A Study

on sources of funds flow analysis in Anantha PVC

pipes pvt ltd at Anantapur
A project report

Submitted in partial fulfillment of the

requirement
For the award of the degree of
Master of Business Administration

By
P.SUDHAKAR
(Regd. No. 099U1E0029)

Under the guidance of

DHESAI

SRI SREENIVASA INSTITUTE OF MANAGEMENT

TADIPATRI
(Affiliated to J.N.T.U University, ANANTAPUR)

DECLARATION
I here by declare that the project entitled A STUDY ON

sources of funds flow analysis in pvc pipes pvt ltd at

Anantapur . is genuine and bonafide work prepared by me under the
guidance of Mr. DHESAI and is submitted in partial fulfillment for the
degree of MASTER OF BUSINESS ADMINISTRATION submitted to
J.N.T.U University, ANANTAPUR. Earlier this report has not submitted for
the award of any other degree.

(P. SUDHAKAR)

ACKNOWLEDGEMENT
I deem it a great privilege of express my profound respect, deep sense of
gratitude to my teacher and project guide P.SUDHAKAR MBA, SRI
SREENIVASA INSTITUTE OF MANAGEMENT STUDIES in. For his
constant encouragement and valuable guidance.
I would like to convey my respectful thanks to Sri OBUL REDDY Founder
and correspondent SSIM and KARTHIK, Principal of SSIM for their
encouragement during my project work for the moral assistance
extended to me.
I am very much thankful to Mr.V.SIVA KUMAR REDDY, Accounts manager,
in Ananta PVC pipes pvt ltd, at Anantapur. I would like to extend my
heartfelt and sincere thanks to my entire friend for their support during
my project work.

P. SUDHAKAR

CONTENTS
NAME
CHAPTER 1
CHAPTER 2
CHAPTER-3
CHAPTER-4

INTRODUCTION
INDUSTERY PROFILE
COMPANY PROFILE
PRODUCT PROFILE
CHAPTER-4 RESEARCH METHODOLOGY
NEED AND SCOPE OF THE
STUDY
OBJECTIVES OF THE STUDY
LIMITATIONS OF THE STUDY
CHAPTER-5 REVIEW OF LITERATURE
CHAPTER -6 DATA ANALYSIS AND

INTERPRETATION
CHAPTER -7 FINDINGS AND
SUGGESITIONS
APPENDEX
BIBLOGRAPHY

PAGE NO

CHAPTER - 1
INTRODUCTION
INTRODUCTION
Finance is the lifeblood of every business activity
without which the wheels of modern business organization system
cannot be greased. Finance management is managerial activity,
which is concerned with planning and controlling of the firms
financial Resources. Finance is a scarce resource and it has to be
managed efficiency for the successful functioning of any company.
Several companies have come to grief mainly because of inefficient
management of finance, in spite of other favorable conditions.
Funds flow statement is an important tool and is widely used in
the hands of financial analysts and managers for analyzing the
financial management of a company. Funds keep on moving in a
business, which itself based on going concern concept. In a narrow
sense, it means inflow and out flow.
cash only and a flow statement prepared on this basis
is called ascash flow statement.

Such a statement enumerates net effects of the various

business transactions on cash and takes into account receipts and
disbursement of cash. In a broader sense, the term fund refers to
money values in whatever form it may exists. Here, funds mean. All
financial resources. But in a popular sense, the term funds means
working capital i.e., excess of current assets over current Liabilities.
The word fund here means net working capital.
Definition:
A statement of sources and Application of Funds is a technical
device designed to analyze the changes in the financial condition of a
business enterprise between two dates.
---R.A.Foulk

CHAPTER 2
INDUSTRY PROFILE
PROFILE OF THE COMPANY
Rayalaseema is economically backward area in Andhra Pradesh,
was rarefied region for industries. A dynamic entrepreneur Sri S.P.Y.
Reddy who is basically a mechanical engineer started a unit at
Nandyal, which manufactures black pipes in 1977. The determination
and hard work of Sri S.P.Y. Reddy helped him to overcome the
problems faced by the company in the initial years, and with financial
assistance from local commercial banks. The company could
overcome the problems of the merger and is running smoothly.
Later the company started manufacturing of Pvc Pipes, which
terminated the manufacturing of black pipes. This resulted in the
formation of a pvt. Ltd. company called SUJALA PIPES PVT LTD.
With Sri S.P.Y. Reddy as the managing director.

STEP BY STEP COMPANYS GROWTH

Sujala pipes Pvt.Ltd is commission with the objectives of
catering to the agriculture needs of the region. In earlier days tool
used for water flow were every ineffective with high percentage of
seepage losses. To counter this has been of Sujala pipes Pvt. Ltd., .
The manor irritants in agriculture practices like lack of rain fall
ground water licking.
Water transport with in the fields has provided magnified thrust
to PVC pipes market. These factors helped Sujala pipes Pvt.Ltd, to
record an excellent growth of sales. Well-equipped laboratory and
quality office looks after the quality. The department people always
striving to the quality.

The companies not only improving the brand name but also it
are undertaking the competitor brands. In 1977 the company
takeover the sagar brand. The manufacturing plant of sager brand
was at medak district. The Sujala pipes company not stopped with
that victory, the company takes over another main competitors brand
monarch in 1999, the manufacturing plan t of monarch plant lies at
Anantapur district. The threats of the old companies are turned to
the opportunities to the company by its excellent management. After
the change of management of brand image of these brands are
improved. At present Sujala pipes Pvt.Ltd. stands at market leader
position provided magnified thrust to PVC pipes market. These factor
helped Sujala pipes Pvt.Ltd, to record an excellent growth of sales
well-equipped laboratory and quality control office looks after the
quality. The department people always striving to improve the
quality.
The companies not only improving the brand name but also it
are undertaking the competitor brand. In 1977 the takeover the
sugar brand. The manufacturing plant of sagar brand was at Medak
district. The Sujala pipes company not stopped with that victory, the
company takeover another main competitors brand monarch in
1999. The manufacturing plant of Monarch plant lies at Anantapur
district.
The threads of the old companies are termed to
opportunities to the company by its excellent management. After the
change of management the brand image of the brands are improved.
At present Sujala pipes Pvt.Ltd, stand set-mark teller position.

MISSION STATEMENT
The mission statement of monarch is as follows.
o
o

To be the preferred supply chain partner to out customers

T0 be the recognized as the best in the world at what we
do.

To create new values in the quality for our customers,

employees and shareholders.

VISION STATEMENT

We are in the business of manufacturing pipes for conveying

safe drinking water and other fluids for domestic and overseas
markets.
We are maintain our dominant position in the domestic pipe market
and enhance our presence in the overseas market by setting up multi
- location units as per business potential.
For sustained growth we intend to venture into related business in
the area of
Suitable horizontal and vertical integration projects.
o Turnkey projects.
o

Engineering and consultancy.

Build-own-operate-transfer projects and diversifies into

new areas of business including infrastructure related
projects.

We will achieve the above through:

Continuous technological up-gradation and absorption of
new technology.
Effective team based working
Continuous training and human resources development.
3. Developing ancillary units.
4. Cost competitiveness.

CHAPTER 3
COMPANY PROFILE
COMPANY PROFILE
It is intended to present an overall view of funds flow
statement. Is also presents the concept of funds flow statement its
uses, importance and significance in
detail.
Financial information. Financial information is needed to
predict, compare and evaluate the firms earnings ability. It is also
required to and in economic decisions making investment and
financing decision-making.
The financial information of an
enterprise is contained in the financial statement or Ac

INTRODUCTION: The basis for financial planning, analysis and decision-making is

the counting reports. Two basics financial statements prepared for
the purpose of external reporting to owners, investors and creditors
are; balance sheet \annual report \statement of financial position &
profit and loss account \income statement)

SIZES:
Various sizes ranging from to 10 area offered to customers.
Even pipes with different gauges and sizes are manufactured to suit
specific conditions.

PACKING:
Packing plays less important role in to the products like PVC
pipes because the hallow space inside can be utilized. For the

purpose of cubic space utilization in trucks while

organization is adopting the technique like pipes in pipes.

transport,

2.4. PAYMENT PERIOD:

For monarch brand the company adopts zero credit policy and
goods are not delivered unless cash remittances are made. For
monarch and sager brands credit is entitled up to a week. The
difference between these brands is due to brand image .

2.5. COVERAGE:
At present Andhra Pradesh, parts of southern states of
Karnataka, Tamilnadu and Kerala are ambit of Sujala pipes Pvt. Ltd.
The company extended their sales in the below regions as shown
below.
1979 : Nandyal region (polyphone pipes)
1984-85 : Rayalaseema region (PVC pipes)
1985-86 : Telangana region
1986-87 : Karnataka and Andhra Pradesh
1988-91 : Tamilnadu and Karnataka
1991-94 : Kerala

2.6. TRANSPORTATION:
The transportation department of Sujala Pipes Pvt. Ltd. Is
very admirable. This unique strength of the organization enables the
dealers to reduce inventory levels to the minimum. Thus dealers are
also supplemented with dealers to reduce inventory levels to the
minimum. Thus dealers are also supplemented with the benefit of the
lower tied-up capital in the form of inventory.

2.7. GENERAL INFORMATION ABOUT THE COMPANY

The company is equipped with sophisticated laboratory to
carry all tests in ascertain out going quality level of the pipes. A
Nandi pipe has got ISI trade mark. Which speaks for itself for the
quality of the pipes? Numbers of statistical quality control techniques
are applied to sustain the quality level of the product. Managers at

the company are dynamic and are well educated. Supervisory staff or
intermediate managerial staff are able in talking their area are not
highly educated. Most of the employees are skilled is uniqueness of
workers in Sujala Pipes Pvt. Ltd., There is non-indulgence in trade
union activities.As the company is located in industrial estate of
Nandyal, it is facilitated with good communication networks, which
includes telex, fax machine, and Internet Company has also got the
support of electronic data processing. The companys major strength
is considered to be transportation vehicles, a unique cash outflow
justifies itself by providing good reputation of the company through
improved customer service.

2.8. FINANCIAL DEPARTMENT:

Through initially the company approached the external sources
for financial aid now the financial status of the company is the very
sound and is being run only with self-finance excepting for loans
taken for hypothecation of machinery and stock from SBI Nandyal.
The company follows cash and carry policy for Nandi brand. The
product is not delivered until the cash is paid and financial
department with the help of marketing department looks after these
transactions.

2.9.MARKETING DEPARTMENT:
Marketing manager who reports to executive director, an
assistant marketing manager who reports and 20 salesmen headed
by 30 sales representatives who are headed by assistant marketing
manager heads the marketing departments effective management of
the marketing department in the organization.

2.10. PERSONAL DEPARTMENT:

The personal department consists the details of the
executives and workers of the organization. The organization is
formed with Sri S.P.Y. Reddy as the Managing Director and Executive
Director who reports managing director. Two marketing managers,
financial manager, public relations officer and quality control officer
who all reports to executive director. Other than executives there are
thousand works in the organization.

Panel consisting of managing director, executive director and

managers of concerned departments makes the recruitment and
selections of persons. A part from the attractive salaries company
provides health card facilities.

PURCHASING DEPARTMENT:
The perplexing situation i.e. conformed by the manufacturers
of the PVC pipes is scarcity of resin. Though the govt. of India has
taken various steps to improve supply conditions of PVC resin the
Indian manufacturers could meet only 50 percent is met from
imports.
The major Petrochemical companies are:
1. Sri ram Vinyl Ltd.,
2. Chem-plast Ltd.,
3. Reliance petrochemical Ltd.,
4. National organic chemical industries Ltd.,
5. Indian petrochemical industries Ltd.,

Process:
The main raw materials are HDPE granules, PP granules. The
manufacturing for pipes consists of mixing various resins along with
coloring materials in a mixture and the prepared material is fed to
the extruder. In the extruder, the material is heated to the required
politicizing temperature (190 Centigrade to 230 Centigrade) the
extruded through the die hard to from the pipe. The hot pipe coming
out of the extruder is cooled in a water bath to retain the final shape.
The pipe coming out of the extruder is guided through the
water bath suitable traction system. The temperature of the water is
maintained by circulating through the cooling toward and with the
help of a chilling plant. The required length of the pipe is cut with a
planetary saw. The cut lengths are titled by titling units and get
corrected in the pipe rack attached to the titling frames. Later they
are stocked separately. The companyhas entered into a technical has
its own processing technology.

2.13. MONARCH PIPES:

Monarch pipe Ltd., was incorporated in the year 1986. The
factory is situated at NH-7, Hampapuram village, Rapthadu
Mandalam, and Anantapur district. It was taken over by Nandi pipes.
Its annual production capacity is 16000 Mts. And it is one of the
leading manufacturers of PVC pipes in south India. The company is
equipped with technical collaboration from Batten field of West
Germany. It has made possible few other small ventures. Pipes are
sold under brand names of MONARCH, KOHINOOR, and KRISHNA.

Monarch pipes with their good quality, trouble free services,

durability and economical use a better choice than mild steel,
galvanized steel, cast iron and plastic pipes. The Company is
managed by a term of professionals under the guidance of a young,
experienced and well-qualified dynamic managing director MR. S.
SREEDHARREDDY.

APPLICAIONS OF UPVC PIPES:

1. Agriculture and irrigation schemes.
2. Rural & urban water supplies scheme.
3. Tube well casing.
4. Gas and oil supply lines.
5. Industrial effluent disposal.
6. Sewerage and drainage scheme.
7. Air-condition ducting.
8. Building installations.
9. Industrial ducting.

ORGANISATION STRUCTURE OF ANANTHA PVC PIPES (Pvt), Ltd.

S.P.Y. REDDY
Sri S.P.Y. REDDY locally well known industrialist with the base
at Nandyal, Kurnool district has been successful entrepreneur and
management. Is technically qualified person with B.E.(Mechanical)
from R.E.C.(Warangal) and with work experience at BAARC(Bombay).
He has daringly ventured and established industries in and around
Nandyal from 70s. As year went of he has established most
successfully the following Nandi Group of companies.
1. Nandi Milk
2. Maha Nandi Mineral waters
3. Nandi Infosys
4. Nandi online services
5. Monarch Pipes Ltd.,
6. Integrated thermos plastics Ltd.,
7. Nandi P.V.C. Products.

PROMOTER:
Sri S.Sridhar Reddy. a computer engineer and a student of HM.
Ahmedabad as been entrusted the management of Monarch Pipes
Ltd., Hampapuram and great assistance and a young upcoming
engineer and industrialist
.

BRANCHES:

1. PANDICHERY
2. SALEAM
3. BELLARY
4. MADURAI
5. SANGJI
6. PIPE TECHNOLOGY TERMS AND CONCEPTS;
Pipe hollow structure usually cylindrical, for conducting
materials. It is used primarily to convey liquids, gases or solid
suspended in a liquid for e.g. slurry and also used for electric wires.
The earliest pipes were probably made of bamboo. Used by the
Chinese to carry water c.5000 BC. The Egyptians made the first metal
pipe of copper c.3000 BC until the cost iron became relatively, Copper
or bronze. Modern materials include cast iron weight iron, steel,
copper, brass, bead, concrete, wood, and glass, plastic. Bending
strips of steel into the form of a tube and welding the longitudinal
seam either by electric resistance, by fusion welding or by heating
the tube and pressing the edges together makes welded steel pipe.
Seamless pipe is made from a solid length of metal pierced
lengthwise by a mandrel with a rounded nose. Steel pipe introduced
in the early 20th century is widely used for conducting substances at
extremely high pressures and temperatures.
Cast-iron pipes, which came into common use in the 1840s resist
corrosion better than steel pipes and are therefore frequently, used
underground. Clay and concrete pipes usually carry sewage and
concrete pipes are also used to carry irrigation water at low
pressures, for moderate pressures the concrete is reinforced with
steel or mixed with asbestos.
Seamless copper and brass pipes are used for plumbing and
boilers because of its softness and resistance to corrosion. Lead is
used for flexible corrections and for plumbing that doesnt carry
drinking water. The chemical and food industries are sued glass
pipes. During World War II manufacturers developed plastic pipes to
replace metals that were in short supply to PVC pipe is widely used to
carry waste water as well as certain corrosive liquids. A pipeline
carries water, gas, petroleum, and many other fluids, long distance.
In lying an oil pipeline, 40ft (12-m) sections of seamless steel
pipe are electrically welded together while held over a trench. Before
being lowered into place the pipe is coated with a protective paint
and wrapped with a substance composed of treated asbestos felt and
fiberglass.

Pumping section located 50 to 75 ml (80-120km). A part boosts

the dwindling pressure backup as much as 1500lb per inch. The
piping must be kept clean either by applying a negative electronic
charge to the pipe or by regular use of a pig, or scrubbing ball,
inserted at one end and carried along by the current. An oil pipe line
6 inches (15 cm) to 24 inches (60 cm) in diameter will move it
contents at about 3 to 6 ml (5-10) per hr. Water has moved since
ancient times in pipelines called aqueducts. The first natural gas and
petroleum pipe line in US. Were builds during the 19th century?
Today in most part of the world pipelines are as extremely important
means of transporting divers fluids. The Trans Arabian pipeline,
which carried oil from the Persian Gulf to the Mediterranean, is over
1000ml (600 km) long.
there is more than 180(288000km) of pipelines in the united states
alone.

The Balance sheet:The Balance sheet shows the financial condition or the state
of affairs of a firm at a particular point of time. More
specifically the Balance sheet contains detailed information
about the firms Assets and Liabilities. Assets represents
economic resources possessed by the firm while the liabilities
are the amounts payable by the firm. The Balance sheet gives
concise summary of firm resources and obligations and
measures the firms liquidity and solvency

Profit and Loss Accounts:

The profit and Loss A\c shows the profitability of the firm by
giving details about income and expenses. It is simply income and
expenditure account. Revenues are benefits, which customers
contribute to the firm in exchange of goods and services. The cost of
economics resources used in providing goods and services to the
customer are called expenses. Profit and Loss Account provides a
concise summary of firms revenues and expenses during the period
of time and measures its profitability.

The above two statements provide useful information regarding

the operations of the firm. They fail to explain the financial data
required for financing and investing decisions by the management i e
causes for changes in Assets and Liabilities and Owners equities.
They do not indicate the movement of funds between Sources and
uses from the end of the period to the end of next periods. It is
therefore, necessary to prepare an additional called Funds Flow
Statements to overcome the above difficulties.

Funds flow Statements:The statement showing the sources and Application of the funds
known as Funds Flow Statement. It is a condensed report of the how
the financial resources have been used during the periods covered by
the statement as it summarizes the financial activities for period of
time.

EXISTING SYSTEM / PRACTICES IN THE

ORGANIZATION
1) General:
The financial statements are prepared under the historical cost
convention in accordance with the provisions of the Companies Act,
1956 and materially comply with the mandatory Accounting
Standards issued by the Institute of Chartered Accountants of India
except to the extent disclosed in the following notes.

2) Fixed Assets and Depreciation:

a) Gross Block:
Fixed Assets are stated at cost of Acquisition inclusive of
inland freight, duties and taxes and incidental expenses related
to acquisition with due adjustments for convert credits.

b)

Depreciation:

i. Depreciation is provided on fixed assets used during the

year under straight-line method at the rates specified in
the schedule XIV of the Companies Act, 1956.
j. Assets acquired and costing Rs.5,000 or less are being
depreciated fully in the year of addition / acquisition.

3) Sales:
Sales include excise duty, wherever applicable and rebate,
discounts, claims, expenses incurred on consignment sales
etc., are excluded there from. Sales on consignment and
expenses there against are being accounted for on receipt of
account sales from respective consignee.

4) Investments:
Long-term investments are stated at cost less permanent
diminution, if any in value. Current investments are carried at lower
of cost or fair value.

5) Inventories:
c) Inventories are valued at lower of the cost or net

realization value. Cost in respect of raw materials, stores

and spares have been calculated on weighted average
basis, which includes expenses incidental to procurement
of the same.

d) By-products are valued at net realizable value.

e) Cost in respect of finished goods includes

manufacturing expenses, factory and administrative

overheads and excise duty.

f) Cost in respect of work in progress represents, cost

incurred up to the state of completion.

6) Revenue Recognition:
All expenses and income to the extent considered payable
and receivable respectively unless specifically stated to be
otherwise are accounted for on mercantile basis.

7) Foreign Currency Transactions:

Foreign currency assets and liabilities are translated at
exchange rates prevailing at the year-end or at forward
contract rate, as applicable. The loss or gain thereon and also
on exchange differences on settlement of the foreign currency
transactions during the year are adjusted to the Profit and Loss
Account under respective heads of accounts. The difference
between forward rate and exchange rate at the date of
transaction is recognized as income or expenses over the life of
the contracts.
8. Retirement Benefits:

g) Provident & Family Pension Fund:

The Company contributes to the employees
provident & family pension fund maintained under the
employees provident fund scheme by the Central
Government.
h. Leave

Encashment Benefits:

Accruing liability towards leave encashment benefit

is provided on the basis of actual eligibility as per the
Companys rules.
i. Gratuity:

Accruing liability towards gratuity is provided on the

basis of the assumption that such benefits are payable to
all eligible employees at the end of the accounting year.
9. Miscellaneous Expenses:

Preliminary expenses and expenditure in connection

with issue of shares are being written off over a period of ten

years.

10. Borrowing Costs:

Borrowing costs that are attributable to the

acquisition, construction or production of a qualifying asset are
capitalized as part of cost of such asset till such time as the
asset is ready for its intended use or sale. A qualifying asset is
an asset that necessarily required a substantial period of time
to get ready for its intended use or sale. All other borrowing
costs are recognized as an expense in the period in which they
are incurred.

11. Contingent Liabilities:

Contingent liabilities are generally not provided for and

are disclosed by way of notes to the accounts.
12. Segment Reporting:

The accounting policies adopted for segment

reporting are in line with the accounting policies
adopted in financial statements.
13. Export

Benefits:

Export benefit arising on account of entitlement for duty free

imports are accounted for through import materials. Such benefits
under duty entitlement pass- books are accounted for on accrual
basis.

14. Government Grants and Other Claims:

Revenue grants including subsidy / rebates,

refunds, claims etc., are credited to Profit and Loss Account
under Other Income or deducted from the related expenses.
Grants relating to fixed assets are credited to capital Reserve
Account or adjusted in the cost of such assets as the case may
be, as and when the ultimate reliability of such grants etc., are
established / realized.
15. Income

Tax:

Provision for tax is made for both current and deferred taxes.
Current tax is provided on the taxable income using the applicable
tax rates and tax laws. Deferred tax assets and liabilities arising on
account of timing differences, which are capable of reversal in
subsequent periods are recognized using tax rates and tax laws,
which have been enacted or substantively enacted.

USES, SIGNIGNIFICANCE AND IMPORTANCE

OF FUNDS FLOWSTATEMENTS:Analysis of Financial Operation:A Funds Flow Statement shows how the resources have been
obtained and the uses to which they are put.
The funds statements determining the financial consequences of
business operation. It also useful ion guiding whether the firm has
expanded at too fast rate and whether financing is strained, it also
point out to the effectiveness with which the management has
handled working during the period under review.

Evaluation of the firms:This statement can consist the financial manager in planning
intermediate and long-term finance for obtaining sources in the
further and determining how they are to be used. That is analysis of
the major sources of funds in the past reveals what positions of the
firms growth was financed internally and what position externally.

Comparison with the budget:The statement defines the past flow of funds and gives insight in
to the evolution of the present situation. It provides certain useful
information about the firms. Financial policies to the outside world
like bankers, government, etc;
Funds Flow statement is becoming popular with; the management
because it helps to explain why in spite of earning sizable amount of
profits, the company is experiencing difficulty in making payments to
creditors, the rate of dividend on equity; shares can not be increased
and the bank balance is getting thinner.

The Funds flow Statements has an analytical value and is an

important planning tool. It helps in guiding the destiny of the
business by enabling the executives to visualize the movements of
funds that constantly takes place.
This statement also helpful in working capital requirements. It
highlights the future need for funds and provides sample time to
work out suitable arrangements. The funds flow statement shows
what portion externally.
The analysis of funds flow statement for the future is externally
available to the executive in planning the intermediate and long term
financing of the firm.

USES OF FUNDS FLOW STATEMENT:It helps in the analysis of financial operations of the company.
It reveals the financing and investing policies followed by the
company.
It answers many un answered questions of general interests.
It helps in proper allocation of resources.
It is an important management tool for the financial planning.
It helps in knowing the overall credit worth users of the firm.

Procedure for Preparing Funds Flow Statement:-

The Fund Flow Statement consists of the following:1. Preparation of statement of changes in Working Capital.
2. Calculation of Funds / (loss) From operations.
3.Finding out the hidden transactions or changes in non-current
assets and non-current liabilities.
4. Preparation of statement showing Sources and Application of
Funds

CHAPTER 4
Research methodology
NEED FOR THE STUDY
The sources of funds for a business could be from both
the long term and short term. Any business to survive and
growth in the competitive market, funds are needed not only to
meet its long-term financial needs but also short-term
requirements. The long-Term sources comprising of share
capital, long term debt inclusive of debentures etc., while the
short term sources comprises of the short term loans, working
capital collection from commercial banks, loans from the call
money market and among these fall the sales which has two
phases the cash sales and the credit sales.
The study is aimed at analyzing the financial position of
Anantha PVC Pipes Private Limited and also identifying the
inflow and outflows of funds i.e., source and application of
funds.

This study will evaluate the way of the firms financial

condition how effectively the funds are mobilized and utilized
in the company for the financial year ending 31.3.04, 31.3.05
and 31.3.06. This study will thus help the company in
maintaining better financial performance, which is followed by
a blend of findings and suggestions.

SCOPE OF THE STUDY

This study refers to only individual enterprise i.e., Anantha PVC
Pipes Private Limited. In fact, an examination of all components of
Current Assets will enable to Asses the efficiency of working capital
management as all these components are interrelated.
This study is on Funds Flow position in the company. It is based on
two statements namely (1) Schedule of changes in Working capital
and (2) Funds Flow statement. The scope of two statements is given
below:(1)Schedule of changes in working capital:
this statement is prepared with Current Liabilities as appearing in
the balance sheet of the Company.
Current Asses means:
Cash in Hand. Cash at bank, Bills Receivables, Sundry Debtors,
Inventory, other short-term loans and advances etc.

Current Liabilities means:

Bills Payable, Sundry creditors, bank over draft, short term loans,
provision for taxation, proposed dividend, interest payable etc.
(2) Funds flow statement:
This statement is also prepared with sources of funds &
application of funds as appearing in the balance sheet of the
company.
Sources of funds means:

Issue of equity and preference shares, funds from operation, sale

of fixed assets (plant, land & building, furniture and etc.), issue of
debentures, Decrease in working capital, sale of investment Etc.
Application of Funds means:Purchase of fixed assets (plant, land & building, furniture, and
etc), increase in working capital, redemption of preference share
capital & debentures, Purchase of Investment, Fund for operation,
repayment of bank loan.
This study on Ananta PVC Pipes schedule of changes in Working
capital, Funds Flow statement for the past 3 years.

STATEMENT OF THE PROBLEM & HYPOTHESIS

It is proposed to analyze the liquidity position of the company and
also the timing of availability and requirement of funds to match or
not.
The problem of the statement is difference between the two shows
(i.e., sources and applications of study) the net change in the
working capital during the period.
It is assumed that bad payment collection system do not lead to
optimization of inflow & outflow of funds and profits in the company.
It is general principal followed by the financial managers all over
the world that the inflows of funds are classified as long- term and
short term. It is imperative that the business enterprise uses long
term funds for long term purpose and short-term funds for shortterm purposes. However a firm, which uses long term funds for
long term purposes, will have lot of business problem. The reason
for this is the long term funds proposed by the company generally
as a fixed cost to it. In case, if this funds are not utilized for long
-term purpose to generate cash, the company will have to pay
interest without matching incant thus leading to mismatch of inflow
funds and outflows funds.

OBJECTIVES OF THE STUDY

To know the working capital of the company and to identify

Sources and

application of fund.

study and analyze the over all financial performance of anantha

pvc pipes ltd

RECEARCH METHODOLOGY
The methodology employed for doing the present study is
that the information is collected from primary and secondary sources.
The information was used to calculate the funds flows on the basis of
these analysis interpretations were made.

Sources of data
Sources of primary data:
The primary data was collected mainly with the interactions and
discussions with the companys Executives.

Sources of secondary Data:

Most of the calculations are made on the financial statement of the
company and the company provided financial statements for 3 years.

Referring standards texts, reference books and Internet collected

some of the information regarding to the theoretical aspects.

PERIOD OF THE STUDY:

It has proposed to study the sources & Application of funds in
Ananta PVC Pipes Private Limited, for 4 years i.e., from the financial
years 2004-2005, 2005-2006, 2006-2007, and 2007-2008 .

LIMITATIONS OF THE STUDY

1) DISCLOSURE OF OVERALL VARIATION ONLY: The funds flows statement shows overall change in working capital
and not the variations in individual items, including on most
significant item cash, constituting the working capital.

2) MANUPULATION BY MANAGERS:

Since non monitory assets such as inventories are included in

working capital the management may manipulate the net change in
working capital and the resources of funds from operation of
applying any of the widely varying methods of inventory valuation
most suited to it.

3) GROUPING OF HETEROGENEOUS ITEMS: The concept of the working capital bundles monetary and non
monetary current asset, together. Consequently it includes widely
dice gent items such as cash, receivables, inventories, prepayments
etc and hence lacks homogeneity. Particularly, stock of standard
product ready for sale, may reasonable be treated as a liquid
resources, but often a large part of the inventory represents work in
progress throughout the various stages of production. This is not
proper to refer to inventories of repayments as funds.

EXISTING SYSTEM / PRACTICES IN THE

ORGANIZATION
1) General:
The financial statements are prepared under the historical cost
convention in accordance with the provisions of the Companies Act,
1956 and materially comply with the mandatory Accounting
Standards issued by the Institute of Chartered Accountants of India
except to the extent disclosed in the following notes.

2) Fixed Assets and Depreciation:

a) Gross Block:
Fixed Assets are stated at cost of Acquisition inclusive of
inland freight, duties and taxes and incidental expenses related
to acquisition with due adjustments for convert credits.

b)

Depreciation:
k. Depreciation is provided on fixed assets used during the
year under straight-line method at the rates specified in
the schedule XIV of the Companies Act, 1956.
l. Assets acquired and costing Rs.5,000 or less are being
depreciated fully in the year of addition / acquisition.

3) Sales:
Sales include excise duty, wherever applicable and rebate,
discounts, claims, expenses incurred on consignment sales
etc., are excluded there from. Sales on consignment and
expenses there against are being accounted for on receipt of
account sales from respective consignee.

4) Investments:
Long-term investments are stated at cost less permanent
diminution, if any in value. Current investments are carried at

lower of cost or fair value.

5) Inventories:
c) Inventories are valued at lower of the cost or net

realization value. Cost in respect of raw materials, stores

and spares have been calculated on weighted average
basis, which includes expenses incidental to procurement
of the same.

d) By-products are valued at net realizable value.

e) Cost in respect of finished goods includes
manufacturing expenses, factory and administrative
overheads and excise duty.

f) Cost in respect of work in progress represents, cost

incurred up to the state of completion.

6) Revenue Recognition:
All expenses and income to the extent considered payable
and receivable respectively unless specifically stated to be
otherwise are accounted for on mercantile basis.

7) Foreign Currency Transactions:

Foreign currency assets and liabilities are translated at
exchange rates prevailing at the year-end or at forward
contract rate, as applicable. The loss or gain thereon and also
on exchange differences on settlement of the foreign currency
transactions during the year are adjusted to the Profit and Loss
Account under respective heads of accounts. The difference
between forward rate and exchange rate at the date of
transaction is recognized as income or expenses over the life of
the contracts.

9. Retirement Benefits:

g) Provident & Family Pension Fund:

The Company contributes to the employees

provident & family pension fund maintained under the
employees provident fund scheme by the Central
Government.
j.

Leave Encashment Benefits:

Accruing liability towards leave encashment benefit
is provided on the basis of actual eligibility as per the
Companys rules.

k. Gratuity:

Accruing liability towards gratuity is provided on the

basis of the assumption that such benefits are payable to
all eligible employees at the end of the accounting year.
10. Miscellaneous Expenses:

Preliminary expenses and expenditure in connection

with issue of shares are being written off over a period of ten
years.
11. Borrowing Costs:

Borrowing costs that are attributable to the

acquisition, construction or production of a qualifying asset are
capitalized as part of cost of such asset till such time as the
asset is ready for its intended use or sale. A qualifying asset is
an asset that necessarily required a substantial period of time
to get ready for its intended use or sale. All other borrowing
costs are recognized as an expense in the period in which they
are incurred.

12. Contingent Liabilities:

Contingent liabilities are generally not provided for and

are disclosed by way of notes to the accounts.
13. Segment Reporting:

The accounting policies adopted for segment

reporting are in line with the accounting policies
adopted in financial statements.

14. Export

Benefits:

Export benefit arising on account of entitlement for duty free

imports are accounted for through import materials. Such benefits
under duty entitlement pass- books are accounted for on accrual
basis.
15. Government Grants and Other Claims:

Revenue grants including subsidy / rebates,

refunds, claims etc., are credited to Profit and Loss Account
under Other Income or deducted from the related expenses.
Grants relating to fixed assets are credited to capital Reserve
Account or adjusted in the cost of such assets as the case may
be, as and when the ultimate reliability of such grants etc., are
established / realized.
16. Income

Tax:

Provision for tax is made for both current and deferred

taxes. Current tax is provided on the taxable income using the
applicable tax rates and tax laws. Deferred tax assets and
liabilities arising on account of timing differences, which are
capable of reversal in subsequent periods are recognized using
tax rates and tax laws, which have been enacted or
substantively enacted.

CHAPTER 5
Review of literature
LIQUIDITY RATIOS:
Liquidity Ratios is also known as short-term solvency.
These ratios are used to measure the firms ability to meet shortterm obligations. They compare short-term obligations to short term
(or current) resources available to meet these obligations. From
these ratios, much insight can be obtained into the present cash
solvency of the firm and the firms ability to remain solvent in the
event of adversity. The creditors of the firm are primarily interested
in the short-term solvency of the firm. A firms liquidity should be
neither too high nor too low but adequate. Low liquidity implied the
firms inability to meet its maturing obligations. This will result in bad
credit rating, loss or creditors confidence or even technical

insolvency, ultimately leading to the closure of the firm. A very high

liquidity position is also bad. It means that the firms current asserts
are too high in proportion to maturing obligations. Idle assets earn
nothing to the firm. The firms funds will be unnecessarily locked up
in the current assets, which if, released can be used to generate
profits to the firm. The ratios, which measured and indicate the
extent of firms liquidity, are known was liquidity ratios or short-term
solvency ratios commonly used liquidity ratios included.
1. Current

Ratio:

Current assets include cash and those assets, which

can be converted into cash within a year, such as marketable
securities, debtors and inventories.
Current liabilities include creditors, bills payable,
accrued expenses, short-term bank loan, income tax liability
and long term debt maturing in current year.
The Current ratio is a measure of the firms short-term
solvency. A current ratio of 2 to 1 or more is considered
satisfactory. The current ratio represents a margin of safety,
for creditors. The higher the current assets in relation to
current liabilities, the more the firm ability to meet its current
obligations.
Firms with less than 2 to 1 current ratio may be doing
well, while firms with 2 to 1 or even higher current ratios may
be struggling to meet their obligation. It is a test of quantity,
not quality. The current ratio is a crude and quick measure of
the firms liquiditie

Current Assets
Current Ratio = -----------------------------------Current Liabilities

2 .QUICK RATIO;
This ratio establishes a relationship between quick, or
liquid, assets and current liabilities. An asset is liquid if it can

be converted into cash immediately reasonably soon without a

loss of value. Cash is the most liquid and included in quick
assets are book debts and marketable securities. Inventories
normally require some time for realizing into cash. the quick
ratio is found out by dividing quick assets by current
liabilities.`
Generally a quick ratio of 1:1 is considered to represent
a satisfactory current financial condition. A company with a
high value of quick ratio can suffer from the shortage of funds
it is has slow paying, doubtful and long- duration out standing
book debts. On the other hands a company with a low value of
quick ratio may really be prospering and paying its current
obligation in time if it has been turning over its inventories
efficiently. The quick ratio remains can important index of the
firms liquidity.
Liquid Assets

Quick Ratio = --------------------------------Current Liabilities

Liquid Assets = Current Assets Inventories

3. ABSOLUTE LIQUID/CASH RATIO:

It is suggested that it would be useful, for the
management if the liquidity measure also takes into account
reserve borrowing power. As the firms real debt paying
ability depends not only on cash resources available with it
but also on its capacity on its capacity on borrow from the
market at short notice. Absolute liquid assets include cash in
hand and at bank and marketable securities or temporary
investments. This ratio may be expressed as undered.
Absolute liquid assets
ABSOLUTE LIQUID RATIO= --------------------Current liabilities

4. NETWORKING CAPITAL RATIO:-

The difference between Current Assets and Current

Liabilities excluding short term bank borrowings is called Net
working capital .It is sometimes used as a measure of a firms
liquidity. It is considered that, between two firms, the one having the
larger Net working capital has the greater ability to meet its current
obligations. This is no necessary so; the measure of liquidity is a
relationship, rather than the difference between Current Assets and
Current Liabilities.

Net working capital

Net working capital ratio = -------------------------------Net assets

Net working capital = Current Assets - Current Liabilities

Statement of Changes of Working Capital:

The increase or decrease in Working Capital can be
calculated by preparing the schedule of changes in working capital.
Working Capital represents the excess of current
assets over current liabilities. Several items of all current assets and
current liabilities are the components of Working Capital. In order to
ascertain the Working Capital at the beginning and at the end of the
period and to measure the increase or decrease therein it is
necessary to prepare a Statements or Schedule of Changes Working
Capital.

Previous year Current year Effect on Working Capital

Rs.
Rs.
Increase
Decrease
Rs.
Rs.

While preparing a schedule of changes in

Working Capital it should be noted that:
1. (a) An increase in Current Assets increase in Working Capital.

(b) A decrease in Current Assets decrease in Working Capital.

(c) A increase in Current Liabilities decrease in Working Capital
(d) A decrease in Current Liabilities increase in Working
Capital.
(e) An increase in Current Assets and increase in Current
Liabilities does not affect Working Capital.
(f) A decrease in Current Assets and decrease in Current
Liability does not affect Working Capital.
(g) Changes in fixed (no-current) assets and fixed (noncurrent) liabilities affect working capital.
2. The changes in all current assets and current liabilities are
merged into one figure only either an increase or decrease in
working capital over the period for which funds statements has
been prepared. If the working capital at the end of the period
is more than the working capital at the beginning thereof.

3. The difference is expressed as increase in working capital. On

the other hand, if the working capital at the end of the period is
less than at the commencement, the difference is called
decrease in working capital.

Working Capital = Current Assets Current

Liabilities

Current Assets:
The expression current assets denotes those assets, which are
continually on the move. Since they are constantly in motion, they
are also known as the circulating capital of the business. These
assets can or will be converted into cash during a complete operating
cycle of the business. Current Assets include.
a. Stock-in-trade or inventories
b. Debtors
c. Payments in advance or prepaid expenses
d. Stores
e. Bills receivable
f. Cash at bank
g. Cash in hand
h. Work-in-progress, etc.

Current Liabilities:
Current liabilities are those liabilities, which are to be paid in the
near future, i.e., during a complete operating cycle of the business.
Such liabilities include:
a. Trade Creditors
b. Accrued or outstanding expenses
c. Bills Payable
d. Income-tax payable
e. Dividends declared
f. Bank overdraft.

Note:- Some experts are of the opinion that as bank overdraft has a

tendency to become more or less permanent source of financing, and

hence it need not be included among current liabilities.

Statement of Sources and Application of

Funds:
1. Funds

from Operations:-

It is an internal source of funds. Funds from operations are to be

calculated as per the method stated above.

2. Funds from long-term loans:Long-term loans such as debentures, borrowings from financial
institutions will increase the working capital and therefore, there will
be inflow of funds. However, if the debentures have been issued in
consideration of some fixed assets, there will be no inflow of funds.

3. Sale of fixed assets:

Sale of land, buildings, and long-term investments will result in

generation of funds.

4. Funds from increase in share capital:

Issue of shares for cash or for any other current asset or in
discharge of current liability is another sources of funds. However,
shares allotted in consideration of some fixed assets will not result in
funds. However, it is recommended that such purchase of fixed
assets as well as issue of securities to pay for them be revealed in
Funds Flow Statement.

5. Decrease in Working Capital:

Decrease in working capital is the result of decrease in current
asset or increase in current liabilities. In both the cases inflow of
funds takes place. Suppose stock, a current asset reduces from
Rs.15,000 to Rs.12,000 the decrease of Rs.3,000 is assumed to be
due to the disposal of stock which undoubtedly brings funds into the
business. In the same way, increase in current liabilities mean lesser
payment, so retaining funds is also a source.

Funds Flow Statement

Sources
Issue of Shares
Issue of Debentures
Long term Borrowings
Sale of Fixed Assets
Operating Profit

Rs. Applications of Funds

xxx Redemption of Redeemable
Preference Shares

Rs.

xxx Redemption of Debentures

xxx

xxx

xxx

Payment of Other Long-term

loans

xxx

Purchase of Fixed Assets

xxx

xxx Operating Loss

Decrease in Working xxx Payment of Dividends taxes,

Capital
etc.
xxxx Increase in Working Capital

xxx
xxx
xxxx

(*)
(*) Only one will be there.

CHAPTER ---6
DATA ANALYSIS AND
INTERPRETATION
Table -1
Current liabilities (in-Rs)

Ratio

2004-05 6,20,39,946

4,88,10,231

1.27

2005-06 5,98,55,287

2,70,11,470

2.21

YEAR

Current assets

(in-Rs)

2006-07 8,11,03,553

1,01,04,429

8.02

2007-08 8,47,55,133

90,20,957

9.39

Interpretation:
The above table shows the current ratio during the study
period. The ratio was 1.27 in 2005, which increased to 9.39 in
2008 and which is too above from the standard ratio that is
2:1

Table: 2
YEAR
2004-05
2005-06
2006-07
2007-08

LIQUID ASSETS
(in-Rs)
5,17,74,131
91,68,641
7,31,48,576
6,69,31,734

CURRENT LIABILITIES
(in-Rs)
4,88,10,231
2,70,11,470
1,01,04,429
90,20,957

RATIO
1.15
0.33
7.23
7.41

Interpretation:
From the above table we see that quick ratio was
standard during the study period. Which is also higher
then the standard ratio that is 1:1

Table: 3
YEAR
ABSOLUTE LIQUID ASSETS CURRENT LIABILITIES RATIO
2004-05 4,12,018
4,88,10,231
0.008
2005-06 4,89,988
2,70,11,470
0.01

2006-07 10,30,357
2007-08 12,75,758

1,01,04,429
90,20,957

0.10
0.14

Interpretation:
It is inferred from the above table that cash ratio is
continuously increasing. So the company maintains cash
reserves in the same manner in future also.

Table: 4
Year
2004-05
2005-06
2006-07
2007-08

NETWORKING CAPITAL
(in-Rs)
1,32,29,715
3,28,43,817
7,09,99,124
7,57,34,176

NET ASSETS
(in-Rs)
6,20,39,946
5,98,55,287
8,11,03,553
8,47,55,133

RATIO
0.21
0.54
0.87
0.89

Interpretation:
It is inferred from the above table that the net
working capital should be increased in the manner for 5 years
it means that the company can increase the working capital
in future also.

STATEMENT OF CHANGES IN WORKING CAPITAL 2004-2005

Particulars
(A) Current assets:
Closing stock
Stores and spares

2004
(in-Rs)

2005
(in-Rs)

Increase(+) Decrease(-)
(in-Rs)
(in-Rs)

2,77,88,120 92,48,773
8,29,175
10,17,042

1,85,39,347
1,87,867

Sundry debtors
Balance with bank
Cash in hand
Other Assets

2,10,20,651
4,26,978
1,09,025
1,79,28,831

Total current assets (A)

(B) Current liabilities:
Sundry creditors
Sales tax defercment
Cheque discount
Payable expenses

6,81,05,780 6,20,39,946

Total current liabilities(B)

Net working capital (A-B)
Decreased in working capital

3,26,57,425 1,16,36,774
3,46,965
83,013
65,053
43,973
1,87,04,689 7,75,858

3,54,94,572 1,58,05,553 1,96,89,019

1,01,63,441 1,30,43,696
28,80,255
1,88,41,280
1,88,41,280
11,07,702
11,19,702
12,000
4,67,65,715 4,88,10,231
2,13,40,065 1,32,29,715
81,10,350
81,10,350
2,13,40,065 2,13,40,065 4,03,99,868 4,03,99,865

Total

Interpretation;

From the above table it is obscene that the net working capital decreased from
2,13,40,065 to 1,32,29,715 in the year 2005. It might be the causes of the debtors have
increased by 81,10,350. It impacts the cash and bank balances. In the current liabilities
the payable expenses also increased by 81,10,350.

FUNDS FLOW STATEMENT

SOURCES

in-Rs

APPLICATION

in-Rs

Decrease in
working
capital
Secured
loans

TOTAL -

Purchase of fixed
81,10,350 assets
78,71,764
1,11,54,857

Payment of
un-secured loans 28,80,255
Capital work in
10,48,074
progressFunds from
74,65,144
operation
1,92,65,207 TOTAL 1,92,65,207

STATEMENT OF CHANGES IN WORKING CAPITAL 2005-2006

Particulars

2005
(in-Rs)

2006

Increase(+) Decrease(-)
(in-Rs)
(in-Rs)

(in-Rs)

(A) Current assets:

Closing stock
Stores and spares
Sundry debtors
Balance with bank
Cash in hand
Other Assets
Total current assets (A)
(B) Current liabilities:
Sundry creditors
Sales tax defercment

92,48,773
10,17,042
3,26,57,425
3,46,965
65,053
1,87,04,689

2,19,50,619 1,27,01,846
3,55,965
66,1,077
2,83,80,062
42,77,363
3,55,831
8,866
1,34,157
69,104
86,78,653
1,00,26,036

6,20,39,946 5,98,55,287
1,58,05,553 88,76,129
69,29,423
1,30,43,696 1,81,35,341

50,91,645

Cheque discount
Payable expenses

1,88,41,280
1,88,41,280
11,19,702
11,19,702
4,88,10,231 2,70,11,470

Total current liabilities(B)

Net working capital (A-B)
Increased in working capital

1,32,29,716 3,28,43,817
1,96,14,100
1,9614,100
3,28,43,817 3,28,43,817 3,96,70,221 3,96,70,221

Total

Interpretation;

From the above table it is obscene that the net working capital increased from
1,32,29,715 to 3,28,29,715 in the year 2006. it might be the cause of the debtors have
decreased by 81,10,350. it impacts the cash and bank balances. In the current liabilities
the payable expenses also decreased by 1,96,14,100.

FUNDS FLOW STATEMENT

SOURCES
Un-secured
loansSecured
loans

in-Rs
APPLICATION
in-Rs
50,91,645 Purchase of fixed
1,26,16,582
assets
1,11,54,857 Increase in
working capital- 1,96,14,100

Capital

7,64,423

Funds from
operation TOTAL -

2,09,52,536
3,22,30,682 TOTAL -

3,22,30,682

STATEMENT OF CHANGES IN WORKING CAPITAL 2006-2007

Particulars
(A) Current assets:
Closing stock
Stores and spares
Sundry debtors
Balance with bank
Cash in hand
Other Assets
Total current assets (A)
(B) Current liabilities:
Sundry creditors
Sales tax defercment
Payable expenses

2006
(in-Rs)

2007
(in-Rs)

2,19,50,619
3,55,965
2,83,80,062
3,55,831
1,34,157
86,78,653

73,40,472
6,14,505
6,24,34,865
7,62,795
2,67,562
96,83,354

Increase(+) Decrease(-)
(in-Rs)
(in-Rs)
1,46,10,147
2,58,540
3,40,54,803
4,06,964
1,33,405
10,04,701

5,98,55,287 8,11,03,553
64,20,962
71,43,087
1,81,35,341
24,55,167
29,61,342

7,22,125
1,81,35,341
5,06,175

2,70,11,470 1,01,04,429
Total current liabilities(B)
Net working capital (A-B)
Increased in working capital

3,28,43,817 7,09,99,124
3,81,55,307

Total

7,09,99,124 7,09,99,124 5,39,93,754 5,39,93,754

3,81,55,307

Interpretation;

From the above table it is obscene that the net working capital increased from
3,28,43,817 to 7,09,99,124in the year 2007. It might be the cause of the debtors have
decreased by 3,81,55,307. It impacts the cash and bank balances. In the current liabilities
the payable expenses also decreased by 3,81,55,307.

FUNDS FLOW STATEMENT

SOURCES
Un-secured
loansSecured
loans
Capital

in-Rs
APPLICATION
44,23,018 Increase in
working capital2,07,120
1,50,00,000

Sale of fixed 24,32,956

assets Funds from 1,62,99,333

in-Rs
3,81,55,307

operationTotal -

3,81,55,307 Total -

3,81,55,307

STATEMENT OF CHANGES IN WORKING CAPITAL 2007-2008

Particulars
(A) Current assets:
Closing stock
Stores and spares
Sundry debtors
Balance with bank
Cash in hand
Other Assets
Total current assets (A)
(B) Current liabilities:
Sundry creditors
Payable expenses

2007
(in-Rs)

2008
(in-Rs)

Increase(+) Decrease(-)
(in-Rs)
(in-Rs)

73,40,472
6,14,505
6,24,34,865
7,62,795
2,67,562
96,83,354

1,61,16,716
17,06,680
5,35,87,898
11,49,509
1,26,249
1,20,68,081

87,76,244
10,92,175

81103553

84755133

71,43,087
65,88,823
29,61,342
24,32,134
1,01,04,429 9020957

88,46,967
6,36,546
1,18,00,519
23,84,727

5,54,264
5,29,208

Total current liabilities(B)

Net working capital (A-B)
Increased in working capital

47,35,052

Total

7,57,34,176 7,57,34,176 1,35,82,019 1,35,82,019

47,35,052

Interpretation;

From the above table it is obscene that the net working capital increased from
7,09,99,124 to 7,54,34,176in the year 2008. It might be the cause of the debtors have
decreased by 47,35,052. It impacts the cash and bank balances. In the current liabilities
the payable expenses also decreased by 47,35,052.

FUNDS FLOW STATEMENT

SOURCES
Un-secured
loansSecured
loans
Sale of fixed
assets Funds from
operationTotal -

in-Rs
APPLICATION
10,75,293 Increase in
working capital17,97,216

in-Rs
47,35,052

14,84,689
21,75,070
47,35,052 Total -

47,35,052

STATEMENT OF CHANGES IN WORKING CAPITAL

Particulars
(A) Current assets:
Closing stock
Stores and spares
Sundry debtors
Balance with bank
Cash in hand
Other Assets
Total current assets (A)
(B) Current liabilities:
Sundry creditors
Sales tax deferment
Cheque discount
Payable expenses
Total current liabilities(B)

2005
(in-Rs)

2006
(in-Rs)

2007
(in-Rs)

2008
(in-Rs)

2009
(in-Rs)

2,77,88,120
8,29,175
2,10,20,651
4,26,978
1,09,025
1,79,28,831

92,48,773
10,17,042
3,26,57,425
3,46,965
65,053
1,87,04,689

2,19,50,619
3,55,965
2,83,80,062
3,55,831
1,34,157
86,78,653

73,40,672
6,14,505
6,24,34,865
7,62,795
2,67,562
96,83,354

1,61,16,716
17,06,680
5,35,87,898
11,49,508
1,26,249
1,20,68,081

6,81,05,780 6,20,39,946 5,98,55,287 8,11,03,553 8,47,55,133

3,54,94,572 1,58,05,553 88,76,129 71,43,087 65,88,823
1,01,63,441 1,30,43,696 1,81,35,341
1,88,41,280
11,07,702 11,19,702
29,61,341 24,32,134
4,67,65,715 4,88,10,231 27011470 1,01,04,429 90,20,957

Net working capital (A-B) 2,13,40,065 1,32,29,715 32843817

70999124

75734176

CHAPTER---7
FINDINGS, SUGGESTIONS & CONCLUSION
FINDINGS, CONCLUSINS & SUGESTIONS FINDINGS:

Working Capital

1. In 2004-05, the company has generated a surplus of

Rs.81,10,350 as internal sources of funds, which worked out to
be 100%of the total sources of funds.

2. During 2005-06 the company utilized Rs.1.96.14.100 towards

finance of the working capital.
3. During 2005-06 the companies utilized RS.3,81,55,307 towards
finance, which worked out to be total application of funds
utilized.

During the study period, it is observed that the first (2004-05) year
working capital generated funds and in their latter two latter two
years it has utilized funds to meet its working capital requirements.

Funds from operation;

1. In 2004-05 the company had generated loss on funds for
operation amounted Rs. 74.65,144 total funds.
2. In 2005-06 the company had generated funds from operation
amount to Rs.2,09,52,536.
3. During the year 2006-07 lf analyses, the company had
generated funds from operation amount Rs.1,62,99,333.

SUGESTIONS
1) A fresh look into the extension of product line.
2) Steps should be initiated in order to cut down the expenses
of the company which; are found to affect to the maximum in;
all the years of study.
3) Efficient of assets utilization for revenue generation is
suggested.
4) Improving the sales performance is desirable. For this, a
dynamic team should be designed, which; can project the
company by its extensive and result oriented marketing
activities enabling the company to complete internal markets.

5) Better utilization of sources of funds is suggested for

getting maximum benefits.

CONCLUSIONS

The following conclusions are arrived at based on the

observations made on the present study:1. Except of the first year (2004-05) the study period it is
observed that
the fund for operation is on loss. It
generated the funds in application of total funds.
2. Except of the first year of the study of period, funds were
utilized for financing the working capital need.
3. The study revealed a mixed trend of application and sources of
funds in respect of
4. Secured and unsecured loans.

BIBLIOGRAPHY;

Author
Title of the book

:
:

I.M. Pandey
Financial management

Publisher
pvt.ltd.

Vikas publishing house

Edition

Eighth edition

Author

M.Y.Khan and P.K.Jain

Title of the book

Financial management

Publisher
publishing co.ltd

Tata McGraw Hill

Edition

Third edition

Author

Prasanna chandra

Title of the book

Financial management

Publisher

Edition

Tata McGraw Hill

publishing co.ltd
Fourth edition