Funds Flow Statement Analysis

INTRODUCTION

Finance is the lifeblood of every business activity without which the wheels of
modern business organization system cannot be greased. Finance management is
managerial activity, which is concerned with planning and controlling of the firm's
financial Resources. Finance is a scarce resource and it has to be managed efficiency
for the successful functioning of any company. Several companies have come to grief
mainly because of inefficient management of finance, in spite of other favorable
conditions.

The funds flow statement is a statement which shows the movement of funds
and is a report of financial operations of the business undertaking. It indicates various
means by which funds were obtained during a particular period and the ways in which
these funds were employed. In simple words it is a statement of sources and
applications of funds.

The funds flow is designed to analyze the changers in the financial condition
of a company between two periods. This statement will highlights the sources from
which funds are received and the uses to which these have been put and it enables to
know with reasons the basic causes of changes in net working capital. This statement
is also termed as “Statement of changes in the financial position on working capital
basis”.

Funds flow statement is an important tool and is widely used in the hands of
financial analysts and managers for analyzing the financial management of a
company. Funds keep on moving in a business, which itself based on going concern
concept. In a narrow sense, it means inflow and out flow of cash only and a flow
statement prepared on this basis is called as "cash flow statement".

DEFINITION:
"A statement of sources and Application of Funds is a technical device
designed to analyze the changes in the financial condition of a business enterprise
between two dates".
----R. A. Foulk

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“Funds Flow Statement as statement either prospective or retrospectives

setting out the sources and application of funds of an enterprise. The purpose of
statement is to indicate clearly the requirement of funds.

___ I.C.W.A

FINANCE

The word ‘Finance’ comes directly from the latin word ‘finis’. Finance may
be defined as the provision of money at that time it is wanted. For example
recruitment of workers in a factory, is clearly a responsibility of the production
department. In addition to this, finance may be required either for setting – up a new
unit or expansion or modernization of the present unit etc., these financial
requirements may be broadly classified as short-term finance and long-term finance.

TYPES OF FINANCE

Finance is usually divided into two categories viz., public finance and business
finance.

PUBLIC FINANCE

Public Finance is normally concern with the ways of securing money for the
conduct of government and the administration of public funds.

BUSINESS FINANCE

It involves an analysis of various means of securing money for business

enterprises and the administration of this money by individuals or voluntary
association etc., business finance is the further sub divided into Personal Finance,
Partnership Finance & Company Finance.

MEANING OF FINANCING

Financing is the process of organizing the flow of funds so that a business firm
can carry out its objectives in the most efficient manner and meet its obligations as
and when they fall due.

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MEANING OF MANAGEMENT

Management is the Art of getting the things done through others. In other
words “Management is What the Managers does”.

MEANING OF FINANCIAL MANAGEMENT

Financial Management is concerned with the proper Management of Financial

Resources. Thus, the finance manager must see that the funds are procured in a
manner that the risk, cost and control considerations are properly balanced in a given
situation and there is optimum utilization of funds.

EVALUATION OF FINANCIAL MANAGEMENT

“Financial Management” emerged as a distinct field of study at the turn of the 20 th

Century. Its evaluation may be divided into three broad Phases:

1. Traditional Phase
2. Transititional Phase
3. Modern Phase
1. THE TRADITIONAL PHASE

The traditional phase was found its first manifestation in 1897 in the book
‘corporate finance’ written by Thomas Greene. A. Typical work of the traditional
phase is the ‘Financial policy of corporations’ by Arthur S. Dewing. This book
discusses types of securities, procedures used in issuing these securities etc.,

2. THE TRANSITIONAL PHASE

The transitional phase began around the early 1940’s and continued through
the early 1950’s. Through the nature of Financial Management during this phase was
similar to that of the transitional phase. In this phase greater emphasis was placed on
the day-to-day problems faced by a Financial Manager in the areas of funds analysis,
planning and control. A representative work of this phase is ‘Essays on Business’ by
Wilfred J. Witman et.al

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3. THE MODERN PHASE

The modern phase began in the 1950’s. Since the beginning of this phase,
many significant developments have occurred in the fields of capital budgeting,
working capital management, capital structure theories etc.

FINANCIAL MANAGEMENT: SCIENCE OR AN ART?

The Financial Management is neither a pure science nor an art. It deals with
various methods and techniques which can be adopted depending on the situation of
business and purpose of the decision. As a science it uses various statistical,
mathematical models and computer applications for solving the financial problems
relating to the firm, for example, capital investment appraisal, capital structure mix,
portfolio management etc., Along with the above a Finance Manger is required to
apply his analytical skills in decision – making. Hence, Financial Management is
both a science as well as an art.

NATURE OF FINANCIAL MANAGEMENT

Finance Management is now regarded both as a science and as an art. It is

based on certain fundamental theories propounded by financial experts. As a science
it heavily draws on related branches Acknowledge like economics, accounting,
statistics, operations research and decision-making.

FINANCIAL MANAGEMENT AND ECONOMICS

Financial Management is in fact an integral part of managerial economics i.e.,

economics applied to decision making. Financial management draws heavily both
from macro and microeconomics. Macroeconomics provides the finance manager
with an insight into the general economic environment and the variables like national
income, general price level etc., which influence the business activity.
Microeconomics enables the finance manager to know how forces like elasticity of
demand, supply and demand influences the economics of a firm and its pricing policy.

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FINANCIAL MANAGEMENT AND ACCOUNTING

Financial Management and Accounting are closely related and are

complimentary to each other. While accounting is concerned with recording,
classifying and summarizing financial transactions and interpreting the results thereof,
financial management is concerned with decision making and wealth maximization.
In accounting revenue is recognized based on accrual method by matching expenses
with sales. In financial management the focus is on cash flows and their timing.
Accounting is historical in nature. It records past data and hence it is objective.
Financial management looks to the future. It involves decision making in the face of
uncertainty. Hence it is subjective in nature. In the following respects, both are
complimentary to each other.

 Profit as determined under accounting forms the basis for computation of

earning per share, which is of vital interest to the finance manager.
 Divided policy determined by the finance manager depends up on the figure of
profits ascertained under financial accounting.
 Investment decision taken by the finance manager are based on information
furnished by the accounts department.

FINANCIAL MANAGEMENT AND COST ACCOUNTING

Financial Management is concerned not only with procurement of funds but

also with effective utilization. The cost data furnished by the costing department

helps the finance manager to evaluate how effectively the funds are utilized and
suggest measures to keep costs under control.

FINANCIAL MANAGEMENT AND STATISTICS

Statistics provide detailed data for decision making. The probability theory of
statistics offers the logic for dealing with the uncertainty of future events. It enables
the finance manager to understand the variables affects decision making.

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FINANCIAL MANAGEMENT AND OPERATION RESEARCH

This is a branch of quantitative science used to analyze a business situation to

find an optimal solution. For example, problems like allocation of storage space,
utilization of transport facilities, choice of inventory etc. Can be solved with the help
of operation research. Linear programming is useful in making best of scarce
resources.

FINANCIAL MANAGEMENT AND DECISION MAKING

Financial management involves decision-making. The theory of decision

making deals with the processes by which expectations under conditions of
uncertainty are formed. Finance is the life a blood of an organization it is all-
pervasive in nature and affects all the activities in the organization. In fact, it is a
service function to other departments. It is closely interlinked with the other functions
of production, marketing and personal. These departments mutually exchange
information for formulation of policies and decision making. The functional
managers have the freedom to take decisions on matters pertaining to their line of
activity, but they have to take into considerations the financial implication involved.

In a firm with plenty of funds, financial considerations do not matter much in

formulating policies regarding production, marketing and personnel. But in a firm
facing financial difficulties, financial considerations must be given due weight in
formulating policies. The linkage between financial management and other functional
areas of management is explained below.

FINANCIAL MANAGEMENT AND PRODUCTION

Production of goods requires large amounts of working capital, for which

funds have to be procured by the finance manager. Diversification of production,
changes in production process necessitate capital expenditure, for which the finance
manager should make funds available after proper evaluation.

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FINANCIAL MANAGEMENT AND MARKETING

The success of firm depends not only on the efficient utilization of funds, but
also its marketing effort and pricing policy. The marketing manager provides the
finance manager with information as to how different prices affect the demand for
products, so that an appropriate pricing policy can be formulated based on costs
estimated at different levels of production.

FINANCIAL AND PERSONNEL MANAGEMENT

Recruitment, training and placement of staff require finance. Decisions on

these issues can only be taken after considering the financial implications involved.
In the face of ever increasing competition, heavy investments have to be made on
development of human resources. Revision of pay scales, schemes for voluntary
retirement etc., require funds on a massive scale. Hence the finance manager should
identify new sources to procure the funds required.

SCOPE OF FINANCIAL MANAGEMENT

The approach to the scope and functions of financial management is divided

for the purpose of exposition two broad categories.

 The Traditional Approach

 The Modern Approach

THE TRADITIONAL APPROACH

The traditional approach to the scope of Financial Management refers to its

subject matter in academic literature, in the initial stages of its evolution as a separate
branch of academic study. The term ‘Corporation Finance’ was used to describe what
is now known in the academic world as ‘Financial Management’.

The traditional approach to the scope of finance function evolved during the
1920’s and 1930’s and dominated academic thinking during the 1940’s and through
the yearly 1950’s now, it has been discarded as its suffers from serious limitations.
The weakness of the traditional approach fall into two broad categories.

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 Those relating to the treatment of the various topics and the emphasis attached
to them.
 Those relating to the basic concepts and analytical frame work of the
definitions and scope of finance function.
THE MODERN APPROACH

Under the modern concept, finance function is concerned with the financial
activities of planning, raising, allocating, and controlling of funds and using them for
generating returns. Thus, Finance Function according to modern experts may be
classified into two groups.

 Executive Finance Function

 Incidental / Routine Finance Function
EXECUTIVE FINANCE FUNCTION

The executive finance function calls for administrative skills in planning and
execution of finance function. It includes the following decisions.

A. Investment Decisions
B. Finance Decisions
C. Dividend Decisions
A. INVESTMENT DECISIONS

It is concerned with the allocation of funds to both capital and current assets.
Capital assets are financed through long – term funds and the current assets are
financed through short-term funds. Thus, it consists of the following.

A) CAPITAL BUDGETING

Effective allocation of capital is one of the most important functions of the

financial management in modern times. This function involves the firm’s decision to
commit its funds in long-term assets. The investment in long-term assets (fixed
assets) will be quite heavy and to be made immediately but the returns will be
available after a certain period. The investment decisions of a company are
commonly called as the capital budgeting decisions are capital expenditure decisions.

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B) WORKING CAPITAL MANAGEMENT

The management of current assets is known as working capital management.

Managing current assets requires more attention than managing fixed assets.

B. FINANCING DECISIONS

The second important decision to be performed by the Finance Manager is the

financing decisions broadly speaking he must decide when, where and how to acquire
funds to meet the firm’s investment needs. Generally, the finance manager obtained
funds through primary markets, financial institutions and, commercial banks. A
proper balance has to be kept between the fixed and non-fixed cost-bearing securities.

C. DIVIDENDS DECISIONS

The return on shareholder’s capital is known as ‘Dividend’. The decision of

finance manager related to the distribution of earnings to the shareholders and the
amount to be retained in the firms is termed as dividend decisions. This decisions has
been considered through which a business firm’s performance is measured. The
share-holders, govt., bankers and others will understand the soundness of the business
through dividend decisions. There fore, the dividend decisions have been considered
as another important decisions of the finance function.

The investment, finance and dividend decisions are inter-related to each other
and therefore, the finance manager while taking any decisions should consider the
impact from all the three angles simultaneously.

INCIDENTAL/ROUTINE FINANCE FUNCTION

It does not require a great managerial ability to carry put finance functions.
These are chiefly clerical and are incident to the effective handling of managerial
finance functions. Some of these functions are listed below:

Supervision of cash receipts and payments.

Safe custody of securities, insurance policies etc.,
Maintenance of records.
Reporting to management etc.,
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GOALS/OBJECTIVES OF FINANCIAL MANAGEMENT

The objectives of financial management are broadly classified into two categories.

 Basic Objectives
 Other Objectives

1. BASIC OBJECTIVES

Traditionally, the basic objectives of financial management are the

maintenance of liquid assets and maximization of profitability. Maintenance of liquid
assets means that the firm has adequate cash in hand to meet its obligations at all time.
And maximization of profitability can be explained in the following lines.

PROFIT MAXIMIZATION

The financial objective of a firms is to maximize the owner’s economic welfare.

There is a controversy as to how the economic welfare of owners can be maximized.
According to this approach actions that increase profits should be undertaken and
those that degrees profits should be avoided. Hence maximization of profits is
regarded as an operational criterion for maximizing the owners economic welfare.
Thus, profit is the central economic objective of any business enterprise. The
objective of profit maximization is justified on account of the following reasons.

 A human being performing any economic activity rationally aims at utility

maximization.Utility can be measured in terms of profits. Thus, the profit
maximization is justified on the ground of rationality.
 The firm by pursuing its objective of profit maximization also maximizes
social economic welfare.
 Profit maximizatio9n will be a motive force to acquire monopoly in the
imperfect capital markets.
However, the objective of profit maximization is subject to criticize in recent years on
the following counts:-

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 It is argued that profit maximization is the result of perfect competition. But,

in modern markets, there exists no perfect competitions.
 In modern markets, it is regarded as immoral difficult and unrealistic.
 The precise meaning of profit maximization is not clear. There is a lack of
unanimity regarding the concept of profit i.e., profit before tax or profit after
tax.
In view of the above reasons, the traditional theory of profit maximization has
often been criticized. It has lost its relevance in the modern business environment.
Hence, the modern financial experts are suggested the maximization of wealth as the
objective of the firm.

WEALTH MAXIMIZATION

Wealth maximization means maximizing the net present worth of a course of

action. The net present worth of a course of action is the difference between the gross
present worth of benefits and the amount of investment required to achieve those
benefits.

OTHER OBJECTIVES

Besides the above basic objectives, the following are the other objectives of
financial management.

 Ensuring return on capital employed

 Value addition and profitability
 Growth in earning per share and price earning ratio
 Efficient utilization of short-term, medium and long-term finances
 Maximization of finance charges
 Ensuring financial discipline in the organization

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Fund Flow Statement Analysis

Meaning of Fund Flow Statement:

A fund flow statement is a statement in summary form that indicates changes in terms
of financial position between two different balance sheet dates showing clearly the
different sources from which funds are obtained and uses to which funds are put.

It summarizes the financing and investing activities of the enterprise during an

accounting period. By depicting all inflows and outflows of fund, the statement shows
their net impact on working capital of the firm.

If the total of inflows is greater than the outflows, the excess goes to increase in
working capital. If there is deficit of funds during a particular accounting period, the
working capital is impaired. So fund flow statement is an important tool for working
capital management.

Definitions

According to R. N. Anthony: “The funds flow statement describes the sources from
which additional funds were derived and the uses to which these funds were put.”

Roy A. Fouke defines fund flow statement as “a statement of sources and application
of funds is a technical device designed to analyse the changes in the financial
condition of a business enterprise between two dates.”

Thus, the fund flow statement reveals the volume of financial transactions and
explains the flow of funds taking place within a business during a particular period of
time and its effect on the net working capital. It is not a substitute for either the Profit

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and Loss Account or the Balance Sheet, but it is an useful supplement to them. It
describes the sources from which funds are obtained and the uses of these funds, in a
condensed form.

Objectives of Fund Flow Statement:

Some of the important objectives of preparing fund flow statement are:

 Fund flow statement reveals clearly the changes in items of financial position
between two different balance sheet dates showing clearly the different sources
and applications of funds. Thus, it summarizes the financing and investing
activities of the enterprise.
 It also reveals how much of the total funds is being collected by disposing of
fixed assets, how much from issuing shares or debentures, how much from long-
term or short-term loans, and how much from normal operational activities of the
business.
 It also provides information about the specific utilisation of such funds i.e., how
much has been used for acquiring fixed assets, how much for redemption of
preference shares, debentures or short-term loans as well as payment of tax,
dividend etc.
 It helps the management in depicting all inflows and outflows of funds which
cause a change in working capital of a business organisation.
 The projected fund flow statement helps management to exercise budgetary
control and capital expenditure control in the enterprise.
 Management uses fund flow statement for judging the financial and operating
performance of the business.

Importance of Fund Flow Statement:

1. Analyses Financial Statements:

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Balance Sheet and Profit and Loss Account do not reveal the changes in the financial
position of an enterprise. Fund flow analysis shows the changes in the financial
position between two balance sheet dates. It provides details of inflow and outflow of
funds i.e., sources and application of funds during a particular period.

Hence it is a significant tool in the hands of the management for analysing the past,
and for planning the future. They can infer the reasons for imbalances in the uses of
funds in the past and take corrective measures for the future.

2. Answers Various Financial Questions:

Fund flow statement helps us to answers various financial questions such as:

(a) How much fund flowed into the business?

(b) How much of these funds were provided by the operations?

(c) What are the other sources of funds?

(d) How were these funds used?

(e) Why was there less/more amount of net working capital at the end of the period
than at the beginning?

(f) Why were the dividends not larger?

(g) How was the purchase of fixed assets financed?

(h) Where have the net profits gone?

(i) How were the loans repaid?

3. Rational Dividend Policy:

Sometimes it may happen that a firm, instead of having sufficient profit, cannot pay
dividend due to inadequate working capital. In such circumstances, fund flow
statement shows the working capital position of a firm and helps the management to
take policy decisions on dividend etc.

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4. Proper Allocation of Resources:

Financial resources are always limited. So it is the duty of the management to make
its proper use. A projected fund flow statement enables the management to take
proper decision regarding allocation of limited financial resources among different
projects on priority basis.

5. Guide to Future Course of Action:

The future needs of the fund for various purposes can be known well in advance from
the projected fund flow statement. Accordingly, timely action may be taken to explore
various avenues of fund.

6. Proper Managing of Working Capital:

It helps the management to know whether working capital has been effectively used
to the maximum extent in business operations or not. It depicts the surplus or deficit
in working capital than required. This helps the management to use the surplus
working capital profitably or to locate the resources of additional working capital in
case of scarcity.

7. Guide to Investors:

It helps the investors to know whether the funds have been used properly by the
company. The lenders can make an idea regarding the creditworthiness of the
company and decide whether to lend money to the company or not.

8. Evaluation of Performance:

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Fund flow statement helps the management in judging the financial and operating
performance of the company.

Limitations of Fund Flow Statement:

1. Historical Nature:

The information used for the preparation of the fund flow statement is essentially
historical in nature. It does not estimate the sources and application of funds for the
near future.

2. Structural Changes Not Disclosed:

The fund flow statement does not disclose the structural changes in financial
relationship in a firm. In other words, it does not reveal shifts among items making up
the current assets and current liabilities. It does not tell us whether any loss of
working capital has unduly weakened the financial position or not.

3. Not Foolproof:

The fund flow statement is prepared from the data provided in the balance sheet and
profit and loss account. Hence, the defects in financial statements will be carried over
to the fund flow statement also.

4. Ignores Non-Fund Items:

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As fund flow statement ignores non-fund items, it becomes a crude device compared
to income statement and balance sheet.

5. Not Relevant:

A study of changes in cash (i.e., cash flow statement) is more relevant than a study of
changes in funds for the purpose of managerial decision-making.

General Rules:

We know, working capital (WC) = Current Assets (CA) – Current Liabilities (CL) or,
WC = CA – CL

From the above equation, we may deduce

(i) An increase in CA or a decrease in CL – Causes an increase in WC

(ii) A decrease in CA or an increase in CL – Causes a decrease in WC

(iii) A simultaneous increase in CA and CL or a simultaneous decrease in CA and CL

— will have no effect on WC.

A flow of funds takes place only if a transaction involves one current account (CA or
CL) and one Non-current account (NCA or NCL).

From above the following general rules can be formed:

(i) Transactions which involve only current accounts (CA or CL) do not result in a
flow of funds.

(ii) Transactions which involve only Non-current accounts (NCA or NCL) do not
result in a flow of funds.
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(iii) Transactions which involve one current account (CA or CL) and one Non-current
account (NCA or NCL) results in a flow of funds.

Preparation of Fund Flow Statement:

Generally, two comparative balance sheets—one at the beginning and the other at the
end of the period—are used for preparing a fund flow statement. In addition, a
summarised income statement comprising non-fund or ‘non-operating’ items and a
statement of retained earnings or at least material information from these statements
are required in order to find out fund from operations.

Additional information regarding change in non-current accounts like plant and

machinery, building, share capital, debentures etc., if available, will sharpen the firms
financial profile as revealed by the fund flow statement.

The fund flow analysis involves the preparation of two statements:

 Statement or Schedule of Changes in Working Capital and

 Statement of Sources and Application of funds.

1. Statement or Schedule of Changes in Working Capital:

The primary purpose of a fund flow statement is to explain the net change in working
capital, it will be better to prepare first the schedule of changes in working capital
before preparing a fund flow statement.

The Schedule or Statement of changes in working capital is a statement that compares

the change in the amount of current assets and current liabilities on two balance sheet
dates and highlights its impact on working capital.

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The format

of this statement is:

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2. Fund Flow Statement:

After preparing the schedule of changes in working capital, the next step is to prepare
the Fund Flow Statement to find out the different sources and applications of funds.
While preparing this statement the emphasis is given on the changes in the fixed
assets and fixed liabilities. The statement may be prepared either in ‘T form’ or in
‘Vertical form’.

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A proforma of each of them is given:

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INDUSTRY PROFILE

INTRODUCTION:

The dairy sector in the India has shown remarkable development in the past
decade and India has now become one of the largest producers of milk and value-
added milk products in the world. The dairy sector has developed through co-
operatives in many parts of the state..During 1997-98, the state had 60 milk
processing plants with an aggregate processing capacity of 5.8 million liters per day
.In addition to these processing plants ,123 government and 33 co-operatives milk
chilling centers operate in the state.

With the increase in milk production. Maharashtra now regularly exports milk
to neighboring states. It has also initiated a free school feeding scheme, benefiting
more than three million school children from over 19,000 schools all over the state.

INDIAN DAIRY INDUSTRY:

Dairy is a place where handling of milk and milk products is done and
technology refers to the application of scientific knowledge for practical purposes.
Dairy technology has been defined as that branch of dairy science ,which deals with
the processing of milk and the manufacture of milk products on an industrial scale.

In developed dairying countries such as the U.S.A, the year 1850 is seen as the
dividing line between farm and factory-scale production. Various factors contributed
to this change in these countries, viz. Concentration of population in cities where jobs
were plentiful, rapid industrialization, improvement of transportation facilities,
development machines etc. Whereas the rural areas were identified for milk
production, the urban centers were selected for the location of milk processing plants
and product manufacturing factories.

History of Indian Market Milk Industry:

Begening in organized milk handling was made in India with the

estableshment of Military Dairy Farms.

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Handling of milk in co-operative Milk Unions established all over the country
on a small scale in the early stages.

Long distance refrigerated rail-transport of milk from Anand to Bombay since

1945

Pasteurization and bottling of milk on a large scale for organized distribution

was started at aarey (1950), calcutta (Haringhata,1959), Delhi (1959),Worli
(1963),Madras (1963) etc..

DAIRY INDUSTRY IN INDIA:

India has the highest livestock population in the world with 50%of the
buffaloes and 20% of the world’s cattle population, most of which are milk cows and
milch buffaloes. India’s dairy industry is considered as one of the most successful
development programmes in the post independence period.

In the year 2006-07 the total milk production in the country was over 94.6
million tones with a per capital availability of 229 gms per day. The industry had been
recording an annul growth of 4% during the period 1993-2005, which is almost 3
times the average growth rate of the dairy industry in the world. Milk processing in
india is around 35% of which the organized dairy industry account for 13% of the
milk produced, while the rest of the milk is either consumed at farm level, or sold as
fresh, non-pasteurized milk through unorganized channels.

Dairy cooperatives account for the major share of processed liquid milk
marketed in the India. Milk is processed and marketed by 170 milk producer’s
cooperative unions, which federate in to 15 state cooperative milk marketing
federations. Over the year, several brands have been created by cooperatives like amul
(GCMMR), vijaya(AP), verka (Punjab), saras (Rajesthan), Nandini(Karnataka),
Milma (Kerala) and Gokul (Kolhapur).

Uttar Pradesh,Punjab, Haryana, rajasthan, Gujarat, maharashtraa, Andhra

Pradesh, Karnataka and tamil nadu are the milk surplus in india. The manufacturing
of the milk products is obviously high in these milk surplus states. Exports of dairy
products have been growing at the rate of 25% per annun in the terms of quantity term

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and 28% in the term of value since 2001. Significant investment opportunities exist
for the manufacturing of value-added milk products like milk powder, packaged milk,
butter, ghee, cheese and ready-to-drink milk products

LEADINGS BRANDS:

Amul, sapan, vijaya spray, meadows, mohan, parag, shweta, malkana, gagan,
white magic, every day.

MARKET GROWTH RATES

1990-91-1996-97 3.6%
1996-97-2001-02 10.1%
2001-02-2006-07 8.7%
2004-05-2009-10 8.3%
2009-10-2014-15 8.0%

The main thrust of proposals is on the improvement of animal health and

adoption of sanitary and phyto-sanitary specification (SPS) for the dairy products. To
wards this end, the technology mission on dairy development (TMDD) has initiated a
wide-ranging program.

QUALITY CONTROL:

It is well established that milk can be a potential carrier of diseases producing

organisms. Milk-borne epidemics have occurred in the past through out world. Unless
proper precautions are taken, such out breaks of milk-borne diseases can occur
anywhere, anytime, especially if raw milk is consumed.

Diseases, which are know to be transmissible through milk, are listed below,
together with the manner in which they may enter the milk.

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India dairy products:

The term india dairy products refers to those milk products, which originated
in undivided india.

FLOW CHART OF CONVERSION OF MILK INTO TRADITIONAL INDIAN

DAIRY PRODUCTS

MILK

Cultured Condensed acid Perception

1. Shrikhand 1.Mishti doll 1.Panner

2. Ghee 2.Rabri 2.Sandesh

3. Lassie 3.Kheer 3.Chhana

4. Kadbi 4.Khoa 4.Rasgoola

5. Pantoda

6. Rasmalai

Buffy Pedha Kalakand Gulabjamun

DAIRY BY-PRODUCTS:

In recent year there has been wide spread and increasing interest throughout
the world in creating newer channels of utilization for the by-products of the dairy
industry. It has always been realized that economic disposal of by-products is an
essential perquisite to profitable dairying.

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DEFINITION:

A dairy by-product may be defined as a product of commercial value produced today

the manufacture of a main product.

By-products of India dairy industry

Main product By-product

Cream Skim milk
Butter Butter milk
Ghee Lassi ghee residue
Chhana/pannier, cheese, Whey
casein

COMPOSITION OF SOME BY-PRODUCTS (%)

Name of by- Water Fat Protein Lactose Ash

product

Skim milk 90.6 0.1 3.6 5.0 0.7

Butter milk 91.0 0.4 3.4 4.5 0.7

Lassie 96.2 0.8 1.4 1.2 0.4

Ghee residue 9.7 61.4 24.8 - 4.1

Chhana whey 93.6 0.5 0.4 5.1 0.4
Cheese whey 93.1 0.3 0.9 4.9 0.6
Acid-casein- 93.1 0.1 1.0 5.1 0.7
whey
Composition

STORAGE:

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Modern milk plants hold both raw and pasteurized milk for a much longer period
than before. Normally the milk storage capacity is equal to one day’s intake. This
allows a more nearly uniform work-day for processing and bottling operations with
less dependence on the time for receiving raw material. Storage tanks are used in Milk
Plants for the storage of raw, pasteurized, or processed products, often in very large
volume. Agitation should be adequate for homogeneous mixing enough to prevent
churning and incorporation of air.

 To maintain milk at a low temperature so as to prevent any determination in

quality prior to processing/product manufacture.
 To allow for uninterrupted operation during processing and bottling.
 To facilitate standardization of the milk.
 To facilitate bulking of the raw milk supply, which will ensure uniform
composition.
DAIRY EQUIPMENTS

Designed with the aid of latest technology, our range of Dairy Equipment is
appreciated for optimum performance and durability. Offered at industry leading
price, these are widely in milk industry to store and process milk. We offer our range
in different specifications provided by our clients.

HOMOGENIZER

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We are reckoned as one of the chief Dairy Homogenizer Manufacturers,

Exporters and Suppliers based in India. Made using superior quality raw material,
these Dairy Homogenizers are widely demanded in dairy industry due to their better
performance and high efficiency. The Dairy Homogenizers offered by us are widely
appreciated for enhancing the consistency of a product by dispersion. The Dairy
Processing Plants offered by us are known for upgrading the co lour, flavor and
appearance of the products and even avoid occurring of the ring formation.

Advantages :

 Better product stability

 Smoothness of product
 Avoids rise of the cream layer

DAIRY PRODUCTS

Utilizing our years of experience and advanced infrastructure, we offer our clients
Dairy equipment, which is in compliance with international quality standards. In-built
features, for better compatibility with continuous as well as batch mode of process
designing, makes it perfect choice for various industries such as food processing and
milk dairy.

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INDUSTRIAL HOMOGENIZER

We are one of the leading manufacturers of Turn Key Liquid Milk Dairy Plants or
dairy processing plants, which are manufactured using superior quality raw material.
These are heavily demanded in dairy industry due to efficient performance and cost
effectiveness. Our range is equipped with in-built features to ensure proper
functioning.

MILK PASTEURIZERS
HTST continuous pasteurizers are extensively used for pasteurization of milk and
cream in dairy & food industries. Plate heat exchangers based pasteurizer offer
enormous convenience for processing milk, cream with flexibility, high thermal
efficiency and effective heat transfer. The system is compact, requires minimal space
and is very easy to expand capacity by adding additional plates.

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SKID MOUNTED PROCESS

We have utilized over a decade experience for creating synergies with global
technologies so as to bring out a locally acceptable techno-commercially viable range
of dairy equipments. We have utilized a generic strategy of cost leadership through
focus on quality and integration of different dairy equipments in a dairy project. You
may always rely on our equipment for international quality at domestic prices. The
equipments have inbuilt features for better compatibility with continuous as well as
batch mode of process designing.

Services for Dairy Industry:

 Boilers, Hot Water Generator, Thermal Fluid Heater's Erection and

Commissioning.
 HT / LT Cabling, Power Control Centre, Motor Control Centre, Complete
Fabrication Erection and commissioning.
 Effluent treatment plant for dairy industry.
 Milk, Butterfat and Milk Powder Packing Automatic Form Fill and Seal
(FFS) machines.
 Conveyor and product flow automation system.
 Complete refrigerated chain systems for dairy and food industry.

PASTEURIZER
We are the largest manufacturer of high quality pasteurizing machine.

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CREAM SEPARATOR
We are the largest manufacturer of high quality cream separator machines .It can
process 80 liters milk per hour.

Max. milk output, l/h 80

Drum rotational speed, min-1 10500 

Number of disks in drum, pcs 10 to 12

Milk bowl capacity, l 12

Max. butter-fat content in 0.05

skimmed milk, %

Cream/skimmed milk volume 1:4 to 1:10

proportion adjustment range

STORAGE TANK  
 We manufacture custom storage tanks for the chemical, pharmaceutical and
food process industries

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MILK PUMP
We manufacturer and exporter of milk pump and dairy milk pump with high quality
and fully automatic 
 Our range of pumps is appreciated owing to the following features:
• Low power consumption
•High performance
• Excellent suction performance
• High capacity

WEIGH BOWL
The superior quality of Weigh Bowl manufactured by our company is made from
good quality raw material which makes them durable.

HOT WATER GENERATOR

We design & manufacture various types of process heat equipments like hot water
generators, agro waste fired hot water generators and hot water boilers.

Features are

1. Rugged construction
2. Low maintenance
3. High efficiency

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REFRIGERATION SYSTEM

We are engaged in the supply of ice bank tank that are in high demand in the domestic
market. Manufactured from superior quality SS (304) these are used for dairy, chilled
milk tank, plate heat exchanger.

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COMPANY PROFILE

Thejes dairy products is a fast-growing dairy company in south India

established in the year2008.since then, Thejes has been maintaining its position as
a fastest growing brand with presence in Major states of India such as Andhra
Pradesh, Telangana, Tamil nadu, Karnataka. Today, Thejes dairy products across
four state-of-the-art manufacturing plants spread across southern state of India.

Legal Compliance:

At Thejes, we strictly ensure to be Compliant with all the legal norms,

whether it is for the products or brands in the market. We understand its
importance and that is why we guarantee its fulfillment.

Consumer Preference:

Thejas has a strong focus on its consumers and therefore goes the extra mile
to provide them consistent quality Products which is relevant their organoleptic
palate. Not only is this about giving consumers the best, but also understanding
what they would need through robust customer- connect programmers’.

Supplier Assurance:

We always strive for ensuring consistent quality products with confirming

purity of the products available the market, which is made possible through the
help of our own Thejes distribution on-time delivery’s to our retailers So that our
products are made available for our consumers 24/7.

Food Safety Guarantee:

 We believe in the philosophy of “consumer first”. As a part of our

corporate responsibility, we ensure that food safety is on our top priority.
We have ISO 22000certifications and FSSAI licenses certify in a
commitment towards food safety and dependability.

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Customer Satisfaction:

 Our consumer satisfaction not only comes from the consistent quality
products, we provide customer care services who are readily available to
provide any product related information, and address any queries or
concerns.


Quality at the Best Price:


 Be in a commodity & dairy market, we ensure our products are not only
the healthiest and tastiest but also affordable for one and all. Quality is not
something we strive for, it’s something weguarantee.
 Superior sales and marketing prowess
 Strategic technological & infrastructural advantage
 Efficient human investment

We have the advantage of

 Procurement of Quality Buffalo and Cow milk through a strong network of

chilling centers spread across states of Andhra Pradesh, Tamil Nadu and
Karnataka.
 Strong roots in local markets and first-hand knowledge of the local culture.
 Business intelligence and technical expertise that is applied to serve our
consumers.

B.Brahma Naidu,Managing Director

He is the Managing Director of Thejes Products Pvt. Ltd., headquartered at

Narasaraopet, Guntur District, Andhra Pradesh, India.

Mr. Naidu hails from a farming family and started his career at a young age of
18 year with a transport business, In 1992, when the Government of Andhra Pradesh
issued a G.O regarding establishment of dairies in private sector, he opened a Milk
Chilling unit in partnership with Mr.B.Nageswara Rao and Mr. Danda Brahmandam
who was working in co-operative dairy at Guntur and had very good knowledge of

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procurement and technical knowledge in dairy field. Later based on the market
research and demand he planned to sell milk in packet under the brand name of
"THEJES". Subsequently, a packing plant was established in the year 1995 at
Vellalcheruvu Village, Santhamagulur Mandal, Prakasam District.

Mr. Naidu scrutinizes every aspect of our day-to-day operations and develops
strategies for continuous improvement of quality and efficiency.

D.Brahmanandam,Joint Managing Director,

He is the Joint Managing Director of Thejes Milk Products Pvt.

Ltd., and he is based at Anna Nagar Chennai.

Hailing from an agricultural family, Mr.Brahmanadam started his career at the

age of 21 Years. After completion of his education at Narasaraopet, worked in
Procurement Team of ‘The Guntur District Milk Producers Co-operative’. He went on
to show his leadership and foresight by co-founding Thejes Milk Products Pvt. Ltd.
along with Mr. Bolla Brahma Naidu and Mr. B.Nageswara Rao.

Mr. Brahmanadam's attention to excellence is shown by his dedication in

making Thejes Milk a household name in Chennai and surrounding areas. Under his
able leadership and operational excellence, Thejes started the SMP & Products plant
at Gudur, Nellore District and commenced export of SMP & Butter.

B.Nageswara Ravo,Director

Mr. B. Nageswara Rao Director hails from Narasaraopet area of Guntur Dist, A.P and
is the co-promoter of Thejes Milk Products Pvt. Ltd.

Mr. B. Nageswa Rao's career spans several decades in logistics. The entire logistical
strategy and operations is handled by him at Thejes Milk Products Pvt. Ltd. Since
joining the company, Mr. Nageswara Rao has held various roles overseeing the
logistical strategies for new business opportunities and responsibility for the
company’s logistical infrastructure.

Mr. Nageswara Rao is now based out of Gudur in Nellore District and manages the
day-to-day operation of the company's largest unit and composite milk and products.

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Dr.N.Venkata rao,director

A graduate in Veterinary Sciences from College of Veterinary Sciences,

Tirupati, and Post Graduate Diploma holder in Rural Management from IRMA,
Anand, Dr.Venkata Rao has over 20 years of experience in this industry. He was
associated with the Guntur Dist, Milk producer’s co-operative union at Sangam in
milk procurement and milk processing departments.

Dr. Venkata Rao is responsible for setting the strategic objectives of the company and
the policy framework in terms of planning and implementation of milk procurement
strategies. Dr.Venkata Rao is now based out of Palamaneru, Chittoor Dist and
oversees the operations in Karnataka and Chittoor district of A.P. He is also
responsible for monitoring the performance of the Tirumala Curd, Milk and other
dairy products in Bangalore and nearby markets.

E.N.Rao, Executive Director

A graduate in Veterinary Sciences from College of Veterinary Sciences,

Tirupati, and obtained Post Graduation in Management from I.I.M., Ahmadabad, Mr.
E.N. Rao

has the appropriate range of proficiency, experience and skills to handle all areas of
operation.

He started off as an Executive Trainee in the Godrej Group and has 19 years
of rich experience. His vast experience in the dairy industry makes him a skilled hand
in ensuring that all appropriate policies and practices of the company will achieve the
business objectives. Mr. Rao has worked as a President at Heritage Foods (I) Ltd,
Hyderabad for 6 years and Director at Creamline Dairy Products, Hyderabad for 5
years. He later joined the Thejes board in Nov 2007 as Executive Director based at
corporate office, Hyderabad.

CORPORATE MANAGEMENT TEAM

Thejes Milk products (p)Ltd is a growth-oriented organization. While competitive

with larger-sized companies, we maintain the flexibility and customer attention that

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only smaller enterprises can provide the Corporate management Team keeps us
focused for betterment in their areas. They are

Raghavan.R

Dairy Technologist with over 28 years experience in dairy and food processing
industries both in india and abroad (Middleast and Africa).Experienced in setting up
of major dairy projects like Ice cream UHT Milk, Yoghurt plants etc. Undergone
intensive training in Europe and US in the field of dairy farming and Technology. He
is working as Sr.General Manager at our Gudur Plant.

Ramesh.Chava

BSC in Dairy Technology (PGDRM (IRMA))worked in various designation in

AP Dairy for 21 years. Worked as GM Marketing in AP Dairy .worked as DGM in
Krishna Milk Union. He is Sr.GM production for our Bhimadolu Region.

Suresh. A

M.Sc in dairy Technology with experience in dairy industry and other food
processing industries. He is General Manager for our Palamaner region.

Srinivasa.R (Msc Dairy Technology)

An MSc Dairy Technology, from Allahabad University (92-94 batch),

Mr.Srinivasa has 13 years of experience in Milk Procurement, Processing and
Marketing. At Tirumala,he is the general Manager, Procurement and handles
Procurement in Narasaraopet Region.

Subbaiah Chowdary.V (CA)

Mr. Subbaiah is having 17 years of experience in the food and dairy business.
At Tirumala,he is the Finance Head and handles Chennai region.

Mr.RajaGopal.VVM.Com.,(ICWAI)

Having 12 years of experience in core accounting.Asst. General Manager-Finance &

Accounts Based at Corporate office, Hyderabad.

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Mallikarjuna Rao.CH (M.Com)

With 10 years of experience, Mr.Mallikarjuna is Manager, Accounts at Regd

Office. He has vast experience in field of Accounts and MIS

AREAS OF OPERATIONS:

 Thejes distributes milk to various parts of Tamil Nadu,Andhrapradesh &

Karnataka.Gudur is the main source for delivering milk and milk products to
Chennai and other major part of Tamil Nadu. The procurement and processing
section located at Pasupattur village of Chittoor district in AP is the source of
milk, curd and products which are supplied in Bangalore and Mysore markets.
 The packing station located at Vellacheruvu,20 km away from our Registered
office and plant at Singavaram West Godavari District and Wadiyaramin
Medak
 District Supplies milk curd and other products to major markets of AP which
includes Hyderabad,Vijayada,Guntur,Rajamandri,Kakinada & Karimnagar.

 Skim milk powder, butter oil produced at Gudur plant are supplied to major
industrial and instoitutional customers located across Indiaand Overseas.
 Our presence is across entire Tamil Nadu, AP &some parts of Karnataka.

CERTIFICATES & AWARDS

In recognition of its efforts and achievements in the dairy foods industry, and
in acknowledgment of all the challenges surmounted, Thejes Milk Products (P) Ltd.
has won many awards and certificates.

More enduring than any public recognition for our contributions is the
satisfaction we enjoy by creating a superior product and giving back to our
communities.

Thejes Milk Products (P) Ltd. is an ISO 9001:2000 and an ISO 22000: 2005
Certified company. The dairy is following Quality Management System and Food
Safety Standards.

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Apart from ISO certification, we have Certificate from SGS on SMP Analysis
too. Thejes Dairy Products (P) Ltd. has ISI Licence, Agmark Licence and adhere to
all other Statutory standards as per requirements.

FINANCIAL

Thejes Dairy Products (P) Ltd. has always reiterated that our added value
businesses would continue to demonstrate attractive growth. Our business strategy
continues to make encouraging progress and is a key driver of the operating profit.

Our strategy will continue to focus on growing our brands and added value
businesses. The strength of our competitive position gives confidence that we will
deliver attractive earnings growth and provides the opportunity for a greater
appreciation in Thejes Dairy value.

Before November 2007, both Thejes Dairy Pvt Ltd and Thejes Dairy Products
Pvt Ltd were separate entities. After that they became one single entity called Thejes
Dairy Products (P) Ltd.

THE FOLLOWING ARE THE TURNOVER INFORMATION OF

THE COMPANY:

SALES TOTAL(in crores)

2006-2007 285.27

2007-2008 373.80

2008-2009 470.79

2009-2010 585.91

2010-2011 834.50

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SALES DETAILS:

900 TOTAL(in crores)

800
700
600
500 TOTAL(in crores)
400
300
200
100
0
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

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PRODUCT PROFILE

Thejes Dairy Products (P) Ltd. covers the entire spectrum of dairy products
sold in markets. The complete ranges of Thejes Dairy Products (P) Ltd. are highly
nutritious, healthy and bring you a world of goodness.

Thejes Dairy Products (P) Ltd. pasteurizes and packages all fresh dairy
products in technologically superior and hygienic conditions to ensure pure natural
freshness.

Thejes Dairy Products (P) Ltd., Handles 6.5 Lakes Liters of Milk per day in all
their packing Stations and main dairy plant which is the highest in the state of Andhra
Pradesh.

Thejes Dairy Products (P) Ltd. handles milk in the following

locations:-

Packing Locations Handling Capacity per day

Packing Location Handling Capacity per day

Guider 4.0 Lake Liters

Vellala Cheruvu 2.0 Lake Liters

Bhimadolu 1.0 Lake Liters

Palamaner 2.0 Lake Liters

Gungal 4.0 Lake Liters

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PROCUREMENT OF MILK

Thejes Dairy Products (P) Ltd. established 35 Chilling centers in Andhra Pradesh
and 8 chilling centers in Tamilnadu to procure both Cow & Buffalo milk. Best quality
milk is procured and chilled at chilling centers, to retain freshness of milk. The
strength of the Thejes Dairy Products (P) Ltd. is to procure more than 13 lakh liters of
milk Per day directly from agents/farmers using state-of-the-art machinery and
professionally trained staff.

PRODUCTION

 Thejes Dairy Products (P) Ltd. has its main dairy plant at Kadivedu
with handling capacity of 4.0 lakhs lts of milk per day from various
chilling centers and local units.
 Main plant processes 4.0 Lakhs Lts of milk per day in automatic
sachet filling machines for supply and distribution to Chennai,
Tirupati, Nellore, etc… in insulated puffs.
 It is the first time in south india, that a private sector dairy is using
modern equipments for packing tetra pack milk in our Gungal palnt.
 There is continuous growth in sale of milk from 50000 ltrs to
10000000 ltrs with in a span of one-decade.
 Tirumala Milk Products (P) Ltd. has its own supply chain
management, which is the key to timely distribution.
 Our Palamaner unit processes and supplies 1.40 lakh liters of milk
and 50000 liters of curd to Bangolore city every day.
 Our Vellalacheruvu ,Gungal, Bhimadolu and Visakhapatnam packing
stations processes and supplies more than 6.0 lakhs liters of milk to
Hyderabad, Warangal, Vijayawada. Elure, Guntur and Rajahmundry,
Karim Nagar, Adilabad, Medak districts of AP

PRODUCTS

 The Main Plant has modern equipments to manufacture milk products like
Buttter, Ghee and Milk Powder.

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 Butter is made from pure cow & buffalow fat under hygienically processed
through continues butter making machine with a capacity of 8 tones per day.
 Ghee is made from pure cow & buffalow butter under supervision of 30 years
experienced dairy technologists to retain granulation, color and aroma of ghee
with a capacity of 8 tones per day.
 Milk powder is made from fresh cow & buffalow milk and the plant is capable
of producing all type of milk powders with a capacity of 15 tones per day.
 By-Products like Sterilized Flavoured Milk, Lassi, Khova, Milk Cake, Mysore
pak, Panner.
 Ice creams of all variants are produced and are available in the Market.
 Tetra Fino Aseptic (TFA). We have recently launched Tetra fino packed Milk,
with high quality and long shelf life. TFA is sold across south India.

FOOD SAFETY:

Ensuring the safety of dairy foods is a responsibility of the dairy industry,

dairy farmers and dairy processors. Milk and other dairy products are among the
safest and most highly regulated foods in the world.

We have established a rigorous and far-reaching food safety program that

ensures that the milk and dairy products you and your family enjoy remain pure and
wholesome.

We have well maintained laboratories in all plants. Technically qualified staff

tests the milk and milk products. Quality assurance programmes are implemented at
every stage to ensure quality of milk and milk products.

CAREERS

Thejes Dairy Products (P) Ltd is is one of the leading dairy in India.It is primarly
known for its quality products and outstanding variety.We are equiped with
exceptional technology and skilled manpower. Our success factor in the region is total
customer satisfaction and modernization.

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ATTRACTIVE WORKPLACE

At Thejes Dairy Products (P) ltd our employees are an important resource and we
want to bo among the top-attractive work place. Our key tool is a close dialogue
between our owners,our management and our employees to ensure that both the
company’s and our employees requirements are covered in the best possible way.

HIGH AMBITION

It is no secret we have high ambition.Our objective is to the leader at all dairy

product stages from product development,through production and sales.from that we
need top-motivated and engaged employees.

EXCELLENT CAREER OPPORTUNITIES

At Thejes Dairy Products (P) ltd we have created an environment with almost
unlimited career opportunities.

RESPONSIBLE AND COMMITTED EMPLOYEES

When recruiting employees we look for both personal as well as professional

qualifications.Ourfuture colleagus must be able to identify themselves with our
normal run of the company and our development,and they must be commited to take
responsibility for making a difference.Equally important is their ability to
communicate and cooperate crisscross departments and frontiers.Therefore, At Thejes
Dairy Products (P) ltd employees are characterized by their pursue of lifelong learning
and development.

At Thejes Dairy Products (P) ltd is one of the preferred companies to work with
because we believe in:

 The power of Open Door Communication

 Providing fair treatment
 Giving equal oppurtunity to everyone
 Providing diversity through nature of work and people

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 Opposing any form of harassment

You are welcome to send us your resume by email in soft form.Remember to

include information about your education,marks obtained,nature of work experience,
previous/current employers, current & expected emoluments etc.

By providing a challenging work environment, we attract and retain the best

talents. Great care is taken to recruit the best people available.

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ORGANIZATION STRUCUTRE

DIRECTOR

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NEED OF THE STUDY

A funds flow statement is an essential tool for the financial analysis and is of
primary importance to the financial management. Now-a-days, it is being widely used
by the financial analysts, credit granting institutions and financial managers.

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The basic purpose of a funds flow statement is to reveal the changes in the
working capital on the two balance sheet dates. It also describes the sources from which
additional working capital has been financed and the uses to which working capital has
been applied.

Such a statement is particularly useful in assessing the growth of the firm, its
resulting financial needs and in determining the best way of financing these needs. By
making use of projected funds flow statements, the management can come to know the
adequacy or inadequacy of working capital even in advance. One can plan the
intermediate and long-term financing of the firm, repayment of long-term debts,
expansion of the business, allocation of resources, etc.

Hence the present study is made to analyze the sources and application of funds during
the study period.
.

OBJECTIVES OF THE STUDY

 To study and analyze the changes those have taken place in the financial position
of the company.
 To study the funds from operations during the study period.

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 To study the trends in net working capital of the company during the study
period.
 To evaluate the major sources of funds during the study period.
 To evaluate the major applications of funds during the study period.

SCOPE OF THE STUDY

The scope the present study is the analysis of Financial Statements of Thejes
Dairy Private Limited by adopting Funds Flow Statement Analysis.

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The study would provide in depth view about how the funds are being raised
by companies during the study period. The study helps in evaluating the working
capital position of a Thejes Dairy Private Limited. Our approach is straight forward
and consistent with in a well-developed frame work for future decision making
regarding out flow and inflow of funds.

LIMITATIONS OF THE STUDY

 The study confined to only specific period of the duration.

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 The study depends on past data only.

 The period of study was not fully sufficient to make in depth and detailed

study.

 The study is restricted to select company only.

RESEARCH METHODOLOGY

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Methodology is an intensive and purposeful search for knowledge and for the
understanding social and physical phenomena. It is the method for discovered of two
values in a scientific way.

SOURCES OF DATA:

There are two sources of data

 Primary Data
 Secondary Data

Primary Data

 The data collected from primary sources is called primary data.

 Primary data are those data which are collected for fresh and for the first time.
 Primary data happened to be original in character.

Secondary data

 The data collected from secondary sources are called secondary data.
 Secondary data are the those which have been already collected by someone
and which have already being passed through statistical process.
 The present data depends on secondary data.
 Annual reports of the company
 Various websites
 Various journals

DATA ANALYSIS AND INTERPRETATION

Dept. MBA, SITAMS, Chittoor Page 54

Funds Flow Statement Analysis

ANALYSIS OF DATA

The data collected is subjected to the techniques of fund flow analysis and
changes in working capital. This clearly brings out a clear picture of inflow and out
flow of funds and also analysis the movement and management of funds.

LIMITATIONS OF STUDY

The data was collected and analysis only for five years which might be too
small a base to draw accurate conclusions.

The study is limited only from the financial statements provided by the
company to me. Much of literatures regarding the financial activities have not been
gathered, because the company is not ready to disclose its financial secrets. Hence,
my study is bound within these limiting factors.

ANALYSIS
Dept. MBA, SITAMS, Chittoor Page 55
Funds Flow Statement Analysis

STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE

YEAR 2017
31/3/2016 31/3/2017 Changes in
. . working capital
Particulars
Increase Decrease
Rs Rs
Current Assets        
Inventory 55762138 91821066 36058928  
Sundry debtors 6496711 3454410   3042301
Cash and bank 3648490 4584931 936441  
Deposits 12111184 32782471 20671287  
Loans and advances 9616257 16609002 6992745  
and prepaid
expenses
Total Current 87634780 149251880    
Assets (a)
Current liabilities        
and Provisions
Current liabilities 29082760 36979282   7896522
Provisions 4058402 4558958   500556
Total current 33141162 41538240    
liabilities (b)
Working Capital 54493618 107713640    
(a-b)
Net Increase / 53220022     53220022
decrease working
capital
 Total 107713640 107713640 64659401 64659401

INTERPRETATION:
In the year, the current Assets of the company are increased from Rs
8,76,34,780 (2016) to Rs14,92,51,880 (2017). The Current Liabilities are also
increased from Rs.3,31,41,162 (2016) to Rs. 4,15,38,240 (2017). The net working
capital is increased by Rs.5,32,20,022.

Calculation of funds from operations

Dept. MBA, SITAMS, Chittoor Page 56

Funds Flow Statement Analysis

(Rs in crores)

Particulars Amount
Profit during the year
Reserves and surplus
Funds from operations
20539377

Total 20539377

FUNDS FLOW STATEMENT FOR THE YEAR 2016- 2017

Sources Rs. Applications Rs.

Share Capital 10000000 Purchase of fixed 24162192

asset

working capital 1805521 Purchase of 2000000

Investment

Secured Loans 47037316 Increase in working 53220022

capital

Funds from operation 20539377    

  79382214   79382214

INTERPRETATION:

It is event from above table that the table Funds Flow during the period from
2016-2017 Rs. 79382214. In this 2016-2017 organization purchased a fixed asset of
Rs. 24162192 and funds from operations are Rs.20539377.

STATEMENT OF CHANGES IN WORKING CAPITAL

2017-2018

Dept. MBA, SITAMS, Chittoor Page 57

 Funds Flow Statement Analysis

31/3/2017 31/3/2018 Changes in

Particulars . . working capital
Increase Decrease
Current Assts        
Inventory 91821066 109075147 17254081  
Sundry debtors 3454410 6358113 2903703  
Cash and bank 4584931 4321650   263281
Deposits 32782471 26367433   6415038
Loans and advances and 16609002 25367448 8758446  
prepaid expenses
Total Current assets(a) 149251880 171489791    
Current liabilities and        
Provisions
Current liabilities 36979282 43292220   6312938
Provisions 4558958 7087149   2528191
Total current liabilities 41538240 50379369    
(b)
Working Capital (a-b) 107713640 121110422    
Net Increase / decrease 13396782     13396782
working capital
 Total 121110422 121110422 28916230 28916230

INTERPRETATION :

It is clear from the above table that the current Assets of the company have
decreased from Rs 149251880 in 2017 to Rs171489791 in 2018 the current
Liabilities of the company are showing increasing trend it is recorded as Rs. 41538240
in 2017 and increases to Rs50379369 in 2018 there is increased in working capital of
Rs. 13396782.

Calculation of funds from operations

Dept. MBA, SITAMS, Chittoor Page 58

 Funds Flow Statement Analysis

(Rs in crores)

Particulars Amount
Profit during the year
Reserves and surplus
Funds from operations
12708655

Total 12708655

FUNDS FLOW STATEMENT OF 2017-2018

Sources Rs. Applications Rs.

Issue of share capital   Increase in working 13396782

capital

Working progress   purchase of fixed asset 17379427

Secured loans 56947991 purchase of Investment  

unsecured loans   working progress 38880437

Funds from operations 12708655    

  69656646   69656646

INTERPRETATION:

It is from 2017-2018 Rs.69656646. In this 2017-2018 organization purchased a

fixed asset of Rs. 17379427 and funds from operations are Rs.1270865.event from
above table that the table Funds Flow during the period.

STATEMENT OF CHANGES IN WORKING CAPITAL

2018-2019

Dept. MBA, SITAMS, Chittoor Page 59

 Funds Flow Statement Analysis

31/3/2018 31/3/2019
Changes in
Particulars working capital
. .
Increase Decrease
Current Assts        
Inventory 109075147 100760856   8314291
Sundry debtors 6358113 6844432 486319  
cash and bank 4321650 7347643 3025993  
Deposits 26367433 38838401 12470968  
Loans and advances, 25367448 22284157   3083291
prepaid expenses
Total Current assets (a) 171489791 176075489    
Current liabilities and        
Provisions
Current liabilities 43292220 60299284   17007064
Provisions 7087149 8349907   1262758
Total current liabilities 50379369 68649191    
(b)
Working Capital (a-b) 121110422 107426298    
Net Increase / decrease   13684124 13684124  
working capital
Total 121110422 121110422 29667404 29667404

INTERPRETATION:

It is clear from the above table that the current Assets of the company have
minor increased from Rs.171489791 in 2018 to Rs.176075489 in 2019 the current
Liabilities of the company are showing increase trend it is recorded as Rs.50379369 in
2018 and increases to Rs.68649191 in 2019 there is decreased in working capital of
Rs.13684124.

Calculation of funds from operations

(Rs in crores)

Dept. MBA, SITAMS, Chittoor Page 60

 Funds Flow Statement Analysis

Particulars Amount
Profit during the year
Reserves and surplus
Funds from operations
15771950

Total 15771950

FUNDS FLOW STATEMENT OF 2018-2019

Sources Rs. Applications Rs.

Share Capital   Purchase of fixed asset 65228504

Working capital 34298695 Purchase of investment  

Secured Loans 1473735    

Decrease in working 13684124    

capital

Funds from operation 15771950    

  65228504   65228504

INTERPRETATION:

It is event from above table that the table Funds Flow during the period from
2018-2019 Rs.65228504. Organization purchased a fixed asset.

STATEMENT OF CHANGES IN WORKING CAPITAL

2019-2020

Particulars 31/3/2019 31/3/2020 Changes in

working capital
. .
Increase Decrease

Dept. MBA, SITAMS, Chittoor Page 61

 Funds Flow Statement Analysis

Current assts        
Inventory 258935801 158174945  
Sundry debtors 6844432 23666599 16822167  
cash and bank 7347643 6990208   357435
Deposits 38838401 144273003 105434602  
Loans and advances and 22284157 48086695 25802538  
prepaid expenses
Total Current Assets(a) 176075489 481952306    
Current liabilities and        
Provisions
Current liabilities 60299284 153837804   93538520
Provisions 8349907 19897427   11547520
Total Current 68649191 173735231    
Liabilities (b)
Working Capital (a-b) 107426298 308217075    
Net Increase / decrease 200790777     200790777
working capital
Total 308217075 308217075 306234252 306234252

INTERPRETATION:

It is clear from the above table that the current Assets of the company have
increased from Rs.176075489 in 2019 to Rs.481952306 in 2020 the current Liabilities
of the company are showing decreasing trend it is recorded as 68649191 in 2019 and
decreases to Rs.173735231 in 2020 there is increased in working capital of
Rs.200790777.

Calculation of funds from operations

(Rs in crores)

Particulars Amount

Dept. MBA, SITAMS, Chittoor Page 62

Funds Flow Statement Analysis

Profit during the year

Reserves and surplus
Funds from operations
56690332

Total 56690332

FUNDS FLOW STATEMENT OF 2019-2020

Sources Rs. Applications Rs.

Share capital 58982382 Purchase of fixed 112855781

asset

Secured loans 198747243 Purchase of 720520

investment

Funds from operation 56690332 Working capital 52879

    Increase in 200790777
working capital

  314419957   314419957

INTERPRETATION:

It is event from above table that the table Funds Flow during the period from
2019-2020 Rs.314419957.

STATEMENT OF CHANGES IN WORKING CAPITAL 2020-2021

Particulars 31/3/2020 31/3/2021 Changes in

working capital
. .
Increase Decrease

Dept. MBA, SITAMS, Chittoor Page 63

Funds Flow Statement Analysis

Current assts        
Inventory 258935801 271428799 12492998  
Sundry debtors 23666599 18113070   5553529
cash and bank 6990208 7787309 797101  
Deposits 144273003 129569540   14703463
Loans and advances and 48086695 72333257 24246562  
prepaid expenses
Total Current Assets(a) 481952306 499231975    
Current liabilities and        
Provisions
Current liabilities 153837804 187019585   33181781
Provisions 19897427 18442538 1454889  
Total Current 173735231 205462123    
Liabilities (b)
Working Capital (a-b) 308217075 293769852    
Net Increase / decrease   14447223 14447223  
working capital
Total  308217075 308217075 53438773 53438773

INTERPRETATION:

It is clear from the above table that the current Assets of the company have
increased from Rs.481952306 in 2020 to Rs.499231975 in 2021 the current Liabilities
of the company are showing increasing trend it is recorded as Rs.17735231 in 2020
and increases to Rs.205462123 in 2021 there is decreased in working capital of
Rs.14447223.

Calculation of funds from operations

(Rs in crores)

Particulars Amount

Dept. MBA, SITAMS, Chittoor Page 64

Funds Flow Statement Analysis

Profit during the year

Reserves and surplus
Funds from operations
98994759

Total 98994759

FUNDS FLOW STATEMENT OF 2020-2021

Sources Rs. Applications Rs.

Share capital Purchase of fixed 60981402

asset

Decrease in 14447223 Working capital in 5750246

working capital progress

Funds from 98994759 Secured loans 46699761

operation

Redemption on 10573
shares

  113441982   113441982

INTERPRETATION:

It is event from above table that the table Funds Flow during the period
from 2020-2021 Rs.113441982.

FINDINGS

 The current liabilities are on increasing trend, so researchers suggested that it

does not increase in the same proportion in future.

Dept. MBA, SITAMS, Chittoor Page 65

Funds Flow Statement Analysis

 The standard current ratio is 2:1. The company’s current ratio is above the
standard it is suggested that the company maintain its current ratio in the same
way in future.
 Every year it is observed that the company has to repaying the loans. It is
suggested that the company should take risk.
 New shares may be issued instead of raising loans of high interest.
 The working capital employed by the company. The company recommended
not to increase the current liabilities and also to decrease the current assets in
future.
 The current assets have increased tremendously in the years therefore the
researchers advised to reduce the current assets, if too much is invested on
current assets there will be blockage of funds which could otherwise be
utilized for some productive purpose.

SUGGESTIONS

 The firm should establish optimum capital structure.

Dept. MBA, SITAMS, Chittoor Page 66

Funds Flow Statement Analysis

 The company has idle cash balance which may reduce the profitability
company may invest such idle cash in marketable securities.
 Steps should be initiated in order to cut down the expenses of the company
which are found to affect profitability of the company.
 Efficient of assets utilizations for revenue generation is suggested.
 Efforts should be made to improve sales level so as to increase funds from
operation.
 Better utilizations to sources of funds in suggested for getting maximum
benefits.

CONCLUSION

The study reveals that the Thejes Dairy Products Pvt. Ltd., management was
inefficient in performing effectively and also the company faced losses. The inventory
Dept. MBA, SITAMS, Chittoor Page 67
Funds Flow Statement Analysis

turnover is increasing year by year due to decreasing production level. For the past 5
financial years, hence the company has to take care of his management in order to
come out from losses and to make profits.

BIBLIOGRAPHY
BOOKS
TITLE Author
 Financial Management I.M.Pandey (9th edition)

Dept. MBA, SITAMS, Chittoor Page 68

Funds Flow Statement Analysis

 Financial Management and Policy V.K.Bhalla (5th edition)

 Financial Management Prasanna Chandra
 Financial Management M.Y.Khan & P.K.Jain

OTHER SOURCES:
 Primary and secondary Data of Thejes Milk Product Pvt Ltd.
 Previous year Balance Sheet of Thejes Milk Product Pvt Ltd

JOURNALS:
 The ICFAI Journal of Applied Finance
 Finance India (Indian Institute of Finance)

WEB SITE:

www.thejesdairyproducts.com
www.freemba.in

BALANCE SHEET OF THEJES DAIRY PRODUCTS (P) LTD

2016-2017

I) Sources of Funds 31st mar’ 16 31st mar’17

(Rs. in lakhs) (Rs. In lakhs)
1) Shareholder’s Funds
a) Share Capital 3976.36 3976.36
b) Reserves & Surplus 3804.74 2160.18
Dept. MBA, SITAMS, Chittoor Page 69
Funds Flow Statement Analysis

2) Loan funds
a) Secured Loans 10886.36 10723.23
b) Unsecured Loans 9588.74 5404.59
3) Deferred tax liability (net) 424.17 -
Tota 28680.37 22264.36
l
II Application of funds
)
1) Fixed Assets
a) Gross Block 20021.36 17884.47
b) Less: Depreciation 5417.03 4648.10
Net Block 14604.33 13236.37
Capital Work in Progress 6015.09 2652.95
2) Investments 589.83 -
3) Current Assets, Loans and Advances.
a) Inventories 7075.18 5294.05
b) Sundry Debtors 7197.89 4098.66
c) Cash & Bank Balances 247.72 447.49
d) Loans and Advances 1616.75 1462.76
16137.54 11302.96
Less: Current Liabilities & Provisions
a) Current Liabilities 8090.45 5052.57
b) Provisions 586.14 572.72
Net Current Assets 7460.95 5677.67
4)deferred tax asset - 683.48
5) Miscellaneous expenditure ( to the 10.17 13.89
extent not written off or adjust)
Total 28680.37 22264.36

BALANCE SHEET OF THEJES DAIRY PRODUCTS (P) LTD

2017-2018

I) Sources of Funds 31st mar’17 31st mar’18

(Rs.in. Lakhs) (Rs.in. Lakhs)
1) Shareholder’s Funds
a) Share Capital 3976.36 3976.36
b) Reserves & Surplus 3993.06 3804.74
2) Loan funds
a) Secured Loans 9244.82 10886.36

Dept. MBA, SITAMS, Chittoor Page 70

 Funds Flow Statement Analysis

b) Unsecured Loans 15069.11 9588.74

Deferred tax liability(net) 618.06 424.17
Total 32901.40 28680.37
II) Application of funds
1) Fixed Assets
a) Gross Block 25035.39 20021.36
b) Less: Depreciation 6510.29 5417.03
Net Block 18525.70 14604.33
Capital Work in Progress 5604.02 6015.09
2) Investments - 589.83
3) Current Assets, Loans and Advances.
a) Inventories 9194.04 7075.18
b) Sundry Debtors 6706.59 7197.89
c) Cash & Bank Balances 350.67 247.72
d) Loans and Advances 2070.42 1616.75
18321.76 16137.54
Less: Current Liabilities & Provisions
a) Current Liabilities 9202.11 8090.45
b) Provisions 354.42 586.14
Net Current Assets 8765.23 7460.95
4) Miscellaneous expenditure (to the extent 6.45 10.17
not written off or adjust)
Total 32901.40 28680.37

BALANCE SHEET OF THEJES DAIRY PRODUCT (P) LTD

2018-2019.
    2018 2019
I) Sources of Funds    
  1) Shareholder's Funds    
  a) Share Capital 13050000 23050000
  b) Reserves & Surplus 23569934 36105831
  a) Secured Loans 79340910 126378626
  h) Unsecured Loans    
  Total 115960844 185534457
II Application of funds    
)
  1) Fixed Assets    

Dept. MBA, SITAMS, Chittoor Page 71

 Funds Flow Statement Analysis

  a) Gross Block 71135061 111386856

  b) Less: Depreciation 25048428 41138031
  Net Block 46086633 70248825
  Capital Work in Progress 6676916 4871395
  Total 52763549 75120220
  2)Investment 610000 2610000
  3) Current Assets, Loans and Advances.    
  a) Inventories 55762138 91821066
  b) Sundry Debtors 6496711 3454410
  c)Deposits 3648490 4584931
  d) Cash & Bank Balances 12111184 32782471
  e) Loans and Advances 9616257 16609002
  Total 87634780 149251880
  Less: Current Liabilities & Provisions    
  a) Current Liabilities 29082760 36979282
  b) Provisions 4058402 4558958
  total current liabilities 33141162 41538240
  Net Current Assets 54493618 107713640
  4) Miscellaneous expenditure (to the extent not 8093677 90597
written off or adjust)
  Total 115960844 185534457

BALANCE SHEET OF THEJES DAIRY PRODUCTS (P)

LTD 2019-2020
    2019 2020
I) Sources of Funds    
  1) Shareholder's Funds    
  a) Share Capital 23050000 23050000
  b) Reserves & Surplus 48579189 64515839
  a) Secured Loans 183326617 184800352
  h) Unsecured Loans    
  Total 254955806 272366191
II) Application of funds    
  1) Fixed Assets  
  a) Gross Block 148467660 243455584
  b) Less: Depreciation 60839408 90598828
  Net Block 87628252 152856756
  Capital Work in Progress 43751832 9453137

Dept. MBA, SITAMS, Chittoor Page 72

 Funds Flow Statement Analysis

  Total 131380084 162309893

  2)Investment 2610000 2610000
  3) Current Assets, Loans and Advances.    
  a) Inventories 109075147 100760856
  b) Sundry Debtors 6358113 6844432
  c)Deposits 4321650 7347643
  d) Cash & Bank Balances 26367433 38838401
  e) Loans and Advances 25367448 22284157
  Total 171489791 176075489
  Less: Current Liabilities & Provisions    
  a) Current Liabilities 43292220 60299284
  b) Provisions 7087149 8349907
  total current liabilities 50379369 68649191
  Net Current Assets 121110422 107426298
  4) Miscellaneous expenditure (to the extent not -144700  
written off or adjust)
  Total 254955806 272366191

BALANCE SHEET OF THEJES DAIRY PRODUCT (P) LTD

2020-2021

    2020 2021
I) Sources of Funds    
  1) Shareholder's Funds    
  a) Share Capital 82032382 82021809
  b) Reserves & Surplus 121127284 220125849
  a) Secured Loans 383547595 336847834
  h) Unsecured Loans    
  Total 586707261 638995492
II Application of funds    
)
  1) Fixed Assets    
  a) Gross Block 440627226 554283910
  b) Less: Depreciation 174915289 227590571
  Net Block 265711937 326693339
  Capital Work in Progress 9400258 15147071
  Total 275112195 341840410
  2)Investment 3330520 3333953
Dept. MBA, SITAMS, Chittoor Page 73
 Funds Flow Statement Analysis

  3) Current Assets, Loans and Advances.    

  a) Inventories 258935801 271428799
  b) Sundry Debtors 23666599 18113070
  c)Deposits 6990208 7787309
  d) Cash & Bank Balances 144273003 129569540
  e) Loans and Advances 48086695 72333257
  Total 481952306 499231975
  Less: Current Liabilities & Provisions    
  a) Current Liabilities 153837804 187019585
  b) Provisions 19897427 18442538
  total current liabilities 173735231 205462123
  Net Current Assets 308217075 293769852
  4) Miscellaneous expenditure (to the extent not 47471 51277
written off or adjust)
  Total 586707261 638995492

Dept. MBA, SITAMS, Chittoor Page 74