vijji

Funds Flow Analysis

1.1 INTRODUCTION

Financial management can be concluded that the term business finance mainly

involves rising of funds and their effective utilization keep

ing in view the overall objectives of the firm. This requires great caution and wisdom on the

party of management makes use of various financial techniques devices etc for administering

the financial affairs of the firm in the most effective and efficiency way.

A cash flow statement is a statement change in cash position from one period to

another. The cash flow statement explains the reasons for such inflows or outflows of cash as

the case may be. It also helps management in making plans for the immediate future.

Cash is a basic unit needed to keep operation of business going a continuing basis. It is

also the final output expected to be realized by selling the products cash is both the beginning

and end of business operations. In fact, what blood is human body cash is to a business

enterprise. A business unit should not always try to keep sufficient cash neither more nor

shortage of cash will threaten the firm’s liquidity and solvency. Where as excessive cash will

not be fruitfully utilized simply remain idle and will affect the profitability of a concern

effective cash management therefore implies proper balancing between the conflicting

objectives of liquidity and profitability

MEANING OF FINANCIAL MANAGEMENT

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Funds Flow Analysis

From the various definitions of the term business finance given above, it can be

concluded that the term business. Finance mainly involves, rising of funds, and their effective

utilization keeping in view the overall objectives of the firm.

DEFINITIONS

1. Financial management is concerned with the efficient use of important economic

sources namely “capital funds”.

- Solomon

2. “Financial management is the application of the planning and control functions to

the finance funds –“Howard and Upton”

1.2 INDUSTRY PROFILE

INTRODUCTION:

Cement is a key infrastructure industry. It has been decontrolled from price and

distribution on 1st March 1989 and deli-censed on 25thJuly 1991. However, the Performance

of the industry and prices of cement are monitored regularly. The Constraints faced by the

industry are reviewed in the infrastructure coordination Committee meetings held in the

cabinet secretariat under the chairmanship of secretary (coordination). The cabinet committee

on infrastructure also reviews its performance.

Cement industry is one of the major and oldest established manufacturing industries

in the modern sector of Indian economy. It is an indigenous industry in which the company is

well endowed with the necessary raw materials, skilled manpower and equipment &

machinery technology.

Cement is required by firms, bridges, buildings, water supply projects, dams, roads,

hydroelectric power projects, seaports, airports, and irrigation schemes. It is thus a vital

industry which assumes a crucial part in the economic development of the country.

RAW MATERIALS:

The basic raw material for manufacturing cement is limestone. This is available in

plenty in the form of limestone deposits in the nature. Limestone is excavated for mines by

mechanical equipment with the help of stocker & reclaimed the correct.

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Funds Flow Analysis

The raw materials consist of limestone, iron ore & bauxite. The correct Proportions

are fed into a grinding mill where they are reduced to a very fine of compressed air. The

power from the storage ribs is fed into rotator kiln; the material is subjected to a temperature

is about 1500c. Chemical reaction takes place between the various materials resulting in the

formation of Cement compound like Tricalcium silicate (about 24%), die calcium

silicate (about 20%), Tricalcium alumina (about 7 to 10%) and aluminum ferrate (about 10 to

12 %).

CAPACITY AND PRODUCTION:

The cement industry comprises of 125 largest cement plants with an installed

Capacity of 148.28 million tones and more than 300 mini cement plants with and estimated

capacity of 11.10 million tons per annum. The cement corporation of India, which is central

public sector undertaking, has 10 units. There are ten large cement plants owed by various

State governments. The total installed capacity in the county as a whole is 159.38 million

tones. Actual cement production in 2002-03 was 116.35 million tones as against a production

of 106.90 million tons in 2001-02, regarding a growth rate of 8.84%.

Keeping in view the trend of growth of the industry in previous years, a Production

target of 126 million tones has been fixed for the year 2003-04. During the period April-

June 2003, a production (provisional) was 31.30 tones. The industry has achieved a growth

Rate of 4.86% during the year.

CEMENT MANIFURING PROCESS:

The cement manufacturing process beings when limestone, the basic raw material

used to make cement, is transported by rail to the plant form the limestone quarry.

The limestone is combined with clay, ground in crusher and fed into the additive

Silos. Sand, iron and bottom ash are then combined with the limestone and clay in a carefully

Controlled mixture with which is ground into a fine power in a 200hp roller mill. Next, the

fine power is heated as it passes through the pre-Heater tower into a large kiln, the Power is

heated to 1500degrees Celsius. This creates a new product, called clinker, which Resembles

pellets about the size of marbles.

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1. Next the fine powder is heated as its passes through the pre-header tower into a large

Kiln, which is over half of the length of a football field and 4.2 meters in diameters. In

the kiln, the powder is heated to 1500 degrees Celsius. This creates a new product,

Called clinker, which resembles pellets about the size of marbles.

2 The clinker is combined with small amounts of gypsum limestone and finely ground

in a finishing mill. The mill is large revolving cylinder containing 250 tons of steel

balls i.e. driven by a 4000ph motor. The finished cement is ground so fine that it can

pass through a sieve that will hold water.

3 The cement manufacturing process consists of many simulations and continuous

Operation using some of the largest moving machinery in manufacturing. Over 5000

sensors and 50.

CAPACITY DISTRIBUTION AND CONSUMPTION NORMS

Process Capacity

(TPD)

% of total Power

Kwh/MT

Fuel

Keal/kg

Dry 282486 93 120-125 750-800

Semi-dry 13910 5 115-120 900-1000

Wet 5260 2 110-115 1300-1600

Total 301656 100

PRODUTION CAPACITY:

Cement plant with a capacity of up to 0.3 mn tpa are classified as mini cement plants

and are eligible for concessional excise duty. Though the minimum economic size of a

cement plant is 1 mn tpa, there are over 300 white and mini cement plants in India a

collective capacity of only 98 mn tpa (8% of the total domestic installed capacity). Most of

the new cement plants being set up have a capacity of 1 mn tpa or more. The average cost of

setting up a mini cement plant is about Rs 1400 per ton, while for large cement it is about Rs

3500 per ton.

EXPORTS:

A part from meeting the entire domestic demand, the industry is also exporting

Cement and clinker. The export cement during 2001-02 and 2003-04 was 5.41 million Tones

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and 6.92 million tons respectively. Export during April-may, 03 was 1.35 million Tones.

Major exporters were Gujarat Ambuja Cement ltd. and L&T ltd.

RECOMMENDATIONS ON CEMENT INDUSTRY:

For the development of cement industry “Working Group of cement industry” was

constituted by the planning commission for the formulation of X five year plan. The working

group has projected creation of additional capacity of 40-62 million tones mainly through

expansion of existing plants. The working group has identified following thru areas for

improving demand for cement.

Further push to housing development programmers.

Promotion of concrete Highways and roads; and

Use of ready – mix concrete in large infrastructure projects

Further, in order to improve global competitiveness of the Indian cement industry, the

dept. Of industrial policy & promotion commissioned a study on the global competitiveness

of the Indian cement industry.

The report submitted by the organization has made several recommendations for

making the Indian cement Industry more competitive in the international market. The

recommendations are under consideration.

HISTORY OF CEMENTS:

1. Invention of cement of JOSEPH ASPARIN. Leeds builder in Leeds in bricklayer.

2. 21st October, 1824 patented as Portland cement.

3. 1904 itish and American standards of Portland cement.

4. 1912 Indian cement company7 limited established factory at Portlander.

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5. 1951 Indian standards.

DIFFERENT TYPES OF CEMENT:

There are varieties of cement based on different compositions according to specific

end uses namely Ordinary Portland /cement, Portland Pozolona cement, Portland Blast

furnace slag cement and specialized cement. The basic difference lies in the percentage of

linker used.

ORDINARY PORTLAND CEMENT:

OPC, popularly known as grey cement has 95% clinker and 5 % of gypsum and other

materials. It contains for 56% of the total consumption. White cement is a variation of OPC

and is used for decorative purposes like rendering of walls, flooring et. Contains a very low

proportion of oxide.

PORTLAND POZZOLONA CEMENT:

PPC has 80% clinker, 15% pozzolona and 5 % gypsum and accounts for 18% of the

total cement consumption. Pozzolona has siliceous and aluminous materials that do not

possess cementing properties in the presence of water. It is cheaply manufactured because

it use flash / burnt clay / coal waste as the ingredient. It has lower heat of hydration, which

helps in preventing cracks where large volumes are being cast.

PORTLAND BLAST FURNACE SLAG CEMENT (PBSFC):

PBSFC consist of 45% clinker, 50% blast furnace slage and 5% gypsum. And

accounts for 10% of the total cement consumed. It has a heat a hydration even lower than

PPC and is generally used in construction of dams and similar massive constructions.

SPECIALIZED CEMENT

Oil Well Cement:

Is made from clinker with special additives to prevent any porosity.

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Funds Flow Analysis

RAPID HARDENING PORTLAND CEMENT:

It is similar to OPC, except, that it is ground much finer, so that casting, The

compressible strength increases rapidly.

Water proof cement

OPC, with small portion of calcium separate or non-saponifiable of to impart

waterproofing properties.

CEMENT INDUSTY IN INDIA

OVERVIEW

1. Indian cement industry data back 1914-first unit was setup at proddatur with a

Capacity of 1000 tones.

2. Currently India is ranked second in the world with an installed capacity of 114 million

tones.

3. Current per capita consumption-85 pages. Against world standard of 256 kgs.

4. Cement grade limestone in the country reported to be 89 bt. A large proportion

however is unexplainable.

5. 55-60% of the cost of production is Govt. control.

6. Cement sales primarily through a distribution channel. Bulk sales account for < 1%

of the total cement produced.

7. Ready mix concrete a relatively nascent market in India.

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CEMENT INDUSTRY: STRUCTURE

Installed capacity 114.2 mn tones per annum

Production around 87.8 mn tones.

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However, cement consumption per capita in our country at about 99-kg/ capita is one

of the Lowest. The world average is about 267 kg/ capita. While that of china is 450 kg /

capita. Similar in Japan it’s 631 kg/ capita while in France it is 447 kg / capita.

PRODUCTION:

1. Excess capacity exists, through some units are sick.

2. 1999-2000 production expended to reach 95 mn tons

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Major cement plants Mini cement plants

Companies: 59 Nearly 300 plants

Plant: 116 Located in Gujarat, Rajasthan, MP.AP

Typical installed capacity for plant:

Above 1.5mnta

Typical capacity < 200 tpd installed

Capacity around gmm. Tones

Total installed capacity: 1.05 mntpa Production around : 6.2 mn tons

Production 98-99:81.6 mnta Excise : Rs 250/ tone

Excise: Rs 408 ton Mini plants were meant to tap scattered

limestone reserves.

All India reach through multiple

plants

However most set up in A.P

Export to Bangladesh, Nepal,

Srilanka, UAE and Mauritius

Most use vertical Kiln technology.

Strong Marketing network, tie ups

with customers, contractors

Production cost/tone- Rs 1,000 to 1,400

Wide spread distribution network Infrastructural facilities not to the best

Sales primarily through the dealer

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Funds Flow Analysis

3. Exports around 2 mn tones.

4. Cement manufactured through the wet, semi-dry or process.

5. Dry process accounts for 90% of the installed capacity.

6. Wet process popular in the past-better control over mixing of raw materials.

GEOGRAPHICAL DISPERSION

Limestone is the most important material input into cement manufacture.

The plant locations are primarily determined based on the proximity of ‘cement

grade’ limestone deposits. These limestone deposits have been classified as “cluster”, some

of which overlap two states.

Cluster Wise Installed Capacity (Large Plants)

Cluster State No of plants

Capacity

(mn tpa)

satna MP 8 12.18

Ballarpur MP 11.16

Gulbarga Karnataka/AP 7 7.82

Chandrapur Maharashtra/AP 7 7.49

Chanderia Rajasthan/MP 7 7.45

Nalgonda AP 8 5.85

Yerraguntla AP 4 5.40

Sub total 50 57.37(52.5%)

Non cluster 63 52.75(47.5%)

Total 120 110.10

Ready mix concrete: Industry

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1. RMC-ready to use concrete, a blend of cement, sand and aggregate and water Mixed

in convenient proportion.

2. Launched first in Mumbai a few years ago is gaining in other metros in India.

3. Typical cost of a plant- Rs. 7.8cts (US $ 1.6 to 1.8 mn) to set up a 100 cubic

meter (cum) plant with 4-5 transit mixers. Gestation period is around 3-4 months

4. Currently RMC is at a very nascent stage, accounts for 0.5% of the demand.

Company No of plantsCapacity ( cu m/hr)

ACC 13 712

RMC Ready mix 4 440

L & T 5 330

Fletcher Challenge 3 320

HCC 2 240

Unitech 2 150

Jog Construction 1 120

Starmnac 1 120

Madras Cement 1 56

Birla Cement 1 30

Three units of ACC to be commissioned

Companies planning to enter this Market.

1. Priyadharshini Cements in Hyderabad.

2. Saurashtra Cements in Navy Mumbai.

3. Pioneer a world leader entering the market.

4. Capacity additions

5. ACC plans to treble its capacities.

6. Grasim is setting up four more plants.

7. L & T plans to add another eight more

Industry inputs

1. Highly capacity intensive industry.

2. Nearly 55-60% of the inputs controlled by the controlled.

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Funds Flow Analysis

3. Facing problems due to power shortages

4. Coal availability the quality affecting production.

5. Mini plants realization of the revenue lower large plants, survival difficult.

6.

Future out look

Most economic forecasts for the Indian cement industry indicate a favorable Outlook

for the Indian cement sector. With no significant addition expected, the supply Demand

position is expected to the better balanced. Retail housing segment is expected To show

significant demand growth over the next two years. With the industrial production Showing

an upward trend, housing construction showing a sign so revival and the Government gearing

up to spend more on infrastructure, the sector looks favorably Poised. The Overall demand

growth is expected to about 7-8 per cent/ Withdrawal of sales Tax benefits for the new units

will give an added push to consolidation via acquisitions. Consolidations will be more

regional, with companies seeking to gain dominance in their Chosen regions.

India’s per capital cement consumption is less than 100 kg compared to the World

average of 250 kg. currently, the total cement demand in India is lower than the total

capacity. The cement manufacturers association of India projects a demand of 101Mn taps in

2000-01 as against 93 mn yap last year. Against this, the total installed Capacity us 109 mn

tap. However seven million tons of Cement Corporation of India and Two million tons of UP

cement are lying ideal. An 8-10 per cent growth is projected in the Coming years, which will

take the demand to 200 million tons in 10 years.

A focus on more value added products likely Ready Mix Concrete (RMC) is emerging.

RMC is a compound in which sand, gravel additives and water are added to Cement and sold

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Funds Flow Analysis

as readymade concrete. Cement products benefit from RMC production as it involves low

capital expenditure. The cost of setting up a 100 metric cube per hour Plant is in the range of

Rs 70 to 90mn. While the central government has declare a Zero Excise duty on RMC, the

Maharashtra government has made it mandatory to us RMC in Construction of 11 the

flyovers. With these measures, the total; RMC consumption is Expected to touch 6 per cent of

total cement capacity in next four year.

Next cost measure appears to be transporting bulk cement. This method is Cement

transportation is preferred by cement manufacturers as it results in lower Packaging Costs,

hence lower demurrage costs. At present, cement is predominantly sold in 50 kg bags. But the

pattern appears to the changing as cement manufacturers have have Increasingly started selling

cement in bulk, especially in cities where construction activity As it is peak. Most of the cement

sold in bulk is currently used by the read mix concrete Plants. Cement consumed in bulk could

help save about Rs 110 per tone (Rs 5.50 per 50 Kg bag) compared to the use of conventional

bags. Around the world, almost 80% of the Cement transportation is carried out in bulk form.

But in India, only about 1 % of total Cement is transported in this form. This is because of the

attendant problems like Inadequate infrastructure in the form of port facilities and lack of timely

availability of Wagons from the railways. Cement packaging costs accounts for nearly 4 per

cent of total Costs for a cement manufacturer.

1.3 COMPANY PROFILE

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Funds Flow Analysis

ZUARI Cement Division project has planned in 1978 and according to Texmaco it

has taken the steps for acquiring the land at YERRAGUNTLA in KADAPA dist, in

1982. Constructing activity is started and the cement plant is completed in March 1985.

Texmaco is Started production at clinker by March 1985. Original plant capacity was 5 lakh

tones per Annum at first.

The Zuari cement is strategically located at Yerraguntla. The plant location Existence

of 6km from Yerraguntla. It is connected to the railway station on by a railway Track of 7 km

length and is having on exchange plant inside the factory; plant is connected to the nearest

highway by 0.2 km land private load.

Basically this is belongs to DR.K.K Birla. in 1994 January 1, this cement unit of

Texmaco being handed over to Zuari agro chemical industry. Under working agreement on

7-2-95. This unit is sold by Texmaco to Zuari in 1997 company has conceives expansion

project investing 370 crores and making increasing rated capacity from 5 lakh to 7 lakh. This

project was completed Formally 1999 and in fact from 1-4-2000. Company entered in

agreement with joint venture partner With Italy cement with 50% of partnership and working

agreement.

The Group has strength of 22,300 employees’ worldwide.

62 cement plants

14 Grinding Units.

4 stand alone terminals

147 aggregate quarries

575 concrete batching units.

Part of the prestigious Dr.K.K.Birla Group a Rs 4000 crores conglomerate Zuari

Cement as within a short time span made its presence felt in the cement industry. It has done

so by making top quality cement.

Consistently, Cement that has won the confidence and trust of millions in the

country. This commitment to quality has being it grow from a modest 0.5 million ton capacity

in 1995 To 2 million tons today. Zuaries quality drive originates in its state of the are cement

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Funds Flow Analysis

plant, situated At yerraguntla, Renewed for rich Narji limestone deposits, this plant is cement

manufacturers envy.

Yet, strategic location is just factor contributing to Zuaries success. There are other

Equal import reasons.

Superior work force.

Cutting-edge technology.

Decentralized quality assurance teams.

All this combine seamlessly to ensure that every bag go cement that leaves the plants

is of Consistent quality, and worthy of bearing the zuari lable.

World Wide excellence with ital cement

Zuari industries ltd has entered into 50:50 joint venture with italcementi group the

Largest producer and distributor of cement in Europe and one of the leaders in cement

Production in the world.

Ital cement operates in 19 countries including Canada, France, Italy, Morocco, USA

And Bulgaria. Italic cements global industrial network includes more than 50 cement plants,

5800 concrete batching units 150 quarries.

Zuaries joint with italcementi gives Sri Vishnu cement a global technological

Advantage which reflects in finesses of every grain of Sri Vishnu cement.

History of Zuari Cements:

Zuari cement was started in 1994 to operate the cement plant of Texmaco Ltd,.

Subsequently, Texmaco cement business was taken over by the company in 1995.

Zuari cements manufacturing facility at Yerraguntla in Andhra Pradesh is one of The

largest in south India and places Zuari cement among the top 5 manufacturers in the south.

In 2000, Italcementi group the second largest producer and distributor of cement in

Europe and fifth largest cement producer in the world enter into a joint venture with Zuari

cement and Zuari cement Limited was formed.

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COMPETITORS:

1. CORAMANDAL CEMENT

2. MAHA CEMENT

3. NAGARJUNA CEMENT

4. LANCO CEMENT

5. ULTRATECK CEMENT

Some of the cements companies. All cement companies are competitors.

Joint venture with Ital cement:

The scenario of mergers and acquisitions is still vast in the cement industry. The

Entry of May multinationals. The other MNC’s planning to enter the Indian market and

Consolidation of the companies in India has been forcing mergers in the cement industry.

Now Company is under joint venture having raged capacity of 17 lakhs per annum.

Ital cement group CCB’S mother company ( Companies des cements ), and the Zuari

Industries Ltd (ZIL) of India have reached an agreement to create a 50:50 joint venture

Which will assume the cement activities of ZIL, consisting of the cement plant of yerraguntla

in Andhra Pradesh.

BOARD OF DIRECTORS

DIRECTORS : Saroj Kumar poddar, Chairman

Rodolfo Danielli

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Yves Rene Nanot

Goran L. Seifert

Maurizio Caneppele, Managing director

EMILY ANANDREEV Director Finance

EXECUTIVES : K.Srivastava: Director-Marketing

p.sheoran:Director-Technical

L.Srivastava: Sr . Vice President

COMPANY SECRETARY: L.R. Neelakanta

BANKERS : State Bank of India,

Andhra Bank,

Standard Chartered Bank.

AUDITORS : BSR & CO,

Chartered Accounts, Bangalore.

REGISTERED OFFICE : Krishna Nagar, Yerraguntla, KADAPA, Dist.

CORPORATE OFFICE : No. 1,10th Main, HAL III Stage, Jeevanbima Nagar,

Bangalore.

Ital Cement Group:

OUR MISSION:-

“Our shared ambition: Effective and Efficient”

To become the most effective and most efficient cement Manufacturer and distributor

in the world.

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Funds Flow Analysis

OUR APPROACH: We are local, we think global

Cement aggregates and ready mixed concrete manure and distribution are local

Business. Around the world we serve local customers in local market 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 group, 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, culture and continents.

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

Location of the plant:

Cement and its raw materials namely coal and lime stone, are all bulky that make

Transportation difficult and uneconomical. Given this, cement plants are located close to both

Sources of raw material and markets. Most of lime stone deposits in India are located in

Madhya Pradesh, Rajasthan, Andhra Pradesh, Maharashtra and Gujarat. There is a trade-off

Between proximity to markets and proximity to raw materials due to which some cement

plants Have been setup near big markets despite lack of raw materials.

Zuari cement industries ltd., is located at Krishna Nagar, in Yerraguntla, Kadapa

District. It was nearest to the railways station and also nearest to the road. It was 6 km

distance To Yerraguntla.

Location of the plants at this place is having the following advantages. Location in

industrial belt of Rayalaseema with sophisticated facilities like water.

Present of best suited limestone prove scientifically for cement.

Low free limestone to ensure reduce surface cracks.

Low heat of hydration from better soundness.

Low magnesia content to ensure reduced tensile cracks.

Specially designed setting time to suit Indian working conditions.

PRODUCTION:

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Funds Flow Analysis

Cement production during the period has also increased from about 72.23 million

Tons about 90 million tons in 2005-2006 excluding the contribution of mini cement plants.

RAW MATERIAL:

The actual requirements of raw material at 100% capacity utilization would be:

12.5 million tons of limestone per annum

70000 tons of Gypsum per annum.

39000 tons of Bauxite per annum.

20000 tons Iron or per annum.

The limestone is major component required for the plant is net from the mines

Located adjacent to the proposed site.

1. Gypsum is procured from fertilizer factories at Madras and Cochin.

2. Iron is soured partly from mini steel plants located at Tirupati and partially from

Bellary

3. Bauxite is procured from Goa, Karnataka and Maharashtra

POWER:

Maximum estimated power demand is 45 M.V The company has an existing contract

50 M.V demands APSEB, the plant presents has D.G sets with an aggregate general capacity

of 12.6 M.V.

WATER:

Water is required for seeds of consumption make for plant and machinery for General

need in plant. Company has pumping station and underground bore wells near Hanuman

Gutta village at Penna River to tap the undergrounds water in riverbed.

TRANSPORT:

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Funds Flow Analysis

The factory is when connected to different part of the country through rail and Road

facilities in near to Yerraguntla railway station and has a railway lint to the factory with An

extern point within the factory premises 605 of the cement is dispatched by rail gal is

received Through rail. The plant is connected to the nearest state highway to Bangalore,

Hyderabad and Chennai.

MANPOWER:

Existing plant has a total of 500 employees. After and addition of employees May be

required.

QUARRY:

It is situated adjacent to the factory. It constituted limestone, one of the major

Materials for cement industry. The quarry has a mining base area of 1027.56 acres.

S.NO DescriptionMassive (MT)

Grade limestone

Flagged

stone (MT)Total (MT)

1.Total reserves of limestone

36 blocks108442 9.894 118.36

2.Un workable limestone

due to Mining obstacles29530 2540 32.07

3. Workable reserves 79912 7354 86.266

Fertilizers and chemicals ltd (CFCL) promoted by Zuari industries ltd., has set Up a

large gas based area manufacturing plant at Gadapan about 35 km from Keta, a Chambal

major Industrial town of Rajasthan state in India.

CFCL’s plant is a state-of-the –are-high-tech complex built at a cost of Rs.12.67

Billions. Spread over an area of 1105 (or 447 hectares 4.47 sq.kms), containing the

Manufacturing units offsite facilities including captive power plant, railways siding and

Amenities like residential complex, club, school, in a pleasant and green surroundings

Snamprogetti of Italy and Haldor topsoe of Denmark provided the technical know-how and

Engineering and other services for Ammonia and urea plant while off-site facilities were Built

mainly by Tokyo engineering India ltd.

The enterprise value of the unit has been pegged at Rs. 740 crores. The creation of

this joint venture company is a new step in the international of the Ital cement group in Asia.

It is a new opportunity for the group, to further increase its presence in the emerging

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countries By entering the promising Indian market, the third larges in the world. In

combination with a Very important partner says a release issued by laggard who advised ital

cement on the deal.

Here are 6 of the many reasons why Zuari 53 grade and 43 grades cement edges Out

its competitors

1. High compressive strengths.

2. Low heat of hydration

3. Better soundness.

4. Lesser consumption of cement for M-20 concrete grade and above.

5. Faster de-shuttering of formed work.

6. Reduced construction time.

With a superior and wide range of cement catering to every conceivable Building need, Zuari

cement is a formidable player in the cement market. Here are just a few reasons why Zuari

cement is chosen by millions in India.

Ideal raw materials

Low time and magnesia content and high proportion of silicates

Greater fineness

Slow initial and fast final setting

Wide range of applications

Quality customers service

A wide range to address every need:

Residential, commercial, multistoried buildings and complex.

Mass concreting-dams, canals, spillways

Construction and repair of pavements, roads, flyovers and runways.

Spun pipes and poles manufacturing

Cold weather concreting

Pre-fabricated elements such a pipes, sleepers, windows, door frames etc.

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Quality customer service:

In an effort to reach out to customers better, Zuari cement as set up a technical Cell

named Zuari home partner. This cell gives guidance in the field of building.Technology,

architecture, housing finance and economical usage of the high quality.

Technical experts provide the assistance according to the individual requirements.

So that customers get the best value for the investment they have made.

1.4 PRODUCT PROFILE

Zuari Cement manufactures and distributes its own main product lines of cement. We

aim to optimize production across all of our markets, providing. A complete solution for

customer’s needs at the lowest possible cost, an approach we Call strategic integration of

activities.

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Cement is made from a mixture of 80 percent limestone and 20 percent clay. These

are crushed and ground to provide the “raw meal”, a pale, flour-like powder. Heated are

crushed 1450 C ( 2642 F) in rotating kilns, the “meal” undergoes complex Chemical changes

and is transformed into clinker. Fine-grinding the clinker together with a small quantity of

gypsum produces cement. Adding other constituents at this Stage produces cements for

specialized uses.

Zuari Cements range of cement

Zuari Superfine Cement

Zuari 43 Grade Cement

Zuari Superfine P53 Cement

Zuari Superfine Cement Zuari 43 Grade Cement Zuari Superfine P53 Cement

Process Technology, the solid Foundation

The Culture of quality that has always prevailed in Zuari Cement’s manufacturing

facilities is best exemplified in the process technology employed. Advanced technology

methods are used to ensure that a high level of quality is attained and sustained right through

the manufacturing process. Yet, these high standards are Constantly improved upon by an

experienced and dedicated R&D team to attain Performance oriented cement.

The process Technology Advantages

Complete homogenization of limestone is achieved by stacking the limestone Stock-

plies with the use of stackers and reclaiming it through recliners

The optimum ratio of raw mix is attained by the use of X-ray analyzer and Automatic

weigh feeder which are linked to the centralized computers control Room.

23

http://zuaricements.com/scripts/productsOPC53.aspx


http://zuaricements.com/scripts/productsPPCsuperfine.aspx

http://zuaricements.com/scripts/productsPPCsuperfine.aspx



Funds Flow Analysis

Reduced variability in kiln feed and complete homogenization of raw meal is attained

through Continuous Flow Silo. This ensures that every grain of Cement is of

consistent quality.

The totally computerized monitoring system enables quality clinkerisation. It dictates

the optimum retention time in the precalciner and the kiln. Equipped With a six stage

double stream pre-heater cyclone system, the precalciner only Adds to the quality.

The modern closed grinding units have a high efficiency separator that produces Finer

particles of cement. This yields cement matrix with a lower pore diameter. This in

turn gives concrete of higher density and lower permeability.

Ventomatic Electronic Packing

Zuari Cement employs Ventomatic packers to ensure that the customer gets exactly

50 Kgs per bag. To minimize damages during transport, advanced loading techniques are

used. These steps reflect Zuari Cement’s commitment to offer the best quality and correct

Quality to its customers.

Environmental-Friendly Technology

To minimize dust emission, Zuari Cement has installed the latest pollution control

Equipment such as electrostatic precipitators in the kiln, raw mills, coal mills and Cement

mills this environmental friendly aspect of Zuari’s process technology has Resulted in

abundance of greenery and clean air in the factory premises.

2. THEROTICAL FRAME WORK

ANALYSIS OF FUNDS FLOW STATEMENT

The statement of changes in financial position, prepared to determine only the sources

and uses of working capital between dates of two balance sheets, is known as the funds flow

24

Funds Flow Analysis

statement. Working capital is defined as the difference. Between current assets and current

liabilities. Working capital determines the liquidity position of the firm.

The balance sheet presents a snapshot picture of the financial position at a given point

of the financial position at a given point of time and the income statement shows a summary

of revenues and expenses during the accounting period. The funds flow statement, also

referred to as the statement of changes in financial position or the statement of changes in

financial position or the statement of sources and uses of funds.

Funds flow analysis provides insight into the movement of funds and helps in

understanding the changes in the structure of assets, liabilities and owners equity. Funds-

Flow statement is a widely used tool in the hands of financial executives for analyzing the

financial performance of a concern. Good concerns always prepare such statement along with

the balance sheet At the end of the year. This statement shows how the activities of a business

have been used during a particular period. The statement of sources and application of funds

serves the purpose.

FUNDS FLOW STATEMENT

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 and

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 and Loss A/c. Thus another statement has to be prepared to show the change in

Assets and 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 of funds flow statement:

“The funds flow statement is not a statement of financial position but it is instead a

report on financial operations, changes flows or movements during the period”. - S.C.

Kuchhal

25

Funds Flow Analysis

“The funds flow statement describes the sources from which additional funds

were derived and the uses to which these were put”.- R.N. Anthony

“A statement of sources and Applications of funds is a Technical device

designed to analyze the changes in the financial condition of a business between two dates”.-

R.A. Foulk

“It is a statement which highlights the underlying financial movements and

explains the changes of working capital from one point of time to another”. – Bierman

MEANING & CONCEPT OF FLOW OF FUNDS

The term flow means movement & 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 amount of funds available

before happening of transactions. If the effect of transaction results in increase of funds. It is

called a "source of funds" and it is results in decrease of funds, it is known as an application

of funds

RULES

The flow of funds occurs when a transaction changes on one hand a non-current A/c

and on the other a current A/c and Vice-versa. According to working capita concept of funds

the term "Flow o Funds" return to movement of funds in working capital.

If any transaction results in increase in working capital. It is said to be a "source" or

"inflow of funds" and if it results in decrease of working capital, it is said to be "application"

or "out flow of funds".

26

Funds Flow Analysis

27

Funds Flow Analysis

CURRENT ASSETS

Current Assets are those assets, which in the ordinary course of business can be or

will be converted into cash within a short period of normally one accounting year.

CURRENT LIABILITIES

Current liabilities are those liabilities which are intended to be paid in ordinary course

of business with in short period of normally one accounting year out of the current assets or

the income of the business.

DIFFERENCES BETWEEN CURRENT LIABILITIES & CURRENT

ASSETS

CURRENT LIABILITIES CURRENT ASSETS

1. Bills Payable

2. Sundry Creditors

3. Accrued O/s Expenses

4. Dividends Payable

5. Bank Overdraft

6. Short term loans, advances &

deposits

7. Provision for taxation

8. Proposed Dividend

1. Cash in Hand

2. Cash at Bank

3. Bills Receivable

4. Sundry Debtors or A/c’s receivable

5. Short term loans & advances

6. Short term investment

7. Inventories or stock

8. Prepaid Expenses

9. Accrued incomes.

28

Funds Flow Analysis

DIFFERENCE BETWWEN FUNDS FLOW STATEMENT & CASH

FLOWSTATEMENT

BASIS OF

DIFFERENCE

FUNDS FLOW STATEMENT CASH FLOW STATMENT

1. Basis of

concept

It is based on a wider concept of funds,

i.e., working capital.

It is based on a narrower

concept of funds, i.e., cash.

2. Basis of

Accounting

It is based on accrual basis of

accounting

It is based on cash basis of

accounting.

3. Schedule on

changes in

Working capital

Schedule of changes in working capital

is prepared to show the changes in

current assets and current liabilities.

No such Schedule of changes

in working

Capital is prepared.

4. Method of

preparing

Funds flow statement reveals the

sources and applications of funds. The

net difference between sources and

applications of funds represent net

increase or decrease in working capital.

It is prepared by classifying

all Cash inflows and outflows

in terror of operating,

investing are financing

activities. The net different

represents time net

Increase or Decrease in Cash

and cash equivalents.

5. Basis of

usefulness.

It is useful in planning intermediate and

long term financing.

It is more useful for short-

term analysis and cash

planning of the business

PROCEDURE FOR PREPARING A FUNDS FLOW STATEMENT

Funds flow Statement is a method by which we study changes in financial position of

business enterprise between beginning & ending financial statement dates. Hence the funds

flow statement is prepared by comparing two balance sheets and any of such other

information derived from the Accounts as may be needed

The preparation of funds flow statement consists of two parts.

29

Funds Flow Analysis

A. Statement or schedule of changes in working capital.

B. Statement of sources & application of fund.

A.) STATEMENT OR SCHEDULE OF CHANGES IN W.C.

Working Capital means the excess of current assets over current liabilities.

Statement of changes in working capital is prepared to show the changes in working

capital between two balance sheet dates.

This statement is prepared with help of current assets and current liabilities derived from two

balance sheets

Working capital = Current Assets - Current Liabilities

An increase in current assets increases W.C.

A decrease in current assets decreases W.C.

An increase in current liabilities decreased W.C.

A decrease in current liabilities increases W.C.

STATEMENT OF SCHEDULE OF CHANGES IN WORKING CAPITAL

Effect on Working capital

30

Funds Flow Analysis

Particular

Previous

year

Current

Year Increase Decrease

Amount Amount Amount Amount

Current Assets: (A)

Stock

Debtors

Cash

Bank

Bills receivable

Prepaid expenses

Total(a)

Current Liabilities: (B)

Creditors

Bills payable

Outstanding expenses

Total(b)

Working Capital(A-B)

Increase/decrease in working

capital

Total

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

-

xx

xx

-

xx

-

xx

-

xx

-

-

xx

-

xx

xx

xx

xxx xxx

xx

xx

xx

xx

xx

xx

xxx xxx

xx xx

xxx xxx xxx Xxx

(B) STATEMENT OF SOURCES & APPLICATION OF FUNDS

31

Funds Flow Analysis

Funds flow statement is a statement, which indicates various sources from which

funds (W.C.) have been obtained during a certain period and uses or applications to which

these funds have been put during that period. Generally this statement is prepared in two

formats.

Statement of sources and application of funds:-

1. Funds from operations: It is an internal source of funds. Funds from operations are

to be calculated as per the method stated above.

2. Funds from long term loans: Long term loans such as debentures, borrowings

from financial institutions will increase the working capital and therefore, there will

be inflow of funds. However, if the debentures have been issued in consideration of

some fixed assets, there will be no inflow of funds.

3. Sale of fixed assets: Sale of land, buildings, and long term investments will result in

generation of funds.

4. Funds from increase in share of capital: Issue of shares for cash or for any other

current asset or in discharge of a current liability is another source of funds.

5. Decrease in working capital: Decrease in working capital is the result of decrease

in current asset or increase in current liabilities. In both the cases inflow of funds

takes place.

PROFORMA OF FUNDS FLOW STATEMENT:

32

Funds Flow Analysis

Sources Rs. Applications Rs.

Funds from operations Xx Funds lost in operations Xx

Issue of share capital Xx Redemption of preference share Xx

Issue of Debentures Xx Capital Xx

Raising of long term loans Xx Redemption of debentures Xx

Sale of non current (fixed) assets Xx Repayment of long term loan Xx

Non-trading receipts such as dividends

Xx Purchase of long term investments

Xx

Scale of long term investments Xx Non-trading payments Xx

Net decrease in working capital Xx Payment of Dividends Xx

Xx Payment of Tax Xx

Xx Net increase in working capital Xx

Xxx Xxx

IMPORTANCE OF FUNDS FLOW STATEMENT:

33

Funds Flow Analysis

A funds statement is an essential tool for the financial analysis and primary

importance to the financial management. Nowadays, it is being widely used by the financial

analysts, credit granting institutions and financial managers. The basic purpose of a funds

flow statement is to reveal the changes in the working capital on the two balance sheet dates.

It is 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, its resulting financial needs and in determining the best way

of financing these needs. By making use of projected funds flow statements, the management

can come to know the adequacy or inadequacy of working capital evening advance. One can

plan the intermediate and long-term financing of the firm, repayment of long term debts,

expansion of the business, allocation of resources, etc. The significance or importance of

funds flow statement can be well followed from its various uses given below:

It helps in the analysis of financial operation:

The financial statements reveal the net effect of various transactions on the operational

and financial position of a concern. The balance sheet gives a static view of the resources of a

business and the uses to which these resources have been put at a certain point of time. But it

does not disclose the causes for changes in the assets and liabilities between two different

points of time. The funds flow statements explains causes for such changes and also the effect

of these changes on the liquidity position of the company. Sometimes a concern may operate

profitability and yet its cash position may become more and worse. The funds flow statement

gives a clear answer to such a situation explaining what has happened to the profit of the

firm.

It throws light on many perplexing questions of general interest:

Which otherwise may be difficult to be answered. Such as:

a) Why were the net current assets lesser in spite of higher profits and

vice versa?

b) Why more dividends could not be declared in spite of available profits?

c) How was it possible to distribute more dividends than the present earnings?

d) What happened to the net profit? Where did they go?

e) What happened to the proceeds of sale of fixed assets or issue of shares, debentures?

g) How was the increase in working capital financed and how will it be financed to

future?

IT HELPS IN THE FORMULATION OF A REALISTIC DIVIDEND POLICY:

34

Funds Flow Analysis

Sometimes a firm has sufficient profits available for distribution as dividend but yet it

may not be advisable to distribute dividend for lack of liquid or cash resources. In such cases,

a funds flow statement helps in the formation of a realistic dividend policy.

IT HELPS IN THE PROPER ALLOCATION OF RESOURCES:

The resources of a Cement are always limited and it wants to make the best use of

these resources. A projected funds flow statement constructed for the future helps in making

managerial decisions. The firm can plan the deployment of its resources and allocate them

among various applications.

IT ACTS AS A FUTURE GUIDE:

A projected funds flow statement also acts as a guide for future to the management. The

management can come to know the various problems it is going to face in near future for

want of funds. The firms future needs of funds can be projected well in advance and also the

turning of these needs. The firm can arrange to finance these needs more effectively and

avoid future problems.

IT HELPS IN APPRAISING THE USE OF WORKING CAPITAL:

A funds flow statement helps in explaining how efficiently the management has used its

working capital and also suggest ways to improve working capital position of the firm.

IT HELPS KNOWING THE OVERALL CREDITWORTHINESS OF A FIRM:

The financial institutions and banks such as state financial institutions. Industrial

Development Corporation, industrial finance corporation of India, industrial development

bank of India, etc. all ask for funds flow statement constructed for a number of years before

granting loans to know the creditworthiness and paying capacity of the firm. Hence, a firm

seeking financial assistance from these institutions has no alternative but to prepare funds

flow statements.

3. RESEARCH METHODOLOGY

35

Funds Flow Analysis

3.1 OBJECTIVES OF THE STUDY

To identify the sources and application of funds a study on “Funds Flow Statements at

“Zuari Cement Ltd.,”.

To analyze the trend of net working capital that is being maintained by the firm for

period of 5 years.

To know and analyze the financial position of the “Zuari Cement Ltd., ”

To know and analyze the Liquidity position of the “Zuari Cement Ltd., ”

3.2 SCOPE OF THE STUDY

36

Funds Flow Analysis

In this study the financial performance of the Cement under the study is done from

the angles Calculating funds from operation, maintaining of working capital, sources and

applications of the funds.

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.

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

source and application of funds

3.3 METHODOLOGY

37

Funds Flow Analysis

Methodology is a systematic process of collecting information in order to analyze and

verifies a phenomenon. The collection of data is two principle sources. They are discussed as

I. Primary Data

II. Secondary Data

PRIMARY DATA:

The primary data needed for the study is gathered through interview with concerned

officers and staff, either individually or collectively, sum of the information has been verified

or supplemented with personal observation conducting personal interviews with concerned

officers of finance department of “Zuari Cement Ltd., .,”

SECONDARY DATA:

The secondary data needed for the study was collected from published sources such

as, pamphlets of annual reports, returns and internal records, reference from Advance

management text books and journal management.

38

Funds Flow Analysis

3.4 LIMITATIONS OF THE STUDY

The source of the study is limited to 5 years from 2008-09 to 2012-13.

The analysis is based on the annual reports.

The liquidity position of Cement is very low.

39

Funds Flow Analysis

4. DATA ANALYSIS & INTERPRETATION

1. WORKING CAPITAL RATIO:

Effective working capital management depends on the systematic management of the

components of working capital .i.e., inventory, debtors, cash etc. Working capital ratio is the

tool of the working capital management. It reflects the ability of the Cement to pay the

current obligations .

It calculated as

Working capital ratio = current assets/current liabilities

TABLE: 4.1

YEARCURREN C CURRENT ASSETS

CURRENT

LIABILITIES

WORKING

CAPITAL RATIO

2008-09 8,167.50 3,509.59 2.32

2009-10 10,725.94 3,922.4 2.73

2010-11 9,427.74 5,388.52 1.74

2011-12 24,288.00 22479.86 1.08

2012-13 36,866 19,445.18 1.89

Factors:

YEAR 2008-09 2009-10 2010-11 2011-12 2012-13

working capital

ratio 2.32 2.73 1.74 1.08 1.89

40

Funds Flow Analysis

CHART: 4.1

INTERPRETATION:

The working capital ratio it was gradually increased the years 2008-09 is , 2.32, 2.73

and it was in the year 2009-10 is very fall down as 1.74 In 2010-2011 it was 1.08 . It and it

was increase a little bit in 2011-12, 1.89 it indicates working capital is not maintaining proper

management in the year 2013. It is decrease to the working capital ratio.

41

Funds Flow Analysis

2. CASH RATIO:

Cash is the most liquid asset. A financial analyst may examine cash ratio and it’s

Equivalent to current liabilities. Trade investment or marketable securities are Equivalent of

cash. The standard ratio is 0.5:1or 50:100(%).

RATIO= (Cash+ Marketable Securities)/Current Liabilities

TABLE: 4.2

YEAR CASH CURRENT LAIBILITIES CASH RATIO

2008-09 1290.71 3509.59 0.36

2009-10 1383.35 3922.48 0.35

2010-11 12012.16 14506.15 0.83

2011-12 4,773.47 22479.86 0.21

2012-13 21,081.89 19,445.18 1.08

FACTORS:

YEAR 2008-09 2009-10 2010-11 2011-12 2012-13

Cash ratio 0.36 0.35 0.83 0.21 1.08

42

Funds Flow Analysis

CHART: 4.2

INTERPRETATION:

The standard cash ratio is 0.5. It represents the satisfactory level in the years 2008-09

to 2012-13 the cash ratio is 0.36, 0.35, 0.83, 0.21 and 1.08 however it has heavily increased

to 1.08 in the year 2011 the ratio 1.08. It represents Cement is maintaining standard level of

cash in the Cement

43

Funds Flow Analysis

3. QUICK RATIO (or) ACID TEST RATIO:

It establishes the relationship between quick or liquid, Assets and liabilities. An asset

is a Liquid if it can be converted into cash immediately. Inventories are considered to be less

liquid. The quick ratio is found out by dividing quick assets by current liabilities. A quick

ratio of 1to1 is considered to represent a satisfactory current financial condition.

Quick Ratio= (current assets-Inventories)/ current liabilities

TABLE: 4.3

YEAR QUICK

ASSETS

CURRENT

LIABLITIESQUICK RATIO

2008-09 5664.30 3509.59 1.61

2009-10 7611.37 3922.48 1.94

2010-11 23365.09 14506.15 1.61

2011-12 18216.65 25214.04 0.72

2012-13 32487.57 24366.35 1.33

FACTOR:

YEAR 2008-09 2009-10 2010-11 2011-12 2012-13

Quick ratio 1.61 1.94 1.61 0.72 1.33

44

Funds Flow Analysis

CHART: 4.3

INTERPRETATION:

The standard ratio of current ratio is 2:1. The higher the current ratio the grater the

margin of safety. In the year 2008-2009. Current ratio is 2.32 and 2009-10, 2.73 from 2010.

The current ratio is gradually increased. In 2013 the current ratio is 1.51 lower than the safety

margin.

45

Funds Flow Analysis

4. INVENTORY TURNOVER RATIO (or) STOCK TURNOVER RATIO:

Inventory turnover ratio is a measure of liquidity. It indicates the speed at which the

inventory is sold out. A high turnover ratio indicates that the inventory is out Fast and a low

turnover ratio show a sale of inventory. This ratio indicates the efficiency of the firm in

selling its products.

Stock turnover ratio=Cost of goods sold / average investment

The high stock turnover ratio is indicating of good inventory management.

TABLE: 4.4

YEARCOST OF GOODS

SOLD

AVG

INVENTORY

INVENTORY

TURNOVER RATIO

2008-09 27153.59 2392.56 11.34

2009-10 29725.95 2808.88 10.58

2010-11 36172.58 3430.26 10.54

2011-12 46374.89 6071.35 7.63

2012-13 40613.42 4378.43 9.27

FACTORS:

YEAR 2008-09 2009-10 2010-11 2011-12 2012-13

Inventory turnover

ratio 11.34 10.58 10.54 7.63 9.27

46

Funds Flow Analysis

CHART: 4.4

INVENTORY TURNOVER RATIO

11.3410.58 10.54

7.63

9.27

0

2

4

6

8

10

12

2008-09 2009-10 2010-11 2011-12 2012-13

YEARS

RA

TIO

S

INTERPRETATION:

A high stock turnover indicated that the stocks are fast moving and get converted into

sales very quickly .the year 2008-09 to 2013. The company inventory turnover ratio is 11.34,

10.58, 10.54, 7.63 and 9.27 respectively. Overall five years the ratio is increased.

47

Funds Flow Analysis

STATEMENT OF THE CHANGES IN FINANCIAL POSITION OF ZUARI

CEMENT LTD WORKING CAPITAL BASIS IN THE YEAR

2008-2009

Statement of change in working capital 2008-2009

Particulars 2008 2009

Change In Working

Capital

Increase Decrease

A) current assets:-

a) inventories 2503.2 3114.57 611.37

b) sundry debtors 2467.39 943.79 1523.6

c) cash & bank balance 1290.71 1383.35 92.64

e) loans and advances 1906.2 5284.23 3378.03

Total current assets 8167.5 10725.94

B) current liabilities:-

a) liabilities 3381.69 3758.62 376.93

b) provision 127.9 163.86 35.96

Total current liabilities 3509.59 3922.48

working capital (A-B) 4657.91 6803.46

Increase in working capital 2145.55 2145.55

TOTAL 6803.46 6803.46 4082.04 4082.04

INTERPRETATION:

From the above table it is observed that the networking capital of the Cement shows

increased i.e. Lakhs 2145.55.

48

Funds Flow Analysis

Funds Flow Statement

Sources Rs Applications Rs

Issue unsecured loans 101.14 Increase in work in progress 149.2

decrease in miscellaneous expenses 102 purchase of investment 166.03

sale of fixed assets 2093.49 payment secured loans 2100.96

funds from operations 2265.11 Increase in working capital 2145.55

4561.74 4561.74

INTERPRETATION:

From the above table it is observed that the Funds flow of the Cement shows fund i.e.

from operation is Lakhs 2265.11.

49

Funds Flow Analysis


CEMENT LTD WORKING CAPITAL BASIS IN THE YEAR 2009-2010



Change in working

capital

Increase Decrease

A) current assets:-

a) inventories 3114.57 3971.01 856.44

b) sundry debtors 943.79 2531 1587.21



Total current assets 10725.94 27336.1


a) liabilities 3758.62 13132.52 9373.9

b) provision 163.86 1373.63 1209.77


working capital (A-B) 6803.46 12829.95


TOTAL 12829.95 12829.95 16610.16 16610.16

INTERPRETATION

From the above table it is observed that the networking capital of the Cement

shows increased i.e. Lakhs 6026.49.

50

Funds Flow Analysis




decrease in miscellaneous expenses 67.1 purchase of fixed assets 28163.9

sale of investment 26672.5 payment secured loans 11161.6

Reserve and surplus 16148.5 Increase in working capital 6026.49

funds from operations 25662.8 Deferred tax liabilities 5659.36

70968.9 70968.9

INTERPRETATION:

From the above table it is observed that the Funds flow of the Cement shows fund i.e.

from operation is Lakhs 25662.8.

51

Funds Flow Analysis





Change in working

capital

Increase Decrease

A) current assets:-

a) inventories 3971.01 6071.35 2100.34

b) sundry debtors 2531 2640.09 109.09



Total current assets 27336.1 24288


a) liabilities 13132.52 22479.86 9347.34

b) provision 1373.63 2734.18 1360.55


working capital (A-B) 12829.95 -926.04

Decrease in working capital 13755.99 13755.99

TOTAL 12829.95 12829.95 17946.58 17946.58

INTERPRETATION:


decreased i.e. Lakhs 13755.9

52

Funds Flow Analysis

INTERPRETATION:

From the above table it is observed that the Funds flow of the Cement shows

sources and applications are same.




Issue secured loans 6173.86 Deferred tax liabilities 518.2

Sale of fixed assets 4646.01

Reserve and surplus 19772.72

Sale of investment 4951.06

Decrease in working capital 13755.99

51619.09 51619.09

53

Funds Flow Analysis


CEMENT LTDWORKING CAPITAL BASIS IN THE YEAR 2011-2012



Change in working

capital

Increase Decrease

A) current assets:-

a) inventories 6071.35 4378.43 1692.92

b) sundry debtors 2640.09 3922.79 1282.7



Total current assets 24288 36866


a) liabilities 22479.86 19445.18 3034.68

b) provision 2734.18 4921.17 2186.99


working capital (A-B) -926.04 12499.65


TOTAL 12499.65 12499.65 20625.8 20625.8

INTERPRETATION:



54

Funds Flow Analysis




issue secured loans 32848.64 Deferred tax liabilities 781.16

sale of fixed assets 4355.69 purchase of investment 11664.09


55813.65 55813.65

INTERPRETATION:

From the above table it is observed that the Funds flow of the Cement shows sources

and applications are same.

55

Funds Flow Analysis





Change in working

capital

Increase Decrease

A) current assets:-

a) inventories 9071.35 6378.43 2692.62

b) sundry debtors 3640.09 4922.79 1282.7



Total current assets 34288 26866


a) liabilities 44479.86 19445.18 32034.18

b) provision 4734.18 8921.17 2586.45


working capital (A-B) -926.04 15499.63


TOTAL 15499.63 15499.63 25625.2 25625.2

INTERPRETATION:



56

Funds Flow Analysis




issue secured loans 58123.25 Deferred tax liabilities 5523.33

sale of fixed assets 8563.56 purchase of investment 5813.05


78006.50 78006.50

INTERPRETATION:

From the above table it is observed that the Funds flow of the Cement shows sources

and applications are same.

57

Funds Flow Analysis

5.1 FINDINGS

The networking capital of the Cement shows increased in 2008-09 i.e. Lakhs

2145.55. Funds flow of the Cement shows fund i.e. from operation is Lakhs

2265.11.


6026.49. Funds flow of the Cement shows fund i.e. from operation is Lakhs

25662.8.

The networking capital of the Cement shows decreased in 2010-11 i.e. Lakhs

13755.99. Funds flow of the Cement shows sources and applications are same.


13425.69. Funds flow of the Cement shows sources and applications are same.

The working capital ratio it was gradually increased the years 2008-09 is , 2.32, 2.73

and it was in the year 2009-10 is very fall down as 1.74 In 2010-2011 it was 1.08 .

It and it was increase a little bit in 2011-12, 1.89 it indicates working capital is not

maintaining proper management in the year 2012. It is decrease to the working

capital ratio.

The higher working capital turnover ratio indicated the better management of working

capital in the years 2008-09 to 2013 the ratio is 8.5 and 5.9, 11.7, 14.8, 9.6

respectively. In the year 2012 working capital turnover will be decreased that is

9.6over. Previous year will not refer the better management of working capital of the

firm. All the five years better management of working capital of the Cement.

58

Funds Flow Analysis

5.2 SUGGESTIONS

The Cement should have maintained working capital turnover without fluctuations for

better management of working capital.

The Cement must have maintained the cash ratio for better circulation of money for in

the Cement for the management of working capital.

The Cement maintains standard level of current ratio 0.5. So the Cement should have

maintained above standard level of current ratio for better management of working

capital.

The Cement should have increase stock turnover for the moving of stock in to sales

very immediately for the better management of working capital.

For the relations to creditors, it helps to. The Cement is ability to efficient in the

management of credit The Cement must have maintained debtors turn over ratios for

the better liquidity fast the debtors are converted into cash in year. It leads to higher the

turnover ratio and lower the collection period.

The financial year 2011 to 2012 can increase the sources.

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Funds Flow Analysis

5.3 CONCLUSION

The Cement being mostly depends on working capital facilities it is maintaining very

good relationship with their banks and their working capital management is balanced.

The Cement is performing exceptionally well due to up wising in the Global market

followed by the domestic market it is up coming on with good and innovative ideas and

believe in improving all the area of its operations. The Cement has a good quality position

and does not delay commitment in case of but its creditors and debtors.

Finally I conclude that the performance of the Cement is satisfactory there was

increasing the activities.

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Funds Flow Analysis

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MAR, 2008-2009

Rs in lakhs


Income

Sales (Gross) 47,306.18 40,166.84

Less : Excise Duty 7,616.56 7,284.19

Sales (Net) 39,689.62 32,882.65

Other Income 457.41 412.55

40,147.03 33,295.20

Expenditure

Purchase of finished goods for resale 3,288.27 1,574.49

Manufacturing and other expenses 29,552.25 28,359.17

Depreciation 2,859.77 2,839.05

Interest and other finance charges 2,234.88 2,333.38

(Increase)/Decrease in stocks of work-in-process a and finished goods

86.54

37,690.57 35,192.63

Profit / (Loss) for the year 2,456.46 (1,897.43)

Povision for Tax

Current Tax -- --

Fringe Benefit Tax 65.00 --

Profit / (Loss) for the year 2,265.11 (2,104.92)

Debit balance brought forward from previous year

(16,609.18) (14,504.26)

Debit balance carried to balance sheet 14,344.07 16,609.18

BALANCE SHEET AS ON 31ST MAR, 2008-2009

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Funds Flow Analysis

Rs in lakhs

Particulars 2009 20081. Sources of Funds :

Share Capital 42,796.14 42,796.14

Reserve & Surplus 21,901.93 21,901.93

64,698.07 64,698.07

Loans Funds :

Secured Loans / Funds 1,533.07 17,431.03

Unsecured Funds 9,868.55 9,767.41

25,198.68 27,198.44

Total 89,896.69 91,896.51

2 . Application of Funds :

Fixed Assets

Goss Block 54,205.96 53,550.07

(-) Dep. 22,537.12 19,787.74

Net Block 31,668.84 33,762.33

Capital work in progress 289.62 140.42

31,958.46 33,902.75

Investments 36,723.60 36,557.57

Current assets, loans & advances :

Inventories 3,114.57 2,503.20

Sundry Debtors 934.79 2,467.39

Cash & Bank Balances 1,383.35 1,290.71

Loans & Advances 5,284.23 1,906.20

10,725.94 8,167.50

Current Liabilities & Provisions :

Current Liabilities 3,758.62 3,38169

Provisions 289.62 127.90

3,922.48 3,509.59

Net Current Assets 6,803.46 4,657.91

Miscellaneous Expenditure 67.10 169.10

Profit and Loss Account 14,344.07 16,609.18

Total 89,896.69 91,896.51

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Funds Flow Analysis


Rs. in lakhs


Income

Sale of manufactured goods 1,16,900.24 47,905.48

Less : Excise Duty 17,521.32 6,388.76

99,378.92 41,516.72

Sale of traded goods - 2,404.44

Other Income 1,832.29 432.61

1,01,211.21 44,353.77

Expenditure

Cost of goods sold 36,172.58 16,825.32

Personnel cost 3,604.81 1,777.200

Other expenses 25,119.28 9,234.53


Amortisation of goodwill 1,7,99.20 --

Interest and other finance cost 950.93 871.49

72,851.03 30,908.95

Profit before tax 28,360.18 13,444.82

Provision for tax 6,542.84 982.00

- Current tax (982.00) -

- MAT credit of earlier years (713.59) -

- fringe benefit tax 115.83 28.00

- deferred tax charge 5,339.36 -

Profit for the year 18,057.74 12,434.82

Debit balance in Profit and Loss account b brought forward (1,909.25) (14,344.07) Balance in Profit & Loss account carried forward

16,148.49 (1,909.25)

BALANCE SHEET AS ON 31st MAR, 2009-2010

63

Funds Flow Analysis


1. Sources of Funds : Share Capital 42,796.14 42,796.14

Reserve & Surplus 38,050.42 21,901.93

80846.56 64,698.07

Loans Funds :



Deferred tax liability 5,659.63 ---------

22,114.29 15,704.14

Total 1,02,960.85 80402.21

2. Application of Funds : Fixed Assets

Gross Block 89,683.71 53,811.03

(-) Dep. 29,850,93 24,043.25

Net Block 59,832.78 29,767.78

Capital work in progress 320,247.06 3,453.60

80,079.84 33,221.38

Investments 10,051.06 42,083.62


Inventories 3971.01 2889.51

Sundry Debtors 2531.00 1866.11

Cash & Bank Balances 12012.16 1576.48

Loans & Advances 8821.93 3442.81

27336.1 9774.91 Current Liabilities & Provisions : Current Liabilities 131132.52 6020.09

Provisions 1373.63 566.86

14506.18 6586.95

Net Current Assets 12,829.95 3,187.96

Profit and Loss Account ----------- 1,909.25

Total 1,02,960.85 80402.21


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Funds Flow Analysis


Income

Sale of manufactured goods 137,728.95 1,16,900.24

Less : Excise Duty 20,207.11 17,521.32

117,521.84 99,378.92

Sale of traded goods -

Other Income 1,807.18 1,832.29

1,19,329.02 1,01,211.21

Expenditure


Personnel cost 4,030.09 3,604.81

Other expenses 29,017.00 25,119.28


Amortization of goodwill 1,7,99.20 1,799.20


87,133.05 72,851.03


Provision for tax 12,881.45 6,542.84

- Current tax - (982.00)

- MAT credit of earlier years - (713.59)


- deferred tax charge 518.20 5,339.36


Debit balance in Profit and Loss account brought forward (16,148.49) (1,909.25)Balance in Profit & Loss account carried forward

(35,921.21) (16,148.49)

BALANCE SHEET AS ON 31stMAR, 2010-2011

65

Funds Flow Analysis

Rs. In lakhs

Particulars 2011 2010 1. Sources of Funds : Share Capital 42,796.14 42,796.14

Reserve & Surplus 57,823.14 38,050.42

100,619.28 80846.56

Loans Funds :



Deferred tax liability 5,141.16 5,659.63

15,704.14 22,114.29

Total 1,30,708.68 1,02,960.85

2. Application of Funds : Fixed Assets

Gross Block 91,539.87 89,683.71

(-) Dep. 36,353.10 29,850,93

Net Block 55,186.77 59,832.78


126,534.72 80,079.84

Investments 5,100.00 10,051.06


Inventories 6,071.35 3971.01

Sundry Debtors 2,640.09 2531.00

Cash & Bank Balances 4,773.47 12012.16

Loans & Advances 10,803.09 8821.93

24,288.00 27336.1


Current Liabilities 22,479.86 13132.52

Provisions 2,734.18 1373.63

25,214.04 14506.18

Net Current Assets 926.04 12,829.95

Profit and Loss Account ----------- ----------

Total 1,30,708.68 1,02,960.85

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST DEC, 2011-2012

Rs. in lakh

66

Funds Flow Analysis


Income

Sale of manufactured goods 1,20,946.74 137,728.95

Less : Excise Duty 12,218.19 20,207.11

1,08,728.55 117,521.84

Sale of traded goods -

Other Income 796.30 1,807.18

1,09,524.85 1,19,329.02

Expenditure



Other expenses 29,052.66 29,017.00


Amortization of goodwill 1,799.20 1,799.20


81,805.61 87,135.02


Provision for tax 11,520.00 12,879.48

- Current tax - -

- MAT credit of earlier years - -


- deferred tax charge (781.16) 518.20


Debit balance in Profit and Loss account brought forward 35,921.21 (16,148.49)Balance in Profit & Loss account carried forward

52,885.16 (35,921.21)

BALANCE SHEET AS ON 31st DEC, 2011-2012

67

Funds Flow Analysis

Rs. in lakhs

Particulars 2012 20111. Sources of Funds :Share Capital 42,796.14 42,796.14

Reserve & Surplus 74,787.09 57,823.14

117,619.28 100,619.28

Loans Funds :




Total 181,385.48 1,30,708.68

2. Application of Funds :Fixed Assets

Gross Block 94,463.86 91,539.87

(-) Dep. 43,632.78 36,353.10

Net Block 50,831.08 55,186.77


152,121.74 126,534.72

Investments 16,764.09 5,100.00


Inventories 4,378.43 6,071.35

Sundry Debtors 3,922.79 2,640.09

Cash & Bank Balances 21,081.89 4,773.47

Loans & Advances 7,482.89 10,803.09

36,866.00 24,288.00


Current Liabilities 19,445.18 22,479.86

Provisions 4,921.17 2,734.18

24,366.35 25,214.04

Net Current Assets 12,499.65 926.04

Total 181,385.48 1,30,708.68

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST DEC, 2012-2013

68

Funds Flow Analysis

Rs. In lakh


Income

Sale of manufactured goods 116,737.13 1,20,946.74

Less : Excise Duty 15,059.29 12,218.19101,677.84 1,08,728.55

Sale of traded goods - -

Other Income 1,955.93 796.30

103,633.77 1,09,524.85

Expenditure



Other expenses 34,007.69 29,052.66


Amortization of goodwill 1,799.20 1,799.20

Interest and other finance cost 3,439.37 424.13

98,570.89 81,805.61


Provision for tax

- Current tax 1,031.00 11,520.00

- MAT credit of earlier years - -

- fringe benefit tax 3,000.00 16.45

- deferred tax charge (1,031.00) (781.16)


Debit balance in Profit and Loss account brought forward 52,885.16 35,921.21Balance in Profit & Loss account carried forward

54,948.0452,885.16

BALANCE SHEET AS ON 31st DEC, 2012-2013

69

Funds Flow Analysis

Rs. in lakhs

Particulars 2013 20121. Sources of Funds :Share Capital 42,796.14 42,796.14

Reserve & Surplus 76,849.97 74,787.09

119,646.11 117,583.23

Loans Funds :




Total 188,042.95 181,385.48

2. Application of Funds :Fixed Assets

Gross Block 193,075.65 94,463.86

(-) Dep. 53,870.09 43,632.78

Net Block 139,205.56 50,831.08


184,064.90 152,121.74

Investments 6850.27 16,764.09


Inventories 9061.61 4,378.43

Sundry Debtors 4123.75 3,922.79

Cash & Bank Balances 4550.46 21,081.89

Loans & Advances 11,510.12 7,482.89

29,245.94 36,866.00


Current Liabilities 29522.36 19,445.18

Provisions 2,595.80 4,921.17

32,118.16 24,366.35

Net Current Assets (2,872.22) 12,499.65

Total 188,042.95 181,385.48

BIBLIOGRAPHY

70

Funds Flow Analysis

1. Author : I.M.PANDEY

Title of the book : Financial Management

Publisher : Vikas Publishing House Pvt. Ltd.,

Edition : Ninth Edition.

2. Author : M.Y. Khan & P.K. Jain


Publisher : Tata Mc. Graw Hill Publishing Co.Ltd.,

Edition : Third Edition.

3. Author : Prasanna Chandra


Publisher : Tata Mc. Graw Hill Publishing Co.Ltd.,

Edition : Fifth Edition.

WEBSITES:

www.zuaricementltd.com

www.wikipedia.com

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