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INTRODUCTION

Finance is the lifeblood of every business activity without which the wheels of modern business organization system cannot be greased. Finance management is managerial activity, which is concerned with planning and controlling of the firms financial Resources. Finance is a scarce resource and it has to be managed efficiency for the successful functioning of any company. Several companies have come to grief mainly because of inefficient management of finance, in spite of other favorable conditions. Funds flow statement is an important tool and is widely used in the hands of financial analysts and managers for analyzing the financial management of a company. Funds keep on moving in a business, which itself based on going concern concept. In a narrow sense, it means inflow and out flow of cash only and a flow statement prepared on this basis is called as cash flow statement. Such a statement enumerates net effects of the various business transactions on cash and takes into account receipts and disbursement of cash. In a broader sense, the term fund refers to money values in whatever form it may exists. Here, funds mean. All financial resources. But in a popular sense, the term funds means working capital i.e., excess of current assets over current Liabilities. The word fund here means net working capital.

Definition:
A statement of sources and Application of Funds is a technical device designed to analyze the changes in the financial condition of a business enterprise between two dates. ---R.A.Foulk

EXISTING SYSTEM / PRACTICES IN THE ORGANIZATION 1. General : The financial statements are prepared under the historical cost convention in accordance with the provisions of the Companies Act, 1956 and materially comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India except to the extent disclosed in the following notes. 1) Fixed Assets and Depreciation: a) Gross Block: Fixed Assets are stated at cost of acquisition inclusive of inland freight, duties and taxes and incidental expenses related to acquisition with due adjustments for cenvat /VAT credits. b) Depreciation: i) Depreciation is provided on fixed assets used during the year under straight-line method at the rates specified in the schedule XIV of the Companies Act, 1956. j) Assets acquired and costing Rs.5, 000 or less are being depreciated fully in the year of addition / acquisition.

3) Sales:

Sales include excise duty, wherever applicable and rebate, discounts, claims, expenses incurred on consignment sales etc., are excluded there from. Sales on consignment and expenses there against are being accounted for on receipt of account sales from respective consignee.

4) Investments: Long-term investments are stated at cost less permanent diminution, if any in value. Current investments are carried at lower of cost or fair value. 5) Inventories: c) Inventories are valued at lower of the cost or net realization value. Cost in respect of raw materials, stores and spares have been calculated on weighted average basis, which includes expenses incidental to procurement of the same. d) By-products are valued at net realizable value. e) Cost in respect of finished goods includes manufacturing expenses, factory and administrative overheads and excise duty. f) Cost in respect of work in progress represents, cost incurred up to the state of completion. 6) Revenue Recognition: All expenses and income to the extent considered payable and receivable respectively unless specifically stated to be otherwise are accounted for on mercantile basis. 7) Foreign Currency Transactions: Foreign currency assets and liabilities are translated at exchange rates prevailing at the year-end or at forward contract

rate, as applicable. The loss or gain thereon and also on exchange differences on settlement of the foreign currency transactions during the year are adjusted to the Profit and Loss Account under respective heads of accounts. The difference between forward rate and exchange rate at the date of transaction is recognized as income or expenses over the life of the contracts.

8) Retirement Benefits: g) Provident & Family Pension Fund: The Company contributes to the employees provident & family pension fund maintained under the employees provident fund scheme by the Central Government. h) Leave Encashment Benefits: Accruing liability towards leave encashment benefit is provided on the basis of actual eligibility as per the Companys rules. i) Gratuity: Accruing liability towards gratuity is provided on the basis of the assumption that such benefits are payable to all eligible employees at the end of the accounting year.

9) Miscellaneous Expenses: Preliminary expenses and expenditure in connection with issue of shares are being written off over a period of ten years.

10) Borrowing Costs: Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of cost

of such asset till such time as the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily required a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred.

11) Contingent Liabilities: Contingent liabilities are generally not provided for and are disclosed by way of notes to the accounts.

12) Segment Reporting: The accounting policies adopted for segment reporting are in line with the accounting policies adopted in financial statements. 13) Export Benefits: Export benefit arising on account of entitlement for duty free imports is accounted for through import materials. Such benefits under duty entitlement pass- books are accounted for on accrual basis.

14) Government Grants and Other Claims: Revenue grants including subsidy / rebates, refunds, claims etc., are credited to Profit and Loss Account under Other Income or deducted from the related expenses. Grants relating to fixed assets are credited to capital Reserve Account or adjusted in the cost of such assets as the case may be, as and when the ultimate reliability of such grants etc., are established / realized. 15) Income Tax: Provision for tax is made for both current and deferred taxes. Current tax is provided on the taxable income using the applicable tax rates and tax laws. Deferred tax assets and liabilities arising on account of timing

differences, which are capable of reversal in subsequent periods are recognized using tax rates and tax laws, which have been enacted or substantively enacted. The basis for financial planning, analysis and decision-making is the counting reports. Two basics financial statements prepared for the purpose of external

reporting to owners, investors and creditors are; balance sheet \annual report \statement of financial position & profit and loss account \income statement) Balance sheet:The Balance sheet shows the financial condition or the state of affairs of a firm at a particular point of time. More specifically the Balance sheet contains detailed information about the firms Assets and Liabilities. Assets represents economic resources possessed by the firm while the liabilities are the amounts payable by the firm. The Balance sheet gives concise summary of firm resources and obligations and measures the firms liquidity and solvency. The

Profit and Loss Accounts:


The profit and Loss A\c shows the profitability of the firm by giving details about income and expenses. It is simply income and expenditure account. Revenues are benefits, which customers contribute to the firm in exchange of goods and services. The cost of economics resources used in providing goods and services to the customer are called expenses. Profit and Loss Account provides a concise summary of firms revenues and expenses during the period of time and measures its profitability.

The above two statements provide useful information regarding the operations of the firm. They fail to explain the financial data required for financing and investing decisions by the management i e causes for changes in Assets and Liabilities and Owners equities. They do not indicate the movement of funds between Sources and uses from the end of the period to the end of next periods. It is therefore, necessary to prepare an additional called Funds Flow Statements to overcome the above difficulties. Funds flow Statements:The statement showing the sources and Application of the funds known as Funds Flow Statement. It is a condensed report of the how the financial resources have been used during the periods covered by the statement as it summarizes the financial activities for period of time.

USES, SIGNIGNIFICANCE AND IMPORTANCE OF FUNDS FLOWSTATEMENTS:-

Analysis of Financial Operation:- A Funds Flow Statement shows how the resources have been obtained and the uses to which they are put. The funds statements determining the financial consequences of business operation. It also useful ion guiding whether the firm has expanded at too fast rate and whether financing is strained, it also point out to the effectiveness with which the management has handled working during the period under review.

Evaluation of the firms:- This statement can consist the financial manager in planning intermediate and long-term finance for obtaining sources in the further and determining how they are to be used. That is analysis of the major sources of funds in the past reveals what positions of the firms growth was financed internally and what position externally.

Comparison with the budget:- The statement defines the past flow of funds
and gives insight in to the evolution of the present situation. It provides certain useful information about the firms. Financial policies to the outside world like bankers, government, etc; Funds Flow statement is becoming popular with; the management because it helps to explain why in spite of earning sizable amount of profits, the company is experiencing difficulty in making payments to creditors, the rate of dividend on equity; shares can not be increased and the bank balance is getting thinner.

The Funds flow Statements has an analytical value and is an important planning tool. It helps in guiding the destiny of the business by enabling the executives to visualize the movements of funds that constantly takes place. This statement also helpful in working capital requirements. It highlights the future need for funds and provides sample time to work out suitable arrangements. The funds flow statement shows what portion externally. The analysis of funds flow statement for the future is externally available to the executive in planning the intermediate and long term financing of the firm.

USES OF FUNDS FLOW STATEMENT:It helps in the analysis of financial operations of the company. It reveals the financing and investing policies followed by the company. It answers many un answered questions of general interests. It helps in proper allocation of resources. It is an important management tool for the financial planning. It helps in knowing the overall credit worth users of the firm. Procedure for Preparing Funds Flow Statement:The Fund Flow Statement consists of the following:1. Preparation of statement of changes in Working Capital. 2. Calculation of Funds / (loss) From operations. 3. Finding out the hidden transactions or changes in non-current assets and noncurrent liabilities. 4. Preparation of statement showing Sources and Application of Funds. 9

Statement of Changes of 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 Statements or Schedule of Changes Working Capital.

While preparing a schedule of changes in Working Capital it should be noted that: 1. (a) An increase in Current Assets increase in Working Capital. (b) A decrease in Current Assets decrease in Working Capital. (c) A increase in Current Liabilities decrease in Working Capital (d) A decrease in Current Liabilities increase in Working Capital. (e) An increase in Current Assets and increase in Current Liabilities does not affect Working Capital. (f) A decrease in Current Assets and decrease in Current Liability does not affect Working Capital. (g) Changes in fixed (no-current) assets and fixed (non-current) liabilities affect working capital. 2. The changes in all current 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

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period is more than the working capital at the beginning thereof. The difference is expressed as increase in working capital. On the other hand, if the working capital at the end of the period is less than at the commencement, the difference is called decrease in working capital. Working Capital = Current Assets Current Liabilities

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. a. Stock-in-trade or inventories; b. Debtors; c. Payments in advance or prepaid expenses; d. Stores; e. Bills receivable; f. Cash at bank; g. Cash in hand; h. Work-in-progress, etc.

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:

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a. Trade Creditors; b. Accrued or outstanding expenses; c. Bills Payable; d. Income-tax payable; e. Dividends declared; f. Bank overdraft.

Note:-Some experts are of the opinion that as bank overdraft has a tendency to
become more or less permanent source of financing, and hence it need not be included among current liabilities. Statement of Sources and Application of Funds: 1. Funds from Operations: It is an internal source of funds. operations are to be calculated as per the method stated above. 2. Funds from long-term loans:- Long-term loans such as debentures, borrowings 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. 3. Sale of fixed assets: Sale of land, buildings, and long-term investments will result in generation of funds. 4. 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 sources 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 Funds from

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well as issue of securities to pay for them be revealed in Funds Flow Statement. 5. 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 reduces 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 same way, increase in current liabilities mean lesser payment, so retaining funds is also a source. Funds Flow Statement Sources Issue of Shares Rs. xxx Applications of Funds Redemption of Redeemable Preference Shares Issue of Debentures xxx Redemption of Debentures xxx Rs. Xxx

Long term

xxx

Payment of Other Long-term loans

xxx

Borrowings

xxx

Purchase of Fixed Assets

xxx

Sale of Fixed Assets

xxx

Operating Loss

xxx

Operating Profit

xxx

Payment of Dividends taxes, etc.

xxx

Decrease in Working xxx Capital

Increase in Working Capital (*)

xxx

(*) Only one will be there.


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METHODOLOGY AND DATABASE

The methodology employed for doing the present study is that the information is collected from primary and secondary sources. The information was used to calculate the funds flow on the basis of these analysis interpretations were made.

Sources of data
Sources of primary data The primary data was collected mainly with the interactions and discussions with he companys Executives. Sources of secondary Data Most of the calculations are made on the financial statement of the company and the company provided financial statements for 3 years. Referring standards texts, reference books and Internet collected some of the information regarding to the theoretical aspects.

PERIOD OF THE STUDY It is proposed to study the sources & Application of funds in SUJALA PIPES, Rachagunneri-517641, srikalahasthi for 3 years i.e., from the financial years 20092010,2010-2011,and 2011-2012.

NEED FOR THE FUNDS FLOW STATEMENT


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The sources of funds for a business could be from both the long term and short term. Any business to survive and growth in the competitive market, funds are needed not only to meet its long-term financial needs but also short-term requirements. The long-Term sources comprising of share capital, long term debt inclusive of debentures etc., while the short term sources comprises of the short term loans, working capital collection from commercial banks, loans from the call money market and among these fall the sales which has two phases the cash sales and the credit sales. The study is aimed at analyzing the financial position of SUJALA PIPESand also identifying the inflow and outflows of funds i.e., source and application of funds. This study will evaluate the way of the firms financial condition how effectively the funds are mobilized and utilized in the company for the financial year ending 31.3.03, 31.3.04 and 31.3.05. This study will thus help the company in maintaining better financial performance, which is followed by a blend of findings and suggestions.

STATEMENT OF THE PROBLEM & HYPOTHESIS It is proposed to analyze the liquidity position of the company and also the timing of availability and requirement of funds to match or not. The problem of the statement is difference between the two shows

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(i.e., sources and applications of study) the net change in the working capital during the period. It is assumed that bad payment collection system do not lead to optimization of inflow & outflow of funds and profits in the company. It is general principal followed by the financial managers all over the world that the inflow of funds are classified as long- term and short term. It is imperative that the business enterprise uses long term funds for long term purpose and short-term funds for short-term purposes. However a firm, which uses long term funds for log term purposes will have lot of business problem. The reason for this is the long term funds proposed by the company generally as a fixed cost to it. In case, if this funds are not utilized for long -term purpose to generate cash, the company will have to pay interest without matching income and thus leading to mismatch of inflow funds and outflows funds.

Scope of the study


This study refers to only individual enterprise i.e., SUJALA PIPES. In fact, an examination of all components of Current Assets will enable to Asses the efficiency of working capital management as all these components are interrelated.

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This study is on Funds Flow position in the company. It is based on two statements namely (1) Schedule of changes in Working capital and (2) Funds Flow statement. The scope of two statements is given below:(1) Schedule of changes in working capital: this statement is prepared with Current Liabilities as appearing in the balance sheet of the Company. Current Asses means: Cash in Hand. Cash at bank, Bills Receivables, Sundry Debtors, Inventory, other short-term loans and advances etc. Current Liabilities means: Bills Payable, Sundry creditors, bank over draft, short term loans, provision for taxation, proposed dividend, interest payable etc. (2) Funds flow statement: this statement is also prepared with sources of funds & application of funds as appearing in the balance sheet of the company. Sources of funds means: issue of equity and preferance shares, funds from operation, sale of fixed assets (plant, land & building, furniture and etc.), issue of debentures, Decrease in working capital, sale of investment Etc.

Application of Funds means:Purchase of fixed assets (plant, land & building, furniture, and etc), increase in working capital, redemption of preference share capital & debentures, Purchase of Investment, Fund for operation, repayment of bank loan. This study on Lancos schedule of changes in Working capital, Funds Flow statement for the past 3 years.

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OBJECTIVES OF THE STUDY

To study and analyze the changes those have taken place in the financial position of the company.

2 3

To analyze fund flow operation. To changes in the amount of working capital of the company. 18

4 5 6 7

To identify sources and application of funds. To find out the operating efficiency of the organization. To measure the overall financial performance of SUJALA PIPES. To offer suitable suggestions for better performance of the company.

LIMITATIONS OF THE STUDY

1) DISCLOSURE OF OVERALL VARIATION ONLY: - the funds flows statement shows overall change in working capital and not the variations in individual items, including on most significant item cash, constituting the working capital.

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2) MANUPULATION BY MANAGERS: - since non monitory assets such as inventories are included in working capital the management may manipulate the net change in working capital and the resources of funds from operation of applying any of the widely varying methods of inventory valuation most suited to it.

3) Grouping of heterogeneous items: - the concept of the working capital bundles monetary and non monetary current asset, together. Consequently it includes widely dice gent items such as cash, receivables, inventories, prepayments etc and hence lacks homogeneity. Particularly, stock of standard product ready for sale, may

reasonable be treated as a liquid resources, but often a large part of the inventory represents work in progress throughout the various stages of production. This is not proper to refer to inventories of repayments as funds.

COMPANY PROFILE
Origin Sujala Pipes Private Limited manufacture of Ploy Vinyl Chloride Pipes under the brand name of Nandi Pipes. The company was started in the year 1977 by a Mechanical Engineer Mr. S.P.Y Reddy, at Nandyal, Kurnool District, who had just left a Plumbers job in BABA ATOMIC RESEARCH CENTER (BARC) and wanted to do something on his own, and he did. The initial investment is Rs. 5Lac and presently, the annual turnover of the whole Nandi group is Rs.200 cores, out of which Rs.100crores is from Sujala 20

Pipes Pvt. Limited. The present production capacity is 22000 Metric Tones of pipes per annum. Nandi pipes are the largest selling PVC pipes brands in South India.

Growth

S.P.Y Reddy in the earlier days of establishment of the company, used to manufacture Galvorised iron pipes and Cast iron pipes. Later he switched over to manufacturing of PVC pipes. It has been a massive growth from 1988. The punch line of Nandi pipes is ENDURING THE QUALITY THROUGH GENERATION

NANDI GROUP OF ORGANSITIONS 1. Sujala Pipes Private Limited, Nandyal Nandi Special Blue Casing Pipes Nandi Electrical PVC pipes Nandi SWR Pipes Nandi Flux Pipes Nandi Garden Tubes Nandi Krishi Pipes Nandi LDPE Pipes Nandi HDPE Pipes

2. Srikanth Water Containers, Nandyal 3. Mahanandi SWR Fitting, Nandyal 21

4.

Nandi Solvent Cement, Nandyal

5. Mahanandi Mineral Water, Nandyal 6. . Nandi Milk Diary Products, Nandyal

Expansion of the Market Development Nandyal Region(Polythene Pipes) Rayalaseema Region(PVC Pipes) Rayalaseema And Telengana Karnataka And Andhra Pradesh Karnataka, Andhra Pradesh, Tamilnadu Karnataka, Andhra Pradesh,Tamilnadu,Kerala Karnataka, Andhra Pradesh And Tamilnadu,Goa And Maharastra

THE FOLLOWING DATA SHOWS THE MARKET DEVELOPMENT FOR PVC PIPES OF SUJALA PIPES PRIVATE LIMITED.

Apart from manufacturing of PVC Pipes, it also runs a partnership form of Showmya Fittings, manufacturing PVC Pipes fitting at bidder.

Variety Out of five varieties of products offered by the organization, Nandyal Pipes has got excellent local popularity as it symbolizes the region of the sacred bull. The remaining got their impact in other states.

S.No

Brand Name

Level of Standard 22

NANDI

On par with ISI Standards

RANI

On par with ISI Standards

JALA

Less than of ISI Standards

USHA

Below ISI Standards

Blue Thread Pipes

Least Quality

Quality
Quality is the dominating factor for the growth of sales and Sujala Pipes follow the world class Quality Control Management Techniques in quality control laboratory to achieve the best quality pies. Stringent quality control tests are regularly conducted to ensure top quality products for multifarious application like

1. Manufactured on par with IS 4985-2000 2. Conforms to tests on par with IS 12235-1986 3. Maximum Specific Gravity of 1.46 4. Maximum ash content of 8% when tested on par with ISO 3451

Sizes
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Various sizes ranging form 1/2 to 10 inches offered to customers. But for the purpose of cubic space utilization in trucks while transport organization is adopting the technique like pipe in pipe.

Warranties
No written are given to customers except an assurance that the product is reliable.

Payment period
The company adopts zero credit policy and goods are not delivered unless cash remittance is made.

CHANNELS OF DISTRIBUTION Sujala Pipes Private Limited has got two levels of distribution. 1. Zero level Channel Distribution 2. Single level Channel Distribution

Zero Level Channel Distribution MANUFACTURE CUSTOMER

Single Level Channel Distribution MANUFACTUREDEALER CUSTOMER Sujala Pipe Private Limited has an extensive network of 300 dealers to Andhra Pradesh and who are directly serviced by company sales force 500 dealers in South India who are directly served by the company. Coverage At present Andhra Pradesh part of Southern States of Karnataka, Thailand and Kerala are in ambit of Sujala Pipes Private Limited. Transportation 24

The companys major strength is its transportation vehicles. Huge investment is made on transportation vehicles. A unique cash out flow justifies itself by providing good reputation of the company through customer service. The unique strength of the organization enables the delivery system to be efficient. This event helps the dealer to reduce inventory levels to the minimum. The companys is equiped with sophisticated laboratory to carry on tests to ascertain outgoing quality level of the pipes. Nandi pipes have got ISI Trademark, which speaks for itself for the pipes.

A number of statistical quality control techniques are applied to sustain the quality level of the product. As the company is located in Industrial Estate of Nandyal, it is facilitated with good network, which network telex and fax machines. Company also availing the Electrical Data Processing Technology. Personnel Department

The personal department consists the details of the company of the organization and all the managers and workers from production, Marketing, finance, transportation, quality departments will report to the Managing and Executive Director about all the dealings of the company. Other than executives there are nearly 900 working in the organization. The recruitment as selection of personnel is made by a panel consisting of managing director in Executive Director, and managers of concerned departments. Apart from the attractive salaries, company provides health care facilities etc. Finance department Though initially the company approached the external sources for financial aid, now the financial status of the company is very sound and is being run only with self-finance expecting for loans taken on hypothecation of machinery and stock from SBI, Nandyal Branch. The financial department is headed by the financial manager with the help of four account officers and other clerks of the department. The company follows cash is 25

paid and these transactions are looked after by the Financial Department with the help of marketing department.

Marketing Department Marketing Manager Gets the information from Assistant Marketing Manager is and he is headed by Sales representatives and salesman. Marketing mix and advertising particular of Sujala Pipes Private Limited shows the department effective management of the marketing department in the organization.

INDUSTRY PROFILE

ABOUT PIPE INDUSTRY The term plastic is derived from the Greek word PLASTICKOS, which means, to access rubber and the other natural product. Resins are both natural and synthetic. Natural resins range from pitch and asafetida to frankincense, myrrh and amber synthetic resins replaced natural resins. The first plastic PRAKESINE later called XYLONITE, was invented by an English chemist and inventor ALEXANDER PARNES in 6.

It was JOHN W. HYAH of the USA who recognized in 1869, the vital palatalizing effect of camphor and named the product CELLULOID.

LEO HENDRICK BAEKELAND, American Chemist, commerciality produced the first computer synthetic plastic from phenol and formaldehyde in. 26

A significant property of most of the plastics is that they softy when hea ted. So that they can be formed into shapes, they became rigid on cooling. This property is derived from the physical structure of Poly Vinyl Chloride which consists of a net work of very large molecules called polymers. Long chains that separate under heat sufficiently to slide apart, but on cooling became firmly entangled again.

All plastics are manufactured by some method of polymerization i.e. the process of forming the long chains and networks of molecules.

The two major types of plastics are:-1. Thermosetting resins 2. Thermoplastics resins.

1. Thermosetting resins They became insoluble and infusible on heating. They are phonetic resins, Furan resins, amino plastics, Alkyls and polyesters of unsaturated acids, Epoxy resins. Polyethanes and silicones. 2. Thermoplastics resins These can be melted and solidified repeatedly, unlikely thermosetting resins. They include cellulose derivatives and additional polymers. Others type4 of resins include oil soluble or modified resins, plastics such as casein and lignin extract from natural products and special application synthetics such as resins used as adhesives and as additives to paper and textiles. The raw materials for plastics include coal and cellulose, but the chief source is petroleum. Plastics are formed by a variety of means, including extrusion blow molding between rollers, thermosetting in hydraulic pressures. 27

INDUSTRIAL PLASTICS Plastics are used for the industrial purpose is called industrial plastics. It is of 2 types 1. Structural foams 2. Sheets and films. 1. Structural foams It is of 2 types a) Rigid Foams b) Flexible Foams

Rigid Foams Rigid Polyether foams in sandwich foams have wide applications a building component because of the stiffness imparted by the thick foam center for a given Weight. They are also best insolvent known today and so have wide application in fitted slabs and are formed into cavities at the building site. Very important se .of rigid foam is for furniture parts to reproduce wood structures.

Flexible Foams Flexible foams, usually polyether Urethane are made in slab roam up to 8 feet (2.4 meters) in which and, as much as 5 feet (1 .5 meters) high, these are cut to required shapes or sizes or molded. Used almost exclusively shapes or sizes or molded. Used almost exclusively by the automobile industry for crash pads, arm sets and dash board covers.

2. Sheets and Films


These include Vinyls Fluroplastics and cellulose acetate vinyl. 28

Plasticized Poly Vinyl Chloride by a calendaring process, can sawn, heat sealed or electronically sealed, it is used for apparel, door curtains. Protective clothing and the like.Made in many colors, transparent and translucent or opaque. Poly Vinyl Chloride can be with pressure sensitive adhesives and printed with decorative patterns. Thicker sheet is colored and embossed for women handbags, luggage and seat covers. This film is used for packaging, especially for meat and fruits. If biaxial stretched, it forms a shrink film that retracts up to 60%. Another important use is a laminate for printed paper. Flooring tiles, largely made of PVC are built up by lamination and decorated either by printing or by rolling in color chips. The common title is vinyl asbestos, pressed into sheets on calendars and ten embossed and cut into titles. Rigid PVC sheet as high dimensional stability and flame redundancy and is often used in corrugated form for building construction. Partitions, drainage gutters, industrial lightening panels are the other uses. Styrene film is widely used for rigid containers, especially packing, molding, laminating by press and casting. Formed plastics are produced by forming gas bubbles in the molten material. Plastic products are further shaped and finished by means of ranging from mechanical through laser machining, ultrasonic welding and radiation processing. Vinyl Chloride, discovered in 1815, is formed by the reaction of acetylene with hydrochloride acid. The polymer Poly Vinyl Chloride (PVC) was first produced in 1912. Plastic research and manufacture was proceeding on a considerable scale in the US study of polymers in the laboratory of E.l DuPont De Nemours and company from 1928 onwards, which led to the super polyamide or Nylon. Vinyl Chloride is made from ethylene and chlorine. Though acetylene can also be used. Then polymer is mainly processed in a highly Plasticized form with varying degrees of flexibility, by a calendaring, extraction molding, often form of dry blends, mixtures made below temperature from polymer plasticizer and pigments. Plasticizers are chosen to maintain flexibility at low temperatures. The range of applications of flexible Poly Vinyl Chloride is enormous and covers flooring, wire insulation, home furnishing, piping etc.

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Acrylonitrile - butanide - styrene possesses a wide range of properties notably scuff resistance, high impact strength at lower temperatures, making it suitable for high, quality luggage , refrigerator linings, food and detergent, containers because of its chemical resistance to heat. Thick acroconitrale - butanide - styrene sheet is used for sports car, bodies and automobile doors. Nylon films mostly from nylon-6.6 are ideal for food packaging, because of strength, impermeability to oils and greases and high meltin9 point. As such Nm is stream strippable: they find many uses in hospitals. They are frequently used fl laminations. Acrylic films have resistance to ultra violet light and external exposure, their prime use in surfacing laminations. Present revolutionary trend in water management speaks about rip irrigation, which is developed in Israel and is practiced by Agriculture Based Nation in the world. Drip Irrigation greatly deals with water management techniques and uses pies as core tools for implementation with the service of this sort, pipes leads the way in strengthening the hands of countrys economy.

PVC PIPES IN INDIA Chief occupation in India is agriculture. For the developing country like India, modernization of the agriculture practices has a pivotal place in improving the economy states and the process of modernization includes usage of high reductive tools and agriculture practices. By using pipes, water can be transported efficiently with lesser no wastages, from the place where there is plenty of water available to the place where there is no less scarcity necessity of water. Pipes have been manufactured in India from the 1960s on imported lines and thereafter indigenous plants were also established. There are few pip manufacture up to 1978-1 979 and production capacity was increased drastically during 197-83. Cement pipes were the conventional pipes used for irrigation in the lift irrigation schemes. Now a days PVC pipe replaced the conventional pipes and they constitute almost 90% in this respect (because of break downs, difficulty in movability etc. The usage of poly vinyl chloride pipes in agricultural fields has lessened the water seepage which was predominant in earlier days.

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The Government of India allowed the imports of sophisticated machinery of technology, which are not available indigenously. The companies Europe and West Germany have competition in machinery producing plastics and it is an essential need for them to carry out continuous research for the up-to-date technology, which gives higher output and good quality products. The state Government of Andhra Pradesh is using rigid PVC pipes for irrigation and water supplies for the past few years. The State Government is producing PVC pipes through APSID (Andhra Pradesh State Irrigation Development Corporation) for its lift irrigation schemes and other development schemes. The Panchayatraj Department is procuring pipes for the public water supply schemes. The main distributors, sub distributors and individual connections can use these Pipes

PIPES MANUFACTURES IN ANDHRA PRADESH The major PVC manufactures in Andhra Pradesh, Nandi Pipes Finolex Pipes Supreme Pipes Monarch Pipes Jam Sudhakar Pipes Sri Lakshmi Venkataswara PVC Pipes Hasthi pipes

FACTORS CONTRIBUTING TO THE BOOM OF PVC PIPES MARKET Less weight Non corrosiveness Excellent pressure Resistance Simple installation portability in handing Super weathering and Economical

PRESENT MARKET SITUATION OF PVC PIPES Existence of large number of firms 31

Product differentiation Freedom of entry and exit of firms Easy availability

BENEFITS OF PVC PIPES

Corrosion Resistance Amuse to galvanic or electrolyte corrosion Chemical Resistance PVC pipes are not attacked by low or high concentration of acids. Oxidizing agents, alkalis oils fats and halogens Maintenance Free No painting coating required Fire Resistance Self extinguishing

Flexibility Flexibility in underground piping Variety of Joining Methods Cementing, heat fusing, threading, flanged compression fitting. Biological Resistance Fit for high purity water applications and resistant to rodent attack.

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LIQUIDITY RATIO

1. Current Ratio:
Current assets include cash and those assets, which can be converted into cash within a year, such as marketable securities, debtors and inventories. Current liabilities include creditors, bills payable, accrued expenses, short-term bank loan, income tax liability and long term debt maturing in current year. The Current ratio is a measure of the firms short-term solvency. A current ratio of 2 to 1 or more is considered satisfactory. The current ratio represents a margin of safety, for creditors. The higher the current assets in relation to current liabilities, the more the firm ability to meet its current obligations. Firms with less than 2 to 1 current ratio may be doing well, while firms with 2 to 1 or even higher current ratios may be struggling to meet their obligation. It is a test of quantity, not quality. The current ratio is a

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crude and quick measure of the firms liquidity.

Current Assets Current Ratio = -----------------------------------Current Liabilities

Table: 1

Year 2008-09 2009-10 2010-11 2011-12

Current Assets 11547.42 15475.74 19393.41 34459.30

Current Liabilities 6472.17 8520.42 13086.24 18233.12

Ratio 1.78 1.81 1.48 1.88

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QUICK RATIO
This ratio establishes a relationship between quick, or liquid, assets and current liabilities. An asset is liquid if it can be converted into cash immediately reasonably soon without a loss of value. Cash is the most liquid and included in quick assets are book debts and marketable securities. Inventories normally require some time for realizing into cash. the quick ratio is found out by dividing quick assets by current liabilities.` Generally a quick ratio of 1:1 is considered to represent a satisfactory current financial condition. A company with a high value of quick ratio can suffer from the shortage of funds it is has slow paying, doubtful and long- duration outstanding book debts. On the other hands a company with a low value of quick ratio may really be 35

prospering and paying its current obligation in time if it has been turning over its inventories efficiently. The quick ratio remains can important index of the firms liquidity Liquid Assets Quick Ratio = --------------------------------Current Liabilities Liquid Assets = Current Assets Inventories.

Table: 2 Year 2008-09 2009-10 2010-11 2011-12 Liquid Assets 5732.07 8988.43 7024.18 18190.04 Current Liabilities 6472.17 8520.42 13086.24 18233.12 Ratio 0.88 1.05 0.53 0.99

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3. ABSOLUTE LIQUID/CASH RATIO:


It is suggested that it would be useful, for the management if the liquidity measure also takes into account reserve borrowing power. As the firms real debt paying ability depends not only on cash resources available with it but also on its capacity on its capacity on borrow from the market at short notice. Absolute liquid assets include cash in hand and at bank and marketable securities or temporary investments. This ratio may be expressed as under:

Absolute liquid assets ABSOLUTE LIQUID RATIO= ---------------------------------Current liabilities

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4. NETWORKING CAPITAL RATIO:The difference between Current Assets and Current Liabilities excluding short term bank borrowings is called Net working capital .It is sometimes used as a measure of a firms liquidity. It is considered that, between two firms, the one having the larger Net working capital has the greater ability to meet its current obligations. This is no necessary so; the measure of liquidity is a relationship, rather than the difference between Current Assets and Current Liabilities.

Net working capital Net working capital ratio = ------------------------------------Net Assets

Net working capital = Current Assets - Current Liabilities

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Table:4 Year NET WORKING CAPITAL 2008-09 2009-10 2010-11 2011-12 5025.25 6955.32 6307.17 16226.18 11547.42 15475.74 19393.41 34459.30 0.43 0.44 0.32 0.47 NET ASSETS Ratio

Interpretation: It is inferred from the above table that the net working capital should be increased in the manner for 5 years it means that the company can increase the working capital in future also.

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SUJALA PIPES BALANCE SHEET FOR THE YEAR 2008-09. (Rs.in. Lakhs)
31st mar08 (Rs. in lakhs) I) Sources of Funds 1) Shareholders Funds a) Share Capital b) Reserves & Surplus 2) Loan funds a) Secured Loans b) Unsecured Loans Total II) Application of funds 1) Fixed Assets a) Gross Block b) Less: Depreciation Net Block Capital Work in Progress 2) Investments 3) Current Assets, Loans and Advances. a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Loans and Advances Less: Current Liabilities & Provisions a) Current Liabilities b) Provisions Net Current Assets 4) Miscellaneous expenditure (to the extent not written off or adjust) Profit & Loss Account Total 31st mar09 (Rs. in lakhs)

5191.23 385.97

5191.23 35.97

3691.52 2004.22 11272.94

2855.27 1826.19 4681.46

7039.98 2373.82 4666.16 57.04

7069.46 2718.85 4350.61 719.09 235.54

2752.56 2619.99 1669.89 332.21 7374.65 3536.64 40.39 3797.62 20.58 2731.54 11272.94

1193.26 2011.67 629.03 338.81 4172.77 2828.57 66.55 1277.65 11.14 3314.63 9908.66

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STATEMENT OF CHANGES IN WORKING CAPITAL 2008-09

Particulars
A) Current Assets Inventories Sundry Debtors Cash and Bank Loan and advances Total of Current Assets (A) B) Current Liabilities Current Liabilities Provisions Total of Current Liabilities (B) Working Capital (A-B)

2008

2009

Increase (+)

Decrease (-)
1559.29 608.32 1040.84

2752.55 2619.99 1669.88 332.22 7374.64

1193.26 2011.67 629.04 338.81 4172.78 6.59

3536.65 40.39 3577.04

2828.58 66.55 2895.13

708.07 26.15

3797.6

1227.65 2519.95 2519.95 3234.61 3234.6

Decreasing in Working Capital 3797.6

3797.6

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FUNDS FLOW STATEMENT


Sources Decrease in Working Capital Rs. Lakhs Application 2519.96 Purchase of Fixed Assets Capital work in progress Payment of secured loans Payment of unsecured loans Purchase of Investments Fund for operation 2519.96 Total Rs. Lakhs 29.49 719.09 836.25 178.02 178.49 578.62 2519.96

Total

ADJUSTED PROFIT & LOSS A/C Dr.


Particulars To Preliminary Expenses Written off To Depreciation Rs. Lakhs 9.43 345.03 Particulars By Balance B/d By Amount withdrawn from reserves

Cr.
Rs. Lakhs 2731.54 1516.17

To Fund for operation To Balance c/d Total

578.62 3314.63 4247.71

Total

4247.71

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SUJALA PIPES BALANCE SHEET FOR THE YEAR 2009-10.


31st mar09 (Rs. in lakhs) I) Sources of Funds 1) Shareholders Funds a) Share Capital b) Reserves & Surplus 2) Loan funds a) Secured Loans b) Unsecured Loans Total Application of funds 1) Fixed Assets a) Gross Block b) Less: Depreciation Net Block Capital Work in Progress 2) Investments 3) Current Assets, Loans and Advances. a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Loans and Advances Less: Current Liabilities & Provisions a) Current liability b) Provisions Net current assets 4) Deferred tax assets 5) Miscellaneous expenditure (To the extent not written off or adjusted) 6) Profit &loss account 31st mar10 (Rs. in lakhs)

5191.24 35.97 2855.28 1826.20 9908.69

3976.36 2160.18 10723.23 5404.59 22264.36

II)

7069.47 2718.85 4350.62 719.09 235.54 1193.26 2011.67 629.04 338.81 4172.78 2828.58 66.55 1277.66 11.15 3314.63 9908.69

17884.47 4648.10 13236.37 2652.95

5294.05 4098.66 447.49 1462.76 11302.96 5052.57 572.72 5677.67 683.48 13.89 22264.36

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STATEMENT OF CHANGES IN WORKING CAPITAL 2009-10

Particulars A) Current Assets Inventories Sundry Debtors Cash and Bank Loan and advances Total of Current Assets (A) B)Current Liabilities Current Liabilities Provisions Total of Current Liabilities (B) Working Capital (A-B) Increasing in Working Capital

2009

2010

Increase (+)

Decrease (-)

1193.26 2011.67 629.04 338.81 4172.78

5294.05 4098.66 447.49 1462.76 11302.96

4100.79 2086.99 181.55 1123.95

2828.58 66.55 2895.13

5052.57 572.72 5625.29

2223.99 506.17

1277.65 4400.02

5677.67 4400.02

5677.67

5677.67

7311.73

7311.73

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FUNDS FLOW STATEMENT Sources Sale of Shares Secured Loans Unsecured loans Sale of Investment Deferred Tax Assets Fund from operation Total Rs. Lakhs 1214.88 7866.95 3578.39 235.54 683.48 3569.64 17148.88 Total 17148.88 Application Increase in working capital Purchase of Fixed Assets Capital work in progress Rs. Lakhs 4400.02 10815.00 1933.86

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ADJUSTED PROFIT & LOSS A/C


Dr Cr

Particulars To Reserved amounts To Depreciation To Balance c/d Total

Rs. Lakhs 4957.76 1929.25 6887.01

Particulars By Balance B/d By Provision for preliminary exp. Fund from operation Total

Rs. Lakhs 3314.63 2.74 3569.64 6887.01

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SUJALA PIPES BALANCE SHEET FOR THE YEAR 2010-11.


I) Sources of Funds 1) Shareholders Funds a) Share Capital b) Reserves & Surplus 2) Loan funds a) Secured Loans b) Unsecured Loans 3) Deferred tax liability (net) Total II) Application of funds 1) Fixed Assets a) Gross Block b) Less: Depreciation Net Block Capital Work in Progress 2) Investments 3) Current Assets, Loans and Advances. a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Loans and Advances Less: Current Liabilities & Provisions a) Current Liabilities b) Provisions Net Current Assets 4)deferred tax asset 5) Miscellaneous expenditure ( to the extent not written off or adjust) Total 31st mar10 (Rs. in lakhs) 3976.36 2160.18 10723.23 5404.59 22264.36 31st mar11 (Rs. In lakhs) 3976.36 3804.74 10886.36 9588.74 424.17 28680.37

17884.47 4648.10 13236.37 2652.95 5294.05 4098.66 447.49 1462.76 11302.96 5052.57 572.72 5677.67 683.48 13.89 22264.36

20021.36 5417.03 14604.33 6015.09 589.83 7075.18 7197.89 247.72 1616.75 16137.54 8090.45 586.14 7460.95 10.17 28680.37

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STATEMENT OF CHANGES IN WORKING CAPITAL 2010-11


Particulars A) Current Assets Inventories Sundry Debtors Cash and Bank Loan and advances Total of Current Assets (A) B)Current Liabilities Current Liabilities Provisions Total of Current Liabilities (B) Working Capital (A-B) Increasing in Working Capital 2010 2011 Increase (+) 1781.13 3099.23 199.77 153.99 Decrease(-)

5294.05 4098.66 447.49 1462.76 11302.96

7075.18 7197.89 247.72 1616.75 8090.45

5052.57 572.72 5625.29 5677.67 1783.28 7460.95

586.14 8676.59 7460.95 629.5

3037.88 13.42

1783.28 7460.95 5034.35 5034.35

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PROFIT AND LOSS ADJUSTMENT ACCOUNT FOR THE YEAR ENDED 2010-11 Dr. Cr.
Particulars To General Reserve To Depreciation To deferred tax (424.17+683.48) To Miscellaneous Expenditure To Balance c/d Total Rs. 1500.00 768.93 1107.65 3.72 748.77 4129.07 Particulars By Balance b/d By Funds from operation Rs. 604.21 3524.86

Total

4129.07

FUNDS FLOW STATEMENT Sources Secured Loans Unsecured Loans Rs. lakhs 163.13 4184.15 Applications Purchase of fixed assets Capital Work in Progress Purchase of investments Increase in working capital Total Rs. lakhs 2136.89 3362.4 589.83 1783.28 7872.4

Funds from operation 3524.86

Total

7872.4

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SUJALA PIPES BALANCE SHEET FOR THE YEAR 2011-12.


31st mar11 (Rs.in. Lakhs) 3976.36 3804.74 10886.36 9588.74 424.17 28680.37 31st mar12 (Rs.in. Lakhs) 3976.36 3993.06 9244.82 15069.11 618.06 32901.40

I) Sources of Funds 1) Shareholders Funds a) Share Capital b) Reserves & Surplus 2) Loan funds a) Secured Loans b) Unsecured Loans Deferred tax liability(net) Total II) Application of funds 1) Fixed Assets a) Gross Block b) Less: Depreciation Net Block Capital Work in Progress 2) Investments 3) Current Assets, Loans and Advances. a) Inventories b) Sundry Debtors c) Cash & Bank Balances d) Loans and Advances Less: Current Liabilities & Provisions a) Current Liabilities b) Provisions Net Current Assets 4) Miscellaneous expenditure (to the extent not written off or adjust) Total

20021.36 5417.03 14604.33 6015.09 589.83 7075.18 7197.89 247.72 1616.75 16137.54 8090.45 586.14 7460.95 10.17 28680.37

25035.39 6510.29 18525.70 5604.02 9194.04 6706.59 350.67 2070.42 18321.76 9202.11 354.42 8765.23 6.45 32901.40

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STATEMENT OF CHANGES IN WORKING CAPITAL 2011-12


Particulars A) Current Assets Inventories Sundry Debtors Cash and Bank Loan and advances Total of Current Assets (A) B) Current Liabilities Current Liabilities Provisions Total of Current Liabilities (B) Working Capital (A-B) Increase in Working Capital 2011 2012 Increase (+) 2118.90 102.95 453.67 Decrease (-)

7075.18 7197.89 247.72 1616.75 16137.54

9194.08 6706.59 350.67 2070.42 18321.76

491.30 -

8090.45 586.14 8676.59 7460.95 1304.28 8765.23

9202.11 354.42 9556.53 8765.23 8765.23

1111.66 231.72

1304.28 2907.24 2907.24

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PROFIT AND LOSS ADJUSTMENT ACCOUNT FOR THE YEAR ENDED 2011-12 Dr. Cr.
Particulars To General Reserve To Depreciation Preliminary expenses Written off To Balance c/d Rs.in. Lakhs 188.32 1093.26 3.72 942.66 2227.96 Particulars By Balance b/d By Funds from operation Rs.in lakhs 748.77 1479.19

2227.96

FUNDS FLOW STATEMENT


Sources Unsecured Loans Capital Work in Progress Sale of investment Funds from operation Rs. 5480.37 411.07 589.83 1479.19 7960.46 Applications Purchase of Fixed Asset Investment Increase in Working Capital Rs. 1641.55 5014.63 1304.28

7960.46

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FINDINGS:

Working Capital
1 In 2008-09, the company has generated Rs.2519.96 lakhs as internal sources of funds, which worked out to be 100%of the total sources of funds. 2 During 2009-10 the company utilized Rs.4400.02 lakhs towards finance of the working capital which worked out to be 35.65% 3 During 2010-11the companies utilized RS.1783.28 lakhs towards finance, which worked out to be 22.65%of the total application of funds utilized.

During the study period, it is observed that the first (2007-08) year working capital generated funds and in their latter two latter two years it has utilized funds to met its working capital requirements.

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FUNDS FROM OPERATION:

In 2008-09 the company had generated loss on funds for operation amounted Rs. 578.62 lakhs. This consisted 22.96%of t0tal funds.

In 2009-10 the company had generated funds from operation amount to Rs.3569.64 lakhs. This consisted 20.81% of total funds.

3 During the year 2010-11 lf analyses, the company had generated funds from
operation amount Rs.3524.86 lakhs.

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SUGGESTIONS: 1) A fresh look into the extension of product line.


2) Steps should be initiated in order to cut down the expenses of the company which are found to affect to the maximum in all the years of study. 3) Efficient of assets utilization for revenue generation is suggested. 4) Improving the sales performance is desirable. For this, a dynamic team should be designed, which; can project the company by its extensive and result oriented marketing activities enabling the company to complete internal markets. 5) Better utilization of sources of funds is suggested for getting maximum benefits.

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BIBLIOGRAPHY 1) Financial Management I.M. Pandey 2) Financial Management S.N.Maheswari 3) Financial journals

WWW.GOOGLE.COM

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