“A STUDY ON RATIO ANALYSIS”

(With reference to Dredging Corporation of India LTD.,

Visakhapatnam)

A project report to be submitted to JNTUK, Kakinada

for the partial fulfillment for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by
DUDA VAMSI
[Link]: 22L31E0032

Under the Esteemed Guidance of

Dr. B. CHANDRA
[Link], MBA, MPhil, PhD
Associate Professor

Department of Management Studies

VIGNAN’S INSTITUTE OF INFORMATION TECHNOLOGY(A)
(Approved by AICTE and Permanently Affiliated to JNTU-GV)
Duvvada, Visakhapatnam - 49

2022-2024

i
 DECLARATION

I hereby declare that this project work entitled “A Study on Ratio

Analysis”,(with special reference to Dredging Corporation of India Ltd.,

Visakhapatnam), submitted by me to the Department of Management Studies,

Vignan's institute of information technology (A), Affiliated to JNTU-GV,

Duvvada, in partial fulfilment for the award of degree of MBA is entirely

based on my own study is being submitted for the first time and it has not been

submitted to any other university or institution for any degree or diploma.

Place: Visakhapatnam. DUDA VAMSI

Date: [Link]:22L31E0032

ii
CERTIFICATE PROVIDED BY THE COMPANY

iii
 VIGNAN’S INSTITUTE OF INFROMATON TECHNOLOGY [A]
(Approved by AICTE and Affiliated JNTU-GV, Vizianagaram)

Duvvada, Visakhapatnam-46

DEPARTMENT OF MANAGEMENT STUDIES

Date:

CE R T I F I C A T E

This is to certify that the project report entitled “A Study on Ratio

Analysis”, (with special reference to Dredging Corporation of India Ltd.,

Visakhapatnam.) is being submitted by Duda Vamsi bearing roll number

22L31E0032 in partial fulfillment for the award of the Degree of Masters

in Business Administration has been carried out by him under my guidance

and supervision.

[Link] [Link]
Project Guide Head of the Department

EXTERNAL EXAMINER

iv
 ACKNOWLEDGEMENT

Apart from the efforts of me, the success of this project depends largely on the
encouragement and guidelines of many others. I take this opportunity to express my
gratitude to the concerned that have been instrumental in the successful completion of this
project.

I extended my sincere gratitude to my project guide [Link] for her

consistent encouragement, benevolent criticism, inseparable suggestions which were the
main reasons to bring the work to present shape.

I honored to extend my sincere regards to esteemed Head of the Department

[Link] for giving me the permission to carry out the project work.

I am also thankful to our beloved Principal [Link] for giving me the

permission to carry out the project work.

I am immensely thankful to the Finance manager B. Gupta who has guided me a every
stage in preparing and finishing the project with their valuable suggestions

Finally, I would like to express my deep sense of gratitude to my beloved parents

and my family members for their love and blessings to complete the project successfully.

DUDA VAMSI

v
 ABSTRACT

Ratio analysis is a crucial tool in financial analysis, offering insights into a company's
financial health, performance, and efficiency. This study focuses on ratio analysis with
reference to Dredging Corporation of India Limited (DCIL), a key player in India's
dredging industry based in Visakhapatnam. The study aims to evaluate the financial
stability, profitability, liquidity, and operational efficiency of DCIL using various financial
ratios. By analyzing financial statements over multiple years, this research provides a
comprehensive assessment of the company’s financial trends and decision-making
effectiveness.

The study utilizes key financial ratios such as liquidity ratios, profitability ratios,
leverage ratios, and efficiency ratios to assess the financial position of DCIL. Liquidity
ratios, including the current ratio and quick ratio, help determine the company’s ability to
meet short-term obligations. Profitability ratios like net profit margin and return on assets
evaluate the company's earnings potential. Leverage ratios assess financial risk by
examining debt-equity levels, while efficiency ratios measure asset utilization and
operational effectiveness.

This research is valuable for investors, policymakers, and corporate decision-makers

seeking to understand DCIL’s financial viability. The findings provide strategic
recommendations to enhance profitability, optimize resource utilization, and strengthen
financial stability. By leveraging ratio analysis, stakeholders can make informed
investment and operational decisions, ensuring the sustainable growth of DCIL in the
highly competitive dredging industry

vi
 CONTENTS
Page
[Link] CONTENTS
No

CHAPTER: I Introduction

1 1.1 Introduction 1-3

2 1.2 Nature of the Study 3

3 1.3 Need of the Study 4

4 1.4 Importance of the Study 4

5 1.5 Scope of the study 5

6 1.6 Review of literature 5-6

7 1.7 Statement of the problem 6

8 1.8 Objective of the study 7

9 1.9 Formulating hypothesis 8

10 1.10 Research methodology 9-10

11 1.11 Period of the study 10

12 1.12 Limitations of the study 11

13 1.13 Presentation of the study 11

CHAPTER: II Organization profile

2.1 A brief profile of the 12-16

14
pharmaceutical industry

2.2 A brief profile of the Pfizer 17-22

15
health care private limited

vii
 CHAPTER: III Conceptual/theoretical framework

16 3.1 Introduction 23-24

3.2 Theoretical background of 24-25

17
performance management

3.3 Theories related to 25-26

18
performance management

3.4 Tools & techniques for data 27

19
analysis

CHAPTER: IV Data analysis & interpretation

20 4.1 Data analysis & interpretation 28-55

21 4.2 Statistical tools and analysis 56-67

CHAPTER: V Summary, findings and suggestions

22 5.1 Summary 68-70

23 5.2 Findings 70-73

24 5.3 Suggestions 73-74

25 5.4 Conclusion 74-75

Bibliography

viii
 LIST OF TABLES

Table No. Title of the Table Page No.

1 4.1 CURRENT RATIO 28

2 4.2 QUICK RATIO 30

3 4.3 INVENTORY TO WORKING CAPITAL 32

4 4.4 DEBT-EQUITY RATIO 34

5 4.5 WORKING CAPITAL TURNOVER RATIO 36

6 4.6 FIXED ASSETS TURNOVER RATIO 38

7 4.7 INVENTORY TURNOVER RATIO 40

8 4.8 GROSS PROFIT RATIO 42

9 4.9 RETURN ON EQUITY 44

10 4.10 RETURN ON ASSETS 46

11 4.11 NET PROFIT RATIO 48

12 4.12 NET WORTH RATIO 50

13 4.13 TOTAL DEBT RATIO 52

14 4.14 TOTAL LIABILITIES RATIO 54

15 4.15 NET SALES RATIO 56

ix
 LIST OF FIGURES

Fig No. Title of the Figure Page No.

1 2.2.2 BOARD OF DIRECTORS 13

2 2.2.3 ORGANIZATIONAL STRUCTURE 14

3 4.1 CURRENT RATIO 28

4 4.2 QUICK RATIO 30

5 4.3 INVENTORY TO WORKING CAPITAL 32

6 4.4 DEBT-EQUITY RATIO 34

7 4.5 WORKING CAPITAL TURNOVER RATIO 36

8 4.6 FIXED ASSETS TURNOVER RATIO 38

9 4.7 INVENTORY TURNOVER RATIO 40

10 4.8 GROSS PROFIT RATIO 42

11 4.9 RETURN ON EQUITY 44

12 4.10 RETURN ON ASSETS 46

13 4.11 NET PROFIT RATIO 48

14 4.12 NET WORTH RATIO 50

15 4.13 TOTAL DEBT RATIO 52

x
16 4.14 TOTAL LIABILITIES RATIO 54

17 4.15 NET SALES RATIO 56

xi
 CHAPTER - I
INTRODUCTION

1
1.1 INTRODUCTION
Ratio analysis is a financial tool used to evaluate the performance and financial
health of a company. It involves calculating and interpreting various ratios derived from
the company’s financial statements, such as the balance sheet, income statement, and cash
flow statement. By analyzing these ratios, businesses, investors, and stakeholders can make
informed decisions regarding profitability, liquidity, efficiency, and solvency.

The primary objective of ratio analysis is to simplify complex financial data,

making it easier to understand and compare over time or against industry benchmarks.
Ratios can be categorized into different types, such as profitability ratios (e.g., net profit
margin, return on equity), liquidity ratios (e.g., current ratio, quick ratio), efficiency ratios
(e.g., inventory turnover, asset turnover), and solvency ratios (e.g., debt-to-equity ratio,
interest coverage ratio).

One of the key benefits of ratio analysis is its ability to highlight strengths and
weaknesses in a company's operations. For instance, a declining profitability ratio might
indicate increasing costs or decreasing sales, prompting management to take corrective
actions. Additionally, it helps in assessing the company’s ability to meet short-term
obligations, manage assets effectively, and sustain long-term financial stability.

However, ratio analysis has its limitations. It depends heavily on the accuracy of
financial statements, which can be influenced by accounting policies and estimates. Ratios
are also influenced by external factors such as economic conditions and industry trends,
making it essential to consider qualitative aspects alongside quantitative analysis for a
comprehensive evaluation.

1.1.1 Meaning of finance and finance function

Finance refers to the management of money, investments, and financial resources

to achieve business objectives. It includes activities such as budgeting, investing, lending,

2
and borrowing. The finance function in an organization ensures efficient allocation of
funds, risk management, and financial planning to maximize profitability and
2sustainability. It plays a crucial role in strategic decision-making, ensuring that financial
resources are used effectively to support business growth.

1.1.2 Financial management

Finance refers to the management of money, investments, and financial resources

to achieve business objectives. It includes activities such as budgeting, investing, lending,
and borrowing. The finance function in an organization ensures efficient allocation of
funds, risk management, and financial planning to maximize profitability and 2
sustainability. It plays a crucial role in strategic decision-making, ensuring that financial
resources are used effectively to support business growth.

1.1.3 Impact of liquidity on profitability

Liquidity refers to a company’s ability to meet its short-term obligations, while

profitability measures its ability to generate earnings. A business must strike a balance
between liquidity and profitability because excessive liquidity may indicate underutilized
resources, leading to lower returns, whereas insufficient liquidity can cause financial
distress and disrupt operations. Proper liquidity management ensures smooth cash flow,
reducing financial risk and supporting sustainable profitability.

3
1.2 NATURE OF THE STUDY
This study on ratio analysis focuses on evaluating the financial performance of a
business using key financial ratios. It involves analyzing profitability, liquidity, solvency,
and efficiency ratios derived from financial statements. The study is both quantitative and
analytical in nature, as it examines can identify strengths, weaknesses, and areas for
improvement in financial management. numerical data to assess financial health and trends.
By using ratio analysis, businesses.

1.3 NEED OF THE STUDY

Financial analysis is essential for stakeholders, including investors, management,
and creditors, to make informed decisions. Ratio analysis helps in understanding a
company’s financial stability, operational efficiency, and overall profitability. The need for
this study arises from the necessity to evaluate financial statements effectively, compare
industry benchmarks, and support strategic decision-making. It also helps businesses
optimize resource allocation and improve financial planning.

1.4 IMPORTANCE OF THE STUDY

This study is important as it provides insights into a company’s financial position,
helping management in performance evaluation and decision-making. It aids investors in
assessing the profitability and risk factors associated with investments. Furthermore, ratio
analysis helps in identifying trends over time, enabling proactive financial management
and long-term sustainability. Key significance are:

1. It provides a comprehensive understanding of a company’s financial position and

operational efficiency.
2. Ratio analysis helps in evaluating the profitability and liquidity of a business,
ensuring proper resource allocation.
3. It assists in financial forecasting and strategic planning for future growth.
4. The study helps businesses identify risks and take proactive measures to mitigate
financial challenges.

4
1.5 SCOPE OF THE STUDY

The scope of this study includes analyzing financial ratios of a selected company
or industry over a specific period. It covers key aspects such as liquidity, profitability,
efficiency, and solvency, providing a comprehensive financial evaluation. The study may
also involve comparing financial performance with industry standards and previous years’
data. While the primary focus is on internal financial health, the study may extend to
external factors influencing financial performance, such as market conditions and
economic trends. Here are the key areas of scope:

1. The study focuses on financial statement analysis for a specific company or

industry over a defined period.
2. The scope includes comparing financial performance with competitors and
industry standards.
3. It analyzes the impact of financial decisions on business growth and stability.
4. The study helps in identifying trends and patterns to support strategic decision
making and financial planning.

5
1.6 REVIEW OF LITERATURE

Review of Literature on Ratio Analysis with Reference to Dredging Corporation of India

Limited, Visakhapatnam

1.6.1 Introduction to Ratio Analysis: Ratio analysis is a widely used financial tool
for evaluating the performance, efficiency, profitability, and financial stability of a
company. According to Pandey (2015), ratio analysis helps stakeholders interpret
financial statements effectively by comparing key metrics over time or against
industry benchmarks. Khan & Jain (2017) also emphasize that ratio analysis provides
a quantitative foundation for decision-making in investment and credit risk
assessment.

1.6.2 Importance of Ratio Analysis in the Dredging Industry: The dredging

industry, being capital-intensive, requires a strong financial evaluation framework.
Rao & Sinha (2018) highlight that financial ratios such as liquidity, solvency, and
profitability are crucial for analyzing firms in capital-heavy industries. Sharma
(2019) further explains that profitability ratios are particularly significant for
dredging companies, given their reliance on large-scale infrastructure projects and
government contracts.

1.6.3 Financial Performance of Dredging Corporation of India Limited

(DCIL): Several studies have examined the financial performance of DCIL. Gupta
& Reddy (2020) conducted a financial ratio analysis of DCIL and found that the
company has shown fluctuations in profitability due to project-based revenue
streams. Singh (2021) analyzed DCIL’s liquidity and observed that short-term
liquidity ratios, such as the current ratio and quick ratio, indicate financial stress due
to high working capital requirements.

6
1.6.4 Key Financial Ratios in DCIL’s Performance Analysis:

1.6.4A Profitability Ratios: Studies like Mehta (2022) emphasize the importance of
net profit margin and return on capital employed (ROCE) in assessing DCIL’s
ability to generate returns. 6

1.6.4B Liquidity Ratios: Patel (2023) highlights the significance of liquidity ratios
in ensuring smooth operations in project-based industries like dredging.

1.6.4C Solvency Ratios: Nair (2020) discusses how solvency ratios, including the
debt-equity ratio, reflect financial risk, particularly in firms with high
infrastructure investments.

1.6.5 Comparative Analysis with Industry Peers: Research by Bose &

Mukherjee (2021) compares DCIL’s financial performance with private dredging
firms, showing that while DCIL benefits from government contracts, it faces
efficiency challenges compared to private players. Verma & Roy (2022) suggest
that improving operational efficiency and capital utilization can enhance DCIL’s
competitive position.

1.6.6 Conclusion and Research Gaps: The existing literature highlights the role of
ratio analysis in assessing DCIL’s financial health. However, gaps remain in
analyzing the impact of recent policy changes, technological advancements, and
global competition on DCIL’s financial performance. Future research should focus
on integrating ratio analysis with predictive financial modeling to provide strategic
insights.

7
1.7 STATEMENT OF THE PROBLEM
This study examines the financial health of Dredging Corporation of India Ltd.,
based in Visakhapatnam, by utilizing ratio analysis to simplify and interpret complex
financial data. While traditional financial statements provide valuable insights, they can be
challenging to analyze. Ratio analysis condenses this data into key financial indicators
profitability, liquidity, solvency, and efficiency—offering a clearer understanding of the
company’s performance. By evaluating these ratios within the local economic context, the
study aims to identify potential financial challenges and opportunities for improvement,
providing a comprehensive assessment of the company's financial standing.

1.8 OBJECTIVES OF THE STUDY

1. To study the Liquidity, Profitability and efficiency positions of the company

during the study period.

2. To evaluate the performance of the company by using ratios as yardstick to

measure the efficiency of the company.

3. To understand the impact of ratio analysis on company’s gross profit, assessing

its effectiveness in evaluating financial performance and decision making.

4. To analyze financial ratios during different periods.

5. To offer appropriate suggestions for the better management of the company

1.9 HYPOTHESIS OF THE STUDY

H0 :- The company's gross profit as not improved over the study period by adjusting the
key ratios of the company.

H1 :- The company's gross profit as improved over the study period by adjusting the key
ratios of the company.

8
1.10 PERIOD OF THE STUDY
The study is scheduled to take place over a period from August 07, 2024, to
September 20, 2024. This period has been carefully chosen to allow sufficient time for data
collection, analysis, and interpretation of findings. The study will focus on gathering
relevant information, if necessary, and evaluating outcomes based on the set objectives.

1.11 LIMITATIONS OF THE STUDY

1. This study relies on the accuracy of Dredging Corporation of India Ltd.'s financial
statements. Errors can lead to misleading ratio analysis.
2. Benchmarking ratios might be difficult due to limited industry data specific to
Visakhapatnam.
3. Ratio analysis focuses on historical data, potentially overlooking future trends.
4. Qualitative factors like management and market sentiment are not captured in
ratios.
5. Availability of relevant economic data for Visakhapatnam could be limited.
6. These limitations necessitate careful interpretation of results for a comprehensive
view.
7. The study was conducted over a period of 45 days, allowing for a comprehensive
evaluation of historical trends and current financial conditions based on the
available data.

1.12 CHAPTERIZATION OF THE STUDY

CHAPTER I : Introduction

CHAPTER II : An overview of organization under the study

CHAPTER III : Research Methodology

CHAPTER IV : Data Analysis and Interpretations

CHAPTER V : Findings, Recommendations and Conclusion

9
 CHAPTER – II

AN OVERVIEW OF ORGANIZATION
UNDER THE STUDY

10
2.1 A BRIEF PROFILE OF THE INDUSTRY

2.1.1 Industry Overview

Dredging is a critical process that involves the removal of sediments and debris from
the bottom of water bodies such as rivers, harbours and oceans. This activity is essential
for maintaining and enhancing navigational channels, ensuring the safe passage of
vessels, facilitating port operations, supporting land reclamation projects, and
contributing to coastal protection. In India, dredging holds significant importance due to
the country's extensive coastline, numerous ports, and inland waterways that are vital for
trade and transportation.

2.1.2 No. of companies within the Industry

The Indian dredging industry comprises both public and private sector entities, along with
international players. Key participants include:

2.1.2A Adani Ports and Special Economic Zone Limited (APSEZ): As of 2024, APSEZ
operates a substantial fleet of 23 dredgers, making it one of the largest private
players in the Indian dredging market.

2.1.2B Dredging Corporation of India (DCI): A public sector undertaking, DCI's fleet
includes 10 trailing suction hopper dredgers, one cutter suction dredger, one
backhoe dumb (non-propelled) dredger, one inland cutter suction dredger, and
auxiliary craft to assist the main fleet.

2.1.2C Dharti Dredging and Infrastructure Limited: This company has been active in
securing significant contracts, including a recent project worth approximately Rs
78.6 crore for fairway maintenance on the Majhaua-Ghazipur stretch under the
capacity augmentation project for National Waterway-1.

2.1.2D International Players: Global dredging companies such as the Netherlands-

based Royal Boskalis Westminster N.V. and Van Oord, along with the
Luxembourg-based Jan De Nul Group, have established a notable presence in the
Indian market, contributing their expertise to various projects.

11
2.1.3 Productivity of the industry
The productivity of the Indian dredging industry has been on an upward trajectory, driven
by several key factors:

2.1.3A Port Maintenance and Expansion: Major ports like Visakhapatnam and Kolkata
have undertaken extensive dredging activities to maintain adequate depth in
shipping channels, accommodating larger vessels and addressing high siltation
issues.

2.1.3B Inland Waterways Development: Initiatives such as the Jal Marg Vikas Project
aim to enhance year-round navigability of National Waterways, supporting trade
and reducing transportation costs.

2.1.3C Land Reclamation Projects: Projects like the Mumbai Land Reclamation and the
Mangrove Restoration Project in Gujarat have contributed to coastal protection and
land reclamation, showcasing the industry's capability in executing complex
assignments.

2.1.4 GDP share of the Industry

Quantifying the exact contribution of the dredging industry to India's Gross
Domestic Product (GDP) is challenging due to the lack of specific data attributing
economic value directly to this sector. However, the significance of dredging is evident
through its integral role in the maritime infrastructure, which is a vital component of India's
economy.

2.1.4A Market Size and Growth: The Indian dredging market has been experiencing
steady growth. In 2023, the global dredging market was valued at approximately
US$16.4 billion and is projected to reach US$20.6 billion by 2034, growing at a
Compound Annual Growth Rate (CAGR) of 2.2%. Within this global context,
India's dredging industry is expected to grow at a CAGR of nearly 4.4% during the
forecast period of 2020-2026, driven by increasing demand from major and non-
major ports.

12
2.1.4B Dredging Volumes: As of 2024, the Indian dredging market encompassed
approximately 157 million cubic meters (mcm) of dredging activity. Maintenance
dredging accounted for about 110 mcm, while capital dredging constituted
approximately 47 mcm.

2.1.4C Economic Significance: While specific figures detailing the dredging industry's
direct contribution to India's GDP are not readily available, its economic
importance is underscored by its role in enabling maritime trade, supporting port
operations, and facilitating coastal development projects. These activities
collectively contribute to the broader economic landscape, influencing sectors such
as shipping, logistics, and international trade.

2.1.5 Related details of the Industry

Several trends and developments are shaping the future of the dredging industry in
India. They are:

2.1.5A Public-Private Partnerships (PPP): Major ports are exploring PPP models in
dredging, allowing operators to recover costs linked to channel traffic. For instance,
15 firms have submitted expressions of interest for land development through
dredging under the Vadhavan port project.

2.1.5B Sustainable Practices: Ports like Haldia have started treating dredged sand for
construction purposes, and ports such as Visakhapatnam, Paradip, and Chennai
have undertaken beach nourishment projects to prevent soil erosion.

2.1.5C Technological Advancements: The adoption of modern dredging techniques and

equipment is on the rise, enhancing operational efficiency and environmental
compliance. The Dredging Guidelines, 2021, emphasize sustainable practices and
the use of advanced technologies in dredging operations.

2.1.5D Government Initiatives: The Sagarmala Programme aims to promote port-led

development, with over 600 projects identified, involving an investment of over Rs
8.7 trillion, to be implemented by 2035. This initiative is expected to significantly
boost dredging activities across the country's ports and waterways.

13
2.2 A BRIEF PROFILE OF THE COMPANY
Dredging Corporation of India Limited (DCI) is a premier organization in the field
of dredging and maritime development in India. Established in 1976, DCI has been
instrumental in providing dredging services to major ports across the country, ensuring the
continuous availability of desired depths in shipping channels.

2.2.1 Origin
DCI was founded in 1976 with the primary objective of catering to the dredging needs
of India's major ports. Over the years, the company has expanded its services to include
capital dredging for the creation of new harbours, deepening existing harbours, and
maintenance dredging for the upkeep of required depths at various ports along India's 7,500
km coastline.

2.2.2 Board of Directors

As of recent records, the Board of Directors comprises:

Organizational Structure

DCI's organizational structure includes key management personnel such as:

Chief Operating Officer (COO): S. V. Prasad

Chief Technical Officers (CTO): Satheesh Chander Rao and Y. S. R. Murthy

Chief Administrative Officer (CAO): Ramachandra Rao Pasupula

Compliance Officer: P. Chandra Kalabhinetri

14
Board

15
2.2.3 Organizational Structure

2.2.4 Functional Departments

DCI operates through various functional departments, including:

2.2.4A Operations Department: Oversees dredging activities and fleet management.

2.2.4B Technical Department: Handles maintenance and technical support for dredging
equipment.

2.2.4C Finance Department: Manages financial planning, budgeting, and accounting.

2.2.4D Human Resources Department: Responsible for recruitment, training, and

employee welfare.

2.2.4E Corporate Planning and Business Development: Focuses on strategic planning

and exploring new business opportunities.

16
2.2.5 Production Types
DCI's fleet consists of modern and sophisticated dredgers, including:

2.2.5A Trailer Suction Hopper Dredgers (TSHD): Ten in number, used for maintenance
and capital dredging.

2.2.5B Cutter Suction Dredgers (CSD): Two in number, utilized for cutting and
removing hard soil or rock formations.

2.2.5C Backhoe Dredger: One in number, suitable for precise dredging operations in
confined areas.

2.2.5D Inland and Ancillary Crafts: Supporting vessels for various dredging operations.

2.2.6 Financials
In the financial year 2022-23, DCI achieved its highest-ever turnover since inception,
amounting to ₹1,165 crore. The company reported a profit of ₹15.18 crore for the same
period, reflecting a significant improvement in profitability. The earnings before interest,
taxes, depreciation, and amortization (EBIDTA) stood at ₹178.24 crore.

2.2.7 SWOT Analysis

2.2.7A Strengths:

1. Established leader in the Indian dredging industry with extensive experience.

2. Diverse and modern fleet capable of handling various dredging operations.
3. Strategic collaborations with major ports enhance operational efficiency.

2.2.7B Weaknesses:

1. Dependence on government contracts may limit revenue diversification.

2. Challenges in fleet modernization due to high capital expenditure requirements.

2.2.7C Opportunities:

1. Expansion into international markets through joint ventures and partnerships.

2. Increasing demand for dredging services due to port infrastructure development and
inland waterways projects.

17
2.2.7D Threats:

1. Intensifying competition from private players in the dredging sector.

2. Economic fluctuations affecting government spending on maritime infrastructure.

2.2.8 Awards & Recognitions

The Dredging Corporation of India Ltd (DCI) is a public sector company in India that
specializes in dredging operations. It was established in 1976 and is headquartered in
Visakhapatnam, Andhra Pradesh. DCI plays a crucial role in maintaining and deepening
India's shipping channels, ports, and harbours, thereby supporting the country's maritime
trade and infrastructure development. DCI provides various dredging services, including
capital dredging, maintenance dredging, and land reclamation. The company has a fleet of
dredgers and equipment to carry out these operations efficiently.

1. DCI has achieved ISO 9001:2000 Certification for integrated dredging

2. DCI has been declared as a Mini Ratna Category -1 Public Sector enterprise by the
Government of India

18
 CHAPTER - III
THEORETICAL FRAMEWORK

19
3.1 THEORETICAL / CONCEPTUAL FRAMEWORK

3.1.1 Ratio Analysis

Financial statements are the culmination of the accounting process within a
business, summarizing key financial information. These statements, typically the balance
sheet and income statement, provide snapshots of a company's financial health at a specific
point in time (balance sheet) and its profitability over a given period (income statement).

Ratio analysis takes this information a step further. It involves calculating and
interpreting various ratios derived from financial statement data. These ratios offer valuable
insights into a company's strengths and weaknesses, aiding decision-making. It should be
used in conjunction with other financial and non-financial information to gain a
comprehensive understanding of a company's performance.

3.1.2 Objectives of Financial Statements

1. To assist in decision making
2. To disclose the extent information related to financial statements.
3. To disclose the true financial position of the firm.
4. To draw the correct picture of the financial operations of the firm.
5. To evaluate the performance of the firm through financial statements.

3.1.3 Importance of Financial Statements

The following are the methods or tools of financial statements:

1. Financial statements help management to formulate and frame policies for better
functions of the operations of the enterprise.
2. Financial statements help owners to know whether their business is profitable or not
and the capital is being correctly employed or not.
3. Financial statements help investors to know whether the company is profitable or not
and the investment is safe or not.
4. Financial statements help government to know the earning capacity of the firm for
framing taxes. It also helps to formulate better fiscal and taxation policies.

20
3.1.4 Tools of Financial Analysis
The following are the methods or tools of financial statements.

1. Comparative Financial Statements

2. 2 Common Size Financial Statements.

3. Trend Analysis.

4. Fund Flow Analysis.

5. Cash Flow Analysis.

6. Ratio Analysis.

3.1.5 Nature of Ratios:

Financial analysis leans heavily on a technique called ratio analysis. In essence,
ratios compare individual or grouped figures from a company's financial statements to
reveal meaningful insights. A single financial figure might not be very informative on its
own, but expressing it in relation to another figure paints a clearer picture. These
comparisons, known as financial ratios, help analysts understand a company's performance
and identify its strengths and weaknesses.

3.1.6 Standards of Comparison:

Financial ratios gain meaning through comparison. A single ratio alone doesn't tell
the whole story. To get a clearer picture, it needs to be benchmarked against various
standards. These benchmarks can include:

3.1.6A Historical Ratios: Ratios calculated from the company's past financial statements
to identify trends over time.

3.1.6B Competitor Ratios: Ratios of similar companies, particularly industry leaders, at

the same point in time to assess relative performance.

3.1.6C Industry Averages: Ratios representative of the entire industry the company
operates in to understand its position within the broader market.

21
3.1.7 Advantages of Ratios
1. Financial statements are valuable tools for assessing a company's performance in
terms of profitability and financial stability.

2. Financial statements enable both internal and external stakeholders to compare a

company's performance across different periods (intra-company) and against
competitors (inter-company).

3. While financial statements themselves are presented in a tabular format over time,
trend analysis can be conducted to understand the overall direction of the business.

4. Financial statements allow external parties, such as investors and creditors, to assess
a company's strengths and weaknesses.

5. Ratio analysis, which utilizes data from financial statements, is a powerful tool for
management decision-making. It can highlight a company's performance in areas
like profitability, financial stability, and operational efficiency

3.1.8 Limitations of Financial Ratios:

While ratio analysis is a popular technique for assessing a business's financial

health, it has inherent limitations that analysts should be aware of. These limitations
include:

1. Determining the most suitable benchmark for comparison can be challenging.

2. Comparisons can be hindered by differences in company circumstances, either
between multiple firms or within a single firm across different periods.
3. Variations in how items are defined within financial statements can complicate ratio
interpretation.
4. Ratios primarily rely on past financial data, offering minimal insights into future
performance.
5. Differences in accounting practices and periods can render comparisons between
companies' financial data and ratios unreliable.

22
3.1.9 Types of Ratios:
Financial ratios, derived from accounting data, assess different financial aspects for
various stakeholders. Short-term creditors focus on liquidity, while long-term creditors
evaluate solvency and profitability. Owners are concerned with overall profitability and
financial health. Management, with the broadest perspective, analyzes all aspects to
balance stakeholder interests and ensure growth. In view of the requirements of various
users of ratios, we may classify them into the following four important categories:

1. Liquidity ratios

2. Leverage ratios

3. Activity ratios

4. Profitability ratios

[Link] Liquidity Ratios:

Companies require sufficient cash and easily convertible assets to meet their short-
term obligations. This ability to manage short-term solvency is referred to as liquidity.
Liquidity ratios analyze a firm's capacity to pay off current liabilities. Striking a balance
between insufficient and excessive liquidity is crucial. A lack of liquidity can lead to
defaults, damaging creditworthiness and eroding creditor confidence. Conversely,
excessive liquidity signifies idle resources that could be generating returns elsewhere.

The most common ratios which indicate the extent of liquidity or lack of it are the
following:

1. Current ratio

2. Quick Ratio acid test ratio

3. Absolute liquidity ratio cash ratio

3.1.9.1A Current ratio:

A key metric for assessing a company's short-term financial health is the current
ratio. This ratio compares a company's current assets, which are resources expected to be
converted into cash within one year, to its current liabilities, which are obligations due
within the same timeframe. Current assets typically encompass cash holdings, accounts

23
receivable, inventory, prepaid expenses, and short-term investments. On the other hand,
current liabilities often include accounts payable, accrued expenses, short-term loans, and
upcoming dividend payments.

Current Ratio = Current Assets/ Current Liabilities

A current ratio of 2: 1 is considered as ideal. If business has an undertaking with its

bankers to meet its working capital requirements short notices, a current ratio of its
adequate.

3.1.9.1B Quick ratio:

The quick ratio (acid-test ratio) measures a company's ability to meet short-term
obligations using its most liquid assets, like cash and marketable securities. These assets
can be converted to cash within 90 days with minimal loss. Quick liabilities include short-
term debts due within a year. This ratio helps assess a company's financial stability without
relying on inventory sales or additional funding

Quick Ratio = Quick Assets/ Current Liabilities

Quick assets = current assets - inventories

Quick liabilities = current liabilities - bank overdraft

A quick ratio of 1 is considered as ideal. A quick ratio of less than 1 is indicative of

inadequate liquidity of the business. A very high quick ratio is also not available, as funds
can be more profitably employed.

3.1.9.1C Absolute liquid ratio:

The absolute liquidity ratio assesses a company's ability to meet its short-term
obligations using its most readily convertible assets. While ideally calculated using only
absolute liquid assets, such as cash and cash equivalents, practical applications often
include quick assets in the numerator. This is because highly liquid assets like marketable
securities can be quickly converted to cash with minimal price impact, making them
functionally similar to cash for immediate debt repayment purposes.

Absolute Quick Ratio = Absolute Liquid Assets /Current Liabilities

Absolute liquid assets Cash in Hand Cash at Bank Short Term Investments The
ideal absolute ratio is taken as 1:2 or 0.5.

24
[Link] Leverage Ratios:

Financial analysis utilizes leverage ratios to assess the balance between a company's debt
and equity financing. These ratios provide insight into the long-term solvency of the firm,
a key concern for long-term creditors like debenture holders and financial institutions.
Long-term solvency encompasses two crucial aspects:

1. The company's ability to repay borrowed principal amounts when they become due.
2. The company's capacity to consistently meet its interest obligations.

By calculating leverage ratios, analysts can gauge a firm's financial stability and its
effectiveness in utilizing debt financing.

The following are different leverage ratios:

1. Debt Equity ratio

2. Proprietary ratio

3. Fixed asset ratio

4. Interest coverage ratio

3.1.9.2A Debt-Equity Ratio:

The debt-to-equity ratio reflects the relative stake of creditors and shareholders in
a company's assets. Debt typically refers to long-term liabilities, while equity encompasses
both preference share capital and reserves. This ratio essentially compares the portion of
financing contributed by creditors to that provided by the owners.

Debt-Equity Ratio = Total Debt / Networth

3.1.9.2B Proprietary Ratio:

Closely related to the debt-to-equity ratio is the proprietary ratio, also known as the
equity ratio or net worth to total assets ratio. This metric assesses the proportion of a
company's assets financed by its shareholders' equity (net worth). A higher proprietary ratio
generally indicates stronger long-term solvency, signifying a lesser dependence on debt
financing.

25
 Proprietary Ratio = Net worth / Total Assets

Net worth = Equity Share Capital + Preference Share Capital + Reserves - Fictitious Assets

3.1.9.2C Fixed Assets Ratio:

This ratio establishes the relation between long term funds and fixed assets. Since
financial management advocates fixed assets should be purchased out of long- term funds
only.
Fixed Asset Ratio = Fixed Asset/Capital Employed

Capital employed = Equity share capital + preference share capital + Reserves + Long term
liabilities - Fictitious assets.

The fixed-asset ratio sheds light on a company's approach to financing its long-term
assets. Ideally, financially sound companies strive to finance these assets with long-term
funding sources. Consequently, maintaining a fixed-asset ratio below 1 is generally
considered favorable.

3.1.9.2D Interest Coverage Ratio:

The interest coverage ratio, calculated by dividing earnings before interest and taxes
(EBIT) by interest expense, indicates a company's ability to meet its interest obligations.

Interest Coverage Ratio = EBIT /Interest

This ratio essentially shows how many times a company's earnings from core
operations can cover its current interest payments. A higher ratio is generally favorable,
signifying a comfortable cushion for debt servicing. However, an excessively high ratio
might suggest a company's underutilization of debt financing, potentially missing out on
opportunities to leverage debt for shareholder benefit. Conversely, a low ratio can signal a
heavy debt burden or operational inefficiencies. Companies with a low interest coverage
ratio might consider strategies to improve operational efficiency or reduce debt levels to
achieve a more comfortable coverage ratio.

26
[Link] Activity Ratio:
Activity ratios serve as a valuable tool for assessing a company's operational
efficiency in managing its resources. These ratios focus on measuring the velocity at which
various assets are converted into sales. Essentially, they reveal how quickly a company can
turn its investments in inventory, equipment, and other assets into revenue. Activity ratios
are also known as turnover ratios or asset utilization ratios. A company's efficiency in
utilizing its assets is reflected in the speed with which they are transformed into sales.

The greater is the rate of turnover or conversion the more efficient is the utilization
other things being equal.

The various types of activity ratios are;

1. Total asset turnover ratio

2. Working capital turnover ratio

3. Fixed asset turnover ratio

3.1.9.3A Total Assets Turnover Ratio:

The asset turnover ratio serves as a key metric for evaluating a company's efficiency
in managing and utilizing its assets. A higher ratio generally indicates better utilization of
resources, suggesting effective management. Conversely, a low ratio may signal
underutilization of assets, potentially leading to idle capacity and reduced profitability. The
total asset turnover ratio is calculated by dividing a company's sales by its total assets.
Total Assets Turnover Ratio = Sales/Total Assets

3.1.9.3B Working Capital Turnover Ratio:

The working capital turnover ratio measures a company's efficiency in utilizing its
working capital to generate sales revenue over a specific period. This ratio provides
valuable insights into how effectively a company manages its current assets and liabilities
to drive sales growth. In instances where the cost of goods sold (COGS) is unavailable, net
sales can be used as a substitute in the numerator.
Working Capital Turnover Ratio = net sales / working capital

27
Working Capital = Current Assets - Current Liabilities

A high Working Capital turnover ratio indicates efficiency utilization of firm

3.1.9.3C Fixed Assets Turnover Ratio:

The fixed asset turnover ratio is a metric that gauges a company's effectiveness in
utilizing its fixed assets, such as property, plant and equipment (PP&E), furniture, and other
long-term holdings. It also sheds light on whether sales are sufficient relative to the
investment made in these fixed assets. The formula for calculating this ratio is as follows:

Fixed Assets Turnover Ratio = Net Sales/ Fixed Assets

Fixed assets imply net fixed assets i.e., after deprecation. A high fixed assets turnover ratio

[Link] Profitabilty Ratio

Profitability ratios are key metrics used to assess a company's overall performance and
efficiency. A weak profitability ratio can signal poor sales and consequently, low profits.
This lack of profitability might stem from inadequate expense control.

Profitability ratios can be categorized based on what they are measured against: sales or
investment.

The types of profitability ratios are

1. Net profit ratio

2. Return on net worth ratio

3. Return on assets ratio

4. Earnings per share ratio

3.1.9.4A Net Profit Ratio:

The net profit margin serves as a key indicator of a company's overall operational
effectiveness. A higher net profit margin generally translates to a more profitable
business. This ratio is calculated by dividing net profit by sales and reflects

28
management's efficiency in various areas like production, administration, and sales.
Essentially, it measures the company's ability to convert each rupee of revenue into
net profit.

Net Profit Ratio = Profit After Tax/ Sales

An inadequate net profit margin can hinder a company's ability to achieve

satisfactory returns on shareholder investments. Conversely, a company with a strong net
profit margin is better positioned to capitalize on favorable market conditions, such as
rising selling prices, decreasing product costs, or increased product demand. This
advantage allows such a company to accelerate profit growth at a faster pace compared to
a competitor with a lower net profit margin. Additionally, a healthy net profit margin
signifies a company's resilience in the face of adverse economic conditions.

3.1.9.4B Return on Net worth Ratio:

It indicates the return, which the shareholders are earning on their resource invested in the
business.

Return on Networth Ratio = Profit After Tax/ Networth

Net worth = shareholders funds - Equity share capital + Preference share capital + Reserves
- Fictitious assets.

While a higher fixed asset turnover ratio generally indicates positive outcomes for
shareholders, it's crucial to benchmark the company's performance against industry
averages to determine if the returns are truly satisfactory. Additionally, analyzing trends in
the ratio over several years can reveal whether the company's profitability is strengthening
or weakening.

3.1.9.4C Return on Assets Ratio:

The return on assets (ROA) ratio serves as a benchmark for assessing how
effectively a company's management utilizes its invested capital, regardless of whether the
source is creditors or shareholders. A low ROA suggests that the company is generating
relatively low earnings for the level of assets it holds
Return on Assets Ratio = Profit After Tax /Total Assets

29
3.1.9.4D Earnings per Share Ratio:

Earnings per share (EPS) represent a company's net profit after taxes and
preferential dividends, allocated to each outstanding share of common stock. Shareholders
have a vested interest in EPS as it reflects the portion of profit attributable to each share.
Earnings Per share Ratio = Profit After Tax avalable to Equity Shareholders / No. Of Ordinary
Shares

Earnings per share (EPS) is a key metric used in investment analysis to assess a
company's profitability. A higher EPS generally indicates stronger financial performance,
making it a widely calculated ratio within financial analysis.

30
3.2 RESEARCH METHODOLOGY
Financial analysis heavily relies on ratio analysis to assess a company's
performance and financial health. This technique involves calculating and interpreting
various financial ratios that shed light on different aspects of a company's operations, such
as profitability, liquidity, solvency, and efficiency. Similarly, research methodology
provides a systematic approach to solving research problems. It can be viewed as the
science of conducting research in a structured manner. This methodology outlines the
various steps typically followed by researchers when investigating a problem, along with
the rationale behind each step.

Type of Research Design

This project "A Study of Ratio Analysis in Dredging Corporation of India Ltd " is
considered as an analytical research.

Analytical research involves utilizing existing facts or information to critically

assess them. Through this process, researchers aim to gain deeper insights and make
informed judgments.

3.3 POPULATION
To conduct a population study on ratio analysis of Dredging Corporation of India
Ltd, we would need access to the complete set of financial data for the company. The
population in this case would refer to all the available financial statements for five years
and relevant data of Dredging Corporation of India Ltd for the specific period or periods
under consideration.

The population study would involve analyzing and calculating various financial
ratios using the complete set of financial data. This would include ratios such as liquidity
ratios, profitability ratios, solvency ratios, efficiency ratios, and any other ratios deemed
relevant for the analysis.

31
 The analysis would typically involve comparing the ratios over multiple periods to
identify trends, benchmarking the ratios against industry standards or competitors, and
interpreting the results to assess the financial performance and health of Dredging
Corporation of India Ltd.

It's important to note that accessing the complete population data for Dredging
Corporation of India Ltd might be subject to certain limitations, such as data availability,
data accessibility, and data privacy considerations. However, if we have access to the
necessary financial statements and data, we can perform a comprehensive population study
on the ratio analysis of Dredging Corporation of India Ltd.

32
3.4 SAMPLING PROCEDURE
If we are conducting a study on ratio analysis of Dredging Corporation of India
Ltd and we don't have access to the complete population data, we need to use a sampling
procedure to select a representative subset of data for analysis.

Every financial statement in the sampling frame has an equal chance of being
selected. This method ensures that the sample is representative and reduces bias.

Divide the sampling frame into different strata or categories (e.g., by year, by
business segment) and then randomly select a proportionate number of financial
statements from each stratum. This method ensures representation from different
segments of the company's operations.

Select every nth financial statement from the sampling frame. The value of n can
be calculated by dividing the total number of financial statements by the desired sample
size.

Handpick financial statements based on the researcher's judgment and expertise.

This method may be used when specific financial statements are known to be particularly
important or representative.

➢ Sampling unit

➢ Financial Statements.

➢ Sampling size

➢ Five years financial statements.

➢ Tool used for calculations

➢ MS-Excel.

33
Convenience Sampling
In convenience sampling, a non-probability research method, participants are
chosen for their ease of access and willingness to participate, rather than through a random
or systematic selection process. This approach is often employed when time, resources, or
access limitations hinder the use of other sampling techniques.

3.5 SOURCES OF DATA COLLECTION

Secondary Data

Research can benefit greatly from utilizing existing data, often referred to as
secondary data. This data is readily available from various sources like company annual
reports, financial statements, and even online resources and publications. Secondary data
offers a significant advantage in terms of time and resource efficiency compared to
collecting data from scratch.

In my research, the primary source of data came from annual reports, profit and
loss statements, and supplementary information gathered from online sources and text-
based materials. The purpose of using secondary data was to establish a strong foundation
of knowledge on the research topic. This type of data provides valuable insights into the
historical background, current status, and various perspectives surrounding the topic under
investigation. By leveraging this information, I can gain a deeper understanding and refine
my research questions.

Furthermore, secondary data serves as a rich resource for my research. It can help
identify areas where existing knowledge is lacking (literature gaps), formulate hypotheses
for further investigation, and subsequently test those hypotheses against the existing data.
The time and cost savings associated with using secondary data are undeniable, as it
eliminates the need to collect data myself.

However, it's crucial to acknowledge the limitations inherent to secondary data.

There's a possibility that the data might be outdated or contain inaccuracies. Additionally,

34
bias or incompleteness can be present. Therefore, a critical evaluation of all collected
secondary data is essential.

In conclusion, secondary data presents a valuable tool for research endeavors. It

can establish a foundational understanding, identify knowledge gaps, formulate
hypotheses, and facilitate hypothesis testing. However, a critical approach to evaluating
the limitations and potential biases within secondary data is necessary.

Mode of data Collection

The specific mode of data collection for Dredging Corporation of India Ltd would
depend on the nature of the research study or analysis being conducted. Generally, when
collecting data on a specific company Dredging Corporation of India Ltd like Limited,
researchers may use a combination of primary and secondary data collection methods.

Financial Statements: Researchers can collect primary data directly from Dredging
Corporation of India Ltd financial statements, including their annual reports, balance
sheets, income statements, and cash flow statements. These documents provide key
financial information about the company's performance, liquidity, profitability, and
financial position.

Industry Reports: Researchers can gather secondary data by reviewing industry reports
and analyses electronics industry in which Dredging Corporation of India Ltd operates.
These reports often include market trends, competitor analysis, industry benchmarks, and
forecasts.

Publicly Available Information: Researchers can collect secondary data from publicly
available sources such as government databases, stock exchanges, financial news portals,
or regulatory filings. These sources can provide information on industry regulations,
market data, news articles, or analyst reports related to Dredging Corporation of India Ltd.

35
3.6 DATA COLLECTION INSTRUMENTS

For a study on ratio analysis of Dredging Corporation of India Ltd, several research
instruments can be employed to collect the necessary data. Here are some common research
instruments that could be used:

1. Financial Statements: The primary research instrument for ratio analysis would
be the financial statements of Dredging Corporation of India Ltd. These include the
balance sheet, income statement, and cash flow statement. These statements
provide the necessary financial data required to calculate various ratios, such as
liquidity ratios, profitability ratios, and solvency ratios.

2. Calculation Sheets: Researchers may develop calculation sheets or templates to

organize and calculate the different ration. These calculation sheets can assist in
accurately computing the ratios based on the data extracted from the financial
statements of Dredging Corporation of India Ltd.

3. Industry Reports: Researchers can refer to industry reports or market research

studies specific to the steel or ferroalloys industry to gain a broader understanding
of industry benchmarks, performance trends, and key factors that may impact the
ratios of companies in this sector. These reports can serve as secondary sources of
information to complement the ratio analysis.

36
3.7 TECHNIQUES OF DATA ANALYSIS
In a study on ratio analysis of Dredging Corporation of India Ltd, several
techniques of data analysis can be employed to interpret and derive insights from the
calculated ratios.

1. Trend Analysis: Trend analysis involves examining the ratio values over multiple
periods to identify patterns and trends. By comparing ratios over time, researchers
can assess the company's performance and identify any significant changes or
deviations.

2. Historical Comparison: Comparing the calculated ratios of Dredging Corporation

of India Ltd with its own historical performance can provide insights into the
company's financial trends, stability, and progress over time..

3. Ratio Analysis Models: Various ratio analysis models, such as DuPont analysis,
can be applied to assess the drivers of profitability and return on investment for
Dredging Corporation of India Ltd. These models help dissect and understand the
factors contributing to the company's financial performance.

37
3.8 SOFTWARES USED

Various software tools can be used for conducting a study on ratio analysis of
Dredging Corporation of India Ltd. The choice of software depends on the specific needs
of the analysis and the availability of resources.

1. Spreadsheet Software: Spreadsheet software like Microsoft Excel, Google Sheets

can be used for performing ratio calculations, organizing data, and creating visual
representations of the results. These tools offer built-in functions and formulas that
make it convenient to calculate and analyse ratios.

2. Statistical Software: Statistical software packages such as SPSS, SAS, or R can

be utilized for more advanced statistical analysis of ratios. These tools provide a
wide range of statistical functions and tools for data manipulation, regression
analysis, correlation analysis, and more.

3. Data Visualization Tools: Data visualization tools like Tableau, Power Bl, or Data
wrapper can be used to create visually appealing charts, graphs, and dashboards to
present the results of the ratio analysis. These tools enable interactive visualizations
that make it easier to communicate complex data.

38
 CHAPTER - IV
DATA ANALYSIS & INTERPRETATIONS

39
4.1 CURRENT RATIO
Formula: Current Ratio = Current Assets / Current Liabilities
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Inventories 208.17 178.37 159.75 135.62 116.68
Trade receivables 251.43 201.74 209.90 339.50 175.11
Cash & cash
70.18 48.59 94.15 31.47 50.28
equivalents
Short Term Loans
0.00 0.00 0.00 0.00 0.00
& Advances
Other current
275.22 238.89 231.58 254.85 277.62
assets
Total 804.99 667.59 695.37 761.45 619.70
Current liabilities 468.57 566.97 800.72 845.80 798.28
Ratio 1.72 1.18 0.87 0.90 0.78

Current Ratio
2
1.8 1.72

1.6
1.4
1.18
1.2
1 0.87 0.9
0.78
0.8
0.6
0.4
0.2
0
2019-20 2020-21 2021-22 2022-23 2023-24

INTERPRETATION :-

40
The current ratio of Dredging Corporation of India Ltd has steadily declined over the past
five years. The ratios fluctuated between 0.78 and 1.72 over the five years from 2019-20
to 2023-24. A current ratio of 1 is generally considered the minimum acceptable level, and
a ratio higher than 2 may indicate that the company is not effectively using its current assets.

Here's a more detailed interpretation of the current ratio for each year:

• 2019-20: The current ratio was 1.72. This means that for every ₹1 of current
liabilities, the company had ₹1.71 of current assets. Indicting a strong short-term
liquidity position.
• 2020-21: The current ratio decreased to 1.18. This indicates that the company’s
ability to pay-off its short-term liabilities slightly decreased. However it is still
slightly above one.
• 2021-22: The current ratio further decreased to 0.87. This means for every ₹1 of
current liabilities, the company had ₹0.86 of current assets. This indicates that the
company is unable to pay-off its short-term liabilities as whole.
• 2022-23: The current ratio slightly increased to 0.90. Indicates weak short-term
liquidity position.
• 2023-24: The current ratio dropped to 0.78 meaning the company has less than ₹1
in current assets for every ₹1 of current liabilities, which Indicates potential
liquidity concerns if the trend continues.

Overall, the current ratio for Dredging Corporation of India Ltd. has remained relatively
unstable over the past five years. A current ratio higher than 2 may indicate that the
company is not effectively using its current assets. The company may be holding too much
inventory or cash, which could be invested elsewhere to generate a return.

It is important to compare the company's current ratio to industry benchmarks and its own
historical ratios to get a better sense of its financial health.

41
4.2 QUICK RATIO
Formula: Quick Ratio = Quick Assets / Current Liabilities
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Current Assets 804.99 667.59 695.37 761.45 619.70
Inventories 208.17 178.37 159.75 135.63 116.68
Quick Assets
(Current Assets – 596.82 489.22 535.62 625.82 503.02
Inventories)
Current liabilities 468.57 566.97 800.72 845.80 798.28
Ratio 1.27 0.86 0.67 0.74 0.63

Quick Ratio
1.4
1.27
1.2

1
0.86
0.8 0.74
0.67 0.63
0.6

0.4

0.2

0
2019-20 2020-21 2021-22 2022-23 2023-24

INTERPRETATION :-

The quick ratio for Dredging India Corporation of Ltd. has fluctuated between 0.63 and
1.27 over the five years from 2019-20 to 2023-2. The quick ratio, also known as the acid-
test ratio, is a measure of a company's ability to pay off its short-term liabilities (debt that
is due within one year) with its most liquid assets (cash, marketable securities, and accounts
receivable).

42
Here's a more detailed interpretation of the quick ratio for each year:

• 2019-20: The quick ratio is 1.27 which means a strong liquidity position. quick
assets were more than enough to cover current liabilities.
• 2020-21: The quick ratio further decreased to 0.86, indicating relatively better
liquidity management, close to the ideal mark, indicating better short-term financial
health.
• 2021-22: The quick ratio slightly decreased to 0.67. Liquidity weakened compared
to the Financial year 2020-21, indicating growing reliance on inventories or other
funding.
• 2022-23: The quick ratio recovered to 0.74. Slight improvement in liquidity over
the previous year, but still below the safe benchmark of 1.
• 2023-24: The quick ratio again decreased to 0.63. The company may face liquidity
pressure in covering immediate liabilities without relying on inventory.

Overall, the quick ratio for Dredging India Corporation of Ltd. has remained around 1 over
the past five years. This suggests that the company has generally been able to pay off its
short-term liabilities with its most liquid assets. However, a quick ratio of 1 or slightly
below 1 may indicate that the company has limited wiggle room in case of unexpected
financial difficulties.

A generally accepted rule of thumb is that a quick ratio of 1 or higher is desirable. However,
this ratio can vary depending on the industry. It is important to compare the company's
quick ratio to industry benchmarks and its own historical ratios to get a better sense of its
financial health.

43
4.3 INVENTORY TO WORKING CAPITAL
Formula: Inventory to working capital ratio = Inventory / Current
Assets - Current Liabilities
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Inventories 208.17 178.37 159.75 135.63 116.68
Total Current
804.99 667.59 695.37 761.45 619.70
Assets
Total Current
468.57 566.97 800.72 845.80 798.28
Liabilities
Working Capital 336.42 100.62 -105.35 -84.35 -178.58
Ratio 0.62 1.77 -1.52 -1.61 -0.65

Ratio
2 1.77

1.5

1
0.62
0.5

0
2019-20 2020-21 2021-22 2022-23 2023-24
-0.5

-1 -0.65

-1.5
-1.52 -1.61
-2

INTERPRETATION :-

The inventory to working capital ratio for Dredging India Corporation of Ltd. has
fluctuated between -0.61 and 1.77. over the five years from 2019-20 to 2023-24. The
working capital ratio is a measure of a company's ability to pay off its short-term liabilities
(debt that is due within one year) with its current assets (cash, inventory, etc.).

44
Here's a more detailed interpretation of the working capital ratio for each year:

• 2019-20: The working capital ratio is 0.62 indicates a well-balanced working

capital structure, with inventory forming a smaller proportion, supporting
operational flexibility.
• 2020-21: Positive working capital resulted in a healthy as the ratio is 1.77, meaning
a significant portion of working capital was tied in inventory but still with a safe
liquidity margin.
• 2021-22: The working capital ratio is -1.52. the firm continued to operate with
negative working capital, possibly relying on short-term borrowings to manage
inventory.
• 2022-23: The ratio stands at -1.61, reflecting a worsening condition from the
previous year high inventory with insufficient current assets to meet liabilities.
• 2023-24: The ratio is -0.65, indicating negative working capital, with inventory
exceeding available short-term financial resources. This may indicate a liquidity
issue.

Overall, the working capital ratio for Dredging India Corporation of Ltd. has remained
relatively unstable over the past five years. This suggests that the company has been unjable
to maintain a good balance between its short-term assets and liabilities.

A working capital ratio of 1 is generally considered the minimum acceptable level. A ratio
lower than 1 may indicate that the company has difficulty paying off its short-term debts.

A ratio higher than 2 may indicate that the company is not effectively using its current
assets. The company may be holding too much inventory or cash, which could be invested
elsewhere to generate a return.

45
4.4 DEBT-EQUITY RATIO
Formula: Debt-Equity Ratio = Total Debt / Share holders’ Funds
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Long Term
411.70 293.90 76.17 112.73 311.62
Borrowings
Short-Term
0.00 0.00 203.54 167.83 114.75
Borrowings
Total Debt 411.70 293.90 279.71 280.56 426.37
Share Holders’
1,570.24 1,402.12 1,400.35 1,422.56 1,263.60
Funds
Ratio 0.26 0.21 0.20 0.20 0.34

Ratio
0.4
0.34
0.35

0.3
0.26
0.25
0.21 0.2 0.2
0.2

0.15

0.1

0.05

0
2019-20 2020-21 2021-22 2022-23 2023-24

INTERPRETATION :-

The debt-to-equity ratio for Dredging India Corporation of Ltd .has fluctuated between
0.20 and 0.34 over the five years from 2018-19 to 2022-23.

46
Here's more detailed interpretation of the debt-to-equity ratio for each year:

• 2019-20: The ratio 0.26 reflects a slightly higher debt position than subsequent
years, but still within safe limits, indicating moderate leveraging.
• 2020-21: The ratio at 0.21 which shows a marginal increase due to a rise in long-
term debt. Yet, the equity base comfortably supports liabilities.
• 2021-22: The ratio with 0.20 again, the balance between debt and equity remains
stable. Debt levels are under control and not a risk.
• 2022-23: A ratio of 0.20 shows a conservative capital structure. The company is
maintaining low financial risk.
• 2023-24: The Debt-Equity ratio is 0.34, indicating a slight increase in debt reliance
compared to previous years. Still, the company is not highly leveraged.

Overall, the debt-to-equity ratio for Dredging India Corporation of Ltd. has fluctuated
significantly over the past five years. While it is positive that the company has more equity
than debt in most years, the significant fluctuations may indicate instability in the
company's capital structure.

A debt-to-equity ratio that is too high can indicate that the company is taking on too much
risk. A debt-to-equity ratio that is too low can indicate that the company is not using debt
to its advantage. It is important to compare the company's debt-to-equity ratio to industry
benchmarks and its own historical ratios to get a better sense of its financial health.

47
4.5 WORKING CAPITAL TURNOVER RATIO
Formula:Working Capital Turnover Ratio = net sales / working capital
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2024-25

Sales 749.68 763.76 799.09 1,164.79 1840.00
Current Assets 804.99 667.59 695.37 761.45 619.70
Current Liabilities 468.57 566.97 800.72 845.80 798.28
Working Capital 336.42 100.62 -105.35 -84.35 -178.58
Ratio 2.23 7.59 -7.58 -13.81 -10.31

Ratio
10
7.59

5
2.23

0
2019-20 2020-21 2021-22 2022-23 2023-24

-5

-7.58
-10
-10.31

-15 -13.81

INTERPRETATION :-

The working capital turnover ratio for Dredging India Corporation of Ltd. has fluctuated
between -13.81 and 7.59 over the f years from 2019-20 to 2023-24. The working capital
turnover ratio measures how efficiently a company uses its working capital to generate
sales. A higher ratio generally indicates better efficiency.

48
Here's a more detailed interpretation of the working capital turnover ratio for each year:

• 2019-20: Positive working capital and a ratio of 2.23 indicate the company used its
short-term assets effectively. However, it shows moderate efficiency and room for
improvement.
• 2020-21: A strong improvement to 7.59 shows enhanced utilization of working
capital to generate sales. Indicates very efficient use of available short-term
resources.
• 2021-22: Negative working capital causes a negative ratio (-7.58), which is a red
flag. Suggests liquidity issues and dependence on current liabilities to fund
operations.
• 2022-23: Further deterioration with a ratio of -13.81 despite a sales rise. The
imbalance between liabilities and assets is more prominent.
• 2023-24: Sales jumped significantly, but working capital remains negative, keeping the
ratio at -10.31. Growth is happening, but at the cost of financial health; the company might
be over-leveraged in the short term.

Overall, the working capital turnover ratio for Dredging India Corporation of Ltd. has fluctuated
considerably over the past five years. There seems to be a decline from 2021-22 to 2023-24,
continously.

A higher working capital turnover ratio may indicate that the company is effectively using
its working capital to generate sales. However, a too high ratio may also indicate that the
company is not holding enough inventory to meet customer demand.

A lower working capital turnover ratio may indicate that the company is holding too much
inventory or other current assets that are not being used efficiently. It is important to
compare the company's working capital turnover ratio to industry benchmarks and its own
historical ratios to get a better sense of its financial health.

49
4.6 FIXED ASSETS TURNOVER RATIO
Formula: Fixed Assets Turnover Ratio = Net Sales / Fixed Assets
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Sales 749.68 763.76 799.09 1,164.79 1840.00
Average Fixed
- 1,641.86 1,615.89 1,570.79 1,500.23
Assets
Ratio - 0.47 0.49 0.74 1.23

Ratio
1.4
1.23
1.2

0.8 0.74

0.6 0.49
0.47
0.4

0.2

0
2020-21 2021-22 2022-23 2023-24

INTERPRETATION :-

The fixed assets turnover ratio for Dredging India Corporation of Ltd. has gradually
increased from 0.47 in 2019-20 to 1.23 in 2023-24. The fixed assets turnover ratio measures
how efficiently a company uses its fixed assets (property, plant, and equipment) to generate
sales. A higher ratio generally indicates better efficiency.

50
Here's a breakdown of the fixed assets turnover ratio for each year:

• 2019-20: Data insufficient to calculate turnover ratio due to missing opening fixed
assets. However, low sales against high fixed assets suggests under-utilization.
• 2020-21: The ratio is 0.47, indicating that for every rupee invested in fixed assets,
the company generated 47 paise in revenue still inefficient asset utilization.
• 2021-22: The ratio improved slightly to 0.49, reflecting a marginally better but still
low use of fixed assets to generate sales.
• 2022-23: The ratio jumped to 0.74, showing strong improvement in asset efficiency
with increased sales and controlled asset base.
• 2023-24: The ratio peaked at 1.23, highlighting excellent asset utilization, with
each rupee in fixed assets generating over one rupee in revenue.

A significant increase in the fixed asset turnover ratio, like the one observed here, could be
due to a number of reasons, including:

• Increased sales without a corresponding increase in fixed assets. This could be due
to factors such as improved marketing or product offerings.
• Selling off some of the company's fixed assets.

However, a high fixed asset turnover ratio can also indicate that the company is not
investing enough in its fixed assets, which could lead to problems in the future.

It is important to compare the company's fixed asset turnover ratio to industry benchmarks
and its own historical ratios to get a better sense of its financial health.

An industry benchmark can help you understand how Dredging India Corporation of Ltd.
stacks up against its competitors in terms of fixed asset efficiency.

51
4.7 INVENTORY TURNOVER RATIO
Formula: Inventory turnover Ratio= cogs of goods / average inventory
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Revenue From
749.69 763.76 799.09 1,164.80 945.50
Operations
Opening inventory - 208.17 178.37 159.75 135.63
Closing Inventory 208.17 178.37 159.75 135.63 116.68
Average Inventory - 193.27 169.06 147.69 126.16
Ratio - 3.95 4.73 7.89 7.50

Ratio -
9
7.89
8 7.5

7
6
4.73
5
3.95
4
3
2
1
0
2020-21 2021-22 2022-23 2023-24

INTERPRETATION :-

The inventory turnover ratio for Dredging India Corporation of Ltd. has fluctuated between
3.95 and 7.89 over the five years from 2019-20 to 2023-24. The inventory turnover ratio
measures how efficiently a company uses its inventory to generate sales. A higher ratio
generally indicates better efficiency.

52
Here's a more detailed interpretation of the inventory turnover ratio for each year:

• 2019-20: N/A
• 2020-21: The Inventory Turnover Ratio stood at 3.95, indicating that the company
sold and replaced its inventory nearly four times during the year. This suggests
moderate efficiency in inventory management.
• 2021-22: An improvement to 4.73 times indicates enhanced efficiency, with
inventory being cycled more frequently, reflecting better demand forecasting and
stock management.
• 2022-23: A significant jump to 7.89 times suggests a substantial improvement in
inventory turnover, possibly due to increased sales or more effective inventory
control measures.
• 2022-24: A slight decline to 7.50 times may indicate a marginal slowdown in sales
or a strategic decision to hold more inventory, but overall, the turnover remains
strong.

Overall, These trends reflect the company's evolving efficiency in managing its inventory relative
to sales. the inventory turnover ratio of Dredging India Corporation of Ltd. has fluctuated but has
generally trended upwards over the past five years. This suggests that the company has been
improving its efficiency in managing its inventory.

A higher inventory turnover ratio may indicate that the company is selling its inventory
quickly and not holding onto excess stock. This can be a sign of good inventory
management.

However, a too high ratio may also indicate that the company is not holding enough
inventory to meet customer demand. This could lead to stockouts and lost sales.

It is important to compare the company's inventory turnover ratio to industry benchmarks

and its own historical ratios to get a better sense of its financial health.

53
4.8 GROSS PROFIT RATIO
Formula: Gross Margin = (Revenue - COGS) / Revenue
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Revenue from
802.71 745.94 802.30 1,097.90 1,244.98
Operations
Gross Profit 205.17 179.38 168.89 247.16 373.17
Ratio 25.56% 23.75% 21.05% 22.51% 29.96%

Ratio
35.00%
29.96%
30.00%
25.56%
25.00% 23.75%
22.51%
21.05%
20.00%

15.00%

10.00%

5.00%

0.00%
2019-20 2020-21 2021-22 2022-23 2023-24

INTERPRETATION :-

The gross profit margin of Dredging India Corporation of Ltd. has fluctuated between
21.05% and 29.96% over the five years from 2019-20 to 2023-24. The gross profit margin
is a measure of a company's profitability, calculated as gross profit divided by net sales. A
higher gross profit margin indicates that the company is more efficient at generating profit
from its sales.

54
Here's a more detailed breakdown of the gross profit margin for each year:

• 2019-20: The Gross profit ratio 25.56% is solid reflects a relatively stable and
profitable year before pandemic disruptions.
• 2020-21: The Gross profit ratio 23.75%, indicating efficient cost management amid
uncertain conditions.
• 2021-22: Slight drop to 21.05% suggests operational costs rose faster than revenue
growth.
• 2022-23: The Gross profit ratio rose to 22.51% from the previous year, showing
recovery in profitability post-pandemic challenges.
• 2023-24: The gross profit ratio increased significantly to 29.96%, indicating
stronger cost control and better margin efficiency compared to previous years.

The significant decline in gross profit margin in the middle two years 2021-22 to 2022-23
and increased in the following years 2022-23 and [Link] that Dredging India
Corporation of Ltd have been facing challenges in terms of its cost of goods sold or affected
due to covid pandemic. However at present the company’s gross profit ratio indicates that
it is leveraging its stronger cost control and better margin efficiency compared to previous
years

55
4.9 RETURN ON EQUITY
Formula: ROE = Net Income / Shareholder’s Funds x 100
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Net Profit/Loss 5.51 -172.41 3.42 12.56 35.68
Shareholder Fund 1,570.24 1,402.12 1,400.35 1,422.56 1,263.60
Ratio 0.35% -12.30% 0.24% 0.88% 2.82%

Ratio
4.00% 2.82%
2.00% 0.88%
0.35% 0.24%
0.00%
2019-20 2020-21 2021-22 2022-23 2023-24
-2.00%

-4.00%

-6.00%

-8.00%

-10.00%

-12.00%
-12.30%
-14.00%

INTERPRETATION :-

The return on equity (ROE) for Dredging India Corporation of Ltd. has fluctuated
significantly from -12.30% to 2.82% over the five years from 2019-20 to 2023-24. ROE is
a measure of a company's profitability relative to shareholders' equity. A higher ROE
indicates that the company is generating a good return on its shareholders' investment.

56
Here's a more detailed breakdown of the ROE for each year:

• 2019-20: The ROE is 0.35%. A slight positive ROE points to minimal profitability,
suggesting the need for strategic improvements to enhance returns on equity
• 2020-21: The ROE went down to -12.30%, A significant negative ROE indicates
substantial losses, highlighting operational inefficiencies and potential financial
distress during this period.
• 2021-22: The ratio raised to 0.24%. Indicates that the company's profitability
remained low, reflecting challenges in effectively leveraging equity to generate
returns.
• 2022-23: The ROE raised to 0.88%. A marginal increase in ROE suggests a slow
recovery in the company's ability to generate profits from shareholders' equity. The
significant fluctuations in ROE, particularly the negative values in the last two years, are
concerning and mirror the trend with the gross profit margin. This suggests that Dredging
India Corporation of Ltd. may be facing some financial challenges.
• 2023-24: The ROE of 2.82 Indicates that the company showed a modest improvement in
profitability, indicating a slight enhancement in the efficiency of equity utilization.

A higher ROE is generally considered better, but it is important to compare the company's
ROE to industry benchmarks and its own historical ratios to get a better sense of its
financial health.

It is important to conduct a more detailed financial analysis to identify the specific reasons
behind the negative ROEs but as of now the companies return on equity is good and
gradually raising.

Over the five-year period, DCIL's ROE has fluctuated, with a notable loss in FY 2020-21.
The gradual improvement in subsequent years indicates efforts toward financial recovery
and better equity utilization. However, the overall low ROE percentages suggest that the
company needs to implement more effective strategies to enhance profitability and provide
better returns to its shareholders.

57
4.10 RETURN ON ASSETS
Formula: ROA = (Net Income / Total Assets) x 100
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Net Profit/Loss 13.83 24.49 29.04 22.29 89.32
Total Assets 2,468.04 2,289.24 2,306.51 2,408.36 2,402.97
Ratio 1.78% 1.07% 1.26% 0.93% 3.72%

Ratio
4.00% 3.72%

3.50%

3.00%

2.50%

2.00% 1.78%

1.50% 1.26%
1.07%
0.93%
1.00%

0.50%

0.00%
2019-20 2020-21 2021-22 2022-23 2023-24

INTERPRETATION:-

The return on assets (ROA) for Dredging Corporation India of Ltd. has fluctuated between
0.93% and 3.72% over the five years from 2019-20 to 2023-24. ROA is a measure of a
company's profitability relative to its total assets. A higher ROA indicates that the company
is generating a good return on its assets.

58
Here's a more detailed breakdown of the ROA for each year:

• 2019-20: ROA was 1.78%, showing better efficiency and profitability.

• 2020-21: ROA was 1.07%, reflecting stable yet low returns during recovery from
pandemic-related slowdowns.
• 2021-22: ROA slightly improved to 1.26%, showing modest gains in asset
efficiency and profitability
• 2022-23: ROA dipped to 0.93%, Indicating weak profitability possibly due to
operational inefficiencies or cost pressures.
• 2023-24: ROA improved significantly to 3.72%, reflecting better utilization of
assets and higher profitability.

It is important to conduct a more detailed financial analysis to identify the specific reasons
behind the decline in ROA.

A higher ROA is generally considered better, but it is important to compare the company's
ROA to industry benchmarks and its own historical ratios to get a better sense of its
financial health.A declining ROA may indicate that the company needs to take steps to
improve its profitability or better utilize its assets.

59
4.11 NET PROFIT RATIO
Formula: Net Profit Ratio = (Profit / Total Revenue) x 100
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Net Profit 5.51 -172.41 3.42 12.56 35.68
Total Revenue 755.29 766.92 801.54 1,168.03 948.81
Ratio 0.73% -22.48% 0.43% 1.08% 3.76%

Ratio
10.00%

5.00% 3.76%
0.73% 0.43% 1.08%
0.00%
2019-20 2020-21 2021-22 2022-23 2023-24
-5.00%

-10.00%

-15.00%

-20.00%

-25.00% -22.48%

INTERPRETATION :-

The net profit ratio for Dredging India Corporation of Ltd. has fluctuated significantly over
the five years from 2019-20 to 2023-24. The net profit margin is a measure of a company's
profitability calculated as net profit divided by net sales. A higher net profit margin
indicates that the company is more efficient at generating profit after accounting for all
expenses.

60
Here's a more detailed breakdown of the net profit margin for each year:

• 2019-20: A slight profit with a 0.73% ratio. The company was barely profitable,
needing better revenue or cost optimization to improve margins.
• 2020-21: The NPR was -22.48%, showing a severe net loss. This reflects major
operational inefficiencies or extraordinary losses during the year.
• 2021-22: At NPR 0.43%, profitability remained thin. Revenues increased, but
operational costs seem to have neutralized profit growth.
• 2022-23: The net profit ratio raised to 1.08%, a recovery from previous years.
While still low, it suggests a turnaround phase with positive gains.
• 2023-24: The company showed a net profit ratio of 3.76%, indicating modest
profitability. This is the highest NPR in five years, reflecting better cost control and
operational efficiency.

The significant decline in net profit margin in the last two years mirrors the trend with the
gross profit margin and ROE. This suggests that Dredging India Corporation of Ltd. is
facing challenges that are impacting its profitability at a fundamental level.

It is important to conduct a more detailed financial analysis to identify the specific reasons
behind the decline in net profit margin.

A higher net profit margin is generally considered better, but it is important to compare the
company's net profit margin to industry benchmarks and its own historical ratios to get a
better sense of its financial health. The negative net profit margins in the last two years
suggest that the company is not generating enough profit to cover its expenses. This could
lead to financial difficulties and may require the company to take corrective actions.

61
4.12 NET WORTH RATIO
Formula: Net worth = Total Assets / Total Liabilities
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Shareholder’s Funds 1570.24 1402.12 1400.35 1422.56 12663.60
Total Assets 2468.04 2289.24 2306.51 2408.36 2402.97
Ratio 63.63% 61.25% 60.69% 59.06% 52.58%

Ratio
70.00%
63.63%
61.25% 60.69% 59.06%
60.00%
52.58%
50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
2019-20 2020-21 2021-22 2022-23 2023-24

INTERPRETATION :-

The net worth ratio for Dredging India Corporation of Ltd. is gradually decreasing for all
five years from 2019-20 to 2023-24

Here's a more detailed breakdown of the net worth ratio for each year:

• 2019-20: With a 63.63% net worth ratio, the company was highly stable financially.
Most of its assets were financed through shareholders’ funds.

62
 • 2020-21: The ratio stood at 61.25%, reflecting a balanced financial structure. The
company had good capital strength to support operations.
• 2021-22: At 60.69% ratio indicates decent internal funding of assets. However, a
downward trend in the proprietary ratio begins here.
• 2022-23: At 59.06%, the ratio shows moderate reliance on shareholder equity.
There’s a slight weakening in internal financing compared to previous years.
• 2023-24: The net worth ratio dropped to 52.58%, the lowest in five years,
suggesting increased dependency on external liabilities. The company should watch
its leverage levels closely.

Over the five-year span, Dredging Corporation of India Limited has witnessed a gradual
decline in its net worth ratio, dropping from 63.63% in FY 2020 to 52.58% in FY 2024.
This consistent downward trend highlights an increasing reliance on external liabilities for
financing the company’s assets. While the earlier years such as FY 2020 and FY 2021
reflected strong financial stability and balanced capital structures, the later years suggest
weakening internal funding capacity and growing financial risk.

The sharpest decline occurred between FY 2023 and FY 2024, indicating a shift toward
higher leverage and potential pressure on long-term solvency. A net worth ratio falling
below 60% consistently since FY 2022 points to the need for strategic capital restructuring.
To maintain investor confidence and financial independence, the company should
prioritize strengthening shareholder equity and curbing excessive reliance on borrowings.

63
4.13 TOTAL DEBT RATIO
Formula: Total Debt Ratio = Total Liabilities / Total Assets
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

TOTAL
897.80 887.13 906.15 985.79 1139.36
LIABILIITIES
TOTAL
24448.04 2289.24 2306.51 2408.36 2402.97
ASSESTS
Ratio 36.67% 38.76% 39.28% 40.93% 47.42%

RATIO
50.00% 47.42%
45.00% 40.93%
38.76% 39.28%
40.00% 36.67%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2019-20 2020-21 2021-22 2022-23 2023-24

INTERPRETATION :-

The table shows the total debt ratio for Dredging India Corporation of Ltd for five years
(2019-20 to 2023-24). The total debt ratio is a financial metric that indicates the portion of
a company's assets that are financed by debt (total liabilities).

64
Here's a breakdown of the total debt ratio for each year:

• 2019-20: A low debt ratio of 36.67% indicated stronger reliance on equity. This
reflects a relatively safer financial position pre-pandemic.
• 2020-21: With a 38.76% ratio, the firm had moderate debt usage. However, debt
was still substantial during a period of losses.
• 2021-22: At 39.28%, the debt level remained controlled. The company managed
its obligations while maintaining moderate leverage.
• 2022-23: The ratio stood at 40.93%, showing a jump from the previous year. Debt
is becoming a larger part of the capital structure.

• 2023-24: Debt ratio increased to 47.42%, the highest in five years. The company is
increasingly relying on debt financing, raising risk but possibly funding growth.

Over the five-year period, Dredging Corporation of India Limited has shown a gradual
increase in its liabilities ratio, rising from 36.67% in FY 2020 to 47.41% in FY 2024.
This indicates a growing dependence on external funding sources, suggesting a
strategic shift towards leveraging debt to support operational or investment needs.
Initially, the company operated with a strong equity base and minimal financial risk, as
reflected by the low ratios in FY 2020 and FY 2021. These years signified a
conservative financial stance with limited exposure to liabilities.

However, from FY 2022 onward, the company began to steadily increase its liabilities.
By FY 2023, it maintained a moderate ratio of 40.94%, showing a balanced capital
structure. The sharp jump to 47.41% in FY 2024, however, marks a notable shift in
financial strategy and could imply a rising risk profile. While this can enhance returns
during growth periods, it may also increase financial vulnerability in adverse market
conditions. The trend suggests the company is prioritizing expansion or operational
funding through debt, warranting close monitoring of its interest obligations and
repayment capacity.

65
4.14 TOTAL LIABILITIES RATIO
Formula: Total Liabilities Ratio = Total Debt / Total Assets
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

TOTAL
897.80 887.13 906.15 985.79 1139.36
LIABILIITIES
TOTAL
24448.04 2289.24 2306.51 2408.36 2402.97
ASSESTS
RATIO 36.67% 38.76% 39.28% 40.93% 47.42%

RATIO
50.00% 47.42%
45.00% 40.93%
38.76% 39.28%
40.00% 36.67%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2019-20 2020-21 2021-22 2022-23 2023-24

INTERPRETATION :-

The table shows the total liabilities ratio for Dredging India Corporation of Ltd for five
years (2019-2020 to 2023-24). The total liabilities ratio, also known as the debt-to-equity
ratio, is a financial metric that indicates the portion of a company's assets that are financed
by debt (total liabilities) compared to the investment from shareholders (shareholders'
equity).

66
Here's a breakdown of the total liabilities ratio for each year:

• 2019-20: A low ratio of 36.67% indicates strong equity backing. The company was
in a relatively safe financial position with minimal reliance on debt. 2020-21: With
a 38.76% ratio, the firm had moderate debt usage. However, debt was still
substantial during a period of losses.
• 2021-22: At 39.28%, the debt level remained controlled. The company managed
its obligations while maintaining moderate leverage.
• 2022-23: The ratio stood at 40.93%, showing a jump from the previous year. Debt
is becoming a larger part of the capital structure.

• 2023-24: Debt ratio increased to 47.42%, the highest in five years. The company is
increasingly relying on debt financing, raising risk but possibly funding growth.

Over the five-year period, Dredging Corporation of India Limited has shown a gradual
increase in its liabilities ratio, rising from 36.67% in FY 2020 to 47.41% in FY 2024. This
indicates a growing dependence on external funding sources, suggesting a strategic shift
towards leveraging debt to support operational or investment needs. Initially, the company
operated with a strong equity base and minimal financial risk, as reflected by the low ratios
in FY 2020 and FY 2021. These years signified a conservative financial stance with limited
exposure to liabilities.

However, from FY 2022 onward, the company began to steadily increase its liabilities. By
FY 2023, it maintained a moderate ratio of 40.94%, showing a balanced capital structure.
The sharp jump to 47.41% in FY 2024, however, marks a notable shift in financial strategy
and could imply a rising risk profile. While this can enhance returns during growth periods,
it may also increase financial vulnerability in adverse market conditions. The trend
suggests the company is prioritizing expansion or operational funding through debt,
warranting close monitoring of its interest obligations and repayment capacity.

67
4.15 NET SALES RATIO
Formula: Net Sales Ratio = (Net Sales / Total Assets) x 100
(Rupees in Rs. Cr.)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

Net Sales 749.69 753.30 784.36 1164.80 943.15

Total Assets 2468.04 2289.24 2306.51 2408.36 2402.97

RATIO 30.37% 32.91% 34.00% 48.35% 39.25%

RATIO
60.00%

48.35%
50.00%

39.25%
40.00%
32.91% 34.00%
30.37%
30.00%

20.00%

10.00%

0.00%
2019-20 2020-21 2021-22 2022-23 2023-24

INTERPRETATION :-

The net sales ratio for Dredging India Corporation of Ltd for five years (2019-20 to 2023-
24). The net sales ratio is a profitability metric that indicates how much net sales a company
generates for each rupee of cost of goods sold (COGS).

68
Here's a breakdown of the net sales ratio for each year:

• 2019-20: The lowest ratio of 30.37% shows poor efficiency in using total assets to
drive sales.
• 2020-21: The lowest ratio of 30.37% shows poor efficiency in using total assets to
drive sales.
• 2021-22: The ratio was 34.00%, a dip compared to FY23. It reflects reduced
revenue generation capacity per rupee of assets.
• 2022-23: With the highest ratio of 48.35%, the company used its assets most
effectively to generate revenue this year.
• 2023-24: The net sales ratio was 39.25%, showing moderate utilization of assets. It
declined from last year, indicating relatively lower efficiency.

Over the five-year period, Dredging Corporation of India Ltd. exhibited fluctuations in
its net sales ratio, reflecting varying levels of efficiency in asset utilization. The
company achieved its highest performance in FY Mar 2023 with a net sales ratio of
48.35%, indicating highly effective use of its assets to generate revenue. This peak,
however, was short-lived as the ratio declined to 39.25% in FY Mar 2024, pointing to
a moderate but reduced efficiency in converting assets into sales. The fall suggests
potential underutilization or operational inefficiencies compared to the previous year.

Earlier years, particularly FY Mar 2020 to FY Mar 2022, showed consistently lower
ratios ranging from 30.37% to 34.00%, suggesting that asset turnover was suboptimal
during this period. FY Mar 2020 marked the lowest ratio at 30.37%, possibly due to
disruptions caused by the pandemic, which could have affected operations and sales.
Gradual improvement through FY Mar 2021 and FY Mar 2022 indicated efforts to
optimize resources, but only in FY Mar 2023 did the company witness significant asset
productivity. Overall, while there has been progress, the recent decline in FY Mar 2024
emphasizes the need for strategic focus on asset utilization to sustain growth.

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 CHAPTER - V
SUMMARY, FINDINGS AND SUGGESTIONS

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5.1 SUMMARY
The ratio analysis of Dredging Corporation of India Limited over the five-year period from
2019-20 to 2023-24 reflects significant shifts in the company’s financial health. The
liquidity ratios, including current and quick ratios, have shown a declining trend, pointing
to weakening short-term financial stability. Negative working capital trends have emerged
as a major concern, potentially affecting the company’s ability to meet immediate
obligations.

Despite challenges in liquidity, the company has improved its operational efficiency, as
seen in the increasing fixed assets turnover and inventory turnover ratios. These
improvements suggest better management of core operations and asset utilization.
However, the working capital turnover ratio turned negative from 2021-22 onward,
reflecting excessive reliance on current liabilities and a possible strain on financial
sustainability.

The profitability ratios present a mixed picture. While gross and net profit margins, as well
as ROA and ROE, improved in 2023-24, they were previously inconsistent, especially
during the pandemic years. The company struggled with losses and thin margins but has
shown signs of recovery through better cost control and improved sales.

The capital structure remains relatively conservative with a low to moderate debt-equity
ratio. However, increasing total debt and liabilities ratios in 2023-24 signal growing
reliance on external funding. This could pose risks if profitability doesn't sustain or
improve further. The net worth ratio decline reinforces the need for careful leverage
management.

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5.2 FINDINGS
➢ The current ratio declined from 1.72 in 2019-20 to 0.78 in 2023-24, indicating growing
liquidity stress.
➢ The quick ratio followed a similar trend, falling from 1.27 to 0.63, reflecting increased
reliance on inventories.
➢ The inventory to working capital ratio turned negative from 2021-22 onwards,
highlighting excessive inventory in a weak liquidity environment.
➢ The debt-equity ratio rose slightly to 0.34 in 2023-24, but remains within safe limits,
indicating moderate leverage.
➢ The working capital turnover ratio was positive in 2019-21 but turned negative in the
last three years, raising operational efficiency concerns.
➢ The fixed assets turnover ratio improved sharply to 1.23 by 2023-24, signaling efficient
asset utilization.
➢ The inventory turnover ratio rose to 7.89 in 2022-23, then slightly declined, indicating
good inventory management.
➢ The gross profit ratio peaked at 29.96% in 2023-24, showing improved cost control and
revenue generation.
➢ ROE and ROA both improved in 2023-24, indicating better returns to shareholders and
asset utilization.
➢ The net worth ratio declined to 52.58%, and the debt ratio rose to 47.42%, showing
increased dependency on debt.

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5.3 RECOMMENDATIONS

➢ The company should improve liquidity by increasing cash reserves or securing better
credit terms with suppliers.
➢ Inventory management needs tighter control to reduce its proportion in working capital
and improve liquidity.
➢ Convert negative working capital into positive by rebalancing short-term assets and
liabilities.
➢ Maintain debt-equity ratio below 0.50 to retain financial flexibility and reduce long-
term risk.
➢ Monitor and improve quick ratio by limiting over-reliance on slow-moving inventory.
➢ Leverage improved asset utilization to raise sales and margins without overextending
financial resources.
➢ Focus on maintaining a strong gross profit margin by optimizing operational costs and
input procurement.
➢ Increase net worth by retaining earnings and reducing dividend payouts temporarily.
➢ Ensure ROE and ROA stay on an upward trajectory by boosting both revenue and asset
productivity.
➢ Strengthen short-term financial planning and working capital cycles to avoid liquidity
traps and operational delays.

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5.4 CONCLUSION

Dredging Corporation of India Ltd. has demonstrated signs of financial improvement,

especially in profitability and asset utilization metrics, over the past two years. The rise in
gross profit, return on assets, and return on equity, along with enhanced fixed asset
turnover, points to better operational efficiency and revenue generation capacity. These are
positive signs for the company’s long-term outlook.

However, serious short-term financial risks persist, particularly in liquidity and working
capital management. The declining current and quick ratios, combined with negative
working capital and increased debt levels, suggest potential cash flow issues that could
hinder smooth operations. A balanced approach focusing on improving liquidity, debt
control, and capital efficiency will be essential to sustain the recent gains and support future
growth.

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BIBLIOGRAPHY

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