FINANCIAL STATEMENT ANALYSIS TABLE OF CONTENTS SERIAL NO TITLE PG.NO CHAPTER – I INTRODUCTION 2 - 8 CHAPTER – II AQUACULTURE 9-19 CHAPTER – III SHRIMP AND PRAWN CULTURE 20-29 CHAPTER – IV AQUACULTURE BUSINESS 30-42 CHAPTER – V SOUTHERN INDIA AQUACULTURE 43- 56 CHAPTER – VI FINANCIAL STATEMENT ANALYSIS 57- 94 CHAPTER – VII RATIO ANALYSIS IN SIAC 95-110 CHAPTER - VIII CONCLUSION 111- 118 CHAPTER-IX FINDINGS AND SUGGISTIONS 1 CHAPTER – I INTRODUCTION CONTENTS: Introduction Significance of the Study Objectives of the Study Nature and Importance of Study Methodology
Limitations 2 INTRODUCTION Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the indicated quotient of two or more things. In financial analysis, a ratio is used as an index or yardstick for evaluating the finical position and performance of firm. The absolute accounting figures reported in the financial statements are not providing a meaningful understanding of the performance and financial position of a firm. Accounting figures conveys meaning when it is related to some other relevant information. “The relationship between two accounting figures, expressed mathematically” is known as financial ratio. A ratio helps the analysis to make qualitative judgment about the firm’s financial performance. A Ratio analysis is defined as the systematic use of ratio to interpret the finical statement so that the strength and weakness of a firm as well as its historical performance and current financial conditions can be determined. Another Factor responsible for high level of working capital is that the repair and maintenance of work under taken in the off seasons. The present study undertaken with the aspiration of that it would be useful in maintaining us components of ratio analysis management of “Southern India Aquaculture” Company, Chennai. Aquaculture can be conducted profitably in a wide variety of conditions and environments. The choice of production system and crop product for your project is affected by local conditions, such as water availability and quality, site topography and climate. Aquaculture is a capital-intensive venture. Capital is required for construction of ponds, water system, aeration system, operational equipment, etc. The investment and economic projections are analyzed by APT( Aquaculture Production Technology ) in a Business Plan, which is key to raising project financing. 3 SIGNIFICANCE OF THE STUDY In a perfect world there would be no necessity for current liabilities and current assets because there would be no uncertainty no transaction costs information search costs or production and technology constraint. However the world on which we live is not perfect. So organization may be faced with on an uncertainty regarding availability of sufficient quantity of critical inputs in future of reasonable price. This may necessitate the holding of critical inputs in future of reasonable price this may necessitate the holding of critical inputs in future of reasonable price. This may necessitate i.e., Current Assets. To ensure that each of the Current Assets is efficiently managed to ensure the overalls liquidity of the unite and at the same time not keeping too high a level of any one of the working capital management is must.
Working Capital attains a proper balance between the amount of current liabilities in such a way that firm is always able to meet its financial obligation whenever due. Working Capital ensures smooth working of the unit without any production help ups due to the paucity of the funds. 4 OBJECTIVES OF THE STUDY • To determine the trends in Working Capital Components. So as to find the inference of each component on working capital of the firm. • To determine the working capital position in the organization by interpreting various ratios like working capital turnover ratio, creditor’s turnover ratio debtors turnover ratio and liquidity ratio. • To stuffy the liquidity solvency and capability position of Southern India Aquaculture Company, Chennai. • To offers suggestion for the improvement of financial position of the. Southern India Aquaculture. To indicate the direction of change and reflect whether the firm’s financial performance has improved deteriorated and or remained constant over time. • Provide management with financial information to be able to spot out financial weakness of the firm to take suitable corrective action. 5 NATURE AND IMPORTANCE OF STUDY To carry business activity the prime requirement is “Capital” required for a business can be classified under two categories viz., fixed capital, and working capital. Every business needs funds for two purposes for its establishments and carryout its day- to- day operations. Long term funds are required to create production facilities through Fixed Assets Such as plant, machinery, Land Buildings, Furniture and Fixtures etc., An Investment in these assets represents that past of firm capital which is blocked on a permanent basis is called “Fixed Capital”. Funds are also needed for short term purposes like purchase of raw materials, payment of wages and other day - to – day expenses etc., 6 METHODOLOGY Methodology is a procedure in the project report has been carried out two important sources of methodology. 1. Primary. 2. Secondary. Primary data has been carried out through study specially designed to fulfill the data needs of problem at hand, the data has been collected through direct personal interview and indirect oral interview. During the study opinion and views of the various departmental heads were taken into consideration. Secondary Data has been collected from published sources like post records, Journals, Magazines …etc., the main source for analyzing of profitability and financial position of Southern India Aquaculture Company, Chennai.
7 LIMITATIONS The present study in carried out basing on the financial statements provided by the form for last five years of the firm. • Since it is a large organization and the time period is just two months it is very difficult to get clear picture. • Analysis is based on ratio and other financial statements calculated and hence the subjective matter of the company must have been ignored. • It is the outcome of the accounting concepts and conventions with personal judgments. • Lack information and communication there is some defaults will arise while showing the overall profitability of organization. • The information is historical in nature. • Lack of information and Communication there is some defaults will arise while presenting origin of Southern India Aquaculture. • The Limitations of ratio analysis are applicable to the study also. • Through the primary data or collected but secondary data plays much role. 8 • Calculate ratios may not be future indicators.
CHAPTER – II AQUACULTURE CONTENTS: Introduction History Definition Production Volume Fish Culture Practice Top Ten Aquaculture Producers Economy of Fish Culture Problems with Fish Culture Fish Culture in Future Department of commerce and NOAA National Aquaculture Policies 9 INTRODUCTION Aquaculture, also known as aqua farming, is the farming of aquatic organisms such as fish, crustaceans, mollusks and aquatic plants. Aquaculture involves cultivating freshwater and saltwater populations under controlled conditions, and can be contrasted with commercial fishing, which is harvesting for wild fish. HISTORY: 1 Aquaculture was operating in china circa 2500 BC. Early aqua culturists fed their brood using nymphs and silkworm feces, and ate them. 2 Japanese cultivated seaweed by providing bamboo poles and, later, nets and oyster shells to serve as anchoring surfaces for spores. 3 Aquaculture spread in Europe during the Middle Ages, since away from the seacoasts and the big rivers, fish were scarce and expensive. 4 Improvement in transportation during the 19 th century made fish easily available and inexpensive. 5 In 1864 Seth Green had established a commercial fish hatching operation at Caledonia springs, near New York. 6 In 1866, artificial fish hatcheries were under way in both Canada and United States. In 1889, Dildo Island fish hatchery opened in New found land, it was 10 the largest and most advance in the world. DEFINITION: “Aquaculture is nothing but farming of aquatic organisms including fish, mollusks, crustaceans and aquatic plants”. Farming implies individual or corporate ownership of the stock being cultivated. PRODUCTION VOLUME: In 2004, the total world production of fisheries was 140 million tones of which aquaculture contributed 45 million tones, about one third. The growth rate of worldwide aquaculture has been sustained and rapid, averaging about 8 % per annum for over thirty years, while the take from wild fisheries has been essentially flat for the last decade. The Aquaculture market reached $ 86 billion in 2009. Aquaculture is an especially important economic activity in china. Between 1980 and 1997, the Chinese Bureau of Fisheries reports, aquaculture harvests grew at an annual rate of 1.67 %. In 2005, China accounted for 70 % of world production. Aquaculture is also currently one of the faster growing areas of food production in the U.S. Approximately 90% of all U.S shrimp consumption is farmed and imported. 11 FISH CULTURE PRACTICE Fish culture is practiced in less than 30 percent of the total areas available. This has a potential to create huge job opportunities, provided fish cultivation is done on a scientific basis India is a large producer of inland fish, ranking next only to Japan. With an abundance of freshwater resources, India has still not been able to tap even 30% of the potential area for inland fish production. Many entrepreneurs have, however, chosen to take this occupation on commercial scale. This is best manifested in Andhra Pradesh, which with 10, 56,000 tons of inland fish production in 2007-08 ranked next only to West Bengal, which is far more endowed with water resources. Andhra Pradesh has emerged among the ranks encouraging farmers to form cooperatives to take up farming in ponds around Kolleru Lake. Both the central and state governments have come up with schemes to help the cause of the farmers. FISH CULTURE IN PONDS Out of the total inland fish production of over 3.6 million metric tons, more than 60% is contributed by fish culture in ponds and reservoirs. The average productivity from ponds on the national level is around 2,500 kg/ha/year, though in Andhra Pradesh and Haryana it is more than 5,000 kg/ha/year, while in some other states like Bihar and UP it is anywhere between 1,500 and 2,500 kg/ha/year. Fish culture is adopted by all kinds of farmers – small and marginal ones, relatively larger farmers and those who do it on commercial scale. Sizes of ponds also depend on how affluent the farmers are. Ponds less than 100 square meters in area prove unsustainable, while those above 1 hectare are expensive for small players. Many farmers in Tamil Nadu, for instance, use ponds of sizes 30 feet by 30 feet to 12 make their living. On the other hand, water spread of anything less than 10 hectares in Andhra Pradesh is treated as a pond. FISH SPECIES BRED IN PONDS: Ponds can be perennial or seasonal. While seasonal ponds can be used for short-term fish culture, provided they retain water for at least four to five months, perennial ponds are suited for fish culture on a larger scale. Since water dries up in a few months, seasonal ponds are easy to harvest fish. Any perennial pond retaining water depth of 2 meters can be used for fish culture. Dr Gopinath Sai, executive director (technical), National Fisheries Development Board (NFDB), says a water level of 3 to 4 feet is preferable, even in summer. Fish farming can be practiced on scientific lines in perennial ponds only, though seasonal ponds can be used to cultivate fry. Though different pond shapes are being adopted by farmers, rectangular ponds are easier to work on, Sai points out. He says freshwater fish culture is a very profitable business provided farmers take up this on scientific lines. Quality of soil, water, and fish seed and fish food needs to be of reasonably good quality to have better yields. The soil for ponds should be able to retain water, and hence clayey soil is preferable. The water should not be acidic in nature, nor should it be highly alkaline. It should be treated with appropriate quantity of lime. Provision for inlets and outlets should be made in ponds, as Sai and C Ratnamachari, joint director, Inland Fisheries, Andhra Pradesh, says. However, Ranjit, a fish farmer from Bihar, now into fish culture and retail trading in Delhi, says, “We do not know about any inlets or outlets in our ponds but we manage a good catch despite that.” Ponds are not the natural habitat of fish; it is rivers and canals. This makes it imperative for farmers to provide food from outside and also create a desirable environment. 13
Fish food is provided in the form of oil cakes and rice bran. But to create conditions suitable for other organisms to grow inside ponds, fertilizers need to be applied. A combination of organic and inorganic fertilizers is ideal, Ratnamachari says. Their application depends on the soil quality to a great extent. 3.6 million Metric tons – Annual produce of inland fish in India, 60 % come from fish culture in ponds and reservoirs, 60 species – Cultivated in different parts of India in ponds or reservoirs, 80 % - Contribution of carps from Fish Culture. MAJOR SPECIES CULTURED IN PONDS: Indian Major Carps – Rohu, Catla, and Mrigal Exotic Carps – Silver Carp, Grass Carp, Common Carp Cat Fish – Magur, Ari, Singhi Tilapia - also known as Kowai. Trout – golden mahseer, silver mahseer, silver grey mahseer, and black mahseer 14 TOP TEN AQUACULTURE PRODUCERS IN 2004 S.No Country Million tonnes
1 China 30.61 2 India 2.47 3 Veitnam 1.2 4 Thailand 1.17 5 Indonesia 1.05 6 Bangladesh 0.91 7 Japan 0.78 8 Chile 0.67 9 Norway 0.64 10 United states 0.61 11 Other countries 5.35
Total 45.46 ECONOMIES OF FISH CULTURE IN PONDS (FOR 1 HA, UP TO 1M EXCAVATION): Economics of Fish Culture in Ponds (for 1ha, up to 1m excavation) Items Amount (in Rs) 15 A. Fixed costs Excavation of one hectare land (10,000 cubic meter land to the depth of one meter @Rs 20/cubic meter 200000 Construction of inlet and outlet to ponds 40000 Equipment and gears 15000 Total fixed costs 255000 B. Recurring costs Lime 500 kg @ Rs 7/kg 3500 Fingerlings 5,000 in number @ Rs 600 for every 1000 3000 Organic manure (cow dung) 15 tons @ Rs 400/ton 6000 Urea 330 kg @ Rs 7/kg 2310 Super phosphate 165 kg @ Rs 6/kg 990 Ammonium sulphate 63 kg @ Rs 6/kg 378 Mustard oil cake 1350 kg@Rs 12/kg 16200 Rice bran 1350 kg @ Rs 4/kg 5400 Insurance cost @ 4% of seed and fertilizers 1200 Miscellaneous including harvesting, security of ponds, etc. 8000 Total recurring cost 46978 Total cost 301978 Income Production (from second year onwards ) (in kg) 3000 Sale price (per kg) 45 Total Income (from second year onwards) (in Rs) 135000 Net income for first seven years Net Income in first year -301978 Net Income in second year 88022 Net Income in third year 88022 Net Income in fourth year 88022 Net Income in fifth year 88022 16 Net Income in sixth year 88022 Net Income in seventh year 88022 Source: Updated from NABARD Rajat Sharma of Haryana Fisheries Department has a simple mathematics for fish farming, which he says is followed by most fish farmers in the state. He says what is needed to produce for 1 kilogram of fish is 1 cubic meter water, 1 kilogram of organic manure, 100 grams of inorganic fertilizer, 1 kilogram of supplementary feed and three fish seeds. Farmers, he says, should wait for one year for the fish to mature. According to his calculation, investment needed for 1 kilogram of fish is anywhere between Rs 15 and 25. The sale price of 1 kilogram of fish to wholesalers is anywhere between Rs 40 and 50, ensuring more than double the income. Being a state subject, the fisheries department also helps farmers get the right quality fingerlings. Private hatcheries have also come up in several parts of the country and government schemes are also aiding this process. Fingerlings must be free from disease because one infected fish may cause widespread damage. Polyculture in ponds is the dominant production system in most parts of the country. Carps, both Indian and exotic, contribute to almost 80% of the produce from ponds. Rohu, katla, mrigal and magur are the favorite pond fish varieties. PROBLEMS WITH FISH CULTURE “The biggest problem with fish culture is the possibility of diseases,” Sai points out. Fish can be infected with fungal, bacterial, ulcer or worm diseases. It is, however, easy to spot infected fish as they become weak and lethargic, and often come to the surface of the water to breathe. In eye diseases, for instance, their eyes 17 become opaque. Infected fish can have open spores on the body, and can also have their scales dropping, something Ranjit says caused him huge losses when he used to cultivate fish. Treatments are available in the form of treating the water with potassium permanganate solution, or with acetic acid and normal salt. Copper sulphate solution and chloromycetin are also used to treat some other diseases. Any unusual feeding behavior of fish should be taken seriously. It is best to prevent diseases, as once infected; the fish population in a pond can be wiped out, causing big losses of both money and time for farmers. Another problem area can be marketing. Fish procured from ponds are perishable goods. To keep the stock fresh and fit enough to be sold in markets, suitable ice containers and cold storages are essential. It is also mandatory to have good transportation links to main wholesale markets. THE FUTURE The central government has come up with schemes in association with state governments from time to time to support fish culture. Development of Inland Fisheries and Aquaculture was one such scheme launched during the 10th Plan. Under the scheme, whose cost is borne by the central and the state governments in the ratio of 75:25, farmers are given assistance for building ponds. A subsidy of 20% is given assuming cost for constructing a pond in plain areas is Rs 200,000 per hectare and at Rs 300,000 per hectare in hilly regions. For people from scheduled castes and scheduled tribes subsidy is a little higher at 25%. If an existing pond is to be renovated, subsidy is given at 20% assuming cost of Rs 60,000 per hectare. 18 The National Bank for Agriculture and Rural Development (NABARD) also refinances the banks extending loans to fisheries cooperatives or to entrepreneurs involved in fish culture. The formation of the Fish Farmers’ Development Agencies (FFDAs) was another major scheme launched by the Ministry of Agriculture in the 1970s. These agencies provide financial, technical and other support to beneficiaries at district level throughout India. Training is also provided through the NFDB. Sai says that the NFDB conducts training for officials from fisheries departments and various NGOs involved with fish farmers. They pass knowledge gained on to the farmers in the field. India produces in excess of 3.6 million metric tons of freshwater fish, but a lot of potential lies untapped. While the area covered by rivers cannot be added, fish production through ponds can definitely be increased by several notches. Fortunately, the stakeholders in the fish business realize this. India has, therefore, fixed a target of over 5.5 million metric tons of freshwater fish catch by 2020. However, more capital investment and technological knowledge is required. There is a need for better resource management and community intervention in all places where fish culture is practiced or can be practiced. Rain-fed areas should also be utilized to cultivate fish. As far as markets are concerned, communication systems among fishermen’s cooperatives controlling marketing need to be enhanced. This would be beneficial not only for farmers, but also for consumers. DEPARTMENT OF COMMERCE AND NOAA NATIONAL AQUACULTURE POLICIES: 19 On June 9, 2011, NOAA and the Department of commerce released final national aquaculture policies. These policies establish a framework to allow sustainable domestic aquaculture to contribute to the U.S. seafood supply, support coastal communities and important commercial and recreation fisheries, and help to restore species and habitat. NOAA sees aquaculture as a critical component to meeting increasing global demand for seafood and maintaining healthy ecosystems. CHAPTER – III SHRIMP AND PRAWN CULTURE CONTENTS: Introduction History of shrimp culture Economy Hatchery training in India 20 Feeds Feed ingredients Feeding practices Summary SHRIMP AND PRAWN CULTURE: INTRODUCTION: A “shrimp farm” is an aquaculture business for the cultivation of marine shrimp or prawns for human consumption. Commercial shrimp farming began in the 1970s, and production grew steeply, particularly to match the market demands of the United States, Japan and Western Europe. The total global production of farmed shrimp reached more than 1.6 million tonnes in 2003, representing a value of nearly 9 billion U.S. dollars. About 75% of farmed shrimp is produced in Asia, in particular in China and Thailand. The other 25% is produced mainly in Latin America, where Brazil, Ecuador, and Mexico are the largest producers. The largest exporting nation is Thailand. 21 HISTORY OF SHRIMP CULTURE: 1 Indonesians and others have farmed shrimp for centuries, using traditional low-density methods. Indonesian brackish water ponds, called tambaks, can be traced back as far as the 15th century. 2 By the 1960s, a small industry had developed in Japan. Commercial shrimp farming began to grow rapidly in the late 1960s and early 1970s. 3 Taiwan was an early adopter and a major producer in the 1980s; its production collapsed beginning in 1988 due to poor management practices and disease. In Thailand, large-scale production expanded rapidly from 1985 4 In South America, Ecuador pioneered shrimp farming, where it expanded dramatically from 1978. Today, there are marine shrimp farms in over fifty countries. ECONOMY: The total global production of farmed shrimp reached 2.5 million tonnes in 2005. This accounts for 42% of the total shrimp production that year. The largest single market for shrimp is the United States, importing between 500 – 600,000 tonnes of shrimp products yearly in the years 2003-2009. About 200,000 tonnes yearly are imported by Japan, while the European Union imported in 2006 another about 500,000 tonnes of tropical shrimps, with the largest importers being Spain and France The import prices for shrimp fluctuate wildly. In 2003, the import price per kilogram shrimp in the United States was US$ 8.80, slightly higher than in Japan at 22 US$8.00. The average import price in the EU was only about US$5.00/kg. About 75% of the world production of farmed shrimp comes from Asian countries; the two leading nations being China and Thailand, closely followed by Vietnam, Indonesia, and India. The other 25% are produced in the western hemisphere. In terms of export, Thailand is by far the leading nation, with a market share of more than 30%, followed by China, Indonesia, and India, accounting each for about 10%. Other major export nations are Vietnam, Bangladesh, and Ecuador. A joint programmed of the World Bank, the Network of Aquaculture Centers in Asia-Pacific (NACA), the WWF, and the FAO was established in August 1999 to study and propose improved practices for shrimp farming. HATCHERY TRAINING IN INDIA: Shrimp hatchery technology development in the Indian private sector has been slow. Inappropriate models and concentration of effort in the public sector were two reasons. It has been recognized that hatchery seed supply will only increase proportionally to the degree of private investment in the industry. Therefore, BOBP’s training programmed targeted the small-scale business community. Advertisements placed in local and regional newspapers during November 1991 offered training in shrimp and prawn hatchery technology. Over 300 applications were received. Of these, 22 were interviewed and ten selected, eight of them for shrimp hatchery training and two for freshwater prawn hatchery training. Of the successful applicants, two had some experience in shrimp culture, while the others were small business persons, including one woman. Geographically, most applications were received from Tamil Nadu, followed by 23 Andhra Pradesh, Orissa and West Bengal Of the successful applicants, six were from Tamil Nadu, two from Andhra Pradesh and one each from Orissa and West Bengal. The candidates from Orissa and West Bengal were selected for freshwater training. The National Prawn Fry Production and Research Center (NAPFRE), Pulau Sayak, Malaysia, was selected as the training site for the eight shrimp hatchery participants. NAPFRE regularly conducts international training courses, has a well trained and experienced staff and has good accommodation facilities. The curriculum included all aspects of tiger shrimp hatchery operation. The training period was for 31 days, June 7 - July 7 1992, and included field visits to small scale commercial hatcheries (see Appendix I for curriculum). The participants from Orissa and West Bengal were trained in freshwater prawn hatchery technology for 35 days during 1993. In addition, two biologists from the Department of Fisheries (DOF) hatchery in Cuttack, Orissa, completed a 10-day short course in June 1993 (see Appendix II for curriculum). Asia is the principal producer of farmed shrimp, accounting for 81 percent of the total world production of about 600,000. ASIAN SHRIMP CULTURE PRODUCTION, 1992 % No of Farms Thailand 25.4 14,000 China 23.7 3,000 Indonesia 22 15,000 India 7.6 1,500 Viet Nam 5.9 1,000 Taiwan 5.1 2,500 24 Philipines 4.2 3,000 Bangladesh 4.2 6,000 Malaysia 0.6 350 Japan 0.5 150 Others 0.8 440
Total 100 46,940 FEEDS: Natural food items: Zooplankton and oligochaete worms play a very important role in the nutrition of freshwater prawns grown in ponds. Even juveniles larger than 2g can utilize live zooplankton. Earthworm and insect larvae are also natural food items for the prawns. Enhancement of macroinvertebrate production in ponds is extremely important in the production of freshwater prawns as it would improve feed efficiency considerably. The use of good quality feeds, however, is important when biomass in the ponds increase as the animals grow. Moreover, more uniform production of large prawns is achieved when feeds are used FEED INGREDIENTS: Prawn head meal, chicken offal, clam meat, silk worm pupae, meat and bone meal, fish meal, crustacean meal, squid meal and mussel meat meal are some of the excellent ingredients used in prawn feed trials. Various cereal grains, oil seed cakes (ground nut oil cake, soybean cake, and sunflower oil cake), rice bran and several other animal husbandry and agro by-products available have also been used 25