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INTRODUCTION

A financial statement is a collection of data organized according
logical and consistent accounting procedures. Its purpose is to convey an
understanding of some financial aspects of a business firm. It may show a
position at a moment in time, as in the case of an income statement, thus the
term financial statements generally refers to the two statements, these are:

Income statement (or) Profit and loss account.
Position statement (or) Balance sheet.

These statements are used to convey to management and other interested
outsiders the profitability and financial position of the firm.

Financial statements are the outcome of summarizing process of
accounting. In the words of john N.Her, the financial statements provide a
summary of the accounts of a business enterprise, the balance sheet
reflecting the asset, liabilities and capital as on a certain date and the income
statement showing the results of operations during a certain period.
Financial statements are also called financial reports. In the words of
Anthony, financial statements, essentially, are interim reports, presented
annually and reflect a division of the life of an enterprise onto more or less
arbitrary accounting period- more frequently a year.


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Meaning of Financial Statements:-

A financial statement is a collection of data organized according
logical and consistent accounting procedures. Its purpose is to convey an
understanding of some financial aspects of a business firm. It may show a
position at a moment in time, as in the case of an income statement, thus the
term financial statements generally refers to the two statements: (I) the
position statement or the balance sheet, and (ii) the income statement or the
profit and loss account. These statements are used to convey to management
and other interested outsiders the profitability and financial position to a firm

Financial statements are the outcome of summarizing process of
accounting. In the words of John N. Her, the financial statements provide a
summary of the accounts of a business enterprise, the balance sheet
reflecting the asset, liabilities and capital as on a certain date and the income
statement showing the results of operations during a certain period. Financial
statements are prepared as an end result of financial accounting and are the
major sources of financial information of an enterprise Smith and Ashburn
define financial statements as. The product of financial accounting in asset
of financial statements prepared by the accountant of a business enterprise
that purport to reveal the financial position of the enterprise, the result of its
recent activities, and an analysis of what has been done with earnings.
Financial statements are also called financial reports. In the words of
Anthony, financial statements, essentially, are interim reports, presented
annually and reflect a division of the life of an enterprise onto more or less
arbitrary accounting period- more frequently a year.
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Objectives of Financial Statements:-

Financial statements are the sources of information on the basis of which
conclusions are drawn about the profitability and financial position of a
concern. they are the major means employed by firms to present their
financial situation of owners, creditors and the general public, the primary
objective of financial statements is to assist in decision making,. The
accounting principles board of America (APB) sates the following objectives
of financial statements.
1. To provide reliable financial information about economic resources and
obligations of a business firm.
2. To provide other needed information about changes in such economic
resources and obligations.
3. To provide reliable information about changes in net resources
(resources less obligations) arising out of business activities.
4. To provide financial information that assists in estimating the earning
potentials of business.
5. To disclose, to the extent possible, other information related to the
financial statements that is relevant to the needs of the users of these
statements.






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Types of Financial Statements:-

Financial statements primarily comprise two basic statements: (1) the
position statement or the balance sheet and (2) the income statement or the
profit and loss account. However, (Generally Accepted Accounting
Principles (GAAP) specifies that a complete set of financial statements must
include:

(1). A Balance Sheet.
(2). an Income Statement (Profit and Loss Account).
(3). A Statement of Changes in Financial Position.

1. Balance Sheet:-
The America institute of certified public accountants defines balance
sheet as. A tabular statement of summary of balances (debits and credits)
carried forward after an actual and constructive closing of books of account
and kept according to principles of accounting. The purpose of the balance
sheet is to show the resources that the company has, i.e. its assets, and from
where those resources come from i.e., its liabilities and investments by
owners and outsiders.

The balance sheet is one of the important statements depicting the
financial strength of the concern. It shows on the one hand the properties
that it utilizes and on other hand the sources of those properties. The balance
sheet shows all the assets owned by the concern and all the liabilities and
claims it owes to owners and outsiders.
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2. Income Statement (or) Profit and Loss Account:-
Income statement is prepared to determine the operational position
of the concern. It is a statement of revenues earned and the expenses
incurred for earning that revenue, if there is excess of revenues over
expenditures it will show a profit and if the expenditures are more than the
income then there will be a loss. The income statement is prepared for a
particular period, generally a year. When income statement is prepared for
the year ending, then all revenues and expenditures falling due in that year
will be taken into account irrespective of their receipt or payment.

The income statement may be prepared in the form of a
manufacturing account to find out the cost of production, in the form of
trading account to determine gross profit or gross loss. In the form of a profit
and loss account determine net profit or net loss, a statement of retained
earnings may also be prepared to show the distribution of profits.

3. Statement of Changes in Owners Equity (Retained Equity):-
The term owners equity refers to the claims of the owners of the
business shareholders against the assets or the firm. It consists of two
elements (1) paid-up share capital, I.e. the initial amount of funds invested
by the shareholders and (2) retained earnings/reserves and surplus
representing undistributed profits. The statement of changes in owners
equity simply shows the beginning balance of each owners equity account
the reasons for increases and decreases in each, and its ending balance.
However in most cases, the only owners equity account that changes
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significantly is retained earnings and hence the statement of changes in
owners equity becomes merely a statement of retained earnings.

A statement of retained earnings is also known as profit and loss
Appropriation Account or income Disposal Statement. As the name suggests
it shows appropriations of earnings. The previous years balance is first
brought toward. The net profit during the current year is added to this
balance. On the debt side, appropriations like interim dividends paid.
Proposed dividend in preference and equity share capital, amounts
transferred to debenture redemption fund, capital redemption funds. General
reserves etc are shown. The balance in tills account will show this amount of
profit retained in hand and carried forward. The appropriations cannot lie
more than the profits so this account will not have a debit balance. There
cannot be appropriations without profits.

4. Statement of Changes in Financial Position:-
The basic financial statements, I.e., the balance sheet and the profit
and loss account or income statement of a business reveal the net effect of
the various transactions on the operational and financial position of the
company.

The balance sheet gives a static view of the resources of a business and the
uses to which these resources have been put at a certain point of time. The
profit and loss account in a general way. Indicates the resources provided by
operations. But there are many transactions that do not operate through
profit and loss account. Thus, for a better understanding another statement
called statement of changes in financial position has to be prepared show the
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changes in assets and liabilities from the end of one period to the end of
another point of time. The objective of this statement is to showing the
movement of funds (working capital or cash) during a particular period. The
statement to changes in financial position may take any of the following two
forms.

(a) Funds Flow Statement:-The funds flow statements is designed to
analyze the changes in the financial conditions of a business enterprise
between two periods. The word fund is used to denote working capital.
This statement will show the sources from which the funds are received and
the uses which these have been put. I his statement enable the management
to have an idea about the sources of funds and their uses for various
purposes. I ills statement helps the management in policy formulation and
performance appraisal.

(b) Cash Flow Statements:-a statement of changes in the financial
position of a firm on cash basis is called cash flow statement. It summarizes
the causes of changes in has position of a lousiness enterprise between states
of two balances sheets. This statement is very much similar to the statement
of changes in working capital I.e., funds flow statement. A cash flow
statement focuses attention on cash changes only.





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Characteristics of Ideal Financial Statements:-
The financial statements are prepared with a view to depict financial
position of the concern. A proper analysis and interpretation of these
statements enables a person to judge the profitability and financial strength
of the business. The financial statements should be prepared in such a way
that they are able to give a clear and orderly picture of the concern. The
ideal financial statements have the following characteristics.

1. Depict True Financial Position:-
The information contained in the financial statements should be such that a
true and correct idea is taken about the financial position of the concern. No
material information should be with held while preparing position of the
concern. No material information should be with held while preparing these
statements.
2. Effective Presentation:-
The financial statements should be presented in a simple and lucid way so
as to make them easily understandable. A person who is not well versed with
accounting terminology should also be able to understand the statements
without much difficulty. This characteristic will enhance the utility of these
statements.
3. Relevance: -
Financial statements should be relevant to the objectives of the enterprises.
This will be possible when the person preparing these statements is able to
properly utilize the accounting information. The information which is not
relevant to the statements should be avoided; otherwise it will be difficult to
make a distinction between relevant and irrelevant data.
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4. Attractive:-
The financial statements should be prepared in such a way that important
information is underlined so that it attracts the eye of the reader.

5. Easiness:-
Financial statements should be easily prepared. The balances of different
ledger accounts should be easily taken to these statements. The calculation
work should be minimum possible while preparing these statements. The
size of the statements should not be very large. The columns to be used for
gibing the information should also be less. This will enable the saving of
time in preparing the statements.

6. Comparability:-
The results of financial analysis should be in a way that can be compared to
the previous years statements. The statement can also be in compared with
the figures of other concerns of the same nature. Sometimes budgeted
figures are given along with the present figures. The comparable figures will
make the statements more useful. The Indian companies Act. 1956 has made
it obligatory to give previous years figures in the balance sheet. The
comparison of figures will enable a proper assessment for the working of the
concern.

7. Analytical representation:-
The information should be analyzed in such a way that similar date is
presented at the same place. A relationship can be established in similar type
of information. This will be helpful in analysis and interpretation.
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8. Brief:-
If possible, the financial statements should be presented in brief. The reader
will be able to form an idea about the figures. On the other hand, it figures
are given in details then it will become difficult to judge the working of the
business.

9. Promptness:-
The financial statements should be prepared and presented at the earliest
possible. Immediately at the close of the financial year, statements should be
ready.

Limitations of Financial Statements:-
Though financial statements are relevant and useful for the concern,
still they do not present a final picture of the concern. The utility of these
statements is dependent upon a number of factors. The analysis and
interpretation of these statements should be done very carefully otherwise
misleading conclusions may be drawn; the financial statements suffer from
the following limitations:

1. Only interim reports:-

These statements don not give a final picture of the concern. The
data given in these statements is only approximate. The actual position can
only be determined when the business is sold or liquidated. However, the
statements have to be prepared for different accounting periods, generally
one year, during the life time of the concern.
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The costs and incomes are apportioned to different periods with a
view to determine profits etc. the allocation of expenses and incomes will
depend upon the personal judgment of the accountant. The existence of
cotangent assets and liabilities also makes the statements imprecise. So
financial statements do not give the final picture and they are the most
interim reports.

2. Do not give exact position:-
The financial statements are expressed in momentary values so they
appear to give final and accurate position. The value of fixed assets in the
balance sheet neither represents the value for which fixed assets can be sold
nor did the amount, which will lie, require replacing these assets. The
balance sheet is prepared on the presumption of a going concern. The
concern is expected to continue in the figure. So fixed assets are shown all
cost less accumulated depreciation. There are certain assets in the balance
sheet such as preliminary expenses, goodwill, discount on issue of shares
which will realize nothing at the time of liquidation through they are shown
in the balance sheet.

3. Historical Costs:-
The financial statements are prepared on the basis of historical costs
or original costs. The value of assets decreases with the passage of time
current price changes are not taken into account. The statements are not
prepared keeping in view the present economic conditions. The balance
sheet losses the significance of being an index of current economic realities.
Similarly, the profitability shown by the income statement may not represent
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the earning capacity of the concern. The increase I profits may be due to an
increase in prices or due to sonic abnormal causes and not due to increase in
efficiency. The conclusions drawn from financial statements may not give a
lair picture of the concern.

4. Impact of Non-Monetary Factors Ignored:-
There are certain f actors which have a bearing on the financial
position and operating results of the business but they do not become a pan
of these statement s because they cannot be measured I monetary terms.
Such factors may include the reputations of the management, credit
worthiness of the concern, sources and commitments for purchases and
sales, co-operation of the employees, etc. The financial statements only
show the position of the financial accounting for business and not the
financial position.

5. No Precision:-
The precision of financial statement data is not possible because the
statement deal with matters which cannot be precisely stated. The data are
recorded by convention procedure is followed over the years. Various
conventions, postulates personal judgments etc, are used for developing the
data.

Financial Statements 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
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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.








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Meaning and Concept of Financial Analysis:-

The term financial analysis also known as analysis and
interpretation of financial statements, refers to the process of determine
financial strengths and weakness of the firm by establishing strategic
relationship between the items of the balance sheet, profit and loss account
and oilier operative data. Analyzing financial statements,
According to Metcalf and Titard. Is a process of evaluating the
relationship between component parts of financial statement to obtain a
better understanding of a firms position and performance? In the words of
Myers, Financial statement Analysis is largely a 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(actors as shown in a series of
statements.)
The purpose of financial analysis is to diagnose the information
contained in financial statements so as to judge the profitability and financial
soundness of the firm, just like a doctor examines ills patient by recording
his body temperature, blood treatment, a financial analyst analysis the
financial statements with various tools of analysis before commenting upon
the financial health or weakness of an enterprise. The analysis and
interpretation of financial statements is essential to bring out the mystery
behind the figures in financial statements. Financial statements analysis is an
attempt to determine the significance and meaning of the financial statement
data so that forecast may be made of the future earnings, ability to pay
interest and debt maturities (both current and long-term) and profitability of
a sound dividend policy.
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Methods or Devices of Financial Analysis:-

1. 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:

I. Absolute Figures (rupee amounts)
II. Changes in absolute figures i.e., increase or decrease in absolute figures.
III. Absolute data in terms of percentages.

The analyst is able to draw useful conclusions when figures are given in a
comparative position. The figures of sales for a quarter, half-year or one year
may tell only the present position of sales efforts. When sales figures of
previous periods, are given along with the figures of current periods then the
analyst will be able to study the trends of sales over different periods of
time. Similarly, comparative figures will indicate the trend and direction of
financial and operating results.
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The financial data will be comparative only when same accounting
principles are used in preparing these statements. In case of a deviation in
the use of accounting principles this fact must be mentioned at the foot of
financial statements and the analyst should be careful in using these
statements. The two comparative statements are (I) balance sheet and (ii)
income statement.
I. 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.
ii. 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.
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2. 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 up and one year, generally the first year, is taken
as a bad year. The figures of the base year are taken as 100 and trend ratios
for other years are calculated on the bases of base year.
3. 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 is stand as a percentage of the total 100. The short-
comings 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 to total values.
4. Funds flow statement:-
The funds flow statement is a statement is a statement which shows
the movement of funds and is a report of the financial operations of the
business under king. It indicates various means by which funds were
obtained during a particular period and the ways, in which these funds were
employed, in simple words, it is a statement of sources and applications of
funds.
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Meaning and concept funds:-
The term funds has been defined in a number of ways:
A. in a narrow sense: it means cash only and a funds flow statement
prepared on this basis is called a cash flow statement. Such a statement
enumerated net effects of the various business transactions on cash and takes
into account receipts and disbursements of cash.
B. in a broader sense: the term funds refers to money values in
whatever forms it may exist. Here funds mean all financial resources, used
in business whether in the form of men, material, money, machinery and
others.
C. in a popular sense: the term funds means working capital i.e., the
excess of current over current liabilities. The working capital concept of
funds has emerged due the tact that total resources of a business are invested
partly in fixed assets in the form of fixed capital and partly kept in form of
liquid or near liquid form as working capital.
The narrower concept of funds i.e., cash or working capital concept
fails to reveal the changes in the total financial resources of a business.
Some significant items, such as purchase of building in exchange of shares
or payment of bonus in the form of shares which do not directly affect cash
or working capital are not revealed from the analysis based on these
concepts, however, the concept of funds as working capital is the most
popular one and in this chapter we shall refer to funds as working capital
and a funds flow statement as a statement of sources and application of
funds.


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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 of 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.
Rule:-
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, is 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 nor 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 noncurrent to current transactions or vice-versa only.
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In simple language funds move when a transaction affects (i) a
current assets and a fixed assets or (ii) 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 fixed
liability or current assets and current liability.

Uses, significance and importance of funds flow statement:-

A funds flow statement is an essential tool for the financial analysis
and is of primary importance to the financial management. Now-a-days it is
being widely used by the financial analysts, credit granting institutions and
financial managers. The basic purpose of a funds flow statement is to reveal
the changes in the working capital in the two balance sheet dates. It also
describes the sources from which additional working capital has been
financed and the uses to which working capital has been applied. Such a
statement is particularly useful in assessing the growth of the firm, its
resulting financial needs and in determining the best way of financing these
needs. By making use of projected funds flow statements, the management
can come to know the adequacy or inadequacy of working capital even in
advance. One can plan the intermediate and long-term financing of the firm,
repayment long-term debts, expansion of the business, allocation of
resources, etc. the significance or importance of funds flow statement can be
followed from its various uses given below.


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1. 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 concern. 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 of time. But it does not disclose
the causes for changes in the assets and liabilities between two different
points of time.
The funds flow 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 situation 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:
Why were the net current assets lesser in spite of higher profits and
vice-versa?
Why more dividends could not be declared in spite of available
profits?
How was it possible to distribute more dividends than the present
earnings?
What happened to the net profit? Where did they go?
What happened to the proceeds of sale of fixed assets or issue of
shares? Debentures etc.?
What are the sources of the repayment of debt?
How was the increase in working capital financial and how will it
be financed in future?
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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.
4. It helps in the proper allocation of resources: the resources of
a concern 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.
5. 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 firms 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.
6. 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.
7. 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.

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Limitations of funds flow statement:-

The funds flow statement has a number of uses; however it has certain
limitations also, which are listed below:
1. It should be 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.
2. It cannot reveal continuous changes.
3. It is not an original statement but simply is arrangement of data given in
the financial statements.
4. It is essentially historic in nature and projected funds flow statement
cannot be prepared with much accuracy.
5. Changes in cash are more important and relevant for financial
management than the working capital.
6. Cash flow statement: a statement of changes in the financial position of
firm on cash basis is called a cash flow statement.

Such a statement enumerates net effects of the various business
transactions on cash and takes into account receipts and disbursements of
cash. A cash flow statement summarizes the causes of changes in cash
position of a business enterprise between dates of two balance sheets. This
statement is very much similar to the statement of changes in financial
position prepared on working capital basis i.e., a funds (low statement,
except that a cash called a cash flow statement because it describes the
inflow (sources) and outflow (uses) of cash.

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Comparison between Funds Flow 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 funds refers to working capital and a 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.

1. Funds flow statement is based on a wider concept of funds I.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.

2. 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.

3. Funds flow statement does not reveal changes in current assets and current
liabilities, rather these appear separately in a schedule of changes in working
capital. No such schedule of change in working capital is prepared for a cash
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flow statement and changes in all assets and liabilities fixed as well as
current, are summarized in the cash flow statement.

4. 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, i.e., 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 in planning intermediate and long-term
financing while as cash flow statement is more useful for short-term
analysis and cash planning of the business.
Uses and Significance of 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 follows:
1. 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.

2. 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
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and how much cash will be needed to make various payments and hence the
firm can well plan to arrange for the future requirements of cash.

3. A comparison of the historical and projected cash flow statements can be
made so as to find the variations and deficiency or otherwise in the
performance so as to enable the firm to take immediate and effective action.

4. A series of intra-firm and inter-firm cash statement reveals whether the
firms liquidity (short-term paying capacity) is improving or deteriorating
over a period of time and in comparison to other firms over a given period of
time.

5. Cash flow statement helps in planning the repayment of loans,
replacement of fixed assets and other similar long-term planning of cash. It
is also significant of capital budgeting decisions.

6. It better explains the causes for poor cash position in spite of substantial
profits in a firm by throwing light on various applications of cash made by
the firm. It further helps in answering some intricate questions like what
happened to the net profits. Where did the profits go? Why more dividends
could not be paid in spite of sufficient available profit?

7. Cash flow analysis is more useful and appropriate than funds flow
analysis for short-term financial analysis as in a very short period it is cash
which is more relevant then the working capital for forecasting the ability of
the firm to meet its immediate obligations.

27

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 or 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.

Accounting ratios can be expressed in various ways such as:
i. A pure ratio say ratio of current assets to current liabilities is 2:I or
ii. A rate say current assets are two times of current liabilities or
iii. A percentage say current assets are 200% of current liabilities.
Each method of expression has distinct advantage over the other. The
analyst will select that mode which wills best-suit his convenience and
purpose.

28

Classification of Ratios:-
1. Liquidity Ratios
2. Activity Ratios
3. Leverage Ratios
4. Profitability Ratios
1. Liquidity ratios. This is the most fundamentally important set of
ratios, because they measure the ability of a company to remain in
business. Click the following links for a thorough review of each
ratio.
o Cash coverage ratio. Shows the amount of cash available to
pay interest.
o Current ratio. Measures the amount of liquidity available to
pay for current liabilities.
o Quick ratio. The same as the current ratio, but does not include
inventory.
o Liquidity index. Measures the amount of time required to
convert assets into cash.
2. Activity ratios. These ratios are a strong indicator of the quality of
management, since they reveal how well management is utilizing
company resources. Click the following links for a thorough review of
each ratio.
o Accounts payable turnover ratio. Measures the speed with
which a company pays its suppliers.
o Accounts receivable turnover ratio. Measures a company's
ability to collect accounts receivable.
29

o Fixed asset turnover ratio. Measures a company's ability to
generate sales from a certain base of fixed assets.
o Inventory turnover ratio. Measures the amount of inventory
needed to support a given level of sales.
o Sales to working capital ratio. Shows the amount of working
capital required to support a given amount of sales.
o Working capital turnover ratio. Measures a company's ability
to generate sales from a certain base of working capital.
3. Leverage ratios. These ratios reveal the extent to which a company is
relying upon debt to fund its operations, and its ability to pay back the
debt. Click the following links for a thorough review of each ratio.
o Debt to equity ratio. Shows the extent to which management is
willing to fund operations with debt, rather than equity.
o Debt service coverage ratio. Reveals the ability of a company
to pay its debt obligations.
o Fixed charge coverage. Shows the ability of a company to pay
for its fixed costs.
4. Profitability ratios. These ratios measure how well a company
performs in generating a profit. Click the following links for a
thorough review of each ratio.
o Breakeven point. Reveals the sales level at which a company
breaks even.
o Contribution margin ratio. Shows the profits left after
variable costs are subtracted from sales.
o Gross profit ratio. Shows revenues minus the cost of goods
sold, as a proportion of sales.
30

o Margin of safety. Calculates the amount by which sales must
drop before a company reaches its breakeven point.
o Net profit ratio. Calculates the amount of profit after taxes and
all expenses have been deducted from net sales.
o Return on equity. Shows company profit as a percentage of
equity.
o Return on net assets. Shows company profits as a percentage
of fixed assets and working capital.
o Return on operating assets. Shows company profit as
percentage of assets utilized.
Plan of the Study:-
From the above description it can be said that the financial statement
analysis, particularly ratio analysis plays an important role in analyzing the
financial position of any organization. N the light of this back ground the
study has been taken up to analyze the ratios to analyze the financial position
of Siva Swati Textile taking ratios analysis as technique study is organized in
the manner described below.









31

INDUSTRY PROFILE

Cotton is a soft, staple fiber that grows around the seeds of
the cotton plant. It is a natural fiber harvested from the cotton plant. The
fiber most often is spun into yarn or thread and used to make a soft,
breathable textile, which is the most widely, used natural-fiber cloth in
clothing today.
Processing of Cotton in India:
In India the raw cotton, also called as Kapas is processed in a
multi-stage process described as below. The Products of processing are
I. Yarn.
II. Cottonseed Oil.
III. Cottonseed Meal.
I. Production of Yarn:
KAPAS TO LINT:
Kapas (also known as raw cotton or seed cotton) is unginned
cotton or the white fibrous substance covering the seed that is obtained
from the cotton plant. The first step in the process is, the cotton is
vacuumed into tubes that carry it to a dryer to reduce moisture and
improve the fiber quality. Then it runs through cleaning equipment to
remove leaf trash, sticks and other foreign matter. In ginning a roller gin is
used to grab the fiber. The raw fiber, now called lint.

32

LINT TO BALE:
The lint makes its way through another series of pipes to a press
where it is compressed into bales (lint packaged for market). After baling,
the cotton lint is hauled to either storage yards, textile mills, or shipped to
foreign countries.
NOTE: The cotton seed is delivered to a seed storage area from where
it is loaded into trucks and transported to a cottonseed oil mill.
BALE TO LAP:
Here the bales are broken down and a worker feeds the cotton
into a machine called a "breaker" which gets rid of some of the dirt. From
here the cotton goes to a "scutcher". (Operated by a worker also called a
scutcher). This machine cleans the cotton of any remaining dirt and
separates the fibers. The cotton emerges in the form of thin "blanket"
called the "lap".
LAP TO CARDING:
Carding is the process of pulling the fibers into parallel
alignment to form a thin web. High speed electronic equipment with wire
toothed rollers performs this task. The web of fibers is eventually
condensed into a continuous, untwisted, rope-like strand called a sliver.

33

SLIVER TO ROVING:
The silver is then sent to combing machine. Here, the fibers shorter
than half-inch and impurities are removed from the cotton. The sliver is
drawn out to a thinner strand and given a slight twist to improve strength,
and then wound on bobbins. This Process is called Roving.
ROVING TO YARN (SPINNING):
Spinning is the last process in yarn manufacturing. Spinning
draws out the short fibres from the mass of cotton and twists them
together into a long. Spinning machines have a metal spike called a spindle
which the thread winds around.
II. Production of Cotton Seed Oil:
Processing of cottonseed in modern mills involves a
number of steps. They are as follows:
The first step is its entry into the shaker room where, through a
number of screens and air equipment, twigs, leaves and other trash are
removed.
The cleaned seed is then sent to gin stands where the linters are
removed from the seed (delinted). The linters of the highest grade,
referred to as first-cut linters are used in manufacturing non-chemical
products, such as medical supplies, twine, and candle wicks. The
second-cut linters removed in further delinting steps, are incorporated
in chemical products, found in various foods, toiletries, film, and
paper.
34


The delinted seeds now go to the huller. The huller removes the tough
seed coat with a series of knives and shakers. The knives cut the hulls
(tough outer shell of the seed) to loosen them from the kernels (the
inside meat of the seed, rich in oil) and shakers separate the hulls and
kernels.

The kernels are now ready for oil extraction. They pass through
flaking rollers made of heavy cast iron, spinning at high speeds. This
presses the meats into thin flakes. These flakes then travel to a cooker
where they are
Cooked at 170 degrees F to reduce their moisture levels. The prepared
meats are conveyed to the extractor and washed with hexane (organic
solvent that dissolves out the oil) removing up to 98% of the oil.
Crude cottonseed oil requires further processing before it may be used
for food. The first step in this process is refining. With the scientific
use of heat, sodium hydroxide and a centrifuge (equipment used to
separate substances through spinning action), the dark colored crude
oil is transformed into a transparent,

Yellow oil. This clear oil may then be bleached with special bleaching
clay to produce transparent, amber colored oil.


35

The refined cotton seed oil has several advantages other than edible
oils. It contains mere advantage over other edible oils. It contains a large
percentage of Poly Unsaturated Fatty Acids (PUFA) which maintain
cholesterol in the blood at a healthy level.
The quality of cotton oil depends on the weather prevailing
during the time that cotton stands in the fields after coming to maturity.
Hence quality of oil varies from place to place and season to season. The
quality of oil is high in dry seasons and low when the seed is exposed to wet
weather in the fields or handled or stored with high moisture. Further
cotton seed cooking oil has a long span of life due to the presence of
vitamin E.
III. Production of Cottonseed Meal/Cake/Kapaskhalli:
Kapaskhalli (cottonseed extraction/meal) is a byproduct of the
cottonseed industry.

Cottonseed is a by-product of the cotton plant, which is primarily
grown for its fiber. Although cotton has been grown for its fiber for
several thousand years, the use of cottonseed on a commercial scale is
of relatively recent origin.
Cottonseed was a raw agricultural product, which was once largely
wasted. Now it is being converted into food for people; feed for
livestock; fertilizer and mulch for plants; fiber for furniture padding;
and cellulose for a wide range of products from explosives to
computer chip boards.
36

The figure showing the products obtained from processing the raw
cotton:







Source: The
Cotton Corporation of India Ltd.
Cotton Varieties in India:
Bengal Deshi mainly produced in the states of Punjab, Haryana, and
Rajasthan.

Jayadhar mainly produced in the state of Karnataka.

Bunny (or) Brahma is mainly produced in the states of Maharashtra,
Madhya Pradesh, Andhra Pradesh, and Karnataka.

Suvin is another variety produced in the state of Tamil Nadu.

H-4 (or) MECH1 is mainly produced in the states of Maharashtra,
Madhya Pradesh, and Andhra Pradesh.
37

Role of Cotton Industry in Indian Economy:

Over the years, country has achieved significant quantitative
increase in cotton production. Till 1970s, country used to import massive
quantities of cotton in the range of 8.00 to 9.00 lakh bales per annum.
However, after Government launched special schemes like intensive cotton
production programmes through successive five-year plans, that cotton
production received the necessary impetus through increase in area and
sowing of Hybrid varieties around mid 70s.
Since then country has become self-sufficient in cotton
production barring few years in the late 90s and early 20s when large
quantities of cotton had to be imported due to lower crop production and
increasing cotton requirements of the domestic textile industry.

Cotton production Areas in India:
India is an important grower of cotton on a global scale. It ranks
third in global cotton production after the United States and China; with 9.50
million hectares grown each year, India accounts for approximately 21% of
the world's total cotton area and 13% of global cotton production. The
Cotton producing areas in India are spread throughout the country. But the
major cotton producing states which account for more than 95% of the area
under and output are:
1. Punjab.
2. Haryana.
3. Rajasthan.
4. Maharastra.
38

5. Gujarat.
6. Madhya Pradesh.
7. Andhra Pradesh.
8. Tamil Nadu.
9. Karnataka.
Of the nine cotton producing States in India, average yields are highest in
Punjab where most of the cotton area is irrigated.
Contribution of Cotton industry for Textile Industry:
Cotton is the most important raw material for India's Rs. 1, 50,
000 cores textile industry, which accounts for nearly 20% of the total
national industrial production. The cotton Industry is the backbone of our
textile industry, accounting for 70% of total fiber consumption in textile
sector. It also accounts for more than 30% of exports, making it India's
largest net foreign exchange industry. India earns foreign exchange to the
tune of $10-12 billion annually from exports of cotton yarn, thread, fabrics,
apparel and made-ups.
The cotton Industry provides employment to over 15 million
people. And the area under cotton cultivation in India (9.5 million ha) is the
highest in the world, i.e., 25% of the world area.
Steps taken by the Cotton Producers in India:

Now-a-days the Indian Cotton producers are continuously
working to up-grade the quality and increase the cotton production to cope
up with the increased global demand for cotton textiles and to meet the
needs of the 39 million spindles capacity of the domestic textile industry
which presently consumes about 12-14 million bales annually.
39


In India, cotton yields increased significantly in the 1980s and
through the first half of 1980s but since 1996 there is no increase in yield.
In the past, the increase in cost of production of cotton was partially offset
by increase in yield but now with stagnant yield the cost of production is
raising. Besides low yield, Indian cotton also suffers from inconsistent
quality in terms of length, micron ire and strength.

Policy of Government of India towards Cotton Industry:
The Cotton production policies in India historically have been
oriented toward promoting and supporting the textile industry. The
Government of India announces a minimum support price for each variety of
seed cotton (kappas) based on recommendations from the Commission for
Agricultural Costs and Prices. The Government of India is also providing
subsidies to the production inputs of the cotton in the areas of fertilizer,
power, etc
Markets for Indian Cotton:
The three major groups in the cotton market are
Private traders,
State-level cooperatives,
The Cotton Corporation of India Limited.
Exports of Cotton:
The main market for Indian cotton export is China. The other
markets also include Taiwan, Thailand and Turkey. In July 2001, the union
government removed all curbs on cotton exports. As a result of these, now
the exporters are not required to obtain any certificate from the Textile
40

Commissioner on the registration, allocation, quality and quantity of export.
India exported around 25 per cent cotton during 2006-07 and it is estimated
nearly 62 per cent exported to China.

During the year 2006-07 the prices of Indian cotton in early part
of the season being lower than the international prices, had been attractive to
foreign buyers and there was good demand for Indian cotton, especially S-6,
H-4 and Bunny, which had resulted in sustained cotton exports, which are
estimated at 55.00 lakh bales

The Cotton Advisory Board estimated an 18-20 percent
increase in cotton exports to 65 lakh bales for Oct 2007- Sep 2008, as
against its Aug 2007 estimate of 58 lakh bales.
Imports of Cotton:
Despite good domestic crops, India is importing cotton because
of quality problems or low world prices particularly for processing into
exportable products like yarns and fabrics.
India imported just 721,000 bales of cotton in 2003-04. The
imports rose to 1,217,000 lakh bales in 2004-05, 4,700,000 lakh bales in
2005-06 and the anticipated imports for the year 2006-07 are 550,000 lakh
bales.
For the year 2006-07 the cotton imports into the country had
once again remained limited mainly to Extra Long staple cottons, like as
previous year, which were in short supply at around 6 lakh bales inclusive of
import of around 2 lakh bales of long staple varieties contracted by mills
during April-May 2007.
41

Role of Cotton seed oil in Indian Economy:
The global production of cottonseed oil in the recent years has
been at around 4-4.5 million tons. Around 2 lakh tons are traded globally
every year. The major seed producers, viz., China, India, United States, and
Pakistan are the major producers of oil. United States (60000 tons) is the
major exporter of cottonseed oil, while Canada is the major importer.
Cottonseed is a traditional oilseed of India. In India the average
production of cotton oil is around 4 lakh tons a year. It is estimated that, if
scientific processing is carried out the oil production can be increased by
another 4 lakh tons.
In India, the oil recovery from cottonseed is around 11%.
Gujarat is the major consumer of cottonseed oil in the country. It is also used
for the manufacture of vanaspati. The price of cottonseed oil is generally
dependent on the price behavior of other domestically produced oils, more
particularly groundnut oil.
India used to import around 30000 tons of crude cottonseed oil,
before palm and soyoil became the only imports of the country. Currently,
the country does not import cottonseed oil.
Role of cottonseed meal in Indian Economy:
India produces around 2 million tons of cottonseed meal a year.
However, in India mainly undecorticated meal is largely produced. Several
associations are promoting the production of decorticated cake in India and
the production of this is expected to increase in the country.
India used to be a major exporter of cottonseed extraction
around two decades ago. However, the demand for other oil meals like
soymeal has lowered the cottonseed demand globally. In addition, the low
42

availability of decorticated meal in India has also been a major reason for the
fall in exports.
The major importers of Indian cottonseed meal (undecorticated)
used to be Thailand. India in 2002-03 exported only 50 tons of decorticated
cottonseed meal. In 2003-04, too there have been no significant exports.
India does not import cottonseed meal.
The Organizations dealing with the promotion of Cotton Industry in
India:
The organizations that try to promote the quantity and quality of Cotton
in India are
I. The Cotton corporation of India Ltd
II. Cotton Advisory Board
III. Cotton Association of India
IV. Central Institute of Cotton Research

I. The Cotton Corporation of India Limited:
The Cotton Corporation of India Ltd. was established on 31st
July 1970 as a Government Company registered under the Companies Act
1956. In the initial period of setting up, as an Agency in Public Sector,
Corporation was charged with the responsibility of equitable distribution of
cotton among the different constituents of the industry and to serve as a
vehicle for the canalisation of imports of cotton.
With the changing cotton scenario, the role and functions of the
Corporation were also reviewed and revised from time to time. As per the
Policy directives from the Ministry of Textiles, Government of India in
1985, the Corporation is nominated as the Nodal Agency of Government of
43

India, for undertaking Price Support Operations, whenever the prices of
kapas (seed cotton) touch the support level.
The Cotton Corporation of India Ltd. Operations covers all the
cotton growing states in the country comprising of:
Punjab, Haryana and Rajasthan in Northern Zone.
Gujarat, Maharashtra and Madhya Pradesh in Central Zone.
Andhra Pradesh, Karnataka & Tamil Nadu in Southern Zone.

II. Cotton Advisory Board:
The Cotton Advisory Board is a representative body of
Government/ Growers/ Industries/ Traders. It advises the Government
generally on matters pertaining to production, consumption and marketing of
cotton, and also provides a forum for liaison among the cotton textile mill
industry, the cotton growers, the cotton trade and the Government. It
functions under the Chairmanship of Textile Commissioner with Deputy
Textile Commissioner as a Member Secretary

III. The Cotton Association of India:
The Cotton Association of India also called as the East India
Cotton Association (EICA) was declared as the statutory body by the
Bombay Cotton Contract Act on 28th December, 1922. Its purpose is to
Provide and maintain suitable buildings or rooms or a Cotton
Exchange in the city of Bombay or elsewhere in India.
Provide forms of contracts and regulate the marketing, etc. of the
contracts.
Fix and adopt standards or classifications of cotton.
44

Adjust by arbitration or otherwise controversies between Persons
engaged in the cotton trade.
Acquire, preserve or disseminate useful information connected with
the cotton interests.


IV. Central Institute of Cotton Research:
With a view to develop a Centre of excellence for carrying out
long term research on fundamental problems limiting cotton production the
Indian Council of Agricultural Research has established the Central Institute
for Cotton Research at Nagpur in April, 1976. CICR was simultaneously
established at Coimbatore to cater to the needs of southern cotton zone.
CICR was established at

Sirsa in the year 1985, to cater to the needs of northern irrigated cotton zone.
All the three research farms are well equipped with tractors and other farm
implements and efforts are underway to initiate further developmental work
in all the farms.
The Vision of the CICR is to improve production and quality of
Indian Cotton with reduced cost to make cotton production cost effective
and competitive in the national and global market. The Mission of CICR is
to develop economically viable and eco-friendly production and protection
technologies for enhancing quality cotton production by 2-3% every year on
a sustainable basis for the next twelve years (till 2020).



45

The Current Scenario of Cotton Industry (2008-09):
The cotton production in the country has been increasing
continuously since last three years and the same has further gone up by
around 11% during cotton season 2008-09 at a record level of 270 lakh bales
as against 244 lakh bales during 2007-08. Gujarat has turned into a largest
cotton producing State with a record production-level of 93 lakh bales
constituting around 34% of the countrys total production.
The area under cotton cultivation during 2008-09 has also gone
up by around 6% at 91.58 lakh hectares as against 86.77 lakh hectares during
2007-08.
With wide usage of hybrid seeds throughout the country as well
as changed mindset of cotton farmers for adoption of better and improved
farm practices, the average productivity of cotton has crossed 503 kgs per
hectare as against 478 kgs during the previous year. The prices of Indian
cotton in early part of the season being lower than the international prices,
had been attractive to foreign buyers and there was good demand for Indian
cotton.
Due to expectation of bumper crop, the mill demand in the
beginning of the season was subdued which put pressure on the cotton prices
right

From the beginning of the season and has resulted into fall in cotton prices
between October 2008 & January 2009. Cotton prices reached its peak level
by end-March 2009 and there was some correction in cotton prices in April
and May 2008. However, on the whole, cotton prices remained better by
almost Rs.1000 per candy in almost all varieties as compared to previous
year.
46


Future of Cotton Industry in India:
The Cotton Advisory Board (CAB) has estimated the cotton
crop at 310 lakh bales for the current season 2008-09. This is a historic high
and represents an 11% jump over last year's crop estimate of 280 lakh bales.
The increase in cotton production area is also expected to increase to 95.30
lakh hectares for the season 2008-09 against 91.42 lakh hectares for the
season 2007-08.
Cotton Advisory Board expects exports to be higher at 65 lakh
bales as against 55 lakh bales in 2007-08. Imports in 2008-09 are projected
at 6.50 lakh bales as compared to 5.50 lakh bales in 2007-08, because mills
have to rely on foreign growths to spin some finer counts of yarn.
It is also estimated that the cotton industry is going to provide
12 million new jobs mainly for the semi-skilled and unskilled labor.
Future Challenges for the Indian Cotton Industry:
The challenges that are going to face by the cotton producers in
India for the season 2009-2010 are:
Rupee appreciation:
The increase in the value of the rupee gives only smaller
import orders to the cotton producers.
Cheaper Imports:
The appreciated rupee value makes the cotton imports cheaper
when compared to past. So this aspect is also required to consider by the
cotton producers.


47

COMPANY PROFILE

INTRODUCTION SIVA SWATI TEXTILE Pvt. Ltd :

The Siva swati textile Pvt. Ltd.,was Established in the year 2005 (60,624
spindles) with STATE OF ART Machinery under supervision of Mr. A. Narendra
Kumar who got 30 years rich experience in the field of Spinning Industry. Spinning
Unit of 60,624 Spindles (Polyester and Polyester Viscose 45,024 and Cotton 15,600)
with latest STATE OF ART Machinery.

We produce 100% Combed Compact Cotton Yarn of Contamination
Controlled Yarn of count ranges from 40
s
to 80
s
Warp and Hosiery Yarns and 100%
Polyester and Polyester Viscose Blend Yarn of counts ranges from 30
s
to 80
s


The unit is situated on NH-5 about 30 K.M. from Guntur. The nearest Air
Port at Gannavaram (Vijayawada). The nearest Railway Station at Guntur



48

MISSION:
The Siva swati textile private Limited are committed to:
Establish their position as a leading and responsible industrial
enterprise. Working towards the development of human needs by providing
quality cotton yarn, polyester yarn viscose yarn and to the textile and clothing
industry. Develop and sustain relationships with their client, employees, and
shareholder
VISION:
Mr. A. Narendra Kumar dream is to see S.S.T.P.L a leading global
player in the world of textile. From its inception the company has always strived
to meet the aspiration of the textile and clothing industry world wide for the finest
quality yarn, denim and the entire range of garments. As responsible corporate
citizens it believes in developing, with a missionary zeal, new and sustaining
existing relationships with all its customers, employees, stakeholders and society
at large in pursuit of overall growth.

Siva swati textile believe that a lasting and fruitful partnership with
every customer is essential. The company truly values this relationship and forges
the growth of collaboration with unwavering support. With a strong marketing
presents backed by a transnationals network, Siva swati textile believes in offering
quality products to its client both in India and abroad.

A customer service cell looks into every aspect of client relation
while on emphasis on quality control at every stage of manufacturing ensures the
superior finish of Siva swati textile products. Recognized as an export house by
the government of India, Siva swati textile exports to discerning market across
Europe, Asia and America.
49

Siva swati textile continues to weave a tradition of innovation and
success. With its contemporary vision, it has not only widened the horizon of the
garment industry but has also infused faith and renewed confidence.

PRODUCT PROFILE:
Development of new textile products is done through production processes
of higher quality and making available modern technologies.

YARN:
Siva swati textile private ltd unit at Ganapavarm, Chilakaluripet in
Andhra Pradesh has a total capacity of 60,624 (Polyester and Polyester Viscose
45,024 and Cotton 15,600) spindles and fully integrated facilities to produce world
class products 100% cotton yarn, polyesters/viscose and fancy yarns. Today Siva
swati offers a wide product mix at par with international standard.
Siva swati textile sophisticated manufacturing and process centres employ
world-class machinery and automated colour matching systems to offer every
shade in the spectrum in dyed yarn as well as colour mlange.
Strategically located close to cotton growing areas, Siva swati textile
has fostered wealth of expertise in cotton in the last five years. A well-equipped
testing laboratory ensures stringent quality control right from the procurement of
raw material to the finished product that may be required.

They manufacture mainly yarn. In that COTTON YARN, POLYSTER
YARN and P V BLEND YARN, 100% VISCOSE YARN.

50




COTTON YARN :
Compact Yarn
Counts 40
s
to 80
s

Warp, Hosiery
Regular, Fancy

POLYSTER YARN AND P V BLEND YARN:
Counts 30
s
to 80
s

Normal, High twist
Warp, Hosiery
Sweing thread
Single, Double Yarn (TFO)
51

POLYSTER YARN AND P V BLEND YARN:
Counts 30
s
to 80
s

Normal, High twist
LATEST EQUIPMENT OF SIVA SWATI TEXTILES PVT LTD
Siva swati textile using latest equipment for manufacturing of yarn. These
equipment are imported from various places in country and from other country
also.
100% Polyester & P.V. Blend yarn are produced with help of Blow Room
to Spinning complete latest machines supplied by
M/s. Lakshmi Machine Works Ltd., Coimbatore & M/s. Rieter, Switzerland
With the help of this machine they produce Bale Plucker,
Unimix, Flexi Clean, Carding LC 300A-V3 Model Pre-Comber Drawing DO/6s
- L.M.W. Ltd., SB2 - Rieter Final Drawing D40 - Rieter, RSB 851 - L.M.W.
Ltd., Simplex LF1400A, LFS 1660 - L.M.W. Ltd., Ring Frames- Spinning LR6s
- L.M.W. Ltd Auto Coners Savio Orion and Polar with Leopfee Zenith Clearers.
COMPACT COTTON YARN & SLUB YARN are produced with
help of Blow Room Bale Plucker, Vario Clean, Unimix, Flexi Clean and Two
sets of Contamination Clearers with Poly Propoline attachement supplied by
Vetal Electronics Carding LC 300A-V3 Model Pre-Comber Drawing SB2 -
Rieter Lap Farmer E32 Rieter Comber E65 - Rieter Auto leveler Draw Frames
RSB D40 - Rieter Simplex LFS 1660 - L.M.W. Ltd., Spinning Zinser Compact
(351 C3) Auto Cones Savio Polar with Leopfee Zenith Clearers with SIRO.
T F O UNIT Cheese Winding PS Metler - Profiler Winder T F O
Veejay Lakshmi - 150 HS Model
52

QUALITY
Our dedicated, committed and involved cotton selectors at different stations headed by
experienced supervisors, spares no pain in the selection of Kapas or Raw cotton
available in the market.
Cotton Yarn
Premium Quality Yarn
Contamination Controlled Yarn
2 No of Contamination Sorters (Vetal) with Polyprolyne Removal
SIRO Clearing in Auto Coner
Packing Carton & Pallet
quality specifications - Cotton Yarn, psf & pv blend
COTTON YARN P S F P V BLEND Viscose 100%
COUNT 40
S
50
S
30
S
30
S
30
S

Count CV % 1.5 1.5 1.5 1.5 1.5
C S P 3250 3200 5800 5000 2400
U % 9.8 10.5 9.8 9.9 10
Imperfections 50 80 25 35 60
R K M 21 20.5 34 30 16
Haireness 3.5 3.0 4.5 4.5 4.0

Laboratory
Equiped with latest Test Equipments
Premier ART
Premier aQURA
Premier IQ

53

MARKET:
Siva Swati Textile believes that a lasting and fruitful partnership with
every customer is essential. The company truly values this relationship and forges
the growth of collaboration with unwavering support. With a strong marketing
presents backed by a transnationals network, Siva Swati Textile believes in
offering quality products to its client both in India and abroad.

A customer service cell looks into every aspect of client relation while on
emphasis on quality control at every stage of manufacturing ensures the superior
finish of Siva Swati Textile products. Recognized as an export house by the
government of India,
Siva Swati Textile exports to discerning market across Europe, Asia and
America. In 2009-2010 exports rose to Rs. 57crores constituting about 4% of the
total turn over
Siva Swati Textile continues to weave a tradition of innovation and
success. With its contemporary vision, it has hot only widened the horizon of the
garment industry but has also infused faith and renewed confidence.

EXPORTS:
Siva swati textile is exporting up to 40% of their products to other counters.
Those countries are

Argentina,
Iran,
54

Bangladesh,
Peru,
Brazil,
Portugal,
Columbia,
Turkey.












55

ORGANIZATIONAL CHART



























Fig2.5


Management
Director
General
Welfare
Personal
Personal
Safety
Accountant
A/C
Finance
Staff
Export
Asst. plant
Plant
Production
Staff
Staff
56

PERSONNEL DEPARTMENT


























Fig 2.4







Personnel
Manager
Welfare
Officer
Medical
Officer
Asst.
(Personal)
Safety
Officer
Chief Time
Keeper
Security
Officer
Supervis
or
(Canteen)
Supervisor
(Co-op
Stores)
Time
Keeper
Typist Compounder
Asst.
Security
Officer
Head
Cook
Security
Head
Guards
Cooks
Supervisor
(Co-op
Stores)
Supervisor
(Co-op
Stores)
Clerk
Asst.
Cooks
Clerks
Nurse
57


Director : A. Narendra Kumar
Cell : +91 9440901234
e-mail : narendrakumar@sivaswatitextile.com

President Technical : K. Venkateswara Rao
Cell : +91 9440901292
e-mail : venkateswararao@sivaswatitextile.com


G.M. Finance : N. Srinivasa Rao
Cell : +91 9441052434
e-mail : srinivasarao@sivaswatitextile.com

Administrative Manager : P. Parameswara Rao
Cell : +91 9440901232
e-mail : parameswararao@sivaswatitextile.com

Sales Manager : Shabbar Khan
Cell : +91 9440901235
e-mail : shabbarkhan@sivaswatitextile.com

Purchase Spares : Kamalakar Rao
Cell : +91 9440901237
e-mail : kamalakar@sivaswatitextile.com

Mill Contact Phones : +91 8647 252243, 259693
Fax : +91 8647 257262

e-mail : info@sivaswatitextile.com
sivaswati@gmail.com


58

FINANCIAL STATUS OF SIVA SWATHI TEXTILES PVT LTD:













AUDITED FINANCIAL RESULTS AS ON 31.3.2011
Particulars Rs. In Lacs (INR)
Income From Operations 13435.73
Gross Profit 1926.23

Interest 674.39
Depreciation 563.97
Pre. Exp Written Off 0.11
Profit before Tax 687.76
Income Tax 116.88
NET PROFIT 570.88
59

EXTERNAL TRAINING PROGRAMMES (IN INDIA):
External training is arranged for around 1/3
rd
of the executives every year, with
the following objectives:
Exposure to the new methods of work, new technology and new
environment.
Updating of domain knowledge.
Interactive learning from experiences of participants from other
organizations.
Net-working with professionals in the field.
To improve aptitude on the subject.
To change the aptitude towards knew ideas, work culture discipline.
Motivation i.e. rewarding good performers.

Executives of all disciplines will be sponsored to various workshop, conventions,
nationals & international seminars (in India), training programmes and exhibitions
related to our industry, to have exposure, to get motivation, to improve knowledge
and skill in their discipline. These shall be organized by reputed institutes within
the state and outside the state, sponsoring can be done more than once in three (3)
years if head of the department makes a specific recommendation.









60

DATA ANALYSIS AND INTERPRETATION
Comparative Balance sheet of SIVA SWATHI TEXTILES PVT LTD
for 2007, 2008 years as on 31-3-2008
Rs. In Lacks

Particulars

2007

2008
Increase/
Decrease
Increase/
Decrease in
%
Assets (Rs Lacks)
Current Assets
Inventories 467.71 1309.34 +841.63 +172.57
Sundry debtors 231.96 182.63 -49.33 -21.77
B.S.D 37.73 64.95 +27.22 +72.14
Loans & Advances 0.00 55.56 +55.56 +100
Cash & Bank 2.47 106.75 +104.28 +4221.86
Other Current
Assets
19.36 0.00 -19.36 -100.00
Total Current
Assets
759.27 1719.25 +959.98 +126.43
Fixed Assets
Net Block 1848.76 2598.83 +750.07 +40.57
Work in Progress 3.67 139.83 +136.16 +3710.08
Total FA 1852.43 2378.66 +886.23 +47.84
Deposits 53.38 53.60 +0.22 0.41
Advances to capital
works
6.63 141.50 +134.87 +2034.23
Debtors above 6(m) 6.76 6.14 -0.62 -9.17
Investments 0.00 0.00 0.00 0.00
Total Assets 2678.47 4659.15 +1980.68 +73.95

61

Liabilities (Rs. In
Lacks)
2007 2008 Increase/
Decrease
Increase/
Decrease in
%
Current Liabilities
TMB OCC 480.18 956.51 +476.33 +99.20
TMB OD 1.88 2.75 +0.87 +46.28
Sundry Creditors 107.85 472.41 +364.56 +338.03
Other current
liabilities
113.26 139.75 +26.48 +23.38
IT Provision 0.00 1.50 +1.50 ------
Total current
liabilities
711.41 1579.13 +867.72 +121.97
Term Liabilities
Unsecured Loan 600.00 700.00 +100.00 +16.67
Sales tax
requirement
104.41 148.97 +44.56 +42.68
Term loan TMB 777.20 1166.99 +389.79 +50.15
Total Term
Liabilities
1481.61 2196.83 +715.22 +48.27
Creditors for capital
works
0.00 180.87 +180.87 +100.00
Share holders fund
Share capital 310.00 480.96 +170.96 +55.15
Reserves & surplus 175.45 402.23 +226.78 +129.26
Total 485.45 883.19 +397.74 +81.93
Total liabilities 2678.47 4659.15 +1980.68 +73.95

INTERPRETATION:
62


CURRENT FINANCIAL POSITIONS

The balance sheet for the year 2007-08 shows the current assets have
increased by 126.43% with Rs.959.98 Lacks and the current liabilities have
increased Rs 867.72 Lacks. The increasing percentage of current assets is
more. The liquidity position of the company is good as it is maintaining a
good working capital.

LONG TERM FINANCIAL POSITION

The balance sheet of the company reveals that during the period
2007-08, there is an increase in fixed assets of Rs 886.23 Lacks i.e. 47.84%
while long term liabilities to outsiders have relatively increased of Rs 715.22
i.e. 48.27% .It shows that the company is purchasing the fixed assets by long
term sources.

PROFITABILITY OF THE COMPANY.

The balance sheet for the year 2007-08 reveals. The reserves and
surplus of the company increased from Rs 175.45 Lacks to 402.23 lacks an
increase of Rs 226.78 Lacks. It shows that the company has a good
profitability margin.


Comparative Balance sheet of SIVA SWATHI TEXTILES PVT LTD
for 2008, 2009 years as on 31-3-2009
63


(Rs.In Lacks)

Particulars

2008

2009
Increase/
Decrease
Increase/
Decrease in %
Current assets
Inventories 1309.34 1402.73 +93.39 +7.13
Sundry debtors 182.63 427.95 +245.32 +134.32
B.S.D 64.95 45.40 -19.55 -30.10
Loans &
Advances
55.56 154.21 +98.65 +177.56
Cash & Bank 106.75 42.74 -64.01 -59.96
Other Current
Assets
0.00 0.00 ------ ------
Total Current
Assets
1719.25 2073.03 +353.78 +20.58
Fixed Assets
Net Block 2598.83 3565.52 +966.69 +37.20
Work in
Progress
139.83 211.58 +71.75 +51.31
Total FA 2738.66 3777.10 +1038.44 +37.92
Deposits 53.60 99.57 +45.97 +85.76
Advances to
capital works
141.50 286.84 +145.34 +102.71
Debtors above
6(m)
6.14 35.63 +29.40 +480.29
Investments 0.00 0.00 -------- -----
Total 201.24 422.04 +220.8 +109.72
Total assets 4659.15 6272.17 +1613.02 34.62



64

Liabilities (Rs. In
Lacks)

2008

2009
Increase /
Decrease
Increase/
Decrease in %
Current Liabilities
TMB OCC 956.51 709.38 -247.13 -58.84
TMB OD 2.75 6.53 +3.78 +137.45
Sundry Creditors 472.41 308.37 -164.04 -34.72
Other current
liabilities
139.74 810.05 +670.31 +479.68
Interest on term
loans
6.20 6.17 +0.03 +0.48
IT Provision 1.50 7.25 +5.75 +383.3
Total current
liabilities
1579.13 1964.83 +385.7 +24.42
Term liabilities
Unsecured loans 700.00 480.00 -220.00 -31.43
Sales tax
department
148.97 236.65 +87.68 +58.86
Term loans TMB 1166.99 1835.62 +668.63 +57.29
Term loans Andhra
Bank
-------- -------- --------- ------
Creditors for capital
works
180.86 139.35 -41.52 -22.96
Total TL 2196.83 2691.62 +494.79 +22.52
Share Holders
funds

Share capital 480.96 480.96 0.00 0.00
Share application
money
----- 193.57 193.57 -------
Reserves & surplus 402.23 941.19 538.96 +133.99
Total SHF 883.19 1615.72 732.53 +82.94
Total liabilities 4659.15 6272.17 1613.02 +34.62



65

INTERPRETATION:

CURRENT FINANCIAL POSITION:

The comparative balance sheet for the year 2008-09 reveals. The
current assets have increased Rs 353.78 Lacks of 20.58% and the current
liabilities have increased Rs 385.7 Lacks of 24.42. The increasing
percentage of current liabilities is more than the current assets in this period.
Company working capital position is come down.

LONG TERM FINANCIAL POSITION :

The comparative balance sheet reveals that during the period 2008-
09 the fixed assets have increase Rs 1038.44 Lacks i.e. 37.92% while ling
term liabilities have relatively increased Rs 494.79 Lacks. It shows that the
company purchasing fixed assets by using the shareholders funds.

PROFITABILITY OF THE COMPANY:

The balance sheet for the year 2008-09 reveals the reserves & surplus
of the company increased from Rs 402.23 Lacks to Rs 941.19 Lacks an
increase of Rs 538.96 Lacks of 82.94%. It shows that the company has a
good profitable margin.


66

Comparative Balance sheet of SIVA SWATHI TEXTILES PVT LTD
for 2009, 2010 years as on 31-3-2010

(Rs.In Lacks)
Particulars 2009 2010 Increase /
Decrease
Increase /
Decrease in %
Current assets
Inventories 1402.73 1598.71 +195.98 +13.97
Sundry debtors 427.95 780.52 +352.57 +82.39
B.S.D 45.4 181.08 +135.68 +298.85
Loans &
Advances
154.21 517.52 +363.31 +235.59
Cash & Bank 42.74 24.47 -18.28 -42.75
Other Current
Assets
0.00 0.00 0.00 0.00
Total Current
Assets
2073.03 3102.30 +1029.27 +49.65
Fixed Assets
Net Block 3565.52 4942.54 +1377.02 +38.62
Work in
Progress
211.58 12.45 -199.13 -94.07
Total FA 3777.10 4954.99 +1177.89 +31.18
Deposits 99.57 115.68 +16.11 +16.18
Advances to
capital works
286.84 105.92 -180.92 -63.07
Debtors above
6(m)
35.63 6.94 -28.69 -80.52
Investments 0.00 0.00 0.00 0.00
Total 422.04 228.54 -193.5 -45.84
Total assets 6272.17 82825.83 +2013.66 +32.10

67

Liabilities (Rs. In
Lacks)

2009

2010
Increase /
Decrease
Increase/
Decrease in
%
Current
Liabilities

TMB OCC 709.38 1125.41 +416.03 +58.65
TMB OD 6.52 2.67 -3.85 -59.05
Sundry Creditors 308.37 450.00 +141.63 +45.93
Other current
liabilities
810.05 720.25 -89.8 -11.09
Interest on term
loans
6.17 0.00 -6.17 -100.00
IT Provision 7.25 36.25 +29.5 +406.89
Total current
liabilities
1964.83 2335.08 +370.25 +18.84
Term liabilities
Unsecured loans 480.00 364.45 -115.55 -24.07
Sales tax
department
236.65 313.27 +72.62 +32.38
Term loans TMB 1835.62 2832.58 +996.96 +54.31
Creditors for
capital works
139.35 46.30 -93.05 -66.77
Total TL 2691.62 3556.6 +864.98 +32.14
Share Holders
funds

Share capital 480.96 783.66 +302.7 +62.94
Share application
money
193.56 151.06 -42.51 -21.94
Reserves &
surplus
941.19 1463.17 +521.92 +55.45
Total SHF 1615.72 2397.89 782.17 +48.41


68

INTERPRETATION:

CURRENT FINANCIAL POSITION:

During the period 2009-10 the current assets have increased Rs
1029.27 Lacks i.e. of 49.65% and current liabilities have increased Rs
370.25 Lacks of i.e. 18.84% increasing percentage of current assets is more
the liquidity position of the is good and maintaining a good working capital.

LONG TERM FINANCIAL POSITION:

The comparative balance sheet of the company for the year 2010
reveals that there is an increase in fixed assets Rs 1177.89 i.e. 31.18% while
long term liabilities to outsiders have increased Rs 864.98 Lacks i.e.
32.14% company using the share capital for purchasing the fixed assets.

PROFITABILITY OF THE COMPANY:

The reserves & surplus of the company increased from Rs 521.92
Lacks it reveals that the company has a good profitable margin.





69

Comparative Balance sheet of SIVA SWATHI TEXTILES PVT LTD
for 2010, 2011 years as on 31-3-2011

(Rs.In Lacks)

Particulars

2010

2011
Increase /
Decrease
Increase /
Decrease in %
Current assets
Inventories 1598.71 1899.01 +300.30 +18.78
Sundry debtors 780.52 1266.57 +486.05 +62.27
B.S.D 181.08 221.41 +40.33 +22.27
Loans &
Advances
517.52 809.53 +292.01 +56.42
Cash & Bank 24.47 40.73 +16.26 +66.45
Other Current
Assets
0.00 0.00 0.00 0.00
Total Current
Assets
3102.30 4237.25 +1134.95 +36.58
Fixed Assets
Net Block 4942.54 5058.39 +115.85 +2.34
Work in
Progress
12.45 105.03 +92.58 +799.83
Total FA 4954.99 5163.42 +208.43 +4.21
Deposits 115.68 134.84 +19.16 +16.56
Advances to
capital works
105.92 50.51 -55.41 -52.31
Debtors above
6(m)
6.94 49.53 +42.59 +613.67
Investments 0.00 0.00 0.00 0.00
Total 228.54 234.88 +6.34 +2.77
Total assets 8285.83 9635.55 +13479.72 +16.29

70

Liabilities (Rs. In
Lacks)

2010

2011
Increase /
Decrease
Increase
/Decrease in %
Current Liabilities
TMB OCC 1125.41 1380.08 +254.67 +22.63
TMB OD 2.67 8.79 +6.12 +229.2
Sundry Creditors 450.00 646.91 +196.91 +43.76
Other current
liabilities
720.25 776.82 +56.57 +7.85
Interest on term
loans
0.00 28.83 +28.83 -------
IT Provision 36.75 3.47 -33.28 -90.56
Total current
liabilities
2335.08 2844.9 +509.83 +21.84
Term liabilities
Unsecured loans 364.45 392.92 +28.47 +7.81
Sales tax
department
313.27 487.94 +176.47 +56.33
Term loans TMB 2832.58 1468.31 -1364.27 -48.16
Term loans Andhra
Bank
0.00 1623.01 +1623.01 -----
Creditors for capital
works
46.30 30.15 -16.15 -34.88
Total term liabilities 3556.06 4004.13 +447.53 12.58
Share holders
funds

Share capital 783.66 783.66 ------- -----
Share application 151.06 214.91 +63.85 +42.27
71

money
Reserves & surplus 1463.17 1787.95 +324.78 +22.19
Total 2397.89 2786.52 +388.63 +16.21
Total liabilities 8285.83 9635.55 +1349.72 +16.29


INTERPRETATION:

CURRENT FINANCIAL POSITION:
The analysisof the comparative balance sheet of SIVA SWATHI
TEXTILES PVT LTD for the year 2011 reveals that the current assets
have increased by Rs 1134.95 Lacks i.e. 36.58% and the current
liabilities have increased Rs 509.83 Lacks is 21.84% the liquidity
position of the company is good. The working capital position of the
company is also good.

LONG TERM FINANCIAL POSITION:
The comparative analysis reveals during the year 2011 the fixed
assets increase Rs 208.43 Lacks i.e. 4.21% and the long term liabilities
have increase Rs 447.53 Lacks i.e. 12.58%.

Profitability of the company:

The reserves & surplus of the company increase Rs 324.78 Lacks
i.e. 22.19%. It tests that the company has a good profitable margin.

72

Comparative Balance sheet of SIVA SWATHI TEXTILES PVT LTD
for 2011, 2012 years as on 31-3-2012 (Rs. In Lacks)

Particulars

2011

2012
Increase /
Decrease
Increase /
Decrease in %
Current
assets

Inventories 1899.01 3247.06 +1348.05 +70.99
Sundry
debtors
1266.57 1383.89 +117.32 +9.26
B.S.D 221.41 100.00 -121.41 -54.83
Loans &
Advances
809.53 2655.00 +1845.47 +227.97
Cash & Bank 40.73 42.91 +2.18 +5.35
Other Current
Assets
0.00 695.00 +695.00 ---------
Total Current
Assets
4237.25 8123.86 +3886.61 +91.72
Fixed Assets
Net Block 5058.39 4506.87 -551.52 -10.90
Work in
Progress
105.03 0.00 -105.03 -100.00
Total FA 5163.42 4506.87 -656.56 -12.72
Deposits 134.84 134.84 -------- --------
Advances to
capital works
50.51 0.00 -50.51 -100.00
73

Debtors above
6(m)
49.53 50.00 +0.47 +0.95
Investments ------ ------ ------ ------
Total 234.88 184.84 -50.04 -21.30
Total assets 9635.55 12815.57 +3180.02 +33.00
Liabilities (Rs. In
Lacks)

2011

2012
Increase /
Decrease
Increase
/Decrease in
%
Current
Liabilities

TMB OCC 1380.08 4000.00 +2619.92 +189.84
TMB OD 8.79 0.00 -8.79 -100.00
Sundry Creditors 646.91 713.15 +66.24 +10.24
Other current
liabilities
776.82 1000.00 +223.18 +28.73
Interest on term
loans
28.83 0.00 -28.83 +100.00
IT Provision 3.47 25.00 +21.53 +620.46
Total current
liabilities
2844.9 5738.15 +2893.25 +101.69
Term liabilities
Unsecured loans 392.92 400.00 +7.08 +1.80
Sales tax
department
489.74 690.00 +200.26 +40.89
Term loans TMB 1468.31 1086.16 -382.15 -26.03
Term loans Andhra 1623.01 1735.39 +112.38 +6.92
74

Bank
Creditors for
capital works
30.15 0.00 -30.15 -------
Total Term
liabilities
4004.13 3911.5 -92.58 -2.31
Share Holders
Fund

Share Capital 783.66 783.66 -------- -------
Share application
money
214.91 214.91 ------- -------
Reserves & surplus 1787.95 2167.30 +379.35 +21.22
2786.52 3165.87 +379.35 +21.22
Total liabilities 9635.55 12815.57 +3180.02 +33.00












75

INTERPRETATION:

CURRENT FINANCIAL POSITION:

The analysis of the comparative balance sheet of SIVA SWATHI
TEXTILES PVT LTD reveals during the year 2011-12 the current assets of
the company increased and more particularly there is substantial increase in
stock. The current assets have increased RS 3886.61 Lacks and the current
liabilities have increased Rs 2893.25 Lacks. The working capital position of
the company is good due to substantial increase in stock the companys
liquidity position may be affected in future.

LONG TERM FINANCIAL POSITION:

The comparative analysis reveals during the year 2011-12. The fixed
assets decrease Rs 656.56 Lacks and term liabilities have decreased Rs
92.58 Lacks.

PROFITABILITY OF THE COMPANY:

The reserves and surplus of the company increase Rs 379.35 Lacks of
21.22%. it reveals the company maintaining constant profitable margin.




76

COMMON SIZE BALANCE SHEET OF SIVA SWATHI TEXTILES
PVT LTD (Rs in Lacks)

Particulars 2007 % 2008 % 2009 %
Current Assets
Inventories 467.71 17.46 1309.34 28.10 1402.73 22.36
Sundry Debtors 231.96 8.66 182.63 3.92 427.95 6.82
B.E.D 37.73 1.41 64.95 1.39 45.40 0.72
Loans &
Advances
0.00 ---- 55.56 1.19 154.21 2.46
Cash & Bank 2.47 0.09 106.75 2.29 42.74 0.68
Other current
assets
19.36 0.72 0.00 ------ 0.00 0.00
Total CA 759.27 28.34 1719.25 38.90 2073.03 33.05
Fixed assets
Net Block 1848.76 69.02 2598.83 55.78 3565.52 56.85
Work in
progress
3.67 0.15 139.83 3.00 211.58 3.37
Total FA 1852.43 69.17 2738.66 58.78 3777.10 60.22
Deposits 53.38 1.99 53.60 1.15 99.57 1.59
Advances to
capital work
6.63 0.25 141.50 3.04 286.84 4.57
Debtors above
(6m)
6.76 0.25 6.14 0.13 35.63 0.57
Investments 0.00 ----- 0.00 ----- 0.00 -------
66.77 2.49 201.24 4.32 422.04 6.73
Total assets 2678.47 100.00 4659.15 100.00 6272.17 100.00

77

COMMON SIZE BALANCE SHEET OF SIVA SWATHI TEXTILES
PVT LTD (Rs in Lacks)


Particulars 2010 % 2011 % 2012 %
Current
Assets

Inventories 1598.71 19.29 1899.01 19.71 3247.06 25.34
Sundry
Debtors
780.52 9.42 1266.57 13.14 1383.89 10.79
B.E.D 181.08 2.19 221.41 2.29 100.00 0.78
Loans &
Advances
517.52 6.25 809.53 8.40 2655.00 20.72
Cash &
Bank
24.47 0.29 40.73 0.42 42.91 0.33
Other
current
assets
0.00 0.00 0.00 0.00 695.00 5.42
Total CA 3102.3 37.44 4237.25 43.98 8123.86 63.39
Fixed assets
Net Block 4942.54 59.65 5058.39 52.50 4506.87 35.17
Work in
progress
12.45 0.15 105.03 1.09 0.00 0.00
Total FA 4954.99 59.80 5163.42 53.59 4506.87 35.17
Deposits 115.68 1.40 134.84 1.40 134.84 1.05
Advances to
capital work
105.92 1.28 50.51 0.52 0.00 0.00
Debtors
above (6m)
6.94 0.08 49.53 0.51 50.00 0.39
Investments 0.00 0.00 0.00 0.00 0.00 0.00
Total 228.54 2.76 234.88 2.83 184.84 1.44
Total assets 8285.83 100.00 9635.55 100.00 12815.57 100.00
78

COMMON SIZE BALANCE SHEET OF SIVA SWATHI TEXTILES
PVT LTD

Particulars 2007 % 2008 % 2009 %
Liabilities
Current
Liabilities

TMB OCC 480.18 17.93 956.51 20.53 709.38 11.31
TMB OD 1.88 0.07 2.75 0.24 6.52 0.10
Sundry Creditors 107.85 4.03 472.41 10.14 308.37 4.92
Other CL 113.26 4.23 139.74 2.10 810.05
Interest on term
loans
8.24 0.31 6.20 0.13 6.17 0.09
IT Provisions 0.00 0.00 1.50 0.03 7.25 0.12
Total CL 711.41 26.56 1579.13 33.89 1964.83 31.33
Term Liabilities
Unsecured Loans 600.00 22.40 700.00 15.02 480.00 7.65
Sales Tax
Department
104.41 3.90 148.97 3.20 236.65 3.77
Term Loans
Andhra Bank
777.20 29.02 1166.99 25.05 1835.62 29.27
Creditors for
capital works
0.00 0.00 180.87 3.88 139.35 2.22
Total term
liabilities
1481.61 55.32 2196.83 47.15 2691.62 42.91
Share Holders
funds

Share Capital 310.00 11.57 480.96 10.32 480.96 7.67
Share application
money
0.00 0.00 0.00 0.00 193.57 3.09
Reserves &
Surplus
175.45 6.55 402.23 8.63 941.19 15.01
Total share
holders fund
485.45 18.12 883.19 18.96 1615.72 25.76
Total Liabilities 2678.47 100.00 4659.15 100.00 6272.17 100.00
79

COMMON SIZE BALANCE SHEET OF SIVA SWATHI TEXTILES
PVT LTD (Rs in Lacks)
Particulars 2010 % 2011 % 2012 %
Liabilities
Current
Liabilities

TMB OCC 1125.41 13.58 1380.08 14.32 4000.00 31.21
TMB OD 2.67 0.03 8.79 0.09 0.00 0.00
Sundry Creditors 450.00 5.43 646.91 6.71 713.15 5.56
Other CL 720.25 8.69 776.82 8.06 1000.00 7.80
Interest on term
loans
0.00 0.00 28.83 0.30 0.00 0.00
IT Provisions 36.75 0.44 3.47 0.04 25.00 0.19
Total CL 2335.08 28.18 2844.9 29.52 5738.15 44.77
Term Liabilities
Unsecured Loans 364.45 4.40 392.92 4.08 400.00 3.12
Sales Tax
Department
313.27 3.78 489.74 5.08 690.00 5.38
Term Loans
Andhra Bank
1821.56 22.04 1468.31 15.24 1086.16 8.48
Term Loans
Andhra Bank
1007.25 12.16 1623.01 16.84 1735.39 13.54
Creditors for
capital works
46.30 0.56 30.15 0.31 0.00 0.00
Total 3552.83 42.92 4004.13 41.56 3911.55 30.52
Share holders
funds

Share capital 783.66 9.46 783.66 8.13 783.66 6.11
Share application
money
151.06 1.82 214.99 2.23 214.91 1.68
Reserves &
Surplus
1463.17 17.66 1787.95 18.55 2167.30 16.91
Total SHF 2397.89 28.94 2786.52 28.92 3165.87 24.70
Total liabilities 8285.83 100.00 9635.55 100.00 12815.57 100.00


80


INTERPRETATION:-

The analysis of common size balance sheet statement for the period
of 2007 to 2012 reveals that in year 2007 invested 28.34% of
resources in Current assets. It is gone up from 28.34% to 63.39 in
the year 2012. In the year 2012 63.39% resources invested in current
assets.

The percentage of current liabilities in total liabilities has gone up in
year 2007- 26.56% to 44.77% in year 2012.

The proportion of current assets has increased by higher percentage
as compared to increase in the proportion of current liabilities this
tells that the increasing working capital position of the company.

The proportion of share holder funds in the total liabilities and the
capital has gone up from 18.12%. In the year 2007 to 25.76% in year
2009 and come down to 16.91% in year 2012.
The proportion of term liabilities in total liabilities in year 2007 is
55.32%. In the year 2010 is 42.91% it is come down 30.52% in
year2012.




81

COMMON SIZE SIVA SWATHI TEXTILES PVT LTD AS ON
PARTICU
LARS
2008 2009 2010 2011 2012
SALES &
OTHER
INCOME
3971.5
1
100.0
0
5162.4
8
100.0
0
7484.0
7
100.0
0
11000.2
2
100.0
0
12505.0
3
100.
00
Raw
material
consumed
2142.1
2
53.94 2744.4
3
53.16 4082.4
7
54.54 6448.35 58.62 7608.27 69.1
6
Power &
fuel
529.26 13.33 687.82 13.32 900.11 12.03 1130.88 10.28 1172.27 9.37
Stores &
spares
99.49 2.51 162.96 3.16 268.55 3.59 409.60 3.72 444.37 3.55
Salaries &
wages
42.32 1.07 71.93 1.39 196.96 2.63 223.79 2.03 268.83 2.15
Repairs &
maintenan
ce
8.19 0.21 3.87 0.75 24.64 0.33 35.92 0.33 37.19 0.29
Other
manual
expenses
7.16 0.18 20.29 0.39 118.24 1.58 373.79 3.40 432.02 3.45
Depreciati
on
323.22 8.14 468.56 9.08 626.13 8.37 815.71 7.42 761.52 6.09
Cost of
productio
n
3151.7
6
79.36 4194.8
6
81.26 6217.1
0
83.07 9438.04 85.80 10724.4
7
85.7
6
Add op.
s+ of wip
56.01 1.41 94.75 1.84 130.34 1.74 197.15 1.79 185.67 1.48
Less cl of
wip
94.75 2.39 130.34 2.52 197.15 2.63 185.67 1.69 200.00 1.60
Add op s+
fg
102.48 2.58 60.69 1.19 124.58 1.6 198.12 1.80 397.02 3.17
Less cl s+
of fg
60.69 1.53 124.56 2.41 198.12 2.65 397.02 3.61 655.74 5.24
Cost of
sales (b)
3154.8
1
79.44 4095.4
0
79.33 6076.7
3
81.20 9250.62 84.09 10451.4
2
83.5
7
Gross 816.7 20.56 1067.0 20.67 1407.3 18.80 1749.6 15.91 2053.61 16.4
82














profit (a-
b)
8 4 2
Less
selling
admin
expenses
399.17 10.05 267.98 5.19 492.45 6.58 913.53 8.30 988.31 7.90
Profit
before int
& tax
417.53 10.51 799.10 15.48 914.89 12.22 836.07 7.60 1065.30 8.52
Interest
on terms
loans
114.52 2.88 101.55 1.97 93.14 1.24 158.23 1.44 226.045 1.81
Interest
on OCC
57.21 1.44 91.19 1.76 108.48 1.46 166.30 1.51 185.30 1.48
Interest
on others
0.00 6.08 0.11 5.38 0.07 1.40 0.01 0.00 0.00
Profit
before tax
245.80 6.19 600.28 11.63 708.89 9.47 510.14 4.63 653.96 5.23
Income
tax
19.02 0.48 61.32 1.19 184.91 2.47 185.36 1.69 274.61 2.20
Net profit
after tax
226.78 5.71 538.96 10.44 521.98 7.00 324.78 2.95 379.35 3.03
83

INTERPRETATION:
Observed form the common size income statement of SIVA
SWATHI TEXTILES PVT LTD from the period of 31-03-2008 to
31-03-2012 the cost of production in percentage in total sales 79.36%
in year 2009. it is increasing 83.76% in year 2011.
The gross profit percentage in total sales was 20.56% in year 2008 the
gross profit percentage was come down 16.42% in year 2012 the low
gross profit percentage is 15.91% in year 2011.
The selling & administrative expenses percentage in total sales was
10.05% in year 2008 it was come down 7.90% in year 2012. The firm
having the control over the selling and administrative expenses.
Profit before invest & tax was 10.51% in year 2008. It increased
15.48% in year 2009 and PBIT come down 8.52% in year 2012.
The net profit after tax was 5.71% in year 2005 it increased 10.44 in
year 2009 the PAT come down 3.03% in year 2012. Low PAT
percentage was 2.95% in year 2011.





84

SCHEDULE OF CHANGES IN WORKING CAPITAL FOR
THE YEAR 2007-2008
Particulars
Previous
year
2006-07
Current
year
2007-08
Working capital
Increase
Rs.
Decrease
Rs.
A) Current assets:

1) Inventories
172256321 187934012

15677691

2) Sundry Debtors 24937024 26860540 1923516
3) cash & bank balance 33465753 6059037 27406716
4) other current assets 28656816 48679846 20023030
5) Loans & Advances 14928012 11723019 3204993
Total Current Assets 274243926 281256454
B) Current liabilities:
1) Current Liabilities 108391431 139624184 31232753
2) Provisions for
taxation
7256927 12018960 4762033
Total Current Liabilities 115648358 151643144
Net working capital (A-B) 158595568 129613310
Decrease in working
capital
28982258 28982258

Total
158595568 158595568 66606495 66606495
Source: Compiled from annual reports of the company
85

ADJUSTED PROFIT & LOSS ACCOUNT FOR THE YEAR 2007-08
Dr. Cr.
Particulars
Amount
Rs.
Particulars
Amount
Rs.
To Depreciation A/c
10547802
1
By Opening Balance of
Reserves and surplus A/c
13516752
5
To Closing Balance of
Reserves and surplus A/c
13027003
6
By Funds from
operations
10058053
2

23574805
7

23574805
7
Source: Compiled from annual reports of the company
FUNDS FLOW STATEMENT FOR THE YEAR 2007-08

Sources
Amount
Rs.
Applications
Amount
Rs.
Raising unsecured loans 23688279 Payment on secured loan 74848773
Funds from operations
10058053
2
Purchase fixed assets 79411683
Sale of investment 736800
Decrease in working
capital
28982258
Increase in differed tax 272587

15426045
6

15426045
6
Source: Compiled from annual reports of the company

86

INTERPRETATION:
It is observed from the above table that the net increase in working
capital for the year 2007-08 is Rs 2, 89, 82,258. The current assents of the
company are decreased comparing with previous year results. The current
liabilities of the company are increased comparing the previous results. The
company gains profit from the operation to an extent Rs 10, 05, 80,532. Net
decrease in working capital is Rs 2, 89, 82,258. This year raising the
unsecured loans and selling some investments. This year changes in differed
tax increased, the company paying some funds to secured loans holders.








87

SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE
YEAR 2008-2009

Particulars
Previous
year 2007-
08
Current
year 2008-
09
Working capital
Increase
Rs.
Decrease
Rs.
A) Current assets:

1) Inventories
187934012 239880075

51946063

2) Sundry Debtors 26860540 35992686 9132146
3) cash & bank
balance
6059037 7150276 1091239
4) other current
assets
48679846 69640943 20961097
5) Loans &
Advances
11723019 12529745 806726
Total Current Assets 281256454 365193725
B) Current liabilities:
1) Current
Liabilities
139624184 202449314 62825130
2) Provisions for
taxation
12018960 9073986 2944974
Total Current
Liabilities
151643144 211523300
Net working capital (A-
B)
129613310 153670425
Increase in working
capital
24057115 24057115

Total
153670425 153670425 86882245 86882245
Source: Compiled from annual reports of the company
88


ADJUSTED PROFIT & LOSS ACCOUNT FOR THE YEAR 2008-09
Dr. Cr.
Particulars
Amount
Rs.
Particulars
Amount
Rs.
To Depreciation A/c 145033137
By Opening Balance of
Reserves and surplus A/c
13027003
6
To Closing Balance of
Reserves and surplus A/c
151136957
By Funds from
operations
16590005
8
296170094
29617009
4
Source: Compiled from annual reports of the company

FUNDS FLOW STATEMENT FOR THE YEAR 2008-09

Sources
Amount
Rs.
Applications
Amount
Rs.
Increase in differed tax 451322 Payment on secured loan 10888974
Funds from operations 165900058 Purchase fixed assets 125206678
Payment Unsecured loan 6198613

Increase in working
capital
24057115

166351380 166351380
Source: Compiled from annual reports of the company
89


INTERPRETATION:
It is observed from the above table. That the net increase in working
capital for the year 2008-09 is Rs 2, 40, 57,115. The current assents of the
company are increased comparing with previous year results. The current
liabilities of the company are decreased comparing the previous results. The
company gains profit from the operation to an extent Rs 16, 59, 00,058. Net
increase in working capital is Rs 2, 40, 57,115. This year company is paying
unsecured loans, at present time no change in investments. And this year
change in differed tax increased and the company pay some funds to secured
loan holders.










90

SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE
YEAR 2009-2010
Particulars
Previous
year
2008-09
Current
year
2009-10
Working capital
Increase
Rs.
Decrease
Rs.
A) Current assets:


1) Inventories
239880075 236975762
2904313
2) Sundry Debtors 35992686 36258591 265905
3) cash & bank balance 7150276 13998934 6848658
4) other current assets 69640943 93687132 24046189
5) Loans & Advances 12529745 10864119 1665626
Total Current Assets 365193725 391784538
B) Current liabilities:
1) Current Liabilities 202449314 158452146 43997168
2) Provisions for taxation 9073986 21580520 12506534
Total Current Liabilities 211523300 180032666
Net working capital (A-B) 153670425 211751872
Increase in working capital 58081447 58081447
Total 211751872 211751872 75157920 75157920
Source: Compiled from annual reports of the company
91

ADJUSTED PROFIT & LOSS ACCOUNT FOR THE YEAR 2009-10
Dr. Cr.
Particulars
Amount
Rs.
Particulars
Amount
Rs.
To Depreciation A/c 182491726
By Opening Balance of
Reserves and surplus A/c
151136957
To Closing Balance of
Reserves and surplus A/c
194200158
By Funds from
operations
225554927
376691884 376691884
Source: Compiled from annual reports of the company
FUNDS FLOW STATEMENT FOR THE YEAR 2009-10

Sources
Amount
Rs.
Applications
Amount
Rs.
Raise secured loans 99207205
Payment on unsecured
loan
11144515
1
Funds from operations
22555492
7
Purchase fixed assets
15451198
9
Decrease in differed tax 723545

Increase in working
capital
58081447


32476213
2

32476213
2
Source: Compiled from annual reports of the company

92

INTERPRETATION:
It is observed from the above table that the net increase in working
capital for the year 2009-10 is Rs 5, 80, 81,447. The current assents of the
company are increased comparing with previous year results. The current
liabilities of the company are decreased comparing the previous results. The
company gains profit from the operation to an extent Rs 22, 55, and 54,927.
Net increase in working capital is Rs 5, 80, 81,447. This year changes in
differed tax decreased and the company raising some funds to secured loan
holders.












93

SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE
YEAR 2010-2011

Particulars
Previous
year
2009-10
Current
year
2010-11
Working capital
Increase
Rs.
Decrease
Rs.
A) Current assets:


1) Inventories
236975762 327412543
90436781
2) Sundry Debtors 36258591 22361498 13897093
3) cash & bank balance 13998934 73891461 59892527
4) other current assets 93687132 151568707 57881575
5) Loans & Advances 10864119 13966691 3102572
Total Current Assets 391784538 589200900
B) Current liabilities:
1) Current Liabilities 158452146 143360960 15091186
2) Provisions for taxation 21580520 90860140 69279620
Total Current Liabilities 180032666 234221100
Net working capital (A-B) 211751872 354979800
Decrease in working capital 143227928 143227928
Total 354979800 354979800 226404641 226404641
Source: Compiled from annual reports of the company
94


ADJUSTED PROFIT & LOSS ACCOUNT FOR THE YEAR 2010-11
Dr. Cr.
Particulars
Amount
Rs.
Particulars
Amount
Rs.
To Depreciation A/c
21850163
2
By Opening Balance of
Reserves and surplus A/c
19420015
8
To Closing Balance of
Reserves and surplus A/c
34590107
1
By Funds from operations
37020254
5

56440270
3

56440270
3
Source: Compiled from annual reports of the company
FUNDS FLOW STATEMENT FOR THE YEAR 2010-11

Sources
Amount
Rs.
Applications
Amount
Rs.
Raise unsecured loans 1790474 Payment on secured loan 49556343
Funds from operations
37020254
5
Purchase fixed assets
21583665
0
Increase in differed tax 36627902 Increase in working capital
14322792
8


40862092
1

40862092
1
Source: Compiled from annual reports of the company
95


INTERPRETATION:
It is observed from the above table that the net increase in working
capital for the year 2010-11 is Rs 14, 32, 27,928. The current assents of the
company are increased comparing with previous year results. The current
liabilities of the company are decreased comparing the previous results. The
company gains profit from the operation to an extent Rs 37, 02, and 02,545.
Net increase in working capital is Rs 14, 32, 27,928. This year is paying
unsecured loans comparing with previous year. This year changes in differed
tax increased, the company raising some funds from secured loan holders.


















96

SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR
2011-12

Particulars

Previous
year
2010-11
Current
year
2011-12
Working capital
Increase
Rs.
Decrease
Rs.
A) Current assets:


1) Inventories
327412543 341906868

14494325

2) Sundry Debtors 22361498 83013158 60651660
3) cash & bank balance 73891461 156007572 82116111
4) other current assets 151568707 219855601 68286894
5) Loans & Advances 13966691 16218624 2251933
Total Current Assets 589200900 817001823
B) Current liabilities:
1) Current Liabilities 143360960 125982205 17378755
2) Provisions for taxation 90860140 127893205 37032911
Total Current Liabilities 234221100 253875256
Net working capital (A-B) 354979800 563126567
Increase in working capital 208146767

Total
563126567 563126567 245179678 245179678
Source: Compiled from annual reports of the company
97

ADJUSTED PROFIT & LOSS ACCOUNT FOR THE YEAR 2011-12
Dr. Cr.
Particulars
Amount
Rs.
Particulars
Amount
Rs.
To Depreciation A/c
25681373
6
By Opening Balance of
Reserves and surplus A/c
19420015
8
To Closing Balance of
Reserves and surplus A/c
42459930
3
By Funds from operations
37020254
5

68141303
9

68141303
9
Source: Compiled from annual reports of the company

FUNDS FLOW STATEMENT FOR THE YEAR 2011-12

Sources
Amount
Rs.
Applications
Amount
Rs.
Raise secured loans
17156566
3
Payment on unsecured
loan
31648312
Funds from operations
33551196
8
Purchase fixed assets
27211513
6
Increase in differed tax 4832584 Increase in working capital
20814676
7


40862092
1

40862092
1
Source: Compiled from annual reports of the company

98


INTERPRETATION:
It is observed from the above table that the net increase in working
capital for the year 2011-12 is Rs 20, 81, 46,767. The current assents of the
company are increased comparing with previous year results. The current
liabilities of the company are decreased comparing the previous results. The
company gains profit from the operation to an extent Rs 33, 55, and 11,968.
Net increase in working capital is Rs 20, 81, 46,767. This year is paying
unsecured loans comparing with previous year. This year changes in differed
tax increased, the company raising some funds from secured loan holders.













99

FINDINGS

It was observed that the SIVA SWATHI TEXTILES PVT LTD
company current assets position was increasing over the period of
time. In the same way the company current liabilities position was
increasing over the period of time from year 2007 to year 2012.

The percentage of increasing current assets is more than the increasing
percentage in current liabilities. It tells that the firm maintaining a
good working capital and having the good liquidity position.
The SIVA SWATHI TEXTILES PVT LTD Company decreasing the
term liabilities component in its capital structure which can be better
by its decreasing term liabilities in its capital structure the company
reducing its financial risk.

The SIVA SWATHI TEXTILES PVT LTD maintaining the constant
fixed assets percentage in its total assets till the year 2011 and the
fixed assets percentage is coming down in year 2012.

The net profit of the company is increasing from year 2008 to year
2009 because the company controlling selling & administrative
expenses. And the net profit percentage decreasing from the period
2009 to 2011 because increasing selling & administrative expenses
and tax and interest. In the year 2009 net profit was increasing.

100

The proportion of the share holders in total liabilities was increasing
on the year on year basis of because the increment in reserves &
surplus. The company increasing share capital in year 2008 and in
year 2010.

The company maintained good fixed assets turnover ratio in all of the
years it has the highest fixed turnover ratio in the year 2011-2012.

The working capital turnover of the company is found to be
satisfactory in all the years.

The company maintained the good current ratio year all the observed
years from 2008 to 2012.

The company gross profit ratio was come down on the year on year
basis in the year 2007 gross profit ratio is 21.88 it is come down 16.42
in year 2012 the net sales was increasing all years buy the gross profit
ratio was decrease because cost of production was increased.








101

SUGGESTIONS

The study observers that the current assets and current liabilities has
been increased observation period it is suggested to the company to
take necessary steps for maintaining proper balance in between
current assets and current liabilities.
As the study observed the current assets position was increased all the
five years it is suggested to the company to maintain proper current
assets for better short term fund management.
The company decreasing the term liabilities component in its capital
structure. It is suggested to the company to maintain a tradeoff
between the term liabilities and equity.
It is suggested to the company to invest more funds to its fixed assets
to generate sales by utilizing them.
The net profit of the company has been fluctuated over the over the
observation period. It is suggested to the company to control the
selling & administrative expenses for to improve the net profit.
The share holders fund has been increased year on year basis. Because
the increment in reserves & surplus. It is a satisfactory position. It is
suggested to maintain the same levels.
The fixed assets turnover ratio is in a satisfactory position it is
suggested to the company to improve the fixed assets turnover ratio
for effective utilization of the fixed assets.



102

CONCLUSION

The working capital position has been increased during the five years
from year 2007 to 2012; the working capital position is good. The
comparative balance sheet position is improved over the period of time.
The common size balance sheet of company is very high and the
comparative income statement position is also needed to be increased to
certain extent. The company maintains the good current ratio for all
years. The company tries to improving its gross profit ratio and net profit
ratio. Significantly in year on year basis.
















103


BIBILIOGRAPHY


Reference Book:

Financial Management by I.M Panday
Advanced Accountancy by R.I Gupta
Cost and Management Accounting Sexena & Vaschist.



http://www.sivaswatitextile.com/

www.cottonindustry.com
www.agriculture-industry-india.com