Funds Flow

Sujala pipes (p) ltd.
CHAPTER-I
INTRODUCTION
1
Sujala pipes (p) ltd.,
INTRODUCTION
The basic financial statements i.e., the balance sheet and profit and loss account
to income statement of business reveal the net effect of the various transactions on the
operational and financial position of the company. The balance sheet gives a summitry of
the assets and liabilities of an undertaking at a particular point of time. It reveals the
financial status of the company. The assets side of a balance sheet shows the development
of resources of an undertaking while the liabilities side indicates its obligation, i.e., the
manner in which these resources were obtained. The profit and loss account reflects the
results of the business operation for a period of time. It contains a summary of expenses
incurred and the revenue realized in an accounting period. Both these statements provide
the essential basic information on the financial activities of business, but their usefulness
is limited for analysis and planning purpose.
The balance sheet gives a static view of the resources (liabilities) of business
and used (assets) to which these resources have been put at a certain point of time. It does
not disclose the causes for profit and loss account, in a general way, indicates the
resources provided by undertaking and which do not operate through profit and loss
account. Thus, another statement has to be prepared to show the change in the assets and
liabilities from the end of one period of time to the end of another period of time. The
state is called a statement of changes in financial position or a funds flow statement.
The funds flow statement is a statement, which shows the movement of funds
and is a report of the financial operations of the business undertaking. It indicates various
means by which funds were obtained during a particular period and the ways in which
these funds were employed. In simple words, it is a statement of sources and application
of funds.
2
OBJECTIVES OF THE STUDY:
The following are the basic objectives of the present study.
* To identify the application of Funds of the sujala pipes limited

* To know how the funds are being utilized.
* To know the liquidity position of the
* To know the liquidity position of the sujala pipes limited
* To find out the reasons behind the losses/ profits of the sujala pipes limited
* To suggest a good method of fund allocation
SCOPE OF THE STUDY:
The magnitude and scope of a project ids generally defined by its objectives.
Constrains and methodology that has adapted to analysis the information. However the
scope of the present project is at macro level i.e., the over all performance of the sujala
pipes limited
RESEARCH METHODOLOGY:
The period selected for the study is five years from 2003-2004 to 2008-2009. The
methodology adopted for this study includes Primary data and Secondary Data.
More than this personal interviews are conducted with the Finance Manager and other
officials to elicit the necessary information. Interviews are very effective and they have
provided needed information particularly to complete this report discussions are held to
verify the data obtained secondary sources.
PRIMARY DATA
Primary data will be through regular interaction with the officials of the sujala
pipes limited Ration relationships will be established basing on the theoretical literature
available from the Finance text books and sujala pipes ltd balance sheets and Profit and
Loss A/cs.
3
SECONDARY DATA
* Annual reports of the sujala pipes 2003- 2004 to 2008-2009

* Financial statements of the sujala pipes.
* Collectively the relevant information for the standard text books and
Financial magazines
* Required information is collected from lecturers, friends.
LIMITATIONS OF THE STUDY
The present study is only for 5 of sujala pipes ltd i.e., from the financial year
(2004-05 to 2009-10).
The analysis is based on the data which is provided by the sujala pipes ltd i.e.
Annual reports of the sujala pipes ltd.
The study is based on funds flow statement; liquidity ratios; C-D ratios
And spread analysis for a period of 6 years only.
Classification of the current and fixed assets / liabilities is based on the
Volatility of the funds.
Provisions of the sujala pipes ltd are treated as current liability.
4
CHAPTER-II
INDUSTRY PROFILE
5
Industry profile
PVC pipes poly vinyl chloride pipes have become synonymous, with modern
living it is undoubtedly a product which has deeply penetrated in to common mans life.
No wonder the industry has achieved remarkable progress in the terms of supply of raw
materials, and diversification of processing capabilities and manufacturing of machinery
and ancillary equipment sophistication.
This versatile material with superior qualities such as light weight, easy
processing corrosion resistance, energy conservative, non taxis etc. may substitute to a
large estimate of many conventional and costly industrial materials like wood, glass,
metal and leather etc. in the future the manifold applications of plastics in the field of
automobiles, electronics, electrical, packaging and agriculture give its immense utility in
PVC plastics.
At present as percent of total requirement of raw material and almost all type of
plastic machines required for the industry are not adequate available. The present
investment in all the three segments of industry namely production of raw materials,
expansion and diversification of raw materials. Expansion and diversification of
processing capacities, manufacturing of processing machinery. Equipment is 1250 crores
and it provided employment at more than 8 lakh people.
Plastics have been subjected to leaves not only at the central level but also the
state and local government. These levels have effected the price of the plastic products
adversely. The per-capita consumption of plastics is very low at 0.5kg as against the
world average of 11kgs. The per-capita consumption is 68kgs in FRANCE, 33kgs in UK.
And even in Asian countries like SOUTH KOREA it is 8.5kgs.
On account of their inherent advantage in properties and versatile in adoption and

use, plastics have come to play a vital role in a variety of applications the world over. In
our country plastics are used in making essential consumer goods which are of daily use
for common man. Such as baskets, carry bags, bottles, pipes, pens, etc. they also have
applications in agriculture, building constructions. Water management resources,
engineering and electronics.
6
The government of India recognized the importance of plastics in agriculture

appointed on march 7, 1981 a national committee on the use of plastics in agriculture
under chairmanship of Dr G.V.K. Rao. The committee has forecast a treatment as fright of
drop irrigation through a network of plastics tubes and pipes. In its origin large scale
adoption of irrigation would lead to support in demand for PVC pipes. LDAP tubes and
play proper by lane emitters. The committee made a number of recommendations would
so a long way is increase the consumption of plastics, which at present is very low. The
committee has highlighted the importance of use of PVC resin is the manufacture of rigid
pipes, flexible pipes and sheets are being used for agriculture operations to carry water
from place and living of panels and reservoirs to reduce sweepers and most important in
drop irrigation sequence
A break through had already taken place in the field of channel lining with poly
urethane in the state of Gujarat. Madhya Pradesh, Punjab and Haryana. The irrigation
departments in these states have taken concrete steps to incorporate canal living with
LDPE (Low density) pipes on priority basis.
Another variety of plastics, that requires artificial manufacturing relates to true

engineering plastics which is used as an alternative to (or) replacement of metals in load
needing applications.
Modified P.P.O. Nylon, polycetal, poly carbonates. Polyster (PBT/PET) phendic are
same of the plastic materials following under the category of en engineering plastics.
Engineering plastics are being increasingly used for various applications in automatic,
electronic, telecommunications and other industries. The plastics are classified into two
major classes.
1. Thermo Plastics
2. Thermostats
The thermo plastics become sufficiently soft as the applications of heart. The
thermostats are the initial application of heat and pressure of heat and pressure subjected
7
to fire, but up on further application of heat pressure they are cured to heat and pressure.
They are cured to hard moulded price which cannot be resofted by reheating.
LDPE: low density poly ethylene:
Production of LDPE was stated in the year in 1955. at present there are 3units
manufacturing LDPE with a total capacity of 1.15 lakh tonnes. Products targeted for
LDPE by the end of 1999 is placed at 1.86 lakh tones.
HDPE: High density poly ethylene:
Production of HDPE in India commenced in 1968, at present there is a unit

(play defines industries Ltd.) in India producing HDPE by the end of 1989-1990 was
producing 1.25 lakhs tones.
PVC Poly vinyl chloride:
Production of PVC started in 1961, against first production of PVC in the world, 1927.
At present there are 6 units manufacture of PVC resins. The total installed capacity
comes to 1.7 lakhs tones. The production target of PVC by the end of 1989-90 is placed
of 2.33 lakhs tones.
POLYSTYRENE:
Polystyrene was first manufactured in India in may 1987. The production target of
polystyrene by the end of 1989-90 is set out to 29000 tones.
Poly propylene
The first production of poly propylene in India commenced in 1978. A production

target of 36000 tonnes is achieved by the end of 1993-94.
ABS(Acrylonitril Bujtadient sysrenl)
8
The production of ABS in India started in 1978. The present total installed
capacity is 5000 tonnes.
Problems
Raw material is always been a problem to be recorded with the plastic industry.
The situation was slightly improved recently and is expected to charge considerably by
commissioning the major petrol chemical project in the pipe line by the year 1990.
The Maharastra Gas cracker complex. Haldia petrol chemical and reliance
petrochemicals together with the expansion of existing giants will go a long way to
mitigate this long, study problems. By the terminal year the plan the installed capacity
targeted is almost 8 lakh tones.
The steep rise in the raw material as a result of imposition of duties and taxed
poses another problem to the plastic industry. On account of this domestic price of
finished goods are higher than the rest of world. Apart from this the administrated pieces
for basic raw materials have not been implemented with a balanced view to
accommodating the interest of both consumers and manufacturers. And chloride 85% of
the polymers are made form naptha feedstock. Hence the pricing naptha by the
government has a cascading effects.
Export of the plastic goods:
Plastic have been excellent potentialities. Our country equipped with all kinds of
processing machines and skilled labour and undoubtedly. An extra effort to boost export
finished plastics goods will yield rich dividend.
Today, India exports plastic product to as many as 80 countries all over the world.
The exports which were stagnant at around Rs 60-70 crores per annum doubled to 129
crores in early 1990 in 1991-92 plastic industry has taken up a challenge of achieves
export target of 250 crores. Major export markets for plastic products and usage are
Australia, Bangladesh, Canada, Egypt, France, Holland, Italy, Hong Kong, Srilanka,
Sweden, Taiwan, UK, USA and Russia.
9
With a view to boosting the experts, the plastics and linoleums, export promotion
council has requested the government to reduce import duty on plastic raw materials
supply of raw materials at international prices, fix duty free backs on weighted average
basis and charge freight rate on plastic products on weight has interested of volume basis.
Prospects:
The production of various plastics raw materials the country is expected to double
by the end of the seventh five-year plan. When the PCS capacity expansion programs is
completed as well the new plants by other manufacturers like PIL, century Enka, reliance
are set up during the period the consumption of touch the one million tones mark by
1989-90. There is immense scope for the use of plastics in agriculture an irrigation and
thus the plastic industry is on the threshold of an explosive growth.
ROLE OF PLASTICS IN THE NATIONAL ECONOMY
Plastic are get perceived as just simple colorful house hold products in the minds
of common man. A dominant part of plastics of present and future improved their
utilization in the following areas.
Agriculture, forestry and water management.

Automobiles and transportation.
Electronics and telecommunications and buildings.
Constructions and furniture especially wood substitutes.
Food processing and packaging.
Power and gas distribution.
10
CHAPTER-III
COMPANY PROFILE
11
Sujala pipes pvt Ltd. Nandyal was incorporated in the year 1988 it is located in the
industrial estate, Nandyal. The company has Rani Plastic Pipes Industry as its sister
concern in the manufacture of PVC pipes. This company is promoted by the Managing
Director Sri .S.P.Y.Reddy, B.E(Mech) who has decades of experience in the
manufacturing industry.
The company has three main PVC pipes brands. They are Nandi, SUJALA,
and Rani. But the flagship brand is NANDI PIPES. The name NANDI derives
form the historical aspects of this town, Nandyal. The brand name NANDI PIPES as
taken from the pilgrimage place called MAHANANDI which is 15 km from Nandyal.
The company has diversified in to various fields in the recent past. Apart from
manufacture of mineral water under the brand name Name mineral water dairy products
Nandi dairy which supplies regular milk to the people of Nandyal and villages in and
around Nandyal.
The company rightly thinks there is an inseparable relation between education and
business. Managing Director Mr. S.P.Y.Reddy encouraging women to educate by
establishing women colleges in Nandyal. Sujala pipes also gone for expansion program.
They have taken over monarch pipes Anantapur which was a main competitor. The
company is providing good source of employment to the people who are at both workmen
level as well as administrative level. Sujala Pipes which was once upon a time a sole
manufacturer of plastic goods in to many companies. Their turnover touched a
remarkable figure nearly Rs. 30 crores in the year 1999-2000.
The main objective in starting this industry was to cater to the needs of farmers to
facilitate water flow in this area which lakhs rainfall and to use the water resources
productively. This helps the farmers in lifting the ground water to the surface as well as
free flow of the water as an and when necessary.
Initially the industry was producing polythene pipes and PVC(poly vinyl chloride)
pipes were introduced under the same brand name later in 1984-85 the growth of PVC
industry in Rayalaseema area of A.P. has seen rapid growth in the early 90s. The
company also produce PVC fittings. In short it can be concluded that the company enjoys
12
95% of south Indian company does is free offer of transportation to the door steps of the
customers when he purchases 100 or more pipes.
The company also provides free medical facilities to the employees. Sujala pipes
also involved in social activities by providing free water supply to the needy people.
Company organize free medical camps to the poor people. It also gives loans to
unemployed youth in fulfilling their career objective.
As the company caters to the needs of farmer and its main products is agricultural
related product they enjoy maximum benefits given by the government. They are no
unions in the organization as there an there is good relation and working climate exists in
the organization between management and employees. It basically work on 2 shifts.
Residences are also provided by the company to its workforce and employees at
concessional rent. Very recently the company had approached the Karur Vysya bank,
Nandyal for working capital loan 150 lakhs in order to meet the changing requirements of
industrial scenario.
Financially the company markets sounds very good. It gives a credit of 21 days to
its customers. It has a wide distribution network both in A.P. as well as neighbour states
in the south India. Industrial accidents are also nil in the company.
The company markets products through telephone orders. It has a wide network
of distributors all over south India. As and when the order is received, it immediately sent
to the production department as well as stores. Basing on orders requirements and
availability at the stores the products are manufactured and sent.
13
Production process of PVC pipes:
The material used in PVC pipes manufacture are:

PVC (poly vinyl chloride)
Tri basic lead sulphate(TBCS)
Die basic lead sulphate (DBLS)
Calcium steric
Lead steric
Calcium carbonate(Ca Ca3)
Titanic dioxide
Steric acid
Wax
The above material are mixed in fixed proportion in a big container and they get
processed in to a solidified product. Immediately pipes of various diameters are
manufactured by using various moulds. Once the pipes are manufactured they will be
shifted to warehouse. As and when the requirement comes, they will be dispatched to the
designated place.
14
CHAPTER-IV
THEORITICAL FRAME WORK
15
Meaning and introduction
One of the most important techniques of financial analysis is a preparation of

funds flow statement. It is the statement which portrays the changes in the financial
position of an enterprise. Balance sheet and income statement do not present a
comparative picture, even if placed side by side in that much clarity as the statement of
changes in financial position which focuses on the sources and uses of funds.
Funds flow statement is a technical device designed to highlight the changes in the
financial condition of a business enterprise between the opening and closing balance sheet
dates. The flow of funds results in mainly profits of a business due to business
operations. And as has been well said that a business with an income at its heals
furnishes always oil for its own wheels, it is the profit which becomes main sources of
funds for a business. However profitable companies can also be anemic with respect to
working capital and since working capital is the life blood of an enterprise, its shortage
can disturb the operating cycle of the business. It is this concept of funds, the flow
which is to be examined in detail as to its sources and applications so as to know the net
increase or decrease in working capital over a period of time, usually a year.
Definition:
a) Funds flow statement in a statement either prospective or re-retrospective setting

out the sources and application of the funds of an enterprise. The purpose of the
statement is to indicate clearly the requirement of funds and how they are propose to be
raised and efficient utilization and application of the same.
b) A financial statement with summary for the period covered by it, the changes in
financial position including the sources from which funds were obtained by the enterprise
and specific uses to which funds were applied.
c) A statement of funds received and expanded a statement of changes in financial

position or sources and application of funds in which elements of net income and working
capital contributing to an understanding of the whole of financial operation during the
reporting period replace total of these items.
16
Concept of funds:
Funds in the narrowness sense of the term as be equated to cash. But in the
broader sense and appropriate one here, it refers to working capital that is current assets
less current liabilities.
A still broader interpretation of the term funds has been given by some
accountants, and according to them funds includes all resources used in the business
whether in the form of men, material, money, machinery and other. But it is not relevant
for the purpose of flow statement. The most common definition of fund is working
capital since they use the term working capital as synonym to current assets. How ever
for the purpose of this book and present chapter too, the term working capital has been
taken as equivalent to the difference of current assets and current liability.
Concept of flow:
The dictionary meaning of the word flow is movement denoting change

Therefore, whenever there is a change of funds that is either increase or decrease there is
a flow of funds. There must be some cause of change- the cause may result in either
raising the funds inflow of funds there by becoming a source of fund or the cause may
lead depletion of funds that is out of funds, implying there by an application or use of
funds in other words source of funds show the reasons of increase in funds that is working
capital and application of funds reveal the reasons of decrease in funds that is working
capital.
17
Concept of funds flow statement
The meaning of funds flow or flow of funds illumination the concept of funds
flow statement clearly the statement which analysis the flow of funds that is the reasons
for changes in working capital is a funds flow statement.
The reasons are set by the sources and application of funds and therefore the
statement can be called as the statement of sources and application (uses) of funds.
Some accountants prefer to call it in short as fund and to which place have gone. It is also
designated as where got and where (movements) of working capital, movements of flow
statements etc.
The statement focuses on various media by which resources were obtained during
a particular period and the ways to which there resources were employed the financial
operations for a period are summarized in such a manner as to indicate by what means
new financing was obtained and for what purposed it was utilized.
18
Difference between Funds Flow Statement and
Income Statement
Fund Flow Statement Income Statement
1. The Statements narrates the item of cost

1. It is disclosing the reasons for change in
and revenue to arrive at the figures of profit
working capital i.e., where from the
and loss earned / incurred during a
working capital funds has been applied.
particular period of time.
2. Income Statement helps the preparation 2. Funds Flow Statement doesnt help
of Funds Flow Statement in as much as one preparation of income statement
source of funds i.e., funds from operation
is found out from the income statement
3. Funds raised are matched with funds 3. Expenses are matched with income in
used. No distinction is made between order to find out the result of operation.
capital and revenue items Only revenue items are considered
19
Difference between Funds Flow Statement and
Position Statement
Fund Flow Statement Position Statement

1. It is a Statement changes in financial 1. It is statement of financial position
position.
2. It show the amount of changes during the 2. It present the amount of assets and
particular period of time. liabilities at a particular point of time
3. It doesnt analyze the change in current 3. It shows all the accounting liabilities
asset and current liability. whether current or non-current
4. It is a analytical statement analyzing form 4. It is not a analytical statement hence not

where they have been used, hence more that much useful for decision making as the
useful. fund flow statement
20
Importance of funds flow statement:
The information which is provided by funds flow statement is neither available in

the balance sheet nor in the income statement and hence its important. The changes
which have taken place in between two accounting dates are highlighted by funds flow
statement. A lay man cannot grasp the underlying significance of achievements and
progress of the company simply by a personal of the balance sheet and income statement
of different years. The comparative and analytical study presented by the statement
giving the details of sources and uses of funds during a given period of immense help to
the users of information. It is very useful tool in analytical kit of the management also,
besides the outsiders, in order to have at a glance appraisal of the financial and operating
performance of a company. Since the statement shows the extent to which the working
capital has been effectively put to use, the managements task of taking policy decision
regarding investment, dividends etc, is great facilitated.
The projected funds flow statement can also be prepared and then
budgetary control and capital expenditure control can be exercised to the benefit of the
entire organization.
Uses of funds flow statement:
Funds flow statement of a company is of great value to management share

holders, creditors, bankers, money lending institutions etc.,
Informative value:- The financial consequence of business operation are clearly

explained in details by a funds flow statement some of the problems which crop
up in the minds of investors are well solved by a simple perusal of this statement
for e.g.,
1. Where have the profit gone.
21
2. Why does an imbalance exist between liquidity position and profitability position
of enterprise?
Forecasting value:- A projected funds flow statement can be prepared and

resources can be properly allocated after an analysis of the present state of affairs.
The optimal utilization of available funds in necessary for the overall growth of
the enterprise. The funds flow statement prepared in advance given a clear
direction to the management in this raged.
Testing value:- Whether the working capital has been effectively is used or not
by the management can well be tested by funds flow statement. Whether working
capital has been maintained at proper level, and whether it is adequate or
inadequate can be known by a study of the statement. The management is warned
against the injudicious uses of funds.
Decision-making value:-
Since over all credit worthiness of the enterprise is known, creditors and money lenders
can decide as to whether they have to provide loans to company or not. The sources of
raising funds and their application help the shareholders to decide whether the management
of the business is an enlightened or not regarding managing funds. Mismanagement of
funds may be prevented. The management can be decide about the future financing policies
and capital expenditure programmers.
22
STATEMENT OF CHANGES IN WORKING CAPITAL
PARTICULARS Previous Current

Year Year CHANGES IN WORKING
CAPITAL
INCREASE
DECREASE
Current assets:
Inventories:
*********** *********
Raw material
Consumable stores *********** *********
Finished goods *********** *********
Sundry debtors *********** *********
Cash in hand *********** *********
Balance with bank *********** *********
Other current assets:
Deposits *********** *********
Income tax (advance tax) *********** *********
Sales tax *********** *********
Total current assets *********** *********
Current liabilities
Trade creditors ** *********
Dealers deposits ** *********
Expenses payable *** *********
Totalurrent liabilities *********** *********
Working capital (current ***********

assets-current liabilities)
Net Increase/decrease
working capital **
***********
*********** ********* ***********
***********
23
Funds From Trading Activities of Operating Profit:

The profit or loss disclosed by profit and loss account doesnt indicate the funds
generated by trading activities, because it contains a variety of write offs and adjustments,
which do not involve any corresponding movement of funds. Therefore appropriate
adjustments are to be made to profit or loss as to arrive at the funds from business
operations. For this purposes items debited to profit & loss account is to be added to
profit, which do not involve any flow of funds. Further ;items credited to profit and loss
account are to be deducted which do not belong trading activities.
Operating Profit = Net Profit + Non-Operating Expenses Non-Operating Income
PARTICULARS AMOUNT AMOUNT
Net profit
Add: Non-Operating Items Debited to P&L a/c- *******

Depreciation *******
Write off depreciation on non-tangible assets
Discount on issue of shares and debentures *******
Loss on sale of non current asset
Provision for income tax ******
Proposed dividend
All transfers to reserves *****
Provision for doubtful debts
********
Less: Non-Operating Items credited to P&L a/c

Profit on sale of non-current asset
Dividend and interest received
********
Non-Operating income
Gain on evaluation of non-current assets
*******
*
Funds from operations
24
Statement of Sources and application of funds
Funds flow statement is a statement, which indicates various sources from which funds
have been obtained during a chain period and the uses or applications to which these
funds have been put during that period.
Sources of funds
Application of Funds.
Statement of sources and Applications
PARTICULARS AMOUNT PATICULARS

AMOUNT
Sources of funds Application of funds
Funds from trading ********** Funds costs in operations *******

Factitively or
Operating profit Repayment of debentures
**********
***********
Issue of shares and
debentures ********** Reduction in share Capital **********
Sale Proceeds of Non- ********** Interest and dividend paid

**********
current asset
Long- term ********** Payment of Long term loans ********
Borrowings
Decrease in working ********** Increase in working capital

**********
Capital
***********
***********
One of the valuable aids to the financial manager or the creditor is funds flow
statement, with which evaluates how a firm uses funds and determines how these uses are
25
financed. In addition to studying the past flow, the analyst can evaluate the future flows
by means of the funds statement based on forecasts. Such as statement provides an
efficient method for the financial manager to assess the growth of the firm and its
resulting financial needs as well as to determined the best way in which those needs may
be financed. In particular, funds statements are very useful in planning intermediate and
long-term financing.
The main purpose of preparing funds flow statement is that it reveals clearly the
important items relating to sources and applications of funds fixed assets, and long-term
loans including capital. It also informs how far the assets derived from normal activities
of business have been utilized properly with adequate consideration
It also reveals how much out of the total funds is collected by disposing of fixed
assets, how much from issuing shares or debentures, how much from long-term or short-
term loans how much from normal operational activities of the business.
It also provides information about the specific utilization of such funds, that is,
how much has been applied for acquiring fixed assets, how much for repayment of long-
term or short-term loans as well as for payment of tax and divided etc.
26
CHAPTER-IV
DATA ANALYSIS
AND
INTERPRENTETION
27
STATEMENT TO CHANGES IN WORKING CAPITAL

CHANGES IN WORKING
CAPITAL
PARTICULARS 1-4-2004 31-3-2005 INCREASE
DECREASE
Current assets:
Inventories:4
Raw material 1,07,53,83 56,58,573
50,95,264
Consumable stores 15,97,989 2,27,778
13,70,211
Finished goods 1,88,81,034 43,96,436
1,44,84,598
Sundry debtors 3,09,98,991 3,11,37,407 1,38,416
Cash in hand 2,10,680 2,95,904 85,224
Balance with bank 2,45,176 3,75,068 1,29,892
Other current assets: 11,53,160 36,53,160 25,00,000
Deposits
Income tax(advance 11,21,361 27,23,822 16,02,461
tax)
Sales tax 3,27,50,000 3,39,65,000 12,15,000
Pipes rental 11,40,801 12,26,802 86,001
Total current assets 9,88,53,029 8,36,59,950
Current liabilities:
Trade creditors 8,91,22,323 7,21,33,509 1,69,88,814
Dealers deposits 4,45,000 4,45,000 ------------
Expenses payable 40,22,674 15,29,621 24,93,053
Total current 9,35,89,996 7,41,08130

Liabilities
Working capital 52,63,032 95,51,820
(current assets
-current liabilities)
Net Increase-in
42,88,788
working capital 42,88,788
95,51,820 95,51,820 2,52,38,861

2,52,38,861
28
Calculation of operating profit

For the period (2003-04 to 2004-05)
Particulars Amount Amount

(Rs) (Rs)
Net profit 9,30,984
Add: depreciation 1,33,98,884
Gross funds generated 1,43,29,868
Less: taxation for the year ----
Net funds generated 1,43,29,868
29
STATEMENT OF SOURCES AND APPLICATION OF FUNDS

Sources Rs Applications Rs
Unsecured loans 77,87,779 Increase in Gross Block

4,68,88,735
2,90,59,876
Secured loans
Funds from operation 1,43,29,868 Net increase in

42,88,788
Working Capital
5,11,77,523 5,11,77,523
Interpretation
30
From the above table it is observed that the working that the working capital of
the company shows increased trend. The current asset of the company have decreased
Rs.9,88,53,029 crores in 2002-2003 to Rs.8,36,59,950 in 2004-2005. But the item cash
balance showing increasing trend in 2004-2005. The current liability of the company are
decreased from Rs.9,35,89,996 in 2004 to Rs.7,41,08,130 in 2005. In 2003-2004 the net
working capital of the company stood at Rs.52,63,032. It is increased to Rs.95,51,820 in
2004-2005 the increasing net working capital is Rs. 42,88,788.
It is evident from the above table that the total funds flow during the period from
2003-2004 to 2004-2005 amount Rs. 5,11,77,523. In the total funds 28% was received
from funds from operation, 56.78% was received from secured loans. And 15.22% from
unsecured loans.
Regarding the application of funds 91.61% used for investment in fixed assets and
funds used for working capital purpose. Constitute 8.3% respectively.
Conclusion:
It is concluded that during the period 2004-2005 more than 28% of funds
came from trading activities. In the application of funds around 91.61% funds utilized for
purchase of fixed assets.
31

CHANGES IN WORKING
CAPITAL
PARTICULARS 1-4-2005 31-3-2006
INCREASE
DECREASE
Current assets:
Inventories:
Raw material 56,58,573 2,59,43,669 2,02,85,096
Consumable stores 2,27,778 8,08,285 5,80,507
Finished goods 43,96,436 43,89,338
7,098
Sundry debtors 3,11,37,406 1,55,43,967
1,55,93,439
Cash in hand 2,95,905 2,41,529
54,376
Balance with bank 3,75,067 2,38,667
1,36,400
Deposits 36,53,160 61,53,160 25,00,000
Income tax(advance 27,23,822 27,23,822 ---------
tax)
Sales tax 3,39,65,000 3,39,65,000 ---------
Trade creditors 7,21,33,509 5,21,29,639 2,00,03,870
Dealers deposits 4,45,000 --------- 4,45,000
Expenses payable 15,29,621 22,56,726
7,27,105
Total current 7,41,08,130 5,43,86,365

Liabilities
Working capital 83,25,017 3,56,21,072
(current assets
Net Increase-in
2,72,96,055 working capital 2,72,96,055
3,56,21,072 3,56,21,072 4,38,14,473 4,38,14,473
32
For the period (2004-2005 to 2005-2006)

(Rs) (Rs)
Net profit 54,80,528
33

Secured loans vehicles 2,64,04,635 Increase in Gross Block

5,04,88,853
Unsecured loans 3,05,46,865

Secured loans paid
8,80,360
Funds from operation 2,17,13,768 Net increase in

2,72,96,055
Working Capital
7,86,65,268 7,86,65,268
Interpretation
34
From the above table it is observed that the net working capital of the
company shows increasing trend. The current assets of the company have increased from
Rs.8,24,33,147 to Rs.9,00,07,437 in 2004-2005. The current liability of the company
showing decreasing trend from Rs.7,41,08,130 5,43,86,365 in 2005-2006. The net capital
company stood at Rs.83,25,017 in 2004-2005. And it is increased to Rs.3,56,21,072. The
increasing working capital is recorded as Rs.2,72,96,055.
It is evident from the above table that the total funds flow during the period from
2005-2006. Amount Rs.7, 86, 65,267. In the total funds flow 27.65% was received from
funds from operation, 33.56% received from secured loans and 38.8% was received from
unsecured loans.
Regarding the application of funds 1.2% used for repayment of secured

loans and 64.18% used for purchase of fixed assets and funds used for working capital
constitution 34.69% respectively.
Conclusion:
It is concluded that during the period 2005-06 more than 27% of the funds
came from trading activities. In the application of funds around 64% of the funds utilized
for investing in fixed assets. And 1.2% used for repayment of secured loans.
35

CHANGES IN WORKING
CAPITAL
PARTICULARS 1-4-2006 31-3-2007
INCREASE
DECREASE
Current assets:
Inventories:
Raw material 2,59,43,669 43,81,922
2,15,61,747
Finished goods 43,89,338 41,40,688
2,48,650
Sundry debtors 1,55,43,968 4,62,98,835 3,07,54,388
Cash in hand 2,41,528 3,92,459 1,50,929
Balance with bank 2,38,667 2,46,413 7,745
Deposits 61,53,159 7 5,36,126 13,82,966
Income tax(advance 27,23,822 28,17,390 93,568
tax)
Sales tax 3,39,65,000 3,99,65,000 60,00,000
Current Liabilities:
Trade creditors 5,21,29,639 6,43,85,730
1,22,56,090
2,36,874
Audit Fee --- 10,000
10,000
Total current 5,43,86,365 6,68,89,330
Liabilities
Working capital 3,56,21,072 4.17.03.833
(current assets
Net Increase-in 60,82,761
60,82,761
working capital
Total current assets 4,17,03,833 4,17,03,833 4,03,96,123
4,03,96,123
36


(Rs) (Rs)
37
FOR THE PERIOD (2005-06 TO 2006-07)
SOURCES AMOUNT APPLICATIONS

AMOUNT
SECURED LOANS 4,72,908 SALES UNSECURED-LOANS

16,34,480
SECURED LOAN VEHICLE 1,86,10,566 GROSS BLOCK

3,32,36,937
FUNDS FROM OPERATION 2,18,70,705 INCREASE IN WORKING

60,82,762
WORKING CAPITAL
4,09,54,179 4,09,54,179
38
INTERPRETATION:
From the above table it is observed that the net working capital of the company
shows increased From Rs. 9,00,07,439 to Rs. 10,85,93,163 in 2006-07. The
Rs. 6,68,89,330 in 2005-06. The net working capital of the company stood Rs.
3,56,21,073 in 2004-2005. And it is increased to Rs. 4,17,03,833. The increasing Working
capital is recorded as Rs. 60,82,761.
It is evident from the above table the total funds flow during the period from
2006-07. Amount Rs 4,09,54,179. In the total funds flow 53.40% was received from
funds operation and 45.44% was received from unsecured loans(vehicles) and 1.15% was
received from secured loans.
Regarding the application of funds 3.99% used for repayment of unsecured

loans and 81.16% used for purchase of fixed assets and funds used for working capital
constitution 14.85% respective.
CONCLUSION:
It is concluded that during the period 2006-07 more than 53.4% of the
funds came trading activities in the application of funds around 81.16% of the funds
utilized for investing in fixed assets. And 3.99% used for repayment of unsecured loans.
39

CHANGES IN WORKING
CAPITAL
DECREASE
Current assets:
Inventories:
Raw material 43,81,922 7,485
43,74,437 Consumable stores 28,14,811 4,64,492
23,50,319
Finished goods 41,40,688 8,02,858
33,37,830
Sundry debtors 4,62,98,356 4,48,74,766
14,23,590 Cash in hand 3,92,459 2,48,165
1,44,294
Balance with bank 2 ,46,413 28,82,845 26,36,432
Deposits 75,36,126 78,64,138 3,28,012
Income tax(advance 28,17,390 29,29,205 1,11,815
tax)
Sales tax 3,99,65,000 4,59,65,553 60,00,553
Trade creditors 6,43,85,730 5,99,89,566 43,96,164

11,81,000 Auditor fee 10,000 10,000
Total current 6,68,89,330 6,36,74,166

Liabilities
Working capital 4,17,03,835 4,23,65,340
(current assets
Net increase in 6,61,506
6,61,506
working capital
4,23,65,341 4,23,65,341 1,34,72,976

1,34,72,976
40

(Rs) (Rs)
41

Increase in Secured loans 1,10,42,798 Increase in Gross Block 92,42,544

Net increase in
Working capital 6,61,506
Secured loans paid 1,84,70,442

Funds from operation 2,28,49,042
Sale unsecured loans 55,17,348
3,38,91,840 3,38,91,840
42
Interpretation:
From the above table it is observed that the net working capital of the
company shows increased From Rs. 10, 85, 93,165 to Rs. 10, 60, 39,507 in 2007-08.
The Rs. 6, 36, 74,166 in 2007-08. The net working capital of the company stood
Rs. 4, 17, 03,835 in 2006-07. And it is increased to Rs. 4, 23, 65,340. The increasing
Working capital is recorded as Rs. 6, 61,506.
2007-08. Amount Rs 2,28,49,042. In the total funds flow 67.42% was received and
32.58% was received from secured loans.
Regarding the application of funds 54.49% used for repayment of secured

loans,16.28% used for repayment of unsecured loans and 27.27% used for purchase of
fixed assets and funds used for working capital constitution 1.95% respective.
CONCLUSION:
It is concluded that during the period 2007-08 more than 67.42% of the
funds came trading activities in the application of funds around 27.27% of the
funds utilized for investing in fixed assets. 54.49% used for repayment of
secured loans and 16.28% used for repayment of unsecured loans.
43

CHANGES IN WORKING
CAPITAL
DECREASE
Current assets:
Inventories:
Raw material 7,485 1,55,53,276 1,55,45,791
Finished goods 8,02,858 1,47,61,454
Sundry debtors 4,48,74,766 2,19,14,841
2,29,59,925 Cash in hand 2,48,165
7,31,462 4,83,297
Balance with bank 28,82,845 28,69,897
12,948 Other current assets:
Deposits 78,64,138 80,42,063 1,77,925
Income tax(advance 29,29,205 26,32,390
2,96,815
tax)
Sales tax 4,59,65,553 5,84,65,55 1,25,00,000
Trade creditors 5,99,89,566 6,66,72,316
66,82,750
26,35,246 Auditor fee 10,000 10,000
Total current 6,36,74,166 7,29,92,162

Liabilities
Working capital 4,23,65,341 5,60,08,702
(current assets
Net increase in 1,36,43,361
1,36,43,361
working capital
5,60,08,702 5,60,08,702 4,62,31,045

4,62,31,045
44
For the period(2007-08 to 2008-09)

(Rs) (Rs)
45

Increase in Secured loans 1,39,73,064 Increase in Gross Block 3,50,70,719

Net increase in
Working capital 1,36,43,361
Secured loans(Vehicles) 1,16,12,921
Funds from operation 2,33,71,281

Sale unsecured loans 2,43,186
4,89,57,266 4,89,57,266
46
Interpretation:
shows increased From Rs.10,60,39,507 to Rs.12,90,00,864 in 2008-09. The
Rs.7,29,92,162 in 2008-09. The net working capital of the company stood
Rs.4,23,65,341 in 2007-08. And it is increased to Rs.5,60,08,702. The increasing Working
capital is recorded as Rs.1,36,43,361.
It is evident from the above table the total funds flow during the period from 2007-08.
Amount Rs.2,33,71,281. In the total funds flow 47.74% was received and 28.54% was
received from unsecured loans,23.72% was received from secured loans(vehicles).
Regarding the application of funds 0.50% used for repayment of unsecured loans
and 71.64% used for purchase of fixed assets funds used for working capital constitution
27.87% respective.
CONCLUSION:
It is concluded that during the period 2008-09 more than 47.74% of the funds
came trading activities in the application of funds around 71.64% of the funds utilized for
investing in fixed assets. And 0.50% used for repayment of unsecured loans.
47
STATEMENT TO CHANGES IN WORKING CAPITHAL

Changes in working Capital
Particulars 01-04-2009 31-03-2010
Increase Decrease
Current Assets:
Inventories:
Raw material 1,84,98,524.13 31,28,164.00 1,53,70,360.13
Consumable stores 87,22,580.58 86,40,932.94 81,647.64
Finished goods 1,47,61,454.00 1,22,78,056.00 24,83,398.00
Cash in hand 7,31,461.46 9,15,498.64 1,84,037.18
Balance with bank 28,69,897.41 13,47,822.21 15,22,075.20
Other current
assets: 8042063.00 8916528.00 8,74,465.00
Deposits 2632390.00 5212794.00 25,80,404.00
Income tax
(Advance tax) 58645553.00 70089759.00 1,16,24,206.00
Sales Tax
11,49,03,923.60 11,05,29,554.80
Total Current
assets
Current liabilities: 6,31,79,848.22 8592148.59 5,45,87,699.63
Trade creditors 63,09,846.00 7831303.00 15,21,457.00
Expenses payable 10,000.00 10,000.00 - -
Auditor fee
6,94,99,694.22 1,64,33,451.59
Total current
Liabilities 4,54,04,229.38 9,40,96,103.21
Working Capital
(Current assets
current liabilities)
48
Net increase in 4,86,91,873.85 4,86,91,873.85

working capital
9,40,96,103.21 9,40,96,103.21 6,81,49,354.97 6,81,49,354.97
Calculation Operating profit for the career 2008-09 to 2009-10
49
STATEMENT OF SOURCES AND APPLICATIONS OF THE FUNDS FOR

THE PERIOD 2008-09 TO 2009-10
SOURCE Rs Applications Rs
Increase in 2,04,19,569.37 Increase in Gross 2,27,14,408.64
Secured loans Block
Secured loans 3,77,77,883.00 Net increase in 4,86,91,873.85
(Vehicles)
Working Capital
Funds from 1,34,14,545.18 Sale Un Secured 2,05,715.06
operations loans
71611997.55 7,16,11,997.55
50
INTERPRETATION:
shows increased from Rs. 11,49,03,923.60 to Rs. 11,05,29,554.80 in 2009-10. The Rs.
1,64,33,451.59 in 2009-10 the net working capital of the company stood Rs.
4,54,04,229.38 in 2008-09 and it is increased to Rs. 9,40,96,103.2, the increasing working
capital is recorded as Rs. 4,86,91,873.85
2009-10 amount Rs. 1,34,14,545.18 in the total funds flow 54.25% was received and
20.03% was received from un secured loans, 25.72% was received from secured loans
(vehicles).
CONCLUSION:
It is concluded tat during the period 2009-10 more than 54.25% of the
funds came trading activities in the application of funds around 71.64% of the funds
utilized for investing in fixed assets. And 0.50% used for repayment of unsecured loans.
51
NET INCREASES IN WORKING CAPITAL
YEAR INCREASE / AMOUNT

DECREASE
2004 - 2005 INCREASE 42,88,788

2005 2006 INCREASE 2,72,96,055
2006 2007 INCREASE 60,82,761
2007 2008 INCREASE 6,61,506
2008 - 2009 INCREASE 1,36,43,361
2009-2010 INCREASE 4,86,91,873.85
52
The above table observed that the working capital in year 2004 05 will be decreased
i.e., 81,06,513. In year 2005 06 the working capital has been increased by Rs.
42,88,788. In the year 2006-07 the working capital is Rs. 27,29,055. & in the year 2007
08 working capital is Rs. 60,82,761. Due to the increase in current liabilities the net
working capital is decreased.
Changes in funds from operations
YEAR AMOUNT
2004 2005 1,43,29,868

2005 2006 2,17,13,768
2006 2007 2,18,70,705
2007 2008 2,28,49,042
2008 2009 2,33,71,281
2009 -2010 13,414545
The above table explains that continuous fluctuations in flow of funds from operation.
53
In the year 200405 the funds from operation is Rs.1,43,29,868 , it has increased
to Rs.2,17,13,768 in the year 2005-06.In the year 2006-07 the funds from operation is
Rs.2,18,70,705.The funds from operation in the year 2007-08 is 2,28,49,042 & it has
increased to Rs.2,33,71,281. in the year 2008-09. The funds from operation in the year
2009-10 are Rs. 13414545-00
54
USES & APPLICATION OF FUNDS
APPLICA 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

TION
Increase in 4,68,88,735 5,04,88,853 3,32,36,937 92,42,544 3,50,70,719 44958369

Gross
Block
Secured
loans paid ------ 8,80,360 ------ 1,84,70,442 ---- 204195.70
Unsecured ---- ---- 16,34,480 55,17,348 2,43,186 205715

loans
The above table shows that Gross block has increased from Rs. 4,68,88,735 in the
year 2004-05 to Rs. 5,04,88,853 in 2005-06. & Rs. 3,32,36,937 in 2006-07. The secured
loans paid Rs.8,80,360 in 200405 &Rs.1,84,70,442 in 2007-08. The unsecured loans
paid Rs.16,34,481in the year2006-07. Next year Rs.55,17,348.And the last year
Rs.2,43,186
55
CHAPTER-VI
FINDINGS & SUGGESTIONS
56
Findings
During the period 2003-2004 to 2004-2005 more than 28% of the funds
came from trading activities. In the application of funds around 91%
utilized for investing in fixed assets.
During the period 2004-2005 to 2005-2006 more than 27% of the funds
came from trading activities. The application of funds around 64% of the
funds was utilized for investing in fixed assets.
During the period 2005-2006 to 2006-07 more than 53.41% of the funds
came from trading activities. In the application of the funds around
81.17% of the funds are utilized for investing in fixed assets.
came trading activities. In the application of the funds 27.27% of the funds
are utilized for investing in fixed assets.
are utilized for investing in fixed assets.
are utilize for the investing in fixed assets.
57
Suggestions
For the improving the financial performance of the company the following
suggestions are made.
In order to reduce the outside borrowings in the company has to acquire. The
capital from equity sources. Keeping in view the debt equity the proportion as
normal.
The liquidity of the company should be improved by maintaining the optimum

current assets and liquid assets according to standard norms.
The quantum of the sales generated should be improved impressively in order to

attain higher return on investment. To improve the financial health of the company
and maximizing the time between the source mobilization and utilization the
management must introduce the new cost saving techniques.
58
CHAPTER-VI
CONCLUSIONS
59
CONCLUSIONS
In order to reduce the outside borrowings in the company has to acquire.

The capital from equity sources. Keeping in view the debt equity the
proportion as normal.
The liquidity of the company should be improved by maintaining the

optimum current assets and liquid assets according to standard norms.
The quantum of the sales generated should be improved impressively in

order to attain higher return on investment. To improve the financial
health of the company and maximizing the time between the source
mobilization and utilization the management must introduce the new cost
saving techniques.
60
CHAPTER-VII
BIBLIOGRAPHY
61
Bibliography
FINANCIAL MANAGEMENT - I.M. Panday
FINANCIAL MANAGEMENT - Prasanna Chandra
FINANCIAL MANAGEMENT - M.Y. Khan & P.K. Jain
PRINCIPLES OF MANAGEMENT - Man Mohan & Goyal

S.N.
FINANCIAL MANAGEMENT - Maheswari S.N.
www.nandipipes.com
62

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Sujala pipes (p) ltd.

OBJECTIVES OF THE STUDY:

The following are the basic objectives of the present study.

* To identify the application of Funds of the sujala pipes limited

SCOPE OF THE STUDY:

* Annual reports of the sujala pipes 2003- 2004 to 2008-2009

LIMITATIONS OF THE STUDY

On account of their inherent advantage in properties and versatile in adoption and

The government of India recognized the importance of plastics in agriculture

Another variety of plastics, that requires artificial manufacturing relates to true

LDPE: low density poly ethylene:

HDPE: High density poly ethylene:

Production of HDPE in India commenced in 1968, at present there is a unit

PVC Poly vinyl chloride:

The first production of poly propylene in India commenced in 1978. A production

ABS(Acrylonitril Bujtadient sysrenl)

Export of the plastic goods:

ROLE OF PLASTICS IN THE NATIONAL ECONOMY

Agriculture, forestry and water management.

Production process of PVC pipes:

The material used in PVC pipes manufacture are:

Tri basic lead sulphate(TBCS)

Die basic lead sulphate (DBLS)

Calcium carbonate(Ca Ca3)

Meaning and introduction

One of the most important techniques of financial analysis is a preparation of

a) Funds flow statement in a statement either prospective or re-retrospective setting

c) A statement of funds received and expanded a statement of changes in financial

The dictionary meaning of the word flow is movement denoting change

Concept of funds flow statement

Difference between Funds Flow Statement and

Fund Flow Statement Income Statement

1. The Statements narrates the item of cost

Difference between Funds Flow Statement and

Fund Flow Statement Position Statement

4. It is a analytical statement analyzing form 4. It is not a analytical statement hence not

Importance of funds flow statement:

The information which is provided by funds flow statement is neither available in

Uses of funds flow statement:

Funds flow statement of a company is of great value to management share

Informative value:- The financial consequence of business operation are clearly

Forecasting value:- A projected funds flow statement can be prepared and

STATEMENT OF CHANGES IN WORKING CAPITAL

PARTICULARS Previous Current

Total current assets *********** *********

Totalurrent liabilities *********** *********

Working capital (current ***********

Funds From Trading Activities of Operating Profit:

Operating Profit = Net Profit + Non-Operating Expenses Non-Operating Income

PARTICULARS AMOUNT AMOUNT

Add: Non-Operating Items Debited to P&L a/c- *******

Less: Non-Operating Items credited to P&L a/c

Statement of Sources and application of funds

Statement of sources and Applications

PARTICULARS AMOUNT PATICULARS

Sources of funds Application of funds

Funds from trading ********** Funds costs in operations *******

Sale Proceeds of Non- ********** Interest and dividend paid

Decrease in working ********** Increase in working capital

STATEMENT TO CHANGES IN WORKING CAPITAL

Total current assets 9,88,53,029 8,36,59,950

Total current 9,35,89,996 7,41,08130

95,51,820 95,51,820 2,52,38,861

Calculation of operating profit

Total current assets *** *

Totalurrent liabilities *** *

Funds from trading **** Funds costs in operations *