Cash Flow Analysis Madhucon Power& Sugar

A Project ReportOn

CASH FLOW ANALYSISWith Special Reference to

MADHUCON POWER & SUGAR INDUSTRIES LIMITED, RAJESWARAPURAM

Project Report submitted to jntu hydIn partial fulfillment of the requirements for the award of Degree

of

MASTER OF BUSINESS ADMINISTRATION

Submitted ByMr. K.SHASHIDHAR

HT. No. 07W01E-0039

Under the Guidance ofMr. B. KRISHNAIAH M.com

SWARNABHARATHI COLLEGE OF ENGENEERING

(Affiliated to JNTU, HYDERABAD)KHAMMAM

(2007 - 2009)

CERTIFICATECERTIFICATE

This is to certify that MR. K. SHASHIDHAR bearing HT.

No. 07W01E-0039 is a student of our college studying M.B.A. has

successfully completed her project work entitled “CASH FLOW

ANALYSIS” WITH SPECIAL REFERENCE TO MADHUCON

SUGAR AND POWER INDUSTRIES LIMITED,

RAJESWARAPURAM. This project report is submitted to JNTU in

partial fulfillment for the award of MASTERS DEGREE IN

BUSINESS ADMINISTRATION during the academic year 2007 -

2009.

Her work is original and had not been submitted for any other

degree or diploma in part or full.

Place : Khammam

Date:

S W A R N A B H A R A T H I C O L L E G E O F E N G E N E E R I N GS W A R N A B H A R A T H I C O L L E G E O F E N G E N E E R I N G

PRINCIPAL( )

SWARNA BHARATHI COLLEGE OF ENGENEERINGKHAMMAM

SWARNA BHARATHI COLLEGE OF ENGENEERINGKHAMMAM

CERTIFICATECERTIFICATE

This is to certify that. K. SHASHIDHAR bearing HT. No.

07W01E-0039 is a Student of our college studying

M.B.A.has ]successfully completed her project work entitled “CASH

FLOW ANALYSIS” WITH SPECIAL REFERENCE TO

MADHUCON SUGAR AND POWER INDUSTRIES LIMITED,

RAJESWARAPURAM. This project report is submitted to JNT

University in partial fulfillment for the award of MASTERS DEGREE

IN BUSINESS ADMINISTRATION during the academic year 2007

-2009.

Her work is original and had not been submitted for any other

degree or diploma in part or full.

Place : Khammam

Date:

PROJECT GUIDE(B.KRISHNAIAH )

DECLARATIONDECLARATIONI hereby declare that the project report entitled “CASH FLOW

ANALYSIS” With Special Reference to MADHUCON SUGAR

AND POWER INDUSTRIES LIMITED, RAJESWARAPURAM

has been prepared by me as a part of the requirement of MASTER OF

BUSINESS ADMINISTRATION,JNYU, HYD. This study is my

original exercise. The findings and conclusions in the work are based on

the information collected by me.

This results embedded in the project work have not been

submitted partially (or) fully to any other university for the Award of my

Degree (or) Diploma.

Place : Khammam

Date :

(K.SHASHIDHAR)

ACKNOWLEDGEMENTACKNOWLEDGEMENTI express my humble gratitude to Mr. SYED. NAZEER,

Sr.Manager (P&A),for the opportunity and facilities provided to me for

under going training in their organization.

I wish sincere thank to Mr. A. VENU, defined Accounts

Manager, for his encouragement throughout the course of the project.

I am grateful to Dr.BHIMA SHANKARAM, Principal of the

college, for his support in doing project work.

I will be failing in my duty without the guidance of Mr. K.

MADHU, for the valuable guidance. I am thanking him whole

heartedly for the successful completion of my project work..

I am also thankful to Mr. RAVI KUMAR, Librarian of SWARNA

BHARATHI College of Management for his co-operation in

fulfilling this project work.

I thank the management, my family members, friends and others

who helped me for the completion of my project work.

(K.SHASHIDHAR)

CONTENTSCONTENTS

CHAPTERS TOPICS

CHAPTER - I INTRODUCTION

Objectives of the study

Scope of the study

Methodology under study

Limitations of the study

CHAPTER - I I PROFILE OF SUGAR INDUSTRY

CHAPTER - I I I

PROFILE OF MADHUCON SUGAR AND POWER INDUSTRY

CHAPTER - IV

CONCEPTUAL THEORY OF MADHUCON SUGAR AND POWER LIMITED

CHAPTER - V

DATA ANALYSIS AND INTERPRETATION

CHAPTER - VI FINDINGS & SUGGESTIONS

BIBLIOGRAPHY

INTRODUCTION

Cash plays a very important role in the entire economic life of a

business. A firm needs cash to make payments to it’s suppliers to incur

day-to-day expenses and to pay salaries, wages,interest and dividend

etc… infact 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. Ample cash

balances provides better solutions for a meeting this difficulty.

Information about the cash flows of an enterprise is useful in

providing users of financial statements with a basis to asses the ability

of the enterprise to generate cash and cash equivalents and the needs

of the enterprises to utilize those cash flows. The economic decisions

that are taken by users require an evaluation of the ability of an

enterprise to generate cash and cash equivalents and the timing and

certainty of their generation.

An attempt has been made to know the flow of cash and its effect

on the entire organization in this Study.

[1]

OBJECTIVES OF THE STUDY: -

Primary objectives of the study are to examine the cash flow

management at MADHUCON SUGARS &POWER INDUSTRIES LTD.

To know about the INDIAN SUGARS INDUSTRY SCENARIO

To know about the MADHUCON SUGARS

To study the general of overall profitability position of the

MADHUCON SUGARS LIMITED.

To examine the cash position of MADHUCON SUGARS during

the study period.

To draw the conclusions and provide the possible solutions.

SCOPE OF THE STUDY: -

The study is totally concerned with examining cash position and

financial Performance of MADHUCON SUGARS LTD. With

the help of Cash flow statements.

Even though there are number of sugar companies, the study has

been done in MADHUCON SUGAR & POWER INDUSTRIESLTD.

Only the cash flow statement has been taking to measure the

financial performance.

[2]

NEED FOR THE STUDY: Financial statements provides ample information for knowing the

financial position of the Madhucon Sugar and Power Industries

Limited. The information provided in financial statements service

the purpose fo different groups such as inventory creditors

general public etc.,

The financial statements has been taken as the base for

analyzing the financial of the concern through Cash Flow Analysis

for accomplishment of the project.

METHODOLOGY UNDER STUDY : - RESEARCH:

Research is an academic activity and as such the term should be

used in a technical sense. According to Clifford woody Research

comprises defining and redefining problems, formulating Hypothesis or

suggested solutions; collecting, organizing and evaluating data, making

deduction and reaching conclusion; and At last care fully testing the

conclusions to determine whether they fit the formulating the

hypothesis.

DATA COLLECTION METHODS: -PRIMARY DATA: -

Primary data refers to information on that is generated to meet

the specific requirements of the investigation at hand it consist

[3]

observation method; interview method; through questionnaires; through

schedules methods.

SECONDRY DATA: -

The information that is collected for a purpose other than to solve

the specific problem under investigation is known as secondary data.

The data has been collected from primary as well as secondary

sources. Primary data has been collected through interaction with

company managers. Secondary data has been collected from books,

publications, web sites, annual reports.

LIMITATIONS:

1) Time is the main constraint in completing the study with in

the stipulated period allowed. It has became difficult to cash

flow analysis all the documents in detail.

2) The cash flow analysis is made on the basis of secondary

data only.

3) The availability of data is only pertaining to five years is one

of the constraint.

4) As there is more dependency on secondary data realistic

conclusion may not be possible to be made.

[4]

5) Even though number of techniques are available for

analyzing financial position only cash flow analysis has

been taken for the study.

[5]

INDUSTRY PROFILE

HISTORY OF SUGAR INDUSTRY: -

INDIA is the fourth major sugar producing country in the world.

The first three being in RUSSIA, BRAZIL and CUBA in that order sugar

industry occupies an important place among organized industries in

INDIA. It ranks third largest industry in terms of its contribution to the net

value added by manufacturing and employees, nearly 3.25 lakhs

workers, besides creating extensive indirect employment for 25 million

cultivators of sugar cane the various agencies of distributive trade and

through subsidiary industries such as confectionery. It is also an

important source excise duty for the central govt.

There are now 420 sugar factories in INDIA, with total installed

capacity of 15 million tons; against this 400 factories were in operation

of which 120 were in the private sectors, 60 in the public sector and 220

in the co-operative sector.

In India before independence co-operative sugar were established

and the First co-operative sugar factory being the co-operative

sugar factory at ETIKOPPAKA IN ANDHRA PREDESH. The Govt.

encouraged the co-operative sector in the sugar industry in the fifties and

new series of co-operative sugar factories started in the fifties.

At present the co-operative sector consists of 50%f the factories

in India, and account for more than 50% of total sugar production. At

present these are 18 sugar factories under co- operative sector and 7 in

private sector.

[5]

Regarding sugar cane price the govt. of India fixes the minimum

sugar cane price linked to recovery of adhoc payment due to high cost

of cane cultivation linked to recovery of 8,5% the concerned state govt.

recommended to pay another adhoc payment due to high cost of cane

cultivation linked to a recovery of 8.5%. The factories are liable to pay a

extra amount of 2/- per each point of recovery percentage per each ton

of sugar cane, if the recovery of sugar reaches above 8.5%.

PRODUCTION IN OTHER COUNTRIES: -

World sugar production will jump 7% in the season that began in

October mainly because of increased output in Brazil and India, the

U.S.D.A said, world production will be 155.2 million tones, up 10.5

million tones, from a year earlier and up 6 million tones from The may

forecast. Consumption is forecast at 146 million tones, up 3.2 Million

from a year earlier. Brazil will produce 30.9 million tonnes And India

25.1 million tones, the U.S.D.A said, with each country’s Output up 4

million tones from the previous year.

BRAZIL:

Exports of Brazil to the Arab countries broke a new record in

October they generated US $730.6 million, an increase of 57% when

compared to the same month last year. The product the most influenced

the performance in the month was sugar sales of the commodity to the

Arabs generated US $325.5million, present growth of almost

170%when compared to last year. The Brazilian sugar is taking over

more and more space that was supplied by EU sugar.

[6]

THAILAND: -

The cabinet recently announced a pre-harvest sugarcane price

for the 2006-07milling year at 800 baht per tonne. The return for sugar

production and distribution was set at 342.86baht per tone of sugarcane

crushed. The cane and sugar board said the price is almost same as it

was last season.

GUATEMALA: -

All sugar for he domestic market is sold through a distribution

company owned by the sugar industry; Asazgua, and association that

represents sugar millers, handles all marketing of sugar for export. The

monopoly power exercised by these organizations enables the industry

to maintain domestic sugar prices well above world market levels.

Guatemala exports 1to 1.3million tones of sugar per year.

COLOMBIA: -

Colombia operates a “price band” system on sugar imports where

by a variable duty (equal to 120% of the difference between the world

price and fixed reference price) is imposed in addition to the basic duty.

“COUNTRYWISE SUGAR REVIEW: NOVEMBER 2006”.

[7]

SUGAR TECHNOLOGYCHANGES IN SUGAR PRODUCTION DECOMPOSING

IRON COMPLEXES WITH OPTIMUMLIME: -

ABSTRACT: -

SUGARCANE, labor and capital are the well known common on

inputs for the production of sugar. Output of sugar behaves in response

to some increase in one particular input or all inputs. Assuming that the

amount of factors of production (output) will depend exclusively on

change in technology by decomposition of unidentified iron complexes

applying electrolytic clarification using optimized lime does from cane

juice during sugar manufacturing. The iron content was deposited at

cathode after decomposition of iron complexes. As a result percentage

of sucrose as well as purity (output) show increasing pattern, which can

be treated as increasing returns to the scale of a sugar industry.

INTRODUCTION: -

India’s highest production had been 20.14million tonnes in the

year 2002-03 when the area under cultivation was about 4.4million

hectares and a sugar recovery of 10.36% on cane .the government said

it would liberalize sugar exports encouraged by prospects of a good

domestic crop and from global prices food minister said as a first step

the government will allow a state trading firm to export up to 300,000

tones of sugar to meet demand from Pakistan and other importing

countries in the region.

[8]

At the moment, the government permits experts by mills, which

had imported raw sugar duty free in the last two years with an obligation

to sell it overseas with in a stipulated time-period. But the industry has

been urging the government to permit all mills to sell overseas to take

advantage of strong global prices, a booming export market and high

domestic production.

India’s sugar production during crop year ending in September is

expected to be around 18.5million tones; up from 13million tones last

year .An industry official has forecast production would rise to 22million

tones in 2006-07. The country annually consumes about 18million tones

of sugar. The industry confident of boosting white.

MARKET REVIEW: -

MARKET REVIEW FOR THE MONTH OF NOVEMBER, 2006: -

Declining trend continued in various wholesale sugar markets of

the country during November, 2006.price eased by Rs40/- to Rs60/- a

quintal on increased supply and lack of demand. He government of

India released a free sale quantity of 12lakh tones for the month of

December as against 11lakh tones during the corresponding period last

year.

Sugar price also declined in the wake of new arrivals in the

market. Weekend wholesale prices of sugar & Sugar are given here

under.

[9]

PRICES OF SUGAR AND GUR FOR THE MONTH OF NOV’2006

Markets

Sugar

31st

October

7th

November

15th

November

22nd

November

30th

November

Delhi1800 1825 1800 1800 1800

1950 1950 1935 1880 1835

Mumbai1744 1755 1729 1711 1700

1774 1782 1782 1762 1751

Calcutta1910 1880 1900 1880 1870

1930 1930 1950 1920 1890

Chennai1670 1695 1680 1665 1635

690 1715 1685 1670 1645

WORLD SUGAR OUTLOOK: -

WORLD SUGAR BALANCE:-

According to F.O. Light’s first estimate of world sugar balance

2006-07, world sugar production in 2006-07 is expected at 160.01

million metric tons raw value (mr+v) or 8.35 million mrtv higher than in

2005-06. World sugar consumption in 2006-07 is expected to rise by

2.88 million mrtv to 148.26 million mrtvs. Imports in 2005-06 are

estimated at about 48.09 million mrtv, 3.88 million mrtv lower than in the

last year while exports are estimated at 51.36 million mrtv, 2.32 million

mrtv lower than in the last season. The current season is expected to

close with a stock of 72.64 million mrtv or 8.45 million mrtv higher than

the closing stock last year. The stocks amount to 48.99% of the

estimated consumption, while last year it was 44.14%.

[10]

U.S SUGAR BALANCE: -

According to the last estimate of U.S.D.A, sugar production in the

U.S in 2006-07 is expected at 8.52 million short tons raw value, or 1, 12

million strive higher than 7.40 million strive produced in 2005-06.

Including opening stock of 1.76 million strive and imports of 2.21 million

strive, the total supply is expected at 12.49 million strive, as against

12.17 million strive in 2005-06. Total (including export) in 2006-07 is

estimated at 10.62 million strive as against 10.41 million strive in 2005-

06. Stock at the end of 2006-07 is estimated at 1.87 million strive as

against 1.76 million strive at the end of 2005-06. Stocks to use ratio in

2006 -07 is expected at 17.6% compared with 16.9 in2005-06.

[11]

S UG A R & H E A L T HS UG A R & H E A L T H

SWEET REMINDER: -

The current festive season always induces a certain degree of

anxiety in me. I must confess that this anxiety is caused on account of

my sweet tooth. Much as would like to think of my self as some one who

has in general a very “responsible” attitude towards the consumption of

sweets, this is the one time of the year when I do tend to over indulge.

Any way what lingers now is the post feasting guilt my only consolation,

if it can be called that is the fact most of us are guilty of the same

misdemeanor to which I have just confessed.

WHY SHOULD ONE FEEL GUILTY AND ALSO WORRY ABOUT CONSUMING SUGAR?

Actually it is the excessive consumption of sugar that is not

desirable. Small amounts of sugar can be consumed without too much

fuss. The W.H.O recommends that we limit our intake of refined sugar

to 5 to 10 percent of our daily calorie requirement. This means that on a

2000-calorie diet-which the average recommended dietary allowance

we can consume about 200 calories of sugar (10 tea spoons)

Remember the following simple rule about many things in life also

applies over here: most things in excess are Harmful or not desirable. In

the case of our diet, excessive consumption of calories, beyond the

2000 limit, is not good whether they come from fat, proteins or from

sugar. All excessive in take gets stored as fat in the body.

[12]

According to a recent issue of the New England journal of

medicine, regular weighing is the single most important tool to keep

your weight under check. it is always better to catch the small increases

in weight can guide you towards making minor but daily adjustments in

your diet so the situation does not never get really out of your control.

CO-PRODUCTS: -

REEP: EASING THE WAY FOR FINANCING OF RENEWABLES

The renewable energy and energy efficiency partnership (REEP),

has launched the “Renewable Energy Exchange (Asia) private ltd.” In

Singapore with the ‘support of the development finance arm of the

German Government, DEG. REEEP is an active, global public-private

partner ship that structures policy and regulatory initiatives for clean

energy, and facilitates financing for energy projects.

It has often been observed that while project developers and

investors find it difficult to identify sources of finance, bankers find it

difficult to identify bankable projects. All this will now be passé, with the

introduction of REEEP’S new exchange programmed.

The renewable energy Exchange would act as a central point of

contact through which a professionally prepared and monitored project

portfolio would be provided to an active group of investors.

DRAMATIC CHANGE OF FORTUNES: -

Despite being a large segment of the country’s burgeoning food

processing Industry, the sugar sector is still subject to controls and

restrictions.

[13]

The INDIAN sugar industry is witnessing a dramatic turn of

fortunes. Rising production for four successive years since 1999-2000

burgeoning stocks with mills, falling prices and squeezed margins have

become a thing of the past in a short span of one year. Critically, Indian

has transformed itself from being an exporter of sugar to an importer of

the sweetener.

What led to this sudden change of fortune form a high of 297

million tones in 2001-2002 and 282 million tones in 2002-03, sugarcane

output faced a sharp decline to236 million tones in 2003-04. Moisture-

stress conditions in some of the important cane growing regions

including Maharastra, Tamilnadu, Karnataka, Gujarat and Uttar Pradesh

resulted in lower crops. Pest infestation (Woolly Aphid) too affected

yields in some. The belief that India’s sugarcane had successfully

broken the cyclical nature of production since 1999-2000 was shaken.

As a result of lower cane output, production that registered a

record 201.32 lakh tones the following season. In addition, as it always

happens, lower output encouraged larger diversion of cane for

alternative sweeteners such as sugar, which enjoyed strong price.

The decline of 60 lakh tones or 30 percent in sugar production

resulted in a sharp draw of stocky during 2003-04. A period

characterized by 9 percent growth in overall agricultural production

rustling in higher rural incomes and expansion of demand.

[14]

AREA AND PRODUCTION OF SUGARCANE

Major States 2001-02

2002-03

2003-04

Uttarpradesh 20.4 18.5 20.3

Tamilnadu 5.8 6.0 5.3

Karnataka 3.2 2.8 1.9

Andhra Pradesh 2.2 2.3 2.0

Gujarat 1.8 2.0 1.6

Others 6.6 8.2 6.5

TOTAL 44.1 43.6 40.0

Area In Lakh Hectors

NEW DIMENSIONS OF SUGAR GROWTH: -

Sugar is the second largest Agro based industry in India located

in rural areas. About 50 million farmers, their dependents and a large

number of agricultural labourers are involved in sugarcane cultivation

harvesting and ancillary activities, constituting 7.5 percent of the rural

population. Besides the industry provides employment to about 2

million skilled and semi skilled workers and others employed in ancillary

activities mostly from rural areas. The industry not only generates power

from by product bagasse for its own requirement but surplus power for

supply to the grid. It also provides ethanol, an eco-friendly and

renewable energy for blending with petrol. With 453 operating sugar

mills in different parts of the country, the industry has been a focal point

for socio-economic development of rural areas. India is among the few countries in the world where the sugar industry has

[15]

diversified into cogeneration of power and production of fuel ethanol.

The Union Government licensed new units with an initial

capacity of 1,250 tonnes a day till the 1980s which was subsequently

increased to 2,500 TCD.

PRODUCTION

Major States 2001-02

2002-03

2003-04

Uttarpradesh 118.0 116.3 113.0

Tamilnadu 45.1 37.0 27.0

Karnataka 32.6 30.0 19.7

Andhra Pradesh 18.1 15.4 14.6

Gujarat 12.5 14.1 10.8

Others 37.9 36.0 35.3

TOTAL 297.2 281.6 236.2

Production in Million Tonnes

TIGHTENING SUPPLIES: -

Although the 2003-04 seasons commenced with an inventory of

about 80 Lakh tones, the market soon took cognizance of the setback to

domestic production, inevitable draw down of stocks and tightening

supplies. Open market prices began to climb, notwithstanding

government insistence that adequate stock of sugar was available in the

country for domestic consumption. It was also clarified that no proposal

for import was under consideration of the Government.

[16]

PROFILE OF INDIAN SUGAR INDUSTRYNumber of factories : 453

Cane price per tonne : Rs. 18,000 crores

No. of cane farmers : 50 Million

Sugar production : 22 Million tones (raw value)

Value of sugar out put : Rs.27000 crores per Annum

Annual tax contribution to exchequer : Rs. 2,700 crores

Employment including ancillary activities : 2 million people

Fuel Ethanol of 5% blend (value) : Rs. 600 crores per annumCurrent export of co-generated power (value) : Rs.750 crores per annum

GROWTH OF SUGAR INDUSTRY: -

YEAR NO.OF UNITS

AVERAGE CAPCITY

1980 299 1650 Tonnes

1990 377 2030 Tonnes

2000 423 3000 Tonnes

2003 453 3200 Tonnes

PIONEERING EFFORT IMPROVES SUGAR QUALITY: -

Even as the sugar industry is going through a crisis, there is

some good news on the quality front. The Kissan Veer Satara

Cooperative Sugar Factory, Bhuinj in Maharastra’s Satara District

initiated an experiment two months ago to improve sugar quality, using

[17]

a technology developed by Mr. V. M. KULKARNI, Founder- Director

of V.M Biotech.

SAVING IN BAGASSE: -

The results show that apart from better sugar, there was a saving

in bagasse and improvement in stream consumption, crushing and

production of bold grain sugar.

No additions or changes in machinery are needed for these

experiments, which are based on the concept of using proper chemicals

in the right doses at the right stage. Essentially, the experiments worked

on balancing chemistry and this improved the overall efficiency of the

factory.

PROBLEMS OF SUGAR INDUSTRY

Problems of mounting losses.

Fixation of high sugarcane prices by the state govt.

The question of minimum economic size.

Old machinery.

Failure to follow a consistent policy.

Low sugar recovery.

Completion from cheaper import.

SUGAR LICENSING POLICY: -

The Govt. of India issues periodically guidelines for licensing new

sugar factories and for expansion of existing sugar factories. The

[18]

guidelines (announced in July 1990) where designed to give a boost to

sugar industry.

1) Licenses for new factories would be issued subject to the

provision that there is no sugar factory with in radius of 15 km.

2) The new sugar factories would be licensed for a minimum

crushing capacity of 2500 tones per day.

3) New licensed would be issued on the condition that cane prices

would be payable on the basis of sucrose content of the

sugarcane.

4) Preference in licensing is to given to proposals from the co-

operative and the public sector rather than from the private

sector.

5) Licenses are to be given liberally for manufacture of the industrial

alcohol through the conversion of molasses, this is to boost

production and export of industrial alcohol.

SUGAR DEVELOPMENT FUNND: -

The sugar development fund was setup in 1982. under the sugar

less act and is funded by transfer of proceeds of sugar was imposed at

the rate of Rs .14 per quintal on sugar produced by all sugar factories.

The fund is utilized for advancing loans on short terms for the

revalidation and modernization of sugar industry and for development of

sugar cane in the sugar factory area. The sugar development fund

makes grants for undertaking research projects for development of

sugar industry.

The fund is also defray expenditure for the purpose of building

have and maintenance of buffer stocks of sugar with a view to

[19]

stabilizing its price. The total allocation created to the fund till 1996

amount to Rs. 1,660/- crores. The fund has so far sanctioned loans

amounting to Rs.960/- crores for sugarcane development and from

modernization / rehabilitation of sugar factories.

Government sugar industry to study the development and growth

of sugar industry in India Vis-a –Vis other sugar producing countries

and suggest modifications amendments or repeal of any existing laws

and controls in order to increase production and efficiency. The govt. of

India had constituted a high – powered committee under the

chairmanship of “B.B. Mahajan”. The “Mahajan Committee” submitted

its report in April 1998.

MAJOR RECOMMENDATIONS OF COMMITTEE ARE: -

1) Complete controls of sugar in order to provide level paying field to

the domestic industry Vis-a –Vis imported sugar.

2) Discontinuation of supply of sugar through the Public Distribution

System (PDS) for plugging the leakages on account of PDS

sugar finding way to open market.

3) Setting of a sugarcane pricing board to determine every

September the advance price (SMP) for the ensuring crushing

season.

4) Minimum distance of 15 km. between an existing sugar mill and a

new sugar mill for which license is to be issued in order to ensure

viability of both the mills.

5) Continue of import of sugar under open general license (OGL) in

order to protect the consumers against any unusual rise in prices.

The sugar industry is essential an Agro industry and therefore it

should be centrally located with in the vast area of cane cultivation’s

otherwise it will increase the cost of transport. It should be established

at a place where agronomic conditions favored to the development of

[20]

sugar cane plantation and where climatic conditions rainfall, land fertility

and irrigation facilities as such as to ensure abdonte supply of sugar

cane with high yield. As per the norms of the govt. the industry should

have basic infrastructure facilities.

[21]

COMPANY PROFILE

MADHUCON SUGAR AND POWER INDUSTRYLTD

During the year 2001-02 Madhucon Sugars Limited was

incorporated to purchase and take over the sick sugar mill namely

---“THE PALAIR CO – OPERATIVE SUGARS LIMITED” Established in 1982. At the time of taking over, the company had

earned net profit in the first year of operations itself.

Later the company’s name was changed as “MADHUCON SUGAR AND POWER INDUSTRIES LIMITED”. These company

is one of the company in group company of Madhucon Projects

Limited which is having diversified activities of construction of

infrastructure projects like Roads, Buildings, Flyovers, Granites, Sugar

and allied products.

MADHUCON GROUP is working on projects in various core

sectors of nation as importance like highways, irrigation, producing the

construction materials, power houses, all of which, no need to say are

so essential now for the all round infrastructure development of the

nation.

MADHUCON GROUP CONSISTS FOLLOWING COMPANIES: -

1) MADHUCON PROJECTS LTD

2) MADHUCON GRANITES LTD

3) MADHUCON ENGINEERS LTD

4) MADHUCON BINAPURI JV

5) MBN ANCHORED EARTH LTD

6) VARALAKSHMI GRANITES PVT LTD

7) MADHUCON SUGAR AND POWER INDUSTRIES LTD

[21]

ABOUT MADHUCON SUGAR AND POWER INDUSTRIES LIMITED: -

Madhucon sugar and power industries limited was Registered on

5th November 2002, which was purchased under privatization scheme

with capacity of 1250 tones per day. The factory is located at

Rajeswarapuram village in Khammam District. The factory and service

area consists of 207 villages situated in radius of 35 Kms and the

company has 5,577 registered cane farmers.

Madhucon Sugar and Power Industries is one of the group

companies of Madhucon group which is having diversified activites of

construction of infrastructure projects like Roads, Bridges, Canals,

Buildings, Flyovers, Granites, sugar and allied products.

The group turnover is around 600 crores and earning reasonable

profits. The present market price of Madhucon Projects Limited share of

Rs.2.00 each is quoting around Rs. 300.00.

THE FOLLOWING IS BOARD OF DIRECTORS OF COMPANY: -

NAME DESIGNATION DIN

Sri. N. Seethaiah Chairman 00022839

Sri. N. Krishnaiah Executive Director 00022778

Sri. T. Venugopala Rao Director 00070688

Sri. K. Srinivasa Rao Director 00022558

[22]

LIST OF SHARE HOLDERS & THEIR SHARE HOLDINGS: -

NAME

No. of Equity

Shares of Rs. 10/-

Each

Value Rs.

Percentage

NAMA NAGESWARARAO 204168 2041680 7

NAMA SEETAIAH 51042 510420 2

NAMA KRISHNAIAH 51042 510420 2

NAMA CHINNAMMA 51042 510420 2

T.VENUGOPALARAO 51042 510420 2

KAMMA SRINIVAS 76563 765630 3

M.SEETARAMAIAH 76563 765630 3

K.LAKSHMAIAH 76563 765630 3

MADHUCON PROJECTED 1081500 10815000 40

MADHUCON GRANITES LTD 991664 9916640 36

TOTAL 2711189 27111890 100

The performance indicators of Madhucon sugar and power

industries limited are as follows: -

DESCRIPTION 2002-03

2003-04

2004-05

2005-06

SALES 91.98 1391.04 1523.75 3254.98

Net profit 0.66 34.40 77.49 240.77

Reserves and Surplus 0.66 37.22 111.61 346.30

Gross Block 996.92 1054.59 1323.20 1606.71

Net Block 947.59 895.42 1050.02 1178.44

Share Capital 271.12 271.12 271.12 271.12

[23]

In view of the good demand for the sugar and its allied

products like Rectified spirit, ENA, ETHANOL etc., the management has

decided to undertake modernization/expansion of the existing

equipment to enhance the crushing season 2006-07 and further

expansion from 2000 TCD to 3500 TCD for the season 2007-08.

The company also proposes to setup a new project for the

production of alcohol/ethanol from molasses and cereal gains with

installed capacity of 65KLPD.

The proposed distillery will mainly manufacture RS, ENA and

impure spirit using the available molasses from sugar cane crushing

during the seasonal operation; Use of own/procured Molasses as

required and use of cereal grains will be made during the off-season

operation. Thus the design of distillery ensures optimum utilization of

the manufacturing facilities.

The company also proposes to setup another new project for the

production of power by setting of Co-gen. plant with the installed

capacity of 20 M W using the Baggasse available from the sugar plant.

[24]

THE ESIMATED COSTS OF THE PROJECTS ARE AS FOLLOWS: -

DESCRIPTION SUGAR

DISTLR

CO-GEN TOTAL

Site Development 48.00 25.00 --- 73.00

Civil works & Buildings 807.00 675.00 730.00 2212.31

Plants and Machinery 2814.00 3693.00 7636.00 14143.00

Miscellaneous Fixed assets 235.00 300.00 130.00 665.00Preliminary, Pre-operative and startup Expenses 400.00 188.00 254.00 842.00

Provision for Contingency 128.00 132.00 389.00 649.66

Margin for working Capital 1109.00 251.00 50.00 1410.00

Interest during Construction --- --- --- ---

GRAND TOTAL 5541.00 5264.00 9190.00 19995.00

MEANS OF FINANCE SUGAR

DISTLR

CO-GEN TOTAL

Term loan 3324.00 3159.00 5514.00 11997.00

Quasi equity from SDF 1662.30 1579.00 2757.00 5998.00

Equity share Capital from MSL 554.10 526.00 919.00 1999.00

GRAND TOTAL 5541.00 5264.00 9190.00 19995.00

The company has appointed renowned consultants M/s. Mitcon Constancy Services Limited, Pune for expansion and

installation of sugar and Distillery and M/s. Avant-Grade Engineers and Consultants Pvt. Ltd., Chennai for co-gen plant.

The above project cost has been estimated by them, keeping in

view of the prevailing market rates. The above projects are expected to

be commissioned by oct.2008.

[25]

The company has already finalized the DPRs and is in the

process of finalization of detailed drawings for the equipment and

placement of orders. The company has already placed orders for boiler

and steam turbines for co-gen plant.

To part finance the above projects the company is proposing to

apply for term loans from the banks and the financial institutions.

The loans are proposed to repay with in 8 years with a

moratorium period for 2.5 years from the date of 1st disbursement of the

loan.

The company is in existence for the last 4 years and earned

reasonable profits from the date of its inception of taking over from the

Palair Co-Operative Sugars Ltd.

PRODUCTION SCENARIO: -

Product : Sugar

Bi-products : Baggasse

: Molasses

: Filter cake

Baggasse is used as firewood to run Boilers

Molasses is used in the manufacturing of Distillers like Alcohol

and spirits, Ethanol etc.,

Filter cake is used as manure for the agriculture.

[26]

SUGAR PRODUCTION DETAILS OF: -

MADHUCON SUGARS AND POWER PROJECTS INDUSTRIES:-

PARTICULARS 2002-03 2003-04 2004-05 2005-06

CANE CRUSHED (M.T.) 1,40,411 65,436,696 151,856.56 179,956.94

SUGAR PRODUCED (QTLS) 1,31,243 60,330 1,44,425 1,56,737

SUGAR SOLD (QTLS) 4,341 1,14,631 88,749 1,83,171

STOCK OF SUGAR (QTLS) 1,26,902 72,601 131,420.34 1,01,454

OBJECTIVES OF THE COMPANY: -

Manufacturing of white crystal sugar

To promote the agriculturists in that particular area

To utilize the harvest of sugar cane in that area

Improving the cultivation methods through giving better support to

the formers

Issuing loans to members for productive and other similes

purposes

To encourage self help thrift and co-operations among members

To undertake such other activities as are incidental and

conducive to the development of sugar cane, sugar and allied

industries.

[27]

WELFARE MEASURES TO THE EMPLOYES: -

The following welfare measures have be provided by Madhucon

Sugars for the employees.

Providing quarters (as per their category)

Shoes for the purpose of safety measures

One pair of uniform for every year for every employ

If any employees met with the accident the management

immediately gives the first aid and takes the patient to Khammam

Govt. Head Quarters hospitals & provides two persons to assist

them for during the hospitalization.

As per the order of the labor department i.e. assists

commissioner of labor & deputy commissioner & deputy

commissioner we have to pay the compensation to the person

who met the accident

The factory management has been sanctioned powers the future

expenses an amount of 500/- to the person who died artificially of

accidentally

Their cases have been recommended to the labor department for

the compensation as per the factory act

The management every year has been sanction productivity

linked incentive (bonus) to employee for every year depending

upon the percentage of the recovery.

The labor department has been introduced the filarial fund to the

employee and worker of the factory.

[28]

PRODUCTION PROCESS: -

In the beginning of production process sugar cane is loaded into

a container, cane carrier carries them in to cane kicker. It helps to

maintain a uniform level of sugar canes; cane cutters cut the whole

cane in to small pieces and even cut the layer of the cut cane those.

Small pieces are sending in to crusher by crushing those small pieces

of sugar cane more juice.

Will be extracting the mill entract the more juice which goes to

process of manufacturing of sugar. There are 4mills in each mill there

are three values. The prepared cane to 1st mill and there it will be

crushed. The product comes from discharge rollers of 1st mill is called

primary juice, like wise the primary baggage passes through remaining

3 mills either hot water or cold water both are used as maceration water

which is used at the 4th mill for extraction of more juice.

Vaccum pans

Condensation

Water cooling system

Cooling, curing and drying

Sugar dryers

Gardens

Molasses weighment

Stream power plant (Boilers)

Chimney

[29]

Miscellaneous items

Sugar muter

Sugar elevators

Diesel generation

Final molasses

Storage tank

Furnace of oil storage tank

Baggage elevator

CONTENTS (OR) RAW MATERIALS OF SUGAR: -

Sugar cane and

Chemical

LIST OF CHEMICALS WHICH INVOLVES IN THE PRODUCTION PROCESS: -

Burnt lime

Sulfur (So2)

Sodium exhamata phosphate

Viscosity reducer

Anti scalant

Descalant

Hydrogen peroxide

[30]

LIST OF MECHINERY WHICH INVOLVES IN THE PRODUCTION PROCESS: -

Cane carrier

Cane kicker

Cane levelers

Cane cutter

Crusher

Mills

Juice wiggling scale

Juice heaters

Juice sulphitation tanks

Sulfur burner

Filter presser

Carbonation plant

Evaporation plant

Syrup treatment plant

[31]

CASH FLOW ANALYSIS

MEANING: -

Cash Flow statement is a statement which describes the inflows

(sources) and out flows (uses) of cash and cash equivalents in an

enterprise during a specified period of time. Such a statement

enumerates net effects of the various business transactions on cash

and its equivalents and takes in to account receipts and disbursements

of cash. A cash flow statement summary the cases of changes cash

position of 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 hand and demand deposits with banks.

2) Cash equivalents are short term, highly liquid investments that

are readily convertible in to known amounts of cash and which

are subject to an insignificant risk of changes in value.

3) Cash equivalents are held for the purpose of meeting short-term

cash commitments rather than for investment or other purpose.

For an investment to qualify as cash equivalent, it must be readily

convertible to a known amount of cash and be subject to an

insignificant risk of change risk of change in value. There fore, an

investment normally qualifies as a cash equivalent only when it

has a short – maturity, of say, three months or less from the date

of acquisition. Investments in shares are excluded from cash

equivalents unless they are, in substance, cash equivalents: for

[32]

example, preference shares of a company acquired shortly before

their specified 40redemption date (provided there is only an

insignificant risk of failure of the company to repay the amount at

maturity).

4) Cash flows are inflows and out flows of cash and cash

5) Equivalents. Flow of cash is 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 results in the

decrease of total cash, it is known as out flow (use) of cash.

NEED FOR CASH FLOW STATEMENT: -

The Financial Accounting Standard Board, U.S.A, has

emphasized the need for cash flow statement as, “Financial reporting

should provide information to help present and potential investors and

creditors and other users in assessing the amounts, timing and

uncertainty of prospective cash receipts from dividends or interest and

proceeds from the sales, redemption or maturity of securities or loans.

The prospects for those cash receipts are affected by an enterprise’s

ability to generate enough cash to meet the obligations when due and

its other operating needs, to reinvest in operations and to pay cash

dividends”.

[33]

In June 1995 the Securities and Exchange Board of India

amended clause 32 of the listing agreement requiring every listed

company to give along with the balance sheet and profit and loss

account, a cash flow statement prepared in the prescribed format,

showing separately cash flows from operating activities, investing

activities and financing activities. Recognizing the importance of cash

flow statement, the Institute of Charted Accounts of India issued. A S-3 Revised: Cash flow statements in MARCH, 1997. The revised accounting standard supersedes AS-3 changes in Financial Position, issued in June 1981.

THE OBJECTIVES OF THE CASH FLOW STATEMENT: -

Information about the cash flows of an enterprise is useful in

providing users of financial statements with a basis to asses the ability

of the enterprise to generate cash and cash equivalents and the needs

of the enterprises to utilize those cash flows. The economic decisions

that are taken by users require an evaluation of the ability of an

enterprise to generate cash and cash equivalents and the timing and

certainty of their generation.

The statement deals with the provision of information about the

historical changes in cash and cash equivalents of an enterprise by

means of cash flow statement which classified cash flows during the

period from operating, investing and financing activities.

[34]

CLASSIFICATION OF CASH FLOWS: -

According to AS-3 (Revised), the cash flow statement should

report cash flows during the period classified by operating, investing

and financing activities. Thus, cash flows are classified in to three main

categories.

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

CASH FLOWS FROM OPERATING ACTIVITIES: -

Operating activities are the principal revenue –producing activities

of the enterprise and 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 operation 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. With other

information, in forecasting future operating cash flows.

Cash flows from operating activities are primarily derived from the

principal revenue-producing activities of the enterprise. Therefore, they

generally result from the transaction and other events that enter into the

determination of net profit or loss.

[35]

EXAMPLE OF CASH FLOWS FROM OPREATING ACTIVITIES ARE: -

a) Cash receipts from the sale of goods and the rendering of

services

b) Cash receipts from royalties, fees, commission, and other

revenue

c) Cash payments to suppliers of goods and services

d) Cash payments to and on behalf of employees

e) Cash receipts and cash payments of an insurance enterprise for

premiums and claims, annuities and other policy benefits

f) Cash payments or refunds of income taxes unless they can be

specifically identified with financing and investing activities

g) Cash receipts and payments relating to futures contracts, forward

contracts, option contracts, and swap contracts, when the

contracts are held for dealing or trading purposes.

Some transaction, such as the sale of an item of plant, may give

rise to a gain or loss which is included in the determination of net profit

or loss. However, the cash flows relating to such transaction are cash

flows from investing activities.

CASH FLOWS FROM INVESTING ACTIVITIES: -

Investing activities are the acquisition and disposal of long-term

assets other investments not included in cash equivalents. The

separate disclosure of cash flows have been made for resources

intended to generate future income and cash flows.

[36]

EXAMPLE OF CASH FLOWS ARISING FROM INVESTING ACTIVITIES ARE: -

a) Cash payments to acquire fixed assets. These payments include

those relating to capitalized research & development costs and

self constructed fixed assets.

b) Cash receipts from disposal of fixed assets (including

intangibles);

c) 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 purpose);

d) Cash receipts from disposal of shares, warrants, or debt

instruments of other enterprises and interests in joint venture

e) Cash advances and loans made to third parties

f) Cash receipts from the repayment of advances and loans made

to third parties

g) Cash payments for futures contracts, forward contracts, option

contracts, and swap contracts except when the contracts are held

for dealing or trading purpose, or the payments are classified as

financing activities

CASH FLOWS FROM FINANCING ACTIVITIES: -

Financing activities are activities that result in changes in the size

and composition of the owners capital and borrowing of 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 to the enterprise.

[37]

USES AND SIGNIFICANCE OF CASH FLOW STATEMENT: -

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 can based on the cash basis of

accounting, it is very useful in the evaluation of cash position of a

firm.

2) Projected cash flow statement can be prepared in order to know

the future cash position of a concern so as to 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 in to 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 cash flow statements reveals whether the

firms liquidity is improving or deteriorating over a period of time

and in comparison to other firms over a given period of time.

5) Cash flow statement helps in planning the repayment of loans,

replacement of fixed assets and other similar long –term planning

of cash. It also significant for capital budgeting decisions.

[38]

6) Cash flow analysis is more useful and appropriate than funds flow

analysis for short –term financial analysis as in 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.

7) Cash flow statement prepared according to AS-3 (Revised) is

more suitable for making comparisons than the funds flow

statement as there is no standard format used for the same.

8) 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, and thus,

cash flow statement is more useful than the funds statement.

LIMITATIONS OF CASH FLOW STATEMENT: -

Despite a number of uses, a cash flow statement suffers from the

following limitations: -

As cash flow statement is based on cash basis of accounting, it

ignores the basic accounting concept of accrual basis.

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.

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.

[39]

PROCEDURE FOR PREPARING A CASH FLOW STATEMENT: -

Cash flow statement is not a substitute of income statement, i.e.,

a profit and loss account, and a balance sheet. It provides additional

information and explains the reasons in cash and cash equivalents,

derived from financial statements at to points of time. The producer for

preparing a cash flow statement is different from the procedure followed

in respect of profit and loss account and balance sheet. It is prepared

with the help of financial statements. The basic information required for

the preparation of cash flow statement is obtained from the following

three sources:

i) Comparative balance sheets at two points of time, i.e., in the

beginning and at the end of the accounting period.

ii) Income statement of the current accounting period or the profit

and loss account.

iii) Some selected additional data to extract the hidden transactions.

The preparation of cash flow statement involves the following

steps: -

Step 1: - Compute the net increase or decrease in cash and

cash equivalents by making a comparison of these accounting

given in the comparative balance sheets.

Step 2: - Calculate the net cash flow provided operating

activities by analyzing the profit and loss account balance sheet

and additional information. There are two methods of converting

net income in to net cash flows from operating activities.

[40]

Step 3: - Calculate the net cash flow from investing activities.

Step 4: - Calculate the net cash flow from financing activities.

Step 5: - Prepare a formal cash flow statement highlighting the

net cash flow from operating investing and financing activities

separately.

Step 6:- Make an aggregate of cash flows from the three

activities and ensure that the total net cash flow is equal to the

net increase or decrease in cash and cash equivalents as

calculated in step 1.

Step 7: - Report significant non-cash transactions that did not

involve cash or cash equivalents in a separate schedule to the

cash flow statement.

[41]

SPEICIMEN OF CASH FLOW STATEMENT

PARTICULARS AMOUNT

AMOUNT

Net Profit Before Tax Extraordinary Items xxxx

Add: -

Non-Cash and Non Operating Item which have already been debited in Profit & Loss A/c.a) Depreciation xxx

b) Transfers to reserves and provisions xxx

c) Good will written off xxx

d) Preliminary expenses written off xxx

e) Other intangible assets written off such as discount or loss on issue of shares debentures etc.,

xxx

f) Loss on sale or disposal of asset xxx

g) Loss on sale of investments xxx

h) Foreign exchange

xxxx

Add: -

Non-Cash and Non Operating Item which have already been credited to P&L A/c.a) Gain on sale of fixed assets xxx

b) Profit on sale of investments xxx

c) Income from interest or dividends on investments xxx

d) Appreciation xxx

e) Reserves written back xxx

f) Foreign exchange gain xxx xxxx

Operating profit before working capital changes adjustments for changes in current assets & liabilities

xxxx

[42]

Less: -

Decrease in accounts operating assets

Decrease in trade debtors xxx

Decrease in bills receivable xxx

Decrease in inventories xxx

Decrease in prepaid expenses xxx

Add: -

Increase in accounts of current operating liabilities

Increase in creditor xxx

Increase in bill payable xxx

Increase in outstanding expenses xxx xxxx

Less: -

Increase in accounts of current operating assets xxx xxxx

Less: -

Decrease in current operating liabilities xxx

Cash generated from operating before tax xxxx

Less: -

Income Tax xxx

Cash flow before extraordinary tax xxxxx

Add/Less: -

Extraordinary item if any xxxx

Net cash flow operating activities xxxxx

[43]

MADHUCON SUGARS LIMITED, RAJESWARAPURAM, KHAMMAM

CASH FLOW STATEMENT FOR THE YEAR 01-04-2003 TO 31-03-2004

PARTICULARS AMOUNT (RS.)

1) Cash from operating activity: -Net profit before tax and extraordinary items adjust for 66285

Add: -

a) Depreciation 4933986

b) MISC expenses written off 122300

Operating Profit Before Tax: 5122571

2) Change in Working Capital

a) Increase in Inventories 136013824

b) Increase in Receivables 4097718

c) Increase in Loans & Advances 2862665

d) Increase in Current Liabilities 36625827

106348386

3) Cash flow from investing activity: -

a) Purchase of Fixed Assets 99692617

b) Increase in Misc. Expenditure 611500

100304117

4) Cash flow from financing activity: -

a) Increase in Equity fund 2711888

b) Increase in Un-secured loans 175316758

202428646

NET CASH FLOW OPERATING ACTIVITY 898720

[44]

INTERPRETATION: -

During the year 2003-04 cash flow analysis of Madhucon Sugars

and Power Ltd., shows the cash from operating activity is 898720,

which is inflow of cash. It shows that the company has maintained

adequate cash balance.

[45]




1) Cash from operating activity: -

Net profit before tax and extraordinary items adjust for 3439734

Add: -





a) Decrease in Inventories 42056414

b) Decrease in Receivables 3944492

c) Increase in Loans & Advances 241507

d) Increase in other Current assets 23917258

e) Decrease in Current Liabilities 28712734

(6897593)


a) Increase in current liabilities 5765940


a) Increase in Bank A/c 6914784


(2725228)

NET DECREASE IN CASH FLOW OPERATING ACTIVITY (610448)

[46]

INTERPRETATION: -


and Power Ltd., shows the cash from operating negative balance of

610448, which is outflow of cash. The statement shows that the

company does not maintained adequate cash balance.

[47]






Add: -





a) Decrease in Inventories (53242169)


c) Decrease in other Current Assets (129570017)

d) Decrease in Loan & Advances (12300869)

e) Increase in Current Liabilities 26255653

(40493343)


a) Increase in Fixed Assets (26861903)


a) Increase in Bank Loan A/c 36777251


49573311

NET INCREASE IN CASH FLOW OPERATING ACTIVITY 1492563

[48]

INTERPRETATION: -



1492563, which is outflow of cash. The statement shows that the


Compare with 2004-05 to 2005-06 the cash from operating value

is increased.

[49]






Add: -





a) Decrease in Inventories 2965177

b) Increase in Receivables (6447481)




13591236




a) Increase in Bank Loan A/c (24234147)


(11688342)

NET INCREASE IN CASH FLOW OPERATING ACTIVITY 1325909

[50]

INTERPRETATION: -



1325909, which is inflow of cash. The statement shows that the


It shows the company has maintained adequate cash balance

during the year of 2006-07.

[51]






Add: -





a) Decrease in Inventories (44560840)





Net cash flow from operating activities 770049



Net cash flow from operating activities 183096602


a) Increase / Decrease in Share Capital 80000000

b) Increase/ Decrease in Bank Loan OCC 60098052

c) Increase / Decrease in Unsecured Loans 14275708

Net cash flow from financing activities 154373760NET INCREASE / DECREASE IN CASH & BANK EQUIVALENTS (1+2+3+4) (12664978)

Opening Cash and Bank BalanceClosing Cash and Bank BalanceIncrease (Decrease) in Cash and Bank Balance

141218601456882

12664978

[52]

INTERPRETATION: -



12664978, which is inflow of cash. The statement shows that the

company has not maintained adequate cash balance.

It shows the company has maintained adequate cash balance

during the year of 2007-08

[53]

GRAPHICAL PRESENTATION OF CASH BALANCES (IN LAKHS)

INTERPRETATION: -

During the year 2003-04 the Madhucon Sugars & Powers Limited

Maintain the inflow cash balance is 898720. Then the next financial

year of 2004-05 the company maintains the negative balance is 610448

it is not suitable for the company.

Among these four years statements during the year of 2004-05

shows the negative balance remaining 3 years maintain the sufficient

cash balances.

[54]

FINDINGS & SUGGESTIONSFINDINGS & SUGGESTIONSFINDINGS:

1) S.T. scenario has been studied. It has observed that Indian

occupied 4th position in Worlds Sugars Industry.

2) MSL has taken over one of the sick unit i.e., PCs, and able

to make the sick unit as a prosperous one.

3) Cash Flow Statement has been prepared to know about

the movement of cash during 2003-04 to 2007-08

4) It has been find out that the company cash flow negative

during the study period i.e., in 2004.

5) It has been observed that as MSL is processing unit of

sugars required more liquid assets, specifically cash

required as immediately company has to pay the amount to

formers.

6) From the data analysis it has been find out that MSL is able

to maintain the position cash balances in 2004, 2006

and 2007.

[55]

SUGGESTIONS:

1) From the study it has been observed that the company has

rehabilitated a sick unit into a prosperous one.

2) But it is facing certain teething problems.

3) It can be recommended to the company that the company

has to maintain ample cash balances.

4) Apart from this the company has to create contingents

funds for meeting any kind of situation as the company is

Agri-based Company.

[56]

BIBLIOGRAPHYBIBLIOGRAPHY

NAME OF THE BOOKS, AUTHORS AND PUBLISHERS

MANAGEMENT ACCOUNTING (PRINCIPLES & PRACTICE)

R.K. SHARMA SHASHI K. GUPTHA KALYANI PUBLICATIONS

FINANCIAL MANAGEMENT

Dr. S.N. MAHESWARI SULTHAN CHAND & SONS

REPORTS

Four Years Annual Reports Of Madhucon Sugars & Industries Limited

JOURNALS

THE HINDU

Survey of Indian Industry - 2008. Annual Reports of Madhucon Sugar and Power

Industries Ltd.,

WEBSITE:

[email protected]

[57]

[58]

Cash Flow Analysis Madhucon Power& Sugar

Documents