“A STUDY ON FUNDS FLOW ANALYSIS

OF
FOODS AND INNS LTD, CHITTOOR”
Project Report
Submitted in partial fulfillment of the requirement
For the award of the Degree
Of
MASTER OF BUSINESS ADMINISTRATION
(JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY)
By
N.MANJUNATH
Reg. No.: 07751E0054
Under the guidance of
Mrs.T. HIMABINDU, M.F.M.,
Assistant Professor, Dept of M.B.A.

 
 
 
 
 
SREENIVASA INSTITUTE OF TEHNOLOGY
AND MANAGEMENT STUDIES
(Affiliated To Jawaharlal Nehru Technological University, Hyderabad)
#74, Thimma Samudram, Bangalore –Tirupati Bye-Pass Road
Chittoor – 517 128
2007-2009
 
 
 
 Sreenivasa Institute of Technology
and                                                                   
Management Studies
(Affiliated to Jawaharlal Nehru Technological University, Hyd)
                                                                                        Murukambattu,
               CHITTOOR – 517 127
 
 
             CERTIFICATE
                            This is to certify that the project report entitled “A STUDY ON FUNDS
FLOW ANALYSIS OF FOODS & INNS LTD, CHITTOOR.ana” submitted by             Mr.N.
MANJUNTH(07751E0054) in partial fulfillment of the requirement for the award of the degree
of “Master of Business Administration” under JNTU, Hyderabad, is a record of independent
work under taken by him/her during the academic year 2008-2009. This project report has not
been submitted earlier either in part or whole for the award of any other degree/diploma of any
university.
 
 
 
     PROJECT GUIDE                                                    DIRECTOR
Mrs. T. HIMABINDU, M.F.M.        Dr .S.E.V.SUBRAMANYAM, M.B.A, PhD.,
    Department of MBA                                               Department of MBA
 
 
 
 
 
                                                 DECLARATION
 
 
              I, N. Manjunath declare that the study conducted on “A STUDY OF FUNDS FLOW
ANALYSIS OF FOODS & INNS LTD, CHITTOOR” is submitted by me to the department of
business management, Sreenivasa Institute of Technology And Management Studies (JNTU),
is of my own and is not submitted to any university or published at any time before.
 
 
 
 
 
 
PLACE:
DATE:
 
  N.MANJUNATH
                                                                           Reg. No.: 07751E0054
 
 
 
 
 
 
 
                                    ACKNOWLEDGEMENT
 
 
                I am very much grateful to FOODS & INNS LTD for allowing me to carry out my
project work. I am thankful to D.S.N.MURTHY (Financial Manager) for giving me the
permission to do my project work in Foods & inns Ltd.
 
              I would like to thank our principal Dr. T. SAIRAMA M.E., PhD, for his valuable guidance
and enthusiasm shown to me.
             
              I owe a special thanks to our Head of the Department,                               Prof.S.E.V.
SUBRAHMANYAM, M.B.A., PhD
 
I would like to express my deep gratitude to my guide                                       Mrs. T. HIMA
BINDU, M.F.M,  for her guidance and motivation.
                    
 
 
 
 
 
(N.MANJUNATH)
           Reg. No.: 07751E0054
 
 
 
                       STATEMENT OF THE PROBLEM 
 

      Funds flow statement summarizes for a particular period the resources made available to
finance the activities of an enterprise and the uses to which such resources have been put. 

      Funds flow statement is based on accrual concept of profit. The Company prepares a
statement of funds flow to cater Purchase of fixed assets and investments, redemption of
debentures and preference shares and repayment of loans, payment of dividend, payment of tax,
and increase in working capital. 

      It is the responsibility of the organization to maintain a standard level of funds flow neither
excess or deficit. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

                             FINANCIAL MANAGEMENT

 

     Management of funds is an important aspect of financial management. Management of funds

acts as the primary concern whether it may be in a business undertaking or in an educational
institution. Financial management, which is simply meant dealing with management of money
matters.
      According to Phillippatus, "Financial management is concerned with the
managerial decisions that result in the acquisition and financing of short term and long
term credits for the firm".

PROCUREMENT OF FUNDS

1. As funds can be obtained from different sources so procurement of funds is considered as

an important problem of business concerns.
2. Funds procured from different sources have different characteristics in terms of risk, cost
and control.
3. Funds issued by the issue of equity shares are the best from risk point of view for the
company as there is no question of repayment of equity capital except when the
company is under liquidation.
4. From the cost point of view equity capital is most expensive source of funds as dividend
expectations of shareholders are normally higher than prevalent interest rates.
5. Financial management constitutes risk, cost and control. The cost of funds should be at
minimum for a proper balancing of risk and control

 
 

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 and values from one asset of equity to another. Flow of funds
is said to have taken place 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 source of funds and if it results in the decrease of funds it is known as an applications of
funds the term flow of funds refers to the movement of funds in the working capital it is said to
be a source or inflow of funds and if it results in the decrease of working capital, it is said to be
an application or outflow of funds. 

MEANING AND DEFINITION OF FUNDS FLOW STATEMENT  

      Funds flow statement is a method by which we study changes in the financial position in the
business enterprise between beginning and ending financial statement dates. It is a statement
showing sources and uses of funds for a period of time. 

      “A statement of sources and applications of funds is a technical device designed to analyze
the changes in the financial condition of a business enterprise between two dates”. 

      Funds flow statement is called by various names such as sources and application of funds;
statement of changes in financial position, sources and uses of funds, summary of financial
operations, where came in and where gone out statement, where got, where gone statement;
movement of working capital statement movement of funds statement, funds received and
disbursed statement; funds generated and expended statement, funds statement etc. 
 

LIMITATIONS OF FUNDS FLOW STATEMENT 

      The funds flow statement has a number of uses, how ever it has certain limitations also which
are listed below: 

1. It should be remembered that a funds flow statement is not a substitute of an income

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

 
 

2. It can not reveal continuous changes.

 
 

3. It is not an original statement but simply, arrangement of data given in the financial
statements.
4. It is essential historic in nature and projected funds flow statement cannot be prepared

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

 
 

RELATIONSHIP BETWEEN BALANCE SHEET AN AND

PROFIT & LOSS ACCOUNT 
      The balance sheet and the profit & loss account are not two separate and independent
statement but they are related to each other. The profit & loss account is a link between the
balance sheet at the beginning of the period and the balance sheet at the end of the period. We
can easily realize the impact of profit & loss account if we remember that revenue is an inflow of
assets (or outflow of liabilities) and expenses are an out flow of assets (or inflows of liabilities). 
 
 

      Generally, the profit and loss account is prepared to compute net profit. Net profit can also be
computed by comparing the balance sheet at beginning and the end of the period. This fact
emphasizes the role of the profit and loss account as a link between consecutive statements of
financial position. Net profit (or net loss) for a period is equal to the change in owner’s equity
during that period. Thus, as a starting point, the difference in beginning and ending owner’s
equity is the net profit (or net loss). 

PROFIT AND LOSS ACCOUNT 

      Balance sheet is considered as a very significant statement by bankers and other lenders
because it indicates the firm’s financial solvency and liquidity, as measured by its resources and
obligations. However, creditors, particularly bankers and financial analysis in India have recently
started paying more attention to the firm’s earning capacity as a measure of its financial strength.
The earning capacity and potential of a firm are reflected by its profit and loss account. The
profit and loss account is a “score board” of the firms performance during a period of time. The
generally accepted convention is to show one year events in the profit and loss account. Since the
profit and loss account reflects the results of operations for a period of time. It is a flow
statement.  

BALANCE SHEET 

      Balance sheet is the most significant financial statement. It indicates the financial condition
or the state of affairs of a business at a particular moment of time. More especially balance sheet
contains information about resources and obligations of a business entity and about its owner’s
interests in the business at a particular point of time. Thus, the balance sheet reveals the firms
financial position on specific date. In the language of accounting balance sheet communicates
information about assets, liabilities and owners equity for a business firm as on a specific date. It
provides a snapshot of the financial position of the firm at the firms accounting period. The
balance sheet is a stock or status statement as it shows assets, liabilities and owners equity at a
point of time.

LIST OF NON CURRENT OR  PERMANENT CAPITAL

ACCOUNTS 
Non-current or permanent liabilities Non-current or permanent assets
Equity share capital Goodwill
Preference share capital Land
Redeemable preference share capital Building
Debenture Plant & Machinery
Long term loans Furniture & fittings
Share premium account Trade Marks
Share forfeited account Patent rights
Profit & loss account Long-term investment
Capital reserve Debit balance of Profit & loss account
Capital redemption reserve Discount on issue of shares
Provision for depreciation against fixed assets Discount on issue of debentures
Appropriate of profits Preliminary Expenses

a. General reserve Other differed expenses

b. Dividend equalization fund
c. Insurance fund
d. Compensation fund
e. Sinking fund
f. Investment fluctuation fund
g. Provision for taxation
h. Proposed dividend

 
 

LIST OF CURRENT OR WORKING CAPITAL

ACCOUNTS 
Current liabilities Current assets
Bills payable Cash in hand
Sundry creditors or accounts payable Cash at bank
Accrued or outstand expenses Bills receivable
Dividends payable Sundry debtors or accounts
receivable
Bank overdraft Short-term loans and advances
Short term loans, advances and deposits Temporary or marketable
investments
Provision against current assets Inventories or stocks such as

a. Raw materials
b. Work in process
c. Stores and spares
d. Finished goods
Provision for taxation if it does not amount to Prepaid expenses
appropriation of profits.

Proposed dividend(may be current/non-current Accrued incomes

liability)

 
 
 

PROCEDURE FOR PREPARING  A FUNDS FLOW

SATEMENT 
      Funds flow statement is a method by which we study changes in the financial position of a
business enterprise beginning and ending financial statements dates, hence the funds flow
statement is prepared by comparing two balance sheets and with the help of such other
information derived from the accounts as may be needed. Broadly speaking the preparation of a
funds flow statement consists of two parts:

1. Statement or Schedule of changes in working capital funds.

2. Statements of sources and application of funds.

Working capital = Current assets – Current liabilities

1. An increase in current assets increases working capital.

2. A decrease in current assets decreases working capital.
3. An increase in current liabilities decreases working capital and.
4. A decrease in current in current increases working capital.

USES, SIGNIFICANCE AND IMPORTANCE OF FUNDS

FLOW STATEMENT 
 It helps in the analysis of financial operations.
 It throws light on many perplexing questions of general interest.
 It helps in the formation of realistic dividend policy.
 It helps in the proper allocation of resources.
 It acts as a future guide.
 It helps in a appraising the use of working capital.
 It helps knowing the overall credit worthiness of a firm.
 
 
 
 
STATEMENT OF SCHEDULE OF CHANGES IN WORKING CAPITAL
PARTICULARS PREVIOUS CURRENT EFFECT ON WORKING
YEAR YEAR CAPITAL
INCREASE DECREASE
CURRENT ASSETS      
   
Cash in hand    
   
Cash at Bank    
   
Bills receivable    
   
Sundry Debtors    
     
Temporary investments  
   
 
Stocks/Inventories  
 
Prepaid expenses  
 
Accrued Incomes  
 
Total Current Assets   
 
CURRENT LIABILITIES
   
Bills payable

Sundry creditors

Outstanding expenses

Bank overdraft

Short-term advance

Dividend payable

Proposed dividends*
Provision for taxation*   
Working Capital
              Total (CA-CL)  
current  
Net increase or decrease in      
working capital      

* May or may not be a current liability 

 
 

PROFORMA OF A FUDS FLOW STATEMENT 

Statement of Sources and Application of Funds 

  Sources:         Rs

A.Issue of share capital

B.Issue of Debenture
C.Institutional Loans
D.Sale of Investment and other fixed assets
E. Trading profit or funds from operations.

                                                                                                     Total_______

Applications:

a) Payment of share capital

b) Repayment of institutional loans.

c) Redemption of debentures

d) Purchase of Investment and other fixed assets.

e) Non-trading payments

 
                                      Total_______

 
 
 
 
 
 
 
 
 

INDUSTRIAL PROFILE
BACKGROUND OF MANGO INDUSTRY

       The lack of mango market development globally opens a large untapped opportunity for
India to make an organized entry in the fresh mango and mango pulp market. India is well
positioned to capitalize on this opportunity with a very large national production of mangos,
including leading varieties like Alphonso. India has the potential to create a long–term global
market position and to capitalize on the fast growth of mango as a preferred ingredient for the
natural package food industry.

      Additionally, mango is a preferred fresh fruit within the Indian domestic market, as well as
globally. Mango is in strong demand within the worldwide retail sector. The total market value
of Indian mango and mango pulp represents 25% of the value of agricultural and processed food
products exported by India. Moreover, the consumption growth for mangos in the United States
and Europe has average 10–15% per year during the last 5 years. Collectively, these factors
indicate a strong opportunity to position Indian mango and mango products to meet a growing
international demand.

      This accounts for 41% of the estimated worldwide mango production of 25.56 million metric
tons in 2003. Despite this large mango production, India is a minor exporter of mango and
mango products at this time. During the five–year period from 1998–2002, exports of fresh
mangos from India averaged approximately 42.4 thousand metric tons, or only about 0.4% of
mango production during this time frame. Data on exports of Indian mango pulp and juice
products are more limited. Data from 1995 indicated that India exported 37.7 thousand metric
tons of mango pulp.  
 Data from 2001 indicated that India exported 3.2 thousand metric tons of mango juice, but also
imported 2.2 thousand metric tons of mango juice. Collectively, these observations indicate that,
despite being by far the world’s largest mango producer, India exports less than 1% of its mango
crop as fresh mangos or processed mango products. These observations with mango are
consistent with aggregate data available on Indian fruit and vegetable exports.
 

       One barrier to efficient development of the Indian mango industry is an exceedingly

complex supply chain. Within the value chain, a number of buyers and other aggregators operate
at local Minds and APMC to assemble larger lots from the many small producers in any given
region. Associated with this inefficient aggregation process is the application of numerous
commissions as fresh agricultural products trade hands. Numerous stakeholders in India have
expressed concern that this overly complex value chain is a hindrance to effective marketing of
Indian mangos and mango products.

        A recent report from the Indian Ministry of Food Processing Industries further details the
overly complex supply chain and its contribution to costs and post–harvest losses. This report
concludes that it is imperative to streamline the mango supply chain in order to reduce wastage
and raw material costs. (Sources: India Ministry of Food Processing Industries and Rambo bank
Report).

INDIA MANGO & MANGO PULP INDUSTRY DEVELOPMENT

       Through partnerships with mango growers, processors, export organizations, and Indian
government organizations, among others, PFID—F&V is working to strengthen the small and
medium mango grower base by providing capacity building at all levels. 

       Education and training in Good Agricultural Practices and other sanitary standards, as well
as employment of certification systems, will lead to better yields, pesticide use in accordance
with regulations, and a more efficient supply chain. PFID—F&V partnerships will also help
identify and facilitate resources necessary for enhancing the mango supplychain such as cold
storage facilities, improved packing and grading facilities, testing facilities, and logistics
management. Furthermore,

       A further approach will target reduction of waste in the fresh mango chain by developing
high–value mango products and enhancing processing capacity for the domestic market.
Ultimately, these steps will help stabilize prices, increase farmer incomes, and development the
farmer base at commercial and social levels.

MANGO PULP INDUSTRY HOPES 

 o Mango pulp production to reach 75,000 tones by 2010
o Mango is raised in 36,000 hectares in Krishna Giri district
o Mango pulp processed annually is 50,000 tones
o Farmers have to go to Bangalore, as there is no testing facility in Krishnagiri
o Farmers are not getting fair price, even if there is a rise in prices in global market

MANGO MARKET DEVELOPMENT

      PFID-F&V India has continued to forge and strengthen public and private partnerships to the
point that, now, just over one year from project start-up, notable results are beginning to show in
the form on increasing contributions from partnership members.    
 

      Dr. Thiagarajan, MSU/PFID-F&V, together with our two India-based coordinators, recently
met with the Agricultural Product Export Development Authority (APEDA) as well as the
Federation of Indian Chambers of Commerce (FICCI) and the National Institute of Marketing
Boards (NIAM) to follow up on each of their commitments to promote the Indian Mango
Industry. 

GOALS OF INDIA MANGO MARKET DEVELOPMENT

   Currently, only 1% of the total mango production in India is exported. One reason contributing
to this poor export performance is that overseas buyers have stricter standards than are currently
accepted within the Indian domestic market. PFID—F&V will facilitate the development and
implementation of quality and safety standards which will meet the demands of the export
market.

o PFID—F&V will partner with relevant Indian organizations in establishing a

global image for the Indian mango starting with the establishment of quality
standards and Good Agricultural Practices (GAPs) standards for India.
o PFID partnerships in India can facilitate the development of a distribution
network in European and other countries where the value realizations for mango
and mango pulp are the highest.
o PFID partnerships can assist mango growers and processors in developing an
"India" brand image for fresh mango and processed mango products that meet
consumer preferences. The predominant mango varieties grown in India make
this product unique in country and abroad.
 o After demonstrated success in developing a strengthening the market
development of mangoes, PFID India liaisons can easily adapt this approach to
the further development of other fruit and vegetable products in India.

FOOD PROCESSING

      Food processing involves any type of value addition to agricultural or horticultural produce
and also includes processes such as grading, sorting, and packaging which enhance shelf life of
food products. The food processing industry provides vital linkages and synergies between
industry and agriculture. The Food Processing Industry sector in India is one of the largest in
terms of production, consumption, export and growth prospects. The government has accorded it
a high priority, with a number of fiscal relief’s and incentives, to encourage commercialization
and value addition to agricultural produce, for minimizing pre/post harvest wastage, generating
employment and export growth. India's food processing sector covers a wide range of products
fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries,
plantation, grain processing and other consumer product groups like confectionery, chocolates
and cocoa products, Soya-based products, mineral water, high protein foods etc.   
 

COMPANY PROFILE
HISTORY OF FOOD AND INNS  Ltd.

        The division combines people with vast experience in agric-trading with the FOODS AND
INNS Ltd Group’s credibility to justify its premier standing in the trading arena. The division
was set up in 1967 and since then has handled a wide range of products - such as Sesame Seeds,
Processed Fruits etc.

    FOODS AND INNS  Ltd began its fruit processing operations in early 70s.However fruit
processing operations have been given a special thrust since the last season with an emphasis on
developing strategic partnerships across the value chain especially fruit procurement and
processing. FOODS AND INNS  Ltd has established it's presence as a reliable and competitive
exporter to Coca Cola, USA, Western Europe, Far East, Middle East etc.

BACKGROUND OF FOOD AND INNS  Ltd .

 
       Situated at Chittoor in Andhra Pradesh, the mango belt in India, FOOD AND INNS  Ltd
(FIL) is a 100% Export Oriented Unit (EOU) processing Tropical Fruit Purees, Concentrates and
Fresh Fruits FOOD AND INNS Ltd was started keeping in mind the local farming community
wealth. The farming community is an integral part and forms the backbone of the organization.
In its effort to be a forerunner in the chosen areas of business in terms of best practices in quality
and technology, FIL plans to benefit armors, the industry and the nation in a phased manner. 

       FOODS AND INNS  Ltd  believes in empowering farmers by providing technical
assistance from research institutes in the food industry to support the farmers in achieving better
quality and higher yields by developing the gardening and harvesting techniques. Further to
educating farmers with latest horticultural techniques, FOODS AND INNS LTD is encouraging
farmers to mobilize the fruits directly to the factory, thereby minimizing the fruit handling
damages and high value realizations.

PRINCIPAL MANUFACTURING DIVISIONS AND PRODUCT RANGE

 
   
DIVISION PRODUCT RANGE
   
Aseptic Purees and concentrates of Mango, Guava & Papaya
   
Canning Institutional packs of mango products, Guava & Papaya Paste.

Consumer packs of Indian vegetables & catering packs for mango Chutneys.

   
Frozen Frozen fruit purees & IQF chunks, frozen IQF vegetables & frozen Indian
snacks like Samosa and Ptras.
   
Spray Drying Fruit powder like Mango, Banana, Orange, Tomato and beat root.

BOARD OF DIRECTORS
S.No Name of the Director  

     

1 Mr.Utsav Dhupelia Director

2 Mr. D.B. Engineer Solicitor
3 Mr.Raymond Simkins Foreign Director

4 Mr.C.M.Maniar Solicitor
5 Mr. D.D. Trivedi Ex. IIM Professor
6 Mr. M. B. Dalal Director

      Mr. Utsav Dhupelia , a Chartered Accountant from U.K., looking after the routine affairs of
the company, is the brain and brawl for taking the company’s turnover from Rs.5 crores (USD1.1
MIO) to Rs.160 Crores (USD 16 MIO) giving the status of
government recognized EXPORT HOUSE..   
 

       With the back up of technical and managerial support staff, the state of art technology
implementation, innovative R & D and Lab facilities, the doyen guidance of Mr.Utsav coupled
with the contribution of other directors, the company is poised for a steady and continuous
growth graph moving upwards in all Para meters.

 
 
 

PRODUCTS
PRODUCTS OF FRUITS
    

   

   

  ALPHONSO        TOTAPURI             GUAVA            PAPAYA

 
 

PRODUCTS OF VEGETABLES

   

 
 

FRUIT SEASONS

  Ja Fe Ma Ap Ma Jun Jul Au Sep Oc No De

n b r r y e y g t t v c
Mang              
o
Papay                
a
Guava                
 
 

  
  
  
  
 

 
 

 
Market Presence

o European Union
o United States of America
o Canada
o Australia
o Middle East including Iran & North Africa
o Japan & South Korea

 
 

SAHER OF COUNTRIES MARKET

  
 

FACILITY

       FOODS AND INNS Ltd processing facility is located in Chittoor, spread over an area of 15
acres. This place has been earmarked to host Integrated Food Complex of International
standards. The facility currently has a tropical fruit Puree / Concentrate processing plant and the
pack house for preparing the Fresh Fruits & Vegetables.

 
      

CUTTING EDGE TECHNOLOGY

       FOODS AND INNS Ltd plant is equipped with state-of-the-art fruit puree processing aseptic
filling line of SIG- Mizzen, Italy to produce natural fruit pulps & concentrates. The plant has one
of the India's single largest fruit processing lines -10 TPH ripen fruit processing with Aseptic
Packaging.

INITIATIVES SPAN THE FOLLOWING DISCIPLINES

 o PLC operated equipments for better control over monitoring and operations with
supervisory units.
o Two stage washing of fruits to ensure HACCP quality requirement.
o Two-stage sterilization to retain the natural flavor and aroma.
o High speed advanced Mono block aseptic filling machine supplied by SIG
Mizzen.
o Integrated Enterprise Resources Planning system is in place to automate business
processes and provide data for analysis and reporting, allowing a closer control
on quality and operations.

                               

EFFICIENT PLANT LAYOUT

o Minimal drop in power and steam transfer.

o Straight-line process flow design to maintain the hygiene• and control in
respective areas.
o Special food grade self-leveling epoxy flooring to maintain optimum hygienic
conditions.
o Curved corners and food grade epoxy painted walls to avoid dust accumulation
and to facilitate easy washing.
o Advanced high raise insulated roofing with double layer GI Sheeting with air
extractors to maintain temperature inside the plant.
o Utility lines are routed outside the plant to keep the interiors free from dust
accumulation.

                        

 
 

VALUABLE INDUSTRIAL EXPERTISE

       FOOD AND INNS Ltd is backed with strong support and service from its team of highly
qualified technical personnel and domain experts with perceptive knowledge and skill. Powered
by priceless hands-on experience these professionals are upgrading themselves continuously to
identify and introduce improved and innovative product offerings that would delight customers
worldwide and comply with the leading global quality standards. 

PURE & CONCENTRATE FACILITY

 

       The fruit processing aseptic line is from SIG-Mazzini of Italy. The line has a capacity to
process 10 metric tones per hour ripened fruits. The processing line is fully integrated and
controlled by PLC.

PACK HOUSE

       FOODS AND INNS (P) Ltd has a set up a Fresh fruit and Vegetable processing facility
from Grief, Spain. Fresh fruits including mangoes, bananas are processed along with tropical
vegetables like Okra, Egg plant, Lemon, Bitter gourd etc. The facility also holds ripening
chambers, pre cooling chambers and cold storage to handle fresh fruits and vegetables. 

VAPOUR HEAT TREATMENT

       To enable Fresh Mango exports to countries like Japan and Korea, FOOD AND INNS Ltd
has commissioned the VHT facility. This ensures irradiation of the fruit flies in the fresh fruit.
FOOD AND INNS Ltd is the first private organization to set up this facility in the country.

 
 

WATER MANAGEMENT

       Water is an essential & precious natural resource. It is a nature’s gift. Without water there is
no life on the earth. It is as important to the fruit processing industry as to the living being. But,
water is becoming scarce year by year due to increase n its consumption in industries &
agriculture sectors & indiscriminate use /wastage by human beings, therefore, it needs a
integrated& scientific approach for its management to use it so that undesirable wastage is
avoided which helps us to save water for right utilization .

STAGE OF USE OF WATER TO THE BEST EFFECT IN OUR FACTORY

       Our main source of water is bore wells. The water is potable. Water from all bore wells is
collected in a sump. From there it is pumped to over head tank to supply to various locations of
use. To manage appropriately & conserve the water, we are taking following steps at various
locations of its use:
 o FRUIT WASHING

      The water is re-circulated after filtration up to it becomes dirty. This water is chl0rinated to
control the contamination by continuous dosing of chlorine in the washing tub.

o STEAM GENERATION

 Water for boiler feeding is treated in water softener to reduce the hardness. The steam
condensate of evaporator is recycled to boiler to save water & energy as condensate will have
high temperature.

 
 
 

OUR CERTIFICATIONS INCLUDE

o HACCP (FOOD SAFETY CERTIFICATION) BY TUV, GERMANY

o ISO 9001:2000 (QUALITY MANAGEMENT SYSTEM) BY TUV,
GERMANY
o KOSHER BY STAR-K, USA
o SURE GLOBAL FAIR (SGF)
o HALAL CERTIFICATION

CUSTOMER FOCUS

       Loyalty and a strong relationship in business are built out of years of experience in a
particular industry. FOODS AND INNS Ltd expertise in the business and its contacts with
Agents\Brokers, Blender-bottlers, End User, Off-shore logistical service providers has made the
supply chain process extremely competitive. Given our renewed emphasis on this product line
we are strengthening relationships in key markets across the buyer spectrum, understanding
unique requirements and delivering value to select global customers.   
 FUTURE PLANS

 Development of the Indian market for foods and inns.

 Thrust of exports.
 Expansion in 4th Aseptic manufacturing capacity.
  Use of IT as a tool to further Business goals.
 Setting up of a Central R&D lab.

Backward integration for improved quality of raw materials using contract farming/ organic
cultivation.

                                         METHODOLGY
 
 

The data is of two type:

 Primary data
 Secondary data

PRIMARY DATA:

Personal interview and discussion was conducted for the collection of data.

SECONDRY DATA:

      Secondary Data are already present one and it is second hand information. We collect
through books magazines, newspaper, journals & websites etc.,

In this study, the secondary data was collected from the company like

1. From financial department of the company retaining to the last 4 years.

2. Annual reports of the company during 2004-2008.
3. Financial statement of the company.
 4. Company records related to financial management.
5. From various financial management next books.

 
 
 
 
 
 
 
 
 
 
 

OBJECTIVES
 

1. To analyze the changes in assets and liabilities from the end of one period of the time to
the end of another period of time

2. To know various needs for which funds were obtained during a particular period based in
which these funds where employed.

3. To understand flow of funds in current or non-current accounts.

4. To find out the sources from which additional funds were derived and the use to which
their sources were put.

5. To analyze the changes of financial position of  Foods and Inns Limited enterprises
between two dates.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

      SCOPE OF THE STUDY

 

      The present study focuses as sources of funds and application of funds for a period of time.
The study is confirmed to find out the changes in the financial position of the Foods and Inns
Limited between the beginning and ending financial date.

      It is a technical device designed to analyze the changes in the financial condition of the
business enterprises between two dates.

      This funds flow statement is a statement which indicates various means by which the funds
have been obtained during a certain period and the ways to which these funds have been used
during the period.

      The term funds used here means working capital that is the excess of current assets over
current liabilities. It is an essential tool for the financial analysts and is of primary importance to
the financial management.

 
      Now a days it is being widely used by the financial analyst credit granting institutions and
financial managers. The basic purpose of the funds flow statement is to reveal the changes in the
working capital on the two balance sheet dates. It helps in the analysis of financial operations. It
helps in the formation of realistic dividend policy. It helps in the proper allocation of resources.
It helps in appraising the use of working capital and finally it acts as future guide.

 
 
 
 
 
 
 
 
 

      LIMITATIONS

 
 

1. It should remember that a funds flow statement is not a substitute of an income statement
or a balance sheet.

2. It provides only some additional information as regards changes in working capital

3. It cannot reveal continuous changes.

4. The study based on the available annual reports and internal information only

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

STATEMENT OF CHANGES IN WORKING CAPITAL

Particulars 2004 2005 Effect on Working

Capital
Increase Decrease
Current Assets(C.A):        
Inventories 7,13,67,793 12,81,66,354 5,67,98,561  

S- debtors 4,29,93,288 7,53,95,773 3,24,02,485

Cash & bank b/s 74,19,293 1,31,16,915 56,97,622

Loans & Advances 12,08,62,668 12,43,06,658 34,43,990  

Investment 2,00,37,665 2,02,53,865 2,16,200

Total C.A 26,26,80,707 36,12,39,565    
Current Liabilities(C.L):        

Current Liabilities 7,89,31,000 9,76,61,293   1,87,30,293

Provisions 62,60,500 87,66,558   25,06,058
Total C.L 8,51,91,500 10,64,27,851    
Net Working Capital(W.C) (C.A-        
C.L) 17,74,89,207 25,48,11,714

Increase in W.C 7,73,22,507     7,73,22,507

TOTAL 25,48,12,714 25,48,12,714 9,85,58,858 9,85,58,858
         
 

TABLE NO: 4.1

FUNDS FLOW STATEMENT FOR THE YEAR 2005

TABLE NO: 4.2

 
Sources Amount Applications Amount
Reserves & Surplus 2,56,90,675 Purchase of Fixed Asset 5,81,19,086
Deferred Tax Liability 27,07,963    
Secured &Unsecured Loans 10,12,39,341 Increase in Working Capital 7,73,22,507

Miscellaneous 4,25,968    

Deferred Tax Assets 75,060

Capital   W-I-P 53,02,586

Decrease in Working Capital         ----    

       
       
       
  13,54,41,593   13,54,41,593
 

Interpretation:                  

                          Comparing the year 2004 and 2005 the statement of changes in working capital
shows the increasing balance. In the particular year the current assets are increased then the
current liabilities.

                          As a result the funds flow statements, the main sources of funds are secured and
unsecured loans, differed tax asset and liabilities. The firm utilizing this fund for the purchasing
of fixed assets. The financial position of FOODS AND INNS LTD in this particular year is good

         STATEMENT OF CHANGES IN WORKING CAPITAL

TABLE 4.3
Particulars 2005 2006 Effect on Working
Capital
Increase Decrease
Current Assets(C.A):        
Inventories 12,81,66,354 12,97,31,772 15,65,418  

S- debtors 7,53,95,773 8,38,39,716 84,43,943

Cash & bank b/s 1,31,16,915 1,90,38,055 59,21,140

Loans & Advances 12,43,06,658 16,95,49,938 4,52,43,280  

Investment 2,02,53,865 2,07,12,685 4,58,820

Total C.A 36,12,39,565 42,28,72,166    
Current Liabilities(C.L):        
 
Current Liabilities 9,76,61,293 12,60,94,310   2,84,33,017
Provisions 87,66,558 1,36,95,608   49,29,050
Total C.L 10,64,27,851 13,97,89,918    
Net Working Capital(W.C)        
(C.A-C.L) 25,48,11,714 28,30,82,248
Increase in W.C 2,82,70,534     2,82,70,534
  28,30,82,248 28,30,82,248 616,32,601 61,63,601
 
 

  

               

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

FUNDS FLOW STATEMENT FOR THE YEAR 2006

TABLE NO : 4.4

 
Sources Amount Applications Amount
Reserves & Surplus 1,72,91,856    
Deferred Tax Liability 1,01,57,385 Purchase of Fixed Asset 94,43,100
Secured &Unsecured Loans 1,11,00,748 Capital   W-I-P 11,06,355
Miscellaneous 2,70,000 Increase in Working Capital 2,82,70,534
Decrease in Working Capital         ----    
       
       
       
  3,88,19,989   3,88,19,989
 
 

Interpretation:
 

      Comparing the year 2005 and 2006 the statement of changes in working capital shows the
increasing balance. In the particular year the current assets are increased then the current
liabilities.

      As a result the funds flow statements, the main soureces of funds are secured and unsecured
loans, differed tax liabilities. The firm utilizing this fund for the purchasing of fixed assets and
capital WIP and the financial position of FOODS AND INNS LTD in this particular year is
good.

 
 

         STATEMENT OF THE CHANGES IN WORKING CAPITAL

TABLE NO: 4.5

Particulars 2006 2007 Effect on Working

Capital
Increase Decrease
Current Assets(C.A):        
Inventories 12,97,31,772 16,29,75,024 3,32,43,252    
9,61,805
S- debtors 8,38,39,716 8,28,77,911 18,06,671

Cash & bank b/s 1,90,38,055 2,08,44,726

Loans & Advances 16,95,49,938 14,47,75,180   2,47,74,758
1,06,00,000
Investment 2,07,12,685 3,13,12,685
Total C.A 42,28,72,166 44,27,85,526    
Current Liabilities(C.L):        
 
Current Liabilities 12,60,94,310 10,20,16,222 2,40,78,088  
Provisions 1,36,95,608 2,92,82,571   1,55,86,963
Total C.L 13,97,89,918 13,12,98,793    
Net Working Capital(W.C) (C.A-        
C.L) 28,30,82,248 31,14,86,733
Increase in W.C 2,84,04,485     2,84,04,485
  31,14,86,733 31,14,86,733 6,97,28,011 6,97,28,011
 
 
              FUNDS FLOW STATEMENT FOR THE YEAR 2007

TABLE NO: 4.6

 
Sources Amount Applications Amount
Reserves & Surplus 2,71,37,838    
Deferred Tax Liability 57,47,268 Purchase of Fixed Asset 5,11,30,616
Secured &Unsecured Loans 5,41,02,778 Capital   W-I-P 74,52,783
Miscellaneous         ---- Increase in Working Capital 2,84,04,485
Decrease in Working Capital         ----    
       
       
       
  8,69,87,884   8,69,87,884
 
 
 

Interpretation:

                                          Comparing the year 2006 and 2007 the statement of changes in
working capital shows the increasing balance. In the particular year the current assets are
increased then the current liabilities.

                                As a result the funds flow statements, the main sources of funds are secured
and unsecured loans, differed tax liabilities. The firm utilizing this fund for the purchasing of
fixed assets and capital WIP and the financial position of FOODS AND INNS LTD in this
particular year is good

Particulars 2007 2008 Effect on Working

Capital
Increase Decrease
Current Assets(C.A):        
Inventories 16,29,75,024 19,61,81,156 3,32,06,132    
77,06,250
S- debtors 8,28,77,911 7,51,71,661 2,84,89,213

Cash & bank b/s 2,08,44,726 4,93,33,939

Loans & Advances 14,47,75,180 14,98,42,311 50,67,130  
 96,00,000
Investment 3,13,12,685 2,17,12,685
Total C.A 44,27,85,526 49,22,41,752    
Current Liabilities(C.L):        

Current Liabilities 10,20,16,222 19,48,90,704   9,28,74,482

Provisions 2,92,82,571 6,64,510 2,86,18,061  
Total C.L 13,12,98,793 19,55,55,214    
Net Working Capital(W.C) (C.A-        
C.L) 31,14,86,733 29,66,86,538  

decrease in W.C   1,48,00,196 1,48,00,196  

  31,14,86,733 31,14,86,733 11,01,80,732 11,01,80,732
 

           STATEMENT OF CHANGES IN WORKING CAPITAL

TABLE NO: 4.7

 
 
 
 
 

           

                     FUNDS FLOW STATEMENT FOR THE YEAR 2008

TABLE NO: 4.8

 
Sources Amount Applications Amount
Reserves & Surplus 2,74,91,433 Purchase of Fixed Asset 3,32,46,513
Deferred Tax Liability 34,11,085    
Secured &Unsecured Loans   Increase in Working Capital --------
8,01,93,229
Decrease in Working Capital      

1,48,00,196      
       
  31,14,86,734   31,14,86,734
 

Interpretation:

                             

                                 Comparing the year 2007 and 2008 the statement of changes in working
capital shows the decreasing balance. In the particular year the current assets are decreased then
the current liabilities.

                                As a result the funds flow statements, the main sources of funds are secured
and unsecured loans, differed tax liabilities. The firm utilizing this fund for the purchasing of
fixed assets. The financial position of FOODS AND INNS LTD in this particular year is good

 
 
 

                                       FINDINGS
 
 

1. The working capital is increased year by year except last year. Apart to this the surplus
funds also increased.

2. It is founded that the company is holding share capital stably.

3. The differ tax liability is increased in 2005-2006.Then it fall down.

4. The company was highly purchased the fixed assets in the year 2005&2007.Then in
2006&2008 the company used low funds for purchasing of fixed assets.

5. The company receives the secured and unsecured loans indicate fluctuating position.
 

6. The working capital is increased in 2005 to 2007 with a low variation in the year the
working capital will be decreased.
7. The working -in- progress rapidly increased by large variation with the amount.

8. The investment is increased year by year up to 2007. In 2008 it is decreased.

 
 
 
 
 
 
 
 
 
 
 
 

SUGGESTIONS
 

 The company may increase their share capital it helps to get more strength in financial
position.
 In 2008, the statement shows decreasing working capital in the company. It is to require
raising short terms funds to solve the financial problems.
 Tax liabilities should also be maintained in a standard manner.
 Regularly use funds in purchase of fixed asset it make profitability.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

CONCLUSION
 
 
 

      It can be concluded that in FOODS & INNS PRIVATE LTD The working capital in
increased year by year except last year. And its main sources of funds are deferred tax liability,
secured& unsecured loans. The main applications of funds are purchase of fixed assets & capital
W.I.P.The over all performance of FOODS &INNS PVT LTD is very good.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

    Income statement of Foods and Inns Limited for the years

                                           31-3-2004 and 31-3-2008     

      (Rupees)

 
Particulars 31-3-2004 31-3-2005 31-3-2006 31-3-2007 31-3-2008
Net sales 61,98,28,811 79,52,51,258 97,41,37,384 1,21,85,00,922 1,46,20,02,142
(-)Cost of goods sold 31,47,24,651 44,44,35,161 51,01,55,033 68,84,37,718 93,40,28,168

Gross profit 30,51,04,160 35,08,16,097 46,39,82,351 53,00,63,204 52,79,73,974

(-)Operating expenses 29,47,64,297 29,84,58,636 45,37,28,308 48,18,88,406 52,84,66,511

  1,03,39,863 5,23,57,461 1,02,54,043 4,81,74,798 (4,92,537)

(+)Operating income 11,96,588 16,64,640 4,74,36,825 4,53,99,528 7,97,63,278

Operating profit 1,15,36,451 5,40,22,101 5,76,90,868 9,35,74,326 7,92,70,741

(-)Non-operating 2,80,73,160 3,24,92,176 3,80,14,076 4,79,42,843 5,43,35,870

expenses
  (1,65,36,709) 2,15,29,925 1,96,76,792 4,56,31,483 2,49,34,871
(+)Non-operating 39,63,754 95,26,969 1,19,34,020 54,39,562 2,27,48,838
income
Profit / loss before tax (1,25,72,955) 3,10,56,894 3,16,10,812 5,10,71,045 4,76,83,709

(-)Provision for tax 55,92,616 48,06,581 1,32,12,385 2,13,78,471 1,75,17,595

Profit / loss after tax (1,81,65,571) 2,62,50,313 1,83,98,427 2,96,92,574 3,01,66,114

 
 
 
 
 
 
 

               Balance Sheet of Foods and Inns ltd.for the year

                                          31-3-2004 and 31-3-2008       

                                                                              (Rupees)

Particulars 31-3-2004 31-3-2005 31-3-2006 31-3-2007 31-3-2008

ASSETS:          
1.Currentassets loans&advances            

    Inventories 7,13,67,793 12,81,66,354 12,97,31,772 16,29,75,024 19,61,81,156

    Sundry debtors 4,29,93,288 7,53,95,773 8,38,39,716 8,28,77,911 7,51,71,661

    Cash&bank balances 74,19,293 1,31,16,915 1,90,38,055 2,08,44,726 4,93,33,939

    Loans & advances 12,08,62,668 12,43,06,658 16,95,49,938 14,47,75,180 14,98,42,311

                         TOTAL CA 24,26,43,042 34,09,85,700 40,21,59,481 41,14,72,841 47,05,29,067

2.Fixed assets 20,69,24,175 26,50,43,261 27,44,86,361 32,56,16,977 35,88,63,490
   Capital work in progress 61,74,275 8,71,689 19,78,044 94,30,827 10,19,80,257
                                  TOTAL FA 21,30,98,450 26,59,14,950 27,64,64,405 33,50,47,804 46,08,43,747
3.Invesments 2,00,37,665 2,02,53,865 2,07,12,685 3,13,12,685 2,17,12,685
4.Deffered tax assets 75,060 - - - -
5.Miscellanious expenditure 6,95,968 2,70,000 - - -
TOTAL ASSETS(1+2+3+4+5) 47,65,50,185 62,74,24,515 69,93,36,571 77,78,33,330 95,30,85,499
LIABILITIES:          
6.Current liabilities, provisions:          
   Current liabilities 7,89,31,000 9,76,61,293 12,60,94,310 10,20,16,222 19,48,90,704
    Provisions 62,60,500 87,66,558 1,36,95,608 2,92,82,571 6,64,510
                                  TOTAL CL 8,51,91,500 10,64,27,851 13,97,89,918 13,12,98,793 19,55,55,214
7.Loan funds:          
   Secured loans 18,94,68,368 29,65,15,257 30,98,19,235 37,06,83,028 44,54,90,381
   Unsecured loans 4,54,67,688 3,96,60,141 3,74,56,910 3,06,95,896 3,60,81,772
                                 TOTAL 23,49,36,056 33,61,75,398 34,72,76,145 40,13,78,924 48,15,72,153
8.Share holders funds:          
   Share capital 1,22,58,200 1,22,58,200 1,22,58,200 1,22,58,200 1,22,58,200
   Reserves & surplus 14,41,64,429 16,98,55,104 18,71,46,960 21,42,84,798 24,17,76,231
                                 TOTAL 15,64,22,629 18,21,13,304 19,94,05,160 22,65,42,998 25,40,34,431
9.Deffered tax liabilities - 27,07,963 1,28,65,348 1,86,12,616 2,19,23,701
TOTAL LIABILITIES(6+7+8+9) 47,65,50,185 62,74,24,515 69,93,36,571 77,78,33,330 95,30,85,499
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

BIBLIOGRAPHY
 

The following books and websites have been referred by me during my project work.

1. Financial Management

                  I.M.PANDY

 
2. Financial Management

                  KHAN AND JAIN

3. Management Accounting

                  M.Y.KHAN

   WEB SITES

                  WWW.GOOGLE.COM

                  WWW.FOODSANDINNS.COM