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]
MADHUCON SUGARS LIMITED, RAJESWARAPURAM, KHAMMAM
CASH FLOW STATEMENT FOR THE YEAR 01-04-2004 TO 31-03-2005
PARTICULARS AMOUNT (RS.)
1) Cash from operating activity: -
Net profit before tax and extraordinary items adjust for 3439734
Add: -
a) Depreciation 11198279
b) MISC expenses written off 122300
Operating Profit Before Tax: 14760313
2) Change in Working Capital
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)
3) Cash flow from investing activity: -
a) Increase in current liabilities 5765940
4) Cash flow from financing activity: -
a) Increase in Bank A/c 6914784
b) Increase in Un-secured loans 9640012
(2725228)
NET DECREASE IN CASH FLOW OPERATING ACTIVITY (610448)
[46]
INTERPRETATION: -
During the year 2004-05 cash flow analysis of Madhucon Sugars
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]
MADHUCON SUGARS LIMITED, RAJESWARAPURAM, KHAMMAM
CASH FLOW STATEMENT FOR THE YEAR 01-04-2005 TO 31-03-2006
PARTICULARS AMOUNT (RS.)
2) Cash from operating activity: -
Net profit before tax and extraordinary items adjust for 7749482
Add: -
a) Depreciation 11402716
b) MISC expenses written off 122300
Operating Profit Before Tax: 19274498
3) Change in Working Capital
a) Decrease in Inventories (53242169)
b) Increase in Receivables 89759
c) Decrease in other Current Assets (129570017)
d) Decrease in Loan & Advances (12300869)
e) Increase in Current Liabilities 26255653
(40493343)
4) Cash flow from investing activity: -
a) Increase in Fixed Assets (26861903)
5) Cash flow from financing activity: -
a) Increase in Bank Loan A/c 36777251
b) Increase in Un-secured loans 12796060
49573311
NET INCREASE IN CASH FLOW OPERATING ACTIVITY 1492563
[48]
INTERPRETATION: -
During the year 2005-06 cash flow analysis of Madhucon Sugars
and Power Ltd., shows the cash from operating negative balance of
1492563, which is outflow of cash. The statement shows that the
company does not maintained adequate cash balance.
Compare with 2004-05 to 2005-06 the cash from operating value
is increased.
[49]
MADHUCON SUGARS LIMITED, RAJESWARAPURAM, KHAMMAM
CASH FLOW STATEMENT FOR THE YEAR 01-04-2006 TO 31-03-2007
PARTICULARS AMOUNT (RS.)
1) Cash from operating activity: -
Net profit before tax and extraordinary items adjust for 24076532
Add: -
a) Depreciation 15507981
b) MISC expenses written off 122300
Operating Profit Before Tax: 39706813
2) Change in Working Capital
a) Decrease in Inventories 2965177
b) Increase in Receivables (6447481)
c) Decrease in other Current Assets (2635857)
d) Decrease in Loan & Advances (21154220)
e) Increase in Current Liabilities 14177617
13591236
3) Cash flow from investing activity: -
a) Increase in Fixed Assets (28350617)
4) Cash flow from financing activity: -
a) Increase in Bank Loan A/c (24234147)
b) Increase in Un-secured loans 12545805
(11688342)
NET INCREASE IN CASH FLOW OPERATING ACTIVITY 1325909
[50]
INTERPRETATION: -
During the year 2006-07 cash flow analysis of Madhucon Sugars
and Power Ltd., shows the cash from operating negative balance of
1325909, which is inflow of cash. The statement shows that the
company does not maintained adequate cash balance.
It shows the company has maintained adequate cash balance
during the year of 2006-07.
[51]
MADHUCON SUGARS LIMITED, RAJESWARAPURAM, KHAMMAM
CASH FLOW STATEMENT FOR THE YEAR 01-04-2007 TO 31-03-2008
PARTICULARS AMOUNT (RS.)
1) Cash from operating activity: -
Net profit before tax and extraordinary items adjust for 468544
Add: -
a) Depreciation 14696971
b) MISC expenses written off 122300
Operating Profit Before Tax: 15287815
2) Change in Working Capital
a) Decrease in Inventories (44560840)
b) Increase in Receivables 4964010
c) Decrease in other Current Assets (5070059)
d) Decrease in Loan & Advances (27736239)
e) Increase in Current Liabilities 17700699
Net cash flow from operating activities 770049
3) Cash flow from investing activity: -
a) Increase in Fixed Assets (183096602)
Net cash flow from operating activities 183096602
4) Cash flow from financing activity: -
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: -
During the year 2007-08 cash flow analysis of Madhucon Sugars
and Power Ltd., shows the cash from operating negative balance of
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.
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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.
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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.
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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:
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