Project On Cash Flow Statement

CHAPTER-1
INTRODUCTION
INTRODUCTION
PREPERATION OF CASH FLOW ANALYSIS:
An organization should prepare a cash flow statement according to

accounting standered-3. The following basic informations are required for the
pr3peration of a cash flow statement:
1. Comparative balance sheets
2. Profit and loss account
3. Additional data.
This statement is prepared in three stages as given below;
Net profit before taxation and extraordinary items.
Cash flow from operating, investing and financing activities.
Cash flow statement.

Changes in fixed assets and fixed liabilities have not
been adjusted as
these are shown separately in the cash flow statement. It is so because current assets and
current liabilities are directly related to operations. Cash paid is deducted from cash
generated from operations in order to get the figure of cash flow before extraordinary
items in order to get the figure of cash provided by or using from operating activitiy
SPECIAL ITEMS:
In addition to the general classification of three types of cash flows accounting

standard-3 for the treatment of cash flows of certain social item as under;
a) Foreign currency cash flows
b) Extraordinary items
c) Interest and dividends
d) Taxes on income
2
e) Investments in subsidiaries, associates and joint ventures

f) Acquisitions and disposal of subsidiaries and other business units.
g) Non-cash transactions;
The acquisition of assets by assuming directly related liabilities;
The acquisition of an enterprise by means of issue of shares; and
The conversion of debt to equity.

So cash flow analysis reveals the various items of inflow and outflow of
cash. It is an essential tool for short term financing analysis and is very helpful in the
evaluation of current liability of a business concern. It helps the business
OBJECTIVES OF THE STUDY
PRIMERY OBJECTIVE:
Cash Flow statement is prepared with an objective to high light the sources and uses
of cash and cash equivalents for a period.
Cash flow statement is classified under operating activities and financing activities.
The economic decisions that are taken by users require an evaluation of the ability
of an enterprise to generate cash and cash equivalents and the timing and certainty
of their generation.
SECONDARY OBJECTIVE:
It deals with the provision of information about the historical changes in cash and
cash equivalents of an enterprise by means of a cash flow statement which classifies
cash flows during the period from operating, investing and financing activities.
Information about the cash flows of an enterprise is useful in providing users of

financial statements.
A basis to assess the ability of enterprise to generate cash ,cash equivalents and the
needs of
the enterprise to utilize those cash flows
SCOPE OF THE STUDY
An enterprise should prepare a cash flow statement and should present it for each
period for which financial statements are presented.
Users of an enterprises financial statements are interested in how the enterprise
generates and uses cash and cash equivalents.
This is the case regardless of the nature of the enterprises activities and irrespective
of whether cash can be viewed as the product of the enterprise, as may be the case
with a financial enterprise.
Enterprises need cash for essentially the same reasons, however different their
principal revenue-producing activities might be.
They need cash to conduct their operations, to pay their obligations, and to provide
returns to their investors
NEED FOR THE STUDY
The choice of area of the study for the project work was given after initial study of
companys cash flows.
Through the company has several departments; the prime of my interest was in
finance. Cash is very important basic input needed to keep the operations of the
business going on a continuous basis.
It is also the final output expected to be realized by selling the product

manufactured by the manufacturing unit.
To analyze the various cash outflows and inflows of company and also to study the
various sources of the cash in this company is needed to study this cash flow
analysis.
RESEARCH METHODOLOGY OF THE STUDY
The following is the methodology of the study. The collection of data is done in
two principle sources. They are as follows:
1 Primary data.
2 Secondary data.
PRIMARY DATA
The primary data needed for the study is gathered through interview with
concerned officers and staff, either individually or collectively. Some of the information has
been verified or supplemented with personal observation conduct.
SECONDARY DATA
The secondary data needed for the study was collected from published
sources such as pamphlets of annual reports, returns and internal records, reference from
text book and journals of financial management.
LIMITATIONS OF THE STUDY
In spite of various uses of cash flow statement, it has the following limitations:
Cash flow statement gives the main of inflow and outflow of cash only and does
not show the liquidity position of the company.
This statement is not a substitute of income statement which shows both cash and
non-items. Therefore, net cash flow does not necessary mean net income of the
business.
It cannot replace funds flow statement as it cannot show the financial position of
the concern in totally
CHAPTER-2
REVIEW OF
LITRATURE
Cash is the basic input needed to keep the operations of the business
going on a continuing basis; it is also the final output expected to be realized by selling
the product manufactured by the manufacturing unit. Cash is both the beginning and the
end of the business operations.
Sometimes, it so happens that a business unit earns sufficient profit, but

inspire of this is not able to pay its liabilities when they become due. Therefore, a
business unit should always try to keep sufficient cash, neither more nor less because
shortage of cash will threaten the firms liquidity and solvency, whereas excessive of
cash will not be fruitfully utilized, will simply remain idle and will affect the
profitability of a concern. Effective cash management, therefore, implies a proper
balancing between the two conflicting objectives of liquidity and profitability.
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The management of cash also assumes importance because it is difficult to

predict cash inflows and outflows accurately and there is no perfect coincidence
between the inflows and outflows of cash giving rise to either cash outflows exceeding
inflows or cash inflows exceeding cash outflows. Cash flow statement is one important
tool of cash management because it throws light on cash inflows and cash outflows of a
particular period.
MEANING OF CASH FLOW ANALYSIS:
A cash analysis is more useful because it gives detailed information to

the management about the sources of cash inflows and outflows. Cash flow analysis
means to reveal the cash outflows and cash inflows in a particular period. An analysis of
cash flows is useful for short-run planning.
DEFINITION OF CASH FLOW ANALYSIS:
A cash flow analysis can be defined,

As a statement which summaries sources of cash inflow and of cash outflows
of a during a particular period of time, say a month or a year
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Such statement can be prepared from the data made available from
comparative balance sheets, profit and loss account and additional information.
It is an essential tool short-term financial analysis and is very helpful in the
evaluation of current liquidity of a business concern. It helps the business executives of
a business in the efficient cash management and internal financial management. It is
evaluating the cash inflows and out flows of companys during a particular period. It
reveals the cash position of the company.
CLASSIFICATION OF CASH FLOWS:
Cash flows for a period can be classified into the three categories of cash
inflows and cash out flows as given below:
1.
Cash flows from operating activities
2.
Cash flows from investing activities
3.
Cash flow from financing activities
1. CASH FLOW FROM OPERATING ACTIVITIES:
The amount of cash flows arising from operating activities is a key

indicator of the extent to which the operations of the enterprise have generated
sufficient cash flows to maintain the operating capability of the enterprise, pay
dividends, repay loans, and make new inventions without recourse to external sources of
financing. Information about the specific components of historical operating cash flows,
in conjunction with other information, in forecasting future operating cash flows.
Cash flows from operating activities are primarily derived from the
principal revenue-producing activities of the enterprise. Therefore, they generally result
10
from the transactions and other events that enter into the determination of net profit or
loss. Examples of cash flows from operating activities are;
Cash receipts from the sale of goods and the rendering of services;
Cash receipts from royalties, fees, commissions, and other revenue;
Cash payments to suppliers for goods and services;
Cash payments to and on behalf of employees;
Cash receipts and cash payments of an insurance enterprise for premiums and
claims, annuities and other benefits;
Cash payments or refunds of income taxes unless they cash be specifically identified
with financing and investing activities; and
Cash receipts and payments relating to future contracts, forward contracts, option
contracts, and swap contracts when the contracts are held for dealing or trading
purposes.
Some transactions, such as the sale of an item of plant, may give
rise to a gain or loss which is included in the determination of net profit or loss.
However, the cash flows relating to such transactions are cash flows from investing
activities.
An enterprise may hold securities and loans for dealing or trading purposes in
which case they are similar to inventory acquired specifically for resale. Therefore, cash
flows arising the purchases and sale of dealing or trading securities are classified as
operating activities. Similarly, cash advances and loans made by financial enterprises
are usually classified as operating activities since they relate to the main revenue
producing activity of that enterprise.
II. CASH FLOW FROM INVESTING ACTIVITIES:
The separate disclosure of cash flows arising from investing activities is

important because the cash flows represent the extent to which expenditures have been
11
made for resources intended to generate future income and cash flows. Examples of
cash flows arising from investing activities are;
Cash payments to acquire fixed assets (including intangibles). These payments
include those relating to capitalized research & development costs and selfconstructed fixed assets;
Cash receipts from disposal of fixed assets (including intangibles)
Cash payments to acquire shares, warrants, or debt instruments of other enterprises
and interests in joint ventures (other than payments for those instruments considered
to be cash equivalents and those held for dealing or trading purposes);
Cash receipts and disposal of shares, or debt instruments of other enterprises and
interests in joint ventures (other than receipts for those instruments considered to be
cash equivalents and those held for dealing or trading purposes);
Cash advances and loans made to third parties (other than advances and loans made
by a financial enterprise);
Cash receipts from the repayment of advances and loans made to third parties (other
than advances and loans made by a financial enterprise);
Cash payments for future contracts, forward contracts, opinion contracts, and swap
contracts except when the contracts are held for dealing or trading purposes, or the
payments are classified as financing activities; and
Cash receipts for future contracts, forward contracts, opinion contracts, and swap
When a contract is accounted for as a hedge of an identifiable
position, the cash flows of the contracts are classified in the same manner as the cash
flows of the position being hedged.
III. CASH FLOWS FROM FINANCING ACTIVITIES:
The separate disclosure of cash flows arising from financing activities is

important because it is useful in predicting claims or future cash flows by providers of
12
funds (both capital and borrowings) to the enterprise. Examples of cash flows arising
from financing activities are;
Cash proceeds from issuing shares or other similar instruments;
Cash proceeds from issuing debentures, loans, notes, bonds, and other short-term or
long-term borrowings; and
Cash repayments of amounts borrow
Cash payments to redeem preference sha
MOTIVES FOR HOLDING CASH:
The firms need to hold cash may be attributed to the following three
motives;
1. The Transactions Motive
2. The Precautionary Motive
3. The Speculative Motive
4. The Compensation Motive.
1. The Transactions Motive:
An important reason for maintaining cash balances is the transactions

motive. This refers to the holding of cash, to meet routine cash requirements to finance
the transactions which a firm carries on in the ordinary course of business. A firm enters
into a variety of transactions to accomplish its objectives which have to be paid form in
the form of cash. For example, cash payments have to be made for purchases, wages
operating expenses, financial charges, like interest, taxes, dividends, and so on.
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Similarly, there is a regular inflow of cash to the firm from sales

operations, returns on outside investments, etc. These receipts and payments constitute a
continuous two way flow of cash. But the inflows (receipts) and outflows
(disbursements) do not perfectly coincide or synchronies, that is they do not exactly
match. At times, receipts exceed outflows while, at other times, payments exceed
inflows. To ensure that firm can meet its obligations when payments becoming due in a
situation in which disbursements are in excess of the current receipts, it must have an
adequate cash balances.
The requirement of cash balances to meet routine cash needs is known as

the transactions motive at such cash balances are termed as transaction balances. Thus,
the transaction motive refers to the holding of cash to meet anticipated obligations
whose timing is not perfectly synchronized with cash receipts. If the receipts of cash
and its disbursements could exactly coincide in the normal course of operations, a firm
would not need cash for transaction purposes. Although a major part of transaction
balances are held in cash, a part may also be in such marketable securities whose
maturity confirms to the timing of the anticipated payments, such as payment of taxes,
dividends, etc.
2. The precautionary motive:
In addition the non-synchronization of anticipated cash inflows and outflows in

the ordinary course of business, a firm may have to pay cash for purposes which cannot be
predicted or anticipated. The unexpected cash needs at short notice may be result of;
Floods, strikes and failure of important customers;
Bills may be presented for settlement earlier than expected;
Unexpected show down in collection of accounts receivable;
Sharp increase in cost of materials.
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The cash balances held in reserve for such random and unforeseen fluctuations in
cash flows are called as precautionary balances. In other words, a precautionary
motive of holding cash implies the need to hold cash to meet unpredictable obligations.
Thus, precautionary cash balance serves to provide a cushion to meet unexpected
contingencies.
Another factor which has a bearing on the level of such cash balances is the
availability of short term credit. If firm cash borrow at short notice to pay for
unforeseen obligations, it will need to maintain a relatively small balance and vice
-versa. Such cash balances are usually held in the form of marketable securities so that
they earn a return.
3.The speculative motive:
It refers to the desire of a firm to take advantage of opportunities which

present themselves at unexpected moments and which are typically outside the normal
course of business. While the precautionary motive is defensive in nature, in that, firms
must take provisions to tide over unexpected contingencies, the speculative motive
represents a motive represents a positive and aggressive approach. Firms aim to exploit
profitable opportunities and keep cash in reserve to do so. The speculative motive helps
to take in advantage of;
An opportunity to purchase raw materials at a reduced price on payment of

immediate cash;
A chance to speculate to interest rate movements by using securities when interest
rates are expected to decline ;
Delay purchases of raw materials on the anticipation
4. Compensative motive:
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Another motive to hold cash balances is to compensate banks for providing

certain services and loans.
Banks provide a variety of services to business firms, such as clearance of
cheque, supply of credit information, transfer of funds, etc. While for some of the
services banks charge a commission or fee, for others a seek indirect compensation.
Usually, clients are required to maintain a minimum balance of cash at the bank. Since
this balance cannot be utilized by the firm for transaction purposes, the banks
themselves can use the amount to earn a return. To be compensated for their services
indirectly in this firm, they require the clients to always keep a bank balances sufficient
to earn a return equal to the cost of services. Such balances are compensating balances.
CLASSIFICATION OF CASH FLOWS:
Cash flows for a period can be classified into the three categories of cash
inflows and cash out flows as given below:
1. Cash flows from operating activities
2. Cash flows from investing activities
3. Cash flow from financing activities
1. CASH FLOW FROM OPERATING ACTIVITIES:
The amount of cash flows arising from operating activities is a key

indicator of the extent to which the operations of the enterprise have generated
sufficient cash flows to maintain the operating capability of the enterprise, pay
dividends, repay loans, and make new inventions without recourse to external sources of
16
financing. Information about the specific components of historical operating cash flows,
in conjunction with other information, in forecasting future operating cash flows.
Cash flows from operating activities are primarily derived from the
principal revenue-producing activities of the enterprise. Therefore, they generally result
from the transactions and other events that enter into the determination of net profit or
loss. Examples of cash flows from operating activities are;
Cash receipts from the sale of goods and the rendering of services;
Cash receipts from royalties, fees, commissions, and other revenue;
Cash payments to suppliers for goods and services;
Cash payments to and on behalf of employees;
Cash receipts and cash payments of an insurance enterprise for premiums and
claims, annuities and other benefits;
Cash payments or refunds of income taxes unless they cash be specifically identified
with financing and investing activities; and
Cash receipts and payments relating to future contracts, forward contracts, option
contracts, and swap contracts when the contracts are held for dealing or trading
purposes.
Some transactions, such as the sale of an item of plant, may give
rise to a gain or loss which is included in the determination of net profit or loss.
However, the cash flows relating to such transactions are cash flows from investing
activities.
II. CASH FLOW FROM INVESTING ACTIVITIES:
The separate disclosure of cash flows arising from investing activities is

important because the cash flows represent the extent to which expenditures have been
made for resources intended to generate future income and cash flows. Examples of
cash flows arising from investing activities are;
17
Cash payments to acquire fixed assets (including intangibles). These payments

include those relating to capitalized research & development costs and selfconstructed fixed assets;
Cash receipts from disposal of fixed assets (including intangibles)
Cash payments to acquire shares, warrants, or debt instruments of other enterprises
and interests in joint ventures (other than payments for those instruments considered
to be cash equivalents and those held for dealing or trading purposes);
Cash receipts and disposal of shares, or debt instruments of other enterprises and
interests in joint ventures (other than receipts for those instruments considered to be
cash equivalents and those held for dealing or trading purposes);
Cash advances and loans made to third parties (other than advances and loans made
by a financial enterprise);
Cash receipts from the repayment of advances and loans made to third parties (other
than advances and loans made by a financial enterprise);
Cash payments for future contracts, forward contracts, opinion contracts, and swap
Cash receipts for future contracts, forward contracts, opinion contracts, and swap
When a contract is accounted for as a hedge of an identifiable
position, the cash flows of the contracts are classified in the same manner as the cash
flows of the position being hedged.
III. CASH FLOWS FROM FINANCING ACTIVITIES:
The separate disclosure of cash flows arising from financing activities is

important because it is useful in predicting claims or future cash flows by providers of
funds (both capital and borrowings) to the enterprise. Examples of cash flows arising
from financing activities are;
18
Cash proceeds from issuing shares or other similar instruments;
Cash proceeds from issuing debentures, loans, notes, bonds, and other short-term or
long-term borrowings; and
Cash repayments of amounts borrowed;
Cash payments to redeem preference shares
Payment of dividend
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CHAPTER-3
INDUSTRY
PROFILE
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Overview of Indian Infrastructure, Real Estate & Construction Industry:

The construction sector is the second largest employer in India after agriculture. Currently,
the construction industry in India, directly or indirectly, employs approximately 32.0
million workers and also accounts for 40.0% of gross investment and 60.0% of
infrastructure costs. The construction sector accounts for a gross annual business volume of
Rs.2,300 billion and accounts for 5.0% of Indias GDP (Indias total GDP is approximately
$1 trillion).
Investment in the construction sector may be broadly classified into the following
categories:
Infrastructure construction investments (i.e. roads, urban infrastructure, power, irrigation
and railways)
Industrial construction investments (i.e. steel plants, textiles plants, oil pipelines
and refineries)
Real estate construction investments (i.e. residential and commercial construction)
Growth in the construction industry is expected to be led by growth in infrastructure and
industrial construction investments, which are expected to grow at a faster rate than real
estate construction investments. Consequently, the share of real estate construction
investments in total construction investments is expected to fall. Nevertheless, real
estate construction investments will continue to be the biggest component of total
construction investments.
Factors driving infrastructure growth:
Political will: Building further on the initiatives taken by previous governments, the
current GoI is undertaking several measures to enhance investments in the infrastructure

segment.
Funding from multi-lateral agencies: Multilateral agencies such as the World Bank
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and the Asian Development Bank (ADB) are funding various infrastructure projects on a
large scale in India. Agencies such as the Japan International Bank for Cooperation
(JIBC), which funded the Delhi Metro (Underground Railway) Project, are also providing
funding to the sector. Various state governments are mobilizing funds from these agencies
to support rural roads and sanitation projects.
The Role of the Private Sector in Infrastructure Development Public

Private Partnership
Historically, the government has played a key role in supplying and regulating
infrastructure services
in India
and private sector has not participated in
infrastructure development. However, due to the public sector's limited ability to meet the
massive infrastructure funding requirements, private sector investment in infrastructure is
critical. Therefore, the Indian government is actively encouraging private investments in
infrastructure. According to World Bank, India needs to invest an additional 3-4 % of GDP
on infrastructure to sustain its current levels of growth in the medium term and to spread the
benefits of growth more widely. (Source: India Country Overview 2009, World Bank)
In order to boost the participation of the private sector in road development, the
Government has planned the following initiatives:
The Government will carry out all preparatory work, including land acquisition and utility
removal. Right of way will be made available to contractor, free from all eencumbrances.
National Highway Authority of India (NHAI)/the Government will provide a capital grant
of up to 40% of the project cost to enhance viability on a case-by-case basis evaluation.
The contractor will receive a 100% tax exemption for five years and 30% relief for the
following five years, which may be utilized in 20 years.
Permitted concession period of up to 30 years.
Duty free importation of specified modern high capacity equipment for highway
construction.
(Source: Public Partnerships in India, Ministry of Finance, Government of India)
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TYPES
OF
CONTRACTS
IN
THE
CONSTRUCTION
AND
INFRASTRUCTURE SECTORS
Build-Operate-Transfer (BOT)
Under this type of Public Private Partnership (PPP) contract, the Government grants to a
contractor a concession to finance, build, operate and maintain a facility for the concession
period. During the concession period, the operator collects user fees and applies these to
cover the costs of construction, debt-servicing and operations. At the end of the concession
period, the facility is transferred back to the public authority. BOT is the most commonly
used approach in relation to new highway projects in India, and is also used in the energy
and port sectors. BOT projects can be annuity-based or toll-based, as defined below:
BOT annuity-based projects

Under this form, the concessionaire is responsible for constructing and maintaining the
project facility. The GoI, usually through the National Highways Authority of India
(NHAI) in the case of highway projects, pays the concessionaire a semi-annual payment,
or annuity. Under this approach, the amount of income collected by the concessionaire is
not directly related to the usage level of the project. In the context of highway projects, the
amount of income is not by direct reference to the number of vehicles using the highway.
Instead, the risk that traffic, and consequently user fees, may be lower than expected is
borne by the NHAI alone.
BOT toll-based projects

In order to reduce the dependence on its own funds and to promote private sector
involvement in developing projects, the NHAI has awarded some highway projects on a toll
basis. In this case, the concessionaire is responsible for constructing and maintaining the
project as well as being allowed to collect revenues through tolls during the concession
period. After the expiry of the concession period, the project is transferred back to the
NHAI.
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Build-Own-Operate-Transfer (BOOT)
BOOT contracts are similar to BOT contracts, except that in this case the contractor owns
the underlying asset, instead of only owning a concession to operate the asset. For example,
in the case of hydroelectric power projects, the contractor would own the asset during the
underlying concession period and the asset would be transferred to the Government at the
end of that period pursuant to the terms of the concession agreement.
Design-Build-Finance-Operate (DBFO)
The NHAI is planning to award new highway project contracts under the DBFO scheme,
wherein the detailed design work is done by the concessionaire. The NHAI
would restrict itself to setting out the exact requirements in terms of quality and other
structures of the road, and the design of the roads will be at the discretion of the
concessionaire. The NHAI expects that the DBFO scheme will improve the design
efficiency, reduce the cost of construction and reduce time to commence operations, in
addition to giving the concessionaire greater flexibility in terms of determining the finer
details of the project in the most efficient manner.
Item Rate Contracts
These contracts are also known as unit-price contracts or schedule contracts. For item rate
contracts, contractors are required to quote rates for individual items of work on the basis of
a schedule of quantities furnished by the customer. The design and drawings are provided
by the customer. The contractor bears almost no risk in these contracts, except the risk of an
escalation in the rate of items quoted by the contractor, as it is paid according to the actual
amount of work on the basis of the per-unit price quoted.
Engineering
Procurement
Construction/Lump-Sum
Turnkey
(EPC/Turnkey)
Contracts
In this form of contract, contractors are required to quote a fixed sum for the execution of
an entire project including design, engineering and execution in accordance with drawings,
designs and specifications submitted by the contractor and approved by the customer. The
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contractor bears the risk of incorrect estimation of the amount of work, materials or time
required for the job. Escalation clauses might exist in some cases to cover, at least partially,
cost overruns.
Operations and Maintenance (O&M) Contracts
Typically an operations and maintenance contract is issued for operating and maintaining
facilities. This could be in sectors such as water, highways, buildings and power. The
contract specifies routine maintenance activities to be undertaken at a predetermined
frequency as well as break-down maintenance during the contract period. While the
contractor is paid for the routine maintenance based on the quoted rates which are largely a
function of manpower, consumables and maintenance equipment to be deployed at the site,
any breakdown maintenance is paid for on a cost-plus basis.
Front End Engineering and Design (FEED) Contracts
Ordinarily, FEED work is carried out as a part of a consultancy assignment where the
consultant provides FEED data to the project owner to enable it to take a decision on
making a tender for construction. In addition to this, the FEED is also a prerequisite to
enable a contractor to bid for EPC/Turnkey projects. A FEED project can be an independent
consultancy project or a part of an EPC/Turnkey contract.
TYPICAL RETURNS FROM PRIVATE INVESTMENTS IN INFRASTRUCTURE
Despite the critical role played by infrastructure development in growth, there still exists a
very wide gap of US$10-15 billion between the current and required levels of private
investments in infrastructure. Returns vary from contract to contract. Typically, in an
annuity, the project Internal Rate of Return (IRR) would be in the range of 12-14 % and
equity IRR would be in the range of 14 -16 %. For toll, where the concessionaire
(contractor) assumes the traffic risk, the project IRR would be in the range of 14- 16 % and
equity IRR would be in the range of 18-20 %.
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Proposed infrastructure investment in 11th Five Year Plan

The 11th Five Year Plan envisages an infrastructure investment of Rs. 20,561 billion, to be
shared between the Centre, states and private sector in the ratio of 37.2%, 32.6% and
30.1%. Below is the estimated level of investment in the infrastructure sector over XI plan:
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ROAD INFRASTRUCTURE
Investment in the roads sector is expected to grow at a Compounded Annual Growth
Rate (CAGR) of 15% over the next five years, with an estimated increase from Rs.1,167
billion in the past five years (fiscal years 2002-2006) to about Rs.2,306 billion in the
next five years (fiscal years 2007-2011).
India continues to need significant investment in the road sector as the population and
economy continues to grow. The Indian road network consists of:
According to the NHAI, roads form the most common type of transportation in India and
accounted for approximately 80.0% of passenger traffic and 65.0% of freight traffic.
National highways accounts for nearly 40.0% of the total road traffic in India.
27
The following table sets forth information relating to the status of National Highways:
The number of vehicles grew at an average pace of 10.10% per annum over the period
from FY 2000 to FY 2004. Passenger traffic on roads as a percentage of total passenger
traffic has also witnessed a huge increase from 30% in 1951 to 86% in
2008. (Source: CRISIL Research, Road Network in India, June 30, 2009).
The focus of the road modernization program in India is the Golden Quadrilateral (GQ)
project. The flagship program to develop and upgrade Indian national highways is the
National Highways Development Program (NHDP). Besides NHDP, the road sector in
India is expected to see a greater level of development activity through road
programmes such as Pradhan Mantri Grameen Sadak Yojana (PMGSY), and Special
Accelerated Road Development Programme North East (SARDP-NE) as well as road
projects at the state level.
The scope of the NHDP project is illustrated by the multi-phase approach set forth
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below:
Phase I of NHDP, Golden Quadrilateral Project (GQ) involves four-laning of
approximately 5,846 km of national highways between Delhi, Mumbai, Chennai and
Kolkata. Phase I is almost complete.
Phase II North-South and East-West corridors (NSEW) involves upgrading of the
existing two-lane highways and the four-laning of approximately 7,274 km of
national highways connecting four extreme points of the country. Phase II is
expected to be completed by 2009/2010.
Phase III involves the development of roads, connecting state capitals and places of
economic and tourist importance to Phase I and Phase II. Phase III involves two
development sections Phase IIIA and Phase IIIB. While approval has been received for
the widening and the strengthening of 4,015km in Phase IIIA, only in-principle approval
has been granted for the development of 6,000 km in Phase IIIB.
Phase IV involves the two-laning of a single lane network of approximately 20,000
km. Phase IV has only received an in-principle approval and has been planned
completely on a BOT-annuity basis.
Phase V involves the six-laning of 6,500 km of high-density four-laned roads.
Phase V has only received in-principle approval.
Phase VI involves the construction of expressways covering approximately 1,000
km of national highways. Phase VI has only received an in-principle approval.
Phase VII involves the development of ring roads, by-passes, over-bridges, flyovers,
etc. Phase VII is still in a conceptual stage.
Source: CRISIL, Roads and Highways Annual Review, September 2006.
The table below sets forth the status of the NHDP as at June 30, 2009:
29
The targets for completion of the various components of the NHDP are as follows:
(Source: Plan Document, 11th Five Year Plan; CRISIL Research, NHDP Review & Outlook, Feb 23, 2009)
30
31
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THE REAL ESTATE SECTOR IN INDIA

The Indian real estate sector involves the development of commercial offices, industrial
facilities, hotels, restaurants, cinemas, residential housing, retail outlets and the
purchase and sale of land and land development rights.
Historically, the real estate sector in India has been unorganized and characterized by
various factors that impeded organized dealing, such as the absence of a centralized title
registry providing title guarantees, a lack of uniformity in local laws and their
application, non-availability of bank financing, high interest rates and transfer taxes
and the lack of transparency in transaction values. In recent years, however, the real
estate sector in India has exhibited a trend towards greater organization and
transparency, accompanied by various regulatory reforms. These reforms include:
GoI support for the repeal of the Urban Land Ceiling Act, with nine state
governments having already repealed the Act;
Modifications in the Rent Control Act to provide greater protection to homeowners
wishing to rent out their properties;
Rationalization of property taxes in a number of states; and
Computerization of land records.
Real estate investments are expected to grow from Rs.10,218 billion invested between
2002-2006 to Rs.18,517 billion over 2007-2011.
33
RESIDENTIAL REAL ESTATE

The main factors that are driving demand in the residential segment are described in
more detail below:
Changing demographics and increasing affluence:
Indias demographics have been impacted by large increases in employment
opportunities, people in the earning age bracket (25 to 44 year olds) and higher
salaries. Such factors are increasing disposable incomes and driving demand for new
residential and retail properties.
The table below shows historic and projected annual growth rates for different segments
of Indias population, classified by levels of annual income. The figures highlight
that strong growth is expected especially in the higher income segments. For example,
the number of households with annual incomes of between Rs. 2 million and Rs. 5
million per year, Rs. 5 million and Rs. 10 million per year and in excess of Rs. 10
million per year is expected to increase in size by 23%, 26% and 28%, respectively,
between financial year 2002 and 2010, as illustrated by the table.These higher income
segments of Indias growing middle class are expected to provide a strong impetus for the
continued development and growth of the Indian real estate sector.
34
Large segment of the population economically active:

Indias growing population in the earning age bracket is recognized as a key driver of growth
in housing demand. The size of Indias main working age group, 25 to 44 year olds, has
increased over the last two decades. According to CRIS INFAC estimates, as of 2005,
approximately 28.2% of Indias population was in this age bracket. This figure is expected
to rise to approximately 30.6% by 2025, an increase of approximately 5.5 million people
each year, which could translate into a further 2.75 million new households per year.
Also, the average age of a home purchaser has fallen from 42 to 31 years old (Source:
CRISINFAC Retail Finance, July 2006).
Shift in consumer preferences from renting to owning houses:

Due to the changing demographic profile in India, there has been a steady decline in the
portion of households living in rented premises. To a certain extent, this may be attributed to
rising income levels. However, with fewer properties available to rent today and an increase
in the rents being charged to tenants, consumers have increasingly been investing in
35
property. Factors such as the increase in the standard

of living of consumers and the greater availability of financing for consumers are
expected to fuel a further decline in the number of households renting premises
(CRIS INFAC Annual Review on Housing Industry, January 2006).
36
Increasing Urbanization:
India has witnessed a trend of increased urbanization as people migrate from rural to
urban areas seeking employment opportunities. According to CRIS INFAC estimates,
Indias urban population is expected to grow at a CAGR of 2.6% over the five year
period from financial year 2005 through 2010, as illustrated in the table below.
Urban areas must accommodate this increase in population which, in turn, is expected to
increase in demand for new urban areas and townships (CRIS INFAC
Annual Review on Housing Industry, January 2006).
37
Shrinking Household Size:

Indias traditional joint family (or multi-occupant) residences are gradually being
replaced by individual or smaller nuclear family residences. For example, according to
CRIS INFAC, the average size of Indian households decreased from approximately
5.52 persons in 1991 to approximately 5.30 persons in 2001. This trend is expected
to continue as factors such as increasing urbanization and migration for employment
opportunities cause a decrease in the size of the average Indian household to an
estimated 5.08 persons by 2011. Given Indias increasing population, such
contraction in the size of the average household is expected to increase demand for
housing (Source: CRIS INFAC Annual Review on Housing Industry, January 2006).
38
Slum Rehabilitation Scheme (SRS):

One sector of the real estate development market that is unique to Mumbai is its
Slum Rehabilitation Scheme. In 1995, the Government of Maharashtra initiated the
Slum Rehabilitation Scheme to be administered by the newly-created Slum
Rehabilitation Authority (SRA). The objective of the SRS is to redevelop slums in the
Mumbai area. Through the scheme, slum dwellings are replaced by residential
buildings containing flats of 225 square feet that are constructed free of cost to
former slum dwellers by private real estate developers participating in the scheme. The
government of Mumbai subsidizes this clearance and construction by granting developers
the right to develop a proportion of former slum land for their own purposes, or
by granting them transferable development rights (TDRs) which may be used to
develop land elsewhere in Mumbai north of the slum land concerned. In other words,
in exchange for the construction of flats for slum dwellers, real estate developers are
allowed to construct residential, commercial and retail properties on slum land, whether
it is government or private land, which they can then freely sell. Moreover, TDRs
permit developers to develop land in certain parts of Mumbai that are outside the
rehabilitated slum area. A TDR is made available in the form of a certificate issued
by the municipal corporation of Mumbai, and its owner can use it either for actual
construction or can sell it on the open market. Residential development on slum
land that is subject to the SRS also benefits from a superior Floor Space Index (FSI)
allowance which determines the total permitted construction area as a portion of the total
land area of a site. Under the SRS, the FSI is generally around 2.5 as against a normal
FSI of 1.33 thereby making SRS development more attractive for developers.
Moreover, the SRS can enable a developer to acquire land in prime locations in
Mumbai, a city where the scarcity of land is a constraint on real estate development. The
acquisition can be made at, in effect, lower cost (e.g., the cost of constructing
replacement housing for the slum dwellers) than traditional purchases of land for
cash, thereby reducing the asset cycle risk for the developer between land acquisition
and sale of developed property or FSI/TDRs. The innovative subsidy mechanism of
the SRS has spurred redevelopment activity in certain deprived areas of Mumbai
which
were
previously
unattractive
to
real
estate developers. In addition to
helping fulfill the social obligations of the government, which does not have the
39
resources to undertake rehabilitation projects on a large scale, an on-going benefit of the

SRS to the government of Mumbai includes the addition of individuals to the tax rolls
when they occupy new housing who, as slum dwellers, were not previously part of the
tax base.
COMMERCIAL REAL STATE

Commercial locations in India: Over the past five years, locations such as Bangalore,
Gurgaon, Hyderabad, Chennai, Kolkata and Pune have established themselves as
emerging business destinations that are competing with traditional business destinations
such as Mumbai and Delhi, especially with respect to their commercial real estate sector.
These emerging destinations have succeeded in matching their human resources base
with necessary skill sets, competitive business environments, operating cost advantages
and improved urban infrastructure. The current relative position of the urban growth
centers in India can be summarized either as (i) mature, (ii) in transition, (iii)
emerging, or (iv) tier III destinations. These classifications are described below:
Mature Destinations: Locations such as Mumbai and Delhi have a metropolitan
character and have consistently been traditional business destinations with a favorable
record in attracting investment opportunities. However, factors such as increasing
operating costs and constraints on the availability of land may impede such areas
from sustaining a high rate of growth in their respective business districts.
Therefore, commercial real estate growth is expected to be focused in the suburbs and
other peripheral locations of these cities. For example, with respect to Mumbai,
commercial real estate growth is expected to be focused in areas north of central Mumbai
and Navi Mumbai and to the east of the city center.
Destinations in Transition: Locations such as Bangalore and Gurgaon have human
resource potential, quality real estate and operating cost advantages. As such, these
locations are best positioned to attract investment in the near future. Lack of
infrastructure is currently the main inhibiting factor precluding robust growth in
these areas.
Emerging Destinations: Locations such as Pune, Chennai, Hyderabad and Kolkata offer
cost advantages, well developed infrastructure, supportive city governments and
minimal restraints on the supply of real estate. While the number of large occupiers in
40
these locations has yet to reach optimum levels, these locations attract a large amount of
real estate investment. Growth in these emerging destinations is predominantly led by the
expansion and consolidation plans of corporations in the IT and ITES sectors.
Tier III Cities: Locations such as Jaipur, Coimbatore, Ahmedabad, and Lucknow have a
large talent pool combined with low cost real estate. As such, businesses in the
technology sector have demonstrated a growing interest in these locations as they seek to
expand their operations.
The Retail Segment:
While real estate development in the retail sector is a relatively new phenomenon in
India, the retail sector has been growing rapidly. A.T. Kearneys 2005 Global Retail
Development Index suggests that the Indian retail market has the largest growth
potential of worldwide retail markets. The following factors contribute to the emergence
and growth of the organized retail segment in India:
Increase in per capita income and household consumption;
Changing demographics and improved standards of living;
Changing consumption patterns and access to low-cost consumer credit
Infrastructure improvements and increased availability of retail space.
Historically, the Indian retail sector has been dominated by small independent local
retailers such as traditional neighborhood grocery stores. However, during the
1990s, organized retail outlets gained increased acceptance due to changing demographic
factors such as an increase in the number of women working, changes in the perception
of branded products, the entry of international retailers into the market and the growing
number of retail malls. The size of the organized retail
segment is expected to grow by 25% to 30% per year, reaching approximately Rs.
1,095 billion of sales in 2010. Although operators in the organized retail segment have
concentrated on larger cities, retailers also have announced expansion plans
into towns and rural areas. Major Indian business groups such as Reliance, Bennett &
Coleman, Hindustan Lever, Hero Group and Bharti as well as international retailers
such as Metro, Shoprite, Lifestyle and Dairy Farm International Wal-Mart, Carrefour
41
and Tesco have already commenced or are considering commencing operations in

India. There are 219 operational shopping malls in the six largest cities of India, spread
over 66 million square feet of land at an average size of 0.3 million square feet per
mall (CRIS INFAC Annual Review on Retailing Industry September 2005).
A significant number of specialized malls, such as automobile, jewellery, furniture
and electronic malls also are being developed.
The Hospitality Segment:
The hospitality industry in India is witnessing robust growth, supported by Indias
growing economy as well as increased business travel and tourism. The cost of travel has
decreased following the Governments liberalization of the airline industry in the
1990s. Also, the increase in disposable income among Indian workers has increased
demand for quality hotels and resorts across the country. According to the World Travel
and Tourism Council (WTTC), Indias travel and tourism sector is expected to grow
8% per annum, in real terms, between 2007 and 2016. The travel and tourism sector is
expected to contribute 1.7% of total GDP (US$ 29.6 bn) by 2016. According to CRIS
INFAC room demand will grow at a CAGR of 10% over the next five years (CRIS
INFAC Hotels Annual Review, July 2006). This is expected to be accompanied by
increases in average room rates of 20% and 10% in fiscal 2007 and
2008, respectively. It is expected that the growth in occupancy rates will be
assisted by factors such as 10% CAGR in the number of incoming travelers to India over
the next five years.
The following chart shows changes in room demand andavailability as well as

42
occupation rates since fiscal 2000 and projections through to fiscal 2010:
According to its publication Hotels Annual Review (July 2006), CRIS INFAC
estimates that investments in the hotel industry will total approximately Rs. 90
billion over the next five years.
Special Economic Zones (SEZ):
The Government introduced SEZs in 2000 to provide an internationally competitive
environment for exports free of bureaucratic barriers. SEZs are specifically
designated duty-free zones deemed to be foreign territories for purposes of Indian
customs controls, duties and tariffs. The introduction of SEZs is aimed at attracting
foreign investment and increasing exportsin order to
promote
economic
development and employment. There are three main types of SEZs: integrated SEZs,
43
which may consist of a number of industries; services SEZs, which may operate across a
range of defined services; and sector-specific SEZs, which focus on one particular
industry. Minimum sizes for SEZs are 2,500 acres for a multi-product SEZ,
250 acres for a sector-specific SEZ, and 25 acres for SEZs in certain specific
industries, such as biotech, IT services, gems, and jewellery. Under current legislation,
SEZ developers and tenants are granted various income tax benefits, which are expected
to attract software companies in particular, given that certain tax breaks in existing
software technology parks expire in 2009.
Entertainment:
Indias entertainment industry is currently estimated at approximately Rs. 234 billion
with cinema accounting for a significant amount (28%) of the industry (The Indian
Entertainment and Media Industry (FICCI PwC Report (2006)). While the
entertainment industry is expected to grow approximately 21% annually and reach
approximately Rs. 617 billion by 2010, the Indian cinema industry is expected to
reach approximately Rs. 153 billion in 2010, contributing approximately 25% to
Indias entertainment industry. The key economic advantages of multiplex cinemas
over single-screen cinemas include better occupancy ratios and the ability for cinema
operators to choose to show movies in a larger or a smaller theatre based on
expected audience size. Multiplex cinema operators are therefore able to maintain
higher capacity utilization compared to single-screen cinemas and can provide a
greater number of film showings. As each movie has a different screening duration, a
multiplex cinema operator has the flexibility to decide on the screening schedule so as
to maximize the number of shows in the multiplexes, thus generating a greater number
of patrons. Multiplexes also allow for better exploitation of the revenue potential of the
movie. The key drivers of growth responsible for the expected increase in the number
of multiplex cinemas include an increase in disposable income across an expanding
Indian middle class, favorable demographic changes, strong growth in organized retail
and the availability of entertainment tax benefits for multiplex cinema developers.
44
RECENT REFORMS IN THE INDIAN REAL ESTATE SECTOR

Foreign direct investment in real estate: In 2005, the government modified the
foreign direct investment (FDI) rules applicable to the real estate sector by
permitting 100% FDI with respect to certain real estate projects such as townships,
housing, built-up infrastructure and construction development projects, subject to a
number of guidelines. The new FDI rules mainly relate to the minimum area required to
be developed by such a project, minimum amounts to be invested and time limits within
which such a project must be completed.
Housing regulations: The Indian Government enacted the Urban Land (Ceiling and
Regulation) Act (ULCRA) in 1976 to prevent speculation and profiteering in land
and to ensure equitable distribution of land in urban areas in order to serve the
common good. Pursuant to ULCRA, urban cities were classified into A, B and C
categories. The act imposed a ceiling on the amount of vacant land that any
individual can possess in a particular urban area, based on the classification of the city
in question. In A class cities, such as Delhi and Mumbai, this amounts to no more
than 500 square meters. The excess land identified was acquired by the government after
compensating the owners thereof and used to provide housing to various sections of
the public. However, it is widely acknowledged that ULCRA has failed to achieve its
objective and has resulted in inflated prices and exacerbated housing shortages. The
Government therefore suggested the repeal of ULCA by way of the Urban Land
(Ceiling and Regulation) Repeal Act 1999 (Repeal Act), which has so far been
adopted by the state governments of Haryana, Punjab, Uttar Pradesh, Gujarat,
Karnataka, Madhya Pradesh, Rajasthan and Orissa, but has not been repealed in a
number of states, including Maharastra where Mumbai is located.
45
46
CHALLENGES FACING THE INDIAN REAL ESTATE SECTOR

Highly regional reach of existing players: Considering the peculiar features of the real
estate sector such as the differing tastes of population across various geographies,
difficulties in mass land acquisition on unfamiliar terrain, absence of business
infrastructure to market projects at new locations, wide number of approvals to be
obtained from different authorities at various stages of construction under the local
laws, and the long gestation period of projects, most real estate developers in India tend
to hover in tried and tested areas where the conditions are most familiar to them. As a
result, currently there are very few players in the country, who can claim to have pannational area of operations.
Majority of market belonging to unorganized segment: The Indian Real Estate Sector is
highly fragmented with the disorganized segment comprising of the small builders and
contractors accounting for a majority of the housing units constructed. As a result, there
is a lesser degree of transparency in dealings or sharing of data across players.
Demand dependent on many factors: A challenge that the real estate developers face is
generating the requisite demand for the properties constructed. The factors that
influence a customers choice in property is not restricted to quality alone, but is
dependent on a number of other external factors including proximity to urban areas,
amenities such as schools, roads, water supply which are often beyond the developers
sphere of reach. Also, demand for housing units is also influenced by policy decisions
relating to housing incentives.
Increasing Raw Material Prices: Construction activities are often funded by the client
who makes cash advances at different stages of construction. In other words, the final
amount of revenue from a project is pre-determined and the realization of this revenue
is scattered across the period of construction. A big challenge that real estate developers
face is dealing with adverse movements in costs. The real estate sector is dependent on
a number of components such as cement, steel, bricks, wood, sand, gravel and paints.
47
As the revenues from sale of units are pre-decided, adverse price changes in any of the
raw materials directly affect the bottom lines of the developers.
Interest Rates: One of the main drivers of the growth in demand for housing units is the
availability of finance at cheap rates. Rising interest rates may dampen the growth rate
of demand for housing units.
Tax incentives: Interest payment on housing loans are tax deductible and it is one of the
major factors influencing demand. The phasing out available tax incentives could affect
the existent demand for housing units.
48
CHAPTER-4
COMPANY PROFILE
49
4. COMPANY PROFILE
4.1Introduction:Lanco is one of the fastest growing Integrated Infrastructure Enterprises of India,
operating across a synergistic span of verticals comprising Power Generation, Power
Trading, Non-Power Infrastructure, Construction, EPC, Property Development and
Renewable.
Lanco Infratech Ltd's current market capitalisation is approximately Rs. 12,000 Crores
(USD 2.59 billion), of which about 68 % equity stake is held by its promoters. Its gross
revenue as on March 2009 was over Rs. 6,000 Crores (USD 1.3 billion). Lanco is fast
emerging as one of the leading private sector power developers in India with 2087 MW
under operation, 8468 MW under construction, and 1039 MW of projects under
development. Out of the total portfolio of 11594 MW, the company has achieved
financial closure for 4533 MW. Having over two and a half decades of experience in
Construction and Civil Engineering, Lanco has created a niche for itself besides building
powerful knowledge bank and systems which facilitate continuous adoption and
implementation of best practices and technologies. Lanco has strategic global partnership
with top-notch companies which include: OHL of Spain, Westports and Genting of
Malaysia, Harbin, GE, Dongfang, Doosan etc. Today, Lanco is one of India's largest
Power Traders in the private sector.
A people driven organization, Lanco operates from 20 States in India and has a human
resource base of 5500 people. Lanco is also a privileged member of the World Economic
Forum and it has been acknowledged as an elite member of the top two hundred Global
Growth Companies. As part of its business strategy, the company has evolved Lanco's
Vision for 2015: to build a High Performance Organisation with an operating capacity of
15000 MW in Power. Lanco also envisages aggressive growth plan for the Construction
and EPC division to achieve an Annual Turnover of Rs 40,000 Crores(USD 8.64 billion)
by 2015.
50
The year 2010 is being celebrated as Lanco's Silver Jubilee Year. It has been twenty five
years since the founder chairman L Rajagopal, taking inspiration from his uncle
Lagadapati Amrappa Naidu, began his career as an entrepreneur. Lanco has risen to its
present level on the strength of their vision and inspiration and under the leadership of L
Madhusudhan Rao, the Chairman of Lanco Group.
4.2Corporate Structure:-
4.3Lanco Infratech Ltd has the following companies under its

operations:
Mission:Development of Society through Entrepreneurship
Vision:Most Admired Integrated Infrastructure Enterprise
51
Values:Organization before Self

We recognize that organization interest is supreme, above individual preferences and
goals. In all our decisions, actions and dealings we put the Organization before selfn
Positive Attitude
We always demonstrate a can-do mind-set and engage to deliver organizational goals.
We look upon challenging circumstances as opportunities to enhance our capabilities and
find ways of achieving.
Team Work
We work harmoniously with a shared vision, energized by our collective talent. We Trust,
Listen to, Share with and Empower team members and take collective responsibility for
the results.
Humility & Respect

We are consistently humble in our approach to and interactions with people. We treat
every person with respect at all times, unconditionally.
Achievement Drive
We have an urge that drives us to intensely focus on performance and act decisively with
high energy to achieve the desired results. We strive to continuously learn and
consistently set higher Standards of Excellence.
Accountability
We own up to our words, actions and outcome. When we commit to do something, we
own it and we do it decisively and responsibly.
52
Innovation
We value and encourage application of creative ideas that enhance the effectiveness of
our business. We freely express ideas and take actions to generate successful Solutions.
4.4Corporate Governance:At LANCO, our objective is to create value for our stakeholders, including our
shareholders, clients, employees, and communities. Good corporate governance standards
that promote the principles of integrity, transparency, and accountability will protect and
likely enhance our stakeholder value. Thus, we believe that good business practices,
transparency in corporate financial reporting, and the highest levels of corporate
governance are essential components of our success.
4.5Consistent with this belief, today at LANCO:
Excluding the CEO, all Board members are independent.
Board committees that address auditing, compensation, corporate governance, and

nominating functions are comprised solely of independent directors.
Committee charters clearly establish the committees' roles and responsibilities.
Corporate Governance Guidelines are regularly reviewed and updated in response to

changing regulations and stakeholder concerns.
Our bylaws have recently been updated to provide for majority voting in uncontested
director
4.6Lanco Businesses:
Construction
Power
Engineering, Procurement and Construction

53
Infrastructure
4.61Construction:LANCO Infratech Ltd has an excellent track record in Construction projects. Its project
expertise spans:
Power plants based on Gas, Coal, Bio-mass and Hydro.
Irrigation and water supply projects, including dams, tunnels, lift irrigation,
sewerage schemes and marine works.
Civil construction including commercial and residential buildings, mass housing

projects and townships, industrial structures, information technology parks,
corporate offices, Hospitals and more. Transportation engineering projects
including roads, highways, bridges and flyovers.
4.62Power: LANCO has proven expertise in power generation from conventional and nonconventional sources of energy including gas, coal, biomass, hydro and wind. Lanco has
operational and under execution projects amounting to over 11000MW.
54
Operational Projects:
Capacity
Plants
Fuel
Location
(MW)
Lanco Kondapalli (Stage
I&II)
601
ABAN Power
120
Lanco Amarkantak (Stage I
600
& II)
Gas
Andhra Pradesh
Gas
Tamil Nadu
Coal
Chhattisgarh
(368+233)
(2x300)
Lanco, Chitradurga
Wind Energy Karnataka
Lanco, Tirunelveli
10
Wind Energy Tamil Nadu
Vamshi Hydro Energies
10
Hydro
Himachal Pradesh
Vamshi Industrial Power
Hydro
Himachal Pradesh
Total
1349
Projects under construction:-
55
Projects
Capacity (MW)
875
Lanco Kondapalli II& III

(133+742)
Lanco Amarkantak III & IV
1,320
Lanco Vidarbha Thermal
1,320
Lanco Anpara
1,200
Udupi Power I&II
1,200
LANCO Green Power
70
Vamshi Industrial Power
LANCO Energy
500
LANCO Hydro Energies
76
Total
6566
Projects under Development:Capacity

Projects
Fuel
Location
(MW)
Lanco Anpara
660
Coal
Uttar Pradesh
Lanco, Babandh I
1320
Coal
Orissa
Fatehpur
1320
Coal
Uttar Pradesh
Hydro
Uttarakhand
LANCO Hydro Energies

Total
76
3376
56
Lanco Kondapalli
ABAN Power
Lanco Amarkantaka
Lanco Chitrdurga
Lanco Trivendram
Vamsi Hydro Energies
Vamsi Industrial Power
Under Implementation:
Lanco Kondapalli
Lanco Amarkantaka
Lanco Anpara
Udipi Power I&II
Lanco Babandh
Lanco Greeen Power
Vamsi industrial power
Lanco Energy
Lanco Hydro Energies
Power Trading
Lanco Power Trading
Engneering, Procurement & Construction:-
57
The EPC group at Lanco ensures project delivery cycles, greater capital expenditure
control, sourcing the best service and technology providers and most importantly allows
its clients to focus on their core business.
The core competence of Lanco is its experienced team for managing contracts during all
phases of a project, while meeting the highest international standards
Lanco provides engineering, procurement, construction, project management and
commissioning services on a Turnkey basis to the Power Sector leveraging on the
experience and expertise of its Group companies, its construction capability and
competent manpower.
Lanco has ongoing projects across India and has in place an established network of
resources. The completed list of power projects includes Thermal, Hydro and Non
conventional Energy
4.63Infrastructure:LANCO Infratech Ltd has executed many challenging infrastructure projects

across India including Highways. Lanco is currently executing the Varanasi
Non Metro Airport Project.
4.64Roads:LANCO has constructed roads and highways across India for the National Highways
Authority of India. LANCO has won the contract for construction and operation of two
road projects in Karnataka, the 81 km Bangalore-Hoskote-Mudbagal stretch on National
Highway 4 and the 82 km Neelamangla - Devihalli stretch on National Highway 48 on
Build, Operate and Transfer (BOT) basis under the National Highways Development
Project
(NHDP)
Phase
III.
The concession agreements for the projects have been signed with the National Highways
Authority Ltd. The total project cost is estimated at Rs 1300 crores and involves six
laning of 16 km stretch and four laning of the remaining stretches. The concession
periods are 20 and 25 years for the two projects respectively, including 30 months of
58
construction period? The contracts have been awarded through a competitive bidding
process.
4.7Investors:Lanco Infratech Limited became a listed entity in November 2006 following the Initial
Public Offering of shares. Presently the market capitalization of the company is around
US$ 3 billion. Of the total 240.78 million shares outstanding 67.95% is held by the
founder promoters of the company.
Stock table:From January 2011

Last Price
High
Low
Volume
BSE
67.05
67.65
65.75
756,294
NSE
67.65
67.35
65.70
2,592,269
4.8Awards:Lanco
Infratech
Limited
Award for Excellence in Bridge Engineering 1999 from the Indian Institute of Bridge
Engineers.
Lanco
Kondapalli
Power
Pvt
Ltd
OHSAS 18001 :1999 Certification in respect of Environmental Management System by
Lloyd's
Register
Quality
Assurance
Ltd
in
2005.
National Award for Excellence in Water Management 2005 by Cll - GBC Green Business
Centre.
Silver Award in Gas Power Sector for Outstanding Achievement in Environment
59
Management
for
2003-04
from
Greentech
Foundation.
Leadership Efforts towards Environmental Management and Sustainable Initiative among
Corporates for 2002-03 by TERI.
Best Environment Improvement Activity Award 2002 - 03 from FAPCCI.
CM Leadership and Excellence Award in Safety, Health and Environment 2002.
ABAN
Power
Company
Ltd
0HSAS 18001:1999 Certificate from TUV SUD Management Service GmbH Trading as
TUV South Asia Pvt Ltd.
Lanco
Group
Corporate
Communications
2007
PRSI National Award for House Journal (English) - First
PRSI National Award for Corporate Film in English - First
PRSI National Award for Corporate Brochure - First Prize
Prize
Prize
2006
PRSI National Award for In- House Magazine (Content and Layout)Second Prize
PRSI
National
Award
for
Corporate
Campaign
Second
Prize
PRSI National Award for Corporate Brochure - Second Prize
2005
PRSI National Award for In-House Magazine (Content and Layout)-Third Prize
PRSI State (Andhra Pradesh) Award for In- House Magazine (Content and Layout) Second Prize.
60
CHAPTER-5
DATA ANALYSIS
AND
INTERPRETATION
61
Balance Sheet as at 31 st March , 2008
Schedules
Rs.
Rs.
1. SOURCES OF FUNDS:
1. Shareholders' Funds:
a. Capital
56,69,92,680
b. Reserves
157,25,55,583
213,95,48,263
2. Loan Funds:
185,73,40,134
a. Secured Loans
48,99,46,869
b. Unsecured Loans
448,68,35,132
II. APPLICATION OF FUNDS:

1. Fixed Assets:
Gross Profit
337,35,07,089
Less: Depereciation
160,60,60,818
Net Profit
176,74,46,271
Capital Work-in -progress
6,05,16,710
182,79,62,981
2.Investments
1,500
3. Current Assts, Loans and Advances

Sundry Debtors
G1
14,12,92,290
Cash & Bank Balances
G2
17,81,32,470
Other Current Assets
G3
4,81,30,040
Loans& Advances
8,61,72,470
62
45,45,72,470
Less: Current Libilities & provisions
a. Liablilites
651,941,573
b. provisions
2,05,61,230
Net Current Assets

4. Deferred tax asset(Net)
21,79,53,160
K
55 ,48,82,327
5. Profit & Loss Account
232,19,41,484
448,68,35,132
63
Profit and Loss Account for the year ended 31st March, 2008
INCOME:
Gross
Sales
Excise Duty
(including
1341716993
L
49259933
Other Income
1390976079
EXPENDITURE:
2781953005
Raw Materials consumed
181903306
payments and Benefits of

Empolyees
M1
99557971
Manufacturing
,
Administration and
892417716
Selling
Other Expenses
598078982
Excise Duty
1497310
Interest
28600214
Depreciation
72918704
Increase/Decrease in stocks
135681510
Profit/ (Loss) before Reliefs and Concessions
55178068
and Writeoffs
80503442
Add: Reliefs and concessions
741142301
Refer Note No:20 (b)of Schedule "o")
2832301456
Balance Carried forward to Next Year
4829617
Earning per share

(Refer
Note
Schedule"O"
No27
of
Basic
-1.42
Dilted
-1.42
Cash
Flow Statement for the Year Ended 31 st
64
March, 2008
Particulars
Rs.
Cash Flow From Operating Activites

Profit/(Loss) as per profit and Loss Account
8,05,03,442
Add/(Less):Adjustments for:
1,85,30,324
Depreciation
7,29,18,704
Extraordinary items (Reliefs&Concessions)
5,51,78,068
Extraordinary items (Deferred Revenue Expenditure)
1,58,90,678
Extraordinary items Deferred Tax Asst (net)
12,000
Credit balances written back
32,16,554
Dividends recevided
33,45,291
Interst received
21,028
Assets written off
38,70,495
Less on sale of assets
1,56,567
provision for gratuity
14,04,32,984
provision for leave encashment
7,56,567
Interst
21,50,897
provision for doubtful advances
7,67,416
profit on sale of investments
1,56,110
provision for obsolets stores & Raw materials
519
provision for diminution of investments
7,72,096
stores written off
6,25,95,791
Operating profit Before working Capital Changes:
11,43,152
Adjustments for:
6,13,85,596
Inventories
13,90,64,443
Trade& other receivables
19,93,06,887
Trade Payables
13,67,11,096
Cash Flow From Investing Activities:
65
purchase of Fixed Assets (Net after transfer

from capital work in progress
10,58,980
Interest received
21,27,742
sale of fixed assets
34,79,111
sale of investments
22,27,555
Dividends received
7,72,415
Taxes paid
12,000
Deferred Revenue Expenditure
9,05,990
Net cash used in investing activities
23,98,369
C. cash Flow from Financing Activties:

Interest paid
4,44,32,595
Un secured loans
2,96,83,876
Repayment of secured Loans
7,04,88,164
Net increase in cash and cash equivalents
14,46,04,635
Net cash from finacing equivalents
54,95,170
Add: Cash and cash equivalents as at 31-03-2002
5,36,25,210
Cash and cash equivalents as at 31-03-2003
Balance Sheet as 31st March ,2009
Schedule
66
Rs.
Rs.
a.
A.
Capital
A
566993
1,477,272
a. Secured Loans
1961652
b. Unsecured Loans
463580
3361813
b. Reseves
2. Loan Funds:
4469498

1. Fixed Assets:
Gross Profit
1,704,722
Less: Depereciation
1657091
Net Profit
1714634
0.02
2.Investments
3. Current Assets, Loans and Advances
112962
Sundry Debtors
G2
148221
G3
54587
G4
1.1
Loans& Advances
81563
398443

a. Liablilites
778984
b. provisions
25552
Net Current Assets

406093
K
558093
4469497
67
Note:The schedules , notes and statement on accounting policies from an

integral part of the Balance Sheet
Profit and Loss

March,2009.
Account
for
the
Schedule
year
ended
Rs.
INCOME:
Gross Sales (including Excise Duty
1255575
Rs. 26,30,22,805(Rs.29,00,23,286)
256178
Other Income
999397
EXPENDITURE:
185864
payments and Benefits of Empolyees
M1
98768
Manufacturing , Selling Administration and
M2
815540
Other Expenses
4.95
Excise Duty
165471
Interest
16304
Depreciation
1282442
Increase)/ Decrease in stocks
17785
-2,851.60
and Writeoffs
10.3
-2,841.30
Refer Note No:20 (b)of Schedule"o")

-2,809.19
-23,219.42
Earning per share
26,028.61
(Refer Note No27 of Schedule"O"

68
31
st
Basic
-4.96
Dilted
-4.96
Cash Flow Statement for the Year Ended 31st

March ,2009
Rs.
-2,809.20
163.04
Depreciation
-10.3
-32.11
-69.87
Dividends recevided
-23.99
Interst received
Assets written off
-23.99
0.13
33.94
Interest
16.11
1,654.71

stores written off
-6.05
-1,083.59
69

Adjustments for:
283.3
Inventories
346.53
132919
Trade Payables
1,959.02

-8.61
35.1
Interest received
21.11
8.51
sale of investments
Dividends received
Taxes paid
3.49
59.6

Interest paid
-793.35
Un secured loans
-294.52
221.41
870.46
64.57
481.3
545.87
70
Balance Sheet as 31st March ,2010

Schedule
Rs.
a. Capital
566993
b. Reseves
13,591.68
Rs.
2. Loan Funds:
19,261.61
16079.06
a. Secured Loans
6,040.28
b. Unsecured Loans
22,119.34
71
14,380.95

1. Fixed Assets:
Gross Profit
33,480.69
Less: Depereciation
18,077.65
Net Profit
15,403.04
559.07
2.Investments
15,962.11
0.02
1,042.05
Sundry Debtors
G2
1,537.42
G3
391.28
G4
21.32
Loans& Advances
1,223.55
a. Liablilites
9,944.67
b. provisions
246.55
4,215.62
Net Current Assets

-59,756
K
5,975.60
5,607.14
41,380.95
Profit and Loss Account for the Year ended 31 st March, 2010
Schedule
Rs.
Rs.
INCOME:
15,599.
47
Rs. 26,30,22,805(Rs.29,00,23,286)
3,046.7
6
72
12,552.
71
Other Income
973.98
13,526.
69
L
EXPENDITURE:
2,203.5
7

payments
Empolyees
and
Benefits
Manufacturing
,
Administration and
of
M1
1,017.77
M2
10,070.05
Selling
Other Expenses
-5.42
Excise Duty
1,844.9
2
Interest
126.71
Depreciation
15,257.
60
9.65
1,740.5
6
and Writeoffs
1,957.6
1
217.05
Refer Note No:20 (b)of Schedule"o")
1.93
241.33
Earning per share
26.028.
61
25,787.
28
Basic
0.43
Dilted
0.43
73
Cash Flow Statement for the Year Ended 31st March ,2010
126.71
Depreciation
1,957.61

Extraordinary
Expenditure)
items
(Deferred
1.93
Revenue
26.21
28.98
0.44
Dividends recevided
19.05
Interst received
10.08
Assets written off
1,844.92
19.99
768.49
-596.62
Interest
stores written off
Adjustments for:
87.58
Inventories
499.49
74
2,093.51
Trade Payables
1,681.60

1,084.98

Interest received
138.59
16.36
sale of investments
18.77
Dividends received
14.63
Taxes paid
780.72

Interest paid
1133.2
Un secured loans
1,330.51
2,012.29

2,020.29
154.59
545.87
391.28
75
BALANCE SHEET AS AT 30 TH SEPTEMBER, 2011

Schedule
Rs.
a. Capital
11,711.73
b. Reseves
12,607.63
a. Secured Loans
6,601.83
b. Unsecured Loans
5,581.34
24.319.36
2. Loan Funds:
12,183.17
36,502.53

1. Fixed Assets:
32,484.59
Gross Block
19.592.12
Less: Depreciation
12,892.47
Net Block
39.25
76
2.Investments
12,931.72
1,293.06
1,293.06
Sundry Debtors
G2
1,070.44
G3
736.74
G4
26.42
Loans& Advances
1.904.46
0.02
1,070.44
5,031.12

a. Liablilites
8,472.77
b. provisions
273
Net Current Assets

3712.65
K
5,515.18
21,770.26
77
36,502.53
Profit and Loss Account for the Year ended 31st

March, 2011
Schedule
INCOME:
12282.69
Rs. 26,30,22,805(Rs.29,00,23,286)
2143.2
Other Income
10139.49
3733.73
13873.22
EXPENDITURE;
M1
M2
1469.92
10194.83
2737.52
165.51
16331.68
Other Expenses
93.88
Excise Duty
16237.8
Interest
2364.58
Depreciation
6501.01
4136.43
and Writeoffs
27.44
91.97
78
Refes Note No:20 (b)of Schedul"o")
4017.02
-25787.28
21770.26
Earning per share

Basic
Rs)
Dilted
(Rs)
3.43
---
79
CASH FLOW STATEMENT FOR THE YEAR ENDED 30th SEPTEMBER, 2011
Rs.
CASH FLOW FROM OPERATING ACTIVITES:
4.017.0
2
PROFIT AND LOSS ACCOUNT

Add/ (Less) Adjustments for:
Depareciation
165.51
Extraordinary items (Reliefs& concessions)
6,501.0
1
Credit balance written back
27.44
Interest received
91.97
Assets written off
-37.19
Loss on sale of assets
78.22
Provision for leave encashment
523.74
Interest PAID
for
doubtful
advances
Provision for leave encashment
7.95
provision for doubtful debts
2,737.5
2
profit on sale of assets
3,492.1
9
stores written off
11.62
2,215.4
3
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES:

Adjustments for:
80
263.18
539.26
Inventories
1,505.6
7
Trade & Other receivables

Trade payables
703.23
CASH GENERATED FROM OPERATIONS

B. CASH FLOW FROM INVESTING ACTIVTIES:
purchase of Fixed Assets (Net
after transfer from Capital work in progress, adustment
-13.73
of Foreight ExCHANGE Fluctuations and deletions)
15.99
Capital work in progress
73.12
Interest received
4.92
Sale of fixed assets
-12.51
Taxes paid
35.81

C. CASH FLOW FROM FINACNCING ACTIVITIES:
Interast paid
Un-secured loans
241.33
share capital received
899.82
share premium received
2,647.2
5
Repayment of Secured Loans
1,352.7
4
Net cash from financing activities
-650.70
1,821.8
5
345.46
391.28
81
736.74
BALANCE SHEET AS AT 31 ST MARCH 2012

Schedule
Rs.
a. Capital
11,711.73
b. Reseves
Rs.
12.607.63
24,502.34
2. Loan Funds:
a. Secured Loans
6,601.83
b. Unsecured Loans
5,353.43

1. Fixed Assets:
36,503
E
Gross Block
Less: Depereciation
12,183.17
32,484.59
19,592.12
12,892.47
Net Block
39.25
12,931.72
2.Investments
0.02
G1
1,293.06
Sundry Debtors
G2
1,070.44
G3
736.74
G4
26.42
82
Loans& Advances
1,931.72
5,031.12
a. Liablilites
8,472.77
b. provisions
8,472.77
Net Current Assets
3,714.65
21,770.26
36,502.53
Profit and Loss Account for the Year ended 31 st March,

2012
Schedule
Rs.
Rs.
INCOME:
51538.99
7285.09
Rs. 26,30,22,805(Rs.29,00,23,286)
Other Income
44253.9
880.78
EXPENDITURE;
M1
45134.68
6857.43
M2
2479.33
26909.33
Other Expenses
18.14
Excise Duty
1609.45
Interest
N1
129.18
Depreciation
38003.38
-70.6
7201.90
83
and Writeoffs
20.22
7222.12
Refer Note No:20 (b)of Schedule "o")
39.61
21770.26
Earning per share
14374.65

Basic
6.14
Dilted
5.66
CASH FLOW STATEMENT FOR PERIOD ENDED 31 ST MARCH

2013
A. CASH FLOW FROM OPERATING ACTIVTIES:
PROFIT(LOSS) AS PER PROFIT AND LOSS ACCOUNT
Depreciation
7,395.61
129.18
213.09
Extraordinary items
39.6
222.54
Dividends recevided
-98.8
Interst received
2.69
Assets written off
1.94
1,609.45
84
233.89
Interst
197.48
8,192.45
4,729.92

stores written off
4,729.92
Adjustments for:
14,214.84
Inventories
473.29
19,418.04
Trade Payables
11,225,59

96.22
11,321.81
Interest received
326.68
3,447.22
sale of investments
96.66
Dividends received
279.29
Taxes paid
3,397.95
2,030.30
330.7

Interest paid
874
Un secured loans
1,625.64
15,143.52
85
15,943.56
1,223.80
736.73
1,960.53
BALANCE SHEET AS ON 31ST MARCH, 2013
AMOUNT
S.NO PARTICULARS
(Rs lakhs) 31-3-
2003
SOURCES OF FUNDS
1)SHARE HOLDERS FUNDS:
Share Capital
25796.1
4
Share application money
17000.0
0
Reserves and surplus
21901.9
3
TOTAL
64698.07
2) Loan funds:
Secured loans
22645.2
3
Unsecured loans
4484.79
27130.02
Total
II
91828.09
APPLICATION OF FUNDS
1) Fixed assets:
86
Gross block
53355.4
4
Less: Depreciation
14266.8
3
Net Block
39088.6
1
Capital wok-in-progress
78.64
39167.25
2)Investments
36233.99
3)Current Assets:
Inventories
2693.46
Sundry Debtors
1838.11
Cash and Bank balances
1371.05
Loans and Advances
1983.03
7885.65
Less:
current
Liabilities
and
provisions
Current liabilities
3557.46
Provisions
36.29
3593.75
Net current assets
4291.90
4)Miscellaneous Expenses
378.60
5)Profit and Loss account
11756.35
TOTAL
91828.09
87
Profit and Loss Account For the Year Ended 2013
Amount
(Rs lakhs)
S. No.
Particulars
Amount
88
31-32003
Income
Sales
31590.4
6
Other income
364.26
Total
31954.72
Income
II
Expenditure
Purchase of finished goods for resale
1075.42
Manufacturing and other expenses
29230.0
3
Depreciation
2841.18
Interest and other finance charges
5152.67
Decrease in stocks of work-in process and
184.18
finished goods
38483.48
Loss for the year
Debit
balance
6528.76
brought
forward
from
5227.59
previous year
Debit balance carried to balance sheet
89
11756.35
FINDINGS
1. In 2007-2008 year, the cash out flows is more than inflows of cash.
Because purchases, payments amount is higher than the sales,
receivables
amount
i.e.,
[(35521.92)-32728.29]
(2793.63).
The
operating income is Rs 3783.33.

2. In 2008-2009 year, cash inflows are more than the cash outflows. Because
of sales, receipts amount are higher than the purchase and payments and
interest amounts i.e., [16085.44-(15740.36)]=345.33. Operating income is
Rs 3780.02.
90
3. During 2009-2010 year, cash outflows are higher than the cash inflows
i.e., [(11144.9)-10719.21]=(425.69). Because purchase of fixed assets,
interest and payments of borrowing interest are more than the sales of
fixed assets, investment. The operating income is Rs 3416.09.
4. In 2010-2011 year, cash inflows are more than the outflows of cash.
Because borrowings, sales of fixed assets, investments are more than the
purchase
and
payment
of
amount
[(20503.09)-20595.73]
=92.64.
Operating income is Rs 8560.73.

5. In 2011the period of 9 months, cash outflows are higher than cash inflows.
[(17085.72)-16892.59]=193.13.
Because
Purchase
of
fixed
assets,
investments are more than the sales of fixed assets. Investments. The
operating income is 17085.72.
6. In 2012 year, also cash outflows are higher than cash inflows. [30303.0220471.75]=9831.27. Because Purchase of fixed assets, investments are
more than the sales of fixed assets. Investments. The operating income
is 30303.02.
7. Company putting investments in Sri Vishnu cement Ltd every year.
8. In 2012- 2013 year, cash inflows amount is very less to compare with the
2007 year.
SUGGESTIONS:
Company should try to reduce the purchases of fixed assets, current

investments and investments in Lacnco infra Ltd.
And also reduce to receive the borrowings from outside of the company. It
will show effects on the time of payment of interest.
91
To try to increase the trade deposits from stockiest and dealers.

And also should increase in cash credit and demand loans.
To reduce the purchases and utilize this amount in the place of receiving
borrowings.
And try to reduce the provision for doubtful debts and miscellaneous
expenses
Conclusion:Every enterprise needs budgeting for effective running of the business activities.
Budgeting is a way of managing business and industry. It emphasizes that management
should anticipate problems and difficulties. Advance decision should be taken for the
course of activities during the forthcoming budget period. Budgetary control denotes a
formal system based on the concept of budgeting. Budgetary control is essential for
policy planning and control. It also acts as an instrument of coordination. The main
objective of budgetary control is to ensure planning for future budget setting up various
budgets. The requirements and expected performance of the enterprise are anticipated.
Lanco Infratech Ltd has introduced various systems of budgetary control in order to
achieve the future objectives of the organization
92
93
Bibliography
Biblography:1Books:
Management Accounting Principles and Practice, Eighth Edition, R.K. Sharma &
Shashi K. Gupta.
Advanced Cost Accounting , Vasisth and Suxena

94
Financial Management, Ninth Edition, I. M. Pandey.
Financial Management, Sixth Edition, Prasanna Chandra.
Financial Management, Fifth Edition, MY. Khan and PK. Jain.
Advance Accounting, R.L. Gupta.
Management and organizational Behavior, P.Subba Rao
Annual Reports of the company.
2Websites:
www.lancogroup.com
www.google.com
95

Project On Cash Flow Statement

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Project On Cash Flow Statement

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CHAPTER-1

PREPERATION OF CASH FLOW ANALYSIS:

An organization should prepare a cash flow statement according to

Net profit before taxation and extraordinary items.

Cash flow from operating, investing and financing activities.

Cash flow statement.

In addition to the general classification of three types of cash flows accounting

e) Investments in subsidiaries, associates and joint ventures

The acquisition of assets by assuming directly related liabilities;

The acquisition of an enterprise by means of issue of shares; and

The conversion of debt to equity.

Information about the cash flows of an enterprise is useful in providing users of

the enterprise to utilize those cash flows

SCOPE OF THE STUDY

NEED FOR THE STUDY

It is also the final output expected to be realized by selling the product

RESEARCH METHODOLOGY OF THE STUDY

LIMITATIONS OF THE STUDY

Sometimes, it so happens that a business unit earns sufficient profit, but

The management of cash also assumes importance because it is difficult to

MEANING OF CASH FLOW ANALYSIS:

A cash analysis is more useful because it gives detailed information to

DEFINITION OF CASH FLOW ANALYSIS:

A cash flow analysis can be defined,

CLASSIFICATION OF CASH FLOWS:

Cash flows from operating activities

Cash flows from investing activities

Cash flow from financing activities

1. CASH FLOW FROM OPERATING ACTIVITIES:

The amount of cash flows arising from operating activities is a key

II. CASH FLOW FROM INVESTING ACTIVITIES:

The separate disclosure of cash flows arising from investing activities is

III. CASH FLOWS FROM FINANCING ACTIVITIES:

The separate disclosure of cash flows arising from financing activities is

MOTIVES FOR HOLDING CASH:

An important reason for maintaining cash balances is the transactions

Similarly, there is a regular inflow of cash to the firm from sales

The requirement of cash balances to meet routine cash needs is known as

In addition the non-synchronization of anticipated cash inflows and outflows in

Bills may be presented for settlement earlier than expected;

Unexpected show down in collection of accounts receivable;

Sharp increase in cost of materials.

3.The speculative motive:

It refers to the desire of a firm to take advantage of opportunities which

An opportunity to purchase raw materials at a reduced price on payment of

Another motive to hold cash balances is to compensate banks for providing

CLASSIFICATION OF CASH FLOWS:

The amount of cash flows arising from operating activities is a key

II. CASH FLOW FROM INVESTING ACTIVITIES:

The separate disclosure of cash flows arising from investing activities is

Cash payments to acquire fixed assets (including intangibles). These payments

III. CASH FLOWS FROM FINANCING ACTIVITIES:

The separate disclosure of cash flows arising from financing activities is

Cash proceeds from issuing shares or other similar instruments;

Cash repayments of amounts borrowed;

Cash payments to redeem preference shares

Overview of Indian Infrastructure, Real Estate & Construction Industry:

Factors driving infrastructure growth:

current GoI is undertaking several measures to enhance investments in the infrastructure

The Role of the Private Sector in Infrastructure Development Public

and private sector has not participated in

BOT annuity-based projects