A

STUDY ON

FUNDS FLOW STATEMENT

With reference to

VIJAYA DIARIES PRIVATE LIMITED, NELLORE

A project report submitted to the

RVR & JC COLLEGE OF ENGINEERING (AUTONOMOUS)

In partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

E.SIVA KUMAR REDDY

Regd. No: Y20MS017

Under the Guidance of

Mr. P. SIDDARDHA

ASSISTANT PROFESSOR

DEPARTMENT OF MANAGEMENT SCIENCES

RVR & JC COLLEGE OF ENGINEERING (AUTONOMOUS)

Chowdavaram, Guntur-522019, Andhra Pradesh

2020-2022
 DEPARTMENT OF MANAGEMENT SCIENCES

RVR & JC COLLEGE OF ENGINEERING

Chowdavaram, Guntur.

CERTIFICATE

This is to certify that the project report titled "A STUDY ON FUNDS FLOW
STATEMENT With reference to VIJAYA DAIRY PVT LTD , NELLORE " is a
Bonafide work done by E.Siva Kumar Reddy, Regd. No:Y20MS017,II MBA under my
guidance & submitted to the Department of Management Sciences, R.V.R. & J.C. COLLEGE
OF ENGINEERING (AUTONOMOUS),GUNTUR, in partial fulfillment of requirements for the
award of Degree of Master of Business Administration, during 2020-2022.

Mr. P.Siddardha Dr. T.Sreekrishna

Project Guide M.B.A. Lr.Ship (UGC), M.Phil,Ph.D.

Head, Dept. of MS

EXTERNAL EXAMINER
 DECLARATION

I E.SIVA KUMAR REDDY, student of Master of Business

Administration,R.V.R& J.C.COLLEGE OF ENGINEERING (AUTONOMOUS),GUNTUR.
I hereby declare that the project entitled "A STUDY ON FUNDS FLOW STATEMENT
with reference to VIJAYA DIARIES PRIVATE LIMITED, NELLORE" is a genuine work
done by me during 2020-22.

The project report is prepared under the guidance of Mr. P.SIDDARDHA , Assistant
Professor in partial fulfillment of the requirements for the award of the Degree of
Master of Business Administration by Acharya Nagarjuna University, Guntur .

I hereby declare that, this is the result of my own efforts and it has not been submitted
to any other university for the award of any Degree or Diploma.

E.SIVA KUMAR REDDY

Regd.No:Y20MS017
 ACKNOWLEDGEMENT

The Successful completion of this report is made possible with the help
and guidance received from various quarters. I would like to avail this opportunity to
express my sincere thanks and gratitude to all of them.

I sincerely thank Principal Dr. K. RAVINDRA for providing necessary

infrastructure and resources for the accomplishment of my project report in R.V.R. &
J.C. COLLEGE OF ENGINEERING, Chowdavaram, Guntur.

I would like to express my profound gratitude and sincere thanks to Dr.

T. SREEKRISHNA, Head of the Department of Management Sciences for his
valuable guidance and constant encouragement given to me during this project work.

I am deeply indebted to the supervisor P. SIDDARDHA, Assistant

Professor, Department of Management Sciences for his valuable guidance, constant
encouragement, constructive criticism and keen interest evinced throughout the course
of my project work.

I am very much thankful to all the faculty members of the MBA

department for their value based imparting of the theory and practical subjects related to
the project. Finally I have a notation to express my sincere thanks to my family
members, friends and all those who guided, inspired and helped me in the completion of
my project work.

E.SIVA KUMAR REDDY

REGD.NO.Y20MS017
SYNOPSIS
 1. INTRODUCTION

Funds flow statement is a technical device designed to highlight the changes in

the financial condition of a business enterprise between the opening and closing
balance sheet dates.  The flow of funds results in mainly profits of a business due to
business operations.  And has been well said that “a business with an income at it heals
furnishes always oil for its own wheels”, it is the profit which becomes main sources of
funds for a business.  However profitable companies can also be anemic with respect to
working capital and since working capital is the life blood of an enterprise, its shortage
can disturb the operating cycle of the business. The concept of  ‘funds’ the flow which
is to be examined in detail as to its sources and applications so as to know the net
increase or decrease in working capital over a period of time, usually a year. 
One of the most important techniques of financial analysis is a preparation of  
funds flow statement.   It is the statement which portrays the changes in the financial
position of an enterprise.  Balance sheet and income statement do not present a
comparative picture, even if placed side by side in that much clarity as the statement of
changes   in financial position which focuses on the sources and uses of funds. 

Definition:
A financial  statement with summary for the period covered by it, the changes in
financial position including the sources from which funds were obtained by the
enterprise and specific uses to which funds were applied. Funds flow statement in a
statement either prospective or retrospective setting out the sources and application of
the funds of an enterprise.  The purpose of the statement is to indicate clearly the
requirement of funds and how they are propose to be raised and efficient utilization and
application of the same.

A statement of funds received and expanded a statement of changes in financial

position or sources and application of funds in which elements of net income and
working capital contributing to an understanding of the whole of financial operation
during the reporting period replace total of these items.

Concept of Funds:
 Funds in the narrowness sense of the term as be equated to cash.  But in the
broader sense and appropriate one here, it refers to working capital that is current
assets less current liabilities.

A still broader interpretation of the term “funds” has been given by some
accountants, and according to them funds includes all resources used in the business
whether in the form of human, material, money, machinery and other.  But it is not
relevant for the purpose of flow statement.  The most common definition of fund is
working capital since they use the term working capital as synonym to current assets. 

CONCEPT of Flow:
The dictionary meaning of the word flow is movement denoting change
Therefore, whenever there is a change of funds that is either increase or decrease there
is a flow of funds. There must be some cause of change- the cause may result in either
raising the funds inflow of funds there by becoming a source of fund or the cause may
lead depletion of funds that is out of funds, implying there by an application or use of
funds in other words source of funds show the reasons of increase in funds that is
working capital and application of funds reveal the reasons of decrease in funds that is
working capital.  
 

Concept of Funds Flow Statement: The meaning of funds flow or flow of

funds illumination the concept of funds flow statement clearly the statement which
analysis the flow of funds that is the reasons for changes in working capital is a funds
flow statement. 

The reasons are set by the sources and application of funds and therefore the
statement can be called as the statement of sources an application (uses) of funds. 
Some accountants prefer to call it in short as fund and to which place have gone.  It is
also designated as where got and where (movements) of working capital, movements of
flow statements etc.

Importance of Funds Flow Statement:

 The information which is provided by funds flow statement is neither available in
the balance sheet nor in the income statement and hence it’s important.  The changes
which have taken place in between two accounting dates are highlighted by funds flow
statement.  A lay man cannot grasp the underlying significance of achievements and
progress of the company simply by a personal of the balance sheet and income
statement of different years.  The comparative and analytical study presented by the
statement giving the details of sources and uses of funds during a given period of
immense help to the users of information. 

It is very useful tool in analytical kit of the management also, besides the outsiders, in
order to have ‘at a glance’ appraisal of the financial and operating performance of a
company.  Since the statement shows the extent to which the working capital has been
effectively put to  use,  the management’s task of taking policy decision regarding

investment, dividends etc, is great facilitated .  

Uses of funds flow statement:

        Funds flow statement of a company is of great value to management share
holders, creditors, bankers, money lending institutions etc. 

 Informative value:-
The financial consequence of business operation are clearly explained in
details by a funds flow statement some of the problems which crop up in the
minds of investors are well solved by a simple perusal of this statement for e.g.,

 Where have the profit gone.

 Why does an imbalance exist between liquidity position and profitability
position of enterprise?
 Forecasting value:- A projected funds flow statement can be prepared
and resources can be properly allocated after an analysis of the present state of
affairs.  The optimal utilization of available funds are necessary for the overall
growth of the enterprise.  The funds flow statement prepared in advance given a
clear direction to the management in this raged.
 Testing value:- Whether the working capital has been effectively used or
not by the management can well be tested by funds flow statement.  Whether
working capital has been maintained at proper level, and whether it is adequate
 or inadequate can be known by a study of the statement.  The management is
warned against the injudicious uses of funds.

 Decision-making value: Since overall credit worthiness of the enterprise is

known, creditors and money lenders can decide as to whether they have to provide
loans to company or not.  The sources of raising funds and their application help the
shareholders to decide whether the management of the business is an enlightened or
not regarding managing funds.  Mismanagement of funds may be prevented.  The
management can be decided about the future financing policies and capital.

NEED FOR THE STUDY

Every company needs to know the flow of funds both inflow and outflow. So that
the efficiency in utilizing the funds can be better understand. For this the present
analysis through funds flow statement will be helpful.

The main need for the study is to study the operating activities, investing
activities and Financing activities in the Vijaya Milk Dairy company and methods to
evaluate the financial performance of the company, with the help of Funds flow to
evaluate the pattern of the firm.

The importance of cash management is so essential in any organization to run

the business with continuous basis. The present study also attempts to know the “cash
management system in selected in selected organization”.

SCOPE OF THE STUDY

 The scope of the study is limited to the analysis of the performance of the firm
based on funds utilization. The study is based on past five years financial reports and
the analysis is confined to the identification of sources and applications of funds by the
firm.
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: -

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

The term funds used here means working capital that is he excess of current
assets over current liabilities.

OBJECTIVES OF THE STUDY

 PRIMARY OBJECTIVE:
To examine the efficiency in the way which the firm utilizes the
funds.

 SECONDARY OBJECTIVE:
To measure the working capital position through schedule of
the changes in working capital system .

Sources of data:
Collected from the secondary sources. The entire study was based on secondary
data, which are collected from company annual report, book, records, journals, profiles
of an organization, and internet sources.
Tools of the study:
In order to analyze financial position of the company main technique of financial
analysis is funds flow analysis. In this technique the statement of changes in working
capital. Funds from operations was used.

LIMITATIONS OF THE STUDY

 Due to the confidential records the data not exposed so the study may not
exposed , so the study may not be full fledged .
 The study is purely based on the data available in the firm of annual reports .
 The period of the study for 5 years and the performance evaluation is also limited
to 5 years
 The study is based on the past date, which cannot predict the future performance
accurately.
 The study may not be detailed in all aspects.
 The study time period is limited.
 INDUSTRY PROFILE

Milk is the food, which contains vitamins, proteins, fats and carbohydrates every human
being consumers neither milk at one time nor the other. World Health Organization
(WHO) suggests that the infants should be fed compulsorily with mother milk because it
provides all the necessary fats, proteins etc. which is essential for the growth of the
baby. So, milk plays a major role in our daily life.

India is the second highly populated country and is about to occupy the first position. In
India the major source of income is agriculture. Dairy is one of the best instruments for
bringing up the socio-economic development of the country, developing countries like
India rural people depend of indigenous Character for a long time because of
consumers tastes of food articles so far delicacies are concerned.

Dairy developing in India has been most spectacular in recent years. While chief
contribution factor to this achievement is the Anand pattern of dairy cooperatives. No
less creditable has been a concerted effort of the national dairy development and the
Indian Dairy Development in India since 1970. Dairying is concerned as whole when it
contains elements like production, procurement and marketing; ‘Kaira District Co-
operative Milk Producers Union Limited’ adopted this integrated approach. This
approach is provided to be successful with ‘AMUL’ and later this approach came to
know as ‘ANAND PATTERN OF DAIRY COOPERATIVES’

.
INTERNATIONAL SCENARIO OF DAIRY INDUSTRY:
Average of 14 billion liters of milk was produced every year, in the UK 73 million tones,
in USA and India’s production is 75 million tones. Half of the total production of milk
used for manufacturing other production in the UK the liquid milk sales had seen a
decline since the previous 10 years.

Since 1980 more than 90% of milk walk was purchased from the milkman. By 1980 this
decline to 89%, in 1990 it decreased to 68.3% and by 1995 doorstep delivery accounted
for 44.5% of milk purchased. Sales in supermarkets and small shops increased in
relation to the decline in doorstep sale. The information collected on international
scenario was achieved from internet and it was not updated to the current year.
EVOLUTION OF THE DAIRY INDUSTRY IN INDIA :
Dairy has been part of the list in India since the ancient vedic times; the modern dairy
industry took roots in 1950 with the slave of bottle milk in Bombay from array milk
colony. The first large scale mil products factory was started in 1954 and ANAND by
Amul a co-operative venture with the assistance of UNICEF (United Nations
International Children’s Emergency Fund) for the production of milk powder, butter and
ghee. These products were made from the buffalo milk.

The world’s largest dairy development program every undertaken the operation
flood undertook the gigantic task if upgrading and modernizing milk production
procurement. Processing and marketing with assistance providing by the world food
program.

The European economic community the World Bank and other internal agencies,
designed and implemented by the NDDB (National Dairy Development Board) and the
Indian dairy-co-operation [IDC] was launched in July 1970. Its basic concepts comprise
the establishment of co-operative structure of Amul pattern.

OPERATION FLOOD –1

Operation flood also referred to as while is a gigantic project propounded by the

government of India for developing dairy industry in the country. The operation flood-2
originally mean to be complemented in 1975 actually looks the period of about 9 years
from 1970-79 for its completion a total cost of about Rs 116 crores. The operation flood
I was wholly finance and selling in India free gifts of 1,26,000 metric tones at skim
powder, and 42,000 metric tones of butter oil donated out of the surplus of European
economic community.

OPERATION FLOOD-2:
The operation flood-2 that started in July 1978 is completed in 1985 at a cost of Rs 483
cores. A humble attempt has been made to present a general appraisal of the
achievements made in same sufficient fields during operation flood-1, these
achievements is at as all made particularly the Anand Pattern Dairy Co-operative unions
are to serve now a bedrock of operation flood-2. These unions are to act as the starting
nuclear for co-operative character federation, the main instrument for the gigantic
project flood-2. The average nuclear character federation world in 6 districts unions
registered and unregistered.

Gujarat state alone government the share of 1666.51 lakhs against 5 states Haryana,
Bihar, Rajasthan and Andhra Pradesh, but together the total distrument in there was
1732 lakhs only. This trend is going to be nationalized operation flood-2.

OPERATION FLOOD-3:
The Indian dairy industry is growing rapidly and may become a strong competitor to
world power. The milk sector is the second largest contribution to the agricultural
economy in terms of produce. The phenomenal growth is a result of the NDDB (National
Dairy Development Board) through operation flood programme. Operation flood-3 was
closing position consolidated the procurement efforts to boost production. Projection for
in output for 2000 was nearly 90 million tons at a 5% growth rate. It is now 5-8 percent
dairy factories established under operation flood. Which covers 170 milk cooperative
collective nearly 10 million liters of milk and marketed 8 million liters per day.

The operation flood being implemented by the NDDB (National Dairy

Development Board) aims to entrance the average milk procurement to 13.7 million
kilograms per day for the year 1996 the concluding the year of the operation flood-3
programs.

The peak procurement level during the some period in expected to means 18.3
million kilograms packed. The compulsive line figures for both during 1987 the base
year of the operation flood programme to be respective 8.5 and 11.2 mkg-pd. Efforts are
also begin made to increase capabilities of milk and production of milk powder.

Under the operation flood improving animal health case and good breeding
natural making available quality fodder understand incurring are and farm fertilization
under co-operation and progressing were added inventory an animal has broadly and
dairying from 1950-90 was 2864 crores achieve of an occasion to the operation flood.
The milk production did wary with import to milk powder expect for a small quality
[26000 tones] during the brought years dairy industry in Andhra Pradesh.

DAIRY INDUSTRY IN ANDHRA PRADESH:

With implementation food-3 programmed in Andhra Pradesh in tempo of dairy

development has gained movements providing a new thrust to eradication of poverty
and unemployment in rural areas and brought greater awaking the confidence among
milk producers to manage a loan affair through dairy co-operative on Anand patterns,
the federation is marching a head with dairy co-operation to held a new area of rural
programs.

GENESIS OF DAIRY INDUSTRY:

Planning for organized dairy industry in AP was conceived in 1951 and pilot milk supply
scheme was started in 1960-61 as a paradise for the integrated milk project.
Hyderabad and Vijayawada for the which the UNICER gifted dairy equipment valued at
1 crore with the objectives of lining up and supplying surplus milk from producing areas
to consuming area.

Andhra Pradesh development co-operation on was formed on 02.04.1974 as a state

government undertaking for the application of commercial principles with the mission of
industrializing rural dairying and extensive infrastructure was developed to procure milk
form and corner of the states to tap higher to tapped milk of land with main objectives
generating grater employment opportunities to the rural people where they are based.

Andhra Pradesh dairy development co-operative federation constructed in October

1981 and active involvement of program is organized milk production procurement
processing and marketing national policy government of India. The India dairy co-
operation offered financial assistance of Rs. 78.51 crores for dairy development
program in AP with 30% grand and 70% on loan basis.

Milk Industry Data

Milk product factories 7

District dairies 10
 Milk Chilling centers 48
Milk collection centers 1,400
Village milk producer's co-operative 5,200
Societies 267
Milk collection routs 267
Milk Producer 5,72,000
[80% of milk producer being to small and
Marginal and agricultural workers]
Village covered for collection of milk 10,000
Milk consumers 6,50,000
Cash paid to milk producers 62,00,00,000
Castle feed plants 6
5000
Women members in union

Dairy Units:
At present there are 54 dairy units in operation with 7 milk product factories. 48 milk
chilling and cooling apart from dairy units there are 6 cattle feed mining plants under the
federation.

MARKETING:

The surplus milk is converted into various dairy products like Vijaya spray food butter,
milk powder, skimmed milk powder ghee etc. with the brand name Vijaya.

They have secured good market reputation all over India besides foreign products like
ice cream, chocobar etc. are also manufactured by the federation.

COMPANY PROFILE

As the years passed Andhra Pradesh District Dairy Co-operative Farmers

(APDDC) built up the infrastructure needed to meet every requirement of dairying that is
procurement of milk from over 800,000 dairy farmers spread across Andhra Pradesh or
getting it ready for national wide distribution. It all happened within the vast dairy plant
network of APDDC. Through extensive use of high technology and management
acumen honed to steer such a wide spread operation, and brought prosperity to the
state many times. The federation has drawn up more comprehensive systems for
procurement and processing of milk.

A dedicated research cases is actively pursuing ways and means of bettering

quality. Collaboration with global experts are also being sought, all in attempt to remain
at the forefront of modern dairying in India where quality will be the watchword.

REACHING OUT TO THE WORLD :

The APDDCF (Andhra Pradesh District Dairy Co-operative Farmers) began its exports
efforts one and half decade ago and has gained significant ground abroad. It has
spread its marketing network in Gulf and is exploring the possibility of exporting dairy
products like Butter,Cheese, Cheese spread,UHT milk Sterilized Cream etc., to other
countries. The federation has been meeting the tastes of divergent cultures, while
bringing back to the pleasures of home to Non-resident Indians.

Today, Andhra Pradesh District Dairy Co-operative Farmers(APDDCF) is in the

process of acquiring capabilities to join the big league in dairy technology from USA,
UK, Australia, New Zealand and the Netherlands.

Profile of the APDDCF :

 10 No.
District Milk Unions
Milk Sheds 5 No.
Milk Product Factories 7 No.
District Dairies 9 No.
Major Dairies 2 No.
Milk Chilling Centres 63 No.
Chilling Capacity 11.37 LLPD
Processing Capacity - -
Milk Products Factories 17.50 LLPD
District Dairies 3.24 LLPD
Major Dairies 3.50 LLPD
Total Processing Capacity 24.24 LLPD
Milk Collection Routes 421 No.
Milk Producers Co-op. Societies 4270 No.
Milk Producers Associations 4958 No.
Milk Collection Centers 9228 No.
Turnover 2005-06 Rs. In cores 697.45 Cores

Dairy Development Activities in Nellore District:

During the year 1969, Nellore Dairy was started with initial capacity of 12,000
liters per day mostly to collect milk from the surrounding villages. Afterwards due to
increase in procurement the handling capacity was expanded to 40,000 liters per day
during the year 1979.

The Milk-Chilling Centre at Kavali was started during the year 1977 with an initial
capacity at Venkatagiri was started during the year 1981 with same capacity.
During the year 1985, due to the increase in milk Procurement in the district, they
handle capacity of milk chilling centre Kavali and Venkatagiri have been increased from
6,000 liters to 12,000 per day. In the year 1986 the Nellore Milk union was registered
under AP Co-operation Societies Act, 1964.
Due to the further increase in milk procurement the present handling capacity of Nellore
dairy is expanded to 40,000 liters to 75,000 liters per day and milk chilling center Kavali
also expanded from 12,000 liters to 20,000 liters per day. Another milk chilling center in
the district Duttalur with handling capacity 10,000 liters per day was started in month of
October 1995 and subsequently expanded 20,000 liters per day during 1998.

At present there are nearly 57,360 milk producers supplying milk to Nellore
Union. Out of which there are small farmers 23,960 marginal farmers 15,030,
Agricultural labourers 10,040 and large farmers 8,300. The data related to the above
development of Nellore dairy has been shown in the following table.

Data of Nellore Dairy

Name of the Unit Capacity per Present per day Peak on any
day date of the year
Nellore Dairy 75,000 Liters 36,000 Liters 43,000 Liters
Kavali Dairy 30,000 Liters 12,000 Liters 17,000 Liters
Venkatagiri Dairy 12,000 Liters 12,000 Liters 12,000 Liters
Duttalur Dairy 22,000 Liters 22,000 Liters 22,000 Liters

ORGANIZATION FLOW CHART IN VIJAYA DAIRY (NELLORE)

Board of directors

Managing director
 Nellore dairy

Engineering plant Accounts Administration Milk

Procurement
Asst.dairy Manager Assistant Junior & inputs
Engineer account manager
Asst.dairy officers Manager
Manager Senior (P &I)
Foreman Account assistant
Super indent Field
Plant charge Processing Junior supervisor
Man supervisor Assistant
UDA’S Field Assistant
Compressor Lab
Operators assistant LDA’S

Pre pack Weighting Computer

Operators clerk operators

Workers Workers Typist

MILK CHILLING CENTER OF VIJAYA DAIRY SURROUNDINGS

(NELLORE)

Board of directors

Managing director

Nellore dairy
Nellore M.C.C. M.C.C. M.C.C. M.C.C.
Dairy Kavali Venkatagiri Duttalur Doravari
Sathram

Manager Manager Manager Manager Manager

Field Field Field Field Field

Supervisor Supervisor Supervisor Supervisor Supervisor

Field Field Field Field Field

Assistant Assistant Assistant Assistant Assistant

Weight Weight Weight Weight Weight

Clerk clerk Clerk Clerk Clerk

Lab Lab Lab Lab Lab

Assistant Assistant Assistant Assistant Assistant

Plant Plant Plant Plant Plant

Mechanic Mechanic Mechanic Mechanic Mechanic

Workers Workers Workers Workers Workers

STAFF SANTIONED STRENGH BY HEAD OFFICE TO NELLORE

VIJAYA DAIRY

SI.NO Description Managing director office

(post sanctioned)
1 Managing Director 1
 2 Asst. Dairy engineer 1
3 Manager GR. I 1
4 Asst. Account officer 1
5 Junior manager 1
6 Acct. superintend 2
7 Asst. Dairy manager 2
8 Foreman 1
9 Manager GR. II 1
10 Field supervisor 10
11 Asst. supervisor 20
12 Fodder Div. officer 1
13 Processing supervisor 4
14 Milk Distribution supervisor 1
15 Plant charge man 2
16 Senior Assistant 2
17 Senior Accountant 2
18 Plant mechanic 3
19 Transport mechanic 1
20 Electrician GR.I 3

21 Senior Driver 7
22 Junior Driver -
23 Junior accountant 4
24 Junior Assistant 5
25 Junior Asst. cum-typist 2
26 Steno typist 1
27 Typist 2
28 Junior. Store keeper 1
29 Lab Assistant 4
30 Boiler operator 3
31 Sales Assistant 1
32 Weighting clerk 2
33 Security supervisor 1
34 Plant operator 6
 35 Record Assistant 1
36 Milk bill writer 11
37 Worker(TSW) FEB (III-1) 90
38 At tender 6
39 Security guard 7
40 Sweeper 3
41 Scavenger 2
42 Women instructor 2
43 Minimum T.S.W’S 25
TOTAL 245

THEORETICAL FRAMEWORK

Funds means working capital this working capital represents the difference between
current assets, current liabilities. All flows of funds pass through working capital. This
means that every transaction has an effect on the firm’s working capital position.
Although financial statement supply useful information to the management and describe
the nature of changes as a result of the periods productive and commercial activities ,
these statements fail to mirror the funds charge that have taken place over a given time
span, they do not spell out the movement of funds. It is more important to describe the
source from which additional funds were put , because the ultimate success of a
business enterprise depends on the where got and where gone situation. The funds
flow statement is therefore prepared to uncover the information which the financial
statement fill to described clearly.

FUNDS FLOW ANALYSIS

The following are the definitions of funds flow statement.
R.N. FOULK
“A statement of sources and application of funds in technical device designed to
analyze the charges in the financial condition of a business between two dates.”

BIERMEN
“It is a statement which highlights the underlying financial movements and explains the
changes of working capital form one point of time to another.”
These, funds flow statement is report which summarizes the events taking place
between the two accounting periods. It spells out the sources from which funds were
derived and the use to which these funds were put. This statement in essentially derived
from an analysis of the changes that have occurred in assets and liabilities item
between two balance sheets dates.
Therefore, the funds flow statement shows the movement of funds into or out of
current assets account of the firm.

The movement of funds has two aspects

1. Source of funds
2. Application of funds
Items to be shown under the head Sources of Funds are as follows: -
1. Issue of Shares and Debentures for Cash: – The total amount received from
the Issue of Shares or Debentures is to shown under this head. But, the Issue of
bonus Shares or Conversion of Debentures into Equity Shares or Shares issued to
vendors shall not be shown here as there is no inflow of Cash.
2. Long Term Loans: The Amount received on raising Long Term Loans is shown
under this head. Short Term Loans are not to be shown here as their treatment has
already been done while preparing the Statement of Changes in Working Capital.
3. Sale of Investments and other Fixed Assets: The Total Amount received on the
sale of Investments and other Fixed Assets is to be shown under this head.
4. Funds from Operations: The Funds generated from Operations as computed in
Step II are also required to be shown here.
5. Decrease in Working Capital: This would be the Balancing Figure of the
Statement and will come from change in Working Capital Statement.

Application of Funds
Items to be shown under Application of Funds are as follows:-
 6. Purchase of Fixed Assets and Investments: The Cash Payment made for
purchase of Fixed Assets and Investments is an application of Funds. But if the
purchase if made by issue of shares or debentures, such a transaction will not
constitute application of funds. Similarly, if the purchases are on credit, these will
not constitute fund applications.
7. Redemption of Debentures, Preference Shares and Repayment of Loan: -
Payment made including Premium (less: Discount) is to be taken as fund
application
8. Payment of Dividend & Tax: Payment of Dividend and Tax are to be taken as
applications of fund if the provisions are excluded from Current Liabilities and
Current Provisions are added back to profit to determine the “Funds from
Operations”
9. Increase in Working Capital: This would be the Balancing Figure of the
Statement and will come from change in Working Capital Statement
As explained above, the Funds Flow Statement summaries for a particular period the
resources made available to finance the activities of an enterprise and the uses to which
such resources have been put.

Prepare Funds from Operations:

The next Step is to prepare the Funds generated only from the Operating Activities of
the Business and not from the Investing/Financing Activities of the business. The
Funds from Operations shall be prepared as follows: -

Particulars Amount
Net Income Xxx
ADD
1. Depreciation on Fixed Assets Xxx
2. Amortization of Intangible Assets Xxx
3. Amortization of Loss on Sale of Xxx
Investments
4. Amortization of Loss on sale of Fixed Xxx
 Assets
5. Losses from Other Non-Operating Xxx
Incomes
6. Tax Provision (Created out of Current Xxx
Profits)
7. Proposed Dividend Xxx
8. Transfer to Reserve Xxx

(LESS)
1. Deferred credit xxx
2. Profit on Sale of Investments xxx
3. Profit on Sale of Fixed Assets xxx
4. Any written back Reserve & Provision xxx

SIGNIFICANCE OF FUNDS FLOW STATEMENT:

Funds flow statement is an important tool of financial analysis. The utility of the funds
flow statement sterns forms the fact that it enables management, shareholder investors,
creditors and other interested in the enterprise to evaluate that user of funds by the
enterprise to evaluate the user of funds by the enterprise to evaluate the user of funds
by enterprise. To determine how these funds are financed.

USEFUL IN DECISON MAKING TO THE MANAGER:

The funds flow statement services as valuable tool of financial analysis to the finance
manager. It helps in understanding the financial stability and efficiency of financial
policies of management. With the help of the funds flow statement, the analyst can
evaluate the financing pattern of the enterprise. An analysis of the major sources of
funds in the part reveals what portion of the growth was finance internally and what
portion externally. The statement is also measuring for judging whether the company
has grown as fast a rate, credit has increased out of proportion to expansion in current
assets and sales. If trade credit has increased relatively high rate one would wish to
evaluate the consequences of slowness in trade payments on the credit standing of the
company and its ability to finance.

Decision of capitalization:
The flow statement serves as hand maid to the financial manager in deciding the
making up capitalization. Estimated user of funds for new fixed assets, working capital,
dividends and repayment of debt are made for each of several futures years. Estimated
are made for each of several future years. Estimates is made of the funds to be
provided by operations and the balance must be obtained by obtained by borrowing
issuance of new securities. If the indicated amount of new funds required is greater than
what the financial manager thinks possible to raise, then plans for new fixed assets
acquisition and the dividend are re-examined so that the use of the funds can be bought
into balance with the anticipated sources of financing them.in particular funds
statements are very useful in planning intermediate and long-term financing.

Uses of funds flow statement:

Funds flow statement helps the financial analyst in having a more detailed analysis and
understanding of changes in the distribution of resources between two balance sheets
dates. In case such study is required regarding the future working capital position of the
company a projected funds flow statement can be prepared. The uses are as follows.

 It explains financial consequences of balances operation funds flow statement

provides a ready access or many conflicting situation such as.
 Why the liquidity position of business is becoming more and more unbalanced

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

presence of net loss for the period.

 Where have the profits gone.

 How the business could have good liquid position in spite of business making
loss(or)acquisition of funds assets.
 It answers intricate queries
The financial analyst can find out answers to a number of intricate questions.
 What are the sources of payment of loan taken?
 What is the overall credit worthiness of the enterprise?
 How much funds are generated through normal business operation.
 What way the management has utilized the funds in the part and
 What are doing likely uses of funds?
It Acts an instrument for allocation of resources A projected funds flow statement will
help the analyst in finding out how the management is going to allocate scare resources
for meeting the productive requirement of business. The use of funds should be phased
in such as order that the valuable resources are put to the best use of the enterprise.
 The funds should be managed in this way that the business is in a position to make
payment of interest and loan installments as per the agreed schedule.

IMPORTANCE OF FUNDS FLOW STATEMENT:

Current
Fidjifhf Assets Fixed Assets

Current Liabilities Fixed Liabilities

MEANING AND TYPES OF FINANCIAL STATEMENTS:

A financial statement is an organized collection of data. According to logical and

consistent accounting to logical and consistent accounting procedures its purpose is to
convey and understanding of some financial aspects of business firm. It may show a
position at a moment of time as, in the case of an income statement.
Financial statement analysis when used carefully, can produce meaningful insights
about a company financial information and its prospects for the future. However, the
analyst must be aware of certain important considerations about financial statements
and the use of these analytical tools. For example, the dollar amounts for many types of
assets and other financial statement items are usually based on historical costs and
thus do not reflect replacement costs inflationary adjustments. Furthermore, financial
statement contains estimates of numerous items. John Mayor, “financial statement
analysis is largely a study of relationship among the various financial factors in a
business as disclosed by single set of statements and a study of the trend of these
factors “as shown in the series of statements.
Thus, the financial statement generally refers to, four financial statements.
 Income statement
 Balance sheet of course a business may also prepared profit &loss account.
 Statement of retained earnings.
 A statement of changes in financial position.

STATEMENT OF CHANGES IN FINANCIAL POSITION:

The Balance Sheet shows the financial condition of the business a particular moment of
time, while the income statement discloses the result of operating of business once a
period of time. However, for a better understanding of affairs of the business it is
essentially to identify the movement of working capital or cash and out of the business
is essential to identify the movement of working capital or cash in and out of the
business this information is available in the statement of changes in financial position of
the business.
 Change in working capital position in such a case the statement in termed
(SCFP) or funds flow statement.
 Change in cash position in such a case the statement in termed as (SCFP) or
cash flow statement.
 Change in overall financial position. In such a case the statement is termed as
statement of changes in finance.

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

FINANCIAL ANALYSIS :

Financial analysis is highly to essential to underlying there efficiency and financial

position of the center prices.
The term ‘Analysis’ means methodical clarification of the data provided in the financial
statement. ‘Analysis ‘ and ‘interpretation ‘ are complementary to each other
interpretation requires analysis. While analysis is useless without interpretation. The
term ‘ Analysis ‘ to cover the meanings of analysis and interpretation , since analysis
involves interpretation.

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

GROWTH & PERFORMANCE OF THE STUDY

TABLE4.1
STATEMENT OF CHANGES IN WORKING CAPITAL
DURING THE YEAR 2016-2017

Particulars 2016 2017 Increase Decrease

Current Assets :
Cash on hand 33266.70 55212.45 21945.75
Cast at Bank 32546459.69 6341044.60 26205415.09
Capital work in pro 12489786.63 13043626.63 553840.00
Invest in co-op institutions 36905.00 36905.00
Inventories 763858.00 519592.00 244266.00
Sundry Debtors 36983552.52 37270822.63 287270.11
Advances to employees 229997.56 283011.06 53013.50
Advance to Temp. 4208025.55 3929495.89 278529.66
Dues receivable 15649345.32 11835915.26 3813430.06
Postage 484.35 360.35 124.00
Tip A/c. due to 4169022.76 4234175.84 65153.08
Closing Stock 2297343.00 10016900.50 7719557.50
TOTAL CURRENT 109408047.10 87567062.21
ASSETS (A) :
CURRENT LIABILITIES:
548476.51 545476.51
TIP A/C DUE TO
3280656.65 3280656.65
GENERATED FUNDS
485299.04 2020462.72 1535163.68
DUES PAYABLE
103352.12 113615.12 10263.00
EMPLOYEE STATUTARY

LIABILITY
25122198.22 27768612.44 2646414.22
OUTSTAND LIABILITIES
990545.56 3384662.74 2394117.18
ADVANCES
2181.00 517.00 1664.00
STATUTORY LIABILITY
2228371.71 2343285.71 114914.00
PAYABLE UNIONS
32761080.81 39460288.89
TOTAL CURRENT

LIABILITIES(B) :
76646966.29 48106773.32
WORKING CAPITAL(A-

B)

Decrease in Working 28540192.95 28540192.95

capital

TOTAL 76646966.29 76646966.29 37242636.89 37242636.89

 TABLE-4.2
FUNDS FROM OPERATIONS FOR THE YEAR 2016-2017

AMOUNT (Rs)
PARTICUALRS

Operating loss Before Taxs 19927858.64

Add temporary adv 38573583.31

58501441.95

Less: Depreciation 53918051.03

Funds from operation 4583389.92

FUNDS FLOW STATEMENT 2016-2017

SOURCES AMOUNT APPLICATIONS AMOUNT

CAPITAL :
Non members 181175.69 PURCHASE OF FIXED 29876297.00
ASSETS
GRANTS : ADJUSTED HEADS DUE TO 1368624.23
NDDB 457297.56 GRANTS TO SOCITY BY 207250.00
 KIND
FROM GOVT 1675000.00 DEPOSITS WITH OTHER 32840.00
DEPARTMENTS
LOAN FROM WDP 935359.31 EXPENDITURE UNDER 5844876.05
BUILDING A/C
LOAN FROM TIP A/C 215520.00 EXPENDITURE UNDER TIP 1938048.15
A/C
GRANTS FROM DRDA 2050000.00
LOAN FROM BUILDING A/C 630000.00
DECREASE IN WORKING 28540192.95
CAPITAL
FUNDS FROM OPERATIONS 4583389.92

TOTAL 39267935.43 39267935.43

Interpretation :

From the above table to observe working capital of the company shows
decreased trend. The current assets has decreased 109408047.10 in 2016 and
87567062.21 in 2017. The current liabilities increased 32761080.81 in 2016 and
39460288.89 in 2017. So the result is net decreasing working capital 28540192.95.

It is evident from the above table that total funds from operation
Rs. 4583389.92 received in the year 2016-17. Because of the depreciation
(38573583.31) is the only non operating expenditure, the temporary advance is the only
non operating income (14346095.39).

The funds flow statement received capital from members (7807627.07) and non
members (3464593.63). The W.D.P one of the source of funds for this year. The
decreasing working capital place vital role in source of funds.

The funds are utilized of the payment of loans purchase of new machinery and having
other deposits.
 STATEMENT OF CHANGES IN WORKING CAPITAL DURING THE
YEAR 2017-2018

Particulars 2017 2018 Increase Decrease

Current Assets :
Cash on hand 55212.45 39991.70 15220.75
Cast at Bank 6341044.60 5055178.70 1285865.90
Cap-working in 13043626.63 13043626.63
progress
Invest in co-op 36805.00 36805.00
institution
Inventories 519592.00 558575.00 38983.00
Sundry Debtors 37270882.63 37473350.63 202468.00
Advances to employee 283011.06 228635.06 54376.00
Advance to Temp. 3928495.89 3778566.50 149929.39
Dues receivable 11835916.26 9957564.32 1878351.94
Postage 484.35 331.35 153.00
Tip A/c. due to 4169022.76 4326635.10 157612.34
Closing Stock 2297343.00 907578.00 1389765.00
TOTAL CURRENT 79781436.63 75406837.99
ASSETS (A) :
CURRENT

LIABILITIES :

TIP A/C DUE TO 548476.51 440842.51 107634.00

GENERATED FUNDS 3280656.65 3280656.65

DUES PAYABLE A/C 2020462.72 4344923.49 2324460.77

STATUTORY 113615.12 678531.82 564916.70

LIABILITY

OUTSTANDING 27768612.44 31757059.79 3988447.35

LIABILITY

ADVANCES 3384662.74 3357560.85 27101.86

RECEIVED
517.00 556.00 39.00
EMPLOYEE

STATUTORY

PAYABLE TO UNIONS 2343286.71 2324833.71 18453.00

TOTAL CURRENT 39460289.89 46184964.85

LIABILITIES (B) :

WORKING CAPITAL 40321146.74 29221873.14

(A-B)
DECREASE IN 11099273.60 11099273.60

WORKING CAPITAL

TOTAL 40321146.74 40321146.74 11651525.80 11651525.80

FUNDS FROM OPERATION:

AMOUNT (Rs)

PARTICUALRS

Operating loss Before Taxs -10577959.62

Add : Depreciation 9935789.67

Net Operating Loss -21513749.29

FUNDS FLOW STATEMENT FOR THE YEAR 2017-2018:

SOURCES AMOUNT APPLICATIONS AMOUNT

CAPITAL :
Members PURCHASE OF FIXED 106857.00
Non members 7807627.07 ASSETS

3464583.63
GRANTS : ADJUSTED HEADS DUE 1368624.29
TO
NDDB GRANTS TO SOCITY BY 207250.00
457279.56 KIND
FROM GOVT DEPOSITS WITH OTHER 36208.00
1675000.00 DEPARTMENTS
LOAN FROM WDP EXPENDITRE UNDER 5844876.05
94000.00 BUILDING A/C
LOAN FROM TIP A/C EXPENDITURE UNDER 1938048.15
2050000.00 TIP A/C
GRANTS FROM DRDA FUNDS LOSS 21513749.29
630000.00 INOPERATION
LOAN FROM BUILDING A/C
3576126.92
RETENTION MONEY
DEPOSIT 161722.00
DECREASE IN WORKING
CAPITAL 11099273.60

TOTAL 31015612.78 TOTAL 31015612.78

Interpretation :
From the above table to observe working capital of the company shows decreased
trend. The current assets has increased 79781436.63 in 2017 and 75406837.99 in
2018. The current liabilities decreased 39460289.89 in 2017 and 46184964.85 in 2018.
So the result net decreasing working capital 11099273.60.

It is evident from the above table that total funds loss in operation
Rs. 21513749.29 received in the year 2017-2018.

The funds flow statement received capital from members (7807627.07) and non
members (3464583.63). The loan from tip a/c and secured loans are the main sources
of funds for the company.

The funds are utilized for W.D.P (3969520.00) and purchase of new assets
(106857.00). The decreasing working capital (11099273.60) is one of the major
application.
 OBSERVATIONS

 Most of funds utilized for purchasing new assets and payment for the loans, most of
the funds came from non trading activities.

 Depreciation is the only non operating expenditure as the company is not maintain
reserves properly.

 The depreciation provision has decreased from 38573583.31 during 2014-2015 to

36687576.31 during 2017-2018 which shows that company is not maintain proper
provision though there is increased in fixed assets.

 The company procure funds from non trading activities and mostly depends upon
the internal sources.

 The advances are gradually declining from year to year.

RECOMMENDATIONS
 The company has to acquire the capital from equity shares, to reduce high risk from
the external borrowings.

 The quantum of the sales generated should be improved, impressively in order to

attain higher returns on investment.
 The liquidity of the company should be improved by maintaining the optimum current
assets.

 To improve financial wealth of the company and maximizing the time between the
source mobilization and utilization.

 It should maintain proper reserves for solve the liquidity problem.

 The company has to maintain the optimum capital structure for getting maximum
results.
 BIBLIOGRAPHY

BOOK NAME AUTHOR PUBLICAION YEAR

FINANCIAL IM pandey 9/e, Vikas Publishing 2004

MANAGEMENT

Fundamentals of Prasanna chandra Tata McGraw Hill, 2003

Financial Management New Delhi.

Financial Management- M.Y Khan,P K Jain Tata McGraw Hill, 2003

Text and Problems New Delhi.

Maheswari S N, Vikas Publishing House 2009

Financial Accounting
Maheswari S K Private Limited,
New Delhi.

Financial Management James C.VanHorne Pearson Education 2004

And policy

INTERNET SITE:

 www.google.com
 www.wikipedia.com
 www.vijayadiaries.com
 www.nwda.gov.in
 CONTENTS

INDEX
S.No CHAPTER NAME Page No.s
1 CHAPTER - I
INTRODUCTON
2 CHAPTER - II
INDUSTRY PROFILE & COMPANY PROFILE
3 CHAPTER - III
THEORETICAL FRAMEWORK
4 CHAPTER – IV
GROWTH & PERFORMANCE
5 CHAPTER – V
OBSERVATIONS & RECOMMENDATIONS
BIBLIOGRAPHY
 CHAPTER – I
INTRODUCTION
 INTRODUCTION

Funds flow statement is a technical device designed to highlight the changes in

the financial condition of a business enterprise between the opening and closing
balance sheet dates.  The flow of funds results in mainly profits of a business due to
business operations.  And has been well said that “a business with an income at it heals
furnishes always oil for its own wheels”, it is the profit which becomes main sources of
funds for a business.  However profitable companies can also be anemic with respect to
working capital and since working capital is the life blood of an enterprise, its shortage
can disturb the operating cycle of the business. The concept of  ‘funds’ the flow which
is to be examined in detail as to its sources and applications so as to know the net
increase or decrease in working capital over a period of time, usually a year. 
One of the most important techniques of financial analysis is a preparation of  
funds flow statement.   It is the statement which portrays the changes in the financial
position of an enterprise.  Balance sheet and income statement do not present a
comparative picture, even if placed side by side in that much clarity as the statement of
changes   in financial position which focuses on the sources and uses of funds. 

Definition:
A financial  statement with summary for the period covered by it, the changes in
financial position including the sources from which funds were obtained by the
enterprise and specific uses to which funds were applied. Funds flow statement in a
statement either prospective or retrospective setting out the sources and application of
the funds of an enterprise.  The purpose of the statement is to indicate clearly the
requirement of funds and how they are propose to be raised and efficient utilization and
application of the same.

A statement of funds received and expanded a statement of changes in financial

position or sources and application of funds in which elements of net income and
working capital contributing to an understanding of the whole of financial operation
during the reporting period replace total of these items.
Concept of Funds:
Funds in the narrowness sense of the term as be equated to cash.  But in the
broader sense and appropriate one here, it refers to working capital that is current
assets less current liabilities.

A still broader interpretation of the term “funds” has been given by some
accountants, and according to them funds includes all resources used in the business
whether in the form of human, material, money, machinery and other.  But it is not
relevant for the purpose of flow statement.  The most common definition of fund is
working capital since they use the term working capital as synonym to current assets. 

CONCEPT of Flow:
The dictionary meaning of the word flow is movement denoting change
Therefore, whenever there is a change of funds that is either increase or decrease there
is a flow of funds. There must be some cause of change- the cause may result in either
raising the funds inflow of funds there by becoming a source of fund or the cause may
lead depletion of funds that is out of funds, implying there by an application or use of
funds in other words source of funds show the reasons of increase in funds that is
working capital and application of funds reveal the reasons of decrease in funds that is
working capital.  
 

Concept of Funds Flow Statement: The meaning of funds flow or flow of

funds illumination the concept of funds flow statement clearly the statement which
analysis the flow of funds that is the reasons for changes in working capital is a funds
flow statement. 

The reasons are set by the sources and application of funds and therefore the
statement can be called as the statement of sources an application (uses) of funds. 
Some accountants prefer to call it in short as fund and to which place have gone.  It is
also designated as where got and where (movements) of working capital, movements of
flow statements etc.
Importance of Funds Flow Statement:

The information which is provided by funds flow statement is neither available in

the balance sheet nor in the income statement and hence it’s important.  The changes
which have taken place in between two accounting dates are highlighted by funds flow
statement.  A lay man cannot grasp the underlying significance of achievements and
progress of the company simply by a personal of the balance sheet and income
statement of different years.  The comparative and analytical study presented by the
statement giving the details of sources and uses of funds during a given period of
immense help to the users of information. 

It is very useful tool in analytical kit of the management also, besides the outsiders, in
order to have ‘at a glance’ appraisal of the financial and operating performance of a
company.  Since the statement shows the extent to which the working capital has been
effectively put to  use,  the management’s task of taking policy decision regarding

investment, dividends etc, is great facilitated .  

Uses of funds flow statement:

        Funds flow statement of a company is of great value to management share
holders, creditors, bankers, money lending institutions etc. 

 Informative value:-
The financial consequence of business operation are clearly explained in
details by a funds flow statement some of the problems which crop up in the
minds of investors are well solved by a simple perusal of this statement for e.g.,

 Where have the profit gone.

 Why does an imbalance exist between liquidity position and profitability
position of enterprise?
  Forecasting value:- A projected funds flow statement can be prepared
and resources can be properly allocated after an analysis of the present state of
affairs.  The optimal utilization of available funds are necessary for the overall
growth of the enterprise.  The funds flow statement prepared in advance given a
clear direction to the management in this raged.

 Testing value:- Whether the working capital has been effectively used or
not by the management can well be tested by funds flow statement.  Whether
working capital has been maintained at proper level, and whether it is adequate
or inadequate can be known by a study of the statement.  The management is
warned against the injudicious uses of funds.

 Decision-making value: Since overall credit worthiness of the enterprise is

known, creditors and money lenders can decide as to whether they have to provide
loans to company or not.  The sources of raising funds and their application help the
shareholders to decide whether the management of the business is an enlightened or
not regarding managing funds.  Mismanagement of funds may be prevented.  The
management can be decided about the future financing policies and capital.

NEED FOR THE STUDY

Every company needs to know the flow of funds both inflow and outflow. So that
the efficiency in utilizing the funds can be better understand. For this the present
analysis through funds flow statement will be helpful.

The main need for the study is to study the operating activities, investing
activities and Financing activities in the Vijaya Milk Dairy company and methods to
evaluate the financial performance of the company, with the help of Funds flow to
evaluate the pattern of the firm.

The importance of cash management is so essential in any organization to run

the business with continuous basis. The present study also attempts to know the “cash
management system in selected in selected organization”.
 SCOPE OF THE STUDY

The scope of the study is limited to the analysis of the performance of the firm
based on funds utilization. The study is based on past five years financial reports and
the analysis is confined to the identification of sources and applications of funds by the
firm.
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: -

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

The term funds used here means working capital that is he excess of current
assets over current liabilities.

OBJECTIVES OF THE STUDY

 PRIMARY OBJECTIVE:
To examine the efficiency in the way which the firm utilizes the
funds.

 SECONDARY OBJECTIVE:
To measure the working capital position through schedule of
the changes in working capital system .

Sources of data:
Collected from the secondary sources. The entire study was based on secondary
data, which are collected from company annual report, book, records, journals, profiles
of an organization, and internet sources.

Tools of the study:

In order to analyze financial position of the company main technique of financial
analysis is funds flow analysis. In this technique the statement of changes in working
capital, Funds from operations was used.

LIMITATIONS OF THE STUDY

 Due to the confidential records the data not exposed , so the study may not be
fully fledged .
 The study is purely based on the data available in the firm of annual reports.
 The period of the study for 5 years and the performance evaluation is also limited
to 5 years
 The study is based on the past date, which cannot predict the future performance
accurately.
 The study may not be detailed in all aspects.
 The study time period is limited.
 CHAPTER – II
INDUSTRY PROFILE AND
COMPANY PROFILE

INDUSTRY PROFILE
Milk is the food, which contains vitamins, proteins, fats and carbohydrates every human
being consumers neither milk at one time nor the other. World Health Organization
(WHO) suggests that the infants should be fed compulsorily with mother milk because it
provides all the necessary fats, proteins etc. which is essential for the growth of the
baby. So, milk plays a major role in our daily life.

India is the second highly populated country and is about to occupy the first position. In
India the major source of income is agriculture. Dairy is one of the best instruments for
bringing up the socio-economic development of the country, developing countries like
India rural people depend of indigenous Character for a long time because of
consumers tastes of food articles so far delicacies are concerned.

Dairy developing in India has been most spectacular in recent years. While chief
contribution factor to this achievement is the Anand pattern of dairy cooperatives. No
less creditable has been a concerted effort of the national dairy development and the
Indian Dairy Development in India since 1970. Dairying is concerned as whole when it
contains elements like production, procurement and marketing; ‘Kaira District Co-
operative Milk Producers Union Limited’ adopted this integrated approach. This
approach is provided to be successful with ‘AMUL’ and later this approach came to
know as ‘ANAND PATTERN OF DAIRY COOPERATIVES’

.
INTERNATIONAL SCENARIO OF DAIRY INDUSTRY:
Average of 14 billion liters of milk was produced every year, in the UK 73 million tones,
in USA and India’s production is 75 million tones. Half of the total production of milk
used for manufacturing other production in the UK the liquid milk sales had seen a
decline since the previous 10 years.

Since 1980 more than 90% of milk walk was purchased from the milkman. By 1980 this
decline to 89%, in 1990 it decreased to 68.3% and by 1995 doorstep delivery accounted
for 44.5% of milk purchased. Sales in supermarkets and small shops increased in
relation to the decline in doorstep sale. The information collected on international
scenario was achieved from internet and it was not updated to the current year.

EVOLUTION OF THE DAIRY INDUSTRY IN INDIA :

Dairy has been part of the list in India since the ancient vedic times; the modern dairy
industry took roots in 1950 with the slave of bottle milk in Bombay from array milk
colony. The first large scale mil products factory was started in 1954 and ANAND by
Amul a co-operative venture with the assistance of UNICEF (United Nations
International Children’s Emergency Fund) for the production of milk powder, butter and
ghee. These products were made from the buffalo milk.

The world’s largest dairy development program every undertaken the operation
flood undertook the gigantic task if upgrading and modernizing milk production
procurement. Processing and marketing with assistance providing by the world food
program.

The European economic community the World Bank and other internal agencies,
designed and implemented by the NDDB (National Dairy Development Board) and the
Indian dairy-co-operation [IDC] was launched in July 1970. Its basic concepts comprise
the establishment of co-operative structure of Amul pattern.

OPERATION FLOOD –1

Operation flood also referred to as while is a gigantic project propounded by the

government of India for developing dairy industry in the country. The operation flood-2
originally mean to be complemented in 1975 actually looks the period of about 9 years
from 1970-79 for its completion a total cost of about Rs 116 crores. The operation flood
I was wholly finance and selling in India free gifts of 1,26,000 metric tones at skim
powder, and 42,000 metric tones of butter oil donated out of the surplus of European
economic community.

OPERATION FLOOD-2:
The operation flood-2 that started in July 1978 is completed in 1985 at a cost of Rs 483
cores. A humble attempt has been made to present a general appraisal of the
achievements made in same sufficient fields during operation flood-1, these
achievements is at as all made particularly the Anand Pattern Dairy Co-operative unions
are to serve now a bedrock of operation flood-2. These unions are to act as the starting
nuclear for co-operative character federation, the main instrument for the gigantic
project flood-2. The average nuclear character federation world in 6 districts unions
registered and unregistered.

Gujarat state alone government the share of 1666.51 lakhs against 5 states Haryana,
Bihar, Rajasthan and Andhra Pradesh, but together the total distrument in there was
1732 lakhs only. This trend is going to be nationalized operation flood-2.

OPERATION FLOOD-3:
The Indian dairy industry is growing rapidly and may become a strong competitor to
world power. The milk sector is the second largest contribution to the agricultural
economy in terms of produce. The phenomenal growth is a result of the NDDB (National
Dairy Development Board) through operation flood programme. Operation flood-3 was
closing position consolidated the procurement efforts to boost production. Projection for
in output for 2000 was nearly 90 million tons at a 5% growth rate. It is now 5-8 percent
dairy factories established under operation flood. Which covers 170 milk cooperative
collective nearly 10 million liters of milk and marketed 8 million liters per day.

The operation flood being implemented by the NDDB (National Dairy

Development Board) aims to entrance the average milk procurement to 13.7 million
kilograms per day for the year 1996 the concluding the year of the operation flood-3
programs.

The peak procurement level during the some period in expected to means 18.3
million kilograms packed. The compulsive line figures for both during 1987 the base
year of the operation flood programme to be respective 8.5 and 11.2 mkg-pd. Efforts are
also begin made to increase capabilities of milk and production of milk powder.

Under the operation flood improving animal health case and good breeding
natural making available quality fodder understand incurring are and farm fertilization
under co-operation and progressing were added inventory an animal has broadly and
dairying from 1950-90 was 2864 crores achieve of an occasion to the operation flood.
The milk production did wary with import to milk powder expect for a small quality
[26000 tones] during the brought years dairy industry in Andhra Pradesh.

DAIRY INDUSTRY IN ANDHRA PRADESH:

With implementation food-3 programmed in Andhra Pradesh in tempo of dairy

development has gained movements providing a new thrust to eradication of poverty
and unemployment in rural areas and brought greater awaking the confidence among
milk producers to manage a loan affair through dairy co-operative on Anand patterns,
the federation is marching a head with dairy co-operation to held a new area of rural
programs.

GENESIS OF DAIRY INDUSTRY:

Planning for organized dairy industry in AP was conceived in 1951 and pilot milk supply
scheme was started in 1960-61 as a paradise for the integrated milk project.
Hyderabad and Vijayawada for the which the UNICER gifted dairy equipment valued at
1 crore with the objectives of lining up and supplying surplus milk from producing areas
to consuming area.

Andhra Pradesh development co-operation on was formed on 02.04.1974 as a state

government undertaking for the application of commercial principles with the mission of
industrializing rural dairying and extensive infrastructure was developed to procure milk
form and corner of the states to tap higher to tapped milk of land with main objectives
generating grater employment opportunities to the rural people where they are based.

Andhra Pradesh dairy development co-operative federation constructed in October

1981 and active involvement of program is organized milk production procurement
processing and marketing national policy government of India. The India dairy co-
operation offered financial assistance of Rs. 78.51 crores for dairy development
program in AP with 30% grand and 70% on loan basis.

Milk Industry Data

 Milk product factories 7
District dairies 10
Milk Chilling centers 48
Milk collection centers 1,400
Village milk producer's co-operative 5,200
Societies 267
Milk collection routs 267
Milk Producer 5,72,000
[80% of milk producer being to small and
Marginal and agricultural workers]
Village covered for collection of milk 10,000
Milk consumers 6,50,000
Cash paid to milk producers 62,00,00,000
Castle feed plants 6
5000
Women members in union

Dairy Units:
At present there are 54 dairy units in operation with 7 milk product factories. 48 milk
chilling and cooling apart from dairy units there are 6 cattle feed mining plants under the
federation.

MARKETING:

The surplus milk is converted into various dairy products like Vijaya spray food butter,
milk powder, skimmed milk powder ghee etc. with the brand name Vijaya.

They have secured good market reputation all over India besides foreign products like
ice cream, chocobar etc. are also manufactured by the federation.
COMPANY PROFILE

As the years passed Andhra Pradesh District Dairy Co-operative Farmers

(APDDC) built up the infrastructure needed to meet every requirement of dairying that is
procurement of milk from over 800,000 dairy farmers spread across Andhra Pradesh or
getting it ready for national wide distribution. It all happened within the vast dairy plant
network of APDDC. Through extensive use of high technology and management
acumen honed to steer such a wide spread operation, and brought prosperity to the
state many times. The federation has drawn up more comprehensive systems for
procurement and processing of milk.

A dedicated research cases is actively pursuing ways and means of bettering

quality. Collaboration with global experts are also being sought, all in attempt to remain
at the forefront of modern dairying in India where quality will be the watchword.

REACHING OUT TO THE WORLD:

The APDDCF (Andhra Pradesh District Dairy Co-operative Farmers) began its exports
efforts one and half decade ago and has gained significant ground abroad. It has
spread its marketing network in Gulf and is exploring the possibility of exporting dairy
products like Butter,Cheese, Cheese spread,UHT milk Sterilized Cream etc., to other
countries. The federation has been meeting the tastes of divergent cultures, while
bringing back to the pleasures of home to Non-resident Indians.

Today, Andhra Pradesh District Dairy Co-operative Farmers(APDDCF) is in the

process of acquiring capabilities to join the big league in dairy technology from USA,
UK, Australia, New Zealand and the Netherlands.

Profile of the APDDCF :

10 No.
District Milk Unions
Milk Sheds 5 No.
 Milk Product Factories 7 No.
District Dairies 9 No.
Major Dairies 2 No.
Milk Chilling Centres 63 No.
Chilling Capacity 11.37 LLPD
Processing Capacity - -
Milk Products Factories 17.50 LLPD
District Dairies 3.24 LLPD
Major Dairies 3.50 LLPD
Total Processing Capacity 24.24 LLPD
Milk Collection Routes 421 No.
Milk Producers Co-op. Societies 4270 No.
Milk Producers Associations 4958 No.
Milk Collection Centers 9228 No.
Turnover 2005-06 Rs. In cores 697.45 Cores

Dairy Development Activities in Nellore District:

During the year 1969, Nellore Dairy was started with initial capacity of 12,000
liters per day mostly to collect milk from the surrounding villages. Afterwards due to
increase in procurement the handling capacity was expanded to 40,000 liters per day
during the year 1979.

The Milk-Chilling Centre at Kavali was started during the year 1977 with an initial
capacity at Venkatagiri was started during the year 1981 with same capacity.

During the year 1985, due to the increase in milk Procurement in the district, they
handle capacity of milk chilling centre Kavali and Venkatagiri have been increased from
6,000 liters to 12,000 per day. In the year 1986 the Nellore Milk union was registered
under AP Co-operation Societies Act, 1964.

Due to the further increase in milk procurement the present handling capacity of Nellore
dairy is expanded to 40,000 liters to 75,000 liters per day and milk chilling center Kavali
also expanded from 12,000 liters to 20,000 liters per day. Another milk chilling center in
the district Duttalur with handling capacity 10,000 liters per day was started in month of
October 1995 and subsequently expanded 20,000 liters per day during 1998.

At present there are nearly 57,360 milk producers supplying milk to Nellore
Union. Out of which there are small farmers 23,960 marginal farmers 15,030,
Agricultural labourers 10,040 and large farmers 8,300. The data related to the above
development of Nellore dairy has been shown in the following table.

Data of Nellore Dairy

Name of the Unit Capacity per Present per day Peak on any
day date of the year
Nellore Dairy 75,000 Liters 36,000 Liters 43,000 Liters
Kavali Dairy 30,000 Liters 12,000 Liters 17,000 Liters
Venkatagiri Dairy 12,000 Liters 12,000 Liters 12,000 Liters
Duttalur Dairy 22,000 Liters 22,000 Liters 22,000 Liters

ORGANIZATION FLOW CHART IN VIJAYA DAIRY (NELLORE)

Board of directiors

Managing director

Nellore dairy

Engineering plant Accounts Administration Milk

 Procurement
Asst.dairy Manager Assistant Junior & inputs
Engineer account manager
Asst.dairy officers Manager
Manager Senior (P &I)
Foreman Account assistant
Super indent Field
Plant charge Processing Junior supervisor
Man supervisor Assistant
UDA’S Field Assistant
Compressor Lab
Operators assistant LDA’S

Pre pack Weighting Computer

Operators clerk operators

Workers Workers Typist

MILK CHILLING CENTER OF VIJAYA DAIRY SURROUNDINGS

(NELLORE)

Board of directiors

Managing director

Nellore dairy

Nellore M.C.C. M.C.C. M.C.C. M.C.C.

Dairy Kavali Venkatagiri Duttalur Doravari
 Sathram

Manager Manager Manager Manager Manager

Field Field Field Field Field

Supervisor Supervisor Supervisor Supervisor Supervisor

Field Field Field Field Field

Assistant Assistant Assistant Assistant Assistant

Weight Weight Weight Weight Weight

Clerk clerk Clerk Clerk Clerk

Lab Lab Lab Lab Lab

Assistant Assistant Assistant Assistant Assistant

Plant Plant Plant Plant Plant

Mechanic Mechanic Mechanic Mechanic Mechanic

Workers Workers Workers Workers Workers

STAFF SANTIONED STRENGH BY HEAD OFFICE TO NELLORE

VIJAYA DAIRY

SI.NO Description Managing director office

(post sanctioned)
1 Managing Director 1
2 Asst. Dairy engineer 1
3 Manager GR. I 1
 4 Asst. Account officer 1
5 Junior manager 1
6 Acct. superintend 2
7 Asst. Dairy manager 2
8 Foreman 1
9 Manager GR. II 1
10 Field supervisor 10
11 Asst. supervisor 20
12 Fodder Div. officer 1
13 Processing supervisor 4
14 Milk Distribution supervisor 1
15 Plant charge man 2
16 Senior Assistant 2
17 Senior Accountant 2
18 Plant mechanic 3
19 Transport mechanic 1
20 Electrician GR.I 3

21 Senior Driver 7
22 Junior Driver -
23 Junior accountant 4
24 Junior Assistant 5
25 Junior Asst. cum-typist 2
26 Steno typist 1
27 Typist 2
28 Junior. Store keeper 1
29 Lab Assistant 4
30 Boiler operator 3
31 Sales Assistant 1
32 Weighting clerk 2
33 Security supervisor 1
34 Plant operator 6
35 Record Assistant 1
36 Milk bill writer 11
37 Worker(TSW) FEB (III-1) 90
38 At tender 6
39 Security guard 7
40 Sweeper 3
41 Scavenger 2
42 Women instructor 2
43 Minimum T.S.W’S 25
TOTAL 245
 CHAPTER – III
THEORITICAL FRAMEWORK

THEORETICAL FRAMEWORK

Funds means working capital this working capital represents the difference between
current assets, current liabilities. All flows of funds pass through working capital. This
means that every transaction has an effect on the firm’s working capital position.
Although financial statement supply useful information to the management and describe
the nature of changes as a result of the periods productive and commercial activities ,
these statements fail to mirror the funds charge that have taken place over a given time
span, they do not spell out the movement of funds. It is more important to describe the
source from which additional funds were put , because the ultimate success of a
business enterprise depends on the where got and where gone situation. The funds
flow statement is therefore prepared to uncover the information which the financial
statement fill to described clearly.

FUNDS FLOW ANALYSIS

The following are the definitions of funds flow statement.
R.N. FOULK
“A statement of sources and application of funds in technical device designed to
analyze the charges in the financial condition of a business between two dates.”

BIERMEN
“It is a statement which highlights the underlying financial movements and explains the
changes of working capital form one point of time to another.”
These, funds flow statement is report which summarizes the events taking place
between the two accounting periods. It spells out the sources from which funds were
derived and the use to which these funds were put. This statement in essentially derived
from an analysis of the changes that have occurred in assets and liabilities item
between two balance sheets dates.
Therefore, the funds flow statement shows the movement of funds into or out of
current assets account of the firm.

The movement of funds has two aspects

3. Source of funds
4. Application of funds
Items to be shown under the head Sources of Funds are as follows: -
1. Issue of Shares and Debentures for Cash: – The total amount received from
the Issue of Shares or Debentures is to shown under this head. But, the Issue of
bonus Shares or Conversion of Debentures into Equity Shares or Shares issued to
vendors shall not be shown here as there is no inflow of Cash.
2. Long Term Loans: The Amount received on raising Long Term Loans is shown
under this head. Short Term Loans are not to be shown here as their treatment has
already been done while preparing the Statement of Changes in Working Capital.
3. Sale of Investments and other Fixed Assets: The Total Amount received on the
sale of Investments and other Fixed Assets is to be shown under this head.
4. Funds from Operations: The Funds generated from Operations as computed in
Step II are also required to be shown here.
5. Decrease in Working Capital: This would be the Balancing Figure of the
Statement and will come from change in Working Capital Statement.

Application of Funds

Items to be shown under Application of Funds are as follows:-

 6.Purchase of Fixed Assets and Investments: The Cash Payment made for
purchase of Fixed Assets and Investments is an application of Funds. But if the
purchase if made by issue of shares or debentures, such a transaction will not
constitute application of funds. Similarly, if the purchases are on credit, these will not
constitute fund applications.
7.Redemption of Debentures, Preference Shares and Repayment of Loan: -
Payment made including Premium (less: Discount) is to be taken as fund application
8.Payment of Dividend & Tax: Payment of Dividend and Tax are to be taken as
applications of fund if the provisions are excluded from Current Liabilities and
Current Provisions are added back to profit to determine the “Funds from
Operations”
Increase in Working Capital: This would be the Balancing Figure of the Statement
and will come from change in Working Capital Statement
As explained above, the Funds Flow Statement summaries for a particular period the
resources made available to finance the activities of an enterprise and the uses to which
such resources have been put.

Prepare Funds from Operations:

The next Step is to prepare the Funds generated only from the Operating Activities of
the Business and not from the Investing/Financing Activities of the business. The
Funds from Operations shall be prepared as follows: -
Particulars Amount
Net Income xxx
ADD
1. Depreciation on Fixed Assets xxx
2. Amortization of Intangible Assets xxx
3. Amortization of Loss on Sale of xxx
Investments
4. Amortization of Loss on sale of Fixed xxx
Assets
5. Losses from Other Non-Operating xxx
Incomes
6. Tax Provision (Created out of Current xxx
Profits)
7. Proposed Dividend xxx
8. Transfer to Reserve xxx

(LESS)
 1. Deferred credit xxx
2. Profit on Sale of Investments xxx
3. Profit on Sale of Fixed Assets xxx
4. Any written back Reserve & Provision xxx

SIGNIFICANCE OF FUNDS FLOW STATEMENT:

Funds flow statement is an important tool of financial analysis. The utility of the funds
flow statement sterns forms the fact that it enables management, shareholder investors,
creditors and other interested in the enterprise to evaluate that user of funds by the
enterprise to evaluate the user of funds by the enterprise to evaluate the user of funds
by enterprise. To determine how these funds are financed.

USEFUL IN DECISON MAKING TO THE MANAGER:

The funds flow statement services as valuable tool of financial analysis to the finance
manager. It helps in understanding the financial stability and efficiency of financial
policies of management. With the help of the funds flow statement, the analyst can
evaluate the financing pattern of the enterprise. An analysis of the major sources of
funds in the part reveals what portion of the growth was finance internally and what
portion externally. The statement is also measuring for judging whether the company
has grown as fast a rate, credit has increased out of proportion to expansion in current
assets and sales. If trade credit has increased relatively high rate one would wish to
evaluate the consequences of slowness in trade payments on the credit standing of the
company and its ability to finance.
Decision of capitalization:
The flow statement serves as hand maid to the financial manager in deciding the
making up capitalization. Estimated user of funds for new fixed assets, working capital,
dividends and repayment of debt are made for each of several futures years. Estimated
are made for each of several future years. Estimates is made of the funds to be
provided by operations and the balance must be obtained by obtained by borrowing
issuance of new securities. If the indicated amount of new funds required is greater than
what the financial manager thinks possible to raise, then plans for new fixed assets
acquisition and the dividend are re-examined so that the use of the funds can be bought
into balance with the anticipated sources of financing them.in particular funds
statements are very useful in planning intermediate and long-term financing.

Uses of funds flow statement:

Funds flow statement helps the financial analyst in having a more detailed analysis and
understanding of changes in the distribution of resources between two balance sheets
dates. In case such study is required regarding the future working capital position of the
company a projected funds flow statement can be prepared. The uses are as follows.

 It explains financial consequences of balances operation funds flow statement

provides a ready access or many conflicting situation such as.

 Why the liquidity position of business is becoming more and more unbalanced

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

presence of net loss for the period.

 Where have the profits gone.

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

 It answers intricate queries

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

 What is the overall credit worthiness of the enterprise?

 How much funds are generated through normal business operation

 What way the management has utilized the funds in the part and

 What are doing likely uses of funds?

 It Acts an instrument for allocation of resources A projected funds flow statement will
help the analyst in finding out how the management is going to allocate scare resources
for meeting the productive requirement of business. The use of funds should be phased
in such as order that the valuable resources are put to the best use of the enterprise.
The funds should be managed in this way that the business is in a position to make
payment of interest and loan installments as per the agreed schedule.

FUNDS FLOW STATEMENT

Current
Fidjifhf Assets Fixed Assets
MEANING AND TYPES OF FINANCIAL STATEMENTS:
A financial statement is an organized collection of data. According to logical and
consistent accounting to logical and consistent accounting procedures its purpose is to
convey and understanding of some financial aspects of business firm. It may show a
position at a moment of time as, in the case of an income statement.
Financial statement analysis when used carefully, can produce meaningful insights
about a company financial information and its prospects for the future. However, the
analyst must be aware of certain important considerations about financial statements
and the use of these analytical tools. For example, the dollar amounts for many types of
assets and other financial statement items are usually based on historical costs and
thus do not reflect replacement costs inflationary adjustments. Furthermore, financial
statement contains estimates of numerous items. John Mayor, “financial statement
analysis is largely a study of relationship among the various financial factors in a
business as disclosed by single set of statements and a study of the trend of these
factors “as shown in the series of statements.

Thus, the financial statement generally refers to, four financial statements.
 Income statement
 Balance sheet of course a business may also prepared profit &loss account.
 Statement of retained earnings.
 A statement of changes in financial position.

STATEMENT OF CHANGES IN FINANCIAL POSITION:

The Balance Sheet shows the financial condition of the business a particular moment of
time, while the income statement discloses the result of operating of business once a
period of time. However, for a better understanding of affairs of the business it is
essentially to identify the movement of working capital or cash and out of the business
is essential to identify the movement of working capital or cash in and out of the
business this information is available in the statement of changes in financial position of
the business.

 Change in working capital position in such a case the statement in termed

(SCFP) or funds flow statement.
 Change in cash position in such a case the statement in termed as (SCFP) or
cash flow statement.
 Change in overall financial position. In such a case the statement is termed as
statement of changes in finance.

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

FINANCIAL ANALYSIS :
Financial analysis is highly to essential to underlying there efficiency and financial
position of the center prices.
The term ‘Analysis’ means methodical clarification of the data provided in the financial
statement. ‘Analysis ‘ and ‘interpretation ‘ are complementary to each other
interpretation requires analysis. While analysis is useless without interpretation. The
term ‘ Analysis ‘ to cover the meanings of analysis and interpretation , since analysis
involves interpretation.
Myres States
Financial statement analysis is largely a study of relationship among. The various
financial factors in business as disclosed by single set of a statements and a study of
the trend of these factors as shown in a series of statements.
 CHAPTER – IV
GROWTH & PERFORMANCE
 GROWTH & PERFORMANCE OF THE STUDY

TABLE 4.1

DATA ANALYSIS AND INTERPRETATION

STATEMENT OF CHANGES IN WORKING CAPITAL DURING THE

YEAR 2016-2017
Particulars 2016 2017 Increase Decrease
Current Assets :
Cash on hand 33266.70 55212.45 21945.75
Cast at Bank 32546459.69 6341044.60 26205415.09
Capital work in pro 12489786.63 13043626.63 553840.00
Invest in co-op institutions 36905.00 36905.00
Inventories 763858.00 519592.00 244266.00
Sundry Debtors 36983552.52 37270822.63 287270.11
Advances to employees 229997.56 283011.06 53013.50
Advance to Temp. 4208025.55 3929495.89 278529.66
Dues receivable 15649345.32 11835915.26 3813430.06
Postage 484.35 360.35 124.00
Tip A/c. due to 4169022.76 4234175.84 65153.08
Closing Stock 2297343.00 10016900.50 7719557.50
TOTAL CURRENT 109408047.10 87567062.21
ASSETS (A) :
CURRENT LIABILITIES:
548476.51 545476.51
TIP A/C DUE TO
3280656.65 3280656.65
GENERATED FUNDS
485299.04 2020462.72 1535163.68
DUES PAYABLE
103352.12 113615.12 10263.00
EMPLOYEE STATUARY

LIABILITY
25122198.22 27768612.44 2646414.22
OUTSTAND LIABILITIES
990545.56 3384662.74 2394117.18
ADVANCES
2181.00 517.00 1664.00
STATUTORY LIABILITY
2228371.71 2343285.71 114914.00
PAYABLE UNIONS
32761080.81 39460288.89
TOTAL CURRENT

LIABILITIES(B) :
76646966.29 48106773.32
WORKING CAPITAL(A-

B)

Decrease in Working 28540192.95 28540192.95

capital

TOTAL 76646966.29 76646966.29 37242636.89 37242636.89

 TABLE 4.2
FUNDS FROM OPERATIONS:

AMOUNT (Rs)
PARTICUALRS

Operating loss Before Taxs 19927858.64

Add temporary adv 38573583.31

58501441.95

Less: Depreciation 53918051.03

Funds from operation 4583389.92

 TABLE 4.3
FUNDS FLOW STATEMENT 2016-2017

SOURCES AMOUNT APPLICATIONS AMOUNT

CAPITAL :
Non members 181175.69 PURCHASE OF FIXED 29876297.00
ASSERTS
GRANTS : ADJUSTED HEADS DUE TO 1368624.23
NDDB 457297.56 GRANTS TO SOCITY BY 207250.00
KIND
FROM GOVT 1675000.00 DEPOSITS WITH OTHER 32840.00
DEPARTMENTS
LOAN FROM WDP 935359.31 EXPENDITRE UNDER 5844876.05
BUILDING A/C
LOAN FROM TIP A/C 215520.00 EXPENDITURE UNDER TIP 1938048.15
A/C
GRANTS FROM DRDA 2050000.00
LOAN FROM BUILDING A/C 630000.00
DECREASE IN WORKING 28540192.95
CAPITAL
FUNDS FROM OPARATION 4583389.92

TOTAL 39267935.43 TOTAL 39267935.43

Interpretation :

From the above table to observe working capital of the company shows
decreased trend. The current assets has decreased 109408047.10 in 2016 and
87567062.21 in 2017. The current liabilities increased 32761080.81 in 2016 and
39460288.89 in 2017. So the result is net decreasing working capital 28540192.95.
It is evident from the above table that total funds from operation
Rs. 4583389.92 received in the year 2016-17. Because of the depreciation
(38573583.31) is the only non operating expenditure, the temporary advance is the only
non operating income (14346095.39).

The funds flow statement received capital from members (7807627.07) and non
members (3464593.63). The W.D.P one of the source of funds for this year. The
decreasing working capital place vital role in source of funds.

The funds are utilized of the payment of loans purchase of new machinery and having
other deposits.
Conclusion :

It is concluded that most of the funds utilized for the non productive activities. Company
have more internal sources for procurement of funds than external sources.

TABLE 4.4
STATEMENT OF CHANGES IN WORKING CAPITAL DURING THE
YEAR 2017-2018

Particulars 2017 2018 Increase Decrease

Current Assets :
Cash on hand 55212.45 39991.70 15220.75
Cast at Bank 6341044.60 5055178.70 1285865.90
Cap-working in 13043626.63 13043626.63
progress
Invest in co-op 36805.00 36805.00
institution
Inventories 519592.00 558575.00 38983.00
Sundry Debtors 37270882.63 37473350.63 202468.00
Advances to employee 283011.06 228635.06 54376.00
Advance to Temp. 3928495.89 3778566.50 149929.39
Dues receivable 11835916.26 9957564.32 1878351.94
Postage 484.35 331.35 153.00
Tip A/c. due to 4169022.76 4326635.10 157612.34
Closing Stock 2297343.00 907578.00 1389765.00
TOTAL C.A (A) 79781436.63 75406837.99
CURRENT

LIABILITIES :

TIP A/C DUE TO 548476.51 440842.51 107634.00

GENERATED FUNDS 3280656.65 3280656.65

DUES PAYABLE A/C 2020462.72 4344923.49 2324460.77

STATUTORY 113615.12 678531.82 564916.70

LIABILITY

OUTSTANDING 27768612.44 31757059.79 3988447.35

LIABILITY

ADVANCES 3384662.74 3357560.85 27101.86

RECEIVED

EMPLOYEE 517.00 556.00 39.00

STATUTORY

PAYABLE TO UNIONS 2343286.71 2324833.71 18453.00

TOTAL CURRENT 39460289.89 46184964.85

LIABILITIES (B) :

WORKING CAPITAL 40321146.74 29221873.14

(A-B)
DECREASE IN 11099273.60 11099273.60

WORKING CAPITAL

TOTAL 40321146.74 40321146.74 11651525.80 11651525.80

TABLE 4.5
FUNDS FROM OPERATION:

AMOUNT (Rs)

PARTICUALRS

Operating loss Before Taxs -10577959.62

Add : Depreciation 9935789.67

Net Operating Loss -21513749.29

TABLE 4.6
FUNDS FLOW STATEMENT FOR THE YEAR 2017-2018:

SOURCES AMOUNT APPLICATIONS AMOUNT

CAPITAL :
Members 7807627.07 PURCHASE OF FIXED 106857.00
Non members 3464583.63 ASSETS
GRANTS : ADJUSTED HEADS DUE 1368624.29
TO
NDDB 457279.56 GRANTS TO SOCITY BY 207250.00
KIND
FROM GOVT 1675000.00 DEPOSITS WITH OTHER 36208.00
DEPARTMENTS
 LOAN FROM WDP 94000.00 EXPENDITRE UNDER 5844876.05
BUILDING A/C
LOAN FROM TIP A/C 2050000.00 EXPENDITURE UNDER 1938048.15
TIP A/C
GRANTS FROM DRDA 630000.00 FUNDS LOSS IN 21513749.29
OPERATION
LOAN FROM BUILDING A/C 3576126.92
RETENTION MONEY 161722.00
DEPOSIT
DECREASE IN WORKING 11099273.60
CAPITAL

TOTAL 31015612.78 TOTAL 31015612.78

Interpretation :
From the above table to observe working capital of the company shows decreased
trend. The current assets has increased 79781436.63 in 2017 and 75406837.99 in
2018. The current liabilities decreased 39460289.89 in 2017 and 46184964.85 in 2018.
So the result net decreasing working capital 11099273.60.

It is evident from the above table that total funds loss in operation
Rs. 21513749.29 received in the year 2017-2018.
The funds flow statement received capital from members (7807627.07) and non
members (3464583.63). The loan from tip a/c and secured loans are the main sources
of funds for the company.

The funds are utilized for W.D.P (3969520.00) and purchase of new assets
(106857.00). The decreasing working capital (11099273.60) is one of the major
application.

Conclusion:

Concluded that the company has increasing working capital it shows the optimum
utilization of current assets. But it is has operating loss due to the lack of proper
reserves.
TABLE 4.7
 STATEMENT OF CHANGES IN WORKING CAPITAL DURING THE
YEAR 2018-2019

Particulars 2018 2019 Increase Decrease

Current Assets :
Cash on hand 39991.70 67836.70 27845.00
Cast at Bank 5055178.70 7453813.64 2398634.94
Cap-work-in 13043626.63 13043626.63
progress
Invest in co-op ins 36905.00 36905.00
Inventories 556575.00 663296.00 106721.00
Sundry Debtors 37473350.63 3569716.93 33903633.70
Advances to 228635.06 248535.06 19900.00
employee
Advance to Temp. 3778566.50 3900484.73 121918.23
Dues receivable 9957564.32 12175199.08 2217634.76
Postage 331.35 379.00 47.65
Tip A/c. due to 4326635.10 4221111.51 105523.59
Closing Stock 907578.00 1044854.00 137276.00
TOTAL CURRENT 79745630.13 117154730.5
ASSETS(A)
CURRENT

LIABILITIES :

TIP RECOVERY 440842.51 188514.51 252328.00

GENERATED 3280656.65 3280656.65

FUNDS

DUES PAYABLE 4344923.49 6438484.48 2093560.99

STATUTORY 678531.82 659347.07 19184.75

LIABILITY

OUTSTANDING 31757059.9 28477101.79 3279958.00

LIABILITIES

CREDIT SALES 3357560.98 3222371.86 1351890.12

STATUTORY 556..00 931.00 375.00

LIABILITY

PAYABLE UNIONS 2324833.71 2342766.61 17932.90

TOTAL CURRENT 46184964.95 44610173.97

LIABILITIES(B)

WORKING 29219973.04 1815584.31

CAPITAL(A-B)
Decrease in Working 27404388.73 27404388.73
Capital
TOTAL 29219973.04 29219973.08 36121026.18 36121026.18

TABLE 4.8
FUNDS FROM OPERATIONS:

PARTICULARS AMOUNT
OPERAING LOSS BEFORE TAXES 506059.87
ADD:
DEPRECIATION 24313392.62

FUNDS FROM OPERATIONS

34820052.48

TABLE 4.9
FUNDS FLOW STATEMENT OF 2018-2019

SOURCES AMOUNT APPLICATIONS AMOUNT

CAPITAL :
MEMBERS 7807627.07 PURCHASE OF FIXED 59436298.00
NON MEMBERS 3464583.63 ASSETS
GRANTS : ADJUSTED HEADS DUE 1368624.23
TO
NDDB 457297.56 GRANTS TO SOCITY BY 207250.00
KIND
FROM GOVT 1675000.00 DEPOSITS WITH OTHER 1793542.55
DEPARTMENTS
LOAN FROM TIP A/C 2050000.00 EXPENDITRE UNDER 5844876.05
BUILDING A/C
GRANTS FROM DRDA 530000.00 EXPENDITURE UNDER 1938048.15
TIP A/C
RETENTION MONEY
DEPOSIT 1490320.00
DECREASE IN WORKING
CAPITAL 24820052.48

TOTAL 70588638.98 TOTAL 70588638.98

Interpretation :

From the above table to observe working capital of the company shows decreased
trend. The current assets has decreased 75404937.99 in 2018 and 46425758.28 in
2019. The current liabilities increased 46184964.95 in 2018and 44610173.97 in 2019.
So the result net decreasing working capital 27404388.73.

It is evident from the above table that total funds from operation
Rs. 24820052.48 received in the year 2018-2019. Because of the depreciation is the
only non operating expenditure.

The funds flow statement consist decreasing working capital, capital from members
(7807627.07) and non members (3464593.83) as a main sources. The funds are mostly
utilized from the secured loans and purchase of fixed assets and have some deposits
(59436298.00).
Conclusion :
It is conclude that the company has increasing its capital and reducing external
barrowings. For improving the efficiency.

TABLE 4.10

STATEMENT OF CHANGES IN WORKING CAPITAL DURING THE

YEAR 2019-2020
2019 2020 Increase Decrease
Particulars
Current Assets :
Cash on hand 67836.70 89550.20 21713.50
Cash at Bank 74513.64 3307939.18 4145874.46
Capital work in pro 13043626.63 13043626.63
Invest in co op institution 36905.00 36905.00
Inventories 663296.00 922334.15 259038.15
Sundry Debtors 3589716.93 21928393.66 18338676.73
Advances to employee 248535.06 227239.06 21296.00
Advance to Temp. 3900484.73 7982945.88 4082461.15
Dues receivable 12175199.08 12554519.52 379320.44
Postage on hand 379.00 180.00 199.00
Tip A/c. due to 4221111.50 4170403.20 50708.30
Closing Stock 1044854.00 855003.00 189851.00

TOTAL C.A (A) 464485758.27 65119039.48

CURRENT

LIABILITIES:

TIP A/C RECOVERY 168514.51 168514.51

GENERATED FUNDS 3280656.65 870566.065 2410090.00

DUES PAYABLE 6438484.48 5058903.07 1379581.41

STATUTORY 659347.07 310469.46 348877.61

LIABILITY

OUTSTANDING 28477101.79 26957571.79 1519530.00

LIABILITIES

PAYABLE UNIONS 16244.06 16244.06

CREDIT SALES 3222371.86 1978605.31 1243766.55

STATUTORY 3310.00 3002.00 308.00

LIABILITIES

TOTAL C.L 42266030.42 35363876.85

WORKING CAPITAL 4179727.85 29755162.63

INCREASE IN 2557543.78 25575434.7

8
WORKING CAPITAL

TOTAL 29755162.63 29755162.63 29983363.54 29983363.5

 4

TABLE 4.11

FUNDS FROM OPERATIONS :

AMOUNT (Rs)
Particulars

Operating loss Before Taxs -8510768.00

Add : Depreciation 92236.67

Net Operating Loss -8603005.10

TABLE 4.12

FUNDS FLOW STATEMENT OF 2019-2020

SOURCES AMOUNT APPLICATIONS AMOUNT

CAPITAL :
MEMBERS 7807627.07 PURCHASE OF FIXED 481600.60
NON MEMBERS 3464583.63 ASSETS
GRANTS : ADJUSTED HEADS DUE 1368624.23
 TO
NDDB 457297.56 GRANTS TO SOCITY BY 207250.00
KIND
FROM GOVT 1675000.00 DEPOSITS WITH OTHER 1793542.55
DEPARTMENTS
LOAN FROM WDP 849359.31 EXPENDITRE UNDER 5844876.05
BUILDING A/C
LOAN FROM TIP A/C 3759420.00 EXPENDITURE UNDER 1938048.15
TIP A/C
GRANTS FROM DRDA 2050000.00 WOMEN DAIRY PROJECT 3100132.35
A/C
LOAN FROM BUILDING A/C 530000.00 INCREASE IN WORKING 2557543.78
CAPITAL
SECURED LOANS 5301325.00 FUNDS LOST 8603005.10
INOPERATION

TOTAL 25984622.81 TOTAL 25984622.81

Interpretation :

From the above table to observe working capital of the company shows decreased
trend. The current assets has decreased 46445758.27 in 2019 and 65119039.48 in
2020. The current liabilities increased 42266030.42 in 2019 and 35363876.85 in 2020.
So the result net increasing working capital 2557543.78

It is evident from the above table that total funds loss in operation
Rs. 8603005.10 received in the year 2019-20.

The funds flow statement received maximum amount from secured loans Rs.
7652641.72 and the company mostly depending on the non trading activities for
procurement of funds. The decreasing capital is the main source of funds.

The funds were utilized for purchasing of fixed assets and payment for the loans.

Conclusion :
It is concluded that the funds were under utilized and there is no optimum capital
structure. Because of most of the funds procured from internal sources like grants and
other loans. There is no proper utilization.

TABLE 4.13

STATEMENT OF CHANGES IN WORKING CAPITAL DURING THE

YEAR 2020-2021

Particulars 2020 2021 Increase Decrease

Current Assets :
Cash on hand 89550.20 78402.20 11148.00
Cast at Bank 3307939.18 5079365.03 1771425.85
Cap work in progress 13043626.63 13043626.63
Invest co op institution 36905.00 36905.00
Inventories 922334.00 841299.88 81034.12
Sundry Debtors 21928393.66 23819283.32 1890889.66
Advances to employee 227239.06 326325.06 99086.00
Advance to Temp. 3982945.88 4506806.40 523860.52
Dues receivable 12554519.02 12716828.79 162309.77
Postage on hand 180.00 3656.00 3476.00
Tip A/c. due to 470403.20 4320683.20 3850280.00
Closing Stock 855003.00 1257186.00 402183.00

TOTAL CURRENT
ASSETS(A) 57419038.83 66030367.51

CURRENT LIABILITIES:

TIP RECOVERY 168514.51 47990.51 120524.00

DUES PAYABLE 5058903.07 6034933.09 976030.02

GENERATED FUNDS 870566.65 870566.65

EMPLOYEE STATUTORY 310469.46 418281.96 107812.50

LIABILITY

OUTSTANDING 269571.79 27624253.43 666681.64

LIABILITIES

STATUTORY LIABILITY 3002.00 2126.00 876.00

PAYABLE UNIONS 2205138.66 2205138.66

TOTAL CURRENT 35574166.14 37203290.30

LIABILITIES (B)
WORKING CAPITAL(A-B) 21844872.69 28827077.21

INCREASE IN WORKING 6982204.52 6982204.52

CAPITAL
TOTAL 28827077.21 28827077.21 8824910.80 8824910.80

TABLE 4.14

FUNDS FROM OPERATIONS:

PARTICULARS AMOUNT (Rs)

Operating loss Before Taxs -7727568.90

Add : Depreciation 18191021.31

Net Operating Loss -25918590.21

 TABLE 4.15

FUNDS FLOW STATEMENT OF 2020-2021:

SOURCES AMOUNT APPLICATIONS AMOUNT

CAPITAL :
Members 7807627.07 PURCHASE OF FIXED 481600.60
Non members 3464583.63 ASSERTS
GRANTS : ADJUSTED HEADS DUE TO 136824.23
NDDB 457279.56 GRANTS TO SOCITY BY 207250.00
KIND
FROM GOVERNMENT 1675000.00 DEPOSITS WITH OTHER 1793542.55
DEPARTMENTS
LOAN FROM WDP 849359.31 EXPENDITRE UNDER 5844876.05
BUILDING A/C
LOAN FROM TIP A/C 3759420.00 EXPENDITURE UNDER TIP 1938048.15
A/C
GRANTS FROM DRDA 2050000.00 INSREASE IN WORKING 2557543.78
CAPITAL
LOAN FROM BUILDING A/C 530000.00 FUNDS LOSS INOPERATION 8603005.10
SECURED LOANS 5301325.24
TOTAL 25894622.81 25894622.81

TOTAL 25894622.81 25894622.81

Interpretation
From the above table to observe working capital of the company shows
decreased trend. The current assets has decreased 57419038.83 in 2020 and
66030367.51 in 2021. The current liabilities increased 35574166.14 in 2020 and
37203290.30 in 2021. So the result net increasing working capital 6982204.52.
It is evident from the above table that total funds loss in operation
Rs. -25918590.21 received in the year 2020-21. Because of the depreciation is the only
non operating expenditure.

The funds flow statement was received amount from secured loans, sales of assets and
decreasing working capital. The secured loans (12932405.43) and increasing working
capital (6982204.52) plays major role for procurement of funds.

Funds for used purchase of assets (104420.00) and payment of the loans.

Conclusion:

It is conducted that the company doesn’t have proper results and the funds are utilized
mostly from the payment of loans. So the company has facing liquidity and solvency
problems.

TABLE 4.16

CHANGES IN WORKING CAPITAL DURING THE PERIOD

2016-2017 TO 2020-2021

Year Increase Decrease

2016-17 28540192.95

2017-18 11099273.60

2018-19 27404388.73

2019-20 2557543.78

2020-21 6982204.52

ANNEXURE

TABLE 4.17
 BALANCE SHEET FOR THE YEAR 2016-2017

LIABILITIES AMOUNT ASSETS AMOUNT

Authorized share
capital 10000000 Cash In Hand & Bank 6396257.05
(100lks made up of
1lks. shares of 100
each)\      
    Inventories 519592
Subscribed & paid
up capital      
From members 7807627.07 Sundry Debtors 37270882.63
From Non-
members 3464593.63     
  Capital Works In Progress 13043626.63
APDDC assets
transferred to
unions 6975153.07     
    Fixed Assets 33111424.1

APDDC      
 Federation 6647100.2 Investment In Co-Op.Inst. 36905
union     
Advances To
Total grants 10083176.87 Emp.&Temp.Others 4212506.95
     
    Adjusting Heads Due To  1368624.23
Secured loan -1865882.43  
    Grants To Societies By Kind 207250 
Tip Accounts   3829133.16   
  Deposits With Other Dep. 1757342.55 
Dues Payable
Account 2020462.72   
Dues Receivables From
  Dist. Unions 11835915.26 
Employees
Statutory
Liabilities 113615.12   
   Exp. Under Building A/C 5844876.05 
Retention Money
Deposits 4981266.66     
  Exp. Under Tip Account 1938048.15
Statutory Liability
From Contractors 517    
    Women Dairy Project 3187141.85
     
Outstanding
Liabilities 27768612.44  Postage On Hand 484.35
       
Advance Received
From Various
Sources 3382662.74 Bldg. Cons. A/C Due To 3172381.7
       
    Tip A/C Due To 4169022.76
Payable To Unions 2343285.71     
Invest. In Emp.Credit Co-
    Op. Societies 5376.5
Reserve Fund 16244.06     
  Closing Stock 2297343
Reserve Created
For Various
Sources 55418117.12     
       
   

Difference b/w assets and

Educational Fund 502.39  liabilities 43675822.13 
     
Bldg. Construction
A/C 15682438    
       
Tip Account 18328508.75   
       
W.D.P Account 6213640.46    
     
       
     
TOTAL 174050822.9    174050822.9 
     
        
     
   

TABLE 4.18

TRADING AND PROFIT & LOSS A/C FOR THE YEAR ENDED-2017

PARTICULARS AMOUNT PARTICULARS AMOUNT

Opening stock 10015900.5 Income by sale of
milk& milk products
Purchase of milk 186511454.9 Milk 222899446.7 
Excises ,taxes, octroi 622129 Products 33392478.95 
 
Procurement & transport 15128512.88 Closing stock 2297343
exp
Common service utilities 6033586.34    
Consumable stores 6010740    
Conversion charges 2746540    
License fee 333640    
Selling & distribution exp 7395609.68    
Gross profit b/d 24091155.31    
TOTAL 258589268.6   258589268.6 
LOSS ACCOUNT   PROFIT ACCOUNT  
    Gross profit as per 24091155.31 
trading c/d
Transport exp 493566.5 Misc. income WDP  3121844.76 
Salaries, wages & other 31448163.15 Misc . income  
exp
Repairs & maintenance 8245979.67    
Depreciation on assets 1886007    
Administrative exp 268065 TOTAL 2721300.07
Postage ,telegraph & 213636.28    
telephones
Insurance charges 126763     
Employees t.a & local 197943  Loss for year 2005-06  23747963.49
conveyance
Interest on loans & other   Loss for the year  19927858.64
 general exp 2006-07
Taxes on vehicles 2448940.71    
Direct exp 101053     
Tip a/c expenditure 254993.5  CUMULATIVE LOSS 43675822.13
Building exp 1415976.9     
Women dairy project      
Expenditure booked 39771     
under temporary advance
TOTAL 47140858.71  TOTAL 47140858.71 

TABLE 4.19

BALANCE SHEET FOR THE YEAR 2017-2018

LIABILITIES AMOUNT ASSETS AMOUNT

Authorized share capital 10000000 Cash In Hand & 5095170.4
Bank
(100lks made up of 1lks. 7807621.07
shares of 100 each)\
Inventories 558575
Subscribed & paid up capital 3464583.63
From members Sundry Debtors 37473350.63
From Non-members 6975153.07
Capital Works In 13043626.63
Progress
APDDC assets transferred to 6647100
unions
Fixed Assets 33218281.1
APDDC federation union 9350176.87
Investment In Co- 36905
Op.Inst.
Advances To 4007201.56
Emp.&Temp.Others
Total grants 25020505.57
Adjusting Heads 1368624.29
 Due To
Secured loan 3721499.16 Grants To Societies 207250
By Kind
Tip Accounts 4344923.49 Deposits With Other 1793542.55
Dep.
Dues Payable Account 678531.82 Dues Receivables 9957564.32
From Dist. Unions
Employees Statutory 5142988.66 Exp. Under Building 5844876.05
Liabilities A/C
Retention Money Deposits 556 Exp. Under Tip 1938048.15
Account
Statutory Liability From 31757059.79 Women Dairy 3172616.35
Contractors Project
Postage On Hand 331.35
Outstanding Liabilities 2324833.71
Bldg. Cons. A/C 3172381.7
Due To
Tip A/C Due To 4326635.1
Payable To Unions 16244.06
Invest. In 5376.5
Emp.Credit Co-Op.
Societies
Reserve Fund 57952783.27
Closing Stock 907578
Reserve Created For Various 502.39
Sources
Educational Fund 15682438 Difference b/w 54253781.7
assets and liabilities 5
Bldg. Construction A/C 19679713.08
Tip Account 6236640.48
W.D.P Account
Grand total 180379916.4 180379916.
4
 TABLE 4.20

TRADING AND PROFIT & LOSS A/C FOR THE YEAR ENDED
-2018

PARTICULARS AMOUNT PARTICULARS AMOUNT

Opening stock 2297343 \Income by sale of
milk&milk products

Purchase of milk 158560219.9 Milk 194058843.6

 Excises ,taxes, octroi 1021375.5  Products 32144573.6

Procurement & 130207115.4  Closing stock   907578

transport exp

Common service 5950304.71     

utilities
 Consumable stores 6173266    
 Conversion charges 309334    
 License fee 37030    
 Selling & distribution 8513484.2    
exp
 Gross profit b/d 31041522.6    
 TOTAL 227110995.2    227110995.2
LOSS ACCOUNT   PROFIT ACCOUNT  
Transport exp 350867 Gross profit as per 31041522.6
trading c/d
Repairs & 5983624.68 Misc .income 15136.76
maintenance
Depreciation on 1596618    
assets
Administrative exp 327881.5    
Postage ,telegraph, 148009 TOTAL 31056659.36
telephones
Insurance charges  169726 Loss for the year 2016- 43675822.13
17
  Loss for the year 2017-
18
Employees t.a & local 143035 Cumulative loss
conveyance
Taxes on vehicles 964911.65  
Direct exp 62363  
Tip a/c expenditure 94275  
Building exp 1193592  
Women dairy project ----------  
exp
   
 
Expenditure booked 37325  
under temporary
advance

TOTAL 41634618.98   41634618.98

TABLE 4.21

BALANCE SHEET FOR THE YEAR 2018-2019

LIABILITIES AMOUNT ASSETS AMOUNT

Authorized share capital 10000000 Cash In Hand & Bank 7521650.34
(100lks made up of 1lks. shares 7807627.07     
of 100 each)\
Subscribed & paid up capital 3464593.83  Inventories 663296
From members 6975153.07  Sundry Debtors 3569716.93
 APDDC assets transferred to 9821076.87 Capital Works In 13043626.63
unions Progress
APDDC federation union 1865882.43 Fixed Assets 92654579.1
Investment In Co- 36905
Op.Inst.
 Total grants 3469171.16 Advances To 4149019.79 
Emp.&Temp.Others
    Adjusting Heads Due 1368624.23 
To
Secured loan 6438484.48 Grants To Societies 207250 
By Kind
Tip Accounts 659347.07  Deposits With Other 1793542.55 
Dep.
Dues Payable Account 6633308.66 Exp. Under Building 12175199.08
A/C
Employees Statutory 931   
Liabilities
Retention Money Deposits 28477101.79  Exp. Under Tip 5844876.05
Account
Statutory Liability From 3222371.86 Women Dairy Project 1938048.15
Contractors
Outstanding Liabilities 16244.06 Postage On Hand 3134830.35
    Bldg. Cons. A/C Due 379
To
Advance Received From 117674554.3    
Various Sources
    Tip A/C Due To 3172381.7
Payable To Unions 502.39   4221111.51
Reserve Fund 15682438  Invest. In 5376.5 
Emp.Credit co-op
Societies
Reserve Created For Various 20588021.09     
Sources
Educational Fund 6236640.46  Closing Stock 1044854
Bldg. Construction A/C   Difference b/w assets 87220250.35
and liabilities
GRAND TOTAL  243765517.3    243765517.
3
 TABLE 4.22

TRADING AND PROFIT & LOSS A/C FOR THE YEAR ENDING -2019

PARTICULARS AMOUNT PARTICULARS AMOUNT

Opening stock 907578.00 \Income by sale of
milk&milk products
Purchase of milk 199001886.31
Milk 1235232085.92
Excises ,taxes, octroi 1907024.00
products 35851477.10
Procurement & transport 11327730.00
exp Closing stock 1044854.00

Common service utilities 5940596.47

Consumable stores 5313579.75

Conversion charges 44122.00

License fee 128158.00

Selling & distribution exp 4948060.66

Gross profit b/d 42609681.83

TOTAL 272128417.02 TOTAL 27218417.02

LOSS ACCOUNT PROFIT ACCOUNT

Transport exp 414459.15

Gross profit as per trading
Salaries, wages & other 32874798.35 c/d 42609681.83
exp

Repairs & maintenance 5530041.00 Misc. income W.D.P ----

 2895420.70
Depreciation on assets 1541181.00 Misc .income

Administrative exp 292290.00

Postage ,telegraph &

telephones 171348.35 45505102.53

TOTAL

Insurance charges 49645.00

Employees t.a & local

conveyance 130330.00 33472528.47
Cummulative loss up to
2020-2021
Interest on loans & other
general exp 2771302.22 Cummulative loss for 54253781.75
2016-17 to 2020-21

Taxes on vehicles 23132.00 87726310.22

Direct exp 168698.00

506059.87
Tip a/c expenditure 993831.59 Profit for the year 2018-
2019
Building exp ----------

87220250.35
Women dairy project exp 37986.00
Cummulative loss up to
Expenditure booked under 2017-2018
temporary advance ----------
45505102.53

Profit for the year 506059.87

TOTAL 45505102.53

TABLE 4.23
 BALANCE SHEET FOR THE YEAR 2019-2020

LIABILITIES AMOUNT ASSETS AMOUNT

Authorized share 10000000 Cash In Hand & Bank 3397489.38
capital
(100lks made up of 1lks.   Inventories 922334.15
shares of 100 each)\
Subscribed & paid up 7807627.07     
capital
From members 3464593.63  Sundry Debtors 21928393.66
From Non- 6975153.07  Capital Works In 13043626.63
members Progress
APDDC assets 6647100.2 Fixed Assets 93136200.1
transferred to unions
APDDC federation 9781076.87 Investment In Co-Op. 36905
union Inst.
  Total grants 7652641.72 Advances To Emp.& 4210184.94 
Temp. Others
    Adjusting Heads Due 1368624.23 
Secured loan 1039081.16 To
Tip Accounts 5058903.07 Grants To Societies By 207250 
Kind
Dues Payable Account 310469.46  Deposits With Other 1793542.55 
Dep.
Employees Statutory 5592910.68  Dues Receivables From 12554519.52 
Liabilities Dist. Unions
Retention Money 3002  Exp. Under Building 5844876.05
Deposits A/C
Statutory Liability From Exp. Under Tip Account 1938048.15 
Contractors
Outstanding Liabilities 26957571.79  Women Dairy Project 3100132.35 
Advances received from 4183744.01 Postage On Hand 180
various Sources
    Payable To Unions 16244.06 Bldg. Cons. A/C Due To 3172381
Reserve Fund 155327  Tip A/C Due To 4170403.2
Reserve Created For 60853790.27 Invest. In Emp. Credit 855003 
Various Sources Co-Op. Societies
Educational Fund Closing Stock 2201568.39 
502.39
Bldg. Construction A/C 15682438  
 Difference b/w assets
and liabilities
Tip Account 20928833.09    
W.D.P Account 6236640.46     
GRAND TOTAL  173887039.5    173887039.5

TABLE 4.24

TRADING AND PROFIT AND LOSS A/C FOR THE YEAR ENDING - 2020

PARTICULARS AMOUNT PARTICULARS AMOUNT

Opening stock 1044854.00 Income by sale of milk&milk
products
Purchase of milk 204886587.9
Milk 253499020.7
Excises ,taxes, octroi 2761897.00
products 40678164.10
Procurement & transport 15745588.00
exp Closing stock 855003.00

Common service utilities 5847570.48

Consumable stores 7735891.89

Conversion charges 78757.00

License fee 47918.00

Selling & distribution exp 6132554.00

Gross profit b/d 50750569.44

295032 295032
TOTAL 187.80 187.80

LOSS ACCOUNT PROFIT ACCOUNT

Transport exp 410195.50

Gross profit as per trading
Salaries, wages & other exp 31259640.06 c/d 50750569.44

Repairs & maintenance 7132634.81 Misc. income W.D.P -----

Depreciation on assets 1359826.00 Misc income 985051.31

Administrative exp 556638.00 TOTAL 51735620.75

Postage ,telegraph, 156666.00

telephones
Profit for the year 2015- 8510768.33
Insurance charges 17061.00 2016

Employees t.a & local Cummulative loss up to -68892926.62

conveyance 135413.00 31-03-2015

Interest on loans & other Capital reserve released 58180590.00

general exp 1493096.84

Taxes on vehicles 61145.00

-2201568.39
Cummulative loss 31-03-
 43224852.52

Direct exp 196318.00 2016

Tip a/c expenditure 411520.31 Grand total

Building exp ----------

Women dairy project exp 346981.00

43224852.52
Expenditure booked under
temporary advance ----------

TABLE 4.25

BALANCES HEET FOR THE YEAR 2020-2021

LIABILITIES AMOUNT ASSETS AMOUNT

Authorized share 10000000 Cash In Hand & Bank 5157767.23
capital
(100lks made up of 1lks.   Inventories 841299.88
shares of 100 each)\
Subscribed & paid up 7807627.07  Sundry Debtors 23819283.32
capital
From members 7807627.07  Capital Works In Progress 13043626.63
From Non- 3464593.63  Fixed Assets 93240620.1
members
APDDC assets 6975153.07 Investment In Co-Op. 36905
transferred to unions Inst.
APDDC federation 6647100 Advances To Emp. 4833131.46
union &Temp. Others
 Total grants 9531076.87   Adjusting Heads Due To 1124331.9
Secured loan 12932405.43 Grants To Societies By 207250 
Kind
Tip Accounts 918557.16 Deposits With Other Dep. 12716828.79 
Dues Payable Account 6034933.09  Dues Receivables From 5844876.05 
Dist. Unions
Employees Statutory 418281.96 Exp. Under Building A/C 1938048.15
Liabilities
Retention Money 5614670.66   Exp. Under Tip Account 3100132.35
Deposits
Statutory Liability From 2126 Women Dairy Project 3656 
Contractors
  Outstanding Liabilities 27624253.43  Postage On Hand 3172381.7
Advance Received From 1026390.06    Bldg. Cons. A/C Due To 4320683.2
Various Sources
  Payable To Unions 2205138.66  Tip A/C Due To 5376.5
Reserve Fund 16244.06 Invest. In Emp. Credit Co- 1257186 
Op. Societies
Reserve Created For 22211717.27
Various Sources
  Educational Fund 502.39   
Bldg. Construction A/C 15682438    
   
Tip Account 21602963.09
W.D.P Account 6236640.46    
  Diffrences between 5526000.51    
assets and liabilities
GRAND TOTAL  176476227.8    176476227.8
     
 TABLE 4.26

TRADING AND PROFIT AND LOSS A/C FOR THE YEAR ENDING -2021

PARTICULARS AMOUNT PARTICULARS AMOUNT

Opening stock 855003.00

Purchase of milk 198656781.5 \Income by sale of milk&milk

products
Excises ,taxes, octroi 2533245.00
Milk 252084456.36
Procurement & transport 13286690.00
Products 35303541.70
Common service utilities 5648249.70
Closing stock 1257186.00
Consumable stores 7496019.41

Conversion charges 117019.00

License fee 35580.00

Selling & distribution exp 7139862.20

Gross profit b/d 52876734.2

TOTAL 288645184.0 TOTAL 288645184.06

6

LOSS ACCOUNT PROFIT ACCOUNT

Transport exp 482648.50

Gross profit as per trading 52876
Salaries, wages & other 35440681.68 c/d 734.25
exp
Misc. income W.D.P -----------
Repairs & maintenance 4625886.00
Misc income 863257.57
Depreciation on assets 1220147.00

Administrative exp 475800.00

Postage ,telegraph & TOTAL 53739991.82

telephones 151621.98

Insurance charges 43827.00

Employees t.a & local Profit for the year 2016- 7727568.90
conveyance 147358.50 2017

Cumulative loss up to -2201568.39

Interest on loans & other 31-03-2016
general exp 2528390.96

Capital reserve released --------

Taxes on vehicles 34580.00

Direct exp 337631.30

5526000.51
Cummulative profit up to
 46012422.92

Tip a/c expenditure 523850.00 31-03-2017

Building exp ---------- Grand total 46012422.92

Women dairy project exp ----------

Expenditure booked under

 CHAPTER – V
OBSERVATIONS & RECOMMENDATIONS
 OBSERVATIONS

 Most of funds utilized for purchasing new assets and payment for the loans, most of
the funds came from non trading activities.

 Depreciation is the only non operating expenditure as the company is not maintain
reserves properly.

 The depreciation provision has decreased from 38573583.31 during 2017-2018 to

36687576.31 during 2018-2021 which shows that company is not maintain proper
provision though there is increased in fixed assets.

 The company procure funds from non trading activities and mostly depends upon
the internal sources.

 The advances are gradually declining from year to year.

 RECOMMENDATIONS
 The company has to acquire the capital from equity shares, to reduce high risk from
the external borrowings.

 The quantum of the sales generated should be improved, impressively in order to

attain higher returns on investment.

 The liquidity of the company should be improved by maintaining the optimum current
assets.

 To improve financial wealth of the company and maximizing the time between the
source mobilization and utilization.

 It should maintain proper reserves for solve the liquidity problem.

 The company has to maintain the optimum capital structure for getting maximum
results.
BIBLIOGRAPHY
 BIBLIOGRAPHY

BOOK NAME AUTHOR PUBLICAION YEAR

FINANCIAL IM pandey 9/e, Vikas Publishing 2004

MANAGEMENT

Fundamentals of Prasanna chandra Tata McGraw Hill, 2003

Financial Management New Delhi.

Financial Management- M.Y Khan,P K Jain Tata McGraw Hill, 2003

Text and Problems New Delhi.

Maheswari S N, Vikas Publishing House 2009

Financial Accounting
Maheswari S K Private Limited,
New Delhi.

Financial Management James C.VanHorne Pearson Education 2004

And policy

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