A

PROJECT REPORT ON CASH FLOW STATEMENT & RATIO ANALYSIS For GUJARAT ALKALIES & CHEMICAL LIMITED Submitted to C.K.SHAH VIJAPURWALA INSTITUTE OF MANAGEMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION Under Gujarat Technological University UNDER THE GUIDANCE OF Faculty Guide Ms.Stuti Trivedi Assistant Lecturer Submitted by Dhruti R.Bhatt Enrollment No.:107050592071 M.B.A.-SEMESTER C.K.Shah Vijapurwala Institute of Management M.B.A. PROGRAMME Affiliated to Gujarat Technological University Ahmedabad July 2011
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Company Guide Mr.A.K.Mishra Finance Officer

PREFACE

In the present fast moving, globalize economy, only theoretical knowledge is not sufficient for an individual to perform efficiently to bridge the gap between theory and practical.

The students are required to undergo training in any organization in subjects like marketing, finance, human resources or information technology.

Summer Internship Program is a Prelude to the final placements that the students will be getting. It is during these fourty-five days of exposure to the industry that the student can make a mark of hard-work, sincerity, knowledge and ethics on the host organization.

Summer Internship Program would also be a great learning experience since it enables the students to apply theory to practice, observe, and learn the current trends in the market.

Therefore, in order to have a practical exposure, I have been placed in GUJARAT ALKALIES & CHEMICAL LIMITED. company for my Summer Internship Program, as my specialization is FINANCE.

ACKNOWLEDGEMENT

It is a universal truth that NO PREPARATION IN ANY WORK CAN BE OBTAINED WITHOUT INSPIRATION. For successful completion of any work, you may need requisite guidelines.

First of all,I like to extend sincere thanks to Ms.Ishita Ashara, Faculty of C.K.Shah Vijapurwala Institute of Management, Vadodara for providing me an opportunity to undertake this project & giving me her valuable guidance.

I am very thankful to Shri Rajkumar Emmunal, Manager (Human Resource Department) who has permitted me to undertake all activities associated with my project during office hours.

I am also thankful to my sectional head Mr.A.K.Mishra, Manager (Finance Department) who has provided me necessary guidance regarding my topic.

I am also thankful to C.K.Shah Vijapurwala Institute of Management, Vadodara for providing me a golden opportunity to attain the professional qualification in the field of Financial Management.

I also like to extend sincere thanks to Gujarat Technological University, Ahmedabad for introducing such type of training in M.B.A. syllabus.

DECLARATION

I Dhruti R.Bhatt, herby declare that the report for Summer Training Project entitled Cash Flow Statement is a report of my own hard my own hard work and my indebtedness to other work publications, referances, if any, have been acknowleged. Place: Vadodara Date: 28/7/11 Dhruti R. Bhatt

EXECUTIVE SUMMARY

This project contains bird view about global chemical industry, details of Gujarat Alkalies & Chemical Ltd, details about Caustic soda and status of chemical market in India.

In section of Indian chemical industry, I have put details about introduction, history, major domestic and global chemical market, various types of chemical product, various demand detail and analysis of finance sector. Moreover, I have taken Gujarat Alkalies & Chemical Ltd for company study. It contains details like introduction, company profile, product profile and also details about various functional departments.

This project gave an idea about future research related to Cash Flow Statment.This project taught us how we can use secondary data and relate it to find out any details.

TABLE OF CONTENTS
PREFACE ACKNOWLEDGEMENT DECLARATION

SR.NO.
1

PARTICULARS
PART-1 GENERAL INFORMATION About GACL 1.1 GACL History 1.2 World Market 1.3 Indian Market 1.4 Growth of GACL 1.5 SWOT Analysis of GACL

PAGE NOS.

10 21 23 25 26 28 29 34 36 37 41 43 47 64 65 66

2 3 4

About major companies in the Industry Product Profile PART-2 PRIMARY STUDY 4.1Introduction of the study 4.2 Literature Review 4.3 Background Information 4.4 Objectives of the study 4.5 Specimen of Cash Flow Statment

5 6 7 8

Data Analysis and Interpretation Result & Findings Limitation of the Study Conclusion/Suggestions

ANNEXTURE REFERENCE

LIST OF TABLES SR. NO.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

PARTICULARS
Export Oriented Countries of GACL Product Analysis Formate of Cash Flow Statment: Indirect Method Formate of Cash Flow Statment: Direct Method Cash Flow Statment of GACL Cash Flow Margin Ratio Free Cash Flow to Operating Cash Flow Ratio Short term Debt Coverage Ratio Capital Expenditure Coverage Ratio Dividend Payout Ratio Operating Cash Flow Ratio

TABLE NO.
1 2 3 4 5 6 7 8 9 10 11

PAGE NO.
22 30 42 44 46 51 53 56 58 61 62

LIST OF GRAPHS SR. NO.

1. 2. 3. 4. 5. 6.

PARTICULARS
Cash Flow Margin Ratio Free Cash Flow to Operating Cash Flow Ratio Short term Debt Coverage Ratio Capital Expenditure Coverage Ratio Dividend Payout Ratio Operating Cash Flow Ratio

GRAPH NO.
1 2 3 4 5 6

PAGE NO.
51 56 57 59 62 63

PART- 1 GENERAL INFORMATION

1.1 ABOUT GACL GACL HISTORY:

Gujarat Alkalis and Chemicals Limited (GACL) were incorporated on 29th March, 1973 in the State of Gujarat by Gujarat Industrial Investment Corporation Limited (GIIC), a wholly owned company of Govt. of Gujarat, as a Core Promoter.

GACL has two units located at Vadodara and Dahej, both in the State of Gujarat. It has integrated manufacturing facilities for Caustic Soda, Chlorine, Hydrogen Gas, Hydrochloric Acid, Chloromethanes, Hydrogen Peroxide, Phosphoric Acid, Potassium Hydroxide, Potassium Carbonate, Sodium Cyanide, and Sodium Ferrocyanide. The Dahej unit also has 90 MW Captive Power Plant (CPP) for regular and economical power supply.

The Company commenced its operations in 1976 with 37,425 MTPA Caustic Soda Plant based on the then, state-of-the-art Mercury Cell process at its Plant which is situated 16 km North of Vadodara near Village Ranoli on the main Railway track route between Ahmedabad and Mumbai.

Right from the inception, GACL has been following the strategy of continuous capacity expansion in core areas. The first stage expansion of the Caustic Soda Plant raising the capacity to 70,425 MTPA was undertaken in October, 1981 followed by a diversification programme to produce 2000 MTPA of Sodium Cyanide in December, 1982.

In 1984, the second stage expansion to increase the capacity of Caustic Soda Plant to 103,425 MTPA was undertaken. Simultaneously, the
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Company undertook the diversification project for manufacture of 10,560 MTPA of Chloromethanes using Chlorine, a co-product of the Company and in 1991, the capacity of Chloromethanes production was doubled.

As power is the major input for production of Caustic Soda and constitutes about 65% to 70% of the cost of production, the Company along with other Corporations like M/s. GSFC, Petrofils Co-operative Ltd. and Gujarat Electricity Board promoted a gas based power unit in Vadodara under the name of Gujarat Industrial Power Company Ltd. (GIPCL) during the year 1985. As a promoter of GIPCL, the Company gets low cost power, as the plant is gas based and is depreciated.

Since production of Caustic Soda is highly power intensive, in order to reduce power cost and to eliminate mercury pollution, the Company, during the year 1989, converted one of its Cell Houses producing Caustic Soda from Mercury Cell Technology to environment friendly Membrane Cell Technology, thereby eliminating the use of mercury. The Capacity of Caustic Soda was increased to 132000 MTA.

The conversion of second Mercury Cell to Membrane Cell was carried out during March, 1994, thereby eliminating the total use of mercury from the Complex for production of Caustic Soda and increasing the capacity of plant along with this conversion to 170000 MTA including Potassium Hydroxide facility.

As part of this Membrane Cell Conversion Project, a new facility for manufacture of 16500 MTA of Potassium Hydroxide Lye based on Membrane Cell was also set up. The Company has further set up facility for converting part of this Caustic Potash Lye into Potassium Carbonate with a capacity of 13200 MTA.
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In order to add further value to its products, the company had set up manufacturing facility for production of 11000 MTA Hydrogen Peroxide (100%) at Vadodara Complex during the year 1996 to utilize Hydrogen gas, which is a co-product from Caustic Soda Process.

In 1995, as a part of diversification programme and to meet the growing demand of its products in the State of Gujarat and nearby areas, the Company had set up a plant for manufacture of Technical Grade Phosphoric Acid with capacity of 26400 MTA "(85% Phosphoric Acid) at a new location at Dahej, District Bharuch. The Company also set up Membrane Cell based grass root Caustic-Chlorine Unit with a capacity of 100000 MTA at Dahej. Along with this, a captive 90 MW co-generation Power Plant was set up so as to ensure uninterrupted and low cost power for its captive operation.

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COMPANY PROFILE:

NAME:GUJARAT ALKILIES & CHEMICAL LIMITED (GACL) REGISTERED OFFICE:P.O. Petrochemicals -391346 Dist -Vadodara Gujarat (INDIA) Pin-391346

VADODARA COMPLEX:P.O. Petrochemicals -391 346 Dist Vadodara Gujarat (INDIA) Pin-391346 Phone - (0265) - 2232681 -82 / 2232701

DAHEJ COMPLEX:Village: Dahej -392 130 Tal: Yagra Dist: Bharuch Gujarat (INDIA) Phone -(02647) - 256315-16-17 / 256235

FORM OF ORGANISATION:Joint Venture SIZE OF ORGANISATION:Large Scale Organisation AUDITIORS:Messers Prakash Chandra Jain & Co. Chartered Accountants, Vadodara

SOLICITORS:Messers Amarchand & Mangaldas & Suresh A. Shroff & Co.

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COST AUDITORS:Messers Diwanji & Associate Cost Accountants Vadodara.

COMPANY SECRETARY & GENERAL MANAGER:Shri. V.L.Vyas BOARDS OF DIRECTORS:Dr. ManjulaSubramaniam (I.A.S) Chairman Shri V.I.Joshi (I.A.S) Shri G.C.Murmu (I.A.S) Shri G.M.Yadwadkar Dr. Sukh Dev Shri Guruprasad Mohapatra (I.A.S.). Managing Director

BANKERS:State Bank of India Central bank of India AXIS Bank Ltd. (UTI) IDBI Bank Ltd. UCO Bank Indian Bank HDFC Bank Ltd.

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POLICIES ADOPTED BY GACL: 1. SHE Policy:

14

2. Supply Chain Policy:

15

3. Training & Development Policy:

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4. Information Technology Policy:

17

5. Quality Policy:

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ORGANISATION STRCTURE:

MD

Sr.ED (Tech.)

GM(Pe rsonnel )

CS & GM (Legal)

CGM( Materia l Mgt.l)

Chief (financ e officer) GM (Finan ce - 2) DGM (Financ e - 2)

ED (Com mercial)

DG M(P & IR)

DGM (Secre tarial)

DGM (MM)

GM(M S.Adm . HRD)

GM (Mktg )

CGM (Dahej)

GM (Eng. Service )

GM(S ecurity &

Vigila nce)

GM (Elect. )

GM (Safety &

Env.)

I/C GM (Opera tion S -2))

GM (Corpor ate Plann)

GM (Engg.

DGM (Mech)

DGM (Inst.)

DGM (Elect)

DGM (Oper 3)

Serv.)

DGM (Corpor ate Plann)

DGM (Mktg.)

DGM (Opera tion -4)

DGM (Elect.)

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1.2 WORLD MARKET

EXPORT: GACL is exporting various goods to other countries.

Export: Raw materials are purchased from India only but its ultimate food is to

sent, out of India as finished foods, are treated as export orient unit(EOU).

Deemed Export: Finished goods are sold within the country only but outside Gujarat in another state.

Consignment Sales: Transfer of raw materials, semi-finished goods from one branch to

other. There is no service tax charged. Export finance is done by commercial banks in two phases, namely pre-shipment and post-shipment. Mostly the medium and small scale exporters who required working capital for buying raw material and buying manufacturing expenses generally required pre-shipment finance. It is rupee finance provided by the commercial banks on the basis of the confirmed export order. It is presently available at 9% rate of interest, which is must lower than the commercial rate charge by the banks for extending credit for domestic trade.

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 GACL's export destinated countries: Export Destinated Countries Table No.1

Export Item Caustic Soda Chlorine Hydrochloric acid Potassium Carbonate Methaline chlorine Chloroform Phosphoric acid Sodium Cyanide Hydrogen peroxide Aluminum chloride

Country African Countries Australia China Europe East countries Latin American Countries Middle east Mauritius South Asia USA

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1.3 Indian Market

GACL is one of the largest producers of caustic soda in India with a market share of 18% in the domestic chlor-alkali market. It has an installed production capacity of 4,29,000 metric tons (MT) of caustic soda as on 31st March, 2010. The companys caustic soda group includes caustic soda lye, caustic soda flakes, caustic soda prills, sodium hypo chlorite, liquid chlorine, compressed hydrogen, gas and hydrochloric acid. GACL has capicity expansion plans of about Rs.26 bn for various projects for next three to four years. The company is putting up a 600 tons per day (TPD) chlor-alkali project, 20,000 tons per annum (TPA) sodium chlorate project, 100MW captive cogeneration power plant, 8000 TPA hydrazine hydrate project and 150 KTPA polyols project. The projects are progressing as per schedule and expected to commence by Fnancial Year 2014. Also the company has taken up an expansion of its existing hydrogen peroxide project to increase the capacity by 14000 TPA and project scheduled for commission in Financial Year 2011. The company is a multi-product company and has more than 27 products in their product portfolio. The company manufactures various basic chemicals like chloromethanes, sodium cyanide, sodium ferro cyanide, hydrochloric acid, caustic potash, potassium carbonate, phosphoric acid (85%), hydrogen peroxide, poly aluminum chloride, anhydrous aluminum chloride and many more. GACL drives 65% of its revenue from chlor-alkali business and 35% from other products Key risks in Indian Market: Timely and successful completion of expansion projects Intense competition from domestic as well as international market Rise in raw material prices due to scarcity in the global market Increasing power & fuel cost which is major input for production of caustic soda Foreign exchange fluctuation
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1.4 GROWTH OF GACL

GROWTH STRATEGY: VISION: To continue to be identified & recognized as dynamic, modern & eco friendly chemicals company with enduring ethics & values. MISSION: To remain the largest producer. To maintain highest quality & be the first choice of customer. To remain in the lowest production through captive power. To have down stream value added products & flexibility of product mix for better margins & wide market. To ultimate good to remain leader in the chlor alkalis.

To manage business responsibility & sensitivity in order to address the needs of customers & stakeholders. To strive for continuous improvement performance, measuring results precisely & ensuring GACL's growth & profitability through innovations. To achieve the highest ethical standards and to ensure products & processes to be of the highest quality.

23

1.5 SWOT ANALYSIS OF GACL

STRENGTH : Single largest caustic soda producer in the country coin a capacity of 27000 TPA having industry share of 13.75% Leader in chlor-alkali industry Low cost power from GIPCL Baroda Integrated down stream plants In house research and development Dedicated men power Proximity to raw material source and market Excellent industry relation Strong and committed work force

The company has been awarded ISO9001:2000certificated from 20th

Nov.03 Nationals award by government of India 1993 for contribution of R & D department of the company in the pollution control environment protection. WEAKNESS: High Price. Highly power intensive products as power. Company's products are in commodity group and therefore the prices are purely market driven.

The supply of natural gas for the power plants varies depending upon availability.

24

OPPORTUNITY: Foreign market the demand for company's products in foreign market is high therefore GACL has golden opportunity to gain share market by exporting its products to foreign countries. Excess capacity in power plant will help in setting up down stream projects for increasing the capacity of caustic soda production. THREATS: The chlore alkali industry in cyclical in nature The industry has faced with over capacity in the country Dependence on the performance of consuming sectors Threats of impact of slow down Indian economic growth

Highly competition market for the products of the company

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2. ABOUT MAJOR COMPANIES IN THE INDUSTRY

COMPETITORS: GACL'S major competitors are: Atul Product Limited Comfad Alkails Limited Century Chemical Limited Tata Chemicals Limited Saurashtra Chemicals Limited Gujarat Heavy Chemical Limited Southen Petrochemicals Industry Limited Modi Alkalis And Chemical Limited

CUSTOMERS: Distribution channel: FERTILIZER: Gujarat State Fertilizer Corporation Gujarat National Fertilizer Corporation IFFCO Deepak Nitrite Deepak Fertilizer

PHARMACUTICALS: Dr. Reddy's Aurbide Pharma Turrent Runbuxy Cadila San Pharma Lupin Laboratory
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TEXTILE: Arvid Mills Limited Ashima Industires Limited

AGRO-CHEMICALS: Gujarat Agrom Chemicals Limited BildgChemicals Arti Industries MeghumaniOrganics Tagro

REFINERY: IOC IPCL Reliance Hajira Jamanagar DETERGENT HLL Godrej WFLimited Nepal Lever Nirma

PAPERS: BILT Rama New Print TamilNadu Pup Industries JK Paper

27

3. PRODUCT PROFILE
1. Caustic Soda Lye 2. Caustic Soda Flakes 3. Caustic Soda Prills 4. Liquid Chlorine 5. Hydrochloric Acid 6. Sodium Hypochloride 7. Sodium Cyanide

8. Sodium Ferrocyanide
9. Caustic Potash Lye 10. Caustic Potash Flakes 11. Potassium Carbonate 12. Poly Aluminum Chloride 13. Chlorinated Paraffin Wax 14. Methyl Chloride 15. Methylene Chloride 16. Chloroform 17. Carbon Tetrachloride 18. Phosphoric Acid 19. Hydrogen Peroxide 20. Compressed Hydrogen Gas 21. Dilute Sulpharic Acid 22. Scalewin 23. Bleachwin 24. Aluminum Chloride 25. Calcium Chloride Powder

28

PRODUCT ANALYSIS Table No.2 Sr. No Main By Product Own Name of product Product Consumption / Sales Customer India Both Caustic soda lyes Caustic soda flakes Caustic soda prills Liquid chlorine Hydrochloric acid Sodium hypochloride Compressed hydrogen Dilute sulpharic acid Aluminum, chlorine, anhydrous Place

1 2 3 4 5 6 7 8 9

29

10 Chloride paraffin wax 11 Sodium cyanide 12 Sodium Ferrocyanide 13 Caustic Potash Lye 14 Caustic Potash
Flakes

15 Potassium carbonate 16 Methaline chloride 17 Chloroform 18 Carbon tetrachloride 19 Phosphoric Acid 20 Calcium chlorine
Powder

21 Hydrogen Peroxide 22 Bleachwin 23 Scalewin 24 Poly Aluminum

Chloride

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PART- 2 PRIMARY STUDY

4.1 INTRODUCTION OF THE STUDY

WHAT DOES CASH FLOW MEAN?

Cash that comes into or goes out of a persons or companys account. In investments, cash flow represents earnings before depreciation, amortization and non-cash charges. Sometimes called cash earnings. Cash flow from operations is important because it indicates the ability to pay dividends.

WHAT DOES CASH FLOW STATEMENT MEAN?

Cash Flow Statement is one of the quarterly financial reports any publicly traded company is required to disclose to the public. The document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter. It answers the questions Where the money came (will come) from? And where it went (will go)? Cash flow statements assess the amount, timing, and predictability of cashinflows and cash-outflows, and are used as the basis for budgeting and business-planning. In cash flow statement the accounting data is presented usually in three main sections: (1) Operating-activities (sales of goods or services), (2) Investing-activities (sale or purchase of an asset), and (3) Financing-activities (borrowings, or sale of common stock).

 Together, these sections show the overall (net) change in the firm's cashflow for the period the statement is prepared.

4.2 LITERATURE REVIEW

Multi Line Industry Conglomerates Family Firm In GCS Industry Category Busine & Chemical

Cash Flow Statement is an important ingredient in the smooth working of businesss entities, it has not attracted much attention of scholars. Whatever studies have conducted, those have exercised profound influence on the understanding of cash flow statement good number of these studies which pioneered work in this area have been conducted abroad, following which, Indian Scholars have also conducted research studies exploring various aspects of working capital. Special Studies have been undertaken, mostly economists, to study the total cash position.

After Analysis of the various reports, I have observed that each research paper make with their own nature. These types of different papers teach me many things. These papers gave me idea about the base of financial planning. It also tells about which activity is more important for company and vice-versa.

I also came to know how activities of finance department are managed by manager in a proper manner. They also give me idea about the various assumptions and limitations of working capital management. According to me, cash position in the company must receive little attention and yielding more significant results. Cash flow management is important because of its effects on the firms profitability and risk, and consequently its value. Greater the investment in current assets, the lower the risk, but also the lower the profitability obtained.

4.3 BACKGROUND OF CASH FLOW

SCOPE OF THE CASH FLOW STATEMENT: 1. An entity which prepares and presents financial statements under the accrual basis of accounting should prepare a cash flow statement in accordance with the requirements of the Standard and should present it as an integral part of its financial statements for each period for which financial statements are presented. 2. Information about cash flows may be useful to users of an entitys financial statements in assessing the entitys cash flows, assessing the entitys compliance with legislation and regulations and for making decisions about whether to provide resources to, or enter into transactions with an entity. They are generally interested in how the entity generates and uses cash and cash equivalents. 3. The Accounting Standard (AS-3) applies to all public sector entities other than Government Business Enterprises. 4. Consolidated cash flow is a financial statement that presents information about the companys cash receipts and disbursements during the accounting period. 5. The purpose of cash flow statement is to provide information on sources and uses of cash and cash equivalents during the period of accounting and cash reconciliation at the beginning of the period with cash at the end of the period plus the cash equivalent balances. NEED OF CASH FLOW STATEMENT: measures the amounts of money that come into a company and out of it over a given time period. This way a company is able to keep track of how much cash it has on hand to pay expenses and buy assets. 2. Cash flow statements use information from both income statements and balance sheets. Using this information, the cash flow statement will reveal the net increase or decrease in cash for the period. Most cash flow statements

1. A cash flow statement is the motor oil for any business finance engine. It

are divided into three separate activities: operating activities, investing activities, and financing activities. (i) Operating Activities Operating activities shows cash flow from net income to net losses to cash used in and for operation procedures. Sometimes, non- cash items are adjusted for any cash that was used or provided by utilizing other operating assets and liabilities. (ii) Investing Activities Investing activities is usually the second part of a cash flow statement. This includes the purchases or sales of long-term assets, such as property, equipment, and even stocks. These actions are still represented as " cash in" or " cash out" depending on what is purchased & sold. (iii) Financing Activities This is the third part of the cash flow statement. And, as the name might suggest, the financing activities section tracks financing activities. For large companies this includes money raised by issuing stock in the company, or borrowing many from banks. Paying back these loans are also considered under this section of the cash flow statement. IMPORTANCE OF CASH FLOW STATEMENT: 1. Many business owners disregard the importance of cash flow statements because they unwittingly believe that their current financial standing can be construed from other financial reports and projections. Unfortunately, however, a cash flow statement is necessary to adequately assess the incoming and outgoing flow of cash and other resources in a business. 2. Not only will a business owner with a cash flow system be more aware of his or her financial standing, but it will also help investors to make educated decisions on future investments. A business with regular and reliable cash flow statements shows more economic solvency, and is more attractive to investors. 3. A cash flow statement documents the incoming and outgoing cash in plain terms. Future sales and sales made for credit (unless they have been paid off) are not included in the cash flow statement, and most of the data will come from core operations. Payables and receivables should be expressly defined,

as should depreciation of product value and inventory that has not yet been moved. 4. This will allow a business owner to compare past periods with the current financial standing and determine whether your receivables have increased or decreased. 5. This can also help to track your investments next to your receivables and payables. Are your investments increasing or decreasing in value? And has your inventory moved at a steady pace? New or expanding businesses can expect to see a decrease in cash flow, but this doesn't mean that the business is going under. More stables businesses should see a steadily increase in cash flow over a period of several months or years. 6. The Statement of Cash Flows is the final document prepared in the Financial Report set, and provides information that is a direct flow of information from the Income Statement, Owner Equity Statement and Balance Sheet; therefore, this report adds validity and accountability to the Financial Statements. ADVANTAGES OF CASH FLOW STATEMENT: 1. It helps the newly formed companies to know their inflow and outflow of cash. 2. It helps the investors to judge whether the company is financially sound or not. 3. It helps the company to know whether it will be able to cover the payroll and other expenses. 4. It helps the lenders to know the companys ability to repay. 5. A cash flow statement is provided on monthly basis or quarterly basis or six monthly basis or yearly basis. 6. These statements help to have an accurate analysis of the firms ability to meet its current liabilities. 7. A cash flow statement is helpful for planning and managing future financial commitments. 8. A cash flow statement summarizes the companys cash receipts and cash payments over a period of time.

9. It is useful for determining the short term ability of the concern to meet its liabilities as it does & not include non cash items. 10. A cash flow statement gives vital information not only about the companys performance but also about its major activities during the year. DISADVANTAGES OF CASH FLOW STATEMENT: 1. By itself, it cannot provide a complete analysis of the financial position of the firm. 2. It can be interpreted only when it is in confirmation with other financial statements and other analytical tools like ratio analysis.

4.4 OBJECTIVES OF THE CASH FLOW STATMENT

Cash flow statement aims at highlighting the cash generated from operating activities. Cash flow statement helps in planning the repayment of loan schedule and replacement of fixed assets, etc. Cash is the centre of all financial decisions. It is used as the basis for the projection of future investing and financing plans of the enterprise. Cash flow statement helps to ascertain the liquid position of the firm in a better manner. Banks and financial institutions mostly prefer cash flow statement to analyse liquidity of the borrowing firm. Cash flow Statement helps in efficient and effective management of cash. The management generally looks into cash flow statements to understand the internally generated cash which is best utilised for payment of dividends.Cash Flow Statement based on AS-3 (revised) presents separately cash generated and used in operating, investing and financing activities. It is very useful in the evaluation of cash position of a firm. The cash flow statement identifies the sources of cash inflows, the items on which cash was expended during the reporting period, and the cash balance as at the reporting date. Cash flow information allows users to ascertain how a public sector entity raised the cash it required to fund its activities and the manner in which that cash was used. In making and evaluating decisions about the allocation of resources, such as the sustainability of the entitys activities, users require an understanding of the timing and certainty of cash flows. The objective of this standard is to require the provision of information about the historical changes in cash and cash equivalents of an entity by

means of a cash flow statement whichclassifies cash flows during the period from operating, investing and financing activities.

4.5 FORMATE OF CASH FLOW STATMENT

Table No.3 Indirect method Format for Cash flow Statement for the year ended............... As per Accounting Standard-3 (Revised) PARTICULARS (i) Cash flows from operating Activities Net Profit as per Profit and Loss A/c Add : Transfer to reserve Proposed dividend for current year Interim dividend paid during the year Provision for tax made during the current year Extraordinary items, if any, debited to Profit and Loss A/c Less : Extraordinary Items, if any, credited to Profit and Loss A/c Refund of Tax credited to Profit and Loss A/c A. Net profit before taxation and Extra ordinary items Adjustment for Non-Cash and Non-Operating Items B. Add : Depreciation Preliminary expenses Discount on issue of shares and debentures written off Interest on borrowings and debentures Loss on sale of fixed assets C. Less : Interest income/received Dividend income received Rental income received Profit on sale of fixed asset D. Operating profits before working capital changes(A + B - C) E. Decrease in current assets and increase in current liabilities xxx xxx xxx xxx xxxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx AMOUNT

F. Less : Increase in current assets and decrease in current liabilities G. Cash generated from operations (D + E F) H. Less : Income tax paid (Net tax refund received) I. Cash flow from before extraordinary items Adjusted extraordinary items (+/) J. Net cash from operating activities (ii) Cash from investing accounting Add : Proceeds from sale of fixed assets Proceeds from sale of investments Proceeds from sale of intangible assets Interest and dividend received Less : Rent income Purchase of fixed assets Purchase of investment Purchase of intangible assets like goodwill Advanced extraordinary items (+/) Net cash from (or used in) investing activities (iii) Cash flows from financing activities Add : Proceeds from issue of shares and debentures Proceeds from other long term borrowings Less : Final dividend fund Interim dividend fund Interest on debentures and loans paid Repayment of loans Redemption of debenture preference shares Adjust extraordinary items (+/) equivalent (i + ii + iii) (v) Add : cash and cash equivalents in the beginning of the

xxx xxx xxx xxx xxx xxxx

xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx

xxx xxx xxx xxx xxx xxx xxx xxx

year cash in hand cash at bank overdraft short term deposit marketable securities (vi) Less : cash and cash equivalents in the end of the year cash in hand cash at Bank (by bank overdraft) short term deposits Cash flow from operation xxx xxx xxx xxx

xxx xxx xxx xxx

Table No.4 Direct method Format for Cash flow Statement for the year ended............... As per Accounting Standard-3 (Revised) PARTICULARS (i) Cash flow from operating activities A. Operating cash receipts Cash sales Cash received from customers Trading commission received Royalties received B. Less : Operating cash payment Cash purchase Cash paid to the supplier Cash paid for business expenses like office expenses, Manufacturing expenses, selling and distribution expenses C. Cash generated from operation ( A B) D. Less Income tax paid (Net of tax refund received) AMOUNT xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx

xxx xxx

E. Cash flow before extraordinary items F. Adjusted extraordinary items (+/)/Receipt/payment G. Net cash flow from (or used in) operating activities (ii) Cash flow from investing activities (calculation same as under indirect method) (iii) Cash flow from financing activities (Calculation same as under indirect method) (iv) Net increase/decrease in cash and cash equivalents (i + ii + iii) v) Add cash and cash equivalent in the beginning of the year (same as under indirect method) (vi) Less cash under cash equivalent in the end of the year Cash Flow from Operation

xxx xxx xxx xxx xxx xxx xxx xxx xxx

5. DATA ANALYSIS & INTERPRETATION

CASH FLOW STATEMENT OF GACL Table No.5 [Rs. in Lakhs] PARTICULARS A. CASH FLOW FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES D. CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR E. CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR F. TOTAL CASH FLOW DURING THE YEAR (A+B+C) or (E-D) A. CASH FLOW FROM OPERATING ACTIVITIES: NET PROFIT / (LOSS) BEFORE TAX AND EXTRAORDINARY ITEMS Adjustments for : Addition / (deduction) Depreciation (Includes Prior Period ` 23.43 Lakhs, Previous Year `3.63 Lakhs) Interest received Dividend received Interest charged to profit & loss account Profit on sale of assets (356.39) (688.92) 1,747.60 (173.74) (678.88) 2,459.40 (0.45) 12,178.70 10,946.94 14,627.90 26,130.40 (1,386.04) (2,800.64) 1,260.88 2,646.92 (25,910.27) (33,703.35) (4,077.09) 2,646.92 (2,887.07) 5,447.56 2009-10 28,601.32 2008-09 33,789.78

Loss on sale of assets Loss on impairment of assets Other capital expenditure (recoating & remembraning) Contribution of power, water & services written off Loss on derivative transactions Excess provision written back on derivative transactions Diminution in value of investment Sub total OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES DECREASE OR (INCREASE) IN ASSETS : Trade and other receivables Inventories INCREASE / (DECREASE) IN LIABILITIES : Trade payables CASH GENERATED FROM OPERATIONS BEFORE TAX Direct taxes paid CASH FLOW BEFORE EXTRAORDINARY ITEMS Extraordinary items NET CASH FLOW FROM OPERATING ACTIVITIES:(TOTAL - A) B. CASH FLOW FROM INVESTING ACTIVITIES: Purchase of fixed assets Sale or adjustment of fixed assets Purchase of investments Proceeds from sale of investments Interest received Dividend received Other capital expenditure (recoating &

16.27 985.90 96.88 (447.46) 736.93 14,269.51 28,897.41

23.16 470.62 964.64 96.88 936.23 301.66 15,346.46 41,476.86

(2,254.04) 3,032.41 1,549.36 31,225.14 (2,623.82) 28,601.32 28,601.32

(6,435.89) (6,585.06) 8,199.15 36,655.06 (2,865.28) 33,789.78 33,789.78

(23,648.62) (33,873.01) 22.33 (3,059.99) 356.39 688.92 (269.30) 14.03 (96.42) 118.10 173.74 678.88 (718.67)

remembraning) NET CASH FLOW FROM INVESTMENT ACTIVITIES :(TOTAL - B) C. CASH FLOW FROM FINANCING ACTIVITIES: Interest paid Dividend paid Long term borrowings Short term borrowings NET CASH FLOW FROM FINANCING ACTIVITIES: (TOTAL - C) D. CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR : Cash and cheques on hand Balances with banks NET CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR: (TOTAL - D) E. CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR : Cash and cheques on hand Balances with banks NET CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR: (TOTAL - E) F. TOTAL CASH FLOW DURING THE YEAR (A+B+C) OR (E - D) (1,386.04) (2,800.64) 940.62 320.26 1,260.88 2,186.57 460.35 2,646.92 2,186.57 460.35 2,646.92 3,954.57 1492.99 5,447.56 (2,062.43) (2,577.53) (12.93) 575.80 (4,077.09) (2,205.94) (3,007.11) 10,731.07 (8,405.09) (2,887.07) (25,910.27) (33,703.35)

5.1 ANALYSIS OF CASH FLOW STATMENT OF GACL

1. Cash Flow from Operating Activities has been decresed from Rs. 33,703.35 lacs of 2008-09 to Rs. 25,910.27 lacs in 2009-10. Purchase of the asset is lesser than previous year, i.e. 23,648.62 lacs in comparison of previous years 33,873.01.But because of cash outflow; cash flow from investing activities is lesser. Purchase of investment is increased much higher than previous year, i.e. From 96.42 lacs of 2008-09 to 3,059.99 lacs in2009-10.Thus, cash outflow is increased much more in comparison of previous year. There is no proceeds occur from sale of investment. Interest received & dividend received has been increased in compare to previous year, i.e. From 173.74 lacs to 356.39 lacs and 678.88 lacs to 688.92 lacs. It shows that cash inflow has increased, but less than cash outflow. Other capital expenditure has been decreased from 718.67 lacs to 269.30 lacs. So cash outflow is decreased. But, here, it is not higher in comparision to increased cash outflow. 2. Cash Flow from Investing Activities has been decreased from Rs. 33,703.35 lacs of 2008-09 to Rs. 25,910.27 lacs of 2009-10.It is in negative form.This shows cash outflow. So, it can be said that cash outflow has been decreased in 2009-10.The reasons are: Purchase of the asset is lesser than previous year, i.e. Rs. 23,648.62 lacs in comparison of previous years Rs. 33,873.01lacs. So, cash outflow has been decreased and cash flow from investing activities is lesser. There is no proceeds occur from sale of investment. Interest received & dividend received has been increased in compare to previous year, i.e. from Rs. 173.74 lacs to Rs. 356.39 lacs and Rs. 678.88 lacs to Rs. 688.92 lacs, respectively. It shows that cash inflow has been increased. Due to this, cash outflow has been settled down. Other capital expenditure has been decreased from Rs. 718.67 lacs to Rs. 269.30 lacs. So cash outflow is decreased. Purchase of investment is increased much higher than previous year, i.e. from Rs. 96.42 lacs in 2008-09 to Rs. 3,059.99 lacs in 2009-10, so, cash

outflow is increased much more in comparison of previous year. Eventhough overall cash outflow of 2009-10 has been decreased. It is happened because of increase in cash inflow & decrease in cash outflow during the year. Increase in cash inflow & decrease in cash outflow is higher than cash outflow due to purchase of Investment. 3. Cash Flow rom Financing Activities has been increased from Rs. 2,887.07 lacs in 2008-09 to Rs. 4,077.09 lacs in 2009-10.The reasons are: Interest paid has been decreased from Rs. 2,205.94 lacs in 2008-09 to Rs. 2,062.43 lacs.So, cash outflow has been decreased. Dividend paid has been decreased to Rs. 2,577.53 lacs in 2009-10 from Rs. 3,007.11 lacs in 2008-09. Here, also, cash outflow has been decreased. Long term borrowings have been decreased from Rs. 10731.07 lacs in 2008-09 to Rs. 12.93 lacs in 2009-10. Short term borrowings have, also, been decreased to Rs. 575.80 lacs in 2009-10 from Rs. 8405.09 lacs in 2008-09. Thus, in all financing activities, cash outflow has been decreased. So, cash flow from financiaing activities is increased as compared to previous year. 4. Cash and Bank balance at the beginning of the year 2009-10 has been decreased to Rs. 2,186.57 lacs & Rs. 460.35 lacs, respectively, in 2009-10 from Rs. 3,954.57 lacs & Rs. 1492.99 lacs, respectively, in 2008-09.Thus, net cash equivalents at the beginning of the year have been decreased by Rs.2982.64 lacs. 5. Cash and Bank balance at the end of the year 2009-10 has, also, been decreased to Rs. 940.62 lacs & Rs. 320.26 lacs, respectively, in 2009-10 from Rs. 2,186.57 lacs & Rs. 460.35 lacs, respectively, in 2008-09. Thus, net cash equivalents at the end of the year have been decreased by Rs.1386.04 lacs. Thus, because these activities, overall cash flow for the year 2009-10 has been decreased to Rs.1414.6 lacs.

5.2 Cash Flow Indicator Ratio

1. Cash Flow Margin Ratio: The Cash Flow Margin ratio is an important ratio as it expresses the relationship between cash generated from operations and sales. The company needs cash to pay dividends, suppliers, service debt, and invest in new capital assets, so cash is just as important as profit to a business firm.The Cash Flow Margin ratio measures the ability of a firm to translate sales into cash.The numerator of the equation comes from the firm's Statement of Cash Flows. The denominator comes from the Income Statement. The larger the percentage, the better for the firm. Formula: Cash Flow Margin Ratio= Operating Cash Flow Net Revenue

Cash Flow Margin ratio Table No.6

YEAR Operating Cash Flow (Rs. In lacs) Net Revenue (Rs. In lacs) Operating Cash Flow to Sales Ratio(In Percentage) 2005-06 33,580.50 2006-07 27,563.15 2007-08 35,203.78 2008-09 33,789.78 2009-10 28,601.32

1,09,395.71 30.70

1,21,510.69 22.68

1,32,238.59 26.62

1,56,412.58 21.60

1,38,444.30 20.66

Cash Flow Margin ratio Graph No.1

35 R 30 A 25 T I 20 O 15 10 I n 5 % 0 2005-06 2006-07 2007-08 YEAR 2008-09 2009-10 ( )

RATIO

Interpretation: GACL has net cash provided by operating activities is Rs. 28,601.32 lacs and net sales is Rs. 1,38,444.30 lacs. An operating cash flow to sales ratio of 2009-10 is 20.66%, or approximately 21 percents of operating cash flow in every sales rupee.It shows that company can able to gain 20.66% cash from sales.The ratio is less in previous year, i.e. 21.60%.From the comparision of five years, it can be seen that in the year, 2005-06, ratio is highest, i.e. 30.70%.It can ,also, be seen that sales has been grown since last four years, from 2005-06 to 2008-09.But it has decreased in previous year.So, in that year, companies ability to convert sales into cash is decreased.

2. Free Cash Flow to Operating Cash Flow: The free cash flow to operating cash flow ratio measures the relationship between free cash flow and operating cash flow. Free cash flow is most often defined as operating cash flow minus capital expenditures, which, in analytical terms, are considered to be an essential outflow of funds to maintain a company's competitiveness and efficiency. The cash flow remaining after this deduction is considered "free" cash flow, which becomes available to a company to use for expansion, acquisitions, and/or financial stability to face difficult market conditions. Formula: FCF/OCF Ratio= Free Cash Flow(Operating Cash Flow-Capital Expenditure) Operating Cash Flow

Free Cash Flow to Operating Cash Flow Ratio Table No.7

YEAR Free Cash Flow (Rs. In lacs) Operating Cash Flow (Rs. In lacs) Free Cash Flow to Operating Cash Flow Ratio (In Percentage) 2005-06 32493.4 2006-07 26655.15 2007-08 34392.66 2008-09 29386.94 2009-10 25011.96

33,580.50

27,563.15

35,203.78

33,789.78

28,601.32

96.76

96.71

97.70

86.97

87.45

Free Cash Flow to Operating Cash Flow Ratio Graph No.2

100 98 96 R A T I O ( I n % ) 94 92 90 88 86 84 82 80 2005-06 2006-07 2007-08 YEAR 2008-09 2009-10 RATIO

Interpretation: This ratio shows financial strength of the company. The higher the percentage of free cash flow embedded in a company's operating cash flow, the greater the financial strength of the company. In all the five years ratio is high.It shows that GACL is financially stable company.It has above 90% ratio in three years,starting from 2005 to 2007.In 2008 & 2009 company has lesser ratio as compared to last three years.But it is not so less.The reason for lesser ratio in these two years is that GACL has incurred more capital expenditure in these years.But it can be said that GACL has achieved strong financial condition.

3. Cash Flow Coverage Ratio: This ratio measures the ability of the company's operating cash flow to meet its obligations - including its liabilities.The operating cash flow is simply the amount of cash generated by the company from its main operations, which are used to keep the business funded.The larger the operating cash flow coverage for these items, the greater the company's ability to meet its obligations, along with giving the company more cash flow to expand its business, withstand hard times, and not be burdened by debt servicing and the restrictions typically included in credit agreements. i. Short term Debt Coverage Ratio: It indicates a companies ability to repay its short term debt. Formula: Short term Debt Coverage Ratio= Operating Cash Flow Short term Debt

Short term Debt Coverage Ratio Table No.8

YEAR Operating Cash Flow (Rs. In lacs) Short term Debt (Rs. In lacs) Short term Debt Coverage Ratio (In Times) 2005-06 33,580.50 2006-07 27,563.15 2007-08 35,203.78 2008-09 33,789.78 2009-10 28,601.32

10000.00

17500.00

15000.00

8050.00

8500.00

3.36

1.58

2.34

4.20

3.36

Short term Debt Coverage Ratio Graph No.3

4.5 4 R A T I O 3.5 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 YEAR 2008-09 2009-10 RATIO

T i m e I s n

Interpretation:In previous year GACL has Ratio of 3.36 times.It indicates that company has 3.36 Rs.cash to repay its short - term debt of Re.1.This is good sign for company.But it can be shown that this Ratio is less as compared to 2008-09. Short term Debt Coverage Ratio shows more fluctuation in five years,as it is 3.36 times in 2005-06 & than falls to 1.6 times in 2006-07. It again rises to 2.34 times in200708.In 2008-09 it is at highest level, i.e.4.20 times & then again falls to 3.36 times.

ii. Capital Expenditure Coverage Ratio: This Ratio indicates how much company is incurring Capital Expenditure against available operating cash.This Ratio is in times. Formula: Capital Expenditure Coverage Ratio= Operating Cash Flow Capital Expenditure

Capital Expenditure Coverage Ratio Table No.9

YEAR Operating Cash Flow (Rs. In lacs) Capital Expenditure (Rs. In lacs) Capital Expenditure Coverage Ratio (In Times) 2005-06 33,580.50 2006-07 27,563.15 2007-08 35,203.78 2008-09 33,789.78 2009-10 28,601.32

960.09

908.00

811.12

4402.84

3589.36

34.98

30.36

43.40

7.67

7.97

Capital Expenditure Coverage Ratio Graph No. 4

R A T I O ( I n T i m e s )

50 45 40 35 30 25 20 15 10 5 0 2005-06 2006-07 2007-08 YEAR 2008-09 2009-10 RATIO

Interpretation: In years from 2005 to 2007 capital expenditure is very low.Due to this, Ratio is much smaller than next two years.In 2009-10, GACL has incurred one rupee of capital expenditure against 7.97 Rs.of operating cash.so, it can be said that company has incurred lesser amount of capital expenditure in the year 2007-08 as compared to above five years. Thus, higher the Ratio, the lesser amount of capital expenditure is incurred during that year.

iii. Dividend Payout Ratio: This ratio identifies the percentage of earnings (net income) per common share allocated to paying cash dividends to shareholders. The dividend payout ratio is an indicator of how well earnings support the dividend payment.The payment of a cash dividend is recorded in the statement of cash flows under the "financing activities" section. Formula: Dividend Payout Ratio= Dividend per Share Earning Per Share

Dividend Payout Ratio Table No.10

YEAR Dividend Per Share (In Rs.) Earning Per Share (In Rs.) Dividend Coverage Ratio (In Percentage) 2005-06 2.00 26.96 2006-07 2.50 25.00 2007-08 3.50 30.00 2008-09 3.00 26.00 2009-10 3.00 23.00

10

11.67

11.54

13.04

Dividend Payout Ratio Graph No.5

14 R A T I O ( I n % ) 12 10 8 6 4 2 0 2005-06 2006-07 2007-08 YEAR 2008-09 2009-10 RATIO

Interpretation: This ratio indicates that how well earnings support the dividend payment.In GACL this ratio is constantly increasing during the period of 2005 to 2009.In 2005-06 it is only 7%,while in 2009-10 it is 13%.During the year 2007 & 2008, the ratio is approximetaly same. There was an increase in both, dividend per share & EPS in 2007 but in 2008,both has decreased. At last, it can be said that the earnings of GACL supports to pay dividend to its shareholders.

4. Operating Cash Flow Ratio: It is a measure of how well current liabilities are covered by the cash flow generated from a company's operations. The operating cash flow ratio can gauge a company's liquidity in the short term. Using cash flow as opposed to income is sometimes a better indication of liquidity simply because, as we know, cash is how bills are normally paid off.

Formula: Operating Cash Flow Ratio= Cash Flow from Operation Current Liabilities

Operating Cash Flow Ratio Table No.11

YEAR Cash Flow from Operation (Rs. in lacs) Current Liabilities (Rs. in lacs) Operating Cash Flow Ratio (In Times) 2005-06 33,580.50 2006-07 27,563.15 2007-08 35,203.78 2008-09 33,789.78 2009-10 28,601.32

23,677.87

31,135.27

41,440.03

53,322.03

50,064.90

1.42

0.88

0.85

0.64

0.57

Operating Cash Flow Ratio Graph No.6

1.6 1.4 R A T I O 1.2 1 0.8 0.6 0.4 0.2 0 2005-06 2006-07 2007-08 YEAR 2008-09 2009-10 RATIO T i m e I s n )

Interpretation: In previous year,current liabilities are more & cash flow was less,so,ratio is lowest as compared to other years.In 2005-06, company had 1.42 times cash to cover its current liabilities.Such ratio is good for company.But then ratio has decreased,till previous year.so,it can be said that, as compared to previous years, liquidity of the company has decreased.

7. RESULTS & FINDINGS

It can be seen that since last two years short term debt of GACL has decreased. So, it is good for the company to repay such loans from available funds.

Dividend Payout Ratio has, also, increased in last five years. Earnings of Gacl support well to pay dividend to the shareholders. GACL should reduce its capital Expenditure. So that, it can become more strong in terms of financial strength. GACL should increase its operating cash flow, because operating cash flow is less as compared to previous four years.It can affect financial strength & liquidity position of the firm.

8. LIMITATION OF THE CASH FLOW STATMENT

Cash is one of the major lubricants of business activity, but there are certain things that cash flow doesn't shed light on. For example, it doesn't tell us the profit earned or lost during a particular period: profitability is composed also of things that are not cash based. This is true even for numbers on the cash flow statement like "cash increase from sales minus expenses", which may sound like they are indication of profit but are not. As it doesn't tell the whole profitability story, cash flow doesn't do a very good job of indicating the overall financial well-being of the company. The statement of cash flow indicates what the company is doing with its cash and where cash is being generated, but these do not reflect the company's entire financial condition. The cash flow statement does not account for liabilities and assets, which are recorded on the balance sheet. Furthermore accounts receivable and accounts payable, each of which can be very large for a company, are also not reflected in the cash flow statement. In other words, the cash flow statement is a compressed version of the company's checkbook that includes a few other items that affect cash, like the financing section, which shows how much the company spent or collected from the repurchase or sale of stock, the amount of issuance or retirement of debt and the amount the company paid out in dividends.

9. CONCLUSION/SUGGESTION
GACL is the cashcow for government of Gujarat. It is the single caustic soda producer in the country with the market share of 13.75%. It is a leader in the chore-Alkalie Industry. It can get raw material at the lowest cost, as Gujarat is having 1600km of sea shore. It has the captive power plant at dahej. The Company enjoys low cost powder which is also considered as raw material. Research & Development department of GACL comes out with new products like poly Aluminums Chloride with even more law cost. It has won many awards on quality control and environmental protection.The company has shown its commitment towards becoming a green company. The Company is having problems with dumping activity of Chinese companies for last many years. But the Indian govt has granted all its recommendation and took Anti-dumping measurements against these Chinese companies. Company has recently adopted performance based pay which will make it more efficient in coming period.

ANNEXTURE:
1. Balance Sheet as on 31.3.2010: PARTICULARS SOURCES OF FUNDS:
Shareholders Funds: Share Capital Reserves and Surplus Loan Funds : Secured Loans Unsecured Loans Deferred Tax (Net) Total APPLICATION OF FUNDS : Fixed Assets : Gross Block Less : Depreciation Net Block Capital Work-inProgress Investments Current Assets, Loans and Advances: Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions Miscellaneous Expenditure Total : 1 2 7,343.84 1,31,764.11 1,39,107.95 3 4 23,797.95 8,525.86 32,323.81 31,757.03 2,03,188.79 7,343.84 1,17,148.75 1,24,492.59 25,784.15 8,088.79 33,872.94 27,908.89 1,86,274.42

(Rs. In Lacs) 31.03.2010 RS. 31.03.2009 RS.

SCHEDULE

RS.

2,78,899.07 1,27,099.94 1,51,799.13 9,097.35 1,60,896.48 14,050.58

2,58,073.16 1,14,067.96 1,44,005.20 8,385.44 1,52,390.64 11,727.52

7 8 9 10 11

14,024.88 26,355.19 1,260.88 36,665.68 78,306.63 50,064.90

17,057.29 24,810.49 2,646.92 30,963.59 75,478.29 53,322.03

28,241.73 --2,03,188.79

22,156.26 --1,86,274.42

2. Schedule of Balance Sheet used in Analysis of Cash Flow Statement: Schedule-4 Unsecured Loans 1.Short term Loans Banks Others (Net of prepayment advances) 2.Sales Tax Deferment Loans Total 31.03.2010 Rs. 8,500.00 ---25.86 8,525.86 (Rs. In Lacs) 31.03.2009 Rs. 5,000.00 3050.00 38.79 8,088.79

3. Profit & Loss Statement for the year ended on 31.3.2010: (Rs. In Lacs) PARTICULARS SCHERS. 31.03.2010 31.03.2009 DULE RS. RS.
INCOME : Sales (Including Excise Duty) Less : Excise Duty Other Income Increase/(Decrease) in Stock of Finished Goods & Prcoess Stock EXPENDITURE : Raw Materials Consumed Manufacturing and Operating Expenses Difference of Excise Duty on Opening and Closing Stock Employees Remuneration and 17 11,990.79 9,059.51 12 1,38,444.30 10,636.37 1,27,807.93 6,183.56 1,33,991.49 (620.12) 1,56,412.58 17,730.47 1,38,682.11 4,325.27 1,43,007.38 1,802.12

13 14

1,33,371.37 15 16 57,790.78 29,328.69 7.70

1,44,809.50 52,202.62 36,582.27 106.7

Benefits Administration, General and Marketing Expenses Interest Depreciation Profit Prior Period Adjustments (Net) Debit / (Credit) Profit before Taxation Provision for Taxation Provision for Taxation Deferred Income Tax (Net) Wealth Tax Fringe Benefits Tax MAT Credit Entitlement Excess Provision for Income Tax of earlier years written back Profit after Taxation Surplus Balance Brought forward from Previous Year Amount Available for Appropriations APPROPRIATIONS : Proposed Final Dividend Tax on Proposed Dividend Transferred to General Reserve Balance Carried to Balance Sheet 18 19 5,234.01 1,747.60 12,155.27 1,18,254.84 15,116.53 488.63 14,627.90 2,368.93 3,848.14 1.07 --(2,368.93) (6,405.69) (2,556.48) 17,184.38 29,101.99 46,286.37 2,203.11 365.91 8,593.00 35,124.35 46,286.37 7,137.21 2,459.4 10,943.31 1,18,491.04 26,318.46 188.06 26,130.40 2,883.53 3,980.39 0.95 38.26

6,903.13 19,227.27 22,066.25 41,293.52 2,203.11 374.42 9,614.00 29,101.99 41,293.52

REFERENCE
1. http://www.careersearch@careratings.com dated on 11/06/2011 2. www.wikipedia.org dated on 16/06/2011 3. www.ibef.org dated on 26/06/2011 4. www.edelweiss.com dated on 15/06/2011 5. www.final-yearprojects.co.cc dated 1/06/2011 6. CRISIL, I-Sec Research dated on 10/06/2011 7. Economic Survey 2009-10, DIPP dated on 16/06/2011 8. http://eaindustry.nic.in dated on 17/06/2011 9. http://www.moneycontrol.com/stocks/company_info//25/6/2011