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INTRODUCTION
the financial condition of a business enterprise between two years. It is also called as a ‘statement
of sources and applications of funds . The funds flow statement is becoming popular with the
management because it not only helps them in analyzing financial operations, providing basis for
comparison with budgets, and serving as a tool of communication, but also explains the financial
consequences of such operations suchas the reason why the company is experiencing difficulty in
accounting bodies that financial statements should provide relevant information which sub serves
the multiple objectives of shareholders, investors, creditors, customers and the public and which
enable them to arrive at rational economic decisions. Normally what the shareholders look for in
these statements is an account of the stewardship of the firm and the amount which may be
expected as dividend. Potential investors look upon funds flow statements as the source of there
realistic view of the value of a company’s shares in terms of an expected futures stream of
2
MEANING OF FUNDS
Fund:
deposit of resources from which supplies are may be drawn a more or less permanent store or
supply. It is also defined as available pecuniary resources but these two meanings are abroad in
nature and apt to macro level planning and control. A number of definitions of the term ‘fund’
Some people call ‘fund’ as ‘cash’. But it is seen in practice that the current assets are
constantly circulating through cash account in business operations and many transactions affect
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 equality to another.
Flow of funds is said top have taken place when any transaction makes changes in the amount of
OBJECTIVE OF STUDY:
1) Helpful in planning.
2) Helpful in organizing.
3) Helpful in interpreting financial information.
4) Helpful in making decision
5) Report to management.
3
Thus, Funds Flow Statement is a report which summarizes the events
taking between the two accounting periods. It spells out the sources from which funds were
derived and the uses to which these funds were put. This statement is essentially derived from an
analysis of which these have occurred in assets and liabilities items between two balance sheet
dates. In this statement, only the net changes are shown so that the outcome of a transaction upon
Fund:
deposit of resources from which supplies are may be drawn a more or less permanent store or
supply. It is also defined as available pecuniary resources but these two meanings are abroad in
nature and apt to macro level planning and control. A number of definitions of the term ‘fund’
Some people call ‘fund’ as ‘cash’. But it is seen in practice that the current assets are
constantly circulating through cash account in business operations and many transactions affect
For example, the sale of goods on credit increases in accounts payable rather than in an
immediate cash flow. Similarly, certain expenses may result in a current liability since they might
not have been paid immediately. In other words, it may be said that any current assets and
current liability has its impact on working capital (as working capital is the difference of current
assets and current liabilities) rather than cash. Therefore there is another view about meaning of
17
The financial institution and banks such as state financial institutions, industrial
development corporation of India, Industrial Development Bank of India etc., all ask for funds
flow statement constructed for a number of years before granting loans to know the credit
worthiness and paying capacity of firm. Hence a firm is seeking assistance from these institutions
The Funds Flow Statement has a number of uses: however, it has certain limitations also,
financial statements.
• Changes in cash are more important and relevant for financial management
22
It may be noted at this stage of analysis that for the purpose of funds flow statement,
the items of balance sheet are classified into two broad categories viz.,Items of current accounts
23
Non-current Account Items
account(deficiency),etc
The word ‘fund’ is to denote working capital. Funds flow there fore refers to the changes in
the fund (i.e., working capital) by the transactions – operational, financial and investment, though
the effect of all the transactions on the funds are considered, it should be remembered here that
24
Transactions not Affecting Flow of Funds:
assets.
amount.
The Funds Flow Statement is also known as “FUNDS FLOW ANALYSIS”. There are
25
Funds Flow Statement:
The Funds Flow Statement is also known as “FUNDS FLOW ANALYSIS”. There are
various factors for inflow and outflow of working capital area shown in a statement, particularly
prepared for this purpose, which is known a “Funds Flow Statement.” This statement reveals the
manner in which the financial resources have been generated and deployed during the accounting
period. This statement is also considered as an important one as the two traditional financial
statements as it supplies important information for the users. In brief it may be said that fund
statement focuses on the flow of funds between the various assets and equity items during the
accounting period and on analysis basis this statement is generally called as “Funds Flow
Analysis”.
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IMPORTANCE OF FUNDS FLOW STATEMENT:
• The balance sheet and profit and loss account failed to provide the information
enterprise.
• This statement indicates the changes which have taken place between the two
accounting dates.
• Gives details of sources and uses of funds during given period is of great help to
• It is also a very useful tool in the hands of management judging the financial and
• It also indicates the working capital position which helps the management in
• Funds Flow statement helps in answering questions like where the profits have
gone? Why there is imbalance existing between liquidity position and profitability
position of the enterprise? Why is the concern financially solid in spite of losses?
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DIFFERENCE BETWEEN
Prepared.
28
DIFFERENCE BETWEEN
Accounting. Accounting.
29
Planning.
Funds Flow statement is a method by which we study changes in the financial position of
a business enterprise between beginning and ending financial statements dates. Hence, the funds
flow statement is prepared by comparing two balance sheets and worth the help of such other
Broadly speaking, the preparation of funds flow statement consists of two parts:
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 prepared with the help of Current Assets and
Liabilities derived with the help of Current Assets and Current Liabilities derived from the two
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The changes in all current assets and liabilities are merged into one figure only – either an
increase or decrease in working capital over the period for which funds statements has been
prepared. If the working capital at the end of the period is more than the working capital at the
beginning thereof, the difference is expressed as ‘Increase in working capital’. On the other hand,
if the working capital at the end of the period is less than that at the commencement, the
Funds flow statement is a final statement. It shows the amount used in a particular period
of time i.e., “Application of Funds” and the how much amount comes into the organization in a
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1) Schedule of changes in Working capital:
32
PARTICULARS PREVI CURR EFFECT ON
OUS ENT WORKING CAPITAL
INCRE DECREA
YEAR YEAR
ASE SE
CURRENT ASSETS
Inventories ** * ** -
* ** ** -
Sundry Debtors
*** *
Cash &Bank
** - **
Loans& Advances ** - **
* *
*** **
Total Current Assets(a)
*
**
CURRENT *** **
LIABILITIES * **
-
**
Current Liabilities
- **
Provisions ** **
* *
Total current
** **
liabilities(b)
* *
**
*** *** **
* *
Working Capital (a-b) ** **
* *
Net increase or decrese
in working capital
** **
* *
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• *** ** *** ***
* **
2) Statement of sources and uses of funds:
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Sources Amount Applications Amount
Rs Rs
Funds from operations *** Redemption of preference ***
Issue of shares and *** shares and debentures ***
Debentures *** Repayment of loan ***
Long-term Loans Purchase of Investment,
*** ***
Sale of investment, Fixed Fixed assets, etc
***
assets, etc Non-Trading Expenses ***
Non-trading Income *** Increase in working capital ***
Decrease in working capital ***
Note:* Any one of these will find the place in the statement
+ Any one of these will find the place in the statement
Funds means working capital this working capital represents the difference between
current assets, current liabilities. All flows of funds pass through working capital. This means that
every transaction has an effect on the firms working capital position.
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Therefore the Funds Flow Statement shows the movement of funds into or out of the current
asset account of the firm.
• Sources of funds.
• Uses of funds
The former supply funds to the working capital and enhances its position. On the other
hand, the latter consume funds and erode the working capital position.
SOURCES OF FUND:
• Issue of debentures
On comparing the balance sheet of two dates there is an increase in share capital. It would
affect working capital to the extent of current assets. If it does not have any impact upon fund, it
would not be a source of fund. For example, shares issued and cash/stock/furniture received.
Merely only cash and stock will affect the fund as these are the companies of working capital.
Issue of Debentures:
That amount of issued debentures would be a source of fund which affects working
capital.
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Creation of Long term Liabilities:
If loan and mortgaged loan has been taken its increase between two balances sheet dates
Any decrease in fixed assets due to sale of fixed assets is shown in the sources of fund as
it involves cash or other current assets which are the elements of working capital.
Applications of Funds:
The fund acquired in the business may be used in the following items:
• DISCHARGE OF LIABILITY
• REDEMPTION OF DEBENTURES
• ADDITION IN ASSETS
Just like profit from operations is a source. Similarly loss from operations is treated as
uses of fund. In fact, incurring of loss means out flow of funds. It may be due to increase in
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Discharge of Liability:
Any decrease in long term liability would be the indicator that fund ha gone from the
business liability which may be decreased due to decrease in assets ( payment of creditors by
giving cash of fixed assets to them ) or increase in liability. For example, a liability is converted
into another.
Redemption of Debentures:
If the redemption is made through conversion into shares or new debentures, it does not
If these preference shares are rendered by issue of new preference shares or equity shares
or debentures such decrease in preference shares will not be treated as use of fund, as the flow of
Addition in Assets:
If these assets whether current or fixed are increased, it will be shown in the users of fund
because such increase entails outflow of fund. If there is increase in fixed assets accompanied
either by increase in long term liabilities or increase in share capital, there will not be outflow of
fund. On the other hand, if these fixed asset are accompanied by decrease in current assets or
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39
INTRODUCTION
Cement Industry has been decontrolled from price and distribution on 1 st March
1989 and de – licensed on 25th July 1991. However, the performance of the industry and prices of
The constraints faced by the industry are reviewed in the Infrastructure Coordination
Committee meetings held in the Cabinet Secretariat under the Chairmanship of Secretary
(Coordination). The Committee on Infrastructure also reviews its performance. The industry is
In India it came to be established during the beginning of 20 th century. In fact the cement
era in India commenced with the establishment of a small cement factory at WASHERMANPET
in 1904 by South India industry Ltd. a company that dates to 1879. The potential capacity of this
plant was only 10,000 metric tones per annum. This was the first attempt of manufacturing
Portland cement with cat carious seashells as a principal raw material. There was sufficient
demand for that product, but because of technological defects and inadequate supply of raw
India is ranked forth in the world after China, Japan, and USA in cement production. Yet
the per-capital consumption of cement in India however low at 70 to 80 kgs against the world
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CEMENT INDUSTRY IN ANDHRA PRADESH
Cement was first manufactured in America in the year 1875. In India, in 1914 the India
Cements Company Limited was established a cement factory at Portland. Andhra Pradesh is the
second largest cement production state in India, one third of the limestone (138crore tones) is
available in A.P.I.A.P. the cement production was started in 1936 with two factories. Of these
two factories one is Andhra Cement Company Limited and another in Krishna Cement Factory.
One is on the side of Krishna Cement Factory. One is on the side of Krishna River and another is
In 1995, one more factory was established at Panyam in Kurnool Dist., named as Panyam
Cement and mineral industries. At the same time one more factory has been established at
Maacherla in Guntur district. At the end of July 1985 the total capital invested on cement
industry was Rs.427.81 lakhs and provided employment for 1262 persons and 19 factories were
It ranks second in the world among cement producing countries, with per capita
consumption at 118Kg compared to the world avg. Of around 317. Per capita consumption is
366 Kg in Thailand, 626 Kg in China, 606 Kg in Malaysia and 1216 Kg in South Korea. This
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The Cement Corporation of India, which is a central public sector undertaking, has 10
units. Besides, there are 10 large cement plants owned by various state Governments. Keeping in
view the past trends, a production target of 133 million tons has been set for the year 2004 – 05.
During the Tenth Plan, the Industry is expected to grow at the rate of 10% per annum and is
Mainly through expansion of existing plants and use of more fly ash inthe production of
cement. A part from meeting the domestic demand, the cement Industry also contributes towards
exports. The export of cement and clinker during the last three years is as under:-
Export of Cement
(In million tons)
The Indian Cement Industry not only ranks second in the production of cement in the
world but also produces quality cement, which meets global standards. However, the Industry
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High railway tariff; high incidence of state and central levies and
duties; lack of private and public investment in infrastructure projects; poor quality coal and
inadequate growth of related infrastructure like sea and rail transport, ports and bulk terminals. In
order to utilize excess capacity available with the cement Industry, the Government has identified
Technological advancements
Indian cement industry is modern and uses latest technology. Only a small segment of
industry is using old technology based on wet and semi-dry process. Efforts are being made to
recover waste heat and success in this area has been significant.
India is also producing different varieties of cement like Ordinary Portland Cement
(OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well
Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement,
etc. Production of these varieties of cement conforms to the BIS Specifications. It is worth
mentioning that some cement plants have set up dedicated jetties for promoting bulk
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Infrastructure – driven demand push
The bulk of cement demand is from housing and commercial development of which
metros account for a significant amount. It is estimated that Mumbai, which consumes almost six
million tones, along with Pune, accounts for 45 percent of Maharastra’s cement consumption,
Bangalore consumes four million tones and Chennai around 3 million tones, “these are really the
growth clusters. Today bulk of the demand is driven by housing and commercial construction and
as infrastructure picks up, for example, Bangalore international airport, Hyderabad airport and
Another large consumer has been the roads sector. The off take was good when the
NHDP programme was launched but there was a lull last year. “Once again new orders have been
placed and in 2006, the industry will pick up. The estimate is that from roads, sdemand is not
more than 4-5 million tones but it makes a difference in the growth numbers”.
almost 100%. On an overall basis, the industry does not do more than 90-92% because of
The industry has been adding capacity of 6-7 million per annum by Brownfield
expansion and de-bottlenecking which is expected to partly cater to the requirement because it is
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Challenges before the industry:
Energy costs account for half of the cost of production of cement. Last year saw a
15-16% increase in coal prices and then diesel prices went up pushing up transportation costs.
Freight problems
The importance of freight for the cement industry cannot be emphasized enough. While
in the last few months’ railways have been steadily losing freight to road sector they have been
confined cement to market-is around Rs.350-400 a ton or Rs.20 and bag that could go as high a
Rs.800 for long leads. This would only easy the first level of sale and additional costs are
Another issue, which will hit the industry hard, is that of logistics and a Supreme
Court judgment on carrying capacity for trucks. Accordingly, a state govt. has been directed to
enforce the discipline that trucks only carry a specified load. “Many states and already
implementing this and there is already an increase in freight rates and in some cases, it has gone
up by 50%. Also, the requirement for trucks to carry the same freight has nearly doubled and in
High taxes
While the railways have had capacity to meet the requirement, it is expected that in March
the commencement of peak season for the procurement of food grains, the railways would be
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So fright rates are up, railways cannot provide wagons and trucks are unlikely to be viable so
manufactures association total taxes and duties on cement come to around Rs.900 a ton or Rs. 45
a bag. “So at a price of Rs.150 a bag in the market, taxes and duties account for one third. Which
is high for such a basic product. This includes excise duty, sales tax and royalty on limestone.
The importance of limestone can only be underscored as for every ton of cement
produced. 1.5tons of limestone is required. “For limestone, royalty is on a per ton basis at Rs. 40
whereas for most minerals it is a percentage of the pithead cost. Effectively we are paying Rs.70 a
ton for limestone as royalty. VAT is at 12.5% without any justification and it should be in 4%
Export Advantages
From a modest beginning if 1.6 lacks tons in 1989-90, Indian exports of cement/clinker
have grown rapidly at about 30-40% and this year exports will cross 10 million tons.
• Abuja -10.7%
• Grasim-10.4%
• Ultra tech-9.5%
• India cement-6.0%
• Jaypee-4.1%
• Lafarge-3.2%
• Madras-3.2%
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Overall, the industry is in a better state today than 2 years ago. “Cement prices even today are
way below global levels. So setting up Greenfield capacities is not attractive, as prices will not
give attractive returns on investment. That is a minor reason why there is no Greenfield capacity
coming up. It has to be born in mind that one third of the prices is accounted for by taxes and
duties and nearly 20-25% by the freight component. So what produces earn at the factory gate is
This year 2008 has commenced on a good note and in fact, December was a very good
month wit dispatches at 12.5 million tons and January dispatches were in excess of 13 million
tons.
“This means capacity utilization is in the nineties which is healthy and will actually
lead to firming up of prices. It looks like sales could be 137 million a ton for 2007-08(125
million tons in 2006-07) and so far growth has been 10%. There are enough reasons to believe
it will sustain.”
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48
INTRODUCTION
A Penna cements industry Ltd was incorporate on Oct 24 th 1991, to set up a cement
plant at Tadpatri in Anantapur District of Andhra Pradesh. The plant commenced commercial
production on Aug 10th 1994 as mini cement plant with initial capacity of 0.30 million tones. The
company short period getting profits. Later 1995 plant capacity was increased 0.4 million tones
Penna cement industries ltd establishing by Mr. Prathap Reddy aged 44 began his
entrepreneur career with civil engineering contracts by lunching pioneer builders mr.prathp reddy
has experiences of two decades in cement industry .he was the executive director of priyadrashini
cement right from its inception in 1984 in 1991 Mr. Pratap Reddy incorporated his own cement
company located in between Talaricheruvu and Urichintala village. At present about 2720 tones
Quarry:
Major raw material for cement industry. The quarry has a mining lease of 235.52 acres in
Talaricheruvu village. 440.47 acres in Urichintala village and 629.75 acres in Korumanipalli
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RAW MATERIALS :
Limestone:
Limestone is the major raw material for the cement industry. Limestone constitutes 60 to
70 percent of the total raw material costs. Nearly 1.5 – 1.6 tons of limestone is required for
producing one ton of cement clinker limestone (calcium carbonate) is a rock of either sedimentary
or metamorphic origin with calcium oxide as its main constituent. In India limestone occurs
mainly as sedimentary rocks and constitutes 30 percent of the total sedimentary rocks in the
country. Cement grade limestone is available in 21 states in the country. About 65 percent of the
cement plants in India uses sedimentary limestone and 20 percent use metamorphic crystalline
limestone. India has 85,980 million tones of cement grade limestone deposits, which is enough to
produce 100 million tones of cement for the next 500 years.
Total reserve
It is quite clear that India’s limestone reserves are adequate for the next several years.
More over new reserves would be discovered every year Limestone is mixed extensively in India
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and ranks second in production next to coal mining. Major portion of limestone mining portion of
limestone mining is for cement industry (nearly 75% to 80%) therefore the demand supply
In India limestone deposits are abundantly found only in Siroly (Rajasthan), Santna,
Belaspur (M.P., wadi (Karnataka), Tadpatri (A.P.) and some places in Gujarat. Units are generally
located in close proximity of limestone deposits in Madhya Pradesh, Andhra Pradesh, Tamil
The quality of required for the cement production should have the following composition.
Lime : 50%
Silican : 3%
Aluminium : 4%
Magnesiam : 0.50%
Total : 100%
If Magnesia content exceeds 0.4-o.5 percent, the limestone is not suitable for cement.
Similarly, lime content is directly proportional to the clinker and cement quality and quantity.
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Gypsum:
about 5 percent of the weight of the cement. Gypsum is added in required quantity at the time of
grinding of clinker. The clinker and the required amount of the Gypsum is added to control the
setting time of the cement. India possesses resources of gypsum. Hence its availability is not a
A few other raw materials like Blast furnace slag and fly ash are also required for the
manufacture of the cement. Blast furnace slag is a waste product obtained from iron smelting
furnace whereas fly ash is the left over ash from thermal power station.
Inputs:
Although limestone is the major raw material for cement industry, the critical raw material
is energy. How well the company uses coal and electricity and how much it costs will determine
the success ratio for cement manufacturers. Major inputs in cement manufacturing include coal,
Coal:
In India coal I am being used as the fuel for the manufacturing of cement. Else where in
the world lignite, nature gas and oil are also used. They are not used in India as continuous
supply of natural gas is not assured used by plants in southern plants ogf India, like Dalmia
Cement, Chettinad cement etc., as a supplement to coal which compensates the storage for coal in
this area. Non cooking coal of lower ash content is required by cement plants. It should be less
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than 30%. A useful heat of 4500 kilocalories per kg of coal. Coal of lower ash enables
The coal should have volatile matter and high temperature. Transport of
coal is another big issue as many of larger cement plants are located close to the limestone
Power:
Power constitutes about 10% of the total cement production costs. About 3 percent of the
total power generated in the country is used by cement industry. The average consumption of
power in the dry process kilns is around 125 units per million tons of clinker.
Freight:
Freight constitutes a very significant part of the cost structure of cement units in India. On
an average freight for transporting finished product alone forms 13.85% of the cost of production
The main areas of freight coast for the cement industries are
Limestone transport would be even costlier than transporting coal or cement. Hence
cement plants are located in cluster near limestone deposits. Indian railway is moving up to 60%
• A very perceptible saving in costs (up to 20% to 25%) due to low setting time
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• Superior quality of the cement resulting in a better overall finest
The company has enhanced its capacity from 600 TPD to 8000 TPD over the period of 10
years. The Existing cement plant was upgraded to 5000 tones capacity per day. The profits for
the year 2007-08 are Rs. 92.77 lakhs and sales of Rs. 946.20 lakhs. The company holds the assets
of Rs. 601.92 lakhs. The annual capacity of the company 18,25000 tones.
companies – Ultra tech, Andhra Cement, Grasim Cement, Gujarat Ambuja cement, Parasakthi,
Larsen and Tubro,Coramandal cement,Priya Cement, Nagarjuna cement, Sagar cement ACC
The company has obtained the basic engineering designs and other technical know-how
from M/s. ONADA ENGINEERING and consulting company limited Japan for the cement plant
he technical collaborates are continuously guiding the company for achieving improved
productivity and benefits such as conservation of energy etc., besides trouble shooting a specific.
Man power:
information to man power planning department regarding the number of persons required. The
departmental heads assess their requirements based on the available departmental job description
to ensure role clarity and to avoid role ambiguity. The Central Personnel Dept. carries out the
recruitment process.
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The total employees in PENNA CEMENT are 345 covering all departments. There are
Limestone, Iron ore, Bauxite, Gypsum and Coal are the basic raw materials used in the
manufacturing process of cement. The average consumption of various raw materials is shown in
the table.
of Cement
1 Limestone 2282 1.4 to 1.5
2 Additives 375 0.06 to 0.75
3 Bauxite iron ore 155 1.16 to 0.20
4 Gypsum 85 0.04 to 0.05
5 Product clinker 500 ------
Note:
Due to change in the quality of lime stone and coal, the consumption of additives has been
changed accordingly.
Material Balance:
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Limestone + Additives Raw material
Note:
Depending upon quality of raw materials the above consumption may value
PRODUCT PROFILE:
Penna Cement manufactures and distributes its own main product lines of cement. It aims
to optimize production across all the marketers, providing a completer solution for customer’s
needs at the lowest possible cost, an approach known as “strategic Integration of Activities”.
Cement is made from a mixture of 80 percent limestone and 20 percent clay. These are crushed
and ground to provide the “raw meal”, a pale, flour – like powder. Heated to around 1450o C
(2642o F) rotating kilns, the “meal” undergoes complex chemical changes and is transformed into
clinker. Fine – grinding the clinker together with a small quality of gypsum produces cement.
Adding other constituents at this stage produces cements for specialized uses.
Presently the company is manufacturing 43 grade, 53 grade. Ordinary portal cement port
ADVANTAGES:
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Here are five of the many reasons why Penna 53 Grade and 43 Grade cement edges out its
competitors.
• Better soundness
• Reduced construction time with a superior and wide range of cement catering
cement market.
Here are just a few reasons why Penna Cement chosen by millions of India.
• Greater fineness
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58
STATEMENT OF CHANGES IN WORKING CAPITAL
2005-2006
Table-1
Particulars 2005 2006 Changes in WC
Rs. Rs. Rs.
Increase Decrease
Current Assets:
Current Liabilities:
Table-1
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Changes In Working Capital
1200000000
1000000000
800000000
2005
600000000
2006
400000000
200000000
0
Total Total Working
Current Current Capital
Assets Liabilities
Sources: we have taken this information from Penna cement, from 2005-2006
Interpretation:
Comparing the year 2005-2006 the current assets increased by 46,97,45,886 rupees
compare the current liabilities 18,89,36,012 as a result working capital increase 28,08,09,874
rupees. There fore short term financial position of The Financial Services limited is good.
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31.12.2006
Table-2
Amount Amount
Sources Rs. Uses Rs.
63,78,87,187 63,78,87,187
Sources: we have taken this information from Penna cement, from 2004-2005
Interpretation:
The Financial Services limited take huge amount of Long term loans through
funds from operations and Sale of investments. The Financial Services limited use some of these
funds to purchase fixed assets. The Financial Services limited is also use these funds to Increase
working capital.
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Particulars 2006 2007 Changes in WC
Rs. Rs. Rs.
Increase Decrease
Current Assets:
Current Liabilities:
Table-3
62
Changes in Working Capital
1200000000
1000000000
Amount
800000000
2006
600000000
2007
400000000
200000000
0
Total Total Working
Current Current Capital
Assets Liabilities
Sources: we have taken this information from Penna cement, from 2006-2007
Interpretation:
Comparing the year 2006-2007 the current assets increased by 10,12,91,506 rupees
compare the current liabilities 32,55,78,269 as a result working capital decrease 22,42,86,763
rupees. There fore short term financial position of The Financial Services limited is not good.
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FUNDS FLOW STATEMENT FOR THE YEAR ENDED WITH
31.12.2007
Table-4
Amount Amount
Sources Rs. Uses Rs.
63,78,87,187 63,78,87,187
Sources: we have taken this information from Penna cement, from 2006-2007
Interpretation:
The Financial Services limited take huge amount of Long term loans through
funds from operations and Purchase of investments. The Financial Services limited use some of
these funds to purchase fixed assets. The Financial Services limited is also use these funds to
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2007-2008
Table-5
Particulars 2007 2008 Changes in WC
Rs. Rs. Rs.
Increase Decrease
Current Assets:
106,64,29,271 133,03,02,653
Total Current Assets(a)
Current Liabilities:
74,94,16,641 76,05,69,548
Total current liabilities(b)
31,70,12,630 56,97,33,105
Working capital a-b
Table-5
65
Changes in Working Capital
1400000000
1200000000
1000000000
800000000 2007
600000000 2008
400000000
200000000
0
Total Total Working
Current Current Capital
Assets Liabilities
Sources: we have taken this information from Penna cement, from 2007-2008.
Interpretation:
Comparing the year 2007-2008 the current assets increased by 26,38,73,382 rupees
compare the current liabilities 1,11,52,907 as a result working capital Increase 25,27,20,475
rupees. There fore short term financial position of The Financial Services limited is good.
Amount Amount
Sources Rs. Uses Rs.
52,41,75,875 52,41,75,875
Sources: we have taken this information from Penna cement, from 2007-2008.
Interpretation:
The Financial Services limited take huge amount of long term loans through funds
from operations and Purchase of investment. The Financial Services limited use some of these
funds to purchase fixed assets. The Financial Services limited is also use these funds to increase
working capital.
Table-7
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Particulars 2008 2009 Changes in WC
Rs. Rs. Rs.
Increase Decrease
Current Assets:
126,59,35,684 145,50,20,788
Total Current Assets(a)
Current Liabilities:
69,62,02,579 102,90,32,147
Total current Liabilities(b)
56,97,33,105 42,59,88,641
Working capital a-b
Table-7
68
Changes in Working Capital
1600000000
1400000000
1200000000
1000000000
2008
800000000
2009
600000000
400000000
200000000
0
Total Total Working
Current Current Capital
Assets Liabilities
Sources: we have taken this information from Penna cement, from 2008-2009.
Interpretation: - Comparing the year 2008-2009 the current assets increased by 18,90,85,104
rupees compare the current liabilities 33,28,29,568 as a result working capital Decrease
14,37,44,464 rupees. There fore short term financial position of The Financial Services limited is
not good.
69
FUNDS FLOW STATEMENT FOR THE YEAR ENDED WITH
31.12.2009
Table-8
Amount Amount
Sources Rs. Uses Rs.
242,77,53,270 242,77,53,270
Sources: we have taken this information from Penna cement, from 2008-2009.
Interpretation:
The Financial Services limited take huge amount of Long term loans through funds from
operations and Purchase of investment. The Financial Services limited use some of these funds to
purchase fixed assets. The Financial Services limited is also use these funds to Decrease working
capital.
70
FINDINGS:
71
• It is found that The Financial Services limited is holding sufficient share capital.
• It is inferred that The Financial Services limited is maintaining a minimum Cash Balances.
.
• In 2004-2005 the Working capital of The Financial Services limited is increased by
28,08,09,874 rupees. In the same period the long term loans of The Financial Services
limited is high because the company get huge amount of funds from operations and also
from decrease in miscellaneous expenditure reserve. The Financial Services limited uses
that fund to redeem the shares and to purchase fixed assets.
72
SUGGESSIONS:
73
• It may be suggested that The Financial Services limited should utilize Limited Funds for
• If The Financial Services limited spend more money on purchase of fixed assets &
• The company must maintain the sufficient working capital in order to meet the daily needs
of the firm.
• The company should increase its investments and its fixed assets.
• It is better to maintain the same steps which it has followed in 2006-07 to decrease its
74
75
CONCLUSION
limited is good because funds from operations are high in every year but increase in loans of
funds. The Financial services limited utilize some funds to purchase fixed assets every year
the financial services limited do some investment activities to utilize funds effectively.
76
77
BIBLIOGRAPHY
• Student hand book on cost accounting and financial management by B. Sarvana Prasad,
• Financial Management Theory & Practice by Prasanna Chandra, Edition-5th 2004, 727 to
758
• Financial Management by I.M. Pandey, Edition -4th 2005, Page no 345 to 325
• http:/www.Pennacement.in
78
79
PENNA CEMENT INDUSTRIES LIMITED
BALANCE SHEET AS AT 31.3.2006
Particulars Schedule No. 2006
SOURCES OF FUNDS
Share holder’s Funds:
Share Capital A 13,43,40,942
Reserves and Surplus B 89,66,23,798
Loan Funds C
Secured Loans 94,03,76,495
Unsecured Loans 96,39,05,443
Deferred Tax Liability 24,78,34,769
Total 318,30,81,447
APPLICATION OF FUNDS
D 266,23,57,147
Fixed Assets
55,57,90,567
Gross Block
Less: Depreciation
Net Block 210,65,66,665
INVESTMENTS F 228,81,65,665
Inventories 35,21,99,400
Total 318,30,81,4471,447
80
PENNA CEMENT INDUSTRIES LIMITED
BALANCE SHEET AS AT 31.3.2007
Particulars Schedule No. 2006
SOURCES OF FUNDS
Share holder’s Funds:
Share Capital A 13,38,00,000
Reserves and Surplus B 105,67,47,530
Loan Funds C
Secured Loans 84,56,73,700
Unsecured Loans 121,84,87,846
Deferred Tax Liability 34,87,20,141
Total 360,34,29,217
APPLICATION OF FUNDS
D 316,89,56,316
Fixed Assets
67,98,52,280
Gross Block
Less: Depreciation
Net Block 248,91,04,036
INVESTMENTS F 250,51,64,140
Inventories 78,09,11,900
Total 360,34,29,217,81,447
81
PENNA CEMENT INDUSTRIES LIMITED
BALANCE SHEET AS AT 31.3.2008
Particulars Schedule No. 2007
SOURCES OF FUNDS
Share holder’s Funds:
Share Capital A 13,38,00,000
Reserves and Surplus B 129,19,28,245
Loan Funds C
Secured Loans 92,73,53,942
Unsecured Loans 140,99,82,580
Deferred Tax Liability 36,42,89,525
Total 412,73,54,292
APPLICATION OF FUNDS
Fixed Assets D
320,81,62,454
Gross Block
82,53,36,717
Less: Depreciation
238,28,25,737
Net Block
Add: Capital works- in- progress E 34,81,93,803
273,10,19,540
F 82,65,11,900
INVESTMENTS
Current Assets, Loans and Advances G
21,89,56,216
Inventories
37,09,00,434
Sundry debtors
11,21,52,347
Cash and Bank Balances
56,39,26,687
Loans and Advances
126,59,35,684
82
BALANCE SHEET AS AT 31.3.2009
Particulars Schedule No. 2008
SOURCES OF FUNDS
Share holder’s Funds:
Share Capital A 13,38,00,000
Reserves and Surplus B 215,63,13,074
Loan Funds C
178,57,14,077
Secured Loans
173,23,88,532
Unsecured Loans
46,92,57,668
Deferred Tax Liability
627,74,73,351
Total
APPLICATION OF FUNDS
Fixed Assets D
398,46,31,393
Gross Block
98,12,21,831
Less: Depreciation
300,34,09,562
Net Block
E 198,56,63,248
Add: Capital works- in- progress
498,90,72,810
F 86,24,11,900
INVESTMENTS
Current Assets, Loans and Advances G
Inventories 35,30,33,377
Total 627,74,73,35181,447
83
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.12.2006
Particulars Schedule No. 2005
INCOME
Sales J 385,65,72,118
(Increase/decrease) in Stock K -1,60,57,823
Total Income 384,05,14,295
EXPENDITURE
Manufacturing Expenses L 153,07,01,345
Cost of trading goods ---
Central Excise Duty 69,86,42,442
Sales Tax 55,90,24,763
Administrative and Selling Expenses M 58,82,88,777
Interest and Finance Charges 14,43,46,417
Depreciation 11,88,30,197
Miscellaneous Expenditure Written off E 22,32,340
Total Expenditure 364,20,66,281
Profit for the year F 19,84,48,014
Provision for taxation 152,54,699
G
Profit after Tax 18,31,93,315
Deferred Tax for the year 3,89,50,042
Fringe Benefit Tax for the year -----------
Prior period expenditure
11,56,849
Profit available for appropriations
14,30,86,424
Transfer to General Reserve
-----------
Proposed Dividend
-----------
Tax on Dividend I
------------
Profit brought forward from previous
56,76,50,645
year
Goodwill on Merger written off -1,98,40,834
Profit Carried to Balance Sheet N 69,08,96,2351,447
84
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.12.2007
Particulars Schedule No. 2006
INCOME
Sales J 452,87,19779
(Increase/decrease) in Stock K -98,74,875
Total Income 451,88,44,904
EXPENDITURE
Manufacturing Expenses L 188,52,41,099
Cost of trading goods 32,67,699
Central Excise Duty 81,46,64,469
Sales Tax 62,30,34,491
Administrative and Selling Expenses M 68,09,34,484
Interest and Finance Charges 9,96,49,474
Depreciation 12,47,85,177
Miscellaneous Expenditure Written off E 10,76,442
Total Expenditure 423,26,53,335
Profit for the year F 28,61,91,569
Provision for taxation 2,24,41,139
G
Profit after Tax 26,61,91,569
Deferred Tax for the year 10,08,85,372
Fringe Benefit Tax for the year -------------
Prior period expenditure 27,41,325
Profit available for appropriations 16,01,23,733
Transfer to General Reserve -----------
Proposed Dividend ------------
Tax on Dividend I ------------
Profit brought forward from previous year 69,08,96,235
Goodwill on Merger written off ----------
Profit Carried to Balance Sheet 85,10,19,968447
N
86
Particulars Schedule No. 2008
INCOME
Sales J 914,46,59,562
(Increase/decrease) in Stock K 3,74,11,258
Total Income 918,20,70,820
EXPENDITURE
Manufacturing Expenses L 311,40,33,391
Cost of trading goods 5,55,30,769
Central Excise Duty 114,28,05,092
Sales Tax 94,83,24,696
Administrative and Selling Expenses M 197,79,88,742
Interest and Finance Charges 13,47,58,957
Depreciation 15,59,73,434
Miscellaneous Expenditure Written off E 89,747
Total Expenditure 752,95,04,820
Profit for the year F 165,25,65,992
Provision for taxation 50,76,18,003
G
Profit after Tax 114,49,47,989
Deferred Tax for the year 10,49,68,144
Fringe Benefit Tax for the year 22,35,543
Prior period expenditure 1,68,20,163
Profit available for appropriations 102,09,24,139
Transfer to General Reserve 15,00,00,000
Proposed Dividend 13,38,00,000
Tax on Dividend I 2,27,39,310
Profit brought forward from previous 108,62,00,683
year -----------
Goodwill on Merger written off N
Profit Carried to Balance Sheet 180,05,85,512
87