A Study On Financial performance through

Fund Flow Analysis

IN
Lanco Industries Ltd Srikalahasthi.

Internal Guide: External Guide:

M.Giri Kumari., MBA, Mr. P. V Maheswara,
Department of Business Management, Financial officer,
SPMVV, Lanco Industries Ltd.,
Tirupathi. Srikalahasthi.

Presented By
S. Vasantha,
MBA (3rd semester)
(201307084)
 INDUSTRY PROFILE
Cement Industry in India:

India is the largest producer of cement in the world after China

and Japan
Cement industry in India is nearly eight decades old, first cement
plant have been commenced in 1904 at Boradhpur (Gujarat).
At present there are around 60 companies in large sector having
1230 plants constituting a total installed capacity of 100.30MT
industry total turnover is around RS. 20,000 crores.
The foundation of a stable Indian cement industry was laid in 1914
Indian Cement Company Limited started manufacturing cement at
Probated in Gujarat.
 COMPANY PROFILE

•The name Lanco has been derived from the promoter of the Group
Sri Lagadapati Amarappa Naidu.
•The company was incorporated on 1st November 1991 company
Act 1956, in the name of Lanco Industries Ltd.
•The Lanco Group is a diversified multi faced conglomerate with
the business interests in
Pig iron
Cement
Power graded Casting
Spun pipes
Information technology
Infrastructure Development
 Competitors of Lanco Cements
In the cement industry the Lanco industries are
facing the competition from the following cement
industries:
Sagar cements limited,
Ambuja cements limited,
Bheema cements limited,
Sri Chakra cements limited,
Priya cements limited,
K C P cements limited,
UltraTech cements limited,
Maha cements limited,
Raasi cements limited,
Vishnu cements limited,
Nagarjuna cements limited.
 RESEARCH METHODOLOGY
Primary Data:
First hand information was collected by consulting
experts of finance department, on the basis of which actual
position of the company can be identified.
Secondary Data:
The Secondary data that is required for the study is
collected from the Annual Reports, Schedules, Budgets and
other statements provided by Finance Department of “Lanco
Industries Limited”.
 SCOPE OF THE STUDY
An extensive study is done on the investment made by
LANCO INDUSTRY; on its funds flow statements and
its adequacy, and the factors determining that
investment.
 The study concentrates on the liquidity position of the
firm and the brief study.
 The technique used by the firm of the management of
its current assets and sources though which the finance
of the funds flow statement in availed for the firm.
The study covers all the financial information of the
firm.
 Need for the study
 The financial pattern of the firm can be known with the help of
funds flow statement analysis
 It is important to know about the need for the growth of the firm
and working capital position of the company
 To find out the outflow and inflow of the funds
 OBJECTIVE OF THE STUDY
To study and analyze the changes those have taken place in
the financial position of the company.
To analyze the funds flow operations.
To identify sources and applications of the funds.
To examine the working capital position of the company.
To suggest some measures to improve the performance of
the company.
 LIMITATIONs OF THE STUDY
Time is also a limiting factor of the study
because the analysis of the project is restricted for
a period of 8 weeks only.
The members of financial department are very
busy with the audit work, hence they are not be
able to spend time more for me.
 Data Analysis
and
Interpretation
 STATEMENT OF CHANGES IN WORKING CAPITAL 2008-09
(Rs. in lakhs)
Changes in working capital
Particulars 2008 2009
Increase Decrease
Current assets (CA)
Inventories 7,075.18 9,194.08 2118.90 -
Sundry debtors 7,197.89 6,706.59 - 491.30
Cash and bank balances 247.72 350.67 102.95 -
Loans and advances 1,616.75 2,070.42 453.67 -
Total current assets 16,137.54 18,321.76
Current liabilities (CL)
Current liabilities 8,090.45 9,202.11 - 1111.66
Provisions 586.14 354.42 231.72 -
Total current liabilities 8,676.59 9,556.53
Net working capital 7,460.95 8,765.23 - -
Increasing working capital 1,304.28 - - 1,304.28
Total 8,765.23 8,765.23 2,907.24 2,907.24

Net increase in working capital Rs.1, 304.28

 STATEMENT OF CHANGES IN WORKING CAPITAL 2009-10
(Rs. in lakhs)
Changes in working capital
Particulars 2009 2010
Increase Decrease
Current assts (CA)
Inventories 9,194.08 10,636.86 1,442.78 -
Sundry debtors 6,706.59 7,667.92 961.33 -
Cash and bank balances 350.67 2,650.37 2,299.7 -
Loans and advances 2,070.42 5,241.68 3,171.26 -
Total Current Assets 18,321.76 26,196.83
Current liabilities (CL)
Current liabilities 9,202.11 10,188.34 - 986.23
Provisions 354.42 538.25 - 183.83
Total current liabilities 9,556.53 10,726.59
Net working capital 8,765.23 15,470.24 - -
Increasing working capital 6,705.01 - - 6,705.01
Total 15,470.24 15,470.24 7,875.07 7,875.07

Net increase in the working capital is Rs. 6,705.01

 STATEMENT OF CHANGES IN WORKING CAPITAL 2010-11
(Rs. in lakhs)
Changes in working capital
Particulars 2010 2011
Increase Decrease
Current assts (CA)
Inventories 10,636.86 12,092.91 1,456.05 -
Sundry debtors 7,667.92 8,814.31 1,146.39 -
Cash and bank balances 2,650.37 420.10 - 2,230.27
Loans and advances 5,241.68 5,289.66 47.98 -
Total Current Assets 26,196.83 26,616.98
Current liabilities (CL)
Current liabilities 10,188.34 9,319.38 868.96 -
Provisions 538.25 711.30 - 173.05
Total current liabilities 10,726.59 10,030.68
Net working capital 15,470.24 16,586.30 - -

Increasing working capital 1,116.06 - - 1,116.06

Total 16,586.30 16,586.30 3,519.38 3,519.38

Net increase in the working capital is Rs.1,116.06

 STATEMENT OF CHANGES IN WORKING CAPITAL 2011-12
(Rs. in lakhs)
Changes in working capital
Particulars 2011 2012
Increase Decrease
Current assts (CA)
Inventories 12,092.91 14,436.48 2,343.57 -
Sundry debtors 8,814.31 11,966.16 3,151.85 -
Cash and bank balances 420.10 3,550.27 3,043.56 -
Loans and advances 5,289.66 6,020.93 817.88 -
Total Current Assets 26,616.98 35,973.84
Current liabilities (CL)
Current liabilities 9,319.38 10,108.38 - 789.00
Provisions 711.30 774.95 - 63.65
Total current liabilities 10,030.68 10,883.33
Net working capital 16,586.30 25,090.51 - -

Increased working capital 8,504.21 - - 8,504.21

Total 25,090.51 25,090.51 9,356.86 9,356.86

Net increase in the working capital is Rs.8,504.21

 STATEMENT OF CHANGES IN WORKING CAPITAL 2012-113
(Rs. in lakhs)
Changes in working capital
Particulars 2012 2013 Increase Decrease
Current assets (CA)
Inventories 14,436.48 11,519.49 - 2,916.99
Sundry debtors 11,966.16 11,845.80 - 120.36
Cash and bank balances 3,550.27 1,516.42 - 2,033.85
Loans and advances 6,020.93 5,581.47 - 439.46
Total current assets 35,973.84 30,463.18
Current liabilities (CL)
Current liabilities 10,108.38 6,853.94 3,254.44 -
Provisions 774.95 1,066.74 - 291.79
Total current liabilities 10,883.33 7,920.68
Net working capital 25090.51 22,542.50 - -
Decrease working capital - 2,548.01 2,548.01 -
TOTAL 25,090.51 25,090.51 5,802.45 5,802.45
Net decrease in the working capital is Rs.2, 548.01
Changes in working capital:
(Rs. In lakhs)
Year Working capital
Increase Decrease
2008-09 1304.28 -----

2009-10 6705.01 -----

2010-11 1116.06 -----

2011-12 8504.21 -----

2012-13 ----- 2548.01

 Changes in working capital
Woking capital

years
Interpretation:
From the above table & graph it is interpreted that 1st
4 years application of fund of Rs 1304.28, 6705.01, 1116.06, 8504.21, in
2012-2013,sources of fund of Rs 2548.01.
 ADJUSTED P&L A/C FOR THE YEAR OF 2008-2009

Particulars Amount Particular Amount

Deferred tax liability 787.50 Funds from operation 1,198.57

Capital W-in-Progress 411.07

Total 1,198.57 Total 1,198.57

 ADJUSTED P&L A/C FOR THE YEAR OF 2009-2010

Particulars Amount Particular Amount

Differed tax liability 569.59

Capital working in 4,849.57 Funds from operation 5,419.16
progress

Total 5,419.16 Total 5,419.16

 ADJUSTED P&L A/C FOR THE YEAR OF 2010-2011

Particulars Amount Particular Amount

Deferred tax liability 1,395.75

Funds from operation 1,395.75

Total 1,395.75 Total 1,395.75

 ADJUSTED P&L A/C FOR THE YEAR OF 2011-2012

Particulars Amount Particular Amount

Deferred tax liability 546.78 Funds from operation 983.42

Capital work in 436.64
progress

Total 983.42 Total 983.42

 ADJUSTED P&L A/C FOR THE YEAR OF 2012-2013

Particulars Amount Particular Amoun

t
Deferred tax liability 312.01 Funds from operation 792.90
Net fixed assets 480.89

Total 792.90 Total 792.90

Comparative statement of Funds from operations

Year Funds from operations

2008-09 1198.5

2009-10 5419.16

2010-11 1395.75

2011-12 983.42

2012-13 792.90
Funds form Operation

YEARS
Interpretation:
Form above table & graph interprets that funds from
operations increased from Rs 1198.57 lakhs To 5419.16 lakhs in the year
2008-09 to 2009-10 later It was drastically decreased to Rs792.9 lakhs In
the years 2012-13.
 Statement of Sources and Applications of Funds for the year
ending at 31st March 2009.

Sources Amount Applications Amount

Unsecured loan 5,480.37 Purchase of fixed assets 3,921.37

Reserves & surplus 188.32 Secured loans(paid) 1,641.55
Funds from operation 1,198.57 Net increase in working 1,304.28
capital

6,867.20 6,867.20

Interpretation
From the above table sources of funds form unsecured loans and
applications of funds in purchase of fixed assets discharged of secured loan.
 Statement of Sources And Applications Of Funds for the year
ended at 31st March 2010.

Sources Amount Applications Amount

Reserves & surplus 1,115.58 Purchase of fixed assets 5,632.38

Secured loans 7,138.11 Unsecured loans 1,335.46
Funds from operation 5,419.16 Net increase in working 6,705.01
capital

13,672.85 13,672.85

Interpretation
From the above table sources of funds from secured loans and
applications of funds in purchase of fixed assets discharged of unsecured loans.
 Statement of Sources and Applications Of Funds for the year
ended at 31st March 2011.

Sources Amount Applications Amount

Reserves & surplus 2,071.06 Capital work in progress 107.56
Secured loan 1,449.41 Purchase of fixed assets 2,230.27
Funds from operation 1,395.75 Unsecured loan 1,462.33
Net increasing in working 1,116.06
capital

4,912.22 4,912.22

Interpretation
From the above table sources of funds form reserves&surplus and
applications of funds, in purchase of fixed assets discharged of secured loan.
Statement of Sources and Applications of Funds for the year ended
at 31st March 2012.

Sources Amount Applications Amount

Reserves & surplus 1,370.07 Purchase of fixed assets 1,851.63
Secured loans 4,813.21 Net increasing in working 8,504.21
Unsecured loans 3,189.14 capital
Funds from operation 983.42

10,355.84 10,355.84

Interpretation
From the above table sources of funds secured loans and applications of funds ,in
purchase of fixed assets discharged of unsecured loans .
 Statement of Sources and Applications of Funds for the
year ending at 31st March 2013.

Sources Amount Applications Amount

Reserves & surplus 5,164.14 Purchase of fixed assets 3,015.84
Unsecured loans 1,251.75 Secured loans (paid) 6,740.96
Funds from operation 792.90
Net decreasing in working 2,548.01
capital

9,756.80 9,756.80

Interpretation:
From the above table sources of funds reserves & surplus applications of funds
in secured loans discharged of the purchase of fixed assets.
 WORKING CAPITAL TURNOVER RATIO
Working capital turn over ratio indicates the velocity of the utilization of
net working capital.

W.C.T.R = sales/net working capital

YEAR Sales Working capital Ratio

2008-2009
30295.60 7460.95 4.06

2009-2010
36936.65 8765.23 4.21

2010-2011
46365.63 15470.24 2.99

2011-2012
64471.61 16586.30 3.88

2012-2013
69057.96 25090.51 2.75
 WORKING CAPITAL TURNOVER RATIO

5 4.21
4.06 3.88
4
2.99
2.75
3
Ratio 2
ratio
1

0
2008-09 2009-10 2010-11 2011-12 2012-13
Years

Interpretation:
From the above table and graph interpreted that the company
funds from operations slightly increased from 2010 to 2011 and then drastically
decreased in the years are 2009 to 2010,2011 to 2012 and slightly decreased from
2012 to 2013.
 INVENTORY TURNOVER RATIO

Inventory & turnover =sales/Average inventory

Year Sales for the Average Turnover

year inventory
2008-09 30295.60 9194.08 3.65

2009-10 36936.65 10636.86 3.85

2010-11 46365.63 12092.91 4.09

2011-12 64471.61 14436.48 4.71

2012-13 69057.96 11519.49 6.16

 INVENTORY TURNOVER RATIO

TURNOVER

YEARS

Interpretation:
The inventory turn over ratio of Lanco Industries Limited indicates the
efficiency of the firm in producing and selling its products maintain good
inventory in the year of 2013(6.16)at high.
 Current Ratio
A very popular ratios, the current ratios is defined as: Current assets
include cash, current investments, debtors, investors, loans and advances,
and prepaid expenses. Current liabilities represent that are expected to
mature in the next twelve months.
Current Assets
Current Liabilitie s
Year Current Assets Current Liabilities Ratio
2008-09 18321.76 9556.53 1.92
2009-10 26196.83 10726.59 2.44
2010-11 26616.98 10030.68 2.65

2011-12 35973.84 10883.33 3.31

2012-13 30,463.18 7,920.68 3.85

Ratios

YEARS

Interpretation:
The above table and graph shows that the Current ratio is in the year 2008-
09 is 1.92 gradually increasing in 2012-2013 is 3.31,3.85 respectively due to
current assets are increasing. year to year.
 Debtors Turn Over Ratio
This ratio shows how many times sundry debtors turn over during
the year. It is defined as:

Net Credit Sales

DebtorsTurnoverRatio 
Average Sundry Debtors

Year sales Debtors Ratio

2008-09 30295.60 6706.59 4.5

2009-10 36936.65 7667.92 4.8

2010-11 46365.63 8814.31 5.2

2011-12 64471.61 11966.16 5.3

2012-13 69057.96 11845.80 5.8

 Debtors Turn Over Ratio

Ratio

years

Interpretation:
The debtors turnover ratio in the year 2009 is 4.5 and it is increasing in
the year 2013
DEBTORS COLLECTION PERIOD
COLLECTION PERIOD :
Collection period represents the average number of days for which a
firm has to wait a before its receivables are converted into cash. This ratio
can be calculated as follows.

 Collection period = No. of days 360 in a year /Debtors turn over

ratio

Year No. of days Debtors Days

Turnover
2008-2009 360 4.5 80
2009-2010 360 4.8 75
2010-2011 360 5.2 69
2011-2012 360 5.3 67
2012-2013 360 5.8 62
 DEBTORS COLLECTION PERIOD

Days

years
Interpretation:
The debtors collection period is increasing in the year 2009. The debtors
collection period is reduced during the year2009-10 to 2011-12. the debtors
collection period will take long time. And the debtors collection period shows
at an decreasing trend, which is not a good sign to the company.
 Findings
In 2009most of the funds were generated through the unsecured loans ie.80%
and 81% of funds were using for purchasing of fixed assets & payment secured
loans.
 In 2010, 60% of funds were raising through secured loans and reserves &
surplus. If we observe at application side funds were utilized to purchase of
fixed assets is 41% and for working capital is of 49%.
 In 2011, 28% of funds generated through trading activity & another 72%
through secured loans and reserve & surplus. In applications the 45% of funds
were utilized to purchase fixed assets.
 In 2012, 77% of funds generated through secured and unsecured loans. If
we observe at application side funds were utilized to purchase of fixed assets is
18% and for working capital is of 82%.
 In 2013, the funds were utilized through purchase of fixed assets, paid of
loans. Funds lost in operation is 26%. So, the balance sheet was not looking
strength by comparing with the other financial year balance sheet.
 Current ratio of the company is in standard norms. Quick ratio is in
standard norm position. This means current assets are high than compare with
the current liabilities.
 SUGGESTIONs
 The major source of funds are sale of assets from unsecured loans,
reserves & surplus , secured loans found from operation and
working capital .
 The major application of funds, purchasing of fixed assets.
 Inventory and debtors collection period is more than 2 months . It
shows the inefficiency of the management try to reduce this
period up to 30 days or 1 month.
 The amount is blocked in the form of inventory and debtors the
management should collect debtors as easily as possible that will
use to discharge the liabilities up to 25%.