siva original project

A STUDY ON FUNDS FLOW STATEMENT WITH REFERENCE

TO ITC LIMITED, BHADRACHALAM.

A project report submitted in partial fulfillment for the award of the degree of“MASTER OF BUSINESS ADMINSTRATION”

Submitted BySIVA RAMA KRISHNA JANJAM

MBA (FINAL)(REGD NO: 109258502040)

(2009-2011)Under the esteemed guidance

Miss.V.REKHA M.B.A

PG-Department of Management StudiesIDEAL COLLEGE OF ARTS &SCIENCES

VIDYUT NAGAR, KAKINADA. (Affiliated to Andhra University, Visakapatnam).

Ideal College of Arts & Sciences Andhra University

CERTIFICATE

This is to certify that Mr. SIVA RAMA KRISHNA JANJAM a student of MBA in

the Department of Management Studies of Ideal College of Arts and Sciences,

Kakinada, during the academic year 2009-2011 has undergone the project work on

FUNDS FLOW STATEMENT at “ITC LIMITED, BADRACHALAM is a record of

bonafide work carried out by him under my guidance and supervision and had fulfilled the

requirements concerning the project work, .

Place: KAKINADA (V.REKHA)

Date: PROJECT GUIDE

DECLARATION


I, SIVA RAMA KRISHNA JANJAM, student of IDEAL COLLE OF ARTS &

SCIENCES, KAKINADA hereby declare that the project work entitled to FUNDS

FLOW STATEMNT has been submitted by me in partial fulfillment of the requirements

for the award of the degree of MASTER OF BUSINESS ADMINISTRATION by

ANDHRA UNIVERSITY.

This project work is original and has not been submitted to any other university for

award of any other degree or diploma or published any time before.

Place:Date: (J.SIVA RAMA KRISHNA)


ACKNOWLEDGEMENT

First & foremost, I would like to express my profound thanks to IDEAL

founder of IDEAL COLLEGE OF ARTS&SCIENCES, KAKINADA and whose

contribution in the field of education makes me feel happy to study in this institute.

I express my sincere thanks to SRI.CHIRANJEVINI KUMARI

(correspondent) IDEAL COLLEGE OF ARTS &SCIENCE. For her blessings and

encouragement through out my course of study.

I convey heartfelt thanks to the Professor& Director-Mr. S.SAI SIVA

RAMA KRISHNA Dept of management studies, Miss.V.REKHA lecturer & guide Sir

IDEAL COLLEGE, KAKINADA. For their kind encouragement, care and directing me

towards completion of my project .

I would like to express my sense of gratitude to MR.KANNAN AIYER

(UNIT HEAD FINANCE), Mr.A.APPAL RAJ for their valuable co-operation and

guidance during the training

J.SIVA RAMA KRISHNA


PREFACE

The project brought out is an attempt to know about FUNDS FLOW STATEMENT in

ITC LIMITED, BHADRACHALAM. For this purpose the entire study has been divided

into the following six chapters.

The first chapter deals with the Introduction, Industry profile.

The second chapter deals with the Need, Objectives, Methodology and Limitations

of the study.

The third chapter deals with the company profile of ITC LIMITED,

BHADRACHALAM.

The fourth chapter deals with the Theoretical frame work of the study.

The fifth chapter deals with the Data Analysis.

The sixth chapter deals with the Findings, suggestions and conclusion.

At the last has been placed.


CONTENTSChapter-I

Introduction Industry Profile

Chapter-II Need of the Study Objectives Scope of the Study Limitations Methodology

Chapter-III Company Profile

Chapter-IV Theoretical Frame work

Chapter-V Data Analysis

Chapter-VI Findings Suggestions & Conclusion

Bibliography Annexure


CHAPTER-1

INTRODUCTION

INDUSTRY PROFILE


INTRODUCTION

Financial management is that managerial activity ,which is concerned with the

planning and controlling of the firm’s financial resourses.The financial management

studies about the process of procuring and optimum utilization of financial resourses with a

view to maximize the value of the firm there by the value of the owners i.e,.equity

shareholders.

Finance is life blood of any business and holds the key to all the business as well

as’human activities’.The government also treats as a sign and healthy indicator to control

and measure its steps.Finance plays the role in every economic situation where there is a

present or future payment of money.

FINANCE AND OTHER MANAGERIAL FUNCTIONS:

There exists an inseperable relationship between finance on the one hand

and production,marketing and other functions on almost all kinds of business

activities,directly or indirectly involve the acquisition and the use of funds .Finance

functions call of skillful planning,control and execution of a firm’s activities .Thus ,while

performing the finance manager should strive to maximize the market value of share.

DECISIONS UNDER FINANCE FUNCTION INCLUDES:

Investment Decisions

Finance Decisions

Dividend Decisions

Liquidity Decisions


FUNDS FLOW STATEMENT

The Funds Flow Statement reports the flow of funds through the firm during the

year i.e., it shows the sources and uses of working capital between two Balance sheet dates.

The FFS attempts to explain the change in financial position from one Balance

sheet to the subsequent Balance sheet in terms of the change in the funds or the working

capital position of the firm so, the FFS is a historical record, a post mortem. Of where the

funds dame from and how these were utilized during the year. In order to prepare a FFS,

therefore, the understanding of the concept of working capital and its flows i.e., its sources

and applications is necessary.

The term working capital (WC) is generally defined as the excess of total current

assets over the total current liabilities

The current assets of a firm may include cash in hand and at bank, stock, debtors,

bills, advances etc, and the current liabilities (CL) includes creditors, bills payable, arts

standing expenses, provision for tax short term liabilities etc. The term WC is a single

figure representing the effect of all the CA and CL. A flow as WC occurs when a

transaction affects the WC


INDUSTRY PROFILE

Indian Paper Industry

Introduction On Paper Industry

The new millennium is going to be the millennium of the knowledge. So

demand for paper would go on increasing in times to come. In view of paper industry's

strategic role for the society and also for the overall industrial growth it is necessary that

the paper industry performs well.

Government has completely delicensed the paper industry with effect

from17th July, 1997. The entrepreneurs are now required to file an Industrial Entrepreneur

Memorandum with the Secretariat for Industrial Assistance for setting up a new paper mill

or substantial expansion of the existing mill in permissible locations.

The Paper industry is a priority sector for foreign collaboration and foreign

equity participation upto 100% receives automatic approval by Reserve Bank of India.

Several fiscal incentives have also been provided to the paper industry, particularly to those

mills which are based on non-conventional raw material.

Capacity, Production, Raw material and Import

There are, at present, about 515 units engaged in the manufacture of paper

and paperboards and newsprint in India. The country is almost self-sufficient in

manufacture of most varieties of paper and paperboards. Import, however, is confined only

to certain specialty papers. To meet part of its raw material needs the industry has to rely

on imported wood pulp and waste paper. Production of paper & paperboard during

the year 2002-03(upto December, 2002) is 24.52 lakhs tonnes. At present about 60.8 per

cent of the total production is based on non-wood raw material and 39.2 per cent based on

wood.


http://www.economywatch.com/business-and-economy/paper-industry.html





Performance of the industry has been constrained due to high cost of

production caused by inadequate availability and high cost of raw materials

, power cost and concentration of mills in one particular area.

Several policy measures have been initiated in recent years to remove the

bottlenecks of availability of raw materials and infrastructure development. To bridge the

gap of short supply of raw materials, duty on pulp and waste paper and wood logs/chips

have been reduced. The capacity utilization of the industry is low at 60%. About 194 paper

mills, particularly small mills, are sick and /or lying closed. Several policy measures have

been initiated in recent years.

Imports of paper and paper products was growing over the years.

However, it has increased during 2001-02 after a fall in 2000-01. About 1,40,000 tonnes of

paper was exported in 2000-01 mainly to the neighbouring countries.

India's per capita consumption of paper is around 4.00 kg, which is one of

the lowest in the world. With the expected increase in literacy rate and growth of the

economy, an increase in the per capita consumption of paper is expected.

Outlook

The demand for upstream market of paper products, like, tissue paper,

tea bags, filter paper, light weight online coated paper, medical grade coated paper, etc., is

growing up. These developments are expected to give fillip to the industry.






Indian paper industry needs the following for being globally more competitive.

i. Sustained availability of good quality of raw materials (forest based) and bulk

import of waste paper to supplement the availability of raw materials.

ii. Adequate modernization of the manufacturing assests.

iii. Improvement of the infrastructure.

iv. Quality improvements and reduction in cost of production

v. Import policy conducive for import of material, equipment, instruments, raw

materials & technologies which are bearing of the quality and environment.

Based on the recommendations made in the Report and in consultant with the industry

Associations, action plans are being finalized in consultation with other

Ministries/Departments concerned. The Main Action Points proposed are as under:

Infrastructure

Improvements of key ports, roads and railways and communication facilities which will

help the entire industrial sector including pulp & paper.

Raw Material

(i) For Wood Based industry

Revision of forest policy so that plantation can be raised by industry/Cooperatives of

farmers/State Government. Degraded forest land to be made available to the industry for

raising plantations.

(ii) For Waste Paper based Industry

Import of waste paper at minimum import duty. Introduction of ecolabeling system where

in products made from recycled fibre are rated higher than the products made form virgin

fibre. Introduction of modern and effective collection and grading system.


(iii) For Agro Based Industry

Funds to be made available for technology upgradation for handling & processing of agro

residue fibre, in small & medium scale industries.

1. DOMESTIC PAPER INDUSTRY (Excluding News Print):

The paper and paperboard demand for the year 2005-2006 was at 48.46

lakhs TPA, a growth of 6.4% over the previous year.

The segment wise growth (%) for the year 2005-2006 over 2004-2005 was as

follows:

Writing & printing paper 6%

Industrial paper 7%

- Duplex board 8%

Specialty paper 8%

Per capita consumption, as per CRIS INFAC estimates, for the year 2003-2004 was

4.5kg and for the year 2004-2005 was 4.7kg.



1. b) Effective capacity ( % ) size wise and region wise distribution:

The total working mills are estimated around 400 (total 551 mills) and the total

installed capacity of paper and paperboard was 54.97 lakhs TPA. (Total capacity 63.32

lakhs TPA). Further, the break up of effective capacity into agro-based, wood based and

waste paper based is as shown in the graph below.

Effective capacity (%) agro based, wood based and waste paper based:

Regional capacity Distribution:


1. c) State wise working capacity is as follows:

Paper & paperboard: state wise working capacity.

State No.of mills Working capacity% in total working capacity

Maharastra 73 1029 18.7Uttar Pradesh 83 919 16.7Gujarat 68 758 13.8Andhra Pradesh 20 513 9.3Tamil Nadu 32 423 7.7Punjab 35 360 6.5Orissa 9 299 5.4Karnataka 13 257 4.7West Bengal 16 169 3.1Madhya Pradesh 23 213 3.9Haryana 19 197 3.6Assam 1 200 3.6Bihar 6 16 0.3Himachal Pradesh 10 71 1.3Kerala 4 19 0.3Rajasthan 9 27 0.5Pondicherry 2 24 0.4Jammu & Kashmir 1 5 0.1Total 424 5497 100

compiled by CRIS INFAC

1. d) DUPLEX BOARD (PAPER BOARD)

The total demand for duplex boards including coated and uncoated in India was

7.36 lakhs TPA in the year 2005-06, as a growth of 7.9% over 2004-05 and expected to

increase to 10.02 lakhs TPA by 2010, a CAGR of 8%. An estimated capacity increased to

1.5 lakhs TPA is under implementation (does not include ITC limited (PSPD).


The major applications of duplex board are as under:

Pharmaceutical packaging 30%

Cigarettes packaging 15%

Match sticks packaging 13%

Housiery packaging 12%

Food packaging 10%

Liquids packaging 5%

Others packaging 15%

1. e) Raw materials

The bamboo royalty rate and the approximate landed cost in various states are as under.

(Rs/tonnes) Bamboo Landed cost

Andhra Pradesh 1100 2750-3100

Karnataka N.A 1760-2350

Madhya Pradesh 1100 N.A

Maharastra 650-750 N.A

Uttar Pradesh N.A 1900-2400

Assam 250 N.A

Total Geographical areas of India are 3.287 million sqkms of which dense forests will

account for 11.17% and the open forests account for 7.95%.

Large Indian paper mills: Energy efficiencies.


EFFICIENT MILL AVERAGE MILL DIFFERENCE

Thermal

(G.cal)

Electrical

(kwh)

Thermal

(G.cal)

Electrical

(kwh)

Thermal

(G.cal) (kwh)

Chipping 0 41 0 58 0 42

Pulping .98 230 1.65 256 68 11

Chemical

Recyclin

g

1.88 141 2.16 188 15 33

Stock

making

0 213 0 238 0 12

Paper

making

1.92 387 2.43 482 27 25

Total 4.78 1012 6.24 1222 110 123


1. g) Out look:

Domestic paper demand is forecasted at 6.5% CAGR for the period 2001-2006. The

higher growth is estimated in the copier paper (12%). The CAGR is duplex board coated

and uncoated is forecasted at 8%.

Paper: Demand supply forecast

(000) tones 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 2009-10 CAGR

Capacity(000tpa) 6400 6583 6697 6797 6947 7097 0.9

Production 4381 4806 5121 5355 5662 5952 6.3

Imports 277 180 180 240 295 395 7.4

Export 165 140 140 95 95 95 -2

Demand 4553 4846 5161 5500 5862 6252 6.5

Compounded annual growth rate for the 2003-04 to 08-09 period.

Paper:

Variety wise demand forecast


(000tonnes) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 CAGR

Writing &

printing paper

1239 1310 1386 1468 1555 1648 9.3

Cream wove 974 1018 1063 1111 1161 1214 4.5

Braced copies 59 66 74 83 93 104 12.0

Coated chrome

paper

86 95 104 115 126 139 10.0

Art paper 71 78 85 94 103 114 10

Art boards 49 54 59 65 72 79 10

Industrial paper 2499 2669 2852 3049 3261 3490 4.8

Kraft's 1300 1398 1503 1615 1737 1867 7.5

Duplex 682 736 795 859 928 1002 8

Grey & white

boards

223 240 260 280 303 327 8

MG poster(<

60gsm)

147 147 147 147 147 147 0

MG poster

(color)

147 147 147 147 147 147 0

Specialty 169 183 198 213 231 249 8

Total 3907 4161 4435 4731 5046 6252 7.3

Small size paper mill (installed capacity of less than 10,000TPA) would continue to benefit

due to the lower cost of production. This would improve their price competitiveness. Small

paper mills produce inferior quality paper and thus do not compete with large sized paper


mills and imported paper. Exemptions from excise duty and fusibility in operations would

enable these mills to continue operations and have the lower and in the market.

Duplex board:

During the period 2005-06 to 2009-10, growth in the demand for duplex

board is expected to be higher due to increase in the production of pharmaceuticals and

packaged foods. Growth in the demand for coated duplex board (chromo and lightweight

coated) is expected to be higher as compared to that of coated duplex board. Demand for

uncoated duplex board is likely to be restricted to the match box and cracker segment.

Demand for uncoated to decline, due to the increasing importance advertisement on

packaging. During the period 2005-06 to 08-09, demand in likely to shift from uncoated

paper to the l WC variety. In the next phase, l WC is likely to be replaced for superior

packaging board.

The customs duty on paper is expected to decline from 35% to 15-20%

during the period 2006-07to 2009-10 and the imports are expected to increase from the

year 08-09.

Paper: variety wise import forecast


(000tonne) 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 2009-10 2004 -05 2005 -06 CAGR

Writing &

printing paper33 40 5 45 45 75 95 130 7.9

Cream wove 0 1 5 0 0 0 0 0 0

Map litho 4 2 30 10 10 25 40 60 14.9

Coated

chrome paper0 0 10 10 10 15 20 25 20.1

Art paper 11 26 20 15 15 20 20 25 4.6

Art boards 18 12 20 10 10 15 15 20 0

Industrial

paper60 32 85 25 25 45 70 125 5.2

Kraft's 40 27 50 10 10 25 40 80 9.9

Duplex 20 5 30 10 10 15 25 40 5.9

Grey &

White boards0 0 5 5 5 5 5 5 0

Specialty 32 35 107 110 110 120 130 140 5.5

Total 125 107 277 180 180 240 295 395 6.2

PAPER INDUSTRY WORLD:


1. Paper & paper boards:

The total world paper production mill (6378 mill) inductive of new print was

estimated for the year 2005at 323.3 million, a growth of 2.6% over the previous year.

Production cost of the Brazilian mills are lowest in the world due to unfavourable

weather condition for growing hard wood fiber and significant pulp and paper

capacity expansive are expected in this region.

2. Pulp:


The total pulp production in the world was estimated at 188.68 million tones in

2000.

Pulp: world production

Million

tonnes

1975 1980 1985 1990 1995 1996 1997 1998 1999 2000

Europe 35 40 41 45 42 5 42 42 45 48

America 51 66 69 80 85 84 84 82 83 83

Asia 13 16 18 24 31 36 37 36 37 39

Australia 1.46 2 2 2 3 2 2 2 4 4

Latin

America

2.91 6 7 7 9 10 10 11 11 12

Africa .95 1 2 2 3 3 3 3 3 3

Total 105.9 131 162 162 174 178 178 176 181 189

Note: Decline in pulp production in 1998 could be attributed to a slowdown in demand from

Asia.

11d) I mpact of Internet on world demand:


Writing &printing

paper

US Western

EuropeJapan

Rest of the

World

Total

Uncoated

mechanical paper-0.37 -0.35 -0.11 -0.01 -0.84

Coated mechanical

paper-0.38 -0.39 -0.11 -0.02 -0.90

Uncoated wood free

paper-0.17 -0.02 -0.02 0.00 -0.17

Coated wood free

Paper-0.42 0.32 -0.12 -0.02 -0.24

News printer -1.40 -0.58 -0.31 -0.16 -2.45

Total -2.74 -0.987 -0.67 -0.21 -4.6

III) GENERAL:


iii a) New paper mill: project cost (2000-2001)

Waste based

Units

Wood based

Units

Capacity 33000 tonnes 55000 tonnes

Cost Rs 250million Rs 2221 million

Cost of plant &equipment 75% 75%

Debt on proportion of

debt & equity

67% 67%

Interest rate 17% 17%

Total interest

Cost per annum

Rs 28 million Rs 253 million

Depreciation rate 5.5% 5.5%

Total depreciation

Cost per annum

Rs10 million Rs 92 million

Total of interest&

depreciation

Rs 39 million Rs 345 million

Capacity utilization 80% 90%

Contribution per Tonnes Rs 2030 per tonne Rs 776 per tonne

Total gross contribution Rs 54 million Rs 384 million

Pretax profit/(loss) Rs 15 million Rs 40 million

iii b) The international input, norms are as under:


Paper: international input-output norms.

S.NO Particulars Units Inputs /tones

1 Water Kl 133

2 Sulphur Kg 16

3 Magnesium hydroxide Kg 20

4 Lime Kg 177

5 Salt cake Kg 33

6 Caustic soda Kg 29

7 Chlorine Kg 54

8 Starch Kg 53

9 Wood Cubic mtr 4

10 Fuel oil Liters 686

11 Fuel coal Kg 1000

12 Power Mj

Kwh

4752

1320

13 Talc Kg 28

14 Synthetic fillers Kg 11

15 Alum Kg 14

16 Clay Kg 66

17 Rosin Kg 6

18 Dye & pigments Kg 8

IV. NEWS PRINT:


The per capita consumption on newsprint in the country was 0.18 kgs in 2005-2006,

a growth of 5% compared previous year. The total demand for the newsprint was 8.15

lakhs TPA in 2005-06 (domestic production 4.65 lakhs TPA & import 3.69 lakhs TPA,

production 4.65 lakhs TPA) and the CAGR of production for the period 1990-91 to 2000-

01 to 2009-2010 is estimated at 2.5%.

Newspaper demand-supply forecast:

(oooTonnes) 2005-06 2006-07 2007-08 2008-09 2009-10 CAGR

Installed

capacity

939 954 964 964 964 0.8

Capacity

utilization

50 50 51 52 53 0

Production 465 477 489 501 514 2.5

Imports 369 387 407 427 449 4.5

Demand 815 852 890 930 972 4.5


CHAPTER-2

SCOPE OF THE STUDY

NEED OF THE STUDY

OBJECTIVES

METHODOLOGY

LIMITATIONS

Scope of the study


It should be remembered that a funds flow statement is not a substitute of income

statement or a balance sheet. It provides only some additional information as

regards changes in working capital.

It cannot reveal continuous changes.

It is not original statement but simply a re-arrangements data given in the financial

statement.

It is essential historic in nature and projected funds flow statement cannot be

prepared much accuracy.

Changes in cash are more important and relevant for financial management

working capital.

NEED OF THE STUDY


The statement of changes in financial position (SCFP) is a statement of flows

i.e., it measures the changes that have taken place in the financial position of a firm

between two balance sheet dates. It summaries the sources from which funds have been

obtained and the use to which they have been applied as a statement of sources and the

uses of funds drawing on the information contained in the basic financial statement. It

shows the sources of funds and application of funds during the period. The changes in

financial position could be related to several different concepts of funds. The two most

common usages of the term funds are cash and working capital viewed in this sense, the

SCFP would explain the changes in cash or working capital. Accordingly, we have two

statements i.e., statement of changes in cash (popularly called cash flow statements)

and statement of changes in working capital (popularly known as an application and

uses statements of funds flow statement).

The presentation and use of the statement of changes in financial position

involving:

1. changes in the firm’s working capital positions.

2. changes in the firm’s cash positions.

3. changes in the firm’s total financial resources.

OBJECTIVES


To know the techniques adopted by the organization, while investing a capital on

a particular project.

To find out the financial stability of the firm.

To know how effective the company is using its resources.

To analyze the funds and its applications how the sources are collected where they

are financed & how they are best utilized

To prepare the funds flow statement with the help of changes in working capital.

To restrict the capital expenditure on projects within authorized limits.

METHODOLOGY


The present study is an exclusive study on ITC BHADRACHALAM to

meet the formulation objectives. The collection of data or information is done through two

principle sources.

1. PRIMARY DATA : Primary data which is directly obtained by through discussing with the

departmental heads and the employees etc,. The primary data are those, which consists of

the data acquired through schedules and interviews.

2. SECONDARY DATA: The secondary data, on the other hand, are those, which have already,

been passed through the statistical process.

The data collected from books, magazines, journal, newspaper, company Annual report,and

other published sources.

LIMITATIONS OF STUDY


1. Time has been limiting factor since that duration of the study that two months were not

sufficient to study & obtain detailed information.

2. Confidentiality of information is also a limiting factor

3 The study in conducted in a short. During this period the study may not be detailed in

all aspects.

4. Financial management does not take in to account the price level change.


CHAPTER-3

COMPANY PROFILE

About ITC Ltd Paper & Specialty Paper Division


The Paper Boards & Specialty paper Divisions came into existence in November 2002

with the amalgamation of ITC Bhadrachalam Paper Boards Ltd. The New Company was set up

as integrated paper board manufacturing facility and commenced operations at Bhadrachalam in

Andhra Pradesh, 300 Km east of Hyderabad. The Bhadrachalam mill today produces 2,10,000

TPY of papers & boards and it the largest single location mill in India. The mill is focused on

producing paper boards for packaging and graphic segments and product range includes cyber

XLpac (folding box boards), Pearl/Saphire Graphic/ (Solid bleached boards high value boards a

part from the Ecoviron range of recycled boards. The mill also makes liquid packaging boards

for Tetrapak in India.

With the commissioning of the new fibre line in September, 2007 the Bhadrachalam mill

have a Elemental Chlorine free pulp capacity of 2,40,000 TPY. Th Bhadrachalam location today

has three board machines and two smaller paper machines. A new paper machine of 90,000

tonnes per year capacity is scheduled for commissioning in April ’08. This line will have the

capability to make both uncoated and coated wood free and communication papers. The unit is

ISO 9002 : 2000 series accredited. The unit is also ISO 14001 certified for Environment

management system.

The tribeni Tissues unit has a hoary history and traces its founting to British American

Tobacco and commenced operations in 1949 manufacturing papers for the cigarette industry.

Between 1961 & 1988 Tribeni was part of the wiggins Teape co. of UK. It merged with ITC Ltd.

In 1992 modernised the mill with an investment of USD 35 million and refurbished two of the

paper machines with latest drives and electronic controls.

The tribeni mill has a capacity of 33,000 TPY and has expanded its product range

beyond cigarette tissues to fine papers, packaging paper and specialties the unit now has three


paper machines making a stunningly diverse range of cigarette Tissues and components,

Laminating Base Tissue. Acid-Free and Antrirust tissues, Low Grammage printing papers, Décor

papers to Insulation Grade Medical Grade Papers. The unit is ISO 9001 : 2000 version and ISO

14001 accradited.

The third manufacturing location at Bollarum near Hyderabad produces 5000 TPY

of cost coated papers and Boards, 10,000 TPY of poly extrusion coated boards and 10,000 TPY

of C2S art boards any Ivory cards. The Unit is ISO 9001:2000 series accredited.

The division is the market leader in south Asia in Carton boards and ranks second

in turnover with in the Indian paper industry. ITC provide paper boards for most leading fast

moving consumer goods brands in India. ITC is the largest exporter of coated boards form India.

About 20 years of ITC sales supplied to the international markets in Malaysia, Srilanka,

Bangladesh, Iran, Australia, UAE, Turkey, china, Singpore, UK, Greece, Germany and USA.

The Paper board facility at coimbatore was acquired from BILT industries packing

company in March 2004. The mill is located at Thekkampati Village near Mettupalayam in

coimbatore Dist of Tamilnadu. The commercial production management began on 29 th March

2004.

The mill at present has single board machine with a capacity of 90,000 TPY. The

main products are coated duplex boards a Grey back and white back made with 100% recycled

fibre. The board machine was 3-wire fourdrinier section, MGclyliner, size press and three


coaters. A siemens DCs system and measurex QCS system ensures that machine can delivery

high quality recycle boards for demanding print and converting applications.

A modern finishing house ansures the delivery of rolls and sheets, with short

turnaround and times. The fibre supply to the Board machine was supplemented with a deinking

line in early 2006. A lamination line has been added at the unit to produce composite solid

boards in high calipers for the publishing display and package.

ECO naturo and Eco naturo-HS are the two grades of coated Duplex Grey Back

board made from this unit. For almost the first time in India a customer has the option to buy

higher bulk and of Grey back Board (GD2 grade) for his Cason requirements.,

The unit has made rapid strides in becoming a word-class producer and has

achieved ISO 9001, ISO 14001 and OHSAS 18001 Certifications.,

The product range, true to ITC’s innovative streak, has been enlarged by developing

cone boards for textiles cones and grey boards for book binding boards.

Addition of power block and deinking facility will increase the competitiveness of

the unit, with potential to make 2,00,000 TPA of Recycled Boards for Indian and export markets.


Vision

To be a Valued Player in the Global Paperboard & Paper Industry by

Leadership in quality – Products, Processes, Service & People.

Continuous enhancement of value for all stakeholders, and

Upholding societal values and expectations

Mission

To manufacture and market 500,000 TPY of premium coated paperboards &

specialty papers by the year 2005.

To be a customer-driven company with strong focus on:

o Customer's needs & total satisfaction

Continuous product innovation to develop new paperboard packaging solutions

Awards won by ITC – PSPD (Badrachalam Unit)

Paper mill of the year by Indian paper manufactures association in the year 2005-06


National award for excellence in energy management best innovative project award

and national award for excellence in water management.

The Greentech environment excellence gold award in 2006.

National award for energy conservation in 2005.

Certification of appreciation award for excellence in energy management 2006 by

CII Hyderabad.

CERTIFICATION:

ISO 9002(2000): Unit Bhadrachalam - Assurance for Quality Management Systems

certified by DNV, The Netherlands. We are in the process of getting the accreditation for

ISO 9001(2000)

ISO 14001(1996): Unit Bhadrachalam – Environment Healthy and Safety systems

certified by DNV (Det Norske Veritas), The Netherlands.

In particular, it is ITC's EHS policy:

To contribute to sustainable development through the establishment and implementation of

environment standards that are scientifically tested and meet the requirement of relevant

laws, regulations and codes of practice.


To take account of environment, occupational health and safety in planning and decision-

making.

To provide appropriate training and disseminate information to enable all employees to

accept individual responsibility for environment, health and safety, implement best practices,

and work in partnership to create a culture of continuous improvement.

To instil a sense of duty in every employee towards personal safety, as well as that of others

who may be affected by the employee's actions.

To provide and maintain facilities, equipment, operations and working conditions which are

safe for employees, visitors and contractors at the Company's premises.

To ensure safe handling, storage, use and disposal of all substances and materials that are

classified as hazardous to health and environment.

To reduce waste, conserve energy, and promote recycling of materials wherever possible.

To institute and implement a system of regular EHS audit in order to assure compliance with

laid down policy, benchmarked standards, and requirements of laws, regulations and

applicable codes of practice.

To proactively share information with business partners towards inculcating world-class EHS

standards across the value chain of which ITC is a part.

All employees of ITC are expected to adhere to and comply with the EHS Policy and

Corporate Standards on EHS. ITC's EHS Policy extends to all sites of the Company. It will be

the overall responsibility of the Divisional/SBU Chief Executives, through the members of their

Divisional Management Committees, General Managers and Unit Heads, to ensure

implementation of this Policy and Corporate Standards on EHS, including formation of various


committees and designating individuals for specific responsibilities in respect of their

Division/SBU.

The Corporate EHS Department is responsible for reviewing and updating

Corporate Standards on EHS, and for providing guidance and support to all concerned.

Quality Policy:

“ ITC PSPD commit to consistently meet our customers' quality expectations of product

and service at competitive cost in an environment fostering continuous improvement of products,

processes, safety and hygiene. ”

INNOVATION OF PAPER

Paper is a unique product used for communicating strong and transporting messages. The

credit of innovating paper goes to “TSAI-LUN” A resident of china in 105 AD.


He soaked “bark of trees hemp waste” all contained cellulose for “someone” to tenderize

them. He then macerated them by beating them under a motar into individual fiber, unitl they

were fabricated and swollen due to this action. He dispersed them further into diluted suspension

& formed a thin flat sheet of fibrous material by staining that material through a screen held in a

frame of “mold”

The tender sheet was then transferred to wool felt and pressed to higher consistency the

wt web was dried under the sun the sheet was then polished flat and smooth with stones to give

the suitable material for writing. Even after many countries the same techniques are used. But the

only difference is modernization of the production process.

The Paper making techniques was brought into India by Arabs who acquired it form the

chine prisoners. The local paper makers were termed as “kagazis” William carey is credited with

the mechanization of production process of papers in India, he was success in this experiment by

the co-ordination of the local “Kagazis” in today’s world the basic paper & board making

process right from the raw material to the product paper can be represented in a simplified form

as.

PAPER MANURACTURING SYSTEM


Products (Badrachalam Unit)

ITC is the largest manufacturer of packaging and graphic boards in south Asia

accompanied by diverse range of speciality papers & Boards fulfilling a variety of needs.


PAPER MAKING CYCLE

RAW MATERIAL PROCUREMENT

SIZE REDUCTIONDIGESTION (COOKING)

WASHINGBLEACHING

STOCK PREPARATION SHAPING THE FLOW GRAVITY AND SUCTION DRAINAGE

PRESSINGDRYINGCALENDARING

PRODUCT

The band width of products has increased continuously and moved up on the value. Quality

scale and today represents one of the preferred set of choices for any discerning global

customer. Seeking a more effective medium to present pack and protest content or products

in a world overloaded with message.

ITC- Pspd (Badrachalam) have a 6 machines. These machines are producing

different types of papers.

In these machines one machines was newly installed.

The following types of papers of each machine producing in ITC-pspd (Badrachalam)

Machine- I

Absorbent kraft,

I L Fached Kraft line

Deluxe kraft paper

Deluxe kraft paper (Special)

Folding B.Board special

Duplex Board

Liner Board

Single coated grey back

White duplex Board (coated)

Coated match

Machine- II


Alfa plus

Hi brite Paper CPM shade

Hi Brite Paper Hi bulk

Hi strength cost coating base

Hi Brite paper

SS Maplitho (T) cb

SS Maplitho (NS)

SS ml mcb

Writing, printing stocks.

Machine –III

Mg poster paper.

Machine –IV

Art Naestrd Base

Carte Perona Base

Coated FBBD stocks

Cyber XL PAC coated

Cyber XL pak

CLC Triplex Board

Coated Cypalc

LP Board

MG Triplex Board

Pearl Graphic


Pearl Graphic Uncoated

Pearl XL pac

Safire XL Pac

Sbs base board uncoated

Safire cote

Sbs board Tr,

Triplex board, uncoated caste Lcemina.

Machine –V

Carte persona Base

Elc triplex Board

Coated Board white Back

Coated FBBD stocks

Coated Folding Box Boards

Coated Gravure Board

Cyber Propac

Cyber XL Pac

Cyber XL Pac uncoated

Coated Board (Gb)

Laminating Base Board (white Black)

MG triplex Board

Pearl graphic

Pearl XL pac

SBS base Board uncoated

Single coated grey back


Sbs board TV

Unconventional coated board (GB)

White DX board super white Back.

Production (in matric Tonnes)

2004-05 2005-06 2006-07 2007-08

Machine –I 62,658 59,621 67,492 66,397

Machine –II 26,421 25,250 25,262 23,431

Machine –III 6,121 6,718 6,923 6,449

Machine –IV 1,34,650 1,32,921 1,33,629 1,49,768

Machine –V 26,212 76,813 87,740 93,126

Total Production 2,56,061 3,01,321 3,21,046 3,39,192


production

0

50000

100000

150000

200000

250000

300000

350000

400000

2004-05 2005-06 2006-07 2007-08

production

PROFILE

ITC is one of India’s foremost private sector companies with a market capitalization of

nearly US$ 18 billion and a turn over US 4.75 billion .ITC is rated among the worlds best big

companies,Asias fab 50 and the worlds most reputable companies by Forbes magazine among

India’s most respected companies by business world and among India’s most valuable

companies by business Today.ITC a also ranks among India’s top 10 most valuable brands in

study conducted by brand finance and published by the Economics Times.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,

Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded

Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an

outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards,

Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of

Packaged Foods & Confectionery, Branded Apparel and Stationery.


As one of India's most valuable and respected corporations, ITC is widely perceived to be

dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a

commitment beyond the market". In his own words: "ITC believes that its aspiration to create

enduring value for the nation provides the motive force to sustain growing shareholder value.

ITC practices this philosophy by not only driving each of its businesses towards international

competitiveness but by also consciously contributing to enhancing the competitiveness of the

large chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating multiple

drivers of growth anchored on its time-tested core competencies: unmatched

distribution reach, superior brand-building capabilities, effective supply chain

management and acknowledged service skills in hoteliering. Over time, the strategic forays into

new businesses are expected to garner a significant share of these emerging high-growth markets

in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the

country's biggest foreign exchange earners (US $ 2.8 billion in the last decade). The Company's

'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by

empowering Indian farmers through the power of the Internet. This transformational strategy,

which has already become the subject matter of a case study at Harvard Business School, is

expected to progressively create for ITC a huge rural distribution infrastructure, significantly

enhancing the Company's marketing reach. ITC's wholly owned Information Technology

subsidiary, ITC Infotech India Limited, is aggressively pursuing emerging opportunities in

providing end-to-end IT solutions, including e-enabled services and businessprocessoutsourcing.


ITC's production facilities and hotels have won numerous national and international awards for

quality, productivity, safety and environment management systems. ITC was the first company

in India to voluntarily seek a corporate governance rating.

ITC employs over 21,000 people at more than 60 locations across India. The Company

continuously endeavors to enhance its wealth generating capabilities in a globalising

environment to consistently reward more than 3,72,000 shareholders, fulfill the aspirations of its

stakeholders and meet societal expectations. This over-arching vision of the company is

expressively captured in its corporate positioning statement: "Enduring Value. For the nation.For

the Shareholder."

ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco

Company of India Limited'. Its beginnings were humble. A leased office on Radha Bazar Lane,

Kolkata, was the centre of the Company's existence. The Company celebrated its 16th birthday

on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed

J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic

in more ways than one. It was to mark the beginning of a long and eventful journey into India's

future. The Company's headquarter building, 'Virginia House', which came up on that plot of

land two years later, would go on to become one of Kolkata's most venerated landmarks. The

Company's ownership progressively Indianised, and the name of the Company was changed to

I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a

wide range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging,

Paperboards & Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting

& Stationery - the full stops in the Company's name were removed effective September 18, 2001.

The Company now stands rechristened 'ITC Limited'.


http://www.itcportal.com/the_itc_profile/ads/ad.htm

Though the first six decades of the Company's existence were primarily devoted to

the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies

witnessed the beginnings of a corporate transformation that would usher in momentous changes

in the life of the Company.

ITC's Packaging & Printing Business was set up in 1925 as a strategic backward

integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house.

In 1975 the Company launched its Hotels business with the acquisition of a hotel in

Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry

into the hotels business was rooted in the concept of creating value for the nation. ITC chose the

hotels business for its potential to earn high levels of foreign exchange, create tourism

infrastructure and generate large scale direct and indirect employment. Since then ITC's Hotels

business has grown to occupy a position of leadership, with over 70 owned and managed

properties spread across India.

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam

Paperboards Limited, which today has become the market leader in India. Bhadrachalam

Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of

the Company, Bhadrachalam Paperboards Division. In November 2002, thisdivision merged

with the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers

Division.

ITC's paperboards' technology, productivity, quality and manufacturing processes

are comparable to the best in the world. It has also made an immense contribution to the

development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It is

directly involved in education, environmental protection and community development. In 2004,


ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd

(BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve customer

service with reduced lead time and a wider product range.

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint

venture. Since inception, its shares have been held by ITC, British American Tobacco and

various independent shareholders in Nepal. In August 2002, Surya Tobacco became a subsidiary

of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal).

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing

company and a major supplier of tissue paper to the cigarette industry. The merged entity was

named the Tribeni Tissues Division (TTD).

To harness strategic and operational synergies, TTD was merged with the

Bhadrachalam Paperboards Division to form the Paperboards & Specialty Papers Division in

November 2002.

Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri

Business Division for export of agri-commodities. The Division is today one of India's largest

exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000 with

soya farmers in Madhya Pradesh. Now it extends to 9 states covering over 4 million farmers.

ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004 at Sehore. On

the rural retail front, 24 'Choupal Saagars' are now operatonal in the 3 states of Madhya Pradesh,

Maharashtra and Uttar Pradesh.


In 2000, ITC launched a line of high quality greeting cards under the brand name

'Expressions'. In 2002, the product range was enlarged with the introduction of Gift wrappers,

Autograph books and Slam books. In the same year, ITC also launched 'Expressions

Matrubhasha', a vernacular range of greeting cards in eight languages and 'Expressions

Paperkraft', a range of premium stationery products. In 2003, the company rolled out 'Classmate',

a range of notebooks in the school stationery segment.

ITC also entered the Lifestyle Retailing business with the Wills Sport range of

international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of

exclusive stores later expanded its range to include Wills Classic formal wear (2002) andWills

Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its men's

wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the country's

most premier fashion event - Wills Lifestyle India Fashion Week - that has gained recognition

from buyers and retailers as the single largest B-2-B platform for the Fashion Design industry.

To mark the occasion, ITC launched a special 'Celebration Series', taking the event

forward to consumers. In 2007, the Company introduced 'Miss Players'- a fashion brand in the

popular segment for the young woman.

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire

value chain found yet another expression in the Safety Matches initiative. ITC now markets

popular safety matches brands like iKno, Mang, Mangaldeep, VaxLit, Delite and Aim.ITC's

foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its

partnership with the cottage sector. ITC's popular agarbattis brands include Spriha and

Mangaldeep across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur,

Sambrani and Nagchampa.


ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body

care products for men and women in July 2005. Inizio, the signature range under Essenza Di

Wills provides a comprehensive grooming regimen with distinct lines for men (Inizio Homme)

and women (Inizio Femme). Continuing with its tradition of bringing world class products to

Indian consumers.

The Company launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels

and Soaps in September, October and December 2007 respectively. The Company also launched

the 'Superia' range of Soaps and Shampoos in the mass-market segment at select markets in

October 2007 and Vivel De WIlls & Vivel range of soaps in February 2008.


Another important division of ITC is INFOTECH

ITC INFOTECH

ITC InfoTech a fully owned subsidiary of ITC limited is one of the fastest growing India based

global IT and it enabled services companies.

Located in picture sque 35 acres campus in the heart of Bangalore city, itc InfoTech , through

its wholly owned subsidiaries in the UK AND USA provides our sources IT solutions and services to

leading global customers in North America and Europe apart from servicing the ITC-group in India.

It offers IT and business process out sourcing services and delivers business friendly solutions across

four key verticals.

Business financial services and insurance

Consumer package goods and retail

Manufacturing

Travel hospitality and transportation .


MILESTONES

2000 ITC InfoTech was born with and SEI CMM level 5 certification and wholly

owned subsidiary in USA&UK.

2001 Established sets of the art training centre prototyping and r&d labs at its 35-

acreheadquarters in Bangalore.

2002 Set up a dedicated off shore development.

2003 Forged US $60million exclusive partnership with the worlds leading plm redact

company.

2004 Forrester and routine ranked itc InfoTech as a leading services provider for out

sourcing expertise in PLM&CRM.

2005 Entered into a strategic alliance with SAP, the world leader in business software

solutions.

2006 Singed multimillion dollar contracts.

2007 Ranked amongst top 10 spatiality application development providers by global

serviced featured in the global serviced 100 listing three years in row. Also many in the

leader’s category for the 2007. global outsourcing 100 by the international

association of out souring professional.


Awards own by ITC

Five star rating award by British safety council UK for PSPDunit Tribune & Bellarm.

Greenstick environment excellence gold award 2006 in paper sector.

Business person of the year 2006 by UK trade to chair man Y.C.Dineswa.

National award for excellence in corporate governance in2006.

Outstanding exporter of the year award in agriculture, food&FMCG category at

the CNBC- tv18 international trade awards 06-07.

The front runner award 2007 for wills life style in the retail category.

The most admired fashion campaign 2006 for John players’


CERTIFICATIONS :

ITC units are encouraged to seek international certification for global bench marking some of the

important ones are:

ISO14001 : Environment management systems.

All Manufacturing units and all major hotels of ITC are certified. The

corporate EHS department and ITC group research and development centre,

Bangalore, were certified in 2004-05.

OHSAS 18001: Occupational health &safety management systems

All ITC Manufacturing units and corporate EHS department are certified.

The Kovai paper boards unit was the latest to be certified.

SA8000 : Social accountability.

Leaf processing plans at Cherala and Anaparthi and Cigarette factory at

Kolkatta are certified.

HACCP : Food safety.


CHAPTER-4

THEORITICAL FRAME WORK


MEANING OF FUNDS:

The term “FUND” has a variety of meanings. There are people who take it

synonymous to cash and to them there is no difference between a Funds Flow Statement

and a cash Flow Statement. While others include marketable securities besides cash in the

definition of the term Funds. The International Accounting Standard No. 7 on statement of

changes in financial position also recognizes the absence of single, generally accepted

definition of term. According to the standard, “The term fund refers to cash and cash

equivalents or to working capital”.

These statements can be classified into four :

Income statement

Funds Flow Statement

Statement of Changes in Financial Position

Cash Flow Statements

1. INCOME STATEMENT

As already indicated in an earlier chapter as an income statement measures the inflow

of assets resulting from rendering of goods or service customers over a period of time.

2. FUNDS FLOW STATEMENT

This statement measures the inflows and the outflows of working capital that result

from any type of business activity.


3. STATEMENT OF CHANGES IN FINANCIAL POSITION

This statement has a wider meaning than funds flow statement. It measures changes

both in working capital and non–working capital.

4. CASH FLOW STATEMENTS

The statement measures inflows and the outflows of cash on account of type of

business activity.

CURRENT ASSETS:

The term Current Assets” includes cash and other asserts that are expect to

to be converted into cash or consumed in production of goods or rendering of services in

the normal course of business. However, the best definitions of the term “ Current Assets”

has been given by gray in the following words. For accounting purpose, the term “Current

Assets” is used to designate cash and other assts or resources commonly identified as those,

which are reasonable, expected to be realized in cash or sold consumed during the normal

Operating cycle of the business.

The Broad categories of “Current Assets “ are:

Cash including fixed deposits with banks

Accounts receivable, Trade debts and bills receivable.

Inventory stock of raw material, work- in –progress, finished goods, stores

and spare parts.


Advances recoverable the advances given to suppliers of goods and

services or deposit with government or other public authorities, custom,

part authorities, advance income tax.

Pre-paid expenses, cost of unexplored services, insurance premium paid in

advance.

CURRENT LIABILITIES:

The term “Current Liabilities” is used principally to designated such obligation

whose liquidation is reasonable expected to require the use of assets classified as current

assets in the same balance sheet or the creation of other current liabilities or those expected

to be satisfied with in a relatively short period of time usually one year. However, this

concept of current liabilities as all obligation that will require with in the coming year of

the operating cycle which ever is longer.

The use does existing current assets

The creation of the current liabilities. In other words, the more fact that an amount

is due with in a year does not make it a current liabilities. For example, debenture due for

redemption with in a year of the balance sheet date will not be taken as a current liabilities

of they are to be paid out of the proceeds realized on account of Sale of debentures

redemption fund investments.

The term current liabilities also includes amounts sea part or provided for any

know liability or which the amount can’t be determined with substantial accuracy called

provision rather than liabilities.


The Broad Categories of “Current Liabilities” are:

Accounts payable, bills payable and trade creditors.

Outstanding expenses, expenses for with services have been received by

the payment have not been made.

Bank overdrafts.

Short-Term loans, loans from banks which are payable with in one year

from the date of balance sheet.

Advance payments received by the business for the services to be rendered

or goods to be supplies in future.

Current majorities of long-time loans, long-term debts due with in a year of

those loans. Provided payable out of existing current assets or by creation

of current liabilities as discussed earlier. However , installment of long-

term loans due after a year should be taken as non-current liabilities.

NON CURRENT ASSETS :

All assets other than current assets come with in the categories of non-current

assets. Such assets include goodwill, land and building, plant and machinery, furniture,

long-time investments , patent rights trade marks, debit balances of the profit and loss

account, discount on issue of shares and debentures, preliminary expenses etc.,

NON-CURRENT LIABILITIES:

All liabilities other than current liabilities come with in the category of non-

current liabilities. They include share capital, long term loans, debentures and share

premium, credit balances of the profit and loss account, revenue and capital reserves.


IMPORTANCE OF FUNDS FLOW STATEMENT:

Funds flow analysis is an invaluable analytical tool for a financial manager or

a creditor for evaluation of the employment of funds by a firm and in determining the

sources for such funds. In addition to studying past flow by means of funds-statement

based upon forecasts. Such a statements provides an efficient method to the financial

manager to asses the growth of the firm and it results in the financial needs, and to

determined the best way to those need. In particular, funds flow analysis is vary useful

in planning intermediate and long term financing.

The traditional package of final accounts and statements through very

significant statements as such a limited role to play in financial analysis. The balance

sheet is a statement of assets and liabilities on particular date. Similarly the income

statement will show in more detail only the profit or loss, change in owners equity

arising during accounting period as result of the productive and commercial activities in

that period. The main criticism against the balance sheet is that it is merely a static

statement. In order to as creation such major financial transactions or movement of

financial resources of funds, the balance sheet of two periods shown in a separate

statement. The statement is a variously known a “Funds Flow statements” . “Statement

of sources and application of funds” “Where got and Where gone statement” or simply

“ Funds statements “.


CONCEPT OF FUNDS:

Some defined the term funds as cash and they concern themselves only with

movements in cash accounts the statements showing the changes in cash balance is termed

as cash flow statement. This is very narrow definition. Tough a record of cash inflows and

cash outflows is valuable in it’s own way, it would however fall to throw light on many

important changes involving the disposition of resources. At the other end there are those

who view funds in broader since as all assets to which the firms resources stand committed

and all liabilities from where these resources are obtain. Net working capital denotes excess

of current assets over current liabilities. The term “Working Capital “ if considered the

most appropriate expression since the wealth of the enterprise continuously revolving

throughout the various current assets is supplemented by current liabilities.

To conclude, funds may be defined in different ways, depending up on the

purpose of the analysis. Other definitions are possible, although the purpose the three

described about are the most common by far viz.,

a) Funds mean cash.

b) Funds mean net working capital.

c) Funds mean all financial resources.

In the chapter, the term “Funds” has been used to mean net working capital.


CONCEPT OF FLOW:

The term “flow” refers to change or transfer and therefore the flow of funds means

transfer of economic values from one asset to another form, one liability to another form

one asset to a liability of vice versa, or a combination of these. But as per the working

capital concept of the funds, it means changes in working capital any increase or decrease

in working capital. The change in funds occur when changes occurring in non current

assets and in non current liabilities. If any transaction results increase of funds, it will be

considered as a “source of funds”, for example, issue of shares for cash will be taken as a

“source of funds”, as it will increase the cash(working capital). Similarly, a transaction, if it

results in decrease of funds, will be treated as and application of funds, as it will be reduced

the cash. Transactions that do not affect the working capital items would be treated as non

fund transactions. And be excluded from funds flow analysis. For example, purchase of

machinery by issuing shares in a non fund transactions.

PRINCIPAL SOURCES OF FUNDS:

Issue of share and debentures.

Long and medium-borrowings.

Sale of fixed assets and long term investments.

Funds from operation and trading income.

Non-trading income such as income from investment, gifts damage awarded in

legal action etc,.


POSSIBLE USES OF FUNDS :

Though there not numerous applications of funds, the main categories are as

follows:

Redemption of share debentures

Repayment of long and medium term loans.

Purchase of fixed assets and long term-investments.

Funds lost in operations or trading losses.

Non-trading losses such as loss of cash by embezzlement fines ete,

CONCEPT OF FUNDS FLOW STATEMENT:

Funds flow statement is a summary from that indicates changes in items of

financial position between two different balance sheet dates showing clearly the different

sources and application of funds. The major purpose of the funds statements is to provide a

detailed presentation to the results of financial management as distinguished from operating

management. It summarizes the financing and investing activities of the enterprises. The

statements shows directly information that readers of the financial reports could other wise

obtained only by making an finance and interpretation of published balance sheets and

statement of income and retained earnings.


Balance sheet are statements of financial position. Where as funds statement

are obviously statement of “Changes “ in financial position. Balance sheets show the status

on a day. In contrast, funds statement income statement and statement of retained earning

over period of time they provided the explanation of why the balance sheet items have

changed. The conventional financial statement shows mostly the position of accounting,

rather than the financial condition of the business in terms of flow of funds. However, since

all financial events are reflected in the conventional statements, it becomes easy to unearth

unusual trends and promotion by the use of analytical methods like the funds flow

statement.

USES OF FUNDS FLOW STATEMENT:

By highlighting the change in the distribution of the resources of an undertaking

the Funds flow statement enables the financial manager to have a clear prospective of the

organization financial strength and weakness. it provides answers to a number of different

questions. The uses of a funds flow statement may be listed as follows.

First, it explains the financial consequences of business of operation. For example,

a business may be earnings use profits but it’s liquidity positions would be highly

unsatisfactory. The funds flow statement will explain the causes of such a seemingly in

recognizable situation by showing what as become flow of funds to activities considered

more beneficial for the efficient working of the enterprise and which is vary essential for

the effective managerial control. When balance sheet presents distorted picture of an

understanding because of a number of non-fund transaction the fund statement would be an

illuminating document.

Secondly, debt capital is very essential for increase profitability to any

enterprise. but the creditor or lender asks the financial manager a number of question in


order to ascertain the credit worthiness and the funds generating capacity of the

organization. Also they would like to know in what way the management has utilized.

The funds in the past and how the funds would be utilized in future. The funds

flow statement by providing the required the information of dues would enables the

financial manager to answer such in a benefit manner.

Thirdly, it acts has an instrument for allocation of the companies secure resources. A

proposal funds flow statement will help to find out how the management is going to

allocate resources for meeting the future productive programs of the business. When a

predicated statement is tied to the capital budget, it will help manager to maintain the

financial health of the organization. Further problems faced by the firm do not arise all of a

sudden. They take time to reach a critical stage and are affected by

a number of factors. A protected funds flow statements by providing a perspective for

considering the financial implication of evolving issues would help management to reserve

a un favorite trend.

Lastly, it is test for evaluation of the effectiveness use of working capital of

management. Information on the adequacy of working capital will enable the management

to decide what possible steps it’s should take for effective use of surplus working capital

or in case of in adequate working capital to make suitable arrangements.


LIMITATIONS OF THE FUNDS FLOW STATEMENTS :

Despite it’s multiple managerial uses, the funds flow statements suffers from certain

limitations:

a) As this statement ignores non-fund items, becomes a crud device compare to

the income statement and balance sheet.

b) The statement does not reveal shifts among the items making up the current

assets and current liabilities. It does not tell weather any loss of working

capital has un duly we can the financial position. Only an examination of the

balance sheet at the end of the period will show the under effect of the

changes .therefore the funds flow statement can’t supplant but only

supplement conventional financial statement either in whole or in part.

c) The information used for the preparation of the funds flow statement is

essential historical in nature though attempts are made to protect the funds

statement for the future period.

Despite these limitations the information supplied by the funds flow statement is really in

valuable and the management in planning capital expenditure, devising dividend and other

financial policies etc., taken in conjunction with ratio analysis provides a rich source of

information regarding possible managerial uses.


PROFORMA OF A FUNDS FLOW STATEMENT

(Statement of sources and applications of funds)

Sources Rs APPLICATIONS Rs

Income from business

operations(profit)

Issue of shares at par

(discount /premium)

Issues of debentures at par

(discount /premium)

Long term and medium

loans taken

Sale of investments

Non- trading income

Sale of fixed assets

Decrease in working capital

xxx

xxx

xxx

xxx

xxx

xxx

xxx

xxx

Income from business

operation(loss)

Redemption of shares at par

(discount /premium)

Redemption of debentures at

Par (discount /premium)

Payment of loans

Purchase of investments

Non-trading payment

Dividend paid

Increase in working capital

xxx

xxx

xxx

xxx

xxx

xxx

xxx

xxx

Total xxx Total xxx

Sources –Application = increase in working capital.


Application –Sources = decrease in working capital.

PROFORMA OF STATEMENTS OF CHANGES IN WORKING CAPITAL

Particulars PreviousYear

CurrentYear

Effect of change inWorking Capital

Increase DecreaseCURRENT ASSETS

CashBankBills receivablesDebtorsStartPrepaid expenses

TOTAL(A)

CURRENT LIABILITIES

Bills payableBank over draftCreditorsProvision for income taxOutstanding expenses

TOTAL(B)

NETWORKING CAPITAL (A-B)

Increase/decrease in working capital

xxxxxxxxxxxxxxxXxx

xxxxxxxxxxxxxxxxxx

Xxx xxx

xxxxxxxxxxxxxxx

xxxxxxxxxxxxxxx

Xxx xxx

xxxXxx

xxxxxx

TOTAL Xxx xxx

Working Capital =Current Assets- Current Liabilities.


Net Increase/Decrease in working Capital

PROFORMA OF ADJUSTED PROFIT & LOSS ACCOUNT

DR CR PARTICULARS Rs PARTICULARS RsTo depreciation written off

To provision for tax

To proposed dividend

The preliminary expenses written off

To good will written off

To discount on issue of shares and debentures

To different revenue expenses already changed

To transfer to general reserves

To transfer to sinking fund

To loss on sale of fixed assets written off

To closing balance

xxx

xxx

xxx

xxx

xxx

xxx

xxx

xxx

xxx

xxx

xxx

By opening balance

By dividends already credited to R & D account

By over-provision for taxation written back

By gain on sale of fixed assets

By funds from trading operations(balancing figure)

xxx

xxx

xxx

xxx

xxx

TOTAL XXX TOTAL XXX


CALCULATION OF FUNDS FROM OPERATION OR TRADING

PROFITS

To current operating profit are the main sources of funds. The operating profits

are the excess of operating or sales revenue operating costs, which include cost of goods sold

and operating expenses. While sales result in inflow of funds in the form of cash bills

receivable and sundry debtors. The operating cost result in outflow of funds in the sundry and

expense creditors and acceptances. thus the net inflow would to sources of funds, and the net

out flow would be applications of funds.

While calculation the funds from operations only those transactions, which

affect the movement of funds, should be considered. In other words, all non fund transactions

such as depreciation etc., should be readjusted to current profit net profit and loss account has

been credited with certain non operating income.


CHAPTER-5

DATA ANALYSIS&

INTERPRETATION


STATEMENT OF CHANGES IN WORKING CAPITAL

During the year 2004-2005

Particulars 2004 (Rs)

2005 (Rs)

Changes in working capital Increase Decrease

Current assets:

Inventories Sundry debtors Cash and bank balancesOther current assets Loans and advances

Total current assets

Current liabilities and provisions:

Sundry creditorsUnclaimed liabilitiesAdvances received against salesTrade depositsStaff security deposits Interest assumed but not due on loansProvisionsTotal current liabilities and provisionsNet working capital

(C.A-C.L)

Decrease in working capitalTOTAL

153,82,60,271 7,31,85,488 5,30,91,438 12,98,174 20,40,18,611

135,29,84,499 12,48,86,536 5,52,57,959 6,52,331 6,04,77,777

---5,17,01,048

21,66,521------

10,86,80,98429,61,21542,49,059

1,200---

2,47,89,500

9,79,15,733

37017189

18,52,75,772------6,45,843

14,35,40,834

------------

20,000---

---

_

186,98,53,982 159,42,59,102

72,09,04,1011,62,40,099

82,88,58072,700

1,45,0004,50,94,109

14,72,50,425

61,22,23,1171,32,78,884

40,39,52175,500

1,65,0002,03,04,519

4,93,34,692

93,79,98,924 69,94,21,233

93,18,55,058 89,48,37,8693,70,171,89

93,18,55,058 93,18,55,058 32,94,82,449 32,94,82,449


INTERPRETATION: The changes in working capital in this year decreased by

3,70,17,189. Sundry creditors has been deceased by10, 86, 80,984 loans and advances

decreased by RS 14,35,40,834 are also the reasons for decreasing the working capital.

ADJUSTED PROFIT AND LOSS ACCOUNT

During the year 2004-2005 DR CR

Particulars Amount in Rs


To Depreciation of fixed assets

To Provision for tax

To Proposed dividend

To Goodwill written off

To Loss on sale of fixed assets

To Transfer to general reserve

To Transfer to sinking fund

To Discount on issue of share & debenture

To Other provisions

To Closing balance

6,17,81,205

1,00,00,000

2,83,46,263

---

---

19,00,00,00

---

---

---

13,53,68,023

By Opening balance

By Gain on sale of fixed assets

By Gain on sale of investments

By Over provision for taxation written off(back)

By Profit from business operation

16,61,67,459

---

---

---

25,93,28,032

42,54,95,491 42,54,95,491


INTERPRETATION: In this year the opening balance is rs.16, 61,67,459. Depreciation

of the fixed assets is rs.6 17,81,205.and the closing balance is rs.13,53,68,023. Finally we

get profit from business operation is rs.25,93,28,032.


(During the year 2004-2005)

(Statement of Sources & Applications of Funds)

Sources

Amount in Rs Applications

Amount in Rs

Profit from Business Operations

Issue of share capital at par(Discount/Premium)

Issue of Debentures(Discount/ Premium)

Increasing unsecured loans

Sale of plant and machinery

Sale of other fixed assets

Sale of Computers& Furniture

Other income received

Sale of buildings

Sale of vehicles


25,93,28,032

---

---

12,62,170

4,80,43,518

4,75,296

11,37,829

57,06,962

20,75,865

3,18,804

3,70,17,189

Redemption of shares at par(Discount/ premium)

Redemption of debentures

Payment of secured loans

Purchase of fixed assets:

Purchase of land

Taxes paid

Dividend paid

---

---

21,29,91,771

6,25,635

11,34,01,996

2,83,46,263

35,53,65,665 35,53,65,665

INTERPRETATION:

The main source of fund is profit from business operation from this we get the amount of

Rs. 25,93,28,032.The main use of the fund is for payment of secured loans by Rs


21,29,91,771,There has been increased in unsecured loans of Rs. 12,62,170 lakhs and

company sale the plant and machinery by Rs. 4,80,43,518.

STATEMENT OF CHANGES IN WORKING CAPITALDuring the year 2005-2006


2006 (Rs)


Current assets:




Sundry creditorsUnclaimed liabilitiesAdvances received against salesTrade depositsStaff security deposits Interest assumed but not due on loansProvisions

Total current liabilities and provisions

Net working capital

(C.A-C.L)


TOTAL

135,29,84,49912,48,86,5365,52,57,9596,52,3316,04,77,777

143,18,24,82511,21,33,1225,02,62,78910,21,84938,99,83,272

7,88,40,326------

3,69,51832,95,05,495

------

30,45,190---

20,00022,23,265

---

13,82,01,376

---1,27,53,41449,95,170

------

24,56,42,64126,22,056

------------

28,61,91,889

159,42,59,102 198,52,25,857

58,50,00,0181,32,78,884

47,48,05375,500

1,65,0002,03,04,519

4,92,10,370

98,06,42,6591,59,00,940

17,03,31375,500

1,45,0001,80,81,254

33,54,02,259

82,27,82,794 135,19,50,925

77,14,76,308

---

63,32,74,932

13,82,01,376

77,14,76,308 77,14,76,308 55,22,05,170 55,22,05,170


INTERPRETATION: The working capital in this year has been decreased by Rs.

13,82,01,376. there is increased the inventories by the amount of Rs. 7,88,40,326 and loans

and advances by Rs. 32,95,05,495. The sundry creditors have been increased by Rs.

24,56,42,641 and provisions by Rs. 28,61,91,889 but year current assets are high when

compared to the current liabilities.

ADJUSTED PROFIT AND LOSS ACCOUNT (During the year 2005-2006) DR CR











To Other provisions

To Closing balance

5,68,70,347

24,33,62,888

8,50,38,787

---

---

28,16,68,973

---

---

---

13,11,31,433

By Opening balance





13,53,68,023

---

---

---

66,27,04,405

79,80,72,428 79,80,72,428


INTERPRETATION: During the year the opening balance is rs.13,53,68,023.

Depreciation of the fixed assets is rs.5,68,70,347.and the closing balance is

rs.13,11,31,433. Finally we get profit from business operation is rs.66,27,04,405.




Sources Amount in Rs

Application Amount in Rs




Increasing unsecured loans






66,27,04,405

---

---

5,58,62,000

6,20,49,447

4,75,297

68,736

3,90,55,806

13,82,01,376



Payment of secured loans


Purchase of Buildings Purchase of landInvestmentVehiclesTaxes paidDividend paid

---

---

38,02,35,486

11,90,9673,30,84,733

31,66,39,17254,63,038

13,67,64,8848,50,38,787

95,84,17,067 95,84,17,067

INTERPRETATION ;


The main sources of fund is income/profit from business operations by this get the

amount of Rs.66,27,04,405.there has been increased in un secured loans by Rs. 5,58,62,000

and the company received other income of Rs 3,90,55,806 and it is used for paying differed

tax liability the main use of the funds is purchase of fixed assets Rs 35,63,77,910 and the

company paid it secured loans by Rs 38,02,35,486.

STATEMENT OF CHANGES IN WORKING CAPITAL During the year 2006-2007

ParticularsCurrent assets:


Total current assetsCurrent liabilities and provisions:


Total current liabilities and provisions

Net working capital

(C.A-C.L)

2006 (Rs)

2007 (Rs)


143,18,24,82511,21,33,1225,02,62,789

10,21,84938,99,83,272

135,93,30,98210,80,116426,81,47,393

15,13,70946,65,45,285

------

1,78,84,6044,91,860

7,65,62,013

17,31,79,885------------

43,72,246---

7,24,93,84341,21,480

---------

---34,47,08796,93,8533,74,675

5,000---

12,37,98,174

5,85,56,496

198,52,25,857 200,35,49,001

98,06,42,659 1,59,00,940 17,03,313 75,500

1,45,0001,80,81,254

33,54,02,259

80,74,62,7741,93,48,0271,13,97,166

4,50,1751,50,000

1,37,09,00845,92,00,433

135,19,50,925 131,17,17,583

63,32,74,932

5,85,56,496

69,18,13,428



TOTAL69,18,31,428 69,18,31,428 27,24,90,608 27,24,90,608

INTERPRETATION:

During this year there has been increase in working capital of Rs. 5,85,56,496.This is

because of decrease in inventories by Rs.7,24,93,843.and there has been also decrease in

sundry debtors Rs.41,21,480 lakhs. The current liabilities and provisions have been

increased by Rs.13,73,18,789.


(During the year 2006-2007) DR CR











To Other provisions

To Closing balance

6,04,66,319

36,55,20,888

11,33,85,050

---

---

25,00,00,000

---

---

---

25,83,05,202

By Opening balance





13,11,31,433

---

---

---

91,65,46,026

104,76,77,459 104,76,77,459


INTERPRETATION:

During the year the opening balance is rs.13,11,31,433. depreciation of the fixed assets is

rs.6,04,66,319.and the closing balance is rs.25,83,05,202. finally we get profit from

business operation is rs.91,65,46,026.








Issue of Debentures(Discount/ Premium) Sale of other fixed assets


91,65,46,026

---

---

4,75,296

2,71,58,172



Payment of secured loans Unsecured loans


Purchase of buildingsPurchase of landPurchase of Plant & MachineryComputer & FurnitureVehiclesInterim dividend paid

Taxes paid

Dividend paid


---

---

1,49,428452,50,73,000

2,67,80,1441,68,32,770

39,03,47,935

2,57,86,2141,14,06,9304,87,82,338

21,22,85,772

11,33,85,050

5,85,56,496


94,41,79,494 94,41,79,494INTERPRETATION:

The main source of fund is income/profit from business

operations .i.e;Rs.91,65,46,026.The other sources of fund is received from others

Rs.2,71,58,172.The fund is used for the purchase the fixed assets of Rs.47,11,53,993. and

the company pay its unsecured loans and secured loans by Rs.4,36,12,914.the increase

working capital has been applied to pay the tax and dividend

STATEMENT OF CHANGES IN WORKING CAPTIAL During the year 2007-2008


2008 (Rs)


Current assets:





Total current liabilities and provisionsNet working capital

(C.A-C.L)


135,93,30,98210,80,11,6426,81,47,393

15,13,70914,90,35,146

132,75,07,94511,45,09,44117,67,30,095

28,08,24614,02,58,734

---64,97,799

10,85,82,70212,94,537---

---70,12,14870,66,9793,26,525

40,00018,22,792

5,97,47,123

---

18,07,38,488

3,18,23,037---------

87,76,412

33,25,29,644---------------

---

---

---

168,60,38,872 176,18,14,461

80,74,62,7741,93,48,0271,13,97,166

4,50,1751,50,000

1,37,09,008

14,16,90,294

113,99,92,4181,23,35,879

43,30,1871,23,6501,10,000

1,18,86,216

8,19,43,171

99,42,07,444 125,07,38,488

69,18,31,428 51,10,92,940

18,07,38,488


TOTAL

---

69,18,31,428 69,18,31,428 37,31,29,093 37,31,29,093

INTERPRETATION:

The working capital in this year has been decreased by Rs. 18,07,38,488. here the

inventories are decreased by Rs. 3,18,23,037 and loans and advances of Rs. 87,76,412

lakhs. The sundry creditors have been increased by the amount of Rs. 33,25,29,644 but the

other liabilities (trade deposit, provisions etc.) are decreased .

ADJUSTED PROFIT AND LOSS ACCOUNT(During the year 2007-2008)

DR CR Particulars Amount

in Rs Particulars Amount

in Rs









To Other provisions

To Closing balance

9,56,41,991

12,74,43,218

5,66,92,525

---

---

2,50,00,000

---

---

---

40,24,83,230

By Opening balance





25,83,05,202

---

---

---

44,89,55,762

70,72,60,964 70,72,60,964


INTERPRETATION:




FUNDS FLOW STATEMENT(During the year 2007-2008)





Issue of Debentures(Discount/ Premium) Decrease in working capital

44,89,55,762

---

---

18,07,38,488



Payment of secured loans Unsecured loans


Purchase of buildingsPurchase of landPurchase of Plant & MachineryComputer & FurnitureVehiclesOther fixed assets

Taxes paid

Dividend paid

---

---

8,78,72,8023,97,00,000

5,50,65,3611,20,93,498

20,02,5094,86,29,865

17,08,38820,02,509

7,05,00,312

25,72,28,90

5,66,92,525

62,96,94,250 62,96,94,250


INTERPRETATION:


The main sources of fund is income/profit from business operations i.e. Rs. 44,89,55,762.

the funds are used for purchase the fixed assets of Rs. 13,00,56,175 and company pay it’s

unsecured loans and secured loans by Rs. 12,75,72,802.

STATEMENT OF CHANGES IN WORKING CAPITAL During the year 2008-2009


2009 (Rs)


Current assets:





Total current liabilities and provisionsNet working capital

(C.A-C.L)

132,75,07,94511,45,09,44117,67,30,095

28,08,24614,02,58,734

126,77,78,8396,09,19,428

20,84,05,38923,12,881

20,23,86,069

------

3,16,75,294---

6,21,27,335

44,43,02,925------

35050,000

38,31,760

---

---

---

5,97,29,1065,35,90,013

---4,95,365

---

---37,20,736

1,04,70,900---------

3,01,86,427

---

38,37,95,117

176,18,14,461 174,18,02,606

113,99,92,4181,23,35,879

43,30,1871,23,6501,10,000

1,18,86,216

8,1943,171

69,56,89,4931,60,56,6151,48,01,087

1,23,30060,000

80,54,456

11,21,29,598

1,25,07,21,521 84,69,14,549

51,10,92,940

38,37,95117

89,48,88,057



TOTAL

89,48,88,057 89,48,88,057 54,19,87,664 54,19,87,664

INTERPRETATION:

During the year 2008-09 it shows that there is increase in working capital of Rs. 38,37,95,117. Here the

inventories are decreased by Rs. 5,97,29,106 sundry debtors Rs. 5,35,90,013 and there has been decrease in

other current assets Rs. 4,95,365 lakhs, and increase in current liabilities & provisions by Rs. 3,01,86,427.

This indicates the financial position is in weaker position.



DR CR Particulars Amount

in Rs Particulars Amount

in Rs









To Other provisions

To Closing balance

10,36,09,837

3,09,93,399

5,66,92,525

---

---

81,46,806

---

---

---

39,91,05,878

By Opening balance





40,24,83,230

---

---

---

19,60,65,215


59,85,48,445 59,85,48,445

INTERPRETATION:








Application

Amount in Rs





Increasing unsecured loans Secured loans




Sale of vehicles

Withdrawn

19,60,65,215

---

---

24,52,09,679

40,78,000

7,29,38,883

4,50,63,819

40,37,340

61,45,898

1,81,46,806



Purchase of fixed assets:Purchase of Buildings

Taxes paid

Dividend paid

Increasing in working capital

---

---

3,64,66,941

11,58,66,941

5,66,92,525

38,37,95,117

59,28,52,156 59,28,52,156

INTERPRETATION :

The main source of fund is from income/profit from business operation of RS.

19,60,65,215. There is increase in secured loans by 24,52,09,679 and the plant and

machinery were sold by the amount of RS.4,50,63,819. and investments Rs. 7,29,38,883.

the main applications of a firm is purchase of building with Rs. 3,64,66,941 and taxes of

Rs. 11,58,97,573.


CHAPTER-6

FINDINGS

SUGGESTIONS

CONCLUSION

FINDINGS

The amount of such profits depends largely upon the magnitude of sales. there is

always time gap between the sale of goods and receipt of each.


There have been major fluctuations in the working capital, which affect the current

assets and current liabilities, and sources of the funds have affected a lot.

Profit from business operations are not stable

During the study, it was also observed the customers are allowed very long credit

period i.e, 4 months

SUGGESTIONS


During the study it was observed that the firms, working capital had depicted in

some year.so the firm has to find ways to increase the sources of funds.

The financial manager should estimate correct amount of working capital and

should be able to determine the correct sources from which funds have to be raised.

The company should finance some parts of its current assets with short term funds.

it should not depend on long term as they involve higher interest payments

So it can be suggested the company has maintain good liquidity positions by

concentrating on the increment of current assets.

Conclusion


Two basic financial statements i.e. Balance sheet and profit and loss account are

important to owners, management and investors.

Balance sheet gives a summary of the firms resources (Assets) and obligations

(liabilities and owners equity) at a point of time.

The way in which the firms uses t financial resources during the period (to pay debts

to pay dividends to share holders and so on)the mostly commonly used forms of the

statements of changes financial positions are called statements of sources and uses of funds

(or simply fund flow statement and cash flow statement).

From the year 2004-2005 to 2005-2006 the funds from business operations has

shown a increasing trend and stood at Rs.91,65,46,026. in the year 2006-2007.which at a

good position from the year 2007-2008 the funds from business operations had turned into

loss and the loss showed as increasing trend year after year and the loss for the year 2008-

2009 stood at Rs.19,60,65,215 which shows a bad financial position of the company.

During the year 2004-2005 working capital has decreased by Rs.3,70,17,189.

Compared to 2005-2006.Because is mainly due to decrease in sundry creditors

Rs10,86,80,984

During the year 2005-2006 the working capital has decreased by Rs.13,82,01,376.


Due to increased in inventory by the amount of Rs.7,88,40,326. and future decreased in the

year 2006-2007 by 5.85.56.496. due to decrease in inventories by Rs.7,42,93,843 and there

has been also decrease in sundry debtors.

During the year 2007-2008 working capital has increased by RS 18,07,38,488.due to

decrease the inventory by the amount 3,18,23,037 and sundry debtorsRS64,97,799 and

there has been decreased in other current assets.

But during the year 2008-2009 ,that there is increase in working capital of

Rs.38,37,95,117.Because the inventors are decrease by Rs.5,97,29,106 and sundry debtors

Rs.5,35,90,013 and there has been decreased in other current assets


BIBLIOGRAPHY

BIBLIOGRAPHY:


Prasanna Chandra: Financial management theory and

Practice.

I.M.Pandy: Financial management

S.N.Maheswari: Financial management sultan

chand publications.

Journals:

1. www. Itcbpl.com

2. www..itcpspd.com

3. www.bhadra.net


http://www.bhadra.net/

Annexure

BALANCE SHEET AT 31ST MARCH 2004-2005


PARTICULARS 31-03-2004 31-03-2005Sources of fundsShareholders funds

Share capital 11,33,85,050 11,33,85,050Reserve & surplus 49,62,80,973 64,54,81,537

60,96,66,023 76,88,66,587Loan funds

Secured loans 1,03,97,20,204 82,67,28,433Un secured loans 18,75,70,830 18,88,33,000

1,22,72,91,034 1,2002,55,61,433Deferred tax

liability Deferred tax liability 24,27,99,798 23,67,36,540

Less : deferred tax liability

9,87,89,550 12,33,34,550

14,40,10,248 11,34,2002,996Total 1,98,09,67,305 1,89,78,30,20026

Application of funds

Fixed assetsGross block 1,26,62,84,128 1,27,66,39,656

Less : depreciation 31,14,59,113 37,32,40,318Net block 95,48,25,20025 90,33,99,338

Capital working progress

5,92,88,422 6,15,21,594

1,2002,41,13,437 96,49,20,932Investments 1,14,32,776 1,14,32,776

Current assets, loans &

Advances Inventory 153,82,60,271 1,35,29,84,499

Sundry debtors 731,85,488 12,48,86,536Cash in bank balance 5,30,91,438 5,52,57,959Other current Assets 12,98,174 6,52,331

Loans & Advances 20,40,18,611 6,04,77,7771,86,98,53,982 1,62,42,59,109

Less : Current liabilities &

Provisions

91,44,32,890 67,27,82,794

Net current assets 95,54,21,092 92,14,76,308Totals 1,98,09,67,305 1,89,78,30,20026





76,88,66,587 12002,48,29,997Loan funds

Secured loans 82,67,28,433 29,64,92,947Un secured loans 18,88,33,000 24,46,95,000

1,2002,55,61,433 54,11,87,947Deferred tax liability

Deferred tax liability 23,67,36,540 20,99,52,818Less : deferred tax

liability 12,33,34,550 7,31,87,934

11,34,2002,996 13,67,64,884Total 1,89,78,30,20026 169,25,82,828

Application of funds Fixed assetsGross block 1,27,66,39,656 132,20,20,324


Capital working progress

6,15,21,594 16,43,32,340

96,49,20,932 104,48,76,936Investments 1,14,32,776 1,44,30,960

Current assets, loans &

Advances Inventory 1,35,29,84,499 143,18,24,825

Sundry debtors 12,48,86,536 11,21,33,122Cash in bank balance 5,52,57,959 5,02,62,789Other current Assets 6,52,331 10,21,849

Loans & Advances 6,04,77,777 38,99,83,2721,69,42,59,109 198,52,25,857


Provisions

67,27,82,794 135,19,50,925

Net current assets 92,14,76,308 63,32,74,932Totals 1,89,78,30,20026 1,69,25,82,828

BALANCE SHEET AT 31ST MARCH 2006-2007 PARTICULARS 31-03-2006 31-03-2007Sources of funds


Shareholders fundsShare capital 11,333,85,050 11,33,85,050

Reserve & surplus 90,12,44,947 127,84,18,71612002,48,29,997 139,18,03,766

Loan fundsSecured loans 29,64,92,947 28,15,50,102

Un secured loans 24,46,95,000 21,96,22,00054,11,87,947 50,11,72,102

Deferred tax liability Deferred tax liability 20,99,52,818 25,03,97,136

Less : deferred tax liability 7,31,87,934 3,81,11,634

13,67,64,884 21,22,85,772Total 169,25,82,828 210,52,61,640

Application of funds Fixed assetsGross block 132,20,20,234 185,31,65,250


Capital working progress 16,43,32,340 4,58,43,02002104,48,76,936 139,70,66,294

Investments 1,44,30,960 1,63,63,918Current assets, loans &

Advances Inventory 143,18,24,825 135,93,30,982


Loans & Advances 38,99,83,272 14,90,35,146198,52,25,857 168,60,38,870


Provisions

135,19,50,925 99,42,07,444

Net current assets 63,32,74,932 69,18,31,428Totals 1,69,25,82,828 210,52,61,640





139,18,03,766 156,09,81,794Loan funds

Secured loans 28,15,50,102 19,36,77,300Un secured loans 21,96,22,000 17,99,22,000

50,11,72,102 37,35,99,300Deferred tax liability

Deferred tax liability 25,03,97,136 2,58,16,139Less : deferred tax liability 3,81,11,364 3,85,7,149

21,22,85,772 25,72,28,990Total 210,52,61,640 219,18,10,084







Loans & Advances 14,90,38,870 14,02,58,734168,60,38,870 176,18,14,461


Provisions

99,42,07,444 125,07,21,521

Net current assets 69,18,31,428 51,10,92,940Totals 210,52,61,640 219,18,10,084



PARTICULARS 31-03-2008 31-03-2009Sources of funds

Shareholders fundsShare capital 11,33,85,050 11,33,85,050

Reserve & surplus 144,75,96,744 143,42,392156,09,81,794 154,76,04,442

Loan fundsSecured loans 19,36,77,300 43,88,86,979

Un secured loans 17,99,22,000 18,40,00,00037,35,99,300 62,28,86,979

Deferred tax liability Deferred tax liability 29,58,16,139 30,13,40,523

Less : deferred tax liability 3,85,87,147 4,74,62,333

25,72,28,990 25,38,78,200Total 219,18,10,084 242,43,69,621







Loans & Advances 14,02,58,734 20,23,86,069176,18,14,461 174,18,02,606


Provisions

125,,07,21,521 84,69,14,549

Net current assets 51,10,92,940 89,48,88,057Totals 219,18,10,084 242,43,69,621


siva original project

Documents

british american tobacco

theoretical frame work

coated duplex board

provisionsnet working capital

balance sheet dates

duplex grey

tribeni tissues division

corporate ehs department