SUMMER TRAINING REPORT

on

“CASH FLOW ”

IN

THOMSON PRESS INDIA

SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT OF AWARD OF

DEGREE

BACHELOR OF BUSINESS ADMINISTRATION (B.B.A)

SESSION: 2010-2011

Submitted To: Co-guidance Submitted by:

Controller of Examination MS. SURBHI MANGLA RAVINDER
M.D.University, BBA 5th semester
Rohtak Roll no.

DAV CENTENARY COLLEGE

NH-3 ,FARIDABAD

1
 PREFACE

There are no lifts or escalators in the world of success. There are only stairs leading from one
level to the next. There is no shortcut to success neither can success come solely through luck
or good fortune. To pluck more than luck is essential for success, since fortune favors the
brave and not the fickle minded. in the nutshell, there is only one way to achieve success and
that is hard work performed as per a wall conceived and imaginative plan.

“If knowledge is power, then knowledge applied is power realized”.

BACHLOR OF BUSINESS ADMINISTRATION (BBA) is a professional course, which
provides the students with the intelligence, and power they need to conquer the business
world of this era.

As a part of the curriculum, the students are required to undergo a practical

training in a reputed business organization for a stipulated period of 8 weeks. This training
gives a first hand knowledge and experience to the student and helps them to know about the
real business world. It serves as a direct exposure to an organization and its ways of
functioning.

I have been fortunate regarding my summer training because I got an

opportunity to work with one of the biggest organization of this country, which is allied with
TRACTEBEL ENGINEERS AND CONSTRUCTORS Pvt. Ltd during the shot span of
two months; I have learnt a large number of things about the business world-the sweet &
bitter truth.

(RAVINDER)

2
 ACKNOWLEDGEMENT

The organization project of such nature for this successful completion needs cooperation and
support of people. I have been fortunate to get constant guidance & encouragement from
many, which helped me a lot to be successful in any efforts. This formal acknowledgement
will hardly be sufficient to express one deep sense or gratitude to all of them.

At the outset, I would like to thank Mr. Nitin.V.Mandge (Training & Placement Officer)
and other members of the placement cell for giving me an opportunity to successfully
complete my summer internship in their esteemed organization.

A project report has never been the sale product of the person whose name appears on the cover.
There are always some people whose guidance proves to be of immense help in giving its final shape.
Therefore, it is my first duty to express my gratitude towards all of them.

(RAVINDER)

3
CHAPTER # 1

Company profile

4
 Thomson press (India) limited

Thomson Press (India) Ltd. is the largest and the most diversified printing house in South Asia having a turnover of more
than 200 crores with multi locational units.

It has been in operation for over 40 years and is part of the India Today GROUP.

A major multimedia company having interests in printing, publishing Group, internet,

television and radio.

5
Customer Service is taken care of by its wide network of sales offices in Delhi, Mumbai,
Kolkatta, Bangalore and overseas in New York, London, and Melbourne.

Thomson press is a member of two prestigious World Bodies GATF and PIRA. Revenue for
the year 2006-2007 was us $60 million on an asset base of us $ 34 million.

Thomson press (I) limited, an ISO 9002 company was incorporated in 1967 with
technical & financial collaboration of Thomson International Corporation of Canada, as
a public limited concern with 51% equity. The parent plant located at Faridabad was
inaugurated on 9th march 1967, by Dr. Zakir Hussein which is celebrated as company
annual day. Today it is recognized as India’s most well equipped and comprehensive
printing plant, employing a work force of over 1700 people. It possesses a unique
infrastructure among printing establishment in the country providing under one roof,
turnkey services for a range of printed work.

Thomson Press (I) ltd. is one of the largest commercial printing house in South East
Asia . Thomson press has worked to exemplary high standard of printing technology
with the use of latest state – of -art technology and an excellent pool of talent,
trained and highly skilled work force led by dynamic managers and management
staff. Thomson press management has thereafter kept pace with Japan, U.K., France,
USA, Canada, Italy, Israel etc., by close globalization with other printing companies
& equipment manufactures on a regular basis.
The company’s registered office is at k9 block, Connaught Circus, New Delhi and the main
unit is at Faridabad.

6
 It facilities range from design arrangements, high speed filmsetting, electronic
scanning and pre press proofing to sophisticated multicolor offset printing and the latest
binding and finishing product for print product.

The company is commercial printer and supplier of magazines like India Today,
Business Today, Computers Today, and Readers Digest. It also produces large number of
multicolor posters, brochures, folders annual report, and company manuals apart from
day to day activities. Thomson press is also engaged in printing Cheques, security bonds,
and airline tickets.

The company has received national and international recognition for

delivering printed material by stringent measures of on-line quality control on
purchasing, vendor evaluation and process controlled production facilities with an eye
for quality where the service is customer driven.

A constant keeping pace with technological advancements in every field

of the trade has been the Thomson’s policy since its inception. The last few years in
particular have been years of high technology acquisition for the press.

7
“QUALITY THROUGH PEOPLE AND TECHNOLOGY”

COMPANY VISION

COMPANY MISSION

• To recognize the customer's right to Quality, Services, Timely Delivery and Cost.
• To ensure maximum satisfaction to the clients.
• To continue to maintain ethical practices, legal, social, personal conscience
framework.
• To encourage individual growth to fullest potential.
• To maintain high degree of efficiency and attain international standards.
• Quality through people and technology.

8
 objectives of the company

• Aim of Profit Maximization with customer satisfaction.

• To satisfy the demands of growing organization, employees and the clients.

• To ensure maximum satisfaction to the clients.

• To maintain integrity & fair play.

• To function as a model unit, follow all the laws applicable, report profits and pay all
the levied taxes.

• To maintain an open information system & understanding within the company and
outside.

9
 THEIR TEAM

Aroon Purie –Managing Director

An alumnus of the London School of Economics and a fellow

of the Institute of Chartered Accountants (England &
Wales), Aroon Purie is responsible for the strategic
direction of the
company.

As founding Editor & Editor-in-Chief, India Today, Chief Executive, the India Today Group
and Chairman, TV Today Network ltd., he sets the journalistic style for the largest and most
respected magazine publishing group in India and for the premier 24-hour news and current
affairs hindi news channel, Aaj Tak.

He is associated with several prestigious councils, amongst them, as member, council of

management, audit bureau of circulations (Chairman, 2000-2001). He is on the executive
committee of the editors' guild of India, council of management All India Management
Association (special invitee). He was also chairman, CII National Committee on Media
(2001-2002).

Recipient of the national award, the Padma Bhushan in March 2001, he has received
numerous other honors. these include, the B.D. Goenka award for excellence in journalism
(1988), 'Journalist of the year 1990' by Indian Federation of Small and Medium Newspapers,
the G.K. Reddy Memorial Award for outstanding contribution to journalism (1993-94), and
the Hall of Fame Award from the Advertising Club of Calcutta (2002).

10
Vinod Kumar-Executtorive Direc

Finance offers a wealth of guidance to all team members. He

has been instrumental in the company achieving a reputation in
the market as a quality printing and high-end typesetting
service provider.

A Chartered Accountant by qualification, he is an associated

member of the Institute of Chartered Accountants, India and
also holds a masters degree in business management from Bombay University.

Anil Mehra-Chief Financial Officer

Anil Kumar Mehra is a fellow member of the Institute of

Chartered Accountants of England & Wales and also of the
Institute of Chartered Accountants of India. He has been
working with the company and the group for more than 30
years and has considerable expertise in the printing and
multimedia industry.

His expertise ranges from advising companies on Financial Management and rendering
service in other areas of management—including business consultancy, corporate planning
and tax planning.

He also holds the dual responsibility of Finance Director of the India Today Group as well as
Financial Advisor appraising all new planned investments.

11
C J Jassawala - Chief Operating Officer

C J Jassawala joined Thomson Press, Print Business as

Chief Operating Officer in December 2006.

He did his post graduation in Human Resource

Management from XLRI, Jamshedpur and was selected to join the Tata Administrative
Services. There after, he worked for 23 years with Voltas (A Tata Group Company)
culminating in his last assignment there as Vice President - Operations and Business Head.
He carries a wide experience in leadership, team building, turnaround management and
business excellence.

As COO, C J Jassawala is responsible for print operations across 5 units in the country and
offices abroad.

12
 NATIONAL AWARDS

Award name: Sappi Trading Printer of the years – Gold

Year: 2007
Topic Printer's own Promotion

Please click here to enlarge

Award Name : Sappi Trading Printer of the years – Gold

Year : 2007
Topic : Calendar

Please click here to enlarge

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Award Name : National Award for Excellence in Printing by all
India Federation of Master Printers

Position : 2nd

Year : 2002

Topic : Group – Offset Category – Book – Technical/

Medical

Award Name : National Award for Excellence in Printing by all

India Federation of Master Printers

Position : 1st

Year : 2002

Topic : Group - Offset Category - Book (Others)

Award Name : Special Export Award by CAPEXIL

Year : 2000 - 2001

Topic : Books

Award Name : Special Export Award by CAPEXIL

Year : 1996-97, 1997-98

Topic : Typesetting

Award Name : Special Export Award by CAPEXIL

Year : 1994-95

Topic : Books

Award Name: National

Award for Excellence in
Printi
ng by all India Federation
of Master printers.
Year : 2002

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 Topic: Group - 'Offset Big' Category Folder

Award Name : Sappi Trading Printer of the years - Bronze

Year : 2007
Topic : Catalogues

Award Name : Xerox

Year : 2007

Topic :

Award Name : Xerox

Year : 2007

Topic :

Award Name : Sappi Trading Printer of the year

Year : 2007

Topic :

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Award Name : National Award for Excellence in Printing by
all India Federation of Master Printers
Year : 2002
Topic : Group - 'Offset Big' Category - Folders

16
 CAREER AT THOMSON PRESS
Thomson Press is a 'People's Company'. the belief that 'human resources are
the main drivers of the organization' helped them in building a pool of
workforce, which is talented, dynamic, innovative, creative and ready to accept
challenges. People at Thomson Press believe in exploring, nurturing and
developing the blooming buds into corporate giants. Fresh recruits in the
company are taken under the following corporate training schemes.

Category : Management Trainee

Qualifications : PhD., MBA, ICWAI, CA
Duration of Training : 1 year
After Completion of Training
Sr. Officer
:

Graduate Engineer Trainee / Junior

Category :
Management Trainee
Qualifications : B.E./ B.Tech./ B.E.(PTG), MSW/ M.Stats.
Duration of Training : 1 year
After Completion of Training
Asst. Officer
:

Category : Supervisor Trainee

Qualifications : Dip. Engg. (Mech./ Electrical/ Electronics)

17
Duration of Training : 2 years

During the period of training, fresh recruits are given exposure to different facets
in their respective field of specialization as well as printing operations. They also
prepare and develop them to shoulder managerial responsibilities.

With attractive remuneration structures and monetary and non-monetary

appreciation for performance, they provide a clear career path for an individual to
grow and develop.

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 Corporate Houses & Advertising Agencies

Print requirements for major Corporate Houses in India such as:

19
 Projects of major advertising agencies such as

• Bates

• Lintas

• R,K Swamy- Bbdo

• Gray

OTHERS ARE:-

• Itc
• Becton & Dickinson
• Lic of India
• Nestle
• Otto Burlington
• Rediffusion
• Mudra
• Sahara airlines
• State Bank of India
• UCO Bank
• Panjab & Sind Bank
• Escorts
•
• Times of India

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 magazines & publications
Press executes the demanding deadline and quality requirements of:

All India Today Group Publications

Readers digest

Amway

30 more magazines for other publishers

21
 Print media

• India Today: English

• India Today: Telugu
• India Today: Malayalam
• India Today: Hindi
• India Today: Tamil
• India Today Plus
• Golf Digest
• Cosmopolitan
• Business Today
• Time
• Fortune
• India Today Travel Plus

MUSIC BUSINESS
Music today: audio cassettes & compact discs.

ELECTRONIC MEDIA
The company started diversifying in to the business of electronic media in 1995. TV
Today Network Ltd. launched a 24 hour Hindi news current affairs channel viz. –“Aaj
Tak”.the channel went operational in December 2000 & is a highly popular channel.

Quality policy of Thomson Press

22
They pledge to achieve customer satisfaction by continual improvement in their processes
and excellence in quality. They wish to achieve this by:

Deploying specific, measurable and time-bound objectives in all processes in

various functions.

Motivating their workforce for excellent standards in their work procedures through
kaizen.
Committing suppliers to continually work on improvement in quality standards.
Working as a well-knit team to ensure that our quality objectives are met.

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role of quality assurance in thomson press

Defect Prevention
By setting standard:
Standard has been set as per the ISO 9001-2000 international quality system and
has been certified from BSI India Pvt. Ltd. The standard is being revised from
time to time whenever there is some improvement or modification in the system.
Ensuring adherence of the standard:
Periodical audit of the system standard is being conducted to check the
compliance of the standard.
Corrective and preventive action:
Every customer complaint is being thoroughly investigated for its origin and
reason. Necessary corrective & preventive action is being taken in consultation
with the concerned departments.
Defect detection
By gathering data constantly on occurrence of defect:
Every job undergoes thorough inspection before dispatch as per the inspection
plan & defect checklist.
By sending information about defects to relevant departments:
Daily, weekly & monthly reports are being sent to the relevant departments and
the same are being reviewed periodically with the concerned departments.

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 Living Media India Limited
The company was incorporated on May 9, 1962 and the publishing business started with the
brand name India Today in 1975. The present total annual turnover of the company is
approx. Rs. 160 corers.
India Today is a news magazine, which is published weekly in English and four
other regional languages. The company diversified its publishing business by adding
magazines on business, technology, women, leisure etc. The India Today Group is one of the
largest magazine publishing houses in India with the brand name of India Today. The present
combined circulation of all the editions of India Today magazines is over 5 million per
month. Additionally, the company produces music cassettes/compact discs under the brand
name of “Music Today”. It has a large number of titles.
It is a matter of great satisfaction that all the products of the company have
been established as market leaders and its publications renowned for its quality
reproductions. The company’s strategy is to maintain its leadership in its publications and
also to pursue its operations in areas, which are relevant in the changed market price.

Organization and Management

A Board of Directors manages the company. Professional managers supported by highly

qualified staff and technical personnel to implement corporate policies head all functions.
Some of the key personnel are:
• Mr.Aroon Purie- Editor In Chief
• Mr.Anil Mehra- Group Executive And Finance Director
• Ms.Mohini Bhullar- Publishing Editorial
• Mr.Prabhu Chawla-Group Editorial
• Mr.Ashish Bagga- Publisher & Executive Director
• Ms.Mala Sekhri-Publisher-Lifestyle Group

Employee Demographics

The company directly employs approx. 700 people and also indirect employment to another
200. It has a record of healthy industrial relations.

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OBJECTIVES OF THE STUDY
The basic purpose of the study is to get an insight of the Finance Department of Living
Media India Limited (part of India Today Group of Companies). The main objectives are:

• To understand the work culture, duties and tasks performed by each individual of the
Finance Department.

• To analyze Cash Management System and Quarterly Information System.

• To analyze the basics of Management Information System and Bank Reconciliation

System.

• To analyze the procedure and Documentation involved for obtaining Loans and the
terminology used in such documents.

• To understand the linkages between the various departments of the organization.

• To learn various things which come across while dealing in Finance.

• Understanding of Stock and Debtors Statement and Monthly Select Operational Data
prepared by the company on monthly basis.

• Understanding and computations of Interest on Term Loans and on Working Capital

Loan of various banks.

Report is prepared with the objective that it is helpful for various parties like

• The researchers can use the study for the further analysis and recommendations.

• The company executives can utilize the training report for the purpose of Financial
Management.

• The training students can use the report to undergo the various accounting concepts.

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Activities handled by officers in finance department (living media india
limited)

Mr. Vijay Gupta : Loan Documentation, CMA (Credit Monitoring Analysis),

Bank Reconciliation Statement, (Supervises Overall
Functioning Of the Department)
Mr. K.K Dudeja : Cash Flow Statement, Funds Flow Statement,
Daily Bank Position, Bank Reconciliation Statement, Funds
Monitoring
Mr. C.K Tyagi : Quarterly Information Statement,
(MSOD) Monthly Select Operational Data,
Bank Reconciliation Statement,
Statement of Stock and Debtors.
Mr. A.C Soni : Posting of Outstation Cheques and Bank Reconciliation
Statement
Mr. Rakesh Sharma: Bank Reconciliation Statement, Management Information System,
Interest Calculations
Mr.Vinod Chand : Guarantee, Bank Reconciliation Statement, Outstation Cheques
Mr.P.Singla : Cash Management System (CMS), Preparation of Vouchers and their
Punching Into the System,
Bank Reconciliation Statement

Mr.Mahinder : Subscription, Posting of Local Cheques

& Mr.Rakesh Kumar

27
 CHAPTER # 2

REVIEW OF LITERATURE

28
 CHAPTER # 2

REVIEW OF LITERATURE

INTRODUCTION

MEANING OF FINANCIAL STATEMENT

Financial statements refer to such statements, which contain financial information about an
enterprise. These statements are a collection of data presented based on logical and consistent
accounting principals. The term financial statements include at least statements, which the
account prepares at the end of an accounting period: - (1) The balance sheet or a statement of
financial position; (2) the income statement or the profit & loss account. These statements are
used to Conway to management and other interested outsiders the profitability and financial
position of a firm.

Financial statements are the outcome of summarizing process of accounting. In the words
John N. Myer, “the financial statements provides the summery of the accounts of a business
enterprise, the balance sheet reflecting the assets, liabilities and capital as on a certain data
and the income statement showing the results of operation during the certain period.”
Financial statements are prepared as results of financial accounting and are the major source
of financial information of an enterprise. Recent activities and analysis of what has been
done with earnings.”

In the words Anthony, “Financial statements, essentially, are interim reports, presented
annually and reflect a division of life of an enterprise into more or less arbitrary accounting
period more frequently the year.”

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 NATURE OF FINANCIAL STATEMENTS

Data exhibited in the financial statement is not absolute fact because they are affected by
personal judgments, recorded facts, accounting conventions. The recorded facts are those,
which can be expressed in monetary terms. The statements are prepared for a particular
period, generally one year. The accounting records and financial statements prepared from
these records are based on historical records.

The following points explain the nature of financial statements:-

Personal judgments: Even though certain accounting conventions are followed while
preparing the financial statements, still personal judgment of the accountant plays a decisive
role in accounting. For example, He is to apply his personal judgment in deciding the role of
deprecation. Accountants have to exercise his personal judgment in respect of rate of
provision for doubtful debts, period for writing off intangible assets and classification of
expenditure into capital and revenue.

Recorded facts: The team `recorded facts` to the data taken out from the accounting
records. The records are maintained on the basis of actual cost data. The original cost or the
historical is the base of recording various accounts such as cash in hand, cash at bank etc.
taken as per the figure recorded in the accounting books.

Accounting Conventions: Certain accounting conventions are following while

preparing financial statements. The convention of valuing inventory at cost or market price,
whichever is lower, is followed. The convention materiality is followed in dealing.

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 ANALYSIS OF FINANCIAL STATEMENTS

In the words of John N. Myers, “Financial statement analysis is a largely a study of

relationship among the various financial factors in a business, as disclosed by a single sat of
statement, and a study of the trends of these factors, as shown in a series of statements.”

Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and make
decisions regarding the operation of the firm.

The AFS is a study of the relationship among various financial figures as given in a set of
financial statements.

OBJECTIVES OF ANALYSIS OF FINANCIAL STATEMEN

The basic purpose of Analysis financial statement (AFS) is to understand the information
contained in financial statements with a view to know the weaknesses and strength of the
firm and to make forecast about the future and help the analyst to take various decisions
regarding the operation of the firm.

The objectives or purposes are as following:-

I. To know the solvency.

II. To provided information to the management.

III. To estimate & determine the possibility of future growth of business.

IV. To evaluate the administrative efficiency of the business enterprise.

V. To find out the relative importance of different components of the financial position
of the firm.

VI. To identify the reasons for change in the profitability / financial position of the firm,

VII. To assets the present profitability and operating efficiency of the firm as a whole as
well as its different departments.

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 PRINCIPAL TECHNIQUE OF AFS

AFS can be undertaken by different persons and for different purposes, therefore the
methodology adopted for the AFS may be varying from one situation to another. However,
the following are some of the common techniques of the AFS;

I. Comparative financial statements

II. Common-size financial statements

III. Trend percentage analysis

IV. Ratio analysis

V. Fund flow statements

VI. Cash flow statements.

COMPARITIVE FINANCIAL STATEMENTS

When financial statements figures for two or more years are placed side by side to facilitate
comparison, these are called comparative financial statements. Such statements not only
show the absolute figures of various years but also provided for columns to indicate the
increase or decries in these figures from one year to another in percentage from.

COMMON-SIZE STATEMENT (CSS)

The CSS are those in which individual figures are converted into percentage to some other
base. In balance sheet the total of assets or liabilities are assumed equal to hundred and all the
figures are expressed as percentage of this total. Similarly in P&L A/C sales figure is taken at
100 and all other figures are expressed as percentage of sales. Thus, the CSS is useful not
only in infra-firm comparisons over a series of different year but also in making inter-firm
comparisons for the same year or for several years.

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 TREND PERCENTAGE ANALYSIS (TPA)

Trend percentages are very useful in making comparative study of the financial statements
for a number of years. In TPA, the trend percentage are calculated for each item by taking the
figure of that item for some base year as 100. These indicate the direction of movement over
a long time and help an analyst of financial statement to form an opinion as to whether
favorable or unfavorable tendencies helps in future forecasts of various items.

RATIO ANALYSIS (RA)

The RA is based on the premise that a single accounting figure by itself may not
communicate any meaningful information but when expressed as a relative to some
significant information. The relationship between two or more accounting figure/groups is
called a Financial Ratio. Ratio can be classified into:

1. The Liquidity Ratio

2. The Activity Ratio

3. The Average Ratio

4. The Profitability Ratio

STATEMENTS OF CHANGES IN FINANCIAL POSITION (SCFP)

Since the balance, sheet and Income Statement of a firm are two basic financial
statements depicting the financial position of a firm at the end of the year. These two
financial statements are called the traditional financial statements.

Both these statements fail to throw light on changes in assets, liabilities and shareholder
wealth during this year.

BS deals with the financial position gives only the static view of the year-end financial
position and fails to indicate the movement and causes change in assets and liabilities
during the year.

33
Similarly, is show the profits or loss resulting out of the firm during the years? This profit
or loss in facts reflects change in shareholder wealth.

Moreover, it is fail to ascertain the sufficiency of resources to declare the dividend etc.
thus, there is need to prepare another statement (together with BS and IS.)

The SCFP is essentially an explanation of the change in financial position of the firm.
The SCFP draw basic information from the BS and IS and helps in understanding the
changing in assets, liabilities and shareholder worth.

The SCFP are intended to summarize-

1. The way in which the firm used its financial resources during the periods. (For
example to acquire fixed assets, to pay debts, to pay dividends to shareholder and so
on.)

2. Changes in assets, liabilities resulting from financial, and investment transitions

during the period as well as those changes, which resulted due to change in owner’s
equity.

The SCFP deals with flow of funds during the year i.e. the funds coming in end going out
of the firm.

The SCFP can be prepared as follows:

1. SCFP (cash basis) also known as a FUND FLOW STATEMENT.

2. SCFP (Net Working Capital) also known as CASH FLOW STATEMENT.

Thus, the SCFP should incorporate all significant financing, investing and other
activities of the facts whether such activity affect the cash /working capital or not.
Therefore, a SCFP prepared on cash basis (i.e., fund flow statement) should include
all significant transitions even if they do not go through cash or current accounts.

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 SCFP (WORKING CAPITAL BASIS)

FUND FLOW STATEMENT

The balance sheet of a firm does not disclose the causes of changes in these items
between the end of previous year and the end of current year. Therefore, an additional
statement called Fund Flow Statement is prepared to show the changes in the assets,
liabilities and capital between the dates of two balance sheets. Fund Flow Statement
is known by various others names also, such as “Statement of sources and application
of fund’’ and “Where got and where gone statement’’.

The term working capital (WC) is generally defined as the excess of total current
assets over the total current liabilities. The current assets (CA) of a firm may include
cash in hand and at a bank, stock, debtors, bill payable, outstanding expenses,
provision for tax, short-term liabilities etc. the term WC is to increase or decrease the
working capital by affecting any of the elements of Current assets or Current
Liabilities. Therefore, the FFS in its standard form, incorporates only those
transactions which affect the working capital i.e., those transactions where in only
one of the affected accounts is a current account.

Now, a flow of working capital arises when one of the affected accounts is a current account.
From the point of view of current accounts, the affect on Working Capital can examined in
the light of the definition of the term Working capital i.e., the excess of current assets over
current liabilities i.e.,

WC=CA-CL
WC (WORKING CAPITAL)
CA (CURRENT ASSETS)
CL (CURRENT LIABILITIES)
Increase in any of the CA or decrease in any of the CL will result in
increase in the WC, decrease in any of the CA or increase in any of the CL will result in
decrease in the WC.

35
A firm undertakes numerous transactions during a year and most of these transactions may
affect one or the current account i.e.; most of these transactions may result in the flow of the
WC. Neither is it necessary not practical to identity the effect of each transaction on the WC.
These transaction, instead, are considered and analysis in collective forms and then their
effect on the WC is identified.

SOURCE OF WORKING CAPITAL

1. OTHER INCOMES;
2. LONG TERM BORROWINGS;
3. SALE OF NON CURRENT ASSETS;
4. FUND FROM BUSINESS OPERATION;
5. ISSUE OF ADDITIONAL EQUITY CAPITAL, OR PREFERENCE SHARE
CAPITAL OR DEBENTIURES.

USES OF WORKING CAPITAL

1. Dividend to shareholder;

2. Purchase of non current assets;

3. Losses from business operations;

4. Repayment of long term borrowings;

5. Redemption of debentures and/ or preference share.

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 SCFP (CASH BASIS)

CASH FLOW STATEMENT

A CFS is statement-showing inflows and out flows of cash during a particular period. In
other, it is a summary of sources and application of cash during a particular spend of time. It
analysis the resources or changes in balance of cash between the two balance sheet dates. The
term cash stands for cash and cash equipments.

This cash balances sheet can be matched with the firm needs for cash during the period; and
accordingly, arrangements can be made the deficit or invest the surplus cash temporarily. A
historical analysis of cash flows provides in sight reliable cash flow projection for the
immediate future.

CFS explains the causes of changes in the cash balances of the firm by showing the sources
of cash receipts and purposes for which the payments were made.

OBJECTIVE OF CASH FLOW STATEMENT

The main objective behind preparing a cash flow statement can be laid down as under:

1. Useful for short term financial planning

2. Useful in preparing the cash budget

3. Comparison with cash budget

4. Study of the trend of cash receipts and payment

5. It explains the deviations of cash from earning

6. Helpful in Ascertaining Cash from various Activities Separately

7. Helpful in making dividend decision.

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 SOURCES OF CASH

The following are the sources of cash:

1. Increase in liabilities

2. Decrease in assets (expect cash)

3. The profitable operation of the firm and

4. Sale proceeds from ordinary or preference share issue.

APPLICATION OF CASH

The following are the application of cash:

1. Decrease in liabilities

2. The loss from operations

3. Increase in assets (except cash)

4. Redemption on redeemable preference shares.

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 IMPORTANCE AND RELEVANCE OF CFS

The CFS has gained importance in view of the fact that there are many managerial decisions,
which are taken in the cast availability or cash position of the firm.

For example, declaration of dividend by the company required cash disbursement and
therefore, the board of direction must consider the cash position before proposing a dividend.
The CFS also provides information for the short term financial planning and in particular, the
short-term cash needs of the firm.

In view of increasing importance and relevance of the CFS, the clause 32 of the listing
agreement (between a company and the stock exchange where the share proposed to be
listed) has been amended by the SEBI. As per this agreement, the listed companies in India
are now required to supply copy of the CFS to each shareholder as a part of Annual Report.
As a result, the listed companies have started practices of sending a CFS for the period fit
which the BS has been prepared as a part of the Annual Report of the company.

MEANING OF CASH FLOW

As a new or small nonprofit, your biggest challenge is likely to be meaningful your cash flow
probably the most important financial statement for a new business is the cash flow
statement. The overall purpose of meaningful your cash flow is to be making sure that you
have enough cash to pay current bills. Business can manage cash flow by examining a cash
flow statement and flow projection. The cash flow statement includes total cash received
minus total cash spent. Cash management looks primarily at actual cash transitions.

(Note that nonprofit must file a financial statement called Cash Flow Statements, or
statements of cash flow- this statement is not the same as a flow budget.)

The balance sheet, income statement, and cash flow statement are the three generally
accepted financial statements used by most business for financial reporting. All three
statements are prepared from the same accounting data, but each statement service its own
purpose. The purpose of the cash flow statement is to report the sources and uses of cash
during the reporting period.

39
 ADVANTAGE OF CASH FLOW STATEMENT

The chief advantages of cash flow statement are:

1. A projected cash flow statement can be prepared in order to know the future cash
position of a concern so to enable a firm to plan and coordinate its financial
operations properly.

2. By preparing this statement, a firm can come to know as to much cash will be needed
to make various payment and hence the can plan to arrange for the future requirement
of cash.

3. Cash flow analysis is more useful and appropriate than flow analysis for short-term
analysis, as is very short period it is cash, which is more reverence then the working
capital for forecasting the ability of the firm to, meets its immediate obligation.

4. Cash flow statement prepared according to As-3 is more suitable for making
comparison then the fund flow statements is no standard format used for the same.

5. Science cash flow statement is basis of accounting; it is very useful in the evolution
of cash position of the firm.

6. Cash flow statement helps in planning the repayment of loan, replacement of fixed
assets and other similar long term planning of cash.

7. It had better explain the causes for poor cash position in spite of substantial profit in a
firm by throwing light on various applications of cash made by firm.

8. A series of intra-firm and inter-firm cash flow statement reveals whatever the firm
liquidity is improving or deteriorating and in comparison to other firms over a given
period.

40
 LIMITATIONS OF CASH FLOW STATEMENT

Even cash flow has a lot of advantage, cash flow statement suffer from the following
limitation:

1. Cash flow statement is not suitable for judging the profitable of a firm as non-cash
charges are ignored while calculating cash flow from the operating activities.

2. It does not present the true liquidity of a firm because the liquidity does not depend
upon cash alone. Liquidity also depends upon those assets, which can be converted
into cash easily.

3. As cash flow statement is based on cash basis of accounting, it ignores the basic
accounting concept of accrual basis.

41
42
 CHAPTER # 3

SYNOPSIS

TITAL OF PROJECT
Title of project is “ANALYSIS OF CASH FLOW STATEMENT” at “LIVING MEDIA
INDIA LIMITED”, FARIDABAD.

SCOPE OF PROJECT
The scope of project is limited to “LIVING MEDIA INDIA LTD”. This company is a
leading manufacturing of all types of magazines and books. This has a distinction of being of
very largely business partners of other companies.

OBJECTIVE OF THIS PROJECT

 TO prepare cash flow statement.

 To find the movement of cash inflow and cash out flow.

 To make the comparisons between cash flow and cash out flow.

 To analysis the Balance sheet of the company in terms of Cash Flow Statement.

 To focus on various activities of the originations in terms of operating, financing,

investment.

43
 RESERCH METHODOLOGY
Research methodology is a way to systematically solve the research problems it may be
understand as a science of studying how to research is done scientifically. In it, study the
various steps that are generally adopted by researcher to know not the research methods /
techniques but also the methodology.

METHODS OF DATA COLLECTION

The data so collected is primary and secondary in Nature:

 Primary

 Secondary

PRIMARY SOURCES OF DATA COLLECTION

The primary data is collected by the personal interview with senior officers, colleagues in
the organization.

SECONDARY METHOD OF DATA COLLECTION

The secondary data is collected by the detailed study and critical analysis of the existing
Annual report. The data can be collected through the magazines, internet etc.

44
 RELEVANCE OF THE STUDY
The relevance of the study can be studied from the following points:

 The benefit of the report from the researcher is that it has to get the knowledge of the
cash inflow &cash outflow.

 This study also unable the company that their cash is not utilizing in unnecessary
things.

 The scope of the report was confined to the outside parties like creditors, shareholder.
Govt., etc. who want to invest their money in the company.

 The benefit of the report for company is that through this report, they can come to
know about the cash flow position of the company.

PARAMETERS
The report is analyzed under the presumption that cash flow position of LIVING MEDIA
INDIA LTD. can be improved and made effective in terms of cash.

In testing the above hypothesis, the following aspect will be considered:

 Balance sheet comparison.

 Presentation of cash flow statement in terms of revised AS-3.

45
 FINANCIAL TOOLS
The Financial tools used in the report are balance sheet. Profit & loss account and cash flow
statement i.e., giving information about the cash flow in the organization.

LIMITATIONS

The study, through conducted to the best of the ability, suffers from some certain limitations.
There are:

 Senior officials were rarely approachable.

 Websites were not giving comprehensive data.

 Not having face to interaction to get more information that is relevant.

 The data is secondary one and such its reliability may be questioned upon.

 Element of Biases may be there due to more dependable on secondary Data.

 The time availabilities for the study are less, and such it hinder the progress of the
study.

46
47
 CHAPTER # 4

DATA ANALYSIS

PREPARATION OF CFS

The CFS is intended to provide information about the flows of cash of a firm and is useful to
asses the ability of the firm to generate cash and cash –equivalent and the needs of the firm to
utilize these cash flow. The primary objective of the CFS therefore, is to provide information
regarding cash inflows and outflows during the year. As per the format given in AS-3
(received), the CFS summarizes the cash receipt, cash payments and net change in cash
position resulting, investing, and financing activities of a firm during the period. In order to
prepare the CFS, the following points worth nothing.

DEFINATIONS:

Cash comprises cash on hand and demand with banks.

Cash Equipments are short term, liquid investments that are readily convertible into known
amounts of cash and which are subject to an in significant risk of change in value. Example
of cash equipments are treasury bills, commercial paper etc.

Cash Flows are inflows and outflows of cash equipments. It means the movement of cash
into organization and movement of cash out of the organization. The difference between the
cash inflows and outflows is known a net cash flow, which can be either net cash inflow or
net cash outflow.

48
 CLASSIFICATION OF CASH FLOW
The cash flow during a period is classified into three main categories of cash inflow and
outflow:

 Cash Flow from operating Activities

 Cash Flow from Investing Activities

 Cash Flow from Financing Activities

CASH FLOW FROM OPERATING ACTIVITIES

Operating activities are the principal revenue-producing activities of the enterprise and the
other activities that are not investing and financing activities that are not investing and
financing activities. Operating activities that enter into the determination of net profit or loss.

Cash flows from operating activities include the following:

 Cash payments to and on behalf of employees.

 Cash payments to suppliers for goods and services.

 Cash receipts from the sale of goods and the rendering of service.

 Cash receipts from royalties, fees, commission, and other revenue.

 Cash receipts and payments of an insurance enterprise for premiums and claims
annuities and other policy of benefits.

49
 CASH FLOW FROM INVESTING ACTIVITIES
Investing activities are the acquisition and disposal of long-term assets other investing not
include in cash equipment. In other words, investing activities include transitions and events
that involve the purchase and sale of long-term productive assets are not held for resale and
other investments.

The following are examples of cash flows arising from investing activities:

 Cash payments to required shares, warrants, or debt instruments of other enterprises

and interest in joint ventures (other then payments for those instruments considered
cash equipments and those held for dealing or trading expenses).

 Cash receipts from disposal of shares, warrants, or debts instruments of other

enterprises and interest in joint ventures (other then receipts for those instruments
considered cash equivalents and those held for dealing or purposes.)

 Cash advances and loans made to third parties other than advances and loans made by
a financial enterprise.

 Cash receipts and payments relating to future contracts, and swap contracts except
when the contract are held for dealing or trading purposes or the receipts are
classified as financing activities.

 Cash payments to acquire fixed assets (including intangible). These payments

include those relating to capitalized research and development cost and self-
constructed fixed assets.

CASH FLOW FROM FINANCING ACTIVITIES

Financing activities are those activities that result in the change in the size and composition
of the owner’s capital (including preface share capital, in case of the company) and
borrowing of the enterprises.

Following are the examples of cash flow arising from financing activities:

• Payment of interest;
• Payment of dividend;
• Repayment of borrowings;
• Cash proceeds from long term borrowings;
• Cash processes from issuing share or other similar instructions.

50
There are two methods for preparing the cash flow statement:

1. Direct method
2. Indirect method

Both methods yield the same result, but different procedures are used to arrive at the cash
flows.

DIRECT METHOD

Under the direct method, we are analyzing our cash and bank accounts to identify cash flows
during the period. We could use a detailed general lender report showing all the entries to the
cash and bank accounts, or we could use the cash receipts and disbursements journals. We
would then determine the offsetting entry for each cash.

Entry in order to where each cash movement should be reported on the cash flow statement.
Some examples for the operating activities section include:

Cash receipts from customers:

• Net sales per the income statement

• Equals cash receipts from customers
• Minus ending balance in accounts receivable
• Plus beginning balance in accounts receivable

CASH RECEIPTS FROM INVENTORY:

• Ending inventory
• Minus beginning inventory
• Equals cash payments for inventory
• Plus beginning balance in accounts payable to vendors

CASH PAID TO EMPLOYEES:

• Equals cash paid to employees

• Salaries and wages per the income statement
• Plus beginning balance in salaries and wages payable
• Minus ending balance in salaries and wages payable

51
CASH PAID FOR OPERATING EXPENSES:

• Minus deprecation expenses

• Equals cash paid for operating expenses
• Operating expenses per the income statement
• Plus increase or minus decrees in prepaid expense
• Plus decrease or minus increase in accrued expenses
TAX PAID:

• Tax expense per the income statement

• Plus beginning balance in taxes payable
• Minus ending balance in taxes payable
• Equal taxes paid

INTEREST PAID:
• Interest expense per the income statement
• Plus beginning balance in interest payable
• Minus ending balance in interest payable
• Equal interest paid

Under the direct method, for this example, you would then report the following in the cash
flows from operating activities section of the cash flow statement:

• Cash receipts from customers

• Cash payment for inventory

• Cash paid to employees

• Cash paid for operating expense

• taxes paid

• interest paid

• equal net cash provided by (used in) operating activities

Similar types of calculation can be made of the balance sheet accounts to estimate the effects
of accrual accounting and determine the cash flows to be recorded in the investing activities
and financing activities sections of the cash flow statement.

52
 INDIRECT METHOD

In preparing the cash flows from operating activities section under the indirect method, we
start with net income per the income statement, revenue out entries to income and expense
accounts that do not involve a cash movement, and show the change in net working capital.
Entries that effect net income but do not represent cash flows could include income we have
earned but not received amortization of prepaid expenses, accrued expense, and deprecation
or amortization. Under this method, we are analyzing our income and expense accounts, and
working capital. The following is an example of how the indirect method would be presented
on the cash flow statement:

• Net income per the income statement.

• Equals cash flows before movements in working capital.

• Plus entries to expenses accounts that do not represent cash flows.

• Minus entries to income accounts that do not represent cash flows

• A decrease in current assets would be shown as a positive figure, because other

current assets were converted into cash.

• An increase in current assets (excluding cash and cash equipments) would be shown
as a negative figure because cash was spent or converted into other current assets,
thereby reducing the cash balance.

• In increase in current liabilities (excluding short-term debt, which would be

represented in the financing activities section) would be shown as a figure since more
liabilities means that less cash was spent.

• A decrease in current liabilities would be shown as a negative figure, because cash

was spent in order to reduce liabilities.

The net effect of the above would then be reported as cash provided by (used in) operating
activities.

53
The cash flows from investing activities would be presented the same way as under the direct
method.

CASH FLOW STATEMENT (PARAGRAPH 18 A)

DIRECET METHOD

Cash flows from operating activities

Cash receipts from customer ****

Cash paid to suppliers and employees ****

Cash generated from operation ****

Interest paid ****
Cash flow before extraordinary item ****
+ Extraordinary items ****
- Net cash from operating activities ****

Cash flow from investing activities

Purchase of fixed assets ****

Proceeds from sale of equipments ****
Interest received ****
Dividend received ****
Net cash from investing activities ****

Cash flows from financing activities

Proceeds from insurance of share capital ****
Proceeds from long term borrowings ****
Repayment of long term borrowing ****
Interest paid ****
Net cash from financing activities ****
Net increase in cash and cash equivalent ****
Cash and cash equivalent at beginning of period ****
Cash and cash equivalents in end of period ****

54
 CASH FLOW STATEMENT (PAREGRAPH 18)

(INDIRECT METHOD)

Cash flows from operating activities

Net profit before taxation, and extra ordinary item ****

Adjustment for:

Depreciation ****

Foreign exchange loss ****

Interest income ****

Dividend income ****

Interest expense ****

Operating profit before working capital changes ****

Add:-

Decrease in current assets ****

Increase in current liabilities ****

****
Less:-

Increase in current assets (****)

Decrease in current liabilities (****)(****)

Cash generated from operations ****

Income tax paid ****

55
Cash flow before extraordinary items ****

+ Extra ordinary items ****

- ****

Net cash from operating activities ****

Cash flows from investing activities

Purchase of fixed assets (****)

Sale of fixed assets ****

Purchase of investment (****)

Sale of investment ****

Interest received ****

Dividend received ****

Net cash from investing activities ****

Cash flows from financing activities

Proceeds from issuance of share capital ****

Proceeds from long-term borrowing ****

Repayments of long-term borrowing ****

Interest paid ****

Dividend paid (****)

Net cash from financing activities ****

Net increase in cash in & cash equivalent ****

Cash and equivalent at beginning of period ****

56
Cash and cash equivalent at end of period ****

STEPBY STAP PROCEDURE TO PREPARE CASH FLOW

STATEMENT

(1) Calculate the net increase or decrease in cash and cash equivalents: for this purpose,
the operating balance of total cash and cash equivalents is compared with the closing
balance of cash and cash equivalents.

Increase / decrease in cash and cash equivalents

Operating balance closing balance

Cash in hand **** ****

Cash at bank **** ****
Short term **** ****
Total **** ****

The difference between the totals and closing balance will be the increase or decrease in cash
equivalents during the period. It may be noted that if there are only one or two items of cash
etc.

(2) Net cash flow from operating activities: The term operating refers to the normal
purchase of goods and services. Based on the information contained in the comparative
BS and IS and the additional information, the net cash flow generated or used by the
operating activities may be ascertained. The IS prepared by the firms gives the net profit
figure earned by the firm gives the net profit figure earned by the firm, on actual basis of
earned / accrued even.

57
(3) If not resulting in cash movements, the profit or loss as by the may not result in increase /
decrease in cash balance by the same amount.

(4) Calculation of cash provided by financing and investing activities: All other items
are analyzed in the light of additional information to find out the resultant cash flow if
any. For this purpose, different items and information is classified into financing
activities and investing activities.

(5) Preparation of CFS: Based on information collection made. Now the CFS can be
prepared as per any of the formats. The net cash flow provided by operating activities
plus investment activities is equal to the net change in cash and equilivalents.

(6) Other items: If there is any other investment or financing truncations that should be
disclosed in the CFS, e.g. there may be a purchase of an asset by issue of capital or
debenture. This transaction will not find place in the usual CFS but must be disclosed to
make the CFS a useful and meaningful document.

58
 CASH FLOW STATEMENT FOR THE FINANCIAL YEAR 2006-07

(Rupees)

A. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax 31,901,031

Add: Non operating and ash expediter:
I. Deprecation 56,097,568
II. Preliminary expenses -
III. Loss on sale of fixed assets -
-
(A) 87,998,599

Less: Non operating income:

I. Interest received 1,146,635

II. Rent (commercial flat) 554,544
III. Profit on sale of fixed assets 911,123
IV. Freight subsidy incentive on export -
V. Subsidy on generator -
VI. Foreign currency fluctuations -
-
(B) 2,612,302
CASH FROM OPERATIONS (A-B) (C) 85,292,432

ADJUSTMENT FROM WORKING CAPITAL CHANGES

I. Excess provision of earlier years 74,577,357
II. Increase in payables 8,452,062
III. Increase in provision 3,541,528
IV. Decrease in loans and advance (D) 86,570,947

Less:
I. Decrease in provision -
II. Increase in receivables 52,869,506
III. Earlier year adjustment 16,917,754
IV. Increase in inventory 303,823

V. Change in working capital 70,091,083

59
 (E) 16,479,864
NET CASH GENERATED FROM OPERATIONS
AFTER WORKING CAPITAL CHANGES (C-E) (F) 101,772,296

Less:
I. Income Tax paid / provision (G) 11,400,000
II. Payable dividend 2,194,350
Total 13,594,350

NET CASH FROM OPERATING ACTIVITIES (F-G) (H) 88,177,946

CASH FLOW FROM INVESTING ACTIVITIES

I. Sale of fixed assets 7,467,460
II. Interest / dividend Received 1,146,635
III. Rent /commercial plat 554,544
IV. Freight subsidy Incentive on export -
V. Subsidy on generator -
VI. Foreign currency fluctuations -
VII. Capital work in progress / capital advances -
(I) 9,168,639
Less:
I. Capital work in progress / capital advances 26,634,108
II. Purchase of fixed assets 118,472,724
III. Preliminary expenses -
IV. Purchase of Investing 27,499,500
(J) 172,606332
NET CASH FROM INVESTING ACTIVITIES (I-J) (K) (163,437,693)

CASH FLOW FROM FINANCING ACTIVITIES

I. Increase in capital Including premium 50,000,000
II. Increase in Term and Other Secured Loan 299,665
III. Increase in Unsecuried Loan 31,247,879
IV. Increase in Working Capital Limit -
-
Total (L) 81,547,544

Less:
I. Decrease in Working Capital Limit 6,833,837
II. Decrease in Term Loan -
(M) -
6,833,837
NET CASH FROM FINANCING ACTIVITIES (L-M) (N) 74,713,707
NET CHANGE IN CASH & EQUIVALENT
(H+K+N) (O) -546,040
Opening balance of cash and cash equivalent 4,613,984
Closing balance of cash and cash equivalent

60
CASH FLOW STATEMENT FOR THE FINANCIAL YEAR 2007-08

(Rupees)
A.CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax 42,123,726

Add: Non operating and ash expediter:
I. Deprecation 49,151,372
II. Preliminary expenses 195,000
III. Loss on sale of fixed assets 261,548
(A) 91,731,646

Less: Non operating income:

I. Interest received 426,735

II. Rent (commercial flat) 590,544
III. Profit on sale of fixed assets -
IV. Freight subsidy incentive on export 1,000,000
V. Subsidy on generator 300,000
VI. Foreign currency fluctuations 54,030
(B) 2,371,309

CASH FROM OPERATIONS (A-B) (C) 89,360,337

ADJUSTMENT FROM WORKING CAPITAL CHANGES

I. Excess provision of earlier years -
II. Increase in payables 82,090,820
III. Increase in provision -
IV. Decrease in loans and advance -
(D) 82,090,820

Less:
I. Decrease in provision 2,028,814
II. Increase in receivables 33,747,237
III. Increase in inventory 46,231,298
IV. Increase in Loan and advance 31,190,516
V. Earlier year adjustment -
113,197,865
Change in working capital (E) -31,190,516

NET CASH GENERATED FROM OPERATIONS

61
AFTER WORKING CAPITAL CHANGES (C-E) (F) 58,253,292

Less:
I. Income Tax paid / provision (G) 16,363,649
II. Payable dividend -

NET CASH FROM OPERATING ACTIVITIES (F-G) (H) 41,889,643

CASH FLOW FROM INVESTING ACTIVITIES

I. Sale of fixed assets 660,307
II. Interest / dividend Received 426,735
III. Rent /commercial plat 590,544
IV. Freight subsidy Incentive on export 1,000,000
V. Subsidy on generator 300,000
VI. Foreign currency fluctuations 54,030
VII. Capital work in progress / capital advances 41,357,018
(I) 44,388,634
Less:
I. Capital work in progress / capital advances 122,334,104
II. Preliminary expenses 975,000
III. Purchase of Investing 84,380,850
(J) 207,689,954
NET CASH FROM INVESTING ACTIVITIES (I-J) (K) (163,301,320)

CASH FLOW FROM FINANCING ACTIVITIES

I. Increase in capital Including premium 25,200,000
II. Increase in Term and Other Secured Loan -
III. Increase in Unsecuried Loan 32,636,634
IV. Increase in Working Capital Limit 70,157,3870

Total (L) 127,994,021

Less:
I. Decrease in Working Capital Limit -
II. Decrease in Term Loan 430,915
(M) 430,915
NET CASH FROM FINANCING ACTIVITIES (L-M) (N) 127,563,106
NET CHANGE IN CASH & EQUIVALENT (H+K+N) (O) 6,151,429
Opening balance of cash and cash equivalent 4,067,944
Closing balance of cash and cash equivalent 10,219,373

62
NOTE – All the figures are imaginary.
ANALYSIS OF CASH FLOW

From the cash flow statement of the Living Media India Lt .it can be analyzed from two years
that the net cash balance of two years of the company has increased more than twice in the
year 2007-2008.

The net profit in the year 2007-2008 is more than last year and due to certain other changes
there has been increase in the cash balance.

The depreciation has decreased but it does not affect cash to an extent, as it is a non-cash
item.

In the head of working capital, there is a drastic change in the balance in the form of loans &
advances and provisions which has affected the cash balance. There is an increase in
receivable as compared to the last year. But the company trade payable than the last year.

So, the net effect is that the cash from operating activities has decreased to half of that of the
last year.

So, the net effect is that the net cash from investing activities is almost same as last year,
which is the negative. There has been an in working capital limit of the company last year.
Ultimately, the net cash from financing activities has increased than that of the last year.

The final year net affect of all the above adjustments is that, Net Closing Balance has
increased to two times as compared to the last year.

63
 CHAPTER # 5

CONCLUSION

AND

RECOMMENDATIONS

64
 CHAPTER # 5

CONCLUSION AND RECOMMENDATIONS

FINDINGS OF THE STUDY

According to cash flow statement of the company, the findings of the study are as follows:
• The company is not a Sick Industrial Company.
• There has been an increase in secured and unsecured loans.
• The company has not accepted any deposit from the public during the year.
• There has also been an increase in loans and advances granted by company.
• The company has paid only a part of term loan during the year.
• The company has got subsidy on generator and freight subsidy incentive on export
this year.

RECOMMENDATIONS

According to cash flow statement of the company, the suggestions of the study are as
follows:

• The company should try to reduce unnecessary expenditure to the minimum possible
extent.
• The principal amount must be paid in time, which can reduce the internet outflow.

• The purchase of the fixed assets must be made only when there is extreme
requirement.
• In order to avoid the taxes the company should go for more investment.
• The company’s borrowings should be reduced for the minimum time possible.
• The company should make more short-term borrowings rather than the long term
borrowing.

65
 CONCLUSION

From the aggregate study of the company’s polices & methods, I am able to conclude my
report by summarizing into flowing points:

1. The facilities provided to the workers are appreciable.

2. The market position of the company is also vary strong.

3. The company can not be called a sick industrial company.

4. The net cash balance of the company has increased very much.

5. The working environment is up to date and makes the employees fulfill their duties.

66
CHAPTER #6

ANNEXURE

67
 CHAPTER # 6

ANNEXTURE
BALANCE SHEET AS AT 31 st MARCH
2007

PARTICULAR SCHEDULE AS AT AS AT
31.3. 2006 31.03.
2007
SOURCE OF FUND
Share capital 1 43,887,000 33,887,000
Reserve & capital 2 242,482,678 184,573,685
Loan funds
Secured loans 3 38,167,010 44,701,182
Unsecured loans 4 61,624,885 30,377,006
Total 386,161,573 293,538,873
APPLICATIONS OF FUNDS
FIXED ASSETS
Gross Block 5 493,945,512 354,674,082

Less deprecation 207,768,496 154,315,884

Net block 256,177,016 200,258,198
Capital advance 47,782,033 4,681,861
Capital work in progress 5,153,039 21,619,103
investments 6 27,949,500 450,000

68
CURRENT ASSETS,LOAN & ADVANCE
Inventories 7 75,981,044 59,063,290
Sundry debtors 8 200,953,500 148,083,290
Cash & bank balance 9 4,067,944 4,613,984
Loan & advances 10 39,857,566 43,399,094
320,859,822 255,160,130
Less: current liabilities & provisions
Current liabilities 11 250,051,678 175,474,322
Provisions 12 21,708,159 13,256,097
271,759,837 188,730,419
Net Current Assets 49,099,985 66,429,711
Miscellaneous Exp.
TOTAL (RS.) 386,161,573 293,538,873
NODES TO ACCOUNTS 20

BALANCE SHEET AS ON 31st MARCH 2008

PARTICULAR SCHEDULE AS AT AS AT
31.3. 2007 31.03.
2008
SOURCE OF FUND
Share capital 1 189,548,000 43,887,000
Reserve & capital 2 147,781,755 242,482,678
Loan funds
Secured loans 3 107,893,483 3,816,010
Unsecured loans 4 94,261,519 61,624,885
Total 539,484,757 386,161,573
APPLICATIONS OF FUNDS
FIXED ASSETS
Gross Block 5 584,819,622 463,945,512
Less deprecation 256,381,729 207,68,496
Net block 328,437,893 256,177,016
Capital advance 10,614,659 47,782,033
Capital work in progress 963,395 5,153,039
investments 6 112,330,350 27,949,500
Current Assets ,Loan & Advance
Inventories 7 122,212,342 75,981,044
Sundry debtors 8 234,700,505 200,953,500

69
 Cash & bank balance 9 10,219,373 4,067,944
Loans & advances 10 71,048,082 39,857,566
438,180,302 320,859,822
Less: current liabilities &
Provisions
Current liabilities 11 332,142,498
provision 12 19,679,345 250,051,678
3,518,21,843 21,708,159
Net current assets 86,358,460 271,759,837
Miscellaneous exp. 780,000 49,099,985
TOTAL (RS.) 539,484,757 3,611,621573
NODES TO ACCOUNTS 20

NOTE- ALL THE FIGURES ARE IMAGENIRY.

PROFIT & LOSS A/C FOR THE YEAR ENDED 31.03.2007

Less: provision for dividend 2,194,350

PARTICULARS SCHEDULE AS AT 31.03.2007 AS AT 31.03.2006
INCOME
Total profit for the year 37,927,178
Sale 13 14,22,723,825 1,094,751,729
Other income 14 61,640,525 47,970,152
Transferred to general reservestocks
INCREASE(DECREASE)in 15 12,218,148 - 37,018,185
11,816,164
1,496,585,498 1,154,538,045
Expenditure
Raw material consumed 16 940,003,491 712,137,132
Manufacturing expenses 17 398,703,847 317,824,490
Profit (loss) carried forward 37,927,178 17,000,000
Administrative and other expenses 18 52,928,908 41,427,768
Financial charges 19 17,041,519 11,318,561
Desperation
NOTES TO ACCOUNTS 5 20 56,097,568 - 44,498,510
20,018,185
1,146,775,332 1,127,206,461
Net profit (loss) before tax 31,807,166 27,331,584
Provision for taxation 11,400,000 10,000,000
Profit (loss) after tax 204,407,166 17,331,584
Add: earlier year adjustment 303,823 2,578,732
Profit (loss) available for appropriation 20,103,343 19,910,316
Surplus (defect) B/F from previous year 20,018,185 17,107,869
Total profit available for appropriation 40,121,528 37,018,185

NOTE- ALL THE FIGURES ARE IMAGENIRY.

PROFIT & LOSS A/C FOR THE YEAR ENDED 31.03.2008

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LESS: Provision for dividend 2,194,350
PARTICULARS SCHEDULE AS AT 31.03.2007 AS AT 31.03.2006
INCOME
Sale 13 1,856,069,467 1,422,723,825
Other income 14 42,107,757 61,640,525
INCREASE(DECREASE)in stocks 15 20,578,386 12,218,148
TOTAL FOR THE YEAR 98,687,255 37,927,17
1,918,755,610 1,496,585,498
8
Expenditure
Raw materialtoconsumed
Transferred General reserve 16 1,134,254,259
- 940,003,491 -
Manufacturing expenses 17 601,874,707 398,703,847
Administrative and other expenses 18 69,714,721 52,928,908
Financial charges 19 21,636,824 17,041,519
Profit (loss) carried forward
Desperation 5 98,687,255
49,151,372 56,097,568 37,927,17
1,876,631,884 8
1,146,775,332
Net profit (loss) before tax 42,123,726 31,807,166
NOTES TO
Provision forA/C
taxation 20 14,140,790 11,400,000
Profit (loss) after tax 27,982,936 20,407,166
Add: earlier year adjustment 2,22,859 303,823
Profit (loss) available for appropriation 25,60,077 20,103,343
Surplus (defect) B/F from previous year 72,927,178 20,018,185
Total profit available for appropriation 9,868,725 40,121,528

CHAPTER # 7

BIBLOGRAPHY

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 CHAPTER # 7

BIBLOGRAPHY

• Kothari, C.R., “Research methodology” sultan Chand publications, New

Delhi, 2001.

• PANDEY, I.M, FINANCIAL MANAGEMENT, VIKAS PUBLICATION

LTD 7th EDDITION.

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 WEBSITES

• www.thomsonpress.com

• www.rediff.com

• www.indiaforge.com

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