FUNDS FLOW ANALYSIS

INTRODUCTION

The basic financial statements i.e., the Balance Sheet and Profit & Loss A/c or

Income Statement of business reveals the net effect of various transactions on operational

and financial position of the company. The balance sheet gives a summary of the assets

& liabilities of an undertaking at a particular point of time.

There are many transactions that take place in an undertaking and which do not

operate Profit & Loss A/c. Thus another statement has to be prepared to show the change

in 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 or a Funds

Flow Statement.

The Funds Flow Statement is a statement which shown the movement of funds

and is a report of financial operations of business undertaking. In simple words it is a

statement of source and application of funds.

DEFINITION:-

FUNDS FLOW STATEMENT is a statement which reflects flow of funds. The statement

is called “statement of sources and applications of funds” or “statement of derivation and

disposition of the mean of operation,” where got or where gone statement “or FUNDS

1
STATEMENT”, other self explanatory names may also be used to the statement. The

statement shows FLOW OF FUNDS into (I. e., sources) and out of (i.e., applications)

business. Obviously, the statement will have two aspect (1) source of Funds, and (2) their

application

MEANING & CONCEPT OF FUNDS

The term “Fund” has been defined and interpreted differing by different experts.

Broadly the term fund refers to all the financial resource of the company on the other

extreme fund has been understood as cash only. The most acceptance meaning of the

“fund” is “working capital”.

Working Capital is excess of current assents over current liability.

The term fund has a variety of meaning.

A) CASH FUND OR NARROW SENSE

In a narrow sense, funds mean only cash. ‘Cash flow statement portrays net effect

of various business transactions cash into account receipts & disbursement of cash.

The concept of preparing funds from statement is not accepted, as there are many

such transactions that do not affect cash but represent the flow of fund.

For Ex:

2
 Purchase of furniture on credit does not affect cash but there is flow of fund.

B) CAPITAL FUND (or) BROADER SENSE

Here funds means all financial resources used in business, whether in the form of

men, money, material, machine & others.

C). NET WORKING CAPITAL (or) POPULAR SENSE

Networking capital means differences between current assets & liabilities. A fund

generally refers to cash or cash equipment or to working capital.

INTRODUCTION OF FUNDS FLOW ANALYSIS:

In any business we can not under estimate the flow of funds from two operations.

The business runs with funds but the organization knows how to flow of funds.

The Funds Flow Statement is concerned with sources and applications of

organization.

Statement of changes in working capital shows the increase or decrease in the

working capital.

3
 “Funds from Operations” statement shows how much funds from operations.

OBJECTIVES OF THE STUDY

 To know the operational efficiency of Zuari cement Limited

 To study working capital position of Zuari cement Limited

 To know the sources and application of funds

 To analyze the movement of funds between the dates of two balance sheets in

period of study.

SCOPE OF THE STUDY:

Financial analysis consists of ratio analysis and funds flow analysis. To know

funds flow from one to one, as the time available is very li8mite3d and the subjects are

very vast, the study is continued to over all financial condition of a firm. This study is to

know working capital increase or decrease funds from operation, sources and application

of funds of M/S ZUARI CEMENT LIMITED, YERRAGUNTLA.

4
TOOLS OF ANALYSIS:

Various statistical tools such as percentages, averages were used to process the

date; various ratios are calculated to examine the causative factors in ascending the

effectiveness of funds flow in organization and management in M/S ZUARI CEMENT

LIMITED, YERRAGUNTLA.

NEED OF THE STUDY

The Funds Flow Statement is a statement which shown the movement of funds and is a

report of financial operations of business undertaking. In simple words it is a statement

of source and application of funds. In a narrow sense, funds mean only cash. ‘Cash flow

statement portrays net effect of various business transactions cash into account receipts &

disbursement of cash. The concept of preparing funds from statement is not accepted, as

there are many such transactions that do not affect cash but represent the flow of fund.

SCOPE OF STUDY

 Financial analysis consists of funds flow analysis. To know funds flow from one

to one, as the time available is very limited and study is continued to over all

financial condition of a firm.

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  The study to know working capital increase or decrease, funds from operation,

source and application of funds

Research Methodology:

Tools of Analysis

Various statistical tools such as percentages averages were used to process the date, of

effectiveness of funds flow in organization & management in ZUARI CEMENT

LIMITED.

Research Design: Analytical Study

Data Sources : Secondary Data

SECONDARY DATA

The secondary data was collected form already published sources such as

annual reports, returns and internal records.

THE DATA COLLECTION INCLUDES:

a. Data collected from annual reports of Zuari Cement Limited.,

b. Reference form textbooks relating to financial management.

RESEARCH TOOLS: Funds Flow Statement

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Limitations of the Study:

 The study is only pertaining to ZUARI CEMENTS LIMITED,

YERRAGUNTLA.

 The period of study is of 5 years and the performance evaluation is

also limited to 5 years.

 The study is purely based on the data available the form of annual

reports...

 Analysis is only means and not an end itself, different people

interpret the same analysis in different ways.

 The over all financial performance is taken into consideration with

out taking into account the minute values or individual values.

This study is conducted with in a short period. The time factor is also a limitation.

7
REVIEW OF LITERATURE

The Funds Flow statement is a statement which shows the movement of Funds and is a

report of the financial operations of the business undertaking. It indicates various means

by which Funds were obtained during a particular period and the ways in which of Funds.

FOULKE:-“A Statement of sources and application of Funds is a technical device

designed to analyze the changes in the financial condition of a business enterprise

between two dates”.

A Funds Flow statement is a statement which reflects Flow of Funds. The statement is

called “statement of sources and application of Funds” or “statement of derivation and

disposition of the means of operation, “where got or where gone statement “or “Funds

statement”. Other self explanatory names may also be used to the statement.

The statement shows Flow of Funds into (i.e., sources) and out of (i.e., application)

business. Obviously, the statement will have two aspect (1) source of Funds, and (2)their

application.

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Here Flow means changes, I.e. ‘Flow of fund’ means changes in working capital by a

business transaction bring the working capital either in the form of decrease or increase.

Flow of Funds involves inflow or outflow of funds. It means, transfer of economic values

from one asset to another or one equity to another, from an asset to an equity or vice

versa. If there is change in current assets and current liabilities in the same direction and

by the same amount, there will be change only in their amount. The working capital or

fund will be same and hence there would be no Flow of in such a situation.

The balance sheet and profit and loss account failed to provide the information which is

provided by Funds Flow statement i.e., changes in financial position of an enterprise.

This statement indicates the changes which have taken place between the two accounting

dates. This statement by giving details of sources and uses of Funds during a given useful

tool in the hands of management for judging the financial an operating performance of

the company . It also indicates the working capital position which helps the management

in taking policy decisions regarding dividend etc., Funds Flow statement is useful for

long term analysis .Such an analysis is of great help to management, share holders,

creditors, brokers etc., the Funds Flow statement helps in answering the questions like

where the position and profitability position of the enterprise! Why is the concern

financially solid in spite of losses! It help management to take policy decisions and to

decide about the financing policies and capital expenditure programmed for future.

I.C.W.A:-

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In this glossary of management accounting terms define Funds Flow statement as “a

statement either prospective or retrospective setting out the source and application of the

Funds of an enterprise. The purpose of the statement is indicate clearly the requirement of

Funds and how they are proposed to be raise and the efficient utilization and application

of the same”. Funds Flow statement is a method by which we study changes in the

financial position of a business enterprise between beginning and ending financial

statements dates. It is a statement showing sources and uses of Funds for a period of time.

ANTHONY:-

“The Funds Flow statement describes the sources from which additional Funds were

derived and the use to which their sources were put”.

Funds Flow statement is not a substitute of an income statements, I.e., a profit and loss

account , and a balance sheet. The profit and loss account is a document which indicates

the extent of success achieved by a business in earning profits .It reports the results of

business activities and indicates the reasons for the profitability or lack thereof. The profit

and loss account does not highlight the changes in the financial position of the business.

It does not reveal the inflows and outflows of Funds in business during a particular

period.

Funds Flow statement is not competitive but complementary to financial statement. The

Funds statement provides additional information regards changes in working capital,

10
derived from financial statement at two points of time. It is a tool of management for

financial analysis and helps in making decisions.

SMITH AND BRAWN:-

“Funds Flow statement is prepared to indicate in summary form, changes occurring in

items of financial position between two different balance sheet dates”.

 To study Working Capital position of the ZUARI CEMENT LIMITED.

 To study changes in current Assets and current Liabilities.
 To study about source of Funds and application of Funds in

ZUARI CEMENT LIMITED.

 To know the capability to generate future Funds Flow and to

know ability of the Firm.

 To study how Funds Flow statement helps in proper allocation of

Funds.
 A Funds Flow statement is an essential tools for the financial

analysis and is of primary importance to the financial

management. Now a days it is being widely used by the financial

analysists, credit granting institutions, and financial managers.

 Funds Flow statement is not a substitute of an income statement,

i.e., a profit and loss account, and a balance sheet.

 A profit and loss account does not highlights the changes in the

financial position of the business . It does not reveal the inflows

and outflow of Funds in business during a particular period.

The basic purpose of a Funds Flow statement is to reveal the changes in the Working

capital on the two balance sheet dates. The study aids in analyzing source of application

of Funds in ZUARI CEMENT.

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Funds Flow statement is a method by which we study changes in the financial position of

a ZUARI CEMENT ltd between beginning and ending financial statements dates. Hence

the Funds Flow statement is prepared by comparing two balance sheets of ZUARI

CEMENT ltd and with the help of such other information derived from the accounts as

may be needed.

The preparations of Funds Flow statement consist of two parts

1. Statement or schedule of changes in working capital.

2. Statement of sources and application of Funds.

WORKING CAPITAL=CURRENT ASSETS-CURRENT LIABILITIES

1. An increase in current assets increases working capital.

2. A decrease in current assets decreases working capital.
3. An increase in current liabilities decreases working capital.

4. A decrease in current liabilities increases working capital

COMPANY PROFILE

3. INTRODUCTION

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HISTORY

Strong foundations for a company of strength.

Zuari entered the Cement business in 1994 to operate the Texmaco Cement Plant. In

1995, Texmaco’s Plant at Yerraguntla was taken over by Zuari and a Cement Division

was formed. The fledging unit came into its own in the year 2001 when Zuari Industries

entered into a Joint Venture with the Italcementi Group, the 5th largest producer of

Cement in the world , Zuari Cement Limited was born. Zuari Cement took over Sri

Vishnu Cement Limited in 2002. Today, the Company is amongst the topmost cement

produces in South India.

Zuari and Italcementi. The strength of two

Zuari Cement is one of the leading cement producers in South India.A fully owned

subsidiary of the Italcementi Group, Commitment to customer satisfaction has seen Zuari

Cement grow from a modest 0.5 million tonne capacity in 1995 to almost 6 million

tones in 2010,and earned a place among the most reliable cement producers in the

country.

ITALCEMENTI GROUP HISTORY

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Founded in 1864, Italcementi was quoted for the first time on the stock markets, at the

Milan Stock Exchange, in 1925, under the name of “Società Bergamasca per la

Fabbricazione del Cemento e della Calce Idraulica” and has been operating since 1927

under the name of Italcementi Spa.

Thanks to a careful plan of investments and take-overs of other cement producers, the

company expanded, quickly reaching a strong position on the market and becoming the

leading cement manufacturer in Italy.

After several acquisitions abroad, in 1992 Italcementi achieved important international

status with its take-over of Ciments Français, one of the main global cement producer.

In 1997 Italcementi consolidated its verticalisation strategy with the acquisition of

Calcestruzzi, thus becoming Italian leader in the ready-mixed concrete sector.

In March 1997, all the international companies of the Group gathered under one single

corporate identity.

Since 1998 Italcementi Group has been pursuing its internationalisation strategy by

acquiring new cement works in Bulgaria, Kazakhstan, Thailand, Morocco, India, Egypt

and the United States.

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 TEXMACO Limited in the year 1995 was changed to Zuari cement by

division of ZUARI CHEMICAL LIMITED, jointly promoted by K.K.BIRLA &

USX CORPORATION a major steel leader in U.S.A.

3.1 LOCATION OF THE PLANT

Zuari cement is running under the Flagship of Zuari Agro chemicals Limited.

Zuari cement is strategies located 6 kms away from Yerraguntla town of

Kamalapuram (Taluk) in Kadapa district Andhra Pradesh. Railway line has been

laid connection the Yerraguntla station of Zuari Cements.

Location of the plant at this place is having following advantages.

1. Location in industrial belt of Rayalaseema with sophisticated facilities like

water, electricity, labor, transport etc.

2. Present of the best limestone proved scientifically for cement.

3. Low free lime to ensure reduced surface cracks.

4. Low heat of hydration for better soundness.

5. Low magnesia content to ensure reduced tensile cracks.

6. Specially designed setting time to suit Indian working conditions.

3.2 JOINT VENTURE WITH ITALIC CEMENT

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 Zuari group has identified as one of the core business to grow. It has

therefore, been decided to constitute a separate corporate entity and hire off

cement business to it. To accelerate the growth and achieve capacity additions

quickly it decided to form a joint venture with a strategic partner after careful

evaluation the multinational cement giant italic cement group was identified to be

suitable partner for pursuing growth.

Zuari and Italic cement groups have agreed to form a joint venture with

50-50 equity sharing. The Zuari cement business will get transferred to the joint

venture company Viz. Zuari cement limited.

It is proposed to have quarters of cement business at Hyderabad. It is

proposed to increase the capacity of1.7 MTPA in span of 3 to 4 years. Italic

cement group is the largest producer & distributor of cement in European and one

of the leaders in the world maker place. The group operates in 13 countries

including Belgium, Canada, France, Greece, Italy, Moraco, Spain, Turkey and U.S

with recent acquisition in Bulgaria, Kazakhstan and Thailand.

The group was founded in 1864 and had its head quarters in Bermago, Italy;

currently the group has 54 plans with an installed capacity of 40 MTPA spread

over 13 countries. The group also has 500 RMC plants all over the world. The

consolidated group turn over in 1998 was 3.4 billion US$. The group has excellent

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R & D and Machine design facilities head quartered at Bermago, Italy, which

renders technical support to all over the group plants.

3.3 ITALIC CEMENTRIC GROUP

Our Mission

Our Shared Ambition: “Effective and Efficient”

To become the most effective and most efficient cement manufacture and

distributor in the world.

Our Approach: “We are local we think Global”.

Cement aggregates and ready to mix concrete manufacture and distribution

are local business. Around the world we serve local customers in local markets

with local needs.

Our Way of Working: “Technological leadership is our Goal”.

Our technology plays the key role in realizing our ambition we are

committed to increasing the value of our groups, our companies, our products and

services, the capabilities of our employees and the ecological standards by which

we operate.

Our spirit: “One team worldwide”.

We operate worldwide in many diverse markets, cultures and continents.

We are proud of our cultural diversity and our distinctive character.

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3.4 ORGANIZAITONAL STRUCTURE

The organizational structure of Zuari is simple and flat. The employees are

assigned grades based on their pay packages. These grades are not based on the

job responsibilities may have different grades for reasons like duration of

association with the company.

3.5 OBJECTIVES OF THE COMPANY:

 To Provide employment to the local employees

 To supply best cement at economical prices

 To get the optimum utilization of the raw materials available of their own

mines.

 Manufacturing quality cement and to stand as a market leader in south

India.

3.6 RECENT DEVELOPMENTS

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 Zuari cement has signed on agreement with the cement corporation of India

(CCI) to market CCI’s cement produces from their facility at tender in Andhra

Pradesh.

Zuari Cement shall market this in the state of Tamil Nadu, Kerala, Andhra

Pradesh and pond cherry. The incremental tonnage for zuari cement as a result of

this arrangement is around 3.5 lakh tones.

COMPANY ANALYSIS

According to the Individual - Audited financial statement for the Year of 2011,

total net operating revenues decreased with -5.38%, from INR 1,095.25 tens of

millions to INR 1,036.34 tens of millions. Operating result decreased from INR

355.97 tens of millions to INR 192.28 tens of millions which means -45.98%

change. The results of the period decreased -87.84% reaching INR 20.63 tens of

millions at the end of the period against INR 169.64 tens of millions last year.

Return on equity (Net income/Total equity) went from 14.43% to 1.72%, the

Return On Asset (Net income / Total Asset) went from 9.58% to 1.14% and the

Net Profit Margin (Net Income/Net Sales) went from 15.49% to 1.99% when

compared to the same period of last year. The Debt to Equity Ratio (Total

Liabilities/Equity) was 151.01% compared to 150.55% of last year. Finally, the

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Current Ratio (Current Assets/Current Liabilities) went from 1.92 to 0.99 when

compared to the previous year

ITALCEMENTI GROUP FINANCIAL INFORMATION

 CONSOLIDATED REVENUE: 2,299.8 MILLION EURO (2,418.5

MILLION

EURO IN FIRST HALF OF 2011)

 RECURRING EBITDA: 328.7 MILLION EURO (371.7 MILLION EURO)

 EBIT: 100.6 MILLION EURO (160.7 MILLION EURO)

 TOTAL PROFIT FOR THE PERIOD: 0.8 MILLION EURO (187.8

MILLION

EURO INCLUDING HIGH CAPITAL GAINS FROM SALE OF

OPERATIONS IN TURKEY)

 NET FINANCIAL DEBT: 2,283.5 MILLION EURO AT JUNE 30, 2012

(2,256.7 MILLION EURO AT JUNE 30, 2011)

 OUTLOOK: 2012 OPERATING MARGINS EXPECTED TO BE

SUBSTANTIALLY IN LINE WITH 2011

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3.7 SOCIAL RESPONSIBILITY

As part of social responsibility the company is maintaining one dispensary

where the near by villagers are treated free of cost. It has one primary school &

also it has constructed bus shelters, traffic signals water sheds, water tanks

hospitals, houses & road dividers.

3.8 MOTIVATION

Motivation in zuari cement limited is one by encouraging the employees

by awarding them rewarding them and identifying their talents and promoting

them to higher positions. The career development is possible through proper

motivational factors.

3.9 MAJOR USERS

Zuari cement is marked through out south India by a wide network of

stockiest. The zuari sales officers and representatives are based in almost all cities.

And towns in south India, Major users of zuari cement are as follows.

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  Madras refineries limited.

 Airport authority of India

 Tamilnadu real estate limited

 East coast construction and industries limited.

 Tamil Nadu port trust.

 Asia pacific hotels limited

 Grind well Norton limited

 Tirumala Tirupati Devasthanam

 APSEB – Srisailam power project.

 Ramco industries visaka industries.

 Hyderabad Everest limited

 Nagarjuna Construction.

3.10 CORPORATE MARKETING OFFICE

Zuari cements limited corporate marketing office is at cheennai (Tamil Nadu) and

branches are at:

 Hyderabad - Andhra Pradesh.

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  Visakapatnam - Andhra Pradesh.

 Bang lore - Karnataka.

 Cochin - Kerala.

 Hanaji - Gao.

 Cheennai - Tamil Nadu.

 Bhuwaneswar - Orrisa.

3.11 COMPETITORS

 Penna - Tadipathri

 Ultra Tech - Tadipathri

 Malabar - Cochin

ZUARI SPECIAL NEW:-

Zuari Cement was the official sponsors of the recently concluded India – Srilanka cricket series

held at Srilanka. In the T20 match between India- Srilanka, our Whole Time Director Mr. Krishna

Srivastava handed over the award of “Asli Taqaat Ka Champion' to cricketer Suresh Raina, for the

overall performance which identified him as the champion

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Mr. Colin Nelson ,MD of Singha Cement also took part in an earlier prize distribution ceremony.

Zuari Cement wins The Prestigious Power Brand-2012 Award Zuari Cement has set

another benchmark in the industry being honored a POWER BRAND-2012 (The most

powerful 100 Brands chosen by the Indian Consumer).

STATEMENT OF CHANGES IN WORKING CAPITAL Rs in lakhs

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 31-3-2007 31-3-2008
Effect of W.C.
Particulars
Increase Decrease
Current Assets :

Inventories 3036.66 2693.46 343.20

Sundry Debtors 3534.10 1838.11 1695.99

Cash & Bank Balances 4164.68 1371.05 2793.63

Loans & Advances 3744.19 1983.03 1761.16

Total Current Assets 14479.63 7885.65

Current Liabilities :

Current Liabilities 3448.29 3557.46 109.17

Provisions 35.25 36.29 1.04

Total Current Liabilities 3483.54 3593.75

Working Capital (C.A. – C.L.) 10996.09 4291.9

Decrease in Working Capital 6704.19 6704.19

10996.09 10996.09 6704.19 6704.19

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STATEMENT OF SOURCES AND APPLICATION OF FUNDS FOR THE

PERIOD (2007-2008) Rs in lakhs

26
27
 Source Rs. Application Rs.

Issue of share capital 17,000.00 Funds lost in operation 6528.76

Repayment of long term loan

Raising of long term loans 765.63 11969.5
loans

Sale of non-current (fixed) Purchase of long term

2656.16 36233.88
assets investments

Non-trading receipts 10.79

Sale of investment 27595.37

Decrease in working capital 6704.19

54732.14 54732.14

TABLE-1

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TABLE 1.1

29
INTERPRETATION

From the table it is observed that the working capital of company shows decreased

trend. The current Asset of the company has decreased Rs 14479.63 in 2007 to Rs 7885.65

in 2008. But the item cash balance showing Decreasing trend in 2008. The current

liabilities of company are decreased 3483.54 in 2007 to Rs 3593.75 in 2008.In 2007 the net

working capital of company stood 10996.09. It is decreased to Rs 4291.9 in 2008. The

decreasing net working capital is Rs 6704.19

It is evident from the above table that the total funds flow during the period from 2007-

2008 amounts Rs 54732.14. In the total funds 23.32% was received from funds from

operation 4.42 from unsecured loans.

Regarding the application of funds 33.71% used for investment in fixed assets and

funds used for working capital purpose. Constitute 30.77% respectively

STATEMENT OF CHANGES IN WORKING CAPITAL

Rs in lakhs

Particulars 31-3-2008 31-3-2009 Effect of W.C.

30
 Increase Decrease
Current Assets :
Inventories 2693.46 2281.92 411.54
Sundry Debtors 1838.11 3109.72 1271.61
Cash & Bank Balances 1371.05 1716.40 345.35
Loans & Advances 1983.03 1771.46 211.57

Total Current Assets 7885.65 8879.50

Current Liabilities :

Current Liabilities 2664.13 3827.14 1163.01

Provisions 36.29 50.43 14.14

Total Current Liabilities 2700.42 3877.84
Working Capital (C.A. – C.L.) 5185.23 5001.66

Decrease in Working Capital 183.57 183.57

5185.23 5185.23 1800.53 1800.53

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE PERIOD (2008-09)

Rs in lakhs

Source Rs. Application Rs.

Issue of share capital 17,000.00 Funds lost in operation 2747.91

Raising of long term loans 6195.00 Redemption of pre share capital 1700.00

Sale of non-current (fixed) assets 2689.41 Repayment of long term loan 6129.33

Purchase of long term

Non-trading receipts 100.41 291.15
investments

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Decrease in working capital 1835.57 Dividend Paid 1652.00

27820.39 27820.39

TABLE 2

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 TABLE 2.1

INTERPRETATION

From the table it is observed that the working capital of company shows

decreased trend. The current Asset of the company has decreased Rs 7885.65 in 2008 to Rs

8879.50 in 2009. The current liabilities of company are decreased 2700.42 in 2008 to Rs

3877.84 in 2009. In 2008 the net working capital of company stood 5185.23. It is decreased

to Rs 5001.66 in 2009. The decreasing net working capital is Rs 183.57

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 It is evident from the above table that the total funds flow during the period from

2009 amounts Rs 27820.39. In the total funds 9.82% was received from funds from operation

35.82 from unsecured loans.

Regarding the application of funds 17.13% used for investment in fixed assets and

funds used for working capital purpose. Constitute 0.84% respectively

STATEMENT OF CHANGES IN WORKING CAPITAL

Rs in lakhs

31-3-2009 31-3-2010 Effect of W.C.

Particulars
Increase Decrease

Current Assets :

Inventories 2281.92 2503.20 221.28

Sundry Debtors 3109.72 2467.39 642.33

Cash & Bank Balances 1716.40 1290.71 425.69

Loans & Advances 1771.46 1906.20 134.74

Total Current Assets 8879.50 8167.50

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 Current Liabilities :
Current Liabilities 3827.41 3381.69 445.72
Provisions 50.43 127.90 77.47
Total Current Liabilities 3877.84 3509.59
Working Capital (C.A. – C.L.) 5001.66 4657.91

Decrease in Working Capital 343.75 343.75

5001.66 5001.66 1145.49 1145.49

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE PERIOD (2010-10)

Rs in lakhs

Source Rs. Application Rs.

Raising of long term loans 696.90 Funds lost in operation 2104.92

Sale of non current (fixed) assets 2575.09 Repayment of long term loans 1587.48

Non-trading receipts 109.09 Purchase of long term investments 32.43

Decrease in working capital 343.75

3724.83 3724.83

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TABLE 3

TABLE 3.1

36
 INTERPRETATION

From the table it is observed that the working capital of company shows decreased

trend. The current Asset of the company has decreased Rs 8879.5 in 2009 to Rs 8167.5 in

2010. The current liabilities of company are decreased 3877.84 in 2009 to Rs 3509.59 in

2010.In 2009 the net working capital of company stood 5001.66. It is decreased to Rs

4657.91 in 2010. The decreasing net working capital is Rs 343.75

It is evident from the above table that the total funds flow during the period from

2010 amounts Rs 3724.83. In the total funds 7.51% was received from funds from operation

4.03% from unsecured loans.

Regarding the application of funds 2.29% used for investment in fixed assets and

funds used for working capital purpose. Constitute 1.57% respectively.

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 STATEMENT OF CHANGES IN WORKING CAPITAL

Rs in lakhs

31-3-2010 31-3-2011 Effect of W.C.

Particulars
Increase Decrease

Current Assets :

Inventories 2503.20 3114.57 611.37

Sundry Debtors 2467.39 943.79 1523.60

Cash & Bank Balances 1290.71 1383.35 92.64

Loans & Advances 1906.20 5284.23 3378.03

Total Current Assets 8167.50 10725.94

Current Liabilities :

Current Liabilities 3381.69 3758.62 376.93

Provisions 127.90 163.86 35.96

Total Current Liabilities 3509.59 3922.48

Working Capital (C.A. – C.L.) 4657.91 6803.46

Increase in Working Capital 2145.55 2145.55

6803.46 6803.46 4082.04 4082.04

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 STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE PERIOD (2010-10)

Rs in lakhs

Source Rs. Application Rs.

Funds from operations 2265.11 Repayment of long term loans 2100.56
Raising of long term loans 101.14 Purchase of long term investments 166.03
Sale of non-current (fixed) assets 1944.29 Increase in Working Capital 2145.55
Non-trading receipts 102.00
4412.54 4412.14

TABLE 4

39
 TABLE 4.1

INTERPRETATION

From the table it is observed that the working capital of company shows increased

trend. The current Asset of the company has increased Rs 8167.50 in 2010 to Rs 10725.94 in

2011. The current liabilities of company are increased 3509.59in 2010 to Rs 3922.48 in 2011.

In 2010 the net working capital of company stood 4657.91. It is increased to Rs 6803.46 in

2011. The increasing net working capital is Rs 2145.55

40
 It is evident from the above table that the total funds flow during the period from

2011 amounts Rs 4412.54. In the total funds 44.42% was received from funds from operation

0.58% from unsecured loans.

Regarding the application of funds 9.44% used for investment in fixed assets and

funds used for working capital purpose. Constitute 9.84% respectively.

41
 STATEMENT OF CHANGES IN WORKING CAPITAL

Rs in lakhs

31-3-2011 31-12-2011 Effect of W.C.

Particulars
Increase Decrease

Current Assets :
Inventories 3114.57 2889.51 225.06
Sundry Debtors 943.79 1866.11 922.32
Cash & Bank Balances 1383.35 1576.48 193.13

Loans & Advances 5284.23 3095.64 2188.59

Total Current Assets 10725.94 9427.74
Current Liabilities

Current Liabilities 3758.62 c 1303.17

Provisions 163.86 326.73 162.87

Total Current Liabilities 3922.48 5388.52

Working Capital (C.A. – C.L.) 6803.46 4039.22

Decrease in Working Capital 2764.24 2764.24

6803.46 6803.46 3879.69 3879.69

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE

PERIOD (ARIL2011 – DEC 2011)

Rs lakhs

Source Rs. Application Rs.

Funds from operations 2265.11 Repayment of long term loans 2100.56
Raising of long term loans 101.14 Purchase of long term investments 166.03
Sale of non-current (fixed) assets 1944.29 Increase in Working Capital 2145.55

42
Non-trading receipts 102.00
4412.54 4412.14

TABLE 5

43
 TABLE 5.1

INTERPRETATION

From the table it is observed that the working capital of company shows

decreased trend. The current Asset of the company has decreased Rs 10725.94 in 31-032011

to Rs 9427.74 in April 31-Dec-2011. The current liabilities of company are decreased

3922.48 in Mar 2011 to Rs 5388.52 in 2011. In 2010-2011 the net working capital of

company stood 6803.46. It is decreased to Rs 4039.22 in April 2011-Dec 2011. The

decreasing net working capital is Rs 2764.24

It is evident from the above table that the total funds flow during the period from

April2011-Dec 2011 amounts Rs 15333.26. In the total funds 44.42% was received from

funds from operation 0.58 from unsecured loans.

Regarding the application of funds 9.44% used for investment in fixed assets and funds

used for working capital purpose. Constitute 9.84% respectively

STATEMENT OF CHANGES IN WORKING CAPITAL

Rs in lakhs

1-1-2012 31-12-2012 Effect of W.C.

Particulars
Increase Decrease
Current Assets :
Inventories 2889.51 3971.01 1081.50

Sundry Debtors 1866.11 2531.00 664.89

Cash & Bank Balances 1576.48 12012.16 10435.68
Loans & Advances 3442.81 8821.93 5379.12

44
 Total Current Assets 9774.91 27336.1

Current Liabilities :

Current Liabilities 6020.09 131132.52 7112.43

Provisions 566.86 1373.63 806.77

Total Current Liabilities 6586.95 14506.18

Working Capital (C.A. – C.L) 3187.96 12829.95

Increase in Working Capital 9641.99 9641.99

12829.95 12829.95 17561.19 17561.19

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE

PERIOD (JAN2012 – DEC11)

Rs in lakhs

Source Rs. Application Rs.

Issue of Share Capital 16148.49 Funds from loss 1909.25
Raising of long term loans 3342.83 Repayment of long term loans 2592.04
Purchase of long term
Sale of non-current(Fixed) Assets 36806.58 32032.56
investments
Non-trading payment 10122.06
Increase in W.C. 9641.99
56297.90 56297.90

45
TABLE 6

TABLE 6.1

46
 INTERPRETATION

From the table it is observed that the working capital of company shows increased

trend. The current Asset of the company has increased Rs 9774.91 in 2011 to Rs 27336.10 in

Jan 2012-Dec 2012. The current liabilities of company are increased 6586.95 in 2011 to Rs

14506.15 in 2012. In 2011-12 the net working capital of company stood 3187.96. It is

increased to Rs 12829.95 in Jan 2012-Dec 2012. The increasing net working capital is Rs

9641.99

It is evident from the above table that the total funds flow during the period from

Jan 2012-Dec 2012 amounts Rs 56297.9. In the total funds 6.82% was received from funds

from operation 19.33%from unsecured loans.

Regarding the application of funds 34.68% used for investment in fixed assets and

funds used for working capital purpose. Constitute 44.26% respectively.

47
NET DECREASE IN WORKING CAPITAL

Rs in Lakhs

Year Increase/Decrease Amount

2007-08 Decrease 6704.19
2008-09 Decrease 183.57
2009-10 Decrease 343.75
2010-11 Increase 2145.55
Mar2011-Dec2011 Decrease 2764.24
Jan2012-Dec2012 Increase 9641.99

TABLE 7

INTERPRETATION

48
 The above table we observed that 2007-08 would be decreased by Rs. 6704.19

.In the year 2008-09 the working capital has been decreased by Rs. 183.57. In the year

2009-10 the working capital is Rs. 343.75. In 2010-11 Rs.2145.55 has increased the

working capital. In the year Rs. 2764.24 decreases April2011-Dec2011 the working

capital and in the year Jan 2012-Dec 2012 has been increased working capital by

Rs.9641.99.

SUMMARY OF FINDINGS

49
1. In the year 2008 the application of funds around 33.71% utilized for investing in

fixed assets. In subsequent year it is 17.13%, 2.29%, 9.44 and 34.68% following

the years 2009, 2010, 2011, and 2012.

2. Unsecured loans to get 4.42% in the year 2008 and subsequent year it is 35.82%,

4.03%, 0.58% and 19.33% following the years 2009, 2010, 2011, and 2012.

3. In the year 2008 the repayment of secured loans is 44.60% and subsequent year

22.84%, 5.91%, 7.82%, and 9.66% following the years 2009, 2010, 2011, and

2012.

4. Repayment of unsecured loans 35.79% in the year 2012 and remaining Years

Company has not repayment of unsecured loans.

5. In the year 2008 & 2009 the issue of share capital is 8.69 % and 8.26 % is in

2012 remaining years company has not issue of share capital.

6. In the year 2008 sale of fixed asset is 5.69% and subsequent years 5.76%, 5.51%,

4.16%, and 78.86 % following the years 2009, 2010, 2011, and 2012

7. In the year 2008 the long term investments is 48.88% and subsequent years

0.39%, 0.04%, 7.23%, and 13.65 following years 2009, 2010, 2011, and 2012

50
8. Non- trading receipts to get 2.36% in 2008 and subsequent years 21.99%,

23.89%, 22.34%, and 29.39% following years 2009, 2010, 2011, and 2012.

9. In the year 2009 Dividends are 13.95% and subsequent years is 0.56 %, 85.48 %

in 2009 and 2012 remaining Years Company has not any payments.

10. Current assets are Decreased to 39.29% in the year 2008 and subsequent year

18.52%, 17.87% and 9.87% following years 2009,2010 and April 2011

11. Current assets are increased to59.36%in the year 2011 and next year is 40.63 %

in 2012.

12. Current Liabilities are Increased to 23.85% in the year 2008 and subsequent years

is 27.80%, 25.89%, and 22.45% following years 2009, 2010, and April 2011.

13. Current Liabilities are decreased to 34.65% in the year 2011 and next year

65.34% in 2012.

14. In the year 2008 the net decrease in working capital 60.07% and subsequent year

it is 1.83%, 3.43%, and 27.65% following the years 2009, 2010, and April 2011.

51
 15. In the year 2011 the net increase in working capital 18.20 and next year it is 81.79

in 2012.

CONCLUSIONS:

 The efficiency of management at financial position of ZUARI CEMENT

LIMITED is good

 From the analysis it is clear that the share capital remained intact during

the five years upto 2011-12 and the reserves and surplus reached in a

good condition.

 Secured loans and unsecured loans increased over the periods.

 Company inventories observed an increment except in the year

 Cash and bank balances increased except during the years 2007-08 and

2008-09.

 The ZUARI CEMENT LIMITED uses more of long term loans/debts than

owner’s equity.

 From the observation it is clear that equity share capital of ZUARI

CEMENT LIMITED remained fixed over the years. There is no

preference share capital in ZUARI CEMENT LIMITED.

 Based on the analysis made the total financial position is good.

52
SUGGESTIONS

 Net working capital is very low; it is suggested to maintain sufficient net working

capital.

 Effective inventory management is needed in the company

 The firm should increase investment in current assets to create sufficient securities

for the current liabilities

53
TEXT BOOKS:

 FINANCIAL MANAGEMENT - I.M.PANDEY

 FINANCIAL MANAGEMENT - PRASANNA CHANDRA

 FINANCIAL MANAGEMENT - KHAN & JAIN

 ADVANCED MANAGEMENT - R.K. SHARMA

WEB SITES:

 www.zuaricementlimited.com

 www.Google.com

 www.wikipedia.org/wiki/Funds Flow statement

 www.studyfinance.com

 www.investorworlds.com

 www.netmba.com/finance/Funds Flow statement

REPORTS:-

 ANNUAL REPORTS OF ZUARI CEMENT LTD 2007-2012.

54
 BALANCE SHEETS FOR THE YEARS 2007-2012

31-3- 31-3- 31-3- 31-12- 31-12-

Particulars 31-3-2007 2008 2009 2010 31-3-2011 2011(9M) 2012(12 m)

Current

Assets :
Inventories 3036.66 2693.46 2281.92 2503.2 3114.57 2889.51 3971.01
Sundry

Debtors 3534.1 1838.11 3109.72 2467.39 943.79 1866.11 2531

Cash & Bank

Balances 4164.68 1371.05 1716.4 1290.71 1383.35 1576.48 12012.16

Loans &

Advances 3744.19 1983.03 1771.46 1906.2 5284.23 3095.64 8821.93

Total

Current

Assets 14479.63 7885.65 8879.5 8167.5 10725.94 9427.74 27336.1

Current

Liabilities :
Current

Liabilities 3448.29 3557.46 3827.14 3381.69 3758.62 5061.79 131132.52

Provisions 35.25 36.29 50.43 127.9 163.86 326.73 1373.63
Total

Current

Liabilities 3483.54 3593.75 3877.84 3509.59 3922.48 5388.52 14506.18

55