project dhana

8/12/2019 Project Dhana

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A STUDY ON

FINANCIAL STATEMENT ANALYSIS

WITH REFERENCE TO

BHPV LTD

A project report in the area of Finance submitted to Andhra University,

Visakhapatnam.

Fulfillment for te !"!r# of #e$ree of

MBA

BY

S%DHANAN&AYA RAO

MRP' COLLE'E(VI)IANA'ARAM%

UNDER THE ESTEEMED 'UIDANCE OF

*IRAN *UMAR

MRP' COLLE'E( VI)IANA'ARAM


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CERTIFICATE

This is to certify that S.!A"A"#A$A %A& , student of '(A)Finance*

in the epartment of 'ana+ement Studies at '%- &//0-0,

Andhra University durin+ the academic year 1232 4 1231 has under+one

the project 5ork on A STU$ &" FU" F6&7 STAT0'0"TS in

(!V , Visakhapatnam under my supervision and had fu8fi88ed the

re9uirements concernin+ the project 5ork.

VISA*HAPATNAM *%SRINIVASA RAO(

DATE+ m!n!$er,fin!n-e.


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DECLARATION

6,S.!A"A"#A$A %A& Student of '(A,)Finance*, is hereby dec8are that

the project report submitted by me to the !ead of the 'ana+ement

Studies A STU$ &" A"A/$S6S &F FU"S F/&7 STAT0'0"T in

(!V, V6S!A:AAT"A' in partia8 fu8fi88ment of the re9uirement forthe 'AST0% &F (US6"0SS A'6"6ST%AT6&" is a record of a

bonafied research carried out by me under the +uidance of ;;;. , 6

hereby dec8are that this project is my o5n and is prepared basin+

upon the data and information +athered durin+ a period of T7& months.

6 further dec8are that this project is a +enuine bonafied 5ork

done by me and is not submitted to any other university pub8ished any

time before.

)S.!A"A"#A$A %A&*

/A0< V6S!A:AAT"A'

AT0


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AC*NOWLED'EMENT

6 take this opportunity to e=press my deepest +ratitude toSri;;;;; , my project +uide > motivator for he8pin+ me in carryin+

out this project.

6 am thankfu8 to ;;;;;;;;;;;. for +ivin+ me permission to do

my project.

6 am thankfu8 to ;;;;;;;;;;;. ept of 'ana+ement studies,

Andhra University, V6S!A:AAT"A' for his va8uab8e +uidance in the

project and a8so my educationa8 career.

6 5ou8d 8ike to e=press my sincere thanks to Shri :. SRINIVASA RAO,

F67A6, 'ana+er, Finance, (!V for +ivin+ me he8pfu8 information to

undertake this study.

)S.!A"A"#A$A %A&*


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CONTENTS

CHAPTER /+ INTRODUCTION

CHAPTER 0+ COMPANY PROFILE 1 INDUSTRY PROFILE


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CHAPTER 2+ THEORITICAL FRAME WOR*

CHAPTER 3+ ANALYSIS AND INTERPRETATION

CHAPTER 4+ SU''ESTIONS 1 BIBLIO'RAPHY


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i. CHAPTER 1: INTRODUCTION

a. Introduction

b. Need for the study

c. Objectives of the study

d. Scope of the study

e. Methodology

f. Liitations


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INT!O"#CTION TO T$E TO%IC

FINANCIAL MANAGEMENT

Financial management is managerial activity which is concerned with

the planning and controlling of firms financial resorces! It was a "ranch

of economics till #$%& and as a separate discipline it was of recent

origin! 'till it has no ni(e "ody of )nowledge of its own and draws

heavily from economics for its theoretical concepts even today! Theory of

financial management provides conceptal and analytical insights to

ma)e decisions relating to the financial aspects of organi*ation s)illflly!

"efinitions of financial anageent&

+Financial management is concerned with the efficient se of an

important resorce namely, capital fnds-! .E/0A '1L1MAN

+Financial management is concerned with the managerial decisions

that reslt in the ac(isition and financing of long2term and short2

term credits for the firm-! . 34ILLI33AT5'!

+Financial management is that "siness activity which is concerned

with the ac(isition and conservation of capital fnds in meeting

financial needs and overall o"6ectives of a "siness enterprise-! .

74EELE0

These definitions we can nderstand the fnctions of the financial

management! Those are procrement of fnds and effective tili*ation

and part of these fnctions se different techni(es!


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O'(ECTI)ES O* *IN+NCI+L M+N+,EMENT

8ite o"viosly, the o"6ective of the firm shold "e the ma9imi*ation of

its vale of the shareholders! The price of shares in the mar)et indicates

the vale of the firm! Factors li)e investment, financing and dividend

e9ercise an inflence on the mar)et price of the shares! The main

o"6ectives of financial management can "e said as:

%!O*IT M+-IMI+TION

The o"6ective of every organi*ation is profit ma9imi*ation! 3rofit

Ma9imi*ation means ma9imi*ing the rpee income of firms!

3rofit is considered as the most appropriate measre of a firms

performance!

/E+LT$ M+-IMI+TION

It is a long 2 term o"6ective! 7ealth ma9imi*ation is nothing "t

increasing the wealth of the shareholders "y way of contri"ting to the

net worth of the shareholders!

For attaining these a"ove said o"6ectives financial manager ma)es crcial

decisions relating to investment in different pro6ects, dividend

decisions , de"t e(ity mi9 decisions, sorce of finance, analysis of ratios

and wor)ing capital management!


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*#N"S *LO/ ST+TEMENTS +N+L0SIS

Fnd flow analysis is the analysis of flow of fndfrom crrent asset to

fi9ed asset or crrent asset to long term lia"ilities or vice2 versa! First of

all, we ma)e fnd flow statement and then stdy its case and effect

deeply and try to find many important facts and information which can "e

sed in "siness! It can also solve following pro"lems!

Fnd flow statement is made "y ta)ing two period"alance sheetsand if

we stdy it then we can find that it may possi"le that we are sing net

profit for prchasing fi9ed assets! 'tatement of changing in wor)ing

capitalcan also show net decrease in wor)ing capital!

INT!O"#CTION +'O#T '$%) LT"

;43< was esta"lished in the year #$== at


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;43< is a premier 1rgani*ation speciali*ing in design, fa"rication,

spply and erection of 4eat E9changers, Colmns, 'torage 'pheres,

0eactors and 'trippers, Mltilayer efence sector etc!, and has "een

contri"ting to the Nation "ilding dring the past for decades! The

Company has good potential to cater to the growing needs envisaged in

3ower, 1il and Gas, Nclear, >efence and other strategic sectors in

ftre! Also, ;43< is highly repted for the 8ality and relia"ility of its

prodcts and possesses several National D International 8ality

accreditations "esides I'1 $&:&&& certification!

;43< started prodction in the year #$#2 with a trnover of 6st

0s!#!$B Crs and crossed 0s!&& Crs in the year #$$=2$! The Company

contri"ted more than 0s! =B& Crs to the national e9che(er dring the

past & years!

;43< is the largest fa"ricator of process e(ipment in India for the

petrolem, fertili*er, chemical and allied indstries! It is a s"sidiary of a

navaratnaCentral 3"lic 'ector Enterprise . 'harat $eavy Electrical

Liitedand is managed "y an atonomos separate "oard of directors!


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'itated in the city of destiny of eccan platea, ;43< is accessi"le "y road, rail, sea and is well

connected to all metropolitan cities "y air!

;43< has "een selected for stdy !The topic selected is 1+ study of 2

*unds flo3 Stateent4with reference to ;43

The importance of the stdy 1*unds flo3 Stateents 4 in ;43elas2 France, 4CG2Netherlands,

4ahn D Clay25'A etc!

Mammoth Engineering capa"ilities D e9cellent designing networ) Dmanfactring facilities, high degree of cstomer confidence, with sond

wor) cltre are some of the vital factors involved in achieving

continos growth in ;43< e9perienced in design of colmns, mlti

layer vessels , heat e9changers, Li(id o9ygen D nitrogen nit,

evaporation plants, digesters , monded vessels ,'lphr recovery nit,

gas dehydration, desalters, heater treaters, crde sta"ili*ations nit,

storage vessels etc!, "ac)ed "y technology a"sorption D adoption from

the world leaders!

4owever in the early &&&s, the financial performance of the indstry

went nder great strain, de to a com"ination of adverse factors, which

got "nched year "y year! 'ince & steep rise in e9or"itant interest


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costs, increased inflation, glo"al competition, Government policy etc

frther aggravated the sitation!

4owever, from the year &&%, the company started showing positive

signs in the operations and stared earning profits! The main reason for

this development is the decision of the Government to delin) the

company from ;HNL, Allaha"ad and ma)e it part of 4eavy Electrical

E(ipment Conglomerate ;4EL! The year 5667 can be said as RE-

BIRTHyear for '$%).

;4EL, from the date of ta)ing over ;43< in &&%, started to loo) after

)ey areas li)e tili*ation of plant capacity to the fllest e9tent, attention

on financial discipline, 40 related pro"lems, Cape9 etc! From the year

&&% the company re2started its "siness with new loo), strategies,

diversification and once again started gaining cstomer confidence,

there"y earning positive financial figres and on the way of regaining

past glory!

The importance of the stdy, *unds *lo3 Stateent +nalysisin ;43


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OBJECTIVES OF THE STUDY

Fnds Flow 'tatement is an an analytical tool in the hands of financial

manager! The "asic prpose of this statement is to indicate on historical

"asis the changes in the wor)ing capital i!e!, where fnds came from and

were there are sed dring a given period!

This stdy of ;43< LT> has "een nderta)en to evalate the over all

efficiency of the organi*ation "y esta"lishing the following o"6ectives!

#! To 6dge the financial position, i!e! the short term li(idity position

and the long term solvency!

! To measre the operational efficiency!

! To determine the profita"ility trends!

! To asses the components of the wor)ing capital management

B! To determine the flctations cased de to them!

=! To give appropriate sggestions this may "e of some importance to

the firm in improving its performance!

! To stdy the profile of the company!


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SCOPE OF THE STUDY

The scope of the stdy is connected to one of the )ey areas of finance i!e!

Analysis D Interpretation of Fnds flow Financial 'tatements! The

stdy appraises the companyJs meeting the re(irements for the process

indstries in the core sector sch as fertili*er, oil refineries, chemicals etc!

MET$O"OLO,0 O* T$E ST#"0

The analysis of the pro6ect was "ased on the availa"le information! Any

information a"ot the topic is called the data! The data was gathered from

varios sorces i!e!, 3rimary and 'econdary sorces!

Type of "ata&

3rimary >ata


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'econdary >ata

%riary "ata& Any information that is collected afresh and for the first

time is called 3rimary data !The primary data happen to "e original

in character! The Information is gathered from concerned employees!

The employees and manager of the financial department have provided

the information needed for the stdy!

Secondary "ata& Information which has already "een collected "y

some"ody else or some other agency with definite prpose and which has

already "een processed is called secondary data! The secondary data for

the stdy have "een gathered from the "alance sheets, profit and loss

acconts annal reports and other "oo)s and manals of the ;43< LT>!

The following data was collected from the company

#! Annal reports!

! Financial reports!

! Acconting reports!

! In2hose maga*ines!

B! >epartmental manals and

=! 3"lic Enterprise srvey reports!


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LIMIT+TIONS O* T$E ST#"0

Every stdy is condcted nder certain limitations! The stdy relates only

to financial data and other areas are not ta)en into

consideration! The stdy is carried ot only for a period of

month! It was not possi"le to get cent percent correct

information! The research was made according to the

information availa"le from related departments and throgh

annal reports p"lished! The sent stdy covers only for a

period of five years! 'o the analysis will "e made on this "asis!

&&=2&&

&&2&&%

&&%2&&$

&&$2&

&2#


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IN"#ST!0 %!O*ILE

;43< is a s"sidiary of ;4EL ?;harat 4eavy Electricals Ltd@, navaratna

Central 3"lic 'ector Enterprise and 4eavy Electrical E(ipment

Conglomerate!

M+!8ET %!O*ILE:2

In addition to ;43< legacy prodcts sch as process plants, com"stion

systems, "oilers, cryogenic e(ipments for refineries, fertili*er plants,

steel pants etc, with the ta)eover of the company "y ;4EL, the company

diversified into manfactring e(ipments re(ired for power generation

plants in and a"road!

C#STOME! %!O*ILE:2

;43


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C OM%+N0 %!O*ILE

4EA> 1FFICE:2 gained fll

confidence of cstomers which cleared the way to enter the line of

cryogenic field, plp coo)ing plant, evaporation plant and indstrial

"oilers on a total trn)ey "asis which of later years helped in

agmenting trnover of the company and increasing profita"ility!

INT!O"#CTION +'O#T '$%) LT"&

In the li"erali*ed economy of India and in the era of glo"ali*ation a

company mst rethin) its "siness mission and all fnctional strategies!

In these days companies find themselves competing in a race where the

road signs and rles )eep days when it was +"siness as sal-

companies cold scceed only "y having innovative ideas com"ined with

"y effective financial management!


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Therefore, it is not srprising that todays winning companies are

those which foresee the ftre and manage the finance effectively! 1ne

can manage finance effectively "y managing wor)ing capital, capital

strctre and ta)ing decision on capital "dgeting! 5ltimately, finance is

at its "est a"ot vale adding, developing new prodcts and raising the

worlds standards of living! The heavy engineering indstry is a ma6or

strength of any economy! These heavy engineering indstries which

prodce capital goods are the most modern of the entire indstrial grop!

In India these heavy engineering indstries occpy a crcial role in its

economic development in view of the hge investment as well as the

critical importance to nation! These indstries are mostly confined to the

p"lic sector only! ;43< Ltd! is the largest fa"ricator of process

e(ipment in India for the petrolem, chemical and allied indstries! It is

flly owned "y the government of India and is managed "y an

atonomos "oard of directors! 'itated in the City of destiny of

eccan 3latea, ;43ring #$%&2%# the company for the second

consective year, earned a net 3rofit ?after ta9@ 0s %!# la)hs from its

operations! This year ;43< Ltd operations inclded manfactring of

very critical and sophisticated e(ipment to core indstries! Again in

#$%#2% the company operations reslted in a net profit of 0s =&!#$ la)hs

as against a "dgeted loss of 0s &2 la)hs! Ma6or pending interest on

loan from G1I was cleared in this year! >ring #$%2% ;43< reached

#&& target prodction and reslted in a net profit of 0s#&!# la)hs as

against the "dgeted loss of 0s $B la)hs! 7ith prestigios wor) orders

from


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%roduct "iversification

The company has nderta)en several E3C contracts on E3CL'T "asis

at varios locations in India and a"road! The Company 0D> >epartment

has developed technology for manfactre of compact 4eat E9changer

for the light Com"at Aircraft ?LCA@ nder the fnding "y Aeronatical

>evelopment Agency ?A>A@! '$%) no3 3ith the technology

acuired fro '$EL D$olding Copany? diversified into po3er

plant euipent? naely $!S, 'oilers? "earators etc.

!evival and Turnaround of the copany&

On 09.05.2008, the company was formally taen o!er "y BHE#, a

na!aratna $%&, as per the re!'!al scheme sanct'one( "y )OI.

The salient features of revival schee are as belo3.

?As per the Govt! of India, Ministry of 4eavy Indstries D 3"lic

Enterprises, >epartment of 4eavy Indstry, letter F!No! # ?##@ && .

3E ?Iated &!&B!&&%@

#! G1I will waive and write off loan and interest amonting to

0s!#B!=# Crs!

! G1I to provide garantee amonting to 0s!B& Crs to ena"le

;43< to raise "onds from the domestic mar)et s"6ect to the

conditions as intimated vide this office letter of even no! dated$!&!&&%

! The entire paid p capital of ;43< to the tne of 0s! !$ Crs

wold "e transferred to ;4EL at a notional vale of 0e! #2!

! ;4EL will ta)eover "oth the assets and lia"ilities ?inclding

contingent lia"ilities@ of ;43< as a going concern!

B! The ta)eover will entail the following concessions from the

=! Government of Andhra 3radesh:


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a@ Transfer of title of land measring %=! acres in possession of

;43< as gift along with waiver of registration and stamp dty!

"@ 7aiver of 'ales Ta9 arrears amonting to 0s!!#= Crs

c@ 7aiver of NALA Ta9 of 0s! la)h and

d@ 7aiver of des towards 7ater Ta9, 3roperty Ta9, and


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The entire paid2p capital of 0s !$ Crs wold "e

transferred to ;4EL at a nominal vale of 0e #2 ! ;4EL will ta)e2over

"oth assets and lia"ilities ?inclding contingent lia"ilities@ of ;43< as a

going concern! ;4EL will ta)e2over ;43< with all its employees!

;4EL will infse at least 0s Crs as additional E(ity Capital and

ade(ate fnds for p2gradation of manfactring facilities, CA3E and

wor)ing capital! A"ove cited +'anctioned 0eha"ilitation.over2'cheme-

has "een fond accepta"le to all the employees and secred creditors!

+bove schee 3as approved by 'I*! in October 5696!

Synergy of 'usiness bet3een '$EL and '$%)&

In addition to improvement in present "siness of ;43


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*actors for revival of '$%) through taFeover by '$EL&

;4EL on its part has wor)ed ot the via"ility of the ;43< ta)eover,

ta)ing into consideration the points:

;4EL to enhance the capa"ilities D capacities of ;43< to "ild pon its

strengths in the e9isting "siness of spplying process e(ipment to

sectors li)e 1il, 3etrochemicals, Fertili*ers etc! In addition, ;4EL plans

to enhance ;43


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7ith a mar)et share of ;43< of #B . #% in the past in this segment,

;43< can "ecome more confident in addressing this mar)et overcoming

its financial constraints "y participating in some of the tenders with

;4EL spport! As sch, ;43


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; 4 3 < : A N 1 < E 0 < I E 7 !

#! INT01>5CTI1N

Incorporation of the Company : #$==

3rimary 1"6ective :

!

Technical Colla"oration provided "y : '1>A,

C*echoslova)ia!

Commencement of Constrction : #$=%

Completion of Constrction : #$#

Commencement of 3rodction : #$#Initial 3ro6ect Cost : 0s! #!B crores

Initial 3rodct Mi9 : 4eat E9changers,

colmns, 3ressre vessels,

Technological

'trctres, 3iping

Installed Capacity : , #& M!T!

Trnover for the year &&$2#& : 0s! #& crores

! 0 E ' 1 5 0 C E '

301>5CTI1N FACILTIE'

Factory Area : #$ Acres

Total Covered Area : $&,&&& s(! Meters

Covered area of 3rodction 'hops : B=,&&& s(! Meters

3ower 0e(irement : ,&&& 7 from

A3'E;

To manfactre cstom "ilt

Capital E(ipment for the

process of Indstries sch as

Fertili*ers, 3etrochemicals,

3etrolem 0efineries, Chemicals

etc!


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No! of Ancillary 5nits : Arond a >o*en


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IM310TANT MAC4INE0H

The ma9imm crane lifting capacity is #& tones, "t loads p to B&

tones can "e lifted with improvisation! Ma9imm 0olling capacity is

=&mm in cold condition and #&mm in hot condition! ;43< has the

largest heat treatment frnace in India, the si*e "eing Meters width, B!B

meters height and =!B meters long! 1ne more frnace of && Ton

capacity and #Bmtrs! ;ogie length has "een added! 1ther critical

e(ipment availa"le with ;43< are >eep >rawing 4ydralic 3ress of

#=&&T capacity 'ingle 'pindle CNC >eep hole >rilling Machine with

Gn >rilling attachment and Nos! CNC drilling machines which can

employ conventional drills! Another CNC >eep hole drilling machine has

"een installed recently "y 4MT!A nm"er of 7elding 0otators of

capacity p to B& Tones! 7elding e(ipment sch as manal Arc, '"

merged Arc, TIG, MIG, 3lasma inclding the latest high prodctive

welding e(ipment sch tne head s"merged arc welding, and ;i2

cathode TIG welding !T"e fining Machine!A nm"er of vertical and

hori*ontal "oring machines with a ma9imm capacity of B meters dia and

&&mm spindle dia respectively! >ifferent types of Non2destrction

Testing E(ipment! 7ell e(ipped 3hysical and Chemical La"oratories!

Metrology section etc! 4CL 'per2Mini Compter, Two Mini compters

B= CA> Machines and ##% 3ersonal compters!


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EM3L1HEE 7ELFA0E AMENITIE'

Township Area 2 #B# Acres

No! of 8arters 2 ##$

& "ed 4ospital

3rotected 7ater 'pply

5ndergrond drainage system

English medim school with C;'E 'ylla"s

Telg medim school with A3 'tate 'ylla"s

'pecial school for mentally handicapped children!


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301KECT' 1F NATI1NAL IM310TANCE EEC5TE>5N>E0

EEC5TI1N

'!N1! C5'T1ME0 301KECTE85I3MENT

#! I1CL, 3anipat 4ydro crac)er reactors2Nos

! I1CL, 3anipat 0eactor, 0egenerator D 1ffice

Cham"er

! I1CL, 3anipat 0eformer D 740 3ac)age

! I1CL, Mm"ai #B& MT Capacity L3C "llets

B! I1CL, Chennai 'phere

=! ;1A0> 'TEEL

3LANT, ;o)aro

Argon 0ecovery nit

! N0L, Nmaligarh Air Fin coolers'' Clad elhi

Cryo Nitrogen plant

#B! 'pace application centre,

Ahmeda"ad

B&Bm >ia thermal vacs system

#=! TEC4NIM1NT IC;

LT>! Mm"ai

Nitrogen plant

#! 1'7AL C4EMI

FE0TILI/E0 LT>2

3aradeep

7aste 4eat L3 "oilers


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As a part of total (ality management program, ;43< has ac(ired I'1

$& certification dring the year #$$2$, particlarly to "oost p its

e9ports and to "e competitive in the international mar)et!

0e2certification of I'1 $& has "een o"tained in 'eptem"er,

#$$=!

In recognition of high standards of or (ality, confederation of

Indian indstry ?CII@, 'othern 0egion, A3 presented the 8ality

Award!

0E'EA0C4 D >Eevelopment department was esta"lished in #$B and is well

e(ipped with high tech e(ipment to cater to Applies 0esearch and

3rodct >evelopment! 0D> has developed #= 3ro6ects so far! 'ome of

the prodcts commerciali*ed inclde:

Titanim Anodes Titanim Air ;ottles

Cryogenic inclde:

CI' Award for 0D> achievement in #$$2$!


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ANCILLA0I'ATI1N

;43< has developed some ancillary indstries in its vicinity to cater to

its re(irements! Apart from offering sfficient wor) load to these

indstrial nits, ;43< has "een assigning wor) to a nm"er of small

sector indstries! ;43< provides material, transportation and inspection

services to the Ancillaries to help them rise to its (ality re(irements!

30E'ENT 'T0ENGT4'

Financial, Managerial, Technical "ac)2p and spport of Navaratna

3'5, ;4EL

E9cellent >esign D Engineering capa"ilities!

'tate .of .the . Art Manfactring facilities!

Accomplished image as a spplier of 8ality 3rodcts in the

domestic and international mar)ets!

4igh degree of cstomer confidence!

Technological tie2p arrangements!

7ell trained and (alified wor) force and Engineers!

'ond wor) cltre D harmonios Indstrial 0elations!

E9tensive compteri*ation!

Capa"ility to spply 3ro6ects D 'ystems on trn)ey "asis!

3ro6ect Management ')ills!


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3LAN' D 'T0ATEGIE'

To grow as an Engineering, 3rocrement and Constrction

Company!

To enlarge E9port ;siness!

To resort to e9tensive compteri*ation and Atomation for

redction of cycle time, improvement of (ality and redcingcosts!

To forge strategic "siness alliances with International Companies

to derive technological and mar)eting advantages!

To strive for continos pdating of technologies to "e on par with

International Companies!

To focs on 4man 0esorces >evelopment!

To change the wor) cltre to "e compati"le with mar)et demands!

C1N'T0AINT'


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Non compteri*ation No E03

4igh average age of employees no e9ective recritment since

#$$%

7or)ing capital constraints

0eplacementpdating of machinery


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44/87

COL#MNS


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!E*INI!IES


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COM'#STION S0STEM


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T!#N80 %+8+,ES


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C$+%TE! III

T$EO!ITIC+L *!+ME /O!8 O* T$E ST#"0

Meaning

Generally a fnd is interpreted as wor)ing capital! Ths, fnds flow is

change in wor)ing capital! 4ence, the changes in wor)ing capital is

called as flow, the flow may "e inflow or otflow! The term wor)ing

capital has two concepts, gross wor)ing capital and net wor)ing capital!

Gross wor)ing capital is the total of all crrent assets, whereas net

wor)ing capital is the e9cess of crrent assets over crrent lia"ilities!

Fnd flow statement is prepared and interpreted on the "asis of net

wor)ing capital concept! Fnds flow statement measres and presents in

an analytical manner the smmari*ed version of the nmeros flows of

fnds for a specified period!

Iportance of funds flo3 stateent

Fnds flow statement is an important tool it helps in the planning,

deployment and controlling of fnds year after year! The following are

the "enefits of fnds flow statement! It provides a detailed analysis and

nderstanding of changes "etween two "alance sheet dates! It shows the

fnd mo"ili*ation and canali*ation! It helps to ta)e fnd pro6ections for

the ftre! It is a sefl techni(e to measre the (antm fnds needs for

efficient operation of a firm!

The "asic prpose of preparing the statement is to have a rich into the

financial operations of the concern! It analyses how the fnds were

o"tained and sed in the past! In this sens, it is a vala"le tool for the

finance manager for analy*ing the past and ftre plans of the firm and

their impact on the li(idity!


49/87

4e can dedce the reasons for the im"alances in ses of fnds in

the past an ta)e necessary corrective actions! In analy*ing the financial

position of the firm, the Fnds Flow 'tatement answers to sch (estions

as2

9. 7hy were the net crrent assets of the firm down, thogh the net

income was p or vice versaO

5. 4ow was it possi"le to distri"te dividends in a"sence of or in

e9cess of crrent income for the period O

@. 4ow was the sale proceeds of plant and machinery sed O

B. 4ow was the sale proceeds of plant and machinery sed O

>. 4ow were the de"ts retired O

=. 7hat "ecame to the proceeds of share isse or de"entre isse O


50/87

?@ +n Instruent for +llocation of !esources. In modern large scale

"siness, availa"le fnds are always short for e9pansion programmes and

there is always a pro"lem of allocation of resorces! It is, therefore, a

need of evolving an order of priorities for ptting throgh their e9pansion

programmes which are phased accordingly, and fnds have to "e

arranged as different phases of programmes get into their stride! The

amont of fnds to "e availa"le for these pro6ects shall "e estimated "y

the finance with the help of Fnds Flow 'tatement! This prevents the

"siness from "ecoming a helpless victim of nplanned action!

DB + Tool of Counication to Outside /orld. Fnds Flow

'tatement helps in gathering the financial states of ;siness! It gives an

insight into the evoltion of the present financial position and gives

answer to the pro"lem Jwhere have or resorces "een movingJO In the

present world of credit financing, it provides a sefl information to

"an)ers, creditors, financial, it provides a sefl informations and

government etc! regarding amont of loan re(ired, its proposes, the

terms of repayment an sorces for repayment of loan etc! the financialmanager gains a confidence "orn ot of a stdy of Fnds Flow 'tatement!

In fact, it carries information regarding firmJs financial policies to the

otside world!

D> *uture ,uide. An analysis of Fnds Flow 'tatements of several

years reveals certain vala"le information for the financial manager for

planning the ftre financial re(irements of the firm and their natre too

i!e! 'hort term, long2term or mid term! The management can formlate its

financial policies "ased on information gathered from the analysis of sch

statements! Financial manager can rearrange the firmJs financing more

effectively on the "asis of sch information along with the e9pected

changes in trade p paya"les and the varios accrals! In this way, it

gides the management in arranging its financing more effectively!


51/87

*und *lo3 +nalysis

Fnd may "e interpreted in varios ways as

?a@ Cash,

?"@ Total crrent assets,

?c@ Net wor)ing capital,

?d@ Net crrent assets!

For the prpose of fnd flow statement the term means net wor)ing

capital! The flow of fnd will occr in a "siness, when a transaction

reslts in a change i!e!, increase or decrease in the amont of fnd!

According to 0o"ert Anthony the fnds flow statement descri"es the

sorces from which additional fnds were derived and the ses to which

these fnds were pt! In short, it is a technical device designed to

highlight the changes in the financial condition of a "siness enterprise

"etween two "alance sheets!

"ifferent naes of *und:*lo3 Stateent

A Fnds 'tatement

A statement of sorces and ses of fnd

A statement of sorces and application of fnd

7here got and where gone statement

Inflow and otflow of fnd statement

1"6ectives of Fnd Flow 'tatement


52/87

The main prposes of FF' are .

To help to nderstand the changes in assets and asset sorces

which are not readily evident in the income statement or financial

statement!

To inform as to how the loans to the "siness have "een sed!

To point ot the financial strengths and wea)nesses of the "siness!

*orat of *und *lo3 Stateent Sources +pplications

Fnd from operation

Fnd lost in operationsNon2trading incomes

Non2operating e9penses

Isse of shares 0edemption of redeema"le preference share

Isse of de"entres

0edemption of de"entres

;orrowing of loans 0epayment of loans

Acceptance of deposits

0epayment of deposits

'ale of fi9ed assets

3rchase of fi9ed assets

'ale of investments ?Long Term@

3rchase of long term investments

>ecrease in wor)ing capital

Increase in wor)ing capital


53/87

Steps in preparation of *und *lo3 Stateent.

#! 3reparation of schedle changes in wor)ing capital ?ta)ing crrent

items only@!

! 3reparation of ad6sted profit and loss accont ?to )now fnd from or

fnd lost in operations@!

! 3reparation of acconts for non2crrent items ?Ascertain the hidden

information@!

%reparation of the fund flo3 stateent.

There is a plenty of "siness transactions which reslts in flow of fnds

or which case changes in wor)ing capital!

For this prpose, all the "siness transactions classified into ?a@ those

transactions which increase fnds i!e! sorces of fnds ?"@ those

transactions which decrease fnds i!e! application of fnds! Identification

of transactions casing for increase or decrease in fnds is essential for

fnds flow statement analysis! The following transactions do not affect

the flow of fnds! These are

#! Transactions "etween two crrent assets! ?For e9! conversion of

stoc) into cash@

! Transactions "etween two crrent lia"ilities!

! Transactions "etween crrent assets and crrent lia"ilities!

! Transactions "etween two non2crrent or fi9ed assets!

B! Transactions "etween two long2term lia"ilities!

=! Transactions "etween non2crrent assets and long2term lia"ilities!

It is clear from a"ove, transactions "etween a crrent accont ?non2

crrent accont@ and another crrent accont ?non2crrent accont@ does

not affect flow of fnds!


54/87

The first three is connected with crrent accont the last three "elongs to

non2crrent accont! As against this concept, any transaction "etween a

crrent accont and a non2crrent accont affect fnds! These are

#! Transaction "etween a long term lia"ility and a crrent asset!

! Transaction "etween a long term lia"ility and a crrent lia"ility!

! Transaction "etween a non2crrent asset and a crrent asset!

! Transaction "etween a non2crrent asset and a crrent lia"ility!

Step : 9& %reparation of Schedule of Changes in /orFing Capital

It reveals the difference "etween the crrent assets and lia"ilities!

Increase in crrent assets and decrease in crrent lia"ility will increase

the wor)ing capital amont! At the same time decrease in crrent assets

and increase in crrent lia"ility will decrease the wor)ing capital amont


55/87

St!tement or 5-e#ule of -!n$e5 in "or?in$ -!6it!l?????????????????????????????????????????????????????????????????????articu8ars revious year urrent year 0ffect on5orkin+ capita8 6ncreaseecrease??????????????????????????????????????????????????????????????

???????

Current A55et5@ ash in hand@ (i88s receivab8e@ Sundry debtors@ Temporary investments@ Stocks inventories@ repaid e=penses@ Accrued incomes

?????????????????????????????????????????????????????????????????????Tota8 current assets?????????????????????????????????????????????????????????????????????

?????????????????????????????????????????????????????????????????????articu8ars revious year urrent year 0ffect on5orkin+ capita8 6ncreaseecrease?????????????????????????????????????????????????????????????????????Current li!ilitie5@ (i88s payab8es@ Sundry creditors@ (ank overdraft@ Short term advances@ ividends payab8es@ rovision for ta=ation??????????????????????????????????????????????????????????????

???????Tota8 current /iabi8ities?????????????????????????????????????????????????????????????????????7orkin+ capita8 B AC /Net in-re!5e or #e-re!5e in "or?in$ -!6it!l


56/87

Step 2 5& %reparation of +djusted %HL +ccount 2 to find fund fro

operations

;ecase is the sorce of fnd and will show in fnd flow statements

sorce side! 'o "efore ma)ing fnd flow statement, we mst ma)e

statement showing the fnd from operation!

1peration means "siness activity and fnd from operation means profit

from "siness activity! 'o, yo will easy nderstand that profit from

"siness activity "etween two acconting period mst "e the sorce of

fnd!


57/87

St!tement of fun# from o6er!tion5 A#>u5te# PL A--ount?????????????????????????????????????????????????????????????????????8osin+ ba8ance of profit and 8oss account or retained earnin+sas +iven in the (a8ance sheet?????????????????????????????????????????????????????????????????????ADD+ non fun# !n# non o6er!tin$ item5 "i- !;e een !lre!#7Deite# to 6rofit !n# lo55 !--ount

3. epreciation1. AmortiDation of fictitious and intan+ib8e assets@ +ood5i88@ patents@ trade marks@ pre8iminary e=penses@ discount on issue of sharesE. Appropriation of retained earnin+ such as@ Transfer to +enera8 reserve@ ividend e9ua8iDation fund@ Transfer to sinkin+ fund@ ontin+ency reserve etc.

. /oss on sa8e of any non current or fi=ed assets such as@ /oss on sa8e of 8and and bui8din+@ /oss on sa8e of machinery@ /oss on sa8e of furniture@ /oss on sa8e of 8on+ term investmentsG. ividends inc8udin+@ 6nterim dividend@ roposed dividend )6f it is an appropriation of profit and not taken as current8iabi8ity*H. rovision for ta=ation )if it is not taken as current 8iabi8ity*I. Any other non fund non operatin+ items 5hich have been debited to /account

Tota8 )A*LESS+ Non Fun# or non o6er!tin$ item5 "i- !;e !lre!#7 een -re#ite# to6rofit !n# lo55 !--ount

3. rofit or +ain from the sa8e of non current fi=ed assets such as@ rofit on sa8e of 8and and bui8din+@ rofit on sa8e of p8ant and machinery@ rofit on sa8e of 8on+ term investment etc.1. Appreciation in the va8ue of fi=ed assets such as increase in the va8ue of 8and ifit has been credited to profit and 8oss accountE. ividends received.0=cess provision retransferred to profit and 8oss account or 5ritten back .

G. Any other non operatin+ item 5hich has been credited to profit and 8oss account


58/87

H. &penin+ ba8ance of profit and 8oss account or retained earnin+s as +iven in theba8ance sheet

???????????????????????????????????????????????????????????????????????????

Tota8 )(*???????????????????????????????????????????????????????????????????????????Fun#5 re-ei;e# from o6er!tion or u5ine55 !-ti;itie5 tot!l ,A. Tot!l ,B.???????????????????????????????????????????????????????????????????

????????

Step 2 @& *unds *lo3 Stateent for the year ending

+ Source of funds

#!Fnd from operation ? "alance of second step @

!Isse of shares capital

!Isse of de"entres

!0aising of long term loans

B!0eceipts from partly paid shares , called p

=!Amont received from sales of non crrent or fi9ed assets

!Non trading receipts sch as dividend received

%!'ale of investments ? Long term @

$!>ecrease in wor)ing capital as per schedle of changes in wor)ing

capital

PPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPP

Total


59/87

' +pplications or uses of funds

JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ

#! Fnds lost in operations ?;alance negative in second step@

! 0edemption of preference share capital

! 0edemption of de"entres

! 0epayment of long term loans

B! 3rchase of long term loans

=! 3rchase of long terminvestments

! Non trading payments

%! 3ayment of ta9

$! 3ayment of dividends

#&! Increase in wor)ing capital ?As per positive "alance of #st step@2

PPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPP

Total
http://www.svtuition.org/2010/02/investment.htmlhttp://www.svtuition.org/2010/02/investment.html


60/87


61/87


62/87

PROFIT AND LOSS ACCOUNT

De5-ri6tion 08/8=// 088 SubCont. H1G1.3I 321.JH HEJ.JI 321G1.G2 H1E.3E 0rection 0=penditure 12J.EI IG2.H1 3EHH.EJ 12KK.1G 112I.1K o5er > Fue8 E1.E 1HJ.J 1GI.2H 13I.1I 1G1.2 Tota8 66 @82%


63/87

BALANCE SHEET

De5-ri6tion 08/8=// 088 Surp8us 1.23 1.23 1.23 1.23 1.23

Secured /oans 2.22 3KE.33 2.2213K3G.1

13IE.J

1

UnCSecured /oans1H2K.

21HKJI.H

1EKEJ.H

KE2EE.3

K2K1G.3

2

Tot!l0


64/87

CASH FLOW STATEMENT

Det!il5 E3.2E.33E3.2E.3

2E3.2E.2J E3.2E.2K E3.2E.2I

C!5 Flo" from O6er!tin$!-ti;itie5

"et rofit for the year KII.GH CKGJ.HJ JHEG.G1C

GH2.K CEHJ.KIAdjustments for u5tment5 for +6ncrease ecrease ininventory CHKK.2E IIK.IH CJJ.J1 C1JI.KJ JK3.Kecrease in /oans >advances CKKH.JG I3J.H3 E2E1.3 EKE.11 JJ3.EJ

6ncrease ecrease inebtors C1EK.I3

C1IK.2

G E2IK.HEC

1EJH.JE 3IE.J26ncrease in effered %evenue0=penditure 2.22 2.22 1GHE.KI H21.JI H3G.JK6ncrease ecrease in/iabi8ities G21.HJ CJ.3K CJG.H CJEI.EI CH1K2.GJ6ncrease ecrease inrovisions H21.IE H2.3H C3GI.G3 3GEG.EI 3J.I

Net -!5 flo" fromO6er!tin$ !-ti;itie5 09


65/87

3J3JE.G2-&6 /oan 7aiver 11K2.EE

C!5 flo" from fin!n-in$!-ti;itie5

=/820%24

203/%89

=/40%3/ 00%3/ 93@0%2/

Net in-r% in -!5 !n# -!5eGui;!lent5 =32%84

//02%24 =/33% =9


66/87

3I

"o of 09uity Shares P`3222 EEIJIK EEIJIK EEIJIK EEIJIK EEIJIK

3K apita8 Additions KJ.J3 H.3E 11.E3 GG.32 2.1J3J Avera+e 6nventory J3E.2K JGK. G2JI.KH HJK.JH G22.IG12 Avera+e ebtors J2.1I IKJ3.KI K221.3G KEE.22 I1E3.K

13 Avera+e reditors E23.GH 1JI.KG 3IG.H2 331G.HE 33GJ.H111 Avera+e 7orkin+ apita8 1HJI.H 3GE.G3 E2IE.G2 I3EK.2G H2IJ.IH1E Avera+e %a5 'ateria8 EIG.13 E32J.12 1JIE.HE EH1H.G1 EHG1.EK1 Avera+e 7orkCinCpro+ress 3H2.EE 1323.21 1312.K1 31I1.IJ 31GJ.II1G Avera+e Finished -oods E2.EI 331.H E12.23 EJ3. H1E.I1

H apita8 0mp8oyed E2I3.3G E11G.J K.GH I3IE.GK JKKI.21

READY RECONERSl P!rti-ul!r5 08/8=// 088


67/87

33 -ross (8ock K3GE.I K2HE.GH IJJJ.E

IJIH.2KIJ12.JK

31 "et (8ock inc8 ap 76 2.J2 H2.J3 G11.GK

3EK.GI3EG.JE

3E urrent Assets 1EHEI.I 11HHI.3 121GK.2I

1H23.2I1K21.3H

3 urrent /iabi8ities 3K1JG.13 3IIJ1.G 3K1KH.I2

3KEK1.3I3JE3J.GE

3G rovisions 1I31.1K 132J.GG 3HJ.EJ

3K2H.J21I3.G

3H 7orkin+ apita8 1HE2.1G 1IHG.2E E13.JK

GK1G.22KG3.2J

3I

/+ term 8oans Q 6nterestaccrued KJ.3I 3J1H.G1 3HJ1.EE

E2EE.3K2K1G.32

3K

Sh term 8oans Q 6nterestaccrued 1G3G.1E 1G3G.1 113I.EG

13K3G.1G13IE.J1

3J Share apita8 EEIJ.IK EEIJ.IK EEIJ.IK

EEIJ.IKEEIJ.IK

12 %eserves > Surp8us 1.23 1.23 1.23

1.231.23

13

apita8 emp8oyed )"et (8 Q7* E2I3.3G E11G.J K.GH

I3IE.GIJKKI.21

11 Accumu8ated /osses 1HEGI.IE 1I1EG.E 1HEIG.H2 GKJ3.K G1KKH.H1E "et 7orth C11JIG.J C1EKGE.G C11JJE.K3

CGIHIE.GHCG1HI3.HJ

1 "umber of of emp8oyees 332J 31G2 3EI2

3GJ3G31

1G Va8ue added per emp8oyee G.32 1.JJ 3.

1.HJG.2

1H Sa8aries, 7a+es > (enefits HH3.12 EHI.EH H112.HE

EE21.K1E2JJ.3I

1I

Va8ue added per %upee of5a+es )%s* 3.13 2.KH 2.E1

3.3J1.H

1K ontribution to 0=che9uer 3IKK.H 13IH.G1 3KI1.31

1HE3.1K1K1E.IJ

1J 0=ports 2 2 2.22

2.222.22

E2 "et rofit to "et 7orth N E.K1 CE.H2 3.J2

CJ.I1CH.GJ

E3

Sa8aries > 7a+es to turnoverN E.2E 3.KI IE.I3

3K.E13I.3K

E1

'at8. Uasa+e to -T& )"et of0* J.H G.3G G.JK

H1.12EI.HI

EE Sun debtors to Turnover ) days* 1GG E1H 1K2

3JE3G


68/87

Statement showing changes in working capital

Particulars

Effecting working capital Increase Decrease

2009-2010 2010-2011

Current Assets

22667.10 23637.74 970.6

!otal current assets

22667.10 23637.74

Current "ia#ilities

19902.07 21007.49 110$.2

!otal current lia#ilities

19902.07 21007.49

%et working capital & 'CA-

C"(

276$.0) 26)0.2$ 1).7*

%et +ecrease in working

capital

1).7*


69/87

,un+s flow stateent

ourcesAount

Application

Aount

/are /ol+er fun+%ill

e+eption ofsecure+ loans

1*).11

Depreciation offie+ assets

20.01

e+eption ofunsecure+ loans

*9.2

,un+s frooperation

*77.$6

%et +ecrease inworking capital

1).7*

10)2.)$ 10)2.)$

+djusted % H L +KC

Particulars Aount Particulars Aount

!o iscellaneous epenses 0.00 34 fun+s fro operation *77.$6

!o accuulate+ loss *77.$6

*77.$6 *77.$6


70/87

Stateent sho3ing changes in 3orFing capital D!s. In laFhs

Particulars

Effects of 5orking

capital

Increase Decrease

2009-2010 200* - 09 s. s.

Current Assets 22667.10 202$*.07 209.0)

!otal current assets 22667.10 202$*.07

Current "ia#ilities 19902.07 199)6.09 ).02

-

!otal current lia#ilities 19902.07 199)6.09

%et working capital & 'CA- 276$.0) )21.9* 2).0$

%et increase in working 2).0$

*und *lo3 Stateent

ourcesAount Application Aount


71/87

/are /ol+er fun+%I"

%et increase in

working capital

aising ofsecure+ loans

1*).11,un+s loss in

operation*$9.69

aising ofunsecure+ loans

)0$7.96

Depreciation offie+ assets

61.67

))02.76 ))02.76

+djusted % H L +KC


!o iscellaneous epenses

0.00

Accuulate+ loss *$9.69

,un+s loss in operation *$9.69

*$9.69 *$9.69


Particulars

Effects of 5orking

capital

Increase Decrease

2007 0* 200* - 09 s. s.


72/87

Current Assets 2601.07 202$*.07 - $7$6.00

!otal current assets 2601.07 202$*.07

Current "ia#ilities 201*9.06 199)6.09 2$2.97

-

!otal current lia#ilities 201*9.06 199)6.09

%et working capital & 'CA- $*2$.01 )21.9* $$0).0)

-

%et +ecrease in working $$0).0)

*und *lo3 Stateent

ourcesAount Application Aount

/are /ol+er fun+%I"

e+eption ofsecure+ loans

21*1$.2

Depreciation offie+ assets *2$.99

e+eption ofunsecure+ loans

1919).$0

,un+s frooperation

)679.72

%et +ecrease inworking capital $$0).0)

100*.7 100*.7

+djusted % H L +KC



73/87

!o iscellaneous epenses 2$6).*7 34 fun+s fro operation )679.72

!o accuulate+ loss )211$.*7

)679.72 )679.72

Interpretation

The short term financial position of the company is not at all

satisfactory where as wor)ing capital in && . &%, B%B! is redced to

#!$% in the year &&% . &$, that means the company has to ta)e drastic

steps to increase its li(idity position!

As per operation of fnds we raised a sorce amont of 0s

=$! with that we have to settle varios loan acconts or "y some

fi9ed assets as per or fnds flow statement! 'ale of fi9ed assets is not at

all a good sign for a company!

1verall performance of the company is not at all satisfactory in

these ?&& . &% to &&% . &$@ years so the management has to ta)e

action regarding the improvement of short term as well as long term

financial position!


ParticularsEffects of 5orking capital Increase Decrease

2006 07 2007 - 0* s. s.

Current Assets 197$6.6 2601.07 62$7.) -

!otal current assets 197$6.6 2601.07


74/87

Current "ia#ilities 11)0$.$$ 201*9.06 - ***).$1

!otal current lia#ilities 11)0$.$$ 201*9.06

%et working capital & 'CA-C"( *$1.09 $*2$.01 2626.0* -

%et +ecrease in workingcapital

2626.0*

*und *lo3 Stateent

ources Aount Applications Aount

/are /ol+er fun+ %I" ,un+s lost in operation $001.*

aising of secure+ loans *0.)2

aising of unsecure+ loans 220*.0*

Depreciation of fie+ asset *7.)6

%et +ecrease in working capital 2626.0*

$001.* $001.*

+djusted % H L +KC


!o iscellaneous epenses 602.97 34 accuulate+ loss $60.*1

!o fun+s lost in operation $001.*


75/87

$60.*1 $60.*1

Interpretation

The short term li(idity position of the company is not at all

satisfactory where as wor)ing capital in &&= . &, %B#!&$ is redced to

B%B! in the year && . &%, that means the company shold ta)e

necessary steps to salvage its wea) li(idity position!

Fnds flow statement shows that we raised application amont of

0s! B&!% which is not a good sign for an enterprise

1verall performance of the company is not at all satisfactory in

these ?&&= . & to && . &%@ years so the management has to ta)e

action regarding the improvement of its wea) li(idity position!

Cash *lo3 Stateent

%articulars +s on @9:6@:5699

Cash flo3 fro operating activitiesNet profit for the year

KII.GH

Ad6stments for:

>epreciation charge for the year32J.J1

Ad6stment for:

Increase >ecrease in inventoryCHKK.2E

>ecrease in loans and advancesCKKH.JG


76/87

Increase >ecrease in de"torsC1EK.I3

Increase in deferred revene e9penditre2.22

Increase>ecrease in lia"ilitiesG21.HJ

Increase>ecrease in provisionsH21.IE

Net cash flo3 fro operating activities 09ecrease in investments2.22

Cash flo3 fro investing activities=ecrease in inventoryIIK.IH

>ecrease in loans and advances I3J.H3


77/87

Increase >ecrease in de"torsC1IK.2G

Increase in deferred revene e9penditre2.22

Increase>ecrease in lia"ilitiesCJ.3K

Increase>ecrease in provisionsH2.3H

Net cash flo3 fro operating activities =0842%4ecrease in investments2.22

Cash flo3 fro investing activities=@3%/2

Increase in secred loans11.EE

Increase in nsecred loansE13K.I

G1I Loan waiver

Cash flo3 fro financing activities 203/%89

Net increase in cash and cash e(ivalents//02%24

Cash and cash e(ivalents 1;2.HJ

Cash and cash e(ivalents C;3GH.2

Cash *lo3 Stateent

%articulars +s on @9:6@:6;

Cash flo3 fro operating activities

Net profit for the year $=B!BAd6stments for:

>epreciation charge for the year %%!&

Ad6stment for:

Increase >ecrease in inventory 2$$!$

>ecrease in loans and advances &!#

Increase >ecrease in de"tors &%!=


78/87

Increase in deferred revene e9penditre B=!%

Increase>ecrease in lia"ilities 2$B!=

Increase>ecrease in provisions 2#B!B#

Net cash flo3 fro operating activities #%&B!%

3rchase of fi9ed assets 2!#Increase>ecrease in investments &!&&

Cash flo3 fro investing activities 2!#

Increase in secred loans 2#%#B!

Increase in nsecred loans 2#$#$!B&

G1I Loan waiver %&!

Cash flo3 fro financing activities 2#%B%!#Net increase in cash and cash e(ivalents 2#!%%

Cash and cash e(ivalents 1; B%B!B

Cash and cash e(ivalents C; &!=$

%articulars

+s on @9:6@:67


Net profit for the year 2B=&!%

Ad6stments for:

>epreciation charge for the year #!=

Ad6stment for:

Increase >ecrease in inventory 2$!%$

>ecrease in loans and advances %!

Increase >ecrease in de"tors 2$=!$

Increase in deferred revene e9penditre =&!$


79/87

Increase>ecrease in lia"ilities 2$!

Increase>ecrease in provisions 2#BB!

Net cash flo3 fro operating activities 2##!

3rchase of fi9ed assets 2BB!&$

Increase>ecrease in investments &!&&Cash flo3 fro investing activities 2BB!&$

Increase in secred loans %&!

Increase in nsecred loans &%!&%

G1I Loan waiver &!&&

Cash flo3 fro financing activities %%!#

Net increase in cash and cash e(ivalents 2%$!=$

Cash and cash e(ivalents 1; #=B!=

Cash and cash e(ivalents C; B%B!B

%articulars +s on @9:6@:6epreciation charge for the year #!B

Ad6stment for:

Increase >ecrease in inventory $%#!%

>ecrease in loans and advances $$#!$

Increase >ecrease in de"tors #!$

Increase in deferred revene e9penditre =#B!$%

Increase>ecrease in lia"ilities 2=%&!B$

Increase>ecrease in provisions #$!

Net cash flo3 fro operating activities 2=%!


80/87

3rchase of fi9ed assets 2&!$

Increase>ecrease in investments &!&&

Cash flo3 fro investing activities 2&!$

Increase in secred loans #%&%!B=

Increase in nsecred loans B=B!BG1I Loan waiver &!&&

Cash flo3 fro financing activities =!#

Net increase in cash and cash e(ivalents =%!B$

Cash and cash e(ivalents 1; %=!=

Cash and cash e(ivalents C; #=B!=

%articulars +s on @9:6@:6=


Net profit for the year 2#!$

Ad6stments for:

>epreciation charge for the year #B#!#

Ad6stment for:

Increase >ecrease in inventory #=B!

>ecrease in loans and advances 2#%=!#

Increase >ecrease in de"tors 2B!B

Increase in deferred revene e9penditre B%$!$

Increase>ecrease in lia"ilities 2#&%!

Increase>ecrease in provisions 2#&!&

Net cash flo3 fro operating activities 2%&!&


81/87

3rchase of fi9ed assets 2=!=#

Increase>ecrease in investments !&

Cash flo3 fro investing activities 2=!B$

Increase in secred loans !%

Increase in nsecred loans BBB!BG1I Loan waiver &!&&

Cash flo3 fro financing activities $%!

Net increase in cash and cash e(ivalents 2%B!$

Cash and cash e(ivalents 1; $#!$=

Cash and cash e(ivalents C; %=!=


82/87

After the li"erali*ation and glo"ali*ation the indstry is facing stiff

competition! Moreover the indstry is characteri*ed "y long cycle times

and as the overheads is soaring steadily! To withstand competition, orders

have to "e delivered mch with in the time than the competitors!

In order to overcome this:

;43< has to maintain some stoc)s of prodction items i!e! raw materials

nli)e the present practice of procring the material after receipt of order

from the cstomers

Team wor) and inter departmental co ordination mst "e elevated to

finish the 6o"s with in the stiplated time "y leaving personal fancies!


83/87

It is the responsi"ility to maintain good and relia"le relationship with

vendors to develop relia"ility and worthiness on the organi*ation to honor

or material procrement orders within the specified time!

3rocedre limitations are to "e minimi*ed and allocate responsi"ilities "y

o"serving the )ey factors!

The management and employees shold trst on each other to overcome

this crisis sitation "y performing the entrsted 6o"s properly!

5nnecessary overhead costs are minimi*ed "y planning the activities in a

proper manner "y sing the scientific methods of principles of

management li)e operations research, pro6ect evalation and

management, MI', and secrity analysis and portfolio management!

After the li"erali*ation and glo"ali*ation the indstry is facing stiff

competition! Moreover the indstry is characteri*ed "y long cycle times

and as the overheads is soaring steadily! To withstand competition, orders

have to "e delivered mch with in the time than the competitors!

In order to overcome this:

;43< has to maintain some stoc)s of prodction items i!e! raw materials

nli)e the present practice of procring the material after receipt of order

from the cstomers

Team wor) and inter departmental co ordination mst "e elevated to

finish the 6o"s with in the stiplated time "y leaving personal fancies!


84/87

It is the responsi"ility to maintain good and relia"le relationship with

vendors to develop relia"ility and worthiness on the organi*ation to honor

or material procrement orders within the specified time!

3rocedre limitations are to "e minimi*ed and allocate responsi"ilities "y

o"serving the )ey factors!

The management and employees shold trst on each other to overcome

this crisis sitation "y performing the entrsted 6o"s properly!

5nnecessary overhead costs are minimi*ed "y planning the activities in a

proper manner "y sing the scientific methods of principles of

management li)e operations research, pro6ect evalation and

management, MI', and secrity analysis and portfolio management!


85/87

Financial analysis "y IM 3andey

Financial management, Apollo 3"lishers

The 4ind Newspaper

Li"rary of ;43

project dhana

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