A

STUDY ON

FUNDS FLOW STATEMENT

With reference to

TIRUMALA MILK PRODUCTS PRIVATE LIMITED,KADIVEDU, NELLORE,A.P

A project report submitted to the

RVR & JC COLLEGE OF ENGINEERING (AUTONOMOUS)

In partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

BEJAWADA.GANESH

Regd. No: Y20MS007

Under the Guidance of

Dr. T.SREEKRISHNA
M.B.A.,Lr(UGC).,M.Phil(JNTUH).,Ph.D(JNTHU)
ASSOCIATE PROFESSOR

DEPARTMENT OF MANAGEMENT SCIENCES

RVR & JC COLLEGE OF ENGINEERING (AUTONOMOUS)

Chowdavaram, Guntur-522019, Andhra Pradesh

2020-2022
 CERTIFICATE

This is to certify that the project report titled "A STUDY ON FUNDS FLOW
STATEMENT With reference to “TIRUMALA MILK PRODUCTS PRIVATE LIMITED,
KADIVEDU, NELLORE,A.P" is a Bonafide work done by BEJAWADA.GANESH,
Regd. No:Y20MS007,II MBA under my guidance & submitted to the Department of
Management Sciences, R.V.R. & J.C. COLLEGE OF ENGINEERING
(AUTONOMOUS),GUNTUR, in partial fulfillment of requirements for the award of Degree of
Master of Business Administration, during 2020-2022.

Dr. T.Sreekrishna

(Project Guide) M.B.A. Lr.Ship (UGC), M.Phil,Ph.D.

Head, Dept. of MS

EXTERNAL EXAMINER
 DECLARATION

I B.GANESH, student of Master of Business Administration,R.V.R&

J.C.COLLEGE OF ENGINEERING (AUTONOMOUS),GUNTUR. I hereby declare that
the project entitled "A STUDY ON FUNDS FLOW STATEMENT With reference to
TIRUMALA MILK PRODUCTS PRIVATE LIMITED, KADIVEDU ,NELLORE ,A.P " is a
genuine work done by me,during 2020-22.

The project report is prepared under the guidance of , Dr.

T.SREEKRISHNA Vc.Head, Department of Management Sciences, in partial fulfillment of the
requirements for the award of the Degree of Master of Business Administration by
Acharya Nagarjuna University, Guntur .

I hereby declare that, this is the result of my own efforts and it has
not been submitted to any other university for the award of any Degree or Diploma.

BEJAWADA.GANESH
Regd.No:Y20MS007
 ACKNOWLEDGEMENT

I sincerely thank Principal Dr.K.RAVINDRA for providing necessary

infrastructure and resources for the accomplishment of my project report in R.V.R. &
J.C. COLLEGE OF ENGINEERING, Chowdavaram, Guntur.

I am highly indebted to and sincerely thank Dr. T.SREEKRISHNA,Vc

Head, Department of Management Sciences, my project guide for his valuable guidance
and suggestions.

I thank my parents and faculty who have always been a source of

inspiration during my project work.

(B.GANESH)
Regd.No.Y20MS007
SYNOPSIS

INTRODUCTION
 Firms create manufacturing capacities for production of goods: some
provide services to consumers. They sell their goods or services to earn profit. They
raise funds to acquire manufacturing and other facilities. Thus, the three most important
activities of a business firm are: finance, production and marketing. A firm secures
whatever capital it needs and employees it (finance activity) in activities which generate
returns on invested capital and marketing activities.

FUNCTIONS OF FINANCIAL MANAGEMENT:

The financial functions can be divided into four broad categories:

1. Investment decisions.
2. Financing decisions.
3. Dividend decisions.
4. Liquidity decisions.

1. Investment decision:

Investment decision or capital budgeting involves the decision of allocation of

capital or commitment of funds to long-term assets, which would yield, benefits in future.
It's one very significant aspect is the task of measuring the prospective profitability of
new investments. Future benefits are difficult to measure and cannot be predicted with
certainty.

2. Financing decision:

Financing decision is the second important function to be performed by the

financial manager. Broadly, he must decide when, where and how to acquire funds to
meet the firm's investment needs. The central issue before him is to determine the
proportion of equity and debt. The mix of debt and equity is known as the firm's capital
structure. The firm's capital structure is considered to be optimum when the market
value of shares is maximized.

3. Dividend decision:

Dividend decision is the third major financial decision. The financial manager
must decide whether the firm should distribute a portion and retain the balance. Like the
debt policy, the dividend policy should be determined in terms of impact on the
shareholder's value. The optimum dividend policy is one, which maximizes the market
value of the firm's shares.
4. Liquidity decision:

Current assets management, which affects a firm's liquidity, is an important

finance function. Current assets should be managed efficiently for safe guarding the firm
against the dangers of liquidity and insolvency. Investment in current assets affects
firm's profitability, liquidity and insolvency. Investment in current assets affects firm's
profitability, liquidity and risk. A conflict exists between profitability and liquidity while
managing current assets.

Financial analysis is the process of identifying the financial strengths and

weaknesses of the firm. It is done by establishing relationships between the items of
financial statements viz. balance sheet and profit and loss account. Financial analysis
can be undertaken by management of the firm or by parties outside the firm viz.,
owner's creditors, investors and others.

Types of analysis:

1. Vertical analysis
2. horizontal analysis

Method of analysis:
Now the financial analyst may use one or multiple methods. financial analysis are:

i. Comparative statements.

ii. Common size statements.

iii. Trend analysis.

iv. Ratio analysis.

v. Funds flow analysis.

vi. Cash flow analysis.

vii. Cost-volume-profit analysis (cvp analysis).

NATURE AND SCOPE OF FINANCIAL MANAGEMENT:

  Financial management is a branch of business management, which is
associated with future planning. Organization, co-ordination and control.
 Financial management provides a sound base to all managerial decisions.
 Production, research and development decisions based on financial
management.
 Financial management is a scientific and analytical analysis.
 In the process of decision making and financial analysis modern mathematical
techniques are used. Managing a firm is both science and an art.
 An analysis of the various definitions mentioned above make it clear that
financial management is concerned with the proper management of funds
keeping in view the enterprise objectives:
 The financial manager should look after that the funds are procured the risk and
cost consideration are properly balanced and there is optimum utilization of
funds. a manner that

Financial Functions:

Initially the finance managers were considered advent of an event requiring

funds. The finance manager was given a target amount of funds to rise and was given a
target amount of funds to raise and was given the responsibility of procuring those
Funds. So his function was limited to raising funds as and when the need arise. Once
the funds
were procured, his function was over.

However, over a period the scope of his function has tremendously widened.
His presence is required at every moment whenever any decision having involvement of
funds is to he taken.

Now it is the F.M require looking into the financial implication, of any decision in
the firm. The functions of F.M are to manage the funds. Any act. procedures, decision
relating to funds comes under the purview of the F.M. since every activity in the
business organization, be it purchases, production marketing or capital expenditure has
a financial implication, the finance function is interlinked with all areas. In particular, the
FM has to focus his attention on:

1. Procurement the required quantum of funds as and when necessary, at the lowest
cost.
2. Investing those funds in various assets in the most profitable way, and
3. Distribute returns to the shareholders in order to satisfy their expectations from the
firm.
The FM is usually faces with the following distinct scenario
1.What should be the size of a firm and how fast should it grow?
2.What are the various types of assets to be acquired? (Investment decision)
3.What should be the pattern of raising funds from various sources? (Financing
decision)

Depending upon the nature and size of the firm, the finance manager is
required to perform all or some of these functions from time to time. While performing
the functions he is required to take different decisions, which can be broadly classified
into three groups:

OBJECTIVES OF THE STUDY

 To present a theoretical framework relating to funds flow analysis.

 The main objective of the study is to analyze the financial information of the
Tirumala milk products private limited.

 To evaluate the liquidity position of Tirumala milk products private limited.

 To understand the operating efficiency of Tirumala milk products private limited.

 To determine the financial status of the company and analyze them.

 To make pertinent suggestions for the effective management of funds flow

analysis of Tirumala milk products private limited.

METHODOLOGY OF THE STUDY

Methodology is a systematic process of collecting information in order to

analyze and verifies a phenomenon. The collection of data is two principle sources.
They are discussed as

 Primary data

 Secondary data
Primary Data:-

The primary data needed for the study is gathered through interview with
concerned officers and staff, either individually or collectively, sum of the information
has been verified or supplemented with personal observation conducting personal
interviews with concerned officers of finance department of "TIRUMALA MILK
PRODUCTS PRIVATE LTD".

Secondary Data:-

The secondary datu needed for the study was collected from published
sources such as, pamphlets annual reports, returns and internal records, reference from
text books and journal management.

Further data needed for the study was collected from:-

 Collection of required data from annual records of the company.

 Reference from text books and journals relating to financial management.

Diagrammatic Representation of Research Methodology

Diagram 2.1

DATA
SOURCE

Secondary
Primary data data

Inside the
Management Respondents
company
 NEED OF THE STUDY

 The main need of the study is to analyses the financial information of the
Tirumala Milk products private limited.

 To find out the liquidity or short term solvency of the Tirumala milk products
private limited.

 To know the different types of funds flow analysis and how it shows

 impact on different organizations.

 To allow the relationship among various aspects in such a way that it allows
drawing conclusion about the performance, strengths and weaknesses of the
company.

 To know the short term servicing ability of the company.

SIGNIFICANCE OF THE STUDY

 This study is useful to the management, owners, investors, government,

employees, suppliers and society.

 This study is useful to the research scholars who conduct in depth research.

 This study is useful to the similar organization in assessing their financial

performance.

  This study provides on insight into the various aspects financial statement
analysis Hence the company can make the necessary changes in the policy
relating to it.
  This study is also useful to competitors to make necessary. Steps to improved
financial statement analysis.

LIMITATIONS OF THE STUDY

 As the time spent on project is only 6 weeks, it is not possible to go into detail
study.

 Since the current year was not completed it was not possible to compare the
current year information with the previous information.

 Some of the information was with registered office of the company due to some
statutory requirements so it became difficult to get the overall information of the
company.

 Since we are new to the company, company refused to provide its financial
information.

 The funds flow contains historical information. This in formation ist useful; but an
investor should be concerned more about the present and future.

 The collected information is mainly through secondary data.

INDUSTRY PROFILE

         Dairying has been of life in India since the ancient times. The modern diary
Industry took roots in 1950 with the sale of bottled milk in Bombay from Array milk
colony. The first large scale milk products factory was started in 1945 at Anand a Co
operative venture, with the assistance of UNICEF, for the production of milk powder,
table butter and ghee. These products were making from the buffalo milk.

     The world's largest development program over undertaken, the operation flood
undertook and gigantic task of upgrading and modernizing with production,
procurement, processing and marketing with the assistance provided by the World Bank
and other external agencies, designed and implemented by the National Diary
Development Board (NDDB) and the Indian Diary Corporation. The project was
launched in July, 1970. Its basic concept compromises the establishment of co-
operative structure on Anand pattern.
           The popular adage "nothing succeeds like success" is applicable to the dairy
development in India. If the country witnessed the "green revolution leading to self
reliance in food grains in the sixties and the seventies, the decades of the eighties and
the nineties witnessed the white revolution". Indian total milk production is ranked first in
the world followed by the United States. Initially dairying was largely an unorganized
activity, By and large land holding farmers kept cattle mainly for bullock production. Milk
was essentially a byproduct. The surplus after domestic consumption was either
converted into conventional products mainly ghee and sold to middle men who cater to
the needs of the market.

          As India enters an era of economic reforms, agriculture, particularly the
livestock sector, is positioned to be a major growth area. The fact that dairying could
play a more constructive role in promoting rural welfare and reducing poverty is
increasingly being recognized. For example, milk production alone involves more than
70 million producers, each raising one or two cowsbuffaloes Cow dung is an important
input as organic fertilizer for crop production and is also widely used as fuel inn rural
areas: Cattle also serve as an insurance cover for the poor households, being sold
during times of distress

            There was an increasing demand for milk from the urban areas. There arose a
need for the farmers to increase the production of milk. Since the demand in the urban
scenario is rapidly increasing so do the farmers generate the supply? Further the new
duiry plant capacity approved under the Milk and Milk products onder (MMPO) has
exceeded 100 million Upd. The new capacity would surpass the projected rural
marketable surplus of milk by about 40 percent by 2005.

HISTORY

           The origin of dairy farms under public management dates back to 1886 when
the department of Defense established a few dairy farms in that year to supply milk and
milk products to the British troops. The next step was initiated during the First World
War.

             In 1914, the Department of Defense on the advice of the Board of Agriculture
advised the Government in 1916, to appoint imperial dairy expert. The next important
step was the decision to conduct a census of livestock The Board of Agriculture carried
out the livestock census in 1919 as a preparatory action for planned dairy development.
In 1920, the imperial expert recommended to the Govemment for the establishment of a
training center to meet the manpower requirements for managing the Defiance Dairy
Farms. By this time there were three dairy farms and until 1923 the British
Government's approach towards dairying was confined to milk requirements of the
military only. After 1923, diploma course in dairy were started at Bangalore.
            Dr. N.C. Waght, Director. Dairy Research institute, Scotland who was invited to
India in 1936 for reviewing the progress of dairying in the country has made two
recommendations:

 Industry needs have to be solved by developing own technology and

technologists in the country.

 india is country of villages, of which most inhabitants are small, marginal farmers
and landless laborers. Development should be promoted only on co-operative
lines.

           In 1937, the Luck now Milk producer's co-operative Union limited was
established paving the way for the organization of such union in districts and state.

               In 1945, the Famine enquiry commission in its report emphasized the
need for developing fodder supply for increasing milk production and recommended the
adoption of mixed farming with a place for fodder and crop rotation. As a sequel to this,
under the Greater Bombay Milk Scheme, milk was procured from kaira district, Gujarat
by the private dairy. That gave way to the idea of creating an institutional structure for
dairying on co-operative lines.

Developments of Industry:-

National Dairy Development Board (NDDB):-

The Government of India had established the National Dairy

Development Board (NDDB), an autonomous body headquartered at Anand's Co-
operative in India. In order to develop dairy in India, NDDN drew plans for operation
flood".

Operation Flood:

In the late sixties, the board drew up a project called Operation

Flood (OF)- meant to crate a flood of milk in India's villages with funds mobilized from
foreign donations. Producer's co-operatives, which sought to link dairy development
with milk marketing, were central plank of this project. The Operation Flood, which
started in 1970, concludes its third phase in 1996 and has to its credit these significant
results:

 The enormous urban market stimulus has led to sustained.

  Production increases, raising per capita availability of milk to carly 200 grams per
day.

 The dependence on commercial imports of milk solids are alone away with.

 Modernization and expansion of the dairy industry and its infrastructure,

activating milk grid.

 Marketing expanded to supply hygienic and fair priced milk to some 300 million
consumers in 550 cities and towns

 A nationwide network of multi-tier producer's co-operative, democratic in

structure and professionally managed, has come into existence. Millions of small
producers participate in an economic enterprise and improve the quality of their
life and environment. 

 Dairy equipment manufacture has expanded meet most of the industry's needs.

Three Phases of Development:-

The scheme sought to establish milk produces co-operatives in the

villages and make modern technology available to them. The broad objectives are to
increase milk productions ("a flood of milk") angment rural incomes and transfer to milk
producers the profits of milk producers the profits of milk, marketing which are hitherto
enjoyed by well-to-do-middlemen.

PHASE:-1

Phase 1 of Operation Flood was financed by the sale within India of

skimmed milk powder and butter oil gifted by the EC countries via the world food
program As founder-chairman of the National Dairy Development Board (NDDB) of
India Dr.Kurien finalized the plans and negotiated the details of EEC assistance. He
looked after the administration of the scheme as found-chairman of the erstwhile Indian
Dairy Co-operation, the project authority for Operation Flood. During its first phase, the
project aimed at linking India's 1s best milk sheds with the milk markets of the four
metropolitan cities of Delhi. Mumbai, Calcutta and Madras.

PHASE:-2

Phase 2 of the project, implemented during 1981-85 raised this to some 136
milk sheds linked to over 290 urban markets. The seed capital rose from the sale of
WFP/EEC gif products and World Bank loan had created, by end 1985, a self-sustaining
system 43,000 village's co-operatives covering 4.25 million milk oducers. Milk powder
production went up from 22.000 tons in the pre project year to 1. 40,000 tuns in 1989,
thanks to dairies set up und Operation Flood. The EEV gifts thus helped to promote
self-reliance. Direct marketing of milk by producer's co-operatives resulting in the
transfer of profits from milk contracts increased by several million liters per day.

PHASE:-3

Phase 3 of Operation Flood (1985-1996) enabled dairy co-operatives to

rapidly build to the basic up the basic infrastructure required to procure and market
more and more milk daily. Facilities were created by the co-operatives to provide better
veterinary first-aid health care services to their producer's members.

Anand Pattern Diary Development

The information Anand pattern of milk co-operative was launched with the
organization of Krishna District Co-operative Milk producers Union Limited. In this
pattern. the function of diary is milk procurement, processing and marketing are
controlled by the milk producers themselves.

Planning Investment:

 33.43 Crores

 247.53 Crores

 187.00 Crores

 349.00 Crores

 116.00 Crores

 >600.00 Crores
Dairy Industry in Andhra Pradesh:

           The program Dairy Industry was mooted with commendable help of the United
National International Children's Emergency Fund. Food and Agriculture Organization
and Freedom from Hunger Company campaign organization of the UK. These
organization insisted a lot of the establishment of the dairy units at Hydria and
Vijayawada in 1967 and 1969 respectively, which lead to pioneer dairy development in
Andhra Pradesh later to set cooling and chilling centers have been setup to feed these
two gigantic units.

        The Government of Andhra Pradesh started dairy development corporation to

interest of milk producers and ensuring adequate supply of fresh milk at reasonable
price to the urban consumers as A.P.D.D.C. come in to the existence on 2 April 1974.
A.P.D.D.C., providing employment to nearly 20 employees and organism casy many as
87 dairy units including seven milk factories, 13 district dairies, 22 chilling centers, 18
cooling centre and 15 mini cooling centers.

             In addition to that the private units have been contributing their little mite in the
development of dairy industry M/s. Hindustan milk foods that has started a maltal milk
product factory in Rajahmundry. Further to enhance working efficiency and to increase
the turnover, the Government has constituted on autonomous dairy development.
Corporation on the recommendation measure the dairy industry improving towards
massive milk production and milk collections.

Dairy Development:

              In 1960 pilot milk supply scheme was started in the state for the dairy
development. Its initial capacity was 100 liters a day in the time of starting. Now its daily
collection increased to 11 lakhs liters per day. It is also working as alien between milk
producers of the towns by providing reasonable price to the producers to maintain
stable market.

A.P. Diary Development Co-Operative Federation (A.P.D.D.C.E):

               APD.DC.F. was formed in October, 1981 to implement Operation Flood-2

program through active involvement of producers in organization milk production,
procurements, processing and marketing on "three-tier". Co-operative structure as per
the National Govern of India. The three-tier system consists of primary dairy co-
operatives societies 13 village level, co-operative unions at district level and federation
at state level.

Operation Flood:

In our state operation flood was divided in three types "Anand

Level".
  Village Level-D.C.S.

 District Level - M.P.C.V.

 State Level -A.P.D.D.C.

Operation Flood Programmer:

              Indian diary Development Corporation own the responsibility of

implementation of operation flood programs, which provides money assistance, put 70
% towards loans and 30% as subsidy. National Diary Development Corporation
selected district of the State for implementation of operation fold.

Development of Dairy in Nineties:

              The momentum gained in the dairy through co-operatives during the last 20
years will now take India into nineties as major dairying country of the world. The
country's milk production in the early sixties which was about 20 million tons has
touched a record of 50 million tons. It is likely to reach about 80 million tons by 2000
AD, India which one time was dependant on other countries for products such as milk
powder, table botter and cheese has now become self sufficient. It has even started
exporting some of them in small quantities simultaneously efforts are made to expand
milk procurement, processing and marketing to meet the growing demand for milk
products.

Growth of the Industry:

Before the independence of India, I n the first half of the 20 century dairying in
the country was largely unorganized Fluid milk and its products were generally not
easily marketable commodities and there was no transport of these products to far
distances. Organized dairying, as well understood in the west started in a small way
when military dairy farms and creameries were established towards the end of the 20th
century to meet the demands of the armed forces and their hospitals. Some private
dairies, such as Kaveters and poisons with encouraged making pasteurized butter,
primarily for the use of the British army. As a result the imperial institute of animal
Husbandry and dairying was established in 1923 at Bangalore. There has been another
major effort in the early 1940's where milk produced in rural areas of kaira district was
collected in bulk Pasteurized and transported by distributing in Bombay by the Bombay
milk scheme" operated by the Bombay municipality. When India become independent in
1947, one of the major milk schemes to be included the country was "the Greater
Bombay milk scheme (GBMS)".
 COMPANY PROFILE:-

TIRUMALA MILK PRODUCTS Private Limited is a professionally managed

company engaged in the manufacture of a wide range of Dairy Products which include
Milk in Sachets, Sweets. Flavored Milk, Cund in Cups and Sachets, Milk Powder,
Butter, Ghee and Butter Oil both in bulk as well as in consumer packs

Established in 1998, TIRUMALA MILK PRODUCTS (P) Ltd. is one of the fastest
growing Private Sector Enterprises in India with a team of dedicated professionals, The
company has one of the most modern and versatile plants in the Indian Dairy Industry
with state-of-the-art technology. TIRUMALA MILK PRODUCTS (P) Ltd. Products meet
stringent quality control tests and cater to the premium segment of the market for Dairy
Products. TIRUMALA MILK PRODUCTS (P) Ltd, is presently implementing an
expansion programme and proposes to launch new products in the near future.

Presently TIRUMALA MILK PRODUCTS market presence in Andhra Pradesh,

Karnataka and Tamil Nadu. It handle 13 Lakh liters of milk per day in packing stations
and dairy plant, which is the single largest plant in the state of Andhra Pradesh. Its
Registered Office is located at Narasaraopet, Gutur Dist and Corporate Office located at
Kavurihills, Hyderabad.

TIRUMALA MILK PRODUCTS (P) Ltd. sells a rich, variod offering of nutritious,
tasty and healthy food products under well-known brand. Taste, health. convenience,
reliability and vitality for consumers are key characteristics Milk comes from cattle herd
that receive the best care along with healthy and nutritious diet in the form of quality
feed to ensure that they produce wholesome, high-quality milk. The major contributors
to the success of TIRUMALA MILK PRODUCTS (P) Lid are:

 Milk Procurement Network

 Superior sales and marketing prowess

 Strategic technological infrastructural advantage i

  Efficient human investments

Brief Introduction about Company:-

We have established a dairy unit named Tirumala Milk products (P) Limited,
at Kadivedu Village, Chillakur Mandal, Nellore District. Andhra Pradesh and
commissionered for commercial production for mareting during sepetember 1999 to
handle 2.25.000 litres of milk per day. The plant is located on Calcuna-Chennai National
High way, 9kms from Gudur town towards Chennai, in an are of 13.00 acres.

 Inception

 Vision 

 Mission

 Policies

1. Inception:

The unit is registered under S.S.I. The milk is bulk is being purchased from other
dairies processed, homogenized, packed and marketed mainly in Chennai, Bangalore
and Mysore cites. The milk is being alss sold in Gudunu, Tirupathi and Nellore towns
basing on consumers' demand. By marketing the milk in various towns, assured market.
Outlet is provided to large number of village milk producers for their surplus are applied
before machinery is installed in the dairy. Strict quality standards are applied before
marketing the milk for which well equipped laboratory is established. In order to deliver
quality milk to the consumers insulted trucks are used to transport milk from the dairy to
various destinations.

2. Vision:

Tirumala Milk Products (P) Limited is a dream come true to the dynamic young
entrepreneurs who have jointly effected to convert their skills, knowledge and
experience in the field of processing and producing milk and milk products.

Realizing the Milk Product Potentialities of the inversion track of the

Government of Andhra Pradesh and Government of India, with self managed financial
resources and established the Tirumala Dairy in the year 1995 at Narasarapet Guntur
District and erected new plant at Kadivedu in the year 1999. Today, the dairy has pods
to equate major dairies into southern region which has not only captured the market but
also has mode "Tirumala" an accepted Brand and preference of the consumers.

3. Mission:
Tirumala Milk Product (P) Limited is a dream come true to the dynamic young
entrepreneurs who have jointly afforded to convert their skills, knowledge and
experience in the field of processing and producing milk products.

4. Policies:

Guntur and erected new plant at Kadivedu in the year 1999. Today, the dairy
has posed to equate major dairies in the southem region which has not only captured
the market but also has mode "TIRUMALA" an accepted Brand and preference of the
consumers.

Organization Chart:

TIRUMALA MILK PRODUCTS (P) Ltd has a seasoned Board of Directors with
a collective blend of visionary leadership, consumer marketing expertise and
technological process.

 B.Brahma Naidu           :              Managing Director

 D.Brahmanandam        :            Joint Managing Director

 B.Nageswara Rao         :             Director

 Dr. N.Venkata Rao      :             Director

 E.N.Rao                      :            Executive Director

 R. srinivasa Rao          :           General Manager

 Ch. Mallikarjuna Rao  :            Financial Manager

Areas of Operation:

Tirumala distributes milk to various parts of Tamil Nadu, Andhra Pradesh, and
Karnataka, Gudur is the main source for delivering milk and milk products to Chennai
and other major parts of Tamil Nadu. The procurement and processing section located
at Pasupattur village of Chitoor district in Andhra Pradesh 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 Registered Office and plant at Singavaram
West Godavari District, Wadiyaram in Medak District and Gunagal in Rangareddy
District supplie milk curd and other products to major markets of Andhra Pradesh which
includes Hyderabad, Vijayawada, Guntur, Rajamandry, Kakinada, Visakhapatnam,
Mahabubnagar and Karim Nagar. Skim Milk Powder, Butter and Butter oil produced at
Gudur plant are supplied to major Industrial and Institutional customers located across
India.

THEORETICAL FRAMEWORK

Funds Flow Statement:

The following are the definitions of funds flow statement.

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".

According to R.A. Foulk:

"A statement of sources and applications of funds is a technical devise designed

to analysis the changes in the financial conditions of a business between two dates":

According to Big man:

It is a statement which highlights the underlying financial movements and

explains the changes of working capital from one point of time to another"

Thus funds flow statement is a report which summarizes the events taking place
between the two accounting periods. It spells out the sources from which funds were
derived and the uses to which these funds were put, This statement is essentially
derived from an analysis of the changes that have occurred in assets and liabilities
items between two balances sheet dates. In this statements only the net changes are
shows that the outcome of a transaction as of a series of transactions upon the financial
condition of at business enterprise is reflected more sharply.

Significance (or) Importance of Funds Flow Statement:

 The funds flow statement is an important tool of financial analysis. The utility of
the funds flow statement items from the fact that it enables management, shareholders,
investors, creditors and other interested in the enterprise to evaluate the uses of
financial policies of the management.

Decisions Relating To Financing:

With the people of the funds flow statement the analyst can evaluate the
financing patterns of the enterprise. An analysis of the major sources of funds in the
past reveals what portion of the growth was financed internally and what portion
externally. The statement is also meaningful in judging whether the company has grown
at too fast a rate. credit has increased at relatively higher rate, one would wish to
evaluate the consequences of slowness in the trade payments on the credit standing of
the company and its ability to finance in future.

Decision On Capitalization:

The funds flow statement serves as handmaid to the finance manager in

deciding the make up of capitalizations. Estimated uses of funds for new fixed assets
working capital, dividend, and repayment of debt are made for each of several future
years. Estimates are made of the funds to be provided by operations, and the balance
must be obtained by borrowing or issuance of new securities, if the indicated amount of
new funds required is greater than what the finance manager thinks possible to raise,
then plans for new fixed assets acquisition and the dividend policies are re-examined so
that the uses of funds can be brought into balance with the anticipated sources of
financing them. In particular funds statements are very useful in planning intermediate
and long term financing

USES OF FUNDS FLOW STATEMENT

The financial statements reveal the net effect of various transactions on the
operational and financial position of a concem. The balance sheet gives a static view of
the resources or a business and the uses to which these resources have been put at a
certain point time. But it does not disclose the causes for changes in the assets and
liabilities. between two different points of time.

The funds flow statement explains causes for such changes and also the effect
of these changes on the liquidity position of the company. Sometimes a concern may
operate profitably and yet its cost position may become more and worse. The funds flow
statement gives a clear answer to such a sinuation explains what has happened to the
profit of the firm.

It shows light on many perplexing question of general interest which otherwise

may be difficult to be answered, such as:
1. Why were the net current assets lesser in spite of higher profits and vice

versa?

2. Why more dividends could not be declared in spite of available profits?

3. How was it possible to distribute more dividends than the present eamings

4. What happened to the net profit? Where did they go?

5. What happened to the proceeds of sale of fixed assets or issue of shares?

Debentures etc.?

6. What are the sources of the repayment of debt?

7. How was the increase in working capsal financial and how will it be financed in
future?

It helps the formation of a realistic dividend policy, sometimes a firm has

sufficient profits available for distribution as dividend but yet it may not be advisable to
distribute divided for lack of liquid of cash resources. In such cases, a funds flow
statement helps in the formation of a realistic dividend policy.

GROWTH & PERFORMANCE

Schedule of working capital the year 2016-2017

Table 4.13
Working Capital
Particulars Previous Current Year
year 2015- 2016-17 Increase Decrease
16
A.Current assets:

Inventories 109075147 100760856 8314291

Sundary debtors 6358113 6844432.02 486319.02
Cash & Bank -balance 26367433 38838401.96 12470968.96
Deposits 4321650 7347643 3025993
Loans,advances and
prepaid expenditures 25367449 22284157.78 3083291

Total Current Assets 171489792 176075490.8

 0
B.Current liabilities:

Current liabilities 43492221 60299284.76 16807063.76

Provision for expenses 7087149 8349907.96 1262758.96

Total Current 50579370 68649192.72

Liabilities:

Net working capital(A- 120910422 10746298.10

B)
Decrease in working 13484123.90
-capital
120910422 120910422

INTERPRETATION:

The overall working capital is decreased by 13484123.90 in the year 2016-17.

Adjusted Profit & Loss Account for the year 2016-17

Table 4.14

Particular Amount Particular Amount

To Depreciation A/c 90598828.16 By Opening Balance of

Reserves and Surplus
A/c 48579189

To Closing Balance of
Reserves and Surplus By Funds from
A/c 64515839.95 operations 106535479.11

15511466.11 15511466.11
 Schedule of working capital the year 2017-2018

Table 4.16
Working Capital
Particulars Previous year Current Year
2016-17 2017-18 Increase Decreas
e
A.Current assets:

Inventories 100760856.00 258935801.00 158174945.00

Sundary debtors 6844432.02 23666599.00 16822166.98
Cash & Bank -balance 3883401.96 144273003.00 105434601.00
Deposits 7347643.00 6990208.00
Loans,advances and 357435.0
prepaid expenditures 22284157.78 48086695.00 25802537.22 0

176075490.80 481952306.00
Total Current Assets

B.Current liabilities:

Current liabilities 60299284.76 153837804.00

Provision for expenses 8349907.96

Total Current 68649192.72 173735231.00

Liabilities:

Net working capital(A-

B) 107426298.10 308217075.00
Decrease in working 4446148
-capital 200790776.90 0.76
1154751
9.04
107426298.10 107426298.10

INTERPRETATION:

The overall working capital is decreased by 200790776.90 in the year 2017-18.

 Adjusted Profit & Loss Account for the year 2017-18

Table 4.17
Particular Amount Particular Amount

To Depreciation A/c 174915289 By Opening Balance of

Reserves and Surplus
A/c 64515839.76

To Closing Balance of
Reserves and Surplus By Funds from
A/c 121127284.00 operations 231526733.10

296042573.00 296042573.00

FINDINGS:-

 It has been observed the share capital of company is not increasing from 2016 to
2017.

 The company is having good reserves and surplus position. These are increasing
year to year from 2016 to 2021.

 The company is taking loans from other sources like banks, financial institutes
etc. it observed from 2016 to 2021.

 It has been observed that the company is investing more on fixed assets from
2016 to 2020.

  It has been observed that the company is raising funds from secured and
unsecured loans, sale of fixed assets and funds from operations and it is
spending to purchase fixed asset, redemption of loans and other payments.

 It has been observed that the company made investments 2016 only. Afterwards
till 2018 no new investments have been made.

 The total increase in current assets of the company has overcome the total
increase in current liabilities in 2016 to 2021.
 It has been observed that the net working capital has decreasing in 2016-2017
(13484123.90) And the company's finds from operations is not satisfactory.

 It has been observed that the net working capsal has decreasing in 2017-2018.
(200790776.90). And the company's funds from operations are not satisfactory.
So,the company has to increase funds from operations.

 It has been observed that the net working capital has increasing in 2018-2019
(396477023.00). And the company's funds from operations are satisfactory. So,
the company has to maintain same level of funds.

 It has been observed that the net working capital has increasing in 2019-2020
(84103104,00) And the company's funds from operations is satisfactory So, the
company has to maintain same level of funds.

 It has been observed that the networking capital has increasing in 2020-2021
(550412450/-) And the company's funds from operations is not satisfactory. So
the company has to increase funds from operations.

SUGGESTIONS:-

 It has been observed that the share capital of the company is not increasing from
2016 to 2017. This is obstructing the growth of the company, Hence I suggest the
company to increase the share capital.

 It has been observed that the company's contribution to the fixed assets is
gradually decreasing through out the study. This would be a problem for the
company procuring funds. Hence I suggest the company focus on this and
increase the allocation for fixed assets.
o
 It has been observed that the company has made investments only in 2016.
Afterwards there are no investments at all though all these years. This may affect
the reputation of the company in the public. Hence I advise the company to
increase investments and improve its image.
  It has been observed that the increase in current assets of the company is less
than current liabilities in 2016-17. This shows that the company has less liquidity
capacity. Hence I suggest the company to maintain the current ration to 2:1 by
increasing current assets or reducing current liabilities.

 The company is getting favorable funds from operations in all years of the study.
This is due to the excellence in operations. This is a good trend and it should be
carefully maintained. It is suggested that the position of the working capital in
2016-17 has decreased. This will have on effect on sources of finds of the
company. Hence I advice the company improve the position of current assets
than current liabilities and control the decrease in working capital

 It is advised that the position of the working capital in 2017-18 has decreased.
This will have on effect on sources of funds of the company. Hence I advice the
company improve the position of current assets than current liabilities and control
the decrease in working capital.

 It is suggested that the position of the working capital in 2018-19 has increased.
So, the company has to maintain same level of working capital

 It is advised that the position of the working capital in 2019-20 has increased. So,
the company has to maintain same level of working capital.

 It is advised that the position of the working capital in 2020-21 has increased So,
the company has to maintain same level of working capita

BIBLIOGRAPHY

BOOK NAME AUTHOR PUBLICATION YEAR

FINANCIAL IM pandey 9/e, vikas 2004

MANAGEMENT publishing
Fundamentals of Prasanna chandra Tata Mc Graw 2003
Financial Hill,New Delhi.
Management

Financial M.Y Khan, P K Tata Mc Graw 2003

Masnagement Jain Hill,New Delhi.
Text and Problems

Financial Maheshwari S N, Vikas Publishing 2009

Accounting House Private
Maheshwari S K Limited , New
Delhi

Financial James Pearson Education 2004

Management and C.VanHorne
Policy

WEBSITES:-

WWW.TIRUMALA MILK PRODUCTS PVTLTD.AC.IN

WWW.TIRUMALA MILK PRODUCTS PVTLTD.COM

WWW. WEKIPEDIA.COM

WWW.MILK INDUSTRY.COM
CHAPTER – 1

INTRODUCTION
 INTRODUCTION

Firms create manufacturing capacities for production of goods some provide

services to consumers. They sell their goods or services to earn profit. They raise funds
to acquire manufacturing and other facilities. Thus, the three most important activities of
a business firm are; finance, production and marketing. A firm secures whatever capital
it needs and employees it (finance activity) in activities which generate returns on
invested capital and marketing activities.

Functions of Financial Management: 

The financial functions can be divided into four broad categories:

1.Investment decisions

2.Financing decisions.

3.Dividend decisions.

4.Liquidity decisions.

1. Investment Decision:

Investment decision or capital budgeting involves the decision of allocation of

capital or commitment of funds to long-term assets, which would yield, benefits in future.
It's one very significant aspect is the task of measuring the prospective profitability of
new investments. Future benefits are difficult to measure and cannot be predicted with
certainty.
2. Financing Decision:

Financing decision is the second important function to be performed by the

financial manager. Broadly, he must decide when, where and how to acquire funds
tomeet the firm's investment needs. The central issue before him is to determine the
proportion of equity and debt. The mix of debt and equity is known as the firm's capital
structure. The firm's capital structure is considered to be optimum when the market
value of shares is maximized.

3. Dividend Decision:

Dividend decision is the third major financial decision. The financial manager
must decide whether the firm should distribute a portion and retain the balance, Like the
debt policy, the dividend policy should be determined in terms of impact on the
shareholder's value. The optimum dividend policy is one, which maximizes the market
value of the firm's shares.

4. Liquidity Decision:

Current assets management, which affects a firm's liquidity, is an important

finance function. Current assets should be managed efficiently for safe guarding the firm
against the dangers of liquidity and insolvency. Investment in current assets affects
firm's profitability, liquidity and insolvency Investment in current assets affects firm's
profitability, liquidity and risk. A conflict exists between profitability and liquidity while
managing current assets.

Financial analysis is the process of identifying the financial strengths and

weaknesses of the firm. It is done by establishing relationships between the items of
financial statements viz., balance sheet and profit and loss account. Financial analysis
can be undertaken by management of the firm or by parties outside the firm viz.,
owner's creditors, investors and others.
                                                        
Types of Analysis

 Vertical Analysis

 Horizontal Analysis

Financial Statement Analysis:

            Financial statements are prepared primarily for decision making. They play a
dominant role in setting the frame work of managerial decision. But the information
provided in the financial statements is not an end in itself as no meaningful conclusions
can be drawn from these statements alone. However, the information provided in the
financial statements is of immense use in making decisions through analysis and
interpretation of financial statements.
           Financial analysis is the process of identifying the financial strengths and
weakness of the firm by properly establishing relationship between the items of the
balance sheet and the profit and loss amount. There are various methods or techniques
used in analyzing financial statements, such as comparative statements, trend analysis,
common size statements, schedule of changes in working capital, funds flow and
analysis, cost volume profit analysis and ratio analysis.

Meaning of Financial Statement Analysis:

            The term financial analysis also known as analysis and interpretation of
financial statements, refers to the process of determine financial strength and weakness
of the firm by establishing strategic relationship between the items of the balance sheet,
profit and loss account and oilier operative data.

          In the words of 'Myers." financial statements analysis is largely study of

relationship among the various financial factors in a business as disclosed by a single-
set of statements and study of the trend of these factors as shown in a series of
statements.

         The analysis and interpretation of financial statements is essential to bring out
the mystery behind the figures in financial statements.

Definition of Financial Statement Analysis:

According to Myers:

"Financial Statements Analysis is largely a study of relationship among the

various financial factors in a business disclosed by a single set of the trend these
factors as shown in a series of statements".

According to Kennedy and Muller:

"The analysis and interpretations of financial statements reveal each and every
aspect regarding the well-being financial soundness, operational efficiency and
creditworthiness of the concerned"

Methods of Financial Statement Analysis:

The analysis and interpretation of financial statement is used to determine the

financial position and results of operations as well. A number of methods or devices are
used to study the relationship between different statements. An effort is made to use
those devices, which clearly analyze the position of the enterprise. The following
methods of analysis are generally used:

 Comparative Statements
  Trend Analysis

 Common size statements

 Funds flow statements

 Cash flow statement

 Ratio Analysis

Comparative Statements:

              The comparative financial statements are statements of the financial position at

different periods of time. The elements of financial position are shown in a comparative
form so as to give an idea of financial position at two or more periods. Any statements
prepared in a comparative term will be covered in comparative statements. From
practical point of view. generally two financial statements (balance sheet and income
statement) are prepared in comparative form for financial analysis purposes.

               Not only the comparison of the figures of two periods but also be relationship
between balance sheet and income statement enables an in-depth study of financial
position a cooperative results. The comparative statement may show:

 Absolute Figures (Rupee Amounts)

 Changes in absolute figures i.e, increase (or) decrease in absolute figures.
 Absolute data in terms of percentages.

Comparative Statements:

1.Comparative Income Statement:

The income statement gives the results of the operation of a business. The
comparative income statement gives an idea of the progress of a business over a
period of time. The changes in absolute data in money values and percentages can be
determined to analyze the profitability of the business. Like comparative balance sheet,
income statement also has four columns. First two columns give figures of various items
for two years. Third and fourth columns are used to show increase is decrease in
figures in absolute amounts and percentages respectively.

2.Comparative Balance Sheet:

The comparative balance sheet analysis is the study of the trend of the same
items, group of items and computed items in two or more balance sheet of the same
business enterprise on different dates. The changes in periodic balance sheet items
reflect the conduct of a business. The changes can be observed by comparison of the
balance sheet at the beginning and at the end of a period and these changes can help
in forming an opinion about the progress of an enterprise. The comparative balance
sheet has two columns for the data of original valance sheets. A third column is used it
show increases in figures. The fourth column may be added for giving percentages of
increases or decreases the balance sheet shows the financial condition of a business at
a given point of time.

Common-Size Statement:

The common size statements, balance sheet and income statement are
shown in analytical percentages. The figures are shown as percentages of total assets,
total liabilities and total sales. The total assets are taken as 100 and different assets are
expressed as a percentage of the total. Similarly various liabilities are taken as a part of
total liabilities, These statements are also known as component percentage or 100
percent statement because every individual item stand as a percentage of the total 100.
The shortcomings in comparative statements and tend percentages where changes in
items could not be compared with the totals have been covered up. The analyst is able
to assess the figures in relation lo total values.

1.Common Size Income Statement:

An income statement in which each account is expressed as a percentages of

the value of sales. This type of financial statement can be used to allow for easy
analysis between companies or between time periods of a company.

2.Common Size Balance Sheet:

A company balance sheet that displays all items as percentages of a common

base figure. This type of financial statement can be used to allow for easy analysis
between companies or between time periods of a company

Cash Flow Statement:

         Cash flow is of vital importance to the financial management. It is an essential tool
of financial analysis for short-term planning. The chief advantages of cash flow
statement are as follow.

 Since cash flow statement is based on the cash basis of accounting, it is very
useful in the evaluation of cash position of a firm.
  A projected cash flow statement can be prepared in order to know the future
cash position of a concern so as to enable a firm to plan and coordinate its
financial operations properly. By preparing this statement, a firm can come to
know as to how much cash will be generated into the firm and how much cash
will he needed to make various payments and hence the firm can well plan to
arrange for the future requirements of cash.

 Cash flow statement helps in planning the repayment of loans, replacement of

fixed assets and other similar long-term planning of cash. It is also significant of
capital budgeting decisions.

Trend Analysis:

The financial statements may be analyzed by computing trends of series of

information; this method determines the direction upwards of downwards and involves
the computation of the percentage relationship that each statement item bears to the
same item in base year. The information for a number of years is taken rp and one year,
generally the first year. taken as a hade year. The figures of the hose year are taken as
100 and trend ratios for other years are calculated on the bases of base year. The
analyst is able to see the trend of figures, whether upward or downward.

Ratio Analysis:

One of the techniques of analysis of financial statements is to calculate ratios.

Ratio is the numerical or an arithmetical relationship between two figures. It is
expressed when one figure is divided by another. If 4000 is divided by 10,000 the ration
can be expressed as 4 ore 2:5 or 40%.

Absolute figures are valuable but they standing alone convey no meaning unless
compared with another. Accounting ration inter-relationships, which exist among various
accounting data'? When relationships among various accounting data supplied by
financial statements are worked out, they are known as accounting ratios.

Classification of Ratios:

Ratios may be classified in a number of ways keeping in view the particular

purpose. Ratios indicating profitability are calculated on the basis of the profit and loss
account, those indicating financial position are computed on the basis of the balance
sheet and those which operating efficiency or productivity or effective use of resources
are calculate on the basis of figures in the profit and loss account and the balance
sheet.

This classification is rather crude and unsuitable to determine the profitability

and financial position of the business. To achiever this purpose effectively ratios may be
classified as.
Ratios:-

 Profitability Ratio

 Activity Ratios

 Liquidity Ratio

 Leverage Ratio

Profitability Ratios:

Profitability Ratios are of outmost importance for a concem, these ratios are

calculated to enlighten the end results of business activities, which is the sole criterion
of the overall efficiency of a business concern.

 Gross profit margin ratio.

 Net profit margin ratio.

Turnover (Performance or Activity) Ratios:

These ratios are very important for a concem to judge how well facilities at the
disposal of the concern are being used or to ratios are usually calculated on the basis of
sales or cost of sales and are expressed in integers rather than as percentage. Such
ration should be calculated separately for each type of asset. Higher the turnover ratio,
the profitability and use of capital or resources will be. The following are the important
turnover ratios usually calculated by a concer.

 Inventory turn over ratio.

 Inventory holding period.

Liquidity Ratios:

These ratios are calculated to the financial posi n of the concern from long-term
as well as short-term solvency point of view. The following are the ratios, which are
calculated in the respect.
  Current ratios

 Quick ratio

Leverage Ratios:

Leverage Ratios to an increased means of accomplishing some purpose. In

financial management it refers to employment of funds to accelerate rate of return to
owners. It may be favorable unfavorable. An unfavorable leverage exists if the rate of
return remains to however. It can be used as a tool of financial planning by the finance
manager.

 Debt ratio.

 Debt equity ratio

OBJECTIVES OF THE STUDY

 To present a theoretical framework relating to funds flow analysis.

 The main objective of the study is to analyze the financial information of the
Tirumala milk products private limited.

 To evaluate the liquidity position of Tirumala milk products private limited.

 To understand the operating efficiency of Tirumala milk products private limited.

 To determine the financial status of the company and analyze them.

 To make pertinent suggestions for the effective management of funds flow

analysis of Tirumala milk products private limited.
 METHODOLOGY OF THE STUDY

Methodology is a systematic process of collecting information in order to

analyze and verifies a phenomenon. The collection of data is two principle sources.
They are discussed as

 Primary data

 Secondary data

Primary Data:-

The primary data needed for the study is gathered through interview with
concerned officers and staff, either individually or collectively, sum of the information
has been verified or supplemented with personal observation conducting personal
interviews with concerned officers of finance department of "TIRUMALA MILK
PRODUCTS PRIVATE LTD".

Secondary Data:-

The secondary datu needed for the study was collected from published
sources such as, pamphlets annual reports, returns and internal records, reference from
text books and journal management.

Further data needed for the study was collected from:-

 Collection of required data from annual records of the company.

 Reference from text books and journals relating to financial management.

Diagrammatic Representation of Research Methodology

Diagram 2.1
 DATA
SOURCE

Secondary
Primary data data

Inside the
Management Respondents
company

NEED OF THE STUDY

 The main need of the study is to analyses the financial information of the
Tirumala Milk products private limited.

 To find out the liquidity or short term solvency of the Tirumala milk products
private limited.

 To know the different types of funds flow analysis and how it shows

 impact on different organizations.

 To allow the relationship among various aspects in such a way that it allows
drawing conclusion about the performance, strengths and weaknesses of the
company.

 To know the short term servicing ability of the company.

 SIGNIFICANCE OF THE STUDY

 This study is useful to the management, owners, investors, government,

employees, suppliers and society.

 This study is useful to the research scholars who conduct in depth research.

 This study is useful to the similar organization in assessing their financial

performance.

  This study provides on insight into the various aspects financial statement
analysis Hence the company can make the necessary changes in the policy
relating to it.

 This study is also useful to competitors to make necessary. Steps to improved

financial statement analysis.

LIMITATIONS OF THE STUDY

 As the time spent on project is only 6 weeks, it is not possible to go into detail
study.

 Since the current year was not completed it was not possible to compare the
current year information with the previous information.

 Some of the information was with registered office of the company due to some
statutory requirements so it became difficult to get the overall information of the
company.

 Since we are new to the company, company refused to provide its financial
information.

 The funds flow contains historical information. This in formation ist useful; but an
investor should be concerned more about the present and future.
 The collected information is mainly through secondary data.
 CHAPTER – 2

INDUSTRY PROFILE AND COMPANY PROFILE

INDUSTRY PROFILE

         Dairying has been of life in India since the ancient times. The modern diary
Industry took roots in 1950 with the sale of bottled milk in Bombay from Array milk
colony. The first large scale milk products factory was started in 1945 at Anand a Co
operative venture, with the assistance of UNICEF, for the production of milk powder,
table butter and ghee. These products were making from the buffalo milk.

     The world's largest development program over undertaken, the operation flood
undertook and gigantic task of upgrading and modernizing with production,
procurement, processing and marketing with the assistance provided by the World Bank
and other external agencies, designed and implemented by the National Diary
Development Board (NDDB) and the Indian Diary Corporation. The project was
launched in July, 1970. Its basic concept compromises the establishment of co-
operative structure on Anand pattern.
           The popular adage "nothing succeeds like success" is applicable to the dairy
development in India. If the country witnessed the "green revolution leading to self
reliance in food grains in the sixties and the seventies, the decades of the eighties and
the nineties witnessed the white revolution". Indian total milk production is ranked first in
the world followed by the United States. Initially dairying was largely an unorganized
activity, By and large land holding farmers kept cattle mainly for bullock production. Milk
was essentially a byproduct. The surplus after domestic consumption was either
converted into conventional products mainly ghee and sold to middle men who cater to
the needs of the market.

          As India enters an era of economic reforms, agriculture, particularly the
livestock sector, is positioned to be a major growth area. The fact that dairying could
play a more constructive role in promoting rural welfare and reducing poverty is
increasingly being recognized. For example, milk production alone involves more than
70 million producers, each raising one or two cowsbuffaloes Cow dung is an important
input as organic fertilizer for crop production and is also widely used as fuel inn rural
areas: Cattle also serve as an insurance cover for the poor households, being sold
during times of distress

           There was an increasing demand for milk from the urban areas. There arose a
need for the farmers to increase the production of milk. Since the demand in the urban
scenario is rapidly increasing so do the farmers generate the supply? Further the new
duiry plant capacity approved under the Milk and Milk products onder (MMPO) has
exceeded 100 million Upd. The new capacity would surpass the projected rural
marketable surplus of milk by about 40 percent by 2005.

HISTORY

           The origin of dairy farms under public management dates back to 1886 when
the department of Defense established a few dairy farms in that year to supply milk and
milk products to the British troops. The next step was initiated during the First World
War.

             In 1914, the Department of Defense on the advice of the Board of Agriculture
advised the Government in 1916, to appoint imperial dairy expert. The next important
step was the decision to conduct a census of livestock The Board of Agriculture carried
out the livestock census in 1919 as a preparatory action for planned dairy development.
In 1920, the imperial expert recommended to the Govemment for the establishment of a
training center to meet the manpower requirements for managing the Defiance Dairy
Farms. By this time there were three dairy farms and until 1923 the British
Government's approach towards dairying was confined to milk requirements of the
military only. After 1923, diploma course in dairy were started at Bangalore.

            Dr. N.C. Waght, Director. Dairy Research institute, Scotland who was invited to
India in 1936 for reviewing the progress of dairying in the country has made two
recommendations:
  Industry needs have to be solved by developing own technology and
technologists in the country.

 india is country of villages, of which most inhabitants are small, marginal farmers
and landless laborers. Development should be promoted only on co-operative
lines.

           In 1937, the Luck now Milk producer's co-operative Union limited was
established paving the way for the organization of such union in districts and state.

                In 1945, the Famine enquiry commission in its report emphasized
the need for developing fodder supply for increasing milk production and recommended
the adoption of mixed farming with a place for fodder and crop rotation. As a sequel to
this, under the Greater Bombay Milk Scheme, milk was procured from kaira district,
Gujarat by the private dairy. That gave way to the idea of creating an institutional
structure for dairying on co-operative lines.

Developments of Industry:-

National Dairy Development Board (NDDB):-

The Government of India had established the National Dairy

Development Board (NDDB), an autonomous body headquartered at Anand's Co-
operative in India. In order to develop dairy in India, NDDN drew plans for operation
flood".

Operation Flood:

In the late sixties, the board drew up a project called Operation

Flood (OF)- meant to crate a flood of milk in India's villages with funds mobilized from
foreign donations. Producer's co-operatives, which sought to link dairy development
with milk marketing, were central plank of this project. The Operation Flood, which
started in 1970, concludes its third phase in 1996 and has to its credit these significant
results:

 The enormous urban market stimulus has led to sustained.

 Production increases, raising per capita availability of milk to carly 200 grams per
day.
  The dependence on commercial imports of milk solids are alone away with.

 Modernization and expansion of the dairy industry and its infrastructure,

activating milk grid.

 Marketing expanded to supply hygienic and fair priced milk to some 300 million
consumers in 550 cities and towns

 A nationwide network of multi-tier producer's co-operative, democratic in

structure and professionally managed, has come into existence. Millions of small
producers participate in an economic enterprise and improve the quality of their
life and environment. 

 Dairy equipment manufacture has expanded meet most of the industry's needs.

Three Phases of Development:-

The scheme sought to establish milk produces co-operatives in the

villages and make modern technology available to them. The broad objectives are to
increase milk productions ("a flood of milk") angment rural incomes and transfer to milk
producers the profits of milk producers the profits of milk, marketing which are hitherto
enjoyed by well-to-do-middlemen.

PHASE:-1

Phase 1 of Operation Flood was financed by the sale within India of

skimmed milk powder and butter oil gifted by the EC countries via the world food
program As founder-chairman of the National Dairy Development Board (NDDB) of
India Dr.Kurien finalized the plans and negotiated the details of EEC assistance. He
looked after the administration of the scheme as found-chairman of the erstwhile Indian
Dairy Co-operation, the project authority for Operation Flood. During its first phase, the
project aimed at linking India's 1s best milk sheds with the milk markets of the four
metropolitan cities of Delhi. Mumbai, Calcutta and Madras.

PHASE:-2

Phase 2 of the project, implemented during 1981-85 raised this to some 136
milk sheds linked to over 290 urban markets. The seed capital rose from the sale of
WFP/EEC gif products and World Bank loan had created, by end 1985, a self-sustaining
system 43,000 village's co-operatives covering 4.25 million milk oducers. Milk powder
production went up from 22.000 tons in the pre project year to 1. 40,000 tuns in 1989,
thanks to dairies set up und Operation Flood. The EEV gifts thus helped to promote
self-reliance. Direct marketing of milk by producer's co-operatives resulting in the
transfer of profits from milk contracts increased by several million liters per day.

PHASE:-3

Phase 3 of Operation Flood (1985-1996) enabled dairy co-operatives to

rapidly build to the basic up the basic infrastructure required to procure and market
more and more milk daily. Facilities were created by the co-operatives to provide better
veterinary first-aid health care services to their producer's members.

Anand Pattern Diary Development

The information Anand pattern of milk co-operative was launched with the
organization of Krishna District Co-operative Milk producers Union Limited. In this
pattern. the function of diary is milk procurement, processing and marketing are
controlled by the milk producers themselves.

Planning Investment:

 33.43 Crores

 247.53 Crores

 187.00 Crores

 349.00 Crores

 116.00 Crores

 >600.00 Crores

Dairy Industry in Andhra Pradesh:

           The program Dairy Industry was mooted with commendable help of the United
National International Children's Emergency Fund. Food and Agriculture Organization
and Freedom from Hunger Company campaign organization of the UK. These
organization insisted a lot of the establishment of the dairy units at Hydria and
Vijayawada in 1967 and 1969 respectively, which lead to pioneer dairy development in
Andhra Pradesh later to set cooling and chilling centers have been setup to feed these
two gigantic units.

        The Government of Andhra Pradesh started dairy development corporation to

interest of milk producers and ensuring adequate supply of fresh milk at reasonable
price to the urban consumers as A.P.D.D.C. come in to the existence on 2 April 1974.
A.P.D.D.C., providing employment to nearly 20 employees and organism casy many as
87 dairy units including seven milk factories, 13 district dairies, 22 chilling centers, 18
cooling centre and 15 mini cooling centers.

             In addition to that the private units have been contributing their little mite in the
development of dairy industry M/s. Hindustan milk foods that has started a maltal milk
product factory in Rajahmundry. Further to enhance working efficiency and to increase
the turnover, the Government has constituted on autonomous dairy development.
Corporation on the recommendation measure the dairy industry improving towards
massive milk production and milk collections.

Dairy Development:

              In 1960 pilot milk supply scheme was started in the state for the dairy
development. Its initial capacity was 100 liters a day in the time of starting. Now its daily
collection increased to 11 lakhs liters per day. It is also working as alien between milk
producers of the towns by providing reasonable price to the producers to maintain
stable market.

A.P. Diary Development Co-Operative Federation (A.P.D.D.C.E):

               APD.DC.F. was formed in October, 1981 to implement Operation Flood-2

program through active involvement of producers in organization milk production,
procurements, processing and marketing on "three-tier". Co-operative structure as per
the National Govern of India. The three-tier system consists of primary dairy co-
operatives societies 13 village level, co-operative unions at district level and federation
at state level.

Operation Flood:

In our state operation flood was divided in three types "Anand

Level".

 Village Level-D.C.S.

 District Level - M.P.C.V.

  State Level -A.P.D.D.C.

Operation Flood Programmer:

              Indian diary Development Corporation own the responsibility of

implementation of operation flood programs, which provides money assistance, put 70
% towards loans and 30% as subsidy. National Diary Development Corporation
selected district of the State for implementation of operation fold.

Development of Dairy in Nineties:

              The momentum gained in the dairy through co-operatives during the last 20
years will now take India into nineties as major dairying country of the world. The
country's milk production in the early sixties which was about 20 million tons has
touched a record of 50 million tons. It is likely to reach about 80 million tons by 2000
AD, India which one time was dependant on other countries for products such as milk
powder, table botter and cheese has now become self sufficient. It has even started
exporting some of them in small quantities simultaneously efforts are made to expand
milk procurement, processing and marketing to meet the growing demand for milk
products.

Growth of the Industry:

Before the independence of India, I n the first half of the 20 century dairying in
the country was largely unorganized Fluid milk and its products were generally not
easily marketable commodities and there was no transport of these products to far
distances. Organized dairying, as well understood in the west started in a small way
when military dairy farms and creameries were established towards the end of the 20th
century to meet the demands of the armed forces and their hospitals. Some private
dairies, such as Kaveters and poisons with encouraged making pasteurized butter,
primarily for the use of the British army. As a result the imperial institute of animal
Husbandry and dairying was established in 1923 at Bangalore. There has been another
major effort in the early 1940's where milk produced in rural areas of kaira district was
collected in bulk Pasteurized and transported by distributing in Bombay by the Bombay
milk scheme" operated by the Bombay municipality. When India become independent in
1947, one of the major milk schemes to be included the country was "the Greater
Bombay milk scheme (GBMS)".

Milk Sheds Unions:

Operation flood programmer has been identified into milk sheds unions.

TABLE 3.1

NO MILK SHEEDS/UNIONS DISTRICTS

1 Visakha Srikakulam,Vizianagaram,Vizag
 2 Godavari East and WestGodavari
3 TIRUMULA TIRUMULA
4 Guntur-prakasam Guntur-Prakasam
5 Chittoor Chittoor
6 Cuddapha Cuddapah
7 Kurnool Kurnool
8 Nalagonda-Ranga Reddy Nalgonda-Ranga Reddy
9 Medak-Nizamabad Medak-Nizamabad

COMPANY PROFILE:-

TIRUMALA MILK PRODUCTS Private Limited is a professionally managed

company engaged in the manufacture of a wide range of Dairy Products which include
Milk in Sachets, Sweets. Flavored Milk, Curd in Cups and Sachets, Milk Powder, Butter,
Ghee and Butter Oil both in bulk as well as in consumer packs

Established in 1998, TIRUMALA MILK PRODUCTS (P) Ltd. is one of the fastest
growing Private Sector Enterprises in India with a team of dedicated professionals, The
company has one of the most modern and versatile plants in the Indian Dairy Industry
with state-of-the-art technology. TIRUMALA MILK PRODUCTS (P) Ltd. Products meet
stringent quality control tests and cater to the premium segment of the market for Dairy
Products. TIRUMALA MILK PRODUCTS (P) Ltd, is presently implementing an
expansion programme and proposes to launch new products in the near future.

Presently TIRUMALA MILK PRODUCTS market presence in Andhra Pradesh,

Karnataka and Tamil Nadu. It handle 13 Lakh liters of milk per day in packing stations
and dairy plant, which is the single largest plant in the state of Andhra Pradesh. Its
Registered Office is located at Narasaraopet, Guntur Dist and Corporate Office located
at Kavurihills, Hyderabad.
 TIRUMALA MILK PRODUCTS (P) Ltd. sells a rich, variod offering of nutritious,
tasty and healthy food products under well-known brand. Taste, health. convenience,
reliability and vitality for consumers are key characteristics Milk comes from cattle herd
that receive the best care along with healthy and nutritious diet in the form of quality
feed to ensure that they produce wholesome, high-quality milk. The major contributors
to the success of TIRUMALA MILK PRODUCTS (P) Lid are:

 Milk Procurement Network

 Superior sales and marketing prowess

 Strategic technological infrastructural advantage i

 Efficient human investments

Brief Introduction about Company:-

We have established a dairy unit named Tirumala Milk products (P) Limited,
at Kadivedu Village, Chillakur Mandal, Nellore District. Andhra Pradesh and
commissionered for commercial production for mareting during sepetember 1999 to
handle 2.25.000 litres of milk per day. The plant is located on Calcuna-Chennai National
High way, 9kms from Gudur town towards Chennai, in an are of 13.00 acres.

 Inception

 Vision 

 Mission

 Policies

1. Inception:

The unit is registered under S.S.I. The milk is bulk is being purchased from other
dairies processed, homogenized, packed and marketed mainly in Chennai, Bangalore
and Mysore cites. The milk is being alss sold in Gudunu, Tirupathi and Nellore towns
basing on consumers' demand. By marketing the milk in various towns, assured market.
Outlet is provided to large number of village milk producers for their surplus are applied
before machinery is installed in the dairy. Strict quality standards are applied before
marketing the milk for which well equipped laboratory is established. In order to deliver
quality milk to the consumers insulted trucks are used to transport milk from the dairy to
various destinations.

2. Vision:

Tirumala Milk Products (P) Limited is a dream come true to the dynamic young
entrepreneurs who have jointly effected to convert their skills, knowledge and
experience in the field of processing and producing milk and milk products.

Realizing the Milk Product Potentialities of the inversion track of the

Government of Andhra Pradesh and Government of India, with self managed financial
resources and established the Tirumala Dairy in the year 1995 at Narasarapet Guntur
District and erected new plant at Kadivedu in the year 1999. Today, the dairy has pods
to equate major dairies into southern region which has not only captured the market but
also has mode "Tirumala" an accepted Brand and preference of the consumers.

3. Mission:

Tirumala Milk Product (P) Limited is a dream come true to the dynamic young
entrepreneurs who have jointly afforded to convert their skills, knowledge and
experience in the field of processing and producing milk products.

4. Policies:

Guntur and erected new plant at Kadivedu in the year 1999. Today, the dairy
has posed to equate major dairies in the southem region which has not only captured
the market but also has mode "TIRUMALA" an accepted Brand and preference of the
consumers.

Organization Chart:

TIRUMALA MILK PRODUCTS (P) Ltd has a seasoned Board of Directors with
a collective blend of visionary leadership, consumer marketing expertise and
technological process.

 B.Brahma Naidu           :              Managing Director

 D.Brahmanandam        :            Joint Managing Director

 B.Nageswara Rao         :             Director

 Dr. N.Venkata Rao      :             Director

  E.N.Rao                      :            Executive Director

 R. srinivasa Rao          :           General Manager

 Ch. Mallikarjuna Rao  :            Financial Manager

Areas of Operation:

Tirumala distributes milk to various parts of Tamil Nadu, Andhra Pradesh, and
Karnataka, Gudur is the main source for delivering milk and milk products to Chennai
and other major parts of Tamil Nadu. The procurement and processing section located
at Pasupattur village of Chitoor district in Andhra Pradesh 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 Registered Office and plant at Singavaram
West Godavari District, Wadiyaram in Medak District and Gunagal in Rangareddy
District supplie milk curd and other products to major markets of Andhra Pradesh which
includes Hyderabad, Vijayawada, Guntur, Rajamandry, Kakinada, Visakhapatnam,
Mahabubnagar and Karim Nagar. Skim Milk Powder, Butter and Butter oil produced at
Gudur plant are supplied to major Industrial and Institutional customers located across
India.

Certificates and Awards:

  In recognition of its efforts and achievements in the dairy foods industry, and in
acknowledgment of all the challenges sumounted. TIRUMALA 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.

  TIRUMALA MILK PRODUCTS (P) Lid is an 150-9001-2000 and an 150 2000:

2005 certified company. The dairy is following Quality Management System and
Food Safety Standards.
  Apart from ISO certification. It has Certificate from SGS on SMP Analysis too.
TIRUMALA MILK PRODUCTS (P) Ltd. has IST Licence, Agmark Licence and
adheres to all other statutory standards as per requirements.

Products:-

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

TIRUMALA MILK PRODUCTS (P) Ltd. pasteurizes and packages all fresh dairy
products in technologically superior and frygienic conditions to ensure pure natural
freshness

TIRUMALA MILK PRODUCTS (P) Ltd. Handles 6,5 Lakhs liters of milk per
day in all their packing Stations and main dairy plant which is the highest in the state of
Andhra Pradesh.

Tirumala Milk Products (P) Ltd. Handles Milk in the Following Locations.

Table 3.2

Packing locations Handling Capacity Per day

Guntur 4.0 Lakh litres
Vellala cheruvu 2.0 Lakh liters
Bhimadolu 1.0 lakh liters
Palamaner 2.0 Lakh liters
Gungal 4.0 Lakh litres

Procurement of Milk:

TIRUMALA MILK PRODUCTS (P) Ltd. established 25 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 TIRUMALA MILK PRODUCTS (P) Ltd. is to procure more than 60 lakh
liters of milk directly from agents farmers using state-of-the-art machinery and
professionally trained staff.

Production:
  TIRUMALA MILK PRODUCTS (P) Ltd. has its main dairy plant at Kadivedu with
handling capacity of 4.0 lakhs hs of milk per day from various chilling centers and
local units.

 Main plant processes 3.0 Lakhs Lts of milk per day in automatic sachet filling
machines for supply and distribution to Chennai, Tirupati. Nellore, etc... in
insulated

 There is continuous growth in sale of milk from 50000 trs to 350000 ltr 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.

  At Palamaner unit processes and supplies 1.00 lakh liters of milk and 20000
liters of curd to Bangalore city.

 Vellalacheruvu Bhimadolu packing stations processes and supplies 2.0 lakh liters
of milk to Vijayawada, Guntur, Eluru, Visakhapatnam, Kakinada and
Rajahmundry.

  Wadiyaram plant has capacity of 50000 Liters milk to cater to the markets of
Medak, Nizambad, Adilabad and Karim Nagar Districts of AP.

Butter:-

Is made from pure cow & Buffalo fat under hygienically processed through
continuous butter making machine.

Ghee:-

Is made from pure cow & Buffalo butter under supervision 30 years granulation,
colour and aroma of ghee with a capacity of 8 tonnes per day. Ghee is packed in a wide
range of 7 mi to 15 Kgs.

Milk Powder:-

Is made from fresh cow & buffalo milk. plant is capable of marketing all type of
milk powders with a capacity of 15 tonnes per day.

By-Products:-

o Flavored Milk
 o  Lassi, Khava

o Milk Cake

o Mysore pak

o Panner

o Ice Cream

o  Curd

o  Buttermilk.

Balance Sheet:

Balance sheet is the most significant financial statement. It indicates the

financial condition or the state of affairs of a business at a particular moment of time.
More specifically, balance sheet contains information about resources and obligations of
a business entity and about its owners interests in the business at a particular pint of
time. Thus, the balance sheet of a firm prepared on March 31, 2021 reveals the firm's
financial position on this specific date. In the language of accounting, balance sheet
communicates information about assets, liabilities and owner's equity for a business firm
as on a specific date. It provides a snapshot of the financial position of the firm at the
close of the firm's accounting period.

Balance Sheet of Tirumala Milk Products Private Limited As On 31-03-2016.

Table 4.1

Sch.no As on 31-03-2016

1.SOURCE OF FUNDS:-

a.Share holders fund 1 23050000.00

b.Reserves and surplus 48579189.00

c.Secured loans 2 183326618.00

d.Un-secured loans 3 0.00

254955807.00
2.APPLICATION OF FUNDS:-

a.FIXED ASSETS:-

Gross block 4 148467660.00

Less:deprecation 60839408.00

Capital Work-in-progress 131380085.00

b.Investments

5 2610000.00
c.Current Assets:-

Inventory

Sundary debtors 6 109075147.00

Deposits 7 6358113.00
Cash and bank balances 8 4321650.00
Loans,advances and prepaid expenses 9 26367433.00
10 25367449.00

171489792.00
Less:current liabilities and provisions:

Current liabilities

Provisions for expenses

43492221.00
11
7087149.00
NET CURRENT ASSETS 12

d. Misc ecpenses to the extent not written 50579370.00

off
120910422.00

55300.00

254955807.00
 Balance Sheet of Tirumala Milk Products Private Limited As On 31-03-2017.

Table 4.2

Sch.no As on 31-03-2017

1.SOURCE OF FUNDS:-

a.Share holders fund 1 23050000.00

b.Reserves and surplus 64515839.95

c.Secured loans 2 104256408.06

d.Un-secured loans 3 80543944.00

272366192.01
2.APPLICATION OF FUNDS:-

a.FIXED ASSETS:-

Gross block 4
243455584.83
Less:deprecation
9058828.16
Capital Work-in-progress
152856756.67

9453137.30

162309893.97
b.Investments
 c.Current Assets:- 5 2610000.00

Inventory

Sundary debtors 6

Deposits 7 100760856.00

Cash and bank balances 8 6844432.02

Loans,advances and prepaid expenses 9 7347643.00

10 38838401.96

22284157.78

Less:current liabilities and provisions : 176075490.76

Current liabilities

Provisions for expenses 11

12
60299284.76

8349907.96
NET CURRENT ASSETS
68649192.72
d. Misc ecpenses to the extent not written
off
107426298.04

20000.00

272366192.01

Balance Sheet of Tirumala Milk Products Private Limited As On 31-03-2018.

Table 4.3

Sch.no As on 31-03-2018

1.SOURCE OF FUNDS:-

a.Share holders fund 1 82032382

b.Reserves and surplus 2 121127284

c.Secured loans 383547595

586707261

2.APPLICATION OF FUNDS:-

a.FIXED ASSETS:-

Gross block
440627226
Less:deprecation 3

174915289
265711938

Capital Work-in-progress 9400258

b.Investments 275112195

Different tax assets 4 3330520

c.Current Assets:- 0

Inventory

Sundary debtors 5 258935801

Deposits 6 23666599

Cash and bank balances 7 6990208

Loans,advances and prepaid expenses 8 144273003

9 48086695
 481952306

Less:current liabilities and provisions : (A)

Current liabilities

Provisions for expenses 10 153837804

11 19897427
NET CURRENT ASSETS:- (A-B)
173735231
d. Misc ecpenses to the extent not written (B)
off 308217075

47471

586707261

Balance Sheet of Tirumala Milk Products Private Limited As On 31-03-2019.

Table 4.4

Sch.no As on 31-03-2019

1.SOURCE OF FUNDS:-

a.Share holders fund 1 82021809

b.Reserves and surplus 2 220125849

c.Secured loans 336847834

 638995492

2.APPLICATION OF FUNDS:-

a.FIXED ASSETS:-

Gross block 554283910

Less:deprecation 3 227590571

326693339
Capital Work-in-progress 15147071
b.Investments 341840410
c.Current Assets:- 4
3330520
Inventory
34333
Sundary debtors 5
271428799
Deposits 6
18113070
Cash and bank balances 7
7787309
Loans,advances and prepaid expenses 8
129569540
9
72333257

Less:current liabilities and provisions:

499231975
Current liabilities (A)

Provisions for expenses

10
187019585
11
18442538
NET CURRENT ASSETS (A-B)

d. Misc ecpenses to the extent not 205462123

written off
(B) 293769853
 20376

638995492

Balance Sheet of Tirumala Milk Products Private Limited As On 31-03-2020.

Table 4.5

Sch.no As on 31-03-2020

1.SOURCE OF FUNDS:-

a.Share holders fund 1 82021809

b.Reserves and surplus 2 352852415

c.Secured loans 448032058

882906282

2.APPLICATION OF FUNDS:-

a.FIXED ASSETS:-

Gross block 739924697

Less:deprecation 3 300906841
 439017856

Capital Work-in-progress 62161069

501178925

3730520
b.Investments
107579
c.Current Assets:- 4
309192143
Inventory
16504157
Sundary debtors 5
9927806
Deposits 6
166447388
Cash and bank balances 7
95244304
Loans,advances and prepaid expenses 8

Less:current liabilities and provisions :

597315799
Current liabilities (A)

Provisions for expenses

10 194101605

NET CURRENT ASSETS (A-B) 11 25341237

d. Misc ecpenses to the extent not written

off
219442842
(B)
377872957

16301

882906282
 Balance Sheet of Tirumala Milk Products Private Limited As On 31-03-2021.

Table 4.6

Sch.no As on 31-03-2021

1.SOURCE OF FUNDS:-

a.Share holders fund 1 221590809

b.Reserves and surplus 2 377469702

c.Secured loans 1125855826

1724916337

2.APPLICATION OF FUNDS:-

a.FIXED ASSETS:-

Gross block
1051402312
Less:deprecation 3
408544350

642857962

149922643

792780605
Capital Work-in-progress
 b.Investments 3730520

c.Current Assets:- 107579

Inventory 4 630516341

Sundary debtors 19477152

Deposits 5 11240757

Cash and bank balances 6 236089263

Loans,advances and prepaid expenses 7 325165903

8 72333257

9 1222489416
Less:current liabilities and provisions:

Current liabilities

Provisions for expenses (A)

259812204

34391806
10
294204010
NET CURRENT ASSETS (A-B) 11

d. Misc ecpenses to the extent not 928285406

written off
(B) 12226

20376

1724916337

Profit and Loss Account:

Balance sheet is considered as a very significant statement by bankers and

other lenders because it indicates the firm's financial solvency and liquidity, as
measured by its resources and obligations. However, creditors, particularly bankers and
financial analysts in India have recently started paying more attention to the firm's
earning capacity as a measure of its financial strength. The caring capacity and
potential of a firm are reflected by its profit and loss account. The profit and loss account
is a "score-board of the firm's performance during a period of time.

Profit and loss account presents the summary of revenues, expenses and net
income (or) net loss of a firm. It serves as a measure of the firm's profitability. Revenues
are amount that the customers pay to the firm for providing them goods and services.
The firm uses economic resources in providing goods and services to customers. The
cost of the economic resources used to earn revenues during a period of time is called
expenses. Thus determine, net profit, the accounting system matches expenses
incurred during the accounting period against revenues earned during that period. This
matching of expenses with revenue is called matching concept.

Revenues and expenses are sometimes categorized as operating and non

operating Revenues (expenses) arising from the main operations or business of the firm
are called operating revenues (operating expenses).

Profit and loss account of Tirumala Milk Products Private Limited for the year
ended on 31.03.2016

Table 4.7

Sch.no For the year ended

31.03.2016
I.INCOME:-
Sales 1240400781.00
Conversion charges received 13 0.00
Other income 14
Increase/(decrease) in stock 3954779.00
15 (504947.00)

1243850613.00
II.EXPENDITURE:-
Raw materials and packing material 1023506571.00
consumed 16
Processing and operating expenses 93831927.00
Salaries,wages and other payments to 17 13783556.00
staff 18 66013137.00
Administrative and financial charges 19
Depreciation 10242362.00
20 19701377.00
III.Profit before tax:-
1227078930.00
Add:earlier year income(net off
expenditure) 16771683.00

Less:provision for tax 142680.00

Profit after tax 16914363.00

Less:Earlier year income tax (4341000.00)
Fringe benefit tax paid
12573363.00
(100006.00)
Add:Balance brought forward 0.00

Balance available for appropriation 12473357.00

36105832.00
BALANCE CARRIED FORWARD TO
BALANCE SHEET
48579189.00

48579189.00

Profit and loss account of Tirumala Milk Products Private Limited for the year
ended on 31.03.2017

Table 4.8

Sch.no For the year ended

31.03.2017
I.INCOME:-
Sales
Conversion charges received 13 148346207.19
Other income 14 1778101.00
Increase/(decrease) in stock 5370829.41
15 (31851606.00)
 1458765531.60

II.EXPENDITURE:-
Raw materials and packing material 1174717128.03
consumed 16
Processing and operating expenses 119458344.49
Salaries,wages and other payments to 17 16813493.80
staff 18 83389660.33
Administrative and financial charges 19
Depreciation 12858460.22
20 29759420.00
III.Profit before tax:-
Add:earlier year income(net off 1436996506.87
expenditure) 21769024.73

Less:provision for tax 0.00

Profit after tax 21769024.87

Less:Earlier year income tax (5088074.00)
Fringe benefit tax paid
16680950.73
(409833.00)
Add:Balance brought forward (334467.00)

Balance available for appropriation 15936650.73

48579189.22
BALANCE CARRIED FORWARD TO
BALANCE SHEET
64515839.95

64515839.95

Profit and loss account of Tirumala Milk Products Private Limited for the year
ended on 31.03.2018

Table 4.9

Sch.no For the year ended

31.03.2018
 I.INCOME:-
Sales
Other income 12 2852734310
Increase/(decrease) in stock 13 8279965
14 12664933

2873679208
II.EXPENDITURE:-
Raw materials and packing material
consumed
Processing and operating expenses 15
Salaries,wages and other payments to 16 2338261619
staff 213408096
Administrative and marketing expenses
Interest and financial charges 17
Depreciation 18 29470626
19 167759794
23599654
III.Profit before tax:- 40369063
Less:provision for tax 2812868852
Fringe benefit tax paid 60810356
Profit after tax:- 13794988
Add:-different tax 547908
Previous years items
Less:income tax of previous year
46467460
0
0
Add:Balance brought forward 1022019

BALANCE CARRIED FORWARD TO 45445441

BALANCE SHEET

75681843

121127284

Profit and loss account of Tirumala Milk Products Private Limited for the year
ended on 31.03.2019
Table 4.10

Sch.no For the year ended

31.03.2019
I.INCOME:-
Sales
Other income 12 3738023759
Increase/(decrease) in stock 13 20013459
14 24192668

3782229886
II.EXPENDITURE:-
Raw materials and packing material
consumed
Processing and operating expenses 15
Salaries,wages and other payments to 16 3003522365
staff 299487356
Administrative and marketing expenses
Interest and financial charges 17
Depreciation 18 43541860
19 213490288
37111286
III.Profit before tax:- 52675282
Less:provision for tax 3659828436
Fringe benefit tax paid 132401449
Profit after tax:- 329876706
Add:-different tax 617811
Previous years items
Less:income tax of previous year
98786932
34333
178851
Add:Balance brought forward 1552

BALANCE CARRIED FORWARD TO 98998564

BALANCE SHEET

121127284

220125849
 Profit and loss account of Tirumala Milk Products Private Limited for the year
ended on 31.03.2020

Table 4.11

Sch.no For the year ended

31.03.2020
I.INCOME:-
Sales
Other income 12 4707947739
Increase/(decrease) in stock 13 21160133
14 -28874089

4700233784
II.EXPENDITURE:-
Raw materials and packing material
consumed
Processing and operating expenses 15
Salaries,wages and other payments to 16 3704017569
staff 366521333
Administrative and marketing expenses
Interest and financial charges 17
Depreciation 18 66503436
19 264456756
31881963
III.Profit before tax:- 75380244
Less:provision for tax 4508761300
Fringe benefit tax paid 191472483
Profit after tax:- 56083597
Add:-different tax 651935
Less:income tax of previous year

134736951
73246
Add:Balance brought forward 2083631

BALANCE CARRIED FORWARD TO

BALANCE SHEET 132726566

220125849

352852415
 Profit and loss account of Tirumala Milk Products Private Limited for the year
ended on 31.03.2021

Table 4.12

Sch.no For the year ended

31.03.2021
I.INCOME:-
Sales
Other income 12 5859096824
Increase/(decrease) in stock 13 17348628
14 196863066

6073308529
II.EXPENDITURE:-
Raw materials and packing material
consumed
Processing and operating expenses 15
Salaries,wages and other payments to 16 4752723438
staff 459801451
Administrative and marketing expenses
Interest and financial charges 17 106475699
Depreciation 18 341971419
19 53709353
107637511
III.Profit before tax:- 5822318871
Less:provision for tax
Fringe benefit tax paid 250989658
Profit after tax:- 86799320
Add:-different tax 0
Less:income tax of previous year
164190338
0
4051
Add:Balance brought forward
Amount transfer for allotment of 146186287
bonus shares
BALANCE CARRIED FORWARD TO
BALANCE SHEET 352852415
517038702
139569000
 377469702

CHAPTER – 3

THEORITICAL FRAMEWORK
 Funds Flow Analysis

Significant technique of financial analysis is 'Funds Flow Analysis". It is designed

to highlight changes in the financial conditions of a business concern between two
points time which generally conform beginning and ending dates. Funds flow statement
is also termed as a statement of sources and applications of Funds", "statement of
changes in working capital, statement of changes in Financial Position", "statement of
Funds supplied and Applied", "statement of Funds Generated and Expended, where got
and where gone statement, funds statement.

Although financial statements supply useful information to the management and

describe the nature of changes ownership as a result of the period's productive and
commercial activities, these statements fail to mirror the funds changes that have taken
place over a given time span. They do not spell out the movements of funds. It is more
important to describe the sources from which additional finds sere derived and the uses
to which these funds were put, because the ultimate success of a business enterprise
depends on where got and where gone situations. The funds flow statement is,
therefore, prepared to uncover the information which the financial statements fail to
describe clearly.

Meaning and Concept of "Flow of Funds:

The term 'flow' means movement and includes both inflow and "outflow. The term
Flow of funds' means transfer of economic valued from one asset off equity to another.
Flow of funds is said to have taken placed when any transaction makes changes in the
amount of funds available before happening of the transaction. If the effect of
transaction results in the increase of funds, it is called sources of funds and if it results
in the decrease of funds, it if known as application of funds, further, in case the
transaction does not change funds it is said to have not resulted in the flow of funds.
According to the working.

Capital concept of funds, the term "flow of funds refers to the movement of funds
in the working capital. If any transaction results in the increase in working capital, it is
said to be a source or inflow of funds and if it results in the decrease if working capital, it
is said to be an application or out-flow of funds.

Funds Flow Statement:

The following are the definitions of funds flow statement.

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".

According to R.A. Foulk:

"A statement of sources and applications of funds is a technical devise designed

to analysis the changes in the financial conditions of a business between two dates":

According to Big man:

It is a statement which highlights the underlying financial movements and

explains the changes of working capital from one point of time to another"

Thus funds flow statement is a report which summarizes the events taking place
between the two accounting periods. It spells out the sources from which funds were
derived and the uses to which these funds were put, This statement is essentially
derived from an analysis of the changes that have occurred in assets and liabilities
items between two balances sheet dates. In this statements only the net changes are
shows that the outcome of a transaction as of a series of transactions upon the financial
condition of at business enterprise is reflected more sharply.

Significance (or) Importance of Funds Flow Statement:

The funds flow statement is an important tool of financial analysis. The utility of
the funds flow statement items from the fact that it enables management, shareholders,
investors, creditors and other interested in the enterprise to evaluate the uses of
financial policies of the management.

Decisions Relating To Financing:

 With the people of the funds flow statement the analyst can evaluate the
financing patterns of the enterprise. An analysis of the major sources of funds in the
past reveals what portion of the growth was financed internally and what portion
externally. The statement is also meaningful in judging whether the company has grown
at too fast a rate. credit has increased at relatively higher rate, one would wish to
evaluate the consequences of slowness in the trade payments on the credit standing of
the company and its ability to finance in future.

Decision On Capitalization:

The funds flow statement serves as handmaid to the finance manager in deciding the
make up of capitalizations. Estimated uses of funds for new fixed assets working
capital, dividend, and repayment of debt are made for each of several future years.
Estimates are made of the funds to be provided by operations, and the balance must be
obtained by borrowing or issuance of new securities, if the indicated amount of new
funds required is greater than what the finance manager thinks possible to raise, then
plans for new fixed assets acquisition and the dividend policies are re-examined so that
the uses of funds can be brought into balance with the anticipated sources of financing
them. In particular funds statements are very useful in planning intermediate and long
term financing.

Reveals The Reasons For Financial Difficulties:

The funds flow statement reveals clearly the cause for the financial difficulties of the
company. The difficulties may be due to improper mix of short and long term sources,
un necessary accumulati of inventory of fixed assets etc. These can be found out by a
careful study of the funds flow statement.

Useful To the External Parties:

The outside parties can have a clear knowledge about the financial policies that
the company has persuade. In the light of the information so supplied by the statement
the outsiders can decide whether or not to invest in the enterprise and on what terms
funds have to be invested. The funds statement provides an insight into the financial
operations of a business enterprise an insight immensely valuable to the finance
manager in analyzing the past and future expansion plans of the enterprise and the
import of these plans an its liquidity. He can detect imbalances in the issue of funds and
undertake remedial actions

Useful As Control Device:

The funds flow statement also serves as a control device in that the statement
compared with the budgeted figures will show to what extent the funds were put to use
according to plan. This enables the finance managers to find out deviation from the
planned course of action and take remedial steps to correct the deviations.
 Thus, the funds statement draws the attention of finance manager to problems
which call for detailed analysis and immediate action. In view of these funds flow
statement is becoming more popular with management. Even some hank managers
make it obligatory for the borrowers to furnish a funds statement along with their annual
balance. sheet now a days many Indian companies are publishing this statement in their
annual reports although they are not obliged to do so under the companies Act,

It Helps In The Analysis of Financial Operations:

The financial statements reveal the net effect of various transactions on the
operational and financial position of a concem. The balance sheet gives a static view of
the resources or a business and the uses to which these resources have been put at a
certain point time. But it does not disclose the causes for changes in the assets and
liabilities. between two different points of time.

The funds flow statement explains causes for such changes and also the effect
of these changes on the liquidity position of the company. Sometimes a concern may
operate profitably and yet its cost position may become more and worse. The funds flow
statement gives a clear answer to such a sinuation explains what has happened to the
profit of the firm.

It shows light on many perplexing question of general interest which otherwise

may be difficult to be answered, such as:

1. Why were the net current assets lesser in spite of higher profits and vice

versa?

2. Why more dividends could not be declared in spite of available profits?

3. How was it possible to distribute more dividends than the present eamings

4. What happened to the net profit? Where did they go?

5. What happened to the proceeds of sale of fixed assets or issue of shares?

Debentures etc.?

6. What are the sources of the repayment of debt?

7. How was the increase in working capsal financial and how will it be financed in
future?

It helps the formation of a realistic dividend policy, sometimes a firm has

sufficient profits available for distribution as dividend but yet it may not be advisable to
distribute divided for lack of liquid of cash resources. In such cases, a funds flow
statement helps in the formation of a realistic dividend policy.

It Helps In The Proper Allocation of Resources: -

The resources of a concem are always limited and it wants to make the best use
of these resources managerial decisions. The firm can plan the deployment of its
resources and allocate them among various applications.

It Acts As A Future Guide:

A projected funds flow statement also acts as a guide for future to the
management. The management can come to know the various problems it is going to
lace in near future for want of funds. The firm's future needs of funds can be projected
well in advance and also the timing of these needs. The firm can arrange to finance
these needs more effectively and avoid future problems.

It Helps In Appraising The Use of Working Capital:

A funds flow statement helps in explaining how efficiently the management has
used is working capital and also suggests ways to improve working capital position of
the firm

It Helps Knowing The Overall Credit Worthiness of A Firm: -

The financial institutions and banks such as state financial institutions, industrial
Development Corporation, industrial financial corporation of India, industrial
development bank of India etc., all ask for funds flow statement constructed for a
number of years before granting loans to know the credit worthiness and paying
capacity of the firm. Hence u firm seeking financial prepare funds flow statements. from
these institutions alternative but to

Limitations of Funds Flow Statement:

The funds flow statement has a number of uses; however it has certain
limitations also, which are listed below.

 It should remembered that a funds how statement is not a substitute of an

income statement or a balance sheet. It provides only some additional
information as regards changes in working capital.

 It cannot reveal continuous changes.

  It is not an original statement but simply is arrangement of data given in the
financial statements.

 It is essentially historic in nature and projected funs flow statement cannot be

prepared with much accuracy.

 Changes in cash are more important and relevant for financial management than
the working capital.

. Cash flow statement: a statement of changes in the financial position

of firm on cash basis is called a cash flow statement.

Rules for Funds Flow Analysis:

 The flow of funds occurs when a transaction changes on the one hand a non
current account and on the other current account and vice-versa.

 When a change in a non current account e.g. fixed assets, long term liabilities
reserves and surplus fictitious assets etc, followed by a change in another non
current account, it does not amount to flow of funds. 

 This is because of the fact that in such cases neither the working capital
increases non decreases, Similarly, when a change in one current account
results in a change in anther current account it does not affect funds. Funds
move from non current to current transactions or vice-versa only.

 In simple fanguage funds move when a transaction affects (1) a current assets
and a fixed assets or (n) a fixed and a current liability or (iii) a current asset and a
fixed liability of (iv) a fixed liability and current liability, and funds so not move
when the transaction affects fixed assets and fised liability or current assets and
current liability.

Financial Statements and Funds Flow Statement:

Financial statement means the profit and loss account and the balance sheet. All
the organizations more particularly, the company from of organizations is required to
present the annual financial statements every year. The financial statements differ with
the funds flow statement in many ways.
 A Funds Flow Statement is a statement measuring the inflows the inflows and
outflows of net working capital that result from any type of business activity between two
dates. An Income statement in a statement measuring the inflows and outflows of net
assets (revenue nature that result form rendering goods on services to customers
between two dates.

A Funds Flow Statements has become a useful tool in the hands of financial
analyst. That is being caused the financial statements i.e. Income statement measures
the flows restricted to transaction relating to rendering of goods and services to
customers. It is not capable of any accurate information of the resources from operating
unless the income data is converted into funds data. It does not depict the major
financial transactions which have resulted in changes in Balance Sheet.

Comparison between Funds Flow Statement and Cash Flow Statement:

The term 'Funds" has a variety of meanings. In a narrow sense it means cash and
the statement of changes in the financial position prepared on cash basis is called a
cash flow statement. In the most popular sense, the term "finds' refers to working capital
and u statement of changes in the financial position prepared on tills basis is called a
funds flow statement. A cash flow statement is much similar to a funds flow statement
as both are prepared to summaries the causes of changes in the financial position of a
business. However, following are the main differences between funds and a cash flow
statement.

 Funds flow statement is based on a wider concept of funds 1.e working capital
while cash flow statement is based in the narrower concept of funds, i.e. cash
only, which is only one element of working capital, the other being debtors stock,
temporary investment, bills receivable etc.

 Funds flow statement is based on accrual basis of accounting while cash flow
statements are based on cash basis of accounting. In cash flow statement while
calculating operating profits, adjustments for prepaid and outstanding expenses
and income are made to convert the data from accrual basis to cash basis, but
no such adjustments are required to be made while preparing a funds flow
statements.

  Funds flow statement does not reveal changes in current assets and current
liabilities. rather these appear separately in a schedule of changes working
capital. No such schedule of change in working capital prepared for a cash flow
statement and changes in all assets and liabilities fixed as well as current, are
summarized cash flow statement.
  the Cash flow statement is prepared by taking the opening balance of cash,
adding to this all the inflow of cash and deducting the outflows of cash from the
total. The balance, ie, opening balance of cash and inflows of cash minus
outflows of cash, is reconciled with closing balance of cash. No such opening or
closing balance appears in a funds flow statement. The net difference between
sources and applications of funds does not represent cash rather it reveals the
net increase or decrease in working capital.
 Funds flow statement is useful planning intermediate and long-term financing
while as cash flow statement is more useful for short-term analysis and cash
planning of the business.

Preparation of Funds Flow Statement:

In order to prepare funds flow statement, it is necessary to find out the "Sources
and Applications of funds.

Sources of Funds:

Funds from Operations:

A fund from operations is the only internal sources of funds. Some

adjustments are to be made in calculating funds from operations to the net profit given
in the financial statement.

Proforma of Calculation of funds forms operations

Table 1.1

Particulars Amount Particulars Amount

To Depreciation XXX By Opening Balance XXX
of P&L Account
To General Reserve XXX By Profit on fixed XXX
Account Assets
To Loss On fixed XXX
asset
To Provision for XXX
Taxation
To Closing Balance XXX By Funds from XXX
P&L operations
XXX XXX

The following procedure is to be followed in the calculation of funds from

operations.
1. Start with the Net Profit given in the profit and loss account.

2. Add the following items to the net profit as they do not result in outflow of funds.

 Depreciation on fixed assets.

 Preliminary expenses or good will etc., written off.

 Contribution to debenture redemption funds, transfer to general reserve

 etc., if they have been deducted before arriving at the figure of net profit.

 Provision for taxation and proposed dividend. These may be taken as

appropriations of profits or current liabilities for the purposes of Funds Flow
Statement. Tax or dividends actually paid are taken as applications to funds.
Similarly interim dividend paid is known as an application of funds All these items
will be added back to net profit if already deducted, to find funds from operations.

 Loss on sale of fixed assets.

3. Deduct the following items from net profit as they do not increase the funds

 Profit on sale of fixed assets, since the full sale proceeds are taken as a separate
source of funds and conclusion here will result in duplication.

 Profit on revaluation of fixed assets.

 Non-operating incomes such as dividend received or accrued rent. These items

increase funds but they are not operating incomes. They will be shown under
separate heads as "sources" of funds" in the Funds Flow Statement.

 In case the profit and loss account shows net loss this should be taken as an
items which decrease the finds.

Statement of Changes in Working Capital:

The increase or decrease in working capital can be calculated by

preparing the schedule of changes in working capital.

Working capital represents the excess of current assets over current liabilities
Several items of all current assets and current liabilities are the components of working
capital. In order to ascertain the working capital at the beginning and at the end of the
period and to measure the increase or decrease therein it is necessary to prepare a
statement or schedule of changes in working capital.

Schedule of Changes in Working Capital of the Company for the Year Ended

Table 1.2

Particulars Previous Current Effect on working capital

Years(R.S) Year(R.S)
Increase Decrease
(R.S) (R.S)
A.Current Assets:-
Stock XXX XXX
Debtors XXX XXX
Cash-Bank XXX XXX
Bills receivables XXX XXX
Prepaid expenses XXX XXX
Total(A)

B.Current liabilities:- XXX XXX

Creditors
Bills receivable
Outstanding expenses XXX XXX
XXX XXX
XXX XXX
Total(B)

XXX XXX
Working changes: (A-
B)

Increase/decrease in XXX XXX

working capital

Total XXX XXX

XXXX XXXX XXXX XXXX

1.While preparing a schedule of changes in working capital it should be noted that.

  An increase in current assets increases working capital;

 A decrease in current assets decrease working capital;

 An increase in current liabilities decreases working capital,

 A decrease in current liabilities increase working capital:

 Increases in current asset and increase in current liabilities does not affect
working capital.

 A decrease in fixed assets and fixed liabilities affects working capital.

2. The changes in all currents assets and current liabilities are merged into one figure
only either an increase or decrease in working capital over the period for which funds
statements has been prepared. If the working capital at the end of the difference
expressed as increase in working capital. On the other hand, if the working capital at the
end of the period is less than that at the commencement, the difference is called
decrease in working capital.

Current Assets:

The expression current assets denotes those assets which are continually on the
move since they are constantly motion, they are also known as the circulating capital of
the business. These assets can or will be converted into cash during a complete
operating cycle of the business. Current assets include;

 stock-in-trade inventories

 debtors

 payments in advance or prepaid expenses

 stores
  Bills receivables

 Cash at bank

 Cash in hand

 Work in progress

Current Liabilities:-

Current liabilities are those liabilities which are to be paid in the near future, i.e..
during a complete operating cycle of the business. Such liabilities include;

 Trade creditors
 Accrued or outstanding expenses

 Bills payable

 Income tax payable

 Dividends declared

 Bank overdraft

Note:

Some experts are of the opinion that as bank over draft has a tendency to
become more or less a permanent source of financing and hence it need not be
included among current liabilities.

statement of Sources and Application of Funds:

Funds From Operation:

 It is an internal source of funds. Funds from operations are to be calculated as
per the method stated above.

Funds From Long Term Loans:

Long Term loans such of debentures, borrowing from financial institutions will
increase the working capital and therefore, there will be inflow of funds. However, if the
dehentures have been issued in consideration of some fixed assets, there will be no
inflow of funds.

Sale Of Fixed Assets:

Sale of land, buildings, and long-term investments will result in

generation of funds

Funds From Increase In Share Capital:

Issue of shares for cash or for any other current asset or in discharge of current
liability is another source of funds. However, shares allotted in consideration of some
fixed assets will not result in funds. However, it is recommended that such purchase of
fixed assets as well as issue of securities to pay for them be revealed in funds flow
statement.

 Decrease In Working Capital:

Decrease in working capital is the result of decrease in current asset or

increase in current liabilities. In both the cases inflow of funds takes place. Suppose.
stock, a current asset reduce from Rs.15,000 to Rs.12,000 the decrease of Rs 3,000 is
assumed to be due to the disposal of stock which undoubtedly brings funds into the
business. In the fame way, increase in current liabilities means lesser payment, so
retaining funds is also a source.

Performa of Funds flow Statements

Table 1.3

Particulars Amount (R.S)

Sources Of Funds:-

Issue of funds XXX

Issue of debenchers XXX

Long term borrowings XXX

Sale of fixed assets XXX

 Decrease in working capital XXX
Total sources

Application Of Funds:- XXX

Redemption of recdeemable XXX
Preference shares XXX
Redemption of debenchers XXX
Purchase of fixed assets XXX
Payment of other long term loans XXX
Payment of dividents,taxes,etc

Increase In Working Capital XXX

Total uses
Note: * only one will be there.

Treatment of Adjustments:

Some times the factors affecting the funds from operations may not be given in
the problems directly and there may be some hidden information. As such,some of the
transcations have to digger out using the additional information provided as adjustments
to the balance sheet. These items include : a) provision b) proposal dividends c)
sale purchase of fixed assets

Provision For Tax:

It is current liability while preparing a funds flow statement, these are two
options available.

• Provision for tax may be taken as a current liability in such a case, when provision for
tax is made the transaction involves profit and loss appropriation account which is a
fixed liability and provision for tax account which is a current liability. It will thus
decrease the working capital. On payment of tax these will be no change in working
capital because it will in-values one current liability (ie, provision for tax) and the other a
current assets (ie, bank or cash balance)

• Provision for tax may be taken only as an appropriation of profit. It means that,there
will now change working capital position when provision for tax is made since it will
involve two fixed liabilities, Le.. profit and less appropriation account and provision for
tax account. However, when tax is paid, it will be taken as application of funds, because
it will when involve "Provision for tax account which has been taken as a fixed liability
and "bank" which is current assets.

Proposed dividends:-

Whatever has been said about the "provision for tax is also applicable to
"proposed dividends". Proposed dividends can also be dealt with in two ways:

• Proposed dividends may be taken current liability since declaration of dividends by the
share holders is simply a formality. Once the dividends are declared in the general
meeting, they will have to be paid within 42 days of theirs declaration. In case proposed
dividends is taken as a current liability it. will appear as one of the items decreasing
working capital in the schedule of changes working capital. It will not be shown as an
application funds when dividend is paid later on.

• Proposed dividends may simply be taken as an appropriation of profits. In such a case

proposed dividend for the current year will be added back to current year's profit in order
to find out funds from operations if such amount of dividend has already been charged
to profits. Payment of dividend will be shown an "application of funds".

Sale Or Purchase Of Fixed Assets:-

For arriving at the final figure we have to prepare the asset account,
depreciation account, assets sold as purchased account. This can be illustrated well
with the following extracts of the balance sheet.

Asset Account (Plant And Machinery Account):-

This is maintained at the cost price. The accounts is debited with the cost of
the machinery as at the beginning of the year (i.e., balance in the machinery account at
the beginning) and with purchases during the year. It is credited with the cost price of
the machinery sold and with cost of the machinery as at the close of the year (e.
balance in the machinery account at the end). In the problems either the total value of
purchases during the year may be missing or the cost of the machinery sold may be
missing. The missing figure can be found out by feeding the account with the available
information and balancing it.

Depreciation Account:

Depreciation is not source of funds. Source of funds is constituted by those

transactions, where one account belongs to current category and the other is longs to
non-current category. In case of depreciation both items belong to non-current category,
as such it does not make any change in the funds and is not a source of funds. In
support of the answer journal entry regarding depreciation is presented herewith.
Profit and loss account is a non-current liability and fixed assets are non-current asset.
As both of them belong to non-current category, so depreciation is not absource of
funds.

Asset Sold Account:

The purpose of preparing this account is to ascertain the profit or loss made on
sale of the asset. The account is debited with the cost of the assets sold (transferred
from the asset account). It is crodited with the accumulated depreciation on the asset
sold (transferred from depreciation account). It is also credited with the money received
on sale of the machinery. The difference between the two sides would be profit (if credit
balance or loss (if debit balance).

CHAPTER – 4
 GROWTH AND PERFORMANBCE

GROWTH AND PERFORMANBCE

Schedule of working capital the year 2016-2017

Table 4.13
Working Capital
Particulars Previous Current Year
year 2015- 2016-17 Increase Decrease
16
A.Current assets:

Inventories 109075147 100760856 8314291

Sundary debtors 6358113 6844432.02 486319.02
Cash & Bank -balance 26367433 38838401.96 12470968.96
Deposits 4321650 7347643 3025993
Loans,advances and
prepaid expenditures 25367449 22284157.78 3083291

Total Current Assets 171489792 176075490.8

0
B.Current liabilities:

Current liabilities 43492221 60299284.76 16807063.76

Provision for expenses 7087149 8349907.96 1262758.96

Total Current 50579370 68649192.72

Liabilities:

Net working capital(A- 120910422 10746298.10

B)
Decrease in working 13484123.90
-capital 120910422 120910422

Adjusted Profit & Loss Account for the year 2016-17

Table 4.14
Dr Cr
Particular Amount Particular Amount

To Depreciation A/c 90598828.16 By Opening Balance of

Reserves and Surplus
A/c 48579189

To Closing Balance of
Reserves and Surplus By Funds from
A/c 64515839.95 operations 106535479.11

15511466.11 15511466.11

Funds Flow Statement for the year 2016-17

Table 4.15

Sources Amount Applications Amount

 Raising unsecured Payment on
loans 80543944 secured loan 79070209.94

Funds from Decreased in

operations 106535479.11 working in
progress 20885171.80
Decreased in
deffered tax assets Purchase fixed
assets 976847492.60
Expenditure 876204027.33
written off

Decreased in 35300.00
working capital

13484123.90

1076802874.34 1076802874.34

Interpretation:-

  It is observed from table 4.13 that the decrease in working capital 13484123.90/-
in the year 2016-17.

 The current assets of the company are increased comparing with previous year
results.

 The current liabilities of the company are increased comparing the previous
results

 To find the table 4.14 the company gains funds from the operation an extent
106535479.11/- 

 To find the table 4,14 the company deprecation is 90598828.16/-

 To find out the table 4.14 the company closing balanced 64515839.95/- reserves
and surplus in

 To find the table 4.15 the company decreased in working capital 13484123.90/-
 Schedule of working capital the year 2017-2018

Table 4.16
Working Capital
Particulars Previous year Current Year
2016-17 2017-18 Increase Decreas
e
A.Current assets:

Inventories 100760856.00 258935801.00 158174945.00

Sundary debtors 6844432.02 23666599.00 16822166.98
Cash & Bank -balance 3883401.96 144273003.00 105434601.00
Deposits 7347643.00 6990208.00
Loans,advances and 357435.0
prepaid expenditures 22284157.78 48086695.00 25802537.22 0

176075490.80 481952306.00
Total Current Assets

B.Current liabilities:

Current liabilities 60299284.76 153837804.00

Provision for expenses 8349907.96

Total Current 68649192.72 173735231.00

Liabilities:

Net working capital(A-

B) 107426298.10 308217075.00
Decrease in working 4446148
-capital 200790776.90 0.76
1154751
9.04
107426298.10 107426298.10

Adjusted Profit & Loss Account for the year 2017-18

Table 4.17
Dr Cr
 Particular Amount Particular Amount

To Depreciation A/c 174915289 By Opening Balance of

Reserves and Surplus
A/c 64515839.76

To Closing Balance of
Reserves and Surplus By Funds from
A/c 121127284.00 operations 231526733.10

296042573.00 296042573.00

Funds Flow Statement for the year 2017-18

Table 4.18

Sources Amount Applications Amount

Raising unsecured Payment on
loans 279291187.00 secured loan 80543944.00

Funds from Decreased in

operations 231526733 working in
progress 197171641.20
Decreased in
deffered tax assets Purchase fixed
assets 5061070557.20
Expenditure 58982382.00
written off

Decreased in 200790776.90
working capital

4568195063.40

5338786142.40 5338786142.40

Interpretation:-
  It is observed from table 4.16 that the decrease in working capital
200790776.90/- in the year 2017-18.

 The current assets of the company are increased comparing with previous year
results.

 The current liabilities of the company are increased comparing the previous
results.

 To find the table 4.17 the company gains funds from the operation to an extent
231526733.10/-

 To find the table 4.17 the company deprecation is 174915289.00/-

 To find out the table 4,17 the company closing balanced reserves and surplus is
121127284.00/-

 To find the table 4.18 the company decreased in working capital 200790776.90/-

Schedule of working capital the year 2018-2019

Table 4.19

Working Capital
Particulars Previous year Current Year
2017-18 2018-19 Increase Decreas
e
A.Current assets:

Inventories 258935801.00 271428799.00 12492998.00

Sundary debtors 23666599.00 18113070.00 5553529.
Cash & Bank -balance 144273033 129569540.00 70880101.00 00
Deposits 6990208.00 7787309.00
Loans,advances and
prepaid expenditures 48086695.00 72333257.00 24246562.00 1470346
3.00

481952306.00 499231975.00
Total Current Assets

B.Current liabilities:

Current liabilities 153837804.00 187019585.00 33181781.00

Provision for expenses 19897427.00 18442538.00 1454889.
00

Total Current 173735231.00 205462123.00

Liabilities:

Net working capital(A-

308217075.00 704694098.00
B)
Decrease in working
396477023.00
-capital

704694098.00 704694098.00

Adjusted Profit & Loss Account for the year 2018-19

Table 4.20
Dr Cr
Particular Amount Particular Amount
To Depreciation A/c 227590571.00 By Opening Balance of
Reserves and Surplus
A/c 121127284.00

To Closing Balance of
Reserves and Surplus By Funds from
A/c 220125849.00 operations 326589136.00

447716420.00 447716420.00

Funds Flow Statement for the year 2018-19

Table 4.21

Sources Amount Applications Amount

 Payment on
Funds from secured loan 46699761.00
operations 326589136.00
Deferred tax
Raising share assets 34333.00
holders fund 10573.00
Purchase fixed
Increasing working assets 113656684.00
in progress
5746813.00 Increase in
Increasing in working capital 396477023.00
working capital
224521279.00

556867801.00 556867801.00

Interpretation:-

 It is observed from table 4.19 that the increase in working capital 396477023,00/-
in the year 2018-19.

 The current assets of the company are increased comparing with previous year.

 The current liabilities of the company are increased comparing the previous
results.

 To find the table 4 20 the company gains funds from the operation to an extent
326589136.00/-
  To find the table 4.20 the company deprecation is 227590571.00/-

 To find out the table 4.20 the company closing balanced of reserves and surplus
is 220125849.00/-

 To find the table 4.21 the company increasing in working capital 396477023.00/-

Schedule of working capital the year 2019-2020

Table 4.22

Working Capital
Particulars Previous year Current Year
2018-19 2019-20 Increase Decreas
e
A.Current assets:

Inventories 271428799.00 309192143.00 37763344.00

Sundary debtors 18113070.00 16504157.00 1608913.
Cash & Bank -balance 129569540.00 166447388.00 36877848.00 00
Deposits 7787309.00 9927806.00 2140497.00
Loans,advances and
prepaid expenditures 72333257.00 95244304.00 22911047.00

499231975.00 597315798.00
Total Current Assets

B.Current liabilities:

Current liabilities 187019585.00 194101605.00 7082020.00

Provision for expenses 18442538.00 25341237.00 6898699.00

205462123.00 219442842.00
Total Current
Liabilities:
293769852.00 377872956.00
Net working capital(A-
B)
Decrease in working
-capital
84103104.00
 377872956.00 377872956.00

Adjusted Profit & Loss Account for the year 2019-20

Table 4.23
Dr Cr
Particular Amount Particular Amount

To Depreciation A/c 300906841.00 By Opening Balance of

Reserves and Surplus
A/c 220125849.00

To Closing Balance of
Reserves and Surplus By Funds from
A/c 352852415.00 operations 433633407.00

653759256.00 653759256.00

Funds Flow Statement for the year 2019-20

Table 4.24

Sources Amount Applications Amount

Payment of
Funds from unsecured loans 208357808.00
operations 433633407.00
Differed tax assets
Raising secured increased 73246.00
operations 111184224.00
Purchase fixed
Increasing in assets 299297471.00
working capital 47013998.00
Increase in
working capital 84103104.00

591831629.00 591831629.00
Interpretation:

● It is observed from table 4.22 that the increase in working capital 84103104.00/-
in the year 2019-20

● The current assets of the company are increased comparing with previous year
results.

● The current liabilities of the company are increased comparing the previous
results

● To find the table 4,23 the company gains funds from the operation to an extent

● 433633407.00

● To find the table 4.23 the company deprecation is 300906841.00/-.

Schedule of working capital the year 2020-2021

Table 4.25

Working Capital
Particulars Previous year Current Year
2019-20 2020-21 Increase Decreas
e
A.Current assets:

Inventories 309192143.00 630516341.00 321324198.00

Sundary debtors 16504157.00 19477152.00 2972995.00
Cash & Bank -balance 166447388.00 236089263.00 69641875.00
Deposits 9927806.00 11240757.00 1312951.00
Loans,advances and
prepaid expenditures 95244304.00 325165903.00 22911047.00
 597315798.00 1222489416.0
0

Total Current Assets

B.Current liabilities: 194101605.00 259812204.00

25341237.00 34391806.00
Current liabilities 65710599.00
Provision for expenses 9050569.00

219442842.00 294204010.00
Total Current
Liabilities:
377872956.00
Net working capital(A-
B) 928285406.00
Decrease in working 550412450.00
-capital
928285406.00 928285406.00

Adjusted Profit & Loss Account for the year 2020-21

Table 4.26
Dr Cr
Particular Amount Particular Amount

To Depreciation A/c 1051402312.00 By Opening Balance of

Reserves and Surplus
A/c 352852415.00

To Closing Balance of
Reserves and Surplus 377469702.00 By Funds from
A/c operations 1076019599.00

1428872014.00 1428872014.00

Funds Flow Statement for the year 2020-21

Table 4.27

Sources Amount Applications Amount

Payment of
Funds from unsecured loans 1193103496.00
operations 1076019599.00
Purchase fixed
Raising secured assets 311477615.00
loans 677823768.00
Increase in
Raising share working capital 550412450.00
holders fund 213388620.00

Increasing working 87761574.00

in progress

2054993561.00 2054993561.00

Interpretation:

 It is observed from table 4.25 that the increase in working capital 550412450.00/-
in the year 2020-21.

 The current assets of the company are increased comparing with previous year
results. 

 The current liabilities of the company are increased comparing the previous
results.

 To find the table 4.26 the company gains funds from the operation to an extent
1076019599.00/-

 To find the table 4.26 the company deprecation is 1051402312.00/-

 To find out the table 4.26 the company closing balanced reserves and surplus is
377469702.00/-
 To find the table 4.27 the company  increasing in working capital 550412450.00/-

CHAPTER – 5
 FINDINGS AND SUGGESTIONS

FINDINGS:-

 It has been observed the share capital of company is not increasing from 2016 to
2017.

 The company is having good reserves and surplus position. These are increasing
year to year from 2016 to 2021.

 The company is taking loans from other sources like banks, financial institutes
etc. it observed from 2016 to 2021.

 It has been observed that the company is investing more on fixed assets from
2016 to 2020.

  It has been observed that the company is raising funds from secured and
unsecured loans, sale of fixed assets and funds from operations and it is
spending to purchase fixed asset, redemption of loans and other payments.
 It has been observed that the company made investments 2016 only. Afterwards
till 2018 no new investments have been made.

 The total increase in current assets of the company has overcome the total
increase in current liabilities in 2016 to 2021.

 It has been observed that the net working capital has decreasing in 2016-2017
(13484123.90) And the company's finds from operations is not satisfactory.

 It has been observed that the net working capsal has decreasing in 2017-2018.
(200790776.90). And the company's funds from operations are not satisfactory.
So,the company has to increase funds from operations.

 It has been observed that the net working capital has increasing in 2018-2019
(396477023.00). And the company's funds from operations are satisfactory. So,
the company has to maintain same level of funds.

 It has been observed that the net working capital has increasing in 2019-2020
(84103104,00) And the company's funds from operations is satisfactory So, the
company has to maintain same level of funds.

 It has been observed that the networking capital has increasing in 2020-2021
(550412450/-) And the company's funds from operations is not satisfactory. So
the company has to increase funds from operations.
 SUGGESTIONS:-

 It has been observed that the share capital of the company is not increasing from
2016 to 2017. This is obstructing the growth of the company, Hence I suggest the
company to increase the share capital.

 It has been observed that the company's contribution to the fixed assets is
gradually decreasing through out the study. This would be a problem for the
company procuring funds. Hence I suggest the company focus on this and
increase the allocation for fixed assets.
o
 It has been observed that the company has made investments only in 2016.
Afterwards there are no investments at all though all these years. This may affect
the reputation of the company in the public. Hence I advise the company to
increase investments and improve its image.

 It has been observed that the increase in current assets of the company is less
than current liabilities in 2016-17. This shows that the company has less liquidity
capacity. Hence I suggest the company to maintain the current ration to 2:1 by
increasing current assets or reducing current liabilities.
  The company is getting favorable funds from operations in all years of the study.
This is due to the excellence in operations. This is a good trend and it should be
carefully maintained. It is suggested that the position of the working capital in
2016-17 has decreased. This will have on effect on sources of finds of the
company. Hence I advice the company improve the position of current assets
than current liabilities and control the decrease in working capital

 It is advised that the position of the working capital in 2017-18 has decreased.
This will have on effect on sources of funds of the company. Hence I advice the
company improve the position of current assets than current liabilities and control
the decrease in working capital.

 It is suggested that the position of the working capital in 2018-19 has increased.
So, the company has to maintain same level of working capital

 It is advised that the position of the working capital in 2019-20 has increased. So,
the company has to maintain same level of working capital.

 It is advised that the position of the working capital in 2020-21 has increased So,
the company has to maintain same level of working capital.

CONCLUSION

The economic life of any organization depends on some important financial

aspects like profits, expenses. A careful analysis of these areas is very much essential
for the success and survival of these organizations. For this purpose financial statement
analysis with the help of the technique like ratios, funds flow etc is to be carried out A
study of this type is very much useful for many organizations to keep into the different
financial aspects and to take some measures to improve in the above areas.

The company under the study of Tirumala milk products pvt ltd, being a unit of
the milk industry as to carefully watch the trends in the milk industry as should come
forward with innovative marketing strategies.
BIBLIOGRAPHY
 BIBLIOGRAPHY

BOOK NAME AUTHOR PUBLICATION YEAR

FINANCIAL IM pandey 9/e, vikas 2004

MANAGEMENT publishing

Fundamentals of Prasanna chandra Tata Mc Graw 2003

Financial Hill,New Delhi.
Management

Financial M.Y Khan, P K Tata Mc Graw 2003

Masnagement Jain Hill,New Delhi.
Text and Problems

Financial Maheshwari S N, Vikas Publishing 2009

Accounting House Private
Maheshwari S K Limited , New
Delhi

Financial James Pearson Education 2004

Management and C.VanHorne
Policy
WEBSITES:-

 WWW.TIRUMALA MILK PRODUCTS PVTLTD.AC.IN

 WWW.TIRUMALA MILK PRODUCTS PVTLTD.COM

 WWW. WEKIPEDIA.COM

 WWW.MILK INDUSTRY.COM