Financial Management by Swapnil Mahajan

1.
INTRODUCTION
Funds Management is of crucial importance for any venture. Financial Management concerns
itself with acquisition of and optimum use of funds. For efficient operation of any business it is
necessary that funds are available when needed and are put to effective use to obtain best result.
Basically Financial Management ensures that funds are raised at most economic cost and are put
to use in optimum way to yield best result. Financial Management plays a role in inflow, outflow
and the distribution of funds.
The three fold decision management in Financial Management consists of Investment Decision,
Financial Decision and Dividend Decision.
Investment decision would need Capital Budgeting to assess the funds involvement in investing
capital into the venture.
Financial decision would consist of decision making in the raising finance for the investment -
by equity / own funds; debt borrowed funds or a combination of both. This would depend on
several factors like gestation period, profitability to name a few.
Dividend decision would involve deliberation and decision as to the distribution of earnings by
way dividends or retention of earning in the business or a combination of both.
Meaning of Financial Management:
Financial management may be defined as planning, organizing, directing and controlling the
financial activities of an organization. According to Guthman and Dougal, financial management
means, the activity concerned with the planning, raising, controlling and administering of funds
used in the business. It is concerned with the procurement and utilization of funds in the proper
manner.
Financial activities deal with not only the procurement and utilization of funds but also with the
assessing of needs for funds, raising required finance, capital budgeting, distribution of surplus,
financial controls, etc.
Ezra Solomon has described the nature of financial management as follows: Financial
management is properly viewed as an integral part of overall management rather than as a staff
specially concerned with funds raising operations.
1
In this broader view, the central issue of financial policy is the wise use of funds and the central
process involved is a rational matching of the advantage of potential uses against the cost of
alternative potential sources so as to achieve the broad financial goals which an enterprise sets
for itself.
In addition to raising funds, financial management is directly concerned with production,

marketing and other functions within an enterprise whenever decisions are made about the
acquisition or distribution of funds.
Definition of Financial Management:
Financial management is an integral part of overall management. It is concerned with the duties
of the financial managers in the business firm.
The term financial management has been defined by Solomon, It is concerned with the efficient
use of an important economic resource namely, capital funds. The most popular and acceptable
definition of financial management as given by
S. C. Kuchal is that Financial Management deals with procurement of funds and their effective
utilization in the business.
Howard and Upton : Financial management as an application of general managerial principles

to the area of financial decision-making.
Weston and Brigham: Financial management is an area of financial decision-making,

harmonizing individual motives and enterprise goals.
Joshep and Massie: Financial management is the operational activity of a business that is
responsible for obtaining and effectively utilizing the funds necessary for efficient operations.
Thus, Financial Management is mainly concerned with the effective funds management in the
business. In simple words, Financial Management as practiced by business firms can be called as
Corporation Finance or Business Finance.
2
Overview of Financial Management:
Financial Management
Maximization of Share Value
Financial Decision
Financing Investment Dividend

Decisions Decisions Decisions
Trade Off
Return Risk
Scope of Financial Management
As an integral part of the overall management, financial management is mainly concerned with
acquisition and use of funds by an organization. Based on financial management guru Ezra
Solomons concept of financial management, following aspects are taken up in detail under the
study of financial management:
(a) Determination of size of the enterprise and determination of rate of growth.
(b) Determining the composition of assets of the enterprise.
(c) Determining the mix of enterprises financing i.e. consideration of level of debt to equity,
etc.
3
(d) Analysis, planning and control of financial affairs of the enterprise.
The scope of financial management has undergone changes over the years. Until the middle of
this century, its scope was limited to procurement of funds under major events in the life of the
enterprise such as promotion, expansion, merger, etc. In the modern times, the financial
management includes besides procurement of funds, the three different kinds of decisions as
well namely investment, financing and dividend. All the three types of decisions would be dealt
in detail during the course of this chapter.
The given figure depicts the overview of the scope and functions of financial management. It
also gives the interrelation between the market value, financial decisions and risk return trade
off. The finance manager, in a bid to maximize shareholders wealth, should strive to maximize
returns in relation to the given risk; he should seek courses of actions that avoid unnecessary
risks. To ensure maximum return, funds flowing in and out of the firm should be constantly
monitored to assure that they are safeguarded and properly utilized.
4
Working Capital
Definition of Working Capital
The process of managing activities and processes related to working capital. This level of
management serves as a check and balances system to ensure that the amount of cash flowing
into the business is enough to sustain the company's operations. This is an ongoing process that
must be evaluated using the current level of assets and liabilities. Working capital management
may involve implementing short-term decisions that may or may not carry over from one
earnings period to the next.
Working capital management refers to a company's managerial accounting strategy designed to

monitor and utilize the two components of working capital, current assets and current liabilities,
to ensure the most financially efficient operation of the company. The primary purpose of
working capital management is to make sure the company always maintains sufficient cash flow
to meet its short-term operating costs and short-term debt obligations. The working capital ratio,
calculated as current assets divided by current liabilities, is considered a key indicator of a
company's fundamental financial health since it indicates the company's ability to successfully
meet all of its short-term financial obligations. Although numbers vary by industry, a working
capital ratio below 1.0 is generally indicative of a company having trouble meeting short-term
obligations, usually due to insufficient cash flow. Working capital ratios of 1.2 to 2.0 are
considered desirable, but a ratio higher than 2.0 may indicate a company is not making the most
effective use of its assets to increase revenues.
5
Receivable Management
Meaning of Receivable Management:
Receivables, also termed as trade credit or debtors are component of current assets. When a firm
sells its product in credit, account receivables are created.
Account receivables are the money receivable in some future date for the credit sale of goods and
services at present. These days, most business transactions are in credit. Most companies, when
they face competition, use credit sales as an important tool for sales promotion. As a sales
promotion tool, credit sale enhances firm's sales revenue and ultimately pushes up the
profitability. But after the credit sale has been made, the actual collection of cash may be delayed
for months. As these late payments stretch out over time, they may cause substantial drop in a
company's profit margin. Since the extension of credit involves both cost and benefits,
the firm's manager must be able to measure them to determine the ultimate effect of credits sales.
In this prospective, we define the receivable management as the aspect of a firm's current
assets management, which is concerned with determining optimum credit policy associated to a
firm, such that the benefit from extension of credit is greater than the cost of maintaining
investment in accounts receivables.
Significance and Purpose of Receivable Management:
The basic purpose of firm's receivable management is to determine effective credit policy that
increases the efficiency of firm's credit and collection department and contributes to the
maximization of value of the firm. The specific purposes of receivable management are as
follows:
1. To evaluate the creditworthiness of customers before granting or extending the credit.

2. To minimize the cost of investment in receivables.
3. To minimize the possible bad debt losses.
4. To formulate the credit terms in such a way that results into maximization of sales revenue and
still maintaining minimum investment in receivables.
5. To minimize the cost of running credit and collection department.
6. To maintain a tradeoff between costs and benefits associated to credit policy.
6
2. COMPANY PROFILE
THE BOMBAY DYEING AND MANUFACTURING COMPANY LIMITED

Established 1879
It was founded in 1879.
Mr. Nusli Wadia is the Chairman of BDMC.
BDMCs turnover was Rs. 16,745.8 million (US$250 million) (20152016)
Share Capital: 41, 31, 00,000 (March 2016)
Bombay Dyeing is one of India's largest producers of textiles. The daily production at Bombay
Dyeing exceeds 300,000 meters of fabrics and it has a distribution chain consisting of 600 plus
exclusive shops spread all over the country. Bombay Dyeing, exports to advanced countries such
as USA, countries in European Union, Australia and New Zealand, and its sales turnover is more
or less equally divided between National and International markets. Apart from the textiles,
Bombay Dyeing also deals in the chemicals.
Bombay Dyeing has two main streams of business. Textile is a dominant activity for which the
company has advanced facilities.
Bombay Dyeing is part of the Wadia Group, which is more than 250 years old. Wadia Group
initially ventured into the area of ship building, and more than 355 ships were designed and built
by the Group. As the industrialization grew in the 19th century, so did the trading, and new
opportunities for business. In the late 19th century, Bombay was one of the major cotton ports of
the world. Nowrosjee Wadia sensed an opportunity in India's mushrooming textile industry and
on August 23, 1879, Bombay Dyeing was founded in a humble redbrick shed. Since then,
Bombay Dyeing has grown into one of India's largest producer of textiles. The company also
diversified and
Pioneered the manufacturing of various chemicals.
7
Committed to high standards of Safety, concern for Environment and Energy
Conservation measures.
Certified to ISO 9001:2000, ISO 14001:1996 & OHSAS 18001:1999 Standards.
Earliest signatory to Responsible Care initiative of the Indian Chemical Manufactures
Association (ICMA).
BDMC have shifted their production from to DMT to Polyester Staple Fiber in Mumbai
unit.
Mission of BDMC
Achieve Excellence and Provide to:
Customers : Quality, Value and Services.

Employees : Fulfillment and Development.
Shareholders: Returns and Growth.
Business Associates: Mutually Beneficial Relationship.
As a responsible Corporate Citizen we shall contribute to the well being of the Society
Board of Directors:
DIRECTORS
Nusli N. Wadia, Chairman
R. A. Shah
S. S. Kelkar
S. Ragothaman
A. K. Hirjee
S. M. Palia
Ms. Vinita Bali (upto October 1, 2014)
Ishaat Hussain
Dr. (Mrs.) Sheela Bhide (w.e.f. March 23, 2015)
Jehangir N. Wadia, Managing Director
8
Companies of Bombay Dyeing Group:
The Bombay Dyeing Mfg. Co. Ltd: Bombay Dyeing & Manufacturing Co. Ltd is India's leading
producer of textiles.
Go Air: go Air is a low-cost carrier promoted by Bombay Dyeing Group.
Bombay Dyeing - DMT: Bombay Dyeing - DMT is the largest manufacturer of

Dimethyl Terephthalate (DMT) in India. DMT is a raw material for the manufacturer of
Polyester fiber, film, filament & yarn and engineering plastics.
National Peroxide Ltd.: The Company is a pioneer and leader in India in peroxygen
chemicals.
Bombay Burmah Trading Corp. Ltd: The Company is engaged in plantations and
produces tea, coffee, cardamom, black pepper and rubber.
Britannia Industries Ltd: It is the largest company in the Indian Food processing
industry. Its product range includes Breads and Cakes.
Wadia BSN India Ltd: The Company was set up in 1994 through tie-up between the
Wadias & Groupe Danone. It plans to introduce packaged foods from the Danone's
international range.
Formica India Division: The Company produces high grade industrial laminates for the
electronic, electrical and other industries.
B.R.T Ltd: The Company produces textile machinery accessories. It is the market leader
in ring, ring travelers, open end rotors and opening roller-spinning machinery accessories
for cotton and synthetic yarns.
BCL Springs Division: BCL Springs Division is the second largest producer of precision
springs. It is a trusted brand in the automobile, consumer durable, electrical, textile &
ammunition industries.
Afcoset Balances Division: Market leader in laboratory weighing equipment in India.
Afco Industrial and Chemicals Ltd: Product range includes battery chargers, DC
systems, Inverters & converters, static voltage regulators & heat sinks.
Dental Products of India: Largest manufacturer of consumable dental products.
9
Medical Micro technology Ltd: Manufacturer of high precision titanium ophthalmic
micro surgical instruments.
Instruments Orthopaedics: Market Leader in Orthopaedic implants, instruments and

equipment in India. Its range includes various implants for the hip, knees, and several
types of screws, nails, plates and prostheses.
Gherzi Eastern Limited: Gherzi Eastern Limited is a joint venture public limited
company between Bombay Dyeing Group and Gherzi Organization, Zurich
(Switzerland). The company was formed to provide consultancy services in the field of
textile industry. Today, the company has diversified its services in the field of
Transportation / Highways, Bridges / Flyovers, Environment, Townships, Housing, Urban
development, Water and Waste Water Engineering, Tourism, Hotels, Industrial projects
and other infrastructural projects.
10
3. DATA ANALYSIS AND DATA INTERPRETATION
I have analyzed last 3 years of Balance Sheet, Profit and Loss Account, Income Statement and
Such Data interpreted for calculation of and Net Working Capital & Receivable Management.
I have used secondary source for data collection and Data collected from Official website of
The Bombay Dyeing & Manufacturing Company Limited (www.bombaydyeing.com) through
the last 3 Annual reports.
11
FINANCIAL STATEMENT (F.Y. 2013 - 2014)
The Bombay Dyeing & Manufacturing Company Limited
Balance Sheet As on 31st March 2014
(` in Crores)
As at
Particulars st
31 March 2014
EQUITY AND LIABILITIES
Shareholders Funds
Share Capital .. (1) 41.31
Reserves and Surplus . (2) 1,422.24
1,463.55
Non-Current Liabilities
Long Term Borrowings . (3) 553.96
Other Long Term Liabilities .. (4) 10.90
Long Term Provisions ... (5) 12.03
576.89
Current Liabilities
Short Term Borrowings .. 512.11
Trade Payables 640.60
Other Current Liabilities . 514.54
Short Term Provisions 55.90
1,723.15
3,763.59
ASSETS
Non Current Assets
Fixed Assets
Tangible Assets .. 852.91
Intangible Assets ......... 4.84
Capital Work in Progress 88.70
Incidental expenditure relating to construction / development 64.69
Non Current Investments 55.96
Long Term loan and advances. 37.84
Other Non Current Assets ....... 1,086.95
2,191.89
Current Assets
Inventories .. 718.72
Trade Receivables ... 195.80
Cash and Bank Balances . 28.23
Short Term Loans and Advances 157.33
12
Other Current Assets ..
471.62
1,571.70
Profit and Loss Account for the year ended 31st March 2014
(` in Crores)
As at
Particulars st
31 March 2014
INCOME
Revenue from operations . 2,782.93

Less: Excise Duty .... 126.70
Revenue from Operation (Net) .... 2,656.23
Other Income ... 39.75
Total Revenue .. 2,695.98
EXPENSES
Cost of Materials Consumed ...

1,391.65
Purchases of Stock-in-Trade ...
141.27
Change on inventories of finished goods, Work-in-progress and stock-in-
318.14
Trade
Employee benefits expenses
93.30
Finance Costs ..
191.02
Depreciation and amortization expenses .
60.02
Other Expenses ....
467.44
2,662.84
Profit before tax .
33.14
Tax expenses :
Current Tax .
8.80
Excess Provision of tax of earlier years ..
-
8.80
Profit for the year .
24.34
Earnings per equity share
Basic earnings per equity share (in `) .
1.18
Diluted earnings per equity share (in `) ..
1.18
Nominal value per equity share (in `)
13
2.00
NOTES TO FINANCIAL STATEMENT (F.Y. 2013-2014)

(1) Share Capital :
(` in Crores)
As at
SHARE CAPITAL
31 March 2014
AUTHORISED
25,00,00,000 (2013 2014 : 25,00,00,000 ) 50.00
Equity Shares of ` 2 each shares of
ISSUED,SUBSCRIBED AND PAID UP

20,35,34,900 (2013 2014 : 20,35,34,900 )
41.31
Equity Shares of ` 2 each fully paid
41.31
(2) Reserves and Surplus :
(` in Crores)
As at
RESERVES AND SURPLUS
31 March 2015
Capital Reserve
As per last balance sheet 28.60
Capital Redemption Reserve
Securities Premium Account
Revolution Reserve
Investment Reserve
Hedging Reserve Account

As per last balance sheet (1.07)
General Reserve
155.81
As per last balance sheet
14
Surplus and Statement of Profit and Loss
Depreciation on assets where remaining useful life is nil, recognized in -
retained earnings
Add : Profit for the year 24.34
122.13
Less : Appropriation
Proposed Divined (16.52)
Dividend distribution tax (2.81)
Transferred to General Reserve (2.43)
Net Surplus in the statement of profit and loss 100.37
1,422.24
(3) Long Term Borrowings :

(` in Crores)
As at
LONG TERM BORROWINGS
31 March 2014
Secured +
Term Loan
- From Bank 458.84
- From Other -
458.84
Unsecured
Fixed Deposits 95.12
553.96
(4) Other Long Term Liabilities

(` in Crores)
As at
OTHER LONG TERM LIABILITIES
31 March 2014
Trade Payable 2.15
Deposits 8.75
10.90
(5) Long Term Provisions

(` in Crores)
As at
LONG TERM LIABILITIES PROVISIONS
31 March 2014
Provision for employee benefits
- Provision for compensated absences 4.27
- Provision for termination benefits 5.88
- Provision for Sales Tax Forms 1.88
12.03
(a) Movement in Provisions
15
Provision for Sales Tax Forms
Balance as at the beginning of the year
Additions 0.63
Amount Utilized
1.25
Balance as at the end of the year -
1.88
(Note: No. of Notes to account given here which required for further calculation.)

Income Statement as on 31st March 2014
(` in Millions)
As at
Particulars st
31 March 2014
Total Revenue : 26562.3
Revenue 26562.3
Other Revenue, Total -
Cost of Revenue, Total ... 20664.4
Gross Profit ... 5897.9
24154.5
Total Operating Expenses :
2889.9
Selling/General/Admin. Expenses, Total .
-
Research & Development
600.2
Depreciation / Amortization
-
Interest Expense (Income) - Net Operating .
-
Unusual Expense (Income) ..
-
Other Operating Expenses, Total .
2407.8
Operating Income :
-2241.6
Interest Income (Expense), Net Non-Operating
0.3
Gain (Loss) on Sale of Assets ...
164.9
Other, Net ..
Net Income Before Taxes : 331.4
16
Provision for Income Taxes .. 88
Net Income After Taxes : 243.4

Minority Interest -
Equity In Affiliates ........ -
U.S GAAP Adjustment .. -
Net Income Before Extraordinary Items : 243.4

Total Extraordinary Items . -
Net Income : 243.4

Total Adjustments to Net Income . -
Income Available to Common Excluding Extraordinary Items : 243.4

Dilution Adjustment ... -
Diluted Net Income 243.4
Diluted Weighted Average Shares . 206.53
Diluted EPS Excluding Extraordinary Items : 1.18

DPS Common Stock Primary Issue . 0.8
Diluted Normalized EPS . 1.18

(` in Crores)
As at
Particulars st
31 March 2015
17
Shareholders Funds
Share Capital .. 41.31
Reserves and Surplus . 1,530.97
1,572.28
Long Term Borrowings . 903.03
Other Long Term Liabilities .. 6.85
Long Term Provisions ... 13.60
926.48
Current Liabilities
1,493.93
3,992.69
ASSETS
Non Current Assets
Fixed Assets
Tangible Assets .. 834.65
Intangible Assets ......... 3.31
Capital Work in Progress 74.59
Incidental expenditure relating to construction / development -
Non Current Investments 55.96
Long Term loan and advances. 37.25
Other Non Current Assets ....... 1,190.74
2,196.50
Current Assets
Inventories .. 710.27
Other Current Assets .. 531.70
1,796.19
3,992.69

18
(` in Crores)
As at
Particulars st
31 March 2015
INCOME

EXPENSES

1,270.59
187.87
(400.59)
Trade
88.23
Finance Costs ..
227.22
Depreciation and amortization expenses .
46.82
Impairment loss on fixed assets ..
13.26
Other Expenses ....
964.84
2,398.24
Profit before tax .
34.94
Tax expenses :
Current Tax .
10.38
24.34
Profit for the year .
Earnings per equity share of nominal value ` 2 each

-Basic
1.19
-Diluted ...
1.19
19
(1) Share Capital :
(` in Crores)
As at
SHARE CAPITAL
31 March 2015
AUTHORISED
25,00,00,000 (2013 2014 : 25,00,00,000 ) 50.00

20,35,34,900 (2013 2014 : 20,35,34,900 ) 41.31
Equity Shares of ` 2 each fully paid 41.31
(` in Crores)
As at
31 March 2015
Capital Reserve
Revolution Reserve
Add : Addition on Conversion of a part of the freehold land into Stock in 694.29
Trade.
Less : Reversal of excess reserve consequent to reduction of base FSI on ICC (238.07)
land due to handover of additional land to MCGM and MHADA
under Integrated Development Scheme.
Less: Released to Statement of Profit and Loss in proportion of revenue
Recognized on entering into agreement for sale. (351.24)
1,098.28
Investment Reserve

(1.07)
Add : / (Less) : Fair Value gain / (loss) on derivative contracts designated as 0.65
cash flow hedges
20
General Reserve (0.45)
Add: Transferred from statement of profit and loss 155.81
-
155.81
Depreciation on assets where remaining useful life is nil, recognized in 100.37
retained earnings (1.54)
Add : Profit for the year
24.56
Less : Appropriation 123.39
Proposed Divined
Transferred to General Reserve (3.37)
Net Surplus in the statement of profit and loss -
103.50
1,530.97
(` in Crores)
As at
31 March 2015
Secured
Term Loan
- From Bank 858.51
- From Other 47.50
906.01
Unsecured
Fixed Deposits 0.02
906.03
(` in Crores)
As at
31 March 2015
Trade Payable 1.89
Deposits 4.96
6.85
(` in Crores)
As at
LONG TERM LIABILITIES PROVISIONS
31 March 2015
21
- Provision for Sales Tax Forms 2.73
13.60
(b) Movement in Provisions
Additions 1.88
Amount Utilized 0.85
-
Balance as at the end of the year
2.73
(` in Millions)
As at
Particulars st
31 March 2015
Revenue 23845.3
Cost of Revenue, Total ... 18166
21551.8
2776.3
-
472.7
-
132.6
4.2
2293.5
Operating Income :
(2235.9)
161.8
92.5
Other, Net ..
Net Income Before Taxes : 311.9

Provision for Income Taxes .. 106.8
Net Income After Taxes : 205.1

Minority Interest 0.2
Equity In Affiliates ........ (1.8)
22
Net Income Before Extraordinary Items : 203.5

Net Income : 203.5

Income Available to Common Excluding Extraordinary Items : 203.5

Diluted Net Income 203.5
Diluted EPS Excluding Extraordinary Items : 0.99

DPS Common Stock Primary Issue . 0.8
Diluted Normalized EPS . 0.89

(` in Crores)
As at
Particulars st
31 March 2016
Shareholders Funds
Share Capital .. 41.31
Reserves and Surplus . 1,270.81
1,312.12
Long Term Borrowings . 1,215.07
Other Long Term Liabilities .. 10.44
Long Term Provisions ... 14.92
1,240.43
Current Liabilities
1,840.90
4,393.45
23
ASSETS
Non Current Assets
Fixed Assets
Tangible Assets ..
Intangible Assets .........
Capital Work in Progress
Incidental expenditure relating to construction / development
Non Current Investments
Long Term loan and advances.
Other Non Current Assets .......
Current Assets
Inventories ..
Other Current Assets .. -
55.96
34.86
1,812.82
2,566.36
(` in Crores)
As at
Particulars st
31 March 2016
INCOME

EXPENSES

897.96
206.75
(152.08)
Trade
24
Finance Costs .. 100.47
Depreciation and amortization expenses . 282.64
Impairment loss on fixed assets .. 33.91
Other Expenses .... -
599.98
1,969.63
(Loss) / Profit before tax .
Tax expenses : (85.24)
Current Tax .
-
Profit for the year . (85.24)
Earnings per equity share of nominal value ` 2 each

-Basic
-Diluted ... (4.13)
(4.13)

(1) Share Capital :
(` in Crores)
As at
SHARE CAPITAL
31 March 2016
AUTHORISED
25,00,00,000 (2014 2015 : 25,00,00,000 ) 50.00

20,35,34,900 (2014 2015 : 20,35,34,900 ) 41.31
Equity Shares of ` 2 each fully paid 41.31
(` in Crores)
As at
31 March 2016
25
Capital Reserve
Revolution Reserve
As per last balance sheet 1,098.28
Add : Addition on Conversion of a part of the freehold land into Stock in -
Trade.
Less : Reversal of excess reserve consequent to reduction of base FSI on ICC -
land due to handover of additional land to MCGM and MHADA
under Integrated Development Scheme.
Less: Released to Statement of Profit and Loss in proportion of revenue
Recognized on entering into agreement for sale. (163.86)
934.42
Investment Reserve

(0.45)
Add : / (Less) : Fair Value gain / (loss) on derivative contracts designated as 1.37
cash flow hedges
0.92
General Reserve
Add: Transferred from statement of profit and loss -
155.81

Depreciation on assets where remaining useful life is nil, recognized in -
retained earnings
Add : Profit for the year (85.24)
18.26
Less : Appropriation
Proposed Divined (10.33)
Net Surplus in the statement of profit and loss 5.83
1,270.81
26
(` in Crores)
As at
31 March 2016
Secured
Term Loan
- From Bank 1,098.53
- From Other 39.37
1,137.90
Unsecured
Fixed Deposits 77.17
1,215.07
(` in Crores)
As at
31 March 2016
Trade Payable 1.86
Deposits 8.58
10.44
(` in Crores)
As at
LONG TERM PROVISIONS
31 March 2016
- Provision for loyalty / long service awards 2.00
- Provision for Sales Tax Forms
3.10
14.92
(c) Movement in Provisions
Additions 2.73
Amount Utilized 1.20
(0.83)
Balance as at the end of the year
3.10
(` in Millions)
As at
Particulars st
31 March 2016
Revenue 18494.6
27
Cost of Revenue, Total ... 9549.8
16964.9
1024.6
-
343.6
-
-
60.46.9
1529.7
Operating Income :
(2899.2)
-
465
Other, Net ..
Net Income Before Taxes : (904.5)

Provision for Income Taxes .. 5.3
Net Income After Taxes : (909.8)

Minority Interest (1)
Equity In Affiliates ........ (0.1)
Net Income Before Extraordinary Items : (910.9)

Net Income : (910.9)

Income Available to Common Excluding Extraordinary Items : (910.9)

Diluted Net Income (910.9)
(4.41)
Diluted EPS Excluding Extraordinary Items :
0.5
DPS Common Stock Primary Issue .
(4.41)
Diluted Normalized EPS .
Calculation of Net Working Capital of The Bombay Dyeing & Manufacturing
Company Limited
28
Net working capital is a difference between current assets and current liabilities.
Net working capital= Current asset Current liabilities
Sources of Funds 2015 2016 2014 2015 2013 2014

Current Assets :
Inventories 679.87 710.27 718.72
Trade Receivable 238.15 264.79 195.80
Cash and Bank Balance 113.77 68.42 28.23
Short Term loans 143.11 221.01 157.33
Other Current Assets 429.46 531.70 471.62
Total Current Assets (A) 1,604.36 1,796.19 1,571.70
Current Liabilities :
Short Term Borrowings 824.07 430.50 512.11
Trade Payables 296.49 480.75 640.60
Other Current Liabilities 678.82 540.21 514.54
Short Term Provisions 41.52 42.47 55.90
Total Current Liabilities (B) 1,840.90 1,493.93 1,723.15
Net Working Capital (A B) (236.54) 302.26 (151.45)
Comment: Financial Year 2014 2015 is in good condition and remaining financial years
company facing deficit in Net Working Capital.
Calculation of Receivable Management of Bombay Dyeing & Manufacturing

Company
29
The Bombay Dyeing & Manufacturing Company Limited present credit policy (2015-16) we can
compare with last two years policies which is 2014-15 and 2013-14 and analyzing which is best
policy according to receivables management
(` in Crores)
Particulars 2015 2016 2014 2015 2013 2014
Sales 1,944.34 2,511.84 2,782.93
Less: Variable Cost :

Raw Material Consumed 1,145.25 1,509.52 1,593.06
Power and Fuel 40.59 68.79 148.21
Other Manufacturing Expenses 350.37 662.00 44.36
Contribution 408.13 271.53 997.30
Less: Fixed Cost

Employee Cost 100.47 88.23 93.30
Profit (A) 307.66 183.30 904.00
Credit Period W.N. # 1 47 Days 33 Days 27 Days
Investment on Debtors
Total Cost 197.81 210.53 138.99

X Credit Period
365
(Total Cost = Variable Cost + Fixed Cost)
62.33 66.34 43.80

Return on Investment @ 31.51%
W.N. # 2 (B)
245.33 116.96 860.02

Net Profit (A B)
Comment: Financial Year 2013 2014 is highest profitability year of The Bombay Dyeing
& Manufacturing Company Limited. According to compare with number of
years given here 2014 2015, 2015 2016 respectively.
30
W.N. # 1 Calculation of Credit Period:
i) For 2015 2016
a) Calculation of Account Receivable Turnover
Credit Sales 1,944.34

7.73
Average Account Receivables = 251.47 =
(Sundry Debtors 264.79 (2015) + 238.15 (2016) / 2 = 230.3)
b) Calculation of Credit Period in Days
365 47.21 Days

7.73 =
ii) For 2014 2015

10.90
(Sundry Debtors 195.80 (2014) + 264.79 (2015) / 2 = 230.3)
365 33.49 Days

10.90 =
iii) For 2013 2014

13.48
(Sundry Debtors 216.80 (2013) + 195.80 (2014) / 2 = 206.3)
365 27.07 Days

13.48 =
31
W.N. # 2 Calculation of Return of Investment:
a) Calculation of Return of Investment
i) For 2015 2016 (On Sales)
RevenueCost of Goods Sold

ROI = Cost of goods Sold X 100
1,944.34 1,536.21
26.56%
ROI = 1,536.21 X 100 =
ii) For 2014 2015 (On Sales)

2,511.84 2,240.31
12.12%
ROI = 2,240.31 X 100 =
iii) For 2013 2014 (On Sales)

2,782.93 1,785.63
55.85%
ROI = 1,785.63 X 100 =
b) Calculation of Average Return of Investment
31.51%
32
26.56+ 12.12+ 55.85 94.53
ARI = 3 = 3 =
4. FINDINGS & SUGGESTIONS

FINDINGS
Bombay Dyeing & Manufacturing Company is the leading manufacturing in textiles sector and
recent couple of years company`s increased growth rate.
According to last recent three years financial statement there have some good and bad things
such like some amounts compare with current and previous year its falls dawn rapidly or huge
increase the amount.
Financial year 2015-16 company have good position at the point of Gross Profit but after that
company falls dawn it is happening by cannot control the operating and admin. Expenses
Company`s ratios are too fluctuating in recent three years comparison according to ratio analysis.
Financial Year 2014 2015 is in good condition and remaining financial years company facing
deficit in Net Working Capital.
Financial Year 2013 2014 is highest profitability year of The Bombay Dyeing &
Manufacturing Company Limited. According to compare with number of years given here
2014 2015, 2015 2016 respectively.
SUGGESTIONS
Company need to select appropriate market strategy and marketing plans to rescue the down
position of company also need to best marketing plans to stay and success in competition.
33
Company should be made their financial statements on revised and accurate accounting standard
to give the best result need to be focus on Ratio because its not relevant when I compared with
other years figure.
Company may follow principals of current liabilities so company can manage their total net
working capital.
Company`s ideal decision strategy should be ideal and its consider all area of organization.
5. CONCLUSION
The study Bombay Dyeing & Manufacturing Company financial statements is the name of my
project. I am learn lots of things when I making this project and its useful for future research
The Bombay Dyeing Company is leading manufacturing in textiles areas and highest market
shares its own. Nature of my project is comparing last three financial years statements and
calculate the Net Working Capital and Net Credit Policy.
I am observed all the components in financial statement and understand the all financial
statements and calculate upon all things which required in this Project.
34
6. REFERANCE
BIBLIOGRAPHY
Advanced Financial Management - Manan Prakashan, Ainnapure, M.Com Sem IV
WEBLIOGRAPHY
http://www.bombaydyeing.com/financialupdates
www.moneycontrol.com/financials/bombaydyeingmanufacturingcompany/balance-
sheetVI/BDM
www.profit.ndtv.com/stock/bombay-dyeing-&-manufacturing-company-
ltd_bomdyeing/financials
35

Financial Management by Swapnil Mahajan

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Financial Management by Swapnil Mahajan

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Meaning of Financial Management:

In addition to raising funds, financial management is directly concerned with production,

Definition of Financial Management:

Howard and Upton : Financial management as an application of general managerial principles

Weston and Brigham: Financial management is an area of financial decision-making,

Maximization of Share Value

Financing Investment Dividend

Scope of Financial Management

(a) Determination of size of the enterprise and determination of rate of growth.

(b) Determining the composition of assets of the enterprise.

Definition of Working Capital

Working capital management refers to a company's managerial accounting strategy designed to

Meaning of Receivable Management:

Significance and Purpose of Receivable Management:

1. To evaluate the creditworthiness of customers before granting or extending the credit.

THE BOMBAY DYEING AND MANUFACTURING COMPANY LIMITED

It was founded in 1879.

Mr. Nusli Wadia is the Chairman of BDMC.

BDMCs turnover was Rs. 16,745.8 million (US$250 million) (20152016)

Share Capital: 41, 31, 00,000 (March 2016)

Pioneered the manufacturing of various chemicals.

Achieve Excellence and Provide to:

Customers : Quality, Value and Services.

Go Air: go Air is a low-cost carrier promoted by Bombay Dyeing Group.

Bombay Dyeing - DMT: Bombay Dyeing - DMT is the largest manufacturer of

Afcoset Balances Division: Market leader in laboratory weighing equipment in India.

Dental Products of India: Largest manufacturer of consumable dental products.

Instruments Orthopaedics: Market Leader in Orthopaedic implants, instruments and

Revenue from operations . 2,782.93

Cost of Materials Consumed ...

NOTES TO FINANCIAL STATEMENT (F.Y. 2013-2014)

ISSUED,SUBSCRIBED AND PAID UP

Hedging Reserve Account

(3) Long Term Borrowings :

(4) Other Long Term Liabilities

(5) Long Term Provisions

The Bombay Dyeing & Manufacturing Company Limited

Net Income Before Taxes : 331.4

Net Income After Taxes : 243.4

Net Income Before Extraordinary Items : 243.4

Net Income : 243.4

Income Available to Common Excluding Extraordinary Items : 243.4

Diluted EPS Excluding Extraordinary Items : 1.18

FINANCIAL STATEMENT (F.Y. 2014 - 2015)

The Bombay Dyeing & Manufacturing Company Limited

Revenue from operations . 2,511.84

Cost of Materials Consumed ...

Earnings per equity share of nominal value ` 2 each

ISSUED,SUBSCRIBED AND PAID UP

Hedging Reserve Account

Net Income Before Taxes : 311.9

Net Income After Taxes : 205.1

Net Income Before Extraordinary Items : 203.5

Net Income : 203.5

Income Available to Common Excluding Extraordinary Items : 203.5

Diluted EPS Excluding Extraordinary Items : 0.99

FINANCIAL STATEMENT (F.Y. 2015 - 2016)

Revenue from operations . 1,944.34

Cost of Materials Consumed ...

Earnings per equity share of nominal value ` 2 each

NOTES TO FINANCIAL STATEMENT (F.Y. 2015-2016)

ISSUED,SUBSCRIBED AND PAID UP

Hedging Reserve Account