CHAPTER - I

1.1 INTRODUCTION

A company can raise the fund required for investment either by increasing owner’s claims or
the creditor’s claim or both. The claims of the owner’s increases when the company raises
the fund by issuing equity shares or ploughs back its earnings. The claims of the creditors
increase when the funds are raised by borrowings. The various means used to raise the funds
represent the financial or the capital structure of the company.

The financing or capital structure decision is of tremendous significance for the

management, since it influences the debt-equity mix of the company, which ultimately affect
shareholder’s return and risk. In case the borrowed funds are more as compared to the
owner’s funds, it result in increase in shareholder’s earning together with increase in their
risk. This is because the cost of borrowed fund is less than that of shareholder’s fund on
account of the cost of borrowed fund being allowable as a deduction for income tax purpose.
But at the same time, the borrowed fund carry a fixed interest, which has to be paid whether
the company is earning profit or not. Thus, The risk of the shareholders increase in case
there is high proportion of borrowed funds in the total capital structure of the company. In a
situation where the proportion of the shareholder’s fund is more that the proportion of the
borrowed fund, the return as well as the risk of shareholders will be much less.

MEANING OF LEVERAGES

The dictionary meaning of the term leverage refers to “an increased means of accomplishing
some purpose.” For example, leverages helps us in lifting heavy objects, which may not be
otherwise possible. However in the area of finance, the term leverage has special meaning. It
is used to describe the firm’s ability to use fixed cost asset or funds to magnify the return to
its owners.

James Horne has defined leverage as “The employment of an asset or funds on which the
firm pays a fixed cost or fixed return”. Thus, according to him, leverage is the result of the
firm employing an asset or a source of fund which has a fixed cost or return is the fulcrum of
leverage. If a firm is not required to pay fixed cost or fixed return, there will be no leverage.

1
Since fixed cost or return has to be paid or incurred irrespective of the volume of output or
sales, the size of such cost or return has considerable influence over the amounts of profit
available for the shareholders. When the volume of sales changes, leverage helps in
quantifying such influence. It may, therefore, be defined as the relative change profit due to
change in sales. A high degree of leverage implies that there will be a large change in profit
due to relatively small change in sales and vice-versa. Thus, higher the leverage, higher is the
risk and higher is the expected return.

TYPES OF LEVERAGES

1. Operating leverage
2. Financial leverage
3. Combined leverage/ Composite leverage

1. Operating Leverage
In the context of business operations, companies incur both fixed and variable costs. The way
these costs are structured significantly affects the company’s profitability, especially when
there are changes in sales volume. This is where operating leverage comes into play. It helps
analyze how a change in sales will impact operating income (EBIT), depending on the
proportion of fixed costs in the cost structure.

Advantages:

 Once fixed costs are covered, any increase in sales leads to a larger increase in EBIT.
 Helps in achieving economies of scale, making production more efficient.
 Aids in analyzing the impact of cost structure on profitability, useful for decision-
making.

Disadvantages:

 sales fall, the company still bears high fixed costs, leading to lower profits or even
losses.
 High fixed costs reduce a firm's ability to adjust costs in response to changing
demand.

2
 2. Financial Leverage
In the world of finance and business, companies often require large amounts of capital to
expand operations, invest in new projects, or purchase assets. While some of this capital can
come from the owner's equity, many businesses turn to borrowing as an alternative. This use
of borrowed money is known as financial leverage. It plays a crucial role in the capital
structure of a company and can significantly impact both profitability and risk.

Advantages:

 If the return on investment exceeds the cost of debt, it magnifies shareholders’

returns.
 Interest expenses on debt are tax-deductible, reducing taxable income.
 Enables businesses to undertake larger projects without diluting ownership.

Disadvantages:

 Fixed interest payments must be made regardless of earnings, which can strain cash
flow.
 Over-reliance on debt can lead to financial distress or bankruptcy.
 High debt levels may limit a firm’s ability to raise additional funds or react to market
changes.

3
 3. Combined Leverage
In business, both operating and financial activities involve certain risks and rewards. While
operating leverage shows the effect of fixed operating costs on a firm’s operating income,
and financial leverage shows the effect of fixed financial costs (like interest) on net income,
combined leverage brings these two together. It provides a comprehensive picture of how
changes in sales affect the firm’s earnings per share (EPS).

Advantages:

 Provides a complete view of how changes in sales affect net income and EPS.
 Small changes in sales can significantly boost EPS when both operating and financial
leverage are high.
 Helps management evaluate total risk from both operational and financial decisions.

Disadvantages:

 High combined leverage means increased vulnerability to fluctuations in sales,

impacting both EBIT and net income.
 Balancing both operating and financial risks requires careful planning and execution.
 Increases earnings volatility, which may concern investors and affect stock prices.

4
1.2 INDUSTRYPROFILE

The chemical industry is a fundamental sector, contributing approximately $4 trillion to the

global economy annually, accounting for nearly 7% of the world's GDP. This vast sector
includes various categories like basic chemicals, specialty chemicals, and consumer
chemicals. Basic chemical companies, such as those producing petrochemicals, polymers,
and fertilizers, dominate the market with large-scale production, supplying essential raw
materials to industries such as automotive, construction, and electronics. Specialty chemicals,
which are produced in smaller quantities, include high-value products like adhesives,
coatings, agrochemicals, and cleaning agents. These chemicals are vital for industries ranging
from agriculture to textiles. Consumer chemicals are used in everyday products, including
personal care items like cosmetics, soaps, and household cleaners.

In terms of market segmentation, the industrial and manufacturing sector accounts for
around 55% of chemical consumption globally, with chemicals used in processes like
refining, metalworking, and electronics production. The pharmaceutical industry is another
major consumer, relying on specialty chemicals for drug manufacturing, representing about
15% of chemical demand. The household and consumer goods sector, which includes
cleaning products and personal care items, consumes about 10% of global chemical
production. This diverse demand ensures the chemical industry remains essential across a
wide range of sectors.

Recent trends in the industry show a significant shift toward sustainability and innovation.
The global chemical market is expected to grow at a compound annual growth rate (CAGR)
of 3.5% from 2023 to 2025, driven by rising demand for eco-friendly chemicals,
biodegradable plastics, and sustainable production methods. Green chemistry, which focuses
on designing products and processes that minimize waste and reduce environmental impact,
is becoming a major focus for leading companies. Digitalization and automation are also
reshaping the industry, allowing companies to optimize their manufacturing processes, reduce
costs, and improve product quality through the use of data analytics, artificial intelligence,
and smart manufacturing techniques.

5
Despite these promising trends, the chemical industry faces significant challenges.
Environmental regulations are tightening worldwide, with governments imposing stricter
rules on emissions, waste disposal, and the use of hazardous chemicals. For example, the
European Union’s REACH regulation requires companies to register all chemicals produced
or imported in quantities above one ton per year, ensuring they meet stringent safety
standards. Additionally, the industry is highly dependent on raw materials like crude oil and
natural gas, making it vulnerable to price fluctuations. The rise in oil prices in recent years
has increased production costs, leading to narrower profit margins for many chemical
companies.

The competitive landscape of the chemical industry is vast, with global giants like BASF,
Dow Chemicals, DuPont, and Sinopec leading the market. BASF, the world's largest
chemical producer, generated over €78 billion in revenue in 2022, with operations spanning
across 80 countries. These large companies dominate the production of basic chemicals but
face competition from smaller, specialized firms in the niche markets of specialty and
consumer chemicals. These smaller players focus on innovation and customized solutions for
industries like electronics, biotechnology, and pharmaceuticals.

In conclusion, while the chemical industry continues to evolve with advancements in green
chemistry, automation, and sustainability practices, it must navigate challenges such as
environmental regulations, price volatility, and competitive pressures. Despite these
obstacles, the future outlook remains positive, with demand growing in key sectors such as
healthcare, agriculture, and renewable energy. The industry’s ability to innovate and adopt
sustainable solutions will determine its long-term success and global impact.

6
1.3 COMPANY PROFILE

Suganj Eco Chemicals Private Limited established in 2009 with three directors having rich
experience. The company has its registered office and manufacturing unit at SIDCO,
Thirumazhisai, Chennai, Tamil Nadu, INDIA.

The company has its branch Office in Hyderabad and sales offices in Madurai, Pondicherry,
Vizag& Bengaluru. Company has a capacity to manufacture 100 tons/month. Company
produces and markets its product range in the verticals namely Industrial, Water treatment,
Housekeeping and automotive specialty products in India & Overseas.

Company supplies wide range of raw chemicals (Commercial & Lab Chemicals) to meet the
various customer needs. Company has its Operation & Maintenance / Housekeeping services.

The industry is experiencing major shifts, particularly towards eco-friendly and sustainable
cleaning products, as consumers demand products that are less harmful to the environment.
Green cleaning products, which are biodegradable and free of harsh chemicals, are becoming
increasingly popular. Companies like Seventh Generation and Method are at the forefront
of this trend. Additionally, industrial cleaning solutions are being integrated with automation
and smart technologies like robotic cleaners and IoT-based systems, improving efficiency
and reducing waste. Hygiene awareness has continued to grow since the pandemic, sustaining
demand for disinfectants and sanitizing products in both households and industries.

Despite its growth, the industry faces challenges, such as strict environmental regulations
and rising raw material costs. Compliance with safety and environmental standards is
crucial, especially in industrial cleaning chemicals, where harsh chemicals are regulated by
authorities like the EPA in the U.S. and REACH in Europe. Additionally, fluctuating prices
of ingredients like surfactants and solvents have affected profitability. Key companies like
P&G, Ecolab, Clorox, and Diversey dominate the competitive landscape, while smaller
players focus on niche markets such as green and sustainable cleaning solutions. The future
of the industry looks promising, driven by increased hygiene awareness, demand for eco-
friendly products, and advancements in automation technology.

7
 COMPANYDETAILS

Suganj Eco Chemicals Private Limited,

GST IN 33AANCS4156M1ZW

Status Active

ROC ROC-Chennai

Company Category Company Limited by shares

Company Sub- Category Non- govt. company

Class of Company Private

Date of Incorporation 2009

Age of Company 15 years

Employee 95 employees

Salary 18,000Rs – 55,000Rs

Payment Mode Bank and Cash

Mobile Number 044 268 10 268

Mail ID info@[Link]

DIRECTORS

Under the leadership of Jamesh, Ganesh, and Suresh Kannan, the company has started in
2019, and expanding its range and distribution network over india sustainability. Today,
Suganj Eco Chemical Pvt. Ltd. is recognized as a prime level company in the eco-friendly
chemical sector, dedicated to reducing the ecological footprint of everyday and industrial
cleaning products. The founders’ vision of a cleaner, greener future continues to drive the
company’s success and innovation.

8
BRANCHES

● Chennai – Head Office

● Vizag
● Madurai
● Pondicherry
● Bengaluru &Hosur

VISION

● To be a prominent and dynamic organization by providing world class products and

services to the customers.

MISSION

● To adopt innovative and qualitative products & services,

● Pay attention to customers needs,
● Give all customers value for money,
● Create a world class sales & service system,
● Nurture an organization driven by values,
● Give back to society,

VALUES

● Transparency across the network system,

● Prioritize customer care to exceed expectations,
● To obtain highest level of satisfaction of our employees,
● To achieve high health, safety & environmental standards,

9
DEPARTMENTS

DEPARTMENT ACTIVITIES:

To be succeeding in the field of Suganj Eco Chemicals Pvt Ltd Company, the
integration of every department is mandatory. In Suganj Eco Chemicals Pvt Ltd Company ,
there are various departments which are interconnected with the organization. It performs
several functions to improve its efficiency to gain its effectiveness. It may be curious about
specific tasks different departments engage in and what their general purpose is.

Understanding how each department with a production works and what they
contribute to its success can be helpful in expanding both your business and knowledge. The
major departments of the company are,

1. Human Resource &Administration Department,

2. Production Department
3. Finance & Accounting Department,
4. Sales Department,
5. Service Department,
6. Maintenance Department,
7. Logistics & Transportation Department

10
1.4 OBJECTIVES OF THE STUDY

● To analyze the financial leverage, operating leverage & combined leverage of

SUGANJ ECO CHEMICALS PVT LTD.
● To examine the impact of leverage on earning per share.
● To analyze the financial performance and structural changes of the company over a
specific period using common size balance sheet analysis.

● To examine how the composition of current and non-current assets has changed over
time and its implications on liquidity.

1.5 LIMITATIONS OF THE STUDY

 Lack of availability to certain data due to confidentially of information.

 Due to constraints of time cost and non-availability of data, the study was restricted to
a period of 7 years.

11
 CHAPTER - II
2.1 REVIEW OF LITERATURE

 Prof. I. M. Pandey (2023) Has defined leverage from different viewpoints and has
explained elaborately the effects of leverage on Shareholders’ return. The point to be
noted is that he has devoted a special section to the tax-shield effect of leverage. He
has dissected the effects of leverage under different scenarios wherein sometimes the
EBIT is varying and rate of taxes also varies. As a practical case- study, he has
analysed the employment of leverage in Voltas Ltd. which is followed by many
examples and illustrations.

 Darshana Lakmal (2022) Management accounting involves using accounting

techniques to aid in decision making and planning for business enterprises. Marginal
costing considers only variable manufacturing costs, while absorption costing
considers all manufacturing costs as production costs. Both techniques have faced
criticism for their overhead recovery rates and allocation of overheads. This paper
reviews previous research and literature on marginal and absorption costing methods,
highlighting their supporters and arguments in favor and against each method.

 Mark Lee Inman (2022) Marginal costing is a decision-making technique that

considers only activity-related costs, assuming time-related costs will be incurred
regardless of expenditure decisions. It charges variable costs to cost units and writes
off fixed costs against the contribution for the period. Marginal costing is useful in
reporting, especially when monitoring operating divisions or activities and dealing
with corporate fixed overhead. However, it is unrealistic to take an arbitrary allocated
cost over which operations management has no control and appraise it. This approach
could produce misleading data when considering decision making and marginal costs.

 Avraham Kamara (2021) Operating leverage increases profitability but reduces

optimal financial leverage, contradicting trade-off theory. This is demonstrated using
China's entry into the World Trade Organization and its impact on U.S. firms' capital-
labour ratio.

12
 B. Kriefman (2021) Marginal costing is a method used to analyze costs in a way that
excludes fixed or unavoidable costs, focusing on short-term changes in total costs
resulting from changes in business activity level, known as marginal costs. Marginal
costing.

 Garin Pratiwi Solihati (2021) This study examines the impact of leverage, return on
assets, company size, and sales growth on the value of manufacturing companies
listed on the Indonesia Stock Exchange The results show that leverage and return on
assets positively affect firm value, while company size and sales growth have no
effect.

 R. Watts (2019) Firms on growth tend to have less leverage and faster growth
compared to their historical records. Most borrowing firms struggle to dispose of debt
due to lack of finance. Debt also hinders firms from doling out dividends, as they may
be cautious about giving out large amounts due to the fear of future cash reserves
being used to service debt.

 Weston and Brigham (2019) They emphasized that financial leverage is a double-
edged sword. It can magnify both gains and losses. Their study indicated that the
proper use of debt can enhance shareholder value, but excessive reliance on leverage
increases financial risk.

 Pandey (2014) Pandey highlighted the importance of analyzing capital structure and
its impact on firm performance. His findings suggested that moderate leverage helps
firms maximize their returns on equity, particularly in stable economic environments.

 Modigliani and Miller (2018) Their capital structure irrelevance theory suggested
that under perfect market conditions, the value of a firm is unaffected by its capital
structure. However, with taxes and bankruptcy costs considered (1963 revision),
leverage could influence firm value.

 Rajan and Zingales (2015) In their cross-country study of capital structure

determinants, they observed that leverage varies across firms due to factors like asset
tangibility, firm size, and profitability. Their study underlined that more profitable
firms tend to use less debt.

13
 Pratheepkanth (2011) This study on Sri Lankan companies found a significant
relationship between financial leverage and corporate performance. Companies with
optimal levels of leverage reported better ROE and ROI.

 Chakraborty (2020) Focused on Indian companies, the study concluded that highly
leveraged firms faced greater risks during economic downturns. Conservative capital
structures were associated with more stable earnings.

 Gill, Biger, and Mathur (2011) Analyzed the impact of financial leverage on
profitability of American firms. Their results showed a positive correlation between
debt ratio and profitability in certain industries, especially those with predictable cash
flows.

 Horngren et al. (2013) Stated that cost behavior is traditionally categorized as fixed,
variable, and mixed costs, assuming a linear relationship between cost and activity
level within a relevant range.

 Anderson, Banker, and Janakiraman (2016) Introduced the concept of cost

stickiness, showing that costs increase more when activity rises than they decrease
when activity falls. This challenged the conventional linear cost model.

 Calleja, Steliaros, and Thomas (2016) Provided empirical evidence of cost

stickiness across multiple countries and industries. They concluded that cost
stickiness is influenced by factors like firm size, industry type, and country-specific
characteristics.

 Kaplan and Cooper (2018) Emphasized the role of Activity-Based Costing (ABC) in
understanding cost behavior by linking costs to specific activities and cost drivers,
especially in complex organizations with high indirect costs.

 Bayu Pratama (2018) This study investigates the impact of company size, financial
leverage, profitability, and dividend payout ratio on earnings smoothing practices in
Indonesian companies listed on the LQ-45 index. Data was collected from 19
companies using purposive sampling. The results show that company size positively
influences earnings smoothing practices, while financial leverage has a negative
impact. Profitability also positively influences earnings smoothing practices, but
dividend payout ratio doesn't significantly affect them.

14
 Alice Johnson, Mark Lee(2014) stated in "The Role of Financial Statement
Analysis in Investment Decisions” related to Investment decisions and this research
explores how investors utilize financial statement analysis to make informed
decisions. It discusses the importance of evaluating balance sheets, income
statements, and cash flow statements. The study presents a model showing how
financial ratios, trend analysis, and common size statements can guide investment
strategies. The authors provide real-world examples of how thorough financial
analysis can lead to better investment outcomes.
 Richard Davis (2015) regarding "Financial Distress Prediction Models" about
Predicting financial distress and states the paper reviews various models used to
predict financial distress, including Altman's Z-score and Ohlson's O-score. It
compares the accuracy of these models in different industries and economic
conditions, providing recommendations for their application in risk management and
lending decisions. The study also highlights the limitations of these models and
suggests areas for future research to enhance their predictive power.

15
 CHAPTER - III
RESEARCH METHODOLOGY
3.1 RESEARCH DESIGN:
Research design is the overall plan or blueprint for conducting a research study. It
outlines how data will be collected, measured, and analyzed. The purpose of a research
design is to ensure that the study is carried out effectively, efficiently, and ethically, so that
the results are valid and reliable.

According to Kerlinger, "Research Design is a plan, conceptual structure, and strategy

of investigation conceived as to obtain answers to research questions and to control variance.

3.2 AREA OF THE STUDY:

The area of the study is at "SUGANJ ECO CHEMICALS PVT. LTD.,

CHENNAI.”

3.3 PERIOD OF THE STUDY:

The project was a detailed study on the topic "A STUDY ON FINANCIAL
LEVERAGE ANALYSIS AND COST BEHAVIOUR ANALYSIS ON SUGANJ ECO
CHEMICALS PVT. LTD., CHENNAI” within the time period of three months from
March-June 2025.

3.4 METHODS USED FOR DATA COLLECTION:

PRIMARY DATA:

Primary data refers to the original information collected directly by a researcher for
a specific research purpose. It is first-hand data that has not been previously gathered or
published. This type of data is collected from the source through various methods such as
surveys, interviews, questionnaires, experiments, focus groups, and direct observations.
Since it is collected specifically to address the problem or topic under study, primary data is
often highly relevant, accurate, and tailored to the research needs.

According to C.R. Kothari, primary data is "collected afresh and for the first time,
and thus happens to be original in character."

16
SECONDARY DATA:

Secondary data refers to information that has already been collected, processed, and
published by someone else for a different purpose, and is now being used by a researcher for
their own study. Unlike primary data, which is original and collected firsthand, secondary
data is derived from existing sources such as books, journals, government reports, research
articles, company records, websites, and databases.

According to W. G. Cochran, secondary data is data that has "been previously

collected by others and is reused for a different analysis or purpose."

The study is mainly based upon the secondary data, which are from the published
annual report of the SUGANJ ECO CHEMICALS PVT. LTD., CHENNAI from 2018-
2024.

3.5 SOURCE OF DATA:

 Balance Sheet of SUGANJ ECO CHEMICALS [Link].

 Profit & Loss Account of SUGANJ ECO CHEMICALS [Link].
 Internal ( Company Journals and Magazines)
 Websites.

3.6 TOOLS AND TECHNIQUES:

Tools used for analyzing the financial statements are given below.

 Leverage Analysis
 Common Size Balance Sheet Analysis
 Trend Analysis

3.6.1 LEVERAGE ANALYSIS:

Operating leverage

Operating leverage may be defined as the company’s ability to use fixed operating
cost to magnify the effects of changes in sales on its earnings before interest and taxes.
Operating leverage consists of two important costs fixed cost and variable cost.

17
Operating leverage can be calculated with the help of the following formula:

Contribution

Operating Leverage =

Operating Profit

Financial leverage

Financial leverage is defined as “the ability of a firm to use fixed financial charges
to magnify the effects of change in EBIT on the earnings per share”.

Financial leverage may be favourable or unfavourable depends upon the use of fixed
cost funds.

Financial leverage can be calculated with the help of the following formula:

Operating Profit (EBIT)

Financial Leverage =

Profit before tax

Combined leverage

Combined leverage is also called as composite leverage or total leverage. Combined

leverage express the relationship between the revenue in the account of sales and the taxable income.

Combined leverage can be calculated with the help of the following formula:

Combined leverage = Operating leverage * Financial leverage

Where,

C = Contribution

OP = Operating Profit

PBT = Profit Before Tax

18
3.6.2 COMMON SIZE ANALYSIS OF A BALANCE SHEET:

Common Size Analysis of a Balance Sheet is a financial analysis technique that

standardizes the financial statements by expressing each item as a percentage of a base
amount. This method facilitates comparison across different periods and with other
companies, regardless of size. For the balance sheet, assets, liabilities, and equity items are
typically expressed as a percentage of total assets. The process involves converting each line
item on the balance sheet into a percentage of the total assets. This approach highlights the
relative size and significance of each item, making it easier to identify trends and structural
changes over time.

Balance Sheet Items

Common Size Analysis = × 100
Total Assets

This analysis is crucial for stakeholders as it provides insights into the company's
financial structure, operational efficiency, and potential areas of concern. By analyzing the
common size balance sheet, investors can assess the proportion of different asset classes, the
level of debt financing, and the composition of shareholders' equity, enabling more informed
decision-making.

3.6.3 TREND ANALYSIS:

Trend analysis is a technique that examines data collected over time to identify patterns and
predict future outcomes. It's essentially about looking at historical data to see how something
changes over time and using that information to anticipate what might happen in the future.

Computation of Trend Percentage:

 Every item is based statement is stated as 100.

 Trend percentage of each item in other statement is calculated with reference to same
item the based statement by using the following formula,

Trend Percentage = (Present year value / Base year value) x100

19
4.1 INTRODUCTION:
ANALYSIS:

The term analysis refers to the computation of certain measures along with searching
for patterns or relationship that exist among data groups. After collection of data, the data has
to be processed and analyzed in accordance with the outline laid down for the purpose at the
time of developing the research plan.

INTERPRETATION:

Interpretation refers to the task of drawing inferences from the collected facts after an
after an analytical and / or experimental study in fact; it is a search for broader meaning or
research findings.

The tasks or interpretation has two major aspects they are.

 The effort to establish continuity in research through linking the results of a

given study with those of another.
 The establishment of some explanatory concept’s interpretation is essential
for the simple reason that the usefulness and utility of research findings lie in
Proper interpretation.

20
4.2 LEVERAGE ANALYSIS:

4.2.1 INCOME STATEMENT FOR THE YEAR 2024:

2024 AMOUNT AMOUNT

₹
7,28,01,604.0
SALES 0
₹
4,98,55,266.0
VARIABLE COST 0
₹
MATERIAL CONSUMED+OTHER EXP-CHANGES IN 4,98,55,266.0
INVENTORIES 0
₹
2,29,46,338.0
CONTRIBUTION 0
₹
1,90,28,668.0
FIXED COST 0
₹
1,90,28,668.0
EMPLOYEE BENEFITS+AMORTIZATION 0
₹
EBIT / OPERATING PROFIT 39,17,670.00
₹
INTREST 30,54,973.00
PROFIT BEFORE TAX ₹ 8,62,697.00
₹ ₹
TAX 16,76,294.00 16,76,294.00
-₹
EAT 8,13,597.00

INTERPRETATION:

For the financial year 2024, the company reported sales revenue of ₹7,28,01,604.00. After
accounting for variable costs, including materials consumed and other expenses
(₹4,98,55,266.00), the contribution margin stands at ₹2,29,46,338.00. The EBIT (Earnings
Before Interest and Tax) is calculated by deducting fixed costs ( ₹1,90,28,668.00) from the
contribution, which results in an EBIT of ₹39,17,670.00. After deducting interest expenses of
₹30,54,973.00, the Profit Before Tax (PBT) comes to ₹8,62,697.00. Post tax
(₹16,76,294.00), the company ends the year with a negative Effective After Tax (EAT) of -
₹8,13,597.00.

21
4.2.2 INCOME STATEMENT FOR THE YEAR 2023:

2023 AMOUNT AMOUNT

₹
7,02,02,183.0
SALES 0
₹
4,72,31,651.0
VARIABLE COST 0
₹
MATERIAL CONSUMED+OTHER EXP-CHANGES IN 4,72,31,651.0
INVENTORIES 0
₹
2,29,70,532.0
CONTRIBUTION 0
₹
2,02,81,644.0
FIXED COST 0
₹
2,02,81,644.0
EMPLOYEE BENEFITS+AMORTIZATION 0
₹
EBIT / OPERATING PROFIT 26,88,888.00
₹
INTREST 26,52,197.00
PROFIT BEFORE TAX ₹ 36,691.00
TAX ₹ 4,93,126.00 ₹ 4,93,126.00
-₹
EAT 4,56,435.00

INTERPRETATION:

For the financial year 2023, the company reported sales revenue of ₹7,02,02,183.00. After
accounting for variable costs, including materials consumed and changes in inventories
amounting to ₹4,72,31,651.00, the contribution margin stands at ₹2,29,70,532.00. The EBIT

22
(Earnings Before Interest and Tax) is calculated by deducting fixed costs of ₹2,02,81,644.00,
from the contribution. This results in an EBIT of ₹26,88,888.00. After deducting interest
expenses of ₹26,52,197.00, the Profit Before Tax (PBT) stands at ₹36,691.00. Following the
tax expense of ₹4,93,126.00, the company concludes the year with a modest Effective After
Tax (EAT) of - ₹ 4,56,435.00.

4.2.3 INCOME STATEMENT FOR THE YEAR 2022:

2022 AMOUNT AMOUNT

₹
6,49,48,504.1
SALES 8
₹
4,16,84,238.0
VARIABLE COST 5
₹
MATERIAL CONSUMED+OTHER EXP-CHANGES IN 4,16,84,238.0
INVENTORIES 5
₹
2,32,64,266.1
CONTRIBUTION 3
₹
2,01,40,209.8
FIXED COST 7
₹
2,01,40,209.8
EMPLOYEE BENEFITS+AMORTIZATION 7
₹
EBIT / OPERATING PROFIT 31,24,056.26
₹
INTREST 32,95,365.64
-₹
PROFIT BEFORE TAX 1,71,309.38
TAX ₹ 4,89,236.18 ₹ 4,89,236.18
EAT -₹

23
 6,60,545.56

INTERPRETATION:

For the financial year 2022, the company reported sales revenue of ₹6,49,48,504.18. After
deducting variable costs, including materials consumed and changes in inventories amounting
to ₹4,16,84,238.05, the contribution margin stands at ₹2,32,64,266.13. The EBIT (Earnings
Before Interest and Tax) is computed by subtracting fixed costs of ₹2,01,40,209.87, from the
contribution. This results in an EBIT of ₹31,24,056.26. After deducting interest expenses of
₹32,95,365.64, the company recorded a loss before tax (PBT) of ₹−1,71,309.38. Post-tax
(₹4,89,236.18), the company ends the year with a negative Effective After Tax (EAT) of ₹
−6,60,545.56.

4.2.4 INCOME STATEMENT FOR THE YEAR 2021:

AMOUNT AMOUNT
₹
5,27,81,744.4
SALES 0
₹
3,41,21,462.0
VARIABLE COST 9
₹
MATERIAL CONSUMED+OTHER EXP-CHANGES IN 3,41,21,462.0
INVENTORIES 9
₹
1,86,60,282.3
CONTRIBUTION 1
₹
1,48,63,498.9
FIXED COST 6
EMPLOYEE BENEFITS+AMORTIZATION ₹

24
 1,48,63,498.9
6
₹
EBIT / OPERATING PROFIT 37,96,783.35
₹
INTREST 37,72,194.94
PROFIT BEFORE TAX ₹ 24,588.41
TAX ₹ 4,15,485.30 ₹ 4,15,485.30
-₹
EAT 3,90,896.89

INTERPRETATION:

For the financial year 2021, the company reported total sales revenue of ₹5,27,81,744.40.
After deducting variable costs, including materials consumed and changes in inventories,
which amounted to ₹3,41,21,462.09, the contribution margin stands at ₹1,86,60,282.31. The
EBIT (Earnings Before Interest and Tax) is calculated by subtracting fixed costs of
₹1,48,63,498.96 from the contribution margin. This results in an EBIT of ₹37,96,783.35.
After deducting interest expenses of ₹37,72,194.94, the company recorded a very slim profit
before tax (PBT) of ₹24,588.41. Post-tax expenses of ₹4,15,485.30 bring the company to a
negative Effective After Tax (EAT) of ₹−3,90,896.89.

4.2.5 INCOME STATEMENT FOR THE YEAR 2020:

2020 AMOUNT AMOUNT

₹
5,23,81,735.0
SALES 0
₹
3,12,96,976.0
VARIABLE COST 0
MATERIAL CONSUMED+OTHER EXP-CHANGES IN ₹

25
 3,12,96,976.0
INVENTORIES 0
₹
2,10,84,759.0
CONTRIBUTION 0
₹
1,62,72,134.0
FIXED COST 0
₹
1,62,72,134.0
EMPLOYEE BENEFITS+AMORTIZATION 0
₹
EBIT / OPERATING PROFIT 48,12,625.00
₹
INTREST 43,18,441.00
PROFIT BEFORE TAX ₹ 4,94,184.00
TAX ₹ 5,27,384.00 ₹ 5,27,384.00
EAT -₹ 33,200.00

INTERPRETATION:

For the financial year 2020, the company reported sales revenue of ₹5,23,81,735.00. After
accounting for variable costs, including material consumed and other expenses totalling
₹3,12,96,976.00, the contribution margin stands at ₹2,10,84,759.00. To determine the EBIT
(Earnings Before Interest and Tax), the company deducted fixed costs of ₹1,62,72,134.00—
from the contribution, resulting in an EBIT of ₹48,12,625.00. After subtracting interest
expenses of ₹43,18,441.00, the Profit Before Tax (PBT) is ₹4,94,184.00. Finally, after tax
(₹5,27,384.00), the company ends the year with a net loss (EAT) of ₹−33,200.00.

4.2.6 INCOME STATEMENT FOR THE YEAR 2019:

2019 AMOUNT AMOUNT

26
 ₹
4,87,58,185.0
SALES 0
₹
3,00,30,320.0
VARIABLE COST 0
₹
MATERIAL CONSUMED+OTHER EXP-CHANGES IN 3,00,30,320.0
INVENTORIES 0
₹
1,87,27,865.0
CONTRIBUTION 0
₹
1,55,25,397.0
FIXED COST 0
₹
1,55,25,397.0
EMPLOYEE BENEFITS+AMORTIZATION 0
₹
EBIT / OPERATING PROFIT 32,02,468.00
₹
INTREST 35,58,509.00
-₹
PROFIT BEFORE TAX 3,56,041.00
TAX ₹ 5,17,406.00 ₹ 5,17,406.00
-₹
EAT 8,73,447.00

INTERPRETATION:

For the financial year 2019, the company reported total sales revenue of ₹4,87,58,185.00.
After deducting variable costs, including materials consumed and changes in inventories,
which amounted to ₹3,00,30,320.00, the contribution margin stands at ₹1,87,27,865.00. The
EBIT (Earnings Before Interest and Tax) is calculated by subtracting fixed costs of
₹1,55,25,397.00 from the contribution margin. This results in an EBIT of ₹32,02,468.00.
After deducting interest expenses of ₹35,58,509.00, the company recorded a loss before tax
(PBT) of ₹−3,56,041.00. Post-tax expenses of ₹5,17,406.00 bring the company to a negative
Effective After Tax (EAT) of ₹−8,73,447.00.

27
4.2.7 INCOME STATEMENT FOR THE YEAR 2018:

2018 AMOUNT AMOUNT

₹
4,14,08,838.0
SALES 0
₹
2,57,74,035.0
VARIABLE COST 0
₹
MATERIAL CONSUMED+OTHER EXP-CHANGES IN 2,57,74,035.0
INVENTORIES 0
₹
1,56,34,803.0
CONTRIBUTION 0
₹
1,32,65,960.0
FIXED COST 0
₹
1,32,65,960.0
EMPLOYEE BENEFITS+AMORTIZATION 0
₹
EBIT / OPERATING PROFIT 23,68,843.00
₹
INTREST 19,38,304.00
PROFIT BEFORE TAX ₹ 4,30,539.00
TAX ₹ 4,38,609.00 ₹ 4,38,609.00
EAT -₹ 8,070.00

INTERPRETATION:

For the financial year 2018, the company reported total sales revenue of ₹4,14,08,838.00.
After deducting variable costs, including materials consumed and changes in inventories,
which amounted to ₹2,57,74,035.00, the contribution margin stands at ₹1,56,34,803.00. The
EBIT (Earnings Before Interest and Tax) is calculated by subtracting fixed costs of
₹1,32,65,960.00 from the contribution margin. This results in an EBIT of ₹23,68,843.00.
After deducting interest expenses of ₹19,38,304.00, the company recorded a profit before tax
(PBT) of ₹4,30,539.00. Post-tax expenses of ₹4,38,609.00 bring the company to a slightly
negative Effective After Tax (EAT) of ₹−8,070.00.

28
4.2.8 EBIT ANALYSIS:

YEARS EBIT / OPERATING PROFIT

2024 ₹ 39,17,670.00
2023 ₹ 26,88,888.00
2022 ₹ 31,24,056.26
2021 ₹ 37,96,783.35
2020 ₹ 48,12,625.00
2019 ₹ 32,02,468.00
2018 ₹ 23,68,843.00

INTERPRETATION:
From the above table, it is observed that the highest EBIT (Operating Profit) was recorded in
the year 2020, amounting to ₹ 48,12,625.00. On the other hand, the lowest EBIT was noted
in the year 2018, with a value of ₹ 23,68,843.00.

29
[Link] The Graph showing EBIT / Operating Profit of Suganj Eco Chemicals Pvt, Ltd.,
Chennai for the period of 2018 – 2024

EBIT / OPERATING PROFIT

₹6,000,000.00

₹5,000,000.00

₹4,000,000.00
EBIT / OPERATING PROFIT
₹3,000,000.00

₹2,000,000.00

₹1,000,000.00

₹0.00
2024 2023 2022 2021 2020 2019 2018

30
4.2.9 EBT ANALYSIS:

YEARS EBT / PROFIT BEFORE TAX

2024 ₹ 8,62,697.00
2023 ₹ 36,691.00
2022 -₹ 1,71,309.38
2021 ₹ 24,588.41
2020 ₹ 4,94,184.00
2019 -₹ 3,56,041.00
2018 ₹ 4,30,539.00

INTERPRETATION:
From the above table, it is observed that the highest EBT (Profit Before Tax) was recorded in
the year 2024, amounting to ₹ 8,62,697.00. In contrast, the lowest EBT was noted in the year
2019, with a negative value of -₹ 3,56,041.00.

31
[Link] The Graph showing EBT / Profit Before Tax of Suganj Eco Chemicals Pvt, Ltd.,
Chennai for the period of 2018 – 2024

EBT / PROFIT BEFORE TAX

₹1,000,000.00

₹800,000.00

₹600,000.00

₹400,000.00
EBT / PROFIT BEFORE TAX
₹200,000.00

₹0.00
2024 2023 2022 2021 2020 2019 2018
(₹200,000.00)

(₹400,000.00)

(₹600,000.00)

32
4.2.10 EAT ANALYSIS:

YEARS EAT
2024 -₹ 8,13,597.00
2023 -₹ 4,56,435.00
2022 -₹ 6,60,545.56
2021 -₹ 3,90,896.89
2020 -₹ 33,200.00
2019 -₹ 8,73,447.00
2018 -₹ 8,070.00

INTERPRETATION:
From the above table, it is observed that the highest (least negative) EAT (Earnings After
Tax) was recorded in the year 2018, at -₹ 8,070.00. In contrast, the lowest EAT was noted in
the year 2019, with a value of -₹ 8,73,447.00.

33
[Link] The Graph showing EAT / Profit After Tax of Suganj Eco Chemicals Pvt, Ltd.,
Chennai for the period of 2018 – 2024

EAT
₹0.00
2024 2023 2022 2021 2020 2019 2018
(₹100,000.00)
(₹200,000.00)
(₹300,000.00)
(₹400,000.00) EAT
(₹500,000.00)
(₹600,000.00)
(₹700,000.00)
(₹800,000.00)
(₹900,000.00)
(₹1,000,000.00)

34
4.2.11 OPERATING LEVERAGE ANALYSIS:

Operating Leverage = Contributiob / EBIT (Operating Profit)

OPERATING LEVERAGE

YEAR CONTRIBUTION EBIT/OPRATING PROFIT RESULT

2018 ₹ 1,56,34,803.00 ₹ 23,68,843.00 6.60

2019 ₹ 1,87,27,865.00 ₹ 32,02,468.00 5.85

2020 ₹ 2,10,84,759.00 ₹ 48,12,625.00 4.38

2021 ₹ 1,86,60,282.31 ₹ 37,96,783.35 4.91

2022 ₹ 2,32,64,266.13 ₹ 31,24,056.26 7.45

2023 ₹ 2,29,70,532.00 ₹ 26,88,888.00 8.54

2024 ₹ 2,29,46,338.00 ₹ 39,17,670.00 5.86

INTERPRETATION:
From the above table, we can observe the operating leverage for the years 2018 to 2024. 2023
experienced the highest operating leverage with a ratio of 8.54, On the other hand, 2020 is the
lowest operating leverage at 4.38,

35
[Link] The Graph showing Operating Leverage of Suganj Eco Chemicals Pvt, Ltd.,
Chennai for the period of 2018 – 2024

Operating Leverage
9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00
2018 2019 2020 2021 2022 2023 2024

36
4.2.12 FINANCIAL LEVERAGE ANALYSIS:

Financial Leverage = EBIT (Operating Profit) / EBT (Profit Before Tax)

FINANCIAL LEVERAGE

YEAR EBIT/OPRATING PROFIT EBT RESULT

2018 ₹ 23,68,843.00 ₹ 4,30,539.00 5.50

2019 ₹ 32,02,468.00 -₹ 3,56,041.00 -8.99

2020 ₹ 48,12,625.00 ₹ 4,94,184.00 9.74

2021 ₹ 37,96,783.35 ₹ 24,588.41 154.41

2022 ₹ 31,24,056.26 -₹ 1,71,309.38 -18.24

2023 ₹ 26,88,888.00 ₹ 36,691.00 73.28

2024 ₹ 39,17,670.00 ₹ 8,62,697.00 4.54

INTERPRETATION:
From the above table, we can observe the financial leverage for the years 2018 to 2024. 2021
experienced the highest financial leverage with a ratio of 154.41. On the other hand, 2019 is
the lowest financial leverage at -8.99.

37
[Link] The Graph showing Financial Leverage of Suganj Eco Chemicals Pvt, Ltd.,
Chennai for the period of 2018 - 2024

Financial Leverage
200.00

150.00

100.00

50.00

0.00
2018 2019 2020 2021 2022 2023 2024

-50.00

38
4.2.13 COMBINED LEVERAGE ANALYSIS:

Combined Leverage = Operating Leverage * Financial Leverage

COMBINED LEVERAGE

YEAR OPERATING LEVERAGE FINANCIAL LEVERAGE RESULT

2018 6.60 5.50 1.2

2019 5.85 -8.99 -0.65

2020 4.38 9.74 0.45

2021 4.91 154.41 0.03

2022 7.45 -18.24 -0.41

2023 8.54 73.28 0.12

2024 5.86 4.54 1.29

INTERPRETATION:
From the above table, we can observe the combined leverage for the years 2018 to 2024. 2018
experienced the highest combined leverage with a ratio of 1.2. On the other hand, 2021 is the
lowest combined leverage at 0.03.

39
[Link] The Graph showing Combined Leverage of Suganj Eco Chemicals Pvt, Ltd.,
Chennai for the period of 2018 – 2024

Combined Leverage
1.5

0.5

0
2018 2019 2020 2021 2022 2023 2024

-0.5

-1

40
4.3 COMMON SIZE ANALYSIS OF A BALANCE SHEET:
4.3.1 COMMON SIZE ANALYSIS OF TOTAL SHAREHOLDER’S FUNDS:
Total Shareholdes fund
Common Size Analysis of Total Shareholders fund = × 100
Total Liability

TOTAL SHAREHOLDER'S FUND

Year Total Shareholder's Fund Common Size Analysis
2018 ₹ 6,81,107.00 2.29%
2019 ₹ 7,27,425.00 2.35%
2020 ₹ 33,12,712.00 9.21%
2021 ₹ 33,02,912.68 9.59%
2022 ₹ 58,59,425.79 15.88%
2023 ₹ 57,57,007.00 14.48%
2024 ₹ 66,11,711.00 20.73%

INTERPRETATION:
From the above table, it is known that Common size analysis of TOTAL
SHAREHOLDER’S FUNDS for the period of 2018-2024 are gathered and analyzed. It is
clearly shown that the highest value (20.73%) of total shareholder’s funds from 2024 and the
lowest value (2.29%) from 2018.

41
[Link] The Graph showing Total Shareholder’s Funds of Suganj Eco Chemicals Pvt,
Ltd., Chennai for the period of 2018 – 2024

TOTAL SHAREHOLDER'S FUND

25.00%

20.73%
20.00%

15.88%
15.00% 14.48%

10.00% 9.21% 9.59%

5.00%
2.29% 2.35%

0.00%
2018 2019 2020 2021 2022 2023 2024

Common Size Analysis

42
4.3.2 COMMON SIZE ANALYSIS OF TOTAL NON-CURRENT LIABILITIES:

Total Non−Current liabilities

Common Size Analysis of Total Non-Current Liabilities = ×
Total Liability
100

TOTAL NON-CURRENT LIABILITIES

Year Total Non-Current Liabilities Common Size Analysis
2018 ₹ 1,17,76,063.00 39.63%
2019 ₹ 1,27,89,594.00 41.33%
2020 ₹ 1,64,67,072.00 45.77%
2021 ₹ 1,27,19,091.74 36.94%
2022 ₹ 1,38,74,075.62 37.61%
2023 ₹ 1,45,98,550.00 36.72%
2024 ₹ 26,11,282.00 8.19%

INTERPRETATION:
From the above table, it is known that Common size analysis of TOTAL
NON-CURRENT LIABILITIES for the period of 2018-2024 are gathered and analyzed. It
is clearly shown that the highest value (45.77%) of total non-current liabilities from 2020 and
the lowest value (8.19%) from 2024.

43
[Link] The graph showing Total non-current liabilities of Suganj Eco Chemicals Pvt,
Ltd., Chennai for the period of 2018 – 2024

TOTAL NON-CURRENT LIABILITIES

50.00%
45.77%
45.00%
41.33%
39.63%
40.00% 36.94% 37.61% 36.72%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00% 8.19%
5.00%
0.00%
2018 2019 2020 2021 2022 2023 2024

Common Size Analysis

44
4.3.3 COMMON SIZE ANALYSIS OF TOTAL CURRENT LIABILITIES:

Total Current Liabilities

Common Size Analysis of Total Current Liabilities = × 100
Total Liability

TOTAL CURRENT LIABILITIES

Year Total Current Liabilities Common Size Analysis
2018 ₹ 1,72,55,723.00 58.07%
2019 ₹ 1,74,28,370.00 56.32%
2020 ₹ 1,61,96,569.00 45.02%
2021 ₹ 1,84,06,989.48 53.46%
2022 ₹ 1,71,58,571.12 46.51%
2023 ₹ 1,94,03,743.00 48.80%
2024 ₹ 2,26,72,971.00 71.08%

INTERPRETATION:
From the above table, it is known that Common size analysis of TOTAL
CURRENT LIABILITIES for the period of 2018-2024 are gathered and analyzed. It is
clearly shown that the highest value (71.08%) of total current liabilities from 2024 and the
lowest value (45.02%) from 2020.

45
[Link] The graph showing Total current liabilities of Suganj Eco Chemicals Pvt, Ltd.,
Chennai for the period of 2018 – 2024

TOTAL CURRENT LIABILITIES

80.00%
71.08%
70.00%

60.00% 58.07% 56.32%

53.46%
50.00% 48.80%
45.02% 46.51%

40.00%

30.00%

20.00%

10.00%

0.00%
2018 2019 2020 2021 2022 2023 2024

Common Size Analysis

46
4.3.4 COMMON SIZE ANALYSIS OF TOTAL NON-CURRENT ASSETS:

Total Non−Current Assets

Common Size Analysis of Total Non-Current Assets = × 100
Total Asset

TOTAL NON-CURRENT ASSETS

Year Total Non-Current Assets Common Size Analysis
2018 ₹ 21,34,497.00 7.18%
2019 ₹ 92,52,072.00 29.90%
2020 ₹ 1,25,26,775.00 34.82%
2021 ₹ 1,28,85,990.03 37.43%
2022 ₹ 1,30,31,420.22 35.32%
2023 ₹ 1,65,74,774.00 41.69%
2024 ₹ 47,84,176.00 15.00%

INTERPRETATION:
From the above table, it is known that Common size analysis of TOTAL
NON-CURRENT ASSETS for the period of 2018-2024 are gathered and analyzed. It is
clearly shown that the highest value (41.69%) of total non-current assets from 2023 and the
lowest value (7.18%) from 2018.

47
[Link] The graph showing Total non-current assets of Suganj Eco Chemicals Pvt, Ltd.,
Chennai for the period of 2018 – 2024

TOTAL NON-CURRENT ASSETS

45.00%
41.69%
40.00% 37.43%
34.82% 35.32%
35.00%
29.90%
30.00%

25.00%

20.00%
15.00%
15.00%

10.00%
7.18%
5.00%

0.00%
2018 2019 2020 2021 2022 2023 2024

Common Size Analysis

48
4.3.5 COMMON SIZE ANALYSIS OF TOTAL CURRENT ASSETS:

Total Current Assets

Common Size Analysis of Total Current Assets = × 100
Total Asset

TOTAL CURRENT ASSETS

Year Total Current Assets Common Size Analysis
2018 ₹ 2,75,78,396.00 92.82%
2019 ₹ 2,16,93,317.00 70.10%
2020 ₹ 2,34,49,578.00 65.18%
2021 ₹ 2,15,43,003.87 62.57%
2022 ₹ 2,38,60,652.31 64.68%
2023 ₹ 2,31,84,526.00 58.31%
2024 ₹ 2,71,11,788.00 85.00%

INTERPRETATION:
From the above table, it is known that Common size analysis of TOTAL
CURRENT ASSETS for the period of 2018-2024 are gathered and analyzed. It is clearly
shown that the highest value (92.82%) of total non-current assets from 2018 and the lowest
value (58.31%) from 2023.

49
[Link] The graph showing Total Current assets of Suganj Eco Chemicals Pvt, Ltd.,
Chennai for the period of 2018 – 2024

TOTAL CURRENT ASSETS

100.00%
92.82%
90.00% 85.00%
80.00%
70.10%
70.00% 65.18% 64.68%
62.57%
60.00% 58.31%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
2018 2019 2020 2021 2022 2023 2024

Common Size Analysis

50
4.4 TREND ANALYSIS:

4.4.1 TREND ANALYSIS OF OPERATING LEVERAGE:

Trend Percentage = (Present year value / Base year value)*100

OPERATING LEVERAGE
YEAR
S CONTRIBUTION EBIT/OPRATIN PROFIT RESULT TREND VALUE

2018 ₹ 1,56,34,803.00 ₹ 23,68,843.00 6.60 100%

2019 ₹ 1,87,27,865.00 ₹ 32,02,468.00 5.85 88.6%

2020 ₹ 2,10,84,759.00 ₹ 48,12,625.00 4.38 66.4%

2021 ₹ 1,86,60,282.31 ₹ 37,96,783.35 4.91 74.5%

2022 ₹ 2,32,64,266.13 ₹ 31,24,056.26 7.45 112.8%

2023 ₹ 2,29,70,532.00 ₹ 26,88,888.00 8.54 129.4%

2024 ₹ 2,29,46,338.00 ₹ 39,17,670.00 5.86 88.7%

INTERPRETATION:
From the above table, it is known that by taking 2018 as the base year,
Operating Leverage for the period of 2018 to 2024 is calculated, it is clearly shown that 2023
holds the high value is 129.4%.

51
[Link] The graph showing Total Operating Leverages Trend analysis of Suganj Eco
Chemicals Pvt, Ltd., Chennai for the period of 2018 – 2024

OPERATING LEVERAGE
140%

120%

100%

80% TREND VALUE

60%

40%

20%

0%
2018 2019 2020 2021 2022 2023 2024

52
4.4.2 TREND ANALYSIS OF FINANCIAL LEVERAGE:

Trend Percentage = (Present year value / Base year value)*100

FINANCIAL LEVERAGE

YEARS EBIT/OPRATIN PROFIT VALUES RESULT TREND VALUE

2018 ₹ 23,68,843.00 ₹ 4,30,539.00 5.50 100%

2019 ₹ 32,02,468.00 -₹ 3,56,041.00 -8.99 -163.5%

2020 ₹ 48,12,625.00 ₹ 4,94,184.00 9.74 177.0%

2021 ₹ 37,96,783.35 ₹ 24,588.41 154.41 2806.5%

2022 ₹ 31,24,056.26 -₹ 1,71,309.38 -18.24 -331.4%

2023 ₹ 26,88,888.00 ₹ 36,691.00 73.28 1332.0%

2024 ₹ 39,17,670.00 ₹ 8,62,697.00 4.54 82.5%

INTERPRETATION:
From the above table, it is known that by taking 2018 as the base year,
Financial Leverage for the period of 2018 to 2024 is calculated, it is clearly shown that 2021
holds the high value is 2806.5%.

53
[Link] The graph showing Total Financial Leverages Trend analysis of Suganj Eco
Chemicals Pvt, Ltd., Chennai for the period of 2018 – 2024

FINANCIAL LEVERAGE
3000%

2500%

2000%

1500% TREND VALUE

1000%

500%

0%
2018 2019 2020 2021 2022 2023 2024
-500%

54
4.4.3 TREND ANALYSIS OF COMBINED LEVERAGE:

Trend Percentage = (Present year value / Base year value)*100

COMBINED LEVERAGE
YEAR RESUL TREND
S OPERATING LEVERAGE FINANCIAL LEVERAGE T VALUE

2018 6.60 5.50 1.2 100%

2019 5.85 -8.99 -0.65 -54.1%

2020 4.38 9.74 0.45 37.5%

2021 4.91 154.41 0.03 2.6%

2022 7.45 -18.24 -0.41 -34.0%

2023 8.54 73.28 0.12 9.7%

2024 5.86 4.54 1.29 107.4%

INTERPRETATION:
From the above table, it is known that by taking 2018 as the base year,
Combined Leverage for the period of 2018 to 2024 is calculated, it is clearly shown that 2024
holds the high value is 107.4%.

55
[Link] The graph showing Total Combined Leverages Trend analysis of Suganj Eco
Chemicals Pvt, Ltd., Chennai for the period of 2018 – 2024

COMBINED LEVERAGE
120%
100%
80%
60%
40% TREND VALUE
20%
0%
2018 2019 2020 2021 2022 2023 2024
-20%
-40%
-60%
-80%

56
4.4.4 TREND ANALYSIS OF CONTRIBUTION:
Trend Percentage = (Present year value / Base year value)*100

CONTRIBUTION

YEARS AMOUNT TREND VALUE

2018 ₹ 1,56,34,803 100

2019 ₹ 1,87,27,865 11978%

2020 ₹ 2,10,84,759 13486%

2021 ₹ 1,86,60,282 11935%

2022 ₹ 2,32,64,266 14880%

2023 ₹ 2,29,70,532 14692%

2024 ₹ 2,29,46,338 14676%

INTERPRETATION:
From the above table, it is known that by taking 2018 as the base year,
Contribution for the period of 2018 to 2024 is calculated, it is clearly shown that 2022 holds
the high value is 14880%.

57
[Link] The graph showing Total Contribution Trend analysis of Suganj Eco Chemicals
Pvt, Ltd., Chennai for the period of 2018 – 2024

CONTRIBUTION
16000%

14000%

12000%

10000%
TREND VALUE
8000%

6000%

4000%

2000%

0%
2018 2019 2020 2021 2022 2023 2024

58
4.4.5 TREND ANALYSIS OF EBIT / OERATING PROFIT:
Trend Percentage = (Present year value / Base year value)*100

EBIT

YEARS AMOUNT TREND VALUE

2018 ₹ 23,68,843 100%

2019 ₹ 32,02,468 13519%

2020 ₹ 48,12,625 20316%

2021 ₹ 37,96,783 16028%

2022 ₹ 31,24,056 13188%

2023 ₹ 26,88,888 11351%

2024 ₹ 39,17,670 16538%

INTERPRETATION:
From the above table, it is known that by taking 2018 as the base year,
EBIT for the period of 2018 to 2024 is calculated, it is clearly shown that 2020 holds the high
value is 20316%.

59
[Link] The graph showing Total EBIT Trend analysis of Suganj Eco Chemicals Pvt,
Ltd., Chennai for the period of 2018 – 2024

EBIT
25000%

20000%

15000%
TREND VALUE

10000%

5000%

0%
2018 2019 2020 2021 2022 2023 2024

60
4.4.6 TREND ANALYSIS OF EBT:
Trend Percentage = (Present year value / Base year value)*100

EBT

YEARS AMOUNT TREND VALUE

2018 ₹ 4,30,539 100%

2019 -₹ 3,56,041 -8270%

2020 ₹ 4,94,184 11478%

2021 ₹ 24,588 571%

2022 -₹ 1,71,309 -3979%

2023 ₹ 36,691 852%

2024 ₹ 8,62,697 20038%

INTERPRETATION:
From the above table, it is known that by taking 2018 as the base year,
EBT for the period of 2018 to 2024 is calculated, it is clearly shown that 2024 holds the high
value is 20038%.

[Link] The graph showing Total EBT Trend analysis of Suganj Eco Chemicals Pvt,
Ltd., Chennai for the period of 2018 – 2024

61
 EBT
25000%

20000%

15000%

10000% TREND VALUE

5000%

0%
2018 2019 2020 2021 2022 2023 2024
-5000%

-10000%

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5.1 FINDINGS:
5.1.1 LEVERAGE ANALYSIS:

 Majority of the Operating Leverage for the period of 2018-2024 is 8.54.

 Majority of the Financial Leverage for the period of 2018-2024 is 154.41.
 Majority of the Combined Leverage for the period of 2018-2024 is 1.2.

5.1.2 COMMON SIZE ANALYSIS:

 Majority of the Total Shareholder’s Funds for the period of 2018-2024 is 20.73%.
 Majority of the Total Non-current Liabilities for the period of 2018-2024 is 45.77%.
 Majority of the Total Current Liabilities for the period of 2018-2024 is 71.08%.
 Majority of the Total Non-current Assets for the period of 2018-2024 is 41.69%.
 Majority of the Total Current Assets for the period of 2018-2024 is 92.82%.

5.1.3 TREND ANALYSIS:

 Majority of the Operating Leverage for the period of 2018-2024 is 129.4%.

 Majority of the Financial Leverage for the period of 2018-2024 is 2806.5%.
 Majority of the Combined Leverage for the period of 2018-2024 is 107.4%.
 Majority of the Contribution for the period of 2018-2024 is 14880%.
 Majority of the EBIT / Operating Profit for the period of 2018-2024 is 20316%.
 Majority of the EBT / Earnings Before Tax for the period of 201-2024 is 20038%.

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5.2 SUGGESTIONS:

Based on the analysis for the period 2018–2024, it is observed that the company has a high
operating leverage of 8.54, indicating a significant proportion of fixed operating costs, which
makes earnings highly sensitive to changes in sales. The financial leverage stands at 154.41,
reflecting a strong dependence on borrowed funds, while the combined leverage of 1.2 shows
the overall effect of both operating and financial risks on earnings. The common size analysis
reveals that total shareholders’ funds constitute 20.73% of the capital structure, whereas non-
current liabilities and current liabilities make up 45.77% and 71.08% respectively, indicating
a larger share of external financing. On the asset side, non-current assets represent 41.69%
and current assets account for 92.82%, suggesting a strong focus on short-term assets. The
trend analysis further highlights significant growth percentages in key financial metrics such
as contribution (14880%), EBIT (20316%), and EBT (20038%), alongside notable increases
in leverage ratios, reflecting dynamic financial changes over the years.

64
5.3 CONCLUSION:

The analysis of the company’s financial performance from 2018 to 2024 reveals a high
degree of operating and financial leverage, indicating significant fixed costs and considerable
reliance on debt financing. While the strong operating leverage suggests that the company’s
profitability is highly sensitive to changes in sales volume, the very high financial leverage
points to increased financial risk due to heavy borrowing. The combined leverage, though
moderate, reflects the cumulative impact of these risks on the company’s earnings. The
common size analysis shows that the company relies more on liabilities than equity for
financing, with a greater proportion of current liabilities and assets, which could affect
liquidity management. Despite these risks, the trend analysis highlights impressive growth in
operating profit, earnings before tax, and contribution, demonstrating the company’s potential
for scalability and improved profitability. However, the financial structure and leverage
position require careful management to sustain long-term stability and growth.

65
5.4 REFERENCE:

● Aasia Asif, Waqas Rasool &Yasir Kamal (2010) "Impact of financial leverage on
dividend policy" Institute of Management Sciences Hayatabad, Peshawar, Pakistan.
● Abdallah Barakat, (2012) "Trends in working capital management and its impacts
on firm's profitability and value". Journal of studies and business research Issue
No.2/2012.
● Ahmed Ibrahim Farhana and colleagues, (1994) financial structure and financial
leverage and its impact on uses of funds, risk, profitability and cost -weighted capital,
unpublished study presented to Arab Institute for Banking and Financial Studies,
Amman.
● Akhtar et al., (2012). Relationship between Financial Leverage and Financial
Performance: Evidence from Fuel & Energy Sector of Pakistan. European Journal of
Business and Management, Vol. 4, No.11, PP.2222- 2839.
● Akintoye Akentola & Taylor Craig, 1998, "Risk analysis and management of
Private Finance Initiative projects" Engineering, Construction and Architectural
Management Journal, UK. Volume 5, Issue 1 PP. 9-21.
● Al Nuaimi, Mohammed Abdel Aal and others. (2011). Impact funding mix in the
market value of Jordanian insurance companies listed in Amman Financial Market.
Journal of Accounting Thought , Cairo , Volume 15 , Issue 2 pp. 283-301.
● Alroud, Shaher Faleh, (2013)"Impact of Solvency of financial on market value of
the share price in the Jordanian commercial banks". (9th International Scientific
Conference proceeding of Arab economic situation and future options) 24-25 April
2013, Zarqa University, Jordan.
● Nibal, Qasaba (2010), Causes of the global financial crisis and proposed solutions,
Amman: University of Jerash, Jordan, research presented to the Conference of
contemporary economic crises, causes, consequences and treatment. From 14 to 16
December 2010.
● Shlash , Solomon and others (2008), the determinants of financial structure in
business companies ,Applied case in Jordanian public shareholding companies listed
in Amman Financial Market , Manara Journal , Volume 14 , Issue 1 , pp. 45-81.
● Stulz, R. (1988). Managerial control of voting rights: Financing policies and the
market for corporate control. Journal of Financial Economics, Vol. 20, pp. 25-54.

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● Anderson, M. C., Banker, R. D. & Janakiraman, S. N. (2003), Are Selling,
General and Adminis-trative Costs „Sticky“? Journal of Accounting Research, Vol.
41, No. 1, pp. 47-63.
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Can We Learn from the Evidence on 'Sticky Costs'? Available at
[Link]
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Utilization Affect the ''Stickiness'' of Cost? Journal of Accounting, Auditing &
Finance, Vol. 19, No. 3, pp. 283-300.
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Turkey.

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