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 By
SIVA RAMA KRISHNA JANJAM
MBA (FINAL)
(REGD NO: 109258502040)
(2009-2011)
Under the esteemed guidance
Miss.V.REKHA
M.B.A
PG-Department of Management Studies

IDEAL 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.

CONTENTS
Chapter-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.
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:
EFFECTIVE CAPACITY(%)
45
40
35
30
25
20
15
10
5
0
WA STE PPR BA SED WOOD BASED AGRO RESIDU
B ASED
Regional capacity Distribution:

REGIONAL WISE PAPER DISTRIBUTION
EAST
20%
SOUTH WEST EAST

27% 21%
WEST
NORTH
SOUTH
NORTH
32%
1. c) State wise working capacity is as follows:

Paper & paperboard: state wise working capacity.
% in total working
State No.of mills Working capacity capacity
Maharastra 73 1029 18.7
Uttar Pradesh 83 919 16.7
Gujarat 68 758 13.8
Andhra Pradesh 20 513 9.3
Tamil Nadu 32 423 7.7
Punjab 35 360 6.5
Orissa 9 299 5.4
Karnataka 13 257 4.7
West Bengal 16 169 3.1
Madhya Pradesh 23 213 3.9
Haryana 19 197 3.6
Assam 1 200 3.6
Bihar 6 16 0.3
Himachal Pradesh 10 71 1.3
Kerala 4 19 0.3
Rajasthan 9 27 0.5
Pondicherry 2 24 0.4
Jammu & Kashmir 1 5 0.1
Total 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 Electrical Thermal Electrical Thermal
(G.cal) (kwh) (G.cal) (kwh) (G.cal) (kwh)

Chipping 0 41 0 58 0 42
Pulping .98 230 1.65 256 68 11
Chemical 1.88 141 2.16 188 15 33
Recyclin
g
Stock 0 213 0 238 0 12
making
Paper 1.92 387 2.43 482 27 25
making
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 & 1239 1310 1386 1468 1555 1648 9.3
printing paper
Cream wove 974 1018 1063 1111 1161 1214 4.5
Braced copies 59 66 74 83 93 104 12.0
Coated chrome 86 95 104 115 126 139 10.0
paper
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 223 240 260 280 303 327 8
boards
MG poster(< 147 147 147 147 147 147 0
60gsm)
MG poster 147 147 147 147 147 147 0
(color)
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 &
33 40 5 45 45 75 95 130 7.9
printing paper
Cream wove 0 1 5 0 0 0 0 0 0
Map litho 4 2 30 10 10 25 40 60 14.9
Coated
0 0 10 10 10 15 20 25 20.1
chrome paper
Art paper 11 26 20 15 15 20 20 25 4.6
Art boards 18 12 20 10 10 15 15 20 0
Industrial
60 32 85 25 25 45 70 125 5.2
paper
Kraft's 40 27 50 10 10 25 40 80 9.9

Duplex 20 5 30 10 10 15 25 40 5.9
Grey &
0 0 5 5 5 5 5 5 0
White boards
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.
WORLD PAPER PRODUCTION
60
50
40
PRICE 30
20
10
0
NEWS PRINT PRINTING & OTHERS
WRITING
PRODUCT

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 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000
tonnes
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 2.91 6 7 7 9 10 10 11 11 12
America
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) Impact of Internet on world demand:
Writing &printing US Western Rest of the Total

Japan
paper Europe World
Uncoated
-0.37 -0.35 -0.11 -0.01 -0.84
mechanical paper
Coated mechanical
-0.38 -0.39 -0.11 -0.02 -0.90
paper
Uncoated wood free
-0.17 -0.02 -0.02 0.00 -0.17
paper
Coated wood free
-0.42 0.32 -0.12 -0.02 -0.24
Paper
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)
Wood based
Waste based
Units
Units
Capacity 33000 tonnes 55000 tonnes
Cost Rs 250million Rs 2221 million
Cost of plant &equipment 75% 75%
67% 67%
Debt on proportion of
debt & equity

Interest rate 17% 17%
Total interest Rs 28 million Rs 253 million
Cost per annum

Depreciation rate 5.5% 5.5%
Total depreciation Rs10 million Rs 92 million
Cost per annum

Total of interest& Rs 39 million Rs 345 million
depreciation
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 4752
Kwh 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 939 954 964 964 964 0.8
capacity
Capacity 50 50 51 52 53 0
utilization

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 29th 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
PAPER MAKING CYCLE
DIGESTION
RAW MATERIAL
SIZE REDUCTION (COOKING)
PROCUREMENT
BLEACHING WASHING
GRAVITY AND SUCTION

STOCK PREPARATION SHAPING THE FLOW
DRAINAGE
CALENDARING DRYING PRESSING
PRODUCT
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.
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
400000
350000
300000
250000
200000 production
150000
100000
50000
0
2004-05 2005-06 2006-07 2007-08
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'.
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 Income from business
operations(profit) xxx operation(loss) xxx
Issue of shares at par Redemption of shares at par

(discount /premium) xxx (discount /premium) xxx
Issues of debentures at par Redemption of debentures at

(discount /premium) xxx Par (discount /premium) xxx
Long term and medium Payment of loans xxx

loans taken xxx
Sale of investments xxx Purchase of investments xxx
Non- trading income xxx Non-trading payment xxx
Sale of fixed assets xxx Dividend paid xxx

Decrease in working capital xxx Increase in working capital xxx
Total xx Total xxx

x
• Sources –Application = increase in working capital.
• Application –Sources = decrease in working capital.
PROFORMA OF STATEMENTS OF CHANGES IN WORKING

CAPITAL
Particulars Previou Current Effect of change in

s Year Working Capital
Year Increase Decrease
CURRENT ASSETS
Cash xxx xxx

Bank xxx xxx
Bills receivables xxx xxx
Debtors xxx xxx
Start xxx xxx
Prepaid expenses Xxx xxx
TOTAL(A) Xxx xxx

CURRENT LIABILITIES
Bills payable xxx xxx

Bank over draft xxx xxx
Creditors xxx xxx
Provision for income tax xxx xxx
Outstanding expenses xxx xxx
TOTAL(B) Xxx xxx

NETWORKING CAPITAL
(A-B)
xxx xxx
Increase/decrease in Xxx xxx
working capital
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 Rs

To depreciation written off xxx By opening balance xxx
To provision for tax xxx By dividends already credited to

R & D account xxx
To proposed dividend xxx
By over-provision for taxation
The preliminary expenses written off xxx written back xxx
To good will written off xxx By gain on sale of fixed assets xxx
To discount on issue of shares and By funds from trading operations

debentures xxx (balancing figure) xxx
To different revenue expenses already

changed xxx
To transfer to general reserves xxx
To transfer to sinking fund xxx
To loss on sale of fixed assets written xxx

off
xxx
To closing balance
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 2005 Changes in working capital

(Rs) (Rs) Increase Decrease

Current assets:
Inventories 153,82,60,271 135,29,84,499 --- 18,52,75,772

Sundry debtors 7,31,85,488 12,48,86,536 5,17,01,048 ---
Cash and bank balances 5,30,91,438 5,52,57,959 21,66,521 ---
Other current assets 12,98,174 6,52,331 --- 6,45,843
Loans and advances 20,40,18,611 6,04,77,777 --- 14,35,40,834
Total current assets

186,98,53,982 159,42,59,102
Current liabilities and
provisions:
Sundry creditors 10,86,80,984 ---

72,09,04,101 61,22,23,117 29,61,215 ---
Unclaimed liabilities 1,62,40,099 1,32,78,884 42,49,059 ---
Advances received against sales 82,88,580 40,39,521 1,200 ---
Trade deposits 72,700 75,500 --- 20,000
Staff security deposits 1,45,000 1,65,000 2,47,89,500 ---
Interest assumed but not due on 4,50,94,109 2,03,04,519
loans
Provisions 9,79,15,733 ---
14,72,50,425 4,93,34,692
Total current liabilities and
provisions 93,79,98,924 69,94,21,233
Net working capital
_
93,18,55,058 89,48,37,869
(C.A-C.L) 3,70,171,89
37017189
Decrease in working capital
TOTAL
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

DR CR
Particulars Amount Particulars Amount

in Rs in Rs
To Depreciation of fixed assets 6,17,81,205 By Opening balance 16,61,67,459
To Provision for tax 1,00,00,000 By Gain on sale of fixed ---

assets
To Proposed dividend 2,83,46,263
By Gain on sale of
--- ---
To Goodwill written off investments
To Loss on sale of fixed assets --- By Over provision for

taxation written off(back) ---
To Transfer to general reserve 19,00,00,00
To Transfer to sinking fund ---
To Discount on issue of share &

debenture ---
To Other provisions ---
To Closing balance 13,53,68,023
By Profit from business

operation 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)
Amount Amount
Sources in Rs Applications in Rs
Profit from Business Operations 25,93,28,032 Redemption of shares at ---

par(Discount/ premium)
Issue of share capital at ---
par(Discount/Premium) Redemption of debentures ---
Issue of Debentures(Discount/ --- Payment of secured loans 21,29,91,771

Premium)
Increasing unsecured loans 12,62,170 Purchase of fixed assets:
Sale of plant and machinery 4,80,43,518
Sale of other fixed assets 4,75,296 Purchase of land 6,25,635
Sale of Computers& Furniture 11,37,829 Taxes paid 11,34,01,996
Other income received 57,06,962 Dividend paid 2,83,46,263
Sale of buildings 20,75,865
Sale of vehicles 3,18,804
Decrease in working capital 3,70,17,189
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.


Current assets:
Inventories 135,29,84,499 143,18,24,825 7,88,40,326 ---
Sundry debtors 12,48,86,536 11,21,33,122 --- 1,27,53,414
Cash and bank balances 5,52,57,959 5,02,62,789 --- 49,95,170
Other current assets 6,52,331 10,21,849 3,69,518 ---
Loans and advances 6,04,77,777 38,99,83,272 32,95,05,495 ---

159,42,59,102 198,52,25,857
provisions:
Sundry creditors --- 24,56,42,641

58,50,00,018 98,06,42,659
Unclaimed liabilities --- 26,22,056
1,32,78,884 1,59,00,940
Advances received against sales 30,45,190 ---
47,48,053 17,03,313
Trade deposits --- ---
75,500 75,500
Staff security deposits 20,000 ---
1,65,000 1,45,000
Interest assumed but not due on 22,23,265 ---
2,03,04,519 1,80,81,254
loans
Provisions --- 28,61,91,889
4,92,10,370 33,54,02,259
Total current liabilities

and provisions
82,27,82,794 135,19,50,925
77,14,76,308 63,32,74,932
Net working capital
(C.A-C.L)
--- 13,82,01,376

TOTAL 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.

DR CR

in Rs in Rs

assets
By Gain on sale of ---
To Goodwill written off --- investments
To Loss on sale of fixed assets --- By Over provision for ---

taxation written off(back)
To Discount on issue of share & ---

debenture
By Profit from business

operation 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 Application Amount

in Rs in Rs
Profit from Business 66,27,04,405 Redemption of shares at ---

Operations par(Discount/ premium)
Issue of share capital at --- Redemption of debentures ---

par(Discount/Premium)
Payment of secured loans 38,02,35,486
Issue of Debentures ---
(Discount/ Premium)
Purchase of fixed assets:
Increasing unsecured loans 5,58,62,000
Purchase of Buildings 11,90,967
Sale of plant and machinery 6,20,49,447 Purchase of land 3,30,84,733
Investment 31,66,39,172
Sale of other fixed assets 4,75,297 Vehicles 54,63,038
Taxes paid 13,67,64,884
Sale of Computers& 68,736 Dividend paid 8,50,38,787
Furniture
Other income received 3,90,55,806
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.

Particulars Changes in working capital

Current assets: 2006 2007 Increase Decrease
(Rs) (Rs)
Inventories
Sundry debtors
Cash and bank balances 143,18,24,825 135,93,30,982 --- 7,24,93,843
Other current assets 11,21,33,122 10,80,11642 --- 41,21,480
10,21,849 15,13,709 4,91,860 ---
38,99,83,272 46,65,45,285 7,65,62,013 ---
Current liabilities and 198,52,25,857 200,35,49,001
provisions:
Sundry creditors
Unclaimed liabilities 98,06,42,659 80,74,62,774 17,31,79,885 ---
Advances received against sales 1,59,00,940 1,93,48,027 --- 34,47,087
Trade deposits 17,03,313 1,13,97,166 --- 96,93,853
Staff security deposits 75,500 4,50,175 --- 3,74,675
Interest assumed but not due on 1,45,000 1,50,000 --- 5,000
loans 1,80,81,254 1,37,09,008 43,72,246 ---
Provisions 33,54,02,259 45,92,00,433 --- 12,37,98,174

and provisions
135,19,50,925 131,17,17,583
Net working capital

63,32,74,932 69,18,13,428
(C.A-C.L)
Increase in working capital 5,85,56,496
5,85,56,496
TOTAL
69,18,31,428 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.


DR CR

in Rs in Rs

assets
To Loss on sale of fixed assets --- By Over provision for ---

To Discount on issue of share & ---

debenture
By Profit from business 91,65,46,026

operation
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.


in Rs in Rs

Issue of Debentures(Discount/ --- Payment of secured loans 1,49,42845

Premium) Unsecured loans 2,50,73,000
Sale of other fixed assets 4,75,296

Purchase of fixed assets:
Other income received 2,71,58,172
Purchase of buildings 2,67,80,144
Purchase of land 1,68,32,770
Purchase of Plant & 39,03,47,935
Machinery
Computer & Furniture 2,57,86,214
Vehicles 1,14,06,930
Interim dividend paid 4,87,82,338
Taxes paid 21,22,85,772
Dividend paid 11,33,85,050
Increase in working capital 5,85,56,496
94,41,79,494 94,41,79,494
INTERPRETATION:
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

Current assets:
Inventories 135,93,30,982 132,75,07,945 --- 3,18,23,037

Sundry debtors 10,80,11,642 11,45,09,441 64,97,799 ---
Cash and bank balances 6,81,47,393 17,67,30,095 10,85,82,702 ---
Other current assets 15,13,709 28,08,246 12,94,537 ---
Loans and advances 14,90,35,146 14,02,58,734 --- 87,76,412
Total current assets 168,60,38,872 176,18,14,461

provisions:
Sundry creditors 80,74,62,774 113,99,92,418 --- 33,25,29,644

Unclaimed liabilities 1,93,48,027 1,23,35,879 70,12,148 ---
Advances received against sales 1,13,97,166 43,30,187 70,66,979 ---
Trade deposits 4,50,175 1,23,650 3,26,525 ---
Staff security deposits 1,50,000 1,10,000 40,000 ---
Interest assumed but not due on 1,37,09,008 1,18,86,216 18,22,792 ---
loans
Provisions 14,16,90,294 8,19,43,171 5,97,47,123 ---
Total current liabilities and 99,42,07,444 125,07,38,488

provisions
Net working capital 69,18,31,428 51,10,92,940
--- ---
(C.A-C.L) 18,07,38,488
Decrease in working capital ---

18,07,38,488 ---
69,18,31,428 69,18,31,428 37,31,29,093 37,31,29,093

TOTAL
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 .

DR CR

in Rs in Rs
To Provision for tax 12,74,43,218 By Gain on sale of fixed

assets ---
To Loss on sale of fixed assets --- By Over provision for

---

debenture ---

operation
70,72,60,964 70,72,60,964
INTERPRETATION:

in Rs in Rs

Issue of Debentures(Discount/ --- Payment of secured loans 8,78,72,802

Premium) Unsecured loans 3,97,00,000
Decrease in working capital 18,07,38,488 Purchase of fixed assets:
Purchase of buildings 5,50,65,361

Purchase of land 1,20,93,498
Purchase of Plant & 20,02,509
Machinery 4,86,29,865
Computer & Furniture 17,08,388
Vehicles 20,02,509
Other fixed assets 7,05,00,312
Taxes paid 25,72,28,90
Dividend paid 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.

Current assets:
Inventories 132,75,07,945 126,77,78,839 --- 5,97,29,106

Sundry debtors 11,45,09,441 6,09,19,428 --- 5,35,90,013
Cash and bank balances 17,67,30,095 20,84,05,389 3,16,75,294 ---
Other current assets 28,08,246 23,12,881 --- 4,95,365
Total current assets 176,18,14,461 174,18,02,606

provisions:
Sundry creditors 113,99,92,418 69,56,89,493 44,43,02,925 ---

Unclaimed liabilities 1,23,35,879 1,60,56,615 --- 37,20,736
Advances received against sales 43,30,187 1,48,01,087 --- 1,04,70,900
Trade deposits 1,23,650 1,23,300 350 ---
Staff security deposits 1,10,000 60,000 50,000 ---
Interest assumed but not due on 1,18,86,216 80,54,456 38,31,760 ---
loans
Provisions 8,1943,171 11,21,29,598 --- 3,01,86,427

1,25,07,21,521 84,69,14,549
and
provisions 51,10,92,940 89,48,88,057 --- ---
Net working capital
38,37,95117
(C.A-C.L)
--- 38,37,95,117
Increase in working capital
89,48,88,057 89,48,88,057 54,19,87,664 54,19,87,664

TOTAL
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

in Rs in Rs
To Depreciation of fixed assets 10,36,09,837

By Opening balance 40,24,83,230
To Provision for tax 3,09,93,399
By Gain on sale of fixed ---
To Proposed dividend 5,66,92,525 assets
To Goodwill written off --- By Gain on sale of ---

investments
To Loss on sale of fixed assets ---
By Over provision for ---
To Transfer to general reserve 81,46,806 taxation written off(back)

debenture ---

operation
59,85,48,445 59,85,48,445
INTERPRETATION:

Sources Amount Applicatio Amount

in Rs n in Rs

Issue of Debentures(Discount/ ---

Premium) Purchase of fixed assets:
24,52,09,679 Purchase of Buildings 3,64,66,941
Increasing unsecured loans
Secured loans 40,78,000 Taxes paid 11,58,66,941
Sale of plant and machinery 7,29,38,883 Dividend paid 5,66,92,525
Sale of other fixed assets 4,50,63,819 Increasing in working 38,37,95,117

capital
Sale of Computers& Furniture 40,37,340
Sale of vehicles 61,45,898
Withdrawn 1,81,46,806
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
Annexure

BALANCE SHEET AT 31ST MARCH 2004-2005

PARTICULARS 31-03-2004 31-03-2005
Sources of funds
Shareholders funds
Share capital 11,33,85,050 11,33,85,050
Reserve & surplus 49,62,80,973 64,54,81,537
60,96,66,023 76,88,66,587
Loan funds
Secured loans 1,03,97,20,204 82,67,28,433
Un secured loans 18,75,70,830 18,88,33,000
1,22,72,91,034 1,2002,55,61,433
Deferred tax
liability
Deferred tax liability 24,27,99,798 23,67,36,540
Less : deferred tax 9,87,89,550 12,33,34,550
liability
14,40,10,248 11,34,2002,996
Total 1,98,09,67,305 1,89,78,30,20026
Application of
funds
Fixed assets
Gross block 1,26,62,84,128 1,27,66,39,65
6
Less : depreciation 31,14,59,113 37,32,40,318
Net block 95,48,25,2002 90,33,99,338
5
Capital working 5,92,88,422 6,15,21,594
progress
1,2002,41,13,43 96,49,20,932
7
Investments 1,14,32,776 1,14,32,776
Current assets,
loans &
Advances
Inventory 153,82,60,271 1,35,29,84,49
9
Sundry debtors 731,85,488 12,48,86,536
Cash in bank balance 5,30,91,438 5,52,57,959
Other current Assets 12,98,174 6,52,331
Loans & Advances 20,40,18,611 6,04,77,777
1,86,98,53,982 1,62,42,59,10
9
Less : Current 91,44,32,890 67,27,82,794
liabilities &
Provisions
Net current assets 95,54,21,092 92,14,76,308
Totals 1,98,09,67,305 1,89,78,30,20026


PARTICULARS 31-03-2005 31-03-2006
Sources of funds
Shareholders funds
Share capital 11,33,85,050 11,33,85,050
Reserve & surplus 64,54,81,537 90,12,44,947
76,88,66,587 12002,48,29,997
Loan funds
Secured loans 82,67,28,433 29,64,92,947
Un secured loans 18,88,33,000 24,46,95,000
1,2002,55,61,43 54,11,87,947
3
Deferred tax liability
Less : deferred tax 12,33,34,550 7,31,87,934
liability
11,34,2002,996 13,67,64,884
Total 1,89,78,30,2002 169,25,82,828
6
Application of funds
Fixed assets
Gross block 1,27,66,39,65 132,20,20,324
6
Net block 90,33,99,338 88,05,44,596
Capital working 6,15,21,594 16,43,32,340
progress
96,49,20,932 104,48,76,936
Investments 1,14,32,776 1,44,30,960
Current assets, loans
&
Advances
Inventory 1,35,29,84,49 143,18,24,825
9
Sundry debtors 12,48,86,536 11,21,33,122
Loans & Advances 6,04,77,777 38,99,83,272
1,69,42,59,10 198,52,25,857
9
Less : Current 67,27,82,794 135,19,50,925
liabilities &
Provisions
Totals 1,89,78,30,2002 1,69,25,82,828
6

PARTICULARS 31-03-2006 31-03-2007
Sources of funds
Shareholders funds
Share capital 11,333,85,050 11,33,85,050
Reserve & surplus 90,12,44,947 127,84,18,716
12002,48,29,99 139,18,03,766
7
Loan funds
Secured loans 29,64,92,947 28,15,50,102
Un secured loans 24,46,95,000 21,96,22,000
54,11,87,947 50,11,72,102
Less : deferred tax liability 7,31,87,934 3,81,11,634
13,67,64,884 21,22,85,772
Total 169,25,82,828 210,52,61,640
Fixed assets
Gross block 132,20,20,234 185,31,65,250
Net block 88,05,44,596 135,12,23,293
Capital working progress 16,43,32,340 4,58,43,02002
104,48,76,936 139,70,66,294
Investments 1,44,30,960 1,63,63,918
Current assets, loans &
Advances
Inventory 143,18,24,825 135,93,30,982
Sundry debtors 11,21,33,122 10,80,11,642
Loans & Advances 38,99,83,272 14,90,35,146
198,52,25,857 168,60,38,870
Less : Current liabilities 135,19,50,925 99,42,07,444
&
Provisions

Totals 1,69,25,82,828 210,52,61,640

PARTICULARS 31-03-2007 31-03-2008

Sources of funds
Shareholders funds
Share capital 11,33,85,050 11,33,85,050
Reserve & surplus 127,84,18,716 144,75,96,744
139,18,03,766 156,09,81,794
Loan funds
Secured loans 28,15,50,102 19,36,77,300
Un secured loans 21,96,22,000 17,99,22,000
50,11,72,102 37,35,99,300
21,22,85,772 25,72,28,990
Total 210,52,61,640 219,18,10,084
Fixed assets
Gross block 185,31,65,250 207,88,63,416
Net block 135,12,23,293 148,12,79,468
139,70,66,294 155,41,25,127
Investments 1,63,63,918 12,65,92,20027
Advances
Inventory 135,93,30,982 132,75,07,945
Sundry debtors 10,80,11,642 1,45,05,441
Loans & Advances 14,90,38,870 14,02,58,734
168,60,38,870 176,18,14,461
Less : Current liabilities 99,42,07,444 125,07,21,521
&
Provisions
Totals 210,52,61,640 219,18,10,084

PARTICULARS 31-03-2008 31-03-2009

Sources of funds
Shareholders funds
Share capital 11,33,85,050 11,33,85,050
Reserve & surplus 144,75,96,744 143,42,392
156,09,81,794 154,76,04,442
Loan funds
Secured loans 19,36,77,300 43,88,86,979
Un secured loans 17,99,22,000 18,40,00,000
37,35,99,300 62,28,86,979
25,72,28,990 25,38,78,200
Total 219,18,10,084 242,43,69,621
Fixed assets
Gross block 207,88,63,416 216,25,26,621
Net block 148,12,79,468 146,13,32,836
155,41,25,127 5,36,53,134
Investments 12,65,92,2002 5,36,53,134
7
Advances
Inventory 132,75,07,945 126,77,78,839
Sundry debtors 11,45,05,441 6,09,19,428
Loans & Advances 14,02,58,734 20,23,86,069
176,18,14,461 174,18,02,606
Less : Current liabilities 125,,07,21,52 84,69,14,549
& 1
Provisions
Totals 219,18,10,084 242,43,69,621


Siva Original Project

Caricato da

Informazioni sul documento

Descrizione originale:

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Siva Original Project

Caricato da

Copyright:

Formati disponibili

A STUDY ON

FUNDS FLOW STATEMENT WITH REFERENCE

PG-Department of Management Studies

Ideal College of Arts & Sciences Andhra University

Place: KAKINADA (V.REKHA)

Ideal College of Arts & Sciences Andhra University

Ideal College of Arts & Sciences Andhra University

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

J.SIVA RAMA KRISHNA

Ideal College of Arts & Sciences Andhra University

into the following six chapters.

• The first chapter deals with the Introduction, Industry profile.

• The fifth chapter deals with the Data Analysis.

At the last has been placed.

Ideal College of Arts & Sciences Andhra University

Ideal College of Arts & Sciences Andhra University

Ideal College of Arts & Sciences Andhra University

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

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

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

DECISIONS UNDER FINANCE FUNCTION INCLUDES:

Ideal College of Arts & Sciences Andhra University

FUNDS FLOW STATEMENT

and applications is necessary.

assets over the total current liabilities

transaction affects the WC

Ideal College of Arts & Sciences Andhra University

Indian Paper Industry

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

Government has completely delicensed the paper industry with effect

Capacity, Production, Raw material and Import

Ideal College of Arts & Sciences Andhra University

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

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

Ideal College of Arts & Sciences Andhra University

(i) For Wood Based industry

(ii) For Waste Paper based Industry

Ideal College of Arts & Sciences Andhra University

(iii) For Agro Based Industry

1. DOMESTIC PAPER INDUSTRY (Excluding News Print):

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

Writing & printing paper 6%

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

Ideal College of Arts & Sciences Andhra University

waste paper based is as shown in the graph below.

Regional capacity Distribution:

Ideal College of Arts & Sciences Andhra University

SOUTH WEST EAST

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

compiled by CRIS INFAC

1. d) DUPLEX BOARD (PAPER BOARD)

Ideal College of Arts & Sciences Andhra University

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%

• Others packaging 15%