A Study on Funds Flow Analysis
1.1 Introduction
Finance is one the basic foundations of all kinds of economic
activities. It is the master key, which provides access to all the
sources for being employed in manufacturing. Hence it is rightly
said that finance is lifeblood of any enterprise, besides being the
scarcest elements, it is also the most indispensable requirement.
Without finance neither any business can be started nor
successfully run. Provision of sufficient funds at the required
time is the key to success of concern. As matter of fact finance
may be said to be the circulatory system of economic body, making
possible the needed co-operation among many units of the
activity.
FINANCIAL MANAGEMENT:
Financial management emerged as a distinct field of study at the
turn of this Century. Many eminent persons defined it in the
following ways.
DEFINITIONS:
According to GUTHMANN AND DOUGHAL: Business finance can broadly
be defined as the activity concerned with planning, rising,
controlling and administering of funds used in the business.
According to BONNEVILE AND DEWEY: Financing consists in the
rising, providing and managing of all the money, capital or funds
of any kind to be used in connection with the business.
According to Prof. EZRA SOLOMAN: Financial management is
concerned with the efficient use of any important economic
resource, namely capital funds.
FINANCIAL FUNCTIONS:The finance functions of raising funds,
investing them in assets and distributing returns earned from
assets to shareholders are respectively known as financing,
investment and dividend decisions. While performing these
functions, a firm attempts to balance cash inflows and outflows.
This is called as liquidity decision.
The finance functions can be divided into four broad
categories.
1. Investment or long-term asset mix decision
2. Financing or capital mix decision
3. Dividend or profit allocation decision
4. Liquidity or short-term asset mix decision
INVESTMENT DECISION:
Investment or capital budgeting involves the decisions of
allocation of cash or commitment of funds to long-term assets,
which would yield benefits in future. It involves measurement of
future profitability, which involves risk, because of uncertain
future. Investment proposal should therefore be evaluated in terms
of both expected return and risk. Other major aspect of investment
decision is the measurement of standard or hurdle rate against
which the expected return of new investment can be compared.
FINANCING DECISIONS:
Financing decision is the second important function to be
performed by the fir. Broadly, he must decide when, where, and how
to acquire funds to meet the firms investment needs. He has to
determine the proportion of debt and equity. This mix of debt and
equity is known as the firms capital structure. The financial
manager must strive to obtain the least financing mix or the
optimum capital structure where the market value of share is
maximized.
DIVIDEND DECISIONS: It is the third major financial decision.
The financial manager decides whether the firm should distribute
all profits, or return them, or distribute a portion and return the
balance. The optimum dividend policy should be determined where is
maximizes the markets value of the share.
LIQUIDITY DECISIONS:
Current assets management, which affects firms liquidity, is yet
another finance function in addition to the management of long-term
assets. Current assets should be managed effectively safeguarding
the firm against the dangers of liquidity and insolvency.
Investment in current assets affects the profitability,
liquidity, and risk. A conflict exists between profitability and
liquidity while managing current assets. If the firm doesnt invest
sufficient funds in current assets it may. Become illiquid. But it
could loose profitability, as idle CA would not earn anything. Thus
a proper takeoff must be achieved between profitability and
liquidity. In order to ensure that neither insufficient nor
unnecessary funds are invested in current assets.
GOALS OF FINANCIAL MANAGEMENT: Maximize the value of the firm to
its equity shareholders. This means that the Goals of the firm
should be to maximize the market value of its equity shares (Which
represent the value of the firm to its equity shareholders)
Maximization of profit.
Maximization of earnings per share.
Maximization of return on equity (defined as equity earnings/net
worth).
Maintenance of liquid assets in the firm.
Ensuring maximum operational efficiency through planning,
directing and Controlling of the utilization of the funds i.e.,
through the effective employment of funds.
Enforcing financial discipline in the use of financial resources
through the coordination of the operation of the various divisions
in the organization.
Building up of adequate reserves for financing growth and
expansion.
Ensuring a fair return to the shareholders on their
investment.
1.2 INDUSTRY PROFILE The present automobiles are most
sophisticate combining luxury, safety economy in utilizing the
energy resource with great speed and least environment. Pollution
using various field of science likes aerodynamics, mechanical
expertise and electrical engineering. Every day improvement in the
existing models holding the price line in reasonable range
involving high become necessity. Present day consumer satisfaction
involves great skill in marketing, advertising and positioning the
product line whim and Cashion advances with increased performance
and reduce size. Business minded people started selling them top
the society.
The automotive components and ancillary industry I Indian has
made big strides in last couple of year following of the phased
manufacturing programmer for his main product. With the launching
of a major modernization scheme by the manufactures, substantial
progress has been made towards indigenization of the auto
components and spare parts.
Commercial vehiclesTATA Motors, Ashok Leyland, Swaraj
Mazda,Mahindra & Mahindra ,Force motors, Eicher Motors
Passenger vehicleTATA Motors, Maruti Udyog, Honda Motors,
Toyata, Skoda, Mahindra & Mahindra, Daimler Chrysler, Hindustan
Motors
Two WheelerHero Honda, Bajaj Auto, Honda Motors, TVS Motors,
Yamaha , Kinetic Motors
Three WheelerBajaj Auto, Piaggio India
RAW MATERIALS
Most of the raw materials to manufacture cylinder blocks are
available from Hyderabad, Chennai and Calcutta. The following are
some of the raw materials used for the production: Aluminum
Alloy
Caustic Soda
Shell Sand
LDO oil
Chromic Acid
Diamond Honing sticks
Nickel Carbonate
1.3 COMPANY PROFILE
M/S SIBAR AUTOPARTS Ltd. Was originally incorporated as private
limited company by name M/s SIBAR AUTOPARTS (PVT) Limited in the
year 1983, located at industrial estate, TIRUPATHI. It was
converted into public limited company in the year 1994. The company
is presently engaged in manufacturing and marketing of aluminum
hard chrome plated cylinder kits mainly for the two wheelers up to
engine capacity 150cc.
The company had started o aluminum foundry with a small capital
of Rs.3.00 lacks to manufacture aluminum alloy casting. The
castings were supplied to reputed establishments viz., TVS, SHKNEY
PARIS ROHME LTD etc. In the year 1987, the company expanded its
activity to achieve the original conceived idea of manufacturing
aluminum hard chrome plated cylinders blocks for two wheelers
applications. The entire technology development was started by
in-house R&D skills and in the course of time the technology
was developed with the in-house R&Ds network, the quality of
the product was found very good land it was accepted in the
European market immediately. The company was reached about 272
lacks worth of exports and the company also received MERIT AWARD
FRO EXPORT PROMOTION COUNCIL for EXCELLENCE in exports during the
year 1994-95 and in the same year the company had come out with a
public issue and it was over subscribed by 18 times which only
shows the companys credibility among the investors. The company has
become public since then and company started developing the
cylinders for domestic ORIGINAL EQUOPMENT (OE) manufactories. In
the process the company has developed various modals of Asias
biggest two wheeler manufacture like M/S BAJAJ AUTO Ltd, M/S HERO
MOTORS Ltd, and M/S ENFIELD INDIA Ltd, etc. from a turnover of
approximately Rs.190 lacks in the year 1993-94 the company achieved
Rs.843 lacks turnover in the year 1996-97. Besides serving these
OEMS in India, the company is still in the over seas market with a
very good network. The technology developed by the company is
UNIQUE.1.4 PRODUCT PROFILEIn India automobile engine cylinders are
predominantly of cast iron or of aluminum with cast iron sleeves
whereas world wide there is a growing shift to aluminum allay
cylinders and engine blocks.
Aluminum cylinders with hard chrome plating reduce engine weight
significantly. Also the wear and tear the piston bore is reduced
drastically because cylinders have about 900 Vickers hardness,
consequently giving better mileage and fuel efficiency.
Unlike aluminum with cast iron sleeves hard chrome plated
aluminum cylinders are of uniform material and provides excellent
heat dissipation. Further very close clearance is possible between
bore and piston for optimal engine power out put without fear of
seizure at higher temperature. Aluminum chrome plated cylinders
also consume less oil than cast iron cylinders and hence are less
polluting and cheaper to maintain.
PROMOTERS: The founder of this company is Mr. P.V.NARAYANA who
is now as vice chairman and managing director. He completed his
company diploma in Mechanical Engineering and completed his
Training tool and Die making from NTTF, Dharwada. After attaining 8
years of experience in reputed companies like M/s Suvega Moped Ltd,
M/s HERO Megistic Ltd, And And etc and setup this unit.
Now this company is also supported with to young men who are the
sons of vice chairman and managing director. Mr.Madhu Pratap, now
as the director-Technical completed his graduation in Mechanical
Engineering, and Post graduation in Industrial.
Engineering and Management. Mr.Ravichandra, now as Executive
director, completed his graduation in chemical Engineering.
TECHNOLOGY:
The company started hard-chrome plating technology with in house
research and development efforts. The company also developed NI-SI
plating. In 1998 the company had entered technical collaboration
with Italian company to refine its technology. Ours is the first
company in India to this technology.
MANUFACTURING PROCESS:
The manufacturing process broadly consists of shell molding, die
casting machining heat treatment, chrome platting, inspecting,
packing and dispatch. The sand shell core and first made using
shell core shooting machine, having a capacity of making 500nos.
Modules/shift. The shells are then housed in the dies. Aluminum
LM-13 grade alloy, melted in bate-out titling furnace, are then
transferred to an electrical holding furnace, where the melt is and
treated with necessary chemicals. The molten metal held in the
holding furnace for around 4 hrs is cast is then used for making
casting by using permanent would gravity dies or low pressure die-
casting. After atmospheric cooling (times 3 hours) the casting is
sawed. Fettling of the casting is then done to remove the flashes.
The casting is then heat treated in a pit furnace (temp 510 c for 3
hours) quenched in the water (temp 60 c ) and aged for 2 hours in
oven at 200 c _250 c for stabilization of the micro structural
properties of the casting. The rough casting is then machine and
made ready for hard chrome platting. The casting is then degreased
using tri-chloreothylene and then chromo- plated. The hard chrome
plated cylinder are further machine is sophisticated machine and
tested with measuring instruments. These operations are very
critical and having very close tolerance those are subsequently
sent to AC room plated kit there in Ac room and bore measurement is
recorded are a temperature of 20c.
ADVANTAGES OF SIBER ALUMINUM HARD CHROME CYLINDERS:
1. The life of the aluminum cylinder block is much longer than
conventional cast iron cylinder blocks. This is due to higher
hardness in aluminum cylinder block because the bore is plated with
hard chrome/nickel. Since the hardness much higher, the wear
pattern of the bore is also much less.
2. Since the aluminum is a light metal, the fuel efficiency is
also better.
3. Since both piton and cylinder block are of the same material,
the expansion is uniform, with will be an added advantage.
4. Since the bore is finished with nickel, the ratio if oil is
use may also be comparatively less. This helps to maintain very low
emission.
5. Since the wear pattern of the cylinder bore is very less, the
cost of maintains is very negligible.
6. Better eye-appeal.
7. There is no need to see bore up to 60,000 kms.
8. Replacing rings easy at nominal cost.
9. 60% reduction in engine weight.
10. More economical.
11. None to beat price.
12. Ready availability of spares with leading two wheeler dealer
through our distributor.
CUSTOMER:
Automotive item O.E.M Customer for casting:
1. M/S greaves cotton ltd-RANIPET.
2. M/S Greaves cotton ltd- AURANGABAD.
3. M/S Same Deutz- FAHRINDIA (P) LTD RANIPET
4. ALKRAFT THERMOTECHNOLOGIES PVT.LTD. CHENNAI (Is 9001-2000
certified unit)
Auto Motive Item O.E.M (INDIA) Customer For Cylinder Blocks:
1. M/S BAJAJ AUTO LTD. PUNE.
2. M/S HERO MOTORS LTD- GAZIABAD.
Auto Motive Item O.E.M (Exports) Customer for Cylinder
Blocks:
1. M/S Electrolux, Meculloch- TALIANA, ITALY,
2. We have replacement market in EUROPE and we supply to ITALY,
NETHERLANDS, and DENMARK etc.
Electrical Transmission Line Item and other are casting
Customer:
1. M/S GR power switches Gear Limited HYDERABED. (ISI 9001
certified unit)
2. M/S KLEMMEN engineering corporation CHENNAI.
3. M/S SEIMENS LIMITED (Hyderabad works) Hyderabad (under
process)
ACHIEVEMENTS
The Company always maintained status of single source supplier
with all its customers. Its customers by serving then quality
products delivery scheduled without interception of their
production.
The company was success full in giving satisfied results of VRDE
(Vehicle Research Development Estate) for their simulation air
crafts engines both hard chrome and NI-SI PLATING.
The company also satisfied NAL (National aeronautical Ltd)
Bangalore by giving them NI-SI plating on propeller shaft ring.
The company was awarded Merit of Excellence in Exports from
Promotion Council in India.The company has been awarded ISO
9001-2000 quality management system (Under clause 7 permissible
exclusion: 7.3).2. REVIEW OF LITERATURE
ANALYSIS OF FUNDS FLOW STATEMENT The statement of changes in
financial position, prepared to determine only the sources and uses
of working capital between dates of two balance sheets, is known as
the funds flow statement. Working capital is defined as the
difference. Between current assets and current liabilities. Working
capital determines the liquidity position of the firm.
The balance sheet presents a snapshot picture of the financial
position at a given point of the financial position at a given
point of time and the income statement shows a summary of revenues
and expenses during the accounting period. The funds flow
statement, also referred to as the statement of changes in
financial position or the statement of changes in financial
position or the statement of sources and uses of funds.
Funds flow analysis provides insight into the movement of funds
and helps in understanding the changes in the structure of assets,
liabilities and owners equity. Funds-Flow statement is a widely
used tool in the hands of financial executives for analyzing the
financial performance of a concern. Good concerns always prepare
such statement along with the balance sheet At the end of the year.
This statement shows how the activities of a business have been
used during a particular period. The statement of sources and
application of funds serves the purpose.
FUNDS FLOW STATEMENT
INTRODUCTION
The basic financial statements i.e., the Balance Sheet and
Profit & Loss A/c or income statement of business reveals the
net effect of various transactions on operational and financial
position of the company. The balance sheet gives a summary of the
assets and liabilities of an undertaking at a particular point of
time.
There are many transactions that take place in an undertaking
and which do not operate Profit and Loss A/c. Thus another
statement has to be prepared to show the change in Assets and
Liabilities from the end of one period of time to the end of
another period of time. The statement is called a statement of
changes in financial position or a Funds Flow statement.
The funds flow statement is a statement which shown the movement
of funds and is a report of financial operations of business
undertaking. In simple words it is a statement of source and
application of funds.
Definition of funds flow statement:
The funds flow statement is not a statement of financial
position but it is instead a report on financial operations,
changes flows or movements during the period. - S.C. Kuchhal
The funds flow statement describes the sources from which
additional funds were derived and the uses to which these were
put.- R.N. Anthony A statement of sources and Applications of funds
is a Technical device designed to analyze the changes in the
financial condition of a business between two dates.-R.A. Foulk It
is a statement which highlights the underlying financial movements
and explains the changes of working capital from one point of time
to another. Bierman
MEANING & CONCEPT OF FLOW OF FUNDS
The term flow means movement & includes both "inflow' &
'outflow'. The term flow of funds means transfer of economic values
from one asset of equity to another. Flow of funds is said to have
taken place when any transaction makes changes in amount of funds
available before happening of transactions. If the effect of
transaction results in increase of funds. It is called a "source of
funds" and it is results in decrease of funds, it is known as an
application of funds
RULES
The flow of funds occurs when a transaction changes on one hand
a non-current A/c and on the other a current A/c and Vice-versa.
According to working capita concept of funds the term "Flow o
Funds" return to movement of funds in working capital.
If any transaction results in increase in working capital. It is
said to be a "source" or "inflow of funds" and if it results in
decrease of working capital, it is said to be "application" or "out
flow of funds".
CURRENT ASSETSCurrent Assets are those assets, which in the
ordinary course of business can be or will be converted into cash
within a short period of normally one accounting year.
CURRENT LIABILITIESCurrent liabilities are those liabilities
which are intended to be paid in ordinary course of business with
in short period of normally one accounting year out of the current
assets or the income of the business.
DIFFERENCES BETWEEN CURRENT LIABILITIES & CURRENT ASSETS
CURRENT LIABILITIESCURRENT ASSETS
1. Bills Payable 2. Sundry Creditors 3. Accrued O/s Expenses4.
Dividends Payable5. Bank Overdraft6. Short term loans, advances
& deposits7. Provision for taxation8. Proposed Dividend
1. Cash in Hand
2. Cash at Bank
3. Bills Receivable
4. Sundry Debtors or A/cs receivable
5. Short term loans & advances
6. Short term investment
7. Inventories or stock
8. Prepaid Expenses
9. Accrued incomes.
DIFFERENCE BETWWEN FUNDS FLOW STATEMENT & CASH
FLOWSTATEMENT
BASIS OF DIFFERENCEFUNDS FLOW STATEMENTCASH FLOW STATMENT
1. Basis of concept It is based on a wider concept of funds,
i.e., working capital.It is based on a narrower concept of funds,
i.e., cash.
2. Basis of AccountingIt is based on accrual basis of
accountingIt is based on cash basis of accounting.
3. Schedule on changes in Working capitalSchedule of changes in
working capital is prepared to show the changes in current assets
and current liabilities.No such Schedule of changes in working
Capital is prepared.
4. Method of preparingFunds flow statement reveals the sources
and applications of funds. The net difference between sources and
applications of funds represent net increase or decrease in working
capital.It is prepared by classifying all Cash inflows and outflows
in terror of operating, investing are financing activities. The net
different represents time net
Increase or Decrease in Cash and cash equivalents.
5. Basis of usefulness.It is useful in planning intermediate and
long term financing.It is more useful for short-term analysis and
cash planning of the business
PROCEDURE FOR PREPARING A FUNDS FLOW STATEMENT
Funds flow Statement is a method by which we study changes in
financial position of business enterprise between beginning &
ending financial statement dates. Hence the funds flow statement is
prepared by comparing two balance sheets and any of such other
information derived from the Accounts as may be needed
The preparation of funds flow statement consists of two parts.A.
Statement or schedule of changes in working capital.
B. Statement of sources & application of fund.
A.) STATEMENT OR SCHEDULE OF CHANGES IN W.C.
Working Capital means the excess of current assets over current
liabilities.
Statement of changes in working capital is prepared to show the
changes in working capital between two balance sheet dates.
This statement is prepared with help of current assets and
current liabilities derived from two balance sheetsWorking capital
= Current Assets - Current Liabilities An increase in current
assets increases W.C.
A decrease in current assets decreases W.C.
An increase in current liabilities decreased W.C.
A decrease in current liabilities increases W.C.
As a separate activity & discipline it is of recent origin.
It was a branch of economics till 1890. Today financial management
is recognized as the most important branch of business
administration. Financial management may be defined as the part of
management, which is concerned mainly with raising funds in the
most economic and suitable manner, using these funds as possible
planning future operations, and controlling current performance and
future development through financial accounting, cost accounting,
budgeting statistics and other means. It guides investment where
opportunity is the greatest production relatively uniform yard
strikes judging most of the firms operations and projects and is
continually necessary for survival and attracting of new capital.
According to Howard and Upyon, financial management involves the
application of general management principles to a particular
operation. N.G.Wright says finance management is intimately itself
woven into the fabric of the management itself. Its central role is
concerned with the some objectives as these of the management which
the way in which the resources of the business are employed and how
the business is finance. He divides financial management into three
main areas.1. Decision on the structures,2. Allocation of available
funds to specific uses,3. Analysis and appraised of problems.
Financial management includes planning of finance, cash budgets and
sources of finance. EZRA Solomon and John Piglet insists that
financial management must attend to investment decision because if
these decision that affects in a large measure the future of a firm
major financial management is an operational function it is
involved with financial planning, forecasting and providing of
finance as well as the formation of financial policies. Hunt
William and Donald Son have called financial management as
Resources Management because in a large Organization, the finance
managers are the members of planning, organization, performing and
controlling the financial affairs of the enterprise. The financial
management is of great importance in the present day corporate
world. It is the science of money, which permits the authorities to
go further.STATEMENT OF SCHEDULE OF CHANGES IN WORKING CAPITAL
ParticularPrevious
Year Current
Year Effect on Working Capital
IncreaseDecrease
AmountAmountAmountAmount
Current Assets: (A)
Stock
Debtors
Cash
Bank
Bills receivable
Prepaid expenses
Total(a)
Current Liabilities: (B)
Creditors
Bills payable
Outstanding expenses
Total(b)
Working Capital(A-B)
Increase/decrease in working capital
Totalxx
xx
xx
xx
xx
xx
xx
xx
xx
xxxx
-
xx
xx
-
xx
-
xx-
xx
-
-
xx
-
xx
xx
xx
xxxxxx
xx
xx
xx
xx
xx
xx
xxxxxx
xxxx
xxxxxxxxxXxx
(B) STATEMENT OF SOURCES & APPLICATION OF FUNDS
Funds flow statement is a statement, which indicates various
sources from which funds (W.C.) have been obtained during a certain
period and uses or applications to which these funds have been put
during that period. Generally this statement is prepared in two
formats.
Statement of sources and application of funds:-
1. Funds from operations: It is an internal source of funds.
Funds from operations are to be calculated as per the method stated
above.
2. Funds from long term loans: Long term loans such as
debentures, borrowings from financial institutions will increase
the working capital and therefore, there will be inflow of funds.
However, if the debentures have been issued in consideration of
some fixed assets, there will be no inflow of funds.
3. Sale of fixed assets: Sale of land, buildings, and long term
investments will result in generation of funds.
4. Funds from increase in share of capital: Issue of shares for
cash or for any other current asset or in discharge of a current
liability is another source of funds.
5. Decrease in working capital: Decrease in working capital is
the result of decrease in current asset or increase in current
liabilities. In both the cases inflow of funds takes place.
PROFORMA OF FUNDS FLOW STATEMENTSources
Rs.
Applications
Rs.
Funds from operations
Xx
Funds lost in operations
Xx
Issue of share capital
Xx
Redemption of preference share
Xx
Issue of Debentures
Xx
Capital
Xx
Raising of long term loans
Xx
Redemption of debentures
Xx
Sale of non current (fixed) assets
Xx
Repayment of long term loan
Xx
Non-trading receipts such as dividends
Xx
Purchase of long term investments
Xx
Scale of long term investments
Xx
Non-trading payments
Xx
Net decrease in working capital
Xx
Payment of Dividends
Xx
Xx
Payment of Tax
Xx
Xx
Net increase in working capital
Xx
Xxx
Xxx
IMPORTANCE OF FUNDS FLOW STATEMENT:
A funds statement is an essential tool for the financial
analysis and primary importance to the financial management.
Nowadays, it is being widely used by the financial analysts, credit
granting institutions and financial managers. The basic purpose of
a funds flow statement is to reveal the changes in the working
capital on the two balance sheet dates. It is also describes the
sources from which additional working capital has been financed and
the uses to which working capital has been applied. Such a
statement is particularly useful in assessing the growth of the
firm, its resulting financial needs and in determining the best way
of financing these needs. By making use of projected funds flow
statements, the management can come to know the adequacy or
inadequacy of working capital evening advance. One can plan the
intermediate and long-term financing of the firm, repayment of long
term debts, expansion of the business, allocation of resources,
etc. The significance or importance of funds flow statement can be
well followed from its various uses given below:
It helps in the analysis of financial operation:
The financial statements reveal the net effect of various
transactions on the operational and financial position of a
concern. The balance sheet gives a static view of the resources of
a business and the uses to which these resources have been put at a
certain point of time. But it does not disclose the causes for
changes in the assets and liabilities between two different points
of time. The funds flow statements explains causes for such changes
and also the effect of these changes on the liquidity position of
the company. Sometimes a concern may operate profitability and yet
its cash position may become more and worse. The funds flow
statement gives a clear answer to such a situation explaining what
has happened to the profit of the firm.
It throws light on many perplexing questions of general
interest: Which otherwise may be difficult to be answered. Such
as:a) Why were the net current assets lesser in spite of higher
profits and vice versa?
b) Why more dividends could not be declared in spite of
available profits?
c) How was it possible to distribute more dividends than the
present earnings?
d) What happened to the net profit? Where did they go?
e) What happened to the proceeds of sale of fixed assets or
issue of shares, debentures, etc.?
f) What are the sources of repayment of debt?
g) How was the increase in working capital financed and how will
it be financed to future?
IT HELPS IN THE FORMULATION OF A REALISTIC DIVIDEND POLICY:
Sometimes a firm has sufficient profits available for
distribution as dividend but yet it may not be advisable to
distribute dividend for lack of liquid or cash resources. In such
cases, a funds flow statement helps in the formation of a realistic
dividend policy.
IT HELPS IN THE PROPER ALLOCATION OF RESOURCES:
The resources of a Spares are always limited and it wants to
make the best use of these resources. A projected funds flow
statement constructed for the future helps in making managerial
decisions. The firm can plan the deployment of its resources and
allocate them among various applications.
IT ACTS AS A FUTURE GUIDE:
A projected funds flow statement also acts as a guide for future
to the management. The management can come to know the various
problems it is going to face in near future for want of funds. The
firms future needs of funds can be projected well in advance and
also the turning of these needs. The firm can arrange to finance
these needs more effectively and avoid future problems.
IT HELPS IN APPRAISING THE USE OF WORKING CAPITAL:
A funds flow statement helps in explaining how efficiently the
management has used its working capital and also suggest ways to
improve working capital position of the firm.
IT HELPS KNOWING THE OVERALL CREDITWORTHINESS OF A FIRM:
The financial institutions and banks such as state financial
institutions. Industrial Development Corporation, industrial
finance 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 creditworthiness and paying
capacity of the firm. Hence, a firm seeking financial assistance
from these institutions has no alternative but to prepare funds
flow statements.
3.1 RESEARCH METHODOLOGY Methodology is a systematic process of
collecting information in order to analyze and verifies a
phenomenon. The collection of data is two principle sources. They
are discussed as
I. Primary Data
II. Secondary Data
PRIMARY DATA:
The primary data needed for the study is gathered through
interview with concerned officers and staff, either individually or
collectively, sum of the information has been verified or
supplemented with personal observation conducting personal
interviews with concerned officers of finance department of SIBAR
AUTOPARTS LTD.,SECONDARY DATA:
The secondary data needed for the study was collected from
published sources such as, pamphlets of annual reports, returns and
internal records, reference from Advance management text books and
journal management.
3.2 OBJECTIVES OF THE STUDY
To identify the sources and application of funds a study on
Funds Flow Statements at SIBAR AUTOPARTS LTD., To analyze the trend
of net working capital that is being maintained by the firm for
period of 5 years.
To know and analyze the financial position of the SIBAR
AUTOPARTS LTD., To know and analyze the Liquidity position of the
SIBAR AUTOPARTS LTD.,3.3 SCOPE OF THE STUDY In this study the
financial performance of the spares under the study is done from
the angles Calculating funds from operation, maintaining of working
capital, sources and applications of the funds.
Financial analysis consists of funds flow analysis. To know
funds flow from one to one, as the time available is very limited
and study is continued to over all financial condition of a
firm.
The study to know working capital increase or decrease, funds
from operation, source and application of funds
3.4 LIMITATIONS OF THE STUDY
The present reported is based on the secondary data provided by
the SIBAR AUTOPARTS LTD., The source of the study is limited to 5
years from 2009-10 to 2013-14. The analysis is based on the annual
reports. The liquidity position of Spares is very low.4. DATA
ANALYSIS & INTERPRETATION1. WORKING CAPITAL RATIO:
Effective working capital management depends on the systematic
management of the components of working capital .i.e., inventory,
debtors, cash etc. Working capital ratio is the tool of the working
capital management. It reflects the ability of the Spares to pay
the current obligations .
It calculated as
Working capital ratio = current assets/current liabilities
TABLE: 4.1 YEARCURREN C CURRENT ASSETSCURRENT LIABILITIESWORKING
CAPITAL RATIO
2009-108,167.503,509.592.32
2010-1110,725.943,922.42.73
2011-129,427.745,388.521.74
2012-1324,288.0022479.861.08
2013-1436,86619,445.181.89
Factors:
YEAR2009-102010-112011-122012-132013-14
working capital ratio2.322.731.741.081.89
CHART: 4.1
INTERPRETATION: The working capital ratio it was gradually
increased the years 2009-10 is , 2.32, 2.73 and it was in the year
2010-11 is very fall down as 1.74 In 2011-2012 it was 1.08 . It and
it was increase a little bit in 2012-13, 1.89 it indicates working
capital is not maintaining proper management in the year 2014. It
is decrease to the working capital ratio.
2. CASH RATIO:
Cash is the most liquid asset. A financial analyst may examine
cash ratio and its Equivalent to current liabilities. Trade
investment or marketable securities are Equivalent of cash. The
standard ratio is 0.5:1or 50:100(%).
RATIO= (Cash+ Marketable Securities)/Current Liabilities
TABLE: 4.2
YEARCASHCURRENT LAIBILITIESCASH RATIO
2009-101290.713509.590.36
2010-111383.353922.480.35
2011-1212012.1614506.150.83
2012-134,773.4722479.860.21
2013-1421,081.8919,445.181.08
FACTORS:
YEAR2009-102010-112011-122012-132013-14
Cash ratio0.360.350.830.211.08
CHART: 4.2 INTERPRETATION:
The standard cash ratio is 0.5. It represents the satisfactory
level in the years 2009-10 to 2013-14 the cash ratio is 0.36, 0.35,
0.83, 0.21 and 1.08 however it has heavily increased to 1.08 in the
year 2012 the ratio 1.08. It represents Spares is maintaining
standard level of cash in the Spares3. QUICK RATIO (or) ACID TEST
RATIO:
It establishes the relationship between quick or liquid, Assets
and liabilities. An asset is a Liquid if it can be converted into
cash immediately. Inventories are considered to be less liquid. The
quick ratio is found out by dividing quick assets by current
liabilities. A quick ratio of 1to1 is considered to represent a
satisfactory current financial condition.
Quick Ratio= (Current Assets-Inventories) / Current
LiabilitiesTABLE: 4.3
YEARQUICK ASSETSCURRENT LIABLITIESQUICK RATIO
2009-105664.303509.591.61
2010-117611.373922.481.94
2011-1223365.0914506.151.61
2012-1318216.6525214.040.72
2013-1432487.5724366.351.33
FACTOR:
YEAR 2009-102010-112011-122012-132013-14
Quick ratio1.611.941.610.721.33
CHART: 4.3 INTERPRETATION:The standard ratio of current ratio is
2:1. The higher the current ratio the grater the margin of safety.
In the year 2009-2010. Current ratio is 2.32 and 2010-11, 2.73 from
2011. The current ratio is gradually increased. In 2014 the current
ratio is 1.51 lower than the safety margin.
4. INVENTORY TURNOVER RATIO (or) STOCK TURNOVER RATIO:
Inventory turnover ratio is a measure of liquidity. It indicates
the speed at which the inventory is sold out. A high turnover ratio
indicates that the inventory is out Fast and a low turnover ratio
show a sale of inventory. This ratio indicates the efficiency of
the firm in selling its products.
Stock turnover ratio=Cost of goods sold / average investment The
high stock turnover ratio is indicating of good inventory
management. TABLE: 4.4 YEARCOST OF GOODS SOLDAVG INVENTORYINVENTORY
TURNOVER RATIO
2009-1027153.592392.5611.34
2010-1129725.952808.8810.58
2011-1236172.583430.2610.54
2012-1346374.896071.357.63
2013-1440613.424378.439.27
FACTORS:
YEAR2009-102010-112011-122012-132013-14
Inventory turnover ratio11.3410.5810.547.639.27
CHART: 4.4
INTERPRETATION:A high stock turnover indicated that the stocks
are fast moving and get converted into sales very quickly .the year
2009-10 to 2014. The company inventory turnover ratio is 11.34,
10.58, 10.54, 7.63 and 9.27 respectively. Overall five years the
ratio is increased.
STATEMENT OF THE CHANGES IN FINANCIAL POSITION OF SIBAR
AUTOPARTS LTD., WORKING CAPITAL BASIS IN THE YEAR
2009-2010STATEMENT OF CHANGE IN WORKING CAPITAL 2009-2010
Particulars20092010Change In Working Capital
IncreaseDecrease
A) current assets:-
a) Inventories2503.23114.57611.37
B) Sundry Debtors2467.39943.791523.6
C) Cash & Bank Balance1290.711383.3592.64
E) Loans and Advances1906.25284.233378.03
Total Current Assets8167.510725.94
B) Current Liabilities:-
A) Liabilities3381.693758.62376.93
B) Provision127.9163.8635.96
Total Current Liabilities3509.593922.48
Working Capital (A-B)4657.916803.46
Increase in Working Capital2145.552145.55
TOTAL6803.466803.464082.044082.04
INTERPRETATION:
From the above table it is observed that the networking capital
of the Spares shows increased i.e. Lakhs 2145.55.
FUNDS FLOW STATEMENT
SourcesRsApplicationsRs
Issue unsecured loans101.14Increase in work in progress149.2
Decrease in miscellaneous expenses102Purchase of
investment166.03
Sale of fixed assets2093.49Payment secured loans2100.96
Funds from operations2265.11 Increase in working
capital2145.55
4561.744561.74
INTERPRETATION:
From the above table it is observed that the Funds flow of the
Spares shows fund i.e. from operation is Lakhs 2265.11.
STATEMENT OF THE CHANGES IN FINANCIAL POSITION OF SIBAR
AUTOPARTS LTD.,WORKING CAPITAL BASIS IN THE YEAR 2010-2011STATEMENT
OF CHANGE IN WORKING CAPITAL 2010-2011
Particulars20102011Change in working capital
Increase Decrease
A) current assets:-
a) inventories3114.573971.01856.44
b) sundry debtors943.7925311587.21
c) cash & bank balance1383.3512012.1610628.81
e) loans and advances5284.238821.933537.7
Total current assets10725.9427336.1
B) current liabilities:-
a) liabilities3758.6213132.529373.9
b) provision163.861373.631209.77
Total current liabilities3922.4814506.15
working capital (A-B)6803.4612829.95
Increase in working capital6026.496026.49
TOTAL12829.9512829.9516610.1616610.16
INTERPRETATION
From the above table it is observed that the networking capital
of the Spares shows increased i.e. Lakhs 6026.49.
FUNDS FLOW STATEMENT
SourcesRsApplicationsRs
Issue unsecured loans2417.93Increase in work in
progress19957.4
Decrease in miscellaneous expenses67.1Purchase of fixed
assets28163.9
Sale of investment26672.5Payment secured loans11161.6
Reserve and surplus16148.5 Increase in working
capital6026.49
Funds from operations25662.8Deferred tax liabilities5659.36
70968.970968.9
INTERPRETATION:
From the above table it is observed that the Funds flow of the
Spares shows fund i.e. from operation is Lakhs 25662.8.
STATEMENT OF THE CHANGES IN FINANCIAL POSITION OF SIBAR
AUTOPARTS LTD.,WORKING CAPITAL BASIS IN THE YEAR 2011-2012STATEMENT
OF CHANGE IN WORKING CAPITAL 2011-2012
Particulars20112012Change in working capital
Increase Decrease
A) Current Assets:-
A) Inventories3971.016071.352100.34
B) Sundry Debtors25312640.09109.09
C) Cash & Bank Balance12012.164773.477238.69
E) Loans and Advances8821.9310803.091981.16
Total Current Assets27336.124288
B) Current Liabilities:-
A) Liabilities13132.5222479.869347.34
B) Provision1373.632734.181360.55
Total current liabilities14506.1525214.04
Working Capital (A-B)12829.95-926.04
Decrease in Working Capital13755.9913755.99
TOTAL12829.9512829.9517946.5817946.58
INTERPRETATION:
From the above table it is observed that the networking capital
of the Spares shows decreased i.e. Lakhs 13755.9
FUNDS FLOW STATEMENT
SourcesRsApplicationsRs
Issue unsecured loans2319.45Increase in work in
progress51100.89
Issue secured loans6173.86Deferred tax liabilities518.2
Sale of fixed assets4646.01
Reserve and surplus19772.72
Sale of investment4951.06
Decrease in working capital13755.99
51619.0951619.09
INTERPRETATION:
From the above table it is observed that the Funds flow of the
Spares shows sources and applications are same. STATEMENT OF THE
CHANGES IN FINANCIAL POSITION OF SIBAR AUTOPARTS LTD.WORKING
CAPITAL BASIS IN THE YEAR 2012-2013STATEMENT OF CHANGE IN WORKING
CAPITAL 2012-2013
Particulars20122013Change in working capital
Increase Decrease
A) current assets:-
a) Inventories6071.354378.431692.92
b) Sundry Debtors2640.093922.791282.7
c) Cash & Bank Balance4773.4721081.8916308.42
e) Loans and Advances10803.097482.893320.2
Total Current Assets2428836866
B) Current Liabilities:-
a) Liabilities22479.8619445.183034.68
b) Provision2734.184921.172186.99
Total Current Liabilities25214.0424366.35
Working Capital (A-B)-926.0412499.65
Increase in Working Capital13425.6913425.69
TOTAL12499.6512499.6520625.820625.8
INTERPRETATION:
From the above table it is observed that the networking capital
of the Spares shows increased i.e. Lakhs 13425.69.
FUNDS FLOW STATEMENT
SourcesRsApplicationsRs
Issue unsecured loans1645.37Increase in work in
progress29942.71
issue secured loans32848.64Deferred tax liabilities781.16
sale of fixed assets4355.69purchase of investment11664.09
Reserve and surplus16963.95Increase in working
capital13425.69
55813.6555813.65
INTERPRETATION:
From the above table it is observed that the Funds flow of the
Spares shows sources and applications are same. STATEMENT OF THE
CHANGES IN FINANCIAL POSITION OF SIBAR AUTOPARTS LTD., WORKING
CAPITAL BASIS IN THE YEAR 2013-2014STATEMENT OF CHANGE IN WORKING
CAPITAL 2013-2014
Particulars20132014Change in working capital
Increase Decrease
A) Current Assets:-
a) Inventories9071.356378.432692.62
b) Sundry Debtors3640.094922.791282.7
c) Cash & Bank Balance4773.4721081.8915308.42
e) Loans and Advances10803.097482.893220.2
Total Current Assets3428826866
B) Current Liabilities:-
a) Liabilities44479.8619445.1832034.18
b) Provision4734.188921.172586.45
Total Current Liabilities28214.0444366.35
Working Capital (A-B)-926.0415499.63
Increase in Working Capital16422.6716422.67
TOTAL15499.6315499.6325625.225625.2
INTERPRETATION:
From the above table it is observed that the networking capital
of the Spares shows increased i.e. Lakhs 16422.67.FUNDS FLOW
STATEMENT
SourcesRsApplicationsRs
Issue unsecured loans2563.24Increase in Work in
Progress4725.05
Issue Secured Loans58123.25Deferred Tax Liabilities5523.33
Sale of Fixed Assets8563.56Purchase of Investment5813.05
Reserve and Surplus8756.45Increase in Working
Capital16422.67
78006.5078006.50
INTERPRETATION:
From the above table it is observed that the Funds flow of the
Spares shows sources and applications are same. 5.1 FINDINGS
The networking capital of the Spares shows increased in 2009-10
i.e. Lakhs 2145.55. Funds flow of the Spares shows fund i.e. from
operation is Lakhs 2265.11.
The networking capital of the Spares shows increased in 2010-11
i.e. Lakhs 6026.49. Funds flow of the Spares shows fund i.e. from
operation is Lakhs 25662.8.
The networking capital of the Spares shows decreased in 2011-12
i.e. Lakhs 13755.99. Funds flow of the Spares shows sources and
applications are same.
The networking capital of the Spares shows increased in 2012-13
i.e. Lakhs 13425.69. Funds flow of the Spares shows sources and
applications are same.
The working capital ratio it was gradually increased the years
2009-10 is , 2.32, 2.73 and it was in the year 2010-11 is very fall
down as 1.74 In 2011-2012 it was 1.08 . It and it was increase a
little bit in 2012-13, 1.89 it indicates working capital is not
maintaining proper management in the year 2013. It is decrease to
the working capital ratio.
The higher working capital turnover ratio indicated the better
management of working capital in the years 2009-10 to 2014 the
ratio is 8.5 and 5.9, 11.7, 14.8, 9.6 respectively. In the year
2013 working capital turnover will be decreased that is 9.6over.
Previous year will not refer the better management of working
capital of the firm. All the five years better management of
working capital of the Spares.
5.2 SUGGESTIONS
The Spares should have maintained working capital turnover
without fluctuations for better management of working capital.
The Spares must have maintained the cash ratio for better
circulation of money for in the Spares for the management of
working capital.
The Spares maintains standard level of current ratio 0.5. So the
Spares should have maintained above standard level of current ratio
for better management of working capital.
The Spares should have increase stock turnover for the moving of
stock in to sales very immediately for the better management of
working capital.
For the relations to creditors, it helps to. The Spares is
ability to efficient in the management of credit The Spares must
have maintained debtors turn over ratios for the better liquidity
fast the debtors are converted into cash in year. It leads to
higher the turnover ratio and lower the collection period.
The financial year 2012 to 2013 can increase the sources.
5.3 CONCLUSION
The Spares being mostly depends on working capital facilities it
is maintaining very good relationship with their banks and their
working capital management is balanced.
The Spares is performing exceptionally well due to up wising in
the Global market followed by the domestic market it is up coming
on with good and innovative ideas and believe in improving all the
area of its operations. The Spares has a good quality position and
does not delay commitment in case of but its creditors and
debtors.
Finally I conclude that the performance of the Spares is
satisfactory there was increasing the activities.
ANNEXURES
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MAR, 2009-2010Rs
in lakhsParticulars20102009
Income
Sales (Gross)47,306.1840,166.84
Less : Excise Duty7,616.567,284.19
Sales (Net)39,689.6232,882.65
Other Income457.41412.55
40,147.0333,295.20
Expenditure
Purchase of finished goods for resale3,288.271,574.49
Manufacturing and other expenses29,552.2528,359.17
Depreciation2,859.772,839.05
Interest and other finance charges2,234.882,333.38
(Increase)/Decrease in stocks of work-in-process a and finished
goods 86.54
37,690.5735,192.63
Profit / (Loss) for the year2,456.46(1,897.43)
Povision for Tax
Current Tax----
Fringe Benefit Tax65.00--
Profit / (Loss) for the year2,265.11(2,104.92)
Debit balance brought forward from previous
year(16,609.18)(14,504.26)
Debit balance carried to balance sheet14,344.0716,609.18
BALANCE SHEET AS ON 31ST MAR, 2009-2010Rs in
lakhsParticulars20102009
1. Sources of Funds :
Share Capital42,796.1442,796.14
Reserve & Surplus21,901.9321,901.93
64,698.0764,698.07
Loans Funds :
Secured Loans / Funds1,533.0717,431.03
Unsecured Funds9,868.559,767.41
25,198.6827,198.44
Total89,896.6991,896.51
2 . Application of Funds :
Fixed Assets
Goss Block54,205.9653,550.07
(-) Dep.22,537.1219,787.74
Net Block31,668.8433,762.33
Capital work in progress289.62140.42
31,958.4633,902.75
Investments36,723.6036,557.57
Current assets, loans & advances :
Inventories3,114.572,503.20
Sundry Debtors934.792,467.39
Cash & Bank Balances1,383.351,290.71
Loans & Advances5,284.231,906.20
10,725.948,167.50
Current Liabilities & Provisions :
Current Liabilities3,758.623,38169
Provisions289.62127.90
3,922.483,509.59
Net Current Assets6,803.464,657.91
Miscellaneous Expenditure67.10169.10
Profit and Loss Account14,344.0716,609.18
Total89,896.6991,896.51
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MAR,
2010-2011Rs. in lakhs
Particulars20112010
Income
Sale of manufactured goods1,16,900.2447,905.48
Less : Excise Duty17,521.326,388.76
99,378.9241,516.72
Sale of traded goods-2,404.44
Other Income1,832.29432.61
1,01,211.2144,353.77
Expenditure
Cost of goods sold36,172.5816,825.32
Personnel cost3,604.811,777.200
Other expenses25,119.289,234.53
Depreciation5,204.232,200.41
Amortisation of goodwill1,7,99.20--
Interest and other finance cost950.93871.49
72,851.0330,908.95
Profit before tax28,360.1813,444.82
Provision for tax6,542.84982.00
- Current tax(982.00)-
- MAT credit of earlier years(713.59)-
- fringe benefit tax115.8328.00
- deferred tax charge5,339.36-
Profit for the year18,057.7412,434.82
Debit balance in Profit and Loss account b brought
forward(1,909.25)(14,344.07)
Balance in Profit & Loss account carried
forward16,148.49(1,909.25)
BALANCE SHEET AS ON 31st MAR, 2010-2011Particulars20112010
1. Sources of Funds :
Share Capital42,796.1442,796.14
Reserve & Surplus38,050.4221,901.93
80846.5664,698.07
Loans Funds :
Secured Loans / Funds4,168.456,760.49
Unsecured Funds12,286.488,943.65
Deferred tax liability5,659.63---------
22,114.2915,704.14
Total1,02,960.8580402.21
2. Application of Funds :
Fixed Assets
Gross Block89,683.7153,811.03
(-) Dep.29,850,9324,043.25
Net Block59,832.7829,767.78
Capital work in progress320,247.063,453.60
80,079.8433,221.38
Investments10,051.0642,083.62
Current assets, loans & advances :
Inventories3971.012889.51
Sundry Debtors2531.001866.11
Cash & Bank Balances12012.161576.48
Loans & Advances8821.933442.81
27336.19774.91
Current Liabilities & Provisions :
Current Liabilities131132.526020.09
Provisions1373.63566.86
14506.186586.95
Net Current Assets12,829.953,187.96
Profit and Loss Account-----------1,909.25
Total1,02,960.8580402.21
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MAR,
2011-2012Particulars20122011
Income
Sale of manufactured goods137,728.951,16,900.24
Less : Excise Duty20,207.1117,521.32
117,521.8499,378.92
Sale of traded goods-
Other Income1,807.181,832.29
1,19,329.021,01,211.21
Expenditure
Cost of goods sold46,374.8936,172.58
Personnel cost4,030.093,604.81
Other expenses29,017.0025,119.28
Depreciation5,377.685,204.23
Amortization of goodwill1,7,99.201,799.20
Interest and other finance cost534.19950.93
87,133.0572,851.03
Profit before tax32,195.9728,360.18
Provision for tax12,881.456,542.84
- Current tax-(982.00)
- MAT credit of earlier years-(713.59)
- fringe benefit tax60.00115.83
- deferred tax charge518.205,339.36
Profit for the year19,772.7218,057.74
Debit balance in Profit and Loss
account brought forward(16,148.49)(1,909.25)
Balance in Profit & Loss account carried
forward(35,921.21)(16,148.49)
BALANCE SHEET AS ON 31stMAR, 2011-2012 Rs. In lakhs
Particulars20122011
1. Sources of Funds :
Share Capital42,796.1442,796.14
Reserve & Surplus57,823.1438,050.42
100,619.2880846.56
Loans Funds :
Secured Loans / Funds10,342.314,168.45
Unsecured Funds14,605.9312,286.48
Deferred tax liability5,141.165,659.63
15,704.1422,114.29
Total1,30,708.681,02,960.85
2. Application of Funds :
Fixed Assets
Gross Block91,539.8789,683.71
(-) Dep.36,353.1029,850,93
Net Block55,186.7759,832.78
Capital work in progress71,347.95320,247.06
126,534.7280,079.84
Investments5,100.0010,051.06
Current assets, loans & advances :
Inventories6,071.353971.01
Sundry Debtors2,640.092531.00
Cash & Bank Balances4,773.4712012.16
Loans & Advances10,803.098821.93
24,288.0027336.1
Current Liabilities & Provisions :
Current Liabilities22,479.8613132.52
Provisions2,734.181373.63
25,214.0414506.18
Net Current Assets926.0412,829.95
Profit and Loss Account---------------------
Total1,30,708.681,02,960.85
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST DEC, 2012-2013
Rs. in lakh
Particulars20132012
Income
Sale of manufactured goods1,20,946.74137,728.95
Less : Excise Duty12,218.1920,207.11
1,08,728.55117,521.84
Sale of traded goods-
Other Income796.301,807.18
1,09,524.851,19,329.02
Expenditure
Cost of goods sold40,613.4246,374.89
Personnel cost4,427.884,030.09
Other expenses29,052.6629,017.00
Depreciation5,488.325,377.68
Amortization of goodwill1,799.201,799.20
Interest and other finance cost424.13534.19
81,805.6187,135.02
Profit before tax27,719.2432,195.97
Provision for tax11,520.0012,879.48
- Current tax--
- MAT credit of earlier years--
- fringe benefit tax16.4560.00
- deferred tax charge(781.16)518.20
Profit for the year16,963.9519,772.72
Debit balance in Profit and Loss account brought
forward35,921.21(16,148.49)
Balance in Profit & Loss account carried
forward52,885.16(35,921.21)
BALANCE SHEET AS ON 31st DEC, 2012-2013Rs. in lakhs
Particulars20132012
1. Sources of Funds :
Share Capital42,796.1442,796.14
Reserve & Surplus74,787.0957,823.14
117,619.28100,619.28
Loans Funds :
Secured Loans / Funds43,190.9510,342.31
Unsecured Funds16,251.3014,605.93
Deferred tax liability4,360.005,141.16
Total181,385.481,30,708.68
2. Application of Funds :
Fixed Assets
Gross Block94,463.8691,539.87
(-) Dep.43,632.7836,353.10
Net Block50,831.0855,186.77
Capital work in progress101,290.6671,347.95
152,121.74126,534.72
Investments16,764.095,100.00
Current assets, loans & advances :
Inventories4,378.436,071.35
Sundry Debtors3,922.792,640.09
Cash & Bank Balances21,081.894,773.47
Loans & Advances7,482.8910,803.09
36,866.0024,288.00
Current Liabilities & Provisions :
Current Liabilities19,445.1822,479.86
Provisions4,921.172,734.18
24,366.3525,214.04
Net Current Assets12,499.65926.04
Total181,385.481,30,708.68
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST DEC,
2013-2014Rs. In lakh
Particulars20142013
Income
Sale of manufactured goods116,737.131,20,946.74
Less : Excise Duty15,059.2912,218.19
101,677.841,08,728.55
Sale of traded goods--
Other Income1,955.93796.30
103,633.771,09,524.85
Expenditure
Cost of goods sold45,948.3340,613.42
Personnel cost4,765.944,427.88
Other expenses34,007.6929,052.66
Depreciation8,610.365,488.32
Amortization of goodwill1,799.201,799.20
Interest and other finance cost3,439.37424.13
98,570.8981,805.61
Profit before tax5,062.8827,719.24
Provision for tax
- Current tax1,031.0011,520.00
- MAT credit of earlier years--
- fringe benefit tax3,000.0016.45
- deferred tax charge(1,031.00)(781.16)
Profit for the year2,062.8816,963.95
Debit balance in Profit and Loss account brought
forward52,885.1635,921.21
Balance in Profit & Loss account carried
forward54,948.0452,885.16
BALANCE SHEET AS ON 31st DEC, 2013-2014Rs. in lakhs
Particulars20142013
1. Sources of Funds :
Share Capital42,796.1442,796.14
Reserve & Surplus76,849.9774,787.09
119,646.11117,583.23
Loans Funds :
Secured Loans / Funds42,501.9343,190.95
Unsecured Funds18,534.9116,251.30
Deferred tax liability7,360.004,360.00
Total188,042.95181,385.48
2. Application of Funds :
Fixed Assets
Gross Block193,075.6594,463.86
(-) Dep.53,870.0943,632.78
Net Block139,205.5650,831.08
Capital work in progress44,859.34101,290.66
184,064.90152,121.74
Investments6850.2716,764.09
Current assets, loans & advances :
Inventories9061.614,378.43
Sundry Debtors4123.753,922.79
Cash & Bank Balances4550.4621,081.89
Loans & Advances11,510.127,482.89
29,245.9436,866.00
Current Liabilities & Provisions :
Current Liabilities29522.3619,445.18
Provisions2,595.804,921.17
32,118.1624,366.35
Net Current Assets(2,872.22)12,499.65
Total188,042.95181,385.48
BIBLIOGRAPHY
1. Author
:I.M.PANDEY
Title of the book
:Financial Management
Publisher
:Vikas Publishing House Pvt. Pvt.Ltd..,
Edition
:Ninth Edition.
2. Author
:M.Y. Khan & P.K. Jain
Title of the book
:Financial Management
Publisher
:Tata Mc. Graw Hill Publishing Co.Pvt.Ltd..,
Edition
:Third Edition.
3. Author
:Prasanna Chandra
Title of the book
:Financial Management
Publisher
:Tata Mc. Graw Hill Publishing Co.Pvt.Ltd..,
Edition
:Fifth Edition.
WEBSITES:
www.sibarautopartsltd.com
www.wikipedia.com
SYNOPSIS
Introduction
Finance is one the basic foundations of all kinds of economic
activities. It is the master key, which provides access to all the
sources for being employed in manufacturing. Hence it is rightly
said that finance is lifeblood of any enterprise, besides being the
scarcest elements, it is also the most indispensable requirement.
Without finance neither any business can be started nor
successfully run. Provision of sufficient funds at the required
time is the key to success of concern. As matter of fact finance
may be said to be the circulatory system of economic body, making
possible the needed co-operation among many units of the
activity.
INDUSTRY PROFILE The present automobiles are most sophisticate
combining luxury, safety economy in utilizing the energy resource
with great speed and least environment. Pollution using various
field of science likes aerodynamics, mechanical expertise and
electrical engineering. Every day improvement in the existing
models holding the price line in reasonable range involving high
become necessity. Present day consumer satisfaction involves great
skill in marketing, advertising and positioning the product line
whim and Cashion advances with increased performance and reduce
size. Business minded people started selling them top the
society.
COMPANY PROFILE
M/S SIBAR AUTOPARTS Ltd. Was originally incorporated as private
limited company by name M/s SIBAR AUTOPARTS (PVT) Limited in the
year 1983, located at industrial estate, TIRUPATHI. It was
converted into public limited company in the year 1994. The company
is presently engaged in manufacturing and marketing of aluminum
hard chrome plated cylinder kits mainly for the two wheelers up to
engine capacity 150cc.
RESEARCH METHODOLOGY Methodology is a systematic process of
collecting information in order to analyze and verifies a
phenomenon. The collection of data is two principle sources. They
are discussed as
III. Primary Data
IV. Secondary Data
PRIMARY DATA:
The primary data needed for the study is gathered through
interview with concerned officers and staff, either individually or
collectively, sum of the information has been verified or
supplemented with personal observation conducting personal
interviews with concerned officers of finance department of SIBAR
AUTOPARTS LTD.,SECONDARY DATA:
The secondary data needed for the study was collected from
published sources such as, pamphlets of annual reports, returns and
internal records, reference from Advance management text books and
journal management.
OBJECTIVES OF THE STUDY
To identify the sources and application of funds a study on
Funds Flow Statements at SIBAR AUTOPARTS LTD., To analyze the trend
of net working capital that is being maintained by the firm for
period of 5 years.
To know and analyze the financial position of the SIBAR
AUTOPARTS LTD., To know and analyze the Liquidity position of the
SIBAR AUTOPARTS LTD.,SCOPE OF THE STUDY In this study the financial
performance of the spares under the study is done from the angles
Calculating funds from operation, maintaining of working capital,
sources and applications of the funds.
Financial analysis consists of funds flow analysis. To know
funds flow from one to one, as the time available is very limited
and study is continued to over all financial condition of a
firm.
LIMITATIONS OF THE STUDY
The present reported is based on the secondary data provided by
the SIBAR AUTOPARTS LTD., The source of the study is limited to 5
years from 2009-10 to 2013-14. The analysis is based on the annual
reports. The liquidity position of Spares is very low.FINDINGS
The networking capital of the Spares shows increased in 2009-10
i.e. Lakhs 2145.55. Funds flow of the Spares shows fund i.e. from
operation is Lakhs 2265.11.
The networking capital of the Spares shows increased in 2010-11
i.e. Lakhs 6026.49. Funds flow of the Spares shows fund i.e. from
operation is Lakhs 25662.8.
The networking capital of the Spares shows decreased in 2011-12
i.e. Lakhs 13755.99. Funds flow of the Spares shows sources and
applications are same.
SUGGESTIONS
The Spares should have maintained working capital turnover
without fluctuations for better management of working capital.
The Spares must have maintained the cash ratio for better
circulation of money for in the Spares for the management of
working capital.
The Spares maintains standard level of current ratio 0.5. So the
Spares should have maintained above standard level of current ratio
for better management of working capital.
CONCLUSION
The Spares being mostly depends on working capital facilities it
is maintaining very good relationship with their banks and their
working capital management is balanced. The Spares is performing
exceptionally well due to up wising in the Global market followed
by the domestic market it is up coming on with good and innovative
ideas and believe in improving all the area of its operations.
H.C.V.
M.C.V.
I.C.V.
MOPEDS
SCOOTERETTES
SCOOTERS
MOTORCYCLE
COMMERCIAL VEHICLE
PASSENGER VEHICLE
3 WHEELER
2 WHEELER
AUTOMOBILE
PAGE BES Group of Institutions (GVIC)Angallu
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