Understanding Financial Management Concepts

MBA PROGRAMME
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Y.S.R.SPINNING MILLS
INTRODUCTION
Financial management is a process of identification, accumulation,
analysis,
preparation,
interpretation
communication
of
financial
information and communication of financial information to plan,

evaluate, and control business firms.
Financial management is the specialized function of general
management, which, is relates to the procurement of finance, and its
effective utilization for the achievement of the goal of the organization.
MEANING AND DEFINITIONS OF FINANCIAL MANAGEMENT

MEANING
Financial Management is an organizational activity that is
concerned with the management of financial resources. In common
parlance is described as providing monetary resources at the time they are
required. But financial management covers the mobilization and effective
utilization of funds.
DEFINITIONS
(1)
Financial Management is defined as that business activity which

is concerned with the acquisition and conservation of capital funds in
meeting the financial needs and overall objectives of business
enterprises
-WHEELER.
(2)
Business finance can be broadly defined as the activity concerned

with the planning, raising, controlling and administrating the funds used
in the business.
S.C.R.ENGINEERING COLLEGE
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-GUTHMANN AND DOUGALL.

(3) Finance Management is concerned with the efficient use of an important
economic resources, namely capital funds.
- SOLOMON
(4)
Financial management is an area of financial decision making

harmonizing individual motives and enterprises goals.
-WESTON & BRIGHAN.
Financial management is concerned with the effective use of an
economic resource namely capital fund.
FUNDS FLOW ANALYSIS

The following are the definitions of funds flow statement.
R.N. ANTONY
"The funds flow statement described the sources from which additional
funds were derived and the used to which these funds are put."
R.N. Foulk
"A Statement of sources and application of funds in technical device
designed to analyze the charges in the financial condition of a business
between two dates.
BIERMAN
"It is a statement which highlights the underlying financial movements
and explains the changes of working capital from one point of time to
another."
These, funds flow statement is report which summarizes the events taking
place between the two accounting periods. It spells out the sources from
which funds were derived and the use to which these funds were put. This
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statement in essentially derived from an analysis of the changes that have

occurred in assets and liabilities item between two balance sheets dates.
In this statement only the net changesare shown that the outcome of a
transaction on of a series of transactions upon the financial conditions of
a business enterprise in reflected more sharply.
CONCEPTS OF FUNDS
The term 'funds' have a variety of meaning. Some people take
funds synonymous to cash, and to them there is no difference between a
cash flow statement prepared on the basis and a fund flow statement.
While other include marketable securities and cash to constitute business
funds. How ever the most common definition of the term 'Fund' is
'working capital' or net 'current assets'. Thus the difference between
current and current liabilities is called funds.
DEFINITIONS
The funds flow statement described the sources from which
additional funds were derived and the used to which these fund are put.
R.N.ANTONY
The fund flow statement is an important device for brining to light
the underlying financial movements the ebb and flow of funds.
PATON & PATON
USES OF FUNDS FLOW STATEMENT
Funds flow statement helps the financial analyst in having a more
detailed analysis and understanding of changes in the distribution of
resources between two balance sheet dates. In case such study is required
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regarding the future working capital position of the company, a projected

funds flow statement can be prepared. The uses are as follows.
It explains financial consequences of balances operation

Funds flow statement provides a ready access or many conflicting
Situations such as.
Why the liquidity position of business is becoming more and more
unbalanced
How was it possible to distribute dividends in excess of current
earnings or in the presence of net loss for the period.
Where have the profits gone.
How the business could have good liquid position in spite of business
making losses (or) acquisition of funds assets.
It answers intricate queries

The financial analyst can find out answers to a number of intricate
Questions.
What are the sources of payment of loan taken.
What is the overall credit worthiness of the enterprise.
How much funds are generated through normal business
operation.
In what way the management has utilized the funds in the part
and what are going to be likely uses of funds.
It Acts an instruments for allocation of resources

A projected funds flow statement will help the analyst in finding out how
the management is going to allocate the scare resources for meeting the
productive requirements of business. The use funds should be phased in
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such as order that the valuable resources are put to the best use of the
enterprise.
SIGNIFICANCE OF FUNDS FLOW STATEMENT
Funds flow statement is an important tool of financial analysis. The utility
of the funds flow statement stems form the fact that it enable
management, shareholder, investors, creditors and other interested in the
enterprise to evaluate the user of funds by the enterprise to evaluate the
user of funds by the enterprise to evaluate the user of funds by the
enterprise and to determine how these funds are financed.
USEFUL IN DECISION MAKING TO THE MANAGER
The funds flow statement services as valuable tool of financial analysis to
the finance manager. It helps in understanding the financial stability and
efficiency of financial policies of management.
Decision relating to Financing

With the help of the funds flow statement, the analyst can evaluate the
financing pattern of the enterprise. An analysis of the major sources of
funds in the part reveals what portion of the growth was finance internally
and what portion externally. The statement is also measuring for judging
whether the company has grown as too fast a rate, credit has increased out
of proportion to expansion in current assets and sales. If trade credit has
increased at relatively high rate one would wish to evaluate the
consequences of slowness in trade payments on the credit standing of the
company and its ability to finance in future.
Decision of capitalization :
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The funds flow statement serves as hand maid to the financial manager in
deciding the making up of capitalization. Estimated user of funds for new
fixed assets, working capital, dividends and repayment of debt are made
for each of several futures years. Estimates are made for each of several
future years. Estimate is made of the funds to be provided by operations
and the balance must be obtained by barrowing or issuance of new
securities. If the indicated amount of new funds required is greater than
what the financial Manager thinks possible to raise, then plans for new
fixed assets acquisition and the dividend policies are re-examined so that
the use of the funds can be brought into balance with the anticipated
sources of financing them. In particular funds statements are very useful
in planning intermediate and long tern financing.
USES OF FUNDS FLOW STATEMENT
Funds flow statement helps the financial analyst in having a more
detailed analysis and understanding of changes in the distribution of
resources between two balance sheet dates. In case such study is required
regarding the future working capital position of the company, a projected
funds flow statement can be prepared. The uses are as follows.
It explains financial consequences of balances operation

Funds flow statement provides a ready access or many conflicting
Situations such as.
Why the liquidity position of business is becoming more and more
unbalanced
How was it possible to distribute dividends in excess of current
earnings or in the presence of net loss for the period.
Where have the profits gone.
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How the business could have good liquid position in spite of business
making losses (or) acquisition of funds assets.
It answers intricate queries

The financial analyst can find out answers to a number of intricate
Questions.
What are the sources of payment of loan taken.
.What is the overall credit worthiness of the enterprise.
.How much funds are generated through normal business operation.
.In what way the management has utilized the funds in the part and what
are going to be likely uses of funds.
It Acts an instruments for allocation of resources

A projected funds flow statement will help the analyst in finding out how
the management is going to allocate the scare resources for meeting the
productive requirements of business. The use funds
Should be phased in such as order that the valuable resources are put to
the best use of the enterprise.
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Funds Flow Statement
MEANING AND TYPES OF FINANCIAL STATEMENTS

A financial statement is an organized collection of data. According to
logical and consistent accounting procedures its purpose is to convey and
understanding or some financial aspects of business firm. It may show a
position at a moment of time as, in the case of a balance sheet or may
reveal a series of activities ones a given period of time, as in the case of
an Income statement.
Financial statement analysis when used carefully, can produce
meaningful insights about a company's financial information and its
prospects for the future. However, the analyst must be aware of certain
important considerations about financial statements and the use of these
analytical tools. For example, the dollar amounts for many types of assets
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and other financial statement items are usually based on historical costs
and thus do not reflect replacement costs or inflationary adjustments.
Furthermore, financial statements contain estimates of numerous items.
John Myer, "Financial Statement analysis is largely a study of
relationship among the various financial factors in a business as disclosed
by single set of statements and a study of the trend of these factors as
shown in a series of statements.
Thus the financial statement generally refers to, four financial statements.
Income Statement
Balance Sheet Of course a business may also prepare profit &
loss account.
Statement of retained earnings,
A statement of changes in financial position.
Financial Statement
STATEMENT OF CHANGES IN FINANCIAL POSITION

The Balance Sheet shows the financial condition of the
business at a particular moment of time, while the income statement
discloses the result of operating of business ones a period of time. How
ever for a better understanding of the affairs of the business it is essential
to identify the movement of working capital or cash in and out of the
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business this information is available in the statement of changes in

financial position of the business.
Change in working capital position in such a case the statement in
termed (SCFP) or funds flow statement,

Change in cash position in such a case the statement in termed as SCFP
(or) cash flow statement,
Change in overall financial position. In such a case the statement is

termed as statement of changes in financial position.
The technique of funds flow analysis is widely used by the financial
analysis, credit granting institutions and financial managers in
performance of their jobs. It has become a useful tool in their analytical
kit. This is because the financial statement i.e. income statement and the
"Balance Sheet" have a limited role to perform. Income statement
measure flows restricted to transactions that pertain to rendering of goods
or services to customers. The Balance Sheet is merely a static statement.
It is the statement of assets and liabilities of business as a particular date.
It does not supply focus those major financial transactions which have
been believed the Balance Sheet changes. One has to draw inferences
from the Balance sheet about major financial transactions only after
comprising the Balance sheet of two periods.
For example, if fixed assets worth Rs.3,00,000 are purchased during he
current year by raising share capital of Rs.3,00,000 the balance sheet
simply shows a higher capital figure and higher fixed assets figure. In
case, One compares one year balance sheet with the previous year
balance Sheet then only one can draw an inference that fixed assets are
acquired by raising share capital of Rs.3,00,000 similarly, Certain
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important transitions which might (Occur during the course of the

accounting) not find any place in the Balance Sheet. For example, if a
loan of Rs.3,00,000 was raised and paid in the accounting year, the
balance sheet will not depict this transaction. However, a financial analyst
must know the purpose for which loan was utilized and the source from it
was raised. This will help him in making better estimates about the
company's financial position and policies.
FINANCIAL ANALYSIS
Financial analysis is highly essential to understand the efficiency and
financial position of the center prise.
The term 'Analysis' means methodical clarification of the data provided in
the financial statements. 'Analysis' and 'Interpretation' are complementary
to each other Interpretation requires analysis, while analysis is useless
without interpretation. The term 'Analysis' to cover the meanings of
analysis and interpretation, since analysis involves interpretation.
Myres States
"Financial statement analysis is largely a study of the relationship among
the various financial factors in a business as disclosed by a single set of a
statements and a study of the trend of these factors as shown in a series of
statements".
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TYPES OF FINANCIAL ANALYSIS

We can classify various types of financial analysis in to different
categories depending upon.
The material used
The method of operation fallowed in the analysis of the modus operand!
Of analysis.
ON THE BASIS OF MATTERIAL USED

According to material used financial analysis can be classified two types.
External analysis
Internal analysis.
EXTERNAL ANALYSIS
It is the analysis by outsiders who don't have access to the detailed
internal accounting records of the business firm, these outsiders include
investors, Potential investors, Potential creditors and government
agencies, credit agencies and the general public. For the financial
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analysis, the external parties to the firm depend almost entirely on the
published financial statements. External analysis only serves for limited
purpose. How ever the recent changes in the Government regulations
requiring business firm to make available more detailed information to
the public through audited published account have considerably improved
the position of the External analysis.
INTERNAL ANALYSIS
The analysis conducted by person who has access to the financial
accounting records of a business firm is known as internal analysis. Such
an analysis can therefore be performed by executive and employee of the
organization as well as Government agencies which have statutory power
rested in these financial analysis for managerial purpose is the internal
type of analysis that can be affected depending upon the purpose be
achieved.
WORKING CAPITAL
It refers to that part of total working capital which required by business
over and above permanent working capital. The extra working capital
needed to support the changing production and sales activities. It is also
called 'Variable working capital'.
ELEMENTS IN WORKING CAPITAL (a) CURRENT ASSETS
The term current asset includes assets which are acquired with the
intention of converting them in to cash during the normal business
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operation of the company. However, the definition of the current assets

has been given by Grady in the following words.
For accounting purpose, the term Current assets is used to designate
cash and other assets or resources commonly identified on those which
are reasonable expected to be realized in cash or sold or consumed during
the normal operating cycle of the business.
The current assets are
Cash including fixed deposit with bank

Account receivables
Inventory
Advance receivables
Prepaid expenses
It should be noted that short term investment should be included in the
definition of the term current assets while loose tools should be excluded
from the category of current assets. Of course, this is not strictly
accordingly to the requirements of the companies Act regarding
presentation of financial statement where investments even though held
temporarily are to be shown separately from current assets while loose
tools are shown separately from current assets while loose tools are
shown under the category of current assets.
Current Liabilities
The term Current Liabilities is used principally to designate such
Dligation whose liquidation is reasonably expected to require the use of
ssets classified as current assets in the same balance sheet or the operation
:
other current liability of those expected to be satisfied with in a
relatively a iort period of time usually one year.
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Account payable
Outstanding expenses
Bank overdraft
Short term loans
Advance payment received by business
PROVISIONS AGAINST CURRENT ASSETS

Provision for doubtful debts, provision for loss on stock, provision
for scount on debtors etc, are treated as current liabilities. Since they
reduce le amount of current assets.
NON-CURRENT ASSETS
All assets other than current assets come within the category of
noncurrent assets include goodwill, land building, machinery, furniture
long term investment, Patent rights, Trader marks, debt balance of the
profit & loss iccount, discount on issue of debentures and preliminary
expenses etc.
NON-CURRENT LIABILITIES
All liability other than current liability comes with in the category
of Non-current liabilities. They include share capital, long term loans,
debentures, hare premium, credit balance in the profit & loss Account.
Revenue and capital reserve, dividend equalization fund, debentures
sinking fund.
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PREPARATION OF FUNDS FLOW STATEMENT

Schedule of changes in working capital
Funds flow statement
SCHEDULE OF CHANGES IN WORKING CAPITAL
The schedule of changes in working capital can be prepared by
computing the current asset and current liabilities of two different balance
sheet dates.
SCHEDULE OF CHANGES IN WORKING CAPITAL
Items
As On
As On
Changes
Increase
Decrease
Current assets :Cash Balance
XXX
XXX
XXX
XXX
Bank Balance
XXX
XXX
XXX
XXX
Marketable Securities
XXX
XXX
XXX
XXX
Account receivables
XXX
XXX
XXX
XXX
Stock in trade
XXX
XXX
XXX
XXX
Prepaid expenses
XXX
XXX
XXX
XXX
Current Liabilities :-
XXX
XXX
XXX
XXX
Bank Overdraft
XXX
XXX
XXX
XXX
Outstanding expenses
XXX
XXX
XXX
XXX
Accounts payable
XXX
XXX
XXX
XXX
Net Increase (or) decrease
XXX
XXX
XXX
XXX
Decrease in Working Capital
XXX
XXX
XXX
XXX
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RULES FOR PREPARING THE SCHEDULE

Increase in a current assets, result in increase in working capital,
Decrease in a current asset result in decrease in working capital,
Increase in a current liability results in decrease in working capital,
Decrease in a current liability results in increase in working capital.
FUNDS FLOW STATEMENT
While preparing a funds flow statement current assets and current
liabilities are to be ignored attention is to be given to change in fixed
assets fixed liabilities. The statement may be prepared in fare following
form.
There will be no flow of funds if there transition involves
Current assets and fixed assets
Ex : Purchasing of building for cash

Current assets and capital
Ex : issue of shares for cash.

Current assets and fixed liability
Ex : Redemption of debentures in cash

Current liabilities and fixed liabilities
Ex : Credit paid off in debenture

Current liability and capital
Ex : Creditors paid of in shares

Current liability and fixed assets
Ex : Building transferred to creditors in satisfaction of their claim.

There will be no flow of funds if these transactions involves,
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Current assets and current liability

Ex. Pay to creditors
Fixed assets and fixed liability
Ex. Building purchased and payment made in debentures

Fixed assets and capital.
Ex. Building purchased and payment made in debentures.

MEANING OF FUNDS FLOWS
The term "Flow" means change and there fore the term "Flow of funds"
means change in "Funds" or change in "Working capital" in other words
any increase or decrease in working capital means "Flow of Funds".
:
Funds Flow statement is also called as a "Statement of Source and
Application of Funds" summary of financial operation etc.

In business several transactions take place some of the transactions
increase the funds while other decrease the funds some may not make any
change in the funds position. In case a transaction results increase of
funds. It will be termed as source of funds. In case a transactions results
in decrease of funds it will be taken as an application or use of funds.
PREPARATION OF FUNDS FLOW STATEMENT
In order to prepare a Funds flow statement if it is necessary to find out the
sources and "Application" of funds.
SOURCES OF FUNDS
Sources of funds can be divided in to two types
Internal source
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External source
INTERNAL SOURCE
Funds from operation is the only internal source of funds how ever, the
following adjustment will be required in the figure of net profit for
finding our real funds from operation.
Depreciation on Fixed assets

Preliminary expenses and good will written / off.
Contribution to debentures redemption fund transfer to general reserve.
Loss on sale of fixed assets.
Provision for tax proposed dividend.
EXTERNAL SOURCES
Funds from long term loans

Long term loan such as debentures borrowing from financial institutions
will increase the working capital and therefore, there will be Flow of
Funds. However if the debenture have been issued in consideration of
some fixed assets, there will be no flow of funds.
State of fixed assets
Sale of land, Building Long term investment will result in generation of
funds.
Funds from increase in share capital
Issue of share for cash or for my other current assets result in increase in
working capital and hence will be a flow of funds.
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APPLICATION OF FUNDS:The uses to which funds are called application of funds. Following are
same of the purpose for which funds may be used.
PURCHASE OF FIXED ASSETS
Purchase of fixed assets such as land, Building Plant, Machinery long
term investments etc, results in decrease of current assets. With out any
decrease in current liabilities. Hence there will be a flow of funds. But in
the case of debentures are issued for acquisition of fixed assets, there will
be no Flow of funds.
PAYMENT OF DIVIDEND
Payment of dividend result in decrease of fixed liability and therefore it
affects funds generally recommendations of directors regarding
declaration of dividends is simply taken as an appropriation of profit and
not as an item effecting the working capital.
PAYMENT OF FIXED LIABILITY

Payment of long term liability such as redemption of debentures of
redemption of redeemable preference shares results in reduction of
working capital and hence it is taken as application of fund.
PAYMENT OF TAX LIABILITY
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Provision for taxation is generally taken as an appreciation of profit and

not as an application fund. But if the tax has been paid it will be taken as
an application.
INCREASE IN WORKING CAPITAL

Working capital is increased. If current assets increase and current
liability decrease. Funds are required in both the case i.e. in order to
acquire more current assets or paying current liabilities and thus funds are
said to have been applied or used.
STATEMENT OF SOURCES AND APPLICATION OF FUNDS
FUNDS FROM OPERATIONS
It is an internal sources of funds. A fund from operation is to be
calculated as per this method.
Funds from operation is the only internal source of funds some
adjustments are to be made in calculating funds from operation to the net
profit given in the financial statement.
USEFUL AS CONTROL DEVICE
The funds flow statement also serves as a control device in that the
statement. Compared with the budgeted figures will show to what extent
the funds were put to use according to plan. This enables the financial
manager to find out deviation form the planned course of action and taken
remedial steps to correct the deviation
USEFUL TO THE EXTERNAL PARTIES
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The outside parties can have a clear knowledge about the financial
policies that the company had purchased in the light of the information so
supplied by the statement, the outsider can decide whether or not to invest
in the enterprise and on what terms funds have to be invested. The funds
flow statement provides an insight into the financial operation of a
business enterprise an insight immensely Valuable to the finance manager
in analyzing the part and future expansion plans of the enterprise and the
impact of these plans on its liquidity. He can debuct imbalance in the use
of funds and undertake remedial actions.
STATEMENTS SHOWING OF FUNDS FROM OPERATIONS
Trading profits or the profits from operations of the business are
the most important and major sources or inflow of funds in the business
as they increase assets but at the same time funds flow out of business for
expenses and cost of goods sold. Thus the net effect of operation will be a
sources of funds if inflow from sales exceeds the outflow for expanses
and cost of goods sold and vice-versa but it must be remembered that
funds from operation do not necessarily mean the profit as shown by the
profit & loss of a firm because there are many non- fund (or) Non
operating items which may have been either debited or credited to profit
& loss Account.
The examples of such items on the debt side of a profit & loss
Account are amortization of fictitious and intangible assets such as good
will, preliminary expenses
and
discount on
issue
of share
&
debentures written off. Appreciation of retained earnings such as transfer

to reserve etc, depreciation and depletion loss and sale of fixed assets,
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payment of dividend etc.
The Non-fund items are those which may be
operational expenses but they do not affect funds of the business.

E.g. for depreciation charged to profit & loss account funds really don't
move out of business non operating items are those which although may
result in the outflow of funds but are not related to the trading operations
of business such as loss on sale of machinery or payment of dividends the
method of calculating funds from operation have been discussed.
METHOD OF CALCULATING FUNDS FROM OPERATION
The first method is to prepare the Profit & loss A/c a fresh by
taking in to Consideration only funds and operational items, which
involve funds, are related to normal operation of the business. The
balancing figures in this case will be either funds generated from
operations or funds in operations depending up on. The income or audit
side (or) profit & loss a/c Exceeds the expenses or debit side of profit &
loss a/c or vice versa.
The second method which is generally used to precede from figure

of net profit & loss account already prepared Funds from operations by
this method can be calculated as under.
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ADJUSTED PROFIT AND LOSS ACCOUNT

Particulars
To
Amount
Depreciation
on
Fixed xxxx
Particulars
Amount
By Opening Balance
xxxx
assets
To Good Will written off
xxxx
By Dividend received xxxx
To preliminary Expenses
xxxx
By Profit on sale of xxxx

assets
To Transfer to general reverse

To
Payment
of
xxxx
proposed
By
Funds
from xxxx
operations
dividend
xxxx
To Provision for tax
xxxx
To Loss on sale of assets
xxxx
To Closing Balance
xxxx
(Balancing Figure)
xxxx
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FUNDS FLOW STATEMENT

Sources of funds
Amount
Application of funds Amount
Issue of shares
xxxx
Redemption
Issue of debentures
xxxx
redeemable
Long term barrowing
xxxx
Preferenceshares
Payment of equity xxxx
Sale of fixed assets
xxxx
shares capital
Operating Profit
xxxx
Redemption
xxxx
debentures
Payment of
Decrease in working capital
of xxxx
of xxxx
other
long term loan

Purchase
of
fixed xxxx
assets
Operating Loss
xxxx
Payment of dividend xxxx

and tax
xxxx
Net
increase
in xxxx
working capital
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TREATMENT OF ADJUSTMENTS
Some times the factors affecting the funds from operation may not be
given in the problem directly and there may be some hidden information
as such some of the transactions have to designed our using the additional
information provided as adjustments to the balance sheet there items
include.
Provision for tax
Proposed dividend
Sale (or) Purchase of fixed assets
PROVISION FOR TAX

It is a current liability while preparing on funds flow statement there are
two options available.
Provision for Tax may be taken as a current liability. In such a case,

where provision for tax is made there transaction involves profit and loss
appropriation Account which is a fixed liability and provision for Tax
Account. Which is a current liability it will thus decrease the working
capital on payment of tax there will be no change in working capital
because it will involve one current liability and other a current assets.
Provision for tax may be taken only as on appropriation of profit. It

means that will no change in working capital position when provision for
tax is made since it involves two fixed liabilities, i.e. profit and loss
appropriation a/c and provision for tax account however what tax is paid
it will be taken as application of funds because it will when involves
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provisions for tax account which has been taken as a fixed liability and
bank account which is a current asset.
PROPOSED DIVIDEND
What ever has been said about the 'Provision for Tax' is also applicable to
"Proposejj dividends" proposed dividend can also be death with in two
ways.
Proposed dividend may be taken as a current liability since declaration

of dividends by the share holders in simply a formality. One the dividends
are declared in the general meeting, they will have to be paid with in 42
days their declaration. Income proposed dividend is taken as a current
liability, it will appear as one of the item decreasing working capital in
the schedule of change in working capital it will not be shown as an
application of funds when dividends is paid later on.
Proposed dividends may simply be taken as an appropriation of

profits. In such as case proposed dividend for the current year will be
added back to current year's profit in order to find out funds from
operations if such amount of dividend has already been charged to profits
payment of dividend will be shown as an "Application of Funds".
SALE OR PURCHASE OF FIXED ASSETS

For arriving at the final figure we have to prepare the assets
depreciation account as sets, sold or purchased account.
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OBJECTIVES OF THE STUDY

The following objectives have been formulated to make in the study.
To assess the Working Capital position of the company from 20062008 to 2012-2013.
To identify sources and uses of the funds of the company from
2006-2008 to 2012-2013.
To examine the sources and applications of the funds through cash
basis from. 2008-2009 to 2012-2013.
To know the operational efficiency.
To study and prepare funds flow statements.
To study the profile of the company
To study the allocation of funds and working capital in the
organization.
The study the use of long term debt as well as owner funds.
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NEED FOR THE STUDY

The need for the study is analyze the financial position of the company
To find out the liquidity or short term solvency of the company.
To allow relationship among various aspects in such a way that it
allows conclusion about the performance, strength and weakness of
the company.
To know how finance works in the typical organization structure.
To know how working capital covers all the current assets and
liabilities.
To know the short term surveying ability of the company.
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SCOPE OF THE STUDY

.
An extensive study is done on the financial position of the
company. The study covers the historical financial information of the
company and finds growth of the company. The study covers all the
transactions of the company and the funds flow statements.
The company covers the measurement of
profitability of firm and the operating efficiency and relationship among
different financial aspects.
Thus a good deal of ground he covered in the
study, including the trends of various compounds of working capital. So,
as to find the effect of component on working .
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METHODOLOGY
Methodology describes the method of achieving objectives through
collection of data. The data collected can be either primary or secondary.
The above information is carried on with the co-operation of the
management of Y.S.R. SPINNING & WEAVING MILLS PVT. LTD.
Primary data:
Primary data is the data, which has been collected directly from the
people of the organization it is also called as first hand data. The primary
data is collected by discussions with the functional managers, officers, staff
and other members of the organization.
Secondary data:
Secondary data is those which have been already collected by some
agency and which have been processed. Secondary data for the present study
has been collected from margins, journals and annual reports, published
books, reference books, websites and any other in direct.
The secondary data is obtained from annual report and financial
statement that is balance sheet and profit and loss account, annual reports,
and from the textbooks of financial management. Here the project is done on
secondary data.
Methods of data collection:
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The data collected from the company files, financial assets,

balance sheet and other library book and other articles and from the
corporate websites e.t.c.
Data analysis
The analyses used in the study are tabulation of data charts and graphs
and mathematical tools or representation and schedule of ratio, cash flow,
and fund flow.
Diagrammatic representation of the research and methodology
DATA
SOURCES
Primary
Secondary
Sources
Personal
Observance
Management
Respondents
Sources
Inside the
Outside the
Company
Company
Text books
Journals
Annual
Reports
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LIMITATIONS OF STUDY
The study is based on the information available in the latest balance
sheets of the company, these balance sheets suffers a few limitations.
The study is based on the working capital analysis only.
The study is made only through secondary source of data.
Normally this will not facilitate to undertake a deeper study on the
subject taken into consideration.
The study is limited to a period of five years for analysing the data.
This study of working capital does not reflect the whole financial
position of the organization.
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INDUSTRY PROFILE
The Indian textile industry has a significant presence in the economy as
well as in the international textile economy. Its contribution to the Indian
economy is manifested in terms of its contribution to the industrial
production, employment generation and foreign exchange earnings. It
contributes 20 percent of industrial production, 9 percent of excise
collections, 18 percent of employment in the industrial sector, nearly 20
percent to the countries total export earning and 4 percent to the Gross
Domestic Product.
In human history, past and present can never ignore the importance of
textile in a civilization decisively affecting its destinies, effectively
changing its social scenario. A brief but thoroughly researched feature on
Indian textile culture.
HISTORY OF TEXTILE INDUSTRY
India has been well known for her textile goods since very ancient times.
The traditional textile industry of India was virtually decayed during the
colonial regime. However, the modern textile industry took birth in India
in the early nineteenth century when the first textile mill in the country
was established at fort gloster near Calcutta in 1818. The cotton textile
industry, however, made its real beginning in Bombay, in 1850s. The first
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cotton textile mill of Bombay was established in 1854 by a Parsi cotton

merchant then engaged in overseas and internal trade. Indeed, the vast
majority of the early mills were the handiwork of Parsi merchants
engaged in yarn and cloth trade at home and Chinese and African
markets.
The first cotton mill in Ahmedabad, which was eventually to emerge as a
rival centre to Bombay, was established in 1861. The spread of the textile
industry to Ahmedabad was largely due to the Gujarati trading class.
The cotton textile industry made rapid progress in the second half of the
nineteenth century and by the end of the century there were 178 cotton
textile mills; but during the year 1900 the cotton textile industry was in
bad state due to the great famine and a number of mills of Bombay and
Ahmedabad were to be closed down for long periods.
The two world War and the Swadeshi movement provided great stimulus
to the Indian cotton textile industry. However, during the period 1922 to
1937 the industry was in doldrums and during this period a number of the
Bombay mills changed hands. The second World War, during which
textile import from Japan completely stopped, however, brought about an
unprecedented growth of this industry. The number of mills increased
from 178 with 4.05 lakh looms in 1901 to 249 mills with 13.35 lakh
looms in 1921 and further to 396 mills with over 20 lakh looms in 1941.
By 1945 there were 417 mills employing 5.10 lakh workers.
The cotton textile industry is rightly described as a Swadeshi industry
because it was developed with indigenous entrepreneurship and capital
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and in the pre-independence era the Swadeshi movement stimulated

demand for Indian textile in the country.
The partition of the country at the time of independence affected the
cotton textile industry also. The Indian union got 409 out of the 423
textiles mills of the undivided India. 14 mills and 22 per cent of the land
under cotton cultivation went to Pakistan. Some mills were closed down
for some time. For a number of years since independence, Indian mills
had to import cotton from Pakistan and other countries.
After independence, the cotton textile industry made rapid strides under
the Plans. Between 1951 and 1982 the total number of spindles doubled
from 11 million to 22 million. It increased further to well over 26 million
by 1989-90.
CURRENT POSSITION OF TEXTILE INDUSTRY IN INDIA
Textile constitutes the single largest industry in India. The segment of the
industry during the year 2000-01 has been positive. The production of
cotton declined from 156 lakh bales in 1999-2000 to 1.40 lakh bales
during 2000-01. Production of man-made fibre increased from 835
million kgs in 1999-2000 to 904 million kgs during the year 2000-01
registering a growth of 8.26%. The production of spun yarn increased to
3160 million kgs during 2000-01 from 3046 million kgs during 19992000 registering a growth of 3.7%. The production of man-made filament
yarn registered a growth of 2.91% during the year 1999-2000 increasing
from 894 million kgs to 920 million kgs. The production of fabric
registered a growth of 2.7% during the year 1999-2000 increasing from
39,208 million sq mtrs to 40,256 million sq mtrs. The production of mill
sector declined by 2.6% while production of handloom, powerloom and
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hosiery sector increased by 2%, 2.7% and 5.1% respectively. The exports
of textiles and garments increased from Rs. 455048 million to Rs. 552424
million, registering a growth of 21%. Growth in the textile industry in the
year 2003-2004 was Rs. 1609 billion. And during 2004-05 production of
fabrics touched a peak of 45,378 million squre meters. In the year 200506 up to November, production of fabrics registered a further growth of 9
percent over the corresponding period of the previous year.
With the growing awareness in the industry of its strengths and weakness
and the need for exploiting the opportunities and averting threats, the
government has initiated many policy measures as follows.
The Technology Upgradation Fund Scheme (TUFS) was launched in
April 99 to provide easy access to capital for technological upgradation
by various segments of the Industry.
The Technology Mission on Cotton (TMC) was launched in February
2000 to address issues relating to the core fibre of Cotton like low
productivity, contamination, obsolete ginning and pressing factories, lack
of storage facilities and marketing infrastructure
A New Long Term Textiles and Garments Export Entitlement (Quota)
Policies 2000-2004 was announced for a period of five years with effect
from 1.1.2000 to 31.12.2004 covering the remaining period of the quota
regime.
In the current year Budget 2006-2007 states the measures for Textile
Industry as follows
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Allocation to the Technology Upgradation Fund (TUF) enhanced

from Rs4.4bn to Rs 5.4bn.
Provision for the interest subsidy on term loans to the handloom
sector to be increased from Rs2.0bn to Rs 2.4bn.
Rs1.9 bn to be provided for the scheme for integrated Textiles
Parks (launched in October 2005 with the intention of creating 25
textile parks)
Excise duty on all man-made fibre yarn and filament yarn to be
reduced from 16% to 8%
Import duty on all man-made fibers and yarns to be reduced from
15% to 10%.
FUTURE PROSPECTS:
The future outlook for the industry looks promising, rising income levels
in both urban and rural markets will ensure a rising market for the cotton
fabrics considered a basic need in the realm of new economic reforms
(NER) proper attention has been given to the development of the textiles
industry in the Tenth plan. Total outlay on the development of textile
industry as envisaged in the tenth plan is fixed at Rs.1980 crore. The
production targets envisaged in the terminal year of the Tenth plan are
45,500 million sq metres of cloth 4,150 million kg of spun yarn and 1,450
million kg of man made filament yarn. The per capita availability of cloth
would be 28.00 sq meters by 2006-2007 as compared to 23.19 sq meters
in 2000-01 showing a growth of 3.19 percent. The export target of textiles
and apparel is placed at $32 billion by 2006-2007 and $50 billion by
2010.
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Vision India 2010 for Textiles

Textile economy to grow to $ 85 bn. by 2010.
Creation of 12 million new jobs in Textile Sector.
To increase Indias share in world trade to 6% by 2010.
Achieve export value of $ 40 Billion by 2010.
Modernisation and consolidation for creating a globally competitive
industry.
STRUCTURE OF INDIAS TEXTILE INDUSTRY
The textile sector in India is one of the worlds largest. The textile industry
today is divided into three segments:
Cotton Textiles
Synthetic Textiles
Other like Wool, Jute, Silk etc.
All segments have their own place but even today cotton textiles continue
to dominate with 73% share. The structure of cotton textile industry is
very complex with co-existence of oldest technologies of hand spinning
and hand weaving with the most sophisticated automatic spindles and
loom. The structure of the textile industry is extremely complex with the
modern, sophisticated and highly mechanized mill sector on the one hand
and hand spinning and hand weaving (handloom sector) on the other in
between falls the decentralised small scale powerloom sector.
Unlike other major textile-producing countries, Indias textile industry is
comprised mostly of small-scale, nonintegrated spinning, weaving,
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finishing, and apparel-making enterprises. This unique industry structure

is primarily a legacy of government policies that have promoted laborintensive, small-scale operations and discriminated against larger scale
firms:
Composite Mills.
Relatively large-scale mills that integrate spinning, weaving and,
sometimes, fabric finishing are common in other major textile-producing
countries. In India, however, these types of mills now account for about
only 3 percent of output in the textile sector. About 276 composite mills
are now operating in India, most owned by the public sector and many
deemed financially sick. In 2003-2004 composite mills that produced
1434 m.sq mts of cloth. Most of these mills are located in Gujarat and
Maharashtra.
Spinning.
Spinning is the process of converting cotton or manmade fiber into yarn
to be used for weaving and knitting. This mills chiefly located in North
India. Spinning sector is technology intensive and productivity is affected
by the quality of cotton and the cleaning process used during ginning.
Largely due to deregulation beginning in the mid-1980s, spinning is the
most consolidated and technically efficient sector in Indias textile
industry. Average plant size remains small, however, and technology
outdated, relative to other major producers. In 2002/03, Indias spinning
sector consisted of about 1,146 small-scale independent firms and 1,599
larger scale independent units.
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Weaving and Knitting.

The weaving and knits sector lies at the heart of the industry. In 2004-05,
of the total production from the weaving sector, about 46 percent was
cotton cloth, 41 percent was 100% non-cotton including khadi, wool and
silk and 13 percent was blended cloth. Three distinctive technologies are
used in the sector handlooms, powerlooms and knitting machines.
Weaving and knitting converts cotton, manmade, or blended yarns into
woven or knitted fabrics. Indias weaving and knitting sector remains
highly fragmented, small-scale, and labour-intensive. This sector consists
of about 3.9 million handlooms, 380,000 powerloom enter-prises that
operate about 1.7 million looms, and just 137,000 looms in the various
composite mills. Powerlooms are small firms, with an average loom
capacity of four to five owned by independent entrepreneurs or weavers.
Modern shuttleless looms account for less than 1 percent of loom
capacity.
Fabric Finishing.
Fabric finishing (also referred to as processing), which includes dyeing,
printing, and other cloth preparation prior to the manufacture of clothing,
is also dominated by a large number of independent, small-scale
enterprises. Overall, about 2,300 processors are operating in India,
including about 2,100 independent units and 200 units that are integrated
with spinning, weaving, or knitting units.
Clothing.
Apparel is produced by about 77,000 small-scale units classified as
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domestic
manufacturers,
manufacturer
exporters,
and
fabricators
(subcontractors).
INDIAS MAJOR COMPETITIORS IN THE WORLD
To understand Indias position among other textile producing the industry
contributes 9% of GDP and 35% of foreign exchange earning, Indias
share in global exports is only 3% compared to Chinas 13.75% percent.
In addition to China, other developing countries are emerging as serious
competitive threats to India. Looking at export shares, Korea (6%) and
Taiwan (5.5%) are ahead of India, while Turkey (2.9%) has already
caught up and others like Thailand (2.3%) and Indonesia (2%) are not
much further behind. The reason for this development is the fact that
India lags behind these countries in investment levels, technology, quality
and logistics. If India were competitive in some key segments it could
serve as a basis for building a modern industry, but there is no evidence
of such signs, except to some extent in the spinning industry.
Indias Competitive Position in Stages of Textile Manufacture
PROBLEM FACED BY THE TEXTILE INDUSTRY IN INDIA
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The cotton textile industry is reeling under manifold problems. The major
problems are the following:
Sickness:
Sickness is widespread in the cotton textile industry. After the
engineering industry, the cotton textile industry has the highest incidence
of sickness. As many as 125 sick units have been taken over by the
Central Government. Sickness is caused by various reasons like the
problems mentioned below.
Obsolescence:
The plant and machinery and technology employed by a number of units
are obsolete. The need today is to make the industry technologically upto-date rather than expand capacity as such. This need was foreseen quite
sometime back and schemes for modernization of textile industry had
been introduced. The soft loan scheme was introduced a few years back
and some units were able to take advantage of the scheme and modernise
their equipment. However, the problem has not been fully tackled and it
is of utmost importance that the whole industry is technologically
updated. Not many companies would be able to find resources internally
and will have to depend on financial institutions and other sources.
Government Regulations:
Government regulations like the obligation to produced controlled cloth
are against the interest of the industry. During the last two decades the
excessive regulations exercised by the government on the mill sector has
promoted inefficiency in both production and management. This has also
resulted in a colossal waste of raw materials and productive facilities. For
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example, the mills are not allowed to use filament yarn in warp in order
to protect the interest of art silk and powerloom sector which use this
yarn to cater to the affluent section of society.
Low Yield and Fluctuation of Cotton Output:
The cotton yield per hectare of land is very low in India. This results in
high cost and price. Further, being largely dependent on the climatic
factors, the total raw cotton production is subject to wide fluctuation
causing serious problems for the mills in respect of the supply of this vital
raw material.
Competition from Man-made Fibres:
One of the serious challenges facing the cotton textile industry is the
competition from the man-made fibres and synthetics. These textures are
gradually replacing cotton textiles. This substitution has in fact been
supported by a number of people on the ground that it is not possible to
increase substantially the raw cotton production without affecting other
crops particularly food crops.
Competition from other Countries:
In the international market, India has been facing severe competition
from other countries like Taiwan, South Korea, China and Japan. The
high cost of production of the Indian industry is a serious adverse factor.
Labour Problems:
The cotton textile industry is frequently plagued by labour problems. The
very long strike of the textile workers of Bombay caused losses
amounting to millions of rupees not only to the workers and industry but
also to the nation in terms of excise and other taxes and exports.
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Accumulation of Stock:
At times the industry faces the problems of very low off take of stocks
resulting in accumulation of huge stocks. The situation leads to price cuts
and the like leading to loss or low profits.
Miscellaneous:
The industry faces a number of other problems like power cuts,
infrastructural problems, lack of finance, exorbitant rise in raw material
prices and production costs etc.
EXPORT AT GLANCE:
Textile exports plays a crucial role in the overall exports from
India.Throught export friendly government policies and positive efforts
by the exporting community, textile exports increased substantially from
US$ 5.07 billion in 1991-92 to US$ 12.10 billion during 2000-01. The
textile export basket contributing over 46 percent of total textile export.
In world textile trade has risen to 3.1 percent in 1999-2000 as against
1.80 percent in early nineties.
Exports have grown at an average of 11 percent per annum over the
last few years, while world textile trade has grown only about 5.4 per cent
per annum in the same years. During the year 2000-01 Indias textile
export was US$ 12014.4 million. It was increased the year 2004-05 US$
13038.64 million. The exports of textiles (including handicrafts, jute, and
coir) formed 24.6% of total exports in 2001-2002, however this
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percentage decreased to 16.24% during 2004-2005. The textile exports

recorded a growth of 15.3% in 2002-2003 and 8.7% in 2003-2004.
Textile exports during the period of April-February 2003-2004
amounted to $11,698.5 million. During 2004-05 textile exports were US$
13,039.00 million, recording a decline of 3.4% as compared to the
corresponding period of previous year. However, during April-November,
2005, the textile exports have shown growth of 8.2% as compare to the
corresponding period of previous year.
Against a target of US$ 15,160 million during 2004-05, the textile
exports were of US$13039 million, registering a shortfall of 14% against
the target. The overall export target for 2005-06 has been fixed at US$
15,565 million. In 2005 textile and garments accounted for about 16% of
export earning. Indias textile export to the US have shown a good rise of
29.5% between January and June 2005.
INVESTMENT IN TEXTILE INDUSTRY
Investment is the key for Indian textiles to make rapid strides. The Vision
Statement prepared by the Indian Cotton Mills federation has projected
that the industry has the potential to reach a size of $85 billion by 2010
from the current level of $ 36 billion. Further, the vision statement has
estimated that textile exports could touch $40 billion by 2010 from $ 11
billion in 2002. In the process, Indias share in the global textile and
clothing trade is expected to double from three percent in 2002 to six
percent by 2010.
To reach these these ambitious target, it is estimated that new investment
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to the tune of Rs.1, 40,000 crores will be needed in the next five years.
After analysing the capacity and technology levels in various segments of
textile Industry and the need for modernisation, funds required for
various segments have been below.
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The Multi-Fibre Agreement (MFA)

The Multi-Fibre Agreement (MFA), that had governed the extent of
textile trade between nations since 1962, expired on 1 January 2005. It is
expected that, post-MFA, most tariff distortions would gradually
disappear and firms with robust capabilities will gain in the global trade
of textile and apparel. The prize is the $360 bn market which is expected
to grow to about $600 bn by the year 2010 barely five years after the
expiry of MFA.
National Textile Policy 2000
Faced with new challenges and opportunities in a changing global trade
environment, the GOI unveiled its National Textile Policy 2000 (NTP
2000) on November 2, 2000. The NTP 2000 aims to improve the
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competitiveness of the Indian textile industry in order to attain $50 billion

per year in textile and apparel exports by 2010.86 The NTP 2000 opens
the countrys apparel sector to large firms and allows up to 100 percent
FDI in the sector without any export obligation.
Export Promotion Capital Goods (EPCG) Scheme
To promote modernization of Indian industry, the GOI set up the Export
Promotion Capital Goods (EPCG) scheme, which permits a firm
importing new or Secondhand capital goods for production of articles for
export to enter the capital goods at preferential tariffs, provided that the
firm exports at least six times the c.i.f. value of the imported capital
goods within 6 years. Any textile firm planning to modernize its
operations had to import at least $4.6 million worth of equipment to
qualify for duty-free treatment under the EPCG scheme.
Export-Import Policy
The GOIs EXIM policy provides for a variety of largely export-related
assistance to firms engaged in the manufacture and trade of textile
products. This policy includes fiscal and other trade and investment
incentives contained in various programs.
Duty Entitlement Passbook Scheme (DEPS)
DEPS is available to Indian export companies and traders on a pre- and
post-export basis. The pre-export credit requires that the beneficiary firm
has exported during the preceding 3-year period. The post-export credit is
a transferable credit that exporters of finished goods can use to pay or
offset customs duties on subsequent imports of any unrestricted products.
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The Agreement on Textiles and Clothing (ATC)

The Agreement on Textiles and Clothing (ATC) promises abolition of all
quota restrictions in international trade in textiles and clothing by the year
2005. This provides tremendous scope for export expansion from
developing countries.
Guidelines of the revised Textile Centres Infrastructure Development
Scheme (TCUDS)
TCIDS Scheme is a part of the drive to improve infrastructure facilities at
potential Textile growth centres and therefore, aims at removing
bottlenecks in exports so as to achieve the target of US$ 50 billion by
2010 as envisaged in the National Textile Policy, 2000.
Under the Scheme funds can be given to Central / State Government
Departments/
Public Sector
Undertakings/ Other
Central /State
Governments agencies / recognized industrial association or entrepreneur

bodies for development of infrastructure directly benefiting the textile
units. The fund would not be available for individual production units.
Technology Upgradation Fund Scheme (TUFS)
At present, the only scheme through which Government can assist the
industry is the Technology Upgradation Fund Scheme (TUFS) which
provides for reimbursing 5% interest on the loans/finance raised from
designated financial institutions for bench marked projects of
modernisation. IDBI, SIDBI, IFCI have been designed as nodal agencies
for large and medium small scale industry and jute industry respectively.
They have co-opted 148 leading commercial banks/cooperative banks and
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financial institutions like State Finance Corporations and State Industrial

Development Corporation etc.
Scheme for Integrated Textile Parks (SITP)
To provide the industry with world-class infrastructure facilities for
setting up their textile units, Government has launched the Scheme for
Integrated Textile Parks (SITP) by merging the Scheme for Apparel Parks
for Exports (APE) and Textile Centre Infrastructure Development
Scheme (TCIDS). This scheme is based on Public-Private Partnership
(PPP) and envisages engaging of a professional agency for project
execution. The Ministry of Textiles (MOT) would implement the
Scheme through Special Purpose Vehicles (SPVs).
National Textile Corporation Ltd. (NTC)
National Textile Corporation Ltd. (NTC) is the single largest Textile
Central Public Sector Enterprise under Ministry of Textiles managing 52
Textile Mills through its 9 Subsidiary Companies spread all over India.
The headquarters of the Holding Company is at New Delhi. The strength
of the group is around 22000 employees. The annual turnover of the
Company in the year 2004-05 was approximately Rs.638 crores having
capacity of 11 lakhs Spindles, 1500 Looms producing 450 lakh Kgs of
Yarn and 185 lakh Mtrs of cloth annually.
Cotton Corporation of India Ltd. (CCI)
The Cotton Corporation of India Ltd (CCI), Mumbai, is a profit-making
Public Sector Undertaking under the Ministry of Textiles engaged in
commercial trading of cotton. The CCI also undertakes Minimum
Support Price Operation (MSP) on behalf of the Government of India.
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The Ministry of Textiles

The Ministry of Textiles is responsible for policy formulation, planning,
and development export promotion and trade regulation in respect of the
textile sector. This included all natural and manmade cellulose fibers that
go into the making of textiles, clothing and handicrafts.
Powerloom development and export promotion council

Powerloom development and export promotion council, set up by the
ministry of textiles government of India. PDEXCIL provide some export
assistance as follows
Exploration of overseas market.
Identification of items with export potential.
Market survey and up-to-date market intelligence.
Contact with protective buyers to interest them in your products.
Providing your company's profile to overseas buyers and vice-
versa.
Advice on international marketing.

Display of selected product groups.
Cotton Textile Export Promotion Council (TEXPROCIL):
The Council looks after the export promotion of cotton fabrics, cotton
yarn and cotton made-ups. Its activities include market studies for
individual products, circulation of trade enquiries, participation in
exhibitions, fairs and seminars at home and abroad, in order to boost
exports.
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COMPANY PROFILE
Introduction
Welcome to the flourishing world of Y.S.R. Spinning & Weaving
Mills Pvt. Ltd. We were established in 1999, with a spindle capacity of
4500 spindles. After expansion made in 2003 and 2006, it was now 25514
spindle and 1030 rotors and 8 numbers of air jet weaving machines to
produce 5 tons of ring spun, 2 tons of open end, 1.5 tons of ring doubling
and 2000 meters of fabric per day. In spinning department the mill has a
complete range of LMW, Trumac machines from blow room to spinning
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departments and in weaving department PICANOL omniplus air jet

weaving machine.
Our best quality products are the key of our success and fame. The
quality of our products has helped us in standing amongst the major
companies in this field. The company has a strong clients based at
different regions of Andhra Pradesh, Gujarat, Karnataka, Maharashtra,
West Bengal, Orissa and Tamil Nadu. We are known as one of the best
cotton yarn manufacturers in India due to the fine quality of our cotton
yarn. We provide genuine quality cotton blended yarn, which is used to
make superior quality garments. We are also widely renowned as one of
the best cotton fabric suppliers in India. Our cotton fabric is highly
admired by our clients due to its durability and supreme quality.
We give the topmost priority to our customers and strive to provide
them the best quality fabrics. We know the value of the time and thus
deliver our products within the stipulated time. You can avail our
products easily at reasonable prices, which would not affect your pocket.
Due to the superior quality of our products we deal with various reputed
companies located in India and China. Our chief motive is to maintain a
long lasting relationship with our honored clients.
We have achieved a great height of success due to the hard work of Mr.
Y. Sridhar Reddy, the chairman and Mr. Y. Srinivasulu Reddy, the
managing director of the company. We have a highly skilled team of
employees, who carries loads of experience in this field. We have a strong
infrastructural base, which is well equipped with the advanced
machineries. We always endeavor to provide the best and pure fabrics to
our customers and thus always check the quality content of the fabric.
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We are engaged in the manufacturing of a wide range of fine cotton

fabrics. Our fine cottons fabrics have a remarkable characteristic of
providing smoothness and softness to the body. We are reckoned as one
of the leading cotton fabrics manufacturers, based in India. Our cotton
fabric is used by big companies for production of various types of
garments. We have also become one of the foremost organic cotton yarn
suppliers in India. Our organic cotton is grown without the use of any
harmful pesticides & chemicals and thus this leads to the increase in its
quality.
Name of CEO
Mr. Y. Sridhar Reddy
Primary Business Type
Manufacturer
Establishment Year
1999
No. of Employees
300
Market Cover
China
Annual Sale
Rs.30.00 Crores
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Products we Offer
: Cotton Yarn & Fabric
Chairmen desk
Mr. Yerram Sridhar Reddy started his business as cotton commission
agent in 1977 at his native place Idupulapadu, Inkollu Mandalam,
Prakasam District, Andhra Pradesh, and planned to forward integration of
Ginner in 1983. He started a firm Sri Srinivasa Trading Company in
1989, supplied cotton bales to various spinning mills in Tamilnadu and
Andhra Pradesh.
It was in the year 1999, he established a Spinning Mill at Ganapavaram
village with a capacity of 4500 spindles. His hardwork, innovative
thoughts and strategic approach has made Y.S.R. Spinning & Weaving
Mills Pvt. Ltd., turn in to one of the leading suppliers of 100% cotton
yarns to many domestic and exported oriented weaving mills in and
around the country.
Mission
To manufacture a high quality yarn thereby withstanding high level of
competitiveness.
Developing a long term relationship with our customers and suppliers.
To use latest technological strategies during production thereby
forming an innovative approach.
To provide a safe, fulfilling and rewarding work environment for our
employees.
Servicing and supporting the communities in which we operate
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Vision
The company has a vision to excel in all fields of textile industry and
agriculture produce basis.
We will be intensely customer focused and will offer products and
services which provide the best value for our customers.
HISTORY
Mr.Yerram Sridhar reddy started his business as cotton commission agent
in 1977 at his native place idupulapadu, inkollu mandalam , prakasam
district, Andhra Pradesh, and planned to forward integration of ginner in
1983. He started a firm sri srinivasa trading company in 1989,supplied
cotton bales to various spinning mills in tamilnadu and Andhra Pradesh.
It was in the year 1999 he established a spinning mill at ganapavaram
village with capacity of 4500 spindles, his hard work, innovative thoughts
and strategic approach has made Y.S.R. sinning & weaving mills
PVT.LTD., turn in to one of the leading suppliers of 100% cotton yearns
to many domestic and exported oriented weaving mills in and around the
country.
Growth
Y.S.R spinning & weaving mills PVT.LTD was established in 1999,with a
spindle capacity of 4500 spindles . after expansion made in 2003 and
2006, it was now 25514 spindle and 1030 rotors and 8 numbers of air jet
weaving machines to produces 5 tons of ring spun ,2tons of open end, 1.5
tons of ring doubling and 2000 meters of fabric per day.
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In spinning department the mills has a complete range of

LMW , turmac machines from blow room to spinning department and in
weaving department PICANOL omni plus air jet weaving meachine.
Quality
Policy
Quality is intergral to everything at Y.S.R We adopt holistic quality
assurance system and an integrated system which covers the entire
production process. All lots are tested before giving to the mixing.
We believe quality is a continual process. With a focus clearly an
delivering quality products and services, we integrate to constantly
innovate and excel. As a result our clients are assured of top notch quality
that is consistent across our product range.
Value:
By a clear comprehension of the market dynamics and the assimilation of
the cutting edge technology we assure the highest quality standards are
met at all times.
Products
We offer an exclusive collection of white cotton fabrics of all sizes. Our
white cotton fabric is made up of pure cotton. We also deal with the
manufacturing and supplying of organic cotton yarn. We provide organic
cotton yarn in all shades. We use environment friendly procedure for
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producing our organic cotton yarn. Below listed are the two divisions that
look after our manufacturing processes.
Cotton fabrics
Cotton yarn
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Cotton Fabrics
We are happy to acquaint ourselves as one of the salient cotton fabric
manufacturers in India. Our cotton fabrics include organic cotton
fabrics and white cotton fabrics. We use pure and good quality yarn
for making the fabric. Our fabric provides immense comfort to the
users. It gives soothing effect to the body and will be the right choice
in the hot and sweaty summers. Our cotton fabrics are light in weight
in comparison to its thickness. Our cotton fabric is easily washable
and its significant feature is its durability. We ensure our customers to
provide good quality cotton fabric on time and that too at moderate
prices.
Cotton Yarn
We provide the best quality cotton yarn that includes organic cotton yarn
and cotton blended yarn. Cotton yarn is produced from genuine quality
fiber, which is obtained from the seed hair of the cotton plant. Our cotton
yarn is used to manufacture genuine quality cotton fabrics. The
significant feature of our cotton yarn is its high tensile strength and its
superior quality. Our cotton yarn is used by various industries for
manufacturing the best quality garments. We are widely known as one of
the prominent cotton yarn suppliers from India.
PROCESS
Spinning division
Y.S.R. Spinning & Weaving Mills Pvt. Ltd., has installed state of art
machines and has a capacity to produce wide range of cotton yarns. Our
machinery lines up using the most equipment sourced from the best
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vendors.
Currently the company produces 8.5 tons of 100% cotton yarn per day,
with a capacity of 25514 spindles and 1050 rotors.
Waving division
Y.S.R. Spinning & Weaving Mills Pvt. Ltd., has installed 8 nos
PICANOL Omniplus Airjet Weaving Machines to produce Grey fabric.
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Spinning Division:
Our major counts range from 24s to 80s both carded and combed cotton
yarns. Adding to these counts we have the setup of doubling of yarns in
Ring Doubling yarns.
Production Capacity
Ring Spun Yarns
5 tons
Open End Spinning
2 tons
Ring Doubling
1.5 tons
Weaving Division:
We are having Air jet weaving machines, which we can produce all types
of constructions as per buyer requirements. Presently we are producing
2000 meters of 40sCX40Sc-132X72-63 grey fabric and available this
fabric in finished form also.
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SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY

Indian textile industry has several Strengths
Abundant Raw Material Availability
Low Cost Skilled Labour
Presence across the value-chain
Growing Domestic Market
Indian textile industry has several Weaknesses
Fragmented industry
Effect of Historical Government Policies
Lower Productivity and Cost Competitiveness
Technological Obsolescence
Indian textile industry has several Opportunities

Post 2005 challenges
Research and Development and Product Development
Indian textile industry has several Threats
Competition in Domestic Market
Ecological and Social Awareness
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Regional alliances
Strengths
Abundant Raw Material Availability:
Allowing the industry to control cost and reduce over all lead-times
across the value chain.
Low Cost Skilled Labour
Low cost skilled labour providing a distinct competitive advantage for the
industry.
Presence across the value-chain
Presence across the value-chain providing a competitive advantage when
compared to countries likes Bangladesh, Srilanka, who have developed
primarily as garmenters.
Reduced Lead-times:
Manufacturing capacity present across the entire product range, enabling
textile companies and garmenters do source their material locally and
reduce lead-time.
Super Market:
Ability to satisfy customer requirements across multiple product gradessmall and large lot sizes specialized process treatments etc.
Growing Domestic Market
Growing Domestic market which could allow manufacturers to mitigate
risks while allowing them to build competitiveness.
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Weaknesses
Fragmented industry
Fragmented industry leading to lower ability to expand and emerge as
world-class players.
Effect of Historical Government Policies- Historical regulations
thought relaxed continue to be an impediment to global competitiveness.
Lower Productivity and Cost Competitiveness
Labour force in India has a much lower productivity as compared to
competing countries like china, Srilanka etc.
The Indian industry lacks adequate economies of scale and is therefore
unable to compete with china, and other countries etc.
Cost like indirect takes, power and interest are relatively high.
Technological Obsolescence
Large portion of the processing capacity is obsolete
While state of the art integrated textile mills exist majority of the
capacity lies currently with the power loom sector.
This has also resulted in low value addition in the industry.
Opportunities
Post 2005 challenges
During the year 2005 is a huge opportunity that needs to be capitalized.
Research and Development and Product Development
Indian companies needs to increase focus on product development.
Newer specialized fabric- smart Fabrics , specialized treatement etc.
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Faster turn around times for design samples Investing in design

centers and sampling labs.
Increased use of CAD to develop designing capability in the
Organisation and developing greater options.
Investing in trend forecasting to enable growth of the industry in
India.
Threats
Competition in Domestic Market
Competition is not likely to remain just in the exports space, the
industry is likely to face competition from cheaper imports as well.
This is likely to affect the domestic industry and may lead to increased
consolidation.
Ecological and Social Awareness
Development in the form of increased consumer consciousness on issues
such as usage of child labour unhealthy working conditions etc.
The Indian industry needs to prepare for the fall out of such issues by
issues by improving its working practices.
Regional alliances
Reginal trade blocs play a significant role in the global garment industry
with countries enjoying concessional tariffs by virtue of being members
of such blocs/ alliances.
Indian industry would need to be prepared to face the fall out of the post
2005 scenarious in the form of continued barriers for imports.
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DATA ANALYSIS AND INTERPRETATIONSCHEDULE OF CHANGES

IN WORKING CAPITAL FOR THE YEAR 2008-2009
Particulars
Previous
Current
year 2008
year 2009
Working capital
Increase
Decrease
Rs.
Rs.
A) Current assets:
1) Inventories
172256321 187934012
15677691
2) Sundry Debtors
24937024
26860540
1923516
3) cash & bank balance
33465753
6059037
4) other current assets
28656816
48679846
5) Loans & Advances
14928012
11723019
Total Current Assets
27406716
20023030
3204993
274243926 281256454
B) Current liabilities:
1) Current Liabilities
2) Provisions for taxation
108391431 139624184
7256927
31232753
12018960
Total Current Liabilities
115648358 151643144
Net working capital (A-B)
158595568 129613310
4762033
28982258
28982258
Total
158595568 158595568
66606495
66606495
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Source: Compiled from annual reports of the company
ADJUSTED PROFIT & LOSS ACCOUNT FOR THE YEAR 2008-09

Dr.
Cr.
Particulars
To Depreciation A/c
To Closing Balance of
Reserves and surplus A/c
Amount
Rs.
105478021
Particulars
By Opening Balance of
Amount
Rs.
135167525
130270036 By Funds from operations
100580532
235748057
235748057
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TABLE 5.3
FUNDS FLOW STATEMENT FOR THE YEAR 2008-2009
Sources
Amount
Rs.
Applications
Amount
Rs.
Raising unsecured loans
23688279
Payment on secured loan
74848773
Funds from operations
100580532
Purchase fixed assets
79411683
Sale of investment
Decrease in working
capital
Increase in differed tax
736800
28982258
272587
154260456
154260456

INTERPRETATION:
It is observed from table 5.4. That the net increase in working capital for
the year 2008-2009 is Rs 2,89,82,258. The current assents of the company are
decreased comparing with previous year results. The current liabilities of the
company are increased comparing the previous results. To find the table 5.5,
the company gains profit from the operation to an extent Rs 10,05,80,532. It
shows the table 5.6, net decrease in working capital is Rs 2,89,82,258. This
year raising the unsecured loans and selling some investments. This year
changes in differed tax increased, the company paying some funds to secured
loans holders.
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SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR

2009-2010
Particulars
Previous
Current
year 2009
year 2010
Working capital
Increase
Decrease
Rs.
Rs.
A) Current assets:
1) Inventories
187934012
239880075
51946063
2) Sundry Debtors
26860540
35992686
9132146
6059037
7150276
1091239
48679846
69640943
20961097
5) Loans & Advances
11723019
12529745
806726
281256454
365193725
139624184
202449314
12018960
9073986
151643144
211523300
129613310
153670425
Increase in working capital
24057115

Total
153670425
62825130
2944974
24057115
153670425
86882245
86882245
Source: Compiled from annual reports of the company Table 5.4
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TABLE 5.5
Dr.
Cr.
Particulars
To Depreciation A/c
Amount
Rs.
145033137
151136957
Amount
Particulars
Rs.
130270036
By Funds from operations
296170094
165900058
296170094
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TABLE 5.6
Amount
Sources
Applications
Rs.

451322
165900058 Purchase fixed assets

Payment Unsecured loan
Increase in working
capital
166351380
Amount
Rs.
10888974
125206678
6198613
24057115
166351380
INTERPRETATION:
It is observed from table 5.7. That the net increase in working capital for
the year 2009-10 is Rs 2,40,57,115. The current assents of the company are
increased comparing with previous year results. The current liabilities of the
company are decreased comparing the previous results. To find the table 5.8,
shows the table 5.9, net increase in working capital is Rs 2,40,57,115. This
year company is
paying unsecured loans, at present time no change in
investments. And this year change in differed tax increased and the company
pay some funds to secured loan holders.
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TABLE 5.7
2010-2011
Particulars
Previous
Current
year 2010
year 2011
Working capital
Increase
Decrease
Rs.
Rs.
A) Current assets:
1) Inventories
2904313
239880075
236975762
2) Sundry Debtors
35992686
36258591
265905
7150276
13998934
6848658
69640943
93687132
24046189
5) Loans & Advances
12529745
10864119
365193725
391784538
202449314
158452146
9073986
21580520
211523300
180032666
153670425
211751872
58081447
1665626
Total
211751872
43997168
12506534
58081447
211751872
75157920
75157920
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TABLE 5.8
Dr.
Cr.
Particulars
To Depreciation A/c
Amount Rs.
182491726
194200158
Amount
Particulars
Rs.
By Funds from operations
376691884
151136957
225554927
376691884
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TABLE 5.9
Sources
Amount
Applications
Rs.
Payment on unsecured
Raise secured loans
99207205
loan
Decrease in differed tax

324762132
Amount
Rs.
111445151
154511989
723545
58081447
324762132

INTERPRETATION:
It is observed from table 5.10. That the net increase in working capital
for the year 2010-11 is Rs 5,80,81,447. The current assents of the company are
increased comparing with previous year results. The current liabilities of the
company are decreased comparing the previous results. To find the table 5.11,
shows the table 5.12, net increase in working capital is Rs 5,80,81,447. This
year changes in differed tax decreased and the company raising some funds to
secured loan holders.
TABLE 5.10
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2011-2012
Particulars
Previous
Current
year 2011
year 2012
Working capital
Increase
Decrease
Rs.
Rs.
A) Current assets:
1) Inventories
236975762 327412543
90436781
2) Sundry Debtors
36258591
22361498
13998934
73891461
59892527
93687132
151568707
57881575
5) Loans & Advances
10864119
13966691
3102572
13897093
391784538 589200900
158452146 143360960
21580520
90860140
180032666
234221100
211751872
354979800
143227928
143227928
354979800 354979800 226404641
226404641
Total
15091186
69279620

TABLE 5.11
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Dr.
Cr.
Particulars
To Depreciation A/c
Amount
Rs.
218501632
Amount
Particulars
Rs.
194200158
370202545
564402703
564402703
TABLE 5.12
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Sources
Raise unsecured loans
Amount
Rs.
1790474
Amount
Applications
Rs.
49556343
215836650
36627902
143227928
408620921
408620921

INTERPRETATION:
for the year 2011-12 is Rs 14,32,27,928. The current assents of the company
are increased comparing with previous year results. The current liabilities of
the company are decreased comparing the previous results. To find the table
5.14, the company gains profit from the operation to an extent Rs 37,02,02,545.
It shows the table 5.15, net increase in working capital is Rs 14,32,27,928.
This year is paying unsecured loans comparing with previous year. This year
changes in differed tax increased, the company raising some funds from
secured loan holders.
TABLE 5.13
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2012-13
Particulars
Previous
Current year
year 2012
2013
Working capital
Increase
Decrease
Rs.
Rs.
A) Current assets:
1) Inventories
327412543
341906868
2) Sundry Debtors
22361498
83013158
73891461
156006572
151568707
219855601
5) Loans & Advances
13966691
16218625
589200900
8170018236
143360960
125982205
90860140
127893051
234221100
253875256
354979800
563126567
208146767
------
Total
563126567
563126567
14494325
60651660
82116110
68286894
2251934
17378755
37032911
208146767
245179678
245179678

TABLE 5.14
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Dr.
Cr.
Particulars
To Depreciation A/c
Amount
Rs.
256813736
Amount
Particulars
Rs.
345901071
335511968
681413039
681413039
TABLE 5.15
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Sources
Raise unsecured loans
Decrease in capital work
in process
Amount
(Rs)
171565663
4832584
335511968
Amount
Applications
(Rs)

Purchase fixed assets
31648312
273665497
208146767
1550361
513460576
513460576
INTERPRETATION:
for the year 2012-13 is Rs 20,81,46,767. The current assents of the company
are increased comparing with previous year results. The current liabilities of
the company are decreased comparing the previous results. To find the table
5.14, the company gains profit from the operation to an extent Rs 33,55,11,968.
It shows the table 5.15, net increase in working capital is Rs 20,81,46,767. This
year the company is rais1ng funds through secured loans, differed tax increased
and decrease in capital work in process. This year The Company spend funds
for purchasing of fixed assets and unsecured loans
CHANGES IN WORKING CAPITAL DURING THE PERIOD

2008-2009 TO 2012-13
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Years
Changes in Working Capital
Amount in lakhs
2008-09
Decrease
289.82
2009-10
2010-11
Increase
Increase
240.57
580.81
2011-12
Decrease
143.22
2012-13
Decrease
208.14
INTERPRETATION:
Comparing the five years data the changes in working capital is in this year.
In the year i.e., 2008-2009 working capital decreases to 289.82 lakhs.
The next year 2009-10 working capital also increased to Rs 240.57 lakhs.
Working capital has decreased it indicates the current assets are increased
and the current liabilities are decreased.
The working capital is increased it indicates the current assets are decreased
and the current liabilities are increased.
The year 2011-12 the working capital is 143.22 lakhs and the financial year
2012-13 the working capital is also decreased.
ADJUSTED PROFIT& LOSS ACCOUNT DURING THE PERIOD
2008-2009 TO 2012-13
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Years
2008-09
2009-10
2010-11
2011-12
2012-13
Adjusted Profit &Loss a/c

Profit from business operation
4000
Amount in Lakhs
1005.80
1659.00
2255.54
3702.02
3355.11
3702.02
3355.11
3500
3000
2500
2255.54
2000
1659
1500
1000
1005.8
500
0
2008-09
2009-10
2010-11
2011-12
2012-13
Interpretation:
The Financial position in Y.S.R. SPINNING & WEAVING MILLS PVT.
LTD in 2008-09 is in good condition, profit from business operation by
Rs.1005.8 lakhs.
In 2009-2010 it is better condition Rs.1659.00 lakhs. In the year 2010-11
the profit from business operations increased Rs.2255.54 lakhs.
The company leads to better position in the year 2011-12 financial year. The
year 2012-13 the profit has decreased to Rs.3355.11 lakhs.
Funds flow and cash flow statement during the period 2008-2009 to 2012-13
Funds Flow Statement

Years
2008-09
(Rs in lakhs)
1542.60
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2009-10
2010-11
2011-12
2012-13
1663.51
3247.62
4086.20
5134.60
6000
5134.6
5000
4086.2
4000
3247.62
3000
2000
1542.6
1663.51
2008-09
2009-10
1000
0
2010-11
2011-12
2012-13
INTERPRETATION:
During the year from 2008-2009 to 2012-13 the company has various
sources of funds and the uses of the funds are done for purchasing of fixed
assets and increasing in the current assets.
In the year i.e, 2012-13 the loans like Unsecured and Secured loans are
increased Rs. 5134.6 lakhs.
In the year 2009-10 the sources of funds Rs.1663.51 lakhs. In the year
2012-13 the sources are Rs.5134.6 lakhs. But the financial position of the
company was in good condition.
FINDINGS
It has been observed the share capital of company is not increasing from
2008 to 2013.
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The company is having good reserves and surplus position. These are
increasing year to year from 2008 to 2013. It has been observed that
reserves increased to Rs from 13,02,70,036 to 42,45,99,303.
The company is taking loans from other sources like banks, financial
institutes etc. it observed from 2008 to 2013, the loan amount has
deceased from Rs 52,96,65,603 to Rs 51,25,12,335. But 2012 the
company is raising up to 65,24,29,686.
It has been observed that the company is investing less on fixed assets
from 2008 to 2013. The decrease is from 60,60,14,108 to 57,09,03,729.
It has been observed that the company made investments in 2006 only.
Afterwards till 2013 no new investments have been made.
The total increase in current assets of the company has overcome the
total increase in current liabilities in 2008 to 2013. Current assets are
increasing year to year. But in 2009 only the increases in current
liabilities overcame the increase in current assets.
It has been observed that the net working capital has decreasing in 20082009 (to Rs 2,89.82.258) while in all other years till 2012, it increased.
And the companys funds from operations is satisfactory
It has been observed that the company is raising funds from secured and
unsecured loans, sale of fixed assets and funds from operations and it is
spending to purchase fixed asset, redemption of loans and other
payments.
SUGGESTIONS
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It has been observed that the share capital of the company is not
increasing from 2008 to 2013.This is obstructing the growth of the
company. Hence I suggest the company to increase the share capital.
It has been observed that the companys contribution to the fixed assets
is gradually decreasing through out the study. This would be a problem
for the company procuring funds. Hence I suggest the company to focus
on this and increase the allocation for fixed assets.
It has been observed that the company has made investments only in
2007. Afterwards there are no investments at all though all these years.
This may affect the reputation of the company in the public. Hence I
advise the company to increase investments and improve its image.
It has been observed that the increase in current assets of the company is
less than current liabilities in 2008-2009. This shows that the company
has less liquidity capacity. Hence I suggest the company to maintain the
current ration to 2:1 by increasing current assets or reducing current
liabilities.
It has been observed that the position of the working capital in 20082009 has decreased. This will have on effect on sources of funds of the
company. Hence I advice the company improve the position of current
assets than current liabilities and control the decrease in working capital.
The company is getting favorable funds from operations in all years of
the study. This is due to the excellence in operations. This is a good
trend and it should be carefully maintained.
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CONCLUSION
Y.S.R. SPINNING & WEAVING MILLS PVT. LTD Company was the
flat ship company of Y.S.R. SPINNING & WEAVING MILLS PVT. LTD
Group after successful beginning and performance of Y.S.R. SPINNING &
WEAVING MILLS PVT. LTD.
The company is having experienced professionals in management and
also in supervisory levels.
The company is having the efficiency of the plant operations on average
for the last 5 years in 98% which is recorded as the best in India. The company
is having scientists in Leaf Management. The company is developing milk
products in certain areas of the country which is said to be of high quality
standards in the market. The company is having experts in almost all
departments and running their company always at better standards than the
competitors in Andhra Pradesh.
They had satisfied their strength and now they are setting on fixed
properties worth about Rs 400 crores. The group is own in fixed properties of
Rs 400 crores and they were enjoying the financial limits.
The company started diversifying into infrastructure projects and
developed a software technology building named as Y.S.R. SPINNING &
WEAVING MILLS PVT. LTD in Hyderabad.
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BIBLIOGRAPHY
Financial Management, I.M.Pandey, Vikas Publishing House, 2003.
Financial Management, M.Y. Khan and P.K.Jain, : Text and Problems,
Tata Mc Graw Hill Publishing Co, 2003.
Financial Management,V.K.Bhalla, and Policy, Anmol publications Pvt.
Ltd., New Delhi.
COMPANY ANNUAL REPORTS.
Page 89
MBA PROGRAMME
PVT.LTD
ANNUAL REPORTS OF Y.S.R. SPINNING & WEAVING MILLS PVT. LTD

Particulars
Sources of Funds:
2008-09
Share capital
13000000
13000000
13000000
13000000
13000000
130270036
151136957
194200158
345901071
424599303
Secured loans
390364244
379475270
478682475
429126132
600691795
Unsecured loans
199239493
193040880
81595729
83386203
51737891
Differed Tax liabilities
5796209
6247531
5523986
42151888
46984472
Total
Applications of Funds
Fixed Assets:
738669982
742900638
773002348
913565294
1137013461
Gross Block
711492129
746114635
738903208
772553600
827717465
Less Depreciation
105478021
145033137
182491726
218501632
256813736
Net Block
606014108
581081498
556411482
554051968
570903729
59399
5165551
1855829
1550361
2983165
2983165
2983165
2983165
2983165
187934012
239880075
236975762
327412543
341906868
26860540
35992686
36258591
22361498
83013158
Cash & Bank Balance
6059037
7150276
13998934
73891461
156006572
Other Current Assets
48679846
69640943
93687132
151568707
219855601
Loans & Advances
11723019
12529745
10864119
13966691
16218624
281256454
365193725
391784538
589200900
817001823
139624184
202449314
158452146
143360960
12598225
12018960
9073986
21580520
90860140
12789505
151643144
129613310
738669982
211523300
153670425
742900638
180032666
211751872
773002348
234221100
354979800
913565294
25387526
5631268
1137013461
Reserves & Surplus
2009-10
2010-11
2011-12
2012-13
Loan Funds
capital work in progress

Investments
Current Assets:
Inventories
Sundry Debtors
(-)Current liabilities:
Current Liabilities
Provisions
Net current Assets
total
Page 90

Understanding Financial Management Concepts

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MBA PROGRAMME

information and communication of financial information to plan,

MEANING AND DEFINITIONS OF FINANCIAL MANAGEMENT

Financial Management is defined as that business activity which

Business finance can be broadly defined as the activity concerned

-GUTHMANN AND DOUGALL.

Financial management is an area of financial decision making

FUNDS FLOW ANALYSIS

statement in essentially derived from an analysis of the changes that have

regarding the future working capital position of the company, a projected

It explains financial consequences of balances operation

It answers intricate queries

It Acts an instruments for allocation of resources

Decision relating to Financing

It explains financial consequences of balances operation

It answers intricate queries

It Acts an instruments for allocation of resources

Funds Flow Statement

MEANING AND TYPES OF FINANCIAL STATEMENTS

STATEMENT OF CHANGES IN FINANCIAL POSITION

business this information is available in the statement of changes in

Change in working capital position in such a case the statement in

termed (SCFP) or funds flow statement,

Change in overall financial position. In such a case the statement is

important transitions which might (Occur during the course of the

TYPES OF FINANCIAL ANALYSIS

ON THE BASIS OF MATTERIAL USED

operation of the company. However, the definition of the current assets

Cash including fixed deposit with bank

other current liability of those expected to be satisfied with in a

relatively a iort period of time usually one year.

PROVISIONS AGAINST CURRENT ASSETS

PREPARATION OF FUNDS FLOW STATEMENT

Current assets :Cash Balance

Net Increase (or) decrease

Decrease in Working Capital

RULES FOR PREPARING THE SCHEDULE

Ex : Purchasing of building for cash

Ex : issue of shares for cash.

Ex : Redemption of debentures in cash

Ex : Credit paid off in debenture

Ex : Creditors paid of in shares

Ex : Building transferred to creditors in satisfaction of their claim.

Current assets and current liability

Ex. Building purchased and payment made in debentures

Ex. Building purchased and payment made in debentures.

Funds Flow statement is also called as a "Statement of Source and

Application of Funds" summary of financial operation etc.

Depreciation on Fixed assets

Funds from long term loans

PAYMENT OF FIXED LIABILITY

PAYMENT OF TAX LIABILITY

Provision for taxation is generally taken as an appreciation of profit and

INCREASE IN WORKING CAPITAL

debentures written off. Appreciation of retained earnings such as transfer

payment of dividend etc.

The Non-fund items are those which may be

operational expenses but they do not affect funds of the business.

loss a/c or vice versa.

The second method which is generally used to precede from figure

ADJUSTED PROFIT AND LOSS ACCOUNT

By Dividend received xxxx