INTRODUCTION

Financial statement analysis is defined as the process of identifying financial

strengths and weaknesses of the firm by properly establishing relationship between the
items of the balance sheet and the profit and loss account. There are various methods or
techniques that are used in analyzing financial statements, such as comparative
statements, schedule of changes in working capital, common size percentages, funds
analysis, trend analysis, and ratios analysis.

Financial statements are prepared to meet external reporting obligations and also
for decision making purposes. They play a dominant role in setting the framework of
managerial decisions. But the information provided in the financial statements is not an
end in itself as no meaningful conclusions can be drawn from these statements alone.
However, the information provided in the financial statements is of immense use in
making decisions through analysis and interpretation of financial statements. Financial
statements analysis is a process of evaluating the relationship between the components
parts of the financial statements to obtain a better understanding of a firms position and
performance.

The analysis of financial statements is a process of evaluating the various financial

statements like balance sheets; annual reports the relationship between component parts
of financial statements to obtain better understanding of the firms position and
performance. The first task of the financial analyst is to select the information relevant to
the decision under consideration from the total information contained in the financial
statement. The second step is to arrange the information in a way to highlight significant
relationship. The final step is interpretation and drawing of inferences and conclusions.
Financial analysis is the process of selection, relation and evaluation.
Financial statements summarize the economic consequences of the business
activities of the enterprise and events that influence its performance. They show the
financial position of the enterprise at the end of the reporting period. They provide

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information that is useful for evaluate the performance of the enterprise and to predict its
future performance.
The financial statement and the end products of a financial accounting system may be
perceived as a model that captures the economic reality of the enterprise

The basic financial statements i.e., the balance sheet and profit and loss account or
income statement of business, reveal the net effect of various transactions on the
operational and financial position of the company. The balance sheet gives a summary of
the assets and liabilities of an undertaking at a particular point of time. It reveals the
financial states of the company. The assets side of a balance sheet shows the deployment
of resources of an undertaking while the liabilities side indicates its obligations i.e., the
manner in which these resources were obtained. The profit and loss account reflects the
results of the business operations for a period of time. It contains a summary of expenses
incurred and the revenue realized in an accounting period and the revenue realized in an
accounting period. Both the statement provides the essential basic information on the
financial activities of a business but their usefulness is limited for analysis and planning
purposes. The balance sheet gives a static view of the resources (liabilities) of a business
and the uses (assets) to which these resources have been put at a certain point of time. It
does not disclose the causes for changes in the assets and liabilities between two different
point of time. The profit and loss account, in a general way indicates the resources
provided by operations. But there are many transactions that take place in an undertaking
and which do not operate through profit and loss account. Thus another statement has to
be prepared to show the change in the assets and liabilities from the end of one period of
time to the end of another period of time. The statement is called a statement of changes
in financial position or a funds flow statement

NEED FOR THE STUDY

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 The Funds Flow Statement is widely used by the financial analysis and credit
granting institutions and financial managers in performance of their jobs. It has become a
useful tool in their analytical kit. This is because the financial statements, i.e., Income
Statement and the Balance Sheet have a limited role to perform. Income Statement
measures flow restricted to transitions that pertain to rendering of goods and services to
customers. The Balance Sheet is merely a static statement. It is a statement of assets and
liabilities as on a particular data

OBJECTIVS OF THE STUDY

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 To know the operational efficiency of kusalava international limited
To show the manner in which the operations have been financed, and show the
financial resource have been used.
To analyze the movement of funds between the dates of two balance sheets in
period of study.
To identify the changes in working capital in between above mentioned year.
To improve the financial performance of the company .
If focuses attention on resource available for capital investement.
They provide useful guide to creditiors & lenders.

SCOPE OF THE STUDY:

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 The scope of the study is to find out how assets and liabilities are maintained. It is
done through the balance sheet of the company for the periods, 2011-12, 2012- 13, 2013-
14,2014-15,2015-16.
The study helps to analyse the financial operations of the company, proper
allocation of funds, appraising the use of working capital and to know the overall credit
worthiness of the company

METHODOLOGY OF THE STUDY:

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 Methodology is a systematic procedure of collecting information in order to analyze and
verify a phenomenon. The collection is done through two principle sources viz.

1. Primary data

2. Secondary data

1. Primary Data:

It is the information collected directly without any reference. In this study it was
mainly through interviews with concerned officers and staff, either individually or
collectively. Some of the information had been verified of supplemented conducting
personal with observation.

The data includes:

Interviews with Kusalava International Ltd. employees.

Organization chart has been drawn through observation.

2. Secondary data:

The secondary data was collected from already published source such as
Pamphlets, annual reports, returns and international records.

The data include

Methodology under study has been collected from the annual reports of Kusalava
International Ltd., in house magazines, Publications, books, Journals on Management and
Websites.

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LIMITATIONS OF THE STUDY

Fund Flow Statement has suffered with the following limitations :

(I) It is prepared on the basis of information related to historical in nature. It ignores to
project future operations.
(2) This statement does not focus on transactions involved in non-fund it

(3) It also ignores when transactions involved between current accounts or non-current
accounts.
(4) It does not provide any additional information to the management because financial
statements are simply rearranged and presented

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AUTOMOBILE INDUSTRY:

The Indian automotive market managed to stand to the vagaries of the economic
meltdown to show slightly positive growth during fiscal 2014-15. Overall vehicle sales at
97.23 lakh grew 0.71 per cent from 96.54 lakh units in 2013-14.

AUTOMOBILE DOMESTIC SALES No. OF VEHICLES

TRENDS

Category 2014-15 2015-16 DIFF GROWTH

%

Passenger 15,49,882 15,51,88 1998 0.13

Vehicles 0

Commercial 4,90,494 3,84,122 -10637 -21.69

Vehicles

Three Wheelers 3,64,781 3,49,719 -15062 -4.13

Two Wheelers 72,49,278 74,37,67 188392 2.6

0

Grand Total 9654435 9723391 164691 0.71

(Source: SIAM )
COMMERCIAL VEHICLES SEGMENT:

The Indian Automobile sector is presently going through a phase of slow down
for the last two years i.e. 2013-14 and 2014-15. The sector witnessed a net decline in
production in 2013-14 of (-) 2.29% and in 2014-15 the sector posted a modest growth in
production at 2.96% over 2013-14. The worst affected segment in the auto sector is the
Commercial Vehicle segment, which has witnessed a production decline by almost 24%
in 2014-15 over the previous year. The medium and Heavy Commercial vehicle category
has been the hardest hit which has seen a decline in production by 35% in 2014-15. The
exports of CVs have also plummeted. The department of heavy industry has taken the

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initiative to ensure that under the Stimulus Package-II announced by the Government, the
state governments will be allowed to buy transport vehicles (buses) under the JNNURM
programmed. Among commercial vehicle makers, all major players saw substantial fall in
volumes.

Market leader Tata Motors with a 60 per cent plus share, showed 22 per cent drop
in numbers at 2.34 lakh units while Ashok Leyland showed 37 per cent drop at 47,632.
Eichers sales volume fell 37 per cent at 17,341 units and Force Motors was down 28 per
cent at 7,819 units in 2014-15. The freight movement is unlikely to improve this fiscal
which will impact truck sales.

AUTO COMPONENTS INDUSTRY:

In 2014-15, the automobile industry grew 2.96 % but the components industry
outpaced the vehicle manufacturers with a 6 per cent growth. The total value of auto parts
sold is Rs. 76,300 crore from Rs 72,000 crore. During the year both automotive industry
and the auto-component industry adversely affected by a unprecedented increase in the
prices of major input materials along with the pricing pressures due to the economic
slowdown, put significant pressures on the margins of the automobile manufacturers and
the auto-component manufacturers.

PROSPECTS:
As per SIAM estimates, passenger vehicles are expected to record a sales growth
of 3-5 per cent in FY11-12, commercial vehicles at 7-10 per cent (over a low base of the
previous fiscal), two-wheelers at 0-5 per cent and three-wheelers at 5-8 per cent.
According to SIAM in the fiscal 2015-16, passenger vehicles are expected to have sales
of 18.9 lakh to 19.2 lakh units. Commercial vehicles have been forecast to clock sales of
5.2-5.4 lakh units, while two-wheelers sales have been pegged at 83.4-87.6 lakh units.

The Indian auto components industry has an estimated production of US$ 10

billion. The spiraling demand from domestic and international auto companies has seen

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this sector emerging as one of the fastest growing manufacturing sectors in India and
globally.

The Auto components industry is predominantly divided into five segments:

Engine parts
Drive Transmission & Steering Parts
Suspension & Brake Parts
Electrical Parts
Body and chassis

According to the ACMA (Auto Components Manufacturers Association of India),

the sector is set to grow at a CAGR of 15 per cent till fiscal 2012. This sector is now
working towards an open market. A large number of joint ventures with leading global
manufacturers have already been set up in the auto-components sector. And with India
estimated to have the potential to become one of the top five auto component economies
by 2025, the pace is expected to pick up even further.

Moreover the automotive components industry is perceived as a lucrative sector

with tremendous potential for foreign direct investments. The year 2006-07 saw the auto
components sector soar with exports touching the US$ 3 billion mark and investments
continuing unabated. The ACMA estimates the global sourcing of components from the
country to double from US$ 2.95 billion to US$ 5.9 billion in 2014-15, and touch US$ 20
billion in seven years owing to the huge and growing markets both within India, and
overseas.

Domestic Investments:

The market is so large and diverse that a large number of players can be absorbed
to accommodate buyer needs. The sector not only has global players looking to invest and

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expand but leading domestic component companies are also pumping in huge sums into
expanding operations:

Bharat Forge invested US$ 135 million in its Pune plant for increasing domestic
capacity to 240,000 tones.
Amtek Auto is expanding capacity of its castings unit to 70,000 tonnes per annum
(TPA) from 30,000 TPA.
Sona Koyo plans to have capacity of three million pieces of manual steering gears,
500,000 units of hydraulic power steering and 250,000 units of electronic power
steering (EPS), apart from doubling the capacity of steering columns from one
million parts.
Rico Auto is investing US$ 23 million to expand capacity.
Apollo Tyres plans to invest US$ 469.58 million in the next three years to increase
its production capacity both in India and abroad.
Kesoram Industries is planning to set up three new tyre units in the northern state
of Uttaranchal to take its tyre-making capacity to 734 metric tonnes per day.

With such accelerating interest by both domestic and foreign investors, the Indian
auto component industry is set to growth exponentially.

Foreign Investments:

India enjoys a cost advantage with respect to casting and forging as manufacturing
costs in India are 25 to 30 percent lower than their western counterparts. Seeing the
growing popularity of India in the automotive component sector (a whopping US$ 530
million in terms of foreign direct investment), the Investment Commission has set a target
of attracting foreign investment worth US$ 5 billion for the next five years to increase
India's share in the global auto components market from the existing 0.4 per cent to 3-4
per cent.

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 Chrysler is setting up a local sourcing unit in Chennai and is expected to start
sourcing for its global plant by next year.
Pal finger AG, the Austrian hydraulic lifting, loading and handling systems
manufacturer, has joined hands with Western Auto LLC, Dubai, the vehicle
dealership arm of ETA Star group, have invested US$ 1.7 million to set base in
India.
IFCI Venture Capital Funds Limited is launching a private equity fund in
association with German consultancy UBF-B worth US$ 144.67 million focused
entirely on domestic automotive components industry.
Auto parts maker Robert Bosch of Germany will invest US$ 201.4 million in its
Indian subsidiaries over the next two years.
Japans Omron Corporation, the leading manufacturers of automation components
has set up the company's first production base on the subcontinent.
Swiss company Reiter Automotive India aims to increase its production capacity
in India and extend its product range to heat shields
Fiat is setting up a group purchasing office in India as part of its strategy to cut
costs by buying more components from low-cost centers such as India and China.
Daimler, Hero joint venture will invest US$ 1.1 billion in 5 years to manufacture
light and medium CVs initially, and heavy-duty vehicles by 2012.

The developments in the Indian auto component industry can be traced to trade
liberalization during the 1990s that resulted in an influx of multinational
automotive companies like ford, general motors, Hyundai, Mercedes-Benz,
Peugeot and Volvo into India. The entry of these foreign auto companies during
the early 90s changed quality standards and impacted the complexity of the parts
required by OEMs.

Consumers reacted favorably to the expanded set of offerings and

consequently the demand for cars in India surged. For example, the sale of foreign
brand cars grew from almost nothing before the entry of Hyundai in 1997 to 15%
of the car market in the year 1998-99 to more than 25% of the car market in 2004-
05. the auto market, consisting of passenger vehicles, commercial vehicles, two
wheelers, three wheelers and tractors, expanded from a sales level of 3.3 million

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 vehicles (417,762 passengers vehicles alone) in the year 1995-96, to nearly 6.8
million vehicles (900,752 passenger vehicles) during 2003-04. The Indian auto
component industry responded to these challenges by adding capacity and
modemizing existing plants. The total sales volume of auto components has
increased from $2.9 billion in the year 1999 to $7 billion in the year 2004.

Many firms entered into technical collaboration and equity partnership

global tier-one suppliers. Global tier-one suppliers like Delphi and Visteon set
manufacturing units in India. During this period, there was significant growth in
multinational companies ($1 billion in 2003-04, as against $0.27 billion in 1997
exports are still very compared to annual global auto component sales, which was
$730 billion, they are a significant share of the sales ( approximately 10-12%)
components firms.

Before Maruthi, the auto component industry was characterized by low

volumes, high fragmentation, negligible auto machine and consequently poor
quality. This was simply because the automobile industry did not have any
volumes worth talking about. Maruthi challenged all that (in the process, Indian
car producers in the first year it self by making 22,500 vehicles) For the first time
the Indian market hand volumes worth speaking of a product that was exportable
and proper systems.

They key of course is the export-worthiness of the Maruthi 800, Zen,

something total alien to the industry before. So as Maruthi grew crossing the 1,
00,000 mark by 1989-90, the component industry boomed in tandem. In the
meantime, other Japanese majors like Honda, Yamaha, Toyota and Mitsubishi also
flagged off two-wheelers and light commercial vehicles production. This paved
the way for foreign collaborations in the component sector, and till date some 95
Japanese alliances have been struck. Maruthiit self floated 11 joint ventures (JVs)
and has as many as 375 vendors.

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 That was just the first step in the process of Indian component marks
producing globally competitive products. The next best thing to happen to this
sector was the recession of 1992-93. To maintain their viability, ancillary had little
choice but to focus on export markets, and step up quality. This is evident in the
spate of ISO 9000- certifications those component makers began to receive. Of
the roughly 350 companies in this sector, at least 130 have bagged ISO 9000
certification, something no other industry can boast of.The step up process has not
ended with the Japanese innovation. Gradually manufacturers from ale parts of
the world are making a beeline for India.

Result: Component makers are now exposed to different, more complex and
advanced development processes. Earlier, they were dealing with just one culture,
one standard Japanese. Today we have the Koreans, the Americans, the Europeans
and the French coming with their global suppliers in to the country. Ford, for
instance, is flagging off the ford ACG (Automotive component group) and general
motors have brought in Delhi. Toyota too, is creating a Toyota village around its
manufacturing unit in the south, as is Hyundai, which will house all its ancillary
suppliers in an industrial park. In the south, auto archly has been taken over by
US Major Rockwell. Saks Ancillaries has suffered the same fate. Joint ventures
though, are imperative and at last count there were at least 322 collaborations with
foreign auto majors.

TheReason: Access to technology to differentiate your product from the scores in

the market. Consider the Ran group, which has hired off its clutch business with
luck of Germany into a 50:50 joint venture. The guiding principle, behind the
venture is the opportunity to bring new technology in to the country. We are not
getting the same satisfaction in the clutch business as we were getting from our
other activities. Our partner is probably number 1 in clutches world. We believe
that we will be able to achieve leadership position in a couple of years, says Ran
group Chair Man L. Laxman.

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 Over the past 3 years the Indian auto component industry has been consistently
exporting at least 20% of its production. In 1996-97 exports were worth a cool $
300 millions (Rs.1, 170 Crores). In 5 years, overseas sales are expected to more
than triple to all of $ one billion.

ORIGIN AND GROWTH OF THE ORGANIZATION:

Kusalava International Limited was established in the year 1964. It was earlier known as
Bharat industries where it was started as a small work shop. But later the name was
changed to Kusalava International Limited. To manufactured cylinder liners under the
brand name of TIGER POWER. The chairman of Kusalava International Limited is
Mr. ChukkapalliKusalava.

Kusalava International Limited is one of the largest cylinder liner manufactures in

INDIA.

Today TIGER POWER brand is the most dynamic name in the cylinder liner
manufacturing business.

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Kusalava International Limited has nearly 38 years of industrial manufacturing
experience in the field. Nearly 50% of the production goes to original equipment.
Kusalava International Limited had geared up to meet the technological changes and
world standards. It also in the stood the competition in the world market which arose
done to the establishment of world trade organization.

Kusalava International Limited has consistently delivered quality automotives

components in line with the specific of automobile majors in India and for the
aftermarket spare parts segments to various countries like U.S, Italy, New Zealand,
Bangladesh, Australia, Malaysia, Thailand, Mauritius, and the Middle East.

QUALITY, ENVIRONMENT AND SAFETY POLICY:

We are committed for the satisfaction of all interested parties by:

Supplying quality products on time.

By providing Clean, Green, Healthy and Safe Work

Environment.

Complying with all applicable Legal and Other Requirements

Conservation of Resources & Prevention of Pollution.

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 Continual Improvement in all the Integrated Management
System Process.

TPM POLICY

Kusalava International Ltd commits their selves to maximize Overall plant

Effectiveness by achieving:

Zero Breakdowns

Zero Accidents

Zero Defects

A Safe and Clean Environment and eliminate all other losses through Total
Employee Involvement.

GROWTH OF THE COMPANY:

Kusalava International Limited belongs to Kusalava group of companies. Its honorable

chairman and promoter is Mr. Chukkapalli Ramakrishna Prasad. The group of companies
and their activities.

1).Kusalava Motors (P) Ltd : The company is involved in the activity of trading 2
Wheelers and 4 Wheelers, it is the official dealer for TVS Motors and Hyundai Cars in
the cities of Vijayawada, Guntur, Ongole, Bhimavaram and Gudivada.

2).Kusalava Informatics: Started of as an in-house software arm for developing an

integrated ERP solution, the division has been spun off into a separate company in 2006.
Since then the company has been working on many projects with overseas clients and has
seen unprecedented growth. Please visit www.kusalavainfo.com.

3).Kusalava Finance: The company has been established way back in 1970 and is
engaged in the business of financing automobiles. The company has been able to carve a

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 niche of itself in the automotive sector by offering clients customized financing options
as per their needs.

4).Kusalava Power: The company is involved in the business of power generation and
has a total generating capacity of 3 MW.

5).Kusalava Realty: The Company is involved in the business of developing housing,

apartments and shopping malls.

6).Bharat Automobiles: The company activities involve trading is automobile spare and
represents a host of reputed manufacturers like Bharat Forge for Crank Shafts, Timken
for Bearing, Maple for Pistons and Kusalava for Liners. The company operations and
network spread across entire south India.

7).KusalavaInc: The Company is a trading firm located in Houston, Texas, USA and is
involved in the activity of sourcing automotive components from India and China to
OEM's in USA. The company has products stocked in 22 warehouses across USA to
supply to customers on a JIT basis.

8).Sneha Biotech: The Company is research firm, which focuses on development of

products using biotechnology for agriculture, marine industry and humans as well. The
products are used as a substitute to chemicals & fertilizers in agriculture and aqua
industries and are used as substitutes to drugs for humans.

MILESTONES IN TIGER POWER MANUFACTURING:

1964: Kusalava International Limited comes into existence as M/S Bharat Industries.
Products: Brake drums

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During the inception year itself supplies were started to OEM, Bajaj Tempo.

1972: Started production of grey iron cylinder liners. Started supplies to major road transport
corporations (STU's)

1982: Supplies to replacement market with TIGER POWER-TOUGH PARTS Brand name.

1986: Installed the first Dual Track Induction Furnace in India.

1987: Became the major source for Defense Vehicle Factory

1990: Exported its first consignment to New Zealand.

1992: Tiger Power became the major supplier of cylinder liners in After Market

1994: Emerged as the Largest cylinder liner manufacturer in India.

1995: Kusalava commissions its first overseas office in Houston, Texas, and USA ISO: 9002 certified.

1996: Sales figures crossed of 1 million USD.

Kusalava becomes a limited company.

1998: QS-9000 certified

1999: Started production of Ductile Iron castings.

2005: ISO/TS 16949 certified.

2006: Turn Over crosses 10 millions USD.

2007: Introduced Six Sigma Process.

Awarded by ACMA for Best Six Sigma Project in 2007

2008: Introduced Lean Manufacturing Practices.

Received the best supplied award from EICHER MOTORS, for outstanding contribution to supply

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chain management.
Awarded by ACMA for Best Six Sigma Project in 2008 again.

2009: Entered into an agreement with the Market Leader Darton Sleeves, USA for supplying High
Grade Ductile iron liners to the Drag Racing Market.

2010: Total PM Kick off on July 3rd 2010.

Kusalava commissions new plant at pantnagar, Uttarakhand.

2011: Turn over crosses 20 million USD.

Kusalava commissions new plant at Visakhaptnam, Andhra Pradesh.

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 ORGANIZATIONAL CHART OF
KUSALAVA INTERNATIONAL LIMITED

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 Director
Technical

Operator

Maintenance Engineers

Maintenance
Quality Manager
Control Manager Quality Control Engineers

Purchase Manager Stores Clerk Supervisor

Product Development Engineers
Director Vice President
Exports Manager Dispatch Supervisor Dispatch Clerk
Production Operations Exports Asst. Manager
Vice President Customer Representative Dispatch
Production Supervisor
Manager Dispatch Clerk
Production Engineer
International Business
Project Manager
Manager Product Development
Purchase Manager Stores Clerk
MANAGING DIRECTOR General Manager Marketing Sales Officers
Customer Representative Dispatch Supervisor Dispatch Clerk
Internal Auditors
Project Manager

Accountants

IT Support Engineers
Director Manager
Marketing Accounts
Director
Manager Asst. Manager Assistant
Human Resources

Director IT Manager
Purchase General Manager
Manager Internal Audit

General Manager Information & Technology

Director Finance

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Locations:

Kusalava international Ltd is located in Autonagar in the city of Vijayawada situated in

the state of Andhra Pradesh in India. This Industry has two production units. Unit-1 is
situated in Adavinekkalam, which is 25 kms from Vijayawada, where as Unit-2 is situated
in Autonagar of Vijayawada. The main administration is at Adavinekkalam unit which is
in the city of Vijayawada and other branches at Visakhapatnam and Rudrapur.

Nature of Activity: Product Manufactured

1. Cylinder Liners:

Cylinder liner is a cylindrical part to be fitted into an engine block to form a

cylinder. It is one of the most important functional parts to make up the interior of an
engine the cylinder liner, serving as the inner wall of a cylinder, forms a sliding surface
for the piston rings while retaining the lubricant within.

The most important function of cylinder liners is the excellent characteristic as sliding
surface and these four necessary points.

High anti-galling properties

Less wear on the cylinder liner itself

Less wear on the partner piston ring

Less consumption of lubricant

The cylinder liner receives combustion heat through the piston and piston rings
and transmits the heat to the coolant.

A cylinder wall in an engine is under high temperature and high pressure, with the
piston and piston rings sliding at high speeds. In particular, since longer service life is

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required of engines for trucks and buses, cast iron cylinders that have excellent wear-
resistant properties are only used for cylinder parts.

Also, with the recent trend of lighter engines, materials for engine blocks have
been shifting from cast iron to aluminum alloys. However, as the sliding surface for the
inner cylinder, the direct sliding motion of aluminum alloys has drawbacks in
deformation during operation and wear-resistance. For that reason, cast iron cylinder
liners are used in most cases.

2. Cylinder Liners for Aluminum Blocks:

Global warming has started to show its adverse effects on the environment. To
improve the fuel efficiency and adhere to latest Euro norms automobile manufactures are
shifting towards aluminum engines. These engines have as cast cylinder liners with
special surface on the outer diameter commonly referred to as spiny lock or stipple finish.
To improve rigidity and high thermal conductivity properties of engine blocks, Kusalava
has developed different specifications of cylinder liners that have high adherence to
aluminum blocks at the time of die casting by controlling the coarseness of the outer
casting surface with the special coating materials and in-process controls.

3. Grey & Ductile Iron Piston Rings:

Kusalava has developed materials with special properties in grey and ductile iron
by centrifugal casting process for critical sealing applications. These rings are being
supplied to Automotive, Locomotive, Marine, and Power generation, Aircraft, Aerospace
and Hydrocarbon processing Applications. We also supply rough machined rings to ring
manufactures around the world in ductile and grey iron materials.

4. Centrifugal Castings:

Centrifugal casting method was developed after the turn of the 20th century to
meet the need for higher standards. Spinning molds generate centrifugal force on molten

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metal to position the metal within a mold. As the molten metal solidifies from the outside
in, a casting with dense, close grain structure is created. As a result of close grain
structure the centrifugal process offers products with better physical properties than
castings made using the static casting method. Proper mold design, mold coatings, mold
spinning speeds, pouring speeds, cooling rates and metal chemistry results in castings
with higher yields, fewer impurities and greater strength.

QUALITY
Six Sigma:

A method or set of techniques, Six Sigma has also become a movement focused on
business process improvement. It is a quality measurement and improvement program
originally developed by Motorola that focuses on the control of a process to the point of
six sigma (standard deviations) from a centerline, or put another way, 3.4 defects per
million items. A Six Sigma systematic quality program provides businesses with the tools
to improve the capability of the business processes.

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 Kusalava had started implementing these techniques in 2002.The company had 5
Black belts and 14 Green Belts. And it was awarded twice for its best projects. It had
tangible results in terms of quality and production.

Infrastructure:

1. Plants
Location of Plant 1 Adavinekkalam, Vijayawada.

Adavinekkalem, AgiripalliMandalam,
Address
Krishna District, AP 521212, India

Products Cylinder Liners, Piston Rings, Valve Seats

& centrifugal castings.
Area 14.43 acres
Operations Casting & Machining.

Location of Plant 2 Autonagar, Vijayawada.

Address B-4, Industrial Estate, Vijayawada
520007, India
Products Cylinder Liners, Valve Seats.
Area 2.6 Acres
Operations Machining.

Location of Plant 3 Rudrapur, Uttaranchal.

Plot No.10, Sector-2,IIE Pant
Address Nagar,Rudrapur,UddamSing
Nagar,Uttaranchal-263 153,India
Products Cylinder Liners
Area 3.35 Acres
Operations Casting & Machining.

Location of Plant 4 Special Economic Zone, Visakhapatnam.

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 Address Kusalava International Ltd., VSEZ,
Duvvada,Visakhapatnam -530046,India
Products Cylinder Liners
Area 7.16 acres
Operations Machining.

TIGER POWER The Tough Parts

TIGER POWER TOUGH PARTS has dovetailed their process to give peak
performance with best quality at affordable price a tangible result. We are proud to say
now TIGER POWER TOUGH PARTS is complete Global.

Most of the vehicle manufacture in the Indian domestic market has a tie-up with
international manufactures like Mazda, Hino, Mercedes Benz, Mitsubishi etc.,,
Kusalava International Limited supplies their product to the bellow OEMs in India who
has international collaboration.

LIST OF DOMESTIC O.E.M. CLIENT:

Product wise market share comparison with competitor.

S.No COMPANY COLLABIRATION TP SHARE

.
1. Ashok Leyland Ltd Hino-Japan & British Leyland 100.00%

2. TELCO Mercedes Benz 70.00%

3. Eicher Motors Mitsubishi 100.00%

4. Bajaj Tempo Ltd Daimler Benz 100.00%

5. Swaraj Mazda Mazda 100.00%

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6. V.S.T. Tillers Tractors Ltd Mitsubishi 100.00%

And for the international Market, Kusalava international Limited had a start 5
years back and supplying the products after quality validation for the below customers.
Interestingly, Kusalava has worked in tandem with the above international collaborated
Indian OEMs to achieve their stringent quality requirement both in Foundry and
Machining. The above OEMs contribute 30% of Kusalava International Limited
turnover.

Technical officers from Kusalava have played a vital role in establishing and
understanding the International specification for the domestic OEMs and had good
report for working hand in hand to meet the drawing print specifications. And for the
International Market Kusalava International Limited is supplying the products after
quality validation for the below customers.

DOMESTIC AFTER MARKET:

KUSALAVA had started supplying its products to the aftermarket under the brand
name TIGER POWER since 1982. It has a dominating presence in the after market
and enjoys the confidence of major engine rebuilders/reorders, OEMs and mechanics.
Currently it possesses a market share of 35% in India and 30% in USA. Even Exports a
major share of its production to various countries across the globe viz., Italy, U.K.,
France, New Zealand, Bangladesh, Australia, Malaysia, Thailand, Mauritius and the
Middle East. It had wide-spread, well established networks in India, USA, Canada and
Europe to serve its clients on 24x7 bases. Tiger Power offers a wide range of The Tough
Parts' like Cylinder Liners/Sleeves, Valve Seat Inserts, Valve Guides, Tappets, Pistons,
Piston Pins, Gaskets, Alfin Nickel Inserts, cast sleeves for aluminum blocks, cast
iron/Ductile Iron Pipes, Inertia Rings.

29
 It caters to Marine, Industrial, Automotive, refrigeration, and compressors, Tractor,
Aeronautical and Truck Business. It also caters to the after market requirements by
indirectly supplying the liners in Bulk to Liner manufacturers.

Company Product:

Kusalava manufacturers Liners/Sleeves in both cast iron and S.G. Iron, Centric cast valve
seat insert and Alfin Piston inserts. As a new development Kusalava has started
manufacturing the engineering items out of its own technology like 3 mts., pipes for ash
disposal for the thermal power plants, sugar crushers material, and motor frames for the
heavy electrical motors.

STRENGTHS:

Equipped with the latest technology (in houses) in the industry to manufacture
any variety of Cylinder Liners as per Customer Having a Track record of 45 years

requirements meeting international standards

Highly automated with state of the art technology having the complete
manufacturing facilities in house

Continuous R&D in house to have an edge over the competition

TS 16949 Certified Company

Good brand image

Major supplier to domestic OEMs like Tata Motors limited, Ashok Leyland
Ltd, Eicher Motors Ltd, Bajaj Tempo Ltd, Swaraj Mazda Ltd, VST Tiller Ltd and
International OEMs as Tier 2

Good Distribution Network all over India in the aftermarket and USA

30
 Wide spread Customer segmentation

Implementation of Lean Manufacturing

Dedicated Manpower

Professional approach to the market Multi-location facilities.

Technology Up gradation:

Kusalava has developed the basic technical requirement for the manufacturing of their
products, and in line to develop the technical strength hires experts from Germany for
upgrading the foundry technology in line to the International practices. Till Kusalava has
taken 3 rounds of experts views to validate their process and to fine tune their existing
process for better productivity. Most significantly, Kusalava deputes their technical
managerial personal for the training in different institutes for betterment of their
knowledge and practices.

Mr. Prasad R.K Chukkapalli, Managing Director of the company has visited Japan
under AOTS programmed for 15days technical training in Quality Systems during the
first week of October 02.

ERP Software:

Kusalava has in house software development Center, and presently implementing self
developed ERP System of K Online integrating Finance, Manufacturing, Distribution
and HR Activities across INDIA and USA offices.

At KOnline, we understand the strategic role supply management must play in a

corporation today and the significant impact a supply chain management strategy can
have on earnings. Supply chain management solutions help companies transform supply
strategy into a competitive advantage. We combine expertise, technology and information

31
to help you bring immediate value and profit your companys bottom line. It was used by
the firm in the past.

SAP SOFTWARE: Recently SAP SOFTWARE was introduced in KUSALAVA

INTERNATIONAL LIMITED.

VISION:
To produce Quality auto component products the matching best available in the
world in terms of innovative design features and endues at competitive cost deliverable in
time and maximize customer satisfaction to ensure constant increase in market share and
global presence for the company.

MISION:
To constantly strive for automation and technology up gradation of companys
plant process and product to maximize customer satisfaction and efficient use of
resources at companys disposal to optimize production and minimize cost.
To trigger higher demand for companys products both Domestic and International
Market and there by improve market share.
To improve both top line and Bottom Line of the company to ensure optimum
returns for all stake-holders of the company.

32
To make Kusalava a true global conglomerate through professional management,
corporate governance initiatives and strict adherence to regulatory compliances.

FUNCTIONS OF DIFFERENT DEPARTMENTS

Production:
Production department takes the raw materials and melts it down in the electrical
induction furnace. It makes rough casting through centrifugal dice.

In production department production engineer does operations according to all the

liners drawings. These operations will be finished on different machines. It takes 8 10
operations. After completion of these operations finished liners will be sent to quality
control department to check the quality of the liner manufactured.

Materials:
Material department purchases the raw material on the parameters like good
quality in time delivery, credit facility and on the right time acquiring the raw materials
cost variability.

Marketing:
Marketing departments sells the products through marketing representatives, sales
offices and distributors. This department gets the orders from the customers through the
representatives, sales officers and distributors. This department sends the senior engineers
to check complaints of the customers. This department provides incentives to sell the
product in the market.

Finance:

33
 This department makes economic plans and helps in decision making through MIS
which are needed in survival and profitability of the organization. This departments work
to the requirements of loans and take necessary steps to acquire them from banks and
other financial institutions. It also prepares and sends yearly expenditure and net profits
to the management.

It took into the matters like fluctuations of profits, change in got policies and sales,
market conditions and orders being placed.

FUNDS FLOW STATEMENT

Introduction
The basic financial statements i.e., the balance sheet and profit and loss account or
income statement of business, reveal the net effect of various transactions on the
operational and financial position of the company. The balance sheet gives a summary of
the assets and liabilities of an undertaking at a particular point of time. It reveals the
financial states of the company. The assets side of a balance sheet shows the deployment
of resources of an undertaking while the liabilities side indicates its obligations i.e., the
manner in which these resources were obtained. The profit and loss account reflects the
results of the business operations for a period of time. It contains a summary of expenses
incurred and the revenue realized in an accounting period and the revenue realized in an
accounting period. Both the statement provides the essential basic information on the
financial activities of a business but their usefulness is limited for analysis and planning
purposes. The balance sheet gives a static view of the resources (liabilities) of a business
and the uses (assets) to which these resources have been put at a certain point of time. It

34
does not disclose the causes for changes in the assets and liabilities between two different
point of time. The profit and loss account, in a general way indicates the resources
provided by operations. But there are many transactions that take place in an undertaking
and which do not operate through profit and loss account. Thus another statement has to
be prepared to show the change in the assets and liabilities from the end of one period of
time to the end of another period of time. The statement is called a statement of changes
in financial position or a funds flow statement

The Funds Flow Statement is a statement, which 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 these funds were employed. In simple words it is a statement of sources &
applications of funds.

Meaning and concept of Funds

The term fund has been defined in a number of ways.

In a narrow sense
It means cash only and a funds flow statement. Such a statement
enumerates net effects of the various business transactions on cash and takes into account
receipts and disbursements of cash.

In a broader sense
The term funds, refers to money values in whatever from it may exit.
Here funds means all financial resources, used in business whether in the form of men,
material money, machinery and others.

In a Popular sense
The term funds, means working capital, i.e., the working capital concept
of funds has emerged due to the fact that total resources of a business are invested partly
in fixed assets in the form of fixed capital and partly kept in form of liquid or near liquid
form as working capital.
35
Meaning and concept of Flow of funds
The term flow means movement and includes both inflow and out flow. The term
flow of funds means transfer of economic values from one asset of equity to another flow
of funds is said to have taken place when any transaction makes changes in the amount of
funds available before happening of the transaction. If the effect of transaction results in
the increase of funds it is called a source of funds and if it results in the decrease of funds,
it is known as an application of funds. Further, in case the transaction does not change
funds, it is said to have not resulted in the flow of funds.
According to the working capital concept of funds, the term flow of funds
refers to the movement of funds in the working capital. If any transaction results in the
increase in working capital, it is said to be a source or flow of funds and if it results in the
decrease of working capital ,it is said to be an application or out flow of funds.

Rule
The flow of funds occurs when a transaction changes on the one hand a
non current account and on the other a current account and vice versa only. In simple
language funds move when a transactions effects
1 a current asset and a fixed asset, or
2 a fixed and a current liability or
3 a current asset and a fixed liability or
4 a fixed liability and current liability
And funds do not move when the transaction affects fixed assets and
fixed liability or current assets and current liabilities.

Current and Non-Current Account

To understand flow of funds it is essential to classify various accounts and
balance sheet items into current and non-current categories

36
 Current accounts can either be current assets or current liabilities. Current assets
are those assets which in ordinary course of business can be or will be converted into
cash within a short period of normally one accounting year.
Current liabilities are those liabilities which are intended to be paid in the
ordinary course of business with in a short period of normally one accounting year
out of the current assets or the income of the business.

37
 LIST OF CURRENT OR WORKING CAPITAL ACCOUNTS

Current Liabilities Current Assets

1. Bills payable 1. Cash in hand.
2. Sundry creditors or accounts payable 2. Cash at bank.
accrued or outstanding expenses

3. Dividend payable Bank over draft. 3. Bills receivable.

4. Short-term loans advances &deposits. 4. Sundry debtors or accounts receivable.

5. Provision against current assets. 5. Short term loans & advances

6. Provision for taxation, if it does not 6. Temporary or Marketable investments.

amount to appropriation of profits.

7. Proposed dividend (may be a current 7. Inventories or stocks Such as

or non-current liability).
1. raw material
2. work in process
3. stores & spares
4. finished goods
8. Prepaid expenses
9. Accrued incomes

38
 LIST OF NON-CURRENT OR PERMANENT CAPITAL ACCOUNTS

Non-current or permanent liabilities Non current or permanent assets

1. Equity share capital 1. Goodwill

2. Preference share capital 2. Land
3. Redeemable preference share capital 3. Building

4. Debentures 4. Plant & machinery

5. Long term loans 5. Furniture & fitting
6. Share premium Account 6. Trade marks
7. Share premium account 7. Patent rights
8. Share forfeited account 8. Long-term investment
9. Profit & loss account (balance of 9. Debit balance of profit and loss
profit, i.e., credit balance) account

10.Capital reserve 10.Discount on issue of shares

11.Capital redemption reserve 11.Discount on issue of debentures

12.Provision for depreciation against fixed 12.Preliminary Expenses

assets

1. general reserve 13.Other deferred expenses

2. dividend equalization fund
13.Insurance fund
14.Compensation fund
15.Sinking fund
16.Investment Fluctuation fund
17.Provision for Taxation
18.Proposed dividend

39
PROCEDURE FOR KNOWING WHETHER A TRANSACTION RESULTS IN THE
FLOW OF FUNDS OR NOT:
1. Analyses the transaction and find out the two accounts involved.
2. Make journal entry of the transaction.
3. Determine whether the accounts involved in the transaction are current or non-
current.
4. If both the accounts involved are current i.e., either current assets or current
liabilities, it does not result in the flow of funds.
5. If both the account involved is, non-current, i.e., either permanent assets or
permanent liabilities, it still does not result in the flow of funds.
6. If the accounts involved are such that one is a current account while the other is a
non-current account, i.e., current asset and fixed asset, or current liability and
permanent liability then it results in the flow of funds.

Meaning and definition of funds flow statement

Funds flow statements 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.
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.
------ FOULKE

The funds flow statement describes the source from which additional
funds were derived and the use to which these coerces were put.
-------ANTHONY.

Funds flow statement as as a statement either prospective or retrospective

setting out the sources and applications of the funds of an enterprise. The purpose of the

40
statement is to indicate clearly the requirement of funds and how they are proposed to be
raised and the efficient utilization and application of the same
------- ICWA.IN GLOSSARY OF MANAGEMENT ACCOUNT

Funds flow statement, income statement and balance sheet:

Funds flow statement is not a substitute of an income statement, i.e., a
profit & loss account and balance sheet.
A balance sheet is a statement of financial position or status of a business
on a given date. It is prepared at the end of accounting period. The balance sheet depicts
various resources of an undertaking and he deployment of these resources in various
assets on a particular date.
Hence, funds flow statement is not competitive but complementary to
financial statements. The funds statement provides additional information as regards
changes in working capital. It is a tool of management for financial analysis and helps in
making decisions.

DIFFERENCE BETWEEN FUNDS FLOW STATEMENT AND INCOME

STATEMENT

41
 Funds flow statement Income statement
1. It highlights the changes in the 1. It does not reveal the inflow and
financial position of a business and outflows of funds but deposits the
indicates the various means by items of expenses and income
which funds were obtained during arrive at the figure of profit or loss.
a particular period and the ways to
which these funds were employed. 2. Income statement is not prepared
2. It is complementary to income from fund flow statement.
statement. Income statement helps
the preparation of funds flow 3. Only revenue item are considered.
statement.
3. While preparing funds flow 4. It is prepared prescribed format.
statement both capital and revenue
item are considered.
4. There is no prescribed format for
preparing a fund flow statement.

DIFFERENCE BETWEEN FUNDS FLOW STATEMENT & BALANCE SHEET

42
 Funds flow statement
1. It is a statement of changes in
financial position and hence is
dynamic in nature.
2. It shows the sources and uses of
funds in a particular period of
time.
3. It is a tool of management for
financial analysis and helps in
making decisions.
4. Usually, schedule of changes in
working has to be prepared before
preparing funds flow statement.
Balance sheet
1. It is a statement of financial
position on a particular date and
hence is static in nature.
2. It depicts the assets and
liabilities at a particular point of
time.
3. It is not of much help to
management in making decisions.
4. No such schedule of
changes in working capital is
required. Rather profit & loss
account is prepared.

Uses of funds flow statement.

1. A fund flow statement is an essential tool for the financial analysis and is of
primary importance to the financial management. The basic purpose of a funds flow
statement is to reveal the changes in the working capital on the two balance sheet
dates. If also describes the sources from which additional working capital has been
financial and the uses to which working capital has been applied. Such a statement is
particularly useful in assessing the growth of the firm. The significance or
importance of funds flow statement can be well followed from its various uses given
below. It helps in the analysis of financial operations
The financial statements reveal the net effect of various transactions on the
operational and financial position of a concern. The balance sheet gives a static view of
the resources of a business and the uses to which these resources of a business and the
uses to which have been put at a certain point of time. The funds flow statement explains
causes for such changes and also the effect of this change on the liquidity position of the
company sometime a concern may operate profitably and yet its cash position may
become more and more worse. The funds flow statement gives a clear answer to such a
situation explaining what has happened.
2. It throws light on many perplexing questions of general interest

43
 Which otherwise may be difficult to be answered, such as
1. Why were the net current assets lesser spite of higher profits and vice versa?
2. Why more dividends could not be declared in spite of available profits?
3. How was it possible to distribute more dividends than the present earnings?
4. What happened to the proceeds of sale of fixed assets or issue of shares,
debentures, ect. ?
5. What happened to the net profit? Where did they go?
6. How was the increase in working capital financed and how will it be financed in
future?
3. It helps in the formation of a realistic dividend policy
Some times a firm has sufficient profits available for distribution as
dividend but yet it may not be advisable to distribute
dividend for lack of liquid or cash resources. In such cases, a
funds flow statement helps in the formation of a realistic dividend policy.

4. It helps in the proper allocation of resources

The resources of a concern are always limited and it wants to make the
best use of these resources. A projected funds flow statement constructed for the future
helps in making managerial decisions. The firm can plan the deployment of its resources
and allocate them among various applications.
5. It acts as a future guide
A projected funds flow statement also acts a guide for future to the
management. The management can come to know the various problems it is going to face
in near future for want of funds. The firms future needs want of funds. The firms future
needs of funds can be projected work in advance and also the timing of these needs.
6. It helps in appraising the use of working capital
A funds flow statement helps in explaining haw effectively the
management has used its working capital and also suggests ways to improve working
capital position of the firm.
7. It helps knowing the overall credit worthiness of a firm
The financial institutions and banks such as state financial institutions.
Industrial Development Corporation, industrial finance corporation of India, industrial
44
development bank of India, etc., all ask for funds flow statement constructed for a
member of years before granting loans to know the credit worthiness and paying capacity
of the firm. Hence, a firm seeking financial assistance from these institutions has no
alternative but to prepare funds flow statement.
LIMITATIONS OF FUNDS FLOW STATEMENT
1. It should be remembered that a funds flow statement is not a substitute of an
income statement or a balance sheet. It provides only some additional information
as regards changes in working capital.
2. It cannot reveal continuous changes.
3. It is not original statement but simply is arrangement of data given in the financial
statements.
4. It is essentially historic in nature and projected funds flow statement cannot be
prepared with much accuracy.
5. Changes in cash are more important and relevant for financial management than
the working capital.
PROCEDURE FOR PREPARING A FUNDS FLOW STATEMENT
The funds flow statement is prepared by comparing two balance sheets
and with the help of such other information derived from the accounts as may be needed.
The preparation of a funds flow statement consists of two parts :
1. Statement or schedule of changes in working capital.
2. Statement of sources and application of funds.
1. Statement or Schedule of changes in Working Capital
Working Capital means the excess of current assets over current liabilities.
Statement of changes in working capital is prepared to show the changes in the working
capital between the two balance sheet dates. This statement is prepare with the help of
current assets and current liabilities derived from the two balance sheets
As, Working Capital = Current Assets Current Liabilities
i) An increase in current assets increases the working capital.
ii) A decrease in current assets decreases the working capital.
iii) An increase in current liabilities decreases the working capital.
iv) A decrease in current liabilities increases the working capital.

45
 A typical for statement or schedule of changes in working capital is as
follows
1. Statement of changes in Working Capital

Effect in working
capital
Previous Current
Particulars year Year Increase Decrease

Current Assets
Cash in hand xxx xxx
Cash at bank xxx xxx
Bills Receivable xxx xxx
Sundry Debtors xxx xxx
Temporary Investments xxx xxx
Stock or Inventories xxx xxx
Prepaid Expenses xxx xxx
Accrued Incomes xxx xxx
Total Current Assets xxx xxx
Current Liabilities
Bills Payable xxx xxx
Sundry Creditors xxx xxx
Outstanding Expenses xxx xxx
Bank Overdraft xxx xxx
Short term advances xxx xxx
Dividend Payable xxx xxx
Proposed Dividend * xxx xxx
Provision for Taxation * xxx xxx
Total Current Liabilities xxx xxx xxx xxx
Working Capital (CA - CL) xxx xxx
Net Increase / Decrease in
Working Capital xxx xxx xxx xxx
* May or may not be a current liability.
2. Statement of Sources and Application of Funds

Funds flow statement is a statement which indicates various sources from

which funds (working capital) have been obtained during a certain period and the

46
 uses a applications to which these funds have been put during that period. Generally,
the statement is prepared in tow formats.

i) T Form or an Account form or Self Balancing Type.

Specimen of Report Form of Funds Flow Statement

Particulars Amount (Rs.)

Sources of Funds
Funds from Operations xxx
Issue of Share Capital xxx
Raising of Long term Loans xxx
Receipts from Partyly Paid Share Called-up xxx
Sales of Non Current (Fixed) Assets xxx
Non Trading Receipts (Dividend Received.) xxx
Sale of Investment (long term) xxx
Decrease in Working Capital xxx
(as per schedule of changes in working capital) xxx
Total xxx
Applications of Funds
Fuds Lost in Operations xxx
Redemption of Preference Share Capital xxx
Redemption of Debentures xxx
Repayment of Long term Loans xxx
Purchase of Non Current (Fixed) Assets xxx
Purchase of Long term Investment xxx
Non Trading Payments xxx
Payment of Dividend * xxx
Payment of Tax * xxx
Increase in Working Capital xxx
(as per schedule of changes in working capital) xxx
Total xxx

T Form or An Account Form or Self Balancing Type Funds Flow

Statement

Amount Amount
Sources (Rs.) Applications (Rs.)

47
Funds from Operations xxx Funds Lost in Operations xxx
Redemption of Preference
Issue of Share Capital xxx Share Capital xxx

Issue of Debentures xxx Redemption of Debentures xxx

Repayment of Long term
Raising of Long term Loans xxx Loans xxx
Receipts from Partly paid Purchase of Non Current
shares, called up xxx (Fixed) Assets xxx
Non trading Receipts Purchase of Long term
(Dividend) xxx Investments xxx
Sale of Long term
Investment xxx Non trading Payments xxx
Net Decrease in Working
Capital xxx Payment of Dividends * xxx
Payment of Taxes* xxx
Net Increase in Working
Capital xxx
xxx xxx

*Note

Payment of dividend and tax will appear as an application of funds only

when these items are appropriations of profits and not current liabilities.

Basically there are two methods of calculating Funds From Operations

a) The first method is to prepare the profit and loss account a

fresh by taking into consideration only fund and operational terms
which involve funds and are related to the normal operations of the
business.
b) The second method (which is generally used) is to proceed
from the figure of net profit and net loss as arrived at from the profit
and loss account already prepared.
48
 Funds from Operations by this method can be calculated as
under.

Calculation of Funds from Operation

Particulars Amount (Rs.)

Closing balance of P&L a/c or Retained Earnings ( as given in the
balance sheet xxx
Add : Non Fund and Non Operating items which have been already
debited to P & L a/c xxx
i) Depreciation and Depletion xxx
ii) Amortization of fictitious and Intangible xxx
1. Good will xxx
2. Patents xxx
3. Trade Marks xxx
4. Preliminary Expenses xxx
5. Discount on issue of Shares, etc., xxx
iii) Appropriation of Retained Earnings, such as xxx
1. Transfer to General Reserve xxx
2. Dividend Equalization Fund xxx
3. Transfer to Sinking Fund xxx
4. Contingency Reserve, etc., xxx
iv) Loss on Sale of any Non Current (Fixed) Assets, such as xxx
1. Loss on Sale of Land & Buildings xxx
2. Loss on Sale of Machinery xxx
3. Loss on Sale of Furniture xxx
4. Loss on Sale of long - term Investments, etc xxx
v) Dividend including xxx
1. Interim Dividend xxx
2. Proposed Dividend (if it is an appropriation of profits
and not taken as current liability xxx

vi) Provision for Taxation (if it is not taken in Current Liability) xxx
vii) Any other non-fund/ non operating items which have been debited
to p & l a/c) xxx
Total (a) xxx

49
Less : Non Fund or Non Operating items which have already been
Credited to P & L a/c xxx
i) Profit on Sale of Non Current (Fixed) Assets, such as xxx
1. Profit on sale of Land & Buildings xxx
2. Profit on sale of Plant & Machinery xxx
3. Profit on sale of Long - term Investments, etc., xxx

ii) Appreciation in the value of Fixed Assets, such as Increase in the

value of Land if it has been credited to P & L a/c xxx
iii) Dividend Received xxx
iv) Excess Provision retransferred to P & L a/c or written off xxx
v) Any other non - operating items which has been credited to P & L
a/c xxx
vi) Opening Balance of P & L a/c or Retained Earnings (as given in
the balance sheet) xxx
Total (b) xxx
Funds Generated by Operations (Total (a) - Total (B)) xxx

b) Funds from Operations can also be calculated by preparing adjusted

Profit & Loss Account as follows.

Adjusted Profit & Loss Account

Amount Amount
Particulars (Rs) Particulars (Rs)

50
To Depreciation & Depletion or
Amortization of Fictions and By Opening Balance (of P &
Intangible Assets xxx La/c) xxx

Good will, Patents, Trade

marks, Preliminary Expenses, By Transfer from excess
etc., provisions xxx
To Appropriation of Retained By Appreciation in the value
Earnings xxx of fixed assets xxx

Transfer to General
Reserves, Dividend Equalization
Fund, Sinking Fund, etc., By Dividends Received xxx
To Loss on Sales of any Non - By Profit on sale of fixed or
Current or Fixed Assets xxx non current assets xxx

By Funds from operations

To Dividends (Including interim (balancing figures incase
Dividend) xxx debit side exceeds credit side) Xxx
To Proposed Dividend (if not
taken as a current liability) xxx
To Provision for Taxation (if not
taken as a current liability xxx

To Closing balance (of P& L a/c) xxx

To Funds lost in Operations

(balancing figure incase side
exceeds the debit side) xxx
xxx Xxx

CASH FLOW STATEMENT

INTRODUCTION

51
 Cash plays a very important role in the entire economic life of a business. A firm
needs cash to make payments to its suppliers, to incur day-to-day expenses and to pay
salaries, wages, interest and dividend, etc. In fact ,what blood is to a human body, cash is
to a business enterprise. It is very essential for a business to maintain an adequate balance
of cash. But many times , a concern operates profitably and yet it becomes very difficult
to pay taxes and dividend. This may be because
although huge profits have been earned yet cash may not have been received.
even if cash has been received, it may have drained out (used) for some other
purposes.
This movement of cash is of vital importance to the management.
We have studied in the previous chapter that the two basic financial
statements, i.e., the balance sheet and profit and loss account , provide the essential basic
information on the financial activities of a business, but their usefulness is limited for
analysis and planning purposes. The balance sheet does not disclose the causes for
changes in the assets and liabilities between two different points of time. The profit and
loss account also fails to disclose the reasons for shortage of cash in spite of positive net
income. Thus, another statement ,called funds flow statement, was prepared to show the
changes in the assets and liabilities from the end of one period of time to the end of
another period of time. To underline the importance of funds statement, the institute of
Chartered Accountants of India (ICAI) issued in June,1981 Accounting Standard-3
dealing with the preparation of statement of changes in Financial Position. The statement
of changes in financial position summarized, for the period covered by it, the changes in
the financial position including the sources from which funds where obtained by the
enterprise and the specific uses to which such funds where applied. For this purpose, the
term funds was defined as cash and cash equivalents or working capital. The statement
in financial position, also called Funds Flow Statement , was intended to provide a
meaningful link between the balance sheet at the beginning and at the end of a period
and the profit and loss account for that period.
MEANING
Cash flow statement is a statement which describes the inflows
(sources) and outflows (uses) of cash and cash equivalents in an enterprise during a

52
period of time. Such a statement enumerates net effects of the various business
transactions on cash and its equivalents and takes into account receipts and disbursements
of cash. A cash flow statement summarizes the causes of changes in cash position of a
business enterprise between dates of two balance sheets. According to As-3 (Revised), an
enterprise should prepare a cash flow statement and should present it for each period for
which financial statements are prepared. The terms cash, cash equivalents and cash flows
are used in this statement with the following meanings:
1. Cash comprises cash on the hand and demand deposits with banks.
2. Cash equivalents are short term, highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an insignificant
risk of changes in value. Cash equivalents are held for the purpose of meeting
short-term cash commitments rather than for investment or other purposes.
3. Cash flows are inflows and outflows of cash and cash equivalents. Flow of cash
is said to have taken place when any transaction makes changes in the amount of
cash and cash equivalents available before happening of the transaction. If the
effect of transaction results in the increase of cash and its equivalents, it is called
an inflow (source) and if it is results in the decrease of total cash, it is known as
outflow (use) of cash.
CLASSIFICATION OF CASH FLOWS

Cash flows are classified into three main categories:

1. Cash flows from operating activities.
2. Cash flows from investing activities.
3. Cash flows from financing activities.
1. Cash Flows From Operating Activities:
Operating activities are the principal revenue-producing activities of the
enterprise and other activities that are not investing or financing 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 investments without recourse to external sources of financing. Information

53
 about the specific components of historical operating cash flows is useful, in
conjunction with other information, in forecasting future operating cash flows.
Examples of cash flows from operating activities are:
(a) cash receipts from the sale of goods and the rendering of services;
(b) cash receipts from the royalties, fees, commissions, and other revenue;
(c) cash payments to suppliers of goods and services;
(d) cash payments to and on behalf of employees.
2. Cash Flows From Operating Activities:
Investing activities are the acquisition and disposed of long-term assets and
other investments not included in cash equivalents. The separate disclosure 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.
(a) cash payments to acquire fixed assets (including intangibles).
These payments include those relating to capitalized research &
development costs and self constructed fixed assets;
(b) 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);
(c) cash receipts from disposal of fixed assets (including intangibles).
3. Cash Flows From Financial Activities:
Financing activities are activities that results in changes in the size and
composition of the owners capital (including preference share capital in the case of a
company) and borrowings of the enterprise The separate disclosure of cash flows arising
from financing activities is important because it is useful in predicting claims on future
cash flows by providers of funds (both capital and borrowings) to the enterprise.
Examples of cash flows arising from financing activities are:
(a) cash proceeds from issuing shares or other similar instruments;

54
 (b) cash proceeds from issuing debentures, loans, notes, bonds, and other short-term
borrowings;
(c) cash repayments of amounts borrowed such as redemption of debentures, bonds,
preference shares
OBJECTIVES
1. Information about the cash flows of an enterprise is useful in
providing users of financial statements with a basis to assess the
ability of the enterprise to generate cash and cash equivalents and
the needs of the enterprise to utilize those cash flows.
2. The economic decisions that are taken by user require an
evaluation of the ability of an enterprise to generate cash and cash
equivalents and the timing and certainly of their generation.
3. The statement 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.
SCOPE
1. An enterprise should prepare a cash flow statement and present it for each period
for which financial statements are presented.
2. Users of an enterprises financial statements are interested in how the enterprise
generates and uses cash and cash equivalents. This is 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, as may be
the case with a financial enterprise.
3. Enterprises need cash for essentially the same reasons, however different their
Principal revenue-producing activities might be.
4. They need cash to conduct their operations, to pay their obligations, and to
provide returns to their investors

USES AND SIGNIFICANCE OF CASH FLOW STATEMENT

55
 Cash flow statement is of vital importance to the financial management. It is an
essential tool of financial analysis for short-term planning. The chief advantages of cash
flow statement are as follows:
(1) Since a cash flow statement is based on the cash basis of accounting, it is very
useful in the evaluation of cash position of a firm.
(2) A projected cash flow statement can be prepared in order to know the future cash
position of a concern so as enable a firm to plan and coordinate its financial
operations properly. By preparing this statement, a firm can come to know as to
how much cash will be generated into the firm and how much cash will be needed
to make various payments and hence the firm can well plan to arrange for the future
requirements of cash.
(3) A comparison of the historical and projected cash flow statements can be made so
as to find the variations and deficiency or otherwise in the performance so as to
enable the firm to take immediate and effective action.
(4) A series of intra-firm and inter-firm cash flow statements reveals whether the firms
liquidity (short-term paying capacity)is improving or deteriorating over a period of
time and in comparison to other firms over a given period of time.Cash flow
statement helps in planning the repayment of loans, replacement of fixed assets and
other similar log-term planning of cash. It is also significant for capital budgeting
decisions.
(5) Cash flow analysis is more useful and appropriate than funds flow analysis for
short-term financial analysis as in a very short period it is cash which is more
relevant then the working capital for forecasting the ability of the firm to meet its
immediate obligations.
(6) Cash flow statement provides information of all activities classified under
operating, investing and financing activities, the funds statement even when
prepared on cash basis, did not disclose cash flows from such activities separately,
Thus, cash flow statement is more useful than the funds statement.

56
LIMITATIONS OF CASH FLOW STATEMENTS
Despite a number of uses, cash flow statements suffers from the following limitations:
(1) As cash flow statement is based on cash basis of accounting, it ignores the basic
accounting concept of accrual basis.
(2) Some people feel that as working capital is a wider concept of funds, a funds flow
statement provides a more complete picture than cash flow statement.
(3) Cash flow statement is not suitable for judging the profitability of a firm as non-
cash charges are ignored while calculating cash flows from operating activities.
PREPARATION OF CASH FLOW STATEMENT
The Cash Flow Statement is to be presented as per the AS-3 of the Institute of
Chartered Accountants of India (ICAI). The ICAI issued AS-3in June, 1981 for the first
time. Later in March, 1997 it revised the standard. The model stipulated in AS-3 is the
widely accepted model for presentation of Cash Flow Statements.
All the listed companies/entities whose financial year ends on March, 1996
and thereafter will be required to give Cash Flow Statement along with Balance Sheet
and Profit and Loss Account. The above amendment comes into effect immediately I.e.,
w.e.f.15-2-1996

PRESENTATION OF CASH FLOW STATEMENT

While preparing the cash flow statement, cash flows from operating activities
are presented first, followed by investing activities and then financing activities .the
individual inflows and outflows relating to investing and financing activities are
presented separately in their respective categories. The operating activities section can be
presented using the direct method or indirect method. In the direct method cash flow
statement is presented primarily on a cash receipts and cash payments basis, instead of on
accrual basis. In the indirect method, net income is adjusted for items that affected net
income but did not affect cash.

Direct Method:

57
Format of Cash Flow Statement

Amount Amount
Particulars Rs Rs

A. Cash Flows from Operating Activities

Cash Receipts:
Sales xxx
Interest Received xxx
Cash payments for xxx
Purchases xxx
Operating Expenses xxx
Interest payments xxx xxx
Income taxes xxx

Net Cash Flows from Operating Activities xxx

B. Cash Flows from Investing Activities
Sale of Plant Assets xxx
Sale pf Investments xxx
Purchase of Plant Assets xxx
Purchase of Investments xxx

Net Cash Flow used by Investing Activities xxx

C. Cash Flows from Financing Activities
Repayment of Bonds and Debentures xxx
Issue of Common Shares xxx
Dividend paid xxx
Net cash flows Financing Activities xxx xxx

Net Increase/Decrease in cash xxx

DATA ANALYSIS &INTERPRETATION

58
Analysis of data

Analysis and interpretation of collected data is the heart of project work. Only
after analysis one can arrive at the various findings with the related problem identified.
This findings that have been arrived after analysis and interpretation helps to find out the
hidden solutions for the problem and give most appropriate suggestions for over coming
problems.

The analysis and interpretation can be carried out by various techniques. These
techniques help in analyzing the large volume of data by establishing the quantity
relation between various caravels of data.

The techniques are involved

Changes in working capital

Funds flow analysis

Cash flow analysis

SCHEDULE OF CHANGE IN WORKING CAPITAL FOR THE YEAR ENDED

2011-12

PARTICULARS 31.03.2011 31.03.2012 INCREASE DECREAS

E
A) Current Assets

59
 Inventories 977.61 1234.0 -- 256.39

Cash and bank balance 46.84 57.14 -- 10.03

Trade Debtors 1418.18 143.57 --

707.06
Sundry Debtors 394.18 710.58 --

316.04
Loans & Advances 305.40

351.69

Total (A) 3162.43 3792

B) Current Liabilities

Creditors for goods 718.38 911.89 193.51 ---

Sundry Creditors 85.36 122.89 37.57 --

Advances 16.09 21.94 5.5 ---

Creditors for expenses 110.09 138.47 28.30 ---

Total (B) 929.91 1195.58

A-B 2232.37 2596.42

Decrease in working capital 364.05 ---- 364.05

Total 2232.37 2232.37

STATEMENT OF FUNDS FLOW FOR THE YEAR ENDED 2011-12

Particulars Rs.in lakhs

Source
Secured loan 164.16

60
Un secured loans 61

Tax adjustment 17.18

Decrease in working capital 58.22

364.05

Applications

Increase in investments 664.63

Increasing fixed assets 23

Total 641.63

STATEMENT OF CASH FLOW FOR THE YEAR ENDED 2011-12

61
Particulars Rs. In lakhs Rs. In lakhs
Inflows
Profit after tax 164.16

(+) Depreciation 438.54

Increase in current liabilities 265.23
Share capital 2.00
Increase in secured loans 61
Increase in unsecured loans 17.18
Deferred tax adjustment 58.22

Total 1005

Outflows
Increase in current assets
Purchase of fixed assets 374.37
Purchase of investment ---
1005
Total

Opening balance of cash & bank 47

Closing balance of cash & bank 57

10
Surplus

INTERPRETATION

During the period 2011-12 there is decrease in working capital. We got funds

loss from operations (164.16) lakhs. There was no contribute the share

capital that means it is constant in that year applications are payment of

secured loans, unsecured loans, purchase of investments. The sources of

62
 funds are increased for the cause of sale fixed assets.

SCHEDULE OF CHANGE IN WORKING CAPITAL FOR THE YEAR ENDED

2012-13

PARTICULARS 31.03.2012 31.03.2013 INCREASE DECREASE

A) Current Assets
Inventories 1234.01 1347.07 144.72 ---
Cash and bank balance 57.14 105.29 14.06 ---
Trade Debtors 1438.57 1667.42 25.93 ---
Sundry Debtors 710.58 640.67 0 12.28
Loans & Advances 351.19 315.63 10.36 ---
Total(A) 3792 4076.11
B) Current Liabilities
63
Creditors for goods 911.82 787.47 --- 47.57
Sundry Creditors 122.89 107.36 30.15 ---
Advances 21.94 19.03 --- 13.92
Creditors for expenses 138.47 182.34 --- 7.5
Total(B) 1195.58 1095.89
A-B 2596.42 2980.22
Increase in working capital 383.3 ----- 383.8
Total 2596.42 2596.42

STATEMENT OF FUNDS FLOW FOR THE YEAR ENDED 2012-13

Particulars Rs.in lakhs

Sources

Profit from operations 176

un secured loans 300

secured loans 50.38

tax liabilities 65

Total 592.38

Applications

Increase in working capital 383.3

64
Purchase of fixed asset 209.08

Total 592.38

CASH FLOW STATEMENT FOR THE YEAR ENDED 2012-13

Particulars Rs. In lakhs Rs. In lakhs

Inflows
Profit from operation 176

Depreciation 448.6
Share capital 2
Secured loan 300
Un secured loan 5.01
Tax liabilities 10 942.85

Total 942.85

Outflows
Current assets 284.1
Purchase of fixed assets 658.75

65
 Purchase of investment -- --
942.85
Total 942.85

Opening balance of cash & bank 57

Closing balance of cash & bank 105
48
Surplus 48

INTERPRETATION

During the period 2012-13 there is increase in working capital.

This year organization is in profit we got funds from operations176. Lakhs.

This is the major sources in the organization and the unsecured loans are also

another source of the company.

The application is payment of secure loans, purchase of fixed assets etc.

66
 SCHEDULE OF CHANGE IN WORKING CAPITAL FOR THE YEAR ENDED

2013-14

PARTICULARS 31.03.2013 31.03.2014 INCREASE DECREASE

A) Current Assets

Inventories 977.61 1234 235.75 ----

Cash and bank balance 46.84 57.14 10.3 ---

Trade Debtors 1418.11 1438.57 20.46 ---

Sundry Debtors 394.18 710.58 316.4 ---

Loans & Advances 327 351.69 64.29

Total(A) 3162.43 3792

B) Current Liabilities

Creditors for goods 718.38 911.89 --- 193.51

Sundry Creditors 85.36 122.84 37.48

Advances 16.09 21.94 5.85 ---

67
Creditors for expenses 110.09 138.47 28.38 ---

Total(B) 929.91 1195.58

A-B 2232.37 2596.42

Increase in working capital 364.05 364.05

Total 2232.37 2232.37

STATEMENT OF FUNDS FLOW FOR THE YEAR ENDED 2013-14

Particulars Rs. in lakhs

Sources
Profit from operations 164.14

Unsecured loans 17.18

Secured loans 61
Deferred tax adjustment 58.22
Decreasing fixed assets 64

Total 364.05

Applications

Increasing working capital 364.05

Purchase in investments --

364.05
Total

68
 CASH FLOW STATEMENT FOR THE YEAR ENDED 2013-14

Particulars Rs. In lakhs Rs. In lakhs

Inflows
Profit after tax 110
(+) Depreciation 219
Increase in current liabilities 122
Share capital 2
Increase in secured loans 195
Increase in unsecured loans 873
Deferred tax adjustment 23

Total 15
44

Outflows 786
Increase in current assets
Purchase of fixed assets 728
Purchase of investments 30

Total 1
544

69
Opening balance of cash & bank 61

Closing balance of cash & bank 62

Surplus 01

INTERPRETATION

During the period 2013-14 there is increase in working capital. This organization is in

profit. We got profit from the operations 164.16.lakhs.The funds from operations, secured

and unsecured loans, share capital were major sources of the organization

The other payments were purchase of fixed assets, and Purchase of investments etc.

70
SCHEDULE OF CHANGE IN WORKING CAPITAL FOR THE YEAR ENDED
2014-15
PARTICULARS 31.03.2014 31.03.2015 INCREASE DECREASE

A) Current Assets

Inventories 569.25 683.52 114.27 ---

Cash and bank balance 60.80 61.59 0.79 ---

Trade Debtors 588.70 1180.60 591.90 ---

Sundry Debtors 360.62 422.42 61.80 ---

Loans & Advances 168.07 185.66 17.59 ---

Total(A) 1747.44 2533.79

B) Current Liabilities

Creditors for goods 213.77 254.69 --- 40.92

Sundry Creditors 171.29 220.83 --- 49.54

Advances 8.93 9.17 --- 0.24

Creditors for expenses 80.22 111.80 --- 31.58

Total(B) 474.23 596.49

A-B 1273.21 1937.3

71
 Increase in working capital 664.09 --- 664.09

Total 1937.30 1937.30

STATEMENT OF FUNDS FLOW FOR THE YEAR ENDED 2014-15

Particulars Rs. in lakhs

Sources

Profit from operations 110

Unsecured loans 873
Secured loans 195
Deferred tax adjustment 23
Share capital 2
Total 1203

Applications

Increase in working capital 664

Purchase in investments 30
Purchase of fixed assets 509

Total 1203

72
 CASH FLOW STATEMENT FOR THE YEAR ENDED 2014-15

Particulars Rs. In lakhs Rs. In lakhs

Inflows

Profit from operation 130.00

Increase in secured loans 371.33
Increase in unsecured loans 301.00
Scale of investment 25.00
Increase in current liabilities 178.00
Depreciation 291.00

Total 1296.00

Outflows
Deferred tax adjustment 4.00

Increase in current assets 547.00

Purchase of fixed assets 745.00

Total 1296.00

62.00
Opening balance of cash & bank

Closing balance of cash & bank 60.00

73
Surplus 2.00

INTERPRETATION

During the period 2014-15 there is increase in working capital. This organization

is in profit from operations 110.00 lakhs.

In this year share capital is increased at 2.00 lakhs. This year major use is increase

in working capital, which is 664.09 lakhs

Other applications payment of purchases of fixed assets, purchase of investments

etc.

74
 SCHEDULE OF CHANGE IN WORKING CAPITAL FOR THE YEAR ENDED
2015-16

PARTICULARS 31.03.2015 31.03.2016 INCREASE DECREASE

A) Current Assets

Inventories 683.52 673.52 --- 10

Cash and bank balance 61.59 59.85 --- 1.73

Trade Debtors 1180.69 1483.40 302.79 ---

Sundry Debtors 422.42 536.65 114.23 ---

Loans & Advances 185.66 327.49 141.82 ---

Total(A) 2533.81 3080.93

B) Current Liabilities

Creditors for goods 254.69 449.83 --- 195.14

Sundry Creditors 220.83 187.83 33.00 ---

Advances 9.17 15.34 --- 005.96

Creditors for expenses 111.80 121.4 --- 009.60

Total(B) 596.50 774.21

A-B 1937.31 2306.73

Increase in working capital 369.42 ---

Total 2306.73 2306.7

75
 STATEMENT OF FUNDS FLOW FOR THE YEAR ENDED 2015-16

Particulars Rs. in lakhs

Sources

Profit from operations 130.74

Increased in unsecured loans 301.28

Increased in secured loans 371.33
Decrease in investment 25.25
Total 828.61

Applications

Increase in working capital 369.42

Purchase of fixed assets 454.64
Decrease deferred tax adjustment 4.55

Total 828.61

76
 CASH FLOW STATEMENT FOR THE YEAR ENDED 2015-16

Particulars Rs. In lakhs Rs. In lakhs

Inflows

Profit after tax 132.75

(+) Depreciation
Increase in current liabilities 85.98
Decrease in current assets 16.73
Default tax adjustment 1.36
Increase in unsecured loans 176.06
Increase in secured loans 201.81

Total 996.00

Outflows
Purchase of fixed assets 969.63

Purchase of investment 26.38

Total 996.00

Opening balance of cash & bank 60.00

Closing balance of cash & bank 50.00

Surplus 10.00

77
INTERPRETATION

During this period 2015-16 these is decrease in working capital .This

organization is not profit from operations 108.43lakhs.This year major use is decrease in

working capital, which is 102.43 lakhs. Other applications payment of purchases of fixed

assets, Purchase of investments etc.

78
 FINDINGS

During the period 2011-12 there is decrease in working capital. The sources of
funds are increased for the cause of sale fixed assets.

During the period 2012-13 there is increase in working capital. This year

organization is in profit we got funds from operations176. Lakhs.

Profit is the major source for the company and the unsecured loans are also

another source of the company.

During the period 2013-14 there is increase in working capital. This organization
is in profit. We got profit from the operations 164.16.lakhs.

During the period 2014-15 there is increase in working capital. This organization
is in profit from operations 110.00 lakhs.This year major use is increase in
working capital, which is 664.09 lakhs.

The current assets has been reduced compare to previous this incurred due to the
company investing more on fixed assets.

During this period 2015-16 these is decrease in working capital. This year major
use is decrease in working capital, which is 102.43 lakhs.

The use of working capital has been reduced compare to previous years which
shows the inefficiency of the company.
But the overall performance of the company is satisfactory.

79
 SUGGESTIONS

The company investing more on fixed assets instead of investing on fixed assets
better to invest on some other projects which are more profitable.
Increase the utilization of working capital. The company has to increase working
capital for better efficiency.
The company depending more on profits and unsecured loans.
It is better to reduce unsecured loans for better credibility.

80
 CONCLUSION

TheKusalava International Limited liquidity position was quite good with high rate
of liquidity levels and it maintains a low rate of cash balances which is not satisfactory.

The sale of the company has tremendously increased which have enhanced the
performance of the company to at great extent when compared to previous years.

The profit margins drastically increased when compare in between the last five years
and is suggested to maintain the levels considerably so that the company could reach the
heights.

Finally, I would like to conclude that the company position is satisfactory in all
aspects.

81
 BIBLIOGRAPHY

REFFERED BOOKS

FINANCIAL MANAGEMENT - I. M. PANDEY

MANAGEMENT ACCOUNTANCY - PILLAI & BAGAVATI

MANAGEMENT ACCOUNTING SHARMA & GUPTA

INTERNET SITE

www.ercap.org

www.wikipedia.com

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