INDEX

[Link] CHAPTER Page

1 CHAPTER -I 01-18
INTRODUCTION
2 CHAPTER -II 19-30
INDUSTRY PROFILE
COMPANY PROFILE
3 CHAPTER -III 31-47
DATA ANALYSIS & INTERPRETATION
4 CHAPTER -IV 48-53
FINDINGS

SUGGESTINS

CONCLUSION

BIBILOGRAPHY

1
CHAPTER -I
INTRODUCTION

2
MEANING OF FINANCIAL ANALYSIS:
The term financial analysis also known as analysis and interpretation of‗
financial statements refers analysis is to diagnose the information contained in
financial statement so as to judge the profitability and financial soundness of firm
the analysis and interpretation of financial statements is essential to bring out the
mystery behind the figures in financial statements. Financial statements analysis is
an attempt to determine the significance to the process of determining financial
strength and weakness of the firm by establishing strategicrelationship between the
items of the balance sheet, profit and loss account and other operative [Link]
purpose of financial meaning of the financial statement data so earnings, ability to
pay interest and debt maturities and profitability of a sound dividend policy. The
term financial statement analysis includes both analysis and interpretation. A
distinction should, therefore, be made between two terms. While the term ‗analysis
is used to mean the simplification of financial data by methodical classification of
the data given in the financial statements. Interpretation means exploring the
meaning and significance of the data so simplified.

Financial statement is the process of identifying the financial strengths and

weaknesses of the firm. It is done by establishing relationships between the
items of financial statements like balance sheet and profit and loss account.
Financial analysis can be undertaken by management of the firm or by parties
outside the firm. Financial management is the specialized function of general
management, which, is relates to the procurement of finance, and its effective
utilization for the achievement of the goal of the organization.

3
 MEANING, DEFINITIONS OF FINANCIAL MANAGEMENT:
Financial Management is an organizational activity that is concerned with the
management of financial resources. In common parlance is described as
providing monetary resources at the time they are required. But financial
management covers the mobilization and effective utilization of funds.
DEFINITIONS:
Finance Management is concerned with the efficient use of an important
economic resources, namely capital funds‖. SOLOMON.
Financial management is an area of financial decision making harmonizing
individual motives and enterprises goals‖. WESTON & BRIGHAN.

OBJECTIVES OF FINANCIAL MANAGEMENT:

Financial decisions can be make keeping in view the basic objective of
maximization of owners economic welfare. It can be achieved through two widely
accepted criteria.

PROFIT MAXIMISATION:

The efficiency of the firm is measured through the volume of profits earned by it.
It means maximizing the rupee income of the firm. Profit maximization objective
may be started in terms of return on investment or profit to sales ratios. This would
help in profitable utilization of society’s economic resources, since the financial
manager is responsible for the efficient utilization of resources, increasing of
revenues, controlling costs, Minimizing risks.

4
➢ WEALTH MAXIMISATION:

Wealth maximization objective is a widely recognized criterion with which the

performance of business enterprise is devalued. The word ―wealth‖ refers to the
net present worth of the firm. The net present worth is the difference between
gross present worth and the amount of capital investment required to achieve the
benefits. Gross present worth represents the present value of expected cash flows
(benefits) discounted at a rate.

IMPORTANCE OF FINANCIAL MANAGEMENT:

Finance is very essential for the smooth running of the business. It has been rightly
termed as universal lubricant, which keeps the enterprise dynamic. It is
indispensable in any organization as it helps in

➢ Financial planning and successful promotion of an enterprise.

➢ Acquisition of funds as and when required at the minimum possible cost

Proper use and allocation of funds
➢ Taking sound financial decisions

➢ Improving the profitability through financial controls;

➢ Increasing the wealth of the investors and the nation; and

IMPORTANCE FINANCIAL ANALYSIS:

Analysis of financial statement is carried out to measure the enterprise liquidity,
profitability, solvency and other indicators to assess its operator efficiency,
financial position and performance. Financial analysis serves the following
purpose.

It should satisfy itself that is current resource are sufficient to meet its
current liabilities. This is possible through the calculation of liquid ratios.

5
 COMPARISON OF PAST AND PRESENT RESULTS:

Financial statement of the previous years can be compared and the trend
regarding various expenses, purchases, sales, gross profit and net profit can be
ascertained.

➢ HELP IN MEASURING THE PROFITABILITY:

Financial statements show the gross profit, net profit and debt and other
expenses. The relationship of these can be established with sales by calculating
operating ratios.

FUNCTIONS OF FINANCIAL MANAGEMENT:

In the context of achieving the goals like maximization of risks, liquidity,
profitability, wealth maximization etc. The total functions of financial management
can be divided into three different groups.

➢ Liquidity function

➢ Profitability functions

➢ Management functions
LIQUIDITY FUNCTION:

In seeking sufficient liquidity to carry the firms activities the financial managers
perform the following the tasks. Forecasting the cash flows and managing the flow
of internal funds.

PROFITABILITY FUNCTION:

The other function of financial manager is to provide reasonable and adequate

return on capital employed. With respect to profitability important financial
functions are cost control and measuring required return.

6
 MANAGING FUNCTIONS:

Managing functions are divided into two types. They are

Managing assets.
Managing funds.
MANAGING ASSETS:

Assets are the resources by which the firm is able to conduct [Link]
function of asset management recognizes the decision making role of financial
manager. Asset management includes knowing the total amount of the assets
needed by the firm to carry out its operation.

MANAGING FUNDS:

Funds may be viewed as the liquid assets of a firm the term includes cash held by
the firm, money borrowed by the firm and money gained from purchases of
common and preferred stock.

TYPES OF FINANCIAL ANALYSIS:

The various types of financial analysis can be brought into different categories the
material used and the method of operation followed in the analysis. According to
material used, the financial analysis may be used either external analysis for internal
analysis. But on the basis of the modus, operandi, it can be classified into horizontal
analysis and vertical analysis.

EXTERNAL ANALYSIS:
This analysis is done on the basis of information available from publishedrecords.
Thus an analysis which is done by outsiders who don‘t have access to the detailed
records of the company is known as external analysis. Outsiders include investors,
credit agencies, government agencies and other creditors. only a very limited
INTERNAL ANALYSIS:

This analysis is done on the basis of information obtained from internal records.
7
 Thus an analysis which is conducted by persons who have access to the detailed
records of the concern is known as internal analysis. Such an analysis is usually
performed by executives and employees of the organization and government
officials.

HORIZONTAL ANALYSIS:
Horizontal analysis is also known as dynamic analysis or trend analysis. Analysis
which is done by analyzing the financial data of a company for several years is
called horizontal analysis. Under this analysis. The analysts compare the figures of
the various years with that of the standard or base year to know the periodical trend
of various items shown in thestatements with the passage of time

VERTICAL ANALYSIS:
Vertical analysis is also known as static analysis or structural analysis. Analysis
which is done by analyzing a single set of financial statement is known as vertical
analysis. Under this analysis, the figures from financial statement of a year are
compared with a base selected from the same year‘s statement.

FINANCIAL STATEMENT ANALYSIS:

Financial analysis is the process of identifying the financial strengths and weakness
of the firm by properly establishing relationship between the items of financial
statements such as balance sheet and the profit and loss account
Financial analysis is highly essential to understand the efficiency and financial
position of the enterprise. It enables the investors to learn and forecast the direction,
growth and future of the organization. Financial analysis can be undertaken by
management of the firm, or by parties outside the firm, viz., owners, creditors,

8
FINANCIAL STATEMENTS:
Financial statements primarily comprise two basic statements:
The position statement or the balance sheet
The income statement or the profit and loss account.
However, specified that a complete set of financial statements must include.

1. A balance sheet

2. An income statement

3. A statement of changes in financial position.

1. BALANCE SHEET:
An American institute of certified public accountants defines balance sheet as a
tabular statement of summary of balances carried forward after an actual and
constructive closing of books of account and kept according to principles of
accounting. The purpose of balance sheet is the show the resources that the
company has i.e., its assets and from where there resources come from i.e., its
liabilities and investments by owners and outsiders.
The balance sheet is one of the important statements depicting the financial strength
of the concern. It shows on the one hand the properties that it utilizes and on other
hand the sources of these properties The balance sheet shows all the assets owned
by the concern and all the liabilities and claims it owes to owners and outsiders.
The balance sheet is prepared on a particular date

[Link] STATEMENT:
Income statement is prepared to determine the operational position of the concern.
It is statement of revenues earned and the expenses incurred for earning that
revenue, if there is excess of revenues over expenditures to will show a profit and
if the expenditures are more than the income then there will bea loss. The income
statement is prepared for a partition period, generally a year. When income
statement is prepared for the year ending then all revenues and expenditures falling

9
due in that year will be taken into account irrespective of their receipt or payment.
Income statement is prepared to determine the operational position of the concern.
It is statement of revenues earned and the expenses incurred for earning that
revenue, if there is excess of revenues over expenditures to will show a profit and
if the expenditures are more than the income then there will be a loss. The income
statement is prepared for a partition period, generally a year. When income
statement is prepared for the year ending then all revenues and expenditures falling
due in that year will be taken into account irrespective of their receipt or payment.

STATEMENTS OF CHANGES IN FINANCIAL POSITION:

The basic financial statements, the balance sheet and the profit and loss account or
income statement of the business operations by summarizing revenues and
expenses of the company. The balance sheet gives a static view of the sources and
users of finances. The profit and loss account but besides profits owners‘ equity
may change due to other factors such additional investment or withdrawal of
[Link] additional statements in needed to show the changes in assets, liabilities
and owners equity between dates of two balance sheets Changes in assets and
liabilities resulting from financial and investment transactions during the period.
The most commonly used forms of the statement of changes in financial position
are called funds flow statement and the cash flow statements
FUNDS FLOW STATEMENT:
The statement of changes in financial position of a business enterprise. The
sources and uses of working capital between dates of two balance sheets are
known as the funds flow statement. A projected statement of changes in working
capital is immensely useful in the firm‘s long range planning. The flows of in
order to plan the repayment schedules of its long-term debt

10
CASH FLOW STATEMENT:
A statement of changes in the financial position of a firm on cash basis is called
cash flow statement. Summarizes the courses of changes in cash positionof a
business enterprise between states of two balance sheets. This statement is
similar to changes in working capital.
FUNDS FLOW STATEMENT:

The statement of changes in financial position of a business enterprise. The

sources and uses of working capital between dates of two balance sheets are
known as the funds flow statement. A projected statement of changes in
working capital is immensely useful in the firms long range planning. The
flows of in order to plan the repayment schedules of its long-term debt. The
major sources of working capital are the firm‘s net profit from operations. The
ultimate success of a company depends upon its ability to earn profit. The
expense items that do not involve working capital should be added to not profit.
Meaning of Funds Flow Statement Funds flow statement is a statement which
discloses the analytical information about the different sources of a fund and
the application of the samein an accounting cycle. It deals with the transactions
which change either the amount of current assets and current liabilities (in the
form of decrease or increase in working capital) or fixed assets, long-term loans
including ownership [Link] gives a clear picture about the movement of funds
between the opening and closing dates of the Balance Sheet. It is also called the
Statement of Sources and Applications of Funds, Movement of Funds
Statement; Where Got—Where Gone Statement: Inflow and Outflow of Fund
Statement, etc. No doubt, Funds Flow Statement is an important indicator of
financial analysis and control This statement supplies an efficient method for
the financial manager Growth of the firm particular funds flow statements are
very useful in planning intermediate and long term financing

11
 Objective of Preparing a Fund Flow Statement:

The main purpose of preparing a Funds Flow Statement is that it reveals clearly the
important items relating to sources and applications of funds of fixedassets, long-
term loans including capital. It also informs how far the assets derived from normal
activities of business are being utilized properly with adequate consideration.
Secondly it also reveals how much out of the total funds is being collected by
disposing of fixed assets, how much from issuing shares or debentures, how much
from long-term or short-term loans, and how much from normal operational
activities of the business. Thirdly, it also provides the information about the specific
utilization of such funds, i.e. how much has been applied for acquiring fixed assets,
how much for repayment of long-term or short-term loans as well as for payment
of tax and dividend etc

Significance and Importance of Funds Flow Statement:

Since traditional reports i.e. Income Statement/Profit and Loss Account, and
Balance Sheet are not very informative, a financial analyst has to dependon some
other report-Funds Flow Statement. In other words, along with the traditional
sources of information, some other sources of information are absolutely required
in order to take the challenge offered by modern [Link] Flow Statement,
no doubt, caters to the needs of management. This is because a Funds Flow
Statement not only presents the Balance Sheet values for consecutive two years, it
also ascertains the changes of working capital— which is a very important
indicator. It not only reveals the source from which additional working capital has
been financed but also, at the same time, the use of such funds. Moreover, froma
projected funds flow statement the management can easily ascertain the adequacy
or inadequacy of working capital, i.e., it helps in decision-making in a number of
ways. The significance and importance of Funds Flow Statements may be
summarizedas:

12
General Rules for Preparing Funds Flow Statement:

Increase in a current asset means increase (plus) in working capital.

Increase in a current liability means decrease (minus) in working cap

Decrease in a current liability means increase (plus) in working capital.

Increase in current asset and increase in current liability does not affectworking
capital.

Decrease in current asset and decrease in current liability does not affectworking
capital.

Changes in fixed (non-current) assets and fixed (non-current) liabilities affect

working capital.
PROFIT &LOSS APPROPRIATION A/C

AMOUNT
PARTICULARS AMOUNT (Rs) PARTICULARS
(Rs)

To reserves and *** By funds from operation ***

surplus

**** ****

13
 FUNDS FLOW STATEMET

SOURCES AMOUNT (Rs) APPLICATIONS AMOUNT (Rs)

Fixed assets
Tangible assets
Capital in progress ***
Long term loans and
advances.
Funds from operation *** ***
Other noncurrent assets
***
Increasing working
Long term borrowings *** capital

***

Differed tax liability *** ***

**** ****
Fixed assets
Tangible assets
Capital in progress ***
Long term loans and
advances.
Funds from operation *** ***
Other noncurrent assets
***
Increasing working
Long term borrowings *** capital

14
 ***

Differed tax liability *** ***

**** ****

CASH FLOW STATEMENT:

The statement of cash flows is useful for short run planning. A firm needs sufficient
cash to pay debts maturing in the near future to pay interest andother expenses and
to pay dividend to shareholders. A statement of changes in financial position on
cash basis, commonly known as the cash flow [Link] the causes of
changes in cash position between dates of the two balance sheets. It indicates the
sources and user of cash.
STATEMENT OF THE PROBLEM
Financial statement analysis is used to identify the trends and relationships between
financial statement items. Both internal management and external users (such as
analysts, creditors, and investors) of the financial statements need to evaluate a
company's profitability, liquidity, working capital [Link] most common
methods used for financial statement analysis are fund flow analysis, and ratio
analysis. These methods include calculations and comparisons of the results to
historical company data, competitors, or industry averages to determine the relative
strength and performance of the company being analyzed.

15
 OBJECTIVES OF THE STUDY
To know the changes in working capital for the year 2011 to 2016.

To know the changes in current assets and current liabilities of thebusiness.

To understand the changes in the funds position for the business.

To understand the short term liquidity position of the business by usingthe

ratio analysis.

SCOPE OF THE STUDY

The study of financial statement analysis of SRI ANANTHA LAKSHMI

SPINNING MILLS (P) LTD. is a very wide topic and could be detailed study. But
here it is intended to make a brief reports keeping in view in the time factor. In the
study many factors that need detailed analysis could not be discussed in detail
because of the limitations regarding length of the project and available [Link]
scope of the study has, therefore, been limited to the presentation of comparative
balance sheets, common size balance sheet, cash flow statements and their analysis
and calculation of various ratios and their [Link] is considered as the life-
blood of any business. It is defined as theprovision of money at the time it is needed.
All the plans of a businessman would remain mere dreams unless adequate money
is available to convert them into [Link] management is very important to
every type of organization. It refers to that part of managerial activity concerned
with the procurement and utilization of funds for business purposes. The financial
manager is also responsible for affective utilization of funds. He is to point out
situations where the funds are being kept idle or where a proper use of funds is
not being made.

16
This is also as an important consideration in dividend decision. Hence, it is crucial
to employ the funds properly and [Link] funds have to be invested that the
company can produce at its optimum level without endangering its financial
solvency. Thus financial implications of each decision to invest in fixed assets are
to be properly [Link] this, the financial manager must have a detailed
knowledge of techniques of capital budgeting and qualifying uncertainty. He must
also keep inview the needs of working capital and ensure that while true forms
enjoy an optimum level of working capital they do not keep too much Funds
blocked in inventories, book debts and cash [Link] twin aspects of procurement
and effective utilization of funds therefore, are the crucial tasks which the financer
manager performs.
THE FINANCIAL MANAGEMENT IS CONCERNED WITH:

(a) Estimation of the fixed and working capital requirements,

(b) Formulation of capital structure,

(c) Procurement of fixed and working capital, and

(d) Management of earnings.

METHODOLOGY OF THE STUDY

Methodology describes the method of achieving objectives through collection of

data. The data collected can be either primary or secondary. The above information
is carried on with the cooperation of management of ‗SRI ANANTHA LAKSHMI
SPINNING MILLS(P) LTD.

17
 SOURCES OF DATA:

1 Primary data

2. Secondary data

PRIMARY DATA:

Most of the information is collected from internal interviews and discussion with
various officials in the finance department and concerned executive of other
department.
SECONDARY DATA:

The information collection from

Annual reports, published records and reference books.

Executive and staff of financial accounting department.

Executives of other departments.

TOOLS OF ANALYSIS
There are some of the tools, which are relevant for the study of rationanalysis
and performance of SRI ANANTHA LAKSHMI SPINNING MILLS LTD.

1) FUND FLOW ANALYSIS

a. SCHEDULE OF CHANGING IN WORKING CAPITAL

b. PROFIT &LOSS APPROPRIATION A/C

c. FUNDS FLOW STATEMENT

18
 CHAPTER-II
INDUSTRY PROFILE
&
COMPANY PROFILE

19
 INDUSTRY PROFILE

COTTON:
Cotton is a natural vegetable fiber of great economic as a raw material for cloth. Its
wide spread use is largely due to the ease with which its fiber are spun in to yam.
Cotton's strength, absorbency, and capacity to be washed and dyed also make it
adaptable to a considerable variety of textile products. Cotton its fashionable nature
and versatile.

HISTORY:
The oldest cotton fibers and boil fragments, dated from around 5000 B.C. were
discovered in Mexico. In 5000 B.C. the Greek historian Herodotus reported of an
plant that "before fleece" cotton has been worn in India and Egypt forever 5000
years. Cotton was grown by Native American as early as 1500. In England in the
1700' it was against the law to import are manufacture fabric made of cotton since
it was a threat to the sheep and wool industry. American colonists were able to grow
lots of cotton, but processing was difficult. It was not until the 1700' that the cotton
industry flourished in the United [Link] was then that Slater, an English men, built
the first American cotton mill has improved over the past centuries making cotton
growth these mills converted cotton fiber in to yam and cloth. In 1973 Eli Whitney
developed the cotton gin, which mechanically separates the seed from the lint fiber.
Whitney named his machine a gin, short for the word "engine technology and
production must more efficient.
COTTON PLANT:
Cotton is produced by small trees and shrubs which bear botanical name "Gossipier'
One or two weeks after showing shoots appear and 50-80 days later flowering
begins. First buds are formed. After 3 weeks blossoms appear after blossoming the
petals fall offend the off spring to the boll [Link] bolls divided by partition
in to 3-5 sections contain seeds. Fiber grows on the seeds. The plant has certainly
been grown and used in India for at least 5000 years and probably for much longer.

20
Cotton was used also by the ancient Chinese, Egyptians, and north and South
[Link] early spring seeds are planted 1-3 in seed, by mechanical planters,
seedbeds. Plants are irrigated fertilized and weeded, as needed, during the 25 week
growing cycle. The true leaves appear after 2 or 4 weeks with the bud also known
as a aquaria appearing about 5 or 7 weeks letting the cotton bowl developed,
producing the fibers abs deeds that are [Link] cotton bolls open naturally
over time and defoliant chemicals is applied by grounder air top quality. This helps
the leaves and fall off and any remaining closed bolls to open. A mechanical cotton
harvester moves through the field picking the cotton, which then packed in to truck
load sized "modules" and taken to the gin. The gin separated the cotton fibers form.
The seeds cleaning equipment removes twigs and other debris. The fiber,now called
lint is packed in to 500 pounds bales and then transported to textile mills. The cotton
is carded roomed, making all of the fibers run parallel, and then spun in to thread.
Some whole cotton seed is fed to cattle. Some seed is further processed the fine
"linter fibers are removed and the seed is pressed and cooked. Producing cotton
seed our as meal.

TYPES OF COTTON:
India grows all the 4 major types of cotton garborturn, ghirsute, gherbaceous, and
barb dense the first hybrid in the cotton crop was developed in India, in Surat, by
dry CT Patel (h4 intrahirsute in 1970) more than 200 varieties and hybrids were
evolved in the subsequent 5 decades.
Hybrids occupy around 45 % of cotton crop in India, as in 1998. Important land
marks in the India cotton history include the development and release of native
hybrids like [Link] D H37, [Link] D H9, DDH2 and drought tolerant straights
verities like SRT1, RENUKA, LRA 5166, ANJALI and RAJ AT.

21
 CULTIVATION:
Successful cultivation of cotton requires alone growing season plenty sunshine and
water during the period growth, and dry weather for harvest. It cultivated in
countries with hot climate as India, china, USA, Pakistan. Cotton producing areas
in India are spread throughout the country. Punjab, Haryana, Maharashtra, Andhra
Pradesh, Tamilnadu and Karnataka are the major cotton producing [Link] is
shown around May and June and harvested around September to [Link]
different parts of the country a number of methods, chemical and mechanical have
been used to control seeds and grass including intensive spraying of herbicide
before and after planting. The cultivating, rotary hoe, and flame cultivator are also
used to destroy weeds.
PROCESSING:
Raw cotton kappa's which is picked from field's cotton seed. To separate the seed
from raw cotton it is taken to machine called gains. Where seed is separated
fromkappa‘s. The kappa's which seeds so generated are called lint. Itis in loose
form the cotton above lint is pressed and packed in BAL form in hydraulic/
pneumatic press and at ken to mills.

MARKETING:
In determination the value of cotton samples are drawn from random bale and
evaluated according to staple, grade, and character. Staple refers to fiber length.
Fiber length can be classified in to 3 grades i.e.
Short staple
Medium staple
Long staple
Grader refers to color, brightness, and amount of foreign matter. Color groping
indicates the degree of whiteness character refers to the diameter, strength, body,
maturity, uniformity and smoothness of the fiber.

22
 PRODUCTS:
Cotton is still a principal raw material for the worlds textile industry, by its
dominant position has been seriously eroded by synthetic fiber. Increased global
production, emergence of synthetic as an alternative to cotton textile and improved
productivity are mainly contributing for world [Link] demand for cotton
continued to be erratic and some groups lobbies for increased price supports, but an
upward trend began in the 1980's. World production of cotton in the early 1990's
stood at 18.9 million metric tons annually. The leading producers include china,
India, USA, Pakistan, and turkey. Cotton textiles command a significant share in
export from India. It accounts for nearly 22% of the total exports.

➢ TOP PRODUCING COUNTRIES:

The majority of the cotton is produced in the cotton belt of the United States,
ranging along the southern part of the nation from California to Florida and
Virginia. In the 2004, cotton was produced in 13 California countries from as for
north as glen country and far south as imperial country. Major production areas are
Fresno, kings and Merced countries.

23
 EXPORTS OF COTTON:
The main market for Indian cotton export is china. The other markets also include
Taiwan, Thailand and turkey. In July 2001, the union government removed all curbs
on cotton exports. As a result of these, now the exporters are not required to obtain
any certificate from the textile commissioner on the registration, allocation, quality
and quantity of export. India exported around 25 percent cotton during 2006-07 and
it is estimated nearly 62 percent exported to [Link] the year 2006-07 the
prices of Indian cotton in early part of the season being lower than the international
prices, had been attractive to foreign buyers and there was good demand for Indian
cotton, especially S-6, H-4 and Bunny which had resulted in sustained cotton
exports, which are estimated at 55.00 laths balesThe cotton advisory board
estimated an 18-20% increase in cotton exports to 65 lakh bales for October 2007-
September-2008, as against its August 2007 estimate of 58 lakh bales.
IMPORTS OF COTTON:
Despite good domestic crops, India is importing cotton because of quality problems
or low world prices particularly for processing in to quality problems or low world
prices particularly for processing in to exportable products like yarns are fabrics.
India imported just 7, 21,000 lakh bales of cotton in 2003-2004. The imports rose
to 1,21,000 lakh bales in 2004-05, 4,70,000 lakh bales in 2005-06 and the
anticipated imports for the year 2006-07 are 5,50,000 lakh bales.

THE ORGANIZATIONS DEALING WITH THE PROMOTION OF

COTTON INDUSTRY IN INDIA:

The organizations that try to promote the quantity and quality of cotton in India
are:

The cotton corporation of India Ltd.

Cotton Advisory Board.
Cotton Association of India.

24
 Central Institute of cotton Research.
.
The cotton corporation of India ltd. was established on 31st July 1970 as a
government company registered under the company's act 1956With the changing
cotton scenario, the role and functions of the corporation were also reviewed and
revised from time to time.
As per the policy directives from the ministry of Textiles, Government of India in
1985, the corporation is nominated as the Nodal Agency of Governmentof India, for
undertaking price support operations, where the prices of support operations,
whenever the prices of kappa's (seed cotton) touch the support level

He cotton corporations of India ltd operations cover all the cotton growing statesin
the country comprising of:

Punjab, Haryana and Rajasthan in northern zone.

Gujarat, Maharashtra and Madhya Pradesh in central zone.
Andhra Pradesh, Karnataka and Tamil Nadu in southern zone.
Cotton Advisory Board.

25
SPINNING PROCESS:

26
BLOW ROOM:

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

CARDING:

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

COMBERS:

The most sophisticated department, which is very important for anybody who wants
to, exports those yams. This department refines the silvers and strength and other
good quality parameters. The output is combed silvers.

DRAW FRAMES:

Combined silvers are fed into draw frame paralyze the fiber in the silver as even
less the quality of the silver by mixing the silver from the different cans and
producing an even quality silver. The output is simple's bobbins.

RING FRAMES:

The simplex bobbins are cruelled to the ring frame spindles where the speed is very
high. By giving the twist, yam is produced. The output is in the form of cops.

SIMPLEX:

The objects in this stage are drafting two silver into roving and twisting the roving
and to win the roving on bobbins.

27
 SPINNING:

The object of spinning is further drafting the roving into yam as per required
count. To import twisting yam for getting strain there. This is the final stage in
manufacturing of yam. The finishing section includes cone winding, cone
packaging, reeling, bounding and labelling not only producing the yam butis to
be packed in sizes in different shapes as required by the buyers.

CONE WINDING:

The spinning cops are cruelled into the cone winding and the yarn is wound on
the drums and the yarn in' cones 'is produced which is the final product. In this
stage is out put it is the final output and it is in the form of yarn.

CONE BAGS:

50 cones are put in each bag. Cone bag are for dispatch. After packing and
bounding of the mill are, printed and the specification of the product from whom it
is sending and to the party to be received also placed. The company has no objection
certificate from pollution control.

MAN POWER REQUIREMENT:

He importance of personal function is increasing day to day. It is the human factor

that can mould the organization as we wish. Any resource cannot yield efficiently
managed by the human resources. That is why some management of human
resources.

28
 COMPANY PROFILE
Sri Anantha Lakshmi Spinning Mills Pvt. Ltd. (SALSM) was located on the NH-5
AT Boyapalem, was established in the year 2005 with an initial capacity of 14,400
spindles specialized in manufacturing 100% cotton yarn of various counts. Within
5 years from its initial commencement, SALSM expanded its total capacity to
26,000 spindles. SALSM is known for best quality and prompt delivery and for the
same reason majority of the production is exported to other countries. The unit
produces yarn of counts ranging from 30s to 60s both Combed and Carded
(Weaving and Knitting) and has established a very strong foothold in national and
international market. It also manufactures other finer counts on order [Link]
from the beginning of its commercial production, Sri Anantha Lakshmi Spinning
Mills Pvt. Ltd. developed the habit of producing best-in-class quality yarn with high
intension, sincere efforts, intelligent direction and [Link] incorporate
proven methodologies and scalable processes to produce high quality yarn that can
best suite our customer requirements.

VISION:
To achieve USD 20 Million dollars turnover in 2017.
MISSION:
To manufacture, supply, and source the best-in-class quality yarn of customer
desired parameters at competitive price. To maintain long term relationship with
all stakeholders by creating a feel-good environment to business with us.

VALUES:
Operational Excellence .Customer [Link] [Link]. Respect
for individual. Learning & Sharing.

29
 MARKETS:
With International Quality Standards. Sri Anantha Lakshmi SpinningMills Pot Ltd
has maintained a very good reputation in both National and international Textile
arena. The 100 % cotton yarn we manufacture is exported to countries like
Bangladesh, Turkey, Peru and Brazil, other than 100% cotton yarn, we can export.

Raw cotton
Cotton Wastes for open End
SpinningNational Sales: Sales @[Link]
QUALITY:
At Sri AnanthaLakshmi Spinning Mills Pvt Ltd each employee is awareof the
importance of quality and always thrives to maintain the same with an emphasis on
end consumer needs. From time to time we conduct awareness and training sessions
for all employees to make them quality [Link] raw cotton selection to
finished yarn packaging, we have defined process to maintain high quality and have
a separate team to monitor and execute the process. With an experience of over 5
decades in raw cotton and trading. The chairman managing director himself gets
into the act in procuring the best Raw Cotton. This signifies the utmost importance
given to quality of products at the company.

30
 CHAPTER -III
DATA ANALYSIS
AND
INTERPRETATION

31
 ANALYSIS AND INTERPRETATION OF DATA
BALANCE SHEET OF M/S. SRI ANANTHA LAKSHMI SPINNING
MILLS (P) LTD, 2011-2016

PARTICULARS 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

CURRENT
ASSETS
Inventories 131630008 162037510 189522253 159840773 175824851 195165585
Trade Receivables 18065596 21706994 237675 12867227 14153950 15710884
Cash and Bank 4631167 5163958 8823592 21267392 23394131 25967486
balance
Short term loans 57610008 71387511 71921633 68141691 74955860 83201004
and advances
FIXED ASSETS
Tangible Assets 271416323 335520403 411908508 395414170 434955587 482800701
Capital work in 2169010 2336262 6115287 10713617 11784979 13081327
progress
Long term Loans 4230312 4662890 5765890 10762920 11839212 13141525
and Advances
Other Non- 16663004 18953754 13887583 18369331 20206265 22428954
Current Assets
TOTAL 506415428 621769282 708182421 697377121 767114835 851497466
ASSETS
Current
&NoncurrentLia
Bilities
Capital 45000000 45000000 45000000 45000000 45000000 49950000
Reserves and 66702027 83377533 84481560 104941079 116435187 129243057
Surplus
Long term 189430279 236787848 307301887 262876792 289964471 321860563
Borrowings
Deferred tax 29383621 36729526 37333573 46156610 51772272 57467222
Liability
Short term 95406448 119258060 147375184 118291485 131120634 145543904
borrowings
Trade payables 19027499 23784373 6879286 36287695 40016465 44418276
Other current 49573554 61966942 64595931 76873460 85060806 94417494
Liabilities

32
 Short-term 11892000 14865000 15215000 6950000 7745000 8596950
Provisions

Total Liabilities 506415428 621769282 708182421 697377121 767114835 851497466

FUNDS FLOW STATEMENT

CHANGING IN WORKING CAPITAL FOR THE YEAR2011-2012
Particulars 2011 2012 INCREASE DECREASE

CURRENT ASSETS

Inventories Trade 131630008 162037510 30407502 ----

receivables
18065596 21706994 3641398 ----
Cash and bank balance
Short term loans and
4631167 5163958 532791 ----
advances
(A) Total current assets
57610008 71387511 13777503 ----

211936779 260295973
Current liabilities
36037278 40421598 48359194 43974874
Short term borrowings
Trade payable Other
current liabilities
Short term provisions 4384320 4384320

Total current liabilities

Net working capital
175899501
(A-B)
40421598 40421598 48359194 48359194
Increasing working
capital

33
``

PROFIT &LOSS APPROPRIATION A/CFOR THE YRAR 2011-12

Particulars Amount (Rs) Particulars Amount (Rs)

To reserves and surplus 16675506

By funds from operation 16675506

16675506
16675506

FUNDS FLOW STATEMENT FOR THE YEAR 2011-2012

SOURCES AMOUNT (RS) APPLICATIONS AMOUNT (RS)

Fixed assets
Tangible assets
Funds from operation 16675506 64104080
Capital in progress
Long term loans and 167252
advances.
432578
Long term borrowings 47357569
Other noncurrent assets
Increasing working capital

2290750
Differed tax liability 7345905
4384320

71378980 71378980

INTERPRETATION:

When compared to 2011 in the year 2012 current assets are increased to
260295973 there has been an increase of 22.81%

When compared to 2011 in the year 2012 current liabilities are increased to
219874375 there has been an increase of 24.9%In 2012 net increases of working
capital is 4384320 In 2011-12 the funds from operations is 16675506.
34
``

CHANGING IN WORKING CAPITAL FOR THE YEAR

2012-2013
Particulars 2012 2013 INCREASE DECREASE

CURRENT ASSETS

Inventories 162037510 189522253 27484743 ----

Trade receivables 21469319
Cash and bank balance 21706994 237675 ---- ----

3659634
Short term loans and 5163958 8823592 534122 ----
advances

(A) Total current 71387511 71921633

assets
Current liabilities
260295973 270505153
Short term borrowings
Trade payable
Other current liabilities
Short term provisions
119258060 147375184 ---- 28117124
Total current liabilities
16905087
Net working capital A-B
23784373 6879286 ---- ----
Decreasing working
capital 2628989

61966942 64595931 ---- 350000

14865000 15215000

219874375 234065401

40421598 36439752 48583586 52565432

3981846 3981846

35
``

40421598 40421598 52565432 52565432

PROFIT &LOSS APPROPRIATION A/C FOR THE YEAR 2012-2013

Particulars Amount (Rs) Particulars Amount (Rs)

To reserves and 1104027

surplus
By funds from 1104027

1104027 operation 1104027

FUNDS FLOW STATEMENT FOR THE YEAR 2012-2013

SOURCES AMOUNT (RS) APPLICATIONS AMOUNT (RS)

Funds from operation 1104027 Fixed assets

Long term borrowings Tangible assets
70514039 76388105
Differed tax liability Capital in progress
Other noncurrent assets 604047 Long term loans and 3779025
Decreasing working advances
5066171 1103000
capital
3981846

81270130 81270130

INTERPRETATION:

When compared to 2012 in the year 2013 current assets are increased to270505153
there has been an increase of 3.9%

When compared to 2012 in the year 2013 current liabilities are increased to
234065401 there has been an increase of 6.45%

In 2013 Net decreases of working capital is 3981846

In 2012-13 the funds from operations is 11044027.

36
``

CHANGING IN WORKING CAPITAL FOR THE YEAR

2013- 2014
Particulars 2013 2014 Increase Decrease

CURRENT ASSETS

Inventories 189522253 159840773 ---- 29681480

Trade receivables 237675 12867227 12629552 ----

Cash and bank balance 8823592 21267392 12443800 ----

Short term loans and advances 71921633 68141691 ---- 3779942

(A) Total current assets 270505153 262117083

Current liabilities

Short term borrowings

147375184 118291485 29083699 ----
Trade payable
6879286 36287695 ---- 29408409
Other current liabilities
64595931 76873460 ---- 12277529

Short term provisions

15215000 6950000 8265000 ----
Total current liabilities
234065401 238402640

Net working capital (A-B)

36439752 23714443 62422051 75147360
Decreasing working capita
12725309 12725309

36439752 36439752 75147360 75147360

37
``

PROFIT &LOSS APPROPRIATION A/c FOR THE YEAR 2013-2014

Particulars Amount (Rs) Particulars Amount (Rs)

To reserves and surplus 20459519

By funds from operation 20459519

20459519 20459519

FUNDS FLOW STATEMENT FOR THE YEAR 2013-2014

Sources Amount (Rs) Applications Amount (Rs)

Funds from operation 20459519 Long term borrowings 44425095

Differed tax liability
8823037 Capital in progress 4598330
Tangible assets
Decreasing working 16494338 Long term loans and 4997030
capital advances.
12725309 4481748
Other noncurrent assets

58502203 58502203

INTERPRETATION:
When compared to 2013 in the year 2014 current assets are decreased to
262117083 there has been an decrease of -3.1%
When compared to 2013 in the year 2014 current liabilities are increased to
238402640 there has been an increase of 1.85%
In 2014 net increases of working capital is 12725309
In 2013-14 the funds from operations is 20459519

38
``

CHANGING IN WORKING CAPITAL FOR THE YEAR

2014-2015
Particulars 2014 2015 INCREASE DECREASE

CURRENT ASSETS

Inventories 159840773 175824851 15984078 ----

Trade receivables
Cash and bank balance 12867227 14153950 1286723 ----

Short term loans and 21267392 23394131 2126739 ----

advances

68141691 74955860 6814169 ----

(A) Total current assets 262117083 288328792

Current liabilities
Short term borrowings
Trade payable
Other current liabilities 118291485 131120634 ---- 12829149
Short term provisions
(B) Total current liabilities
36287695 40016465 ---- 3728770

76873460 85060806 ---- 8187346

Net working capital (A-B)
Increasing working capital 6950000 7745000 ---- 795000

238402640 263942905

23714443 24385887 26211709 25540265

671444 671444

39
``

24385887 24385887 26211709 26211709

PROFIT &LOSS APPROPRIATION A/C FOR THE YEAR 2014-2015

Particulars Amount (Rs) Particulars Amount (Rs)

To reserves and surplus 11494108

By funds from operation 11494108

11494108 11494108

FUNDS FLOW STATEMENT FOR THE YEAR 2014-2015

SOURCES AMOUNT (RS) APPLICATIONS AMOUNT (RS)

Funds from operation 11494108 Tangible assets 39541417

Differed tax liability
5615662 Capital in progress 1071362
Long term borrowings
27087679 Long term loans and 1076292
advances.

Other noncurrent
assets 1836934

Increasing working 671444

44197449 capital 44197449

40
``

INTERPRETATION:
When compared to 2014 in the year 2015 current assets are increased to
`288328792 there has been an increase of 10%
When compared to 2014 in the year 2015 current liabilities are increased to `
238402640 there has been an increase of 10.7%
In 2015 net increases of working capital is671444
In this year 2014-15 funds from operations is 11494108.
CHANGING IN WORKING CAPITAL FOR THE YEAR 2015-2016

Particulars 2015 2016 INCREASE DECREASE

CURRENT ASSETS

Inventories 175824851 195165585 19340734 ----

Trade receivables 14153950 15710884 1556934 ----

Cash and bank balance 23394131 25967486 2573355 ----

Short term loans and 74955860 83201004 8245144 ----

advances
288328792 320044959
(A) Total current assets
Current liabilities
131120634 145543904 ---- 14423270
Short term borrowings
40016465 44418276 ---- 4401811
Trade payable
85060806 94417494 ---- 9356688
Other current liabilities
7745000 8596950 ---- 851950
Short term provisions
263942905 292976624
(B) Total current liabilities
24385887 27068335 31716167 29033719

2682448 2682448

41
``

Net working capital (A-B) 27068335 27068335 31716167 31716167

Increasing working capital

PROFIT &LOSS APPROPRIATION A/C FOR THE YEAR 2015-2016

Particulars Amount (Rs) Particulars Amount (Rs)

To reserves and surplus 12807870

By funds from operation 12807870
12807870 12807870

FUNDS FLOW STATEMENT FOR THE YEAR 2015-2016

SOURCES AMOUNT (RS) APPLICATIONS AMOUNT (RS)

Funds from operation 12807870 Tangible assets 47845114

Differed tax liability 5694950 Capital in progress 1296348
Long term borrowings 31896092 Long term loans and 1302313
advances.
Increase in share capital 4950000
Other noncurrent
assets 2222689

Increasing working 2682448

capital

55348912 55348912

INTERPRETATION:
When compared to 2015 in the year 2016 current assets are increased to
320044959 there has been an increase of 10.9%
When compared to 2015 in the year 2016b current liabilities are increased to
292976624 there has been an increase of 11%In 2016 net increases of working
capital is 2682448. In 2015-16 the funds from operations is 1280787

42
 INTERPRETATION:
The Net working capital has been fluctuating in the study period 2011-2016, here
2010-11 is the base year. In the year 2011-2012 the net working capital is increased
by 12.16% comparing to base year2010-11, in the year 2012-13 increased by 1.11%
comparing to base year, and the year 2013-14 net working capital is decreased by
34.1% comparing to base year, in the year 2014-15 the net working capital is
decreased by 32.33% when I am comparing to 2010-11 the net working capital is
decreased by 24.88% in the year 2015-16. It is observed that the overall net working
capital is not good comparing to base year. So company should increase current
assets and reduce current liabilities.

CURRENT ASSETS & CURRENT LIABILITIES OF SRI

ANANTHALAKSHMI SPINNING MILLS PVT LTD, 2011-2016
YEAR CURRENT PERCENTAGE CURRENT PERCENTAGE
ASSETS INCRESE OR LIABILITIES INCRESE OR
DECRESE DECRESE
CURRENT CURRENT
ASSETS (2010-11 LIABILITIES
base year) (2010-11 base
year)
2010-11 211936779 100% 175899501 100%
2011-12 260295973 22.8% 219874375 24.9%
2012-13 270505153 27.6% 234065401 33%
2013-14 262117083 23.6% 238402640 35.5%
2014-15 288328792 36% 263942905 50%
2015-16 320044959 51% 292976624 66.5%

43
 Graph: 4.2
35000000
30000000 CURRENT ASSETS
25000000
20000000 PERCENTAGE INCRESE OR
15000000 DECRESE CURRENT ASSETS
10000000 CURRENT LIABILITIES
50000000
0 PERCENTAGE INCRESE OR
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 DECRESE CURRENT LIABILITIES

INTERPRETATION:
The current assets and current liabilities has been fluctuating in the study period
2011-2016, here 2010-11 is the base year. 2011-12 the current assets are increased
by 22.8% and current liabilities are increased by 24.9% comparing to base year, in
every year the current assets and current liabilities are increasing in the year 2015-
16 the current assets are increased by 51% and current liabilities are increased by
66.5% comparing to base year [Link] you observe everyyear current assets and
current liabilities are increasing but current liabilities are increasing more then
current liabilities.

FUNDS FROM OPERATIONS OF SRI ANANTHALAKSHMI

SPINNING MILLS PVT LTD, 2011-2016
YEAR FUNDS FROM OPERATIONS PERCENTAGE INCRESE OR
DECREASE FUNDS FROM
OPERATIONS
(on the base of 2022-23)
2011-12 16675506 100%
2012-13 1104027 -93.3%
2013-14 20459519 22.6%
2014-15 11494108 -31.0%
2015-16 12807870 -23.19%

44
 Graph: 4.3

25000000
FUNDS FROM
20000000
OPERATIONS
15000000

10000000 PERCENTAGE
INCRESE OR
5000000 DECREASE FUNDS
FROM OPERATIONS
0
2011-12 2012-13 2013-14 2014-15 2015-16
-5000000

INTERPRETATION:
The current assets and current liabilities has been fluctuating in the study period
2011-2016, here 2011-12 is the base year. Funds from operations are decreased by
93.3% in 2012-13comparing to 2011-12, in the year 2013-14 funds from operations
are increased by 22.6%, 2014-15 the funds are decreased by 31% comparing to base
year , in the year 2015-16 the funds from operations are decreased by 23.2%
comparing to [Link] funds from operation are decreasing comparing to 2011-
12 in the year 2013-14 the highest funds from operations is 22.6% increased.

PROFIT OR LOSSES OF SRI ANANTHALAKSHMI SPINNING

MILLSPVT LTD, 2011-2016
YEAR PROFIT OR LOSSES BY PERCENTAGE (%) OF
INCRESED OR DECRESED
PROFITS (2010-11 base year)
2010-11 66702027 100%
2011-12 83377533 24.9%
2012-13 84481560 26.6%
2013-14 104941079 57.3%
2014-15 116435187 74.5%
2015-16 129243057 93.7%

45
 Graph: 4.4

100.00% 93.70%

80.00% 74.50%
57.30%
60.00%

40.00%
24.90% 26.60%
20.00%

0.00%
2011-12 2012-13 2013-14 2014-15 2015-16

BY % OF INCRESED OR DECRESED PROFITS (ON THE BASE OF 2010-11)

INTERPRETATION:
The profits has been fluctuating in the study period 2011-2016, here 2010-11 is the
base year. In the year 2011-2012 the profit is increased by 24.9% comparing to base
year2010-11, in the year 2012-13 the profit is increased by 1.32% comparing to
previous year2011-12, in the year 2013-14 the profit is increased by 24.21%
comparing to2012-13, in the year 2014-15 the profit is increased by 10.90%
comparing to 2013-14, in the year 2015-16 the profit is increased by 10.99%
comparing to 2014-2015.

46
CHAPTER -IV
FINDINGS
SUGGESTIONS
CONCLUSION
BIBILOGRAPHY

47
 FINDINGS:

1. It was observed that in the year 2011-2012 the current assets are increased
by 22.81% and current liabilities are increased by 24.9% finally the
working capital also increased by 4384320.
2. It was observed that in the year 2012-2013 the current assets are increased
by 3.9% and current liabilities are increased by 6.45% finally the working
capital also decreased by 3981846.
3. It was observed that in the year 2013-2014 the current assets are decreased
by 3.1% and current liabilities are increased by 1.85% finally the working
capital also decreased by 12725309.
4. It was observed that in the year 2014-2015 the current assets are increased
by 10% and current liabilities are increased by 10.7% finally the working
capital also increased by 671444.
5. It was observed that in the year 2015-2016 the current assets are increased
by 10.9% and current liabilities are increased by 11% finally the working
capital also increased by 2682448.
6. It was observed that the net working capital in decreased to 24.88%
comparing to 2015-16
7. It was observed that the current assets are increased by 51%, and current
liabilities are increased by 66.5% comparing to base year.
8. It was observed that the profits are increased 93.7% in 2015-16 comparing
to 2010-11

48
5.2 SUGGESTIONS:

1. Company should maintain sufficient current assets by issue of loans &

advances to outsiders; it will help to increase working capital.
2. The company is suggested to maintain sufficient amount of cash and bank
balance to pay its quick liabilities which will increase its credit
worthiness and goodwill
3. To maintain sufficient reserve and surplus, to ensure financial stability of
the business

4. 1Company should maintain cash and bank balance sufficiently.

5. Company should increase current assets and reduce current liabilities

6. The company should improve the liquidity

49
5.3 CONCLUSION:
The study conducted on fund flow analysis and ratio analysis at ―THE
ANANTHALAKSHMI SPINNING MILLS (P) LTD” gives a view of
analysis evaluation of liquidity position of the company is not well comparing to
previous years the company should increase current assets and reduce current
liabilities. And profitability of the company is good based on the tools used
analysis and interpretations have been made giving way for useful and
constructive suggestions. The company should enhance its performance for
meeting challenges and exploiting opportunities in future. The project will guide
to the management to interpret its weakness and problems this will certainly help
the management to taking financial decisions. However more efforts need to be
taken to improve the financial position for the growth of the [Link] on
the analysis and interpretation I tried to give my findings and suggestions for the
company as per my best knowledge.

50
 BIBLIOGRAPHY

➢ Financial management by I.M. PANDAY Published by VIKAS

Publishing house PVT LTD

➢ Financial management theory and practices by PRASANA\JA

CHANDRA

➢ Financial management text problems by M.Y. KHAN & [Link]

➢ Financial management and polices by V.K. BHALLA

➢ Financial management by S.N. Maheswari

➢ Financial and management accounting by DR.R. Thirumal published by

thakur publishers

Web sites:

➢ www. [Link]

➢ www. [Link]

➢ [Link] mba .com

➢ www. Accounting for [Link]

➢ www. Financial management. Com

➢ www. Financial ratios. Com

51
52