INTRODUCTION

The term 'funds' have a variety of meaning. Some people take funds synonymous
to cash, and to them there is no difference between a cash flow statement prepared on the
basis and a fund flow statement. While other include marketable securities and cash to
constitute business funds. How ever the most common definition of the term 'Fund' is
'working capital' or net 'current assets'. Thus the difference between current and current
liabilities is called funds.
DEFINITIONS
The funds flow statement described the sources from which additional funds were
derived and used to which these funds are put.
R.N.ANTONY
The fund flow statement is an important device for brining to light the underlying
financial movements the ebb and flow of funds.
PATON & PATON
USES OF FUNDS FLOW STATEMENT
Funds flow statement helps the financial analyst in having a more detailed analysis and
understanding of changes in the distribution of resources between two balance sheet
dates. In case such study is required regarding the future working capital position of the
company, a projected funds flow statement can be prepared. The uses are as follows.

 It explains financial consequences of balances operation

Funds flow statement provides a ready access or many conflicting Situations

such as.
 Why the liquidity position of business is becoming more and more unbalanced

 How was it possible to distribute dividends in excess of current earnings or in

the presence of net loss for the period.

 How the business could have good liquid position in spite of business making
losses (or) acquisition of funds assets.

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FUNDS FLOW ANALYSIS
In every concern, the funds flow in form different sources and similarly funds
invested in various sources of investment.
It is continuous process . The study and control of this funds – flow process (i.e.,
the uses and sources of funds ) is the main objective of financial management to assess
the soundness and the solvency of the enterprise.
A summary of a firm ‘ changes in a financial position from one period to another ;
it is also called a sources and uses of funds statement are a statement of changes in
financial position has been replaced by the cash flow statement (1989) in U . S. audited
annual reports.
The funds –flow- statement is a report on financial operations changes, flow or
moments during the period.It is a statement which shows the sources an application of
funds or it shows how the activities of a business are financed in a particular period. In
otherwords, such a statement shows how the financial resources have been used during a
particular period of time. It is , thus, a historical statement showing sources and
application of funds between the two dates designed especially to analyze the changes in
the financial conditions of an enterprise

“ A Statement Of Sources And Application of funds is a technical device designed to

analyze the changes in the financial condition of a business enterprises between two
dates.”

Funds flow statement is not an income statement. Income statement shows the items of
income and expenditure of a particular period, but the funds flow statement is an
operating statement as it summarizes the financial activities for a period of time. It covers
all moments that involve an actual exchange of assets.

Various titles are used for this statement such as ‘Statement of sources and
application of funds’, ‘Summary of financial operations ‘,’Changes in financial position’,
‘Fund received and dispersed ‘,’Funds generated and expanded’,’ changes in working
capital’, ‘Statement of fund’ etc. Title of fundsflow statement has been modified from

2
time to time. Really it is very difficult to find a short time for such statement which
carries much to the readers regarding its contents and functions.

A new interpretation of the term ‘ Funds, now been adopted as to include assets or
financial resourceful which do not flow through the working capital accounts. It seems to
be the most suitable meaning fort the term ’Funds’ but the most commonly used
interpretation of the term ‘Funds’, is ‘Working capital’.
Different names of funds flow statement:
 A funds statement.
 A statement of sources and uses of fund.
 A statement of sources and application of fund.
 Where got and where gone statement.
 Inflow and outflow of fund statement .

3
 NEED OF THE STUDY

 To Know the sources of funds and it’s applications with the help of funds
flow Statement.

 To understand the profit position of the company.

 To highlight the importance of the current assets & current liabilities.

 To search new ways for the optimum cash requirements.

 To determine the threats in working capital components, so as to find the

inference of each component on working capital of the firm.

4
 OBJECTIVES OF THE STUDY

 To know the working capital position of the company through current assets
& current liabilities.
 To know the sources of funds and also it’s applications with the help of
fund flow statement.
 To know the short term liquidity position of the company as it can be
identified from the changes in the working capital.
 To gain practical insight into the useful ness of the concept of funds flow
analysis in industry.
 To knows the overall financial strengths of the company.

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 SCOPE OF THE STUDY

The present study is confined to Balarama Krishna Spinning mills Pvt.Ltd area
the study of fixed capital covers the aspects of fixed capital, working capital
management, together with the relevant ratios. The study finally confined only to the
problem and prospects of capital structure of capital working capital management relating
to Balarama Krishna Spinning mills Pvt.Ltd.

Techniques like averages, standard formats have been shown in addition to that
diagrams, drafts etc., and projected at appropriate places. Different statistical measures
are used for collection of data. Tabulations, calculations analysis for the purpose of
preparation of funds flows, which are needed for the calculations of working capital in
Balarama Krishna Spinning mills Pvt.Ltd.

6
 METHODOLOGY OF THE STUDY

The required information for this study would be collected through two sources
i.e.

METHODS

PRIMARY DATA
SECONDARY DATA

Primary Data:
The primary data comprises of information obtained by the candidate
during discussions with head of the Departments and from the meeting with
officials and staff.

Secondary Data:
The secondary data has been collected from the information through
 Annual Reports
 Public Report
 Magazines
 Company records
 Internet websites

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 LIMITATIONS OF THE STUDY

 The company could provide financial statements of at last 5 years and the
computation and analysis could be made only for five years.
 The study is limited only to the funds flows analysis.
 The analysis based on financial statements which wear subjective several
limitations. Therefore any analysis based on such statements also suffer from
similar limitations.
 The external factors on that effect the financial performance of the company have
not been given much importance.
 Some of the information were not available into the confidential nature.

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 PLAN OF THE STUDY
The Study will be organized as under

 In the First chapter will be contain Introduction of the Fund flow analysis.

 Objectives and methodology of the study has been presented in second chapter.

 In the Third chapter profile of the industry as well as company profile have been
presented.

 Theoretical frame work has been discussed in fourth chapter.

 In the Fifth chapter data analysis and interpretation have been presented.

 In the final chapter summary of findings, suggestions and conclusion of the study
have been given.

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 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.

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.

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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.

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:

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 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.

 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..

 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.

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 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.

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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.

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

14
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.
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.

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Contribution of Cotton industry for Textile Industry:
Cotton is the most important raw material for India's Rs. 1, 50, 000
crores 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.
In India, cotton yields increased significantly in the 1980’s and
through the first half of 1980’s 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,
micronaire 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)

16
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 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.

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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.

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.

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 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 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

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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 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.

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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.
 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).

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The Current Scenario of Cotton Industry (2017-18):
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 2017-18 at a record level of 270 lakh bales as against
244 lakh bales during 2016-17. Gujarat has turned into a largest cotton producing
State with a record production-level of 93 lakh bales constituting around 34% of
the country’s total production.
The area under cotton cultivation during 2017-18 has also gone up
by around 6% at 91.58 lakh hectares as against 86.77 lakh hectares during 2016-
17.
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 2015 & January 2016. Cotton prices reached its peak level
by end-March 2016 and there was some correction in cotton prices in April and
May 2015. However, on the whole, cotton prices remained better by almost
Rs.1000 per candy in almost all varieties as compared to previous year.

Future of Cotton Industry in India:

The Cotton Advisory Board (CAB) has estimated the cotton crop at
310 lakh bales for the current season 2017-18. 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

22
hectares for the season 2017-18 against 91.42 lakh hectares for the season 2016-
17. Cotton Advisory Board expects exports to be higher at 65 lakh bales as against
55 lakh bales in 2016-17. Imports in 2017-18 are projected at 6.50 lakh bales as
compared to 5.50 lakh bales in 2016-17, 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 labour.

Future Challenges for the Indian Cotton Industry:

The challenges that are going to face by the cotton producers in
India for the season 2017-18 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.

Low quality:
The Quality of cotton is also far from satisfactory considering the
presence of a large number of contaminants. So the cotton producers are also
required to take care in this aspect.

23
 COMPANY PROFILE

Balarama Krishna Spinning Mills Private Limited is a Private incorporated on 10 May

2004. It is classified as Non-govt company and is registered at Registrar of Companies,
Hyderabad. Its authorized share capital is Rs. 78,000,000 and its paid up capital is Rs.
60,250,000.It is inolved in Spinning, weaving and finishing of textiles.

Balarama Krishna Spinning Mills Private Limited's Annual General Meeting (AGM) was
last held on 30 August 2017 and as per records from Ministry of Corporate Affairs
(MCA), its balance sheet was last filed on 31 March 2017.

Directors of Balarama Krishna Spinning Mills Private Limited are Rayankula Lakshmi
Prasanna, Balarama Krishnaiah Vankayalapati, Seetharavamma Vankayalapati,
Mallikharjuna Rao Rayidi, .

Balarama Krishna Spinning Mills Private Limited's Corporate Identification Number is

(CIN) U17116AP2004PTC043228 and its registration number is 43228.Its Email address
is brkspinningmills@yahoo.co.in and its registered address is ROOM NO.2, 1 ST
FLOOR A.P.COTTON ASSOCIATION BUILDINGS, MAIN ROAD
LAKSHMIPURAM, GUNTUR.ANDHRA PRADESH AP 522007

Vision & Mission

 To be acknowledged and acclaimed in the world markets as a reliable source of

world – classs quality yarn .
 Investment growth
 Maximization of returns
 Abiding and reliable long – term business relationships

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Mission

To consistently work towards process enhancement , product development and people

empowerment with the aim to be among india’s top spinning companies.
 To use latest technological strategies during production thereby forming an
innovative approach.

 To provide a safe, fulfilling and rewarding work environment for our employees.

 Developing a long term relationships with our customers and suppliers.

 Serving and supporting the communities in which we operate.

 To manufacture a high quality yarn thereby withstanding high level of

competitiveness.

OBJECTIVES

The company attains by meeting its objectives in a timely and efficient manner.

 Constantly maintaining and improving up on the quality of yarn.

 Purchase of high grade raw-material.
 Investments in modern technology.
 Practice high level of customer service while equally exceeding on employee
welfare measures.

PRODUCTS
We believe that quality products are not only by promises but also by proven
results. Development of new textile products is done through - Innovation in defining
production processes of higher quality and making available modern technologies and
professionals with the highest level of competence.
The following advantages which have always been our ultimate goals: -
 High Efficiency
 The Most Competitive & Reasonable Price
 Products Quality Guarantee
 Prompt & Superior Service
 Punctual Delivery

25
 1. Cotton fabrics

We are happy to acquaint ourselves as one of the salient cotton

fabric manufacturers in India. Our cotton fabrics include organic cotton fabrics and
white cotton fabrics. We use pure and good quality yarn for making the fabric. Our
fabric provides immense comfort to the users. It gives soothing effect to the body and
will be the right choice in the hot and sweaty summers. Our cotton fabrics are light in
weight in comparison to its thickness. Our cotton fabric is easily washable and its
significant feature is its durability. We ensure our customers to provide good quality
cotton fabric on time and that too at moderate prices.
2. Cotton yarn

We provide the best quality cotton yarn that includes organic cotton yarn
and cotton blended yarn. Cotton yarn is produced from genuine quality fiber, which is
obtained from the seed hair of the cotton plant. Our cotton yarn is used to manufacture
genuine quality cotton fabrics. The significant feature of our cotton yarn is its high tensile
strength and its superior quality. Our cotton yarn is used by various industries for
manufacturing the best quality garments. We are widely known as one of the prominent
cotton yarn suppliers from India.

26
 ORGANIZATIONAL STRUCTURE

CHAIRMAN

Managing Director

Executive Director

Vice President

Marketing Finance Human Resource Production R&D

manager manager manager manager Department

Executive Executive Senior officer

Regional

Senior Junior officer

Assistant
Assistant
manager

Junior Assistant
Accountant
Marketing
Officer
Wage Workers
Clerks

Sales Field
Representatives Assistants

Sales Trainers

27
 SWOT ANALYSIS
STRENGTHS
 Abundant Raw Material availability that helps industry to control costs and
reduces the lead-time across the operation.
 Availability of Low Cost and Skilled Manpower provides competitive advantage
to industry.
 Availability of large varieties of cotton fiber and has a fast growing synthetic fiber
industry.
 Good brand equity.
 Many persons are working here. This shows commitment of employees towards
of the organization.
 Laboratory for testing the quality of the product.
 Strong and intellectual management.

WEAKNESSES

 Industry is highly dependent on Cotton.

 Lower Productivity in various segments.
 Lack of Technological Development that affect the productivity and other
activities in whole value chain.
 Unfavorable labor Laws.
 Lack of Trade Membership, which restrict to tap other potential market.
 Lacking to generate Economies of Scale.

OPPORTUNITIES

 The company can offers a wide range of career opportunities and is too keen to
employ a work force of innovative people who can work together and add value
to our vision.
 The company to help the employees reach the career objectives in line with their
personal goals.

28
THREATS
 Continuous Quality Improvement is need of the hour as there are different

demand patterns all over the world.

 Geographical Disadvantages.
 To balance the demand and supply.
 To make balance between price and quality.
 Increase in minimum wage rates.
 International labor and Environmental Law.

CSR

Balarama Krishna Mills recognizes its social and environmental responsibilities towards
its customers, suppliers, employees and is committed to conduct business in a manner
which promotes sustainable growth while fulfilling legal and moral obligations.

Business Principles and Code of Conduct

We strive to ensure that our business is conducted according to the highest ethical and
professional standards in all respects, taking into account applicable laws, regulations and
customs in the countries and regions where we operate.

Labor
To bring the value of social responsibility to our employees and be part of the engine to
drive social responsibility activities through Employee suggestions, Employee
participation and Employee survey.

Ethics
Ethics is one of the most important and fundamental values underlying our business
activities at aIl levels of its organization. Balarama Krishna Mills has established and
rolled out Code of Business Conduct which embodies rules, requirements, and standards
of conducts in the areas of human rights, labor, environment anticorruption and others.

Environment
We seek to limit the environmental impact of our activities through the prevention of

29
pollution, minimization of waste and use of best environmental practices by employing
effective management systems that promote continual improvement. This includes
ensuring that our activities and operations are in compliance with current legislation as
well as company standards. We are committed to identifying and analyzing the risks
associated with Environmental impacts of its products, services and activities.

Safety and Health

We are committed to high standards of safety and health, recognizing our duty and the
benefits of providing safe work conditions for our employees. We aim to achieve
continuous improvement in safety and health performance through the use of robust
safety and health management systems.

Suppliers
We regard suppliers as our partners and work with them to achieve our ambitions in the
delivery of our product, but also understand the importance to track where products are
sourced to ensure that the principles of environmental sustainability are upheld. We also
work to ensure that the welfare of workers and labor conditions within our supply chain
meet or exceed recognized standards.

Customers
We recognize that our business and livelihood depend upon our customers. Every
employee is responsible for ensuring the highest level of customer focus and that any
contact with our customers is always professional and appropriate. We aim to ensure that
our customers receive the level of service and quality of product that they have come to
expect from Balarama Krishna Mills.

Community
We endeavor to contribute to the communities in which we operate, particularly those
neighboring our sites through the support of community initiatives and local charities.
Each individual Balarama Krishna Mills location is encouraged to develop programs
which address the needs of their local community.

30
Employees
We provide equal opportunities to all existing and prospective employees recognizing
that our future is dependent on their work quality, effectiveness and skill base. We are
committed to the fair and equitable treatment of all employees, specifically prohibiting
discrimination on the grounds of race, religion, sexual orientation, nationality or ethnic
origin. Opportunities are also available to disabled persons in accordance with their
abilities and aptitudes on equal terms with other employees.

VALUE
By a clear comprehension of the market dynamics and the assimilation of the
cutting edge technology we assure the highest standards are met at all times.
The company initially started with Agricultural procedure basis. The company will
procure cotton kappas from farmers as well as traders from various market places in and
around AP. Indirectly it is helpful to farmers and small traders.
Now the company is doing cotton spinning with a spindle capacity of 40,000 here
at about 1000 No. of workers and 50 No’s of staff engaged in the industry. The main
motive of the company is to provide more jobs for the poor and middle class people.
The company is supplying its products in various states like Tamilnadu,
Karnataka, Maharashtra, Gujarat, Bombay, and Rajasthan.
There are product of yarn is useful for weaving industry. The company is
providing indirectly jobs in the textile industry.
QUALITY
The company has a long reputation of quality performance and innovation.
Quality of final product is determined with quality of raw material. In Balarama Krishna
Mills, we take meticulous care in the selection of cotton.
Our dedicated committee and involved cotton selectors at different station headed
by the experienced supervisors, spares no pain in the selection of kapas or Raw cotton
available in the market.
SPINNING PROCESS AND TECHNOLOGY

MIXING

31
 BLOW ROOM

CARDING

FOR COMBES YARN FOR CARDED YARN

SILVER LAPPER/ RIBBION

LAPPER

COMBER

DRAWING I

DRAWING II

SIMPLEX

SPINNING

CONE WINDING REELING

CONE PACKING BUNDLE BALLING

Spinning process is shown in the flow chart given below. Cotton which is in
the form of bales is fed to blow room followed by the various operations like carding and
combing depends up on the requirement. The final yarn of required specifications are met
through these operations and winded.

32
 Mixing
Cotton based is opened and those from different varieties are mixed together
according to the formula formulated by the technical authorities in order to get the
desired yarn parameters.

Blow Room
The cotton mix is then fed in to the blow room where the clearing of the cotton
is carried out, in order to remove the trash and other foreign materials. Major part of the
impurities is nearly 5% of the input, and is removed as waste, a part of which goes
invisible waste. The output in this stage is in the form of laps.

Carding
The laps are fed in to cards, where the next important stage of cleaning as cotton
and removal of short fibers takes place. Only 60 to 65% of the trash will be cleaned in
blow room. Carding only will clean balance amount of trash. The output in this stage
is in the form of silvers.

Combers
The most sophisticated department, which is very important for anybody who
wants to export these yarns. This department refines the silvers and strength and other
good quality parameters. The output in this stage is combed silvers.
Draw frames
Combined silver are fed in to draw frame which paralyze the fiber in the silver
as well as evenness the quality of the silver by mixing the silver from the different cans
and producing a even quality silver. The output in this stage is simplex bobbins.
Ring frames
The simplex bobbins are creeled to the ring frame spindles where the speed is
very high by giving the twist, yarn is produced. The output is in the form of cops.

Simplex
The objects in this stage are drafting too silver in to roving and twisting the
roving and to wind the roving on bobbins.

33
Spinning
The object of spinning is further drafting the roving in to yarn as per required
count. To import twisting yarn for getting straight thread. This is the final stage in
manufacturing of yarn. The finishing section includes cone winding, cone packaging,
reeling, bundling and labeling not only producing yarn but is to be packed in different
shapes as required by the buyer.

Cone winding
The spinning cops are creeled in to the cone winding and the yarn is wound on
the drums and the yarn in “cones” is produced which is the final product. In this stage the
output itself is the final output and it is in the form of yarn.

Cone packaging
50 cones are put in each bag. Cone bags are ready for dispatch. After packaging
and bundling of the product, the mill can print the specifications of the product from
which it is sending and to the party to be received also placed. The company has obtained
no objection certificate from pollution control.
Man power requirement
The importance of personnel function is increasing day by day. It is the human
factor that can mould the organization as we wish. Any resource cannot yield effectively
unless it is efficiently managed by the human resource. That is why some management
scientists like to autonomy says personnel management is the management of human
resources.
The behavioral approach of management studies emphasized the dominant role
of human factor in an organization. Any function in an organization say planning,
organizing, staffing, directing, and controlling can be carried out effectively with the
strong based personnel. Till recently the personnel function has not been recognized
properly. But almost all the organizations have recognized its importance and saved the
way for the flourishment of personnel function which in turn flourishes the future for the
organization.

34
 In India also the public sector and private sector have identified the
importance of personnel function and are giving proper recognition to this function in the
organization. Human resource development is the latest coined term in this prospect. It
aim at developing the overall efficiency of the personnel in all aspects. The main
objective of human resource development program is the optimum utilization of human
resources in an organization. The government of India has created a separate ministry
under a senior cabinet minister to look after the utilization of human resource. The
business environment is becoming a source. Human resource is treated as one of the
scarce resources effectively. It can’t with stand in the market. To utilize all other
resources efficiently, first the human resource should be optimally utilized.

The term personnel management is called by different name. in certain public

enterprises of India, it is known as “Personnel Administration” while in other it is known
as “Labor Management (or) Industry Relations (or) Manpower Management”. In essence
of personnel management is concerned with the proper use of human factor in business.

Personnel management aims at getting the best out of the people by winning and
maintaining their whole hearted collaboration. Personnel administration does not exist for
any such primary purpose as making condition easier (or) improving the lot of workers.
This is one of the means through best regarded as one of the ordinary social responsibility
of administration.

The broad objectives of personnel program are two:

1. To improve the service rendered by the enterprise to society through building
better employee morale, which leads to efficient individuals and group
performance.

2. To establish in the minds of those associated with the enterprise- employee, share
holder, creditor, customer and the public at the large. The fact is the enterprise that
is rendering best service at which and it is capable and distributing. The benefits

35
 derived there from fairly in the light of the relative contributions of each to the
success of enterprises.

Technology
The plant and machinery required for the spinning mill process for
manufacturing yarn of different counts are blow room machinery, metal detection system,
spark diversion system, carding machines, card accessories, draw frame( finisher and
breaker) speed frame, combers, ring frame, electrical infrastructure, yarn testing
instruments, humidification and waste collection system and automatic cone winding
machine etc.

Market
The world cotton cultivation area and cotton production are estimated at around
30-31 million hectares and 20 million tons respectively. The biggest cultivators of cotton
are America, India, China, Egypt, Pakistan, Sudan and Eastern Europe. India is the third
largest producers of cotton after USA and China. USA has a considerable share in world
exports.
India and China both fall short of their domestic requirement and are net
importers. Andhra Pradesh is 3rd largest state in India which grows cotton. Among the
consumers China leads the way being followed by India, Pakistan, USA and Turkey.
Indian Textile Industry contributes 4% to the GDP of the country; it contributes 14% to
Industrial Production, 9% of excise collections, 18% of employment in industrial sector,
and has 16 % share in country’s export. Textile industry provides employment to 35
million people in India.

Directors Responsibility Statement under Section 217 (2aa) Of the Companies Act,
1956.

1) In the preparation of the annual accounts, all the applicable accounting standards had
been followed except as-15, employee benefits in the form of gratuity are accounted
on cash basis.

36
2) The directors had selected such accounting policies and applied them consistently and
made judgments and estimates that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the company at the end of the financial year and of
the profit of the company for that period.
3) The Directors had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of this act for safeguarding the
assets of the company and for preventing and detecting fraud other irregularities.
4) The Directors had prepared the annual accounts on a going concern basis.

Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,

1988.
Statement Containing Particulars Pursuant To the Companies, Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988. And forming part of directors’ report.

 Employee benefits:
I. Short term employee benefits are accounted on accrual basis.
II. Retirement benefits in the form of defined contributions are accounted on
the basis of contribution paid or payable.
III. Retirement benefits in the form of defined benefits are accounted on cash
basis.

Business Experience of M.D:

The Managing director of the company is Mr. Lanka Raghu Rami Reddy
managing director & Chairman. He is qualified in B.com (Textile) 1st Class. He joined in
the company in May 2005 as a Director.
He was well trained in Spinning now he is looking weaving. Now he is in
Coimbatore he had taken some sizing & weaving units in and around Coimbatore. Within
a 3 months period under his supervision 50,000 mtrs of grey cloth produced and sold with
a good quality and rate.
 rate.

37
Product Profile
At Brand , we have always been relied on , for the high quality of yarn that we manufacture . we are
constantly looking at new ways to improve and develop our product portfolio . we are working towards the
production of world – class core spun yarn , dyed yarn and Melange yarn in the near future . at present our
product range as follow :

PRODUCT COUNT TYPE END USE

RANGE
100 % cotton combed NE 20 TO SINGLE KNITTING/
yarn NE 40 WEAVING
100 % cotton Carded NE 20 TO SINGLE KNITTING/
yarn NE 40 WEAVING
100 % cotton combed NE 20 TO SINGLE/ DPHR
yarn ( HANK YARN ) NE 40 DOUBLE
100 % cotton carded NE 20 TO SINGLE/DOUBLE DHCR
yarn ( HANK YARN ) NE 40
100 % cotton compact NE 40 TO SINGLE/DOUBLE KNITTING/WEAVING
combed yarn NE 80
100 % Open End yarn NE 10 TO SINGLE/DOUBLE KNITITNG/WEAVING
NE 30
DEPARTMENT MANUFACTURER MODEL YEAR NO.OF
MACHINES
BLOW ROOM
VXL INDIA VXL-25 2016 1
TRUETZSCHLER INDIA BLENDOMAT BO- 2015 1
A2300
TRUETZSCHLER INDIA CLP 053.25-05 2014 1
LMW INDIA UNIMIX LB 7/4 2013 1
LMW INDIA SUPREMO CLEEN 2012 1
LB1012
VETAL INDIA VETAL SCANER WITH 2010 1
POLY SENSORS
CARDING
LMW INDIA LC300V3 CARD 2006 3
LMW INDIA LC300V3 CARD 2007 5
TRUETZSCHLER INDIA TRUTZSCHLER TC 5-3 2009 1
TRUETZSCHLER INDIA TRUTZSCHLER TC 5-3 2010 1
PREPARETORY
LMW INDIA LDO/6 2006 1
LMW INDIA SB-2 2006 1
LMW INDIA LRSB-851 2006 1
REITER , GERMANY RSB D40 2011 1
REITER , GERMANY RSB D40 2012 1

38
 REITER , GERMANY E-32 UNILAP 2006 1
REITER , GERMANY COMBER E 65 2006 3
REITER , GERMANY COMBER E 65 2009 1
LMW INDIA LF1400A 2006 1
LMW INDIA LF1400A 2007 2
RING FRAME
LMW INDIA LR6/S 2006 5
LMW INDIA LR6/S 2007 5
LMW INDIA LR6/S 2010 2
LMW INDIA LR60AX 2013 1
LMW INDIA LR60A 2010 4
AUTO CONER
SAVIO , ITALY SAVIO ORIAN
SIRO AND PP 2006 2
CLEARERS
SAVIO , ITALY SAVIO 2007 1
ORIAN,SIRO
CLEARERS
OERLIKON X5- 2010 2
SCHLAFHORST,GERMANY 50014174.2010,SIR
O CLEAARERS
REELING KEYER INDUSTRIES INDIA DOUBLE HANK 2007 10
REEL CONE
FEEDER
QAD USTER GERMANY YARN TESTER UT 5 2010 1
STATEX INDIA YARN CSP TESTER 2010 1
STATEX INDIA TPI TESTER 2007 1
STATEX INDIA TRASH TESTER 2007 1

39
Packing Configuration
PACKING TYPE Configuration 20 FEET 40 FEET 40 FEET
HQ

CARTONS Conicity 5 Deg 5 Deg 5 Deg

With 1.89 Kgs packing cone weight 1.89 Kgs 1.89 1.89 Kgs
cones / cartons 24 24 24
cartons / container 180 390 430
Total Kgs 8164.8 17690.4 19504.8

CARTONS Conicity 5 Deg 5 Deg 5 Deg

WITH 2.05 Kgs packing cone weight 2.05 Kgs 2.05 kgs 2.05 Kgs
cones / cartons 24 24 24
cartons/ container 180 390 430
Total Kgs 8856 19188 21156

PALLETS AND CARTONS conicity 4 Deg 4 Deg 4 Deg

WITH 1.89 kgs packing cone weight ( kg ) 1.89 1.89 1.89
cone / cartons 16 16 24
cartons / container 21 60 60
sub Total A 635 1814 2722

cones / pallets 432 432 468

cones / Layers 36 36 36
No of Layers 12 12 13
No of pallets 10 20 20
Sub Total B 8165 16330 17690

TOTAL Kgs ( A + B ) 8800 18144 20412

Note :
1 - we can provide 2.05 Kgs cone as per customer requirements.
2 - we can also provide pallets packing as per customer requirements.
3 - customized packing is also available.
4 - Each cone is wrapped in a plastic bag.

40
Our Presence

41
Gallery (Infrastructure)

42
Gallery (Factory Tour)

43
 THEORETICAL FRAMEWORK

CONCEPTS OF FUNDS
The term 'funds' have a variety of meaning. Some people take funds synonymous
to cash, and to them there is no difference between a cash flow statement prepared on the
basis and a fund flow statement. While other include marketable securities and cash to
constitute business funds. How ever the most common definition of the term 'Fund' is
'working capital' or net 'current assets'. Thus the difference between current and current
liabilities is called funds.
DEFINITIONS
The funds flow statement described the sources from which additional funds were
derived and used to which these funds are put.
R.N.ANTONY
The fund flow statement is an important device for brining to light the underlying
financial movements the ebb and flow of funds.
PATON & PATON
USES OF FUNDS FLOW STATEMENT
Funds flow statement helps the financial analyst in having a more detailed analysis and
understanding of changes in the distribution of resources between two balance sheet
dates. In case such study is required regarding the future working capital position of the
company, a projected funds flow statement can be prepared. The uses are as follows.

 It explains financial consequences of balances operation

Funds flow statement provides a ready access or many conflicting Situations

such as.
 Why the liquidity position of business is becoming more and more unbalanced

 How was it possible to distribute dividends in excess of current earnings or in

the presence of net loss for the period.

 How the business could have good liquid position in spite of business making
losses (or) acquisition of funds assets.

44
 It answers intricate queries

The financial analyst can find out answers to a number of intricate Questions.
 What are the sources of payment of loan taken

 What is the overall credit worthiness of the enterprise.

 How much funds are generated through normal business operation.

 In what way the management has utilized the funds in the part and what are
going to be likely uses of funds.

 It Acts an instruments for allocation of resources

A projected funds flow statement will help the analyst in finding out how the
management is going to allocate the scare resources for meeting the productive
requirements of business. The use funds should be phased in such as order that the
valuable resources are put to the best use of the enterprise.
Funds flow Statement:

MEANING AND TYPES OF FINANCIAL STATEMENTS

A financial statement is an organized collection of data. According to logical and
consistent accounting procedures its purpose is to convey and understanding or some

45
financial aspects of business firm. It may show a position at a moment of time as, in the
case of a balance sheet or may reveal a series of activities ones a given period of time, as
in the case of an Income statement.
Financial statement analysis when used carefully, can produce meaningful
insights about a company's financial information and its prospects for the future.
However, the analyst must be aware of certain important considerations about financial
statements and the use of these analytical tools. For example, the dollar amounts for
many types of assets and other financial statement items are usually based on historical
costs and thus do not reflect replacement costs or inflationary adjustments. Furthermore,
financial statements contain estimates of numerous items. John Myer, "Financial
Statement analysis is largely a study of relationship among the various financial factors in
a business as disclosed by single set of statements and a study of the trend of these factors
as shown in a series of statements.
Thus the financial statement generally refers to, four financial statements.
 Income Statement
 Balance Sheet Of course a business may also prepare profit & loss

account.
 Statement of retained earnings,
 A statement of changes in financial position.

Financial Statement

STATEMENT OF CHANGES IN FINANCIAL POSITION

The Balance Sheet shows the financial condition of the business at a
particular moment of time, while the income statement discloses the result of operating of

46
business ones a period of time. How ever for a better understanding of the affairs of the
business it is essential to identify the movement of working capital or cash in and out of
the business this information is available in the statement of changes in financial position
of the business.
 Change in working capital position in such a case the statement in termed (SCFP)
or funds flow statement,
 Change in cash position in such a case the statement in termed as SCFP (or) cash
flow statement,
 Change in overall financial position. In such a case the statement is termed as
statement of changes in financial position.

The technique of funds flow analysis is widely used by the financial analysis, credit
granting institutions and financial managers in performance of their jobs. It has become a
useful tool in their analytical kit. This is because the financial statement i.e. income
statement and the "Balance Sheet" have a limited role to perform. Income statement
measure flows restricted to transactions that pertain to rendering of goods or services to
customers.
` The Balance Sheet is merely a static statement. It is the statement of assets and
liabilities of business as a particular date. It does not supply focus those major financial
transactions which have been believed the Balance Sheet changes. One has to draw
inferences from the Balance sheet about major financial transactions only after
comprising the Balance sheet of two periods.
For example, if fixed assets worth Rs.3,00,000 are purchased during he current
year by raising share capital of Rs.3,00,000 the balance sheet simply shows a higher
capital figure and higher fixed assets figure. In case, One compares one year balance
sheet with the previous year balance Sheet then only one can draw an inference that fixed
assets are acquired by raising share capital of Rs.3,00,000 similarly, Certain important
transitions which might (Occur during the course of the accounting) not find any place in
the Balance Sheet. For example, if a loan of Rs.3,00,000 was raised and paid in the
accounting year, the balance sheet will not depict this transaction.
However, a financial analyst must know the purpose for which loan was utilized
and the source from it was raised. This will help him in making better estimates about the
company's financial position and policies.

47
FINANCIAL ANALYSIS
Financial analysis is highly essential to understand the efficiency and financial
position of the enterprise.
The term 'Analysis' means methodical clarification of the data provided in the
financial statements. 'Analysis' and 'Interpretation' are complementary to each other
Interpretation requires analysis, while analysis is useless without interpretation. The term
'Analysis' to cover the meanings of analysis and interpretation, since analysis involves
interpretation.

Myres States
"Financial statement analysis is largely a study of the relationship among the various
financial factors in a business as disclosed by a single set of a statements and a study of
the trend of these factors as shown in a series of statements".

TYPES OF FINANCIAL ANALYSIS

We can classify various types of financial analysis in to different categories depending
upon.
 The material used
 The method of operation fallowed in the analysis of the modus operand! Of
analysis.

48
ON THE BASIS OF MATTERIAL USED
According to material used financial analysis can be classified two types.
 External analysis

 Internal analysis.

 EXTERNAL ANALYSIS

It is the analysis by outsiders who don't have access to the detailed internal
accounting records of the business firm, these outsiders include investors, Potential
investors, Potential creditors and government agencies, credit agencies and the
general public. For the financial analysis, the external parties to the firm depend
almost entirely on the published financial statements. External analysis only serves
for limited purpose. How ever the recent changes in the Government regulations
requiring business firm to make available more detailed information to the public
through audited published account have considerably improved the position of the
External analysis.
 INTERNAL ANALYSIS

The analysis conducted by person who has access to the financial accounting records of a
business firm is known as internal analysis. Such an analysis can therefore be performed
by executive and employee of the organization as well as Government agencies which
have statutory power rested in this financial analysis for managerial purpose is the
internal type of analysis that can be affected depending upon the purpose be achieved.
ON THE BASIS OF MODUS OPERANDI
This analysis also classification in to two types
 Horizontal Analysis

 Vertical Analysis

 HORIZONTAL ANALYSIS

Horizontal analysis refers to the comparison of financial data of a company for several
years. The figure for this type of Analysis is presented Horizontal over a no of columns.
The figures of the various years are compared with standard or base year. A base year is a

49
year chosen as beginning point. This type of analysis is also called dynamic as it is based
on the data from year rather that an data from any one year.
Horizontal analysis means it possible to focus attention on items that have
changed significantly during the period under review comparison of an item over several
periods with a base year may show a trend development comparative statement and trend
percentage are two tools employed in Horizontal analysis.
Since this reflects changes in financial position of the company over a long period of time
it comprises:
 Comparison of the financial statements of different years of the same business
unit.

 Comparison of financial statement of a particular year of different business units.

 VERTICAL ANALYSIS

Vertical analysis is refers to the study of the various items in the financial statement
of one accounting period. In this type of analysis of the figure from financial statement of
a year are compared with a base select from the same year statement. It is also known as
"Static analysis" common size financial statement and financial ratios are two tools
employed in Vertical Analysis. Since Vertical Analysis considers data for one time period
only it is very conductive to a proper analysis of financial statement. However may be
used along with horizontal analysis to make it more effective and meaningful.

METHODS (OR) EVICES OF FINANCIAL ANALYSIS

The analysis and interpretation of financial statement is used to determine the financial
position and result of operations as well. A number of methods (or) devices are used to
study the relationship between different statements. An effort is made to use those
devices which clearly analysis are generally used.
 Comparative statement
 Common size statement
 " Trend analysis
 Funds flow statement
 Cash flow statement
 Ratio analysis
 Cost volume profit analysis

50
FROMS OF WORKING CAPITAL
 Gross Working Capital

 .Net Working Capital

 Permanent Working Capital

 Temporary Working Capital

 GROSS WORKING CAPITAL

It refers to the companies investments in current assets which can be converted into cash
within one year (or) in an accounting year. It includes cash, short term securities.
Working capital is necessary to run a business firm and to meet day-today expenses. Cash
is generated through sales which is possible with the investment in inputs such as raw
materials, consumables, labour etc hence working capital is necessary for acquiring
inputs.
Gross working capital focus on two aspects of current assets management.
(i) How to optimize in current assets
(ii) How current assets should be financed.
The financial manager should have knowledge of the sources of working capital funds as
well as investment revenue where idle funds may be temporarily invested.
 NET WORKING CAPITAL:-

It refers to excess of current assets over current liability i.e. difference between current
assets and current liabilities. Current liabilities are those claims of outsiders. Which are
expected to mature of payment with in accounting expenses. Net working Capital may be
positive or negative. A present working capital will arise when current assets are
exceeding current liabilities.
A net working capital will occur when current liabilities are in excess of current assets.
Net working capital is a qualitative concept of indicators the liquidity position of the
company and suggests the extent to which working capital.
 PERMANENT WORKING CAPITAL

51
It refers to the minimum level of current assets, which is continuously required by the
company to carry out the business operations. Permanent working capital is also known
as fixed working capital. It is payment in the same way as the company's fixed assets are
depending up on the changes in production and sales. The need for working capital ones
and above permanent working capital will fluctuation.
 TEMPORARY WORKING CAPITAL

It refers to that part of total working capital which required by business over and above
permanent working capital. The extra working capital needed to support the changing
production and sales activities. It is also called 'Variable working capital'.
ELEMENTS IN WORKING CAPITAL (a) CURRENT ASSETS
The term current asset includes assets which are acquired with the intention of converting
them in to cash during the normal business operation of the company. However, the
definition of the current assets has been given by Grady in the following words.
For accounting purpose, the term Current assets is used to designate
cash and other assets or resources commonly identified on those which are reasonable
expected to be realized in cash or sold or consumed during the normal operating cycle of
the business.
The current assets are
 Cash including fixed deposit with bank
 Account receivables
 Inventory
 Advance receivables

 Prepaid expenses

It should be noted that short term investment should be included in the definition
of the term current assets while loose tools should be excluded from the category of
current assets. Of course, this is not strictly accordingly to the requirements of the
companies Act regarding presentation of financial statement where investments even
though held temporarily are to be shown separately from current assets while loose
tools are shown separately from current assets while loose tools are shown under the
category of current assets.
 Current Liabilities

52
 The term Current Liabilities is used principally to designate such Delegation
whose liquidation is reasonably expected to require the use of assets classified as
current assets in the same balance sheet or the operation : other current liability of
those expected to be satisfied with in a relatively a short period of time usually one
year.
 Account payable
 Outstanding expenses
 Bank overdraft
 Short term loans

PROVISIONS AGAINST CURRENT ASSETS

Provision for doubtful debts, provision for loss on stock, provision for scout on
debtors etc, are treated as current liabilities. Since they reduce the amount of current
assets.

NON-CURRENT ASSETS
All assets other than current assets come within the category of noncurrent assets include
goodwill, land building, machinery, furniture long term investment, Patent rights, Trader
marks, debt balance of the profit & loss account, discount on issue of debentures and
preliminary expenses etc.

NON-CURRENT LIABILITIES
All liability other than current liability comes with in the category of Non-current
liabilities. They include share capital, long term loans, debentures, hare premium, credit
balance in the profit & loss Account. Revenue and capital reserve, dividend equalization
fund, debentures sinking fund.

53
FUNDS FLOW STATEMENT
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 value 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 lo 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.
According to R.N. Anthony:-
"The funds flow statement describes the sources from which
additional funds were derived and the uses to which these funds were put”.

According to R.A. Foulk:-

“A statement of sources and applications of funds is a technical devise
designed to analysis the changes in the financial conditions of a business between two
dates”.
According to Big man:-
“It is a statement which highlights the underlying financial
movements and explains the changes of working capital from one point of time to
another”. Thus funds flow statement is a report which summarizes the events taking place
between the two accounting periods. It spells out the sources from which funds were
derived and the uses to which these funds were put. This statement is essentially derived
from an analysis of the changes that have occurred in assets and liabilities items between
two balances sheet dates. In this statements only the net changes are shows that the
outcome of a transaction as of a series of transactions upon the financial condition of a
business enterprise is reflected more sharply.

54
Significance (or) Importance of Funds Flow Statement:-

The funds flow statement is an important tool of financial analysis.

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

 Decisions Relating To Financing:-

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

 Decision On Capitalization:-

The funds flow statement serves as handmaid to the finance manager

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

55
  Reveals The Reasons For Financial Difficulties:-

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

 Useful To the External Parties:-

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

 Useful As Control Device:-

The funds flow statement also serves as a control device in that the
statement compared with the budgeted figures will show to what extent the funds were
put to use according to plan. This enables the finance managers to find out deviation from
the planned course of action and take remedial steps to correct the deviations.

Thus, the funds statement draws the attention of finance manager to

problems which call for detailed analysis and immediate action. In view of these funds
flow statement is becoming more popular with management. Even some bank managers
make it obligatory for the borrowers to furnish a funds statement along with their annual
balance sheet now a days many Indian companies are publishing this statement in their
annual reports although they are not obliged to do so under the companies Act.

56
  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:

1. Why were the net current assets lesser in spite of higher profits and vice-
versa?
2. Why more dividends could not be declared in spite of available profits?
3. How was it possible to distribute more dividends than the present
earnings?
4. What happened to the net profit? Where did they go?
5. What happened to the proceeds of sale of fixed assets or issue of shares?
Debentures etc.?
6. What are the sources of the repayment of debt?
7. How was the increase in working capital financial and how will it be
financed in future?
 It helps the formation of a realistic dividend policy, sometimes a firm has
sufficient profits available for distribution as dividend but yet it may not be
advisable to distribute divided for lack of liquid of cash resources. In such cases, a
funds flow statement helps in the formation of a realistic dividend policy.

57
  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.

 It Acts As A Future Guide: -

A projected funds flow statement also acts as a guide for future to

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

 It Helps In Appraising The Use of Working Capital: -

A funds flow statement helps in explaining how efficiently the

management has used is working capital and also suggests ways to improve working
capital position of the firm.

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

The financial institutions and banks such as state financial

institutions, industrial Development Corporation, industrial financial corporation of India,
industrial development bank of India etc., all ask for funds flow statement constructed for
a number of years before granting loans to know the credit worthiness and paying
capacity of the firm. Hence a firm seeking financial assistance from these institutions has
no alternative but to prepare funds flow statements.

58
Limitations of Funds Flow Statement:-
The funds flow statement
has a number of uses; however it has certain limitations also, which are listed below:
 It should 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.
 It cannot reveal continuous changes.
 It is not an original statement but simply is arrangement of data given in the
financial statements.
 It is essentially historic in nature and projected funs flow statement cannot be
prepared with much accuracy.
 Changes in cash are more important and relevant for financial management than
the working capital.
 Cash flow statement: a statement of changes in the financial position of firm on
cash basis is called a cash flow statement.
Rules for Funds Flow Analysis:-
 The flow of funds occurs when a transaction changes on the one hand a non current
account and on the other current account and vice-versa.
 When a change in a non current account e.g., fixed assets, long term liabilities
reserves and surplus fictitious assets etc, 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 non current to
current transactions or vice-versa only.
 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.

59
Financial Statements and Funds Flow Statement:-
Financial statement means the profit and loss account and the
balance sheet. All the organizations more particularly, the company from of organizations
is required to present the annual financial statements every year. The financial statements
differ with the funds flow statement in many ways.
A Funds Flow Statement is a statement measuring the inflows the
inflows and outflows of net working capital that result from any type of business activity
between two dates. An Income statement in a statement measuring the inflows and
outflows of net assets of revenue nature that result form rendering goods on services to
customers between two dates.
A Funds Flow Statements has become a useful tool in the hands of
financial analyst. That is being caused the financial statements i.e., Income statement
measures the flows restricted to transaction relating to rendering of goods and services to
customers. It is not capable of any accurate information of the resources from operating
unless the income data is converted into funds data. It does not depict the major financial
transactions which have resulted in changes in Balance Sheet.

Comparison between Funds Flow Statement and Cash Flow Statement:-

The term ‘Funds’ has a variety of meanings. In a narrow sense it

means cash and the statement of changes in the financial position prepared on cash basis
is called a cash flow statement. In the most popular sense, the term ‘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.

 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

60
 only, which is only one element of working capital, the other being debtors stock,
temporary investment, bills receivable etc.
 Funds flow statement is based on accrual basis of accounting while cash flow
statements are based on cash basis of accounting. In cash flow statement while
calculating operating profits, adjustments for prepaid and outstanding expenses
and income are made to convert the data from accrual basis to cash basis, but no
such adjustments are required to be made while preparing a funds flow
statements.
 Funds flow statement does not reveal changes in current assets and current
liabilities, rather these appear separately in a schedule of changes in working
capital. No such schedule of change in working capital is prepared for a cash
flow statement and changes in all assets and liabilities fixed as well as current,
are summarized in the cash flow statement.
 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.

61
Preparation of Funds Flow Statement:-
In order to prepare funds flow statement, it is necessary to find out
the “Sources and Applications” of funds.

Sources of Funds:-
Funds from Operations:-

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

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

Performa of Calculation of funds forms operations

Particulars Amount Particulars Amount

By Opening Balance of P&L
To Depreciation xxx xxx
A/c
To General Reserve Account xxx By Profit on fixed Assets xxx
To Loss on fixed asset xxx

To Provision for Taxation xxx

To Closing Balance of P&L
xxx By Funds from operations xxx
A/c

xxx xxx

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

62
1. Start with the Net Profit given in the profit and loss account.

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

 Depreciation on fixed assets.

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

 Contribution to debenture redemption funds, transfer to general

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

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

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

 Loss on sale of fixed assets.

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

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

 Profit on revaluation of fixed assets.

 Non-operating incomes such as dividend received or accrued rent.

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

63
 In case the profit and loss account shows net loss this should be
taken as an items which decrease the finds.

Statement of Changes in Working Capital:-

The increase or decrease in working capital can be calculated by

preparing the schedule of changes in working capital.

Working capital represents the excess of current assets over current

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

64
 Schedule of Changes in Working Capital of the Company for the Year Ended

Particulars Previous Current Effect on working capital

Year(Rs.) Year(Rs.) Increase (Rs.) Decrease(Rs.)
(A) Current Assets:-
Stock XXX XXX
Debtors XXX XXX
Cash – Bank XXX XXX
Bills receivable XXX XXX
Prepaid expenses XXX XXX
Total (A) XXX XXX

(B) Current liabilities:-

Creditors XXX XXX
Bills payable XXX XXX
Outstanding expenses XXX XXX

XXX XXX
Total (B)
XXX XXX
Working changes:(A-B)

Increase/decrease in
XXX
Working capital
XXXX XXXX XXXX XXXX
Total
While preparing a schedule of changes in working capital it should be noted that.

65
  An increase in current assets increases working capital;

 A decrease in current assets decrease working capital;

 An increase in current liabilities decreases working capital;

 A decrease in current liabilities increase working capital;

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

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

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

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

 stock-in-trade or inventories

 debtors

 payments in advance or prepaid expenses

 stores

 Bills receivables

66
  Cash at bank

 Cash in hand

 Work in progress

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

 Trade creditors

 Accrued or outstanding expenses.

 Bills payable.

 Income tax payable

 Dividends declared;

 Bank overdraft

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

67
Statement of Sources and Application of Funds:-
 Funds From Operation:-

It is an internal source of funds. Funds from operations are to be

calculated as per the method stated above.

 Funds From Long Term Loans:-

Long term loans such of debentures, borrowing from financial

institutions will increase the working capital and therefore, there will be inflow of
funds. However, if the debentures have been issued in consideration of some fixed
assets, there will be no inflow of funds.

 Sale Of Fixed Assets:-

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

generation of funds.
 Funds From Increase In Share Capital:-

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

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

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

68
 Performa of Funds flow Statements

Particulars Amount (Rs.)

Sources Of Funds:-
Issue of shares XXX
Issue of debentures XXX
Long term borrowings XXX
Sale of fixed assets XXX
* Decrease in working capital XXX
XXX
Total sources
Application Of Funds:-
XXX
Redemption of redeemable
XXX
Preference shares
XXX
Redemption of debentures
XXX
Purchase of fixed assets
XXX
Payment of other long term loans
XXX
Payment of dividends, taxes, etc
XXX
*Increase In Working Capital XXX
Total uses
Note: * only one will be there.

Treatment of Adjustments:-

69
 Some times the factors affecting the funds from operations may not
be given in the problems directly and there may be some hidden information. As such,
some of the transactions have to digger out using the additional information provided as
adjustments to the balance sheet. These items include: a) provision for tax (b) proposed
dividends (c) sale purchase of fixed assets.

 Provision For Tax:-

It is current liability while preparing a funds flow statement, these

are two options available.

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

 Provision for tax may be taken only as an appropriation of profit. It means

that, there will now change in working capital position when provision for
tax is made since it will involve two fixed liabilities, i.e., profit and loss
appropriation account and provision for tax account. However, when tax is
paid, it will be taken as application of funds, because it will when involve
‘Provision for tax account’ which has been taken as a fixed liability and
‘bank’ which is current assets.

 Proposed dividends:-

70
 Whatever has been said about the “provision for tax is also
applicable to “proposed dividends”. Proposed dividends can also be dealt with in
two ways;

 Proposed dividends may be taken current liability since declaration of

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

 Proposed dividends may simply be taken as an appropriation of profits. In

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

 Sale Or Purchase Of Fixed Assets:-

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

 Asset Account (Plant And Machinery Account):-

This is maintained at the cost price. The accounts is debited with

the cost of the machinery as at the beginning of the year (i.e., balance in the
machinery account at the beginning) and with purchases during the year. It is
credited with the cost price of the machinery sold and with cost of the machinery
as at the close of the year (i.e., balance in the machinery account at the end). In
the problems either the total value of purchases during the year may be missing

71
 or the cost of the machinery sold may be missing. The missing figure can be
found out by feeding the account with the available information and balancing it.

 Depreciation Account:-

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

by those transactions, where one account belongs to current category and the other is
longs to non-current category. In case of depreciation both items belong to non-
current category, as such it does not make any change in the funds and is not a source
of funds. In support of the answer journal entry regarding depreciation is presented
herewith.

Profit and loss account is a non-current liability and fixed assets are
non-current asset. As both of them belong to non-current category, so depreciation is not
a source of funds.

 Asset Sold Account:-

The purpose of preparing this account is to ascertain the profit or

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

72
 Table 5.1
CHANGES IN WORKING CAPITAL POSITION OF BALARAMA KRISHNA
SPINNING MILLS PVT.LTD FOR THE YEAR 2013-14
(Rs. lakhs)
PARTICULARS 2013 2014 INCREASE DECREASE
Current assets
Inventories 7977.23 8703.94 726.71 -
Debtors 2783.85 2791.08 7.23 -
Cash and bank 563.71 794.91 231.20 -
Loans & advances 2290.19 2814.79 524.60 -
Other current assets 250.80 129.25 - 121.55
Total Current Assets 13865.78 15233.97 - -
Current Liabilities
Creditors 3751.13 4056.15 - 305.02
Advance from customer 141.87 70.85 71.02 -

Dividend unclaimed 10.42 11.86 - 1.44

Other liabilities 3512.37 3341.43 170.94 -
Provision tax 333.61 467.06 - 133.45
Interest occurred but not 233.84 164.50 69.34 -
due on Loans
Total Current Liabilities 7983.24 8111.85 - -

Net working capital 5882.54 7122.12 - -

Increase in W.C 1239.58 - - 1239.58
Total 7122.12 7122.12 1801.04 1801.04

Table 5.2
ADJUSTED P&L ACCOUNT FOR THE YEAR 2013-14

73
 Particulars Amount Particulars Amount

To Depreciation 2001.55 By Opening balance of P&L a/c 2235.55

By Income from Investments
To Loss on sale of fixed ------- By profit on sale or reduction of 0.03
assets investment 88.19
By Profit on sale of asset
By Provision no longer required 45.34
By Miscellaneous receipts 50.75
By Sundry creditors Balance 33
written back 5.29
By claimed received 39.18
By Funds from operations 103.45
2662.76
To closing balance of P&L
a/c 1766.53

Total 4664.31 4664.31

Table 5.3
FUNDS FLOW STATEMENT FOR THE YEAR 2013-14
Sources of funds Amount Application of funds Amount

Raising of unsecured loans 650.90 Payment of Secured loans 2057.99

Reserves and surplus 1521.70 Purchase of fixed assets 1376.31
Sales of fixed assets 466.98 Reduction of share capital 163.33
Differed credit 431.10 Increase in working capital 1239.58
Funds from operation 1766.53

Total 4837.21 Total 4837.21

74
INTERPRETATION:-

 The working capital statement of 2013-14 clearly show that the working
capital increase Rs.1239.58 lakhs previous in the year.
 The current assets of the company such as inventories debtors, cash at bank,
loans and advances are increased. Current assets such as other current
assets are decreased.
 The current liabilities like advances from customers, interest occurred but
not due on loans, other liabilities are increased. Current liabilities such as
creditors, provision tax, and dividend unclaimed are decreased.
 The company gains profit from the operation to an extent of Rs.1766.53
lakhs.
 The sources of company were achieved from rising of unsecured loans, sale
of fixed assets, reserves and surplus and company also spend its sources
from the purchase of fixed assets, payment of secured loans, reduced in
share capital.

75
 Table 5.4
CHANGES IN WORKING CAPITAL POSITION OF BALARAMA
KRISHNA SPINNING MILLS PVT.LTD. FOR THE YEAR 2014-15

(Rs. lakhs)
PARTICULARS 2014 2015 INCREASE DECREASE
Current assets
Inventories 8703.94 8624.29 - 79.65
Debtors 2791.08 2687.77 - 103.31

Cash and bank 794.91 612.33 - 182.58

Loans & advances 2814.79 3294.97 480.18 -

Other current assets 129.25 80.73 - 48.52

Total Current 15233.97 15300.09 - -

Assets
Current Liabilities

Creditors 4056.15 4567.27 - 511.12

Advance from 70.85 171.13 - 100.28

customer
Dividend unclaimed 11.86 14.70 - 2.84

Other liabilities 3341.43 3498.24 - 156.81

Provision tax 467.06 380.93 86.13 -

Interest occurred but 164.50 138.34 25.56 -

not due on Loans
Total Current 8111.85 8771.21 - -
Liabilities

Net working capital 7122.12 6528.88 - -

Decrease in W.C - 593.24 593.24 -

Total 7122.12 7122.12 1185.11 1185.11

Table 5.5

76
 ADJUSTED P&L ACCOUNT FOR THE YEAR 2014-15

(Rs. Lakhs)

Particulars Amount Particulars Amount

To Depreciation 2062.86 By Opening balance of P&L a/c 2662.76

By Income from Investments
To Loss on sale of fixed ------- By profit on sale or reduction of 9.65
assets investment 182.73
By Profit on sale of asset
By Provision no longer required 9.42
By Miscellaneous receipts 10.36
By Sundry creditors Balance 209.71
written back
By claimed received 16.15
3391.96 By Exchange fluctuation 167.00
To closing balance of P&L By Funds from operations 34.57
a/c 2046.11

Total 5454.82 5454.82

Table 5.6

FUNDS FLOW STATEMENT FOR THE YEAR 2014-15

(Rs in lakhs)

Sources of funds Amount Application of funds Amount

Raising of unsecured loans 3790.88 Payment of Secured loans 2199.57

Decrease working capital 593.24 Purchase of fixed assets 3172.24

Funds from operation Payment of dividend 1057.42

2046.11
Total 6430.23 Total 6430.23

77
INTERPRETATION:-

 The working capital statement of 2014-15 clearly show that the working
capital decreased Rs.593.24 lakhs previous in the year.
 The current assets of the company such as loans and advances are
increased. Current assets such as inventories, debtors, cash at bank, and
other assets are decreased.
 The current liabilities like provision tax, interest occurred but not due on
loans are increased and current liabilities like creditors, advances from
customers, other liabilities, dividend unclaimed are decreased.
 The company gains profit from the operation to an extant of Rs.2046.11
lakhs.

78
 Table 5.7
CHANGES IN WORKING CAPITAL POSITION OF BALARAMA
KRISHNA SPINNING MILLS PVT.LTD FOR THE YEAR 2015-16

(Rs. lakhs)
PARTICULARS 2015 2016 INCREASE DECREASE
Current assets
Inventories 8624.29 8093.28 - 531.01
Debtors 2687.77 2632.95 - 54.82

Cash and bank 612.33 776.63 164.30 -

Loans & advances 3294.97 4045.70 750.73 -

Other current assets 80.73 54.39 - 26.34

Total Current Assets 15300.09 15602.95 - -

Current Liabilities

Creditors 4567.27 9993.96 - 5426.69

Advance from customer 171.13 64.51 106.62 -

Dividend unclaimed 14.70 15.80 - 1.10

Other liabilities 3498.24 3478.51 19.73

Provision tax 380.93 582.53 - 201.60

Interest occurred but not 138.34 351.82 212.88

due on Loans
Total Current Liabilities 8771.21 14487.13 - -

Net working capital 6528.88 1115.82 - -

Decrease in W.C - 5413.06 5413.06 -

Total 6528.88 6528.88 6454.44 6454.44

79
 Table 5.8

ADJUSTED P&L ACCOUNT FOR THE YEAR 2015-16

(Rs. Lakhs)

Particulars Amount Particulars Amount

To Depreciation 2124.35 By Opening balance of P&L a/c 3391.96

By Income from Investments
To Loss on sale of fixed ------- By Profit on sale of asset 12.52
assets By Provision no longer required 138.59
By Miscellaneous Income 117.03
By Sundry creditors Balance
written back 395.25
By claimed received 10.64
By Interest Income tax deducted
By Funds from operations 13.29
4220.14 409.37
To closing balance of P&L 1855.85
a/c

Total 6344.49 6344.49

Table 5.9

FUNDS FLOW STATEMENT FOR THE YEAR 2015-16

(Rs in lakhs)

Sources of funds Amount Application of funds Amount

Raising of secured loans 13857.69 Payment of Secured loans -------

Decrease working capital 5413.06 Purchase of fixed assets 19037.18

Raising of unsecured loans 4430.17 Payment of dividend 6519.59

Funds from operation 1855.85

Total 25556.77 Total 25556.77

80
INTERPRETATION:-

 The working capital statement of 2015-16 clearly show that the working
capital decreased Rs.5413.06 lakhs previous in the year.
 The current assets of the company such as cash at bank, loans and advances
are increased and current assets such as inventories, debtors, other current
assets are decreased.
 The current liabilities like advances from customers, other liabilities are
increases and current liabilities like creditors, unclaimed dividend,
provision tax, interest occurred but not due on loans are also decreased.
 The company gains profit from the operation to an extant of Rs.1855.85
lakhs.
 The sources of company were achieved from rising of secured loans, rising
of unsecured loans and company also spent its sources for the purpose of
purchase of fixed assets and payment of dividend.

81
 Table 5.10
CHANGES IN WORKING CAPITAL POSITION OF BALARAMA KRISHNA
SPINNING MILLS PVT.LTD. FOR THE YEAR 2016-17

PARTICULARS 2016 2017 INCREASE DECREASE

Current assets
Inventories 8093.28 8946.30 853.02 -
Debtors 2632.95 3489.86 856.91 -
Cash and bank 776.63 971.94 195.31 -

Loans & advances 4045.70 4659.56 613.86 -

Other current assets 54.39 97.42 43.03 -
Total Current 15602.95 18165.08 - -
Assets
Current Liabilities
Creditors 9993.96 9147.72 846.24 -
Advance from 64.51 238.82 - 174.31
customer
Dividend unclaimed 15.80 17.22 - 1.42
Other liabilities 3478.51 2049.25 1429.26 -
Provision tax 582.53 301.46 281.07 -
Interest occurred but 351.82 808.49 - 456.67
not due on Loans
Total Current 14487.13 12562.96 - -
Liabilities

Net working capital 1115.82 5602.12 - -

Increase in W.C 4486.30 - - 4486.30

Total 5602.12 5602.12 5118.70 5118.70

82
 Table 5.11
ADJUSTED P&L ACCOUNT FOR THE YEAR 2016-17

(Rs. Lakhs)

Particulars Amount Particulars Amount

To Depreciation 4142.64 By Opening balance of P&L a/c 4220.14

By Income from Investments
To Loss on sale of fixed -------- By Profit on sale of asset 27.99
assets By Provision no longer required 4.34
By Miscellaneous Income 1481.68
By Sundry creditors Balance 248.20
written back
By claimed received 13.25
By Interest received 180.75
By Funds from operations 105.23
2290.30
To closing balance of P&L 127.36
a/c

Total 6432.94 6432.94

Table 5.12

FUNDS FLOW STATEMENT FOR THE YEAR 2016-17

( Rs in lakhs)

Sources of funds Amount Application of funds Amount

Raising of secured loans 8622.11 Payment of Secured loans 355.49

Sales of fixed assets 262.58 Purchase of fixed assets 15553.94
Reserves and surplus 2112.11
Differed tax liability 201.90 Payment of dividend -------
Raising of unsecured loans 9069.67 Increase in working capital 4486.30
Funds from operation 127.36

Total 20395.73 Total 20395.73

83
INTERPRETATION:-

 The working capital statement of 2016-17 clearly show that the working
capital increase Rs.4486.30 lakhs previous in the year.
 The current assets of the company such as inventories debtors, cash at band,
loans and advances, other current assets are increased.
 The current liabilities like creditors, other liabilities, provision tax are
increased and current liabilities like advance from customers, dividend,
unclaimed, interest occurred but not due on loans are decreased.
 The company gains profit from the operation to an extant of Rs.127.36
lakhs.
 The sources of company were achieved from raising of secured loans,
rising of unsecured loans, reserves and surplus, sales of fixed assets and
company also spent.

84
 Table 5.13
CHANGES IN WORKING CAPITAL POSITION OF BALARAMA KRISHNA
SPINNING MILLS PVT.LTD. FOR THE YEAR 2017-18

PARTICULARS 2017 2018 INCREASE DECREASE

Current assets
Inventories 8946.30 10481.36 1535.06 -
Debtors 3489.86 4587.70 1097.84 -

Cash and bank 971.94 1329.50 357.56 -

Loans & advances 4659.56 5530.55 870.99 -

Other current assets 97.42 81.23 - 16.19

Total Current Assets 18165.08 22010.34 - -

Current Liabilities

Creditors 9147.72 10765.31 - 1617.59

Advance from customer 238.82 284.94 - 46.12

Dividend unclaimed 17.22 16.46 0.76 -

Other liabilities 2049.25 615.18 1434.07 -

Provision tax 301.46 301.46 - -

Interest occurred but not 808.49 1092.98 284.49

due on Loans
Total Current Liabilities 12562.96 12774.87 - -

Net working capital 5602.12 9235.47 - -

Increase in W.C 3331.89 - - 3331.89

Total 9235.47 9235.47 5296.28 5296.28

Table 5.14

85
 ADJUSTED P&L ACCOUNT FOR THE YEAR 2017-18

(Rs. Lakhs)

Particulars Amount Particulars Amount

To Depreciation 5236.22 By Opening balance of P&L a/c 2290.32

By Income from Investments
To Loss on sale of fixed ------ By Profit on sale of investment 32.01
assets By Provision no longer required
By Miscellaneous Income 0.02
By Sundry creditors Balance 41.36
written back 539.10
By claimed received
By Interest received 177.23
By Funds from operations 459.68
1966.37 76.48
To closing balance of P&L
a/c 3586.41

Total 7202.59 7202.59

Table 5.15
FUNDS FLOW STATEMENT FOR THE YEAR 2017-18
(Rs in lakhs)
Sources of funds Amount Application of funds Amount

Raising of secured loans 7454.84 Payment of Unsecured loans 6371.50

Sales of fixed assets ------ Purchase of fixed assets 2467.92
Reserves and surplus 2943.95 Interest paid 1045.65
Differed tax liability ------ Payment of dividend 467.06
Raising of unsecured loans ------ Repayment of borrowings 301.18
Funds from operation 3586.41 Increase in working capital 3331.89

Total 13985.20 Total 13985.20

86
INTERPRETATION:-

 The working capital statement of 2017-18 clearly show that the working
capital increase Rs.3331.89 lakhs previous in the year.
 The current assets of the company such as inventories debtors, cash at band,
loans and advances, other current assets are increased.
 The current liabilities like creditors, other liabilities, provision tax are
increased and current liabilities like advance from customers, dividend,
unclaimed, interest occurred but not due on loans are decreased.
 The company gains profit from the operation to an extant of Rs.127.36
lakhs.
 The sources of company were achieved from raising of secured loans,
rising of unsecured loans, reserved=s and surplus, sales of fixed assets and
company also spent.

87
 FINDINIGS

 The current ratio of the Company is highly satisfactory and so the

company is suggested to thrive to maintain the position.
 The quick ratio is below the level and so it is suggested to take suitable
steps to increase the quick assets.
 The current ratio of the sales is not satisfactory. Sales have some
fluctuations and current assets also have some fluctuations. The
company should maintain the increasing trend in the position of sales by
liberalizing its debtors.
 The working capital in 2016-17 is very low and high is 2017-18 is very
high.
 The company maintained good fixed assets turnover ratio in all of the
years it has the highest fixed turn over ratio in the year 2017-18.

88
 SUGGESTIONS

 In order to maintain proper liquidity position the company should have

stable cash position. So it is suggested to maintain borrowing power.
 The inventory turnover ratio is suggested to be improved so as to
optimize the investment in inventories to the maximum extent since the
inventories occupy maximum importance in the working capital of the
Mills.
 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.
 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.

89
 CONCLUSION

After 41 days of my sincere work at is BALARAMA KRISHNA

SPINNING MILLS PVT.LTD financial average. In handling of the financial
statements professionalism may be encourage. The company‘s overall position is
satisfactory. During my project work I had got good experience regarding the
BALARAMA KRISHNA SPINNING MILLS PVT.LTD

90
 BIBLIOGRAPHY

List of the books

 Financial Management, I.M.Pandey, Vikas Publishing House, 2003.

 Financial Management, M.Y. Khan and P.K.Jain, : Text and Problems, Tata Mc

Graw Hill Publishing Co, 2003.

 Financial Management,V.K.Bhalla, and Policy, Anmol publications Pvt. Ltd.,

New Delhi.

Websites:
www.balaramakrishnamills.com
www.cottonindustry.co.in
www.scribd.com
www.slideshare.com
News papers

 Economic Times
 Business line
 Financial chroniocle

91
BALANCE SHEET OF BALARAMA KRISHNA MILLS AS ON 31-3-2014 (Amount)
PARTICULAR 31-3-2014

EQUITY AND LIABILITY:

Share capital 7900000
Reserves and surplus 56307470
Secured loans 60876041
NON-CURRENT ASSESTS
Deferred tax 4320
CURRENT LIABILITTY
Sundry creditors 13540173
Other liability 741894
interest accrued but due 2225257
unclaimed dividend 7650
provisions 2224
unsecured loans 32241854
Total 173846883
ASSETS:
NON-CURRENT ASSETS
Fixed assets 57196902
Investments 6121606
CURRENT ASSESTS
Inventory 69737359
Sundry debtors 35010412
Cash balance 75930
Interest accrued 65717
Bank balance 18224
Loans and advances 1953275
Deposits 3667458
Total 173846883

92
 STATEMENT PROFIT AND LOSS ACCOUNT OF BALARAMA KRISHNA MILLS
PARTICULARS year ended 31-3-2014

INCOMES:
Sales 423742302
Other incomes 3954779
Increase /decrease in stock 504947
Total incomes 428202028

EXPENDITURE:
Raw materials& packing material consumed 1023506571
Processing and operating expenses 93831927
Salaries , wages& other payments to staff 13783556
Administrative and marketing expenses 66013137
Interest and financial charges 10242362
Depreciation 20711271
Expenditure total 1656290852

PROFIT BEFORE TAX: 16771683

Less: provision for tax 4341000
Fringe benefit tax 0
PROFIT AFTER TAX: 12430683
Add: differed tax 649804
Add: previous year items 142680
Less: income tax for previous years 0
13223167
Add: balance brought forward 36005826

BALANCE CARRIED FORWARD TO BALANCE SHEET 49228993

93
BALANCE SHEET OF BALARAMA KRISHNA MILLS AS ON 31-3-2015 (Amount Rs)
PARTICULARS 31-3-2015
EQUITY AND LIABILITY
Share capital 7900000
Reserves and surplus 56307470
Secured loans 60876041
NON-CURRENT ASSESTS
Deferred tax 4320
CURRENT LIABILITTY
Sundry creditors 13540173
Other liability 741894
interest accrued but due 2225257
unclaimed dividend 7650
provisions 2224
unsecured loans 32241854
Total 173846883
ASSETS
NON-CURRENT ASSETS
Fixed assets 57196902
Investments 6121606
CURRENT ASSESTS
Inventory 69737359
Sundry debtors 35010412
Cash balance 75930
Interest accrued 65717
Bank balance 18224
Loans and advances 1953275
Deposits 3667458
Total 173846883

94
STATEMENT OF PROFIT AND LOSS ACCOUNT OF BALARAMA KRISHNA MILLS
PARTICULARS year ended 31-3-2015

INCOMES:
Sales 518467430
Other incomes 11201221
Increase /decrease in stock -24980001
Total incomes 504688650

EXPENDITURE:
Raw materials& packing material consumed 1794218532
Processing and operating expenses 155197289
Salaries , wages& other payments to staff 26868972
Administrative and marketing expenses 136080239
Interest and financial charges 18507324
Depreciation 39089995
Expenditure total 2169962351

PROFIT BEFORE TAX: 36478151

Less: provision for tax 8446493
Fringe benefit tax 467313
PROFIT AFTER TAX: 27564348
Add: differed tax 1488949
Add: previous year items 0
Less: income tax for previous years 461694
28591603
Add: balance brought forward 48579189

BALNACE CARRIED FORWARD TO BALANCE SHEET 77170792

95
BALANCE SHEET OF BALARAMA KRISHNA MILLS AS ON 31-3-2016 (Amount Rs)
PARTICULARS 31-3-2016

EQUITY AND LIABILITY:

Share capital 7900000
Reserves and surplus 68223241
Secured loans 78558221
NON-CURRENT LIABILITY:
Deferred tax 1488949
CURRENT LIABILITIES:
Sundry creditors 10979735
Other liabilities 2297589
Interest accrued but not due 1241888
Unclaimed dividend 25906
Provisions 8250
Unsecured loans 30754008
Total 199180198
ASSETS:
NON CURRENT ASSETS:
Fixed asset 65445118
Investments 45086655
CURRENT ASSETS:
Inventory 69675444
Sundry debtors 11353719
Interest accrued 66662
Cash balance 27983
bank balance 75591
Loans and advance 3459568
Deposits 3989458

Total 199180198

96
STATEMENT OF PROFIT AND LOSS ACCOUNT OF BALARAMA KRISHNA MILLS
PARTICULARS Year ended31-3-2016

INCOMES:
Sales 546350198
Other incomes 8279965
Increase /decrease in stock 12664933
Total incomes 567295096

EXPENDITURE:
Raw materials& packing material consumed 2338261619
Processing and operating expenses 213408096
Salaries , wages& other payments to staff 29470626
Administrative and marketing expenses 167759794
Interest and financial charges 23599654
Depreciation 40369063
Expenditure total 2812868852

PROFIT BEFORE TAX: 60810356

Less: provision for tax 13974988
Fringe benefit tax 547908
PROFIT AFTER TAX: 46467460
Add: differed tax 2261614
Add: previous year items 0
Less: income tax for previous years 1022019
47707055
Add: balance brought forward 75681843

BALANCE CARRIED FORWARD TO BALANCE SHEET 123388898

BALANCE SHEET OF BALARAMA KRISHNA MILLS AS ON 31-3-2017 (Amount Rs)

97
 PARTICULARS 31-3-2017
EQUITY AND LIABILITY:
Share capital 7900000
Reserves and surplus 76877359
Secured loans 56481947
NON-CURRENT LIABILITY:
Deferred tax 2261614
CURRENT LIABILITIES:
Sundry creditors 13540173
Other liabilities 741894
Interest accrued but not due 2225257
Unclaimed dividend 7650
Provisions 2224
Unsecured loans 32241854
Total 192241854
ASSETS:
NON CURRENT ASSETS:
Fixed asset 65220427
Investments 16531170
CURRENT ASSETS:
Inventory 69737359
Sundry debtors 35010412
Interest accrued 65717
Cash balance 75930
bank balance 18224
Loans and advance 1953275
Deposits 3667458

Total 192279972

STATEMENT OF PROFIT AND LOSS ACCOUNT OF BALARAMA KRISHNA MILLS

98
 PARTICULARS year ended31-.3-2017

INCOMES:
Sales 694457939
Other incomes 20013459
Increase /decrease in stock 24192668
Total incomes 738664066

EXPENDITURE:
Raw materials& packing material consumed 3003522365
Processing and operating expenses 299487356
Salaries , wages& other payments to staff 43541860
Administrative and marketing expenses 213468904
Interest and financial charges 37111286
Depreciation 52675282
Expenditure total 3649807053

PROFIT BEFORE TAX: 13240449

Less: provision for tax 32986706
Fringe benefit tax 627811
PROFIT AFTER TAX: 98786932
Add: differed tax 2315161
Add: previous year items 178853
Less: income tax for previous years 1552
101279394
Add: balance brought forward 121127284

BALANCE CARRIED FORWARD TO BALANCE SHEET 222406678

99
BALANCE SHEET OF BALARAMA KRISHNA MILLS AS ON 31-3-2018 (Amount Rs)
PARTICULARS 31-3-2018
EQUITY AND LIABILITY:
Share capital 7900000
Reserves and surplus 87912406
Secured loans 70731166
NON-CURRENT LIABILITY:
Deferred tax 2315161
CURRENT LIABILITIES:
Sundry creditors 10981225
Other liabilities 1838879
Interest accrued but not due 1609364
Unclaimed dividend 7650
Provisions 1841219
Unsecured loans 22959662
Total 208096732
ASSETS:
NON CURRENT ASSETS:
Fixed asset 65854756
Investments 35122538
CURRENT ASSETS:
Inventory 70039902
Sundry debtors 27695016
Interest accrued 65757
Cash balance 81869
bank balance 191043
Loans and advance 5368232
Deposits 3677619

Total 208096732

100
 STATEMENT OF PROFIT AND LOSS ACCOUNT OF BALARAMA KRISHNA MILLS
PARTICULARS year ended 31-3-2018

INCOMES:
Sales 729138804
Other incomes 21160133
Increase /decrease in stock -28874089
Total incomes 721424848

EXPENDITURE:
Raw materials& packing material consumed 3704017569
Processing and operating expenses 366501332
Salaries , wages& other payments to staff 66523436
Administrative and marketing expenses 264456756
Interest and financial charges 31881963
Depreciation 75380244
Expenditure total 450876130

PROFIT BEFORE TAX: 191472483

Less: provision for tax 56086597
Fringe benefit tax 651935
PROFIT AFTER TAX: 134733951
Add: differed tax 3221103
Add: previous year items 0
Less: income tax for previous years 2083631
135871423
Add: balance brought forward 220125849

BALANCE CARRIED FORWARD TO BALANCE 355997272

101