CONTENTS

CHAPTER I
 INTRODUCTION  NEED FOR THESTUDY  OBJECTIVE OF THE STUDY  RESEARCH METHODOLOGY  SCOPE OF STUDY  LIMITATIONS OF THE STUDY

CHAPTER II
 ORGANISATIONAL PROFILE  COMPANY PROFILE

CHAPTER III
 THEORETICAL FRAME WORK

CHAPTER IV

 DATA ANALYSIS & INTERPRETATION

CHAPTER V
 FINDINGS & SUGGESTIONS

BIBILIOGRAPHY

CHAPTER-I

INTRODUCTION

Funds constitute prime importance in starting and operating any business Enterprise the most significant of all financial activities is the raising and management of funds financial decisions are those which concern the generation and flow of funds various sources and the use of these funds. The accounting standards state that in many countries the approach to provide a statement of changes in financial position as a part of audited accounts is the trend in India companies are under no legal obligation to publish a statement of changes in financial position statements along with financial statements especially in the case of companies listed on the stock exchanges and other large commercial industrial and business enterprise in public and private sectors. The funds flow statement which shows the movement of funds and is the part of financial operation of the business under taking. It indicates various means by which funds. Where obtained during a particular period and the ways in which there funds where employed in simple words. It is a statement of sources and application of funds. Funds flow analysis refers to the process of determining the financial strengths and weakness of the by establishing relationship between the items of balance sheet and profit and loss account. Funds flow statement serves as a handy tool in financial analysis making financial planning preparation of budget through this analysis firm group the change in the allocation resources between the two balance sheets.

The Funds flow statement expresses the changes in working capital and assesses the impact upon liquidity position of the undertaking with the help of this statement. The financial management can plan the intermediate and long term financial of the concern repayment of loans, expansions of business and distribution of resources. It is helpful in the crucial decision making process incase of expansion. Diversification of conservation of more funds for profitable utilization of sound projects in the sequent year. It is useful to economize financial institution, investors and owners for analyzing performance of the firm.

OBJECTIVES OF THE STUDY

y y y

To identify the source of funds of the Kesoram Cements Limited. To identify the application funds of the Kesoram Cements Limited. To identify the changes in working capital

SCOPE OF THE STUDY Only the FUNDS FLOW has been taking to measure the financial performance. The study confines to the funds management at Kesoram Cements Limited, only. This study can not reflect the Overall Industrys funds management system.

y y

METHODOLDY UNDER STUDY

RESEARCH:

Research is an academic activity and as such term should be used in a technical sense. According to Clifford woody research comprises defining and redefining problems, formulating Hypothesis or suggested solutions; collecting, organizing and evaluating data, making deduction and reaching conclusion; and At last care fully testing the conclusions to determine whether they fit the formulating the hypothesis.

DATA COLLECTION METHODS PRIMARY DATA: Primary data refers to information on that is generated to meet the specific requirements of the investigation at hand it consist observation method; interview method; through questionnaires; through schedules methods.

SECONDRY DATA: The information that is collected for a purpose other than to solve the specific problem under investigation is known as secondary data. The data has been collected form primary as well as secondary sources. Primary data has been collected through interaction with company managers. Secondary data has been collected from books publications, websites, and annual reports.

NEEDS FOR THE STUDY The basic financial statements i.e. the Balance sheet, Profit and income statement reveal the net effect of the various transaction on the operational and Financial position of the company. But these statements do not disclose the cases for changes in the assets and liabilities between two different points of time. Even the profit & loss account indicates the resources provided by operations. But there are many transactions that take place in an undertaking which do not operate through profit & loss account. Thus another statements has to be prepared show the change in the assets and liabilities from the end of one period of time to the end of another period of time. That statement is called Funds flow statement. So, I have undertaken this study to examine the changes which are occurring in the financial operation of the organization and to the Funds management system in KESORAM CEMENTS LTD.

LIMITATIONS y The analysis made on the basis of secondary data. y y y The availability of date is only is pertaining to five years. It is a major constraint for this project. The project duration i.e. 45 days is also a constraint to give realistic interpretations. y This analysis has done based on the information provided by the bank. If any mistakes published in this reports, the same information has taken into consideration. y This project is not a basis for further research.

CHAPTER II ORGANIZATION PROFILE & COMPANY PROFILE

HISTORY OF INDIAN CEMENT INDUSTRY By stating production in 1914 the story of story of Indian cement is a stage of continuous growth. Cement is derived from the Latin word cementam. Egyptians and Romans found the process of manufacturing cement. In England during the first century the hydraulic cement has become more versatile building material. Later on, Portland cement was invented and the invention was usually attributed to Joseph Aspdin of England. India is the worlds 4th largest cement produced after China, Japan and U.S.A. The South Industries have produced cement for the first time in 1904. The company was setup in Chennai with the installed capacity of 30 tonnes per day. Since then the cement industry has progressing leaps and bounds and evolved into the most basic and progressive industry. Till 1950 1951, the capacity of production was only 3.3 million tonnes. So far annual production and demand have been growing a pace at roughly 78 million tonnes with an installed capacity of 87 million tonnes. In the remaining two years of 8th plan an additional capacity of 23 million tonnes will actually come up. India is well endowed with cement grade limestone(90 billion tonnes) and coal(190 billion tonnes). During the nineties it had a particularly impressive expansion with growth rate of 10%.

The strength and vitality of Indian Cement Industry can be gauged by the interest shown and support gives by World Bank considering the excellent performance of the industry in utilizing the loans and achieving the objectives and targets. The World Bank is examining the feasibility of providing a third line of credit for further upgrading the industry in varying areas, which will make it global. With liberalization policies of Indian Government. The industry is posed for a high growth rates in nineties and the installed capacity is expected to cross 100 million tonnes and production 90 million tonnes by 2003 AD. The industry has fabulous scope for exporting its product to countries like the U.S.A., U.K, Bangladesh, Nepal and other several countries. But there are not enough wagons to transport cement for shipment.

Cement The product: The natural cement is obtained by burning and crushing the stones containing clayey, carbonate of lime and stone amount of carbonate of magnesia. The natural cement is brown in color and its best variety is known as ROMAN CEMENT. It sets very quickly after addition of water. It was in the eighteenth century that the most important advances in the development of cement were which finally led to the invention of Portland cement.

In 1756, John Smeaton showed that hydraulic lime which can resist the action of water can be obtained nit only from hard lime stone but from a limestone which contain substantial proportion of clayey. In 1796, Joseph Parker found that modules of argillaceous limestone made excellent hydraulic cement when burned in the usual manner. After burning the product was reduced to a powder, this started the natural cement industry. The artificial cement is obtained by burning at a very high temperature a mixture of calcareous and argillaceous material. The mixture of ingredients should be intimate and they should be in correct proportion. The calcined product is known as clinker. A small quantity of gypsum is added to clinker and it is then pulverized into very fine powder, which is known as cement. The common variety of artificial cement is known as normal setting cement or ordinary cement. A mason Joseph Aspdn of Leeds of England invented this cement in 1824. He took out a patent for this cement called it PORTLAND CEMENT because it had resemblance in its color after setting to a variety of sandstone, which is found a abundance in Portland England. The manufacture of Portland cement was started in England around 1825. Belgium and Germany started the same 1855. America started the same in 1872 and India started in 1904. The first cement factory installed in Tamilnadu in 1904 by South India limited and then onwards a number of factories manufacturing cement were started. At present there are more than 150 factories producing different types of cements.

Composition of Cement: The ordinary cement contains two basic ingredients, namely, argillaceous and calcareous. In argillaceous materials the clayey predominates and in calcareous materials the calcium carbonate predominates. A good chemical analysis of ordinary cement along with desired range of ingredients.

Ingredients

Percent

Range

Lime(CaO) Silica(SiO2) Alumina(Al2O3) Calcium sulphate (CaSO4) Iron Oxide (Fe2O3) Magnesia(MgO) Sulphur (S) Alkalies

62 22 5 4 3 2 1 1

62-67 17-25 3-8 3-4 3-4 1-3 1-3 0.2-1

Industry Structure and Development: With a capacity of 115 million tonnes of large cement plants, Indian Cement industry is the fourth largest in the world. However per captia consumption in our country is still at only 100Kgs of developed countries and offers significant potential for growth of cement consumption as well as addition to cement capacity. The recent economic policy announcement by the government in respect of housing, roads, power etc., will increase cement consumption. Opportunity and threats: In view of low per captia consumption in India, there is a considerable scope for growth in cement consumption and creation of new capacities in coming years. The cement industry does not appear to have adequately exploited cement consumption in rural segment where damaged where damaged growth is possible. Landed cost of cement (with import duty)continues to be higher than home market prices but with reduced import duty, increasing imports, may pose a serious threat to the domestic cement industry. Outlook The recent change in the budget 2003- 2004 relating to fiscal incentives for individual housing and reduction in borrowing cost for this purpose and with the government reaffirmation to accelerate the reform process, infrastructure development should logically get priority leading to increase in demand of cement in coming years. The addition capacity of cement in the pipeline

is limited and therefore the demand and supply situations is expected to be more favorable and cement prices are likely to firm up. Risks and Concerns Slow down of Indian economy or drop in growth rate of agriculture may adversely affect the consumption. The recent increase in railway freight coupled with diesel / petrol price like will increase the cost of production and distribution, as being bulky, cement is freight intensive increase in Limestone royalty also adds to the cost of production, which is considerably higher than corresponding costs of many other developing countries. In our country there is a need to undertake a massive programme of house construction activity into the rural and urban areas. It is impossible to construct a house without cement and steel, in other words, cement is one of the basic construction materials and therefore it is one of the vital elements for the economic development of the nation. India inspite of being the 4th biggest producer of cement in the world has still a very low per capital consumption of cement. Cement Companies Cement plant Installed Capacity Total Investment (approx) Total Manpower 51 Nos 99Nos 64.8mt Rs.10,000 Crores Over 1.25 Lakhs

Management Awards of the Government of Andhra Pradesh. Kesoram is also conscious of its social responsibilities. Its rural and community development programmes include adoption of two nearby villages, running an Agricultural Demonstration Farm, Model Dairy Farm etc., impressed by these activities, FAPCCI chose Kesoram to confer the Award for Best efforts of an Industrial Unit in the year 1994 as well as in1998. Kesoram also has to its credit the National Award (Shri S.R. Rangta Award for Social Awareness) for the year 1995- 1996, for the Best Rural Development Efforts made for Best Workers Welfare Kesoram got the first Prize for Mine Environment and pollution Control for year 1999 too, for the 3rd year in succession in July, 2001 Kesoram annexed the Vana Mithra Award from the Government of Andhra Pradesh. Quality conscious and progressive in its outlook, KESORAM CEMENT is an OHSAS 08001 Company and also joined the select brand of ISO9001-2000 Companies. History The first unit was installed at Basanthnagar with a capacity of 2.5 lacks TPA (tonnes per annum) incorporating humble supervision, preheated system, during the year 1969. The second unit followed suit with added a capacity of 2 lack TPA in 1971. The plant was further expanded to 9 lack by adding 2.5 lack tonnes in August, 1978, 1.13 lack tonnes in January, 1981 and .87 lack tonnes in September, 1981.

Power

A Singareni colliery makes the supply of coal for this industry and the power was obtained form AP TRANSCO. The power demand for the factory is about 21MW. Kesoram has got 2 diesel generator sets of 4MW each installed in the year 1987. Kesoram cement now has a 15KW captive power plant to facilitate for uninterrupted power supply for manufactured of cement.

KESORAM CEMENT One among the industrial giants in the country today, serving the nation on the industrial front Kesoram Industries Limited has a chequeres and evenful history is dating back to the Twenties when the industrial House of Birlas acquired it. With only a Textile Mill under it banner in 1924, it grew from strength and paper, spun pipes and Refractories, tyres, Oil Mills and Refinery Extractions. Looking to the wide gap between demand and supply, of a vital commodity, cement, which plays an important role in nation building the government of India de-licensed the Cement industry in the year 966 with a view to attract private entrepreneurs to argument the cement product Kesoram rose to the occasion and decided to setup a few cement plants in the country. The Cement plant of Kesoram with a capacity of 2.5 lack tonnes per annum based on dry process, was established in 1969 at Basanthnagar a backward area in Karimnagar District, Andhra Pradesh, and christened it Kesoram Cement. The second unit followed suit, which added a capacity of 2.00 lack tonnes in 1971. The plant was further expanded to 9.00 lack tonnes by

adding 2.5 lack tonnes in August 1978. 1.14 lack tonnes in January, 1981 and 0.87 lack tonnes in September, 1981. Kesoram Cement has outstanding track of performance and distinguished itself among all the Cement factories in India bagging the coveted National Productivity Award for two successive years, i.e., in 1985 and 1936, so also the National Awards for Mines Safety for two year 1985-86 and 1986- 87. Kesoram also bagged NCBMs (National Council for Cement Building Materials) National Award for Energy Conservation for the year 1989-90.

Kesoram got the prestigious state Award Yajamanya Ratna & Best Management Award for the year 1989: so also the FAPCCI (Federation of Andhra Pradesh Chamber of Commerce and Industry) Award for Best Family Planning effort in the State. Foe the year 1987-88, Kesoram also got the FAPPCI Award for Best Industrial Promotion/ Expansion effort in the State. In the year 1991 Kesoram also got the May day Award of the Government of Andhra Pradesh for Best Management and Pandit Jawaharlal Nehru Silver Rolling Trophy for Best Productivity effort in the State, Sponsored by FAPCCI, for 1993 Kesoram got the Best.

Performance:

The performance of Kesoram Cement industry had been outstanding achieving over percent capacity utilization although despite many odds like power cuts and which most 40% was due to wagon shortage etc. The company being a continuous process industry works round the clock and has an excellent record of performance achieving over 100% capacity utilization. Kesoram has always combined technical progress with industrial performance. The company had a glorious track record for the last 27 years in the industry. Technology Kesoram Cement uses most modern technology and the computerized control in the plant. A team of dedicated and well experienced experts manages the plant. The quality is maintained much above the bureau of Indian Standards. The raw materials used for manufacturing cement are:  Lime stone  Bauxite  Hematite  Gypsum

Environmental and Social Obligations For environmental promotion and to keep-up the ecological balance, this section has undertaken various social welfare programs by adopting ten nearly villages, organizing family welfare camps, surgical camps, children immunization camps, animal health camps, blood donation camps, distribution of fruit bearing trees and seeds, training for farmers etc., were arranged. Welfare and Recreation Facilities For the purpose of recreation facility 2 auditoriums were provided for playing indoor games, cultural function and activities like drama, music and dance etc.

The industry had provided libraries and reading rooms. About 1000 books are available in the library. All kinds of newspaper, magazines are made available. Canteen is provided to cater to the needs to the employees for supply snacks, tea, coffee and meals etc. One English medium and one Telugu medium school are provided to meet the educational requirements. The company has provided a dispensary with a qualified medical office and paramedical staff for the benefit of the employees. The employees covered under ESI scheme have to avail the medical facilities from the ESI hospital.

Competitions in sports and games are conducted every year for August 15, Independence Day and January 26, Republic Day among the employees.

Electricity The power consumption per ton cement has come down to 108 units against 113 units last year, due to implementation of various energy saving measures. The performance of captive power plant of this section continues to be satisfactory. Total power generation during the years was 84 million units last year. This captive power plant is playing a major role in keeping power costs with in economic levels.

The management has introduced various HRD Programs for training and development and has taken various other measures for the betterment of employees efficiency / performance. The section has installed adequate air pollution systems and equipment and is ISO 14001 such as Environment Management System is under implementation. Awards Kesoram cement bagged many prestigious awards including national awards for productivity, technology, conservation and several state awards since 1984. The following are the some of important awards.

Awards of Kesoram

No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Year 1984 1985-86 1985-86-87 1987-88 1987-89 1988-89 1988-89 1988-89 1989 1989

Awards Best family planning effort in the state National Productivity Award Mines Safety Best industrial promotion/expansion effort Productivity Award Best industrial promoter Expansion effort in the state Award for contribution given for rural economy Best family planning effort Yajmanya Ratna & Best Management Award

National / State State National National State State State State State State State

11. 12. 13.

1988-90 1988-90 1991

Community development programs Energy conservation May Day award of the Government of Andhra Pradesh for best Management

State National State

14.

1991

Pandit Jawaharlal Nehru rolling trophy for best national productive effort

State

15.

1993

Indira Gandhi National Award for excellence in Industry(Best Management Award)

State

16. 17.

1994 1994-95

Best industrial rebellion award Rural development chief minister environmental and mineral conservation award

State State

18. 19.

1995 1995-96

Best industrial rebellion award Best effort of an industrial unit to develop rural economy

State State

20.

1996

Shri S.R.Rungta award for social awareness for best rural development efforts

National

21. 22. 23.

1996 1996-97 1999

Best workers welfare Best family welfare award First prize for mine environment & pollution control for the 3rd year in succession.

State State State

24.

2001

Vana Mithra award from Andhra Pradesh Government.

State

25. 26. 27.

2005 2007 2010

Best workers welfare Best Family welfare award FAPCCI Award for Excellence in Industrial Productivity from Andhra Pradesh Government

State State State

In the mines safety week celebrations, under the auspices of the Director General of Mines Safety, Kesorams Basanthnagar limestone Mines won 2 first prizes for environment and pollution control and safe drilling and blatting and 14 2nd prizes for overall performance, productivity, operation and maintenance of machines publicity / propaganda etc.

This section also bagged the award for Environment Protection in the Godavari River belt, sponsored by the Godavari Pradushana Pariharana Pariyavarana. Production Last 20 years production of Kesoram Cements industry, Basanthnagar.

Year 1984-85 1985-86 1986-87

Production(in tonnes) 749197 761581 805921

1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98

760708 550254 601453 643307 343663 748258 685596 731177 784555 782383 731049

1998-99 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

746474 688305 777092 692424 727447 735012 746418 754834 1046166 1056742 1199445

Note: Production including internal consumption also. Cement and clinker production were lower than the previous year mainly because of lower dispatches of cement due to recession prevailing in cement industry wit slowdown in demand during the year under review. This section had to curtail production due to accumulation of large stocks of clinker. However, sales realization during the second half of the year has improved and it it=shoped that prices will stabilize at some reasonable levels.

Directors of Kesoram industries Limited Chairman  Sri.B.K.birla Directors  Smt. K.G.Maheshwari  Shri. Pramod Khaitan  Shri.B.P.Bajoria  Shri.P.k.Chokesy  Smt.Neeta Mukerji (Nominee of ICICI  Shri. D.N.Mishra (Nominee of L.I.C.)  Shri P.K.Malik  Smt Manjushree Khaitan Secretary  Shri. S.K.Parik Senior Executives  Shri.K.C.Jain (Manager of the Company)

 Shri J.D.Poddar  Shri O.P.Poddar  Shri P.K.goyenka  Shri D. Tandon Auditors  Messrs Price Waterhouse Subsidiary Companies of Kesoram Industries  Bharat General & Textile Industries Limited  KICM Investment Limited  Assam Cotton Mills Limited  Soft shree Estates Limited

CHAPTER-III THEORETICAL FRAME WORK

FINANCIAL STATEMENTS

INTRODUCTION

The basis for financial planning, analysis and decision-making is the financial information. Financial information is needed to project, compare and evaluate the firms earning ability. It is also required to aid in economic decision-making investment and financial decision-making. The financial information of an enterprise is contained in the financial statements or accounting reports. Three basic financial statements of great significance to owners, management and investors are balance sheet, profit and loss account and cash flow statement. BALANCE SHEET Balance sheet is the most significant financial statement. It

indicates the financial condition or the state of affairs of a business at a particular moment of time. More specially, balance sheet contains

information about resources and obligations of a business entity and about its owners interest in the business at a particular point of time. Thus, the balance sheet communicates information about assets, liabilities and owners

equity for a business firm as on a specific date. It provides a snapshot of the financial position of the firm at the close of the firms accounting period. Assets are valuable economic resources owned by the firm. They embody future benefits and are measured in monetary terms. Assets

represent: (a) stored purchasing power (e.g., cash), (b) money claims (e.g., receivables stock ) and (c) tangible and intangible items that can be sold or used in business to generate earning. Tangible items that include land,

building, plant, equipment or stocks of materials and finished goods and all such other items do not have any physical existence, but they have value to a firm. They include patents, copyrights, trade name or goodwill. Assets are classified as: (1) current assets and (2) fixed (long term) assets. Current assets sometimes called liquid assets are those of a firm which are either held in the form of cash with in the accounting period are of one-year duration. Current assets include cash, tradable (marketable)

securities, and debtors (accounts receivables) and stock of raw material, work-in process and finished goods.

Fixed assets are long-term in nature; they are held for periods longer than the accounting period. They include tangible fixed assets like land, building, machinery, equipment, furniture etc. Intangible fixed assets

represent the firms rights and include patents, copyrights franchises, trademarks, trade names and goodwill. Firms obligations are called liabilities. Liabilities represent debts payable in future by the firm to its lenders and creditors. They represent economic obligations to pay cash or pay cash or to provide goods services in some future period. Examples of liabilities are creditors, bills payable,

wages, salaries payable, taxes payable, bonds, debentures, borrowings from banks and financial institutions, public deposits etc Liabilities are of two types: (1) current liabilities; and (2) long-term (fixed) Liabilities. Current liabilities are debts payable within an accounting period. Current assets are converted into cash to pay current liabilities. Long-term liabilities are the obligations or debts payable in a period of time greater than the accounting period. Long-term liabilities include debentures, bonds, and secured long-term loans from financial institutions.

The financial interest of the owners are called owners equity or simply Equity. The owners interest is residual in nature, reflecting the excess of the firms assets over its liabilities. As liabilities are the claims of outside

parties, equity represents owners equity has two parts (a) paid-up share capital and (b) reserves and surplus. Paid-up share capital is the amount of funds directly contributed by the shareholders through purchase of shares. Reserves and surplus or obtained earning are undistributed profits. Paid up share capital and reserves and surplus together are called net worth. PROFITS AND LOSS ACCOUNTS Balance sheet is considered as a very significant statement by bankers and other lender because it indicates the firms financial solvency and liquidity, as measured by its resources and obligations. However, creditors, particularly bankers and financial analysis in India have recently started paying more attention to the firms earning capacity as a measure of its financial strength. The earning capacity and potential of a firm are reflected by its profit and loss account. The profit and loss account is a score-board of the firms performance during a period of time.

Profit and loss account presents the summary of revenues, expenses, net income or net loss of a firm. It serves as measure of firms profitability. Revenues are amounts that the customers. The cost of the firm for providing them goods and services to customers. The cost of the economic resources used to earn revenues during a period of time is called Expenses. Revenues and expenses are sometimes categorized as operating and non-operating business of the firm are called operating revenues (operating expenses). Revenues (expenses) which are incidental or indirect to the main operations of the firm are called non-operating revenues (expenses). MEANING OF FINANCIAL STATEMENTS Financial statements at least refer to the two statements which are prepared by a business concern at the end of the year. These are 1) Income statement or trading and profit and loss account which

is prepared by business concern in order to know the profit earned and loss sustained during a specified period.

2)

Position statement or Balance sheet which is prepared by a

business concern on a particular date in order to know its financial position. Concern on a particular dare in order to know its financial position. To these statements are added the statement of Retained Earnings and some other statements such as (Funds flow statement, Cash flow statement etc) and schedules of fixed assets, investments, current assets etc to give a full the package of financial statements. Statement of Retained Earnings (When prepared separately ) or profit and loss appropriation account shows the utilization of profits of the company i.e., dividend declared, amount transferred to general reserve or any other reserve as shows in this account. Funds flow statement summarizes the changes in working capital in a specified period and indicates the various sources and applications of funds.

Cash flow statement gives the various items of inflow and outflow of cash. Various schedules of fixed assets, investments, current assets etc, are prepared by companies to show as to how the figures shown in the balance sheet have been arrived at. NATURE OF FINANCIAL STATEMENTS Financial statements are prepared for the purpose of presenting a periodical review or report by the management and deal with the state of investment in business and result achieved during the period under review. They reflect a combination of recorded facts, accounting

conventions and personal judgments. From this it is clear that financial statements are affected by three things i.e. recorded facts, accounting conventions and personal judgments.

IMPORTANCE OF FINANCIAL STATEMENTS The information given in the financial statement is very useful to a number of parties as given below: 1. OWNERS: Owners provide funds for the operation of business and they want to know whether their funds are being properly utilized or not. The financial statement prepared from time to time to satisfy their curiosity. 2. CREDITORS: Creditors (i.e. suppliers of goods and services on credit, bankers and other lenders of money) want to know the financial position of a concern before giving loans or granting credit. The financial statements help them in judging such positions. 3. INVESTORS: Prospective investors, who want to invest money in a firm, would like to make an analysis of the financial statements of that firm to know how safe proposed investment would be. 4. EMPLOYEES: Employees are interested in the financial position of a concern they serve, particularly when payment of bonus depends upon the size of the profit earned. They would like to know that the

bonus being paid to them is correct; so they became interested in the preparation of correct profit and loss account. 5. GOVERNMENT: Central and State Governments are interest in the financial statements because they reflect the earnings for a particular period for purpose of taxation. Moreover, these financial statements are used for compiling statistics concerning business which in turn, help in compiling national accounts. 6. RESEARCH SCHOLARS: The financial statements being a

mirror of the financial position of a financial position of a firm are of immense value to the research scholars who wants to make a study into financial operations of a particular firm. 7. CONSUMERS: Consumers are interested in the establishment of

good accounting control so that cost of production may be reduced with the resultant of the prices of goods they buy. 8. MANAGERS: Management is the art of getting things done

through others. This requires that the subordinates are doing work properly. Financial statements are an aid in this respect because they serve manager in appraising the performance of the subordinates by

comparing the actual results with the standards established and identifying the deviations, if any and taking remedial measures to remove deviations. MEANING OG ANALYSIS OF FINANCIAL STATEMENTS Analysis is the process of critically examining in details accounting information given in the financial statements. For the purpose of analysis, individual items are studied their interrelationship with other related figures established, the data is sometimes rearranged to have better understanding of the information with the help different techniques or tools for the purpose. In the words of MYNR, financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statements and a study of the trend of these factors as shown in a series of statements. MEANING OF INTERPRETATION Analysis and interpretation are closely related. Interpretation is not possible without analysis and with interpretation analysis has no value.

In the words KENNDY AND MEMULLAR,The analysis and interpretation of financial statements data so that a forecast may be made of the prospects for future earning, ability to pay interest and debt maturities (both current and long-term) and profitability of a sound dividend policy. TYPES OF FINANCIAL STATEMENT ANALYSIS Different types of financial statements analysis can be made on the basis of 1. The nature of the analysis and the material used by him. 2. The objectives of the analysis. 3. The Modus operandi of the analysis. These are discussed one by one. ON THE BASIS OF NATURE OF THE ANALYST AND THE MATERIAL USED BY HIM: y EXTERNAL ANALYSIS: It is made by those persons who are not connected with the enterprise. They do not have access to the

enterprise. They do not have access to the detailed record of the

company and have to depend mostly on published statements. Such type of analysis is made by investors, credit agencies, governmental agencies and research scholars. y INTERNAL ANALYSIS: The internal analysis is made by those persons who have access to the books of accounts. They are members of the organization. Analysis of financial statements or other

financial data for managerial purpose is the internal type of analysis. The internal analysis can give more reliable result than the external analysis. ON THE BASIS OF OBJECTIVE OF THE ANALYSIS: On the basis the analysis can be long-term and short-term analysis. y LONG-TERM ANALYSIS: This analysis is made in order to study the long-term earning capacity of a business concern. The purpose of making such type of analysis is to know whether in the long-run the concern will be able to earn a minimum amount which will be sufficient to maintain a reasonable rate of return on the investment so as to provide the funds required for modernization, growth and development of the business and to meet its costs of capital.

y SHORT-TERM ANALYSIS: This is made to determine the short term solvency, stability and liquidity as well as earning capacity of the business. The purpose of this analysis is to know whether in the short run a business concern will have adequate funds readily available to meet its Short-term requirements and sufficient borrowing capacity to meet contingencies in the near future. ON THE BASIS OF MODUS OPERANDI OF ANALYSIS: On this basis, the analysis may be horizontal and vertical analysis. y HORIZONTAL (OR DYNAMIC) ANALYSIS: This analysis is made to review and analyze financial statements of a number or years and therefore based on financial data year from several years. This is very useful for long-term trend analysis and planning. It is also termed as dynamic analysis. y VERTICAL (OR STATIC) ANALYSIS: This analysis is made to review and analyze the financial statement of one particular year

only. Ratio analysis of the financial year relating to a particular year is an example of this type of analysis. TECHINIQUES (TOOLS OR METHODS) OF ANALYSIS AND INTERPRETATION: The following techniques can be used in connection with analysis and interpretation of financial statements: 1. Comparative financial statements (or Analysis). 2. Common measurement statements (or Analysis). 3. Trend percentages (or Analysis). 4. Funds flow statements (or Analysis). 5. Net working capital (or Analysis). 6. Cash flow statements. 7. Ratio Analysis.

FUNDS FLOW STATEMENTS INTRODUCTION

The basis financial statement i.e. the balance sheet and profit & loss account or income statements of business reveal the net effect of the various transactions on the sssoperational and financial position of the company. The balance sheet gives a summary of the assets and liabilities of an undertaking at a particular point of time; it reveals status of the company. The asset side of a balance sheet shows the deployment of resources of an under taking while the liabilities side indicates its obligation financial activities of a business for a period of time and financial activities if a business but their usefulness is limited for analysis and planning purpose. But they are many transactions that take place in an under taking and which do not operate though profit & loss account. Another statement has to be prepared to show the change in the assets & liabilities from the end of one period of time to the end of another period of time. The statement is called a statement of changes in financial position of a fund flow statement.

MEANING & CONCEPT OF FUND The term fund has been defined in a number of ways. y IN A NARROW SENCE: It means cash only and funds flow statement prepared on this basic is called a cash flow statement. Such statement enumerates net effects of the various business transactions on cash and takes into account receipts and disbursement of cash. y IN A BORDER SENCE: The term funds refers to money values in whatever from in may exits, here funds means all financial resources, used in business whether in the form of men, material, money, machinery and others. y IN A POPULOAR SENCE: The term funds means working The

capital, i.e. the excess of current over current liabilities.

working capital concept of funds has emerged due to the fact that total resources are invested partly in fixed assets in the form of capital and kept in form of liquid or near liquid form as working capital.

MEANING & CONCEPT OF FLOW OF FUNDS The term FLOW means movement and includes both inflow & outflow. The term FLOW OF FUNDS means transfer of economic values from one asset of equity to another. FLOW OF FUNDS is said to have taken place when any transaction makes changes in the amount of funds available before happening of the transaction. transaction resulted in the FLOW OF FUNDS. According to the working capital concept of funds the term FLOW OF FUNDS refers to the movements of funds in the working capital, it is said to be an application or out of funds. RULE: The flow of funds occurs when a transaction on the one hand a noncurrent and on the other a current account and vice-versa. When a change in a non-current account E.g. Fixed assets, long term liabilities, reserve and surplus, fictitious assets etc is followed by a change in another non-current account, it does not amount to flow of funds. This is because of the fact that in such cases neither the working capital increases nor decreases. Similarly, when a Effect on

change in one current account results in change in another current. It does not affect funds. Funds move from non-current transactions or vice-versa only. In simple language funds move when a transaction affects. 1. A current assets and fixed assets. 2. A fixed liabilities and current liabilities. 3. A current asset and a fixed asset. 4. A fixed liabilities and current liabilities. And funds do not move when the transaction affects fixed assets and fixed liabilities or current assets and current liabilities.

CURRENT AND NON-CURRENT ASSETS To understand flow of funds, it is essential to classify various accounts and balance sheet items into current and non current categories. y Current accounts can either be current assets or current liabilities. Current assets are those assets which in the ordinary course of business can be or will be converted into cash in a short period of normally one accounting year. y Current liabilities which are intended to be paid in the ordinary courses of business with in a short period of normally one accounting year out of the current assets or the income of the business.

The following is list of current working capital accounts List of current or working capital accounts Current liabilities 1. Bills payable. 2. Sundry creditors (or) account payable. 3. Accrued (or) outstanding expenses. 4. Dividends payable. 5. Bank over drafts. 6. Short term loans advances & deposits. 7. Provision against current assets. 3. Bills Receivable. 4. Short tern (or) Account Receivable. 5. Short term loans & Advances. 6. Temporary (or) Marketable investment. 7. Inventories or stock such as a) Raw material. b) Working process c) Stores and pares. d) Finished goods. 8. Prepaid expenses. Current assets 1. Cash in hand. 2. Cash at bank.

8. Provision for taxation, if it does not amount to Appropriation of profit. 9. Proposed dividend (may be a current (or)non current Liabilities).

9. Accord income.

Procedure for knowing a transaction resulting in the flow of funds y Analysis the transaction and find out the two accounts in valued y Makin journal entry of the transaction y Determine whether the account in valued in the transaction are current or non-current y If the both account in valued are non current i.e. either permanent assets or permanent liabilities, it does not result in the flow of funds. y If both the account invalid are non-current. y If he accounts in valued are such that one is a current account while the other is a non-current account i.e. current assets and permanent and fixed assets or current liabilities and fixed assets or current liability and permanent liability & fixed assets or current liability & permanent liability then it result in the flow of funds.

DIAGRAMS DEPICTING FLOW OF FUNDS Flow of Funds

No

Yes

When Both current (or) Non current a/c Are in valued

When One current and other non current A/c isin valued

FLOW OF FUNDS

Current Assets

No Yes

Current Liabilities

Yes

Yes

Current Assets No

Current Assets

FUNDS FLOW statement, Income statement & Balance sheet Funds flow statement is not a substitute an income, i.e. a profit and loss account and balance sheet. The profit and loss account is a document which indicates the extent of success achieved b y a business in earning profits. It reports the result of business activities and indicates the reasons for the profitability of a business. It does not reveal the inflow and outflow of funds in business during a particular period. Hence funds flow statement is not competitor to financial statements. The funds statement provides additional information as regards changes in working capital, derived from financial statements at two point of time. It is a tool of management for financial analysis and helps in making decisions

Difference between funds flow statement and income statement

Funds flow statement 1. It highlights the changes in the financial position of a business and indicates the various mean by which funds were obtained during a particular period and the ways to be which these funds were employed. 2. It is complementary to income statement income statement helps the preparation of funds flow statement. 3. While preparing funds flow statement both capital and revenue items are considered. 4. There is no prescribed format for preparing a funds flow statement. 4. It is preparing in prescribed format. 3. Only revenue items are considered. 2. Income statement is not prepared from funds flow statement. Income statement 1. It does not reveal the inflow and outflows of fund but depicts the items of expenses and incomes arrive at the figure of profit or loss.

Difference between funds flow statement and balance sheet Funds flow statement 1. It is a statement of changes in financial position and hence is dynamic nature. 2. It shows the sources and use of funds in a particular period of time. 3. It is a total of management for financial analysis and helps in decisions. 4. Usually, schedule of changes in working capital has to be prepared before preparing funds flow statement. Balance sheet 1. It is a statement of financial position on particular data and hence is static in nature. 2. It depicts the assets and liabilities at particular point of time. 3. It is not of much help to management in making decisions. 4. No such of changes in working capital is required. Rather profit & loss account is prepared.

of significant and importance of funds flow statement A funds flow statement is an essential tool for the financial tool for the financial analysis and is of primary importance to the financial management. Now a days it is being widely used by the financial analysis, credit granting institution and financial manages. The basic purpose of funds

flow statement is to reveal the changes in the working capital on the two balance sheets data. It also describes the sources from which additional working capital has been financed and the uses to which working capital has been applied. Such a statement is particularly useful in assessing the growth of the firm. It resulting financial needs and in determining the best way of financial these needs. These significance or importance of funds flow statement can be well followed one can plan the intermediate and long term financing of the firm. USES OF FUNDS FLOW STATEMENT 1. Helps in analysis of financial statement. 2. Throes light or preplanning questions. 3. Helps in formulation of dividend policy. 4. Helps in the proper allocation of resources. 5. Acts as a future guide. 6. Helps appraising the use of working capital. 7. Helps knowing the credit worthless.

LIMITATIONS OF FUNDS FLOW STATEMENT The funds flow statement has a number of users; however, it has creation limitations also, which are listed below. 1. It should be remembered that a funds flow statement is not a substitute of an income statement or a balance sheet. It provides only some additional information as regards changes in working capital. 2. It can not reveal continuous changes. 3. It is not an original statement but simply is arrangement of data given in the financial statement. 4. It is essentially historical in nature and relevant for financial management in that the working capital. PROCEDURE FOR PREPARING A FUNDS FLOW STATEMENT Funds flow statement is method by which we study changes in the financial position of a business. Enterprise between beginning and ending financial statement dates. Hence the funds flow statement is prepared by

comparing two balance sheets and with the help of such other information derived from the accounts as may be needed. Broadly speaking the

preparation of a funds flow statement consists of two parts. 1. Statement of schedule of changes in working capital. 2. Statement of sources and application of funds.

1. Statement of schedule of changes in working capital

Working capital means the excess of current assets over current liabilities. Statement of changes in working capital is prepared to show the changes in the working capital between the two balance sheet dates. This

statement is prepared with the help of current assets & current liabilities derived from the 2 balances. Working capital = current assets current liabilities

Statement of schedule of changes in working capital Particulars Current assets: Cash in hand Cash at bank Bills receivable Sundry debtors Temporary Investment Stock Prepaid expenses Accrued incomes xxx xxx xxx xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Previous year Current year Effect on working capital Increase Decrease

Total assets

current Xxx

Xxx

Xxx Current liabilities: Xxx Bills payable Xxx Sundry creditors Outstanding Xxx expenses Xxx Bank overdraft Xxx Short advantages Xxx Dividend payable Provision for Xxx taxation

Xxx xxx Xxx Xxx xxx xxx Xxx Xxx

Xxx Total current Xxx liabilities Working capital (CA-CL) Net increase (or) decrease in working capital.

Xxx Xxx

Statement of sources and application of funds Funds flow statement is a statement which indicates various sources from which funds (working capital) have been obtained during a certain period and the users or applications to which these funds have been put during the period. Generally this statement prepared two formats. a. Report form b. T form or an account form or self balancing type.

Specification of reports form of funds flow statement particulars Source of funds Funds from operation. Issue of share capital. Raising of long term loans. Receipts from partly paid shares, called up. Sales of non current assets. Non trading receipts, such as dividends received. Sales of investment(long term) Decrease in working capital (as per schedule of change in working capital). Total: Application (or) uses of funds Funds lost in operation. Redemption of debentures. Repayment of long term loans. Purchase of long term investment. Purchase of non current assets. Non trading payments. Payment of dividends. Payment of tax. Increase in working capital. Total: Rs Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx Xxx xxx

T forms an account form or self balancing type funds flow statements Sources Funds from Rs operation Xxx xxx xxx Applications Funds in Rs Operation. Xxx

Issue of Share Capital Issue of debentures.

Redemption of preference xxx share capital Redemption of debentures. xxx Repayment of long term Xxx loans

Raising of long term loans. Xxx Receipts from partly paid Xxx hares. Sales of non current xxx

Purchase of non current Xxx (fixed) assets. Purchase investment. of long term Xxx

(fixed) assets. Non trading receipts such Xxx as dividends. Sales of long term Xxx

Non trading Payment Payment of dividends

Xxx Xxx Xxx Xxx xxx

investments Net decrease in working capital Xxx Total xxx

Payment of tax Net increasing in working capital. Total

NOTE:- Payment of dividend and tax will appear as an application of funds only when these items are appropriations of profit and not current liabilities.

STATEMENT OF CHANGING WORKING CAPITAL FOR THE YEAR PARTICULARS YEAR YEAR2 2 CURRENT ASSETS Inventories Sunday Debtors Cash & Bank balance Others Current Assets (A) Current Liabilities:Current Liabilities Provisions xxx xxx Xxx xxx xxx xxx xxx xxx Xxx xxx xxx Xxx xxx xxx INCREA DECREAS SE E

Total Current Liabilities xxx (T.S)

xxx

Working Capital = (A+B) Decrease / Increase in working Capital

(+xxx xxx

(+xxx xxsx xxx

STATEMENT SOWING SOURCES AND APPLICSATION OF FUNDS:Amount Application of funds Sources of funds Issue of shares xxx Preferences of Shares xxx Amount

Issue of Debentures xxx

Redemption of Debentures

xxx

Long term Borrowings

xxx

Payment of other Long Term Loans xxx

Purchase of Fixed Assets Sales of Fixed Assets xxx Payment of Fixed Assets xxx Operating profit xxx Increase in working Capital xxx Decrease in working Capital TOTAL xxx xxx

TOTAL

xxx

xxx

DATA ANALYSIS & INTERPRETATION

STATEMENT OF CHANGING IN WORKING CAPITAL FOR THE YEAR 2005-2006 OF KESORAM CEMENTS LTD.

PARTICULARS A) Current Assets:a) Inventories b) Sundry Debtors c) Cash and Bank Balance d) Loans and Advances e) Other current assets Total current Assets: B) Current Liabilities & Provisions:a) Current Liabilities b) Other current Liabilities Total current Liabilities NETWORKING CAPITAL (A-B) Net increase in Working Capital

2005

2006

EFFECT ON WORKING CAPITAL INCREASE DECREASE

136013824 93957410 4097718 153226 898720 388272 262000 242665 26537258 384172 23917258 141507

42056414 3944492 510448

143872927 121420338 28689754 31982

36577367 48460 36625827

7887613 16478 7904091 6269147

107247100 113516247

6269147 11351627

11356247

52780501

52780501

FUNDS FLOW STATEMENT FOR YEAR 2005-06 OF KESORAM CEMENTS LTD Source of funds Sale of factory buildings Amount (Rs) 2707908 Purchase of furniture & fixtures Purchase other fixed Sale of other fixed assets Decrease in un secured 964002 Increase in Reserves & Surplus increase in working Increase in secure loans 6914784 capital 6269147 3655878 loans 3815939 assets 1140902 166750 Application of funds Amount

Funds from operation Total

122302

17216811

Total

17216811

INTERPRETATION:-

The above calculation that in 2005-2006 total current assets amount to Rs. 14,38,72,927 has been decreased to Rs. 12,14,20,338. The decrease in current assets amount Rs. 2, 24,52,589. Cash and bank balance has lower i.e. from (8,98,720 to 3,88,272) Rs. 610448 loans and advances also increase from 26,20,000 to 2,65,37,258 i.e., Rs 2,39,17,258. At the same time the current liabilities also decreased from Rs. 36625827 to Rs. 7904091 i.e. Rs. 28721736. The net working capital increase during the study period amount to Rs 62699147. so this is a healthy sign that the company able to manage current assets and liabilities.

STATEMENT OF CHANGING IN WORKING CAPITAL FOR THE YEAR 2006-2007 OF KESORAM CEMENTS LTD PARTICULARS 2006 2007 EFFECT ON WORKING CAPITAL Current Assets: a) Sundry Debtors b) Cash and Bank Balances c) Loans and Advances d) Other current assets Total current Assets (A): Current Liabilities & Provisions: a) Current Liabilities b) Other current liabilities Total Current Liabilities (B) 623100 1668991 7904091 27029530 7130214 34159744 20794430 5461223 153226 288272 26537258 94441582 63467 1470425 38838127 148979468 1182153 12300869 54537886 Increase Decrease 89759

121420338 189351487

113516247 155191743 NETWORKING CAPITAL (A-B) Net increase in Working Capital Total 15519174 155191743 41675496 416755496 68020908 68020908

FUNDS FLOW STATEMENTS FOR YEAR 2006-07 OF KESORAM CEMENTS LTD Sources of funds Amount (Rs) Sales of factory buildings Increase in un secured loans 12796060 Purchase of Plant and 11421497 Machinery 2583834 Purchase of Land Application of funds Amount (Rs) 6621525

Increase in Reserves & Surplus

7439073

Increase in working capital

41675496

Increase in secure loans

36777251

Funds from operations

122300

Total

59718518

Total

59718518

INTERPRETATION:-

The above calculation that in 2006-2007 total current assets amount to Rs. 12,14,20,338 has been decreased to Rs. 18,93,51,487. The increased in current assets amount Rs. 6,79,31,149. Cash and bank balance has higher i.e. from ( 288272 to 1470425) Rs. 1182143 loans and advances also increased from 26537258 to 3583127 i.e.Rs 12300869. At the same time the current liabilities also decreased from Rs. 6235100 to 27029530 i.e. Rs. 20794430. The net working capital increased during the study period amount to Rs. 416755496. So this is a healthy sign that the company able to manage current assets and liabilities

STATEMENT OF CHANGING IN WORKING CAPITAL FOR THE YEAR 2007-2008 OF KESORAM CEMENTS LTD.

EFFECT PARTICULARS 2007 2008 Capital INCREASE Current Assets: a) Inventories b) Sundry Debtors c) Cash and Bank Balances d) Loans and Advances e) Other current assets Total current Assets (A) Current Liabilities & Provisions: a) Current Liabilities b) Other current liabilities 27029530 7130214 30094997 18242364 744879734 63467 1470425 38838127 74489734 189351487 60982074 6510948 14121860 59992347 60982074 202589303 6447481 1261435

ON

working

DECREASE

13507660

21154220 13507660

365467 11112150

Total Current Liabilities (B) NETWORKING B)

34159744

48337361 15425942

CAPITAL(A- 155191743

939801 939801

155191

155191743

19098916

19098916

FUNDS FLOW STATEMENT FOR YEAR 2007-2008 OF KESORAM CEMENTS LTD. Source of funds Sales of factory buildings and other fixed assets Amount (Rs) 2733270 Application of funds Purchased of Furniture & Fixtures Amount (Rs) 82932

Decrease in working capital

939801

Purchase of plant &Machinery

13860146

Increase in Reserves & Surplus

23468817

Purchase of computers

284216

Increase in un secured loans

12545805

Purchase of other fixed assets

1348674

Funds from operations Total

122300

Decrease in secured loans Total

2423425

39809993

39809993

INTERPRETATION:-

The above calculation that in 2007-2008 total current assets amount to Rs. 189351487 has been increased to Rs. 202589303. The increased in current assets amount Rs. 13237816. Cash and bank balance has shown higher i.e. from ( 14742514121860) Rs. 12651435 loans and advances also increased from 38838127 to 59992347 i.e. Rs. 21154550. At the same time the current liabilities also increased from Rs. 34159799 to 4833736 i.e. 14177617. The net working capital decreased during the study period amount to Rs. 939801. so this is a healthy sigh that the company able to manage current assets and liabilities.

STATEMENT OF CHANGING IN WOKRING CAPITAL FOR THE YEAR 2008-2009 OF KESORAM CEMENTS LTD.
2008 Particulars Current Assets:Inventories Sundry Debtors Cash & Advantages Loans & Advantages Other current Assets 109570320 150355335 43785015 6802874 14121860 59992347 4123820 2374408 1456882 32256108 8658335 45344515 4428466 12664978 27736239 2009 Effect on working capital Increase Decrease

Total current Assets (A)

19411221

193783874

Current liabilities & Provisions:-

Current liabilities Other current liabilities Total current liabilities (B)

32775006 4881795 37656801

59813506 5897969 65711475

Working Capital (A-B)

156954420 128078399 28876021

Decrease in working capital

28876021

Total

185830441 185830441 73705704

73705704

FUNDS FLOW STATEMENT FOR YEAR 2008-2009 OF KESORAM CEMENTS LTD. Particulars Source of funds Rs Particulars Application of funds Share holder funds 80000 Purchase of fixed Reserve & surplus 12761 assets 168399 Rs

Unsecured loans

1427570

Secured loans

60098

Differed tax liability

34093

Preliminary Expenses

1223

Total

168399

Total

168399

INTERPETATION:-

The above calculation that in 200682009 total current assets amount to Rs 1946111221 has been decreased Rs 193789874. The decreased in current assets Rs 821347. Cash & Bank balance has shown lower i.e. from (14121860 to 1456882) Rs 12664978 loans and Advances also decreased fro 59992347 to 32256108 i.e. 2854674. At the same time the current liabilities also decreased from Rs. 37656801 i.e. 28054674. The net working capital decreased during the study period amount to Rs 28876021. The decline in net working capital resulted from decrease sundry debtors. Cash & Bank balances loans & Advances.

STATEMENT OF CHANGING IN WORKING CAPITAL FOR THE YEAR 2009-2010 OF KESORAM CEMENTS LTD.

Particulars

2009

2010

EFFECT ON working Capital Increase Decrease

Current Assets:Inventories Sundry Debtors Cash & Advantages Loans & Advantages Other current Assets Total current Assets (A) Current liabilities & Provisions:Current liabilities Other current liabilities Total current liabilities (B) Working Capital (A-B) Decrease in working capital

150355335 190669403 40314068 1546938 2133751 586813 1456882 25737490 24280608 32256108 35980085 3723977 9485805 119585076 110099271 195101068 374105885

60140091 5897968 66038008

149330012 8789433 158119445

129063008 215986440 86923432

86923432

Total

215986440 215986440 172086122

172086122

FUNDS FLOW STATEMENT FOR YEAR 2009-2010 OF KESORAM CEMENTS LTD.

Particulars

Amount (Rs)

Particulars

Amount (Rs)

Sources FUNDS

of

Application FUNDS

of

Secured loans

955799.5

Reserve & Surplus 7056.19

Unsecured loans

418527.6

Differed liability

tax

346.8

Purchase of fixes 1275569.3 assets

Miscellaneous Expenditure

2606

Net current Asset Total 1374327.1 Total

88407.9 1374327.1

INTERPETATION:The total current assets value for the year 2008-2009 is 195101068. It increased to 37410585 for the year ending 2009-2010. Cash & Bank balance showed an increase of 24280608. Which is derived from a sea change in companys cash balances? The cash & Bank balance for the year 2009-2010 are 1456882 and 25733490 respectively. At the same time the current liabilities also increased from Rs 6603860 to 158119445 i.e. Rs 92081385. The net working capital increased during the study period amount to Rs. 86923432. So this is a healthy sighs that the company able to manage good liquidity.

FINDINGS

1. In the year 2005-2006 the total source of funds is Rs. 1,70,94,509. The main source of the fund is secured loans amounted to Rs 6914784. Total

applications of funds for the year 2005-2006 are Rs 17216811. The main application component is purchase of other fixed assets Rs 1140902. 2. In the year 2006-2007 the total source of funds is Rs 59596218. The main source of fund is secured loans amounted to Rs 36777252. Total

applications of funds for the year 2006-2007 are Rs 59718518. The main application component is purchase of plant and machinery Rs 11421497. 3. In the year 2007-2008 the total source of funds is Rs 39687693. The main source of funds is Reserves & Surplus amounted Rs 23468817. Total

applications of funds for the year 2007-2008 are Rs 3980993. The main application component is secured loans Rs 242324025. 4. In the year 2008-2009 the total source of fund is Rs 94926638. The main source of the fund is unsecured loans amounted to Rs 1427570. Total

applications of funds for the year 2008-2009 are 168399000. The main application component is purchase of fixed assets Rs 168399000. 5. The year 2009-2010 the total source of fund are Rs 13743271. The main source of the fund is secured loans amounted to Rs 955799.5. Total

applications of funds for the year 2009-2010 are 1374327.1. The main application component is purchase of fixed assets Rs 1275569.3.

CONCLUSION

1. The company always maintains sound level of funds. 2. Company maintains adequate level of working capital during the study period except the year 2007-08, 2008-09. 3. The company paid the amount of unsecured loans. 4. For meeting working capital requirement the company has cash credit arrangement from various banks. 5. Depreciation calculates from beginning of the month for all the assets. 6. Investment is carried at market value with out providing any provision. 7. The company maintained their fixed assets at book value and providing depreciation where is necessary. 8. The company has taken loans from Government of India. 9. The company maintains their reserves and surplus consistently.

SUGGESTION
 There is lot of pretension consistence demand the cement industry as a cement producer the company can able to source, their funds throw more share holders funds.  Company is maintaining in inventories a part of current assets for the entire study period. At shows that excessive inventory level are not good for any organization and any company. Si the company has to concentrate much more on inventory maintains.  The company has to main super quick assets in order to maintain sound liquidity.  During study period there are negative working capital levels for the company so the company must maintained enough current assets the keep working capital, figure positively.  A company has to recollect their our standing amount from the debtors regularly.  The company has to maintain same funds long-term investment.  The company has to monitory from liability position, in regular intervals.  The company must be conscious about their working capital position.

BIBILIOGRAPHY

Author RK Sharma shashi K Gupth Dr.S.N.Maheshwari edition I.M pandey edition

Name of the book Management of accounting Financial management Financial management

Edition 8th edition 6th 9th

SOURCES:  Company reports.  Memorandum of association and Articles of association.  Web site of a company www.kesoram.com  Web site for cement industry www.kesoram