PROPOSED SYNOPSIS ON

“A STUDY OF FUNDS FLOW STATEMENT”

AT SIBAR AUTOPARTS PVT LTD

Submitted to Chadalawada Ramanamma Engineering college for

The year 2018-19 in partial fulfillment of the requirements for the award of

Masters program in Business Administration

SUBMITTED BY

K. YALLAPPA

Reg. No. 17P11E00C7

UNDER THE GUIDANCE OF

ASSOCIATE PROFESSOR

J. SUCHARITHA

CHADALAWADA RAMANAMMA ENGINEERING COLLEGE

(AUTONOMOUS)
2017-2019

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 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 firm's 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.

The funds flow statement is a statement which shows the movement of funds and is a
report of financial operations of the business undertaking. It indicates various means by
which funds were obtained during a particular period and the ways in which these funds were
employed. In simple words it is a statement of sources and applications of funds.

The funds flow is designed to analyze the changers in the financial condition of a
company between two periods. This statement will highlights the sources from which funds
are received and the uses to which these have been put and it enables to know with reasons
the basic causes of changes in net working capital. This statement is also termed as
“Statement of changes in the financial position on working capital basis”.

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 of cash only and a flow statement prepared on this basis is called
as "cash flow statement".

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 Industry Profile

The present automobiles are most sophisticated combining luxury, safety economy in
utilizing the energy resource with great speed and least environment pollution using various
fields of science like aerodynamics, mechanical expertise and electrical engineering. Every
day improvement in the existing models holding the price line in reasonable range involving
high economy in fuel consumption and building light cost comfortable body health become
necessity. Present day consumer satisfaction involves great skill in marketing, advertising
and positioning the product line whim and Cashion advance with increased performance and
reduce size. Business minded man started selling them to top society.
The automobile components and ancillary industry in India has made big strides in
last couple of years following the introduction of the manufacturing programe for the main
products with the launching of a major modernization scheme by the manufacturers,
substantial progress has been made towards indigenization of the auto components and spare
parts.
In the process the company has developed various models of Asia’s biggest two
wheelers manufacturers like M/A BAJAJ AUTO LTD; M/a HERO MOTORS LTD and m/s
ENFIELD INDIA LTD; etc from a turnover of approximately Rs 190 lakhs in the year
1993-94 company achieve Rs 843 lakhs in turnover in the year 1996-97 besides serving the
OEMS in the company, is sill in the overseas market with a good market. ACMA
The Automotive Component Manufacturers Association of ​India (ACMA) is the
nodal agency for the​ Indian Auto​ Component Industry.

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 It's active involvement in trade promotion, technology up-gradation, quality
enhancement and collection and dissemination of information has made it a vital catalyst for
this industry's development. It's other activities include participation in international trade
fairs, sending trade delegations overseas and bringing out publications on various subjects
related to the automotive industry.
ACMA is represented on a number of panels, committees and councils of the
Government of ​India ​through which it helps in the formulation of policies pertaining to the
Indian automotive industry​.

Indian auto components industry:

The Indian auto ancillary industry has come long way since it had small beginnings in
the 1940's. If the evolution of the industry is traced in India, it can be classified into three
distant phases namely; period prior to the entry of Marti Udhyog ltd, period after the entry of
Marti Udhyog ltd and period post liberalization. The period prior to the entry of Marti
Udhyog ltd was characterized by small number of auto majors like Hindustan motors,
premier auto mobiles, Telco, Bajaj, Mahindra & Mahindra.

The entry of martin in the 1980s marked the beginning of the second phase of the
industry. The auto ancillary industry in the country really showed a spurt in growth during
this period. This period witnessed the emergency of a new generation of auto ancillary
manufactures, who were required to meet the stringent quality standard of Marti’s Korean
collaborator Suzuki of Japan.

The auto ancillary industry witnessed huge capacity expansions and modernization
initiatives in post liberalization period. Technological collaborations and equity partnerships
with world leaders in auto components become a common affair. However, the global
automobile majors soon realised the folly of their estimations in India.

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Global scenario:

Prior to 2000, it had been almost ten years, since TTS (Tire transfer systems) had
been awarded any new transfer case business for the European market. Then concerted efforts
were made to Re-entre that market & attain new business with improved technologies. In the
global scenario of transfer case industry there are significant differences between the
American and European markets.

While the American car-buyer is primarily interested in traction & larger, more
powerful vehicles, the European driver is more interested in vehicle handling, stability and
safety. But as the American car buyers are more interested in powerful engines the auto
makers are offering a wide range of SUVs for which the torque transfer system (TTS) Is
particularly well suited making the 2 wheels drive into 4 wheel drive (4*4). The vehicles tend
to technically more creating new market potential for TTS.

Location:
The registered office and plant was located at Industrial Estate, Renigunta Road,
Tirupati, Chittoor Dist., in Andhra Pradesh.

Promoters:
​The Promoter and Managing Director of this company is Mr. P.VEERA NARAYANA,
who is having very good experience in automobile Engineering and Tool Designing. He had
been associated with leading Two-wheeler manufacturers in India, where the company’s had
collaboration from Europe.

Management:

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 The management and board of directors. It comprises of Executive Directors and Non
Executive Directors. The managing Director and Vice chairman of company is Mr. P. Veera
Narayana and board of directors consists of 10 members including APIDC nominee.

Company Profile

M/S SIBAR AUTO PARTS LTD, was originally incorporated as private Ltd
company by name M/S SIBAR AUTO PARTS (PVT) limited located at industrial Estate
Tirupathi. It was converted into public ltd company in the year 1994. The company is
presently engaged in manufacturing and marketing of aluminum hard chrome plated cylinder
kits mainly for the two wheelers up to engine capacity 150CC.
The company had started on aluminum foundry with a small capital of Rs 3.00 lakhs
to manufacturer aluminum alloy castings. The castings were supplied to reputed
establishments TVS, SHKNEY PARIS ROHME limited etc., in year 1987 the company
expanded it is active to achieve the original conceived idea of manufacturing aluminum hard

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chrome plated cylinders blocks four two wheelers applications the entire technology
development was started by in house R$D skills and in the course of time the technology was
developed with the in house R$D network, the quality of the product was found very good
land it was accepted in the European market immediately. The company was reached about
272 lakhs worth of exports and the company also received MERIT AWARD FROM
EXPORT PROMOTION COUNCIL (EPC) for the excellence in exports during the year
1994-95 and in the same year the company had come with in a public issue and it was over
subscribed by 18 times which only shows the company credibility among the started
developing the cylinders for domestic ORIGINAL EQUIPMENT (OE) manufacture.
In the process the company has developed various models of Asia’s biggest two
wheelers manufacturers like M/A BAJAJ AUTO LTD; M/a HERO MOTORS LTD and m/s
ENFIELD INDIA LTD; etc from a turnover of approximately Rs 190 lakhs in the year
1993-94 company achieve Rs 843 lakhs in turnover in the year 1996-97 besides serving the
OEMS in the company, is sill in the overseas market with a good market.

Promoters

The Promoter and Managing Director of this company is Mr. P.VEERA NARAYANA, who
is having very good experience in automobile Engineering and Tool Designing. He had been
associated with leading Two-wheeler manufacturers in India, where the company’s had collaboration
from Europe.

Management

The management of board of directors. It comprises of Executive Directors and Non Executive
Directors. The managing Director and Vice chairman of company is Mr. P. Veera Narayana and
board of directors consists of 10 members including APIDC nominee.

Finance

The company had started an Aluminum Foundry with a small capital of Rs.3 Lakhs to
manufacture Aluminum Alloy castings. The sources of finance are from financial institutions and

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banks, mainly from Industrial Development Bank of India, Chennai and Central Bank of Hyderabad
Stock Exchange Ltd., Hyderabad and the Stock Exchange Mumbai.

Raw materials

Most of the raw materials to manufacture cylinder blocks are available from Hyderabad,
Chennai and Calcutta. The following are some of the raw materials used for the production;

Aluminum Alloy

Caustic Soda

Shell Sand

LDO oil

Chronic Aci

Diamond Honing sticks

Nickel Carbonate

About the product

In India automobiles engine cylinders are predominately of cast iron or of aluminum with cast
iron sleeves whereas world wide there is a growing shift to aluminum alloy cylinders and engine
blocks.

Aluminum cylinders with hard chrome plating reduce Engine weight significantly. Also the
wear and tetar the piston bore is Reduced drastically because cylinders have about 900 vickers
hardness, consequently giving better mileage and fuel efficiency.

Unlike aluminum with cast iron sleeves hard chrome plated Aluminum Cylinders are of
dissipation very close clearance is possible between bore and piston four optimal engine power out put
with out fear of seizure at higher temperature. Aluminum chromo plated cylinders also consume less
oil and cast iron cylinders and hence and less polluting and cheaper to maintain.

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Product advantages

✔ The life of the aluminum cylinder block is much longer than conventional cast-iron cylinder
blocks. This is due to higher hardness in Aluminum cylinder block, because the Bore is
plated with hard chrome nickel. Since the hardness is much higher and the wear pattern of the
bore is much also less.

✔ Since the Aluminum is a light metal, the fuel efficiency is also better.

✔ Since both piston and Cylinder Block are of the same material, the expansion is uniform,
which will be an added advantage.

✔ Since the Bore is finished with Nickel, the ratio of oil is used, may also be comparatively less.
This helps to maintain very low emission.

✔ Since the wear pattern of the cylinder bore is very less, the cost of maintenance is very
negligible.

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 Review Of The Literature

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 firm’s 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.
C​ash only and a flow statement prepared on this basis is called as ”cash 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.

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 Research 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 flow on the basis of these analysis interpretations was made.

Objectives of fund flow statement analysis:

(1) To analysis it pinpoints the mobilization of resources and the further utilization of
resources at sibar auto part pvt ltd.
(2) To findout it highlights the financing of the general expansion of the business firm
sibar auto pvt ltd.
(3) To exemplifies the utilization of debt finance in the structure of financing at sibar
auto parts pvt ltd.
(4) To portrays the relationship between the financing, investment, liquidity and dividend
decision of the firm during the given point of time at sibar auto part pvt ltd.

Scope Of The Study​:

This study refers to only individual enterprise i.e., Sibar Auto Parts 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

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(1) Schedule of changes in Working capital and

(2) Funds Flow statement.

Limitation 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)Manipulation 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 is treated as 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".

Sources Of Data
Primary data:

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 Information collects from financial experts data of Sibar Auto Parts Limited
Secondary data:
Information collects from company websites journals, newspapers Sibar Auto Parts
Limited

Techniques Of Data Collection

The data collected is subjected to the techniques of fund flow analysis and changes in
working capital. This clearly brings out a clear picture of inflow and out flow of funds an

also analysis the movement and management of funds.

Findings
The current liabilities are on increasing trend, so researchers suggested that it does not
increase in the same proportion in future.
The standard current ratio is 2:1. The company’s current ratio is above the standard it
is suggested that the company maintain its current ratio in the same way in future.
Every year it is observed that the company has to repaying the loans. It is suggested
that the company should take risk.
New shares may be issued instead of raising loans of high interest.
The working capital employed by the company. The company recommended not to
increase the current liabilities and also to decrease the current assets in future.
The current assets have increased tremendously in the years therefore the researchers advised
to reduce the current assets, if too much is invested on current assets there will be blockage of
funds which could otherwise be utilized for some productive purpose.

Suggestions

The firm should establish optimum capital structure.

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 The company has idle cash balance which may reduce the profitability company may
invest such idle cash in marketable securities.
Steps should be initiated in order to cut down the expenses of the company which are
found to affect profitability of the company.
Efficient of assets utilizations for revenue generation is suggested.
Efforts should be made to improve sales level so as to increase funds from operation.
Better utilizations to sources of funds in suggested for getting maximum benefits.

Conclusion

It is an enriching experience at Sibar Auto Parts Limited during my project study.

There has been so much knowledge going out the extend for the last two months about “A
study on Funds flow statement”.

Bibliography

Books
TITLE Author
Financial Management I.M.Pandey (9​th​ edition)
Financial Management and Policy V.K.Bhalla (5​th​ edition)
Financial Management Prasanna Chandra
Financial Management M.Y.Khan&P.K.Jain

Other sources:

Primary and secondary Data of Sibar Auto Parts Limited.

Previous year Balance Sheet of Sibar Auto Parts Limited

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Journals:
The ICFAI Journal of Applied Finance
Finance India (Indian Institute of Finance)
Web site:
www.sibarautoparts.com
www.google.com
www.wikipedia.com

Signature of guide Signatue of student

(J SUCHARITHA) (K YALLAPPA)

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