Assignment: Cash statement analysis of South Indian Paper Mills

SAP ID: 801188160072

Name: Arvind Seshadri

Date: 21-11-2017

Year Ended 2015 2016 2017

Cash From OA ₹ 14.57 ₹ 29.90 ₹ 26.15
Cash From IA ₹ -7.40 ₹ -44.05 ₹ -28.95
Cash From FA ₹ -4.39 ₹ 12.03 ₹ 3.43
Net ₹ 2.74 ₹ -2.03 ₹ 0.63
(all figures in lakh Rs)

Cash from Operating activity:

Overall trend seems to suggest that they are generating cash from operations which is a healthy
sign. It suddenly doubled from 2015 to 2016. The reasons are:

1. Non-Operating incomes have gone up

2. Inventories have been reduced, freeing up cash.
3. Although their receivables increased, they seemed to have borrowed and increased their
liabilities.

Going into 2017 their Cash from Ops changed considerably less, and is still positive. Going from 2016
to 2017:

1. Depreciation has increased probably for some new equipment.

2. Non-operating income continues to grow
3. Even though they have done a better job at collecting receivables they have increased
liabilities and provisions.
4. The amount of tax paid has come down

Cash from Investing activities:

Overall, they have been investing in themselves. One can see a huge increase in fixed assets in 2016.
Maybe they have invested in equipment to prepare for the growth they are expecting to see.
Interest incomes have also been increasing showing good money management.

Cash from financing activities:

Financing seems to be high in 2016 and then comes down again in 2017 . Probably after the new
machinery was funded for, they don’t need as much as funding. This is further seen as short-term
borrowings have come down significantly. Long term borrowings increased but they also seem to be
paying their long-term borrowers. Section under “other long term liabilities” has been controlled
and improved on. While borrowings have been there, they have continued to give dividends to
shareholders trying to maintain the interest of investors.
Overall:
Positive cash in OA shows ops generating cash. Negative cash from IA shows that they are investing
looking for more promising growth. Positive cash in FA seems to show that they have borrowed and
invested too! Considering that they have been conservative in 2015 (they invested less than what
they earned in ops and tried to repay their debt) but are now borrowing to invest, shows possible
promising growth. All in all, seems like a good company to invest in.