FUNDS FLOW ANALYSIS

INTRODUCTION

The basic financial statements i.e., the Balance Sheet and Profit & Loss A/c or
Income Statement of business reveals the net effect of various transactions on operational
and financial position of the company. The balance sheet gives a summary of the assets
& liabilities of an undertaking at a particular point of time.

There are many transactions that take place in an undertaking and which do not
operate Profit & Loss A/c. Thus another statement has to be prepared to show the change
in Assets & Liabilities from the end of one period of time to the end of another period of
time. The statement is called a statement of changes in financial position or a Funds
Flow Statement.
The Funds Flow Statement is a statement which shown the movement of funds
and is a report of financial operations of business undertaking. In simple words it is a
statement of source and application of funds.

DEFINITION:FUNDS FLOW STATEMENT is a statement which reflects flow of funds. The statement
is called statement of sources and applications of funds or statement of derivation and
disposition of the mean of operation, where got or where gone statement or FUNDS

STATEMENT, other self explanatory names may also be used to the statement. The
statement shows FLOW OF FUNDS into (I. e., sources) and out of (i.e., applications)
business. Obviously, the statement will have two aspect (1) source of Funds, and (2) their
application

MEANING & CONCEPT OF FUNDS

The term Fund has been defined and interpreted differing by different experts.
Broadly the term fund refers to all the financial resource of the company on the other
extreme fund has been understood as cash only. The most acceptance meaning of the
fund is working capital.
Working Capital is excess of current assents over current liability.
The term fund has a variety of meaning.
A) CASH FUND OR NARROW SENSE
In a narrow sense, funds mean only cash. Cash flow statement portrays net effect
of various business transactions cash into account receipts & disbursement of cash.

The concept of preparing funds from statement is not accepted, as there are many
such transactions that do not affect cash but represent the flow of fund.
For Ex:

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

B) CAPITAL FUND (or) BROADER SENSE

Here funds means all financial resources used in business, whether in the form of
men, money, material, machine & others.

C). NET WORKING CAPITAL (or) POPULAR SENSE

Networking capital means differences between current assets & liabilities. A fund
generally refers to cash or cash equipment or to working capital.

INTRODUCTION OF FUNDS FLOW ANALYSIS:

In any business we can not under estimate the flow of funds from two operations.
The business runs with funds but the organization knows how to flow of funds.

The Funds Flow Statement is concerned with sources and applications of

organization.

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

working capital.

Funds from Operations statement shows how much funds from operations.

OBJECTIVES OF THE STUDY

To know the operational efficiency of Zuari cement Limited

To study working capital position of Zuari cement Limited

To know the sources and application of funds

To analyze the movement of funds between the dates of two balance sheets in
period of study.

SCOPE OF THE STUDY:

Financial analysis consists of ratio analysis and funds flow analysis. To know
funds flow from one to one, as the time available is very li8mite3d and the subjects are
very vast, the study is continued to over all financial condition of a firm. This study is to
know working capital increase or decrease funds from operation, sources and application
of funds of M/S ZUARI CEMENT LIMITED, YERRAGUNTLA.
4

TOOLS OF ANALYSIS:

Various statistical tools such as percentages, averages were used to process the
date; various ratios are calculated to examine the causative factors in ascending the
effectiveness of funds flow in organization and management in M/S ZUARI CEMENT
LIMITED, YERRAGUNTLA.

NEED OF THE STUDY

The Funds Flow Statement is a statement which shown the movement of funds and is a
report of financial operations of business undertaking. In simple words it is a statement
of source and application of funds. In a narrow sense, funds mean only cash. Cash flow
statement portrays net effect of various business transactions cash into account receipts &
disbursement of cash. The concept of preparing funds from statement is not accepted, as
there are many such transactions that do not affect cash but represent the flow of fund.

SCOPE OF STUDY

Financial analysis consists of funds flow analysis. To know funds flow from one
to one, as the time available is very limited and study is continued to over all
financial condition of a firm.

The study to know working capital increase or decrease, funds from operation,
source and application of funds

Research Methodology:

Tools of Analysis

Various statistical tools such as percentages averages were used to process the date, of
effectiveness of funds flow in organization & management in ZUARI CEMENT
LIMITED.

Research Design:

Analytical Study

Data Sources

Secondary Data

SECONDARY DATA
The secondary data was collected form already published sources such as
annual reports, returns and internal records.

THE DATA COLLECTION INCLUDES:

a. Data collected from annual reports of Zuari Cement Limited.,
b. Reference form textbooks relating to financial management.

RESEARCH TOOLS:

Funds Flow Statement

6

Limitations of the Study:

The study is only pertaining to ZUARI CEMENTS LIMITED,

YERRAGUNTLA.

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

also limited to 5 years.

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

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

interpret the same analysis in different ways.

The over all financial performance is taken into consideration with

out taking into account the minute values or individual values.

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

REVIEW OF LITERATURE

The Funds Flow statement is a statement which shows the movement of Funds and is a
report of the financial operations of the business undertaking. It indicates various means
by which Funds were obtained during a particular period and the ways in which of Funds.

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

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

A Funds Flow statement is a statement which reflects Flow of Funds. The statement is
called statement of sources and application of Funds or statement of derivation and
disposition of the means of operation, where got or where gone statement or Funds
statement. Other self explanatory names may also be used to the statement.

The statement shows Flow of Funds into (i.e., sources) and out of (i.e., application)
business. Obviously, the statement will have two aspect (1) source of Funds, and (2)their
application.
8

Here Flow means changes, I.e. Flow of fund means changes in working capital by a
business transaction bring the working capital either in the form of decrease or increase.
Flow of Funds involves inflow or outflow of funds. It means, transfer of economic values
from one asset to another or one equity to another, from an asset to an equity or vice
versa. If there is change in current assets and current liabilities in the same direction and
by the same amount, there will be change only in their amount. The working capital or
fund will be same and hence there would be no Flow of in such a situation.

The balance sheet and profit and loss account failed to provide the information which is
provided by Funds Flow statement i.e., changes in financial position of an enterprise.
This statement indicates the changes which have taken place between the two accounting
dates. This statement by giving details of sources and uses of Funds during a given useful
tool in the hands of management for judging the financial an operating performance of
the company . It also indicates the working capital position which helps the management
in taking policy decisions regarding dividend etc., Funds Flow statement is useful for
long term analysis .Such an analysis is of great help to management, share holders,
creditors, brokers etc., the Funds Flow statement helps in answering the questions like
where the position and profitability position of the enterprise! Why is the concern
financially solid in spite of losses! It help management to take policy decisions and to
decide about the financing policies and capital expenditure programmed for future.

I.C.W.A:-

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

statement either prospective or retrospective setting out the source and application of the
Funds of an enterprise. The purpose of the statement is indicate clearly the requirement of
Funds and how they are proposed to be raise and the efficient utilization and application
of the same. Funds Flow statement is a method by which we study changes in the
financial position of a business enterprise between beginning and ending financial
statements dates. It is a statement showing sources and uses of Funds for a period of time.

ANTHONY:-

The Funds Flow statement describes the sources from which additional Funds were
derived and the use to which their sources were put.
Funds Flow statement is not a substitute of an income statements, I.e., a profit and loss
account , and a balance sheet. The profit and loss account is a document which indicates
the extent of success achieved by a business in earning profits .It reports the results of
business activities and indicates the reasons for the profitability or lack thereof. The profit
and loss account does not highlight the changes in the financial position of the business.
It does not reveal the inflows and outflows of Funds in business during a particular
period.

Funds Flow statement is not competitive but complementary to financial statement. The
Funds statement provides additional information regards changes in working capital,
10

derived from financial statement at two points of time. It is a tool of management for
financial analysis and helps in making decisions.

SMITH AND BRAWN:Funds Flow statement is prepared to indicate in summary form, changes occurring in
items of financial position between two different balance sheet dates.
To study Working Capital position of the ZUARI CEMENT LIMITED.
To study changes in current Assets and current Liabilities.
To study about source of Funds and application of Funds in
ZUARI CEMENT LIMITED.
To know the capability to generate future Funds Flow and to
know ability of the Firm.
To study how Funds Flow statement helps in proper allocation of
Funds.
A Funds Flow statement is an essential tools for the financial
analysis and is of primary importance to the financial
management. Now a days it is being widely used by the financial
analysists, credit granting institutions, and financial managers.
Funds Flow statement is not a substitute of an income statement,
i.e., a profit and loss account, and a balance sheet.
A profit and loss account does not highlights the changes in the
financial position of the business . It does not reveal the inflows
and outflow of Funds in business during a particular period.
The basic purpose of a Funds Flow statement is to reveal the changes in the Working
capital on the two balance sheet dates. The study aids in analyzing source of application
of Funds in ZUARI CEMENT.
11

Funds Flow statement is a method by which we study changes in the financial position of
a ZUARI CEMENT ltd between beginning and ending financial statements dates. Hence
the Funds Flow statement is prepared by comparing two balance sheets of ZUARI
CEMENT ltd and with the help of such other information derived from the accounts as
may be needed.
The preparations of Funds Flow statement consist of two parts
1. Statement or schedule of changes in working capital.
2. Statement of sources and application of Funds.

WORKING CAPITAL=CURRENT ASSETS-CURRENT LIABILITIES

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

COMPANY PROFILE

3. INTRODUCTION

12

HISTORY
Strong foundations for a company of strength.
Zuari entered the Cement business in 1994 to operate the Texmaco Cement Plant. In
1995, Texmacos Plant at Yerraguntla was taken over by Zuari and a Cement Division
was formed. The fledging unit came into its own in the year 2001 when Zuari Industries
entered into a Joint Venture with the Italcementi Group, the 5th largest producer of
Cement in the world , Zuari Cement Limited was born. Zuari Cement took over Sri
Vishnu Cement Limited in 2002. Today, the Company is amongst the topmost cement
produces

in

South

India.

Zuari and Italcementi. The strength of two

Zuari Cement is one of the leading cement producers in South India.A fully owned
subsidiary of the Italcementi Group, Commitment to customer satisfaction has seen Zuari
Cement grow from a modest 0.5 million tonne capacity in 1995 to almost 6 million
tones in 2010,and earned a place among the most reliable cement producers in the
country.

ITALCEMENTI GROUP HISTORY

13

Founded in 1864, Italcementi was quoted for the first time on the stock markets, at the
Milan Stock Exchange, in 1925, under the name of Societ Bergamasca per la
Fabbricazione del Cemento e della Calce Idraulica and has been operating since 1927
under the name of Italcementi Spa.
Thanks to a careful plan of investments and take-overs of other cement producers, the
company expanded, quickly reaching a strong position on the market and becoming the
leading cement manufacturer in Italy.
After several acquisitions abroad, in 1992 Italcementi achieved important international
status with its take-over of Ciments Franais, one of the main global cement producer.
In 1997 Italcementi consolidated its verticalisation strategy with the acquisition of
Calcestruzzi, thus becoming Italian leader in the ready-mixed concrete sector.
In March 1997, all the international companies of the Group gathered under one single
corporate identity.

Since 1998 Italcementi Group has been pursuing its internationalisation strategy by
acquiring new cement works in Bulgaria, Kazakhstan, Thailand, Morocco, India, Egypt
and the United States.

14

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

division of ZUARI CHEMICAL LIMITED, jointly promoted by K.K.BIRLA &
USX CORPORATION a major steel leader in U.S.A.

3.1 LOCATION OF THE PLANT

Zuari cement is running under the Flagship of Zuari Agro chemicals Limited.
Zuari cement is strategies located 6 kms away from Yerraguntla town of
Kamalapuram (Taluk) in Kadapa district Andhra Pradesh. Railway line has been
laid connection the Yerraguntla station of Zuari Cements.
Location of the plant at this place is having following advantages.
1. Location in industrial belt of Rayalaseema with sophisticated facilities like
water, electricity, labor, transport etc.
2. Present of the best limestone proved scientifically for cement.
3. Low free lime to ensure reduced surface cracks.
4. Low heat of hydration for better soundness.
5. Low magnesia content to ensure reduced tensile cracks.
6. Specially designed setting time to suit Indian working conditions.

3.2 JOINT VENTURE WITH ITALIC CEMENT

15

Zuari group has identified as one of the core business to grow. It has
therefore, been decided to constitute a separate corporate entity and hire off
cement business to it. To accelerate the growth and achieve capacity additions
quickly it decided to form a joint venture with a strategic partner after careful
evaluation the multinational cement giant italic cement group was identified to be
suitable partner for pursuing growth.

Zuari and Italic cement groups have agreed to form a joint venture with
50-50 equity sharing. The Zuari cement business will get transferred to the joint
venture company Viz. Zuari cement limited.

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

proposed to increase the capacity of1.7 MTPA in span of 3 to 4 years. Italic
cement group is the largest producer & distributor of cement in European and one
of the leaders in the world maker place. The group operates in 13 countries
including Belgium, Canada, France, Greece, Italy, Moraco, Spain, Turkey and U.S
with recent acquisition in Bulgaria, Kazakhstan and Thailand.

The group was founded in 1864 and had its head quarters in Bermago, Italy;
currently the group has 54 plans with an installed capacity of 40 MTPA spread
over 13 countries. The group also has 500 RMC plants all over the world. The
consolidated group turn over in 1998 was 3.4 billion US$. The group has excellent
16

R & D and Machine design facilities head quartered at Bermago, Italy, which
renders technical support to all over the group plants.

3.3 ITALIC CEMENTRIC GROUP

Our Mission
Our Shared Ambition: Effective and Efficient
To become the most effective and most efficient cement manufacture and
distributor in the world.
Our Approach: We are local we think Global.
Cement aggregates and ready to mix concrete manufacture and distribution
are local business. Around the world we serve local customers in local markets
with local needs.

Our Way of Working: Technological leadership is our Goal.

Our technology plays the key role in realizing our ambition we are
committed to increasing the value of our groups, our companies, our products and
services, the capabilities of our employees and the ecological standards by which
we operate.

Our spirit: One team worldwide.

We operate worldwide in many diverse markets, cultures and continents.
We are proud of our cultural diversity and our distinctive character.

17

3.4 ORGANIZAITONAL STRUCTURE

The organizational structure of Zuari is simple and flat. The employees are
assigned grades based on their pay packages. These grades are not based on the
job responsibilities may have different grades for reasons like duration of
association with the company.

3.5 OBJECTIVES OF THE COMPANY:

To Provide employment to the local employees

To supply best cement at economical prices
To get the optimum utilization of the raw materials available of their own
mines.
Manufacturing quality cement and to stand as a market leader in south
India.

3.6 RECENT DEVELOPMENTS

18

Zuari cement has signed on agreement with the cement corporation of India
(CCI) to market CCIs cement produces from their facility at tender in Andhra
Pradesh.
Zuari Cement shall market this in the state of Tamil Nadu, Kerala, Andhra
Pradesh and pond cherry. The incremental tonnage for zuari cement as a result of
this arrangement is around 3.5 lakh tones.

COMPANY ANALYSIS

According to the Individual - Audited financial statement for the Year of 2011,
total net operating revenues decreased with -5.38%, from INR 1,095.25 tens of
millions to INR 1,036.34 tens of millions. Operating result decreased from INR
355.97 tens of millions to INR 192.28 tens of millions which means -45.98%
change. The results of the period decreased -87.84% reaching INR 20.63 tens of
millions at the end of the period against INR 169.64 tens of millions last year.
Return on equity (Net income/Total equity) went from 14.43% to 1.72%, the
Return On Asset (Net income / Total Asset) went from 9.58% to 1.14% and the
Net Profit Margin (Net Income/Net Sales) went from 15.49% to 1.99% when
compared to the same period of last year. The Debt to Equity Ratio (Total
Liabilities/Equity) was 151.01% compared to 150.55% of last year. Finally, the
19

Current Ratio (Current Assets/Current Liabilities) went from 1.92 to 0.99 when
compared to the previous year
ITALCEMENTI GROUP FINANCIAL INFORMATION

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

MILLION
EURO IN FIRST HALF OF 2011)

RECURRING EBITDA: 328.7 MILLION EURO (371.7 MILLION EURO)

EBIT: 100.6 MILLION EURO (160.7 MILLION EURO)

TOTAL PROFIT FOR THE PERIOD: 0.8 MILLION EURO (187.8

MILLION
EURO

INCLUDING

HIGH

CAPITAL

GAINS

FROM

SALE

OF

OPERATIONS IN TURKEY)

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

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

OUTLOOK: 2012 OPERATING MARGINS EXPECTED TO BE

SUBSTANTIALLY IN LINE WITH 2011

20

3.7 SOCIAL RESPONSIBILITY

As part of social responsibility the company is maintaining one dispensary

where the near by villagers are treated free of cost. It has one primary school &
also it has constructed bus shelters, traffic signals water sheds, water tanks
hospitals, houses & road dividers.

3.8 MOTIVATION

Motivation in zuari cement limited is one by encouraging the employees

by awarding them rewarding them and identifying their talents and promoting
them to higher positions. The career development is possible through proper
motivational factors.

3.9 MAJOR USERS

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

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

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

21

 Madras refineries limited.

Airport authority of India
Tamilnadu real estate limited
East coast construction and industries limited.
Tamil Nadu port trust.
Asia pacific hotels limited
Grind well Norton limited
Tirumala Tirupati Devasthanam
APSEB Srisailam power project.
Ramco industries visaka industries.
Hyderabad Everest limited
Nagarjuna Construction.

3.10 CORPORATE MARKETING OFFICE

Zuari cements limited corporate marketing office is at cheennai (Tamil Nadu) and
branches are at:
Hyderabad

- Andhra Pradesh.

22

 Visakapatnam

- Andhra Pradesh.

- Karnataka.

Bang lore

Cochin

- Kerala.

Hanaji

- Gao.

Cheennai

- Tamil Nadu.

Bhuwaneswar

- Orrisa.

3.11 COMPETITORS

Penna

- Tadipathri

Ultra Tech

- Tadipathri

Malabar

- Cochin

ZUARI SPECIAL NEW:-

Zuari Cement was the official sponsors of the recently concluded India Srilanka cricket series
held at Srilanka. In the T20 match between India- Srilanka, our Whole Time Director Mr. Krishna
Srivastava handed over the award of Asli Taqaat Ka Champion' to cricketer Suresh Raina, for the
overall performance which identified him as the champion
23

Mr. Colin Nelson ,MD of Singha Cement also took part in an earlier prize distribution ceremony.
Zuari Cement wins The Prestigious Power Brand-2012 Award Zuari Cement has set
another benchmark in the industry being honored a POWER BRAND-2012 (The most
powerful 100 Brands chosen by the Indian Consumer).

STATEMENT OF CHANGES IN WORKING CAPITAL

24

Rs in lakhs

31-3-2007

31-3-2008

Particulars

Effect of W.C.
Increase

Decrease

Current Assets :
Inventories

3036.66

2693.46

343.20

Sundry Debtors

3534.10

1838.11

1695.99

Cash & Bank Balances

4164.68

1371.05

2793.63

Loans & Advances

3744.19

1983.03

1761.16

14479.63

7885.65

3448.29

3557.46

109.17

35.25

36.29

1.04

3483.54

3593.75

10996.09

4291.9

Total Current Assets

Current Liabilities :
Current Liabilities
Provisions
Total Current Liabilities
Working Capital (C.A. C.L.)
Decrease in Working Capital

10996.09

25

6704.19

6704.19

10996.09

6704.19

6704.19

STATEMENT OF SOURCES AND APPLICATION OF FUNDS FOR THE

PERIOD (2007-2008)

Rs in lakhs

26

27

Source
Issue of share capital

Rs.

Application

17,000.00 Funds lost in operation

Rs.
6528.76

Repayment of long term loan

Raising of long term loans

765.63

11969.5
loans

Sale of non-current (fixed)

Purchase of long term

2656.16

assets
Non-trading receipts
Sale of investment
Decrease in working capital

36233.88
investments

10.79
27595.37
6704.19
54732.14

TABLE-1

28

54732.14

TABLE 1.1

29

INTERPRETATION

From the table it is observed that the working capital of company shows decreased
trend. The current Asset of the company has decreased Rs 14479.63 in 2007 to Rs 7885.65
in 2008. But the item cash balance showing Decreasing trend in 2008. The current
liabilities of company are decreased 3483.54 in 2007 to Rs 3593.75 in 2008.In 2007 the net
working capital of company stood 10996.09. It is decreased to Rs 4291.9 in 2008. The
decreasing net working capital is Rs 6704.19
It is evident from the above table that the total funds flow during the period from 20072008 amounts Rs 54732.14. In the total funds 23.32% was received from funds from
operation 4.42 from unsecured loans.
Regarding the application of funds 33.71% used for investment in fixed assets and
funds used for working capital purpose. Constitute 30.77% respectively

STATEMENT OF CHANGES IN WORKING CAPITAL

Rs in lakhs
Particulars

31-3-2008
30

31-3-2009

Effect of W.C.

Increase

Decrease

Current Assets :
Inventories
Sundry Debtors
Cash & Bank Balances

2693.46
1838.11
1371.05

2281.92
3109.72
1716.40

Loans & Advances

1983.03

1771.46

Total Current Assets

7885.65

8879.50

2664.13

3827.14

1163.01

36.29

50.43

14.14

2700.42
5185.23

3877.84
5001.66

411.54
1271.61
345.35
211.57

Current Liabilities :
Current Liabilities
Provisions
Total Current Liabilities
Working Capital (C.A. C.L.)
Decrease in Working Capital
5185.23

183.57

183.57

5185.23

1800.53

1800.53

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

Rs in lakhs
Source
Issue of share capital

Rs.

Application

17,000.00 Funds lost in operation

Rs.
2747.91

Raising of long term loans

6195.00 Redemption of pre share capital

1700.00

Sale of non-current (fixed) assets

2689.41 Repayment of long term loan

6129.33

Purchase of long term

Non-trading receipts

100.41

291.15
investments

31

Decrease in working capital

1835.57 Dividend Paid

27820.39

TABLE 2

32

1652.00
27820.39

TABLE 2.1

INTERPRETATION

From the table it is observed that the working capital of company shows
decreased trend. The current Asset of the company has decreased Rs 7885.65 in 2008 to Rs
8879.50 in 2009. The current liabilities of company are decreased 2700.42 in 2008 to Rs
3877.84 in 2009. In 2008 the net working capital of company stood 5185.23. It is decreased
to Rs 5001.66 in 2009. The decreasing net working capital is Rs 183.57

33

It is evident from the above table that the total funds flow during the period from
2009 amounts Rs 27820.39. In the total funds 9.82% was received from funds from operation
35.82 from unsecured loans.

Regarding the application of funds 17.13% used for investment in fixed assets and
funds used for working capital purpose. Constitute 0.84% respectively

STATEMENT OF CHANGES IN WORKING CAPITAL

Rs in lakhs
31-3-2009

31-3-2010

Particulars

Effect of W.C.
Increase

Decrease

Current Assets :
Inventories

2281.92

2503.20

Sundry Debtors

3109.72

2467.39

642.33

Cash & Bank Balances

1716.40

1290.71

425.69

Loans & Advances

1771.46

1906.20

Total Current Assets

8879.50

8167.50

34

221.28

134.74

Current Liabilities :
Current Liabilities
Provisions
Total Current Liabilities

3827.41
50.43
3877.84

3381.69
127.90
3509.59

Working Capital (C.A. C.L.)

5001.66

4657.91

Decrease in Working Capital

5001.66

445.72
77.47

343.75

343.75

5001.66

1145.49

1145.49

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

Rs in lakhs

Source
Raising of long term loans
Sale of non current (fixed) assets

Rs.

Application

696.90 Funds lost in operation

2575.09 Repayment of long term loans

Non-trading receipts

109.09 Purchase of long term investments

Decrease in working capital

343.75
3724.83

35

Rs.
2104.92
1587.48
32.43

3724.83

TABLE 3

TABLE 3.1

36

INTERPRETATION

From the table it is observed that the working capital of company shows decreased
trend. The current Asset of the company has decreased Rs 8879.5 in 2009 to Rs 8167.5 in
2010. The current liabilities of company are decreased 3877.84 in 2009 to Rs 3509.59 in
2010.In 2009 the net working capital of company stood 5001.66. It is decreased to Rs
4657.91 in 2010. The decreasing net working capital is Rs 343.75

It is evident from the above table that the total funds flow during the period from
2010 amounts Rs 3724.83. In the total funds 7.51% was received from funds from operation
4.03% from unsecured loans.

Regarding the application of funds 2.29% used for investment in fixed assets and
funds used for working capital purpose. Constitute 1.57% respectively.

37

STATEMENT OF CHANGES IN WORKING CAPITAL

Rs in lakhs
31-3-2010

31-3-2011

Particulars

Effect of W.C.
Increase

Decrease

Current Assets :
Inventories

2503.20

3114.57

611.37

Sundry Debtors

2467.39

943.79

Cash & Bank Balances

1290.71

1383.35

92.64

Loans & Advances

1906.20

5284.23

3378.03

Total Current Assets

8167.50

10725.94

3381.69

3758.62

376.93

127.90

163.86

35.96

Total Current Liabilities

3509.59

3922.48

Working Capital (C.A. C.L.)

4657.91

6803.46

Increase in Working Capital

2145.55

1523.60

Current Liabilities :
Current Liabilities
Provisions

6803.46

38

2145.55
6803.46

4082.04

4082.04

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

Rs in lakhs

Source
Funds from operations
Raising of long term loans
Sale of non-current (fixed) assets
Non-trading receipts

Rs.
Application
2265.11 Repayment of long term loans
101.14 Purchase of long term investments
1944.29 Increase in Working Capital
102.00

Rs.
2100.56
166.03
2145.55

4412.54

4412.14

TABLE 4

39

TABLE 4.1

INTERPRETATION

From the table it is observed that the working capital of company shows increased
trend. The current Asset of the company has increased Rs 8167.50 in 2010 to Rs 10725.94 in
2011. The current liabilities of company are increased 3509.59in 2010 to Rs 3922.48 in 2011.
In 2010 the net working capital of company stood 4657.91. It is increased to Rs 6803.46 in
2011. The increasing net working capital is Rs 2145.55

40

It is evident from the above table that the total funds flow during the period from
2011 amounts Rs 4412.54. In the total funds 44.42% was received from funds from operation
0.58% from unsecured loans.

Regarding the application of funds 9.44% used for investment in fixed assets and
funds used for working capital purpose. Constitute 9.84% respectively.

41

STATEMENT OF CHANGES IN WORKING CAPITAL

Rs in lakhs
31-3-2011

31-12-2011

Particulars

Effect of W.C.
Increase

Decrease

Current Assets :
Inventories
Sundry Debtors
Cash & Bank Balances

3114.57
943.79
1383.35

2889.51
1866.11
1576.48

Loans & Advances

5284.23

3095.64

10725.94

9427.74

3758.62

1303.17

163.86

326.73

162.87

Total Current Liabilities

3922.48

5388.52

Working Capital (C.A. C.L.)

6803.46

4039.22

Total Current Assets

225.06
922.32
193.13
2188.59

Current Liabilities
Current Liabilities
Provisions

Decrease in Working Capital

6803.46

2764.24

2764.24

6803.46

3879.69

3879.69

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE

PERIOD (ARIL2011 DEC 2011)
Rs lakhs

Source
Funds from operations
Raising of long term loans
Sale of non-current (fixed) assets

Rs.
Application
2265.11 Repayment of long term loans
101.14 Purchase of long term investments
1944.29 Increase in Working Capital
42

Rs.
2100.56
166.03
2145.55

Non-trading receipts

102.00
4412.54

TABLE 5

43

4412.14

TABLE 5.1
INTERPRETATION
From the table it is observed that the working capital of company shows
decreased trend. The current Asset of the company has decreased Rs 10725.94 in 31-032011
to Rs 9427.74 in April 31-Dec-2011. The current liabilities of company are decreased
3922.48 in Mar 2011 to Rs 5388.52 in 2011. In 2010-2011 the net working capital of
company stood 6803.46. It is decreased to Rs 4039.22 in April 2011-Dec 2011. The
decreasing net working capital is Rs 2764.24
It is evident from the above table that the total funds flow during the period from
April2011-Dec 2011 amounts Rs 15333.26. In the total funds 44.42% was received from
funds from operation 0.58 from unsecured loans.

Regarding the application of funds 9.44% used for investment in fixed assets and funds
used for working capital purpose. Constitute 9.84% respectively

STATEMENT OF CHANGES IN WORKING CAPITAL

Rs in lakhs
1-1-2012

31-12-2012

Particulars

Effect of W.C.
Increase

Current Assets :
Inventories

2889.51

3971.01

1081.50

Sundry Debtors

1866.11

2531.00

664.89

Cash & Bank Balances

1576.48

12012.16

10435.68

Loans & Advances

3442.81

8821.93

5379.12

44

Decrease

Total Current Assets

9774.91

27336.1

6020.09

131132.52

7112.43

566.86

1373.63

806.77

Total Current Liabilities

6586.95

14506.18

Working Capital (C.A. C.L)

3187.96

12829.95

Increase in Working Capital

9641.99

Current Liabilities :
Current Liabilities
Provisions

12829.95

9641.99
12829.95

17561.19

17561.19

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE

PERIOD (JAN2012 DEC11)
Rs in lakhs
Source
Issue of Share Capital
Raising of long term loans
Sale of non-current(Fixed) Assets

Rs.
Application
16148.49 Funds from loss
3342.83 Repayment of long term loans
Purchase of long term
36806.58
investments
Non-trading payment
Increase in W.C.
56297.90

45

Rs.
1909.25
2592.04
32032.56
10122.06
9641.99
56297.90

TABLE 6

TABLE 6.1

46

INTERPRETATION

From the table it is observed that the working capital of company shows increased
trend. The current Asset of the company has increased Rs 9774.91 in 2011 to Rs 27336.10 in
Jan 2012-Dec 2012. The current liabilities of company are increased 6586.95 in 2011 to Rs
14506.15 in 2012. In 2011-12 the net working capital of company stood 3187.96. It is
increased to Rs 12829.95 in Jan 2012-Dec 2012. The increasing net working capital is Rs
9641.99

It is evident from the above table that the total funds flow during the period from
Jan 2012-Dec 2012 amounts Rs 56297.9. In the total funds 6.82% was received from funds
from operation 19.33%from unsecured loans.

Regarding the application of funds 34.68% used for investment in fixed assets and
funds used for working capital purpose. Constitute 44.26% respectively.

47

NET DECREASE IN WORKING CAPITAL

Rs in Lakhs

Year
2007-08
2008-09
2009-10
2010-11
Mar2011-Dec2011
Jan2012-Dec2012

Increase/Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Increase
TABLE 7

INTERPRETATION

48

Amount
6704.19
183.57
343.75
2145.55
2764.24
9641.99

The above table we observed that 2007-08 would be decreased by Rs. 6704.19
.In the year 2008-09 the working capital has been decreased by Rs. 183.57. In the year
2009-10 the working capital is Rs. 343.75. In 2010-11 Rs.2145.55 has increased the
working capital. In the year Rs. 2764.24 decreases April2011-Dec2011 the working
capital and in the year Jan 2012-Dec 2012 has been increased working capital by
Rs.9641.99.

SUMMARY OF FINDINGS
49

1. In the year 2008 the application of funds around 33.71% utilized for investing in
fixed assets. In subsequent year it is 17.13%, 2.29%, 9.44 and 34.68% following
the years 2009, 2010, 2011, and 2012.

2. Unsecured loans to get 4.42% in the year 2008 and subsequent year it is 35.82%,
4.03%, 0.58% and 19.33% following the years 2009, 2010, 2011, and 2012.

3.

In the year 2008 the repayment of secured loans is 44.60% and subsequent year
22.84%, 5.91%, 7.82%, and 9.66% following the years 2009, 2010, 2011, and
2012.

4.

Repayment of unsecured loans 35.79% in the year 2012 and remaining Years
Company has not repayment of unsecured loans.

5. In the year 2008 & 2009 the issue of share capital is 8.69 % and 8.26 % is in
2012 remaining years company has not issue of share capital.

6. In the year 2008 sale of fixed asset is 5.69% and subsequent years 5.76%, 5.51%,
4.16%, and 78.86 % following the years 2009, 2010, 2011, and 2012

7. In the year 2008 the long term investments is 48.88% and subsequent years
0.39%, 0.04%, 7.23%, and 13.65 following years 2009, 2010, 2011, and 2012
50

8.

Non- trading receipts to get 2.36% in 2008 and subsequent years 21.99%,
23.89%, 22.34%, and 29.39% following years 2009, 2010, 2011, and 2012.

9. In the year 2009 Dividends are 13.95% and subsequent years is 0.56 %, 85.48 %
in 2009 and 2012 remaining Years Company has not any payments.

10. Current assets are Decreased to 39.29% in the year 2008 and subsequent year
18.52%, 17.87% and 9.87% following years 2009,2010 and April 2011

11. Current assets are increased to59.36%in the year 2011 and next year is 40.63 %
in 2012.

12. Current Liabilities are Increased to 23.85% in the year 2008 and subsequent years
is 27.80%, 25.89%, and 22.45% following years 2009, 2010, and April 2011.

13. Current Liabilities are decreased to 34.65% in the year 2011 and next year
65.34% in 2012.

14. In the year 2008 the net decrease in working capital 60.07% and subsequent year
it is 1.83%, 3.43%, and 27.65% following the years 2009, 2010, and April 2011.

51

15. In the year 2011 the net increase in working capital 18.20 and next year it is 81.79
in 2012.

CONCLUSIONS:
The efficiency of management at financial position of ZUARI CEMENT
LIMITED is good
From the analysis it is clear that the share capital remained intact during
the five years upto 2011-12 and the reserves and surplus reached in a
good condition.
Secured loans and unsecured loans increased over the periods.
Company inventories observed an increment except in the year
Cash and bank balances increased except during the years 2007-08 and
2008-09.
The ZUARI CEMENT LIMITED uses more of long term loans/debts than
owners equity.
From the observation it is clear that equity share capital of ZUARI
CEMENT LIMITED remained fixed over the years. There is no
preference share capital in ZUARI CEMENT LIMITED.
Based on the analysis made the total financial position is good.

52

SUGGESTIONS

Net working capital is very low; it is suggested to maintain sufficient net working
capital.
Effective inventory management is needed in the company
The firm should increase investment in current assets to create sufficient securities
for the current liabilities

53

TEXT BOOKS:
FINANCIAL MANAGEMENT

- I.M.PANDEY

FINANCIAL MANAGEMENT

- PRASANNA CHANDRA

FINANCIAL MANAGEMENT

- KHAN & JAIN

ADVANCED MANAGEMENT

- R.K. SHARMA

WEB SITES:
www.zuaricementlimited.com
www.Google.com
www.wikipedia.org/wiki/Funds Flow statement
www.studyfinance.com
www.investorworlds.com
www.netmba.com/finance/Funds Flow statement
REPORTS:-

ANNUAL REPORTS OF ZUARI CEMENT LTD 2007-2012.

54

BALANCE SHEETS FOR THE YEARS 2007-2012

Particulars
Current
Assets :
Inventories
Sundry

31-3-

31-3-

31-3-

31-3-2007 2008

2009

2010

31-3-2011

31-12-

31-12-

2011(9M)

2012(12 m)

3036.66

2693.46

2281.92

2503.2

3114.57

2889.51

3971.01

3534.1

1838.11

3109.72

2467.39

943.79

1866.11

2531

Balances
Loans &

4164.68

1371.05

1716.4

1290.71

1383.35

1576.48

12012.16

Advances
Total

3744.19

1983.03

1771.46

1906.2

5284.23

3095.64

8821.93

14479.63

7885.65

8879.5

8167.5

10725.94

9427.74

27336.1

3448.29
35.25

3557.46
36.29

3827.14
50.43

3381.69
127.9

3758.62
163.86

5061.79
326.73

131132.52
1373.63

3483.54

3593.75

3877.84

3509.59

3922.48

5388.52

14506.18

Debtors
Cash & Bank

Current
Assets
Current
Liabilities :
Current
Liabilities
Provisions
Total
Current
Liabilities

55