive fertilizer berths (FB)  Commissioning of ore handling
plant.
• Commissioning of EQ-5 &EQ-6.
• Commissioning of Visakhapatnam Port Trust.

35
 • Commencement of night navigation.

1971-81:
• Commissioning of new oil mooring to accommodate large crude ships.
• Commissioning of outer harbor and berths (OB-1 & OB-2) to accommodate ships of
size 150,000DWT.

1981-91:

• Construction of an offshore tanker terminal (OSTT) in the outer harbor to

accommodate crude tankers up to 150,000DWT.
• Construction of a general-cum bulk cargo berth to caber to ships up to 60,000DWT.

1991-2001:
• Conversion of the jetty berths WJ-1, 2&3 into a regular quay berth with more width.
• Commissioning of a multipurpose berth EQ-7 in the inner harbor.
• Commissioning of multipurpose berth in the outer harbor (now container terminal)
• Construction of an exclusive and specialized terminal for discharging LPG from gas
carriers at the outer harbor.

2001-2010:
• Commencement of operation of the first BOT project- container terminal at outer
harbor concessioner to Visakha container terminal private LTD.
• Development of two new berths in the extended Northern arm of inner harbour (EQ 8
& E) on BOT basis by M/s. Vizag sea port PVT LTD.
• Commissioning of multipurpose berth WQ-7 in the inner harbor.
• Navigation of first PANAMAX vessel into inner harbor.
• Commissioning of the LPG covers facility.
• Merging of Visakhapatnam Dock Labor Board with Visakhapatnam Port Trust.
Widening the entrance of IH to 111mtrs and permissible draft upto 14.5 meters‟
• Installation of 2 no‟s harbor mobile cranes at west quay berths of the inner harbor on
hire basis.

36
2010-16:

Award of PPP works related to GCB, WQB, EQ-10, EQ-1&1A, Ore Handling Plant etc.,

CHAPTER-4

THEORITICAL FRAME WORK OF STUDY

THEORETICAL FRAMEWORK

INTRODUCTION:

• Ratio analysis is very important in fundamental analysis, which investigates the

financial health of the companies. An example of ratio analysis is the comparison of
price earnings ratios of different companies share prices properly reflect their

37
 performances and therefore basing on ratio analysis one can decide, what investments
are most likely to be the most profitable.

• A way of expressing relationships between a firm‟s accounting numbers and their

trends overtime that analysis use to establish values and evaluate risks.

• A study of the relationships between financial variables. Ratios of one firm are often
compared with the same ratios of similar firms or of all firms in a single industry.
This comparison indicates of a particular firm‟s financial statistics are support.
Likewise, a particular ratio for a firm may be evaluated over a period of time to
determine if any special trend.

• Ratio analysis is a widely used tool of financial analysis. It is defined as the

systematic use of ratio to interpret the financial statements so that the strength and
weaknesses of a firm as well as its historical performance and current financial
condition can be determined. The term ratio refers to the numerical or quantitative
relationship between two variables.

• Ratio analysis is a name given to the financial statements analysis using the ratio of
two financial statements that are related to each other.

• Ratio analysis is a scientific attempt devised by intelligent to reasonably predict the

future outcome of investment. As true as this may be, investors still need to use ratio
analysis with caution.

• Ratio analysis is widely used in practice in business. Teams of investment analysis

pour over the historical and forecast financial Information of quoted companies using
ratio analysis as part of their toolkit of methods for assessing financial performance.
Venture capitalists and banker use the ratios featured here and others when they
consider investing in or loaning to businesses.

38
 • The main strength of ratio analysis Is that it encourages a systematic approach to
analyzing performance.

SIGNIFICANCE OF RATIO ANALYSIS:

• It helps in evaluating the firm’s performance:

With the help of ratio analysis conclusions can be drawn regarding several aspects such as
financial health, profitability and operational efficiency of the undertaking. Ratio points out
the operating efficiency of the firm i.e. whether the management has utilized the firm‟s assets
correctly, to increase the investor‟s wealth. It ensures a fair return to its owners and secures
optimum utilization of firm‟s assets.

• It simplifies financial statements:

The information given in the financial statements serves no useful purpose unless it is
interrupted and analyzed in some comparable terms. The ratio analysis is one of the tools in
the hands of those who want to know something more from the financial statements in the
simplified manner.

• It helps in inter-firm comparison:

Ratio analysis helps in inter-firm comparison by providing necessary data. An inter-firm
comparison indicates relative position. It provides the relevant data for the comparison of the
performance of different departments. If comparison shows a variance, the possible reasons
of variations may be identified and if results are negative, the action may be initiated
immediately to bring them in line.

IMPORTANCE OF RATIO ANALYSIS:

• For Short Term Creditors:

The Short - term creditors like bankers and suppliers of materials can be determine the
firm‟s ability to meet its current obligation with the help of liquidity ratio and quick ratio.

39
 • For Long Term Creditors:
The Long - term creditors like debenture holders and financial institutions can determine the
firm‟s long term financial strength and survival with the help of leverage or capital structure
ratio as debt equity ratio.

• For the Management:

The Management can determine the operating efficiency with the firm is utilizing its various
in generating the sales revenues with the help of activity ratio such as capital turnover ratio,
stock turnover ratio etc.

• For Investors:
The Investors can determine the magnitude and direction of the movement in firm‟s earning

with the help of profitability ratio such as earning per share etc.

• Analyzing financial statements:

Ratio analysis is an important technique of financial statement analysis. Accounting ratios are
useful for understanding the financial position of the company.

• Judging efficiency:

Accounting ratios are important for judging the company‟s efficiency in terms of its
operations and management. They help judge how well the company has been able to utilize
its assets and earn profits.

• Locating weakness:
AR can also be used in locating weakness of the company management can then pay attention
to the weakness and take remedial measures to overcome them.

• Formulating plans:
Although AR is used to analyze the company‟s past financial performance, they can also be
used to establish future trends of its financial performance. As a result they help formulate the
company‟s future plans.
40
 • Comparing performance:
It is essential for a company to know how well it is performing over the years and as

compared to the other firms of the similar nature.

ADVANTAGES OF RATIO ANALYSIS:

• Ratio analysis provides an excellent and comprehensive first step towards gaining

insight into a firm‟s performance, strengths and weak points.

• Helpful in decision making.

• Helpful In financial forecasting and planning.

• Helpful in communication.

• Helpful in co-ordination.

• Helps in control.

• Helpful for shareholder‟s decisions.

• Helpful for creditor‟s decisions.

• Helpful for employees‟ decisions.

• Helpful for govt. decisions.

DISADVANTAGES:

• Problem in getting comparable information.

• Use of outdated information.

• Ratios are subjective.

• Analysis cannot be used in isolation.

• Ratios are not definite.

• Ratios have no standard form.

41
LIMITATIONS OF RATIO ANALYSIS:

• While ratio analysis can be great for comparison between companies, however if there
is only one company then ratio analysis can be misleading.

• Since ratio analysis is done from the data in the financial statements like profit and
loss and balance sheet, in case of any mistakes in those financial statements will
reflect in the ratios also.

• Since ratios are easy to manipulate they are misused by mangers for window dressing;
window dressing refers to presenting of better picture of the company than what it is.

• Ratio analysis does not take into account the qualitative factors; it only presents the
figures as they are. So for example it may possible that company may have higher
current ratio indicating that liquidity position of the company is good, however if
large portion of those current asset includes inventory then it does not mean a sound
liquidity position.

• Ratios are not same for everybody that is different people have different perception
regarding the ratios. So a current ratio of 2:1 may be good for some people, however
some people may think it is not adequate.

TYPES OF RATIO ANALYSIS:

• LIQUIDITY RATIO:
The term Liquidity refers to the firm‟s ability to meet its Current Liabilities. A firm should
ensure that it does not suffer from lack of liquidity and that it is not too highly liquid. The
failure of a firm to meet its obligations due to lack of sufficient liquidity will result in closure
of the firm. A very high degree of liquidity is also bad as idle assets earn nothing. The firm‟s
funds will necessarily get locked up in the current assets. Therefore it is necessary to strike a
proper balance between liquidity and non-liquidity. The ratios which reflect the short term
solvency of a business unit are current ratio, quick ratio, working capital, turnover ratio, stock
turnover ratio, debtor turnover ratio, creditors turnover ratio, fixed assets turnover ratio etc.

42
The most common ratio which indicates the extent of liquidity or lack of it:
• Current ratio
• Quick ratio or Acid test ratio
• Cash ratio
• Networking capital ratio

• CURRENT RATIO:
Current ratio is defined as the Ratio of Current assets to Current liabilities. It shows the
relationship between total current assets and total current liabilities. It is a measure of the
firm‟s short - term solvency.

The current ratio is also called the working capital ratio. As working capital is the difference
between current assets and current liabilities. This ratio measures the ability of a company to
pay its current obligations using current assets. The current ratio is calculated by dividing
current assets by current liabilities. A relative high ratio is an indication that the company is
having high liquidity position and has the ability to pay its current obligation in time as when
they became due.

Current ratio =

This ratio indicates the company has more current assets than current liabilities. Different
industries have different levels of expected liquidity. Whether the ratio is considered adequate
coverage depends on the type of business, the components of its current assets and the ability
of the company to generate cash from its receivables and by selling inventory.

 ACID TEST RATIO:

Liquid ratio is the ratio of liquids (quick assets) to current liabilities. It establishes the
relationship between quick assets and current liabilities. It is also called acid test ratio.
The Acid test ratio is also called the Quick ratio. Quick assets are defined as cash, marketable
(or short term) securities and accounts receivable and notes receivable, net of the allowances
for doubtful accounts. These assets are considered to be very liquid (easy to obtain cash from
assets) and therefore, available for immediate use to pay obligations. The acid test ratio is
calculated by dividing quick assets by current liabilities.

43
Acid test ratio =

The traditional rule of thumb for this ratio has been 1:1. Anything below this level requires
further analysis of receivables to understand how often the company turns them into cash. It
may also indicate the company needs to establish a line of credit with a financial institution to
ensure the company has access to cash when it needs to pay its obligations.

 CASH RATIO:

Cash ratio establishes a relationship between cash and cash equivalents and current liabilities.
To get the cash ratio only absolute liquid assets and readily realizable securities are taken into
considerations. Indicates a conservative view of liquidity such as when a company has
pledged its receivables and its inventory, or the analyst suspect severe liquidity problems with
inventory and receivables.

A cash ratio of 0.5 to 1 is considers as satisfactory.

Cash ratio=

• NET WORKING CAPITAL:

Working capital ratio is the difference between current assets and current liabilities. The
amount of working capital is sometime used as a measure of the firm‟s liquidity. It is
considered that if a firm has more working capital ratios has the greater ability to meet its

current obligations.

Working capital= Current Assets – Current Liabilities.

• LEVERAGE RATIO:
44
The short - term creditors like banks and suppliers of raw materials are interested in the short
term solvency of a firm. For example of short term solvency or the current financial position,
liquidity ratios are used. The shareholders, debenture holders and other long - term creditors
like financial institutions are more interested in the long term financial position or long - term
solvency of a firm. Leverage or solvency ratios are used for such an analysis. These ratios are
also used to analyze for capital structure of a company. That is only these are also called
capital structure ratios. The term solvency generally refers to the firm ability to pay the
interest regularly and repay the principal amount of debt on due date.
There are two aspects of long term solvency of a firm:

• Ability to repay the principal amount of loan on the due date and  Regular payment
of interest.

Accordingly, there are two types of leverage ratios. The first type of leverage ratios is based
on the relationship between owned capital and borrowed capital. These ratios are calculated
from the balance sheet items. The second type of leverage ratios is coverage ratios. These are
computed from the profit and loss account.

The important leverage ratios, which are calculated from balance sheet items to determine the
proportion of debt in total finance is:

• Debt-equity ratio.
• Total debt ratio.
• Capital employed to network.
• Other debt ratio-total liability to total assets ratio.

• DEBT – EQUITY RATIO:

Debt-equity ratio shows the relationship between total debts and owned capital. It is the ratio
of the amount invested by outside to the amount invested by the shareholders. It is known as
external – internal equity ratio. This ratio reflects claims of shareholders and creditors against
the assets of a company alternatively; this ratio indicates the relative proportion of debt and
equity in financing the assets of a company.

45
Debt equity ratio =

 TOTAL DEBT RATIO:

The total debt ratio can be calculated by dividing total debt by capital employed or total net
assets. The total debt will include short and long - term borrowings from financial institution.
Capital employed will include total debt and net worth or net assets consists of net fixed(long
term) assets minus current liabilities excluding interest bearing short term debt.

Total debt ratio =

 CAPITAL EMPLOYED TO NET WORTH RATIO:

The ratio can be calculated by dividing capital employed or net assets by net worth. Network

includes share capital and; reserves and surplus.

Generally capital employed or net worth ratio should be more than 1.

Capital employed of net assets=

• TOTAL LIABILITY RATIO:

While contributing the leverage ratios to the current liabilities are excluded even though it is
one of the important elements in the balance sheet and it creates short term liability to the
firm.

One may like to introduce these current liabilities for computation leverage ratios on the
ground that they are important determinants of the firm‟s financial risk. They represent
obligation and exert pressure on the firm and restrict its activities

46
 • ACTIVITY RATIOS:
The funds of creditors and owners are invested in various kinds of assets of generate sales and
profits. The better the management of assets the larger the amount of sales.So the activity
ratio are employed to evaluate the efficiency with which the firm managers and utilize its
assets. These ratios are also called as turnover ratios because they indicate the speed with
which assets as being converted or turned over into sales. Several activity ratios can be
computed for evaluating the effective utilization of assets.

• Inventory turnover ratio.

• Debtor turnover ratio.
• Capital employed or net assets turnover ratio.
• Total assets turnover ratio
• Current turnover ratio
• Working capital turnover ratio
• INVENTORY TURNOVER RATIO:

The inventory turnover ratio measures the number of times the company sells its inventory
during the period. It is calculated by dividing the cost of goods sold by average inventory.
Average inventory is calculated by adding beginning inventory and ending inventory and
dividing by 2.

If the company is cyclic, an average calculated on a reasonable basis for the company‟s

operations should be used such as monthly or quarterly.

Inventory turnover ratio =

 TOTAL ASSETS TURNOVER RATIO:

Measure the activity of the assets and the ability of the business to generate sales through the
use of the assets.

47
This ratio shows the firm‟s ability is generating sales from all financial resources committed
to total assets. This ratio is calculated by dividing sales by total assets of the firm.

Total assets turnover ratio =

• FIXED ASSETS TURNOVER RATIO:

Measure the capacity utilization and the quality of fixed assets. This ratio measures the
efficiency of the firm utilizing its investments in fixed assets such as land and buildings. Plant
and machinery, furniture etc. it also indicate the adequacy of sales relation to the investment
in fixed assets.

Generally, a high fixed turnover ratio indicates efficient utilization of fixed assets in
generating sales while a low ratio indicates inefficient management and utilization of fixed
assets.

• CURRENT ASSETS TURNOVER RATIO:

Current assets turnover ratio is measured to know firm‟s efficiency of utilizing of investments

in current assets.

Current assets turnover ratio=

 WORKING CAPITAL TURNOVER RATIO:

The ratio show the firm is able to generate sales by using its limited resources of working

capital.

Networking capital turnover ratio=

48
 • PROFITABILITY RATIOS:
Profitability ratios can be determined on the basis of Operating Income and Investments.

In Relation to Operating Income:

• Gross profit ratio

• Net profit ratio  Operating expenses ratio

• Operating profit ratio.

In Relation to Investments:
• Return of capital

• Return of shareholder equity

• Return of total assets

• Earnings per share.

IN RELATION TO OPERATING INCOME:

• GROSS PROFIT RATIO:

It is the first profitability ratio calculated in relation to operating income. This ratio can be
called as gross profit margin or gross margin ratio. This ratio establishes a relationship
between gross profit and operating income to measure the efficiency of the firm and it reflects
its pricing policy.

49
The ratio is calculated by dividing the gross profit by operating income. A high gross profit
margin indicates that the firm is able to produce at relatively lower cost and it is also a sign of
good management.

Whereas, a low gross profit margin reflects a higher cost of goods sold due to the firm
inefficient management.

Gross profit ratio =

This ratio indicates on an average gross margin earned on a scale of Rs.100. Higher the ratio
better will be the performance.Gross profit which is excess of net operating income over cost
of goods sold.

 NET PROFIT RATIO:

Net profit ratio measures the relationship between the net profit & operating income. It
indicates the result of overall operation of the firm.

This ratio is computed by dividing the net profit by the net operating income.

This expressed as a percentage. Its formula is as follows.

Net profit ratio =

This ratio indicates on an average net margin earned on a scale of Rs.100

Higher is the ratio greater is the capacity of the firm to withstand adverse economic

conditions.

50
 • OPERATING PROFIT RATIO:
Operating profit ratio measures the relationship between operating profit and net operating
income. This ratio is computed by dividing the operating profit by the net operating income
and expressed as percentage.

Operating profit ratio=

Operating profit is the excess of gross profit over other operating expenses. The main
objective of computing this ratio is to determine the operating efficiency of the management.

• OPERATING EXPENSES RATIO:

This ratio measures the relation between operating expenses and operating income. It also
explains the changes in profit margins (EBIT to operating income) ratio.

This Operatingexpenses ratio is a yardstick of operating efficiency but it should be used

continuously. Further, the operating ratio cannot be used as a test of financial conditions in
case of those firms where non - operating revenues and expenses form a substantial part of
the total income.

This ratio can be calculated by dividing by operating income.

Operating expenses include cost of goods sold plus selling expenses, general and
administrative expenses(Excluding interest, taxes etc).

A higher operating expenses ratio is unfavorable since it leaves a small amount of operating
income to meet interest dividends etc.

A lower operating expenses ratio is favorable because it will have large amount to meet
necessary needs of the firm.

51
Operating expenses ratio

IN RELATION TO INVESTMENTS:

• RETURN ON CAPITAL EMPLOYED:

This ratio illustrates that how much return is learned in the firm of net profit after taxes out of
the total capital employed. The capital employed is nothing but the combination of both
noncurrent liabilities and owners‟ equity.

The ratio expresses the relationship in between the total earnings after taxation and the total
volume of capital employed.

Return on total capital employed:

Total capital employed/net profit after taxes

Standard norms of the ratio:

Higher the ratio is better the utilization of the long term funds raised under the capital
structure means that greater profits are earned out of the total capital employed.

• RETURN ON SHAREHOLDERS EQUITY:

Return on shareholder equity is calculated to see the profits earned by the firms or owners

investments. The shareholder equity will include the paidup share capital, share premium and

reserves and surplus less accumulated losses. In other words, shareholder equity is sometimes

called as net worth and it can also be found by subtracting total liabilities from total assets.

But the net worth refers to the market value of the owners equity is recorded at book value in

the balance sheet.

52
The return on share holder equity is calculated by net profit after tax divided by share holder
equity or net worth.

Return on shareholder equity =

• EARNINGS PER SHARE:

Earnings per share are the net profit after tax and preferences dividend which is earned on
capital representative of one equity share. It is calculated as

Profit after tax- preference dividend number of equity shares.

The EPS, the better is the performance of the company. The EPS is one of the driving factors
in investment analysis and perhaps the most widely calculated ratio amongst all ratios used
for financial analysis.

• RETURN ON TOTAL ASSETS RATIO:

It is calculated as

Return on total assets ratio

Total assets do not include fictitious assets.The higher ratio the better it is.

53
 CHAPTER-5

DATA ANALYSIS
&
INTERPRETATION

54
DATA ANALYSIS AND INTERPRETATION OF THE STUDY

• CURRENT RATIO:
TABLE 4.1
CURRENT RATIO Rs in Cr
Year Current assets Current liabilities Ratio
2016-17 2075.63 2117.03 0.98
2017-18 2052.89 2150.09 0.95

2018-19 1874.94 2205.74 0.85

2019-20 2253.30 2376.12 0.95

2020-21 2312.76 2021.13 1.14

GRAPH 4 .1

1.2 CURRENT RATIO

1
0.8
0.6
0.4 Ratio
0.2
0
2016-17 2017-18 2018-19 2019-20 2020-21
Ratio 0.98 0.95 0.85 0.95 1.14

INTERPRETATION:
Graph 4.1 presents current ratio during the period 2016-17 to 2020-21. The ideal ratio for
current ratio is 2:1. A relatively high current ratio is an indication that the firm is liquid and
has ability to pay its current obligations in time as and when they become due. On the other
hand a relatively low current ratio represents that the liquidity position of the firm is not good
and firm shall not be able to pay its current liabilities in time without facing difficulties. From
the above graph it can be interpreted that the ratio has been decreased from 0.98 in 2016-17 to
0.85 in 2018-19. But in later years i.e. from 2019-20 to 2020-21 the ratio has been increased

55
from 0.95 to 1.1. An increase in the current ratio represents improvement in the liquidity
position of the firm.
• QUICK RATIO:
TABLE 4.2
QUICK RATIORs in Cr
Year Quick assets Current Ratio
liabilities
2016-17 2055.41 2117.03 0.97

2017-18 2028.73 2150.09 0.94

2018-19 1847.17 2205.74 0.84

2019-20 2225.19 2376.12 0.94

2020-21 2289.80 2021.13 1.13

QUICK RATI O
1.2
1
0.8
0.6
0.4
0.2
0
2016-17 2017-18 2018-19 2019-20 2020-21
Series 1 0.97 0.94 0.84 0.94 1.13
GRAPH4.2

INTERPRETATION:
Graph 4.2 presents quick ratio during the period 2016-17 to 2020-21. The ideal ratio for quick
ratio is 1:1. A high quick ratio is an indication that the firm is liquid and has ability to meet its
current or liquid liabilities in time and on the other hand, a low quick ratio represents that the
firm‟s liquidity position is not good. From the above graph it can be interpreted that the ratio
has been decreased from 0.97 in 2016-17 to 0.84 in 2018-19. But in later years i.e. from

56
2019-20 to 2020-21 the ratio has been increased from 0.94 to 1.13. An increase in the quick
ratio represents the firm has the ability to meet its current or liquid liabilities in time.

• DEBTORS TURNOVER RATIO:

TABLE 4.3
DEBTORS TURNOVER RATIORs in Cr
Operating Average Ratios

Year Income debtors

917.58 441.81 2.08
2016-17
1063.81 448.43 2.37
2017-18
2018-19 1201.39 394.52 3.05

1404.18 396.24 3.54

2019-20
1436.86 364.15 3.94
2020-21
GRAPH4.3
5

4 DEBTORS TURNOVER RATIO

3

2016-17 2017-18 2018-19 2019-20 2020-21

ratio 2.08 2.37 ratio 3.54 3.94
3.05

57
INTERPRETATION:

Graph 4.3 presents debtors turnover ratio during the period 2016-17 to 2020-21. Debtors
turnover ratio indicates the number of times the debtors turned each year. A high turnover
indicates an efficient credit management system and the company is able to convert its
receivables into cash. From the above graph it can be interpreted that the ratio has been
increasing from 2016-17.

• AVERAGE COLLECTION PERIOD:

TABLE 4.4

AVERAGE COLLECTION PERIOD

Year No. of days in Debtor’s Average

a year turnover collection
ratio period
2016-17 366 2.08 175.75

2017-18 365 2.37 153.86

2018-19 365 3.05 119.86

2019-20 365 3.54 103.11

2020-21 365 3.94 92.63

GRAPH.4 .4
AVERAGE COLLECTION PERIOD
200
150
100
50
0
2016-17 2017-18 2018-19 2019-20 2020-21
Average collection period

INTERPRETATION:

58
Graph 4.4 presents average collection period during the period 2016-17 to 2020-21. From the
above graph it can be observed that the collection period is increased in the year 2016-17 but
certainly it started decreasing from the year 2017-18. The average collection period is low
means it is good to the company. It means that the company can collect accounts relatively
quickly.

• FIXED ASSETS TURNOVER RATIO:

TABLE 4.5

FIXED ASSETS TURNOVER RATIORs in Cr

Year Operating Fixed Ratio
income assets
2016-17 917.58 1305.50 0.70

2017-18 1063.81 1415.06 0.75

2018-19 1201.39 1711.61 0.70

2019-20 1404.18 1905.14 0.74

2020-21 1436.86 2102.70 0.68

GRAPH4.5

0.76 FIXED ASSETS TURNOVER RATIO

0.74
0.72
0.7
0.68 Ratio

0.66
0.64
2016-17 2017-18 2018-19 2019-20 2020-21
Ratio 0.7 0.75 0.7 0.74 0.68

INTERPRETATION:

59
Graph 4.5 presents fixed assets turnover ratio during the period 2016-17 to 2020-21. The
fixed assets turnover ratio indicates the number of times fixed assets has been fixed over. The
highest the ratio the more efficient has been the utilization of fixed assets. On the other hand,
a low turnover ratio might be an indication of over capitalization. From the above graph it can
be interpreted that the ratio has been increased in the year 2017-18 and then certainly
decreased to 0.70 in the year 2018-19. But in the later year i.e. 2019-20 it increased to 0.74
and then certainly decreased to 0.68 in the year 2020-21. Therefore, it indicates that the
company is having less efficiency to utilize fixed assets as the ratio stands at 0.68 in 2020-21.

• GROSS PROFIT RATIO:

TABLE 4.6
GROSS PROFIT RATIORs in Cr
Year Gross profit Operating Ratio
income
2016-17 385.94 917.58 0.42
2017-18 522.11 1063.81 0.49
2018-19 610.38 1201.39 0.50
2019-20 741.62 1404.18 0.52
2020-21 782.69 1436.86 0.54
GRAPH.4 .6

GROSS PROFIT RATIO

0.60

0.50

0.40

0.30 Ratio

0.20

0.10

0.00
2016-17 2017-18 2018-19 2019-20 2020-21

INTERPRETATION:
60
Graph 4.6 presents gross profit ratio during the period 2016-17 to 2020-21. There is no ideal
ratio or standard gross profit ratio. The higher the ratio is better the performance of the
business. From the above graph it can be interpreted that the ratio has increased from 2016-17
to 2020-21 i.e. 0.42 to 0.54.

• NET PROFIT RATIO:

TABLE 4.7
NET PROFIT
Year Net profit Operating Ratio
income
2016-17 23.04 917.58 0.02

2017-18 195.87 1063.81 0.18

2018-19 124.51 1201.39 0.10

2019-20 274.39 1404.18 0.19

2020-21 240.63 1436.86 0.16

RATIORsinCR
GRAPH 4.7

NET PROFIT RATIO

0.20

0.15

0.10
RATIO
0.05

0.00
2016-17 2017-18 2018-19 2019-20 2020-21
RATIO 0.02 0.18 0.10 0.19 0.16

61
INTERPRETATION:
Graph 4.7 presents net profit ratio during the period 2016-17 to 2020-21. The ratio establishes
the relationship between operating income and net profit and it indicates the management
efficiency in manufacturing, administration and selling. Higher the ratio is the better
performance of the business. From the above graph it can be interpreted that the ratio has
been improved from 2017-18 drastically and reached at 0.18 which is good, indicator of
profit. In the later year i.e. 2018-19 the ratio has been decreased to 0.10. but in the later year
i.e. 2019-20 it increased to 0.19 and then certainly decreased to 0.16 in the year 2020-21.

• OPERATING RATIO:
TABLE 4.8
OPERATING RATIO Rs in Cr
Year Operating Operating Ratio
expenditure income
2016-17 531.64 917.58 0.58

2017-18 541.70 1063.81 0.51

2018-19 591.01 1201.39 0.49

2019-20 662.55 1404.18 0.47
2020-21 654.16 1436.86 0.45

GRAPH.4 .8

OPERATING RATIO
0.70
0.60
0.50
0.40
0.30
Ratio
0.20
0.10
0.00
2016-17 2017-18 2018-19 2019-20 2020-21
Ratio 0.58 0.51 0.49 0.47 0.45

62
INTERPRETATION:
Graph 4.8 presents operating ratio during the period 2016-17 to 2020-21. From the above
graph it can be interpreted that the ratio has been decreasing from 2016-17. This indicates that
the firm is having good operating ratio.

• RETURN ON TOTAL ASSETS RATIO:

TABLE 4.9
Year Net profit Total assets Ratio
2016-17 23.04 4215.22 0.01

2017-18 195.87 4428.51 0.04

2018-19 124.51 4567.70 0.03

2019-20 274.39 4997.92 0.05

2020-21 240.63 4934.94 0.04

RETURN ON TOTAL ASSETS RATIO

63
GRAPH.4.9

RETURN ON TOTAL ASSETS RATIO

0.06
0.05
0.04
0.03
0.02 Ratio
0.01
0.00
2016-17 2017-18 2018-19 2019-20 2020-21
Ratio 0.01 0.04 0.03 0.05 0.04

INTERPRETATION:
Graph 4.9 presents return on total assets ratio during the period 2016-17 to 2020-21. Higher
the ratio the more efficient the company is at generating profits. From the above graph it can
be interpreted that the ratio has been increased from 0.01 in 2016-17 to 0.04 in 2017-18 and
in 2018-19 the ratio has been decreased to 0.03 but in 2019-20 the ratio has been increased to
0.05 and then certainly the ratio has been decreased to 0.04 in the year 2020-21.

• NET WORKING CAPITAL TURNOVER RATIO:

TABLE 4.10
NET
Year Operating Net working Capital Ratio
income

2016-17 917.58 -41.40 -22.16

2017-18 1063.81 -97.20 -10.94

2018-19 1201.39 -330.80 -3.63

2019-20 1404.18 -122.82 -11.43

2020-21 1436.86 291.63 4.92

WORKING CAPITAL TURNOVER RATIO

64
GRAPH.4.10
NET WORKING CAPITAL TURNOVER RATIO
10
5
0
-5
-10
-15
-20
-25
2016-17 2017-18 2018-19 2019-20 2020-21
ratio -22.16 -10.94 -3.64 -11.43 4.92

ratio

INTERPRETATION:
Graph 4.10 presents net working capital turnover ratio during the period 2016-17 to 2020-21.
The ratio is used to measure the firm‟s liquidity. The ratio measures the firm‟s potential
reservoir of funds. From the above graph it can be interpreted that the net working capital
turnover ratio of VPT is satisfactory, because it is a service oriented organization, there is no
need to maintain current assets more than current liabilities but VPT maintains current assets
more than current liabilities.

• ABSOLUTE CASH RATIO:

TABLE 4.11

Year Absolute cash Current Ratio

liabilities
2016-17 819.22 2117.03 0.39
2017-18 955.33 2150.09 0.47

2018-19 635.67 2205.74 0.28

2019-20 987.36 2376.12 0.41

2020-21 978.23 2021.13 0.48

ABSOLUTE CASH RATIORs in Cr

GRAPH4.11

65
 ABSOLUTE CASH RATIO
0.6
0.5
0.4
0.3
0.2 Ratio
0.1
0
2016-17 2017-18 2018-19 2019-20 2020-21
Ratio 0.39 0.47 0.28 0.41 0.48

INTERPRETATION:
Graph 4.11 presents absolute cash ratio during the period 2016-17 to 2020-21. Service
oriented organization like VPT maintains the ratio as per requirement from the above table
absolute cash ratio of VPT improved. They should maintain their cash ratio as per their safety
level. From the above graph it can be interpreted that the cash ratio has been increased from
0.39 in 2016-17 to 0.47 in 2017-18 and in 2018-19 the ratio has been decreased to 0.34 but in
later the years i.e. from 2019-20 to 2020-21 the ratio has been increased from 0.41 to 0.48.

• CAPITAL EMPLOYED TURNOVER RATIO:

TABLE 4.12
CAPITAL EMPLOYED TURNOVER RATIO
Operating
Year Capital employed Ratio
expenses
2016-17 531.64 1264.10 0.42
2017-18 541.70 1317.87 0.41
2018-19 591.01 1380.81 0.42
2019-20 662.55 1782.32 0.37
2020-21 654.16 2394.33 0.27

66
GRAPH.4 .12

CAPITAL EMPLOYED TURNOVER RATIO

0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2016-17 2017-18 2018-19 2019-20 2020-21
RATIO 0.42 0.41 0.42 0.37 0.27

RATIO

INTERPRETATION:
Graph 4.12 presents capital employed turnover ratio during the period 2016-17 to 2020-21.
From the above graph it can be interpreted that the ratio is fluctuating. It refers to less
efficient utilization of owners and long - term funds. So, the capital employed turnover ratio
of Visakhapatnam port trust is to be improved.

• OPERATING EXPENSES RATIO:

TABLE 4.13
Operating
Year Operating Expenses Ratio
Income
2016-17 531.64 917.58 0.57

2017-18 541.70 1063.81 0.50

2018-19 591.01 1201.39 0.49

2019-20 662.55 1404.18 0.47

2020-21 654.16 1436.86 0.45

OPERATING EXPENSES RATIORs in Cr

67
GRAPH.4.13

OPERATING EXPENSES RATIO

0.60

0.50

0.40

0.30
Ratio
0.20

0.10

0.00
2016-17 2017-18 2018-19 2019-20 2020-21
Ratio 0.57 0.50 0.49 0.47 0.45

INTERPRETATION:
Graph 4.13 presents operating expenses ratio during the period 2016-17 to 2020-21. From the
above graph it can be interpreted that the ratio has been decreasing from 2016-17 due to
decrease in cargo handling storage expenses, railway expenses etc. so operating expenses are
balanced.

• INVENTORY TURNOVER RATIO:

TABLE 4.14
INVENTORY TURNOVER RATIORs in Cr

68
 YEAR COST OF AVERAGE RATIO
GOODS INVENTORY
SOLD

2016-17 551.68 21.29 25.91

2017-18 531.64 22.19 23.95

2018-19 541.69 25.96 20.86

2019-20 591.01 27.94 21.15

2020-21 654.16 25.53 25.62

GRAPH.4.14

INVENTORY TURNOVER RATIO

30
25
20
15
10
5
0
2016-17 2017-18 2018-19 2019-20 2020-21
Ratio 25.91 23.95 20.86 21.15 25.62

Ratio

INTERPRETATION:

Graph 4.14 presents inventory turnover ratio during the period 2016-17 to 2020-21. Higher
the turnover ratio means company is selling goods quickly and there is considerable demand
for their products. On the other hand, lower the turnover ratio indicates weaker sales and
declining demand for a company‟s products. From the above graph it can be interpreted that
the ratio has been started to decrease from the year 2016-17 i.e. 25.91 to 2018-19 i.e. 20.86.
But in later the years i.e. from 2019-20 to 2020-21 the ratio has been increased from 21.15 to
25.62.

• CREDITORS TURNOVER RATIO:

TABLE 4.15

69
CREDITOR’S TURNOVER RATIO Rs in Cr
YEAR OPERATING AVERAGE RATIO
EXPENSES CREDITORS
2016-17 551.68 5.22 105.68

2017-18 531.64 2.75 193.32

2018-19 541.69 0.74 732.01

2019-20 591.01 2.19 263.86

2020-21 654.16 8.30 78.81

GRAPH.4.15

800
700
600
500
400
300
200
100
0
2016-17 2017-18 2018-19 2019-20 2020-21
Ratio 105.68 193.32 732.01 263.08 78.81

Ratio

INTERPRETATION:
Table 4.15 presents creditors turnover ratio during the period 2016-17 to 2020-21. Higher the
ratio is more desirable than a lower turnover ratio because it indicates that company can
quickly pays its debts. From the above graph it can be interpreted that the ratio has been
started to increase from the year 2016-17 to 2018-19 i.e. 105.68 to 732.01. But in later the
year i.e. from 2019-20 to 2020-21 the ratio has been decreased from 263.86 to 78.81.
therefore, the lower turnover ratio indicates that the company cannot quickly pay the debts.

• AVERAGE PAYABLE PERIOD: TABLE 4.16

70
 YEAR NO. DAYS IN A CREDITOR AVERAGE
YEAR TURNOVER PAYABLE
RATIO PERIOD

2016-17 365 105.68 3.45

2017-18 365 193.32 1.88

2018-19 365 732.01 0.49

2019-20 365 263.08 1.38

2020-21 365 78.81 4.63

AVERAGE PAYABLE PERIOD

GRAPH.4.16

AVERAGE PAYABLE PERIOD

5
4
3
2
1
0
2016-17 2017-18 2018-19 2019-20 2020-21
RATIO 3.45 1.88 0.49 1.38 4.63

RATIO

INTERPRETATION:
Graph 4.16 presents average payable period during the period 2016-17 to 2020-21. Average
payable period indicates the credit worthiness of the company. Shorter payment period
indicates prompt payments to creditors. From the above graph it can be interpreted that the
payable period started to decrease from the year 2017-18 i.e. 1.88 to 0.49 in 2018-19 but in
later the year i.e. 2019-20 to 2020-21 the ratio has been increased from 1.38 to 4.63.

• ABSOLUTE LIQUDITY RATIO:

TABLE 4.17
ABSOLUTE LIQUIDITY RATIO Rs in Cr

71
 CASH IN HAND + CURRENT
YEAR CASH AT BANK+ LIABILITIES RATIO

MARKETABLE
SECURITITES

2016-17 849.22 2117.03 0.40

2017-18 984.73 2150.09 0.45

2018-19 942.51 2205.74 0.42

2019-20 1280.40 2376.12 0.53

2020-21 1320.29 2021.13 0.65

GRAPH.4.17

ABSOLUTE LIQUIDITY RATIO

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2016-17 2017-18 2018-19 2019-20 2020-21
ratio 0.4 0.45 0.42 0.53 0.65

ratio

INTERPRETATION:
Graph 4.17 presents absolute liquidity ratio during the period 2016-17 to 2020-21. Higher
liquidity ratio indicates that the company is more liquid and has better coverage of
outstanding debts. From the above graph it can be interpreted that the ratio has been
increasing from the year 2016-17 i.e. 0.40 to 0.45 in 2017-18 and in 2018-19 the ratio has
been decreased to 0.42. but in later the years i.e. 2019-20 to 2020-21 the ratio has been
increased from 0.53 to 0.65.

• CURRENT ASSETS TO FIXED ASSETS RATIO:

TABLE 4.18
CURRENT ASSETS TO FIXED ASSETS RATIO

72
 YEAR CURRENT FIXED RATIO
ASSETS ASSETS
2016-17 2075.62 1777.46 1.16

2017-18 2052.89 1991.63 1.03

2018-19 1874.93 2061.82 0.90

2019-20 2253.29 2081.08 1.08

2020-21 2312.76 2102.70 1.10

GRAPH.4.18

CURRENT ASSETS TO FIXED ASSETS RATIO

1.4
1.2
1
0.8
0.6
0.4
0.2
0
2016-17 2017-18 2018-19 2019-20 2020-21
ratio 1.16 1.03 0.91 1.08 1.1

ratio

INTERPRETATION:

Graph 4.18 presents current ratio to fixed assets ratio during the period 2016-17 to 2020-21. a
higher ratio indicates that the company is efficient in generating sales or revenue from its
assets base. On the other hand, lower ratio indicates that the company is not using its assets
efficiently and may have internal problems. From the above graph it can be interpreted that
the ratio has been started to decrease from the year 2017-18 i.e. 1.03 to 2018-19 i.e. 0.90 but
in later the years i.e. 2019-20 to 2020-21 the ratios has been increased from 1.08 to 1.10.

• RETURN ON INVESTMENT(ROI):
TABLE 4.19

73
 YEAR NET PROFIT CAPITAL RATIO
BEFORE EMPLOYED
INTEREST
AND TAXES

2016-17 45.32 1736.05 0.02

2017-18 259.52 1894.43 0.13

2018-19 200.91 1731.01 0.11

2019-20 305.82 1958.26 0.15

2020-21 407.28 2394.33 0.17

RETURN ON INVESTMENT Rs in Cr

GRAPH .4.19

RETURN ON INVESTMENT
0.2

0.15

0.1

0.05

0
2016-17 2017-18 2018-19 2019-20 2020-21
RATIO 0.02 0.13 0.11 0.15 0.17

RATIO

INTERPRETATION:

74
Graph 4.19 presents Return on investment during the period 2016-17 to 2020-21. High ROI
means that the firm is successful at using the investment to generate high returns. Investors
will typically avoid an investment with a negative ROI. From the above graph it can be
interpreted that the ratio has been increased from 0.02 in 2016-17 to 0.13 in 2017-18 and in
2018-19 the ratio has been decreased to 0.11 but in later the year i.e. from 2019-20 to 202021
the ratio has been increased from 0.15 to 0.17.

• DEBT – EQUITY RATIO:

TABLE 4.20
DEBT
YEAR LONG TERM SHAREHOLDERS RATIO
– DEBTS FUNDS
EQUTIY RATIO
Rs in 2016-17 341.53 2068.78 0.16 Cr
2017-18 347.38 4155.57 0.08

2018-19 405.18 4531.09 0.08

2019-20 684.46 4972.16 0.13

2020-21 707.11 6128.58 0.11

GRAPH 4.20

DEBT - EQUTIY RATIO

0.2

0.15

0.1

0.05

0
2016-17 2017-18 2018-19 2019-20 2020-21
RATIO 0.16 0.08 0.08 0.13 0.11

RATIO

INTERPRETATION:
Graph 4.20 presents debt – equity ratio during the period 2016-17 to 2020-21. The optimal
debt – to – equity ratio will tend to vary widely by industry. But in general consensus is that it

75
should not be above a level of 2.0. from the above table it can be interpreted that the ratio has
been decreased from 0.16 in 2016-17 to 0.08 in 2018-19 and in 2019-20 the ratio has been
increased to 0.13 but in later the year i.e. in 2020-21 the ratio has been decreased to 0.11.

SUMMARY
Finance is the elixir that assists in the formation of new business and allows business to take
advantage of opportunities to grow, employ local workers and in turn support other business
and local, state and federal government through the remittance of income taxes. The strategic
use of financial statements, such as loans and investments, is key to the success of every
business. Financial trends also define the state of the economy on a global level, so central
banks can plan appropriate monetary policies.

Finance plays an important role in any organization. Finance is needed to promote establish
the business acquire the fixed assets or expansion of its existing one. The function of finance
is not only arranging funds for the business organization but also it includes planning,
forecasting, of cash flow, both receipts and payments, raising the funds, allocation of funds
and financial control.

In Financial statement analysis, common – size analysis and trend analysis and comparative
analysis and ratio analysis helps gauge the financial performance and condition of a company
through an examination of relationships among these many financial items. Ratio Analysisis
the analysis of the financial statements in conjunction to the interpretation of financial results
of a period of operations, derived with the help of „Ratio‟. Ratio analysis is used to determine
the financial soundness of a business concern. Ratio analysis refers to access of current assets
over current liabilities. The ratio analysis is the amount of funds necessary to cover the cost
of operating the enterprise. The management of ratio analysis is therefore, concerned with the
problem that arise in administrating of both current assets and current liabilities. In other
words, ratio analysis involves deciding upon the amount and composition of current assets
and how to finance these assets. The major elements in current assets are stock or inventories,

76
debtors, or accounts receivable, short – term investments, bank and cash balances. Current
liabilities include accounts payable, overdraft, bank loan, cash credits etc.

The financial statements provide some extremely useful information to the extent that the
balance sheet mirrors the financial position on a particular date in terms of the structure of
assets, liabilities and owner‟s equity and so on the profit and loss account shows the result of
operations during a certain period of time in terms of the revenues obtained the cost incurred
during the year. Thus, the financial statements provide a summarized view of the financial
position and operations of a firm. The analysis of financial statements is thus, an important
aid to financial analysis. The financial analysis of a company requires examining its
efficiency in putting its assets to work, its liquidity position, its solvency, and its profitability.
We can use the tools of common – size analysis and financial ratio analysis, to help
understand where a company has been. We then use relationship among financial statement
accounts in proforma analysis, forecasting the company‟s income statements and balance
sheets for future periods, to see how the company‟s performance is likely to evolve.

Financial statement is the outcome of the summarized process of the accounting. A financial
statement is an organized collection of data accounting to logical and consistent accounting
procedure. It may show a position at a moment of time as in the case of the balance sheet or
may reveal a series of activities over a given period of time, as in the case of income
statement the primary ratio is one, which is of the prime importance to a concern; thus return
on capital employed is named as primary ratio. Like that the ratio, which are prime
importance to the organization, will come under the roof of primary ratios. The other ratios,
which support or explain the primary ratio are called secondary ratios. Example, the
relationship of operating profit to sale or the relationships of sales to total assets of the firm
are secondary ratios.

The port started in 1933 transformed itself into a mega major port. With a capacity to handle
more than 125 million tones per annum, it is capable of handling all types of cargoes
including iron ore, coal, crude oil, petroleum products, LPG, fertilizers, dry cargoes, liquid
cargoes and containers. Port of Visakhapatnam has super cape handling capability and the
deepest container terminal among major ports. The port has fully merchandised facilities for

77
handling coal, iron ore and alumina besides liquid and containers cargoes. Efficient cargo
evacuation infrastructure is developed by the port for transportation of cargo by rail and road.
The port owns and operates a railway and east coast railway of the Indian railways.

Chennai, Calcutta, Mumbai were the older ports. These cities became metro cities because of
the port trade. The port of Visakhapatnam and cochin came up 1993 and 1936. After partition
of India, in lieu of Karachi port was newly constructed and commissioned in 1959. There are
no proposals in 10th plan to create any new major port. The effort is to expand and consolidate
the existing major ports. About 90% of international trade is transported through sea and port.
Handling in major ports have increased from 20 million tones in 1950 (5 ports) to 679.35
million tones by 2020 in 12 ports. These are about 200 minor ports, many of them are not
operational. About 271.74 million tones have been handled in the minor ports. Major ports
are under control of central government and minor ports are under control of maritime state
government for development and administration. The ports are costly to construct, maintain,
requiring enough draft of international ship movement, need faster handling, and the assured
cargo. Indian ports are considered to be inefficient compared to foreign ports.

Visakhapatnam port trust, one of the leading ports of India, has been playing a vital role in
fostering country‟s foreign trade and economic development. Originally conceived as one
outlet for manganese, export in 1935, the port has gained strength, adapting itself to the needs
of fast changing sea transport systems strategically located on the east coast, the ports is not
only serving the commercial requirement of the country but also promoting industrialization
of the hinter land by acting as a catalyst for location of various types of port based industries,
VPT was opened for traffic. Now VPT is one of the 12thworking major ports in India.

Visakhapatnam is an ancient port city, which had trade relations with middle east and Rome.
Ships were anchored at open road and loaded with cargo from Visakhapatnam shore by all
means. Visakhapatnam port is one of the best, natural port in India and its location provide
protection from cyclones, which strikes the east coast regularly during May and November.
The „Dolphin Nose‟ hill which is to the south of the entrance canal, rises and the Dora hill
which is to the north of the entrance channel are land form which provided tranquil water for
the port for the outer harbor to artificial break water for the port for outer harbor to artificial
break of water to provide necessary condition for tranquil water. This low range of minimum

78
of 1.82 meters this section of the sea is advantages for the location of the port central
provinces. Visakhapatnam port was the minor port, ships were anchored in the shore areas
and the cargo transported in small muscular boats. They gained the status of a minor port in
1963 and it was in February 1963 that the Visakhapatnam port was constituted.

The port was opened to sea-going vessels in October.1933 at IH when the first ship S.S.
JALA DURGA landed the port. This port when commissioned in 1933-34 handled 1.3lakh
tons of cargo with 3 berths. It is a natural harbor with low tidal range of 1.52 meters of
maximum and offers safe anchorage of ships even during severe cyclones, which are common
phenomenon on each coast.

Visakhapatnam port mainly derive their revenue from cargo handling in their port areas,
charges on the ships visiting their areas and other related charges. Visakhapatnam port is
natural port. The port has the specific feature of quick turn round of ships, better labor
productivity, coast affective cargo handling, fast clearance of easiest better industrial
relations, exemptions of levy on export cargos. Visakhapatnam port ships were anchored in
the open of shore areas and the cargo transported in small muscular boats.

The port of Visakhapatnam handled 58.05 million tones of cargo throughout during the year
2014 – 2015 and is consistently making relentless efforts in enhancing its capacity and
productivity in consonance with changing requirements of the trade. They dry bulk of trade at
port of Visakhapatnam in increasing year by year. Projection of dry bulk cargo as per the
Maritime agenda – 2014 – 2015 is 58.05 million tones and 71.75 million tones by 2019 –
2020. To cater to handling needs of cargos such as coking coal, thermal coal, steam coal, iron
ore, fertilizers, and LAM coke through bigger size vessels, and to provide a long - lasting
solution to the environmental concerns, the port is developing new berths and mechanizing
existing berths. The present proposal is envisaged in order to cater to handling needs to dry
bulk cargoes and any other cargoes.

The study of Ratio analysis is prepared for the purpose of presenting a periodical review or
report to the management and to deal with the state of investment in business and result
achieved during the period under review. They reflect the financial position and operating

79
strengths and weakness of the concerns by properly establishing relationship between the
items of ratio analysis estimates and review estimates.

Ratio analysis is a widely used tool of financial analysis. It can be used to compare the risk
and return relationships of firms of different sizes. It is defined as the systematic use of ratio
to interpret the financial statements so that the strengths and weakness of a firm as well as its
historical performance and quick financial condition can be determined. The term ratio refers
to the numerical or quantitative relationship between two items and variables.

Ratio analysis is very important in fundamental analysis, which investigates the financial
health of the companies. An example of ratio analysis is the comparison of price earning ratio
of different companies share prices properly reflect their performances and therefore basing
on ratio analysis one can decide, what investments are most likely to be most profitable.
Ratio analysis is a way expressing relationship between a firm‟s accounting numbers and
trends overtime that analysis use to establish values and evaluate risks. Ratios of one firm are
often compared with the same ratios on a similar firms or of all firms in a single industry.
This comparison indicates of a particular firm‟s financial statistics are support. Ratio analysis
is a name given to the financial statements analysis using the ratio of two financial statements
that are related to each other. Ratio analysis is a scientific attempt devices by intelligent to
reasonably predict the future outcomes of investment. As true as this may be, investors still
need to use ratio analysis with caution. Venture capitalist and banker use the ratio analysis
featured here and others when they consider investing in or loaning to businesses.

Ratio analysis is important because it has an impact on all the activities of a firm. Ratio
analysis is the life blood and nerve systems of a business. Just as circulation of blood is
essential to maintain the smooth running of business. No business can run successfully
without an adequate ratio analysis.

Ratio analysis is the process of identifying the finance strengths and weakness of the firm by
properly establishing relationship between the items of the balance sheet and the profit and
loss account. Financial analysis can be undertaken by management of the firm or by parties
outside of the firm, viz. owners, creditor‟s investors and others to form judgment about
operating performance and financial position of the firm.

80
Users of the financial statements can get better insight about the financial strength and
weakness of the firm if they properly analyze the information reported in the statements.
Management should be interested in knowing the financial weakness of firm to take suitable
corrective actions. The future plans of the firm should be laid down in the view of the firm‟s
financial strengths and weaknesses. Thus analysis is the starting point for making plans,
before using any sophisticated forecasting and planning procedures. Understanding the past
prerequisite for anticipate the future.

Ratio analysis is the powerful tool of financial analysis. Several ratios calculated from the
accounting data can be grouped into various classes according to financial activity or function
to be evaluated. Ratio analysis is “the indicate quotient of two mathematical expressions and
as the relationship between two or more things”. It evaluates the financial position and
performance of the firm.
As started in the beginning many diverse groups of people are interested in analyzing
financial information to indicate the operating and financial efficiency and growth of firm.
These people use ratios to determine those financial characteristics of firm in which they
interested with the help of ratios one can determine. The ability of the firm to meet its current
obligations. The extent to which the firm has used its long – term solvency by borrowing
funds. The efficiency with which the firm is utilizing its assets in generating the sales
revenue. The overall operating efficiency and performance of the firm. Alexander Wall is the
pioneer of ratio analysis. He presented a detailed system of ratio analysis in the year 1919.
Ratio analysis is important one for all management accounting for decision making. Ratio
analysis of financial statements stands for the process of determining and presenting the
relationship of items and groups of items in the statements. Ratio analysis is a process of
identifying the financial strengths and weakness of the firm by properly establishing the
relationship between the different items of balance sheet and profit and loss account for the
meaningful understanding of the financial position and performance of the firm.

Ratio analysis can be undertaken by the management of the firm, viz, owners, creditors,
investors and others. Ratio analysis is made for a particular purpose in view. To find out the
financial stability and soundness of business enterprise. To assess and evaluate the earning
capacity of the business. To estimate and determine the possibilities of future growth of

81
business. To estimate and evaluate the fixed assets and stock etc. To assess and evaluate the
firm‟s capacity and ability to repay short – term and long – term loans.

Ratio analysis refers to the excess of quick assets over quick liabilities. The ratio analysis is
the amount of funds necessary to cover the cost of operating the enterprise. The management
of ratio analysis is therefore, concerned with the problems that arise in administrating of both
quick assets and quick liabilities. In other words, ratio analysis involves deciding upon the
amount and composition of quick assets and how to finance these assets. The major elements
in quick assets are stock or inventories, debtors or accounts receivable, short term
investments, bank and cash balances. Quick liabilities include accounts payables, overdraft,
bank loan, cash credits etc.

Ratio analysis involves comparison for a useful interpretation of the financial statements. A
single ratio in itself does not indicate favorable or unfavorable condition. It should be
compared with some standards.

Ratio analysis holds an important place in financial accounting and financial management.
This topic is selected due to the significance in any financial set up. It facilitates the
accounting information to be summarized and simplified in a required form. It provides
necessary information to the management to take prompt decision relating to business. Ratio
analysis reveals profitable and unprofitable activities. Thus, the management is able to
concentrate on unprofitable activities and considers improving the efficiency. Ratio analysis
is used as a measuring rod for effective control of performance of business activities.

The three basic financial statements are the balance sheet, the trading and profit and loss
account and the profit and loss appropriation account are more fruitfully used if the
statements are analyzed and interpreted to have insight into the strengths and weakness of the
firm.

Ratios are powerful tool in the interpretation of the accounts and can discover issues and
problem not immediately evident from the accounts and financial information provided in the
annual report. They can provide the basis for inter – firm comparisons allowing managers to
82
benchmark the performance and efficiency of the examined and analyzed. Stakeholders may
use ratios to support their decision making. Employees, for example may use profit ratios to
support pay claims and creditors can use liquidity ratios to evaluate whether debts will be
repaid. Its scope is for expensive because the techniques of financial analysis that are
employed for diagnosing the economic health of an enterprise eventually helps both the
internal and external parties concerned with and interested in the profitability of the extra
price in eventually its overall performance.

An absolute figure does not give any meaning unless it is related with the other relevant
figure. Amount of current liabilities of a company does not tell anything about solvency
position of the company. When it is related with current assets amount of the same company,
an opinion about the solvency position of the company can be had. Ratios are important both
in vertically and horizontal analysis. In vertical analysis, ratios help the analysts to form a
judgment whether the performance of the corporation at a point of time is good, average or
poor. Ratios can be useful to judge financial condition and profitability performance of the
corporation when they are compared. An analysis of ratio gives two types of comparison.
First, a comparison is made between present ratios with past expected future ratios of the
same firm.

Ratio analysis refers to the excess of current assets over current liabilities. The ratio analysis
is the amount of funds necessary to cover the cost of operating the enterprise. The
management of ratio analysis is therefore, concerned with the problems that arise in
administrating of both current assets and current liabilities.

The focus of ratio analysis is one key figures contained in the financial statements and the
significant relationship that exists between them. “analyzing financial statements” , according
to Metcalf and Titard, is a process of evaluating the relationship component parts of a
financial statement to obtain a better understanding of a firm‟s position and performance.

Financial statement is the outcome of the summarized process of the accounting. A financial
statement is an organized collection of data accounting to logical and consistent accounting
procedure. It may show a position at a moment of time as in the case of the balance sheet or
83
may reveal a series of activities over a given period of time, as in the case of income
statement the primary ratio is one, which is of the prime important to a concern‟s, thus return
on capital employed is named as primary ratio. Like that the ratio, which are prime
importance to an organization. Will come under the roof of primary ratios. The other ratios
which support or explain the primary ratio are called secondary beatless. Example, the
relationship of operating profit to sale or the relationship of sales to total assets of the firm are
secondary ratios. The focus of ratio analysis is one key figure‟s contained in the financial
statements and the significant relationship that exists between them “analyzing financial
statements” according to Metcalf and Tigard, is a process of evaluating the relationship
component parts of a financial statement to obtain a better understanding of a firm‟s position
and performance.

Any information which has already been analyzed by someone else and which has already
been passed through the statistical process is called secondary data. The secondary data for
the study have been gathered from balance sheet, profit and loss account, annul reports and
other books and manual of VPT, secondary data may either be published data that are
available.

The dry bulk trade at port of Visakhapatnam is increasing year by year. Projections of dry
bulk cargo as per the maritime agenda – 2010 – 2020 by 2014 – 2015 is 51.60 million tones
and 71.75 million tones by 2019 – 2020. To cater to handling needs of cargoes such as coking
coal, thermal coal, steam coal, iron ore, fertilizers, CP coke and LAM coke through bigger
size vessels, and to provide a long – lasting solution to the environmental concerns, the port is
developing new berths and mechanizing/strengthening existing berths. The present proposal
is envisaged in order to cater to handling needs of dry bulk cargoes and any other cargoes.

The existing ore handling plant at outer harbor which was developed in 1976 has completed
more than 38 years of life and a need has arisen to replace certain vital components of the
system to sustain the efficiency levels. The port has explored many possibilities to modernize
the existing system, viz, through funding from JICA. However, port could not make any
progress in this direction due to reason beyond its control. Keeping in view the declared
policy of the government to induct private sector participation in development of cargo
handling facilities, with a view to transforming the port sector as landlord ports in line with

84
global practices, a view was taken by the port to modernize the outer harbor facility on
DBFOT basis.

The task of preparing Techno - economic feasibility report for the modernization of outer
harbor was entrusted to MECON and the consultant submitted their draft report in October
2012. Co – terminus with this, the port has also taken up the project of development of
mechanized handling facilities at inner harbor (WQ1 berth) to handle iron ore which can cater
to vessels up to 12.5 m draft. The preparation of Techno – economic feasibility report was
entrusted to RITES and the report was submitted in 2011.

It was decided by the port to integrate these two facilities, i.e., outer harbor and inner harbor
as a single project and develop the same on DBFOT basis, instead of having two facilities for
the same cargo. This decision was taken keeping in view the variegated vessel sizes deployed
for iron ore handling ranging from 40,000 DWT to 1,70,000 DWT at present.
By developing a mechanized loading facility at inner harbor to cater to vessels up to 12.5 m
draft, it would be possible for the operator to have a judicious distribution of iron ore vessels
at both the facilities depending upon the size of the vessels. Thus, this facility at inner harbor
is viewed as a complementary facility to the one at outer harbor, thus achieving optimum
utilization of scarce water front.

FINDINGS
A Ratio is a widely used tool of financial analysis. A ratio reflects the financial position of the
company to the users such as management creditors and inventories. The ratios which are
calculated to evaluate the financial position of Visakhapatnam port trust are broadly classified
into liquidity, leverage, and profitability and activity ratios.
The study conducted at VPT depicts that it has been performing well in terms of liquidity,
leverage, profitability and activity.

85
• The current ratio of Visakhapatnam port trust is good at present i.e. 2020-21. Higher
the ratio is the more capable of the company to Pay there debts.
• The quick ratio of Visakhapatnam port trust is good at present i.e. 2020-21. Higher the
ratio means business is healthy and can pay its liabilities.
• The debtors turnover ratio of Visakhapatnam port trust is good at present i.e. 2020-21.
That shows that the VPT is having efficient credit management system. The company
is able to convert its receivables into cash.
• The average collection period of Visakhapatnam port trust is good at present i.e.
2020-21. It means that the company can collect accounts relatively quickly.
• The fixed assets turnover ratio of VPT is not good at present i.e. 2020-21. Therefore,
it indicates that the company is having less efficiency to utilize fixed assets.
• The gross profit ratio of Visakhapatnam port trust is good at present i.e. 2020-21. The
gross profit ratio of VPT has increased from 2016-17 to 2020-21 i.e. 0.42 to 0.54.
• Net profit ratio had shown that the management efficiency in manufacturing,
administration and selling of VPT is not in a good position.
• The operating ratio of Visakhapatnam port trust has been decreasing from 2016-17.
This indicates that the firm is having good operating ratio.
• The Return on total assets ratio had shown that the efficiency of VPT in generating
profits is not in a good position.
• Net working capital turnover ratio shows the liquidity position of Visakhapatnam port
trust is good at present i.e. 2020-21.
• The absolute cash ratio of VPT is good at present i.e. 2020-21. Visakhapatnam port
trust is maintaining their cash ratio as per their safety level.
• The capital employed turnover ratio had shown that the VPT is having less efficient
utilization of owners and long term debts.
• The operating expenses ratio of Visakhapatnam port trust is good at present i.e.
202021 because the operating expenses are balanced.
• Inventory turnover ratio of VPT shows that the firm has selling goods quickly and
there is considerable demand for their products.
• Creditors turnover ratio of Visakhapatnam port trust is not good at present i.e. 202021
because lower turnover ratio indicates difficulty in paying its debts.
• Average payable period of VPT is good at present i.e. 2020-21. Increase of payable
period indicates the high credit worthiness of the company.
• Absolute liquidity ratio had shown that the VPT is having more liquidity and better
coverage of outstanding debts.
• Current assets to fixed assets ratio had shown that the Visakhapatnam port trust is
efficient in generating sales or revenue from its assets base.

86
 • Return on investment (ROI) had shown that the VPT is successful at using the
investment to generate high returns.
• Debt – equity ratio of Visakhapatnam port trust is not good at present i.e. 2020-21.
The ratios are fluctuating.

SUGGESTIONS
From the findings of the study the following are the suggestions offered to the company.

• The performance of VISAKHAPATNAM PORT TRUST regarding the traffic

handled, labor productivity and the performance of ships is good. However, more
facilities are yet to be provided to meet the requirements of increased traffic.
• In order to give quick delivery of unloaded ships coming into the port it has to
increase the operating efficiency with high technological developments.
• Net profit ratio indicates the company‟s management efficiency in manufacturing,
administration and selling. The net profit ratio of Visakhapatnam port trust is not good
at present i.e. 2020-21. So the net profit ratio has to be improved.
87
 • Thecapital employed turnover ratio indicates the company‟s efficient utilization of
owners and long term debts. The capital employed turnover ratio of VPT is not good
at present i.e. 2020-21. So the capital employed turnover ratio has to be improved.
• Creditors turnover ratio indicates the company‟s efficiency in paying debts. The
creditors turnover ratio of Visakhapatnam port trust are not good at present i.e. 2020-
21. So the creditors turnover ratio has to be improved.
• The position of VISAKHAPATNAM PORT TRUST is not satisfactory at present. It
is below the requirements during the year 2016 as depicted by the ratio analysis. It is
better to improve the performance of the VPT.

BIBLIOGRAPHY

BOOKS REFERRED:

BOOK NAME AUTHOR NAME PUBLISHER

Financial management I.M. PANDEY Vikas publications

Financial management KHAN AND JAIN Tata McGraw – Hill

Financial management and V. K. BHALLA Anmol publications

policy
Management accounting PEARSON Mc Laney and Atrill

ANNUAL REPORTS:

• With reference to annual reports of VPT from year 2016 – 21.

WEBSITES:

• www.investopidea.com
• www.visakhapatnamporttrust.com

88
ANNEXURES

89
90
VISAKHAPATNAM PORT TRUST STATEMENT OF PROFIT AND
LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2017
(Rs in Cr)

91
VISAKHAPATNAM PORT TRUST BALANCE SHEET AS AT 31ST
MARCH 2017

92
93
94
VISAKHAPATNAM PORT TRUST STATEMENT OF PROFIT AND
LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2018
(Rs.in Cr.)

95
VISAKHAPATNAM PORT TRUST BALANCE SHEET AS AT 31ST
MARCH 2018

96
97
98
VISAKHAPATNAM PORT TRUST STATEMENT OF PROFIT AND
LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2019
(Rs.in. Cr.)

99
VISAKHAPATNAM PORT TRUST BALANCE SHEET AS AT 31ST
MARCH 2019

100
101
102
VISAKHAPATNAM PORT TRUST STATEMENT OF PROFIT AND
LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2020
(Rs.in Cr.)

103
VISAKHAPATNAM PORT TRUST BALANCE SHEET AS AT 31ST
MARCH 2020

104
105
106
107
108
109