Analyze Cash Flow

Cash Flow Analysis
CHAPTER-I
INTRODUCTION
Financial Management is a goal-oriented activity. It has been described as the
blend of art and science and through which the important decisions of what to invest
in, how to finance it, how to maximize some appropriate objective, are taken. The
broad and dynamic field of finance affects the financial lives of virtually every
business- financial and non-financial, private and public, large and small, profit-
seek2ing and nonprofit. The performance of the firm is measured in financial terms;
the success of the firm depends on how it is perceived by, and reacts to, external
economic markets. The field of finance is much more complicated and faster faced
today. New technologies and relaxed regulations are changing the institutional setting.
Financial markets are volatile, interest rates can move sharply up or down in a very
short-term period. Knowledge of all these developments and their impact is necessary
for the effective management and financial viability of the modern business firms.
Financial managers need to know how effective decisions can be made, and
ineffective ones be avoided.
Cash flow is essentially the movement of money into and out of your business. It's
the cycle of cash inflows and cash outflows that determine your business' solvency.
Cash flow analysis is the study of the cycle of your business' cash inflows and
outflows, with the purpose of maintaining an adequate cash flow for your business,
and to provide the basis for cash flow management.
Cash flow analysis involves examining the components of your business that affect
cash flow, such as accounts receivable, inventory, accounts payable, and credit terms.
By performing a cash flow analysis on these separate components, you'll be able to
more easily identify cash flow problems and find ways to improve your cash flow.
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Cash Flow Analysis
A quick and easy way to perform a cash flow analysis is to compare the total
unpaid purchases to the total sales due at the end of each month. If the total unpaid
purchases are greater than the total sales due, you'll need to spend more cash than you
receive in the next month, indicating a potential cash flow problem.
Cash flow is the movement of money into or out of a business, project, or

financial product. It is usually measured during a specified period. Measurement of
cash flow can be used for calculating other parameters that give information on a
company's value and situation.
Cash flow is a generic term used differently depending on the subject. It may
be defined by users for their own purposes. It can be referring to past flows or
projected future flows. It can refer to the total of all flows involved or a subset of
those flows. Subset terms include net cash flows from operating cash flow and free
cashflow.
Cash Flow Statement (CFS):
Cash flow statement is like fund flow statement. The basic of fund statement
is fund while cash and cash equivalents are the basis of cash flow statement. Thus, it’s
the statement which indicate the changes of cash during an accounting period .c f s
also shows the sources of inflows of cash and applications or uses of outflow of
outflow of cash during specified period.
According to ICWA has defined the CFS has cash flow statement is “a
statement setting out the flow of cash under different heads of sources and their
utilization to determine the requirement of cash during and prepare for its adequate
provisions”.
Thus, cash flow statement is a statement in which the sources of inflow of cash
and applications of out flows of cash of business entities are indicated during an
accounting period
1 Cash payments to supplies for goods &services
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Cash Flow Analysis
2 Cash receipts & cash payments of insurance enter price for premiums and
claim annuities and annuities and other policy penalties.
3 Cash payments to and on benefit of employees.
4 Cash payment or refund of income taxes unless then can be specifically in
defined with financing &investing activities.
5 Cash receipts and payments relating to future contracts, option contracts and
swap cost when the contracts are held for dealing or trading purposes.
According to (ICWAI) has defined the CFS as cash under different heads of
sources and their utilization to deeming the requirements of cash during the given
period and prepare for its adequate torsions.
Thus, cash flow statement is s statement in which the source of inflow of cash
and applications of outflows of cash of a business entity are indicated during on
accounting period.
Classifications of cash flows:
As per as-3(received) the cash flow statement is prepared in a manner reporting

the cash flows into following categories
1. Cash flow from operating activities.
2. Cash flow from investing activities.
3. Cash flow from financing activities.
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Cash Flow Analysis
1. Cash Flows from Operating Activities
Cash flow from operating activities are earned from the principle revenue-
producing activity of an enterprise, through these activities let we know the net profit
& loss of the business is also be determined.
E.g.: - Cash receipts from the sale of goods & render of services.
Cash receipts from royalties, fees
Diagrammatic presentation of cash flow from operating activities
CASHFLOWS
CASH INFLOWS
CASH
OUTFLOW
CASH RECEIPTS RECEIPTS REE FUND RECEIPTS

SALE FROM FROM TAX FROM
S DEBTORS ROYALTYS FUTURE
FEE CONTRAC
COMMISION TS
CASH PAYMENTS PAYMENTS PAYMENT OF PAYMENT

PURCH OF OF TAX CONTRACTS OF
ASE SALARYS CREDITORS
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Cash Flow Analysis
2. Cash flow from investing activities:
Investing activities of an enterprise include the purchase of fixed assets

intension to generate the future incomes.
1. Cash payments of acquired fixed assets [including intangible} these payments
include those related to capitalize research and development costs and self
constructed fixed assets:
2. Cash receipts from disposal of fixed assets.
3. Cash payment to acquired shares, warrants or debt instructor of other enterprises
and interests in joint venture.
4. Cash advances and loans made to third parties.
5. Cash receipts from the repayment of advances and loans made to third parties.
6. Cash payments for future contract, forward contract, option contracts and swap
contracts.
7. Cash receipts from future contracts, forward contracts, and option contracts and
swap contracts.
CASH FLOWS
CASH INFLOWS
CASH OUTFLOW
DISPOSAL RECEIPTS ON RECEIPTS

OF FIXED REPAYMENT FROM
ASSETS OF LOANS & FUTURE
ADVANCE CONTRACTS
PURCHASE PAYMENT
OF FIXED ADVANCES TO FUTURE
ASSETS AND LOANS
WARRENTYS TO
CUSTOMER
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Cash Flow Analysis
3. Cash flow from financing activities: -

.
Under financial activities those activities are include which are related to
the size and composition of capital [equity] and barrowing or loans. E.g.: - Cash flow
arising from financing activities
Cash proceeds from issuing shares or other similar instruments
1. Cash proceeds from issuing debentures, loans notes, bonds and other shares or
loans form borrowings
2. Cash repayments of amounts borrowed.
CASH FLOWS
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Cash Flow Analysis
PROFORMA OF CASH FLOW STATEMENT

As -3(received) has not provided any specific formats for preparing a cash
flow statement. However, an idea of the suggested format can be inferred form the
illustrations appearing in the appending to the accounting standard, the cash flows
during the period classified by operating, investing and financing activities. A widely
used formula of cash flow statement is giver below.
Particulars Rs. Rs.

Cash flow from operating activities
Net profit Before Tax --------
Add: Adjustments for Non- cash and Non-Operating Items
Depreciation -------
Loss on Sales of Fixed Assets -------
Goodwill Written Off -------
Preliminary Expenses Written off ------
Underwriting Expenses Written Off -----
Transfer to Reserves ------
Loss on Revaluation o f Fixed Assets ------
Foreign exchange Loss ------
Less Adjustments for Non- cash and Non-operating
Income
Profit on sale of Fixed Assets -----
Profit on sale of investments -----
Profit on Revaluation of Fixed Assets ------
Foreign Exchanges Gain ------ ------
Operating Profit before Working Capital Charges -------
Add decrease in Current Assets ----
Increase in current Liabilities ----- -------
Less Increase in current assets -----
Decrease in Current liabilities ----- ------
Cash Generated from Operating -----
Less tax paid ------
Cash flow Before Extraordinary Items -----
Extraordinary Items ------
Net Cash from operational Actives -----
-----
(2) cash Flows from Investing Activities
Purchases of fixed Assets (----)
Purchases of Investments (----)
Sale of Fixed Assets -----
Sale of Investments -----
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Cash Flow Analysis
Interest Received ----

Dividends Received ------
Net cash from (used in) Investing Activities ------
(3) Cash Flows from Financing Activities:
Cash Receipts from
Issue Share (Equity and preference) -----
Debenture and bonds -----
Long-term Loans or Borrowings -----
Repayment of preference Shares (-----)
Repayment of debentures (-----)
Repayment of Loan (-----)
Interest and finance (-----)
Dividend paid (-----)
Net cash from (used in) financing activities -----
Net Interest(Decrease) in cash and Cash Equivalents -----
Add: Cash and Cash Equivalents at the Beginning of Period
Cash and cash Equivalents at the end of period ------
Note: - As per the amendment of Clause 32 of the listing Agreement of SEBI, 1995,
all the listed companies have to prepare their Cash Flow statement as per the above
formats with their annual financial statements in the reports. SEBI recommends the
indirect method to prepare the cash flow statement.
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Cash Flow Analysis
1.2 INDUSTRY PROFILE
CEMENT INDUSTR IN INDIA:
"Economy builds the nation and industry builds the economy"
Cement was produced for the first time at washermanpet in madras in 1904 by
South India Industries Limited. This unit had an installed capacity of 30 tons per day.
Since the partial decontrol in 1989 the cement industry has witness’s secular progress
mainly due to the forces of economic liberalization and the jettisoning of price
controls and capacity restriction.
The foundation of a Stable India Cement Industry was in 1941. The indian
cement company limited. First manufactured cement at prouder in Gujarat. At the end
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Cash Flow Analysis
of the march 1988 there were 2 large cement units and 136 mini cement plants with a
total installed capacity of 57 million tones and actual production of 40 tones.
Over two lakh persons are employed in the industry. India is the 4 th largest
producer in the world with 106 large lands belonging to 34 companies. The per capital
consumption of cement in India however is one of the lowest in the world ranking
i.e., 32 kegs in capital in India ( in year 1979) compared to 689 kg’s in Japan, 528
kg’s in west Germany, 500 kg’s in France and 483 kg’s in U.S.S.R.
In 1936, all the cement companies’ with exception of song valley Portland
Company limited. This is more facilitated cost reductions well as uniformity in
quality by 1947 the installed capacity of the industry rose to 2.2 million tons per
annum.
Cement is a key infrastructure industry. It has been decontrolled from price
and distribution on 1st March, 1989 and de-licensed on 25th July, 1991. However, the
performance of the industry and prices of cement are monitored regularly. The
constraints faced by the industry are reviewed in the Infrastructure Coordination
Committee meetings held in the Cabinet Secretariat under the Chairmanship of
Secretary (Coordination). Its performance is also reviewed by the Cabinet Committee
on Infrastructure.
Capacity and Production
The cement industry comprises of 125 large cement plants with an installed
capacity of 148.28 million tunes and more than 300 mini cement plants with an
estimated capacity of 11.10 million tunes per annum. The Cement Corporation of
India, which is a Central Public-Sector Undertaking, has 10 units. There are 10 large
cement plants owned by various State Governments. The total installed capacity in the
country is 159.38 million tunes. Actual cement production in 2005-06 was 116.35
million tunes as against a production of 107.90 million tunes in 2001-02, registering a
growth rate of 8.84%.
Keeping in view the trend of growth of the industry in previous years, a

production target of 126 million tunes has been fixed for the year 2005-06. During the
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Cash Flow Analysis
period April-June 2005, a production (provisional) was 31.30 million tones. The
industry has achieved a growth rate of 4.86 per cent during this
Exports
Apart from meeting the entire domestic demand, the industry is also exporting
cement and clinker. The export of cement during 2001-02 and 2005-06 was 5.14
million tunes and 6.92 million tunes respectively. Export during April-May, 2005 was
1.35 million tunes. Major exporters were Gujarat Ambuja Cements Ltd. and L&T Ltd.
CEMENT INDUSTRY STRUCTURE

Installed capacity114.2mn tones per annual production around 87.8mn
tones.
MAJOR CEMENT PLANTS MINI CEMENT PLANTS
Companies : 59 Nearly 300 plants
Plant : 116 Located in Gujarat, Rajasthan, MP, AP
Typical installed capacity per plant : Above 1.5 Typical capacity < 200tpd installed
manta capacity around gmm. tones
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Total installed capacity : 105 mntpa Production around : 6.2mn tones
Production 98 – 99 : 81.6 manta Excise : Rs250 / tone
Excise : Rs.408 tone Mini plans were meant to tap scattered

limestone reserves.
All India reach through multiple plants However most set up in A.P.
Export to Bangladesh, Nepal, Sri Lanka, UAE Most use vertical Kiln technology
and Mauritius
Strong marketing network, tie ups with Production cost / tone – Rs.1,000 to 1,400
customers, contractors
Wide spread distribution network Infrastructural facilities not to the best
Sales primarily through the dealer channel
PRESENT SCENARIO OF CEMENT INDUSTRY IN INDIA

The well developed Indian cement industry built almost totally on domestic
capital formations modern, efficient and reasonably new and today accounts for a
total production of around one hundred million tons. The industry is fully capable of
meeting the needs of the country.
In 1999-2000 the production of large plants was the order of 94.01 million
tones as against 81.66 million tons in the previous year. The capacity utilization of
cement plants also increased to 85% as 1999-2000 as against 78% in the previous
years.
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Cash Flow Analysis
The cement industry witnessed a phenomenal demand growth of 15% in the

fiscal years 1999-2000. However the large scale capacity auditioned and upgraded to
the tune of around and up gradation to the tune of around 10.25 million tons in the last
2 years (4.4. million tons in the south alone) led to capacity demand mismatch.
The year under review also saw in an increased momentum in market
consolidation with major cement companies expanding their market share through the
acquisition route. In the current fiscal growth has been lower with production in April
– August 2000, being of the order of 40.90 million tons arise of only 3.62 as against
38.69 million tons in April – August 1999. A similar trend is noticeable in respect of
cement dispatches grew by the 3.66% to 39.90 million tons as against 38.49 tons in
the current fiscal.
However, there has been very little additional / new capacity increase and this is
a clear and visible signal that the capacity demand mismatch is slowly coming to an
end. With prices also firming up in the market, the cement industry can hopefully look
forward to better prospects in the current fiscal.
Over the next 2 to 3 year, with reasonable growth in the demand to the tune of
around 7 to 9% sure to take place, invite of the incentives granted to housing and
infrastructure, the ambition plans of the Government boost rural housing and kick
start the a National Highways’ development Projects all trace of capacity demand
mismatch will vanish. As Such, the overall outlook of the cement industry is good in
the near to medium term.
Technological Change
Cement industry has made tremendous strides in technological up gradation

and assimilation of latest technology. At present ninety three per cent of the total
capacity in the industry is based on modern and environment-friendly dry process
technology and only seven per cent of the capacity is based on old wet and semi-dry
process technology. There is tremendous scope for waste heat recovery in cement
plants and thereby reduction in emission level. One project for co-generation of power
utilizing waste heat in an Indian cement plant is being implemented with Japanese
assistance under Green Aid Plan.
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Cash Flow Analysis
The induction of advanced technology has helped the industry immensely to

conserve energy and fuel and to save materials substantially. India is also producing
different varieties of cement like Ordinary Portland Cement (OPC), Portland
Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well
Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement,
White Cement etc. Production of these varieties of cement conform to the BIS
Specifications, It is worth mentioning that some cement plants have set up

dedicated jetties for promoting bulk transportation and export.
Recommendations on Cement Industry
For the development of the cement industry 'Working Group on Cement

Industry' was constituted by the Planning Commission for the formulation of X Five
Year Plan. The Working Group has projected a growth rate of 10% for the cement
industry during the plan period and has projected creation of additional capacity of
40-62 million tunes mainly through expansion of existing plants. The Working Group
has identified following thrust areas for improving demand for cement;
(i) Further push to housing development programmes
(ii) Promotion of concrete Highways and roads; and
(iii) Use of ready-mix concrete in large infrastructure projects.
Further to improve global competitiveness of the Indian Cement

Industry, the Department of Industrial Policy & Promotion commissioned a study
on the global competitiveness of the Indian Industry through an organization of
international repute, viz. KPMG Consultancy Pvt. Ltd. The report submitted by
the organization has made several recommendations for making the Indian
Cement Industry more competitive in the international market. The
recommendations are under consideration.
Cement, the wonder material for binding stones and bricks, together has
contributed to the development of modern civilization in a number of ways, due to
which it known as the building of modern of modern civilization. It is a grayish
powdered lime stones lime stones as the basis material, mixed with clay, calculated to
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Cash Flow Analysis
clinker, gypsum added ground to a powder called cement. It has become the basis of
all modern construction.
In past history times, lime stone was roasted in hot fire to have crude from of
lime which when mixed with water formed mortal. The use of burnt system and also
lime dates back to the fix Egyptians. The Greek civilization used some form of mortar
but Roman developed it. The cement has thus form the very early era contributed to
the advancement of the civilization in general measure.
When one speaks of cement today it invariably refers of Portland cement only.
Portland cement has its origin in England but until 19th century mixture of limestone
with possalona a type of volcanic earth was known as cement. It was known as
cement
It was JOSEPH ASPDIN who in 1924 took out the first sample of cement,
being an improvement in the modes of product. In artificial stone and it came to bear
the “Portland Cement”. The first cement factory was established around 1890 in both
Canada and Australia, while it was found in 1884 in New Zealand.
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1.3 COMPANY PROFILE
SRIKALAHASTI PIPES PVT formerly known as LANCO Industries. With

its headquarters in Hyderabad, US$500 million asset –based LANCO Group is one of
the leading business houses in India. It has operations in the United States as well.
LANCO is diversified into Power Generation, Power Trading, Information
Technology, Engineering and Construction, Property Development and
Manufacturing.
The name LANCO has been derived from the promoter of the Group Sri,
Lagadapati Amarappa Naidu. The LANCO group is a diversified multi faced
conglomerate with the business interests in Pig Iron, Cement, Power, Graded
Castings, Spun Pipes, Information Technology and Infrastructure Development.
The LANCO Group is promoted by young technocrats with exceptional

entrepreneur skills with a mission and a great vision and the top agenda to put the
group on the global corporate may be during the next 10 years. It was established in
the year of 1993. It is an ISO 9002 certified Company.
LOCATION
LANCO industry limited is a rural based factory sprawling over many areas
of land with deep resources and congenial soil. It is located in Rachagunneri village
near Tirupati. Nearly 50% of the consumption of electrical power is supplied by
APSEB, government of Andhra Pradesh and other 50% of power is maintained by the
company owned Dg sets and power plants. Since it is a rural area labor potential is
available and also company is enjoying the subsidies from state government. The
LANCO group is a diversified Multiphase conglomerate, with business interests In
Pig Iron, Cement, Power Graded Castings, Spun Pipes, Real Estate Development,
Information Technology a past from infrastructure use development promoted by
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Cash Flow Analysis
entrepreneurial skills and the agenda to put the group on the global corporate map
during the next 10 years.
LANCO KALAHASTI CASTINGS LIMITED: (merged with Lanco
Industries Limited)
Established in 1997 and strategically located in close proximity to the mini-

blast furnace of the Pig Iron Plant, it has a clear economic mileage over other casting
sites. The molten metal from the blast furnace is directly used as a basic raw material
to produce graded castings, cast iron pipes and Ductile iron spun pipes with a capacity
of 60,000 TPA, which will be gradually expanded for the to meet the surging demand
of the products. The ups to the pipe plant will be met through 10 MW captive power
plants. To emerge to enhance the necessities and the self-Sufficiency, it was decided
to enhance the production capacity from 60,000 TPA to 90,000 TPA from 2003.
After takeover, a financial re-engineering and re-structuring of LIL was

undertaken by ECL by implementing the following:
 Immediately after take over an amount of Rs.2200 lakhs was infused as share
capital of the Company by M/s ECL to strengthen the equity base of the
company.
 During 2002, the capacity of Pig Iron was increased from 90,000 TPA to
150,000 TPA.
 With effect from 1st April, 2002 LKCL was merged with the company to take
advantage of the close synergy in the business of the two companies, since a
large part of Molten Iron / Pig Iron is consumed by LKCL for manufacture of
Dl Pipes.
 After the merger, the share capital of LIL, the paid up share value of Rs.10/-
was reduced to Rs.2.50 per share and accordingly one share of Rs.10/- each
fully paid up in LIL was issued to all the existing shareholders for every 4
shares held by them.
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BRIEF HISTORY OF LIL SINCE INCORPORATION TILL DATE
LANCO Industries Limited (LIL) was incorporated on 1st November, 1991 by

LANCO Group of Companies to manufacture Pig Iron using Korf (German)
technology and Cement. The unit is located at Rachagunneri Village on Tirupati
-Srikalahasti road which is about 10Kms from Tirupati and 10Kms from Srikalahasti.
The installed capacity of Pig Iron was 90,000 TPA and with similar capacity 90,000
TPA for cement.
Due to the poor demand and other reasons, the operations of the cement unit
of the Company were suspended and the unit was re-engineered for producing a
different product mix having potential in South India.
As a measure of forward integration project for adding value to the Pig Iron
manufactured by the Company, LIL floated an another company named LANCO
Kalahasthi Castings Limited (LKCL) on 4th March 1997 to manufacture iron castings
and spun pipes in the same campus of the Company with an annual capacity of 40,000
TPA and 35,700 TPA respectively. Accordingly, LIL had an arrangement with LKCL
for supply of molten iron and Pig Iron to LKCL, being a value added product, as such
iron pipes manufactured by LKCL offered better returns.
However, due to falling Pig Iron prices, increase additional capacity in the
industry, competition and the technical and financial assistance, the operations of both
LIL and LKCL were affected and the Company was exploring financial and technical
strategic alliance with Indian / Foreign Partner.
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During the same time M/s. Electro steel Castings Limited, was also looking for
additional capacities for producing spun pipes. Considering the synergies involved,
LANCO Industries Limited entered into a strategic alliance partnership during
December 2002, with M/s. Electro steel Castings Limited (ECL), Calcutta a leading
manufacturer of Cl, Pipes and Dl pipes. This was win-win situation for both LIL and
ECL.
The above has resulted in the company witnessing a profitable years after a gap of 8
years during the years ended 31st March, 2003, 2005 and 2006 and a dividend of 10%
was declared for the years ended 31st March 2005 and 2006 to the shareholders.
In 2003 LKCL go merged with LANCO INDUSTRIES LIMITED (with effect

from 1stApril, 2003) to take advantage of the close synergy in the business model of
the two companies. Since a large part of pig iron in liquid form is consumed by LKCL
for manufacture of pipes In 2005. 1, 50, 000 TPA coke oven plant was setup at capital
outlay of Rs.45 crores.
INSURANCE
WORKMEN’S COMPENSATION INSURANCE
As per the Workmen’s Compensation Act, 1923, the workmen who are
injured while on duty are to be compensated as per the rules of the Act. Therefore the
workmen whose salary is less than Rs.4, 000/- are covered under Workmen’s
Compensation Insurance.
GROUP MEDICAL AIM INSURANCE

The workmen and his dependents are covered under GMA Policy sum assured
of Rs.15, 000/- under GMA scheme. This is a named policy where each individual’s
name is to be informed to the insurers whenever additions and deletions are made.
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PAYROLL
Salaries for the employees are paid as per the payment of Wages Act’ 1936 on
07th of every month.
The salary is paid on the above scheduled date in covers. The individual
should check the correctness of the amount and any difference should be brought
immediately to the notice of the accounts staff at the time of receipt of the payment
itself. Any clarification with regard to leave, loss of pay or deductions can be
separately clarified with the Time Office.
PROVIDENT FUND
P.F is deducted as per the provisions of Employees Provident Fund and

Miscellaneous Provisions Act 1952 @ 12% on Basic pay and an equal amount is
contributed by the Management.
SPUN
Pre-analyzed liquid metal from Blast Furnace is taken in to Induction Furnace.

The metal is superheated to a temperature of about 1520 o C and adjusted for
chemical composition by addition of Steel Scrap and Ferro Silicon. The adjusted
metal is taken into a converter for treatment to convert into SG iron. The adjusted
form converter is transferred Spinning Machines through ladles. The metal is poured
to unlined water- cooled metallic moulds through a runner. The mould is kept at a
slightly inclined position and rotated at high speed. Due to centrifugal force the metal
is held against the mould wall and the solidification of metal takes place due to water-
cooling of mould. The pipe cast through above process as DELVAD process is heat-
treated to achieve the requisite physical properties and microstructure. After heat
treatment the pipes are coated externally Zinc and then pipes are finished before
testing them with hydrostatic pressure.
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PIG IRON
“Blossoming of a fiery bud!” exclaimed Dr.Shanker Dayal Sharma the then
precident of India while inaugurating the Pig Iron Plant of LANCO Industries Limited
in September 1994.And the bud has indeed blossomed
Commissioned in a record time of 11 months LANCO Industries Limited
90,000 tones per annum Pig Iron Plant surpassed its rated capacity just after two years
of commissioning. Later it transformed the slag-a wasted by product into productive
Slag Cement with setting up Cement plant. The Pig Iron Plant capacity was up graded
to 1, 50,000 tones per annum in the year 2003.
“What represented the finest faced of India’s youthful techno entrepreneurial
strength has today evolved to become the future of growth of Indians.
“Business is a turning competition into partnership.” These words of
Dr.Shankar Dayal Sharma sums up the saga of LANCO industries limited which as
turned 12 years.
Location of LANCO industries Limited in one of the most underdeveloped
areas of Chittoor District in Andhra Pradesh proved to be a big boom of a for the
local people in terms of employment opportunities both direct and indirect leading to
considerable economic growth of regio
CEMENT
LANCO Cement is the result of a unique blend of slag and clinker with the
following destructive characteristics.
 Progressively increasing later strength.
 100% no leakage& no honey combing on application.
 Low heat of hydration, very low pore volume in concrete, high
impermeability resulting in structures of high strength & long life.
 Crack free structure & walls, result of low thermal stresses and absence of
differential volume change.
 East workability with high concentration of fines.
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COKE OVEN
“ENERGY RECOVERY COKE OVEN PLANT”
LANCO Industries Limited is engaged in manufacturing of the ductile Iron

pipes manufactured through a spinning process from 1999, with a capacity of
1,00,000 tones/year. To meet the pipe plant requirement of hot metal Lnaco operates
a mini blast furnace with a capacity of 1, 65,000 tons/year.
Previously, Lanco use to import coke from Japan and China to meet the
requirement of the mini blast furnace but then due to the steep rise in the coke prices
in the international market it was very difficult to maintain the cost of hat metal
produced.
Thus it was decided to install to coke manufacturing facility to meet the in-
house coke requirements. The company was attracted by the low cost of the non-
recovery type of coke oven with its easy compliance with the pollution control norms
without any major investments. Now the company operated a coke oven plant with a
set of 68 ovens based on the Dasgupta Technology. The plant was commissioned in
May 2006 and is producing to the rated capacity of 1, 25,000 Tons/year
STEP-BY-STEP COMPANY'S GROWTH
1994 - Setting up of Mini Blast Furnace with 90,000 TPA Capacity
1995 - Setting up a 250 TPO Mini Cement Plant

1997 - Setting up of LKCL for manufacture of 40,000 TPA
1991 - Incorporation of Lanco
CASTING AND 35,700 TPA 01 Pipes.
2002 - Strategic Alliance with Electro steel Casting Limited
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2002 - Infusion of RS.2200 lakhs to the equity and financial

Restructuring
2005 - Merger of LKCL with L1L for synergy
2007 - Capacity of Pig Iron was increased to 90~000 TPA to
150000 TPA.
2009 - Capacity of 01 Pipes was increased to 90,000 TPA.
2011 - Commissioning of 150,000 TPA coke oven plant.
2013 - Setting up of Captive Power Plant of 12 MW by using
The waste heat recovered from the coke oven plant
2015 - Merger of LKCL with LIL for synergy.
COMPETITORS OF LANCO CEMENTS

In the cement industry the Lanco industries are facing the competition from
the following cement industries.
 Sagar cements limited
 Ambuja cements limited,
 Bheema cements limited,
 Sri Chakra cements limited,
 Priya cements limited,
 Ultratek cements limited,
 Mahan cements limited,
 Raasi cements limited,
 Vishnu cements limited,
 Nagarjuna cements limited
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Cash Flow Analysis
CHAPTER-II
2.1 RESEARCH METHODOLOGY
SOURCE OF DATA
The data on introduction relating “Cash Management analysis of LANCO

INDUSTRIES LTD
The data is collected in two ways.

 Primary Data
 Secondary Data
Primary Data
First hand information is known as primary data .Primary data collected through
interviews, personnel experience.
Secondary Data
The secondary data that is required for the study is collected form the annual
reports, schedules, budgets, and other segments provided by finance department of
Lanco- Industries ltd.
Page 24
Cash Flow Analysis
2.2 NEED FOR THE STUDY
 To measure the cash position of the business.

 To study the solvency of the business [Shorter].
 To study the liquidity of the business
 To study the maintenance of cash inflows and cash out flows.
 To study the cash flow from operating ,investing, financing activities
Page 25
Cash Flow Analysis
2.3 SCOPE OF THE STUDY
The present study is undertaken with an intention that it would be helpful in

assessing the cash position in the organization and to make recommendations for
the improvement of the cash requirements of LANCO INDUSTRIES LTD.
The study also highlights the present scenario of the CEMENT Industry in
the global market as a whole and the contribution of LANCO INDUSTRIES LTD
in the Indian market& state market in particular.
The study includes various aspects regarding the future plans and
diversification activities of LANCO INDUSTRIES LTD..in directors report.
Page 26
Cash Flow Analysis
2.4 OBJECTIVES OF THE STUDY
 To measure the cash position of the business

 To study the cash flow from operating, financing, investing activities of the
company
 To study the cash &cash equality of the company
 To study the solvency of the business [ short term]
Page 27
Cash Flow Analysis
2.5 LIMITATIONS OF THE STUDY
1. The study is limited to the five years balance sheet

2. Time available was a constraint
3. Some of the secondary data were not provided by the company
Page 28
Cash Flow Analysis
CHAPTER-III
DATA ANALYSIS & INTERPRETATION
3.1 CASH FLOW STATEMENT FOR THE YEAR - 2013
S.No Particular Amount Amount
(in lakhs) (in lakhs)
01 Cash flow from operating activities
Net profit before tax 353.44
Add: Adjustment for non cash & non-operating items
Deprecation 35.46
Loss on sale of fixed assets 0.32
Reserve 150.00 185.78
Less : Adjustment non cash and non operating income NIL

Cash generated before working capital changes 539.22
Add : Decrease in current assets
Inventories 82.49
Loans and advances 603.64
Increase in current liabilities
Liabilities 557.67
1243.8
Less: Increase on current assets
Debtors 220.97
Cash & Bank Balance 582.8
Other Current assets 72.23
Decrease in current as Libities
Provisions 657.17
1533.17
Cash generate form operation 249.85
Less:- tax paid 111.80
Net cash flows from operating activity 138.05
02 Cash flow from investing activity
Sale of fixed assets 33.34
Interest received 34.21
Dividend received 1.66
purchase of investment (0.07)
net cash flow from investing activity 69.14
03 cash flow from financing activity
loans procured 109.13
dividend paid (100.89)
net cash from financing activity 8.43
Net increase in cash&cash equalent(a+b+c) 316.45
Cash& cash equalents at beginning NIL
Cash&cash equalents at end of period 316.45
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Cash Flow Analysis
3.2 CASH FLOW STATEMENT FOR THE YEAR - 2014

Deprecation 32.1
Loss on sale fixed assests 0.32
Reserve 150.00 182.42
508.46
Less : Adjustment non cash and non operating income NIL
Add : Decrease in current assests
Inventories 289.96
Cash and bank balance 341.19
Other current assets 68.38
Liabilities 67.64
Provisions 260.48 1027.65
1536.11
Debtors 908.15
Decrease in current assets and Liabilities
Provisions ----- NIL
1049.52
purchase of investment (66.15)
net cash flow from investing activity (17.85)
loans procured ------
net cash from financing activity (100.89)
Net increase in cash& cash equalent (a+b+c) 261.39
Cash&cash equalents at beginning 316.45
3.3 CASH FLOW STATEMENT FOR THE YEAR – 2015

Page 30
Cash Flow Analysis

Deprecation 31.47
Loss on sale fixed assets -----
Reserve 1100 1131.47
3229.52
Less : Adjustment non cash and non operating income
Profit on sale of fixed assets 0.73 0.73
Debtors 621.09
Liabilities 201.2
Provisions 1760.94 2582.31
5811.1
Other Current assets 29.8
Inventories 50.91
Decree in current Liabilities
2884.25
Purchase OF fixed assets (16.92)
Dividend paid (100.89)
NET CASH FROM FINANCING ACIVITY (100.89)
3.4 CASH FLOW STATEMENT FOR THE YEAR – 2016
Page 31
Cash Flow Analysis

Deprecation 40.26
Goodwill written off 4.67
Reserve 500.00 544.93
2521.66
Less : Adjustment non cash and non operating income NILL

Inventories -------
Cash and bank balance -------
Other current assets 128.92
Debtors 14.86
Liabilities 504.76
Provisions ------- 673.27
3194.93
Inventory 28.72
Decrease in current Liabilities
Provisions 75.16
1395.84
loans procured 183.49
net cash from financing activity 83.4
3.5 CASH FLIOW STATEMENT FOR THE YEAR - 2017
Page 32
Cash Flow Analysis

Deprecation 58.81
Goodwill written off -----
Reserve 8000.00 8058.81
16947.2
Less : Adjustment non cash and non operating NILL
income
Liabilities 313.8
Provisions ------- 313.8
17261.00
Debtors 357.32
Inventory 28.72
Inventories 534.085
Decree in current Liabilities
Provisions 1375.29
5799.16
NET CASH FLOW FROM INVESTING ACTIVITY 53.68
03 CASH FLOW FROM FINANCING ACTIVITY
LOANS PROCURED 107.73
Dividend paid (100.89)
NET CASH FROM FINANCING ACTIVITY 6.84
Net increase in cash&cash equalent(a+b+c) 10567
Cash&cash equalents at end of period
15002
Page 33
Cash Flow Analysis
DIAGRAMETIC ANALYSIS
TABLE: 1
NET CASH FLOW FROM OPERATING ACTIVITY (Rupees in Lakhs)
YEAR 2012-13 2013-14 2014-15 2015-16 2016-17
Cash flows 138.05 380.38 2175.2 1099.14 10507.25
Graph : 1
INTERPRETATION
Page 34
Cash Flow Analysis
 Net cash flow from the operating activities in the year of 2012-13is
Rs.138.5lakhs.It is increased up to Rs.2175.2 lakhs in the year 2014-15Due to
the cash is raised by the net profit after tax than compare to previous years.
 The reserves also be increased in the year 2011-12 and the current liabilities
are increased gradually.
 To study the year 2015-16 was decreased to Rs.1099.14 lakhs by the net profit
after tax and reserves are decreased. Current assets are increased due to
purchase or procure of funds.
 In the year 2017 is Rs. 10507.25 lakhs highly increased by the net profit after
tax and reserves are kept in more.
TABLE: 2
Page 35
Cash Flow Analysis
NET CASH FLOW FROM INVESTING ACTIVITY (Rupees in Lakhs)
Year 2012-13 2013-14 2014-15 2015-16 2016-17

Cash flows 69.14 -17.85 253.35 348.64 53.68
GRAPH : 2
INTERPRETATION
Page 36
Cash Flow Analysis
As seen from the above table net cash from investing activities as follows:
o To study the investment activities in the year 2012-13 is

Rs.69.14 lakhs and in the year of 2013-14 is -17.85 , it was decreased more due to
investments are purchased then compare to previous year.
o To study in the 2014-15was increased more Rs.253..35 lakhs
by the making interest and dividend.
o In the year 2014-15 is also increased by the sale of investment
and raised interest and dividend.
o In the 2015-16 was increased more due to purchase of fixed
assets. year 2016-17 is 53.68.it has been more decreased.
o As seen from the above table net cash from investing activities
in the year 2013-14 and 2016-17 was decreased and remaining years are
increased.
Page 37
Cash Flow Analysis
TABLE: 3
NET CASH FLOW FROM FINANCING ACTIVITY (Rupees in Lakhs)
Year 2012-13 2013-14 2014-15 2015-16 2016-17

Cash flows 8.43 -100.89 -100.89 83.4 6.84
GRAPH: 3
INTERPRETATION
Page 38
Cash Flow Analysis
As seen from the above table net cash from financing activities as follows.
As seen from the above table net cash from financing activities. In the year
2012-13 is 8.43 and the year 2013-14,2014-15 is -100.89.its highly decreased.
Net cash flow from financing activities of a company in the year 2015-16 is 83.4
its highly increased than past performance.
Net cash flow from financing activities of a company in the year 2015-16 is 83.4
in the year 2016-17 is 6.84.it has been frequently decreased.
TABLE: 4
Page 39
Cash Flow Analysis
NETCASHFLOWS AT THE END OF THE YEAR (rupees in lakhs)
Year 2012-13 2013-14 2014-15 2015-16 2016-17

Cash flows 316.45 577.84 2904.39 4435.1 13629.57
GRAPH: 4
INTERPRETATION
Page 40
Cash Flow Analysis
 In the year 2012-13 net cash flow at the end of the year 316.45 lakhs it is
increased to Rs.577.84 lakhs in 2013-14 by the operating activities and opining
the cash balance are raised.
 In the year 2013-14net cash flow at the end of the year 577.84 lakhs it is increased
to Rs.2904.39 lakhs in 2014-15 by the operating activities and net profit of the
year and decreased in current assets increased current liability.
increased to Rs.4435.1 lakhs in 2015-16 by the opining the cash balance are
raised and net cash flows from investing activities.
increased to Rs.15002 lakhs in 2016-17 because opening the cash balance are
raised net profit are all so be raised.
Page 41
Cash Flow Analysis
CHAPTER-IV
4.1 FINDINGS
 Net cash flow from operating activities are increased upto 2014-15 but in 2015-16
it decreased and then improved drastically in 2016-17 i.e., 1099.14 to 10507.25.
 Net cash flow from investing activities is fluctuating trend. In 2013-14 it
tremendously falls to 17.85 in that Year Company reduced the investment on
fixed assets.
 Net cash flow from financial activities in 2014-15 shows negatively (-100.89)
because not properly managed the issue of shares. In 2016-17 company
maintained little bit finance.
 Net cash of the company shows increasing trend from 2012-13 to 2016-17.
 All the activities of the company is performed well except net cash flow from
financing activities.
Page 42
Cash Flow Analysis
4.2 RECOMMEDATIONS
 Net cash flow from operating activities are maintained properly ,this trend is
advisable to be followed in future also
 The LANCO INDUSTRIES LTD should invest on the quick earning assets
and investment on fixed assets.
 The LANCO INDUSTRIES LTD cash position is increased trend so the
company has try to invest in both short and long term investment.
Page 43
Cash Flow Analysis
4.3 CONCLUSION
The cash fluctuations increase in cash level from year to year has high
variations. So, it is necessary to reduce these variations in the cash and there is
necessary to take actions to avoid the high increases in cash and try to invest more in
fixed assets to maintain the company in a better position for a long run.
Page 44
Cash Flow Analysis
ANNEXURES
BALANCE SHEET
PARTICULARS SNO 2013 2014 2015 2016 2017

1. SOURCES OF
FUNDS
i. SHARE HOLDERS
FUNDS 1 63062000 63062000 63062000 63062000 63062000
a. CAPITAL 2 332807523 351603441 471792515 525848672 728251242
b. RESERVES &
SURPLES 395869523 414665447 5349854515 588910672 791313242
ii. LOANS FUNDS
SECURED LOANS 3 10912687 _ _ 18349718 10773614
iii. DEFFERED GOVT
GRAETS 40508 37235 35002 32547 29586
TOTAL 40682278 414702676 534889517 607292937 802116442
2. APPLICATION OF
FUNDS:
i. FIXED ASSETS
GROSS BLOCK 4 78384663 78994964 83250416 92453245 10295844
LESS: DEPRECIATION 45268727 48411921 50975682 51996515 56936285
NET BLOCK 33115936 30583043 32274737 40456730 67232129
CAPITAL WORKING
PROGRESS 33120145 30618302 32308587 40456730 67232129
ii. INVESTMENTS 5 9375610 15990360 15990360 5590360 4572330

iii. DEFFERRED TAX 10371804 11952738 8853140 11250444 1758876
TOTAL
INVESTMENTS 52867559 58561400 57152087 57297534 73563335
IV. CURRENT
ASSETS LOANS
&ADVANCES
a. INVENTORIES 6 46706065 17709650 22801070 25673750 79082273
b. SUNDRY DEBTORS 7 37947922 128763249 66653866 65167516 100899048
c. CASH & BANK
BALANCE 8 366936548 332817536 539232473 668429709 741654712
d. OTHER CURRENT
ASSETS 9 19502177 12663743 15644347 2752596 56937905
c. LOAN &
ADVANCES 129932408 144069089 218007303 215533498 441407167
TOTAL AMOUNT 601025120 636023267 862339059 977557069 1419981105
LESS:
CURRENT
LIABILITIES &
PROVISIONS 11
a. LIABILITIES 171559967 178323770 198444344 248919907 280300784
b.PROVIDEND 75509961 101558221 186457285 178641759 411127214
NET CURRENT
ASSETS 247069928 279881991 384601629 427561666 691427998
TOTAL= 40682278 414702676 534889517 607292937 802116442
Page 45
Cash Flow Analysis
PROFIT AND LOSS ACCOUNT

PARTICULARS SNO 2013 2014 2015 2016 2017
NET SALES 401937171 412684904 647737033 635111010 991470955
0VERHEADS
MANUFACTURING &
OTHER EXP 16 363766713 377935647 442040166 440848001 98981967
DEPRECIATION 3546024 3210112 3146606 4026276 5881079
FIXED ASSETS WRITTEN
OFF _ _ _ _ _
LESS ON SALE OF
ASSETS 31669 32333 _ 467359 _
367344406 381178092 445186772 445341636 104863046
PROFIT FOR THE YEAR 34594765 31506812 202550261 189769374 886607909
LESS : PRIOR PERIOD
ADJUSTINETS 17 440902 2476454 152544 870700 508272
35035667 29030358 202397717 190640074 886099637
ADD : PROVISION ON
LONG RIGHTS WRITTEN
BACK 306897 3573576 7408033 7033208 2739862
PROFIT BEFOR TAX 35342564 32603934 209805750 197673282 888839499
LESS:TAX 11180151 10621009 75165918 56539359 95456000
PROFIT AFTER TAX 24162413 21982925 134639832 123533516 _
PROVISIONS 35974344 33182096 136694788 91965866 823268452
APPROPRIATIONS:
TRANSFER TO GENERAL
RESERVE 15000000 15000000 110000000 50000000 800000000
PROPOSED DIVIDEND 10089920 10089920 10089920 10089920 10089920
DIVIDEND FOR EARLY
YEAR _ _ _ 276211 _
DIVIDEND TAX ON
PROPOSED DIVIDEND _ 1292771 1261240 1714782 1714782
RESERVE FOR
DOUBTFUL DEBTS 1266187 5203718 _ _ 2083181
SURPLUS CARRIED TO
BALANCE SHEET 9618237 1595687 15343628 29884953 93805679
TOTAL 35974344 33182096 136694788 91965866 823268452
Page 46
Cash Flow Analysis
BIBLIOGRAPHY
1. Financial accounting and analysis

- K.K.VARMA
2. Management accounting
- Dr.VARMA & AGARWAL
3. Financial management
- I.M. PANDAY
4. Financial management
- KHAND & JAIN
Websites:
www.wikipedia.com
www.lancoindustries.org
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Cash Flow Analysis

Cash flow is the movement of money into or out of a business, project, or

Cash Flow Statement (CFS):

1 Cash payments to supplies for goods &services

As per as-3(received) the cash flow statement is prepared in a manner reporting

1. Cash Flows from Operating Activities

Diagrammatic presentation of cash flow from operating activities

CASH RECEIPTS RECEIPTS REE FUND RECEIPTS

CASH PAYMENTS PAYMENTS PAYMENT OF PAYMENT

2. Cash flow from investing activities:

Investing activities of an enterprise include the purchase of fixed assets

DISPOSAL RECEIPTS ON RECEIPTS

3. Cash flow from financing activities: -

PROFORMA OF CASH FLOW STATEMENT

Particulars Rs. Rs.

Interest Received ----

1.2 INDUSTRY PROFILE

CEMENT INDUSTR IN INDIA:

"Economy builds the nation and industry builds the economy"

Capacity and Production

Keeping in view the trend of growth of the industry in previous years, a

CEMENT INDUSTRY STRUCTURE

MAJOR CEMENT PLANTS MINI CEMENT PLANTS

Companies : 59 Nearly 300 plants

Plant : 116 Located in Gujarat, Rajasthan, MP, AP

Total installed capacity : 105 mntpa Production around : 6.2mn tones

Production 98 – 99 : 81.6 manta Excise : Rs250 / tone

Excise : Rs.408 tone Mini plans were meant to tap scattered

Wide spread distribution network Infrastructural facilities not to the best

Sales primarily through the dealer channel

PRESENT SCENARIO OF CEMENT INDUSTRY IN INDIA

The cement industry witnessed a phenomenal demand growth of 15% in the

Cement industry has made tremendous strides in technological up gradation

The induction of advanced technology has helped the industry immensely to

Specifications, It is worth mentioning that some cement plants have set up

For the development of the cement industry 'Working Group on Cement

Further to improve global competitiveness of the Indian Cement

1.3 COMPANY PROFILE

SRIKALAHASTI PIPES PVT formerly known as LANCO Industries. With

The LANCO Group is promoted by young technocrats with exceptional

Established in 1997 and strategically located in close proximity to the mini-

After takeover, a financial re-engineering and re-structuring of LIL was

BRIEF HISTORY OF LIL SINCE INCORPORATION TILL DATE

LANCO Industries Limited (LIL) was incorporated on 1st November, 1991 by

In 2003 LKCL go merged with LANCO INDUSTRIES LIMITED (with effect

GROUP MEDICAL AIM INSURANCE

P.F is deducted as per the provisions of Employees Provident Fund and

Pre-analyzed liquid metal from Blast Furnace is taken in to Induction Furnace.

“ENERGY RECOVERY COKE OVEN PLANT”

LANCO Industries Limited is engaged in manufacturing of the ductile Iron

STEP-BY-STEP COMPANY'S GROWTH

1994 - Setting up of Mini Blast Furnace with 90,000 TPA Capacity

1995 - Setting up a 250 TPO Mini Cement Plant

2002 - Strategic Alliance with Electro steel Casting Limited

2002 - Infusion of RS.2200 lakhs to the equity and financial

COMPETITORS OF LANCO CEMENTS

2.1 RESEARCH METHODOLOGY

The data on introduction relating “Cash Management analysis of LANCO

The data is collected in two ways.

2.2 NEED FOR THE STUDY

 To measure the cash position of the business.

2.3 SCOPE OF THE STUDY